Eastern District of New York

A federal jury in Central Islip returned a guilty verdict today against Cornell Bozier, the former Chairman of the Board of Commissioners at the Village of Hempstead Housing Authority (VHHA) on four counts of an indictment charging him with conspiracy to commit honest services wire fraud and federal program bribery.  The verdict followed a two-week trial before United States District Judge Joan M. Azrack.  When sentenced, Bozier faces a maximum sentence of 20 years’ imprisonment.  

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Christina Scaringi, Special Agent-in-Charge, U.S. Department of Housing and Urban Development, Office of the Inspector General, Northeast Region (HUD-OIG), announced the verdict.

“As found by the jury, having been trusted to serve the residents of low-income housing as a Village of Hempstead public official, Bozier instead lied, cheated and stole federal funds for himself,” stated United States Attorney Donoghue.  “If, like Mr. Bozier, you betray the public you are hired to serve, expect to find yourself in a courtroom facing the consequences.”

 “Plain and simple, this is a case of greed; Bozier and his co-conspirators engaged in public corruption for personal gain,” said HUD-OIG Special Agent-in-Charge Scaringi.  “We are not talking about the abstract here, this is a case involving real money that should have been used to improve the lives of those living within the public housing authority that these offenders were entrusted to serve.”

The evidence at trial established that between March 2011 and November 2012, Bozier engaged in schemes with his co-conspirators – contractors James Alimonos and Peter Caras – to defraud the citizens of the Village of Hempstead (the Village) and the VHHA by soliciting and accepting bribes and kickbacks in exchange for Bozier using his official position to ensure that the Board of Commissioners (the Board) accepted fraudulently submitted bids for VHHA construction projects.  The VHHA is responsible for providing and maintaining safe and affordable low-income housing in the Village.  As chairman, Bozier controlled the Board and could bypass HUD regulations for bidding and for awarding construction projects.

The Totten Avenue Intercom Project

In August 2011, Bozier fraudulently obtained an “emergency” designation from the Board for repair of the intercom system at a VHHA on Totten Avenue in the Village without the public bid requirement to ensure that the contract was awarded to the lowest qualified bidder.  Alimonos then directed another co-conspirator to submit a falsely inflated bid of $95,740 to replace the intercom system.  Alimonos paid Bozier approximately $30,000 for securing the Board’s acceptance of the fraudulent bid.

The Yale Street Roof Project 

In September 2011, the VHHA received four proposals from companies controlled by Alimonos to replace the roof of a building on Yale Street in the Village.  Bozier accepted a bid of $248,000, although the bid lacked the required paperwork.  Bozier then  secured the Board’s approval, and the VHHA paid a total of $273,900 for the project.  Thereafter, Alimonos hired another construction company to replace the roof for $23,000.  In return, Bozier received a kickback of approximately $55,000 from his co-conspirators.

The Gladys Avenue Piping Project

In July 2012, the VHHA received two proposals from companies controlled by Alimonos to repair the boiler piping system at a building on Gladys Avenue in the Village.  Bozier ensured that the $164,000 contract was awarded to a company established in the name of Alimonos’s wife, although the bid lacked the required supporting information.  Alimonos then hired another construction company to do the repair work for approximately $26,000.  In return, Bozier received approximately $30,000 in kickback payments from Alimonos and Caras.

Alimonos and Caras previously pleaded guilty to honest service fraud conspiracy and testified at trial against Bozier.  Both are awaiting sentencing.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Paul G. Scotti and Artie McConnell are in charge of the prosecution.  Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division is handling matters related to forfeiture.  

The Defendant:

CORNELL BOZIER
Age:  58
North Baldwin, New York

E.D.N.Y. Docket No. 15-CR-303 (JMA)

A criminal complaint was filed today in federal court in Central Islip charging William Umberto Martinez Chavez with illegal reentry into the United States.  The defendant was arrested this morning in Huntington, New York, and made his initial appearance this afternoon before United States Magistrate Judge A. Kathleen Tomlinson, where he was ordered detained.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Thomas R. Decker, Field Office Director, U.S. Immigration and Customs Enforcement (ICE), Enforcement and Removal Operations (ERO), announced the arrest.

“As alleged, Martinez Chavez illegally returned to the United States after he served a lengthy New York State prison sentence for a homicide he committed on Long Island, and was deported to El Salvador,” stated United States Attorney Donoghue.  “This Office is firmly committed to prosecuting criminals who illegally reenter the United States, especially MS-13 gang members who break into the country after deportations resulting from violent crime convictions.”  Mr. Donoghue expressed his appreciation to the Joint Criminal Alien Removal Taskforce and the United States Marshals NY/NJ Regional Fugitive Task Force, Long Island Division, for their assistance with the case.

“Martinez Chavez is a known MS-13 gang member who was convicted of manslaughter, served his time and was removed from the United States, only to resurface on the same streets after having entered illegally,” stated ERO New York Field Office Director Decker.  “It is the job of the brave men and women of ICE to take those who break the laws of this country off the streets and see that they are removed back to their home countries.”

According to the complaint, Martinez Chavez, a Salvadoran national, was deported from the United States in October 2017, after having been convicted and served a sentence for manslaughter in connection with a May 2000 stabbing outside a deli in Huntington.  Martinez Chavez stabbed the victim, severing his aorta and causing his death.  The defendant has admitted to previously being a member of the MS-13 gang and still bears MS-13 tattoos, on his abdomen and on his chest.

If convicted, Martinez Chavez faces a maximum term of imprisonment of 20 years.

The charge in the complaint is an allegation, and the defendant is presumed innocent unless and until proven guilty.

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

The Defendant:

WILLIAM UMBERTO MARTINEZ CHAVEZ (also known as “William Martinez,” “William Martines,” “Wiliam Martinez Chavez” and “Julio Cordero”)
Age:  40
Huntington, New York

E.D.N.Y. Docket No. 19-MJ-297 (AKT)

A criminal complaint was filed today in federal court in Central Islip charging Gerson Eli Turcios Maradiaga with illegal reentry into the United States.  The defendant was arrested Thursday and made his initial appearance this afternoon before United States Magistrate Judge Arlene R. Lindsay at the federal courthouse in Central Islip. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Thomas R. Decker, Field Office Director, U.S. Immigration and Customs Enforcement (ICE), Enforcement and Removal Operations (ERO), announced the arrest.

“As alleged, Turcios illegally returned to the United States after his deportation for a homicide conviction,” stated United States Attorney Donoghue.  “This Office will prosecute felons who reenter the United States.  The message to deported felons is clear – if you are deported from the United States, stay out or the only thing you will be returning to is prison.”  Mr. Donoghue expressed his appreciation to the Nassau County Police Department and the United States Marshals NY/NJ Regional Fugitive Task Force, Long Island Division, for their assistance with the case.

Turcios has a felony conviction and was sentenced in the United States before being removed to his home country,” stated ERO New York Field Director Decker.  “This case is one of a convicted criminal who re-entered the country illegally, only to be right back in our New York neighborhoods.  ERO officers will continue to seek out those criminals aliens who enter the country with no regard for the laws of this nation, protecting the public with steadfastness and professionalism.”

According to the complaint, Turcios, a Honduran national, was deported from the United States in November 2012, after having been convicted in December 2008 of manslaughter in connection with the February 17, 2008 shooting outside Don Juan’s La Boom Club in Westbury, New York, killing one and wounding several others.  At the time of the shooting, the defendant was a member of the 18th Street gang.

If convicted, Turcios faces a maximum term of imprisonment of 20 years’ incarceration.

The charge in the complaint is an allegation, and the defendant is presumed innocent unless and until proven guilty.

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

The Defendant:

GERSON ELI TURCIOS MARADIAGA
Age:  28
Levittown, New York

E.D.N.Y. Docket No. 19-MJ-289 (ARL)

An indictment was unsealed today in federal court in Central Islip charging Robert Quarles, Charles Scruggs, Michael Steketee and Deena Colgan with conspiring to distribute heroin, fentanyl and cocaine base in the Riverhead area.  Quarles, Scruggs and Steketee were arrested this morning, and were arraigned this afternoon before United States Magistrate Judge Arlene R. Lindsay, where they were ordered detained.  A related criminal complaint has also been filed charging Tyrone Ligon with possession with intent to distribute cocaine, heroin and fentanyl.  Ligon was arrested this morning and was also ordered detained by Magistrate Judge Lindsay at his arraignment this afternoon.  Colgan is in custody and will be arraigned on April 2, 2019.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charges.

“As alleged, the defendants sold dangerous drugs with no regard for the harm caused to the users or residents of the community,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners at the FBI and the East End Drug Task Force will continue to tirelessly investigate and prosecute individuals who contribute to the opioid epidemic.” 

“These dealers who allegedly trafficked in deadly illegal drugs don’t see the destruction left in their wake, they only see the money they make from pushing and selling.  The opioid deaths in our community and our country get worse each day, but the FBI Long Island Gang Task Force and our law enforcement partners won’t stop investigating and arresting all the dealers we can to keep more people from dying,” stated FBI Assistant Director-in-Charge Sweeney.

Between January 2018 and March 2019, the defendants were involved in a conspiracy to distribute several controlled substances, including over one kilogram of heroin, 40 grams of fentanyl, and crack cocaine.  At the time of his arrest, Quarles was found in possession of distribution quantities of crack cocaine and heroin.  Ligon was also found in possession of narcotics when he was taken into custody. 

The charges in the indictment and complaint are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, Colgan, Quarles, Scruggs and Steketee face up to life imprisonment; Ligion faces up to 20 years in prison.

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

The Defendants:

ROBERT QUARLES (also known as “Black”)
Age: 43
Mastic, New York

CHARLES SCRUGGS (also known as “Chuck”)
Age: 31
Riverhead, New York

MICHAEL STEKETEE
Age: 41
Flanders, New York

TYRONE LIGON
Age: 49
Southampton, New York

DEENA COLGAN
Age: 47
Riverhead, New York

E.D.N.Y. Docket No. 19-CR-156 (DJH)

Jaime Alberto Giraldo Alzate will be arraigned today in federal court in Brooklyn before United States Magistrate Judge Sanket J. Bulsara on an indictment charging him with money laundering and money laundering conspiracy.  Alzate allegedly laundered over $200,000 for undercover law enforcement agents in his capacity as a Foreign Commercial Business Manager at an international bank in Colombia.  Alzate was extradited to the United States from Colombia on March 27, 2019.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Jonathan D. Larsen, Acting Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York (IRS-CI), announced the extradition.

“As alleged, the defendant corruptly abused his position as a bank employee to launder money for undercover agents he believed were narcotics traffickers,” stated United States Attorney Donoghue. “I commend the outstanding investigative work by IRS undercover agents that led to the arrest of the defendant, who boasted he had been laundering drug proceeds for years.”

“The alleged laundering of illegal drug profits is as important and essential to drug traffickers as the very distribution of their illegal drugs,” stated IRS-CI Acting Special Agent-in-Charge Larsen.  “Without these ill-gotten gains, the traffickers cannot finance their organizations. As the role of IRS CI in narcotics investigations is to follow the money, we are highly adept at financially disrupting and dismantling drug trafficking organizations as well as identifying third parties that facilitate the laundering of these funds such as Alzate. We are proud to provide our financial expertise as we work alongside the United States Attorney’s Office to bring criminals to justice.”

In mid-2016, IRS-CI special agents received information that Alzate was laundering money for narcotics traffickers.  As alleged in the indictment, undercover agent (“UC”) met with Alzate and said he wanted to launder money from the United States to Colombia.  The UC explained that the people he worked for were “only interested in two things, selling their coke and money.”  Alzate responded that he could receive the money via wire transfers and deposit it into two accounts at his bank – up to $130,000 per week – for a fee of four percent of the amount of money laundered.  Alzate assured the UC that he had been working at the bank for 27 years and had been “doing this for years.”

Following Alzate’s instructions, in January and April 2017, the UC transferred money from a bank account in Brooklyn to an account at the International Bank.  Thereafter, Alzate gave checks to other IRS-CI undercover agents, representing the amount of money laundered, less his four percent fee.

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

The government’s case is being handled by the Office’s International Narcotics & Money Laundering Section.  Assistant United States Attorney Tyler Smith is in charge of the prosecution.  The Department of Justice’s Office of International Affairs assisted in the extradition.

The Defendant:

Jairo Alberto Giraldo Alzate
Age:  53
Barranquilla, Colombia

E.D.N.Y. Docket No. 17-547 (ARR)

A nine-count indictment was unsealed today in federal court in Brooklyn charging  Patrick McDonnell, also known as “Jason Flack,” with wire fraud in connection with a scheme to defraud investors in virtual currency.  McDonnell was arrested earlier today, and is scheduled to be arraigned this afternoon before United States Magistrate Judge Sanket J. Bulsara. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the charges.

 “As alleged, the defendant defrauded investors by making false promises and sending them fraudulent balance statements, hiding the fact that he was stealing their money for his personal use,” stated United States Attorney Donoghue.  “The defendant’s fraud ends now, he will be held responsible for his criminal conduct.”  Mr. Donoghue expressed his grateful appreciation to the United States Commodity Futures Trading Commission (CFTC) for its significant cooperation and assistance in this case. 

“The defendant, Patrick K. McDonnell, used smoke and mirrors to allegedly dupe investors into paying his company—CabbageTech, for advice and strategies on crypto-currency trading,” stated USPIS Special Agent-in-Charge Bartlett.  “However, Postal Inspectors and their federal law enforcement partners unmasked McDonnell and his scheme to defraud investors, and brought him to justice for his alleged criminal actions.”

As alleged in the indictment, between approximately November 2014 and January 2018, McDonnell portrayed himself as an experienced trader in virtual currency, promising customers he would provide trading advice, and purchase and trade virtual currency on their behalf.  Beginning in approximately May 2016, McDonnell made similar representations through his Staten Island-based company, CabbageTech, Corp., also known as Coin Drop Markets.  However, neither McDonnell nor CabbageTech provided investment services.  Instead, McDonnell sent investors false balance statements purportedly showing that their investments had been profitable, and stole their money for his personal use.  When investors requested refunds, McDonnell initially offered excuses for delays in repayment, and eventually stopped responding at all.   In total, McDonnell defrauded at least 10 victims of at least $194,000 in U.S. currency, 4.41 Bitcoin, 206 Litecoin, 620 Ethereum Classic and 1,342,634 Verge currency.

The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, McDonnell faces a maximum sentence of 20 years’ imprisonment. 

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorney Hiral D. Mehta is in charge of the prosecution. 

The Defendant:

PATRICK MCDONNELL (also known as “Jason Flack”)
Age:  46
Staten Island, New York

E.D.N.Y. Docket No. 19-CR-148 (NGG)

Earlier today, John Wolf, a former Manhattan dentist, was sentenced in federal court in Brooklyn to 121 months’ imprisonment by United States District Judge William F. Kuntz II for conspiring to distribute methamphetamine and possessing child pornography.  As part of his sentence, Wolf must serve 10 years’ supervised release following his imprisonment and not have unsupervised contact with minors.  Wolf will also be required to register as a sex offender upon his release from prison. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York (DEA), announced the sentence.

“Wolf was once a successful dentist who now finds himself deservedly confined behind prison walls for conspiring to distribute dangerous drugs and sharing images of children being subjected to sexual violence,” stated United States Attorney Donoghue.  “Today’s sentence reflects the seriousness of the defendant’s crimes and demonstrates the commitment of the Department of Justice to protecting the community.”  Mr. Donoghue expressed his grateful appreciation to the FBI’s New York Violent Crimes Against Children International Task Force for leading the investigation. 

Wolf pleaded guilty in October 2017 to conspiracy to possess with intent to distribute methamphetamine and possession of child pornography.  During the investigation, the defendant was consensually recorded discussing distribution of methamphetamine and provided child pornography to a person who, unbeknownst to him, was an undercover FBI agent.  The child pornography included depictions of toddlers being raped by adult men.    

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorney Moira Kim Penza is in charge of the prosecution. 

The Defendant:

JOHN WOLF
Age:  62
Residence: New York, New York

E.D.N.Y. Docket No. 15-CR-624 (WFK)

Earlier today, Jerry Ciauri, also known as “Fat Jerry,” an inducted member of the Colombo organized crime family (the Colombo family), pleaded guilty before United States District Judge William F. Kuntz II to racketeering, including predicate acts of extortionate collection of extensions of credit.  Another inducted member of the Colombo family, Vito Difalco, also known as “Victor” and “The Mask,” and two Colombo family associates, Salvatore Disano and Joseph Maratea, pleaded guilty to racketeering last week.  On March 15, 2019, Joseph Rizzo, an associate of the Colombo family, pleaded guilty to stalking conspiracy.  The defendants’ criminal activities took place in Brooklyn, Staten Island and elsewhere between March 2017 and June 2018.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the guilty pleas.

According to court filings and facts presented during the guilty plea proceeding, Ciauri made extortionate loans and used extortionate means to collect payments on those loans from six victims.  In connection with this loansharking business, Ciauri once threatened to shoot a loansharking partner who had fallen behind making payments to Ciauri, and on another occasion, enlisted an associate to slash a victim’s tires in the middle of the night.  Disano assisted Ciauri in collecting debts enforced with extortionate means.  Rizzo and Ciauri also stalked Ciauri’s former loansharking business partner after he started to cooperate with law enforcement officers and stopped assisting Ciauri with the business.

Difalco and Maratea also ran a loansharking business.  In connection with that business, Difalco used extortionate means to collect debts from eight victims, and Maratea helped collect debts from five of those victims.  In one conversation, Difalco threatened a loansharking victim by telling him that he had a past history of setting fire to the cars of those who failed to make timely payments; Difalco told the victim, “Good things happen to me when I stay calm see like I was by your house the other day….  Four years ago, I would have put the Benz on fire.”  

When sentenced, Ciauri, Difalco, Disano and Maratea face up to 20 years’ imprisonment.  Rizzo faces a maximum of five years on the stalking conspiracy charge. 

The government’s case is being handled by the Office’s Organized Crime & Gangs Section.  Assistant United States Attorneys Elizabeth A. Geddes and Mathew S. Miller are in charge of the prosecution.

The Defendants:

JERRY CIAURI (also known as “Fat Jerry”)
Age:  59
Brooklyn, New York

VITO DIFALCO (also known as “Victor” and “The Mask”)
Age:  63
Brooklyn, New York

SALVATORE DISANO
Age:  48
Brooklyn, New York

JOSEPH MARATEA
Age:  42
Brooklyn, New York

JOSEPH RIZZO
Age: 51
Staten Island, New York

E.D.N.Y. Docket No. 18-CR-337 (WFK)

On Friday, March 22, 2019, following a three-week trial, a federal jury in Brooklyn returned a guilty verdict on all five counts against Dan Zhong, the head of U.S. operations of Chinese Liaoning Rilin Construction (Group) Co. Ltd. (also known as China Rilin) and U.S.-based subsidiaries, including U.S. Rilin, who was formerly a diplomat of the People’s Republic of China (PRC).  The counts of conviction were conspiracy to provide forced labor, providing and benefitting from forced labor, concealing passports and immigration documents in connection with forced labor (also known as document servitude), conspiracy to commit alien smuggling and conspiracy to commit visa fraud.  The jury also found as a sentencing enhancement that Zhong engaged in the alien smuggling for commercial gain.  Today, the jury separately concluded that six properties where the forced labor victims worked, including a high rise building in midtown Manhattan and a mansion on Long Island, are forfeitable.  Zhong’s co-defendant in the indictment, Landong Wang, is a fugitive, believed to be in the PRC.

When he is sentenced by United States District Judge Ann M. Donnelly, Zhong faces up to 20 years’ imprisonment.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Angel M. Melendez, Special Agent-in-Charge, Department of Homeland Security, Homeland Security Investigations (HSI), New York, and Timothy W. Dumas, Special Agent-in-Charge, New York Field Office, Diplomatic Security Service, U.S. Department of State (DSS), announced the verdict.

“Unlike Chinese Communist elites, Americans do not practice, condone or tolerate forced labor,” stated United States Attorney Donoghue.  “Mr. Zhong, a former long-time PRC diplomat, believed he could oppress and coerce Chinese construction workers in New York, forcing some to work for years without pay under the threat of physical harm and financial ruin.  His crimes not only violate our laws, they contradict the values of this country.”  Mr. Donoghue expressed his appreciation to the Department of State’s Office of Foreign Missions and the FBI’s Field Office in Newark, New Jersey, for their assistance on the case.

“These are human beings, forced to work seven days a week with no pay and forced to live in squalid housing with dozens of others, trapped by guards who would hunt them down and drag them back if they escaped,” stated FBI Assistant Director-in-Charge Sweeney. “This didn’t take place in a foreign country, this happened here in Manhattan, on Long Island and New Jersey.  No human being deserves to be treated this way, in any country.  Mr. Zhong and others may have believed they could get away with human trafficking and forced labor in this country because of the Chinese government’s disregard of the laws where it operates, but they will now face justice for their crimes.”

“With the hopes of attaining the proverbial American dream, victims were brought to the U.S. by Zhong, only to be forced to live in cramped, unsafe conditions, with locks on the doors so they could not escape,” stated HSI Special Agent-in-Charge Melendez.  “Many worked 14 hour days for years, submitting to threats of financial ruin to their families or threats of violence.  Forced labor simply put is modern day slavery and this investigation shed light on the willingness of criminals to exploit people for personal financial gain. We will seek prosecution of anyone who looks to increase their profit by forcing people to work with no pay.”

