Eastern District of New York

BROOKLYN, NY – A three-count criminal indictment was unsealed today in federal court in the Eastern District of New York charging Low Taek Jho, also known as “Jho Low,” and Ng Chong Hwa, also known as “Roger Ng,” with conspiring to launder billions of dollars embezzled from 1Malaysia Development Berhad (1MDB), Malaysia’s investment development fund, and conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes to various Malaysian and Abu Dhabi officials.  As part of the three-count indictment, Ng is also charged with conspiring to violate the FCPA by circumventing the internal accounting controls of a major New York-headquartered financial institution (Financial Institution), which underwrote more than $6 billion in bonds issued by 1MDB in three separate bond offerings in 2012 and 2013, while Ng was employed at the Financial Institution as a managing director.  Ng was arrested earlier today in Malaysia, pursuant to a provisional arrest warrant issued at the request of the United States.  Low remains at large.

Also unsealed today in federal court in the Eastern District of New York was the guilty plea of Tim Leissner, the former Southeast Asia Chairman and participating managing director of the Financial Institution, to a two-count criminal information charging Leissner with conspiring to launder money and conspiring to violate the FCPA by both paying bribes to various Malaysian and Abu Dhabi officials and circumventing the internal accounting controls of the Financial Institution while he was employed by it.  According to court filings, Leissner has been ordered to forfeit $43,700,000 as a result of his crimes. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York, John P. Cronan, Principal Deputy Assistant Attorney General of the Department of Justice’s Criminal Division, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and R. Damon Rowe, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation (IRS-CI), Los Angeles Field Office, announced the charges.

The Criminal Scheme

1MDB is a Malaysian state-owned and controlled fund created to pursue investment and development projects for the economic benefit of Malaysia and its people.  As alleged in court filings, between approximately 2009 and 2014, as 1MDB raised money to fund its projects, billions of dollars were misappropriated and fraudulently diverted from 1MDB, including funds 1MDB raised in 2012 and 2013 through three bond transactions that it executed with the Financial Institution.  As part of the scheme, and as alleged in court filings, Low, Ng, Leissner and others conspired to bribe government officials in Malaysia, including at 1MDB, and Abu Dhabi to obtain and retain lucrative business for the Financial Institution, including the 2012 and 2013 bond deals.  They also allegedly conspired to launder the proceeds of their criminal conduct through the U.S. financial system by purchasing, among other things, luxury residential real estate in New York City and elsewhere, and artwork from a New York-based auction house, and by funding major Hollywood films. 

As alleged, Low’s close relationships with high-ranking government officials in Malaysia and Abu Dhabi were central to the scheme.  Ng, Leissner, and others at the Financial Institution allegedly knew Low was close to these government officials, including a high-ranking Malaysian government official who had authority to approve 1MDB business decisions (Malaysian Official #1).  According to allegations in court filings, beginning in approximately 2009 and continuing through 2014, Low, Ng, Leissner and the other co-conspirators used Low’s relationships to obtain and retain business for the Financial Institution through the promise and payment of hundreds of millions of dollars in bribes, including to ensure 1MDB awarded the Financial Institution a role on three bond transactions known internally at the Financial Institution as “Project Magnolia,” “Project Maximus” and “Project Catalyze.”  As a result of its work for 1MDB during that time, the Financial Institution allegedly received approximately $600 million in fees and revenues along with increased reputational prestige.  At the same time, Ng, Leissner and others allegedly received large bonuses and enhanced their own reputations at the Financial Institution.  In total, according to allegations in court filings, more than $2.7 billion was misappropriated from 1MDB and Low, Ng, Leissner and others conspired to launder this money through the U.S. financial system to pay bribes to foreign officials and for the personal benefit of themselves and their relatives.

Project Magnolia

In early 2012, according to allegations in court filings, following a series of meetings in Malaysia and the United Kingdom, Low, Leissner, Ng and the co-conspirators agreed that, with the assistance of the Financial Institution, 1MDB would issue $1.75 billion in bonds guaranteed by an entity wholly owned and controlled by the government of Abu Dhabi.  Low allegedly explained to Ng, Leissner and others at the time that, to complete the transaction, bribes would need to be paid to officials in Malaysia and Abu Dhabi and, as alleged, hundreds of millions of dollars were actually paid to officials in these countries.  Low, Ng, Leissner and other co-conspirators also knew that Low intended to use funds misappropriated from the bond transaction to bribe and influence the officials to obtain the necessary approvals and any additional assistance needed to execute Project Magnolia for the Financial Institution and to pay kickbacks to Ng, Leissner and others.

In or around March 2012, 1MDB allegedly selected the Financial Institution to be the sole bookrunner and arranger for Project Magnolia.  As part of the scheme, Low and other co-conspirators enlisted the assistance of 1MDB officials, promising to pay them bribes and kickbacks.  In one instance, as alleged in court filings, in connection with Project Magnolia, Low told one 1MDB official that he would “[g]ive [the official a] big present” when the transaction closed.  According to allegations in court documents, the fact that bribes and kickbacks were being paid in connection with Project Magnolia was known to Ng, Leissner and other employees of the Financial Institution.

After Project Magnolia closed on or about May 21, 2012, more than $500 million of the bond proceeds were misappropriated and diverted from 1MDB through numerous wire transfers to bank accounts in the name of shell companies beneficially owned and controlled by Low, Leissner, Ng and other co-conspirators, including a high-level official at the Abu Dhabi entity that guaranteed the Project Magnolia bonds and a close relative of Malaysian Official #1.  As alleged, the bond proceeds transferred to Malaysian Official #1’s close relative were later used by the relative’s U.S. motion picture company to assist in the production of the film “The Wolf of Wall Street,” a movie based on a previous Eastern District of New York prosecution.   

Project Maximus and Project Catalyze

Court filings further allege that from May 2012 and continuing through 2013, Low, Ng, Leissner and their co-conspirators continued to work to ensure that the Financial Institution obtained and retained additional 1MDB business, including the bond transactions known as “Project Maximus” and “Project Catalyze,” which transactions generated substantial fees and revenues for the Financial Institution.  As alleged, although both transactions were designed to raise more than $4 billion for 1MDB’s investment and development projects, Low, Ng, Leissner and other co-conspirators allegedly used the transactions to further the criminal scheme, ultimately laundering hundreds of millions of dollars of diverted funds from these transactions into bank accounts beneficially owned and controlled by, among others, the co-conspirators, including Low, Leissner and officials in Malaysia and Abu Dhabi.  As alleged in court filings, throughout this time, Ng, Leissner, and at least one other employee of the Financial Institution knew that Low would and did pay bribes to influence officials in Malaysia and Abu Dhabi to obtain the necessary approvals to execute Project Maximus and Project Catalyze.  Low, Ng, Leissner and others allegedly knew that large portions of the bond proceeds would be illegally diverted to themselves and others, including to foreign government officials.  

As part of the scheme alleged in court filings, Low, Ng, Leissner and other co-conspirators again used a series of wire transfers to launder billions of dollars of misappropriated and fraudulently diverted funds from Project Maximus and Project Catalyze.  As alleged, following the close of Project Maximus, approximately $790 million of the bond proceeds was transferred through a series of shell company accounts beneficially owned and controlled by Low, Leissner and others, including accounts of officials in Malaysia and Abu Dhabi.  In particular, Leissner and Ng caused millions of dollars of these funds to be transferred to accounts of 1MDB officials or relatives of such officials in exchange for their assistance in obtaining and retaining business for the Financial Institution.  Over $35 million of the bond proceeds also allegedly was used by a co-conspirator to help acquire a condominium in New York, New York beneficially owned by Low.

Similarly, according to allegations in court filings, after Project Catalyze closed in March 2013, more than $1 billion dollars of diverted funds, traceable to the transaction, were laundered, at Low’s direction, to bank accounts in the name of entities beneficially owned and controlled by Low, Leissner and others, including 1MDB officials.  As alleged, more than $4 million of the funds were transferred to a bank account beneficially owned by a relative of Ng.  Additionally, as part of the scheme, Low used a shell company account to receive more than $1 billion of the Project Catalyze bond proceeds and spent approximately $137 million of these funds to purchase works of art at a high-end art auction house in New York, New York. 

