Eastern District of New York

Earlier today, at the federal courthouse in Brooklyn, Joanna De Alba was sentenced by United States District Judge Dora L. Irizarry to 96 months in prison for distributing, and possessing with intent to distribute, illegal drugs over the “dark web.”  De Alba distributed an array of illegal drugs—including fentanyl, heroin, MDMA, cocaine, methamphetamine, oxycodone and methadone—over the dark web in exchange for Bitcoin and other cryptocurrency.  De Alba pleaded guilty in April 2021.   

Breon Peace, United States Attorney for the Eastern District of New York, and Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), announced the sentence.

“The prison sentence imposed on De Alba today demonstrates that her clandestine use of the dark web to distribute a potentially lethal array of powerful drugs like fentanyl, heroin and oxycodone in exchange for cryptocurrency was a failure,” stated United States Attorney Peace.  “This investigation and vigorous prosecution show that we will not allow the dark web to be a haven for drug traffickers.”

“This sentencing demonstrates that drug traffickers are not untouchable by dealing in the dark web,” stated DEA Special Agent-in-Charge Donovan.  “Attempting to hide through anonymity, De Alba became a parent’s worst nightmare by pushing fentanyl, heroin and other dangerous drugs into homes across our many communities.  I applaud the Cyber Investigative Unit- New York Division and the U.S. Attorney's Office Eastern District of New York for their commendable work throughout this investigation.”

The internet contains online marketplaces for narcotics and other contraband on the “dark web,” a part of the internet located beyond the reach of traditional internet browsers and accessible only through networks designed to conceal user identities.  The “Wall Street Market” was a global dark web marketplace that required its users to trade in digital currencies, primarily Bitcoin. 

Between June 2018 and May 2019, De Alba advertised and sold illegal narcotics on the Wall Street Market.  These narcotics included opioids—including fentanyl (concealed as oxycodone pills) and heroin—as well as other potent illegal drugs including oxycodone, cocaine, methamphetamine, ecstasy and other substances containing MDMA.  De Alba took various measures to operate anonymously and conceal her identity, including using the online alias “RaptureReloaded,” using fake company names and shipping addresses, using the name of her deceased husband to receive packages from her suppliers and using credit cards in her deceased husband’s name to fund the tracking of her shipments.  De Alba also directed customers to contact her through encrypted email and messaging services and pay her with cryptocurrency.  De Alba offered free shipping to addresses in the United States and free tracking of all orders.

De Alba participated in over 600 transactions on the Wall Street Market in which she sold more than: 840 grams of heroin; 190 grams of methamphetamine; 1,250 pills of MDMA; and 280 pills of oxycodone.  De Alba also sold more than 750 fake oxycodone pills—pills that actually contained fentanyl, but were concealed and disguised as oxycodone.  De Alba received payment in the cryptocurrencies Bitcoin and Monero, and pocketed approximately 16.32 BTC and 400 XMR, which together are worth more than $1 million today.

The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section.  Assistant United States Attorneys Saritha Komatireddy and Francisco J. Navarro are in charge of the prosecution.

The Defendant:

JOANNA DE ALBA (also known as “RaptureReloaded”)
Age: 40
Tijuana, Mexico

E.D.N.Y. Docket No. 19-CR-563 (DLI)

Earlier today, in federal court in Brooklyn, Daniel Rendon Herrera, also known as “Don Mario,” a citizen of Colombia, pleaded guilty to engaging in a continuing criminal enterprise and conspiring to provide material support to a designated foreign terrorist organization.  The proceeding took place before United States District Judge Dora L. Irizarry.  When sentenced, Rendon Herrera faces a mandatory minimum sentence of 20 years in prison and up to life imprisonment, as well as forfeiture in excess of $45 million and a fine of up to $2.25 million. 

Breon Peace, United States Attorney for the Eastern District of New York; Damian Williams, United States Attorney for the Southern District of New York; Matthew G. Olsen, Assistant Attorney General for the Justice Department’s National Security Division; Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA); Rick J. Patel, Acting Special Agent-in-Charge, Homeland Security Investigations, New York (HSI); Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Dermot F. Shea, Commissioner, New York City Police Department (NYPD); and Kevin P. Bruen, Superintendent, New York State Police (NYSP), announced the guilty plea.

“With today’s guilty plea, Rendon Herrera, who was once the most feared narco-terrorist in Colombia, admitted to leading one of the world’s largest and most violent drug cartels and flooding the streets of America with cocaine.  Rendon Herrera also admitted to providing material support to a designated terrorist organization that brutally killed, kidnapped, and tortured rival drug traffickers and civilians.” stated United States Attorney Peace.  “I commend the determined efforts of countless members of law enforcement, foreign and domestic, who brought the defendant to justice.”

“By his admission, Daniel Rendon Herrera was a leader of a brutal and murderous narco-terrorist organization in Colombia, and he trafficked more than 80 tons of cocaine,” stated United States Attorney Williams.  “Rendon Herrera oversaw operations of a paramilitary cartel that carried out kidnappings, torture, and murders.  Now, through the combined efforts of law enforcement officers and prosecutors, Rendon Herrera awaits sentencing for his crimes.”

“Don Mario’s guilty plea has left footprints for other drug kingpins to follow,” stated DEA Special Agent-in-Charge Donovan.  “This notorious founder and leader of Clan Usaga is facing the consequences of his billion-dollar cocaine empire that spread fear, drug addiction, and death throughout Colombia and the United States.  I commend the law enforcement alliance that has worked for years to bring Rendon Herrera to justice.”  

“Rendon Herrera, one of Colombia’s most prominent and feared drug kingpins and once the leader of the narco-terrorist Los Urabenos Drug Trafficking Organization, committed heinous crimes in pursuit of power and profit. This plea demonstrates HSI and its law enforcement partners’ commitment to disrupting and dismantling the criminal organizations responsible for the dangerous narcotics flooding our streets. We will continue to pursue these organizations at the highest levels, both at home and abroad, and put an end to the terror that they generate across the world.” stated HSI Acting Special Agent-in-Charge Patel.

“All roads travelled by international drug cartels seem to lead straight to our cities, where their members poison our neighbors and wreak deadly havoc. In this case, Mr. Herrera admits to supporting designated terrorists as they kidnapped, tortured, and murdered people so he could build his power and wealth. Our pursuit of these groups won't wane with his guilty plea today. Even now, we are on to the next leader who most likely believes he won't suffer the same fate,” stated FBI Assistant Director-in-Charge Driscoll.

“Our NYPD investigators work tirelessly to avert narcotics, terrorism and threats from the kind of violent, overseas criminal enterprises that this long term investigation has dismantled. I commend our officers, our law enforcement partners and the prosecutors in the United States Attorney’s Office for the Eastern District of New York for their public service to all New Yorkers in achieving today’s guilty plea,” stated NYPD Commissioner Shea.

According to court filings and facts presented during the plea proceeding, the guilty plea stems from Rendon Herrera’s role, since the late 1990’s, as a leader of the designated foreign terrorist organization, the Autodefensas Unidas de Colombia (AUC), and as founder and leader of Los Urabeños Drug Trafficking Organization (the Urabeños, also referred to as Clan Usuga and Clan del Golfo), effectively the successor organization to the AUC. 

The AUC, founded in 1997, was a Colombian paramilitary and drug-trafficking organization, designated in 2001 by the United States Department of State as a Foreign Terrorist Organization and Specially-Designated Global Terrorism Organization.  The AUC engaged in armed conflict with the Fuerzas Armadas Revolucionarios de Colombia (FARC), Colombia’s main guerilla group, and sought to remove FARC sympathizers from positions of power and influence in Colombia.  To support its political and terrorist objectives, the AUC imposed “taxes” on cocaine trafficked through AUC-controlled areas and engaged in violent attacks including murders and kidnappings.  By 2006, many members of the AUC demobilized as part of the Colombian government’s Justice and Peace process – a process under which paramilitary members surrender to the Colombian government and relinquish their criminally-derived assets in exchange for reduced sentences and amnesty from extradition.  Rather than submit to the peace process, Rendon Herrera re-mobilized the AUC as the Urabeños.

The Urabeños, like the AUC, continued to finance their paramilitary and drug trafficking by imposing a “tax” on multi-ton shipments of cocaine that transited through areas in Colombia controlled by the organization and were ultimately destined for importation into the United States.  The Urabeños employed “sicarios,” or hitmen, who carried out various acts of violence, including murders, assaults, kidnappings and assassinations to collect drug debts, maintain discipline, control and expand drug territory, and to promote and enhance the prestige, reputation, and position of the organization.  In 2009, when Rendon Herrera was captured by the Colombian National Police, he commanded 16 “bloques,” or territories, across Colombia and thousands of armed paramilitary fighters.

In connection with his plea, Rendon Herrera accepted responsibility for trafficking at least 73,645 kilograms of cocaine.  The charges relating to the AUC were initially filed in the Southern District of New York and transferred to the Eastern District of New York for the consolidated plea.  The charges relating to the Urabeños originated in the Eastern District of New York.  Additionally, since 2009, Rendon Herrera has been designated by the United States Department of the Treasury, Office of Foreign Assets Control, as a Specially Designated Narcotics Trafficker pursuant to the Foreign Narcotics Kingpin Designation Act.  Rendon Herrera is also wanted to serve sentences for convictions in the Republic of Colombia relating to numerous homicides, weapons, and narcotics trafficking, which remain pending his service of his sentence in the United States.

The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section.  Assistant United States Attorneys Jonathan P. Lax, Francisco J. Navarro, and Andrew D. Grubin are in charge of the prosecution, with assistance provided by Assistant United States Attorney Alexander Li of the U.S. Attorney’s Office for the Southern District of New York, and Trial Attorney Elisabeth Poteat of the National Security Division’s Counterterrorism Section.  The Justice Department’s Office of International Affairs handled the extradition in this matter and the Department of Justice Judicial Attaché’s Office was instrumental in supporting the case.

This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

The Defendant:

DANIEL RENDON HERRERA (also known as “Don Mario”)
Age: 56
Antioquia, Colombia

E.D.N.Y. Docket Nos. 14-CR-625 (S-3) (DLI) / 20-CR-569 (S-6) (DLI)

S.D.N.Y. Docket Nos. 04-CR-962 (LAP) / 08-CR-659 (SAS)

Earlier today, in federal court in Central Islip, an indictment was unsealed charging Anthony Cyntje, a New Jersey correction officer, Anthony Leonardi, his brother Robert Leonardi, William Junior Maxwell II, who is the rap artist also known as “Fetty Wap,” Brian Sullivan, and Kavaughn Wiggins with conspiring to distribute and possess controlled substances.  Five of the defendants are also charged with using firearms in connection with drug trafficking. 

Sullivan was arrested on September 30, 2021, arraigned before United States Magistrate Judge Steven L. Tiscione, and ordered detained pending trial.  Anthony Leonardi and Cyntje were arrested on October 13, 2021, arraigned before United States Magistrate Judge Anne Y. Shields, and ordered detained pending trial.  Robert Leonardi was arrested in Pennsylvania on October 13, 2021, arraigned before United States Magistrate Judge Richard A. Lloret of the Eastern District of Pennsylvania, and ordered detained pending trial.  Wiggins was arrested on October 27, 2021, arraigned before United States Magistrate Judge Steven J. Locke, and ordered detained pending trial.   Maxwell was arrested yesterday and will be arraigned this afternoon before United States Magistrate Judge Locke.    

Breon Peace, United States Attorney for the Eastern District of New York; Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Timothy D. Sini, District Attorney for Suffolk County; and Stuart Cameron, Acting Commissioner, Suffolk County Police Department (SCPD), announced the charges.

“As alleged, the defendants transported, distributed and sold more than 100 kilograms of deadly and addictive drugs, including heroin and fentanyl, on Long Island, deliberately contributing to the opioid epidemic that has devastated our communities and taken too many lives,” stated United States Attorney Peace.  “We will continue to work nonstop with our law enforcement partners to keep our neighborhoods safe from the scourge of dangerous drugs and gun violence.”  Mr. Peace thanked the United States Postal Inspection Service for its assistance during the investigation.

“The pipeline of drugs in this investigation ran thousands of miles from the West Coast to the communities here in our area, contributing to the addiction and overdose epidemic we have seen time and time again tear people's lives apart. The fact that we arrested a chart-topping rap artist and a corrections officer as part of the conspiracy illustrates just how vile the drug trade has become. I want to commend the work of our Long Island Gang Task Force and our law enforcement partners for working day in and day out to get these deadly drugs off our streets,” stated FBI Assistant Director-in-Charge Driscoll.

“These defendants ran a multimillion-dollar bicoastal drug distribution organization with Suffolk County as their home base,” stated District Attorney Sini. “They were wholesale drug dealers who pumped massive quantities of narcotics into our communities. As our investigation revealed, they would frequently use cutting agents to process just one of those kilograms of drugs into as many as four even before it was distributed to lower-level dealers, so the magnitude of this operation was enormous. Thanks to law enforcement’s efforts, this prolific supply chain has been cut off. I thank the Eastern District for partnering with my Office to prosecute these individuals and hold them accountable.” 

“This is another example of law enforcement working together to take down a major drug trafficking ring that brought more than 100 kilograms of illicit narcotics to Long Island and New Jersey,” stated SCPD Acting Commissioner Cameron said.  “Holding these six individuals accountable, most of whom were using firearms to protect their drugs, will have a significant impact on the drug supply in Suffolk County and will help us in our continuing effort to combat the opioid epidemic.”

As alleged in the indictment and in court proceedings, from approximately June 2019 through June 2020, the defendants distributed more than 100 kilograms of cocaine, heroin, fentanyl, and crack cocaine across Long Island and New Jersey.  The defendants obtained the narcotics on the West Coast and used the United States Postal Service and drivers with hidden vehicle compartments to transport the controlled substances across the country to Suffolk County, where they were stored.  The drugs were then distributed to dealers who sold the controlled substances on Long Island and in New Jersey.  Five of the defendants also used firearms to protect their drug organization and distribution chain.  Defendants Anthony Leonardi, Robert Leonardi, Sullivan, and Wiggins participated in the purchase and transport of the narcotics from the West Coast to the East Coast where they were processed, stored, and ultimately resold.  Maxwell was a kilogram-level redistributor for the trafficking organization and Cyntje transported kilograms of cocaine from Long Island to New Jersey.

Search warrants executed during the investigation resulted in the recovery of approximately $1.5 million in cash, 16 kilograms of cocaine, 2 kilograms of heroin, numerous fentanyl pills, two 9mm handguns, a rifle, a .45 caliber pistol, a .40 caliber pistol, and ammunition.   

The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, the defendants face a maximum of life imprisonment.  

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Christopher C. Caffarone, Andrew P. Wenzel, and Special Assistant United States Attorney Jacob T. Kubetz are in charge of the prosecution.

The Defendants:

Anthony Cyntje
Age: 23
Passaic, New Jersey

Anthony Leonardi
Age:  47         
Coram, New York

Robert Leonardi
Age: 26
Levittown, Pennsylvania

Willie Junior Maxwell II (also known as “Fetty Wap”)
Age: 30
Paterson, New Jersey

Brian Sullivan
Age: 26
Lake Grove, New York

Kavaughn L. Wiggins (also known as “KV”)
Age: 26
Coram, New York

E.D.N.Y. Docket No. 21-CR-452 (JS)

A superseding indictment was filed today in federal court in Brooklyn charging Cory Martin with murder-for-hire and conspiracy to commit murder-for-hire.  Martin was previously charged with conspiracy to commit wire fraud, aggravated identity theft and fraudulent use of identification relating to an alleged scheme to fraudulently obtain life insurance policies in the name of Brandy Odom, a 26-year-old woman, murder her, and then claim benefits under the life insurance policies.   

Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the charges.

“The defendant allegedly brutally murdered a young woman, dismembered her body and scattered her body parts in a Brooklyn park in order to profit from life insurance policies that he fraudulently obtained in her name,” stated United States Attorney Peace.  “He will now be held to account for his alleged heinous acts.  We hope that today’s charges bring some measure of solace to the victim’s family.”

Mr. Peace expressed his appreciation to the Brooklyn South Homicide Squad of the New York City Police Department and the Brooklyn District Attorney’s Office for their outstanding investigative work on this case and for their assistance during the prosecution. 

“It's unthinkable that a person could view another human being as a get rich quick scheme. We allege Mr. Martin murdered, then dismembered a young woman so he could cash in on fraudulent life insurance policies. Ms. Odom didn't deserve the sheer indignity of dying that way, no one does. Mr. Martin facing justice won't bring Ms. Odom back, but it will keep him from plotting another despicable attempt at profiting off someone's life,” stated FBI Assistant Director-in-Charge Driscoll. 

“With dogged tenacity and meticulous investigative work, our NYPD detectives and law enforcement partners never wavered in their mission to seek justice for this crime victim. Now, more than three years after the malicious fraud and brutal killing alleged in today's indictment, New Yorkers can find our collective answer in these court papers from the United States Attorney's Office for the Eastern District of New York,” stated NYPD Commissioner Shea.

As alleged in the indictment and other court documents, in March 2017, a year prior to Odom’s murder, Martin and a co-conspirator fraudulently obtained two life insurance policies in the victim’s name.  They arranged for premium payments to the life insurance companies to be made by Western Union money order and by using a debit card in Odom’s name. 

In April 2018, Martin allegedly strangled Odom, and, over the course of several days, dismembered her corpse.  On April 6, 2018, Martin had searched Home Depot’s website for an online listing for a “Dewalt 12-Amp Corded Reciprocating Saw,” described as featuring a “powerful 12 Amp motor designed for heavy-duty applications.”  Later that evening, Martin searched YouTube using the search term “how to insert blade for reciprocating saw” and “using reciprocating saw,” which he subsequently deleted from his cell phone. 

In the early morning of April 8 and April 9, 2018, Martin disposed of Odom’s body parts in Canarsie Park with the assistance of his co-conspirator.  On April 10, 2018, Martin conducted dozens of Internet searches for news articles, including “Search area expands after dismembered body found in Canarsie Park in Brooklyn.”  Martin also accessed a Twitter post titled “Person walking dog discovers remains of woman in Brooklyn park.”  The following day, Martin searched YouTube using the search term “exclusive interview of mother of girl found in park.”  After Odom’s murder, at Martin’s direction, several unsuccessful attempts to claim benefits under Odom’s life insurance policies were made by his co-conspirator.

The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, Martin faces a mandatory penalty of life imprisonment, or possibly, the death penalty.

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Tanya Hajjar and Emily Dean are in charge of the prosecution.

The Defendant:

CORY MARTIN
Age:  34
Queens, New York

E.D.N.Y. Docket No. 20-CR-549 (AMD)

A criminal complaint was unsealed today in federal court in Brooklyn charging Marsiste Adolphe, Margaret Dominique-McLain, Mercedes Falcon, Tracy Gibson, Roselee Johnson, Jeannette Monclova, Manuel Moore, Kikelomo Ogundiran, and Dino Paolicelli with stealing more than $3 million from the New York State Early Intervention Program (the “EIP”), including more than $993,000 from Medicaid and more than $1,998,000 from the New York City Department of Health and Mental Hygiene (“NYC DOHMH”), an agency that receives federal funds.  The EIP is a New York State program that provides remedial services to developmentally delayed children from birth to age three, such as physical therapy, occupational therapy, speech therapy, special instruction and social work services.  The defendants, all EIP therapists, were arrested earlier today and are scheduled to make their initial appearance this afternoon before United States Chief Magistrate Judge Cheryl L. Pollak. 

Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Margaret Garnett, Commissioner, New York City Department of Investigation (DOI), announced the charges.

“As alleged, the defendants exploited disabled infants and toddlers, the youngest and most vulnerable among us, to enrich themselves by millions of dollars,” stated United States Attorney Peace.  “This Office and our law enforcement partners will continue to vigorously protect government programs from fraud and abuse that not only hurts taxpayers, but also deprives developmentally delayed children from receiving much-needed services.”  Mr. Peace also thanked the office of the Special Commissioner of Investigation for the New York City School District for its assistance on the case.

“Defrauding government programs produces a ripple effect that trickles down to taxpayers who foot the bill for fraud schemes.  As alleged in this complaint, however, the defendants not only stole money from the system itself, they also prevented children with EIPs from accessing the amount of care they were authorized to receive.  When systems designed to help our most vulnerable are manipulated in this way, rest assured federal charges will be applied,”  stated FBI Assistant Director-in-Charge Driscoll.

“This criminal case exemplifies the broad and damaging impact of corruption. These nine defendants not only stole more than $3.3 million in public funds but also robbed more than 200 New York City children of essential Early Intervention services they were entitled to receive, according to the charges. The City Department of Health and Mental Hygiene (DOHMH) was instrumental in identifying billing discrepancies involving Early Intervention specialists and then referring them to DOI for further investigation. I thank our law enforcement partners, the FBI and the U.S. Attorney’s Office for the Eastern District of New York for their collaboration on this important investigation; and the DOHMH for spotting the inconsistencies and immediately referring them. This type of cooperation among agencies and law enforcement is essential in combatting corruption,” stated DOI Commissioner Garnett.

As set forth in the complaint, between January 1, 2015 and June 30, 2019, the defendants allegedly submitted fraudulent documentation for thousands of EIP therapy sessions that never took place.  The defendants collectively received millions of dollars as payments for these non-existent EIP therapy sessions.  In addition, because each EIP recipient is only entitled to a fixed number of sessions, fraudulently billing for sessions that do not take place deprives disabled infants and toddlers of EIP therapy sessions they are entitled to receive. 

For example, Adolphe claimed to provide EIP therapy sessions every single day of 2016, including on Christmas and Thanksgiving.  Gibson claimed to provide EIP therapy sessions every day from April 2, 2017 to July 31, 2018.  Between May 8, 2016 and September 8, 2018, a period of 854 days, Manuel Moore claimed to provide EIP therapy sessions every day except January 4, 2018.  Paolicelli claimed to provide EIP therapy sessions a total of 1,086 days out of 1,096 days between January 1, 2016 and December 31, 2018.  Falcon claimed to provide EIP therapy sessions from early in the morning and until late into the evening — sometimes claiming that sessions began at 4:00 a.m. or ended at 3:00 a.m.  The evidence also revealed that Ogundiran’s travel records reflected that she billed for at least 300 EIP therapy sessions at times when she was not in New York.  Moore’s cell phone records reflected that he was not in the area of claimed EIP sessions on at least 6,025 sessions, and Falcon’s phone records also reflected that she was not in the area of claimed EIP sessions on at least 6,100 occasions.

The charges in the complaint are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, they each face a statutory maximum of 10 years of imprisonment.

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Kaitlin Farrell and Jonathan Siegel are in charge of the prosecution.

The Defendants:

MARSISTE ADOLPHE
Age: 58
Brooklyn, New York

MERCEDES FALCON
Age: 57
Brooklyn, New York

KIKELOMO OGUNDIRAN
Age: 54
Dix Hills, New York

MANUEL MOORE
Age: 36
Manhattan, New York

ROSELEE JOHNSON
Age: 73
Brooklyn, New York

JEANETTE MONCLOVA
Age: 69
North Bellmore, New York

MARGARET DOMINIQUE-MCLAIN
Age: 54
Mastic, New York

TRACY GIBSON
Age: 37
Queens, New York

DINO PAOLICELLI
Age: 58
Staten Island, New York

E.D.N.Y. Docket No. 21-MJ-1205

Earlier today, in federal court in Brooklyn, a jury returned guilty verdicts against Donal O’Sullivan, the founder, owner and President of Navillus Tile, Inc. d/b/a/ Navillus Contracting (“Navillus”), one of New York City’s largest construction firms, Padraig Naughton, Navillus’s Financial Controller, and Helen O’Sullivan, a Payroll Administrator, on all 11 counts charging wire fraud, mail fraud, embezzlement from employee benefits funds, submission of false remittance reports to union benefits funds, and conspiracy to commit those crimes.   The verdicts followed a three-week trial before United States District Judge Pamela K. Chen.  When sentenced, each of the defendants faces up to 20 years in prison.

Breon Peace, United States Attorney for the Eastern District of New York, announced the verdict.

“As found by the jury, the defendants deliberately devised a fraudulent scheme to avoid making required contributions to union benefits funds on behalf of Navillus’s workers, in order to deprive the workers of benefits they had earned and deserved,” stated United States Attorney Peace. “This Office and its law enforcement partners will continue to investigate and prosecute these types of blatant frauds that are harmful to workers.” 

Mr. Peace expressed his thanks to the agents and investigators of the Federal Bureau of Investigation, New York Field Office; United States Department of Labor, Office of Inspector General; the United States Department of Labor, Employee Benefits Security Administration; the Port Authority of New York and New Jersey, Office of Inspector General; and Homeland Security Investigations for their outstanding work on the case.   