“This case illustrates the global reach of the Diplomatic Security Service and the effectiveness of federal agency collaboration to stop criminals from illegally obtaining U.S. visas to exploit foreign workers,” stated DSS Special Agent in Charge Dumas.  “We’re committed to investigating visa fraud committed by U.S. business operators and others who facilitate criminal visa applications at U.S. Embassies and Consulates around the world.”

The evidence at trial established that Zhong’s company performed construction work on a variety of PRC government facilities in the United States, including the Permanent Mission of the PRC to the United Nations, the Embassy of the PRC to the United States, and PRC Consulates General in the United States (collectively, the PRC Facilities).  Initially, Zhong, and his co-conspirators required workers to turn over substantial “security deposits,” including the deeds to their family homes that were subject to forfeiture if they refused to work as a key element of “debt bondage” contracts the workers signed.  Once in the United States, the workers also had to surrender their passports to the conspirators.  The workers were forced to put in 14-hour days, seven days a week, for years without receiving any pay.  Twenty or more workers were housed in one and two-family houses in Jersey City, New Jersey.  Inspections of some of these houses revealed numerous fire code violations, as well as illegal locks to prevent the workers from escaping.  Through this scheme, Zhong and his co-conspirators attempted to prevent escape by the workers, at times using violent force.  Several workers testified about their families being threatened and forced out of their homes in the PRC by Rilin.  One worker testified that after escaping and being re-captured, he was warned that his legs would be broken if he again tried to escape.  More recently, Zhong and his co-conspirators abused the legal process in the PRC by photographing a worker and his wife in front of a pile of cash totaling RMB1 million belonging to Rilin and then obtaining from a PRC court an enforcement order against the worker’s wife for RMB1 million after the worker escaped. 

Although the visa applications prepared for the workers provided that the workers would work only at PRC diplomatic facilities, the evidence at trial established that Zhong and his co-conspirators forced them to work on private construction projects, including a commercial building in midtown Manhattan and private residences in Queens and elsewhere on Long Island.   Zhong also used these workers as personal servants, preparing meals, chauffeuring him, and performing yard work.  

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys Alexander A. Solomon, Ian C. Richardson and Craig R. Heeren are in charge of the prosecution, with assistance provided by Assistant United States Attorney Brian Morris of the Office’s Civil Division, which is responsible for the forfeiture aspect of the case.

The Defendant:

DAN ZHONG
Age:  49
Livingston, New Jersey

E.D.N.Y. Docket No. 16-CR-614 (AMD)

Paul Semplice, a member of the Gambino organized crime family, was sentenced today to 28 months in prison by United States District Judge Pamela K. Chen at the federal court in Brooklyn for conducting a loansharking scheme in which he extended extortionate loans with annual interest rates up to 54 percent. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, announced the sentence.

“Semplice targeted victims desperate for loans and used his status as a Mafia soldier to make sure they paid the exorbitant interest rate,” stated United States Attorney Donoghue.  “With today’s sentence, the defendant will pay for his crimes in prison.”  Mr. Donoghue thanked the Federal Bureau of Investigation and the New York City Police Department for their investigative work on this case.

Semplice, a long-time made member of the Gambino crime family, engaged in a conspiracy with others to make extortionate extensions of credit to multiple victims.  During one recorded conversation with a cooperating witness (CW), Semplice boasted that he had a “very special relationship,” “like brothers,” with a captain in the family and “answer[ed] to nobody but him.”  In another recorded conversation with the CW, Semplice explained that in connection with a $200,000 loan to victim John Doe #1, he collected $9,000 interest per month, or 54 percent, and personally kept $8,000.  Semplice called the arrangement “a beautiful thing.” 

On November 18, 2016, during a lawfully intercepted conversation, Semplice talked about abusing victim John Doe #2.  “I started abusing him, right.  He was in his forties….  Once I – I had to smack him.  I go, ‘What?’ Bang! I go, ‘I’ll smack you again.’  He goes, ‘Why?’  ‘Cause I shouldn’t have to come see you.’ ”

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

The Defendant:

PAUL SEMPLICE
Age:  55
Brooklyn, New York

 E.D.N.Y. Docket No. 17-CR-612 (PKC)

Vitaly Korchevsky, a former hedge fund manager, was sentenced in federal court in Brooklyn today by United States District Judge Raymond J. Dearie to 60 months’ imprisonment for conspiracy to commit wire fraud, conspiracy to commit securities fraud and computer intrusion, conspiracy to commit money laundering and two counts of securities fraud.  The Court also ordered Korchevsky to pay $14.4 million in forfeiture and a $250,000 fine.  Co-defendant Vladislay Khalupsky, a securities trader, was convicted of the same charges, and was sentenced on January 11, 2019 to 48 months’ imprisonment.      

Following a four-week jury trial, Korchevsky and Khalupsky were convicted in July 2018 for their roles in an international scheme to hack into three newswire services and steal press releases containing non-public financial information prior to their publication.  The defendants and their co-conspirators then used this information to make trades generating approximately $30 million in illegal profits

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and David E. Beach, Special Agent-in-Charge, United States Secret Service, New York Field Office (USSS), announced the sentences.

“Korchevsky and Khalupsky will now pay the price for using their experience as traders to generate millions of dollars in unlawful trades based on hacked information,” stated United States Attorney Donoghue.  “Today’s sentence sends a powerful message that, no matter how sophisticated or novel the scheme, cybercriminals and traders who steal information from U.S. companies and undermine the integrity of our financial markets will be held accountable for their actions.”  Mr. Donoghue expressed his grateful appreciation to the United States Attorney’s Office for the District of New Jersey (USAO-DNJ), the Department of Homeland Security (DHS) and the U.S. Securities and Exchange Commission (SEC) for their significant cooperation and assistance in this case.

 “The Secret Service remains committed to aggressively investigating and pursuing those responsible for cyber-enabled financial crimes,” stated USSS Special Agent-in-Charge Beach.  “The sentence today is testament to the Secret Service’s commitment to building strong partnerships between local, state and federal law enforcement and represents a win against those who chose to threaten the financial infrastructure of the United States.” 

Between February 2010 and August 2015, computer hackers based in the Ukraine gained unauthorized access into the computer networks of Marketwired L.P., PR Newswire Association LLC and Business Wire, through a series of sophisticated cyberattacks.  The hackers moved through the computer networks and stole press releases about upcoming announcements by public companies concerning earnings, revenues and other material non-public information. 

In order to monetize that information, the hackers shared the stolen press releases with a network of traders, including Korchevsky and Khalupsky, through overseas computer servers controlled by the hackers, and/or through secure email accounts.  Korchevsky and Khalupsky then generally traded ahead of the public distribution of the stolen releases, executing trades in extremely short windows of time, usually shortly after the close of the markets.  As a result, the trading data often showed a flurry of trading activity around a stolen press release just prior to its public release.  Korchevsky, Khalupsky and their co-conspirators traded on stolen press releases concerning hundreds of publicly traded companies.

The illegal trading by the criminal network resulted in gains of more than $30 million, much of which was routed back to the hackers.  Korchevsky traded on the stolen press releases both in brokerage accounts that benefitted the criminal network, as well as in his personal brokerage accounts, and ultimately netted approximately $15 million in profits over the course of the scheme.  Khalupsky primarily traded in accounts that benefited the criminal network, and received a percentage of the multi-million dollars in profits he generated by trading on the stolen press releases.  He directed that payments received for the illegal profits he generated for the criminal network be made to offshore shell companies.

The charges against Korchevsky and Khalupsky were set forth in an indictment unsealed in August 2015 in connection with a broader investigation conducted by this Office, the USAO-DNJ, the FBI, the USSS and the DHS, as well as a parallel investigation by the SEC.  In total, nine defendants were charged criminally for their roles in the scheme.  All have either pleaded guilty or been convicted at trial, except for three defendants who remain at large. 

The government’s case is being handled by the Office’s Business and Securities Fraud Section and National Security and Cybercrime Section.  Assistant United States Attorneys Richard M. Tucker, Julia Nestor and David Gopstein are in charge of the prosecution.  Assistant United States Attorney Tanisha Payne is in charge of forfeiture aspect of the case.

The Defendants:

VITALY KORCHEVSKY
Age: 53
Glen Mills, Pennsylvania

VLADISLAV KHALUPSKY
Age:  48
Brooklyn, New York and Odessa, Ukraine

E.D.N.Y. Docket No. 15 CR 381 (RJD)

Lydia Hills, an attorney admitted to practice in the state of New York since 2011, was convicted today by a federal jury in Brooklyn of obstructing an official proceeding, and conspiring to do the same.  Specifically, Hills attempted to influence the U.S. Attorney’s Office for the Southern District of New York (USAO-SDNY) to remove a lien on her client’s real properties by misrepresenting that the properties would be sold and that the client would not receive any proceeds from the sale.  The verdict followed a three-day trial before United States District Judge I. Leo Glasser.  When sentenced, Hills faces up to 20 years’ imprisonment on each count of the indictment.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the verdict.   

“As proved at trial, Hills violated her oath as an attorney by participating in a corrupt scheme to impede the collection of forfeiture and restitution owed to the government by her client,” stated United States Attorney Donoghue.  “Today’s verdict holds her responsible for attempting to undermine the laws she was sworn to uphold, and serves as a message to others that this Office will not tolerate such conduct.”

“When the government imposes a restitution and forfeiture agreement in response to a crime that’s been committed, the best course of action is to pay up.  In this case, Lydia Hills masterminded a scheme so her client could skirt the system. At one point, Hills expressed concerns about the deal that was about to go down.  As evidenced by today’s conviction, she had every reason to fear the inevitable outcome,” stated FBI Assistant Director-in-Charge Sweeney.

Hills’ client was convicted in 2010 in federal court in the SDNY of conspiracy to commit wire fraud and bank fraud.  The client was sentenced to 70 months’ imprisonment and ordered to pay more than $4.9 million in restitution (the Judgment) and more than $13.5 million in forfeiture (the Forfeiture Order).  The USAO-SDNY filed a lien against four properties in Queens, New York, to prevent Hill’s client from selling the properties without first satisfying the Judgment and Forfeiture Order.

Hills, who was also a licensed as a real estate broker, subsequently represented the client in a mortgage “short sale” of the properties.  In a short sale, the mortgage holder can pay off the mortgage with the proceeds of the short sale, but the mortgager does not receive any of the proceeds.  During March and April 2016, Hills conspired with her client to sell the four properties in a transaction where the client would receive the sales proceeds in a hidden cash transaction and conceal it from the USAO-SDNY, which was entitled to the proceeds to partially satisfy the Judgment and Forfeiture Order.  On March 15, 2016, Hills faxed a letter to the USAO-SDNY requesting that the lien be released in order to proceed with the sale, falsely representing that the client would not receive any financial benefit from the short sale. However, on April 6, 2016, Hills, the client and the buyer met at the closing, and the buyer gave Hills a bag containing $33,100 in cash, representing $25,000 for one property and Hills’ broker fee of $8,100.  At the closing, which was recorded by FBI agents, Hills told the buyer with regard to her client, “I’m afraid.  I’m an attorney… I don’t want her to say something… The wrong thing on the phone one day and it’s being recorded and I’m screwed.”

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Martin E. Coffey and Alexander Mindlin are in charge of the prosecution.

The Defendant:

LYDIA HILLS
Age:  38
Brooklyn, New York

E.D.N.Y. Docket No. 16-cr-204 (ILG)

Earlier today in federal court in Brooklyn, Richard Luthmann, a Staten Island attorney, pleaded guilty to wire fraud conspiracy and extortion conspiracy before United States Magistrate Judge Ramon E. Reyes, Jr.  As part of his guilty plea, Luthmann stipulated that he obstructed justice following his arrest, by sending a threatening letter to a potential witness whom he believed was cooperating with the government and violating a court order regarding discovery materials. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Jonathan Carson, Special Agent-in-Charge, U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, New York Field Office (Commerce), announced the guilty plea.

Beginning in summer 2015, Luthmann, co-defendant George Padula and the victim participated in a scheme in which they contracted with overseas companies to sell and ship them containers of valuable scrap metal, but instead packed the containers with cheap filler material, such as concrete blocks.  As part of the scheme, Luthmann registered shell companies, including Omni Metal Corporation, with the New York Department of State and recruited a client of his law practice to be the nominal president of Omni.  At the direction of Luthmann and Padula, the client opened bank accounts to facilitate the fraud, and between October 2015 and December 2015, the over-seas companies wired over $500,000 to those accounts.  That money was then transferred into accounts controlled by Luthmann or a co-conspirator.

On December 5, 2016, Luthmann lured the victim to his law office, ostensibly to sign some paperwork.  Once there, Padula and co-defendant Michael Beck blocked the victim from leaving.  Beck then pulled out a firearm, aimed it at the victim’s head and knee, and claimed the victim owed him $10,000 because Beck had purchased a $7,000 debt that the victim owed Padula, plus a $3,000 “vig,” or interest payment, that Beck had added.  The victim was then permitted to leave, but not before being warned by Padula not to contact the police. 

When sentenced, Luthmann faces a maximum sentence of 20 years’ imprisonment on each count.  

Padula and Beck have previously pleaded guilty, respectively, to wire fraud conspiracy (Padula), kidnapping conspiracy (Beck), extortion conspiracy and use of a firearm in connection with a crime of violence (Padula and Beck).

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

The Defendants

RICHARD LUTHMANN
Age:  39
Staten Island, New York

GEORGE PADULA III
Age:  30
Staten Island, New York

MICHAEL BECK
Age:  60
Staten Island, New York

E.D.N.Y. Docket No. 17-CR-664 (JBW)

The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today that the United States filed suit under the federal Safe Drinking Water Act against the city of New York and the New York City Department of Environmental Protection for their longstanding failure to cover the Hillview Reservoir located in Yonkers, New York.  A consent decree requiring the City to make improvements and cover the Reservoir at an estimated cost of $2.975 billion and to pay a $1 million civil penalty was also lodged with the Court.  The State of New York will be a co-plaintiff and is a party to the consent decree.

“Today we take the necessary steps to fix a serious public-health problem,” said Assistant Attorney General Jeffrey Bossert Clark for the Department of Justice’s Environment and Natural Resources Division.  “Congress enacted the Safe Drinking Water Act to ensure that every American has access to safe water to drink.  And we vindicate that Act by ensuring in our enforcement action that the City of New York will comply with this federal law by protecting against contaminants aerially deposited into the Hillview Reservoir, which millions of New Yorkers depend for their everyday drinking water needs.”

“The United States brought this action to ensure that New York City covers the Hillview Reservoir to protect the drinking water City residents receive from the Catskill-Delaware Drinking Water Supply.  This Office will continue to monitor and enforce the Consent Decree through completion of its requirements,” said United States Attorney Richard P. Donoghue for the Eastern District of New York.

“New York City failed to comply with Safe Drinking Water Act requirements that keep drinking water safe from harmful bacteria and viruses, even when it was under an order to do so,” said EPA Administrator Andrew Wheeler. “EPA will ensure the City complies with the decree and takes the necessary steps to prevent its drinking water from harming the health of its residents.”

The Reservoir is part of New York City’s public water system, which delivers up to a billion gallons of water a day.  The Reservoir is an open storage facility and is the last stop for drinking water before it enters the City’s water tunnels for distribution to city residents.  The 90-acre reservoir is divided into two segments, the East and West Basins.  Prior to the water entering the Reservoir, it receives a first treatment of chlorine and ultraviolet treatment.  Since the Reservoir is an open storage facility, the treated water in the Reservoir is subject to recontamination with microbial pathogens from birds, animals, and other sources, such as viruses, Giardia, and Cryptosporidium.  Giardia and Cryptosporidium are protozoa that can cause potentially fatal gastrointestinal illness in humans.  

The City has been required to cover the Reservoir since it first executed an administrative order with the State of New York on March 1, 1996.  Under the Safe Drinking Water Act and its regulations, the City also became obligated, as of March 6, 2006, to cover the Reservoir by April 1, 2009.  In May 2010, EPA entered into an administrative order with the City requiring the City to meet a series of milestones to cover the Reservoir.  The first milestone was Jan. 31, 2017.  When the City failed to meet that date, this lawsuit followed. 

The consent decree requires construction of two projects in addition to the cover, the Kensico Eastview Connection (KEC) and the Hillview Reservoir Improvements (HRI).  The KEC entails the construction of a new underground aqueduct segment between the upstream Kensico Reservoir and Eastview ultraviolet treatment facility.  The HRI requires extensive repairs to the Hillview Reservoir, including replacing the sluice gates that control water flow and building a new connection between the reservoir and water distribution tunnels.  The completion of the KEC is expected to take until 2035.  The City estimates the construction cost of the KEC to be approximately $1 billion.  The HRI project will be conducted concurrently with the KEC and is anticipated to be completed by 2033.  The City estimates the construction cost of the HRI to be approximately $375 million.  Following the completion of the KEC and the HRI, the East Basin cover will be constructed, with expected commencement of full operation in 2042, and then the West Basin cover will be constructed, with expected commencement of full operation in 2049.  The City’s estimate in 2009 for the cost of its then planned concrete cover for the 90-acre Reservoir was $1.6 billion. 

Until the cover is in operation, the consent decree also requires the City to implement Interim Measures to help protect the water, including enhanced wildlife management at the Reservoir and Reservoir monitoring.

In addition, under the consent decree, the City will pay the United States a civil penalty of $1 million for its past violations of federal requirements.  The consent decree also provides that the City will pay New York State $50,000, and implement a state Water Quality Benefit Project in the amount of $200,000, to settle the State’s claim for penalties for violations of a state administrative order.

The proposed settlement which is subject to a 30-day public comment period is available at: https://www.justice.gov/enrd/consent-decrees.

The civil negotiations and settlement were handled by the U.S. Attorney’s Office’s Civil Division and the U.S. Department of Justice’s Environment and Natural Resources Division.  Negotiations were conducted by Assistant United States Attorney Deborah B. Zwany, working with Elizabeth Yu of the Environment and Natural Resources Division; Phyllis Kaplan Feinmark, Regional Counsel’s Office, EPA Region 2; Doughlas McKenna, Chief of the Water Compliance Branch, EPA Region 2; Nicole Foley Kraft, Chief of the Ground Water Compliance Section, EPA Region 2; Morgan Rog of the EPA Office of Enforcement and Compliance Assurance; Gavin McCabe from the New York State Attorney General’s Office; and Roger Sokol from the New York State Department of Health’s Bureau of Water Supply Protection.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Jeffrey Bossert Clark, Assistant Attorney General for the Environmental and Natural Resources Division of the United States Department of Justice, and Andrew Wheeler, Administrator of the United States Environmental Protection Agency (EPA), announced today that the United States filed suit under the Safe Drinking Water Act against the City of New York and the New York City Department of Environmental Protection (the City) for failure to cover the Hillview Reservoir (the Reservoir), located in Yonkers, New York, in violation of federal regulation and federal and state administrative orders.  A Consent Decree requiring the City to cover the Reservoir and pay a civil penalty was also lodged with the Court.  Following a 30-day public comment period, the United States will review the comments and, if appropriate, move for entry of the Consent Decree by the Court.

“The United States brought this action to ensure that New York City covers the Hillview Reservoir to protect the drinking water City residents receive from the Catskill-Delaware Drinking Water Supply.  This Office will continue to monitor and enforce the Consent Decree through completion of its requirements,” said United States Attorney Richard P. Donoghue. 

“Today we take the necessary steps to fix a serious public-health problem,” said Assistant Attorney General Jeffrey Bossert Clark for the Department of Justice’s Environment and Natural Resources Division.  “Congress enacted the Safe Drinking Water Act to ensure that every American has access to safe water to drink.  And we vindicate that Act by ensuring in our enforcement action that the City of New York will comply this federal law by protecting against contaminants aerially deposited into the Hillview Reservoir, which millions of New Yorkers depend for their everyday drinking water needs.”          

“New York City failed to comply with Safe Drinking Water Act requirements that keep drinking water safe from harmful bacteria and viruses, even when it was under an order to do so,” said EPA Administrator Wheeler. “EPA will ensure the City complies with the decree and takes the necessary steps to prevent its drinking water from harming the health of its residents.”

The Reservoir is part of New York City’s public water system.  It is an open storage facility and is the last stop for drinking water before it enters the City Water Tunnels for distribution to City residents.  The 90-acre Reservoir receives nearly a billion gallons of water each day through the Catskill and Delaware Aqueducts, and serves as a holding tank that allows the City to meet daily peak water demand.  It is divided into two segments, the East and West Basins.  Prior to the water entering the Reservoir, it receives a first treatment of chlorine and ultraviolet treatment.  Since the Reservoir is downstream of these treatments and is an open storage facility, the finished water[1] in the Reservoir is subject to recontamination with microbial pathogens, such as viruses, Giardia and Cryptosporidium, from birds, animals and other sources.  Giardia and Cryptosporidium are protozoa that can cause potentially fatal gastrointestinal illness in humans.  If the water in the Reservoir were to be re-contaminated, public health would be threatened, since sufficient microbial treatment is not available downstream of the Reservoir.  A cover is necessary to prevent recontamination by such pathogens.  Until the cover is in operation, the City is required to take active measures to control wildlife in and around the Reservoir and monitor the Reservoir to ensure that the water is safe for drinking.

The City has been required to cover the Reservoir since it first executed an Administrative Order with the State of New York on January 26, 1999.  On March 6, 2006, the City also became obligated to cover the Reservoir under federal regulation, specifically the Safe Drinking Water Act.  The regulation required uncovered finished water storage facilities, such as the Reservoir, to be covered by April 1, 2009, or for the discharge from the uncovered finished water storage facilities to be treated to achieve inactivation and/or removal of microbial contaminants.  In May 2010, EPA entered into an Administrative Order requiring the City to meet a series of milestones leading to the completion of a cover for the Reservoir.  The first milestone date was January 31, 2017.  The City failed to meet that date, and this lawsuit followed. 