Post-Catalyze 1MDB Transactions at the Financial Institution

The Financial Institution continued to seek business from 1MDB after Project Catalyze.  As alleged, Leissner and others were particularly focused on securing a role for the Financial Institution on a proposed initial public offering (“IPO”) of 1MDB’s energy assets.  To influence certain officials to award the Financial Institution a role in the proposed IPO, Low and Leissner allegedly continued to pay bribes to certain officials at 1MDB. 

For example, as alleged, in an online chat between Low and Leissner in June 2014, Low and Leissner discussed the need to “suck up to” a 1MDB official and to send “cakes” to a person believed to be the wife of Malaysian Official #1.  A few months after this chat, a bank account owned and controlled by Leissner and his relative was used to transfer approximately $4.1 million to a high-end New York jeweler, in part, to pay for gold jewelry for the wife of Malaysian Official #1.

The charges in the indictment as to Low and Ng are allegations, and those defendants are presumed innocent unless and until proven guilty. 

The investigation was jointly conducted by the FBI’s International Corruption Unit and IRS-Criminal Investigation.  The government’s criminal 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 and the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Fraud Section.  Assistant United States Attorneys Jacquelyn M. Kasulis and Drew Rolle and Trial Attorneys Jennifer E. Ambuehl, Woo S. Lee, Mary Ann McCarthy, Katherine A. Nielsen and Nikhila Raj are prosecuting the case. Additional Criminal Division Trial Attorneys and Assistant U.S. Attorneys within U.S. Attorney’s Offices for the Eastern District of New York and Central District of California have provided valuable assistance with various aspects of this investigation, including with civil and criminal forfeitures.

The Criminal Division’s Office of International Affairs provided critical assistance in this case.  The Department also appreciates the significant cooperation and assistance provided by the U.S. Securities and Exchange Commission, and the Board of Governors of the Federal Reserve System along with the Federal Reserve Bank of New York.  The Department also appreciates the significant assistance provided by the Attorney General’s Chambers of Malaysia, the Royal Malaysian Police, the Malaysian Anti-Corruption Commission, the Attorney General’s Chambers of Singapore, the Singapore Police Force-Commercial Affairs Division, the Office of the Attorney General of Switzerland, the Judicial Investigating Authority of the Grand Duchy of Luxembourg, and the Criminal Investigation Department of the Grand-Ducal Police of Luxembourg.

The Defendants:

LOW TAEK JHO
Age: 36

NG CHONG HWA
Age: 51

E.D.N.Y. Docket No. 18-CR-538 (MKB)

TIM LEISSNER
Age: 48

E.D.N.Y. Docket No. 18-CR-439 (MKB)

Earlier today, in federal court in Brooklyn, Lorindo Powell was sentenced by United States District Judge Margo K. Brodie to 51 months’ imprisonment and ordered to pay $770,632.50 in restitution following Powell’s guilty plea to one count of conspiracy to commit wire and bank fraud and one count of access device fraud for her schemes to defraud elderly victims over the course of more than a decade.  In total, Powell stole at least $770,632.50 from her victims.  Powell pleaded guilty to the charges in May 2018.  A co-defendant, Tavoy Malcolm, pleaded guilty in August 2017 and is awaiting sentencing.

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.

“Powell has now been held to account for targeting vulnerable victims, gaining their trust and stealing their savings,” stated United States Attorney Donoghue.  “Elder fraud enforcement is a Department of Justice priority, and this Office will continue to investigate and prosecute criminals who prey on senior citizens.”

“Powell’s actions were shameful as she preyed on the susceptibilities of the elderly, including a couple with dementia and another who was left homeless,” stated HSI Special Agent-in-Charge Melendez.  “Elder fraud is of serious concern and law enforcement will continue to investigate, arrest and prosecute those who choose to take advantage of our aging population rather than take care of them.”

In 2009, Powell contacted Jane Doe #1, a 79-year-old teacher in Brooklyn, with a purported opportunity to claim lottery winnings.  Powell induced Jane Doe #1 to skip her mortgage payments and make payments to her instead.  Powell also persuaded Jane Doe #1 to cash and hand over her paychecks for years.  As a result, Jane Doe #1 was evicted from her home in 2011.  Powell took control of Jane Doe #1’s retirement account, changing the email address to Powell’s own and impersonating Jane Doe #1 in order to make withdrawals.  Jane Doe #1 lost at least $589,000 as a result of Powell’s actions.

Beginning in 2011, Powell induced Jane Doe #3 and her husband, a Maryland couple suffering from dementia, to wire money to Powell and others, purportedly to claim lottery winnings.  In total, the two victims lost at least $119,476.50. 

In October 2016, Powell defrauded John Doe #1, an 89-year-old man living in Florida, of approximately $23,000 after contacting him about purported sweepstakes winnings. 

In between December 2016 and April 2017, Powell obtained Jane Doe #2’s personal identification information by posing as a bank representative and stole over $38,000 by making withdrawals from her checking account and charging purchases to her credit card.  At the time, Jane Doe #2, a woman in her 90s, was residing in a New Jersey retirement home. 

The government’s case is being prosecuted by Assistant United States Attorney Alexander Mindlin.

The Defendant:

LORINDO POWELL
Age:  30
Brooklyn, New York

E.D.N.Y. Docket No. 17-CR-311 (MKB)

 

Earlier today, in federal court in Central Islip, Rogelio Mendez was sentenced by United States District Judge Sandra Feuerstein to 57 months’ imprisonment for illegally reentering the United States after being deported.  After illegally reentering the United States for a second time following his conviction for possessing a loaded firearm, Mendez was convicted in the County Court of Suffolk County of rape.  Judge Feuerstein ordered that the sentence imposed today would run consecutively to a 30-month term of imprisonment that Mendez received for his rape conviction.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William Joyce, Acting Field Office Director, U.S. Immigration and Customs Enforcement (ICE), Office of Enforcement and Removal Operations (ERO), New York, announced the sentence.

“Mendez repeatedly showed contempt for the rule of law by reentering the United States twice after he was first deported,” stated United States Attorney Donoghue.  “The Department of Justice has made criminal immigration enforcement a priority, and today’s sentence should serve as a deterrent to others who would illegally return to the United States after having been deported.” Mr. Donoghue expressed his appreciation to the Town of Southampton Police Department and the United States Marshals NY/NJ Regional Fugitive Task Force, Long Island Division, for their assistance with the case.

“Mendez had a past criminal history in the U.S. and was removed twice, but then decided to illegally reenter the country only to commit a more heinous crime,” stated ERO Acting Field Office Diriector Joyce. “This man is already incarcerated for his recent rape conviction, and now, thanks for the proactive approach of the men and women of ICE, he will serve a lot more time behind bars for his felony reentry offense.”

According to court filings and facts presented during court proceedings, Mendez, a Mexican citizen, was initially deported from the United States in 2004, after he served a two-year New York State prison term for his conviction for possessing a loaded firearm in Queens, New York.  Mendez illegally reentered the United States in 2005 and was deported in March 2009.  Mendez again illegally reentered the United States from Mexico in 2010.  On September 11, 2016, while he was employed at a restaurant in Southampton, New York, Mendez raped a woman at a home that the defendant shared with his co-workers.  The defendant pleaded guilty to third-degree rape in February 2017 and was sentenced to 30 months’ imprisonment.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorney Bradley T. King is in charge of the prosecution.

The Defendant:

ROGELIO MENDEZ (also known as “Rogelio Mendez-Puebla”)
Age:  38
Jackson Heights, New York

E.D.N.Y. Docket No. 17-CR-83 (SJF)

Richard P. Donoghue and Geoffrey S. Berman, the United States Attorneys for the Eastern and Southern Districts of New York, respectively, announced today that special telephone numbers have been set up to receive complaints of possible violations of federal election laws relating to the upcoming general elections in New York City and other counties in their districts. 

The United States Attorneys said that their Offices will be available to receive complaints at the following numbers on Tuesday, November 6, 2018:

(718) 254-6790                       (for Brooklyn, Queens, Staten Island, Nassau, and Suffolk counties)

(646) 369-4739                       (for Manhattan, Bronx, Dutchess, Orange, Putnam, Rockland, Sullivan, and Westchester counties)

In addition, complaints of possible violations of federal election laws may be made directly to the Federal Bureau of Investigation at (212) 384-1000.

The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur.  The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on Election Day.

Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.  It also contains special protections for the rights of voters, and provides that they can vote free from acts that intimidate or harass them.  For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting, may violate federal voting rights law.  Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.

The right to vote is a cornerstone of American democracy. We all must ensure that those who are entitled to vote exercise that right if they choose, and that those who seek to corrupt it are brought to justice. 