Navillus was a signatory to multiple collective bargaining agreements that required the company to make contributions to union benefits funds, such as health, pension and vacation funds, for all “covered work” performed by its workers at construction sites.  Between 2011 and 2017, the defendants engaged in a scheme to avoid making these required contributions by placing some of Navillus’s workers on the payroll of another company (the “Consulting Company”).  The Consulting Company then issued weekly paychecks to those Navillus workers for work they did on Navillus construction jobs.  To conceal the scheme from benefits fund auditors, the defendants caused the Consulting Company to issue fraudulent invoices to disguise the fact that the funds Navillus had issued to the Consulting Firm were made to reimburse the Consulting Company for the wages the Consulting Company had paid to Navillus workers.  

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Turner Buford and Meredith Arfa, and Special Assistant United States Attorney Virginia Nguyen are in charge of the prosecution.

The Defendants:

DONAL O’SULLIVAN
Age:  60
Queens, New York

PADRAIG NAUGHTON
Age:  49
New York, New York

Helen o’sullivan
Age:  61
Queens, New York

E.D.N.Y. Docket No. 20-CR-272 (PKC)

Earlier today, in federal court in Central Islip, Jose Omar Sorto Portillo, a member of the Leeward Locos Salvatruchas clique of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, pleaded guilty to murder in aid of racketeering for his participation in the August 7, 2019 murder of 15-year-old Jasson Medrano-Molina.  The proceeding was held before United States Circuit Judge Joseph F. Bianco.  

Breon Peace, United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Stuart Cameron, Acting Commissioner, Suffolk County Police Department (SCPD), and Timothy Sini, Suffolk County District Attorney, announced the guilty plea.

“With today’s guilty plea, the defendant admitted to shooting a 15-year-old alleged rival gang member to death at close range in a meaningless effort to boost his status as an MS-13 gang member,” stated United States Attorney Peace.  “This Office, in partnership with the Long Island Gang Task Force, will continue to work tirelessly to prevent these senseless killings and eliminate gang violence that is endangering our communities.”

“MS-13 will stop at nothing in their reign of terror, including this senseless murder of a teenager,” stated SCPD Commissioner Cameron. “I am proud of the efforts of the Suffolk County Police Department and its law enforcement partners to bring these violent individuals to justice and cripple this transnational criminal organization.”

“This senseless murder was characteristic of MS-13’s M.O., which is to commit acts of violence against anyone perceived as an enemy, even when that person is only a 15-year-old child,” stated District Attorney Sini. “This is the latest of many convictions that hold these dangerous gang members responsible for the death they’ve caused. It has been a major focus of my Office to decimate MS-13’s presence on Long Island, and we’ve been very successful in those efforts by working in close collaboration with our federal partners in the U.S. Attorney’s Office and cross-designating assistant district attorneys to prosecute gang members together. We will continue to keep the pressure on to prevent gang violence in our communities and keep the public safe.”

According to court filings and statements by the defendant at the guilty plea proceeding, in July and August 2019, the defendant and other MS-13 members and associates were seeking to attack and kill individuals whom they believed were rival gang members in order to elevate their own positions in the gang.  The defendant and his co-conspirators targeted several individuals, including the victim.  In the early morning hours of August 7, 2019, the defendant and two co-conspirators lured Medrano-Molina and two other individuals to a wooded area in Central Islip.  The defendant, who was armed with a .40 caliber handgun, was waiting in the wooded area for an MS-13 associate to lead the victim and other individuals to the pre-determined location.  When the victim arrived, the defendant shot him multiple times at close range.  Medrano-Molina died at the scene.  The other two individuals ran and were able to escape unharmed. 

Portillo is now 18 years-old and was 16 years-old at the time of the Medrano-Molina murder.  He was initially was charged by a complaint on August 14, 2019, and, thereafter, a juvenile information on September 13, 2019, both of which were filed under seal in the Eastern District of New York.  Prior to pleading guilty, Portillo consented to being transferred to adult status in the case. 

Today’s conviction is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent, transnational criminal organization.  The MS-13’s leadership is based in El Salvador, Honduras, Guatemala and Mexico, but the gang has thousands of members across the United States.  With numerous branches, or “cliques,” the MS-13 is the most violent criminal organization on Long Island.  Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York.  A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders and assaults.  Since 2010, this Office has obtained indictments charging MS-13 members with carrying out more than 60 murders in the Eastern District of New York, and has convicted dozens of MS-13 leaders and members in connection with those murders.  These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, which is comprised of agents and officers of the FBI, SCPD, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation Office, Suffolk County Sheriff’s Office, the New York State Police, the Hempstead Police Department, the Rockville Centre Police Department and the New York State Department of Corrections and Community Supervision. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys John J. Durham, Paul G. Scotti, Justina L. Geraci, Megan E. Farrell, and Special Assistant United States Attorney Kathleen Kearon are in charge of the prosecution.

The Defendant:

JOSE OMAR SORTO PORTILLO (also known as “Duende”)
Age: 18 
Central Islip, New York

E.D.N.Y. Docket No. 19-CR-423 (S-1)(JFB)

Earlier today in federal court in Brooklyn, Ivan Reyes Arzate, a former Mexican Federal Police Officer and Commander of the Mexican Federal Police’s Sensitive Investigative Unit (“SIU”), pleaded guilty to cocaine trafficking conspiracy.  Reyes Arzate received a bribe in exchange for agreeing to assist the El Seguimiento 39 drug cartel ship cocaine from Mexico to the United States.  The El Seguimiento 39 cartel is associated with the Sinaloa Cartel, the Beltran Leyva Organization and other Mexico-based cartels.  Today’s proceeding was held before U.S. District Judge Brian M. Cogan.

Breon Peace, United States Attorney for the Eastern District of New York; Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA); Ricky J. Patel, Acting Special Agent-in-Charge, Homeland Security Investigations, New York (HSI); Dermot F. Shea, Commissioner, New York City Police Department (NYPD); and Kevin P. Bruen, Superintendent, New York State Police (NYSP), announced the guilty plea.

“By accepting thousands of dollars in bribes in exchange for information about law enforcement’s investigation into the El Seguimiento 39 cartel, Arzate forged a deplorable alliance with drug traffickers, and betrayed not only the people of Mexico he was sworn to protect, but also his law enforcement partners who put themselves at risk to disrupt the cartel,” stated United States Attorney Peace.  “This Office and its law enforcement partners remain committed to rooting out corruption and preventing drug cartels from sending massive quantities of illegal drugs into the United States.”  Mr. Peace expressed his appreciation to the United States Attorney’s Offices for the Southern District of California and the Northern District of Illinois for their assistance on the case.

“Reyes-Arzate turned a blind eye toward drug traffickers, enabling criminal enterprises to operate with impunity, while serving as a Commander in the Mexican Federal Police.  DEA and our law enforcement partners worked tirelessly to isolate and identify this bad seed and bring him to justice,” stated DEA Special Agent-in-Charge Donovan.

 “Arzate turned his back on the people of Mexico who he was sworn to protect, on the oath that he took to uphold law and order, and on his fellow law enforcement brothers and sisters around the globe, who put their trust in each other to combat the scourge of narcotics trafficking carried out by vicious drug cartels,” stated HSI Acting Special Agent-in-Charge Patel.  “At the time when Arzate commanded a special unit of the Mexican Federal Police and worked closely with law enforcement officials from the U.S., he was also meeting with the leadership of several Mexico-based cartels.  He chose to selfishly serve his own interest by taking hundreds of thousands of dollars in bribes from the cartels in exchange for sensitive information about U.S. investigations.  This case was carried out in coordination with the full force of U.S. law enforcement and Arzate will now have to answer for his crimes when he learns his sentence.” 

“This guilty plea should demonstrate that who choose abuse their position of trust and put others in danger for financial gain, will be brought to justice. This former police officer and commander not only betrayed those he swore to protect, but also his fellow law enforcement working to dismantle a dangerous drug cartel. The State Police will continue to work with our law enforcement partners to prevent cartels from shipping deadly narcotics to the United States, but also to hold accountable those who mistakenly think they can get away with and benefit from these types of crimes,” stated NYSP Superintendent Bruen.

SIU officers in Mexico routinely work with U.S. law enforcement to combat narcotics trafficking, money laundering and other criminal activities. From 2003 to 2016, Reyes Arzate was a Mexican Federal Police Officer assigned to SIU.  In 2008, he was appointed SIU Commander, making him its highest-ranking officer and principal point of contact for information sharing between U.S. and Mexican law enforcement personnel assigned to the SIU.

In approximately November 2016, while participating in a joint investigation of El Seguimiento 39 with U.S. law enforcement authorities, Reyes Arzate met with the leadership of El Seguimiento 39, shared with them information about the U.S. law enforcement investigation, and accepted a $290,000 bribe in exchange for his agreement to assist the cartel.

When sentenced, Reyes Arzate faces a mandatory minimum sentence of five years in prison and a maximum sentence of 40 years in prison.

This investigation was led by the New York Strike Force, a crime-fighting unit comprising federal, state and local law enforcement agencies supported by the Organized Crime DEA Task Force and the New York/New Jersey High Intensity Drug Trafficking Area.  The Strike Force is based at the DEA’s New York Division and includes agents and officers of the DEA, NYPD, NYSP, HSI, U.S. Internal Revenue Service Criminal Investigation Division, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Customs and Border Protection, U.S. Secret Service, United States Marshals Service, New York National Guard, Clarkstown Police Department, U.S. Coast Guard, Port Washington Police Department and New York State Department of Corrections and Community Supervision.

The government’s case is being handled by the Office’s International Narcotics and Money Laundering and Public Integrity Sections.  Assistant United States Attorneys Ryan Harris and Philip Pilmar are in charge of the prosecution.

The Defendant:

IVAN REYES ARZATE
Age:  49
Mexico City, Mexico

E.D.N.Y. Docket No. 20-CR-30 (BMC)

BROOKLYN, NY – Credit Suisse Group AG, a global financial institution headquartered in Switzerland, and Credit Suisse Securities (Europe) Limited (CSSEL), its subsidiary in the United Kingdom (collectively, Credit Suisse), each admitted to conspiring to commit wire fraud by defrauding U.S. and international investors in an $850 million loan to finance a tuna fishing project in Mozambique.  Credit Suisse has been assessed with more than $547 million in penalties, fines and disgorgement as part of coordinated resolutions with criminal and civil authorities in the United States and the United Kingdom.  After taking account of crediting by the department of the other resolutions, Credit Suisse will pay approximately $475 million, as well as restitution to victims in an amount to be determined by the Court.  As part of these coordinated resolutions with the department, the U.S. Securities & Exchange Commission (SEC) and the U.K. Financial Conduct Authority (FCA), as well as an enforcement action by Switzerland’s Financial Market Supervisory Authority (FINMA), Credit Suisse will be subject to enhanced compliance and self-reporting, including that FINMA will impose an independent third party to monitor the bank’s transactions, risk management and internal control systems, as well as its existing credit transactions with financially weak and corruption-prone states and companies, to prevent and detect similar conduct in the future.

Credit Suisse entered into a deferred prosecution agreement with the department in connection with a criminal information filed today in the U.S. District Court for the Eastern District of New York charging the bank with conspiracy to commit wire fraud.  CSSEL pleaded guilty in the U.S. District Court for the Eastern District of New York to a one-count criminal information charging it with conspiracy to commit wire fraud.

Previously, Andrew Pearse, a former managing director of CSSEL, pleaded guilty to conspiracy to commit wire fraud.  Surjan Singh, a former managing director of CSSEL, and Detelina Subeva, a former vice president of CSSEL, pleaded guilty to conspiracy to commit money laundering.  These cases are assigned to United States District Judge William F. Kuntz II of the Eastern District of New York.

Breon Peace, United States Attorney for the Eastern District of New York, Kenneth A. Polite Jr., Assistant Attorney General of the Justice Department’s Criminal Division, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), made the announcement.    

“Over the course of several years, Credit Suisse, through its subsidiary in the United Kingdom, engaged in a global criminal conspiracy to defraud investors, including investors in the United States, by failing to disclose material information to investors, including millions of dollars in kickbacks to its bankers and a high risk of corruption, in connection with a $850 million fraudulent loan to a Mozambique state-owned entity,” stated U.S. Attorney Peace.  “This coordinated global resolution demonstrates this Office’s commitment to working across borders with our global law enforcement partners to root out abuse and fraud by financial institutions in order to protect investors here in the United States.”  

“Credit Suisse Group AG, through its U.K. subsidiary CSSEL, defrauded U.S. and international investors in connection with a lending project in Mozambique,” stated Assistant Attorney General Polite.  “Among other things, Credit Suisse Group AG, CSSEL, and their co-conspirators deceived investors by hiding information about the risk that loan proceeds were used for illegal purposes in connection with the restructuring of the loan. Today’s coordinated resolution with the U.S. Securities and Exchange Commission and the Financial Conduct Authority in the United Kingdom shows that the department will not tolerate fraud by international financial institutions and is committed to working in parallel to domestic and foreign authorities to use all tools at our disposal to hold corporate wrongdoers accountable.”

According to Credit Suisse’s admissions and court documents, between 2013 and March 2017, Credit Suisse, through its subsidiary CSSEL, and its co-conspirators used U.S. wires and the U.S. financial system to defraud investors in securities related to a Mozambican state-owned entity, Empresa Moçambicana de Atum, S.A. (EMATUM), which Mozambique created to develop a state-owned tuna fishing project.  Credit Suisse, through its employees and agents, conspired to defraud investors and potential investors in EMATUM by making numerous material misrepresentations and omissions relating to, among other things (i) the use of loan proceeds; (ii) kickback payments to CSSEL bankers and the risk of bribes to Mozambican officials; and (iii) the existence and maturity dates of debt owed by Mozambique, including another private loan that Credit Suisse arranged for a Mozambique state-owned entity (ProIndicus) and a different private loan another bank arranged with Credit Suisse’s knowledge.  Credit Suisse represented to investors that the loan proceeds would only be used for the tuna fishing project.  Instead, the co-conspirators used U.S. wires to divert loan proceeds obtained from investors; specifically, the contractor paid kickbacks of approximately $50 million to CSSEL bankers and bribes totaling approximately $150 million to senior Mozambican government officials.

Credit Suisse also admitted that, prior to and during the EMATUM financing, it identified significant red flags concerning the transaction.  For example, Credit Suisse identified significant corruption and bribery concerns associated with the contractor that supplied the boats and equipment for EMATUM and which received the loan proceeds directly from Credit Suisse.  In addition, in or about 2015, Credit Suisse became aware that EMATUM had encountered problems servicing the loan, raising the risk of default.  Credit Suisse agreed to arrange the restructuring and exchange of the original EMATUM security into a sovereign bond with a longer maturity date (the “EMATUM Exchange”).  Credit Suisse did so, in part, to protect its reputation.  During the EMATUM Exchange, Credit Suisse employees raised concerns about corruption allegations made in the press about the ProIndicus loan and disparities in the use of EMATUM loan proceeds.  To address these concerns, Credit Suisse retained two independent industry experts to conduct a market valuation of the tuna fishing boats and other goods the contractor provided for the project.  Credit Suisse knew that these experts identified a shortfall of between $265 million and $394 million between the funds raised for the EMATUM loan and the fair market value of the boats and accompanying infrastructure and training the contractor sold to EMATUM.  Credit Suisse did not disclose this material information to investors during the EMATUM Exchange.  Aspects of Credit Suisse’s fraudulent conduct were revealed beginning in April 2016, causing the price of the EMATUM Securities to drop and resulting in losses to investors.

Under the terms of the agreements, Credit Suisse will be assessed a criminal penalty of over $247 million, and after crediting by the department to the other resolutions, will pay approximately $175 million to the United States.  Credit Suisse has also agreed to an event study methodology to calculate proximate fraud loss for victims of its criminal conduct, and the amount of restitution that Credit Suisse will pay to those victims will be determined at a future proceeding.  Credit Suisse also reached separate parallel resolutions with the SEC and the FCA.  In addition, as part of FINMA’s enforcement action, Credit Suisse will be subject to FINMA’s supervisory powers and enforcement tools, including an independent third-party monitor, to determine the effectiveness of the bank’s compliance measures for business conducted in financially weak and high-risk corruption countries.

The department reached this resolution with Credit Suisse based on several factors, including the nature and seriousness of the offense, which included the involvement of several bankers within CSSEL.  Credit Suisse received credit for its cooperation with the department’s investigation because, among other things, it provided documents and information to the department and made several employees available as witnesses.  Accordingly, the total criminal penalty reflects a 15 percent reduction off the bottom of the applicable United States Sentencing Guidelines range.  Credit Suisse has also agreed to continue to cooperate with the department, to enhance its compliance program and internal controls, and provide enhanced reporting to the department on the bank’s remediation and compliance program.  Among other things, the enhanced reporting provisions require Credit Suisse to meet with the department at least quarterly and to submit yearly reports regarding the status of its remediation efforts, the results of its testing of its compliance program, and its proposals to ensure that its compliance program is reasonably designed, implemented, and enforced so that is effective in deterring and detecting violations of fraud, money laundering, the Foreign Corrupt Practices Act, and other applicable anti-corruption laws.

The investigation was conducted by the FBI’s New York Field Office.  The prosecution is being handled by the Business and Securities Fraud Section of the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section and Money Laundering and Asset Recovery Section.  Assistant U.S. Attorney Hiral Mehta of the Eastern District of New York and Trial Attorneys Molly Moeser, David Fuhr and Katherine Nielsen of the Criminal Division are prosecuting the case.   The Justice Department’s Office of International Affairs of the Criminal Division provided critical assistance in this case.  

The department also appreciates the significant assistance provided by SEC and the FCA.  The department also expresses its appreciation for the assistance provided by authorities in Switzerland and the United Kingdom in responding to Mutual Legal Assistance requests.

The Defendants:

CREDIT SUISSE GROUP AG

E.D.N.Y. Docket No. 21-CR-521

CREDIT Suisse Securities (Europe) limited

E.D.N.Y. Docket No. 21-CR-520

An Illinois man pleaded guilty today to attempting to provide material support to designated foreign terrorist organizations, the Islamic State of Iraq and al-Sham (ISIS) and Al-Nusra Front (ANF). As part of his plea agreement, the defendant agrees to the entry of an order of removal so he will be removed from the country after completing his sentence.

According to court documents, Dilshod Khusanov, 36, of Chicago, encouraged individuals to travel to Syria to wage violent jihad, or holy war in 2014 and 2015. For example, on Sept. 28, 2014, Khusanov urged co-conspirator Akmal Zakirov to engage in jihad: “I hope that the only [reason] that is preventing you from jihad is some mistakes and flaws that are occurring among” the other fighters. Khusanov explained that it would be better to help those fighters, rather than criticize them.

Later in 2014, two Brooklyn residents, Abdurasul Juraboev and Akhror Saidakhmetov, began planning to travel to Syria to fight for ISIS. A group of individuals in a domestic network based in New York and elsewhere, including Khusanov, worked together to raise and contribute money to help fund that trip to Syria. In February 2015, Abror Habibov, Zakirov, Azizjon Rakhmatov and Kasimov discussed providing money to support Saidakhmetov’s travel and expenses in Syria. Rakhmatov and Zakirov also agreed to solicit money from others to fund Saidakhmetov’s travel. Zakirov contacted Khusanov, then-based in Illinois, and asked him to contribute money for Saidakhmetov’s travel and to ask another individual to contribute money as well. Khusanov agreed and arranged for money to be deposited in Zakirov’s bank account before Saidakhmetov’s scheduled departure. Saidakhmetov was arrested in February 2015 at John F. Kennedy International Airport, as he boarded a plane bound for Istanbul, Turkey, a transit point for foreign fighters bound for Syria.

Khusanov is the last charged defendant in this plot to be convicted. Juraboev, Saidakhmetov, Habibov, Zakirov and Rakhmatov previously pleaded guilty, and Kasimov was convicted at trial. Juraboev and Saidakhmetov each were sentenced to 15 years’ imprisonment, and Rakhmatov was sentenced to 12 and a half years imprisonment. Habibov, Kasimov and Zakirov are awaiting sentencing.

“With today’s plea, Khusanov admits to providing financial support to individuals seeking to travel to Syria to join ISIS, a foreign terrorist organization that seeks to wage war on the United States and other countries,” said U.S. Attorney Breon Peace for the Eastern District of New York. “This office will continue to work tirelessly with its local, national and international law enforcement partners to eliminate ISIS’s jihadist regime and threat of terrorist violence.”

“Money is the oxygen that feeds the flame of any organized terrorist activity,” said Commissioner Dermot Shea of the New York Police Department (NYPD). “This case makes it clear that whether you are a terrorist bomber, a planner, or simply the facilitator who raises the money to pay for their travel, you will be a target of the New York Joint Terrorism Task Force. They are the most experienced detectives and agents in the country in these cases.”

Khusanov pleaded guilty to attempting to provide material support to ISIS and faces a maximum penalty of 11 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant U.S. Attorneys David K. Kessler, J. Matthew Haggans, and Jonathan E. Algor for the Eastern District of New York, and Trial Attorney Steven Ward of the National Security Division’s Counterterrorism Section are prosecuting the case.

The FBI and NYPD are investigating the case.

Dilshod Khusanov pleaded guilty today to attempting to provide material support to a designated foreign terrorist organization, the Islamic State of Iraq and al-Sham (ISIS) and Al-Nusra Front (ANF).  The proceeding was held before United States District Court Judge William F. Kuntz, II.  When sentenced, Khusanov faces 11 years’ imprisonment pursuant to the terms of his plea agreement with the government.  As part of his plea agreement, the defendant agrees to the entry of an order of removal so he will be removed from the country after completing his sentence.

Breon Peace, United States Attorney for the Eastern District of New York; Mark J. Lesko, Acting Assistant Attorney General for the Justice Department’s National Security Division; Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the guilty plea.

“With today’s plea, Khusanov admits to providing financial support to individuals seeking to travel to Syria to join a violent foreign terrorist organization that seeks to wage war on the United States and other countries,” stated United States Attorney Peace.  “This Office will continue to work tirelessly with its local, national and international law enforcement partners to eliminate the threat of terrorist violence posed by ISIS and ANF.”

"Khusanov’s guilty plea is the final step toward wrapping up this years-long case in which the FBI’s Joint Terrorism Task Force worked tirelessly—as they always do—to keep the citizens of our city and our country safe from potential terrorist acts,” stated FBI Assistant Director-in-Charge Driscoll.  “Khusanov now awaits his fate for his willingness to provide support to ISIS and the Al-Nusra Front. This is not the end, however, of the FBI’s continued efforts—along with those of our partners—to diminish the threats posed by terrorists and would-be terrorists worldwide.”

“Money is the oxygen that feeds the flame of any organized terrorist activity. This case makes it clear that whether you are a terrorist bomber, a planner, or simply the facilitator who raises the money to pay for their travel, you will be a target of the New York Joint Terrorism Task Force.  They are the most experienced detectives and agents in the country in these cases,” stated NYPD Commissioner Shea.

As set forth in court filings, Khusanov encouraged individuals to travel to Syria to wage violent jihad, or holy war in 2014 and 2015. For example, on September 28, 2014, Khusanov urged co-conspirator Akmal Zakirov to engage in jihad: “I hope that the only [reason] that is preventing you from jihad is some mistakes and flaws that are occurring among” the other fighters. Khusanov explained that it would be better to help those fighters, rather than criticize them.

Later in 2014, two Brooklyn residents, Abdurasul Juraboev and Akhror Saidakhmetov, began planning to travel to Syria to fight for ISIS.  A group of individuals in a domestic network based in New York and elsewhere, including Khusanov, worked together to raise and contribute money to help fund that trip to Syria.  In February 2015, Abror Habibov, Zakirov, Azizjon Rakhmatov, and Dilkhayot Kasimov discussed providing money to support Saidakhmetov’s travel and expenses in Syria.  Rakhmatov and Zakirov also agreed to solicit money from others to fund Saidakhmetov’s travel.  Zakirov contacted Khusanov, then-based in Illinois, and asked him to contribute money for Saidakhmetov’s travel and to ask another individual to contribute money as well.  Khusanov agreed and arranged for money to be deposited in Zakirov’s bank account before Saidakhmetov’s scheduled departure.  Saidakhmetov was arrested in February 2015 at John F. Kennedy International Airport, as he boarded a plane bound for Istanbul, Turkey, a transit point for foreign fighters bound for Syria.

Khusanov is the last charged defendant in this plot to be convicted.  Juraboev, Saidakhmetov, Habibov, Zakirov and Rakhmatov previously pleaded guilty, and Kasimov was convicted at trial.  Juraboev and Saidakhmetov each were sentenced to 15 years’ imprisonment, and Rakhmatov was sentenced to 12 ½ year’s imprisonment.  Habibov, Kasimov and Zakirov are awaiting sentencing.

The government’s case is being handled by the Office’s National Security & Cybercrime Section.  Assistant United States Attorneys David K. Kessler, J. Matthew Haggans, and Jonathan E. Algor are in charge of the prosecution, with assistance provided by Trial Attorney Steven Ward of the National Security Division’s Counterterrorism Section.