The Consent Decree contains requirements for construction of two projects in addition to the cover, the Kensico Eastview Connection (KEC) and the Hillview Reservoir Improvements (HRI).  The KEC entails the construction of a new underground aqueduct segment between Kensico and Eastview that replaces the previously planned Catskill Aqueduct Pressurization Project.  The HRI requires extensive repairs to the Hillview Reservoir, including replacing the sluice gates that control water flow and building a new connection between the reservoir and water distribution tunnels.  The completion of the KEC is expected to take until 2035.  The City estimates the construction cost of the KEC to be approximately $1 billion.  The HRI project will be conducted concurrently with the KEC and is anticipated to be completed by 2033.  The City estimates the construction cost of the HRI to be approximately $375 million.  While the KEC and HRI construction and repair work are underway, the City will conduct facilities planning and design work for the Hillview cover.  Following the completion of the KEC and the HRI, the East Basin cover will be constructed, with expected commencement of full operation in 2042, and then the West Basin cover will be constructed, with expected commencement of full operation in 2049.  The City’s estimate in 2009 for the cost of its then planned concrete cover for the 90-acre Reservoir was $1.6 billion.  The actual cost of the cover may be lower, should the City choose a different type of cover.

Because the schedule in the Consent Decree is lengthy, and there is a possibility that the schedule could be accelerated under certain circumstances, the Consent Decree provides for potential acceleration.  The Consent Decree also requires the City to implement Interim Measures to protect the water until the Hillview Reservoir cover is in full operation including: (1) enhanced wildlife management at the Reservoir; (2) weekly sampling of source water for Cryptosporidium and Giardia at the Kensico Reservoir effluent(s), and Cryptosporidium and Giardia sampling at the Reservoir effluent; (3) quality control sampling of the Reservoir effluent; and (4) implementation of a Cryptosporidium and Giardia Action Plan for response procedures for elevated Cryptosporidium and Giardia at the Reservoir.

In addition, under the Consent Decree, the City will pay the United States a civil penalty of $1 million for its past violations of federal requirements.  The Consent Decree also provides that the City will pay New York State $50,000, and implement a state Water Quality Benefit Project in the amount of $200,000 to settle the State’s claim for penalties for violations of a State administrative order.

The civil negotiations and settlement were handled by the Office’s Civil Division.  Assistant United States Attorney Deborah B. Zwany is in charge of this matter, working together with  Elizabeth Yu, U.S. Department of Justice, Environment and Natural Resources Division, Phyllis Kaplan Feinmark, Regional Counsel’s Office, EPA Region 2, Doughlas McKenna, Chief of the Water Compliance Branch, EPA Region 2 and Nicole Kraft, Chief of the Ground Water Compliance Section, EPA Region 2, Gavin McCabe from the New York State Attorney General’s Office, and Roger Sokol from the New York State Department of Health’s Bureau of Water Supply Protection.

[1] Finished water is water that has been introduced into the distribution system of a public water system and is intended for distribution and consumption without further treatment, except as necessary to maintain water quality in the distribution system.

Earlier today, at the federal courthouse in Central Islip, Raymond R. Pellegrino, a chiropractor, pleaded guilty to health care fraud.  Today’s plea took place before United States District Judge Joseph F. Bianco.  When sentenced, Pellegrino faces up to 10 years in prison, as well as restitution of $2,110,000, forfeiture of $504,444 and a fine to be determined.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, announced the guilty plea.

“Pellegrino abused his position of trust as a health care provider by billing millions of dollars in fraudulent claims for services that doctors never provided,” stated United States Attorney Donoghue.  “Today’s guilty plea sends the message that those who engage in such criminal conduct will be prosecuted to the fullest extent of the law.”  Mr. Donoghue expressed his grateful appreciation to the Federal Bureau of Investigation and the New York State Department of Financial Services for its assistance in the case.

Pellegrino operated chiropractic offices in West Hempstead and Hicksville, New York.  He hired medical doctors for part-time work and then billed Anthem Empire Blue Cross Blue Shield under the taxpayer identification numbers of those doctors for osteopathic manipulation and other services purportedly provided to beneficiaries.  Between December 2013 and September 2014, Pellegrino was paid over $2 million for fraudulent claims filed with Anthem Blue Cross/Blue Shield, billing for medical services that he knew the doctors had not provided.

The government’s case is being 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:

RAYMOND R. PELLEGRINO
Age:  50
McKinney, Texas

E.D.N.Y. Docket No. 18-CR-496 (JFB)

Earlier today, in federal court in Central Islip, Jamie Rivera, a member of the Almighty Latin King and Queen Nation street gang, pleaded guilty to the 2005 murder of C.W. Post student and basketball star, Tafare Berryman.  The guilty plea was entered before United States Magistrate Judge Anne Y. Shields.    

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), and Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD), announced the guilty plea.

 “Nearly fourteen years ago, an innocent young man lost his life to senseless gang violence.  Like his family, we do not forget,” stated United States Attorney Donoghue.  “This case demonstrates our relentless pursuit of justice for the victims of gang violence and our determination to hold gang members accountable.”  Mr. Donoghue expressed his grateful appreciation to the FBI, DEA and NCPD for their outstanding work on the case.

According to court filings and the facts presented at the plea proceeding, on April 2, 2005, Rivera and other Latin King gang members were present at La Mansion bar and nightclub, located on Long Beach Road in North Long Beach.  Also present were several C.W. Post students, including Tafare Berryman and some of his friends.  At least one altercation occurred in the club between gang members and a Post student, and later continued outside in the parking lot. 

Berryman and a friend left the club and while walking to their car, the friend was hit in the head with a bottle, causing a laceration.  The two entered a car and drove away.  Shortly thereafter, Berryman’s friend pulled the car to the side of the road to tend to the bleeding cut on his head.  Rivera then drove up alongside and fatally shot Berryman once, believing that Berryman and his friend had been involved in the prior altercation in the parking lot.

When sentenced, Rivera faces a maximum term of life.  

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

The Defendant:

Jaime Rivera
Age: 32
Freeport, New York

E.D.N.Y. Docket No. 17-50 (SJF) (SIL)

An indictment was unsealed today in federal court in Brooklyn charging Anthony Pandrella, an alleged longtime associate of the Gambino organized crime family, with the Hobbs Act robbery and murder of  78-year-old Vincent Zito.  The indictment was returned under seal by a federal grand jury on March 7, 2019.  Pandrella was arrested last night and is scheduled to be arraigned this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the charges.

According to the indictment and detention letter, on October 26, 2018, Pandrella met with Zito, a friend of many years, in Zito’s home.  While there, he shot Zito in the back of the head at close range, and stole the assets of Zito’s loan business.  Pandrella then cleaned up evidence that might link him to the murder.  Later that day, Pandrella returned to Zito’s home and met with his family, friends and relatives and tried to learn the status of law enforcement’s investigation.  Pandrella was captured on security camera footage coming to and going from Zito’s residence at the time of the robbery and murder. Additionally, Pandrella’s DNA was recovered from the trigger of the murder weapon.

“As charged in the indictment, Pandrella executed a 78-year-old man in his own home so he could steal from him” stated United States Attorney Donoghue.  “With today’s arrest, he will now face justice for these brutal crimes.”  Mr. Donoghue extended his grateful appreciation to the Brooklyn District Attorney’s Office for its assistance during the investigation.

“An associate of the Gambino crime family allegedly shoots his friend in the back of the head, returns to the home to visit with the family and then thinks he can dispose of the evidence of the crime,” stated FBI Assistant Director-in-Charge Sweeney.  “It takes a certain type of evil to murder a friend in their own home, and then console the grieving relatives.  The FBI Joint Organized Crime Task Force hasn’t stopped pursuing members and associates of these crime families and bringing them to justice for their disregard of the law and human life.”

“Stamping out organized crime and the violence that is associated with it remains a priority of the NYPD and its partners in law enforcement,” stated NYPD Commissioner O’Neill.  “I want to thank our colleagues at the Eastern District, the FBI, the Brooklyn District Attorney’s office, and the investigators involved in the case for bringing this individual to justice and for their unceasing efforts to combat organized crime and violence.”

 The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, Pandrella faces up to life imprisonment and is eligible for the death penalty.

The government’s case is being prosecuted by the Office’s Organized Crime and Gang Section.  Assistant United States Attorney M. Kristin Mace is in charge of the prosecution.

The Defendant:

Anthony Pandrella
Age:  59
Brooklyn, New York

E.D.N.Y. Docket No. 19-CR-122 (MKB)

A 22-count indictment was unsealed today in federal court in Brooklyn charging Rakesh Kumar, the President of Orba Construction Company (“Orba”), with conspiracy to commit mail and wire fraud, and 21 counts of mail fraud and wire fraud.  The charges stem from Kumar’s alleged misrepresentations to the New York City School Construction Authority (“SCA”) regarding the number of hours worked and wages paid by Orba to employees on New York City public school construction projects.  Kumar was arrested today and is scheduled to be arraigned this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr.     

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Margaret Garnett, Commissioner, New York City Department of Investigation, and Michael Mikulka, Special Agent-in-Charge, U.S. Department of Labor, Office of Inspector General, announced the charges.

As alleged in the indictment, between 2014 and 2018, Kumar submitted false certified payrolls to the SCA for work performed by Orba employees on SCA-funded projects.  These payroll forms falsely stated that Orba had paid its employees the prevailing wage, as required by the New York State labor law and labor agreements with the SCA, when in fact the employees had been paid far less, often in cash or by checks issued by a related company owned by Kumar.

“As alleged, through his actions, Kumar cheated laborers, who toiled many long days at manual labor, out of their honest and hard-earned wages,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will vigorously pursue employers who illegally enrich themselves at the expense of their workers.”

“An important mission of the Office of Inspector General is to investigate allegations of fraud related to union members’ wages and benefits,” stated DOL OIG Special Agent-in-Charge Mikulka.  “We will continue to work with our law enforcement partners to investigate these types of allegations.”

“Theft of wages has far-reaching effects – stripping hard-working employees of their rightful pay, jeopardizing the financial security of all those who rely on the wage-earner’s income, and creating unfair advantages over companies that do right by their workers,” stated DOI Commissioner Garnett.  “In this case, Orba Construction Corporation for five years siphoned workers’ pay through underreporting hours on doctored payroll reports, according to the charges. DOI will continue working with its partners like the U.S. Attorney for the Eastern District of New York to investigate bad actors who steal their employees’ wages.”

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

If convicted, Kumar faces up to 20 years’ imprisonment for each of the mail and wire fraud charges.

The government’s case is being prosecuted by the Office’s Public Integrity Section.  Assistant United States Attorney Martin E. Coffey is in charge of the prosecution.

The Defendant

RAKESH KUMAR (also known as “Rikki”)
Age:  64
Basking Ridge, New Jersey

E.D.N.Y. Docket No. 19-CR-101 (DLI)

Earlier today, at the federal courthouse in Central Islip, Suzanne Silva, the former Chief Operating Officer of Winthrop University Hospital Employees Federal Credit Union (Winthrop University HEFCU), pleaded guilty to embezzling $465,172 during her employment at the credit union.  Today’s plea took place before United States District Judge Denis R. Hurley.  When sentenced, Silva faces up to 30 years in prison, as well as restitution of $465,172 and a fine of up to $1 million.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty plea.

“Silva has admitted that she abused her authority as Chief Operating Officer by stealing funds from the Credit Union for personal travel and shopping sprees,” stated United States Attorney Donoghue.  “Today’s guilty plea sends the message that those who engage in such criminal conduct will be caught and prosecuted.”

Between March 2011 and June 2018, Silva used her authority at Winthrop University HEFCU to transfer hundreds of thousands of dollars from operating accounts of the credit union to accounts in her name and the names of family members.  She used the funds to take Caribbean cruises, travel to Cancun and pay thousands of dollars a month for purchases from the Amazon and Etsy websites.  Silva’s employment was terminated by Winthrop University HEFCU in June 2018. 

The government’s case is being 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:

Suzanne Silva
Age:  35
Carle Place, New York

E.D.N.Y. Docket No. 18-CR-507 (DRH)

Earlier today, following a seven-week trial, a federal jury in Central Islip, New York, returned guilty verdicts against former Nassau County Executive Edward Mangano on multiple counts of accepting bribes and kickbacks in exchange for official government action, and for conspiracy to obstruct justice.  Linda Mangano, the wife of Edward Mangano, was also convicted of conspiracy to obstruct justice, obstruction of justice and making false statements to Federal Bureau of Investigation (FBI) agents in connection with her employment by Long Island restaurateur Harendra Singh.

When they are sentenced by United States District Judge Joan M. Azrack, Edward Mangano faces up to 20 years’ imprisonment on honest services wire fraud charges and conspiracy to commit honest services wire fraud, up to 10 years’ imprisonment for federal program bribery, and up to five years’ imprisonment for conspiracy to commit federal program bribery.  Edward Mangano and Linda Mangano each face up to 20 years’ imprisonment for each obstruction of justice charge, and up to five years’ imprisonment for each false statement charge. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, FBI, New York Field Office, and Jonathan D. Larsen, Acting Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York (IRS-CI), announced the verdict.

“As found by the jury, Edward Mangano abused his power as a public official by taking bribes and kickbacks from a businessman in exchange for helping him obtain loans worth millions of taxpayer dollars,” stated U.S. Attorney Donoghue.  “Among the personal benefits received was a lucrative no-show job for Linda Mangano.  The defendants tried and failed to cover up their crimes by lying to the FBI and federal prosecutors, and will now be held responsible for these crimes.  No one is above the law.  The Eastern District and the FBI will be relentless in our efforts to root out corruption at all levels of government in New York.”

“In a quid-pro-quo wheeling and dealing, Edward Mangano effectively opened the door that unjustly benefitted restaurateur Harendra Singh, sat idly by while public funds were exchanged for favors, and waited patiently in the wings to accept a payout for the plan he put in motion,” stated FBI Assistant Director-in-Charge Sweeney.  “In Linda Mangano’s case, she kept up the ruse with a bogus job as food taster and menu planner at one of Singh’s restaurants.  Whether they believe it or not, today we’ve proven they bit off more than they could chew.”

“Serving the public is an honor, especially when that position is the result of being elected by the people,” stated IRS-Criminal Investigation Acting Special Agent-in-Charge Larsen.  “Mr. Mangano abused his elected office and the trust of his constituents. Our agents from IRS-CI diligently utilized their investigative expertise to prove these complex financial transactions.”

The evidence at trial established that between January 2010 and February 2015, Edward Mangano engaged in schemes to solicit and receive bribes and kickbacks from Singh.  In return for the cash and personal benefits he received, Mangano, who served as Nassau County Executive from January 2010 to December 2017, performed official actions to benefit Singh in connection with his businesses.

The TOB Loan Scheme

Several weeks after Edward Mangano took office as Nassau County Executive in January 2010, he urged the TOB Supervisor to help Singh obtain financing in order to make required capital improvements at TOBAY Beach and The Woodlands at the TOB golf course, by authorizing the TOB to indirectly guarantee four bank loans totaling approximately $20 million.  Mangano used his official position to ensure that the TOB backed the loans.  In April 2010, Singh hired Linda Mangano for a sham job as the purported Director of Marketing for Singh’s businesses.  On June 8, 2010, the TOB board voted to authorize the town to back Singh’s personal loans for the beach and the golf course.  Singh paid for five vacations, hardwood flooring, a custom-made office chair, a massage chair and a watch for the Manganos, as well as over $450,000 in total for Linda Mangano’s no-show job.  

Obstruction of Justice

Edward and Linda Mangano conspired to obstruct a federal grand jury investigation when they schemed with Singh to fabricate examples of work never performed by Linda Mangano’s at the Water’s Edge, in an attempt to thwart a grand jury investigation.  On May 20, 2015 and May 22, 2015, Linda Mangano made false statements to the FBI and federal prosecutors about the work she claimed to have performed for Singh.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Catherine M. Mirabile, Lara Treinis Gatz and Christopher Caffarone are in charge of the prosecution.  Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division is responsible for the forfeiture of assets.

The Defendants:

EDWARD MANGANO
Age:  56
Bethpage, New York

LINDA MANGANO
Age:  56
Bethpage, New York

E.D.N.Y. Docket No. 16-CR-540 (S-2) (JMA)

BROOKLYN, NY – An indictment was unsealed on March 4, 2019, charging Najib Allam, an executive of the Privinvest family of maritime services companies, and Teofilo Nhangumele and Antonio do Rosario, former Mozambican government officials, for their roles in a $2 billion fraud and money laundering scheme that victimized investors in the United States and around the world.  The indictment was previously unsealed on January 3, 2019 as to co-defendants Jean Boustani, a Privinvest executive, Manuel Chang, the former Finance Minister of Mozambique, and Andrew Pearse, Surjan Singh and Detelina Subeva, former high-ranking investment bankers at an international investment bank (the Investment Bank).  Each defendant is charged with wire fraud conspiracy and money laundering conspiracy.  In addition, Boustani, Allam, Chang, do Rosario, Pearse, Singh and Subeva are charged with securities fraud conspiracy.  Pearse, Singh and Subeva are also charged with conspiracy to violate the anti-bribery and internal controls provisions of the Foreign Corrupt Practices Act (FCPA).

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Brian A. Benczkowski, Assistant Attorney General of the Justice Department’s Criminal Division, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charges.

“As charged in the indictment, the defendants orchestrated an immense fraud and bribery scheme that took advantage of the United States financial system, defrauded its investors and adversely impacted the economy of Mozambique, in order to line their own pockets with hundreds of millions of dollars,” said United States Attorney Donoghue.  “This indictment underscores the Department of Justice’s continuing efforts to end such fraudulent and corrupt practices and to hold those responsible to account for their crimes.” 

“The indictment unsealed today alleges a brazen international criminal scheme in which corrupt Mozambique government officials, corporate executives, and investment bankers stole approximately $200 million in loan proceeds that were meant to benefit the people of Mozambique,” said Assistant Attorney General Benczkowski.  “The Department of Justice and our law enforcement partners are dedicated to using all tools at our disposal to prosecute those who engage in money laundering, financial fraud and corruption at the expense of U.S. investors, wherever those individuals may be located.”

“Today’s indictment proves that no matter who you are, or what position of power you’re in, you’re not immune from prosecution,” stated FBI Assistant Director-in-Charge Sweeney.  "The FBI will continue to use all resources at our disposal to uncover crimes of this nature and expose them for what they really are.”

The Fraudulent Scheme

The indictment alleges that between approximately 2013 and 2016, Boustani, Allam, Nhangumele, do Rosario, Chang, Pearse, Singh, Subeva and their co-conspirators ensured that the Investment Bank, and another foreign investment bank, would arrange for more than $2 billion to be extended, in three loans, to companies owned and controlled by the Mozambican government:  Proindicus S.A. (Proindicus), Empresa Moçambicana de Atum, S.A. (EMATUM) and Mozambique Asset Management (MAM).  The proceeds of the loans were intended to fund three maritime projects for which Privinvest was to provide the equipment and services.  Specifically, Proindicus was to perform coastal surveillance, EMATUM was to engage in tuna fishing and MAM was to build and maintain shipyards. 

Instead, the defendants and their co-conspirators illegally facilitated Privinvest’s criminal diversion of more than $200 million of the proceeds of the loans.  These stolen funds included more than $150 million that Privinvest — at the direction of Boustani, Allam and others — used to bribe Chang, Nhangumele, do Rosario and other Mozambican government officials to ensure that companies owned and controlled by the Mozambican government would enter into the loan arrangements, and that the government of Mozambique would guarantee those loans.  In addition, Privinvest diverted approximately $50 million in kickback payments to Pearse, Singh and Subeva, who assisted the co-conspirators to obtain financing for the loans through the Investment Bank and the other foreign investment bank.  The loans were subsequently sold in whole or in part to investors worldwide, including in the United States.  In doing so, the participants in the scheme conspired to defraud these investors by misrepresenting how the loan proceeds would be used, the amount and maturity dates of other financial obligations held by Mozambique and the ability of the government of Mozambique to repay the loans. 

To date, the companies controlled by the government of Mozambique have failed to make more than $700 million of loan repayments that have become due.

The Defendants

Boustani, a citizen and resident of Lebanon and Antigua and Barbuda, was the lead salesperson and negotiator for Privinvest, and is charged for his role in coordinating the payment by Privinvest of more than $200 million in bribe and kickback payments to Mozambican government officials and investment bankers in order to facilitate the three loans.  He is alleged to have personally received at least $15 million from the scheme.  Boustani was arrested in Queens, New York on January 2, 2019 and arraigned later that day in federal court in Brooklyn.  Boustani has pleaded not guilty to the charges, and a trial date has not yet been set.

Allam, a citizen of Lebanon, was the Chief Financial Officer of Privinvest, and is charged for his role in helping Boustani and others coordinate the payment by Privinvest of more than $200 million in bribe and kickback payments.  Allam remains at large.

Nhangumele, a citizen and resident of Mozambique, acted in an official capacity on behalf of the President of Mozambique during the charged scheme, and is charged for his role in facilitating the payment by Privinvest of over $150 million to Mozambican government officials to gain approval for the maritime projects, and to cause Mozambique to borrow more than $2 billion from the two investment banks in government-guaranteed loans to finance the projects.  Nhangumele has not yet been arrested on the charges in this indictment and Nhangumele is not currently in U.S. custody.   