The United States Attorneys also noted that the following additional telephone numbers are available on Election Day for citizens to call for routine inquiries, such as where to vote or how late the polls are open, or to register complaints that may concern violations of New York State election laws:

IN NEW YORK CITY

City Board of Elections

Main Office                           (866) 868-3692 TTY #:

                                             (212) 487-5496

IN COUNTIES OUTSIDE NEW YORK CITY

County Boards of Elections

Dutchess                                  (845) 486-2473

Nassau                                     (516) 571-8683

Orange                                     (845) 360-6500

Orange (Spanish language)       (855) 331-2444

Putnam                                     (845) 808-1300

Rockland                                   (845) 638-5172

Suffolk                                      (631) 852-4500

Sullivan                                     (845) 807-0400

Westchester                              (914) 995-5700

Assistant United States Attorney Erik Paulsen is responsible for overseeing the handling of complaints of voting rights abuses and election fraud for the Eastern District of New York.

Assistant United States Attorney David J. Kennedy is responsible for overseeing the handling of complaints of voting rights abuses and election fraud for the Southern District of New York.

 

Earlier today, in federal court in Central Islip, Ronald Catalan, a former leader of the Brentwood Locos Salvatruchas (BLS) clique of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, and Jerlin Villalta, a member of the Freeport Locos Salvatruchas (FLS) clique of the MS-13, pleaded guilty to racketeering charges relating to their participation in crimes of gang-related violence on Long Island.  Catalan pleaded guilty to three attempted murders and a conspiracy to distribute cocaine and marijuana as predicate racketeering acts, as well as illegally using firearms in connection with crimes of violence.  Villalta pleaded guilty to the June 3, 2016 murder of Jose Pena and conspiracy to distribute marijuana as predicate racketeering acts.  The guilty pleas were entered in separate proceedings before United States District Judge Joseph F. Bianco.  When sentenced, each defendant faces up to life imprisonment, and Villalta faces deportation.

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 guilty pleas.

“The defendants have admitted carrying out numerous MS-13 attacks on Long Island, including murder and attempted murders, as part of the gang’s campaign of wanton violence,” stated United States Attorney Donoghue.  “Working with our partners on the Federal Bureau of Investigation’s Long Island Gang Task Force, we will not rest until MS-13 and the threat this transnational criminal enterprise presents to our communities is eliminated.”  Mr. Donoghue thanked the Task Force for their invaluable assistance during the investigation.

According to the superseding indictment and statements made in court, on June 23, 2009, Catalan and two other MS-13 members, all of whom were new members of the BLS clique, armed themselves with handguns and drove through Brentwood, hunting for rival gang members to attack and kill in order to increase their standing in the gang.  They observed a group of males on Barleau Street, whom they believed to be members of the rival Bloods street gang.  The MS-13 members exited the car, approached the group and started firing.  John Doe #1 was struck in the armpit and back as he tried to run; he underwent surgery and ultimately survived.

Catalan also admitted to participating in the October 21, 2015 attempted murders of two men on Bancroft Road in North Bay Shore.  Catalan, who was the leader of the BLS clique from 2015 until his arrest in July 2017, and other MS-13 members retaliated against suspected members of the rival Latin Kings gang for the assault of an MS-13 member earlier that day.  Armed with two .38 caliber revolvers, the MS-13 gang members drove around Brentwood and Bay Shore and observed a group of people they believed to be Latin Kings.  Catalan directed two newer MS-13 members to carry out the shooting and gave them the .38 caliber revolvers.  The MS-13 members approached the group and fired multiple shots before fleeing the scene.  Two victims were struck by gunfire, but survived their wounds. 

Villalta admitted that he and several co-conspirators murdered Jose Pena, a member of the MS-13, because he was suspected of cooperating with law enforcement and being  homosexual.  After consulting with MS-13 leadership in El Salvador, Villalta and the other MS-13 members obtained weapons and a vehicle to be used in the murder.  On June 3, 2016, they  lured Pena into the car and drove to a secluded wooded area in Brentwood, where they stabbed and slashed him with knives until he was dead.  Pena’s body was not discovered for four months.

Both Catalan and Villalta pleaded guilty to participating in drug conspiracies with the BLS and FLS cliques, respectively. 

Today’s guilty pleas are 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.  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 Eastern District of New York, and has convicted dozens of MS-13 leaders and members in connection with those murders.  These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, comprising agents and officers of the FBI, Suffolk County Police Department, Nassau County Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Office, Rockville Centre Police Department and the New York State Police.

The government’s cases are being prosecuted by the Office’s Long Island Criminal Division.  Assistant United States Attorneys John J. Durham, Paul G. Scotti, Raymond A. Tierney and Michael T. Keilty are in charge of the prosecution.

The Defendants:

RONALD CATALAN (also known as “Stranger” and “Extrano”)
Age: 27 
Brentwood, New York

JERLIN VILLALTA (also known as “Sonic”)
Age: 21
Brentwood, New York

E.D.N.Y. Docket No. 16-CR-403 (S-6) (JFB)

Earlier today, Louis F. Petrossi, the founder and president of the Wealth Research Institute, a purported investment research firm, was sentenced by United States Chief District Judge Christopher C. Conner of the Middle District of Pennsylvania to 100 months and three days in prison for stealing investors’ money.  The sentence will run concurrent (with three days consecutive) to the 44-month sentence he received in the Eastern District of New York in May 2017 for his role in the ForceField Energy Inc. securities fraud scheme. On March 8, 2018, following a four-day trial, a federal jury in the Middle District of Pennsylvania found Petrossi guilty of securities fraud, investment adviser fraud and wire fraud. Petrossi was also ordered to pay $2,265,735.84 in restitution and $1,170,940 in forfeiture.   

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.

“Petrossi abused the trust placed in him by investors, many of whom reported that they suffered significant loss of savings for retirement and education expenses as a result of his scheme.  With today’s sentence, Petrossi has been held responsible for misappropriating more than $1 million of investor funds for his personal use – a fraud he carried out while on pre-trial release for a related criminal case in the Eastern District of New York,” stated United States Attorney Donoghue.  Mr. Donoghue expressed his appreciation to the United States Attorney’s Office for the Middle District of Pennsylvania for their assistance with the case.

Between January 2015 and January 2017, Petrossi solicited more than $1.8 million in investments in one of his “Chadwicke” funds from more than 25 investors, including an investor residing in the Middle District of Pennsylvania.  Petrossi promoted Chadwicke as an opportunity to invest in high-profile startup companies such as Lyft, Inc., Maplebear Inc., Pinterest Inc., Spotify Technology SA and Palantir Technologies, Inc., among others.  Petrossi invested approximately $665,400 in privately held startup companies but used more than $1.1 million in investor funds to pay for personal expenses, including payment for his BMW, renovations to his home and payment of his legal fees.   

On May 3, 2016, Petrossi was arrested in Nevada pursuant to an indictment returned by a federal grand jury in the Eastern District of New York for his role in a securities fraud scheme involving ForceField Energy Inc.  Under the terms of Petrossi’s pre-trial release, he was prohibited from employment “directly involving the handling of investors.”  Nevertheless, Petrossi continued to engage in the Chadwicke scheme.

The fraud charges pursuant to which the defendant was sentenced today were initially brought as part of the ForceField Energy case, but were subsequently transferred to the Middle District of Pennsylvania.

The Chadwicke securities fraud case is being prosecuted by Assistant United States Attorney Mark E. Bini of the Eastern District of New York’s Business and Securities Fraud Section and Special Assistant United States Attorney John O. Enright of the United States Securities and Exchange Commission’s Enforcement Division.

The Defendant:

LOUIS F. PETROSSI
Age:  77
Residence: Reno, Nevada

M.D.P.A. Docket No. 17-CR-192 (CCC)

Earlier today, in federal court in Brooklyn, James Bayfield was sentenced by United States District Judge Eric N. Vitaliano to 21 months’ imprisonment, to be followed by three years of supervised release, for conspiracy to commit bank and wire fraud. Bayfield was also ordered to pay $184,651 in forfeiture.  Bayfield, a self-described mortgage specialist, was convicted by a federal jury in January 2017 for his role in a multi-million dollar mortgage fraud scheme.