The Defendant:

DILSHOD KHUSANOV
Age:  36
Chicago, Illinois

E.D.N.Y. Docket No. 17-CR-475 (WFK)

Breon Peace was sworn in earlier today as United States Attorney for the Eastern District of New York by United States Chief District Judge Margo K. Brodie.  He was appointed by President Joseph R. Biden.  As U.S. Attorney, Mr. Peace leads an office that is responsible for all federal criminal and civil cases in a district comprised of more than 8 million people in the boroughs of Brooklyn, Queens, and Staten Island, and in Nassau and Suffolk counties on Long Island.  Mr. Peace now supervises a staff of approximately 163 Assistant U.S. Attorneys and 116 support personnel.  Prior to his appointment, Mr. Peace was a partner in the New York office of Cleary Gottlieb Steen & Hamilton LLP and was a member of the firm’s White-Collar Defense & Investigations and Litigation Groups.

“I am honored to serve as the United States Attorney for the Eastern District of New York.  This Office has a long history of excellence, integrity, and outstanding service to the community.  I look forward to leading the Office’s incredibly talented and dedicated women and men in addressing present and future challenges in the Eastern District.  We will continue to work tirelessly with our law enforcement partners to pursue equal justice under the law, and protect and serve the people of the district.  I am eager to get to work,” stated United States Attorney Peace.

Mr. Peace has had a distinguished career, having joined Cleary in 1996.  From 1997 to 1998, he served as law clerk to The Honorable Sterling Johnson, Jr., of the United States District Court for the Eastern District of New York.  From 2000 to 2002, he served as an Assistant United States Attorney for the Eastern District of New York, where he successfully handled a wide array of federal criminal cases in the district court and U.S. Court of Appeals for the Second Circuit. As an Acting Professor of Clinical Law at New York University School of Law, Mr. Peace trained aspiring prosecutors in the law school’s Prosecution Clinic during the 2002-2003 academic year. He returned to Cleary in 2003 and in 2007 made history by becoming the first African American man to be elected partner at the firm.   In addition to handling significant white collar, regulatory enforcement, and complex commercial litigation matters for clients, Mr. Peace held several positions of leadership at the firm, serving most recently as a member its Global Executive Committee. 

In 2012, Mr. Peace was appointed by The Honorable Nicholas G. Garaufis of the United States District Court for the Eastern District of New York to serve as a Special Master in United States et al. v. City of New York, a high-profile case brought against the New York City Fire Department alleging discrimination on the basis of race and national origin in hiring black and Hispanic firefighters.  While at the law firm, Mr. Peace also maintained an active pro bono practice vindicating the rights of clients in criminal, immigration, human trafficking, and civil rights cases.  Notably, he led the team of lawyers that in 2016 won dismissal of the indictment of a man who had been wrongly convicted of murder, rape, and robbery in 1981 and spent almost 30 years in prison. 

Mr. Peace received his J.D. in 1996 from New York University School of Law where he was a member of the Law Review and later served as a member of the Board of Trustees, and his B.A. from the University of California, Berkeley, in 1993. 

Earlier today, in federal court in Central Islip, Marcello Sozio, the former operator of a hyperbaric oxygen chamber business based in Great Neck, New York and Chicago, Illinois, was sentenced by United States District Judge Denis R. Hurley to 36 months’ imprisonment for wire fraud in connection with a scheme to defraud banks, his business partners and a customer who allegedly received services from Sozio’s business.  The Court also ordered Sozio to pay approximately $1.1 million in forfeiture and restitution to the victims of his crimes. 

The sentence was announced by Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the sentence. 

“Today, the defendant has been deservedly sentenced to prison for the financial harm he caused by defrauding his business partners and lenders and stealing from the parents of a young patient,” stated Acting U.S. Attorney Kasulis. “In conjunction with its law enforcement partners, this Office will continue to seek compensation for victims and prosecute defendants like Sozio who, out of greed, commit fraud for their own financial gain.”

“Mr. Sozio is a classic example of a fraudster, who schemed and used others to obtain funds based on nothing but lies. Now Mr. Sozio will spend his time behind bars soaking in the air from a jail cell instead of one of his hyperbaric chambers,” stated USPIS Inspector-in-Charge Bartlett.

Between approximately March 2014 and December 2016, Sozio applied for and obtained approximately $770,000 in loans for a hyperbaric oxygen chamber business.  In the loan applications, Sozio claimed that his business partners had authorized him to apply for the loans on their behalf as part of their joint business venture.  The partners did not authorize the loan applications and Sozio obtained the unauthorized loans by forging the partners’ signatures on various loan documents, both by hand and electronically, and by impersonating one business partner during a telephone call with a lender.  As a result of Sozio’s actions, his partners were liable for approximately $770,000 in loans.  In addition, between September 2016 and December 2016, Sozio caused approximately $230,000 in credit card charges to the parents of a minor patient for services that were purportedly provided for medical reasons at a Great Neck facility that Sozio operated.  In reality, Sozio provided no services to the child in exchange for the fraudulent billings.  

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Bradley T. King and Madeline M. O’Connor are in charge of the prosecution.

The Defendant:

MARCELLO SOZIO
Age:  65
Huntington, New York

E.D.N.Y. Docket No. 18-CR-177 (DRH)

Earlier today, in federal court in Central Islip, Michael Wustrow, a former musical director at St. Agnes Cathedral on Long Island, was sentenced by United States District Judge Denis R. Hurley to 72 months in prison for receiving child pornography.  As part of his sentence, Wustrow will also be required to register as a sex offender upon his release from prison.  The defendant pleaded guilty to the charge in June 2019.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.

“Today’s sentence underscores the serious consequences Wustrow will face for years to come for his sordid role in receiving child pornography and perpetuating the sexual abuse of children,” stated Acting United States Attorney Jacquelyn M. Kasulis.  “Protecting vulnerable children from predators and those who traffic in child pornography will always be a priority of this Office and the Department of Justice.”  Ms. Kasulis extended her grateful appreciation to the FBI’s Long Island Child Exploitation and Human Trafficking Task Force leading the investigation.

“Mr. Wustrow actions, and the material he collected, are a shock to our collective conscience. Thankfully, he's now headed to federal prison where he will no longer be a danger to the innocent children who have no ability to protect themselves from evil,” stated FBI Assistant Director-in-Charge Driscoll.

In June 2016, law enforcement officers acting in an undercover capacity engaged in chats with Wustrow via the Kik Messenger program (hereinafter “Kik”), which is an instant messaging service, during which the defendant discussed child pornography and shared images of child pornography with the officer.  Wustrow utilized the Kik username “pervdad516.”  In September 2017, Wustrow was found to be in possession of multiple images on his iPhone of children engaged in sexually explicit conduct. Among these images was a picture of a toddler being abused by an adult male, which Wustrow had received from the Kik messaging app.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorney Oren Gleich is in charge of the prosecution. 

The Defendant:

MICHAEL WUSTROW
Age:  59
Freeport, New York

E.D.N.Y. Docket No. 19-CR-00087 (DRH)

Earlier today, in federal court in Brooklyn, Bryan Cho, a former Special Agent with the Internal Revenue Service Criminal Investigation (“IRS-CI”), was sentenced by United States District Judge Ann M. Donnelly to 30 months’ imprisonment for wire fraud and aggravated identity theft in connection with a scheme to create false identification documents and passports using the stolen identity of the former subject of an IRS-CI investigation.  Additionally, the defendant forfeited $394,374.63 as part of the plea agreement.  Cho pleaded guilty to the charges in June 2021.  Cho’s employment was terminated since his arrest.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, announced the sentence.

“The defendant’s fraud and corruption extended to creating an entirely false identity by stealing information he obtained while conducting an investigation in his official capacity as an IRS Special Agent,” stated Acting United State Attorney Kasulis.  “Today’s sentence demonstrates that this Office will vigorously prosecute and hold accountable law enforcement officials who betray the public trust and violate their sworn duty to uphold the law.”  Ms. Kasulis thanked the Federal Bureau of Investigation, New York Field Office, and the Treasury Inspector General for Tax Administration for their outstanding work on the case.

Cho stole the identity of a former subject in one of his investigations and used it to create fake identification documents in the person’s name.  The false documents included purported identification cards and passports from the Republic of Marshall Island, the Philippines and the Republic of Guinea Bissau.  Some of the documents, including identification cards from the Philippines and the Republic of Guinea Bissau, featured Cho’s picture.  One false identification document was used by Cho to register a corporation overseas in the name of the subject.  Cho then lied during an official background investigation when he failed to disclose this conduct and denied having any aliases or foreign interests.   

The government’s case is being handled by the Office’s Public Integrity Section.   Assistant United States Attorneys Elizabeth Geddes and Turner Buford are in charge of the prosecution. 

The Defendant:

BRYAN CHO (also known as “Yong Hee Cho”)
Age: 50
New York, New York

E.D.N.Y. Docket No. 21-CR-40 (AMD)

BROOKLYN, NY – Earlier today, in federal court in Brooklyn, Jose Carlos Grubisich, a Brazilian national and the former Chief Executive Officer of Braskem S.A. (Braskem), a publicly traded Brazilian petrochemical company, was sentenced by United States District Judge Raymond J. Dearie to 20 months in prison for conspiring to divert hundreds of millions of dollars from Braskem into a secret slush fund and to pay bribes to government officials, political parties and others in Brazil to obtain and retain business. In addition, the Court imposed a $1 million fine and Grubisich was ordered to pay $2.2 million in forfeiture.

On April 15, 2021, Grubisich pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and one count of conspiracy to violate the books and records provision of the FCPA and to fail to accurately certify Braskem’s financial reports. 

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Kenneth A. Polite, Jr., Assistant Attorney General of the Justice Department’s Criminal Division, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.

As set forth in court filings and at today’s proceedings, between approximately 2002 and 2014, Grubisich, who served as the CEO and a member of the board of directors of Braskem—as well as in various capacities for Braskem’s parent company, Odebrecht S.A. (Odebrecht)—engaged in a scheme to bribe Brazilian government officials in violation of the FCPA.  As part of the scheme, Grubisich and his co-conspirators diverted approximately $250 million from Braskem into a secret slush fund, which Grubisich and others generated through fraudulent contracts and offshore shell companies secretly controlled by Braskem. 

In December 2016, Braskem and Odebrecht each pleaded guilty in the Eastern District of New York to separate one-count criminal informations charging them with conspiracy to violate the anti-bribery provisions of the FCPA.  Braskem also resolved related civil proceedings with the U.S. Securities and Exchange Commission (SEC) on the same day.

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant U.S. Attorneys Julia Nestor and Alixandra Smith of the Eastern District of New York are in charge of the prosecution with Co-Principal Deputy Chief Lorinda Laryea and Trial Attorney Leila Babaeva of the Criminal Division’s Fraud Section.  Assistant U.S. Attorney Laura D. Mantell of the Asset Recovery Section of the Office’s Criminal Division is handling forfeiture matters.  The FBI’s International Corruption squad in New York is investigating the case. 

The FBI’s International Corruption squad in New York investigated the case. The Criminal Division’s Office of International Affairs provided substantial assistance. The department also expresses its appreciation for the assistance provided by the SEC’s Division of Enforcement, Ministério Público Federal and the Departamento de Polícia Federal in Brazil, the Office of the Attorney General and the Federal Office of Justice in Switzerland, and the governments of Portugal, Andorra, the United Kingdom, and Panama.

The Defendant

JOSE CARLOS GRUBISICH
Age:  64
Sao Paulo, Brazil                 

E.D.N.Y. Docket No. 19-CR-102 (RJD)

Earlier today, at the federal courthouse in Brooklyn, Gary Brown was sentenced by United States District Judge Eric R. Komitee, to 48 months’ imprisonment for being a convicted felon in possession of numerous firearms and ammunition.  Brown pleaded guilty to the charge in April 2021.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and John B. DeVito, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Field Division (ATF), announced the sentence.

“As a result of the outstanding investigation conducted by agents of the ATF, the defendant has been brought to justice and his extensive collection of dangerous weapons and ammunition – including untraceable ghost guns –- no longer pose a threat to the safety of our community,” stated Acting United States Attorney Kasulis.  “This Office is working tirelessly with our federal partners and local law enforcement to stem the epidemic of gun violence in this district.”  Ms. Kasulis also thanked the Social Security Administration, Office of Inspector General, for their assistance with the case.

In July 2019, the Federal Bureau of Alcohol, Tobacco, Firearms and Explosives began investigating the manufacture, distribution and possession of privately made firearms (“PMFs”), which are commonly referred to as “ghost guns.”  Through that investigation, law enforcement agents learned that Brown had purchased hundreds of rounds of ammunition, enough PMF parts to assemble at least fourteen separate firearms and a Ghost Gunner 2, which is a machine that can be used to assemble PMFs.  On August 12, 2020, law enforcement executed a search of Brown’s residence in Brooklyn and found an arsenal of weapons, including traditional firearms, PMFs, numerous high-capacity magazines, including one 100 round magazine and multiple magazines with a capacity of thirty rounds or more and hundreds of rounds of ammunition.  The firearms were strewn about the residence, where the defendant lived with his fiancé and toddler daughter, in unsecured bags and drawers.  A later search of a storage locker used by Brown also revealed a 12 Gauge Shotgun, additional PMF parts, hundreds of additional rounds of ammunition and a Ghost Gunner 2. 

Brown was previously convicted in May 2009 of manslaughter stemming from a 2008 incident in which Brown threw a woman to the ground causing severe head trauma, and ultimately, her death.  

The government’s case is being prosecuted by Assistant United States Attorney Rachel A. Bennek. 

The Defendant:

GARY BROWN
Age:  40
Brooklyn, New York

E.D.N.Y. Docket No. 20-CR-352 (EK)

Earlier today, in federal court in Brooklyn, Robert Hassett, a former New York City Police Department (“NYPD”) officer, pleaded guilty to conspiring to participate in a scheme to sell the personal information of automobile accident victims in exchange for bribes (the “Victim Database Scheme”).  Hassett also admitted that he participated in a scheme to steer vehicles damaged in automobile accidents to a tow truck company in contravention of NYPD’s Direct Accident Response Program (“DARP”) in exchange for bribes (the “Tow Truck Scheme”).

 On August 5, 2021, former NYPD officer Heather Busch pleaded guilty to accepting bribes in connection with her participation in the Tow Truck Scheme.  On October 6, 2021, a third defendant, retired NYPD officer Robert Smith, pleaded guilty to accepting bribes in connection with his participation in the Tow Truck Scheme; Smith also pleaded guilty to attempted distribution of at least one kilogram of heroin.  As part of his plea, Smith also admitted that he participated with Hassett in the Victim Database Scheme.  At the time that they participated in the Tow Truck Scheme and the Victim Database Scheme, the defendants were NYPD officers assigned to the 105th Precinct in Queens, New York. 

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Dermot F. Shea, Commissioner, NYPD, announced the guilty pleas.

“The defendants’ guilty pleas to accepting bribes are also acknowledgements that they abused the public trust and dishonored the NYPD by their actions,” stated Acting United States Attorney Kasulis.  “This Office will continue working closely with our law enforcement partners to identify and prosecute corrupt police officers.”

According to court filings and facts presented at the plea proceeding, between 2016 and 2017, Hassett and Smith received thousands of dollars of bribe payments in exchange for referring business to a towing company, contrary to DARP.  Smith resumed the corrupt scheme without Hassett in late 2019 and when Smith retired from the NYPD in March 2020, Smith enlisted Busch to take his place in the scheme.   

In early 2020, Smith and Hassett also sold the names and contact information of automobile accident victims whose accidents occurred within the confines of the 105th Precinct for thousands of dollars in bribe payments, ostensibly so that the purchaser could resell that personal information to physical therapy businesses and personal injury lawyers who would contact the automobile accident victims as prospective customers. 

After Smith’s retirement in March 2020, he also agreed to transport what he believed to be one kilogram of heroin for a drug trafficking organization.

Since their arrests in May 2021, Busch and Hassett have resigned from the NYPD.

When sentenced, Smith faces up to 25 years in prison, while Hassett and Busch each face up to five years in prison.  As part of their respective pleas, Smith has agreed to forfeit $20,000, Hassett has agreed to forfeit $10,000 and Busch has agreed to forfeit $6,000.

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Ryan C. Harris and Nicholas J. Moscow are in charge of the prosecution.

The Defendants:

HEATHER BUSCH
Age:  34
Massapequa, New York

ROBERT HASSETT
Age:  36
Farmingville, New York

ROBERT SMITH
Age:  44
Plainview, New York

E.D.N.Y. Docket No. 21-CR-254 (RPK)

This afternoon, in federal court in Brooklyn, Kevin J. Lipsitz pleaded guilty before United States District Judge Kiyo A. Matsumoto to mail fraud in connection with his sale of large quantities of personal protective equipment (PPE) at the beginning of the COVID-19 pandemic.  When sentenced, Lipsitz faces up to 20 years in prison, as well as forfeiture, a fine of up to $250,000 and restitution to his victims. 

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the guilty plea. 

“With today’s guilty plea, Lipsitz admits to making blatantly false promises and providing fabricated shipping confirmations to thousands of customers who were in urgent need of life-saving PPE,” stated Acting United States Attorney Kasulis.  “This Office will vigorously prosecute defendants who shamelessly seek to profit from an unprecedented national crisis like the COVID-19 pandemic.”

“As our nation was getting its initial glimpse into the COVID-19 Pandemic that was wreaking havoc on our communities and way of life, Kevin Lipsitz took the opportunity to capitalize and profit from people’s fears,” stated HSI Special Agent-in-Charge Fitzhugh.  “Lipsitz advertised and sold PPE at exorbitant prices to vulnerable people who were willing to do almost anything to keep themselves and families safe.  Working with our partners at the United States Attorney’s Office, Eastern District of New York, the FBI, and the U. S. Postal Inspection Service, HSI New York will continue to pursue those in our society who seek to enrich themselves at the expense of those around them.”

“At one of the worse times this country has seen, Mr. Lipsitz devised a scheme to not only price-gouge, but steal from those who needed much sought after PPE supplies. During times of crisis, our citizens must join together for the greater good. His conduct is shameful and he will now pay the price for his greed,” stated USPIS Inspector-in-Charge Bartlett.

According to court filings and facts presented during the plea proceeding, Lipsitz operated SuperGoodDeals.com Inc. (SGD), an online storefront that was based in Staten Island and sold various types of merchandise to customers across the United States.  Between March 2020 and May 2020, as the COVID-19 pandemic swept through the United States, Lipsitz accumulated huge quantities of PPE, including surgical masks and N-95 and KN-95 filtering facepiece respirators.  During that same time period, Lipsitz took advantage of the increased public demand for medical equipment by making false statements to thousands of customers regarding SGD’s inventory and ability to quickly fill and ship orders of PPE.  For example, Lipsitz prominently featured statements on the SGD website that customers could “pay today” and that their orders would “ship tomorrow.”  After customers placed orders relying on these statements, Lipsitz would issue false same-day shipping confirmations, which included tracking numbers that customers could purportedly use to monitor the shipment of their orders.  Despite these promises, Lipsitz did not fulfill orders for PPE on the promised timeline for hundreds of customers.   In addition, Lipsitz further took advantage of the demand for PPE by selling it at large markups, ranging from 150 percent to over 500 percent above what he paid for the goods.

The government’s case is being handled by the Office’s Business & Securities Fraud and International Narcotics & Money Laundering Sections.  Assistant United States Attorneys Julia Nestor and Andrew Wang are in charge of the prosecution.

The Defendant:

KEVIN JAY LIPSITZ
Age:  62
Staten Island, New York

E.D.N.Y. Docket No. 20-CR-394 (KAM)

A New York certified public accountant pleaded guilty today to conspiring with a small business owner to defraud the IRS.

According to court documents, John Savignano, of White Plains, conspired with co-defendant Rocco Manzione, who owned and operated several companies that sold concrete, to evade the assessment of individual income taxes. For the tax years 2012 through 2014, Manzione received income from his concrete companies but did not file individual returns with the IRS or pay the taxes due. In 2015, Manzione sought to borrow money in connection with the purchase of a condominium in Miami. As part of the loan application process, the financial institutions requested that Manzione supply three years of filed tax returns. Thereafter, Manzione contacted Savignano, who helped him prepare and file false individual tax returns with the IRS that substantially underreported Manzione’s true income. In total, the conspiracy caused a tax loss to the IRS of more than $400,000.

Savignano is scheduled to be sentenced on Jan. 27, 2022, and faces a maximum penalty of five years in prison. The defendant also faces a period of supervised release, restitution, and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Manzione previously pleaded guilty to tax evasion and employment tax fraud on Sept. 23.  

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Jacquelyn M. Kasulis for the Eastern District of New York made the announcement.

IRS-Criminal Investigation is investigating the case.

Trial Attorneys Brittney Campbell and Kathryn Carpenter of the Justice Department’s Tax Division are prosecuting the case.

Earlier today, in federal court in Central Islip, Ever Flores, a member of the Sailors Locos Salvatruchas Westside (Sailors) clique of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, pleaded guilty to racketeering charges relating to his participation in the murder of Dewann Stacks and a conspiracy to distribute cocaine and marijuana.  The proceeding was held before United States Circuit Judge Joseph F. Bianco.  

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Stuart Cameron, Acting Commissioner, Suffolk County Police Department (SCPD), announced the guilty plea.

“Today’s guilty plea makes clear that the defendant, an MS-13 gang member who admittedly hunted on residential streets in Long Island in order to kill, actively participated in the butchering and beating death of the victim until he was almost unrecognizable,” stated Acting U.S. Attorney Kasulis.  “This Office and the Long Island Gang Task Force have vowed to end these horrific killings and dismantle the MS-13.” 

“This case is a grim reminder of just how vicious MS-13 can be,” stated SCPD Acting Commissioner Cameron. “This victim was sought out like prey and killed in an act of savagery illustrating the danger this street gang poses. Today, there is one less murderer and drug dealer to plague the streets of Suffolk County, and I commend the U.S. Attorney’s Office for the Eastern District of New York and our law enforcement partners for their continued dedication to bringing individuals like Ever Flores to justice.”

According to prior court filings and Flores’s statements during the plea proceeding, on October 13, 2016, Flores and other MS-13 co-conspirators drove around the streets of Central Islip and Brentwood hunting for rival gang members to attack and kill.  They located Stacks on American Boulevard, a residential street in Brentwood and, believing him to be a rival gang member, decided to kill him.  Flores, wielding a machete, and two other MS-13 members, one armed with a machete and the other a baseball bat, attacked the victim, beating and hacking him to death.  The victim sustained severe sharp and blunt force trauma to the face and head, leaving him nearly unrecognizable.       

In addition, Flores also pleaded guilty to participating in a drug conspiracy, admitting that between April 2016 and October 2017, he and other members of the Sailors clique conspired to distribute cocaine and marijuana to raise money for the MS-13.

Today’s conviction is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent, transnational criminal organization.  The MS-13’s leadership is based in El Salvador, Honduras, Guatemala and Mexico, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America.  With numerous branches, or “cliques,” the MS-13 is the most violent criminal organization on Long Island.  Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York.  A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders and assaults.  Since 2010, this Office has obtained indictments charging MS-13 members with carrying out more than 60 murders in the Eastern District of New York and has convicted dozens of MS-13 leaders and members in connection with those murders.  These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, which is comprised of agents and officers of the FBI, SCPD, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation Office, Suffolk County Sheriff’s Office, the New York State Police, the Hempstead Police Department, the Rockville Centre Police Department and the New York State Department of Corrections and Community Supervision. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys John J. Durham, Paul G. Scotti, Justina L. Geraci and Megan E. Farrell are in charge of the prosecution.

The Defendant:

EVER FLORES (also known as “Negro” and “Grone”)
Age: 29
Brentwood, New York

E.D.N.Y. Docket No. 16-CR-403 (S-7)(JFB)

A federal jury in Central Islip returned a guilty verdict this afternoon against Frank Parasmo, a medical doctor with an office in Deer Park, on 31 counts of unlawfully distributing oxycodone, a highly addictive prescription painkiller, and one count of unlawfully distributing hydrocodone without a legitimate medical purpose.  The verdict followed four weeks of trial before United States District Judge Joan M. Azrack.  When sentenced, Dr. Parasmo faces up to 20 years in prison.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), announced the verdict.

“By prescribing painkillers in the absence of any recognized medical need, the defendant not only betrayed his oath as a physician to do no harm, he also endangered the lives of vulnerable patients and contributed to the spread of the opioid epidemic by peddling dangerous drugs,” stated Acting United States Attorney Kasulis.  “As today’s verdict demonstrates, this Office will continue to hold accountable medical professionals like the defendant who misuse their advanced education, specialized training and access to prescription painkillers to exploit drug dependency in our communities.”

“The egregious prescribing records detailed in court proceedings outlined clearly how the defendant disregarded his patients’ health, and instead, risked their lives while they suffered from substance abuse,” stated DEA Special Agent-in-Charge Donovan.  “There is no excuse for a doctor, an individual who is given great trust and responsibility, to put their patient’s lives and the public’s health, in jeopardy.  I commend the DEA Long Island District Office Tactical Diversion Squad and the U.S. Attorney’s Office Eastern District of New York for their diligent work throughout this investigation.”