Do Rosario, a citizen and resident of Mozambique, held positions within the Mozambican government, including with the Mozambican state intelligence service, known as “SISE,” and managerial roles for each of the three state-owned entities formed to undertake the maritime projects that are the subject of the indictment.  He is charged for his role in ensuring that Mozambique would undertake the maritime projects and award the contracts for those projects to Privinvest, and that Finance Minister Chang would issue government guarantees binding Mozambique to repay $2 billion in loans to undertake the projects.  He is alleged to have personally received more than $12 million from the scheme.  Do Rosario has not yet been arrested on the charges in this indictment and is not currently in U.S. custody. 

Chang, a citizen and resident of Mozambique, was the former Finance Minister of Mozambique, and is charged for signing guarantees on behalf of Mozambique for the three corrupt loans.  He is alleged to have personally received at least $5 million from the scheme.  Chang was arrested on December 29, 2018, in South Africa, pursuant to a provisional arrest warrant issued at the request of the United States.  The United States is seeking his extradition. 

Pearse, a citizen of New Zealand, Singh, a citizen of the United Kingdom and Subeva, a citizen of Bulgaria, reside in the United Kingdom.  At the time of the charged scheme, Pearse and Singh were managing directors, and Subeva was a vice president, of the Investment Bank.  Each has been charged for facilitating bribe payments to government officials in Mozambique and for circumventing the internal accounting controls of the Investment Bank, which arranged two of the three loans.  Pearse, Singh and Subeva were arrested on January 3, 2019, in the United Kingdom, pursuant to provisional arrest warrants issued at the request of the United States.  The United States is seeking their extradition.

*   *   *   *   *

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

The investigation is being conducted by the FBI’s New York Field Office.  The government’s case is being handled by the Business and Securities Fraud Section of the United States Attorney’s Office for the Eastern District of New York (EDNY), the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and the Fraud Section.  Assistant United States Attorneys Matthew S. Amatruda and Mark E. Bini of the EDNY, Trial Attorneys Margaret Moeser and Sean W. O’Donnell of MLARS and Trial Attorney David M. Fuhr of the Fraud Section are prosecuting the case.

The Criminal Division’s Office of International Affairs provided critical assistance in this case.  The Department appreciates the significant cooperation and assistance provided by the United States Securities and Exchange Commission.  The Department also appreciates the assistance provided by law enforcement authorities in the United Kingdom and in South Africa.

The Defendants: JEAN BOUSTANI
Age:  40
Lebanon, Antigua and Barbuda

NAJIB ALLAM
Age:  58
Lebanon

MANUEL CHANG
Age:  63
Mozambique

ANTONIO DO ROSARIO
Age:  44
Mozambique

TEOFILO NHANGUMELE
Age:  50
Mozambique

ANDREW PEARSE
Age:  49
United Kingdom

SURJAN SINGH
Age:  44
United Kingdom

DETELINA SUBEVA
Age:  37
United Kingdom

E.D.N.Y. Docket No. 18-CR-681 (WFK)

Earlier today, at the federal courthouse in Brooklyn, Charles Gallman, also known as “T.A.,” was sentenced by United States District Judge Carol Bagley Amon to three years’ imprisonment for conspiring to violate the Travel Act by bribing a witness to testify falsely in a double-homicide trial in Suffolk County Supreme Court, and for conspiring to make false statements to the Bureau of Prisons (BOP).  Gallman pleaded guilty to the charges on November 8, 2018.       

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence. 

 “Gallman was the driving force behind brazen criminal conduct designed to undermine our criminal justice system,” stated United States Attorney Donoghue.  “Today, the defendant has been held accountable, thanks to the outstanding work of this Office’s prosecutors and our law enforcement partners.”  Mr. Donoghue expressed his grateful appreciation to the Offices of the Queens County and Suffolk County District Attorneys for their assistance in the investigation.

The charges in the case stemmed from an investigation led by the Queens County District Attorney’s Office.  Court-authorized intercepted communications between Gallman and an attorney revealed the two plotting to bribe a witness, Luis Cherry, to testify falsely in a criminal trial against Reginald Ross in Suffolk County.  Ross was ultimately convicted of murdering two men in separate attacks in 2010.  The intercepted communications also captured Gallman scheming with three others co-conspirators, including another attorney, to defraud the BOP by submitting a fraudulent letter to help an inmate obtain early release from prison. 

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Andrey Spektor and Lindsay K. Gerdes are in charge of the prosecution.

The Defendant:

Charles Gallman (also known as “T.A.”)
Age:  57
Queens, New York

E.D.N.Y. Docket No. 18-CR-123 (CBA) 

A four-count indictment was returned on Dec. 19, 2018, by a grand jury in the Eastern District of New York, charging two executives of a shipbuilding company, three former senior Mozambican government officials, and three former London-based investment bankers for their roles in a $2 billion fraud and money laundering scheme that victimized investors from the United States and elsewhere.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Richard P. Donoghue of the Eastern District of New York, and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office made the announcement.

“The indictment unsealed today alleges a brazen international criminal scheme in which corrupt Mozambique government officials, corporate executives, and investment bankers stole approximately $200 million in loan proceeds that were meant to benefit the people of Mozambique,” said Assistant Attorney General Benczkowski.  “The Department of Justice and our law enforcement partners are dedicated to using all tools at our disposal to prosecute those who engage in money laundering, financial fraud and corruption at the expense of U.S. investors, wherever those individuals may be located.”

“As charged in the indictment, the defendants orchestrated an immense fraud and bribery scheme that took advantage of the U.S. financial system, defrauded its investors and adversely impacted the economy of Mozambique, in order to line their own pockets with hundreds of millions of dollars,” said U.S. Attorney Donoghue.  “This indictment underscores the Department of Justice’s continuing efforts to end such fraudulent and corrupt practices and to hold those responsible to account for their crimes.”

“Today’s indictment proves that no matter who you are, or what position of power you’re in, you’re not immune from prosecution,” said FBI Assistant Director in Charge Sweeney.  “The FBI will continue to use all resources at our disposal to uncover crimes of this nature and expose them for what they really are.”

Jean Boustani, 40, a citizen of Lebanon who worked for the Privinvest Group, a United Arab Emirates-based shipbuilding company, was arrested at John F. Kennedy Airport in New York on Jan. 2, 2019 and arraigned later that day in the Eastern District of New York on charges that he conspired with others to commit one count of wire fraud, one count of securities fraud, and one count of money laundering in connection with $200 million in bribe and kickback payments he helped organize relating to three loans totaling more than $2 billion that were marketed and sold to U.S. victim investors.  Boustani has pleaded not guilty to the charges; a trial date has not yet been set.  Alongside Boustani, Privinvest’s chief financial officer Najib Allam, 58, a citizen of Lebanon, was charged with the same counts.  Allam is alleged to have worked with Boustani to make the bribe and kickback payments.  Allam is not currently in U.S. custody.

Manuel Chang, 63, the former Mozambican minister of finance who is a citizen and resident of Mozambique, was charged with the same counts as Boustani, namely one count of conspiracy to commit wire fraud, one count of conspiracy to commit securities fraud, and one count of conspiracy to commit money laundering.  Chang was arrested at the request of the United States by South African authorities on Dec. 29, 2018.  The United States is seeking Chang’s extradition.

Antonio do Rosario, 44, a citizen and resident of Mozambique, was an official with Mozambique’s State Information and Security Service and a director and officer of each of the three Mozambican entities that obtained the maritime loans.  Do Rosario was charged with one count of conspiracy to commit wire fraud, one count of conspiracy to commit securities fraud, and one count of conspiracy to commit money laundering in connection with his receipt of bribe payments relating to the loans.  Do Rosario is not currently in U.S. custody.

Teofilo Nhangumele, 50, a citizen and resident of Mozambique, acted on behalf of the Office of the President of Mozambique.  Nhangumele was charged with one count of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering in connection with his negotiation and receipt of bribe payments relating to the loans.  Nhangumele is not currently in U.S. custody.

The three investment bankers, Andrew Pearse, 49;  Surjan Singh, 44; and Detelina Subeva, 37, each of whom is a resident of the United Kingdom, were also charged with one count of conspiracy to commit wire fraud, one count of conspiracy to commit securities fraud, and one count of conspiracy to commit money laundering.  In addition, each banker was charged with one count of conspiracy to violate the anti-bribery and internal controls provisions of the Foreign Corrupt Practices Act (FCPA) in connection with their roles in facilitating bribe payments to government officials in Mozambique and for circumventing the internal accounting controls of a foreign investment bank that arranged two of the loans.  At the time, Pearse and Singh were managing directors of the investment bank, and Subeva was a vice president.

Pearse, Singh and Subeva were arrested on Jan. 3, in the United Kingdom, all pursuant to provisional arrest warrants issued at the request of the United States.  The United States is seeking their extradition.

The indictment alleges that between approximately 2013 and 2016, the co-conspirators organized for more than $2 billion in three loans to be arranged by Investment Bank and another foreign bank.  The loans were made to companies owned and controlled by the Mozambican government:  Proindicus S.A., Empresa Moçambicana de Atum, S.A. (EMATUM) and Mozambique Asset Management (MAM).  The money was purportedly to be used to fund three maritime projects for which the shipbuilder, Privinvest, would provide the equipment and services.  Proindicus was to perform coastal surveillance, EMATUM was to engage in tuna fishing, and MAM was to build and maintain shipyards.  Chang, in his capacity as minister of finance, signed guarantees on behalf of Mozambique for all three fraudulent loans.  Singh signed the agreements on behalf of the investment bank for the two loans on which the bank acted as primary arranger.  The investment bank subsequently paid the loans directly to Privinvest.

As further alleged in the indictment, the co-conspirators facilitated Privinvest’s criminal diversion of more than $200 million in loan proceeds, including more than $150 million in bribe payments to Chang and other Mozambican government officials that Privinvest paid to ensure that Mozambique would enter into the loan arrangements.  In addition to the bribe payments, the alleged fraud also included approximately $50 million in kickback payments to Pearse, Singh, and Subeva, who assisted the conspirators to obtain financing for the loans through their investment bank and a second foreign investment bank.  Pearse, Singh, and Subeva, along with the other members of the conspiracy, allegedly subsequently sold the loans to investors worldwide, including in the United States.  Moreover, the participants in the scheme allegedly conspired to defraud these investors by misrepresenting how the loan proceeds would be used, the amount and maturity dates of other loans and debt Mozambique was obligated to pay, and the ability of Mozambique or its state-owned entities to repay the loans.

Mozambique and its state-owned entities have thus far allegedly failed to make more than $700 million of repayments that have become due on the loans.

The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The investigation is being conducted by the FBI’s New York Field Office.  The government’s case is being prosecuted by the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Fraud Section, and the Business and Securities Fraud Section of the U.S. Attorney’s Office for the Eastern District of New York.  MLARS Trial Attorneys Sean W. O’Donnell and Margaret A. Moeser, Fraud Section Trial Attorney David M. Fuhr, and Assistant U.S. Attorneys Matthew S. Amatruda and Mark E. Bini of the Eastern District of New York are prosecuting the case.

The Criminal Division’s Office of International Affairs provided critical assistance in this case.  The Department appreciates the significant cooperation and assistance provided by the Securities and Exchange Commission.  The Department also appreciates the assistance provided by law enforcement authorities in the United Kingdom and in South Africa.

MLARS’s Bank Integrity Unit investigates and prosecutes banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.

The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

An indictment was unsealed today in federal court in Brooklyn charging Grace Kay with wire fraud related to a long-running scheme to solicit funds from real estate investors.  Kay was arrested today and is scheduled to be arraigned this afternoon before United States Magistrate Judge James Orenstein.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charges.

According to the indictment, between January 1, 2010 and April 15, 2018, Kay and co-conspirators falsely represented to investors that she had inherited real estate in Japan, including three skyscraper buildings, and required funds to pay various fees and taxes in order to sell the properties and return a large profit to the investors.  Relying on Kay’s false representations, investors provided Kay with more than $10 million, which she stole for her personal use. 

“As alleged in the indictment, Kay devised a real estate scheme built on tall tales to fleece investors out of millions of dollars,” stated United States Attorney Donoghue.  “With today’s arrest, this Office begins the process of bringing justice to the victims.”

The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted of wire fraud, Kay faces up to 20 years’ imprisonment.

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorney Matthew S. Amatruda is in charge of the prosecution.

The Defendant:

GRACE KAY
Age:  74
Manhasset, New York

E.D.N.Y. Docket No. 19-CR-113 (DLI)

A Springfield Gardens, New York, resident was convicted yesterday by a federal jury for conspiring to commit aggravated identity theft and for two counts of aiding and assisting in the preparation of false tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to the evidence presented at trial, Afolabi Ajelero, the owner of Mo-Betta Ventures Inc., a tax preparation business located in Springfield Gardens, New York, conspired with others to possess and use without lawful authority one or more means of identification of another person. He also filed false corporate income tax returns for the 2014 and 2015 tax years for his business.

Ajelero was acquitted of wire fraud and aggravated identity theft counts.

Ajelero faces a maximum sentence of five years for the conspiracy conviction and a maximum sentence of three years in prison for each count of aiding or assisting in the preparation of false returns. He also faces a period of supervised release, restitution, forfeiture and monetary penalties.

On Feb. 15, 2019, co-defendant Hakeem Bamgbala pleaded guilty to 18 counts of wire fraud, 22 counts of aggravated identity theft, one count of conspiring to commit aggravated identity theft, and one count of aiding and assisting the filing of a false tax return. On July 31, 2018, co-defendant Michael Campbell pleaded guilty to conspiracy to commit aggravated identity theft. A sentencing date has not been set for Bamgbala and Campbell.

Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorneys Mark McDonald and Eric Powers of the Tax Division, who are prosecuting the case.

Earlier today in federal court in Brooklyn, Stella Boyadjian, the operator of a non-profit organization called Big Apple Music Awards Foundation Inc. (BAMA), based in Rego Park, New York, pleaded guilty to conspiracy to bring aliens unlawfully into the United States, visa fraud, and aggravated identity theft.  The guilty plea was entered before United States Magistrate Judge Sanket J. Bulsara.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Brian A. Benczkowski, Assistant Attorney General of the Justice Department’s Criminal Division, and Christian J. Schurman, Principal Deputy Assistant Secretary for Diplomatic Security and Director for Diplomatic Security Service, announced the guilty plea.

Between January 2013 and December 2014, Boyadjian and others (the conspirators) engaged in a widespread visa fraud scheme to bring foreign nationals illegally into the United States by fraudulently claiming to the United States Citizenship and Immigration Services (USCIS) that they were members of traditional Armenian performance groups and thus qualified for P-3 visas as “culturally unique” artists or entertainers.   

The conspirators solicited foreign nationals and, in exchange for fees up to $10,000, prepared and filed fraudulent P-3 visa applications.  In furtherance of the scheme, the conspirators purchased fraudulent documentation to support the applications, including fake dance certificates and staged photo sessions where the foreign nationals wore Armenian dance costumes to make it appear as though they were traditional Armenian musicians, singers and performers.  Once successfully in the United States, some recipients of the fraudulently obtained P-3 visas paid additional fees to the conspirators to obtain extensions of their stays in the United States.  

When sentenced, Boyadjian faces a maximum of 10 years’ imprisonment for visa fraud, and an additional mandatory consecutive sentence of two years’ imprisonment for aggravated identity theft.

This case is a joint investigation by the Diplomatic Security Service’s Criminal Fraud Investigations and Overseas Criminal Investigations Divisions, with assistance from the U.S. Citizenship and Immigration Services Fraud Detection and National Security Directorate.

The government’s case is being prosecuted by Assistant United States Attorney David Gopstein and Trial Attorney Sasha N. Rutizer of the Criminal Division’s Human Rights and Special Prosecutions Section.

The Defendant:

STELLA BOYADJIAN
Age: 48
Rego Park, New York

E.D.N.Y. Docket No. 18-CR-57 (MKB)

Earlier today, at the federal courthouse in Central Islip, Ronald DeRisi pleaded guilty before United States District Judge Joseph F. Bianco to threatening to assault and murder United States senators in retaliation for their support of the nomination and confirmation of Justice Brett Kavanaugh to the U.S. Supreme Court.  When sentenced, DeRisi faces up to 10 years in prison.  As part of his plea agreement with the government, DeRisi will forfeit two rifles to the United States.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Matthew R. Verderosa, Chief of Police, United States Capitol Police, announced the guilty plea.

“This defendant threatened to assault and murder two sitting United States senators in an effort to intimidate them and interfere with their performance of official duties,” stated United States Attorney Donoghue.  “Ours is a system of laws – not threats – and the Department of Justice will vigorously prosecute those who seek to undermine the integrity of our constitutional system through violence.”  Mr. Donoghue extended his grateful appreciation to the United States Capitol Police, the Federal Bureau of Investigation and the Suffolk County Police Department for their investigative work and assistance in the case. 

 “The mission of the United States Capitol Police is to protect the Congress, the U.S. Capitol, and all who work and visit here. I want to thank our investigators for their excellent work as well as our law enforcement partners and Mr. Donoghue and his staff for bringing this investigation and trial to this satisfactory conclusion,” stated U.S. Capitol Police Chief Verderosa.

In September and October of 2018, DeRisi telephoned and left more than 10 threatening voice-messages at the offices of two United States senators in connection with the nomination and confirmation of Justice Kavanaugh to the U.S. Supreme Court.  When DeRisi was arrested on October 19, 2018, members of law enforcement recovered the prepaid cellular telephone that had been used to make the threatening calls, as well as live ammunition during the execution of a search warrant. 

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

The Defendant:

Ronald DeRisi
Age: 74
Smithtown, New York

E.D.N.Y. Docket No. 19-CR-090 (JFB)

Earlier today, in federal court in Central Islip, Brian Newton was sentenced to 19 years’ of imprisonment by United States District Judge Joseph F. Bianco following the defendant’s guilty plea on May 3, 2018 to transportation of child pornography in interstate and foreign commerce.  As part of his sentence, Newton must serve five years’ supervised release following his imprisonment, during which time he must remain registered as a sex offender and not have unsupervised contact with minors. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.

“Newton, despite being a registered sex offender, again chose to victimize children by sharing images of their abuse with others online, conduct that is deserving of a substantial prison sentence and underscores a message of deterrence to others,” stated United States Attorney Donoghue.  “The protection of innocent children is a priority of utmost importance for this Office and our law enforcement partners.  We will continue to work tirelessly to ensure that those who victimize children will be arrested and prosecuted to the full extent of the law.”  Mr. Donoghue extended his grateful appreciation to the FBI New York Crimes Against Children Task Force for its investigative work and assistance. 

“Child pornography is not an abstract crime. It is a direct byproduct of the sexual abuse of innocent children – in this instance, including infants and toddlers,” stated FBI Assistant Director-in-Charge Sweeney. “And though he was already on probation for a prior child pornography conviction, Newton continued and even escalated his depraved actions, sharing child pornography while sexually soliciting minor children online. Today’s sentence provides a measure of justice for Newton’s victims, and protects those he sought to victimize. The FBI’s Human Trafficking and Child Exploitation Task Force and our partners are committed to investigating and prosecuting anyone who seeks to harm children.”

Newton, who at the time of the charged offense was on probation from a conviction in Suffolk County in 2014 for possession of child pornography, was caught trading child pornography including sadistic depictions of the sexual abuse of infants and toddlers.  During the execution of a search warrant at his residence, law enforcement seized Newton’s large collection of child pornography, including hundreds of videos and thousands of images.  After his arrest, Newton admitted engaging in conversations with minors over internet chat platforms, as well as sending nude images of himself to minors and soliciting nude images from minors.    

This prosecution is part of Project Safe Childhood, a nationwide initiative led by the Department of Justice to combat the epidemic of child sexual exploitation and abuse.  Led by United States Attorneys’ Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Lara T. Gatz and Michael R. Maffei are in charge of the prosecution. 

The Defendant:

BRIAN JOSEPH NEWTON
Age:  38
East Northport, New York

E.D.N.Y. Docket No. 17-CR-341 (JFB)

Michael Foder, a former detective employed by the New York City Police Department (NYPD) at the time of the charged conduct, was sentenced in federal court in Brooklyn today by United States District Judge Pamela K. Chen to three months’ imprisonment.  In August 2018, Foder pleaded guilty to perjury in connection with false statements he made under oath during a criminal proceeding.  Foder was arrested in February 2018 and resigned from the NYPD in August 2018.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James P. O’Neill, Commissioner, NYPD, announced the sentence.

“Integrity is an essential characteristic for every law enforcement officer and the overwhelming majority of officers earn and deserve the trust of the public,” stated United States Attorney Donoghue.  “In choosing to lie, this defendant undermined fellow officers and rendered himself unfit to serve as a law enforcement officer.” 

On December 29, 2016, Foder, then assigned to the 70th Precinct in Flatbush, Brooklyn, falsely testified under oath at a hearing in a federal prosecution about when and how he showed photographs of two robbery suspects to a victim of a carjacking.  Following the hearing, the government found discrepancies in the photo array identifications, including when the identifications had occurred. 

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorney Nathan Reilly is in charge of the prosecution.

The Defendant:

MICHAEL FODER
Age:  42
Staten Island, NY

E.D.N.Y. Docket No. 18-CR-97 (PKC)

Earlier today, Jose Rodriguez was sentenced by United States District Judge Eric N. Vitaliano to 272 months’ imprisonment for leading a Far Rockaway-based drug trafficking organization that distributed more than a kilogram of heroin, quantities of crack and powder cocaine and marijuana, and sold more than a dozen firearms, including two assault rifles.  Rodriguez pleaded guilty on January 20, 2017 to conspiring to distribute narcotics and using and brandishing a firearm in furtherance of a narcotics distribution conspiracy. 