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

“Bayfield has portrayed himself as a mortgage specialist, but now stands exposed as a convicted thief who used his knowledge of real estate transactions to carry out his fraudulent schemes against lending institutions,” stated United States Attorney Donoghue.  “This Office will continue working with our law enforcement partners to vigorously prosecute those who commit mortgage fraud and enrich themselves at the expense of lenders left holding the loans.”  Mr. Donoghue thanked the Federal Bureau of Investigation; the Federal Housing Finance Agency, Office of Inspector General; the U.S. Department of Housing and Urban Development, Office of Inspector General; the Federal Deposit Insurance Corporation, Office of Inspector General; and the New York State Department of Financial Services for their hard work and dedication over the course of this multi-year investigation and prosecution. 

Between September 2008 and May 2011, Bayfield and his co-conspirators caused mortgage loan applications with false information to be submitted to lending institutions, including Amtrust, Bank of America and JPMorgan Chase, in connection with the purchase of residential properties located in Brooklyn and Queens.  These applications contained fraudulently inflated purchase prices and false information about the assets and income of the purported purchasers, many of whom were paid to act as straw purchasers.  Bayfield and his co-conspirators also provided false down payment checks to make it appear as if the straw purchasers and other borrowers had made down payments on the properties. 

To complete their scheme, Bayfield and his co-conspirators conducted simultaneous and secretive purchases and sales of the properties, sometimes called “flips,” at inflated prices.  Ultimately, the lending institutions issued millions of dollars of mortgage loans secured by properties with inflated appraisal values, and many of these loans were placed into default status.

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys David C. Pitluck, Mark E. Bini and Michael T. Keilty are in charge of the prosecution.

The Defendant:

JAMES BAYFIELD
Age: 46
Queens, New York

E.D.N.Y. Docket No. 14-CR-356 (S-1) (ENV)

WASHINGTON – Nine Assistant United States Attorneys (AUSA), one paralegal specialist and a former AUSA from the Eastern District of New York (EDNY) were among the 244 department employees recognized by Attorney General Jeff Sessions for their distinguished public service today at the 66th Annual Attorney General’s Awards Ceremony.  Thirty-six other individuals outside of the department were also honored for their work.  This annual ceremony recognizes employees and other individuals who have demonstrated exceptional achievements, leadership and service to the Department of Justice and the American people.  This year’s awards ceremony included an award for exceptional heroism to U.S. Marshal Senior Inspector Basilio S. Perez, Jr., for his courageous actions to protect and aid victims of the October 1, 2017, mass shooting in Las Vegas, Nevada.                                            

“Service in the Department of Justice is more than a normal job; it is a calling to the highest standards of professionalism,” Attorney General Jeff Sessions said.  “That is true for all of the 115,000 Department of Justice employees.  But it is especially true for these award winners.  And so I want to thank them and their families for their exemplary service to this Department and to the American people.  They have made this Department proud.”

“The outstanding work of EDNY prosecutors, working in conjunction with our law enforcement partners, exposed an international culture of corruption within organized soccer, dismantled a fraud scheme that victimized the elderly and held responsible the brutal killers of a heroic federal agent,” stated United States Attorney Donoghue.  “The wide scope of the achievements recognized today demonstrates that this Office will pursue justice for the people of the Eastern District of New York wherever the evidence takes us.”

This year’s program honors individuals across the department and our federal, state, local and tribal partners for their selfless efforts, protecting our national security and our civil rights, addressing rising violent crime in our communities, and going after gangs and those trafficking in dangerous narcotics and human beings.  The awards also honor the work of civil and environmental litigation, which enforces the rule of law and upholds our Constitution.  They also recognize employees whose ideas and efforts save taxpayer dollars and help our government operate more effectively and efficiently, among other contributions to public safety and good governance.

FIFA

Assistant U.S. Attorneys Keith D. Edelman, Kaitlin T. Farrell, M. Kristin Mace, Brian D. Morris and Samuel P. Nitze, Paralegal Specialist Sherene Watson and former Assistant U.S. Attorney Paul A. Tuchmann, together with their team of FBI and IRS Special Agents, were recognized for their path-breaking investigative and prosecutorial work in combating an entrenched culture of corruption at the highest levels of organized soccer in the United States and around the world and the accompanying abuse of the U.S. financial system.  The case was the first to use the RICO and wire fraud statutes to attack corruption in international sports organizations and involved an extraordinary array of investigative techniques, complex tracing and analysis of foreign and domestic money flows, and unprecedented coordination and collaboration with foreign law enforcement authorities.  In addition to more than 20 convictions secured through guilty pleas, the team secured convictions of José Maria Marin, a former president of the Brazilian soccer federation, perhaps the most powerful soccer federation in the world, and Juan Angel Napout, the president of CONMEBOL, the regional confederation that oversees soccer in South America, after a six-week trial conducted in November and December 2017. 

Elder Fraud Sweep

Assistant U.S. Attorneys Michael J. Castiglione, Evan P. Lestelle and John Vagelatos were recognized for their outstanding contributions to the 2018 national Elder Fraud Sweep.  The sweep was the largest operation in U.S. history targeting fraud on the elderly.  The team both independently and in coordination with the Consumer Protection Branch of DOJ and the United States Postal Inspection Service, investigated and filed some of the sweep’s biggest cases.  The EDNY team filed four civil actions and obtained temporary restraining orders against 24 individual and corporate defendants for operating multi-million dollar international mail fraud schemes that targeted elderly and vulnerable victims.  The team obtained permanent consent judgments against defendants in three of the actions and, in the final action, has obtained a permanent consent judgment against several of the defendants and preliminary injunctions against the remaining defendants while the case is being actively litigated.

Los Zetas – “Operation Fallen Hero”

Senior Litigation Counsel Andrea Goldbarg and a team of Trial Attorneys and AUSAs from the DOJ Organized Crime and Gangs Section, DOJ Narcotic and Dangerous Drug Section and the United States Attorney’s Office for the District of Columbia were recognized for their extraordinary efforts and commitment in the prosecution of Los Zetas Mexican Cartel Members.  Members of the cartel brutally murdered Homeland Security Investigations (HSI) Special Agent Jaime Zapata and wounded HSI Special Agent Victor Avila on February 15, 2011, during an attempted car-jacking on a highway south of San Luis Potosi, Mexico.  The HSI Special Agents were on an official mission in an armored SUV when a Zetas “hit” squad attacked the vehicle.  Deploying immediately after the attack, the team pursued every evidentiary lead and soon began filing charges against the perpetrators.  After the attack and over the following six years, seven defendants were extradited to the United States, five of whom pleaded guilty and agreed to cooperate.  Two defendants proceeded to trial.  On July 27, 2017, after a three-week trial, a jury convicted two defendants of, among other crimes, murder and attempted murder of an officer or employee of the United States.  Both trial defendants were sentenced to life imprisonment.

 

Following eight days of trial, a federal jury in Brooklyn today convicted Larry Pagett, a leader of the Eight Trey Crips street gang, of murder in-aid-of racketeering.  Pagett faces a mandatory sentence of life in prison when he is sentenced by United States District Judge William F. Kuntz, II.

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, announced the verdict.

“Motivated by his twisted allegiance to the Eight Trey Crips street gang, Pagett opened fire with a handgun in a crowded nightclub, murdering a rival in cold blood and wounding an innocent bystander,” stated United States Attorney Donoghue.  “Today’s verdict sends the message loud and clear that wanton violence will not be tolerated in our community.  This Office and our law enforcement partners will continue working tirelessly to eradicate violent street gangs and bring to justice those criminals who value murder and mayhem over human life.”

“Gang members have shown they will do whatever necessary to maintain control over their turf and retaliate against those who they see as a threat,” stated FBI Assistant Director-in-Charge Sweeney.  “As proven in court, Larry Pagett demonstrated this when he shot and killed someone in a crowded nightclub without regard for the lives of his victim or the myriad others who could have been hurt or killed by Pagett’s violent actions.  With today’s verdict, justice has been served, and Pagett faces the prospect of spending the rest of his life in prison.”

As proven at trial, the Eight Trey Crips were based in and around the Flatbush Gardens housing complex.  The Crips and the Folk Nation, a rival street gang, had been engaged in a deadly feud over territory in Brooklyn for years.  On August 28, 2015, Pagett encountered Chrispine Philip, also known as “Droppa,” inside a crowded nightclub called the Buda Hookah Lounge located at 589 Flatbush Avenue.  Pagett believed Philip was a member of the rival Folk Nation and blamed him for the murder of an Eight Trey Crips gang member in Trinidad in the Spring of 2015.  Pagett pulled out a gun and shot Philip multiple times including with a final bullet to the back of his head.  An innocent bystander in the nightclub was also shot in the stomach and arm, but survived.  The murder was recorded on video surveillance cameras inside the club. 