 As proven at trial, between January 2014 and December 2015, Dr. Parasmo provided prescriptions for oxycodone and hydrocodone pills to 18 of his patients without a legitimate medical purpose and outside the course of a professional medical practice.  Parasmo issued prescriptions to patients who had just completed detox treatment in rehabilitation facilities, as well as patients who had just been discharged from the hospital following an overdose, In addition, Parasmo issued prescriptions to many patients he knew were taking illegal drugs or who he suspected were addicts.  There is a significant risk of an overdose when oxycodone is taken with heroin and cocaine.  From 2010 to 2015, Dr. Parasmo prescribed over 1.5 million oxycodone and hydrocodone pills making him one of the top prescribers of the painkiller in New York State during that time period.

This case was investigated by the DEA’s Long Island District Office Tactical Diversion Squad comprising agents and officers of the DEA, Nassau County Police Department, Suffolk County Police Department, Port Washington Police Department, and Department of Health and Human Services-Office of Inspector General. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Michael Maffei and Charles P. Kelly are in charge of the prosecution.

The Defendant:

FRANK PARASMO
Age:  75
Great River, New York

E.D.N.Y. Docket No. 19-CR-1 (JMA)

Earlier today, in federal court in Central Islip, Tameshwar Ammar, a former medical doctor in Roslyn, New York, was sentenced by United States District Judge Denis R. Hurley to five years’ imprisonment for conspiring to illegally distribute oxycodone.  In June 2020, Ammar relinquished his license to practice medicine.  In July 2020, Ammar pleaded guilty to the charge.  As part of his sentence, Ammar agreed to forfeit $245,700 in criminal proceeds. 

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), announced the sentence.

“Today’s sentence sends a stern warning that doctors who decide to betray their Hippocratic oaths by acting as profit-seeking drug dealers will face severe consequences,” stated Acting United States Attorney Kasulis.  “This Office and our partners at the DEA are working tirelessly to combat the opioid epidemic on Long Island and elsewhere, including by prosecuting medical professionals who contribute to the risk of addiction, overdose and death by their callous actions.”  Ms. Kasulis also thanked the U.S. Department of Health and Human Services, Office of Inspector General, New York Region, for their assistance during the investigation.

“Doctors are supposed to be among the most trusted professionals in our society. This defendant, on the other hand, used his position to prey upon members of our community,” stated DEA Special Agent-in-Charge Donovan.  “By knowingly and intentionally writing prescriptions of addictive opioids that he knew would be resold, he violated not only his oath as a doctor, but the trust of his community. I applaud the efforts of the Long Island District Office’s Tactical Diversion Squad and the US Attorney’s Office in the Eastern District of New York for their dedication to this investigation.”

As set forth in the indictment and other court filings, between 2013 and 2019, Ammar illegally prescribed thousands of highly addictive oxycodone pills to two individuals identified in the indictment as John Doe 1 and John Doe 2.  According to a review of Ammar’s medical files for the two individuals, Ammar wrote the prescriptions without any diagnostic proof of legitimate medical need.  Ammar prescribed oxycodone pills to John Doe 1, knowing that he intended to sell the pills to others.  In addition, Ammar continued to prescribe oxycodone pills and methadone to John Doe 2, even after learning that he had been admitted to a psychiatric facility in March 2018. 

The government’s investigation was led by the DEA’s Long Island Tactical Diversion Squad, comprised of agents and officers of the DEA, Nassau County Police Department, Suffolk County Police Department, Port Washington Police Department and Rockville Centre Police Department.  The DEA Tactical Diversion Squad also worked in conjunction with officers and agents of the U.S. Department of Health & Human Services Office of the Inspector General and the Hempstead Police Department. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Bradley T. King and Madeline O’Connor are in charge of the prosecution.  

The Defendant:

TAMESHWAR AMMAR
Age:  53
Amityville, New York

E.D.N.Y. Docket No. 19-CR-516 (DRH)

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, today announced agreements pursuant to Title II of the Americans With Disabilities Act of 1990 (the “ADA”), with five New York State and local government agencies to fix accessibility barriers for people with visual impairments on their COVID-19 vaccination websites.

Pursuant to Title II of the ADA, the United States Attorney’s Office investigated the vaccination websites for New York State’s Department of Health, the City of New York’s Department of Health, New York City Health + Hospitals, Nassau County, and Suffolk County.  As a result of this review, the United States Attorney’s Office identified multiple areas where text was difficult to read for visually impaired people.  On some of the websites, individuals with visual impairments using screen readers were prevented from identifying what steps they needed to take to complete forms, or from readily navigating the websites.  On some websites, lettering was set against a background causing a low contrast. 

Following this investigation, the New York State’s Department of Health, the City of New York’s Department of Health, New York City Health + Hospitals, Nassau County, and Suffolk County have now entered into written agreements with the United States Attorney’s Office certifying that they have corrected the identified problems. These government entities further committed to maintaining that their COVID-19 vaccination websites will be accessible for people with visual impairments.

“In the midst of the ongoing global pandemic, people with vision impairments must be able to access information about how and where to obtain COVID-19 vaccinations,” stated Acting United States Attorney Kasulis.  “Our Office thanks the New York State Department of Health, the City of New York, New York Health + Hospitals, and Nassau and Suffolk counties for their cooperation in complying with the requirements of the ADA and for ensuring that these vital websites are accessible to the visually impaired.”

The United States Attorney’s Office gratefully acknowledges the assistance of WebAIM, a nonprofit web accessibility organization based at the Institute for Disability Research, Policy, and Practice at Utah State University, which provided information on accessibility issues on the websites addressed in the agreements announced today.

The government’s review was handled by Assistant United States Attorney Edward K. Newman.  The United States Attorney’s Office for the Eastern District of New York recently announced a Civil Rights Team in the Office’s Civil Division.  The Civil Rights Team focuses on protecting the rights of the most vulnerable residents of the Eastern District of New York.  The Office has also a webpage, located at https://www.justice.gov/usao-edny/civil-rights, dedicated to Civil Rights Enforcement, which highlights the work of the Office and provides links to complaint forms and to other civil rights resources.  For more information on the U.S. Attorney’s Office, or to report to report suspected violations of civil rights please visit https://www.justice.gov/usao-edny.  

Earlier today, in federal court in Brooklyn, Patrick McCrann and Richard Zavada, two former employees of a New York-based utility company (the “Company”), pleaded guilty to accepting bribes and kickbacks from the owners of a Long Island-based contractor (the “Contractor”) in exchange for steering lucrative contracts to the Contractor.  Last week, Ricardo Garcia and Jevan Seepaul, two other former employees of the Company, also pleaded guilty to accepting bribes and kickbacks from the Contractor.  Today’s proceedings took place before United States District Judge Carol Bagley Amon.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty pleas.

“The defendants have admitted to accepting thousands of dollars in bribes and kickbacks for their own enrichment and to subverting the no-bid process for awarding contracts,” stated Acting U.S. Attorney Kasulis. “The Office will remain vigilant in prosecuting criminals who seek to enrich themselves at the expense of taxpayers and consumers.”

As alleged in the criminal information and other court filings, the defendants were managers employed in the facilities department of the Company who steered contracts to certain Long Island-based contractors, including the Contractor, in exchange for hundreds of thousands of dollars in bribes and kickbacks.  The Contractor secured more than $50 million in facility maintenance contracts from the Company during the time that the Contractor was paying bribes to the defendants.  As managers, the defendants had the authority to approve “no-bid” contracts valued at less than $50,000.  The Contractor understood that if it did not pay bribes, the defendants would award the Company’s work to the Contractor’s competitors.  In exchange for the bribe payments, the defendants also took various steps to assist the Contractor in obtaining contracts from the Company for which there was a bidding process, including providing it with non-public bidding information, circumventing the Company’s competitive bidding process and offering favorable reviews of the Contractor’s work. The Contractor paid bribes to ensure that the defendants did not slow or stop disbursement of project funds to the Contractor, provide negative performance reviews regarding the Contractor’s work, or otherwise claim that the Contractor’s work did not meet contractual specifications. 

The illicit payments to the defendants included cash, the purchase of a recreational vehicle, home improvements, landscaping and an overseas vacation.  As part of the investigation, agents recovered approximately $300,000 in cash from a safe deposit box held by Zavada. 

When sentenced, each defendant faces a maximum sentence of five years in prison, a maximum fine of $500,000, mandatory restitution and forfeiture.

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Turner Buford and Artie McConnell are in charge of the prosecution.

The Defendants Who Pleaded Guilty Today:

PATRICK MCCRANN
Age:  57
Selden, New York

E.D.N.Y. Docket No. 21-CR-467 (CBA)

RICHARD ZAVADA
Age:  65
Hicksville, New York

E.D.N.Y. Docket No. 21-CR-468 (CBA)

The Defendants Who Previously Pleaded Guilty:

RICARDO GARCIA
Age:  48
Stroudsburg, Pennsylvania

E.D.N.Y. Docket No. 21-CR-460 (CBA)

JEEVAN SEEPAULAge:  36
Rockville Centre, New York

E.D.N.Y. Docket No. 21-CR-469 (CBA)

Earlier today, a federal jury in Brooklyn convicted Ppassim Elder, also known as “Bsam,” “Big Sam” and “Sam,” and Wilbert Bryant, also known as “Will” and “La,” of extortion, bank fraud, firearms and murder offenses.  The verdict followed a three-week trial before by United States District Judge William F. Kuntz, II.  When sentenced, the defendants face up to life in prison.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York; Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Dermot F. Shea, Commissioner, New York City Police Department, announced the verdict.

“With today’s verdict, a jury has held the defendants accountable for their heinous crimes, including the murder of a Queens business owner while attempting to collect a debt they claimed was owed by the victim’s son,” stated Acting United States Attorney Kasulis.  “This Office and our law enforcement partners are working tirelessly to protect the communities in our district from violent criminals like the defendants who will now face very serious consequences for their actions.”  Ms. Kasulis also expressed her appreciation to the Queens County District Attorney’s Office for their assistance during the investigation and prosecution.

As proven at trial, on the morning of October 23, 2017, Bryant and two other perpetrators walked into Garden Valley Distributors, a family-owned wholesale distribution business located in Ozone Park, Queens.  The perpetrators said that “Big Sam” had sent them to collect his money.  Earlier that year, Elder, who was known as “Big Sam,” had given the murder victim’s son money, which the son used to support the business.  When Elder demanded full repayment, the son was unable to repay the debt because much of the money had been used to purchase merchandise for Garden Valley.  Elder then began a campaign of intimidation against the son and his family.  On one occasion, Elder paid co-conspirators to throw a rock through a window of the victim’s home.  On another, Elder barged into the family home, intimidating members of the victim’s family.  Finally, Elder dispatched Bryant and two co-conspirators into Garden Valley business where, on October 23, 2017, the perpetrators brandished a firearm, pistol-whipped the son and fatally shot the father in the face. 

In addition to the murder, Elder extorted another person whose brother had stolen the proceeds of a fraud scheme committed by Elder.  Although the victim was not involved in the theft, Elder nonetheless punched him in his face in front of his daughters, breaking and bloodying his nose in order to “send a message” to the victim’s brother.  Elder and Bryant were also convicted of bank fraud conspiracy for lying to banks about the true owner of certain bank accounts, which permitted Elder to defraud innocent victims across the country, including an elderly man who lost over $30,000 when he was tricked into believing he was purchasing a car and another individual who lost over $150,000 when he was defrauded into believing he was purchasing two real estate properties.  Elder was also convicted of crimes committed after his arrest in this case, including stealing his attorney’s identity and lying to federal officials.

This case was brought as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.  As part of the program, U.S. Attorneys’ Offices work in partnership with federal, state, local and tribal law enforcement and their local communities to develop effective, locally based strategies to reduce violent crime.  

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Keith D. Edelman, Genny Ngai and Anna L. Karamigios are in charge of the prosecution. 

The Defendants:

PPASSIM ELDER (also known as “Bsam,” “Sam” and “Big Sam”)
Age: 42 
Staten Island, New York

WILBERT BRYANT (also known as “Will” and “La”)
Age: 57
Brooklyn, New York

E.D.N.Y. Docket No. 18-CR-92 (S-5) (WFK)

Earlier today, in federal court in Central Islip, Ibrahim Aksakal pleaded guilty to conspiring to commit health care and wire fraud in connection with a so-called “birth tourism” scheme in Suffolk County between approximately 2017 and 2020.  The scheme facilitated pregnant Turkish women fraudulently entering the United States using tourist and business visas to give birth so that their children would obtain birthright citizenship and medical benefits.  As part of his plea, Aksakal consented to the forfeiture of $397,500 as proceeds linked to his role in the scheme.  Today’s proceeding was held before United States District Judge Joanna Seybert.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York; Timothy D. Sini, District Attorney for Suffolk County; Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI); Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General, New York Region (HHS-OIG); Frank T. Walsh, Jr., Acting Medicaid Inspector General, New York State Office of the Medicaid Inspector General (OMIG); and Stuart Cameron, Acting Commissioner, Suffolk County Police Department (SCPD), announced the guilty plea.

“With today’s plea, Aksakal admits to an outrageous scheme in which he caused the Medicaid program to disburse more than $1 million in benefits for pregnant Turkish nationals who, masquerading as tourists, entered the United States under false pretenses to obtain birthright citizenship for their newborns,” stated Acting U.S. Attorney Kasulis.  Ms. Kasulis also thanked the United States Department of State, Diplomatic Security Service, for its assistance with the case. 

“This was an extremely complex, international investigation that led law enforcement to the core of this scheme right here in our backyard,” stated District Attorney Sini. “More than $1 million of American citizens’ hard-earned money was stolen through this conspiracy, and today’s plea holds its ringleader accountable. We will not tolerate the theft of taxpayer money in any form, and will continue to work with all of our law enforcement partners to target, arrest and prosecute anyone trying to take advantage of the system.”

“The criminality of birth tourism manipulates our visa and immigration systems and diverts precious financial resources from an already exhausted health care system that serves our local communities to combat COVID-19 and other critical needs,” stated HSI Special Agent-in-Charge Fitzhugh.  “This is a criminal organization that threatens our homeland and preys on the vulnerable.  HSI, along with its valued partners, will continue to use every resource to dismantle and bring those responsible to justice.”

“Millions of people in New York depend on Medicaid for vital services, and taxpayers across the state pay for that care,” stated HHS-OIG Special Agent-in-Charge Lampert.  “When individuals like Mr. Aksakal use this program to perpetrate fraud, they divert precious funding that puts the future availability of Medicaid and other public assistance programs at risk.  HHS-OIG and our law enforcement partners will continue to aggressively root out fraud schemes and hold criminals accountable.”

“Medicaid fraud, as this egregious scheme represents, threatens the health and safety of beneficiaries, wastes tax payer dollars and drains essential resources from the health care delivery system,” stated Acting OMIG Inspector General Walsh. “My office will continue to be vigilant, particularly in these most challenging times in responding to the COVID-19 pandemic, and work closely with our law enforcement partners to protect the integrity of the Medicaid program, hold wrong doers fully accountable, and preserve precious health care resources.”

“Healthcare fraud is an issue that hurts both the individuals who rely on these services and the taxpayers who ultimately get stuck with the bill,” stated SCPD Commissioner Cameron said. “This is the first time the Suffolk County Police Department handled a birth tourism case and I would like to commend the efforts of our Criminal Intelligence detectives as well as our partners in law enforcement who successfully worked on this case while also sending a message to others exploiting birth tourism—bilking the system and swindling our residents is not be an acceptable practice here in Suffolk.”

From at least January 2017 to the September 2020, Aksakal and his co-conspirators advertised a birth tourism scheme on two Turkish-language Facebook pages, www.facebook.com/ bebegimamerikadadogsun and www.facebook.com/amerikadadogum.org, and a Turkish-language website https://amerikadadogum.org.  Translated into English, “bebegimamerikadadogsun” means “My baby should be born in America,” and “amerikadadogum” means “Giving Birth in America.”  As translated, some of the defendants’ advertisements stated, “If you believe your baby should be born in the USA and become a U.S. citizen then you are at the right place. . . .  [W]e at ‘Bebegim Amerika Dogsun’ . . . will provide future mothers and fathers this opportunity, with minimal costs . . . .”  The advertisements further stated that fees paid by pregnant women – approximately $7,500 nearly all in cash – would include transportation, “insurance” to cover the costs of pre-natal, delivery and post-natal medical care, assistance with the process for applying for United States citizenship on behalf of children born in connection with the scheme and consultation in Turkish concerning health care issues.  Aksakal and his co-conspirators also instructed the women to conceal their pregnancies. 

The pregnant women stayed in one of seven “birth houses” that Aksakal maintained in Center Moriches, Dix Hills, East Northport, East Patchogue, Smithtown and West Babylon, New York.  In addition to facilitating fraudulently obtained Medicaid benefits and lodging and transportation of the pregnant women, Aksakal and his co-conspirators also advertised the scheme on websites.  As a result of the scheme, Medicaid disbursed more than $1 million in fraudulently obtained benefits.

When sentenced, Aksakal faces up to 20 years’ imprisonment. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Bradley T. King and Oren Gleich and Special Assistant United States Attorney Jeremy Glicksman are in charge of the prosecution.

The Defendant:

IBRAHIM AKSAKAL (also known as “Dennis”)
Age: 49
East Patchogue, New York

E.D.N.Y. Docket No. 20-CR-400 (JS)

An indictment was unsealed today in federal court in Brooklyn charging James Davneiro, Giancarlo Osma, and Michael Perri with one count of conspiracy to violate the Travel Act and one count of using interstate facilities to commit bribery.  During the relevant period, Davneiro, Osma, and Perri were New York City Police Department (“NYPD”) officers assigned to the 107th Precinct in Queens.  Perri retired from the NYPD in June 2020.

The defendants were arrested this morning and are scheduled to be arraigned this afternoon before United States Magistrate Judge Lois Bloom.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Michael J. Driscoll Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Dermot Shea, Commissioner, NYPD, announced the charges.

“As alleged in the indictment, these defendants disgraced their badges and betrayed the public trust and their oaths as police officers by lining their pockets with cash bribes,” stated Acting U. S. Attorney Kasulis.  “We will continue to root out and prosecute corruption by those who are sworn to enforce and uphold the law.”  Ms. Kasulis also thanked the National Insurance Crime Bureau for its assistance with the case.

“Accepting bribes as a law enforcement officer in lieu of following legal procedure is against the law and won't be tolerated. Those charged today aren't representative of the tens of thousands of men and women who serve the NYPD with honor day in and day out and, as such, will be held accountable for their alleged crime,” stated FBI Assistant Director-in-Charge Driscoll.

“The NYPD cleans its own house. Corruption is a crime and a violation of a police officer’s sworn oath. This investigation is the third phase of an ongoing case where our Internal Affairs Bureau investigators left no stone unturned. I want to thank our FBI partners from the Public Corruption Unit, and the prosecutors of the U.S. Attorney’s Office for the Eastern District of New York who have helped guide this case throughout,” stated NYPD Commissioner Shea.

Beginning in approximately May 2020, after Davneiro and Osma responded as NYPD officers to automobile accidents, they would steer the damaged vehicles to a licensed tow trucking and automobile repair business operated by Perri, instead of using the NYPD’s Directed Accident Response Program, as legally required. That program requires the NYPD to identify appropriate licensed tow trucking and automobile repair businesses to respond to automobile accident scenes and remove damaged vehicles.  In exchange for steering the removal and repair of damaged vehicles to Perri’s business, Perri paid Davneiro and Osma thousands of dollars in cash bribes.

The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, the defendants face up to five years in prison.

The government’s case is being prosecuted by the Office’s Public Integrity Section.  Assistant United States Attorneys Ryan C. Harris and Olatokunbo Olaniyan are in charge of the prosecution.

The Defendants:

JAMES DAVNEIRO
Age:  42
Bayside, New York

GIANCARLO OSMA
Age:  39
Deer Park, New York

MICHAEL PERRI
Age:  32
East Islip, New York

E.D.N.Y. Docket No. 21-CR-508 (RPK)

A complaint was unsealed today in federal court in Brooklyn charging Eric Goldstein, the former Chief Executive Officer of the New York City Department of Education’s (“NYC DOE”) Office of School Support Services (“OSS”), Blaine Iler, Michael Turley and Brian Twomey with conspiring to commit extortion under color of official right and solicitation and giving of bribes relating to programs receiving federal funds.  Goldstein was arrested this morning, made his initial appearance this afternoon before United States Magistrate Judge Lois M. Bloom and was released on a $150,000 bond.  Turley was arrested in Arkansas this morning and will make his initial appearance in the Western District of Arkansas tomorrow.  Iler and Twomey will make their initial appearances in the Northern District of Texas this afternoon.   

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the arrests and charges.

“Goldstein is alleged to have abused his position as a senior executive with the Department of Education by soliciting and accepting thousands of dollars in bribes for pure financial gain.  In exchange, Goldstein’s co-conspirators obtained lucrative contracts to provide food services that consisted of substandard products that were served to students, teachers and staff in public schools.” stated Acting U.S. Attorney Kasulis.  “This Office and its law enforcement partners are committed to ensuring integrity in government contracts, and will not tolerate corruption that compromises the quality of food that is served in New York City public schools.”

“As alleged, Goldstein used his position within the DOE to help promote a business in which he had a financial interest, which is not only illegal, but also doesn’t allow for a fair bidding process between competing interests. As a result of this scheme, Goldstein—and his coconspirators—learned a lesson of their own today in what not to do with taxpayer money,” stated FBI Assistant Director-in-Charge Driscoll.

As alleged in the complaint, from 2008 to 2018, Goldstein was the Chief Executive Officer of OSS.  In that role, Goldstein was the NYC DOE senior executive in charge of overseeing the management, budget and operations of several NYC DOE departments, including the Office of Food and Nutrition Services, also known as SchoolFood, which is responsible for managing the food service operations for all New York City public schools.  Iler, Turley and Twomey were the founders and operators of a food services company (the “Food Service Company”) that sold food products to retail and food service markets, including schools.   

Between 2015 and 2016, Goldstein, while he was head of OSS, together with Iler, Turley and Twome, formed and operated a grass-fed beef importation business called Range Meats Supply Co., LLC (“RMSCO”).  During the same time, between 2015 and 2016, Goldstein used his official position within SchoolFood to ensure that the food products promoted and sold by the Food Service Company would be purchased by SchoolFood and served in New York City public schools.  In exchange, Iler, Turley and Twomey transferred tens of thousands of dollars to RMSCO for Goldstein’s benefit, including a payment of $7,000 to Goldstein’s personal divorce lawyer and a $3,000 wire transfer to a close relative of Goldstein.

In one instance alleged in the complaint, in October 2016, SchoolFood stopped serving the Food Service Company’s chicken tenders after a NYC DOE employee choked on a bone that had not been removed from a chicken tender supplied by the Food Service Company.  Goldstein, who had final approval as to whether and when the chicken tenders would be allowed back in schools, delayed approving the reintroduction of the tenders until Iler, Turley and Twomey agreed to transfer the Food Service Company’s ownership interest in RMSCO to Goldstein as well as to transfer $66,670 to a bank account in RMSCO’s name that Goldstein had opened and controlled.  Following weeks of negotiations, on November 29, 2016, Iler, Turley and Twomey agreed to pay the bribe Goldstein was soliciting and one day later, on November 30, 2016, Goldstein approved reintroduction of the Food Service Company’s chicken products in schools.  The products were served in schools until April 2017 when, following repeated complaints from students and staff that the chicken tenders continued to contain foreign objects, including plastic, metal and bones, SchoolFood decided to remove all of the Food Service Company’s food products from New York City public schools.

The charges in the complaint are allegations, and the defendants are presumed innocent unless and until proven guilty.

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Robert Polemeni and Laura Zuckerwise are in charge of the prosecution.

The Defendants

ERIC GOLDSTEIN
Age: 53
New Rochelle, New York

BLAINE ILER
Age: 34
Dallas, Texas

MICHAEL TURLEY
Age: 51
Fayetteville, Arkansas

BRIAN TWOMEY
Age: 48
Dallas, Texas

E.D.N.Y. Docket No. 21-MJ-1102

Earlier today, at the federal courthouse in Central Islip, Ira Hall was sentenced by United States District Judge Joanna Seybert to 13 years’ imprisonment for distributing cocaine and the unlawful use of a firearm in furtherance of drug trafficking in August 2017.  When Hall pleaded guilty in June 2021, he also admitted to distributing fentanyl that caused the death of a 27-year-old resident of Glen Cove, New York in May 2017. 

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and William Whitton, Chief, Glen Cove Police Department, announced the sentence.

“Today’s sentence ensures that the defendant will serve a lengthy prison term for selling dangerous drugs while carrying a firearm, and also for callously causing the fentanyl overdose death of a resident of this district,” stated Acting U.S. Attorney Kasulis.  “This Office, together with our federal and local partners, will continue to prosecute and hold accountable those who contribute to the opioid epidemic and overdose deaths in our communities.”  Ms. Kasulis thanked the Drug Enforcement Administration for its assistance on the case.

“This investigation and arrest is an example of the Glen Cove Police Department’s continuing commitment to combat the sale of illegal drugs and to identify and arrest those responsible for overdose deaths occurring in our community,” stated Glen Cove Chief Whitton.     