Rodriguez is the fifth defendant to be sentenced in this case and a related case.  In November 2017, Jose Perez was sentenced to 84 months’ imprisonment; in February 2018, Grace Jaen was sentenced to 33 months’ imprisonment; in December 2018, Jermaine Stephenson was sentenced to 72 months’ imprisonment; and in January 2019, Johnathan Johnson was sentenced to 87 months’ imprisonment. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), John B. Devito, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Division (ATF), and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the sentence.

“Rodriguez’s drug organization endangered the residents of Far Rockaway, not only by distributing highly addictive drugs and guns throughout the community, but also using threats of gun violence to operate the drug business,” stated United States Attorney Donoghue.  “This Office, along with our law enforcement partners, will continue to relentlessly investigate and prosecute to the fullest extent of the law those who threaten the safety of our communities.” 

“The frustration and fear felt in communities plagued by drug dealers and criminal organizations protecting their turf must be exhausting for people just trying to live their lives,” stated FBI Assistant Director-in-Charge Sweeney.  “The FBI’s New York Metro Safe Streets Task Force, along with our law enforcement partners, understands one of the most powerful ways to address the problem is going after the leadership of these groups.  We work day in and day out with the goal of making an impact in places where people may not feel much hope.”

“The Rodriguez organization was responsible for distributing significant amounts of illegal narcotics and guns within the community. Members of this organization utilized illegal guns to terrorize the community in order to maintain control over their lucrative drug turf,” stated ATF Special Agent-in-Charge Devito.  “This case is yet another example of how the men and woman of ATF work in a collaborative manner with all of our law enforcement partners to disrupt and dismantle violent criminal organizations. I would like to thank the Unites States Attorney’s Office for their work in prosecuting this case.”

 “This is another great example of how the NYPD, in close partnership with our law enforcement colleagues, precisely hones in on the worst criminals in New York City and sees their cases through to appropriate and meaningful prison sentences,” stated NYPD Commissioner O’Neill.  “Anyone who illegally deals in narcotics or firearms can fully expect the nation’s best investigators to be relentless in our mission to make every neighborhood safer.”

Rodriguez’s drug organization bought distribution quantities of heroin, and packaged it in “sleeves,” each containing 100 individual bags of heroin, and in “bundles,” each containing 10 individual bags of heroin, for resale by mid-level drug dealers to users.  In a recorded conversation, Rodriguez admitted earning $10,000 to $20,000 per week selling drugs. 

Rodriguez and his co-conspirators sold and used firearms in furtherance of their drug trafficking activities.  During the investigation, Rodriguez was intercepted ordering firearms from co-conspirator Jonathan Johnson, who acquired them in North Carolina and delivered them to Rodriguez in Far Rockaway.  In another intercepted call, a drug customer complained to Rodriguez that co-conspirator Jose Perez threatened him with a gun.  Rodriguez replied, “I know he pulled a gun. . . .  He did that because you owed me money.  That’s why I told him not to shoot you.” 

This case was investigated as part of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies.  The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high-level members of illegal drug and weapons trafficking organizations.

This case is 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.  The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorneys’ Offices to work in partnership with federal, state, local and tribal law enforcement and the local community to develop effective, locally based strategies to reduce violent crime.

The government’s case is being prosecuted by Assistant United States Attorneys Kevin Trowel and Mathew S. Miller.

The Defendants:

Jose Rodriguez (also known as “Lazaro”)
Age:  51
Far Rockaway, New York

Jermaine Stephenson (also known as “Half”)
Age:  36
Far Rockaway, New York

Jose Perez
Age:  53
Far Rockaway, New York

Grace Jaen
Age:  43
Far Rockaway, New York

E.D.N.Y. Docket No. 15-576-ENV

JOHNATHAN JOHNSON (also known as “Black Keys”)
Age: 38
Rockingham, North Carolina

E.D.N.Y. Docket No. 17-185-ENV

Earlier today, in federal court in Brooklyn, Keith Liwanag was sentenced to 15 years’ imprisonment by United States District Judge Jack B. Weinstein following the defendant’s guilty plea in June 2018 to sexual exploitation of a child.  Upon completion of his sentence, Liwanag must register as a sex offender.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York, announced the sentence. 

“This is a just sentence for a defendant who used technology to victimize vulnerable children half a world away,” stated United States Attorney Donoghue.  “Protecting children from sexual exploitation will always be a priority of this Office.”  Mr. Donoghue extended his grateful appreciation to INTERPOL’s Crimes Against Children Unit for its investigative work and assistance during the investigation. 

“Liwanag paid others to victimize children for his own pleasure,” stated HSI Special Agent-in-Charge Melendez.  “His use of women in the Philippines to exploit children for the production of child pornography is not just criminal, it’s evil.  Because of the great work of law enforcement and the prosecutor’s office, he will now serve 15 years for his unfathomable acts, facing the full justice of his actions behind bars.”

Between September 2016 and October 2016, Liwanag used a Facebook account to direct women in the Philippines to engage in sexual acts with children in exchange for money, and to produce and send child pornography to him over Facebook’s private messaging service.  During the government’s investigation, law enforcement seized over 50 recorded video conferences between Liwanag and women engaged in the sexual abuse of children over Facebook and Skype.  The investigation revealed that Liwanag shared the videos he created online.

This prosecution is part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by United States Attorneys’ Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The government’s case is being prosecuted by Assistant United States Attorneys Tanya Hajjar and Erin Reid. 

The Defendant: KEITH LIWANAG
Age:  27
Queens, New York

Earlier today, at the federal courthouse in Central Islip, Jermaine Green, also known as “730,” a member of the Bloods street gang from Roosevelt, New York, was sentenced by United States District Judge Joseph F. Bianco to 15 years’ imprisonment on his conviction for racketeering and discharging a firearm in connection with a crime of violence.  The charges related to Green’s involvement in a conspiracy to murder rival gang members and a November 16, 2015 shooting in which Green fired at least nine shots from an assault rifle across a busy street.  Green pleaded guilty to the charges on June 21, 2018.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD), announced the sentence.

“Green turned a suburban street into a war zone while attempting to murder a rival, firing multiple shots from an assault rifle in broad daylight, endangering not only the intended target but everyone in the vicinity,” stated United States Attorney Donoghue.  “Today’s sentence ensures that the community will be protected from further crimes by the defendant for a long time.  This Office, together with our law enforcement partners, remains committed to ridding Long Island of gangs that threaten our communities.”

“The men sentenced to federal prison in this case won’t be able to terrorize the Roosevelt community and areas around it any longer,” stated FBI Assistant Director-in-Charge Sweeney.  “They waged a decade long gang war, creating fear and spreading crime at will.  The FBI Long Island Gang Task Force investigated this case doggedly, rounding up the gang leadership, and crime dropped significantly soon after.  Our work continues on other investigations to make sure others don’t attempt to fill the void.”

“The closure of this case with the sentencing of notorious Blood gang member Jermaine Green is a clear example this type of criminal behavior will never be accepted or tolerated,” stated NCPD Commissioner Ryder.  “This multi-jurisdictional investigation completed by numerous law enforcement professionals takes a dangerous felon off the streets in Nassau County thus keeping our children, our families and the entire community safe. I would like to commend the dedication, professionalism and diligence of all of the investigators and the law enforcement agencies involved.”

On November 16, 2015, Green and a fellow Bloods gang member retaliated against the Rollin’ 60s Crips by opening fire on a man who the defendant believed was responsible for the 2008 murder in Roosevelt of a Bloods member.  The shooting took place as the man walked on Babylon Turnpike with another individual in the middle of the afternoon.    Although no one was injured, the storefront of a nearby delicatessen was struck by several bullets.   

This case is 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.  The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorneys’ Offices to work in partnership with federal, state, local and tribal law enforcement and the local community to develop effective, locally based strategies to reduce violent crime. 

To date, as part of this case, this Office has charged eight members and associates of the Bloods from Roosevelt for violent crimes committed on behalf of the gang.  Five other members and associates of the gang have pled guilty and are awaiting sentence.  The remaining two defendants are awaiting trial.

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

The Defendant:

JERMAINE GREEN (also known as “730”)
Age:  28
Roosevelt, New York

E.D.N.Y. Docket No. 17-CR-106 (S-2) (JFB)

A Brooklyn, New York, resident pleaded guilty on Friday to 42 counts of an indictment charging him with 18 counts of wire fraud, 22 counts of aggravated identity theft, one count of conspiring to commit aggravated identity theft, and one count of aiding and assisting the filing of a false tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Richard P. Donoghue for the Eastern District of New York.

According to court documents, Bamgbala, the owner of Kaybamz Inc., a tax preparation business located in Brooklyn, New York, used stolen Social Security Numbers to file false tax returns with the Internal Revenue Service (IRS) to obtain fraudulent refunds.  The superseding indictment also alleges that Bamgbala and others conspired to deposit the unlawfully obtained tax refund checks into a specified bank account to obtain the cash value of those checks, and created fraudulent IRS forms and New York State identification documents to facilitate the scheme.

Bamgbala faces a mandatory minimum sentence of two years in prison for each count of aggravated identity theft, a maximum sentence of 20 years in prison for each count of wire fraud, a maximum sentence of five years in prison for each conspiracy count, and a maximum sentence of three years in prison for the aiding and assisting in the filing of a false tax return count. He also faces a period of supervised release, restitution, forfeiture and monetary penalties.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Donoghue commended special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorneys Mark McDonald and Eric Powers of the Tax Division, who are prosecuting the case.

Earlier today, at the federal courthouse in Central Islip, Richard Jacobellis was sentenced by United States District Judge Joanna Seybert to an agreed upon 16 years of imprisonment, to be followed by three years’ supervised release, for distributing heroin.  When Jacobellis pleaded guilty in June 2018, he admitted that heroin he distributed caused the death of 20-year-old Nicholas Weber in 2016 and serious bodily injury to another in 2015. 

Richard P. Donoghue, 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.

“With today’s sentence, Jacobellis will serve a significant jail term for callously pushing deadly heroin that resulted in the death of one young man and nearly killed another, but for the heroic efforts of Suffolk County Police Officers,” stated United States Attorney Donoghue.  “We hope the victims’ families can find some solace in this result and in the knowledge that this Office will continue working tirelessly to hold accountable those who contribute to the opioid epidemic on Long Island and elsewhere in the district.”  Mr. Donoghue thanked the Suffolk County Police Department for its assistance on the case.

“The defendant’s drugs killed a young man who had a whole life in front of him,” stated DEA Special Agent-in-Charge Donovan.  “We cannot console the Weber family enough, but we can continue to investigate and arrest drug traffickers like Jacobellis.”

Jacobellis, a narcotics dealer since 2012, sold heroin to an individual on or about March 8, 2015.  The individual, then 18-years-old, used the heroin and overdosed.  Suffolk County Police Officers administered Narcan to the individual, who later recovered from a coma.  On May 16, 2016, Jacobellis sold $100 worth of heroin to Weber, then 20-years-old, causing his death.  Weber was a graduate of Kings Park High School where he was a champion wrestler in his weight class and, at the time of his death, was a student at Suffolk County Community College. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Christopher C. Caffarone is in charge of the prosecution.

The Defendant:

RICHARD JACOBELLIS
Age:  25
Ridge, New York

E.D.N.Y. Docket No. 17-CR-52 (JS)

Earlier today, a complaint was unsealed in federal court in Brooklyn charging seven defendants variously with narcotics distribution in the Flatbush neighborhood of Brooklyn and firearms trafficking relating to the sale of an AK-47 rifle.  The defendants Rahmel Smith, also known as “Mello,” Michael Martin, also known as “Scooter,” Jamel Aldridge, also known as “Vooks,” Tiffany Lanier and Shakayna Wheeler, who are members and associates of the Eight Trey Cowboys street gang; Shakim Carr, also known as “Sha,” a member of the Bloods street gang, and Shawn Taylor were arrested this morning and will be arraigned this afternoon before United States Magistrate Judge Steven M. Gold. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the charges and arrests

“The dangerous mix of street gangs, drug dealing and illegal firearms poses a direct threat to the safety and quality of life of our residents,” stated United States Attorney Donoghue.  “This Office and our partners in the FBI and the NYPD will continue to target and eradicate criminal gangs that contribute to addiction and violence in our communities.” 

“The FBI is keenly focused on combating and dismantling local street gangs,” stated FBI Assistant Director-in-Charge Sweeney.  “The suspects arrested in this case allegedly spread drugs and crime in our local communities where they believe they have to protect their turf.  The FBI New York Metro Safe Streets Task Force works day in and day out to stop these gangs from terrorizing innocent people and spreading deadly illegal drugs.”

According to court documents, since early 2017, Smith, Carr, Martin, Aldridge, Lanier and Wheeler distributed crack, cocaine, heroin and marijuana.  Smith, a leader of the Eight Trey Cowboys, directed fellow gang members Martin and Aldridge to sell narcotics on a daily basis, as well as Bloods member Carr, who was one of Smith’s main distributors.  Based on wire interceptions, Lanier and Wheeler’s roles in the narcotics trafficking organization included preparing, packaging, delivering and accepting money for the narcotics and storing the narcotics at their residences.  Additionally, Taylor is charged with selling Smith a Romarm Cugir rifle, commonly referred to as an AK-47, which was later resold by Smith to a confidential informant.     

If convicted of the narcotics charges, Smith faces up to life in prison, Carr, Aldridge, Martin, Wheeler and Lanier face up to 20 years’ imprisonment.  If convicted of the firearms charge, Taylor faces up to 10 years’ imprisonment.

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

This case was investigated by the FBI and NYPD as part of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies.  The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high-level members of illegal drug and weapons trafficking.

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.  The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorneys’ Offices to work in partnership with federal, state, local and tribal law enforcement and the local community to develop effective, locally based strategies to reduce violent crime.

The case is being handled by the Office’s International Narcotics and Money Laundering Section.  Assistant United States Attorneys Penelope J. Brady, Erin Reid and Temidayo Aganga-Williams are in charge of the prosecution.

The Defendants:

RAHMEL SMITH (also known as “Mello”)
Age: 29
Brooklyn, New York

SHAKIM CARR (also known as “Sha”)
Age:  37
Brooklyn, New York

MICHAEL MARTIN (also known as “Scooter”)
Age: 26
Brooklyn, New York

JAMEL ALDRIDGE (also known as “Vooks”)
Age: 35
Brooklyn, New York

TIFFANY LANIER
Age: 37
Brooklyn, New York

SHAKAYNA WHEELER
Age: 25
Brooklyn, New York

SHAWN TAYLOR
Age: 37
Brooklyn, New York

E.D.N.Y. Docket No. 19-MJ-137

Earlier today, following a two-week trial, a federal jury in Brooklyn returned a guilty verdict against Humberto Baez for conspiring to import and distribute cocaine, and for possessing with intent to distribute cocaine, in connection with his participation in a scheme responsible for smuggling 16 kilograms of cocaine into the United States through the Dominican Republic in February 2018.  When sentenced by United States District Judge Jack B. Weinstein, the defendant faces a mandatory minimum sentence of 10 years’ imprisonment.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Ray Donovan, Special Agent-in-Charge, Drug Enforcement Administration, New York Field Division (DEA), announced the verdict.

“The defendant’s scheme to conceal 16 kilograms of cocaine in a shipment of chili peppers wasn’t such a hot idea, and with today’s verdict, he has been held responsible for his crimes,” stated United States Attorney Donoghue.  “I commend the prosecutors and the Drug Enforcement Administration agents for their excellent work in preventing illegal narcotics from being distributed in our country.” 

“Drug traffickers go to extraordinary lengths to bring poison into our country,” stated DEA Special Agent-in-Charge Donovan.  “The DEA has seen smuggling groups conceal drugs in bananas, floor tiles, exotic statues and even animals.  This conviction sends a message to drug trafficking organizations that law enforcement is on watch.  I applaud the U.S. Attorney’s Office for the Eastern District of New York and our law enforcement partners in their diligent efforts to bring Baez and other drug traffickers to justice.”

Between August 2016 and March 2018, Baez, a produce importer based in Pennsylvania, conspired with others to import cocaine, hidden inside a shipping container, into the United States.  In furtherance of the conspiracy, Baez contacted an individual who, unbeknownst to Baez was cooperating with the DEA, to use the individual’s importing company as a front to transport cocaine from Baez’s source of supply in the Dominican Republic.  Baez and his co-conspirators then set up two “dry run” shipments containing only produce into the Red Hook Terminal in Brooklyn, to establish the appearance of a legitimate business relationship between the exporter and importer and not attract scrutiny when subsequently shipping cocaine.  In late February 2018, a third shipment arrived in Miami, Florida with approximately 16 kilograms of cocaine concealed in cardboard boxes containing chili peppers.  Baez informed the cooperator that the third shipment contained “ripe tomatoes,” using agreed upon code words for cocaine, and instructed him to transport the narcotics by truck to Baez’s warehouse in Pennsylvania.  On March 1, 2018, law enforcement officers searched the container and seized the hidden cocaine. 

The government’s case is being handled by the Office’s International Narcotics & Money Laundering Section.  Assistant United States Attorneys Nomi D. Berenson and Erin M. Reid are in charge of the prosecution.

The Defendant:

HUMBERTO BAEZ
Age:  50
Lancaster, Pennsylvania

E.D.N.Y. Docket No. 18-cr-168 (JBW)

BROOKLYN, N.Y. – Joaquin Archivaldo Guzman Loera, known by various aliases, including “El Chapo” and “El Rapido,” was convicted today by a federal jury in Brooklyn of being a principal leader of a continuing criminal enterprise – the Mexican organized crime syndicate known as the Sinaloa Cartel – a charge that includes 26 drug-related violations and one murder conspiracy.  Guzman Loera was convicted of all 10 counts of the superseding indictment, including narcotics trafficking, using a firearm in furtherance of his drug crimes and participating in a money laundering conspiracy.  The verdict followed a 12-week trial before United States District Judge Brian M. Cogan. Guzman Loera faces a mandatory sentence of life imprisonment.

Matthew G. Whitaker, Acting Attorney General; Richard P. Donoghue, United States Attorney for the Eastern District of New York; Ariana Fajardo Orshan, United States Attorney for the Southern District of Florida; Brian A. Benczkowski, Assistant Attorney General of the Justice Department’s Criminal Division; Uttam Dhillon, Acting Administrator, U.S. Drug Enforcement Administration (DEA); Christopher A. Wray, Director, Federal Bureau of Investigation (FBI); Kirstjen Nielsen, Secretary, United States Department of Homeland Security; Derek Benner, Executive Associate Director, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Bryan T. Mullee, Acting U.S. Marshal, Eastern District of New York; and James P. O’Neill, Commissioner, New York City Police Department, announced the verdict.

The Evidence at Trial

As proven at trial, Guzman Loera was a principal leader of the Sinaloa Cartel, a Mexico-based international drug trafficking organization responsible for importing and distributing vast quantities of cocaine, marijuana, methamphetamine and heroin in the United States.  The evidence at trial, including testimony from 14 cooperating witnesses; narcotics seizures totaling over 130,000 kilograms of cocaine and heroin; weapons, including AK-47s and a rocket-propelled grenade launcher; ledgers; text messages; videos; photographs and intercepted recordings, detailed the drug trafficking activity of Guzman Loera and his co-conspirators over a 25-year period from January 1989 until December 2014.  Guzman Loera was repeatedly referred to by witnesses as one of the leaders of the Sinaloa Cartel. 

Guzman Loera oversaw the smuggling of narcotics to wholesale distributors in New York, Miami, Atlanta, Chicago, Arizona, Los Angeles and elsewhere.  The billions of illicit dollars generated from drug sales in the United States were then clandestinely transported back to Mexico.  Guzman Loera used “sicarios,” or hit men, who carried out hundreds of acts of violence in Mexico to enforce Sinaloa’s control of territories and to eliminate those who posed a threat to the Sinaloa Cartel.

Drug Trafficking                     

In the course of the decades-long drug trafficking conspiracy, the Sinaloa Cartel transported tens of thousands of kilograms of narcotics from Central and South America for distribution in the United States.  Guzman Loera used various methods to transport the cartel’s narcotics into the United States, including submarines, carbon fiber airplanes, trains with secret compartments and transnational underground tunnels.  Multiple witnesses testified about seizures by law enforcement officers of massive amounts of cocaine, heroin and marijuana linked to the Sinaloa Cartel.  One of the largest seizures of drugs bound for the U.S. involved over seven tons of cocaine concealed in jalapeño cans. 

The jury also heard recordings of Guzman Loera’s own damning words discussing his drug trafficking, corruption and violence.  calls included Guzman Loera discussing sending “ice,” meaning methamphetamine, to Ohio, Tucson, Minneapolis and Los Angeles. 

Communications Network

Guzman Loera also utilized a sophisticated encrypted communications network to operate the global narcotics trafficking operation.  As an information technology engineer testified at trial, Guzman Loera paid him one million dollars to purchase and set up a network to enable the defendant to communicate via Internet with his drug-trafficking associates in Colombia, Ecuador, Canada and the United States without fear of being intercepted by law enforcement or his rivals.   The witness devised a secret and secure system, consisting of encrypted cell phones and encrypted apps.

Cartel Violence

The success of the Sinaloa Cartel relied upon the use of violence to maintain their power throughout the region and beyond.  Numerous co-conspirators testified that Guzman Loera directed his hitmen to kidnap, interrogate, torture and shoot members of rival drug organizations, at times carrying out acts of violence himself.  A former hitman testified that Guzman Loera beat two men with a tree branch until their bodies “were completely like rag dolls,” before shooting the men and ordering their bodies to be tossed into a bonfire.  The former hitman also testified that Guzman Loera interrogated a rival drug cartel member, shot him and ordered that he be buried alive.  In an intercepted call, the jury heard Guzman Loera order one of his sicarios to kidnap rival cartel members, but not to kill them without first checking with him.