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Patrick T. Hein and Mathew S. Miller are in charge of the prosecution.

The Defendant:

LARRY PAGETT (also known as “Biz,” Biz Loc” and “Molotovbizzz”)
Age:  39
Brooklyn, New York

E.D.N.Y. Docket No. 17-CR-306 (WFK)

Earlier today, in federal court in Brooklyn, Armando Moronta, who previously served as a federal correctional officer employed by the United States Bureau of Prisons (BOP) at the Metropolitan Detention Center (MDC), was sentenced by United States District Judge Roslynn R. Mauskopf to 10 years’ imprisonment for four counts of sexual abuse of a ward, one count of soliciting bribes as a public official and one count of conspiring to distribute narcotics.  The charges stemmed from two separate indictments.  As part of his sentence, Moronta is also required to forfeit $15,000 in bribe payments and to register as a sex offender.  Moronta was suspended by the BOP in January 2017 after his initial arrest, and he pleaded guilty in November 2017.  Moronta resigned from the BOP in December 2017.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Guido Modano, Special Agent-in-Charge, United States Department of Justice, Office of the Inspector General (DOJ-OIG), and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the sentence.

“Over a period of months, Moronta flagrantly violated his sworn duty as a law enforcement officer, sexually abused inmates entrusted to his supervision and undermined the safety of his fellow officers and others in exchange for bribes,” stated United States Attorney Donoghue.  “Today’s sentence  reflects the seriousness of the defendant’s crimes and demonstrates our steadfast commitment to holding accountable correctional officers who abuse their power and the inmates they are responsible for.” 

“Moronta engaged in an egregious abuse of power and breach of the public’s trust.  Today’s sentence demonstrates that such corruption will not be tolerated in our federal prisons or our law enforcement community,” stated DOJ-OIG Special Agent-in-Charge Modano.  “The DOJ-OIG will work tirelessly to hold individuals who engage in such conduct accountable to the fullest extent of the law.”

“Corrections officers are in place to maintain order, not flagrantly abuse their power.  Mr. Moronta not only accepted money for smuggling in contraband, he sexually abused female inmates,” stated FBI Assistant Director-in-Charge Sweeney.  “The abuse of power by officers sworn to protect is one of the FBI’s priorities because no one is above the law, especially those who took an oath to uphold it.”

Between March and December 2016, on approximately 12 occasions, Moronta smuggled cellular telephones and narcotics, including the synthetic narcotic “K2” and Suboxone, into the MDC for use and distribution by male inmates in exchange for thousands of dollars in bribe payments.  Separately, between May and June 2016, Moronta engaged in criminal sexual acts with three female inmates in his custody while he was assigned to guard their unit.  He committed these criminal sexual acts inside the Guard’s Office located within a female housing unit. 

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

The Defendant:

ARMANDO MORONTA
Age: 40
Brooklyn, New York

E.D.N.Y. Docket Nos. 17-CR-036 (RRM) and 17-CR-279 (RRM)

Former New York State Assemblywoman Pamela Harris was sentenced today by United States District Judge Jack B. Weinstein in federal court in Brooklyn to six months in prison and 400 hours of community service following her conviction for two counts of wire fraud, one count of disaster relief fraud and one count of witness tampering.  As part of the sentence, the Court imposed restitution of $70,400 and forfeiture of $10,000.  Harris was arrested on January 9, 2018, resigned from the New York State Assembly on April 2, 2018 and pleaded guilty on June 12, 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 Mark G. Peters, Commissioner, New York City Department of Investigation (DOI), announced the sentence. 

“With today’s sentence, Pamela Harris has been held responsible for stealing tens of thousands of dollars in government funds set aside for underserved children and funds allocated for victims of Hurricane Sandy, as well as lying and presenting fraudulent documents to the FBI when her crimes were uncovered,” stated United States Attorney Donoghue.  “She committed these fraudulent acts both before and while she served as a New York State Assemblywoman in Brooklyn, betraying the trust placed in her by her constituents.  This Office, together with our law enforcement partners, will continue to hold accountable corrupt public officials who act as if they are above the law.”

“Today, this onetime state Assemblywoman, convicted of using the disaster of Superstorm Sandy for personal profit, was held to account for her crimes with a decisive price – prison,” stated DOI Commissioner Peters.  “Her illegal conduct exemplifies the term, ‘corrupt politician,’ claiming to be a public servant while she stole from disaster relief funds intended to assist victims of Hurricane Sandy, some of whom were constituents in her district trying to recover from the storm. This type of corruption is what saps public confidence in government. Today’s sentencing offers a measure of justice. DOI is gratified to have worked with the United States Attorney for the Eastern District of New York and the FBI on this successful investigation and prosecution.” 

According to the indictment, court filings and facts presented during the sentencing hearing, between 2012 and 2017, Harris defrauded the Federal Emergency Management Agency (FEMA) and the New York City Council (NYC Council), among other entities, of tens of thousands of dollars, and then pressured witnesses to lie to FBI agents who were conducting the grand jury investigation into her fraud schemes.   

Between 2012 and 2014, Harris defrauded FEMA out of nearly $25,000 in temporary relocation funds by falsely claiming that she had been forced out of her Coney Island residence because of damage caused by Hurricane Sandy.  In furtherance of the scheme, she claimed that she was paying rent in Staten Island and submitted fake lease agreements and fraudulent rent payment receipts to FEMA.  In reality, Harris continued to live at her Coney Island residence and pocketed the FEMA payments for her own benefit.  Harris subsequently made similar misrepresentations to other organizations providing hurricane relief funds, including New York City’s Build it Back Agency.

Between August 2014 and January 2017—both before and while she served as a New York State Assemblywoman—Harris defrauded the New York City Council of $45,600 in discretionary funding allocated to Coney Island Generation Gap (CIGG), a not-for-profit organization that she controlled.  Harris falsely represented that she intended to use the funds to pay for rental space and to provide cash stipends to adolescents who participated in CIGG programs.  In support of these claims, she submitted fraudulent lease agreements containing forged signatures and fraudulent sign-in sheets with forged signatures of the adolescents.  When CIGG received the funds, Harris diverted them to her own bank account and used them to pay her personal expenses.  Harris also misappropriated CIGG’s money from its bank accounts to fund her purchase of a sauna and a hot tub and to make mortgage payments on her residence. 

Between March 2017 and September 2017, as the investigation into her fraudulent conduct progressed, Harris obstructed the investigation, including by pressuring close family members and a CIGG associate to lie to the FBI and destroy evidence.   

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

The Defendant:

PAMELA HARRIS
Age: 57 
Brooklyn New York

E.D.N.Y. Docket No. 18-CR-11 (JBW)

A Brooklyn, New York, man was sentenced to 48 months in prison for conspiring to defraud the government and theft of public funds, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to documents filed with the court, Akim Martin, also known as Akim Davis, conspired with others to file fraudulent tax returns for companies and individual taxpayers.  As part of the scheme, from March 2009 through March 2013, Martin and his co-conspirators filed false tax returns in the names of businesses they purportedly owned and operated, claiming phony deductions for wages paid to employees that purportedly worked for the fake companies.  Martin negotiated fraudulently obtained federal refund checks and spent the money on his personal expenses.   Martin’s conduct resulted in a tax loss of over $550,000.

In addition to the term of imprisonment imposed, U.S. District Judge Carol Bagley Amon ordered Martin to serve 3 years of supervised release, forfeit $82,600, and to pay restitution of $544,325 to the IRS.    

Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorneys Jason Scheff and Ann M. Cherry of the Tax Division, who prosecuted the case.  
 

Jose Osvaldo Melendez-Rojas and Rosalio Melendez-Rojas were extradited to the United States yesterday and arraigned today before United States Magistrate Judge Cheryl L. Pollak at the federal courthouse in Brooklyn on an 18-count indictment charging them variously with sex trafficking conspiracy, sex trafficking of minors, interstate prostitution, alien smuggling and related offenses. Judge Pollak entered a permanent order of detention with leave for the defendants to present bail packages at a later date.  The defendants were arrested in February 2018 in Mexico following a joint investigation by U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) Mexico City, HSI New York and the Mexican Federal Police.  The defendants are charged together with three co-defendants who were previously arrested in the United States. 