On May 30, 2017, Hall sold a quantity of fentanyl to a coconspirator who then provided the fentanyl to the victim, who suffered a fatal overdose.   In August 2017, while investigating the overdose death, detectives of the Glen Cove Police Department arrested Hall after he sold cocaine in a Taco Bell parking lot while carrying a loaded .38 caliber Smith & Wesson revolver.  A search warrant of Hall’s residence the following day led to the seizure of additional rounds of .38 caliber ammunition.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Charles N. Rose and Lara Treinis Gatz are in charge of the prosecution.

The Defendant:

IRA HALL (also known as “Streets”)
Age:  33         
Glen Cove, New York

E.D.N.Y. Docket No. 18-CR-239 (JS)

Robert Sylvester Kelly, the R&B singer also known as “R. Kelly,” was convicted today by a federal jury in Brooklyn of all nine counts of a superseding indictment charging him with racketeering predicated on criminal conduct including sexual exploitation of children, forced labor and Mann Act violations involving the coercion and transportation of women and girls in interstate commerce to engage in illegal sexual activity. The verdict followed six weeks of trial before United States District Judge Ann M. Donnelly. 

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI), announced the verdict.

“Today’s guilty verdict forever brands R. Kelly as a predator, who used his fame and fortune to prey on the young, the vulnerable, and the voiceless for his own sexual gratification,” stated Acting U.S. Attorney Kasulis.  “A predator who used his inner circle to ensnare underage teenage girls, and young women and men, for decades, in a sordid web of sex abuse, exploitation and degradation.   To the victims in this case, your voices were heard, and justice was finally served. We hope that today’s verdict brings some measure of comfort and closure to the victims.”  Ms. Kasulis also thanked the U.S. Attorney’s Office for the Northern District of Illinois and the Cook County State’s Attorney’s Office for their assistance with the case.

“Robert Kelly is a serial sexual predator who used his fame and musical tours as his personal hunting grounds to find his victims,” stated HSI Special Agent-in-Charge Fitzhugh.  “Mr. Kelly ran a criminal enterprise whose mission was to serve his sexual gratification by setting up a complex organization of enablers and handlers.  When his victims tried to escape, Mr. Kelly and his accomplices silenced them through bribery, intimidation, and physical violence.  The brave survivors who overcame Mr. Kelly’s abuse deserve our upmost respect for telling their stories and bringing an end to his 30-year reign of terror over the young and vulnerable.”

As proven at trial, for nearly three decades, Kelly was the leader of a criminal enterprise (“the Enterprise”) consisting of himself and an entourage of individuals who served as managers, bodyguards, accountants, drivers, personal assistants and runners for the defendant.  As the leader of the Enterprise, Kelly used his fame to recruit women and girls to engage in illegal sexual activity with him.  Kelly identified these girls and women at concerts, and then directed members of the Enterprise to escort them backstage following his musical performances.  Kelly exchanged contact information with girls and women so that he and other members of the Enterprise could arrange travel and lodging for them to visit Kelly and engage in the charged illegal sexual conduct.  

The evidence at trial included the testimony 45 government witnesses, including more than 10 victims, five of whom are named in the superseding indictment, testimony from employees of the defendant, text messages, video and audio recordings, photographs, phone and travel records, DNA evidence and expert witnesses. 

Kelly issued rules that many of his sexual partners were required to follow, including that the women and girls were to call him “Daddy”; they were not permitted to leave their rooms to eat or visit the bathroom without receiving his permission; they were required to wear baggy clothing when not accompanying Kelly to an event; and they were directed to keep their heads down and not look at or speak to other men.  Kelly also isolated the women and girls from their friends and family and made them dependent on him for their financial well-being.  He required the victims to engage in sex with him and others, and recorded many of the sexual encounters.

Racketeering Act One – Bribery

Kelly bribed a state employee to create an identification card for Jane Doe #1, then 15 years old, so that Kelly could marry Jane Doe #1 because he believed she was pregnant and therefore the marriage could keep him out of jail. 

Racketeering Acts Two, Seven and Ten – Sexual Exploitation of a Child – Jane Doe #2, Jane Doe #4 and Jane Doe #5

Kelly coerced Jane Doe #2, Jane Doe #4 and Jane Doe #5 to engage in sexually explicit conduct for the purpose of producing video recordings.  Over the course of decades, he made these recordings, and other recordings of sexually explicit conduct, using VHS video cameras, Canon camcorders, iPhones and iPads.

Racketeering Acts Six, Eleven and Thirteen – Forced Labor – Jane Doe #4, Jane Doe #5 and Jane Doe #6

Kelly used the threat of physical harm and physical restraint to ensure that his victims, including Jane Doe #4, Jane Doe #5 and Jane Doe #6, performed sexually at his command.  As to Jane Doe #4, he slapped her, choked her and spit on her, before demanding she give him oral sex.  As to Jane Doe #5, over a period of years, he spanked her, viciously assaulted her, confined her for periods of days and otherwise manipulated her, to ensure that she would perform for him sexually, including with other women and a man.  As to Jane Doe #6, he forced her to give him oral sex.  When he did that, there was a gun within Kelly’s reach.

Racketeering Acts Five and Nine – Mann Act Violations – Jane Doe #4 and Jane Doe #5

Between May 2009 and January 2010, Kelly regularly spoke with Jane Doe #4 over the telephone to arrange for Jane Doe #4 to come to his residence in Olympia Fields for the purpose of illegal sexual activity, which was illegal because Jane Doe #4 was too young to consent to sex in Illinois.  Similarly, between September 2015 and October 2015, Kelly transported Jane Doe #5, who was then 17 years old, from New York City to Oakland, California for the purpose of illegal sexual activity, as she was too young to consent to sex in California.

Racketeering Acts Eight, Thirteen and Fourteen – Mann Act Violations – Jane Doe #5 and Jane Doe #6

In April 2015, Kelly arranged for Jane Doe #5 to fly from her home in Orlando, Florida, to Los Angeles, California, for the purpose of illegal sexual activity, which was illegal because Kelly knew he had an incurable sexually transmitted disease (“STD”) and did not inform Jane Doe #5 about the STD prior to engaging in sexual intercourse with her.  In May of 2017 and again in February of 2018, Kelly arranged for Jane Doe #6 to fly from her home in San Antonio, Texas, to La Guardia Airport in Queens, New York, for the purpose of illegal sexual activity, which again was illegal because Kelly failed to disclose that he had an incurable STD and obtain Jane Doe #6’s consent to engage in sexual intercourse under those circumstances.

When sentenced, Kelly faces a mandatory minimum sentence of 10 years’ imprisonment and up to life in prison.

The government’s case is being handled by the Office’s Civil Rights Section.  Assistant United States Attorneys Elizabeth Geddes, Nadia Shihata and Maria Cruz Melendez are in charge of the prosecution. 

The Defendant:

ROBERT SYLVESTER KELLY (also known as “R. Kelly”)
Age:  54
Chicago, Illinois

E.D.N.Y. Docket No. 19-CR-286 (AMD)

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Todd Kim, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division, and Walter Mugdan, Acting Regional Administrator of the United States Environmental Protection Agency, Region 2 (EPA), announced today that the United States filed suit under the Clean Air Act (CAA) against the City of New York and the New York City Department of Education (NYCDOE) to address their longstanding failure to properly monitor and control harmful emissions from NYCDOE oil-fired boilers in New York City public schools.  Many of NYCDOE’s boilers are located in disadvantaged communities whose residents are exposed to disproportionately high pollution levels that result in adverse health and environmental impacts.  The parties agreed to enter into a Consent Judgment, also filed today with the court, that requires NYCDOE to: (1) conduct regular tune-ups to monitor and repair its boilers as required by the CAA to control excess emissions; (2) reduce its boiler emissions by transitioning seven of its largest oil-fired boilers to cleaner, natural gas boilers by 2023 at an approximate cost of $50 million; and (3) pay a civil penalty of $1 million to the United States. 

The Complaint and Consent Judgment were filed in the United States District Court for the Eastern District of New York, in Brooklyn, New York.  Following a 30-day public comment period, the United States will review all comments and, if appropriate, ask the court to enter the Consent Judgment.

“The United States brought this action to protect our children, teachers, staff, and communities from exposure to high levels of hazardous air particles and particulate matter emitted by oil-fired boilers at NYCDOE schools, many of which are located in areas of the city that are already burdened by disproportionate levels of air pollution,” stated Acting United States Attorney Kasulis.  “This settlement demonstrates that this Office and its Environmental Justice Team are committed to addressing environmental justice concerns and reducing dangerous emissions and hazardous air pollutants in disadvantaged communities.”

"Students and teachers should not have to be concerned that the air they are breathing at school is harmful to their health,” stated Assistant Attorney General Kim. “This settlement will benefit New York’s schools and the communities they serve, who already suffer an unjust burden from polluted air.”

“Thousands of New York City residents will be breathing cleaner air as a result of this case, many of whom live in communities overburdened by dangerous air pollution and other environmental challenges,” stated EPA Acting Regional Administrator Mugdan. “This case demonstrates EPA’s commitment to advancing environmental justice and working with our partners like the Justice Department to ensure compliance with critical federal laws that protect public health and clean air. Children’s health is an EPA priority because they are often more vulnerable than adults to the risks of pollutants and environmental hazards.”

The CAA was passed by Congress in 1970, and amended in 1990, to protect public health and the environment through the regulation of air emissions from both stationary and mobile sources. The 1990 amendments to the law required the EPA to establish standards for air toxics, also known as hazardous air pollutants (HAPs).  These standards impose limitations on HAP emissions from a variety of sources. In order to reduce these emissions from oil-fired boilers located at institutional sources including schools, the EPA promulgated national operation and maintenance standards for such boilers in 2011.  These standards are commonly referred to as the Area Source Boiler Rule.

NYCDOE, the nation’s largest public school system, operates oil-fired boilers at hundreds of public schools throughout the city. When these boilers are properly maintained, they play an important role in keeping the schools warm. When these boilers are not properly maintained, they can emit excess HAPs, along with other regulated pollutants such as particulate matter, nitrogen oxides, sulfur oxides, carbon monoxide, and greenhouse gases.  Regular tune-ups, which include monitoring of emissions, can increase a boiler’s combustion efficiency, lowering its actual emissions rate.

Over 1,300 of NYCDOE’s oil-fired boilers, at approximately 566 school facilities, became subject to the Area Source Boiler Rule in 2014.  These regulations require boiler operators to conduct regular tune-ups and submit reports to the EPA about the status of all boilers subject to the rule. The rule also required NYCDOE to conduct one-time energy assessments for certain large oil-fired boilers.  However, as set forth in the United States’ complaint, NYCDOE failed to comply with these requirements for several years after they took effect.  As a result of the EPA’s enforcement efforts, NYCDOE has now brought its boilers into compliance with the CAA. 

The NYCDOE’s failure to properly perform tune-ups resulted in excess emissions that will be mitigated under the Consent Judgment.  Notably, many of NYCDOE’s boilers are located in communities identified by the EPA as posing Environmental Justice concerns, due to the large number of minority or low-income residents who are disproportionately exposed to air pollution and its harmful effects.  Particulate matter and HAP emissions are linked to a range of health problems and also cause environmental harm.   The mitigation projects described below are targeted to provide environmental benefits in these communities. 

The settlement requires the NYCDOE to regularly and properly conduct periodic tune-ups of regulated boilers. These tune-ups will proceed according to a checklist which ensures that the proper procedures and quality assurance measures are followed, and that all necessary maintenance or repairs are identified and addressed.  To mitigate past emissions, NYCDOE has also agreed to convert or replace seven large oil-fired boilers that burn more polluting number 4 oil to natural gas prior to March 2023 – including one of the largest boilers in the school system, located at K430 (Brooklyn Tech High School).  The other schools at which boilers will be replaced or converted are: Q053 (M.S. 53 Brian Piccolo), X029 (P.S./M.S. 029 Melrose School), K068 (I.S. 068 Isaac Bildersee); K306 (P.S. 306 Ethan Allen), M013 and M117 (each containing various co-located schools).  These new or converted boilers will emit far less HAPs when running on natural gas, a cleaner-burning fuel.  This effort is projected to reduce NYCDOE’s oil consumption and combustion by over 3 million gallons by November 2027, thereby mitigating excess emissions caused by NYCDOE’s earlier failure to follow the Area Source Boiler Rule.  The mitigation projects effectively advance NYCDOE’s compliance with New York City’s PlaNYC, under which the city plans to phase out number 4 oil from all boilers by 2030.  

The civil negotiations and settlement were handled by Assistant U.S. Attorney Matthew Silverman of the U.S. Attorney’s Office for the Eastern District of New York, working with Liliana Villatora and Erick Ihlenburg, Office of Regional Counsel, U.S. EPA Region 2, Robert Buettner, Chief, Air Compliance Branch, U.S. EPA Region 2, Gaetano LaVigna, Chief, Stationary Source Compliance Section, Air Compliance Branch, and Ray Slizys and Harish Patel, also with the EPA Region 2 Air Compliance Branch, Greg Fried, Chief, Stationary Source Enforcement Branch, Air Enforcement Division, EPA Office of Enforcement and Compliance Assurance (OECA) and Robert Klepp, also with OECA.

In June of this year, Acting U.S. Attorney Kasulis announced the creation of an Environmental Justice Team within the Office’s Civil Division comprised of seven Assistant U.S. Attorneys and led by Assistant U.S. Attorney Silverman, the Chief of Environmental Litigation.  The Environmental Justice Team’s focus is the protection of the rights of residents of the Eastern District of New York who are disproportionately burdened by environmental and health hazards.

E.D.N.Y. Docket No.: 21-CV-5338 (PKC)

Earlier today, at the federal courthouse in Brooklyn, United States District Judge Frederic Block sentenced Frank Smith, also known as “Fresh,” a leader of the Coney Island-based gang Rival Impact, to two mandatory life sentences plus an additional 20 years’ imprisonment for racketeering, including predicate acts of murder conspiracy and narcotics offenses, as well as two counts of murder-in-aid-of racketeering for the murder of rival gang members Terrance Serrano and Rashawn Washington.  These sentences also include two counts of causing a death through the use of a firearm.  Smith was convicted by a jury in June 2018 following a three-week trial.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the sentence.

“Today’s sentence brings a measure of justice to the families of the victims of these calculated murders and holds Frank Smith accountable not only for the lives he snuffed out, but also for the devastation he and the other members of his street gang caused for years in Coney Island and elsewhere with their drug trafficking and senseless violence,” stated Acting United States Attorney Kasulis.  “This Office, together with our federal and local  law enforcement partners, will continue to use all available tools to disrupt and dismantle violent street gangs that wreak havoc on our communities.”  Ms. Kasulis expressed her appreciation to the Manhattan District Attorney’s Office for its assistance in the case.   

Between January 2000 and January 2014, Smith was a member—ultimately rising to become one of the leaders—of the Rival Impact street gang, a criminal enterprise based in the Mermaid Houses in Coney Island.  For more than a decade, Smith and other members of Rival Impact distributed heroin, crack and other narcotics in Brooklyn, New York, and several other states.  Smith and other Rival Impact members also engaged in multiple acts of violence in connection with their drug trafficking, including murders, attempted murders, armed robberies and assaults.  By the late 2000s, Rival Impact was engaged in a war with members of Thirty-O, a rival street gang based around the Coney Island Houses.  After a high-ranking Rival Impact member was slain, purportedly by Thirty-O crew members,  Smith and other members of Rival Impact plotted retaliatory murders of Thirty-O members, including Serrano and Washington, who Smith and his gang believed were responsible for the killing of their Rival Impact member.  On October 4, 2010, after learning that Serrano and Washington were at a nightclub near Union Square in Manhattan, Smith and another Rival Impact member drove from Coney Island to Manhattan, where they laid in wait to ambush Serrano and Washington.  Once Serrano and Washington entered their car, Smith and his co-conspirator opened fire, killing both men.

This case was brought as part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.  As part of the program, U.S. Attorneys’ Offices work in partnership with federal, state, local and tribal law enforcement and their local communities to develop effective, locally based strategies to reduce violent crime.

The government’s case is being handled by the Office’s Organized Crime & Gangs Section.  Assistant United States Attorneys Maria Cruz Melendez, Jennifer M. Sasso and Josh Hafetz are in charge of the prosecution.

The Defendant:

FRANK SMITH (also known as “Fresh”)
Age:  36
Brooklyn, New York

EDNY Docket No. 16-CR-346 (S-1)

Earlier today, in federal court in Brooklyn, a criminal complaint was unsealed and two criminal informations were filed yesterday charging Anuli Okeke, Charlene Wint and Hashim Campbell, respectively, for their participation in a conspiracy to commit bank and wire fraud in connection with a scheme to fraudulently obtain more than $3 million from the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program, both of which were created by Congress as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.  Wint and Campbell pleaded guilty on Thursday to conspiracy to commit bank and wire fraud before United States Magistrate Judge Roanne L. Mann.  Okeke was arrested this morning and made her initial appearance this afternoon before United States Magistrate Judge Robert M. Levy who released the defendant on a $100,000 bond.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York; Kenneth A. Polite, Jr., Assistant Attorney General of the Justice Department’s Criminal Division; Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); John Grasso, Special Agent-in-Charge, Social Security Administration, Office of the Inspector General (SSA-OIG); Jay N. Lerner, Inspector General, Federal Deposit Insurance Corporation, Office of Inspector General (FDIC-OIG); Stephen Donnelly, Acting Special Agent-in-Charge, Office of Inspector General for the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection, Eastern Region (FRS-OIG); and Amaleka McCall-Brathwaite, Special Agent-in-Charge, Office of the Inspector General of the U.S. Small Business Administration, Eastern Region Office (SBA-OIG) announced the charges.

“As alleged, the defendants plotted to steal millions in funds that were specifically earmarked by Congress to provide emergency assistance to small businesses and vulnerable workers during a global pandemic and time of great economic hardship,” stated Acting U.S. Attorney Kasulis.  “Together with our law enforcement partners, this Office will vigorously prosecute defendants who shamelessly seek to enrich themselves by taking advantage of government programs that are designed to help those in need during the COVID crisis.”

“Fraudulent schemes exploiting the Paycheck Protection Program are unfortunately all too commonplace. Okeke, Wint, and Campbell, as charged today, join the ranks of others before them who took it upon themselves to personally and illegally benefit from the protections offered to small businesses during a global pandemic. They are likely not the last, however, and the FBI and our partners will continue to uncover more schemes of this nature and being their perpetrators to justice,” stated FBI Assistant Director-in-Charge Driscoll.

“Our office will relentlessly investigate fraud schemes and pull them out by the roots,” stated SBA-OIG Special Agent-in-Charge McCall-Brathwaite.  “SBA’s PPP and EIDL programs are intended to provide assistance to the nation’s small businesses struggling with the pandemic challenges.  I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”

“The defendants in this case – two bank officials at a major financial institution and an accountant – are charged with misusing the bank’s operations for their personal benefit, in order to fraudulently obtain Government-guaranteed loans [which were intended to help small businesses during the current pandemic].  We remain committed to working with our law enforcement partners in investigating such cases where individuals seek to exploit Federal relief programs and threaten to undermine the integrity of our nation's banks,” stated FDIC Inspector General Lerner.

“We are fully committed to holding accountable any wrongdoers whose fraudulent actions impact the Federal Reserve Board’s ability to assist small businesses under the Paycheck Protection Program Liquidity Facility,” stated FRS-OIG Special Agent-in-Charge Donnelly.

The CARES Act is a federal law enacted on March 29, 2020 to provide emergency financial assistance in connection with economic effects of the COVID-19 pandemic.  One source of relief provided by the CARES Act was the allocation of funds for the issuance of forgivable loans to small businesses for job retention and certain other expenses through the PPP.  The PPP allowed qualifying small businesses to receive unsecured loans on favorable terms, which they were required to use for specified expenses, including payroll costs, interest on mortgages, rent and utilities.  The PPP provided for forgiveness of the loan if recipient businesses spent the proceeds on these specified expenses within a limited time period and used a certain percentage for payroll costs.

Another source of relief provided by the CARES Act was the EIDL program, which provided low-interest financing to small businesses, renters and homeowners in regions affected by declared disasters.  Under the program, EIDL recipients were eligible to receive advances of up to $10,000 for small businesses within three days of applying for an EIDL (EIDL Advance).  The amount of an EIDL Advance was determined based on the number of employees working for the applicant.  The EIDL Advance did not have to be repaid.

As alleged in the charging documents, Okeke, a branch manager at a large financial institution, Wint, a supervisor at the same branch, and Campbell, a tax preparer, along with their co-conspirators, provided false tax documents and helped borrowers to complete and submit PPP applications that contained fraudulent information.  Despite knowing that the PPP applications contained false statements, Okeke signed each PPP loan application on behalf of the bank and submitted them for approval.  Once the loan proceeds were disbursed to the borrowers, Okeke, Wint, Campbell and their co-conspirators received kickbacks from the loan proceeds.  Moreover, Okeke, Wint, Campbell and their co-conspirators were involved in preparing fraudulent EIDL applications that fabricated borrower’s financials, and at times sought loans for individuals who were not legitimate business owners.  

The charges in the complaint are allegations, and Okeke is presumed innocent unless and until proven guilty.

The government’s case is being handled by the Office’s Business and Securities Fraud Section and the Criminal Division’s Fraud Section.  Assistant United States Attorneys Julia Nestor, Chand Edwards-Balfour, and Lindsay Gerdes of the Eastern District of New York, and Trial Attorney Michael McCarthy of the Fraud Section are in charge of the prosecution, with assistance from Assistant United States Attorney Brian D. Morris of the Office’s Asset Forfeiture Section. 

The Defendants:

ANULI OKEKE
Age: 49
Bronx, New York

CHARLENE WINT
Age: 54
Bronx, New York

HASHIM CAMPBELL
Age: 41
New York, New York

E.D.N.Y. Docket Nos. 21-CR-477 (FB), 21-CR-478 (FB), and 21-CR-477 (FB)

Earlier today, Wanzhou Meng, Chief Financial Officer of Huawei Technologies Co., Ltd. (Huawei), appeared before U.S. District Judge Ann M. Donnelly in federal district court in Brooklyn, New York, for an arraignment on charges of conspiracy to commit bank fraud, conspiracy to commit wire fraud, bank fraud, and wire fraud, after she entered into a deferred prosecution agreement (DPA) with the United States Attorney’s Office for the Eastern District of New York, the Counterintelligence and Export Control Section of the Justice Department’s National Security Division (CES), and the Money Laundering and Asset Recovery Section of the Justice Department’s Criminal Division (MLARS) to resolve those charges.

Nicole Boeckmann, Acting United States Attorney for the Eastern District of New York, Acting Assistant Attorney General Mark J. Lesko of the Justice Department’s National Security Division, Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division, and Alan Kohler, Assistant Director, Federal Bureau of Investigation, Counterintelligence Division (FBI), announced the deferred prosecution agreement.

“In entering into the deferred prosecution agreement, Meng has taken responsibility for her principal role in perpetrating a scheme to defraud a global financial institution,” stated Acting U.S. Attorney Boeckmann.  “Her admissions in the statement of facts confirm that, while acting as the Chief Financial Officer for Huawei, Meng made multiple material misrepresentations to a senior executive of a financial institution regarding Huawei’s business operations in Iran in an effort to preserve Huawei’s banking relationship with the financial institution.  The truth about Huawei’s business in Iran, which Meng concealed, would have been important to the financial institution’s decision to continue its banking relationship with Huawei.  Meng’s admissions confirm the crux of the government’s allegations in the prosecution of this financial fraud—that Meng and her fellow Huawei employees engaged in a concerted effort to deceive global financial institutions, the U.S. government, and the public about Huawei’s activities in Iran.” 

“This Deferred Prosecution Agreement will lead to the end of the ongoing extradition proceedings in Canada, which otherwise could have continued for many months, if not years,” stated Acting Assistant Attorney General Lesko for the Justice Department’s National Security Division. “We are enormously grateful to Canada’s Department of Justice for its dedicated work on this extradition and for its steadfast adherence to the rule of law.”

“Financial institutions are our first line of defense in maintaining the safety and security of the U.S. financial system,” said Assistant Attorney General Polite of the Justice Department’s Criminal Division.  “That is why the law requires that companies who avail themselves of the U.S. financial system provide financial institutions with truthful information about their business operations. Meng Wanzhou, CFO of Huawei Technologies, admitted today that she failed to tell the truth about Huawei’s operations in Iran, and as a result the financial institution continued to do business with Huawei in violation of U.S. law. Our prosecution team continues to prepare for trial against Huawei, and we look forward to proving our case against the company in court.”   

“Meng's admissions are evidence of a consistent pattern of deception to violate U.S. law.  The FBI will continue to aggressively investigate companies doing business in the United States when there are signs they behave with contempt for our laws,” stated FBI Assistant Director Kohler.