Weapons

The Sinaloa Cartel had unfettered access to weapons.  A law enforcement witness showed the jury over 40 AK-47s that were seized in El Paso, Texas before they could be delivered to Guzman Loera in Mexico.  Additionally, witnesses identified photographs of various weapons, including grenades and a rocket-propelled grenade launcher utilized by the Sinaloa Cartel.  Guzman Loera’s personal arsenal included a gold plated AK-47 and three diamond-encrusted .38 caliber handguns, one emblazoned with his initials, “JGL.” 

Corruption

The evidence presented at trial demonstrated that to further the interests of the Sinaloa Cartel, Guzman Loera and his organization took advantage of a vast network of corrupt government officials.  These officials ranged from local law enforcement officers, prison guards, state officials, high ranking members of the armed forces, as well as politicians.  These corrupt officials assisted Guzman Loera and his organization in exchange for millions of dollars’ worth of bribery payments.  For example, according to the testimony of several witnesses, in many instances, Guzman Loera and his workers were warned of pending law enforcement operations which allowed Guzman Loera to avoid capture on multiple occasions.  In other instances, Guzman Loera, through his employees, paid officials to turn a blind eye to trafficking activities in an effort to facilitate the shipment of drugs, weapons and bulk cash. 

Money Laundering

Guzman Loera’s lucrative drug trafficking business generated billions of dollars in illicit proceeds.  Guzman Lorea used various methods to launder money including bulk cash smuggling from the United States to Mexico.  One of the largest seizures was of $1.26 million seized from hidden compartments in a truck driven by Guzman Loera’s brother in Arizona in 1989.  In addition to the bulk cash smuggling, Guzman Loera oversaw numerous shell companies, including a juice company and a fish flour company, to launder the cartel’s narcotics trafficking proceeds.

“I am pleased that the Department has brought Joaquin Guzman Loera (El Chapo) to justice by securing a conviction against this drug kingpin, who was a principal leader of the Sinaloa Cartel,” said Acting Attorney General Whitaker.  “As was clear to the jury, Guzman Loera’s massive, multi-billion dollar criminal enterprise was responsible for flooding the streets of the United States with hundreds of tons of cocaine, as well as enormous quantities of other dangerous drugs such as heroin and methamphetamine. The trial evidence also overwhelmingly showed that Guzman’s unceasing efforts to expand his cartel’s control and consolidate its power left a wake of corruption and violence in communities in both Mexico and the United States.  This case demonstrated the extraordinary reach of the U.S. government, our tenacity and commitment to pursuing kingpins like Guzman whom — if their power is unchecked — will, like Guzman, develop what for 25 years was an almost unstoppable capacity to move massive quantities of drugs into our country.  Guzman had the capital to absorb huge losses and run his enterprise with impunity; the enormous power to corrupt; and the capability to employ violence on a massive scale.  This case, and more importantly, this conviction serves as an irrefutable message to the kingpins that remain in Mexico, and those that aspire to be the next Chapo Guzman, that eventually you will be apprehended and prosecuted. Finally, this verdict demonstrates that the United States, working in close partnership with the Mexican government, will continue to bring all possible resources to bear in its fight against international drug traffickers and their violent organizations.”

“Guzman Loera’s bloody reign atop the Sinaloa Cartel has come to an end, and the myth that he could not be brought to justice has been laid to rest.  Today, Guzman Loera has been held accountable for the tons of illegal narcotics he trafficked for more than two decades, the murders he ordered and committed, and the billions of dollars he reaped while causing incalculable pain and suffering to those devastated by his drugs,” stated EDNY United States Attorney Donoghue.  “Today’s verdict is the culmination of the tireless work of countless brave members of law enforcement, here and abroad, and we congratulate them.  The Department of Justice is committed to eradicating criminal organizations that fuel America’s drug epidemic, and our mission will continue until it is completed.”

“The conviction of former Sinaloa Cartel leader Joaquin Guzman Loera strips the power from a man who employed horrific acts of violence to infect communities, throughout the United States and abroad, with the venom of illicit drugs,” stated SDFL United States Attorney Fajardo Orshan.  “Today’s verdict is a reminder to all, that our international borders do not protect narco-traffickers and the cartels’ criminal enterprises from federal prosecution.  U.S. Attorney’s Offices across the nation stand united with our domestic and foreign law enforcement partners, as we continue our fight against transnational criminal organizations.”

“Today’s conviction of Joaquin “El Chapo” Guzman demonstrates the dedication and determination of the men and women of DEA to bring the world’s most dangerous and prolific drug trafficker to justice,” stated DEA Acting Administrator Dhillon. “Those who bring drugs and violence into the United States that destroy lives and communities will not be tolerated, nor evade our reach. The success of this case is a testament to the strength of our relationship with our Mexican counterparts. DEA will continue to pursue justice worldwide and protect Americans.”

“The reign of Joaquin Guzman Loera’s crime and violence has come to an end,” said FBI Director Christopher Wray.  “As leader of the Sinaloa Cartel, Guzman Loera carried out and directed acts of brazen violence as he oversaw the import and distribution of vast amounts of illegal drugs throughout the United States.  But today, through the steadfast determination and collective efforts of the FBI and our law enforcement partners both domestic and abroad, and due to our continuing partnership with the government of Mexico, justice has been served.”

“The guilty verdict against Joaquin Guzman Loera, one of the most violent and feared drug kingpins of our time, is a testament to the hard work and courage of America’s frontline law enforcement personnel, including ICE’s Homeland Security Investigations. They gathered substantial evidence over multiple investigations, which made his extradition to the United States and a successful prosecution possible,” stated United States Department of Homeland Security Secretary Nielsen.  “Today’s verdict sends an unmistakable message to transnational criminals: you cannot hide, you are not beyond our reach, and we will find you and bring you to face justice.  Like Guzman, you will suffer the consequences of your criminal behavior.  I applaud the brave men and women at DHS who helped make this conviction possible and thank our interagency and international partners for their exceptional work.”

“HSI is committed to using our unique border authority to target and dismantle transnational criminal organizations responsible for trafficking narcotics and bringing violence into the United States,” said HSI Executive Associate Director Benner.  “Through collaboration with local, federal and international law enforcement partners, HSI special agents were able to bring an end to Joaquin Guzman Loera’s criminal activities, and help ensure he was brought to justice.”

“The conviction of Joaquin “El Chapo” Guzman demonstrates what is possible when law enforcement works collectively and coordinates their efforts. The United States Marshals Service ensured the integrity of the judicial process in this case.  From providing safe and secure detention and transportation of the world’s most notorious drug kingpin to ensuring the anonymity of the jury, protecting the judge, attorneys, witnesses and the public, the Marshals Service proudly played its important role in the process,” said Acting U.S. Marshal Mullee of the Eastern District of New York.  “I would like to express my gratitude to all of our law enforcement partners who worked tirelessly in support of our mission.  They are the talented men and women of the New York City Police Department, Federal Protective Service, 24th Civil Support Team of the New York National Guard, and the Federal Bureau of Prisons. The U.S. Marshals take our responsibility of protecting the federal judicial process very seriously. We must anticipate and deter threats, while continuously developing and employing innovative protective tactics. We carry out these responsibilities with precision every day across the country. The successful prosecution of Joaquin “El Chapo” Guzman stands as a shining example of our mission.”

“Just over two years ago, we announced the arrival of this notorious drug kingpin on U.S. soil, where he would face American justice and finally answer for his many years of illegal behavior.  And today, I commend the members of the jury for their dedication to this important case, as well as the lawyers of the Eastern District and all of our domestic and foreign law-enforcement colleagues, who continue to be our great partners in so many efforts.  In close cooperation with members of the DEA, the FBI, the U.S. Marshals Service, Homeland Security Investigations, the New York State Police and more, NYPD detectives on the Drug Enforcement Task Force tirelessly investigated Mr. Guzman Loera’s criminal enterprise for years,” stated NYPD Commissioner O’Neill.  “Today’s guilty verdict shows that, collectively, we never shelve an unfinished case.  He operated a drug-trafficking network responsible for perpetuating a murderous, toxic scourge that forever altered lives, tore apart families and netted billions of dollars in illicit revenue.  I thank the investigators for their hard work, and I remind the people we serve that New York City and America will always stand with our colleagues around the world in the fight against any individual or criminal group that venerates illegal profit above all else.”

When sentenced by Judge Cogan, Guzman Loera faces a mandatory life sentence without the possibility of parole for leading a continuing criminal enterprise, and a sentence of up to life imprisonment on the seven remaining drug counts.  After the verdict, the government will seek a forfeiture money judgment for billions of dollars constituting the cartel’s illegal drug-trafficking proceeds.

The government’s case is being prosecuted by Assistant U.S. Attorneys Gina Parlovecchio, Andrea Goldbarg, Michael Robotti, Patricia Notopoulos and Hiral Mehta from the Eastern District of New York; Assistant U.S. Attorneys Adam Fels and Lynn Kirkpatrick from the Southern District of Florida; and Trial Attorneys Amanda Liskamm, Anthony Nardozzi, Michael Lang and Brett Reynolds of the U.S. Department of Justice Criminal Division’s Narcotic and Dangerous Drug Section.

The case was investigated by the DEA, ICE and the FBI, in cooperation with Mexican, Ecuadorian, Netherlands, Dominican and Colombian law enforcement authorities.  Substantial assistance was provided by the U.S. Attorneys’ Offices in the Northern District of Illinois, the Western District of Texas, the Southern District of New York, the Southern District of California and the District of New Hampshire.  The Department of Justice Office of International Affairs also played an integral role in securing the extradition of Guzman Loera to the United States, in cooperation with authorities of the Mexican government, without which his extradition and prosecution would not have been possible.  The investigative efforts in this case were coordinated with the Department of Justice Special Operations Division, comprising agents, analysts and attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section, DEA New York, DEA Miami, FBI Washington Field Office, FBI New York Field Office, FBI Miami Field Office, ICE HSI New York, ICE HSI Nogales, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Marshals Service, Internal Revenue Service - Criminal Investigation, U.S. Bureau of Prisons, NYPD and New York State Police.

This case is the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies.  The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high level members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.

Joaquin Archivaldo Guzman Loera, known by various aliases, including “El Chapo” and “El Rapido,” was convicted today by a federal jury in Brooklyn, New York of being a principal operator of a continuing criminal enterprise – the Mexican organized crime syndicate known as the Sinaloa Cartel – a charge that includes 26 drug-related violations and one murder conspiracy.  Guzman Loera was convicted of all 10 counts of a superseding indictment, including narcotics trafficking, using a firearm in furtherance of his drug crimes and participating in a money laundering conspiracy.  The verdict followed a 12-week trial before U.S. District Judge Brian M. Cogan.  Guzman Loera faces a mandatory sentence of life imprisonment at his sentencing scheduled on June 25.

Acting Attorney General Matthew G. Whitaker, U.S. Department of Homeland Security Secretary Kirstjen Nielsen, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Richard P. Donoghue for the Eastern District of New York, U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida, Acting Administrator Uttam Dhillon of the U.S. Drug Enforcement Administration (DEA), FBI Director Christopher Wray, Executive Associate Director Derek Benner of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and Acting U.S. Marshal Bryan T. Mullee of the Eastern District of New York, announced the verdict.

The Evidence at Trial:

As proven at trial, Guzman Loera was a principal leader of the Sinaloa Cartel, a Mexico-based international drug trafficking organization responsible for importing and distributing vast quantities of cocaine, marijuana, methamphetamine and heroin into the United States.  The evidence at trial, including testimony from 14 cooperating witnesses; narcotics seizures totaling over 130,000 kilograms of cocaine and heroin; weapons, including AK-47s and a rocket-propelled grenade launcher; ledgers; text messages; videos; photographs and intercepted recordings, detailed the drug trafficking activity of Guzman Loera and his co-conspirators over a 25-year period from January 1989 until December 2014.  Guzman Loera was repeatedly referred to by witnesses as one of the leaders of the Sinaloa Cartel.

Guzman Loera oversaw the smuggling of narcotics to wholesale distributors in Arizona, Atlanta, Chicago, Los Angeles, Miami, New York, and elsewhere.  The billions of illicit dollars generated from drug sales in the United States were then clandestinely transported back to Mexico.  Guzman Loera also used “sicarios,” or hit men, who carried out hundreds of acts of violence in Mexico to enforce Sinaloa’s control of territories and to eliminate those who posed a threat to the Sinaloa Cartel.

Drug Trafficking

In the course of the decades-long drug trafficking conspiracy, the Sinaloa Cartel transported tens of thousands of kilograms of narcotics from Central and South America for distribution in the United States.  Guzman Loera used various methods to transport the cartel’s narcotics into the United States, including submarines, carbon fiber airplanes, trains with secret compartments and transnational underground tunnels.  Multiple witnesses testified about seizures by law enforcement officers of massive amounts of cocaine, heroin and marijuana linked to the Sinaloa Cartel.  One of the largest seizures of drugs bound for the United States involved over seven tons of cocaine concealed in jalapeño cans. 

The jury also heard recordings of Guzman Loera’s own damning words discussing his drug trafficking, corruption and violence.  The calls included Guzman Loera discussing sending “ice,” meaning methamphetamine, to Los Angeles, California; Minneapolis, Minnesota; Ohio and Tucson, Arizona. 

Communications Network

Guzman Loera also utilized a sophisticated encrypted communications network to operate the global narcotics trafficking operation.  As an information technology engineer testified at trial, Guzman Loera paid him one million dollars to purchase and set up a network to enable the defendant to communicate via the internet with his drug trafficking associates in Colombia, Ecuador, Canada and the United States without fear of being intercepted by law enforcement or his rivals.  The witness devised a secret and secure system, consisting of encrypted cell phones and encrypted apps.

Cartel Violence

The success of the Sinaloa Cartel relied upon the use of violence to maintain their power throughout the region and beyond.  Numerous co-conspirators testified that Guzman Loera directed his hitmen to kidnap, interrogate, torture and shoot members of rival drug organizations, at times carrying out acts of violence himself.  A former hitman testified that Guzman Loera beat two men with a tree branch until their bodies “were completely like rag dolls,” before shooting the men and ordering their bodies be tossed into a bonfire.  The former hitman also testified that Guzman Loera interrogated a rival drug cartel member, shot him and ordered that he be buried alive.  In an intercepted call, the jury heard Guzman Loera order one of his sicarios to kidnap rival cartel members, but not to kill them without first checking with him.

Weapons

The Sinaloa Cartel had unfettered access to weapons.  A law enforcement witness showed the jury over 40 AK-47s that were seized in El Paso, Texas before they could be delivered to Guzman Loera in Mexico.  Additionally, witnesses identifed photographs of various weapons, including grenades and a rocket-propelled grenade launcher utilized by the Sinaloa Cartel.  Guzman Loera’s personal arsenal included a gold plated AK-47 and three diamond-encrusted .38 caliber handguns, one emblazoned with his initials, “JGL.” 

Corruption

The evidence presented at trial demonstrated that to further the interests of the Sinaloa Cartel, Guzman Loera and his organization took advantage of a vast network of corrupt government officials.  These officials ranged from local law enforcement officers, prison guards, state officials, high ranking members of the armed forces, as well as politicians.  These corrupt officials assisted Guzman Loera and his organization in exchange for millions of dollars’ worth of bribery payments.  For example, according to the testimony of several witnesses, in many instances, Guzman Loera and his workers were warned of pending law enforcement operations which allowed Guzman Loera to avoid capture on multiple occasions.  In other instances, Guzman Loera, through his employees, paid officials to turn a blind eye to trafficking activities in an effort to facilitate the shipment of drugs, weapons, and bulk cash. 

Money Laundering

Guzman Loera’s lucrative drug trafficking business generated billions of dollars in illicit proceeds.  Guzman Loera used various methods to launder money including bulk cash smuggling from the United States to Mexico.  One of the largest seizures was of $1.26 million seized from hidden compartments in a truck driven by Guzman Loera’s brother in Douglas, Arizona in 1989.  In addition to the bulk cash smuggling, Guzman Loera oversaw numerous shell companies, including a juice company and a fish flour company to launder the cartel’s narcotics trafficking proceeds.

“I am pleased that the Department has brought Joaquin Guzman Loera (El Chapo) to justice by securing a conviction against this drug kingpin, who was a principal leader of the Sinaloa Cartel,” said Acting Attorney General Whitaker.  “As was clear to the jury, Guzman Loera’s massive, multi-billion dollar criminal enterprise was responsible for flooding the streets of the United States with hundreds of tons of cocaine, as well as enormous quantities of other dangerous drugs such as heroin and methamphetamine.  The trial evidence also overwhelmingly showed that Guzman’s unceasing efforts to expand his cartel’s control and consolidate its power left a wake of corruption and violence in communities in both Mexico and the United States.  This case demonstrated the extraordinary reach of the U.S. government, our tenacity and commitment to pursuing kingpins like Guzman whom — if their power is unchecked — will, like Guzman, develop what for 25 years was an almost unstoppable capacity to move massive quantities of drugs into our country.  Guzman had the capital to absorb huge losses and run his enterprise with impunity; the enormous power to corrupt; and the capability to employ violence on a massive scale.  This case, and more importantly, this conviction serves as an irrefutable message to the kingpins that remain in Mexico, and those that aspire to be the next Chapo Guzman, that eventually you will be apprehended and prosecuted.  Finally, this verdict demonstrates that the United States, working in close partnership with the Mexican government, will continue to bring all possible resources to bear in its fight against international drug traffickers and their violent organizations.”

“The guilty verdict against Joaquin Guzman Loera, one of the most violent and feared drug kingpins of our time, is a testament to the hard work and courage of America’s frontline law enforcement personnel, including ICE’s Homeland Security Investigations,” said DHS Secretary Nielsen.  “They gathered substantial evidence over multiple investigations, which made his extradition to the United States and a successful prosecution possible.  Today’s verdict sends an unmistakable message to transnational criminals: you cannot hide, you are not beyond our reach, and we will find you and bring you to face justice.  Like Guzman, you will suffer the consequences of your criminal behavior.  I applaud the brave men and women at DHS who helped make this conviction possible and thank our interagency and international partners for their exceptional work.”

“Guzman Loera’s bloody reign atop the Sinaloa Cartel has come to an end, and the myth that he could not be brought to justice has been laid to rest,” said U.S. Attorney Donoghue.  “Today, Guzman Loera has been held accountable for the tons of illegal narcotics he trafficked for more than two decades, the murders he ordered and committed, and the billions of dollars he reaped while causing incalculable pain and suffering to those devastated by his drugs.  Today’s verdict is the culmination of the tireless work of countless brave members of law enforcement, here and abroad, and we congratulate them.  The Department of Justice is committed to eradicating criminal organizations that fuel America’s drug epidemic, and our mission will continue until it is completed.”

“The conviction of former Sinaloa Cartel leader Joaquin Guzman Loera strips the power from a man who employed horrific acts of violence to infect communities, throughout the United States and abroad, with the venom of illicit drugs,” said U.S. Attorney Fajardo Orshan.  “Today’s verdict is a reminder to all, that our international borders do not protect narco-traffickers and the cartels’ criminal enterprises from federal prosecution.  U.S. Attorney’s Offices across the nation stand united with our domestic and foreign law enforcement partners, as we continue our fight against transnational criminal organizations.”

“The reign of Joaquin Guzman Loera’s crime and violence has come to an end,” said FBI Director Wray.  “As leader of the Sinaloa Cartel, Guzman Loera carried out and directed acts of brazen violence as he oversaw the import and distribution of vast amounts of illegal drugs throughout the United States.  But today, through the steadfast determination and collective efforts of the FBI and our law enforcement partners both domestic and abroad, and due to our continuing partnership with the Government of Mexico, justice has been served.”

 “Today’s conviction of Joaquin “El Chapo” Guzman demonstrates the dedication and determination of the men and women of DEA to bring the world’s most dangerous and prolific drug trafficker to justice,” said DEA Acting Administrator Dhillon.  “Those who bring drugs and violence into the United States that destroy lives and communities will not be tolerated, nor evade our reach. The success of this case is a testament to the strength of our relationship with our Mexican counterparts. DEA will continue to pursue justice worldwide and protect Americans.”

“HSI is committed to using our unique border authority to target and dismantle transnational criminal organizations responsible for trafficking narcotics and bringing violence into the United States,” said HSI Executive Associate Director Benner.  “Through collaboration with local, federal and international law enforcement partners, HSI special agents were able to bring an end to Joaquin Guzman Loera’s criminal activities, and help ensure he was brought to justice.”

“The conviction of Joaquin “El Chapo” Guzman demonstrates what is possible when law enforcement works collectively and coordinates their efforts,” said Acting U.S. Marshal Mullee.  “The U.S. Marshals Service ensured the integrity of the judicial process in this case.  From providing safe and secure detention and transportation of the world’s most notorious drug kingpin to ensuring the anonymity of the jury, protecting the judge, attorneys, witnesses and the public, the Marshals Service proudly played its important role in the process.  I would like to express my gratitude to all of our law enforcement partners who worked tirelessly in support of our mission.  They are the talented men and women of the New York City Police Department, Federal Protective Service, 24th Civil Support Team of the New York National Guard, and the Federal Bureau of Prisons.  The U.S. Marshals take our responsibility of protecting the federal judicial process very seriously.  We must anticipate and deter threats, while continuously developing and employing innovative protective tactics.  We carry out these responsibilities with precision every day across the country.  The successful prosecution of Joaquin “El Chapo” Guzman stands as a shining example of our mission.”