The extradition and charges were announced by Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Angel M. Melendez, Special Agent-in-Charge, HSI New York.  

“With this successful extradition, we demonstrate our resolve to prosecute those who profit from the forced sexual servitude of vulnerable women and girls, such as the Melendez-Rojas sex-trafficking network,” stated United States Attorney Donoghue.

 “These brothers were flown thousands of miles to faces charges for their role in the ‘family business’ of exploiting and trafficking young women purely for profit, using intimidation and abuse to force their victims to participate in sexual acts against their will,” stated HSI Special Agent-in-Charge Melendez.  “The number of times women were victimized to support their criminal empire is reprehensible.  The safety and well-being of the victim comes first and we will continue to work with our law enforcement partners in ensuring these criminal organizations cease to victimize for revenue.”

As alleged in the second superseding indictment and other court filings, between 2006 and July 2017, Jose Osvaldo Melendez-Rojas and his brother Rosalio Melendez-Rojas, together with other relatives, illegally smuggled young women and girls from Mexico into the United States, where they were forced to work as prostitutes in New York City and elsewhere.  The victims of this sex trafficking organization are identified in the indictment as Jane Does #1 through 6.  The defendants are also charged with conspiring to launder money in connection with the illicit proceeds of their sex-trafficking and prostitution enterprise.

The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted of the sex-trafficking related charges, the defendants face a maximum sentence of life in prison.

Mr. Donoghue commended HSI New York’s Trafficking in Persons Unit for leading the investigation of the Melendez-Rojas Trafficking Organization; thanked the HSI Mexico City Attaché Office, the Department of Justice’s Office of International Affairs, the State Department, Interpol, and the New York City Police Department (NYPD) for their assistance; and praised the government of Mexico for its role in advancing bilateral anti-trafficking enforcement efforts.  Mr. Donoghue also acknowledged the non-governmental victim service providers and advocates for their dedicated efforts to restore and improve the lives of survivors of trafficking and their families.

The investigation, prosecution, bilateral enforcement action and extradition of the defendants apprehended in Mexico were coordinated through the U.S.-Mexico Bilateral Human Trafficking Enforcement Initiative.  Since 2009, the Departments of Justice and Homeland Security have collaborated with Mexican law enforcement counterparts in a Bilateral Human Trafficking Enforcement Initiative to more effectively dismantle human trafficking networks operating across the U.S.-Mexico border, bring human traffickers to justice, restore the rights and dignity of human trafficking victims and reunite victims with their children.  These efforts have resulted in successful prosecutions in both Mexico and the United States, including U.S. federal prosecutions of over 170 defendants in multiple cases in Georgia, New York, Florida and Texas, in addition to numerous Mexican federal and state prosecutions of associated sex traffickers.  The extraditions in this case are also the latest development in the Eastern District of New York’s comprehensive anti-trafficking program, which has to date indicted more than 80 defendants for sex trafficking; assisted more than 150 victims, including over 40 minors, reunited 19 victims’ children with their mothers, and secured restitution orders of over $4 million on behalf of trafficking victims.

The government’s case is being handled by the Office’s Civil Rights Unit.  Assistant United States Attorneys Taryn A. Merkl, Erin E. Argo and Monica K. Castro are in charge of the prosecution.

The New Defendants:

JOSE OSVALDO MELENDEZ-ROJAS
Age:  42
Mexico

ROSALIO MELENDEZ-ROJAS (also known as “Leonel, “Wacho” and “El Guacho”)
Age:  37
Mexico

Defendants Previously Arrested:

FRANCISCO MELENDEZ-PEREZ (also known as “Paco” and “el Mojarra”)
Age:  24
Mexico

FABIAN REYES-ROJAS
Age:  38
Mexico

ABEL ROMERO-MELENDEZ (also known as “La Borrega” and “Borrego”)
Age:  32
Mexico

E.D.N.Y. Docket No. 17-CR-434 (ARR)

A criminal complaint was unsealed today in federal court in the Eastern District of New York charging Ronald DeRisi with threatening to murder and assault two United States Senators in retaliation for their support of the confirmation of Judge Brett Kavanaugh to the United States Supreme Court.  DeRisi was arrested earlier today in Smithtown, Long Island, and his initial appearance is scheduled for this afternoon before United States Magistrate Judge Gary R. Brown at the United States Courthouse, 100 Federal Plaza, Central Islip, New York.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Matthew R. Verderosa, Chief, United States Capitol Police (USCP), announced the charges.

“Representative democracy cannot work if elected officials are threatened with death for simply doing their job,” stated United States Attorney Donoghue.  “The First Amendment - the pinnacle of American achievement - protects debate, disagreement and dissent, not death threats.  We and all those dedicated to the rule of law will not tolerate the use violence and threats of violence in attempts to prevail in political disputes.”  Mr. Donoghue extended his grateful appreciation to the United States Capitol Police, the agency responsible for leading the investigation. 

“I greatly appreciate the hard work of our investigators for addressing these threats so quickly, and that of the U.S. Attorney’s staff for prosecuting this case,” stated USCP Chief Verderosa.

As alleged in the complaint, beginning on September 27, 2018, DeRisi left more than 10 threatening voice-messages at the offices of two United States Senators (identified in the complaint as Senator-1 and Senator-2) regarding the nomination and confirmation of Judge Kavanaugh to the high court.  The threats in the voice-messages were apparently made to discourage Senator-1 and Senator-2 from supporting Judge Kavanaugh’s nomination and/or as retaliation for having voted to confirm Judge Kavanaugh to the Supreme Court.  The complaint details the content of some of the expletive-laced recorded voice-messages. 

For example, in the first of two voice-messages left for Senator-1 on September 27, 2018, DeRisi said that he had a “present” for Senator-1, stating, in part, “It’s a nine millimeter.  Side of your … skull ….”  DeRisi concluded with “Yeah, Kavanaugh – I don’t think so.”

In a voice-message left for Senator-2 on October 6, 2018, DeRisi stated, in part, “… you better pray this guy don’t get in….”  Less than an hour and a half later, DeRisi called Senator-2 again and left a message stating, in part, “I’m gonna get you.”

According to the complaint, DeRisi was identified through telephone records as well as by voice exemplars. 

Following DeRisi’s arrest, USCP executed a search warrant and seized the cellular telephone used to leave the voice-messages detailed in the complaint.

The charges in the complaint are allegations, 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 Justina L. Geraci is in charge of the prosecution.

The Defendant:

RONALD DERISI
Age: 74
Smithtown, New York

E.D.N.Y. Docket No. 18-MJ-998

 

 

The United States has reached an agreement with Nomura Holding America Inc. and several of its affiliates (“Nomura”), which will pay a $480 million penalty to resolve federal civil claims that Nomura misled investors in connection with the marketing, sale and issuance of residential mortgage-backed securities (“RMBS”) between 2006 and 2007.  Nomura’s investors, which included university endowments, retirement funds and federally insured financial institutions, suffered significant losses due to Nomura’s misconduct.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Jennifer Byrne, Associate Inspector General, Federal Housing Finance Agency-Office of Inspector General (FHFA-OIG), announced the settlement.

“This settlement holds Nomura accountable for its fraudulent conduct in connection with its Residential Mortgage-Backed Securities offerings, which caused substantial harm to investors and contributed to the financial crisis of 2008,” stated United States Attorney Donoghue.  “The Department of Justice, this Office and our partners will continue to aggressively pursue wrongdoing in our financial markets, including, as appropriate, financial crisis-era misconduct.” 

“The actions of Nomura resulted in significant losses to investors, including Fannie Mae and Freddie Mac, which purchased Nomura Residential Mortgage-Backed Securities backed by defective loans,” stated FHFA-OIG Associate Inspector General Byrne.  “We are proud to have partnered with the U.S. Attorney’s Office for the Eastern District of New York on this matter.” 

The settlement stems from allegations that Nomura knowingly securitized defective mortgage loans in its RMBS and misled investors regarding the quality and characteristics of those loans.  For example, the United States alleged that:

• In presentations regarding its RMBS program, Nomura claimed that its due diligence process was “extensive,” “disciplined” and “carefully developed.”  Nomura also told investors that it only worked with “hand-picked industry leading” due diligence vendors, and that, as a result of its superior standards and due diligence processes, “Nomura’s loan performance should surpass industry standards.”  These claims were false.  Nomura knew, based on its due diligence, that thousands of loans that it securitized in its RMBS did not comply with applicable underwriting guidelines or were supported by inflated and potentially fraudulent appraisals.  Nomura concealed these deficiencies from investors, securitizing many of these defective loans as “favors” to loan originators—including, for example, loans that one originator openly described to Nomura as “dogsh[*]t.”  As stated by a member of Nomura’s RMBS due diligence group: “There is no such thing as a bad loan . . . just a bad price.” 