The Scheme to Defraud Financial Institutions

According to court filings, and as agreed to by Meng in the DPA’s statement of facts, Skycom Tech. Co. Ltd. (“Skycom”) was a Hong Kong company that primarily operated in Iran.  As of February 2007, Skycom was wholly owned by a subsidiary of Huawei Technologies Co., Ltd. (“Huawei”), Hua Ying Management (“Hua Ying”).  In November 2007, Hua Ying transferred its shares of Skycom to another entity that Huawei controlled, Canicula Holdings (“Canicula”).  At the time Hua Ying transferred its Skycom shares to Canicula, Meng was the Secretary of Hua Ying.

In February 2008, after Huawei transferred ownership of Skycom from Hua Ying to Canicula, Meng joined Skycom’s Board of Directors, which was comprised of Huawei employees.  She served on the Board until April 2009.  After Meng departed from Skycom’s Board, Skycom’s Board members continued to be Huawei employees, Canicula continued to own Skycom, and Canicula continued to be controlled by Huawei.  As of August 2012, Huawei included Skycom among a list of “other Huawei subsidiaries” in Huawei corporate documents written in English.

Between 2010 and 2014, Huawei controlled Skycom’s business operations in Iran, and Skycom was owned by an entity controlled by Huawei.  All significant Skycom business decisions were made by Huawei.  Moreover, Skycom’s country manager—the head of the business—was a Huawei employee.  Individuals employed by Skycom believed they worked for Huawei. 

During the same time period, Huawei employees engaged with a U.K. staffing company to provide engineers in Iran to support Skycom’s work with Iranian telecommunications service providers.  Negotiations and contracting on behalf of Skycom were conducted by Huawei employees.  To pay for these contractors, Huawei sent at least $7.5 million to the U.K. staffing company in a series of approximately 80 payments from Skycom’s bank accounts in Asia, including at a multinational financial institution (“Financial Institution 1”), to the U.K. staffing company’s account in the United Kingdom.  The transactions were denominated in U.S. dollars and cleared through the United States.

In December 2012 and January 2013, various news organizations, including Reuters, reported that Skycom offered to sell “embargoed” equipment from a U.S. computer equipment manufacturer in Iran in potential violation of U.S. export controls law, and that Huawei had close ties with Skycom.  In a statement to Reuters published in a December 2012 article, Huawei claimed that Skycom was one of its “major local partners” in Iran.  Reuters reported that Huawei had further stated that “Huawei’s business in Iran is in full compliance with all applicable laws and regulations including those of the U.N., U.S. and E.U.  This commitment has been carried out and followed strictly by our company.  Further, we also require our partners to follow the same commitment and strictly abide by the relevant laws and regulations.”

In January 2013, a subsequent Reuters article reported that Meng had served on the Board of Directors of Skycom between February 2008 and April 2009 and identified other connections between Skycom directors and Huawei.  The article also quoted the following statement from Huawei: “The relationship between Huawei and Skycom is a normal business partnership. Huawei has established a trade compliance system which is in line with industry best practices and our business in Iran is in full compliance with all applicable laws and regulations including those of the UN. We also require our partners, such as Skycom, to make the same commitments.”  This statement was incorrect, as Huawei operated and controlled Skycom; Skycom was therefore not Huawei’s business “partner.”

After these articles were published, Financial Institution 1 and other global financial institutions that provided international banking services to Huawei (collectively, the “Financial Institutions”), including U.S. dollar-clearing, made inquiries to Huawei in response to the above-described press reports.  In early 2013, Huawei employees represented to the Financial Institutions that Skycom was just a local business partner of Huawei in Iran and that Skycom had not conducted Iran-related transactions using its accounts at the Financial Institutions.

To address the allegations in the news reports, Huawei requested an in-person meeting with a senior Financial Institution 1 employee.  That meeting occurred on August 22, 2013 in Hong Kong, at which time Meng met with an executive of Financial Institution 1 responsible for operations in the Asia Pacific region.  During the meeting, Meng delivered a PowerPoint presentation written in Chinese, which was translated by an interpreter into English.  Meng stated that she was using an interpreter to be precise in her language.

In her presentation, Meng stated, among other things, that Huawei’s relationship with Skycom was “normal business cooperation” and “normal and controllable business cooperation,” and she described Skycom as a “partner,” a “business partner of Huawei,” and a “third party Huawei works with” in Iran.  Those statements were untrue because, as Meng knew, Skycom was not a business partner of, or a third party working with, Huawei; instead, Huawei controlled Skycom, and Skycom employees were really Huawei employees.  It would have been material to Financial Institution 1 to know that Huawei controlled Skycom.

In addition, Meng stated that Huawei “was once a shareholder of Skycom” but had “sold all its shares in Skycom.”  Those statements were untrue, because, as Meng knew, Huawei had “sold” its shares to an entity that Huawei controlled. Specifically, Huawei transferred Skycom shares from a Huawei subsidiary (Hua Ying) to another entity that was controlled by Huawei (Canicula).  It would have been material to Financial Institution 1 to know that Skycom was transferred from one Huawei-controlled entity to another.

Finally, Meng stated that Huawei “operates in Iran in strict compliance with applicable laws, regulations and sanctions” and that “there has been no violation of export control regulations” by “Huawei or any third party Huawei works with.”  These statements were untrue because Huawei’s operation of Skycom, which caused the Financial Institutions to provide prohibited services, including banking services, for Huawei’s Iran-based business while Huawei concealed Skycom’s link to Huawei, was in violation of the U.S. Department of the Treasury’s Office of Foreign Assets Control’s Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560.  Moreover, between 2010 and 2014, Huawei caused Skycom to conduct approximately $100 million worth of U.S.-dollar transactions through Financial Institution 1 that cleared through the United States, at least some of which supported its work in Iran in violation of U.S. law, including $7.5 million for Iran-based contractors from the U.K. staffing company to do work in Iran.

At no point during or after the meeting did Meng, who was aware of Huawei’s public statements about Skycom in Reuters, retract or amend any of those statements.  Moreover, Huawei’s Treasurer, who also attended the August Meeting, did not correct or amend any of the statements made by Meng.

Shortly after the meeting between Meng and Financial Institution 1, Huawei prepared an English version of the PowerPoint presentation at Financial Institution 1’s request.  Meng later arranged for a paper copy of that PowerPoint presentation to be delivered to the Financial Institution 1 executive she had met with in September 2013.  The representations in the English version of the PowerPoint presentation closely tracked the ones Meng had made during the meeting.

After the meeting and subsequent to receipt of Meng’s PowerPoint presentation, Financial Institution 1 decided to continue its relationship with Huawei.  The other Financial Institutions similarly continued their respective relationships with Huawei.

The DPA

Under the terms of the DPA, Meng has agreed to the accuracy of a four-page statement of facts that details the knowing false statements she made to Financial Institution 1.  Meng also has agreed not to commit other federal, state, or local crimes.  If Meng breaches the agreement, she will be subject to prosecution of all of the charges against her in the third superseding indictment filed in this case.  The government also agreed to withdraw its request to the Ministry of Justice of Canada that Meng be extradited to the United States. 

Assistant U.S. Attorneys Alexander A. Solomon, Julia Nestor, David K. Kessler, Sarah M. Evans, and Meredith A. Arfa, MLARS Trial Attorneys Laura Billings and Christian Nauvel, and CES Trial Attorneys Thea D. R. Kendler, David Lim and R. Elizabeth Abraham are in charge of the prosecution, with assistance provided by Assistant U.S. Attorneys Brian Morris and Brendan King of the Eastern District of New York’s Civil Division and Trial Attorneys Andrew Finkelman, Margaret O’Malley, and John Reisenberg of DOJ’s Office of International Affairs.

The Defendant:

WANZHOU MENG
Age:  49
People’s Republic of China

E.D.N.Y. Docket No. 18-CR-457 (S-3) (AMD)

The Chief Financial Officer of Huawei Technologies Co. Ltd., Wanzhou Meng, 49, of the People’s Republic of China (PRC), appeared today in federal district court in Brooklyn, entered into a deferred prosecution agreement (DPA) and was arraigned on charges of conspiracy to commit bank fraud and conspiracy to commit wire fraud, bank fraud and wire fraud.

“In entering into the deferred prosecution agreement, Meng has taken responsibility for her principal role in perpetrating a scheme to defraud a global financial institution,” said Acting U.S. Attorney Nicole Boeckmann for the Eastern District of New York. “Her admissions in the statement of facts confirm that, while acting as the Chief Financial Officer for Huawei, Meng made multiple material misrepresentations to a senior executive of a financial institution regarding Huawei’s business operations in Iran in an effort to preserve Huawei’s banking relationship with the financial institution. The truth about Huawei’s business in Iran, which Meng concealed, would have been important to the financial institution’s decision to continue its banking relationship with Huawei. Meng’s admissions confirm the crux of the government’s allegations in the prosecution of this financial fraud — that Meng and her fellow Huawei employees engaged in a concerted effort to deceive global financial institutions, the U.S. government and the public about Huawei’s activities in Iran.”

“This Deferred Prosecution Agreement will lead to the end of the ongoing extradition proceedings in Canada, which otherwise could have continued for many months, if not years,” said Acting Assistant Attorney General Mark J. Lesko for the Justice Department’s National Security Division. “We are enormously grateful to Canada’s Department of Justice for its dedicated work on this extradition and for its steadfast adherence to the rule of law.”

“Financial institutions are our first line of defense in maintaining the safety and security of the U.S. financial system,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “That is why the law requires that companies who avail themselves of the U.S. financial system provide financial institutions with truthful information about their business operations. Meng Wanzhou, CFO of Huawei Technologies, admitted today that she failed to tell the truth about Huawei’s operations in Iran, and as a result the financial institution continued to do business with Huawei in violation of U.S. law. Our prosecution team continues to prepare for trial against Huawei, and we look forward to proving our case against the company in court.”   

“Meng's admissions are evidence of a consistent pattern of deception to violate U.S. law,” said Assistant Director Alan E. Kohler Jr. of the FBI’s Counterintelligence Division. “The FBI will continue to aggressively investigate companies doing business in the United States when there are signs they behave with contempt for our laws.”

The Scheme to Defraud Financial Institutions

According to court documents, and as agreed to by Meng in the DPA’s statement of facts, Skycom Tech. Co. Ltd. (Skycom) was a Hong Kong company that primarily operated in Iran. As of February 2007, Skycom was wholly owned by a subsidiary of Huawei Technologies Co., Ltd. (Huawei), Hua Ying Management (Hua Ying). In November 2007, Hua Ying transferred its shares of Skycom to another entity that Huawei controlled, Canicula Holdings (Canicula). At the time Hua Ying transferred its Skycom shares to Canicula, Meng was the Secretary of Hua Ying.

In February 2008, after Huawei transferred ownership of Skycom from Hua Ying to Canicula, Meng joined Skycom’s Board of Directors, which was comprised of Huawei employees. She served on the Board until April 2009. After Meng departed from Skycom’s Board, Skycom’s Board members continued to be Huawei employees, Canicula continued to own Skycom, and Canicula continued to be controlled by Huawei. As of August 2012, Huawei included Skycom among a list of “other Huawei subsidiaries” in Huawei corporate documents written in English.

Between 2010 and 2014, Huawei controlled Skycom’s business operations in Iran, and Skycom was owned by an entity controlled by Huawei. All significant Skycom business decisions were made by Huawei. Moreover, Skycom’s countrymanager – the head of the business – was a Huawei employee. Individuals employed by Skycom believed they worked for Huawei.

During the same time period, Huawei employees engaged with a U.K. staffing company to provide engineers in Iran to support Skycom’s work with Iranian telecommunications service providers. Negotiations and contracting on behalf of Skycom were conducted by Huawei employees. To pay for these contractors, Huawei sent at least $7.5 million to the U.K. staffing company in a series of approximately 80 payments from Skycom’s bank accounts in Asia, including at a multinational financial institution (Financial Institution 1), to the U.K. staffing company’s account in the United Kingdom. The transactions were denominated in U.S. dollars and cleared through the United States.

In December 2012 and January 2013, various news organizations, including Reuters, reported that Skycom offered to sell “embargoed” equipment from a U.S. computer equipment manufacturer in Iran in potential violation of U.S. export controls law, and that Huawei had close ties with Skycom. In a statement to Reuters published in a December 2012 article, Huawei claimed that Skycom was one of its “major local partners” in Iran. Reuters reported that Huawei had further stated that “Huawei’s business in Iran is in full compliance with all applicable laws and regulations including those of the U.N., U.S. and E.U. This commitment has been carried out and followed strictly by our company. Further, we also require our partners to follow the same commitment and strictly abide by the relevant laws and regulations.”

In January 2013, a subsequent Reuters article reported that Meng served on the Board of Directors of Skycom between February 2008 and April 2009 and identified other connections between Skycom directors and Huawei. The article also quoted the following statement from Huawei: “The relationship between Huawei and Skycom is a normal business partnership. Huawei has established a trade compliance system which is in line with industry best practices and our business in Iran is in full compliance with all applicable laws and regulations including those of the UN. We also require our partners, such as Skycom, to make the same commitments.” This statement was incorrect, as Huawei operated and controlled Skycom; Skycom was therefore not Huawei’s business “partner.”

After these articles were published, Financial Institution 1 and other global financial institutions that provided international banking services to Huawei (collectively, the “Financial Institutions”), including U.S. dollar-clearing, made inquiries to Huawei in response to the above-described press reports. In early 2013, Huawei employees represented to the Financial Institutions that Skycom was just a local business partner of Huawei in Iran and that Skycom had not conducted Iran-related transactions using its accounts at the Financial Institutions.

To address the allegations in the news reports, Huawei requested an in-person meeting with a senior Financial Institution 1 employee. That meeting occurred on Aug. 22, 2013 in Hong Kong, at which time Meng met with an executive of Financial Institution 1 responsible for operations in the Asia Pacific region. During the meeting, Meng delivered a PowerPoint presentation written in Chinese, which was translated by an interpreter into English. Meng stated that she was using an interpreter to be precise in her language.

In her presentation, Meng stated, among other things, that Huawei’s relationship with Skycom was “normal business cooperation” and “normal and controllable business cooperation,” and she described Skycom as a “partner,” a “business partner of Huawei,” and a “third party Huawei works with” in Iran. Those statements were untrue because, as Meng knew, Skycom was not a business partner of, or a third party working with, Huawei; instead, Huawei controlled Skycom, and Skycom employees were really Huawei employees. It would have been material to Financial Institution 1 to know that Huawei controlled Skycom.

In addition, Meng stated that Huawei “was once a shareholder of Skycom” but had “sold all its shares in Skycom.” Those statements were untrue, because, as Meng knew, Huawei had “sold” its shares to an entity that Huawei controlled. Specifically, Huawei transferred Skycom shares from a Huawei subsidiary (Hua Ying) to another entity that was controlled by Huawei (Canicula). It would have been material to Financial Institution 1 to know that Skycom was transferred from one Huawei-controlled entity to another.

Finally, Meng stated that Huawei “operates in Iran in strict compliance with applicable laws, regulations and sanctions” and that “there has been no violation of export control regulations” by “Huawei or any third party Huawei works with.” These statements were untrue because Huawei’s operation of Skycom, which caused the Financial Institutions to provide prohibited services, including banking services, for Huawei’s Iran-based business while Huawei concealed Skycom’s link to Huawei, was in violation of the U.S. Department of the Treasury’s Office of Foreign Assets Control’s Iranian Transactions and Sanctions Regulations, 31 C.F.R. Part 560. Moreover, between 2010 and 2014, Huawei caused Skycom to conduct approximately $100 million worth of U.S.-dollar transactions through Financial Institution 1 that cleared through the United States, at least some of which supported its work in Iran in violation of U.S. law, including $7.5 million for Iran-based contractors from the U.K. staffing company to do work in Iran.

At no point during or after the meeting did Meng, who was aware of Huawei’s public statements about Skycom in Reuters, retract or amend any of those statements. Moreover, Huawei’s Treasurer, who also attended the August meeting, did not correct or amend any of the statements made by Meng.

Shortly after the meeting between Meng and Financial Institution 1, Huawei prepared an English version of the PowerPoint presentation at Financial Institution 1’s request. Meng later arranged for a paper copy of that PowerPoint presentation to be delivered to the Financial Institution 1 executive she had met with in September 2013. The representations in the English version of the PowerPoint presentation closely tracked the ones Meng had made during the meeting.

After the meeting and subsequent to receipt of Meng’s PowerPoint presentation, Financial Institution 1 decided to continue its relationship with Huawei. The other Financial Institutions similarly continued their respective relationships with Huawei.

The DPA

Under the terms of the DPA, Meng has agreed to the accuracy of a four-page statement of facts that details the knowingly false statements she made to Financial Institution 1. Meng also has agreed not to commit other federal, state or local crimes. If Meng breaches the agreement, she will be subject to prosecution of all the charges against her in the third superseding indictment filed in this case. The government also agreed to withdraw its request to the Ministry of Justice of Canada that Meng be extradited to the United States.

Assistant U.S. Attorneys Alexander A. Solomon, Julia Nestor, David K. Kessler, Sarah M. Evans and Meredith A. Arfa for the Eastern District of New York; Trial Attorneys Laura Billings and Christian Nauvel for the Criminal Division’s Money Laundering and Asset Recovery Section; and Trial Attorneys Thea D. R. Kendler, David Lim and R. Elizabeth Abraham of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case. Valuable assistance was provided by Assistant U.S. Attorneys Brian Morris and Brendan King of the Eastern District of New York’s Civil Division and Associate Director John Riesenberg, Attaché Andrew Finkelman of U.S. Embassy Paris and former Trial Attorney Margaret O’Malley of the Justice Department’s Office of International Affairs.

Today, the United States has returned to the Republic of Iraq a rare cuneiform tablet bearing a portion of the epic of Gilgamesh, a Sumerian poem considered one of the world’s oldest works of literature, at a repatriation ceremony at the Smithsonian Institution’s Museum of the American Indian in Washington, D.C.  Known as the Gilgamesh Dream Tablet, the artifact originated in the area of modern-day Iraq and entered the United States contrary to federal law.  An international auction house (the “Auction House”) later sold the tablet to Hobby Lobby Stores, Inc. (“Hobby Lobby”), a prominent arts-and-crafts retailer based in Oklahoma City, Oklahoma, for display at the Museum of the Bible (the “Museum”).  Law enforcement agents seized the tablet from the Museum in September 2019.

Acting Executive Associate Director Steve K. Francis of the Department of Homeland Security, Homeland Security Investigations (HSI) and Iraq’s Ambassador to the United States Fareed Yasseen signed a ceremonial certificate transferring ownership of the artifact from the United States to Iraq. Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; Acting Principal Deputy Assistant Secretary Stacy White of the State Department’s Bureau of Educational and Cultural Affairs; Principal Deputy Assistant Secretary of State for Near Eastern Affairs Joey Hood; Minister of Culture, Tourism and Antiquities Hassan Nadhem; Director-General Audrey Azoulay of the United Nations Educational, Scientific and Cultural Organization; and Ambassador-at-large Richard Kurin for the Smithsonian Institution also participated in the repatriation ceremony.

The U.S. Attorney’s Office for the Eastern District of New York and the Department of Justice’s Money Laundering and Asset Recovery Section (MLARS) worked with HSI to forfeit the tablet in July 2021.

“This Office is proud to have played a central role in making this rare and ancient cuneiform tablet available for repatriation to its country of origin and the people of Iraq,” stated Jacquelyn M. Kasulis, Acting U.S. Attorney for the Eastern District of New York.  “We will continue to use our civil forfeiture laws to combat the illegal sale of cultural treasures so that they may be restored to their rightful place in a country’s history.”  

“We hope that returning the Gilgamesh Dream Tablet to the Republic of Iraq is a message to the people of Iraq, and to the world, that the United States government will take action to seize and repatriate antiquities and other significant items of cultural heritage that have been unlawfully brought into the United States,” stated Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division.

“Today, Iraq is reclaiming a piece of its cultural history,” stated HSI New York Special Agent-in-Charge Peter C. Fitzhugh. “We are honored to have played a role in the repatriation of this rare tablet that was pillaged from Iraq, only to be sold without a valid provenance and any regard for his cultural value.  HSI New York’s Cultural Property, Arts and Antiquity Investigations program will continue to work tirelessly to interrupt the criminal activities of those who loot antiquities and seek to profit off the theft of a country’s rich history.”

Background

As alleged in the government’s amended complaint, in 2003, a U.S. antiquities dealer (“the Antiquities Dealer”) purchased the Gilgamesh Dream Tablet, encrusted with dirt and unreadable, from a family member of a coin dealer in London. The Antiquities Dealer and a U.S. cuneiform expert shipped the Gilgamesh Dream Tablet to the United States without declaring formal entry. After it was imported and cleaned, experts in cuneiform recognized it as bearing a portion of the Gilgamesh epic in which the protagonist describes his dreams to his mother. The protagonist’s mother interprets the dreams as foretelling the arrival of a new friend. She tells her son, “You will see him and your heart will laugh.” The names of the hero, Gilgamesh, and the character who becomes his friend, Enkidu, are replaced in the Gilgamesh Dream Tablet with the names of deities Sin and Ea. The Gilgamesh Dream Tablet measures approximately 6-inches by 5-inches and is written in the Akkadian language, which was spoken in ancient Mesopotamia.

In 2007, the Antiquities Dealer sold the Gilgamesh Dream Tablet with a false provenance letter that stated that the tablet had been among miscellaneous ancient bronze fragments purchased in a 1981 auction. This false letter traveled with the Gilgamesh Dream Tablet as it was sold several times in different countries, and a later owner provided the letter to the Auction House in London. In 2014, the Auction House sold the Gilgamesh Dream Tablet to Hobby Lobby in a private sale and an Auction House employee carried it on a flight from London to the United States and then transferred it to New York.  Hobby Lobby consented to the tablet’s forfeiture based on the tablet’s illegal importation into the United States in 2014.

The government’s case was handled by Assistant United States Attorney Sylvia Shweder and Senior Trial Attorney Ann Brickley of MLARS.

E.D.N.Y. Docket No.: 20-CV-2222 (AMD)

Earlier today, in federal court in Central Islip, Eduardo Portillo, also known as “Firuli” and “Tito” (Portillo), a member of the violent transnational criminal organization La Mara Salvatrucha, also known as the “MS-13,” pleaded guilty to racketeering charges relating to his participation in the murder of 15-year-old Javier Castillo, and to conspiring to distribute cocaine and marijuana.  The guilty plea was entered before United States Circuit Judge Joseph F. Bianco.  

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Stuart Cameron, Acting Commissioner, Suffolk County Police Department (SCPD), announced the guilty plea.

“With today’s guilty plea, the defendant, an MS-13 gang member, admits to an utterly depraved and heinous crime, of taking turns with a machete to hack a teenage boy to death, simply because he believed the boy belonged to a rival gang,” stated Acting U.S. Attorney Kasulis.  “This Office and its law enforcement partners in New York and El Salvador are committed to stopping the violence of MS-13 gang members and bringing an end to their reign of brutality and murder in this district.  It is my hope that today’s plea brings some measure of closure to the family members of the young victim.”  Ms. Kasulis expressed her grateful appreciation to the investigators and analysts from the FBI’s Transnational Anti-Gang (TAG) Unit in El Salvador, the FBI’s Long Island Gang Task Force for their outstanding collaboration in locating and apprehending this fugitive, as well as the Justice Department’s Office of International Affairs for their partnership in this case.

“Eduardo Portillo violently participated in taking the life of another teen as well as fed the drug epidemic plaguing our community,” stated SCPD Acting Commissioner Cameron.  “This guilty plea is another step in the fight against gang violence and drug addiction in our county. Members of the department will continue to work with the Eastern District of New York and our law enforcement partners to put violent criminals behind bars and bring justice to the victims and their families.”  

As set forth in prior court filings and the defendant’s statements during his guilty plea, Portillo and his fellow MS-13 members targeted Castillo because he was believed to be a member of the 18th Street gang, one of MS-13’s principal rivals.  On October 10, 2016, Portillo and other Brentwood-based members of the Sailors Locos Salvatruchas Westside (Sailors) clique of the MS-13 convinced Castillo, who lived in Central Islip, to go with them to Freeport – approximately 30 miles away – to smoke marijuana.  They lured Castillo to an isolated marsh area in Cow Meadow Park in Freeport, where they attacked him, taking turns hacking the victim with a machete.  Afterwards, the MS-13 members dug a hole and buried Castillo’s body, which was not recovered until one year later, in October 2017.

Portillo also pleaded guilty to participating in a drug trafficking conspiracy, admitting that between April 2016 and March 2017, he and other members of the Sailors clique conspired to distribute cocaine and marijuana in the Brentwood area to raise money for the MS-13 and fund its operations.

Portillo was arrested in Morazán, El Salvador on February 23, 2019 and extradited to the United States on November 6, 2020. 