When sentenced by Judge Cogan, Guzman Loera faces a mandatory life sentence without the possibility of parole for leading a continuing criminal enterprise, and a sentence of up to life imprisonment on the seven remaining drug counts.  After the verdict, the government will seek a forfeiture money judgment for billions of dollars constituting the cartel’s illegal drug-trafficking proceeds.

The government’s case is being prosecuted by U.S. Department of Justice Trial Attorneys Amanda Liskamm, Anthony Nardozzi, Michael Lang and Brett Reynolds of the Criminal Division’s Narcotic and Dangerous Drug Section, Assistant U.S. Attorneys Gina Parlovecchio, Andrea Goldbarg, Michael Robotti, Patricia Notopoulos and Hiral Mehta of the Eastern District of New York and Assistant U.S. Attorneys Adam Fels and Lynn Kirkpatrick of the Southern District of Florida.

The case was investigated by the DEA, HSI and the FBI, in cooperation with Mexican, Ecuadorian, Netherlands, Dominican, and Colombian law enforcement authorities. Substantial assistance was provided by the U.S. Attorneys’ Offices in the Northern District of Illinois, the Western District of Texas, the Southern District of New York, the Southern District of California and the District of New Hampshire.  The Department of Justice’s Office of International Affairs also played an integral role in securing the extradition of Guzman Loera to the United States, in cooperation with authorities of the Mexican government, without which his extradition and prosecution would not have been possible.  The investigative efforts in this case were coordinated with the Department of Justice’s Special Operations Division, comprising of agents, analysts and attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section; DEA New York, DEA Miami, FBI Washington Field Office, FBI New York Field Office, FBI Miami Field Office; HSI New York, HSI Nogales; Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Marshals Service; IRS Criminal Investigation; U.S. Bureau of Prisons, NYPD and New York State Police.

This case is the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high level members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.

A federal jury in Brooklyn returned a guilty verdict today against Nicholas Washington, also known as “Face,” a member of the Bedford Stuyvesant-based street gang G’z Up, on two counts of murder-in-aid of racketeering, two counts of causing a death through the use of a firearm, and attempted obstruction of justice.  The verdict followed three weeks of trial before United States District Judge Eric N. Vitaliano.  When sentenced, Washington faces a mandatory term of life imprisonment.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the verdict.

“As the jury found, Washington planned and directed two murderous schemes related to his drug trafficking enterprise at the Marcy Houses that left two unintended victims dead,” stated United States Attorney Donoghue.  “Washington will now be held responsible for this total disregard for human life.  Today’s verdict underscores the resolve of this Office and our law enforcement partners to eradicate violent gangs that jeopardize the safety of our communities.”

The evidence at trial established that between January 2004 and December 2006, Washington and other members and associates of G’z Up sold crack cocaine at the Marcy Houses in Bedford Stuyvesant, with a base of operations at 564 Park Avenue, as well as in Monticello, New York, and Altoona, Pennsylvania.  On February 10, 2005, Washington directed two G’z Up members to kill the leader of a rival drug crew whose members were feuding with G’z Up.  Washington provided a handgun and directed the two to ambush the leader of the drug crew inside a building at the Marcy Houses development.  Both gunmen fired, but missed their intended target and killed a bystander, Steven Negron.

After Washington’s brother, John Hayes, was murdered by a rival in July 2006, Washington sought revenge.  On August 7, 2006, the day of Hayes’s funeral, Washington traveled to the Tompkins Houses in Bedford Stuyvesant with five G’z Up members and associates, where they confronted the individual they believed responsible for Hayes’s murder.  Two gunmen opened fire, but again missed their intended target, and instead killed a bystander, Andrell Napper. 

Following his indictment on the murders in 2014, Washington evaded arrest for two years and in 2016 attempted to avoid arrest by providing false information to an NYPD officer.

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Margaret Gandy and Virginia Nguyen are in charge of the prosecution.

The Defendant: 

NICHOLAS WASHINGTON
Age:  35
Bedford Stuyvesant, Brooklyn

E.D.N.Y. Docket No. 14-CR-266 (ENV)

Earlier today, at the federal courthouse in Brooklyn, Tyvon Bannister, also known as “Turtle,” a member of the Crips-affiliated Cypress Gangsta Crips (CGC) street gang, was sentenced by United States District Judge Brian M. Cogan to 30 years’ imprisonment following his conviction for the July 8, 2014 murder of Rayvon Henreques.  Bannister pleaded guilty in May 2018.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the sentence.

“With today’s sentence, Bannister will spend decades in prison for callously ending the life of a 26-year-old man simply because he was associated with a rival gang,” stated United States Attorney Donoghue.  “This Office will continue working tirelessly with our law enforcement partners to make our community safe by eradicating these destructive street gangs and holding their violent members accountable.”

“The primary mission of the NYPD and our law enforcement partners is to arrest, prosecute, and send away with a meaningful prison sentence anyone who instills fear in New Yorkers through their criminal actions. With this sentence today, the result of our efforts are tangible. I thank our colleagues at the Eastern District and the FBI for their unceasing professionalism and dedicated work in removing from our streets those who commit crime and disorder, especially when it’s in the form of gang violence,” stated NYPD Commissioner O’Neill.

Bannister is a member of the CGC, which is comprised of individuals residing in and around the Cypress Hills Houses (“Cypress”), a large New York City Housing Authority complex in East New York, Brooklyn.  Cypress has been plagued by gang and drug-related violence arising largely from a long-standing feud between the CGC and a local Bloods-affiliated gang.  On July 8, 2014, Bannister and another gang member shot and killed Henriques in front of a nightclub in East New York.  Henriques was targeted because of his association with the Bloods-affiliated gang.     

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Margaret E. Gandy, Andrey Spektor and David Gopstein are in charge of the prosecution.

The Defendant:

TYVON BANNISTER (also known as “Turtle”)
Age:  25
Brooklyn, New York

E.D.N.Y. Docket No. 17-CR-116 (BMC)

Luis Rivas, Dennis Cabrera and Javier Rodriguez, members of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, will be arraigned this afternoon before United States Magistrate Judge Vera M. Scanlon in federal court in Brooklyn on an indictment charging them with assault in-aid-of racketeering.  The defendants were arrested earlier today and transferred to federal custody.  The case is assigned to United States District Judge Pamela K. Chen. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the indictment and arrests.

According to court filings, the defendants are members of MS-13.  On October 22, 2018, while the defendants were incarcerated on state charges at the Manhattan Detention Complex, they assaulted a fellow inmate who they suspected to be a member of the rival Latin King gang, punching, kicking and stabbing him with a makeshift knife, first in his cell and then in a hallway of the facility.  The brutal assault was captured on video surveillance footage.  At the conclusion of the assault, Rivas flashed an MS-13 hand sign at the victim. 

The victim suffered multiple puncture wounds to his back, torso and arms, including two deeper lacerations that required stitches.

“As alleged, the defendants are members of the MS-13, an international gang known for its culture of violence,” stated United States Attorney Donoghue.  “Unprovoked, they assaulted and stabbed an inmate housed with them for no other reason than the inmate’s suspected affiliation with a rival gang.  We will continue to work with our law enforcement partners to hold MS-13 members accountable for their crimes.”  Mr. Donoghue thanked the Manhattan District Attorney’s Office for its assistance in the investigation.

“The gang members charged in this investigation displayed once again their disregard for obeying the law and for human life, allegedly stabbing and beating another inmate while incarcerated for other crimes.  The FBI New York Safe Streets Task Forces work each day to disrupt and dismantle MS-13 in our communities, so their dangerous and criminal actions don’t harm innocent people.”

“Targeting and dismantling gangs and crews, and preventing the violence so often associated with their illegal activities, continues to be among the highest priorities for the NYPD and our law enforcement partners,” stated NYPD Commissioner O’Neill.  “By precisely targeting the relatively small percentage of people responsible for committing much of the violence in New York, we are making the safest large city in America even safer.  We remain relentless in our efforts to identify, arrest, and prosecute anyone who involves themselves in such behavior whether it is on our streets or in our jails.”

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 20 years’ imprisonment.

Today’s indictment 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 international criminal organization.  The MS-13’s leadership is based in El Salvador and Honduras, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America.  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 45 murders in the district, and has convicted dozens of MS-13 leaders and members in connection with those murders.  These prosecutions are the product of investigations led by our law enforcement partners including the FBI’s Safe Streets Task Force, comprising agents and officers of the FBI and NYPD.

The government’s case is being prosecuted by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Nadia E. Moore and Nadia I. Shihata are in charge of the prosecution.

Earlier today, at the federal courthouse in Brooklyn, Andres Lopez Elorez, a veterinarian who surgically implanted liquid heroin in puppies on behalf of Colombian drug traffickers, was sentenced by United States District Judge Sterling Johnson, Jr. to 72 months’ imprisonment.  In September 2018, Elorez pleaded guilty to conspiring to import heroin into the United States.  Upon completion of his sentence, the defendant will be deported.

Richard P. Donoghue, 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.

“Every dog has its day, and with today’s sentence, Elorez has been held responsible for the reprehensible use of his veterinary skills to conceal heroin inside puppies as part of a scheme to import dangerous narcotics into the United States,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will continue to investigate and prosecute drug trafficking organizations, operating here and abroad, to reduce the availability of opioids and save American lives.”  Mr. Donoghue extended his grateful appreciation to the U.S. Drug Enforcement Administration, New York and Miami Divisions and Bogota and Madrid Country Offices; the United States Marshals Service; the Colombian National Police; the Government of Spain and the Spanish Guardia Civil for their assistance in the investigation, extradition and prosecution. 

“This sentencing closes the case on a trafficking organization that used live puppies to smuggle drugs from Colombia to New York,” stated DEA Special Agent-in-Charge Donovan.  “Today, the veterinarian responsible for surgically implanting packets of liquid heroin in puppies has been sentenced to 72 months in federal prison.  I commend our law enforcement partners and U.S. Attorney’s Office, Eastern District of New York, for their diligent efforts throughout this 14-year investigation.”   

According to court filings and facts presented during court proceedings, Elorez and his co-conspirators, based in Colombia, smuggled heroin into the United States using various methods to conceal the narcotics from law enforcement.  Specifically, between September 8, 2004 and January 1, 2005, Elorez leased a farm in Medellin, Colombia, where he secretly raised dogs and surgically implanted bags of liquid heroin in nine puppies for importation into the United States.  On January 1, 2005, law enforcement searched the farm and seized 17 bags of liquid heroin weighing nearly three kilograms, including 10 bags that were removed from the puppies.  Three of the puppies died after they contracted a virus following the surgeries. 

Elorez was a fugitive until he was arrested in Spain in 2015.  Elorez was extradited to the United States in May 2018.

The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section.  Assistant United States Attorneys Nathan D. Reilly and Alicia N. Washington are in charge of the prosecution.

The Defendant:

ANDRES LOPEZ ELOREZ
Age:  39
Country of Birth: Colombia

E.D.N.Y. Docket No. 05-CR-835 (SJ)

An indictment was unsealed today in federal court in Brooklyn charging Darin Hamilton, also known as “Satch,” and Jerome Jones, also known as “Sha,” for their participation in the 1992 murders of Anthony Lloyd and Robert Arroyo.  Specifically, Hamilton is charged with the intentional murder of Anthony Lloyd while engaged in narcotics trafficking, and both defendants are charged with the murder of Robert Arroyo while engaged in narcotics trafficking, as well as conspiracy to do the same.  Hamilton was arrested this morning and is scheduled to be arraigned this afternoon before United States Magistrate Judge Robert M. Levy.  Jones is in federal custody and will be arraigned at a later date.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the arrests.

As detailed in the indictment and the government’s detention memorandum, Hamilton and Jones were members of a Queens-based crew that called itself “Black Rain,” and sold narcotics at several locations on Rockaway Boulevard in the early 1990s.  Specifically, the crew sold heroin under the brand name “Black Rain,” cocaine under the brand name “White Lightning” and crack cocaine under the brand name “Thunder.”  The gang committed acts of violence, including murder, to protect its profitable operation.

Both murders took place in the vicinity of 128th Street and Rockaway Boulevard in South Ozone Park, where Hamilton and Jones managed a drug spot.  As alleged, in June 1992, Hamilton shot and killed Anthony Lloyd, whom he believed had stolen from Black Rain.   

Two months later, in August 1992, Hamilton and Jones recruited and paid two members of Black Rain to murder Robert Arroyo, whom they believed was a police informant.  In their first attempt, the recruits mistakenly shot another man they incorrectly believed to be Arroyo.  The victim survived his wounds.  On September 8, 1992, at Hamilton and Jones’s direction, the two recruits located Arroyo on a crowded street and shot him multiple times, killing him. 

 “As today’s charges make clear, we will not let the passage of time deter us from bringing murderers to justice.  It is our hope that this prosecution will bring some measure of consolation to the families of the victims,” stated United States Attorney Donoghue.  Mr. Donoghue praised the extraordinary investigative efforts of the FBI and NYPD. 

“Investigations grow cold with the passage of time, but investigators don’t stop searching for evidence they need to bring the suspects involved to justice,” stated FBI Assistant Director-in-Charge Sweeney.  “Anthony Lloyd and Robert Arroyo were murdered nearly three decades ago, and their killers may have believed they were in the clear.  However, the FBI New York Metro Safe Streets Task Force and our partners at the NYPD want this case to serve as a warning for those who believe they can let their guard down, we are still on the case and we won’t give up.”

“Today’s charges prove that the best investigators in the world do not ever forget victims, and they do not ever forget the justice that is owed to those victims’ families,” stated NYPD Commissioner O’Neill.  “All New Yorkers deserve to be safe, and to feel safe. The NYPD and our colleagues at the U.S. Attorney’s Office for the Eastern District and the FBI will stop at nothing until every street, in every neighborhood of New York City, is as safe as our safest streets are today.”

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Tanya Hajjar, Moira Kim Penza and Penelope J. Brady are in charge of the prosecution. 

The Defendants:

JEROME JONES (also known as “Sha”)
Age: 54
West Virginia

DARIN HAMILTON (also known as “Satch”)
Age: 60
South Ozone Park, Queens

E.D.N.Y. Docket No. 19-CR-54 (NGG)

Earlier today in federal court in Central Islip, New York, Edward E. Bohm, President of Sales and an undisclosed owner of Long Island mortgage lender Vanguard Funding, LLC (Vanguard), pleaded guilty to conspiring to commit wire fraud and bank fraud in connection with the illegal diversion of more than $8.9 million of warehouse loans that Vanguard had obtained to fund mortgages.  The guilty plea was entered before United States District Judge Sandra J. Feuerstein.  When sentenced, Bohm faces up to 30 years in prison, as well as restitution, criminal forfeiture and a fine.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, and Linda A. Lacewell, Acting Superintendent, New York State Department of Financial Services, announced the guilty plea.

According to court filings and the facts presented at the plea proceedings, between August 2015 and March 2017, Bohm engaged in a scheme in which he and others obtained warehouse, or short-term, loans for Vanguard by falsely representing that Vanguard would use the proceeds of those loans to fund mortgages or provide mortgage refinancing for Vanguard’s clients.  Once Vanguard received the loans, however, Bohm, along with others diverted the monies to pay personal expenses and compensation, and to pay off loans they had previously obtained with fraudulent loan submissions for improper purposes. 

Earlier, in 2018, Vanguard’s Chief Operating Officer and the Chief Financial Officer entered guilty pleas in connection with this fraud and were sentenced to terms of incarceration.

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Whitman G.S. Knapp and Elizabeth Losey Macchiaverna are handling the prosecution with assistance from Assistant United States Attorney Laura Mantell of the Office’s Asset Forfeiture Section.

The Defendant:

EDWARD E. BOHM
Age: 41
Residence: Nissequogue, New York

E.D.N.Y. Docket No. 18-CR-036 (SJF)

BROOKLYN, N.Y. – Ingrid Innes, the former chief executive officer, and Alex Tasker, a former senior vice president of Insurance Corporation of Barbados Limited (ICBL), a Barbados-based insurance company, were charged in a superseding indictment unsealed on January 18, 2019, with laundering bribes to the former Minister of Industry of Barbados in exchange for his assistance in securing government contracts for ICBL.  Innes and Tasker are not in U.S. custody.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Brian A. Benczkowski, Assistant Attorney General of the Justice Department’s Criminal Division, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charges.

Innes and Tasker were charged with one count of conspiracy to launder money and two counts of money laundering in the superseding indictment.  The former Minister of Industry of Barbados, Donville Inniss, a U.S. legal permanent resident who resided in Tampa, Florida, and Barbados, was charged with the same crimes in an indictment unsealed on August 6, 2018, and as a co-defendant of Innes and Tasker in the superseding indictment.  Inniss is scheduled for trial on June 24, 2019, before United States District Judge Kiyo A. Matsumoto.

The superseding indictment alleges that in 2015 and 2016, Innes and Tasker participated in a scheme to launder into the United States approximately $36,000 in bribes that they paid to Inniss, who at the time was a member of the Parliament of Barbados and the Minister of Industry, International Business, Commerce and Small Business Development of Barbados. 

The charges in the superseding indictment are allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

ICBL voluntarily disclosed to the government the payments to Inniss and received a prosecution declination under the FCPA Corporate Enforcement Policy.  ICBL disgorged to the government $93,940.19 in illicit profits that it earned from the scheme.

The FBI’s New York Field Office and International Corruption Squad is investigating the case.  In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption. 

Assistant United States Attorney Sylvia Shweder of the U.S. Attorney’s Office for the Eastern District of New York and Trial Attorney Gerald M. Moody, Jr., of the Criminal Division’s Fraud Section are in charge of the prosecution.

The Fraud Section is responsible for investigating and prosecuting all Foreign Corrupt Practices Act (FCPA) matters.  Additional information about the Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.   

The Defendants:

DONVILLE INNISS
Age:  52
Barbados

INGRID INNES
Age:  63
Canada

ALEX TASKER
Age:  58
Barbados

E.D.N.Y. Docket No. 18-CR-134 (S-1) (KAM)

A criminal complaint was unsealed today in federal court in Brooklyn charging William Jacobsen and his wife Marta Medvedeva with conspiring, and aiding and abetting others, to enter into sham marriages with foreign nationals for the purpose of obtaining lawful permanent residency in the United States.  The defendants were also charged with evading United States immigration laws by making materially false statements in immigration applications, affidavits and other documents.  The defendants’ initial appearances were held this afternoon before United States Magistrate Judge Vera M. Scanlon. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charges.

“Our immigration process is not for sale.  The defendants’ scheme to game the system and reap ill-gotten profits by promoting sham marriages is not only criminal, it is an affront to those individuals who abide by the rules to obtain permanent residency in the United States lawfully,” stated United States Attorney Donoghue.  “Today’s charges send the clear message that this Office and our partners at the FBI will not tolerate such activity.”

As alleged in the complaint, between approximately November 2016 and January 2019, Jacobsen and Medvedeva identified and recruited U.S. citizens who were willing to enter into sham marriages with foreign nationals.  The foreign nationals paid the defendants approximately $30,000 for their services, and a portion of the fee was then passed on to the U.S. citizen spouses for their participation in the fraud.  The defendants also coached the couples on how to successfully pass immigration interviews and provided misleading or false documentation needed during various steps in the immigration process.

During several recordings and communications, Jacobsen and Medvedeva discussed the details of their scheme, including the number of participants they had available to participate in the “fake” marriages (as characterized by Jacobsen), payment of approximately $10,000 to the U.S. citizens for their services, and the coaching and training the couples would receive to pass the required immigration interviews.  In one recorded conversation, Jacobsen explained to a confidential source posing as a potential U.S. citizen spouse:    

The hardest part is getting married.  The easy part is the [immigration] interview, because I know the questions they’re gonna ask you.  That’s why everyone comes here, because they want training.   Everybody’s looking for training.  When I do it, it’s a five minute interview.  You go with the lawyer, you’re in there for an hour, hour and a half.  I’ve been doing it for fifteen years ….  This is the easy part. The hardest part is the marriage, cause both sides are nervous, they have to go there and kiss each other.  Interview is nothing, that’s the easy part.

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

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Maria Cruz Melendez and Elizabeth Macchiaverna are in charge of the prosecution.

The Defendants:

WILLIAM JACOBSEN
Age: 60
Brooklyn, New York

MARTA MEDVEDEVA
Age: 68
Queens, New York

EDNY Docket No. 19-MJ-57

BROOKLYN, N.Y. – A 13-count indictment was unsealed earlier today in federal court in Brooklyn, New York, charging four defendants,[1] all of whom are affiliated with Huawei Technologies Co. Ltd. (Huawei), the world’s largest telecommunications equipment manufacturer, with headquarters in the People’s Republic of China (PRC) and operations around the world.  The indicted defendants include Huawei and two Huawei subsidiaries — Huawei Device USA Inc. (Huawei USA) and Skycom Tech Co. Ltd. (Skycom) — as well as Huawei’s Chief Financial Officer (CFO) Wanzhou Meng (Meng).

The defendants Huawei and Skycom are charged with bank fraud and conspiracy to commit bank fraud, wire fraud and conspiracy to commit wire fraud, conspiracy to defraud the United States, conspiracy to violate and substantive violations of the International Emergency Economic Powers Act (IEEPA), and conspiracy to commit money laundering.  Huawei and Huawei USA are charged with conspiracy to obstruct justice related to the Grand Jury investigation in the Eastern District of New York.  Meng is charged with bank fraud, wire fraud, and conspiracy to commit bank and wire fraud.