• Nomura also knew that a significant number of loans that it securitized in its RMBS had not gone through Nomura’s stated due diligence process, and, more broadly, that its process had been compromised.  Nomura’s head of RMBS due diligence (in the context of proposed changes to Nomura’s loan-by-loan buying program) stated that Nomura was “turning into the lemming of the mortgage business,” “following the herd” and compromising its standards “to comply with the masses in p[u]rsuit of volume.”  Additionally, a member of Nomura’s RMBS group’s origination sales team, in an email to the entire RMBS group, remarked that “advertising will be a great career when all these loans finally blow up . . . . (I will be selling vacuum cleaners door to door when the market goes by the way).”

• Despite this knowledge, Nomura failed to address the weaknesses in its due diligence processes, and continued to do business with originators that, according to its own due diligence personnel, were “extremely dysfunctional,” had “systemic” underwriting issues and employed “questionable” origination practices.  Indeed, Nomura’s securitization of defective loans in the subject deals—in spite of numerous red flags—reflected a conscious decision by senior Nomura personnel to compete for market share in a highly competitive RMBS market.  As stated by one member of Nomura’s RMBS team, Nomura could not just “buck the entire marketplace when [it was] hammered to grow.”

• Likewise, despite knowing that its due diligence was ineffective and did not remove large numbers of defective loans from its RMBS, in mid-2006, Nomura announced new, “more liberal” underwriting guidelines for its loan-by-loan purchase program.  Although Nomura’s head of RMBS due diligence warned that Nomura had already “loosened guidelines in so many areas” and that it was “at risk of giving away the proverbial store,” the prevailing view, as characterized by Nomura’s RMBS trading desk, was that Nomura’s “box [was] too restrictive.”  Nomura’s new guidelines allowed for the purchase of loans that Nomura’s due diligence personnel previously described as “sheer lunacy.”  

These are allegations only, which Nomura disputes, and there has been no trial or adjudication or judicial finding of any issue of fact or law.

The settlement was the result of a multi-year investigation by the Civil Division of the U.S. Attorney’s Office for the Eastern District of New York, pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.  Assistant U.S. Attorney Clayton P. Solomon and former Assistant U.S. Attorney Morgan J. Brennan led the government’s investigation.

An individual who defied court orders by operating a multimillion mass-mailing fraud scheme pleaded guilty on Friday, October 12, 2018, in federal court on Long Island before a magistrate judge, the Department of Justice announced.

Tully Lovisa, 55, of Huntington Station, New York, pleaded guilty to conspiracy to commit mail fraud for sending prize-promotion mailings that led recipients, many of whom were elderly and vulnerable, to believe that they could claim a large cash prize in exchange for a modest fee.  This was false; victims who submitted fees, which in total exceeded $30 million, did not receive large sums of money.  Lovisa operated the prize-promotion mailing scheme in violation of court orders that resulted from a lawsuit against him by the Federal Trade Commission (FTC).

Lovisa also pleaded guilty to wire fraud in connection with a related scheme to defraud the FTC.  Specifically, as part of his resolution of the FTC lawsuit’s against him, Lovisa was ordered by a court to sell a home he owned in Las Vegas, Nevada, and to turn over the proceeds of the sale to the FTC.  Lovisa, however, failed to comply with this order by arranged a sham sale of the house in September 2012 for $155,500 (which he reported to the FTC), and then actually selling the house in April 2015 for $540,000 (which he did not report to the FTC).

“As the Attorney General has made clear, the Department of Justice is determined to bring to justice those who exploit elderly consumers in violation of federal law,” said Assistant Attorney General Joseph Hunt of the Department of Justice’s Civil Division.  “We will work with our law enforcement partners at the U.S. Postal Inspection Service to stop and punish schemes harming the elderly wherever we find them.”

When sentenced, Lovisa faces up to 20 years in prison on each charge, forfeiture, and a fine of up to $250,000 or twice the gross gain or gross loss from each offense.

Friday’s plea took place before Magistrate Judge Gary R. Brown, who recommended that it be accepted by the district judge. The United States Postal Inspection Service investigated the case. The case is being prosecuted by Trial Attorneys Daniel Zytnick and Timothy Finley of the Department of Justice’s Consumer Protection Branch and Assistant U.S. Attorney Charles P. Kelly of the Eastern District of New York.

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.  For more information about the U.S. Attorney’s Office for the Eastern District of New York, visit its website at https://www.justice.gov/usao-edny.

Earlier today, in federal court in Central Islip, Tully Lovisa pleaded guilty before United States Magistrate Judge Gary R. Brown to conspiracy to commit mail fraud by sending prize-promotion mailings that led recipients, many of whom were elderly and vulnerable, to believe that they could claim large cash prizes in exchange for a modest fee.  Lovisa also pleaded guilty to wire fraud in connection with a related scheme to defraud the Federal Trade Commission (FTC).   

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Joseph H. Hunt, Assistant Attorney General for the Justice Department’s Civil Division, and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the guilty pleas.

As he admitted at his guilty plea, Lovisa’s prize promotion mailings were fraudulent.  None of the victims who submitted fees, which in total exceeded $30 million, received a substantial cash prize.  Lovisa’s involvement in the scheme was also in violation of prior court orders that resulted from a lawsuit against him by the FTC.  As part of his resolution the FTC lawsuit, Lovisa was ordered by a federal court to sell a home he owned in Las Vegas, Nevada, and turn over the proceeds to the FTC.  Lovisa arranged for a sham sale of the house in September 2012 for $155,500, and then sold the house in April 2015 for $540,000 and kept the proceeds.

When sentenced, Lovisa faces up to 20 years in prison on each count, as well as forfeiture of at least $1 million and a fine of up to $250,000 or twice the gross gain or gross loss from each offense.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorney Charles P. Kelly, with Trial Attorneys Daniel Zytnick and Timothy Finley of the Justice Department’s Consumer Protection Branch, are in charge of the prosecution.  Assistant United States Attorney Tanisha R. Payne is in charge of the forfeiture.

The Defendant:

TULLY LOVISA
Age:  55
Huntington Station, New York

E.D.N.Y. Docket No. 18-CR-349

Earlier today, at the federal courthouse in Brooklyn, Yevgeniy Braziler pleaded guilty to one count of securities fraud for orchestrating a scheme to target investors, including numerous elderly victims, by selling them partnerships in fraudulent real estate companies.  The guilty plea took place before United States District Judge Anne M. Donnelly.

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 guilty plea.

Braziler and his associates promised potential investors that the real estate companies in Brooklyn that he managed would purchase, renovate, rent and re-sell residential real estate in the Buffalo and Niagara Falls, New York areas.  In response to Braziler’s solicitations, investors sent him over $1.8 million.  Instead of using the money for the promised purposes, Braziler stole most of the funds.  For example, investors sent one of Braziler’s investment vehicles at least $978,000, but Braziler purchased only one property for at most $12,000, and took most of the remaining funds for himself and his associates.  The investors lost nearly all of their money. 

When Braziler is sentenced, he faces a maximum of 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:

YEVGENIY BRAZILER
Age: 40
Residence: Staten Island, New York

E.D.N.Y. Docket No. 17-CR-385 (AMD)

An 11-count indictment was unsealed today in federal court in Brooklyn charging Benjamin Uzilov with conspiracy to commit Hobbs Act robbery, nine counts of Hobbs Act robbery, and brandishing a firearm during a crime of violence.  Uzilov was previously arrested on a complaint that charged him with robbing three 7-Eleven stores on September 26, 2018.  The indictment charges the defendant with a total of nine robberies in Brooklyn, adding three additional robberies on September 16, 2018 and three additional robberies on September 25, 2018.  Uzilov will be arraigned at a later date.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Ashan M. Benedict, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the charges.  Mr. Donoghue expressed his appreciation to the NYPD detectives and ATF special agents assigned to the Strategic Pattern Armed Robbery Technical Apprehension (SPARTA) Task Force for their work during the investigation.