Today’s conviction is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent, transnational criminal organization.  The MS-13’s leadership is based in El Salvador, Honduras, Guatemala and Mexico, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America.  With numerous branches, or “cliques,” the MS-13 is the most violent criminal organization on Long Island.  Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York.  A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders and assaults.  Since 2010, this Office has obtained indictments charging MS-13 members with carrying out more than 60 murders in the Eastern District of New York and has convicted dozens of MS-13 leaders and members in connection with those murders.  These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, which is comprised of agents and officers of the FBI, SCPD, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation Office, Suffolk County Sheriff’s Office, the New York State Police, the Hempstead Police Department, the Rockville Centre Police Department, and the New York State Department of Corrections and Community Supervision. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Paul G. Scotti, Justina L. Geraci, Megan E. Farrell, and John J. Durham are in charge of the prosecution.

The Defendant:

EDUARDO PORTILLO (“Firuli” and “Tito”)
Age: 24
Residence: San Francisco Gotera, Morazán, El Salvador; formerly of Central Islip and Brentwood, New York

Earlier today, in federal court in Central Islip, Nelson Argueta-Quintanilla, a member of the Sailors Locos Salvatruchas Westside (Sailors) clique of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, pleaded guilty to racketeering charges relating to his participation in the murder of Oscar Acosta, the attempted murder of suspected rival gang members and a conspiracy to distribute cocaine and marijuana.  The guilty plea was entered before United States Circuit Judge Joseph F. Bianco.  

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Stuart Cameron, Acting Commissioner, Suffolk County Police Department (SCPD), announced the guilty plea.

“With today’s guilty plea, the defendant, a member of the notorious MS-13, admits to being an active participant in a brutal murder in which the victim was viciously stabbed with a machete after being beaten, bound and thrown in the trunk of a car.  In addition, compounding his wanton disregard for human life, the defendant also admits to attempting to murder rival gang members by approaching the outside of a home where they were standing and opening fire on them,” stated Acting U.S. Attorney Kasulis.  “This Office and the Long Island Gang Task Force are deeply committed to dismantling the MS-13 and eliminating the threat of their senseless violence from our communities.”

“This guilty plea will ensure that yet another violent member of MS-13, who has no regard for human life, will be imprisoned for his senseless, brutal crimes,” stated SCPD Acting Commissioner Cameron said. “I would like to commend the Long Island Gang Task Force and Eastern District of New York for their unwavering commitment to holding gang members accountable and keeping our residents safe. We will continue to combine resources to rid our communities of gang violence.”

As set forth in prior court filings and the defendant’s statements during his guilty plea, Argueta-Quintanilla and other MS-13 members decided to kill Acosta in 2016 because they suspected that he was associating with the rival 18th Street gang.  The Sailors clique leader assigned roles as to which members would take the lead in planning and carrying out the murder.  On April 29, 2016, Argueta-Quintanilla and other MS-13 members encountered Acosta in a wooded area near an elementary school in Brentwood where he was lured under the guise of smoking marijuana.  Argueta-Quintanilla and the other MS-13 members brutally beat Acosta with tree limbs, knocking him unconscious.  Then they tied Acosta’s hands and feet, wrapped an article of clothing around his mouth, to prevent him from making noise and summoned other MS-13 members.  The MS-13 members loaded Acosta into the trunk of a car and drove to a more secluded area in Brentwood near an abandoned psychiatric hospital.  They took Acosta, who was still alive, out of the car and carried him into the woods where they stabbed and slashed him to death with a machete.  The MS-13 members buried Acosta’s body in a shallow grave, which was discovered in September 2016.

In addition, on August 10, 2016, Argueta-Quintanilla and other MS-13 members attempted to kill suspected rival gang members in Brentwood.  Argueta-Quintanilla and another MS-13 member, both of whom were armed with handguns, approached a house on Lukens Avenue where the suspected rival gang members were standing outside and fired numerous shots in their direction.  No one was struck, but a stray bullet entered a neighbor’s house and struck the headboard of a bed in which the neighbor was sleeping.  Argueta-Quintanilla also pleaded guilty to participating in a drug conspiracy, admitting that between April 2016 and October 2017, he and other members of the Sailors clique conspired to distribute cocaine and marijuana to raise money for the MS-13.

Today’s conviction is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent, transnational criminal organization.  The MS-13’s leadership is based in El Salvador, Honduras, Guatemala and Mexico, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America.  With numerous branches, or “cliques,” the MS-13 is the most violent criminal organization on Long Island.  Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York.  A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders and assaults.  Since 2010, this Office has obtained indictments charging MS-13 members with carrying out more than 60 murders in the Eastern District of New York and has convicted dozens of MS-13 leaders and members in connection with those murders.  These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, which is comprised of agents and officers of the FBI, SCPD, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation Office, Suffolk County Sheriff’s Office, the New York State Police, the Hempstead Police Department, the Rockville Centre Police Department and the New York State Department of Corrections and Community Supervision. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys John J. Durham, Paul G. Scotti, Justina L. Geraci and Megan E. Farrell are in charge of the prosecution.

The Defendant:

NELSON ARGUETA-QUINTANILLA (also known as “Mendigo”)
Age: 24 
Brentwood, New York

E.D.N.Y. Docket No. 16-CR-403 (S-7)(JFB)

Earlier today, in federal court in Brooklyn, Christopher Walker, a licensed urogynecologist, pleaded guilty to participating in a scheme involving the payment of bribes and kickbacks to obtain referrals of female patients across the United States for surgeries to remove transvaginal mesh (TVM) implants.  Wesley Blake Barber, an owner of Surgical Assistance Inc., pleaded guilty on September 14, 2021 to participating in the same scheme.  Both proceedings took place before United States District Judge Raymond J. Dearie. 

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI) announced the guilty pleas.

“With these guilty pleas, both defendants have admitted to participating in a reprehensible bribery and kickback scheme to exploit women across the country in connection with costly transvaginal mesh removal surgeries,” stated Acting United States Attorney Kasulis.  “This Office, the Department of Justice and the FBI are committed to investigating and prosecuting medical professionals and others who take advantage of vulnerable victims for their own illegal gain and personal profit.”

According to court filings and facts presented at the plea proceeding, Barber and Walker sought to profit in connection with lawsuits filed throughout the United States relating to alleged harm that TVM implants had caused female patients.  The scheme sought to take advantage of the fact that female patients who had their TVM implants surgically removed were entitled to receive larger settlements than female patients whose inserts remained implanted.  As part of the scheme, Walker and others paid kickbacks and bribes to Barber in exchange for the referral of female patients for these surgeries, including patients who traveled across the United States to undergo the surgeries.

When sentenced, Walker faces up to 10 years in prison and has agreed to forfeit approximately $800,000.  Barber faces up to 5 years in prison and has agreed to forfeit approximately $1.1 million.  

The government’s case is being prosecuted by Assistant United States Attorneys Elizabeth Geddes and Sarah Evans and Trial Attorney Andrew Estes of the Criminal Division’s Fraud Section.

The Defendants:

WESLEY BLAKE BARBER
Age:  51
Detroit, Michigan

CHRISTOPHER WALKER
Age:  49
Windermere, Florida

E.D.N.Y. Docket No. 19-CR-239 (RJD)

Michael Calabria, Joseph Keegan and Casey Silver pleaded guilty yesterday in federal court in Central Islip to criminal copyright infringement.  Calabria and Keegan were principals of Constructure Technologies, LLC (“Constructure”), located in Melville, New York, and Silver was a Constructure employee.  The charge relates to the defendants’ installing unlicensed versions of software by using “cracking” programs or “key generators,” which allowed Constructure employees to activate copies of the software without paying for a license and obtaining a key.  In addition to the guilty pleas, Constructure itself is charged with a felony violation of the Digital Millennium Copyright Act (“DMCA”) and agreed to pay a $60,000 fine.  The fine is part of a deferred prosecution agreement that Constructure has entered into with the United States Attorney’s Office for the Eastern District of New York. The relevant portion of the DMCA prohibits the criminal circumvention of copyright protection systems, including encryption systems. 

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty pleas and deferred prosecution agreement.

“With the guilty pleas and deferred prosecution agreement, Constructure and the individual defendants admit to committing a high-tech theft by installing unlicensed software they didn’t pay for, and cheating software companies of license fees they were owed,” stated Acting U.S. Attorney Kasulis.  “Protecting intellectual property rights is an important priority of this Office, and we will continue to investigate and prosecute those who ignore those rights for their own profit.”  Ms. Kasulis also thanked the Suffolk County Police Department and VMWare for their valuable assistance with the case.

“We install software on our computers to protect us from hackers and criminals. Software companies are constantly updating and fixing programs with patches to stay one step ahead of the bad actors who work non-stop to exploit vulnerabilities.  The three employees who are pleading guilty in this investigation only saw the profit they could make if they gamed the system.  Users paying for security software should be able to rely on the legitimacy of it,” stated FBI Assistant Director-in-Charge Driscoll.

The Scheme to Circumvent Copyright Protection Systems

According to court filings, Constructure provided information technology services, helping install, manage and service various networks and other technology products for small and medium sized businesses.  Calabria was Constructure’s President, Keegan was the Chief Technology Officer, and Silver was a Project Manager.

Between 2011 and 2018, Constructure sold, installed and provided services for computer programs that were copyrighted and then sold by software companies (“Victim Software Companies”), including VMWare, a global cloud computing software company.  Some of those computer programs were designed so that they could not be activated until a user paid the company for a “license” to use that software.  In purchasing a license, the user received a “key”—a string of letters, numbers and symbols—that, when entered into the copy of software obtained by the user, activated the software.  Constructure’s clients generally paid Constructure to purchase licenses for such computer programs and to activate those programs with a legitimate license key.

Starting in or about 2011, Calabria, Keegan, and Silver helped to operate Constructure’s business in part by installing unlicensed versions of software from Victim Software Companies by using cracking programs or key generators, which allowed Constructure to activate copies of the software without paying for a license and obtaining a key.  Constructure employees, often at the express direction of Calabria or Keegan, used cracking programs or key generators to install software from multiple Victim Software Companies. 

Constructure employees, including Keegan, obtained license keys and cracking programs from the Internet.  They also tested those programs on a computer server located in the basement of Constructure’s office in Melville and on a file-sharing site controlled by Constructure, so that the programs could be used remotely by Constructure employees. 

By installing working, but unlicensed, versions of software, Constructure was able to bill a customer for the software, under the pretense that Constructure purchased a copy on behalf of the customer, while not actually paying for it.  Constructure employees did not inform Constructure’s clients or the Victim Software Companies that Constructure employees used “cracks” to install those programs. 

From approximately 2011 to approximately 2018, Constructure employees installed cracked software programs for multiple clients, including clients located in Hicksville, New York; Mineola, New York; Manhattan, New York; and Bridgewater, New Jersey.

When sentenced, each defendant faces up to one year in prison and a fine. 

The Deferred Prosecution Agreement and Criminal Information as to Constructure

Under the terms of the deferred prosecution agreement, Constructure will pay a criminal penalty of $60,000 and maintain a compliance and ethics program designed to prevent and detect violations of the DMCA and other applicable laws.  If the company breaches the agreement, it will be subject to prosecution for the charge in the criminal information that was filed today, charging Constructure with a criminal violation of the DMCA. 

The government’s case is being handled by the Office’s the National Security and Cybercrime Section and the Cybercrime Task Force.  Assistant United States Attorney David K. Kessler is in charge of the prosecution.   

The Eastern District of New York’s Cybercrime Task Force was formed in May 2021 to combat cybercrime, which is proliferating in the United States, including in this district, as well as internationally.  The Task Force’s goals are to initiate cybercrime investigations and prosecutions, disseminate information about emerging cybercrime issues and trends, and heighten awareness about a wide variety of cybercrime schemes.  The Task Force works with our traditional law enforcement partners, including the FBI, the United States Secret Service, Homeland Security Investigations and the Cybersecurity and Infrastructure Security Agency, as well as the Drug Enforcement Administration.  The Task Force also coordinates with regulatory partners, including the U.S. Securities & Exchange Commission and the Federal Trade Commission, as well as state and local counterparts, such as the New York State Department of Financial Services, New York City Cyber Command and the New York City Police Department.

The Defendants:

CONSTRUCTURE TECHNOLOGIES, LLC

MICHAEL CALABRIA
Age:  49
Manorville, New York

JOSEPH KEEGAN
Age:  46
Merrick, New York

CASEY SILVER
Age:  36
Stamford, Connecticut

E.D.N.Y. Docket No. 21-CR-368 (JS)

A nine-count superseding indictment was filed today in federal court in Brooklyn charging Darrius Sutton, also known as “Blizz Meecho,” with violent crimes in-aid-of racketeering — including attempted murder and related firearms offenses.  Sutton is already in federal custody following his arrest in July 2020 on charges of being a felon in possession of ammunition.  He will be arraigned on the superseding indictment at a later date.  

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Dermot F. Shea, Commissioner, New York City Police Department (NYPD), announced the superseding indictment.

“As alleged in the superseding indictment, the defendant terrorized the East New York neighborhood of Brooklyn by engaging in armed warfare with rival gangs, and innocent bystanders were caught in the crossfire,” stated Acting U.S. Attorney Kasulis.  “This Office is working tirelessly with our law enforcement partners to take violent gang members off the street and put an end to senseless violence plaguing communities in the district.” 

“Members of criminal gangs often don’t fear the consequences of their actions, but Mr. Sutton now faces a long stay in federal prison for his alleged crimes. Our FBI Metro Safe Streets Task Force and law enforcement partners haven’t backed off our pursuit of these groups and stopping the chaos gangs create,” stated FBI Assistant Director-in-Charge Driscoll. 

“This case highlights the NYPD’s and our law enforcement partners relentless pursuit of those few individuals who drive the worst kinds of violence and disorder in the city.  I want to thank our colleagues at the FBI and the United States Attorney’s Office for the Eastern District of New York for their commitment in bringing this individual to justice,” stated NYPD Commissioner Shea.

As set forth in court filings, Sutton is a member of an East New York-based gang called “Bamalife,” which has ongoing and violent rivalries with other gangs in East New York and elsewhere in Brooklyn. The charges in the superseding indictment relate to three non-fatal shootings in East New York in which four individuals were wounded.

The August 11, 2019 Shooting

As alleged, on August 11, 2019, Sutton attended a party at a rental hall located at 2529 Atlantic Avenue in East New York, Brooklyn.  Surveillance video and other evidence established that shortly after Sutton left the party, he confronted a member of a rival gang who was also leaving the party.  Sutton demanded to know if the victim was a member of the rival gang; Sutton began shooting and pursuing the intended victim as the victim attempted to flee.  In addition to striking his intended victim in the forearms and groin, Sutton’s gunfire also wounded an innocent bystander in the leg.   

The April 20, 2020 Shooting

As alleged, on April 20, 2020, Sutton ambushed a victim in the vicinity of 375 Sheffield Avenue in East New York, Brooklyn.  Surveillance video shows Sutton approaching the victim undetected from behind, drawing his weapon, firing several shots and striking the male in the chest, thigh and wrist.  

The May 16, 2020 Shooting

As alleged, on May 16, 2020, Sutton shot a member of a rival gang in the vicinity of 2211 Pitkin Avenue in East New York, Brooklyn.  Surveillance video shows two cars pulling up to a location approximately four blocks from the scene of the shooting.  Sutton exited one of the cars and walked to 2211 Pitkin Avenue, where members of a rival gang are known to congregate.  Sutton entered the lobby of the building with a firearm in his hand.  Moments later, Sutton shot the victim in the courtyard of the building.  

This case is being prosecuted as part of the joint federal, state, and local Project Safe Neighborhoods (PSN) Program, the centerpiece of the Department of Justice’s violent crime reduction efforts.  PSN is an evidence-based program proven to be effective at reducing violent crime.  Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them.  As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.

The charges in the indictments are allegations, and the defendant is presumed innocent unless and until proven guilty.

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Kevin Trowel and Nicholas Axelrod are in charge of the prosecution.

The Defendant:

DARRIUS SUTTON (also known as “Blizz Meecho”)
Age:  24
Brooklyn, New York

E.D.N.Y. Docket No. 20-CR-323 (AMD)

Earlier today, in federal court in Brooklyn, Alvaro Vivero Rendon was sentenced to 18 years’ imprisonment by United States District Judge Edward R. Korman for conspiracy to internationally distribute cocaine.  As part of the sentence, the Court entered a forfeiture money judgment of $20 million.  Vivero pleaded guilty to the charge in March 2017.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York; Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA); Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI); Dermot F. Shea, Commissioner, New York City Police Department (NYPD); and Kevin P. Bruen, Acting Superintendent, New York State Police (NYSP), announced the sentence.

“With today’s lengthy prison sentence and entry of a $20 million forfeiture money judgment, Vivero is prevented from profiting from his crimes while being held accountable for leading an international drug-trafficking conspiracy that transported massive quantities of cocaine into the United States through Central America and Mexico,” stated Acting United States Attorney Kasulis.  “This Office and its law enforcement partners are committed to tracking down international narcotics traffickers like the defendant and stopping the pipeline of drugs coming into our communities from abroad.”

Ms. Kasulis expressed her appreciation to DEA’s Bogota Country Office Group 2 (BCO2) and the Colombian National Police (CNP) Direccion de Investigacion Criminal e Interpol (DIJIN) Sensitive Investigative Unit (SIU) for their assistance.

“Vivero played a vital role in international cocaine trafficking, pushing multi-million dollar loads into America,” stated DEA Special Agent-in-Charge Donovan.  “Evident in his plea and $20 million forfeiture, Vivero bypassed laws, bribed corrupt law enforcement, and concealed contraband in order to profit off the sale of poison.”

“Alvaro Vivero Rendon is responsible for flooding American streets with tens of thousands of pounds of cocaine over a six-year period,” stated HSI Special Agent-in-Charge Fitzhugh.  “The continued cooperation between law enforcement ensures Vivero and individuals like him can no longer profit from the poison he trafficked and will now have to face the consequences.”

According to court filings, from 2009 until his arrest in October 2014, Vivero led a massive international drug trafficking conspiracy responsible for trafficking tens of thousands of kilograms of cocaine from Colombia to intermediary locations in Central America and Mexico by air and by sea, before the cocaine was transported to the United States.  Vivero shipped much of this cocaine through San Andres Island off the coast of Nicaragua, which he used as a strategic transshipment point.  Vivero’s air drug route through San Andres relied on bribing corrupt law enforcement officials at airports in both mainland Colombia and on San Andres.  From San Andres, Vivero’s workers usually sent the cocaine to Honduras via fast boats.  After the fast boats unloaded the cocaine in Honduras, they were typically loaded with drug proceeds, usually in the form of U.S. dollars, which they transported back to San Andres before couriers brought suitcases full of drug proceeds back to mainland Colombia.

Vivero received an estimated $20 million for his role in the conspiracy.  Vivero was arrested in Colombia in October 2014 and he was extradited to the United States in April 2016.                                 

This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section.  Assistant United States Attorney Nomi D. Berenson is in charge of the prosecution.  The Justice Department’s Office of International Affairs provided significant assistance in this matter.

The Defendant:

ALVARO VIVERO RENDON (also known as “Jhon Francisco Melo Barrera,” “John Francisco Melo Barrera,” “El Ingeniero,” “Felipe,” “Francisco Melo,” “La Policia,” “Principe,” “Profe” and “Alberto Ramos”)
Age:  56
Buga, Colombia

E.D.N.Y. Docket No. 14-CR-153 (S-1) (ERK)

Earlier today, in federal court in Brooklyn, a 19-count indictment was unsealed charging 14 defendants, including 10 members and associates of the Colombo crime family of La Cosa Nostra and a member of the Bonanno organized crime family, with various offenses including labor racketeering involving multiple predicate acts of extortion conspiracy, attempted extortion and extortion, extortionate collection of credit conspiracy, extortionate collection of credit and money laundering conspiracy.  The charges in the indictment against the Colombo crime family members relate to multiple charged schemes in a long-running effort by the crime family to infiltrate and take control of a Queens-based labor union (the “Labor Union”) and its affiliated health care benefit program (the “Health Fund”) that provides medical benefits, including dental, optical and pharmacy benefits, to the members of the Labor Union, and to a conspiracy to commit fraud in connection with workplace safety certifications.

Among those charged with racketeering are Andrew “Mush” Russo, the boss of the Colombo crime family, Benjamin “Benji” Castellazzo, the underboss, and Ralph DiMatteo, the consigliere.  Alleged Colombo crime family captains Theodore Persico, Jr., Richard Ferrara and Vincent Ricciardo are charged with racketeering, along with soldier Michael Uvino and associates Thomas Costa and Domenick Ricciardo.  In addition, alleged Bonanno family soldier John Ragano is charged with loansharking, fraud and drug trafficking offenses. 

Thirteen defendants were arrested today in New York and New Jersey and are scheduled to be arraigned via videoconference this afternoon before United States Magistrate Judge Taryn A. Merkl at the federal courthouse in Brooklyn.  Vincent Ricciardo was arrested in North Carolina and will be arraigned before United States Magistrate Judge David C. Keesler in federal court in Charlotte.  DiMatteo remains at large.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York; Michael Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Jonathan Mellone, Special Agent-in-Charge, U.S. Department of Labor Office of Inspector General, New York Region (DOL-OIG); Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD); Dermot F. Shea, Commissioner, New York City Police Department (NYPD); and Margaret Garnett, Commissioner, New York City Department of Investigation (DOI), announced the charges and arrests.

“Today’s charges describe a long-standing, ruthless pattern by the administration of the Colombo crime family, its captains, members and associates, of conspiring to exert control over the management of a labor union by threatening to inflict bodily harm on one of its senior officials and devising a scheme to divert and launder vendor contract funds from its health care benefit program.  In addition, for their own enrichment, the defendants conspired to engage in extortionate loansharking, money laundering and fraud, as well as drug trafficking,” stated Acting U.S. Attorney Kasulis. “This Office and its law enforcement partners are committed to dismantling organized crime families, eliminating their corrupt influence in our communities and protecting the independence of labor unions.”

Ms. Kasulis also thanked the U.S. Department of Labor, Employee Benefits Security Administration, Atlanta and New York Offices (DOL-EBSA), the Nassau County District Attorney’s Office, the Waterfront Commission of New York Harbor and the Department of Justice’s Organized Crime and Gang Section for their valuable assistance in the investigation.

“Everything we allege in this investigation proves history does indeed repeat itself. The underbelly of the crime families in New York City is alive and well. These soldiers, consiglieres, under bosses, and bosses are obviously not students of history, and don't seem to comprehend that we're going to catch them. Regardless of how many times they fill the void we create in their ranks, our FBI Organized Crime Task Force, and our law enforcement partners, are positioned to take them out again, and again,” stated FBI Assistant Director-in-Charge Driscoll.

“An important mission of the Office of Inspector General is to investigate criminal allegations relating to organized crime and their illicit influence over labor unions and their affiliated employee benefit plans.  We will continue to work with our law enforcement partners to investigate these types of allegations,” stated DOL-OIG Special Agent-in-Charge Mellone.

“The indictment of 14 defendants, including members of the Columbo crime family on labor racketeering, extortion and money laundering charges should send a clear and concise message that these types of crimes will never be tolerated by law enforcement.   By infiltrating and taking control of a Queens-based labor union and its affiliated health care benefit program these defendants were able to extort a substantial amount of money which should have been used for the members of the union. These benefits included medical, dental, optical and pharmaceutical.  Congratulations to all of the investigators and their affiliated agencies on a job well done during this extensive investigation,” stated NCPD Commissioner Ryder.

“This indictment is another example of the NYPD’s long-term commitment, working with its law enforcement partners, in making sure those accused of organized crime are held accountable. I commend those who carried out the investigation as well as the office of the United States Attorney for the Eastern District in New York for its work in ensuring there is justice in this case,” stated NYPD Commissioner Shea.

“Every time construction certifications are faked, every time bogus records are created and used to manipulate the facts, building in this City is undermined and New Yorkers' safety is compromised. This investigation is evidence of how corruption can erode the integrity of construction in New York City. And these charges reveal how DOI is working with its law enforcement partners to uncover and stop the illegal conduct,” stated DOI Commissioner Garnett.  “DOI thanks the City Department of Buildings for reporting allegations related to this conduct, and the Office of the United States Attorney for the Eastern District of New York, the FBI, and the Office of Inspector General for the U.S. Department of Labor for their partnership.”

As set forth in the indictment and other court documents, the defendants and their co-conspirators committed a variety of crimes – including extortion, loansharking, fraud and drug trafficking – on behalf of the Colombo organized crime family.  First, the Colombo crime family’s administration, including Russo, Castellazzo and Dimatteo, as well captains Persico, Ferrara and Vincent Ricciardo, used extortionate means, including direct threats of bodily harm, to control the management of the Labor Union and caused it to make decisions that benefitted the Colombo crime family.  Since approximately 2001, Colombo captain Vincent Ricciardo and his cousin, associate Domenick Ricciardo, have collected a portion of the salary of a senior official in the Labor Union (“John Doe #1”) by threatening to harm John Doe #1 and his family.  At the direction of the Colombo crime family’s leadership, beginning in late 2019, the defendants broadened the extortion effort to force John Doe #1 and others at the Labor Union and its affiliated Health Fund to make decisions that benefitted the Colombo crime family, including by forcing them to select vendors for contracts who were associated with the Colombo crime family.  The defendants sought to divert more than $10,000 per month from the Health Fund’s assets to the administration of the Colombo crime family. 