Matthew G. Whitaker, Acting United States Attorney General, Richard P. Donoghue, United States Attorney for the Eastern District of New York, Brian A. Benczkowski, Assistant Attorney General of the Justice Department's Criminal Division, John C. Demers, Assistant Attorney General of the Justice Department’s National Security Division, Christopher A. Wray, Director, Federal Bureau of Investigation (FBI),  Kirstjen Nielsen, Secretary, U.S. Department of Homeland Security, and Wilbur Ross, Secretary, U.S. Department of Commerce, announced the charges.

“Today we are announcing that we are bringing criminal charges against telecommunications giant Huawei and its associates for nearly two dozen alleged crimes,” stated Acting Attorney General Whitaker.  “As I told Chinese officials in August, China must hold its citizens and Chinese companies accountable for complying with the law.  I’d like to thank the many dedicated criminal investigators from several different federal agencies who contributed to this investigation and the Department of Justice attorneys who are moving the prosecution efforts forward. They are helping us uphold the rule of law with integrity.”

“As charged in the indictment, Huawei and its subsidiaries, with the direct and personal involvement of their executives, engaged in serious fraudulent conduct, including conspiracy, bank fraud, wire fraud, sanctions violations, money laundering and the orchestrated obstruction of justice,” stated United States Attorney Donoghue.  “For over a decade, Huawei employed a strategy of lies and deceit to conduct and grow its business.  This Office will continue to hold accountable companies and their executives, whether here or abroad, that commit fraud against U.S. financial institutions and their international counterparts and violate U.S. laws designed to maintain our national security.”  Mr. Donoghue thanked the FBI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, U.S. Department of Commerce Office of Export Enforcement and the Defense Criminal Investigative Service agents who are investigating this case for their tireless work and dedication.

“These charges lay bare Huawei’s blatant disregard for the laws of our country and standard global business practices,” stated FBI Director Wray.  “Companies like Huawei pose a dual threat to both our economic and national security, and the magnitude of these charges make clear just how seriously the FBI takes this threat. Today should serve as a warning that we will not tolerate businesses that violate our laws, obstruct justice, or jeopardize national and economic well-being.”

“As charged in the indictment, Huawei and its Chief Financial Officer broke U.S. law and have engaged in a fraudulent financial scheme that is detrimental to the security of the United States,” stated U.S. Department of Homeland Security Secretary Nielsen.  “They willfully conducted millions of dollars in transactions that were in direct violation of the Iranian Transactions and Sanctions Regulations, and such behavior will not be tolerated.  The Department of Homeland Security is focused on preventing nefarious actors from accessing or manipulating our financial system, and we will ensure that legitimate economic activity is not exploited by our adversaries.  I would like to thank ICE Homeland Security Investigations for their exceptional work on this case.”

“For years, Chinese firms have broken our export laws and undermined sanctions, often using the U.S. financial systems to facilitate their illegal activities,” stated U.S. Department of Commerce Secretary Ross.  “This will end.  The Trump Administration continues to be tougher on those who violate our export control laws than any administration in history. I commend the Department’s Office of Export Enforcement, and our partners in the FBI, Justice Department, Department of Defense, and Department of Homeland Security for their excellent work on this case.”

* * * *

Overview of the Indictment

The charges in this case relate to a long-running scheme by Huawei, its CFO, and other employees to deceive numerous global financial institutions and the United States government regarding Huawei’s business activities in Iran.  Beginning in 2007, Huawei employees misrepresented Huawei’s relationship to an unofficial subsidiary in Iran called Skycom, and as a result falsely claimed that Huawei had only limited operations in Iran and that Huawei did not violate U.S. or other laws or regulations related to Iran.  Most significantly, after news publications in late 2012 and 2013 disclosed that Huawei operated Skycom as an unofficial subsidiary in Iran and that Meng had served on the board of directors of Skycom, Huawei employees, and in particular Meng, continued to lie to Huawei’s banking partners about Huawei’s relationship with Skycom, falsely claiming that Huawei had sold its interest in Skycom to an unrelated third party in 2007 and also that Skycom was merely Huawei’s local business partner in Iran.  In reality, Skycom was Huawei’s longstanding Iranian subsidiary, and Huawei orchestrated the 2007 sale to appear as an arm’s length transaction between two unrelated parties although Huawei actually controlled the company that purchased Skycom. 

As part of this scheme to defraud, Meng personally made a presentation in August 2013 to an executive of one of Huawei’s major banking partners in which she repeatedly lied about the relationship between Huawei and Skycom. 

Huawei relied on its global banking partners for banking services that included processing U.S.-dollar-denominated transactions through the United States.  U.S. laws and regulations generally prohibited these banks from providing U.S.-dollar transactions related to Iran through the United States.  The banks could have faced civil or criminal penalties for processing transactions that violated U.S. laws or regulations.  Relying on the repeated misrepresentations by Huawei, banking partners continued their banking relationships with Huawei.  One banking partner cleared more than $100 million worth of Skycom-related transactions through the United States between 2010 and 2014.

As a further part of this scheme to defraud, Huawei and its principals repeatedly lied to U.S. government authorities about the relationship between Huawei and Skycom in submissions to the U.S. government, and in responses to government inquiries.  For example, Huawei provided false information to the U.S. Congress regarding whether Huawei’s business in Iran violated any U.S. law.  Similarly, as indicated in the indictment, in 2007 — months before Huawei orchestrated the purported sale of Skycom to another Huawei-controlled entity — Huawei’s founder falsely stated to FBI agents that Huawei did not have any direct dealings with Iranian companies and that Huawei operated in compliance with all U.S. export laws. 

After one of Huawei’s major global banking partners (identified as Financial Institution 1 in the indictment) decided to exit the relationship in 2017 because of Huawei’s risk profile, Huawei allegedly made additional misrepresentations to several of its remaining banking partners in an effort to maintain and expand those relationships.  Huawei and its principals are alleged to have repeatedly and falsely claimed that Huawei had decided to separate from Financial Institution 1, and not that Financial Institution 1 had decided to cause the separation.  On the basis of these misrepresentations, those other banking partners continued their banking relationships with Huawei.

In 2017, when Huawei became aware of the government’s investigation, Huawei and its subsidiary Huawei USA tried to obstruct the investigation by making efforts to move witnesses with knowledge about Huawei’s Iran-based business to the PRC, and beyond the jurisdiction of the U.S. government, and by destroying and concealing evidence of Huawei’s Iran-based business that was located in the United States.

In December 2018, Canadian authorities apprehended Meng in Vancouver pursuant to a provisional arrest warrant issued under Canadian law.  The U.S. government is seeking Meng’s extradition to the United States.

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

The indictment unsealed today is assigned to U.S. District Judge Ann M. Donnelly of the Eastern District of New York.

The government’s investigation is ongoing.  Individuals and companies with information about additional misconduct by these defendants or their related entities and principals should contact their local FBI field office.

The investigation is being jointly conducted by the FBI’s New York Field Office, HSI’s New York Field Office, OEE’s New York Field Office, and DCIS’s New York Resident Agency.  Agents from the FBI, HSI, OEE, and DCIS offices in Dallas provided significant support and assistance.  The government’s case is being handled by the National Security and Cybercrime and Business and Securities Fraud Sections of the U.S. Attorney’s Office for the Eastern District of New York, Justice Department’s Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), and Justice Department’s National Security Division’s Counterintelligence and Export Control Section (CES). 

Assistant U.S. Attorneys Alexander A. Solomon, Julia Nestor, David K. Kessler, Kaitlin Farrell, and Sarah Evans, MLARS Trial Attorneys Laura Billings and Christian Nauvel, and CES Trial Attorneys Thea D. R. Kendler and David Lim are in charge of the prosecution, with assistance provided by Assistant U.S. Attorney Mark Penley of the Northern District of Texas, Assistant U.S. Attorneys Brian Morris and Brendan King of the Eastern District of New York’s Civil Division and Trial Attorneys Andrew Finkelman and Margaret O’Malley of DOJ’s Office of International Affairs.  Additional Criminal Division and National Security Division Trial Attorneys and Assistant U.S. Attorneys within U.S. Attorney’s Offices for the Northern District of Texas, the Eastern District of Texas, and the Northern District of California have provided valuable assistance with various aspects of this investigation.

The Defendants:

Huawei Technologies Co. Ltd.

Huawei Device USA Inc.

Skycom Tech Co. Ltd.

Meng Wanzhou, also known as “Cathy Meng” and “Sabrina Meng”
Age: 46

Residence: People’s Republic Of China

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

[1] The indictment charges other individuals who have not yet been apprehended and whose names will not be publicly released at this time.

Huawei Device USA Inc. and Huawei’s Iranian Subsidiary Skycom Also Named Defendants  

Other Charges Include Money Laundering, Conspiracy to Defraud the United States, Obstruction of Justice and Sanctions Violations

A 13-count indictment was unsealed earlier today in federal court in Brooklyn, New York, charging four defendants,[1] including Huawei Technologies Co. Ltd. (Huawei), the world’s largest telecommunications equipment manufacturer, with headquarters in the People’s Republic of China (PRC) and operations around the world.  The indicted defendants include Huawei and two Huawei affiliates — Huawei Device USA Inc. (Huawei USA) and Skycom Tech Co. Ltd. (Skycom) — as well as Huawei’s Chief Financial Officer (CFO) Wanzhou Meng (Meng).

The defendants Huawei and Skycom are charged with bank fraud and conspiracy to commit bank fraud, wire fraud and conspiracy to commit wire fraud, violations of the International Emergency Economic Powers Act (IEEPA) and conspiracy to violate IEEPA, and conspiracy to commit money laundering.  Huawei and Huawei USA are charged with conspiracy to obstruct justice related to the grand jury investigation in the Eastern District of New York.  Meng is charged with bank fraud, wire fraud, and conspiracies to commit bank and wire fraud.

Acting U.S. Attorney General Matthew G. Whitaker, Secretary Kirstjen Nielsen of the U.S. Department of Homeland Security, Secretary Wilbur Ross of the U.S. Department of Commerce, U.S. Attorney Richard P. Donoghue for the Eastern District of New York, FBI Director  Christopher A. Wray, Assistant Attorney General Brian A. Benczkowski of the Justice Department's Criminal Division and Assistant Attorney General John C. Demers of the National Security Division, announced the charges.

“Today we are announcing that we are bringing criminal charges against telecommunications giant Huawei and its associates for nearly two dozen alleged crimes," said Acting Attorney General Whitaker.  "As I told Chinese officials in August, China must hold its citizens and Chinese companies accountable for complying with the law.  I’d like to thank the many dedicated criminal investigators from several different federal agencies who contributed to this investigation and the Department of Justice attorneys who are moving the prosecution efforts forward.  They are helping us uphold the rule of law with integrity.”

“As charged in the indictment, Huawei and its Chief Financial Officer broke U.S. law and have engaged in a fraudulent financial scheme that is detrimental to the security of the United States,” said Secretary Nielsen.  “They willfully conducted millions of dollars in transactions that were in direct violation of the Iranian Transactions and Sanctions Regulations, and such behavior will not be tolerated.  The Department of Homeland Security is focused on preventing nefarious actors from accessing or manipulating our financial system, and we will ensure that legitimate economic activity is not exploited by our adversaries.  I would like to thank ICE Homeland Security Investigations for their exceptional work on this case.”

“For years, Chinese firms have broken our export laws and undermined sanctions, often using U.S. financial systems to facilitate their illegal activities,” said Secretary Ross. “This will end.  The Trump Administration continues to be tougher on those who violate our export control laws than any administration in history.  I commend the Commerce Department’s Office of Export Enforcement, and our partners in the FBI, Justice Department, Department of Defense, and Department of Homeland Security for their excellent work on this case.”

“As charged in the indictment, Huawei and its subsidiaries, with the direct and personal involvement of their executives, engaged in serious fraudulent conduct, including conspiracy, bank fraud, wire fraud, sanctions violations, money laundering and the orchestrated obstruction of justice,” stated U.S. Attorney Donoghue.  “For over a decade, Huawei employed a strategy of lies and deceit to conduct and grow its business.  This Office will continue to hold accountable companies and their executives, whether here or abroad, that commit fraud against U.S. financial institutions and their international counterparts and violate U.S. laws designed to maintain our national security.”  Mr. Donoghue thanked the FBI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), U.S. Department of Commerce Office of Export Enforcement (OEE) and the Defense Criminal Investigative Service (DCIS) agents who are investigating this case for their tireless work and dedication.

“These charges lay bare Huawei’s alleged blatant disregard for the laws of our country and standard global business practices,” said FBI Director Wray.  “Companies like Huawei pose a dual threat to both our economic and national security, and the magnitude of these charges make clear just how seriously the FBI takes this threat.  Today should serve as a warning that we will not tolerate businesses that violate our laws, obstruct justice, or jeopardize national and economic well-being.”

* * * *

Overview of the Indictment

The charges in this case relate to a long-running scheme by Huawei, its CFO, and other employees to deceive numerous global financial institutions and the U.S. government regarding Huawei’s business activities in Iran.  As alleged in the indictment, beginning in 2007, Huawei employees lied about Huawei’s relationship to a company in Iran called Skycom, falsely asserting it was not an affiliate of Huawei.  The company further claimed that Huawei had only limited operations in Iran and that Huawei did not violate U.S. or other laws or regulations related to Iran.  Most significantly, after news publications in late 2012 and 2013 disclosed that Huawei operated Skycom as an unofficial affiliate in Iran and that Meng had served on the board of directors of Skycom, Huawei employees, and in particular Meng, continued to lie to Huawei’s banking partners about Huawei’s relationship with Skycom.  They falsely claimed that Huawei had sold its interest in Skycom to an unrelated third party in 2007 and that Skycom was merely Huawei’s local business partner in Iran.  In reality, Skycom was Huawei’s longstanding Iranian affiliate, and Huawei orchestrated the 2007 sale to appear as an arm’s length transaction between two unrelated parties, when in fact Huawei actually controlled the company that purchased Skycom. 

As part of this scheme to defraud, Meng allegedly personally made a presentation in August 2013 to an executive of one of Huawei’s major banking partners in which she repeatedly lied about the relationship between Huawei and Skycom. 

According to the indictment, Huawei relied on its global banking relationships for banking services that included processing U.S.-dollar transactions through the United States.  U.S. laws and regulations generally prohibited these banks from processing transactions related to Iran through the United States.  The banks could have faced civil or criminal penalties for processing transactions that violated U.S. laws or regulations.  Relying on the repeated misrepresentations by Huawei, these banks continued their banking relationships with Huawei.  One bank cleared more than $100 million worth of Skycom-related transactions through the United States between 2010 and 2014.

In furtherance of this scheme to defraud, and as alleged in the indictment, Huawei and its principals repeatedly lied to U.S. government authorities about Huawei’s business in Iran in submissions to the U.S. government, and in responses to government inquiries.  For example, Huawei provided false information to the U.S. Congress regarding whether Huawei’s business in Iran violated any U.S. law.  Similarly, as indicated in the indictment, in 2007 — months before Huawei orchestrated the purported sale of Skycom to another Huawei-controlled entity — Huawei’s founder falsely stated to FBI agents that Huawei did not have any direct dealings with Iranian companies and that Huawei operated in compliance with all U.S. export laws. 

After one of Huawei’s major global banking partners (identified as Financial Institution 1 in the indictment) decided to exit the Huawei relationship in 2017 because of Huawei’s risk profile, Huawei allegedly made additional misrepresentations to several of its remaining banking partners in an effort to maintain and expand those relationships.  Huawei and its principals are alleged to have repeatedly and falsely claimed that Huawei had decided to terminate its banking relationship with Financial Institution 1, when in fact it was Financial Institution 1 that had decided to terminate the banking relationship.  Through these misrepresentations, Huawei was able to continue its banking relationships with its other banks.

In 2017, when Huawei became aware of the government’s investigation, Huawei and its subsidiary Huawei USA allegedly tried to obstruct the investigation by making efforts to move witnesses with knowledge about Huawei’s Iran-based business to the PRC, and beyond the jurisdiction of the U.S. government, and by concealing and destroying evidence of Huawei’s Iran-based business that was located in the United States.

In December 2018, Canadian authorities apprehended Meng in Vancouver pursuant to a provisional arrest warrant issued under Canadian law.  The U.S. government is seeking Meng’s extradition to the United States.

The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The indictment unsealed today is assigned to U.S. District Judge Ann M. Donnelly of the Eastern District of New York.

The government’s investigation is ongoing. 

The investigation is being jointly conducted by the FBI’s New York Field Office, HSI’s New York Field Office, OEE’s New York Field Office, and DCIS’s Southwest and Northeast Field Offices.  Agents from the FBI, HSI, and OEE offices in Dallas provided significant support and assistance.  The government’s case is being handled by the National Security and Cybercrime and Business and Securities Fraud Sections of the U.S. Attorney’s Office for the Eastern District of New York, the Justice Department’s Criminal Division’s Money Laundering and Asset Recovery Section (MLARS), and the Justice Department’s National Security Division’s Counterintelligence and Export Control Section (CES). 

Assistant U.S. Attorneys Alexander A. Solomon, Julia Nestor, David K. Kessler, Kaitlin Farrell, and Sarah Evans, MLARS Trial Attorneys Laura Billings and Christian Nauvel, and CES Trial Attorneys Thea D. R. Kendler and David Lim are in charge of the prosecution, with assistance provided by Assistant U.S. Attorney Mark Penley of the Northern District of Texas, Assistant U.S. Attorneys Brian Morris and Brendan King of the Eastern District of New York’s Civil Division and Trial Attorneys Andrew Finkelman and Margaret O’Malley of DOJ’s Office of International Affairs.  Additional Criminal Division and National Security Division Trial Attorneys and Assistant U.S. Attorneys within U.S. Attorney’s Offices for the Northern District of Texas, the Eastern District of Texas, and the Northern District of California have provided valuable assistance with various aspects of this investigation.

The Defendants:

Huawei Technologies Co. Ltd.

Huawei Device USA Inc.

Skycom Tech Co. Ltd.

Meng Wanzhou, also known as “Cathy Meng” and “Sabrina Meng”
Age: 46

Residence: People’s Republic Of China

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

[1] The indictment charges other individuals who have not yet been apprehended and whose names will not be publicly released at this time.

Earlier today, at the federal courthouse in Central Islip, William Castellanos, also known as “Dizzy” and “Satanico,” a member of La Mara Salvatrucha, also known as the MS-13, a violent transnational criminal organization, was sentenced by United States District Judge Joseph F. Bianco to 27 years’ imprisonment.  The sentencing followed Castellanos’s February 2018 guilty plea to firearms-related murder charges in connection with the June 30, 2015 murder of 16 year-old Jonathan Cardona-Hernandez in Central Islip, New York. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Geraldine Hart, Commissioner, Suffolk County Police Department (SCPD), and Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD), announced the sentence.

“Castellanos brutally murdered Jonathan Cardona-Hernandez simply because he believed Cardona-Hernandez was a member of a rival gang,” stated United States Attorney Donoghue.  “With today’s sentence, Castellanos will pay for this senseless crime.  The defendant’s conviction and punishment reflects the commitment of this Office and our law enforcement partners to vigorously investigate, prosecute and dismantle MS-13 and any other gang that terrorizes our communities.”

“The success of our collaborative efforts with our law enforcement partners is evident in today’s sentencing — the latest in a series holding MS-13 members accountable for their despicable crimes,” stated SCPD Commissioner Hart. “The Suffolk County Police Department will continue to focus our resources on halting the violence that surrounds MS-13, and I would like to thank the Eastern District of New York and the Long Island Gang Task Force for their unwavering commitment to dismantling this violent street gang.”

“The arrest, conviction and sentencing of defendant William Castellanos in connection with the 2015 murder of 16 year-old Jonathan Cardona-Hernandez is an excellent example of the professionalism and dedication of numerous law enforcement agencies that have worked tirelessly and collaborated on this case,” stated NCPD Commissioner Ryder.  “Our residents and communities will be safer with defendant Castellanos incarcerated. Gangs and their heinous crimes can never be tolerated in any community and we are taking a proactive approach to keep our residents and police safe.”

Castellanos, who was a member of the Karlington Locos Salvatruchas clique of MS-13 (“KLS”) based in Central Islip, and two MS-13 co-conspirators targeted Cardona-Hernandez because they suspected that he was associated with a rival gang, known as “L-Block.”  In the early morning hours of June 30, 2015, Castellanos and his co-conspirators drove Cardona-Hernandez to the vicinity of Nicoll Avenue and Messina Street in Central Islip. When Cardona-Hernandez exited the car, Castellanos approached him from behind and shot him multiple times with a 9mm semi-automatic handgun.  The co-conspirators then took turns shooting Cardona-Hernandez with a second 9mm semi-automatic handgun.  Cardona-Hernandez was struck by at least 10 bullets and was found dead in the street.  The shooters fled the crime scene, met with an MS-13 leader and telephoned MS-13 leaders in El Salvador to report that the murder had been successfully carried out.  By the time of his arrest by the FBI’s Long Island Gang Task Force in May 2016, Castellanos had risen to the position of leader of the KLS clique.  

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 MS-13.  MS-13’s leadership is based in El Salvador and Honduras, 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 largest and most violent street gang 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 45 murders in the district, 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, comprising agents and officers of the FBI, SCPD, NCPD, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Department, Rockville Centre Police Department, the New York State Police, and the Bureau of Alcohol, Tobacco, Firearms and Explosives. 

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, Raymond A. Tierney, Michael T. Keilty and Justina L. Geraci are in charge of the prosecution.

The Defendant:

WILLIAM CASTELLANOS (“Dizzy” and “Satanico”)
Age: 22
Central Islip, New York

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