For example, on June 21, 2021, in a consensually recorded conversation, Vincent Ricciardo threatened to kill John Doe #1 if he did not comply with Vincent Ricciardo’s demands.  He explained that John Doe #1 knows, “I’ll put him in the ground right in front of his wife and kids, right in front of his f-----g house, you laugh all you want pal, I’m not afraid to go to jail, let me tell you something, to prove a point? I would f-----g shoot him right in front of his wife and kids, call the police, f--k it, let me go, how long you think I’m gonna last anyway?”

Further, Colombo crime family members Russo, Castellazzo, Dimatteo, Ferrara, Persico, Vincent Ricciardo, Uvino joined with defendants Thompkins and Bellantoni, among others, to devise a scheme to launder money from Health Fund contracts and payments through third parties and eventually to the Colombo crime family’s leaders.  The defendants attempted to re-bid Health Fund vendor contracts for claims administration, pharmaceuticals and other health services to persons and companies affiliated with the defendant Joseph Bellantoni.  Bellantoni and others agreed that in exchange for the new vendor contracts, they would pay kickbacks to the Colombo crime family and would use various intermediaries to hide the payments.

The indictment also charges Bonanno organized crime family soldier John Ragano with leading a scheme to issue fraudulent workplace safety training certifications.  As alleged, Ragano operated two workplace safety schools in the New York area that claimed to provide Occupational Safety and Health Administration’s (“OSHA”) training courses and certifications, along with various New York state certifications, to construction industry workers.  Rather than provide training, Ragano along with his business partner John Glover and Domenick Ricciardo, falsified paperwork to the U.S. Department of Labor and other government agencies which represented that hundreds of workers had completed required safety courses when in reality they had not.  Instead, various defendants used Ragano’s “schools” to conduct meetings involving members of La Cosa Nostra and to store illegal drugs and fireworks.

Vincent Ricciardo, Uvino, Ragano and Costa are also charged with loansharking.  As alleged, these defendants participated in extending and collecting on extortionate loans totaling $250,000 to an individual identified as “John Doe #2.”  The defendants charged and collected a weekly 1.5% interest rate that did not reduce the principal owed and divided the proceeds between themselves.  Further, Vincent Ricciardo, Ragano, Costa, Glover and Vincent Martino were charged with conspiracy to distribute marijuana by transporting large shipments of marijuana in vehicles from New York to Florida.  Vincent Ricciardo and Costa were also charged, as previously convicted felons, with possessing and transporting ammunition, and Persico, who is currently on federal supervised release following his release for a prior racketeering conviction, was charged with lying to federal court officers about his dealings with other Colombo crime family members. 

The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, the defendants each face up to 20 years’ imprisonment.

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys James P. McDonald and Devon Lash are in charge of the prosecution.

The Defendants:

ANDREW RUSSO (also known as “Mush”)
Age: 87
Glen Head, New York

JOSEPH BELLANTONI
Age: 39
Massapequa, New York

BENJAMIN CASTELLAZZO (also known as “Benji”)
Age: 83
Manahawkin, New Jersey

THOMAS COSTA
Age: 52
West Islip, New York

RALPH DIMATTEO
Age: 66
Merrick, New York

RICHARD FERRARA
Age: 59
Brooklyn, New York

JOHN GLOVER
Age: 62
Queens, New York

VINCENT MARTINO
Age: 43
Medford, New York

THEODORE PERSICO, JR. (also known as “Teddy”)
Age: 58
Brooklyn, New York

JOHN RAGANO (also known as “Bazoo” and “Maniac”)
Age: 59
Franklin Square, New York

DOMENICK RICCIARDO
Age: 56
Franklin Square, New York

VINCENT RICCIARDO (also known as “Vinny Unions”)
Age: 75
Franklin Square, New York

ERIN THOMPKINS
Age: 53
Franklin Square, New York

MICHAEL UVINO
Age: 56
Garden City, New York

E.D.N.Y. Docket No. 21-CR-466 (ARR)

BROOKLYN, NY – An indictment was unsealed yesterday in federal court in Brooklyn charging three former operators of financial services firm Biscayne Capital with conspiring to defraud investors and financial institutions in an international fraud scheme that caused more than $155 million in investor losses.  Roberto Gustavo Cortes Ripalda (“Cortes”), Fernando Haberer Bergson (“Haberer”) and Ernesto Heraclito Weisson Pazmino (“Weisson”) are charged with conspiracy to commit wire fraud, bank fraud and money laundering.  Weisson was arrested yesterday in Florida, made his initial appearance yesterday afternoon in federal court in Miami and was ordered held pending a detention hearing.  Cortes and Haberer were arrested yesterday in Spain and Argentina, respectively.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Kenneth A. Polite Jr., Assistant Attorney General of the Justice Department’s Criminal Division, Darrell J. Waldon, Acting Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office (IRS-CI), and Raymond Villanueva, Special Agent in-Charge, Homeland Security Investigations, Washington, D.C. Field Office (HSI), announced the arrests and charges.

“As alleged, the defendants orchestrated a complex and fraudulent scheme to repeatedly mislead investors about the nature and performance of their investments.  The defendants enriched themselves with millions of dollars in investor funds while making misrepresentations that caused more than $155 million in investor losses,” stated Acting United States Attorney Kasulis.  “The charges demonstrate this Office’s commitment to ensuring integrity in the management of investor funds and prosecuting those who commit fraud to enrich themselves at their investors’ expense.”  Ms. Kasulis also expressed her appreciation to the IRS-CI Boston Field Office for their assistance with the case.

“The charges unsealed yesterday reflect the seriousness of criminal activities carried out by the defendants.  Our agency, and particularly the D.C. based Global Illicit Financial Team, remains dedicated to rigorously investigating criminal organizations that jeopardize the integrity of our financial system,” stated IRS-CI Acting Special Agent-in-Charge Waldon. 

“Financial schemes like the one alleged here not only damage the lives of those victimized by the fraud, but the international money laundering involved poses a direct threat to the security of the U.S. financial system,” stated HSI Special Agent-in-Charge Villanueva.  “HSI is committed to working with its law enforcement and private sector partners to investigate these criminal enterprises and stop them in their tracks.”

As alleged in the indictment, Biscayne Capital was a financial services company founded in approximately 2005 and maintained offices in Florida, Ecuador, Argentina, the Bahamas and Uruguay.  Between approximately 2013 and 2018, Cortes, Haberer and Weisson, together with others, orchestrated a scheme to defraud Biscayne Capital clients and financial institutions through a series of material misrepresentations and omissions about how Biscayne Capital client funds would be used.  The defendants and their co-conspirators used the funds they fraudulently obtained from clients and financial institutions to pay other investors, cover Biscayne Capital expenses and pay themselves millions of dollars. 

The indictment further alleges that the defendants and their co-conspirators falsely represented to some Biscayne Capital clients that the clients’ investments in certain private investment products (referred to in the indictment as “Proprietary Products”) would be used to finance the development of real estate projects.  In reality, the defendants and their co-conspirators used clients’ investments to pay other Biscayne Capital clients.  In some cases, the defendants and their co-conspirators invested in Proprietary Products without the clients’ knowledge and provided clients with fraudulent account statements that showed fake investments.  The defendants and others also conspired to fraudulently induce financial institutions to extend short-term credit to help further the scheme. Haberer then generated fake letters of authorization to repay the banks out of Biscayne Capital clients’ accounts without those clients’ authorization. 

In approximately September 2018, the scheme collapsed, and Biscayne Capital went into liquidation, resulting in more than $155 million in losses to Biscayne Capital clients.

The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty. 

The government’s case is being handled by the Office’s Business and Securities Fraud Section and the Criminal Division’s Money Laundering and Asset and Recovery Section (“MLARS”) and Fraud Section.  Assistant United States Attorneys David Gopstein and Benjamin Weintraub of the Eastern District of New York, MLARS Trial Attorneys Randall Warden and Shaunik R. Panse and Fraud Section Trial Attorney John (Fritz) Scanlon are in charge of the prosecution.  The Justice Department’s Office of International Affairs provided significant assistance in this matter.

The Defendants:

ROBERTO GUSTAVO CORTES RIPALDA
Age: 54
Madrid, Spain

FERNANDO HABERER BERGSON
Age: 48
Argentina

ERNESTO HERACLITO WEISSON PAZMINO
Age: 53
Miami, Florida

E.D.N.Y. Docket No. 21-CR-458 (DG)

Earlier today, in federal court in Central Islip, John Drago, the former owner/operator of several check cashing businesses on Long Island, pleaded guilty to illegally structuring financial transactions and payroll tax evasion. The proceeding took place before United States District Judge Gary R. Brown.  When sentenced, Drago faces up to 10 years in prison, has agreed to forfeit approximately $253,000 and to pay restitution of approximately $593,000.  As part of his plea, Drago is required to surrender his check cashing licenses, his federal money services business registrations and he is barred from applying for any such licenses or registrations in the future.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and Thomas Fattorusso, Acting Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), and Shirin Emami, Acting Superintendent, New York State Department of Financial Services (DFS), announced the guilty plea.

“Drago’s guilty plea makes clear that running a check cashing business is not a license to evade financial reports to cheat the IRS or a blank check for committing fraud,” stated Acting United States Attorney Kasulis.  “This Office will prosecute and hold to account defendants like Drago who, under the guise of running a legitimate business, are actually engaging in egregious schemes to avoid paying taxes.”   

“Drago’s plea today acknowledges his egregious misuse of Kayla Companies as a conduit to circumvent mandatory CTR filing requirements and evade employment taxes of Kayla Company employees.  Greedy tax evasion schemes such as those facilitated by Drago, critically impair the integrity of our financial system and directly impact employees, who may see future benefits such as Social Security, Medicare or Unemployment Compensation reduced or eliminated because of Drago’s willful disregard of the law.  IRS Criminal Investigation works tirelessly to protect the American taxpayer and maintain public confidence in our system of taxation,” stated IRS-CI Acting Special Agent-in-Charge Fattorusso.  

“John Drago breached the public trust by using his licensed check-cashing businesses to engage in illegal structuring transactions,” said Shirin Emami, Acting Superintendent of Financial Services. “DFS applauds the Eastern District of New York’s prosecution and is pleased to have been able to coordinate with the EDNY on this matter.”

According to court filings and facts presented at the plea proceeding, Drago owned and operated check cashing businesses on Long Island, including Kayla Check Cashing Corp., North Island Check Cashing Corp., South Island Check Cashing Corp., East Island Check Cashing Corp., Bay Shore Check Cashing Corp. and Brentwood Check Cashing Corp. (collectively, the “Kayla Companies”).  Financial institutions are required to file a Currency Transaction Report (“CTR”) for each cash transaction in excess of $10,000.  In addition, a CTR is required to be filed by the financial institution when multiple checks, the total value of which exceeds $10,000, are cashed in a single day.

From January 2010 to October 31, 2013, Drago instructed employees to cash multiple checks in excess of $10,000 in a single day for certain customers without filing required CTRs.  In addition, to avoid the required CTR filings, Drago directed employees to deposit and cash checks that had been submitted together on a single day in amounts in excess of $10,000.  Drago also instructed employees to tell certain customers who presented individual checks in amounts exceeding $10,000 to return with multiple checks in amounts that were less than $10,000 to avoid the reporting requirement for such financial transactions.  As a result of Drago’s scheme, more than $9.5 million in check cashing transactions were concealed from the IRS.

Between April 1, 2012 and July 31, 2013, Drago paid overtime wages and commissions to employees of the Kayla Companies in cash and failed to inform the IRS of the payment of these cash wages.  Drago falsely underreported to the IRS the gross wages paid to his employees to avoid paying the full amount of Federal Insurance Contribution Act taxes that the Kayla Companies owed.  

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Burton T. Ryan, Jr., Bradley T. King and Madeline O’Connor are in charge of the prosecution.

The Defendant:

JOHN DRAGO
Age:  57
Central Islip, New York

E.D.N.Y. Docket No. 18-CR-394 (S-1) (GRB)

Earlier today, in federal court in Brooklyn, Gilberto Melgarejo pleaded guilty to conspiracy to distribute and possess with intent to distribute illegal drugs over the “dark web.”  Co-defendant Brooke Gray pleaded guilty to the same charge on August 10, 2021.  Melgarejo and Gray participated in dozens of transactions on the dark web in which they sold an array of illegal drugs including methamphetamines, fentanyl, heroin, LSD and MDMA, and took payment in the form of cryptocurrency.  Both defendants pleaded guilty before United States Chief District Judge Margo K. Brodie.  They were arrested on November 14, 2019 in Albuquerque, New Mexico.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), announced the guilty pleas.

“With today’s guilty plea, the defendants have admitted to peddling potentially lethal narcotics on the dark web in a failed effort to hide their illegal and dangerous activity from law enforcement,” stated Acting United States Attorney Kasulis.  “As these defendants have learned, drug dealers who push their poison online cannot evade prosecution by hiding in the dark corners of the internet.  This Office, together with its law enforcement partners, will continue to aggressively prosecute narcotics traffickers who contribute to the opioid epidemic and harm our communities.”

“This investigation proves that there is no place to hide in the dark web when it comes to law enforcement’s efforts to save lives.  Their selling point was anonymity, but law enforcement followed ‘THEQUEENSHIVE’ trail to the defendants’ base of operations in Albuquerque, New Mexico.  With overdoses on the rise, it is our goal to shut down as many drug trafficking organizations online and on the streets,” stated DEA Special Agent-in-Charge Donovan.

The internet contains online marketplaces for narcotics and other contraband on the “dark web,” a part of the internet located beyond the reach of traditional internet browsers and accessible only through networks designed to conceal user identities.  The “Wall Street Market” and “Empire Market” were global dark web marketplaces that required their users to trade in digital currencies, primarily Bitcoin. 

Between March 2019 and September 2019, Melgarejo and Gray advertised and sold illegal narcotics on Wall Street Market and Empire Market, using the moniker “THEQUEENSHIVE.”  Customers were directed to pay for illegal narcotics with cryptocurrency and contact Melgarejo and Gray through encrypted email and messaging services.  Melgarejo and Gray claimed to sell “the highest quality product at the best price on the market…our packaging is covert as seal team six to ensure we avoid interception.”  Beginning in March 2019, Melgarejo and Gray unknowingly made multiple sales of narcotics, including methamphetamine, heroin, fentanyl, LSD and MDMA to undercover DEA agents.  Melgarejo and Gray used fake address labels and shipping materials designed to disguise the narcotics, then mailed the narcotics using United States Postal Service mailboxes located in multiple gas stations in the Albuquerque area in a futile effort to evade detection.  The investigation further revealed that after receiving Bitcoin in exchange for the narcotics, Melgarejo and Gray converted the Bitcoin to cash and shared the proceeds.  Melgarejo and Gray participated in over 90 transactions on Wall Street Market and Empire Market.

When they are sentenced, Melgarejo and Gray each face up to life in prison.

The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section.  Assistant United States Attorney Francisco J. Navarro is in charge of the prosecution.

The Defendants:

GILBERTO MELGAREJO (also known as “THEQUEENSHIVE”)
Age:  27
Albuquerque, New Mexico

BROOKE GRAY (also known as “THEQUEENSHIVE”)
Age:  23
Albuquerque, New Mexico

E.D.N.Y. Docket No. 19-CR-586 (MKB)

Earlier today, in federal court in Brooklyn, Nancy Salzman, also known as “Prefect,” the former president and co-founder of Nxivm, was sentenced to 42 months’ imprisonment and ordered to pay a $150,000 fine by United States District Judge Nicholas G. Garaufis for racketeering conspiracy, including predicate acts of conspiracy to commit identity theft and conspiracy to obstruct justice.  Salzman agreed to forfeit several real properties, more than $500,000 in cash and a Steinway grand piano.  Salzman pleaded guilty in March 2019. 

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Thomas Fattorusso, Acting Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), and Peter C. Fitzhugh, Special Agent-in-Charge, Homeland Security Investigations, New York (HSI) announced the sentence.

“In her misguided loyalty and blind allegiance to Keith Raniere, the defendant engaged in a racketeering conspiracy designed to intimidate Nxivm’s detractors and that inflicted harm on Nxivm’s members,” stated Acting U.S. Attorney Kasulis.  “Today’s sentence holds the defendant accountable for her crimes and we hope that it brings some measure of closure to the vulnerable women who were victimized and abused.”  Ms. Kasulis also expressed her  appreciation to the New York State Police and the United States Attorney’s Office for the Northern District of New York for their assistance during the investigation and prosecution.

“Serving as Raniere’s right hand for more than a decade, Nancy Salzman’s conduct supported Nxivm’s objectives to recruit victims, stave off critics and alter evidence connected to a federal lawsuit. Today’s sentence does little to erase the suffering of Nxivm’s victims, but it serves as another reminder of the government’s commitment to seeing this case through to the end,” stated FBI Assistant Director-in-Charge Driscoll.

“Today, Nancy Salzman was held accountable for the role she played in this devious criminal enterprise,” stated IRS-CI Acting Special Agent-in-Charge Fattorusso.  “As with many conspiracies, the financial aspects of this investigation required the expertise of IRS Criminal Investigation to unravel the layers of falsehood and deceit.”

“Salzman was essential to the NXIVM criminal enterprise, not merely a peripheral co-defendant.  As the co-founder with Keith Raniere, Salzman had immense influence on NXIVM, which included conspiracy to commit identity theft and conspiracy to alter records,” stated HSI Special Agent-in-Charge Fitzhugh.  “HSI New York’s strong relationship with its federal partners allows for the seamless and effective investigations that lead to the arrest, prosecution, and sentencing of those involved.”

For more than a decade and until her arrest in July 2018, Nancy Salzman was a high-ranking member of a criminal enterprise led by her co-defendant Keith Raniere.  The primary purpose of the enterprise was to promote Raniere and recruit individuals into various purported self-help organizations that Raniere founded, including Nxivm and affiliated programs, and a secret society within Nxivm called “DOS.”

Between August 2005 and November 2008, Nancy Salzman, along with Raniere, participated in the unlawful surveillance and investigation of perceived critics and enemies of Raniere and Nxivm.  As part of the scheme, Nancy Salzman agreed to unlawfully surveil these perceived enemies in an attempt to gain advantage over them and stop them from criticizing the company.  On March 27, 2018, a search warrant was executed on Salzman’s residence.  Law enforcement agents recovered a box containing purported private banking information of many individuals perceived to be critics and enemies of Raniere, including journalists, judges and an expert on cults.

The defendant also conspired to obstruct justice by altering videotapes that were to be produced in discovery in a federal lawsuit in New Jersey.  In 2003, Nxivm and affiliated entities filed a copyright infringement suit against a former Nxivm student, her parents and a cult deprogrammer.  In 2008, attorneys representing the former student filed counterclaims against Nxivm alleging that the defendant had misrepresented the nature and effectiveness of Nxivm’s programs. During the course of the pending litigation, the defendant and others agreed to alter the videotapes to remove segments that they believed would have supported the former student’s claims and to make it look as if the videos were unedited.  These altered videotapes were then produced in discovery by Nxivm’s attorneys with the false claim that they were provided in “unedited fashion.” 

Raniere was convicted by a federal jury of racketeering and racketeering conspiracy, sex trafficking, attempted sex trafficking and sex trafficking conspiracy, forced labor conspiracy and wire fraud conspiracy.  On October 27, 2020, Raniere was sentenced to 120 years’ imprisonment.  On September 30, 2020, Nxivm executive board member Clare Bronfman was sentenced to 82 months’ imprisonment for identity theft and immigration offenses.  On April 19, 2019, Kathy Russell, a bookkeeper for Nxivm, pleaded guilty to visa fraud and is awaiting sentencing. 

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Tanya Hajjar and Kevin Trowel are in charge of the prosecution.  Assistant United States Attorney Tanisha Payne of the Criminal Division’s Asset Recovery Section is handling forfeiture matters.

The Defendant:

NANCY SALZMAN (also known as “Prefect”)
Age:  67
Clifton Park, New York

Defendants Previously Sentenced:

KEITH RANIERE (also known as “Vanguard” and “Grandmaster”)
Age:  61
Waterford, New York

CLARE BRONFMAN
Age:  42
Clifton Park, New York

ALLISON MACK
Age:  39
Brooklyn, New York

LAUREN SALZMAN
Age:  45
Clifton Park, New York

Defendant To Be Sentenced:

KATHY RUSSELL
Age:  63
Clifton Park, New York

E.D.N.Y. Docket No. 18-CR-204 (S-2) (NGG)

Earlier today, at the federal courthouse in Central Islip, Allen Goldmeirer and his brother Steven Goldmeier, owners of a toy company called Millennium Products Group (MPG), pleaded guilty to hoarding personal protective equipment (“PPE”) amid the Covid-19 pandemic and price-gouging customers that purchased three-ply surgical masks from them in violation of the Defense Production Act of 1950. The proceeding took place before United States Magistrate Judge James M. Wicks.

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty pleas.

“The defendants selfishly sought to make millions of dollars in profits during an unprecedented public health crisis by hoarding and selling at exorbitant prices personal protective equipment that was desperately needed by the State of Oklahoma to protect the public health and safety, and save lives,” stated Acting United States Attorney Kasulis.  “This Office will continue to do everything in its power to enforce the Defense Production Act and ensure that opportunists like the defendants are held accountable for their indiscriminate acts of greed.”  Ms. Kasulis also expressed her appreciation to the United States Attorney’s Office for the District of New Jersey and the Justice Department’s Covid-19 Hoarding and Price Gouging Task Force for their assistance with the case.

“During the height of the pandemic, cases in which people sought to capitalize on the situation at the expense of others were, unfortunately, an all-too-common occurrence. More than a year later, the FBI continues to work to identify and hold accountable any company, individual, or entity whose intention it was to do so. The Goldmeirer brothers pleaded guilty today for their role in a price-gouging scheme, and they’ll now await sentencing for their crimes,” stated FBI Assistant Director-in-Charge Driscoll.

On March 18, 2020, in response to the Covid-19 pandemic, the Defense Production Act was invoked making it illegal to acquire medical supplies and devices designated by the Secretary of Health and Human Services as scarce in order to hoard them or sell them for excessive prices.

According to statements in court today, in March and April 2020, the defendants used their toy company, MPG, to obtain millions of three-ply surgical masks from China for between approximately $0.18 and $0.60 per mask.  Almost immediately thereafter, the defendants sold 1,227,500 of these masks to the State of Oklahoma, among others, at a price of $1.65 per mask – a markup of over 900% in many cases.  Pursuant to their agreement with the government, the defendants will pay $1 million in restitution to the State of Oklahoma prior to sentencing in this matter.  In addition, the defendants face up to one year in jail and a maximum fine of $10,000. 

On May 17, 2021, the Attorney General established the Covid-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus

Anyone with information about allegations of attempted fraud involving Covid-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The government’s case is being handled by the Office’s Long Island Criminal Division, with assistance from the Justice Department’s Covid-19 Hoarding and Price-Gouging Task Force.  Assistant United States Attorney Megan E. Farrell is in charge of the prosecution.

The Defendants:

ALLEN GOLDMEIER
Age:  68
Oyster Bay, New York

STEVEN GOLDMEIER
Age: 64
Plainview, New York

E.D.N.Y. Docket No. 21-CR- 399 (JMW)

Earlier today, at the federal courthouse in Central Islip, Kwesi Bovell, the former chief financial officer (CFO) of The Mulholland Group, a real estate company in Manhasset (“Mulholland”), was sentenced by United States District Judge Joan M. Azrack to 60 months’ imprisonment and ordered to pay restitution of $3.45 million for embezzling millions of dollars from his employer over the course of three years. 

Jacquelyn M. Kasulis, Acting United States Attorney for the Eastern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.

“To fund a lifestyle of extravagance and opulence, the defendant plundered his employer’s company from the time he was hired until his fraud was discovered three years later, and with today’s sentence, he is punished for his avarice and betrayal,” stated Acting United States Attorney Kasulis.  Ms. Kasulis thanked the FBI for its investigative work on the case. 

According to court filings, Bovell began embezzling funds shortly after he was hired in 2015 to be the CFO of Mulholland.  As CFO, Bovell had signature authority over numerous bank accounts of Mulholland and its subsidiaries.  Over the next three years, Bovell fraudulently transferred over $3.5 million from Mulholland to Southgate Holdings, a company controlled by Bovell.

Bovell spent most of the stolen funds on luxury purchases for himself and others.  Those expenses included a $66,000 ring, vacations, $500,000 to a woman with whom he was in a relationship, an additional $500,000 into a laundromat business operated, in part, by that woman, approximately $90,000 to another woman for whom he rented an apartment in Manhattan, $722,000 on a failed gym, Evolution Fitness, in Suffolk County, as well as purchases at Brooks Brothers, Cartier, Chanel and Gucci.  According to Mulholland, at least $1.5 million remains unaccounted for.

The government’s case is handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Charles P. Kelly and Madeline O’Connor are in charge of the prosecution.

The Defendant:

KWESI BOVELL
Age:  36
Valley Stream, New York

E.D.N.Y. Docket No. 18-571 (JMA)