“As alleged in the indictment, Uzilov carried out a crime wave, repeatedly targeting Brooklyn businesses where he robbed hard-working store clerks at gunpoint,” stated United States Attorney Donoghue.  “This Office is committed to vigorously prosecuting those violent criminals who commit robberies, jeopardizing the safety of members of our community, in order to fill their own pockets with cash.”

“The defendant as alleged has committed numerous brazen acts of violence leaving innocent people traumatized and in a state of fear,” stated ATF Special Agent-in-Charge Benedict.  “Thanks to the excellent investigative work of the ATF/NYPD Joint Robbery Task Force he will no longer prey on the innocent in his community. ATF remains steadfast in its commitment to protecting citizens from violence and the lasting effects it has on communities. I would also like to thank the United States Attorney’s Office for prosecuting this case.”                       

“There is no place in civil society for violent criminals who target innocent New Yorkers,” stated NYPD Police Commissioner O’Neill.  “I commend the NYPD detectives and ATF investigators who comprise our Strategic Pattern Armed Robbery and Technical Apprehensions Task Force, or SPARTA – who so effectively pursue and strengthen high-profile armed robbery cases like this. And now, due to the nature of these crimes and the unparalleled cooperation between our agencies and the Eastern District of New York, I am very confident he will be successfully prosecuted and receive a lengthy federal prison sentence.”

As detailed in court pleadings and as captured on video surveillance, Uzilov entered each store, threatened employees with a gun and then stole money from his victims.  On more than one occasion, Uzilov ordered his victims to get on the floor and count to 10 as he exited the store.  Shortly after the final robbery on September 26, 2018, Uzilov was apprehended by NYPD officers at a gas station on Ocean Avenue in Brooklyn.  The officers observed a black ski mask on the front seat of Uzilov’s car and recovered cash in the pocket of his hooded sweatshirt and a gun in the glove compartment. 

The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, Uzilov faces a minimum of seven years in prison.

The indictment charges Johnson with the following robberies, all in Brooklyn:

• Shell Gas Station on September 16, 2018;
• Mill Basin Convenience Store on September 16, 2018;
• Allegiance Gas Station on September 16, 2018;
• Verrazano Deli and Grocery on September 25, 2018;
• Stop and Smile Grocery on September 25, 2018;
• Sam’s Deli on September 25, 2018;
• 7-Eleven on September 26, 2018;
• 7-Eleven on September 26, 2018; and
• 7-Eleven on September 26, 2018.

The government’s case is being handled by the Office’s General Crimes Section.  Assistant United States Attorney Megan E. Farrell is in charge of the prosecution.

The Defendant:

BENJAMIN UZILOV
Age:  37
Brooklyn, New York

E.D.N.Y. Docket No. 18-CR-546

Earlier today, Leroy Scott, a resident of Queens, pled guilty at the federal courthouse in Central Islip, New York, to armed bank robbery and a related firearms possession charge.  When sentenced, Scott faces up to 25 years’ imprisonment for the bank robbery and a minimum of seven years’ imprisonment and up to life imprisonment for the firearms charge. 

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 guilty plea.

According to court filings and prior public proceedings in the case, on August 21, 2017, Scott acted as a lookout for a co-conspirator, Pedro Benitez, who entered the Bridgehampton Savings Bank in Hewlett, New York, ordered customers and employees to the floor at gunpoint and demanded money from bank employees.  Another co-conspirator, Troy Tavares, waited outside in a vehicle.  Benitez fled the bank with over $12,000 and Tavares drove Benitez to a nearby location where they met up with Scott and another co-conspirator to split the proceeds.  At his guilty plea proceeding, Scott admitted that he had also participated in two additional robberies that the crew committed during the summer of 2017, both in Nassau County.  In each of those robberies, Scott had assisted in the planning and acted as a lookout for Benitez.  In total, the robbery crew stole over $70,000 from four banks between July and September of 2017.

Scott is the last of the co-defendants in this bank robbery crew to plead guilty in this case.  The government’s case is being prosecuted by Assistant United States Attorney Michael Maffei. 

The Defendant:

LEROY SCOTT
Age:  28
Far Rockaway, New York

E.D.N.Y. Docket No. 17-CR-572 (S-1) (JS)

One year ago, the Department of Justice announced the revitalization and enhancement of Project Safe Neighborhoods (PSN), which Attorney General Jeff Sessions has made the centerpiece of the Department’s nationwide violent crime reduction strategy.  PSN is an evidence-based program proven to be effective at reducing violent crime.  Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in communities and to develop comprehensive solutions to address them.  As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally-based prevention and reentry programs for lasting reductions in crime.

“Project Safe Neighborhoods is a proven program with demonstrated results,” Attorney General Sessions said in marking the anniversary.  “We know that the most effective strategy to reduce violent crime is based on sound policing policies that have proven effective over many years, which includes being targeted and responsive to community needs.  I have empowered our United States Attorneys to focus enforcement efforts against the most violent criminals in their districts, and directed that they work together with federal, state, local and tribal law enforcement and community partners to develop tailored solutions to the unique violent crime problems they face.  Each United States Attorney has prioritized the PSN program, and I am confident that it will continue to reduce crime, save lives and restore safety to our communities.”

“Over the past year, the Eastern District of New York has arrested and prosecuted dozens of gang members, gun traffickers and other violent offenders who have committed hundreds of serious crimes in our District.  The charged crimes include racketeering, murders, aggravated assaults, armed robberies, drug trafficking, firearms trafficking, and the possession of firearms by convicted felons and illegal aliens.  These prosecutions are a testament to the Project Safe Neighborhoods targeted enforcement strategies, which we have pursued with our federal and local law enforcement partners,” stated United States Attorney Donoghue.  “We and our partners remain completely committed to identifying those who are most responsible for violence in our District and prosecuting them to the fullest extent of the law, while continuing to support vital outreach programs for young people at risk.”

The PSN efforts of the U.S. Attorney’s Office for the Eastern District of New York over the last year include:

MS-13 Enforcement

Over the last year, this Office has continued its decade-long enforcement efforts against the MS-13 street gang.  For example, in 2018, more than two dozen Long Island MS-13 gang members were charged in a single superseding indictment with racketeering offenses, including 16 murders and numerous attempted murders.  Additional racketeering charges were brought against other Long Island MS-13 defendants in additional indictments throughout the year.  Numerous defendants, including juvenile defendants, have already pleaded guilty to serious charges, including several murders.  The investigations that led to those indictments were conducted with the Federal Bureau of Investigation’s (FBI) Long Island Gang Task Force, which includes the FBI, the Suffolk County Police Department (SCPD), the Nassau County Police Department (NCPD), the Nassau County Sheriff’s Department (NCSD), the Suffolk County Sheriff’s Department (SCSD) and other partners.

Also, in August of 2018, four MS-13 gang members were charged with murder conspiracy and attempted murder in Queens.  Those MS-13 defendants are charged with aiding and abetting co-conspirators who shot and paralyzed a 16-year-old suspected rival gang member.  The investigation was conducted with the FBI’s Safe Streets Gang Task Forces in Queens and on Long Island, which includes the FBI, the New York City Police Department (NYPD) and other partners.

Coney Island Gang Enforcement

The Office’s Organized Crime and Gangs Section has increased its enforcement efforts in the Coney Island area.  The number of shooting victims in the NYPD’s 60th Precinct is down 70 percent year-to-date, and the number of shooting incidents is down 66 percent year-to-date, according to the NYPD. 

In June 2018, a Brooklyn gang member was convicted of racketeering and two murders.  The defendant, a member of the Coney Island-based Rival Impact gang, gunned down the victims in a gang war with the Thirty-O gang.  The investigation was conducted with the FBI and the NYPD.

In November 2017, five members of a Coney Island street gang were indicted for murder, racketeering conspiracy and unlawful use of firearms.  Three of the defendants are charged with a fatal shooting outside the Mermaid Houses in Brooklyn.  The investigation was conducted with the FBI, the New York City Department of Investigation and the NYPD.

Other Street Gang Enforcement

In April 2018, four 18th Street gang members and associates were indicted for murder conspiracy and the murder of an MS-13 gang rival in Queens.  The investigation was conducted with the Queens County District Attorney’s Office and the FBI’s New York Metro Safe Streets Task Force, including the NYPD.

Also in April 2018, a Long Island Bloods gang member was indicted for murder and racketeering.  The defendant is charged with fatally shooting a victim at the Illusions Gentlemen’s Club in Deer Park.  The investigation was conducted with the Suffolk County District Attorney’s Office and the FBI’s Long Island Gang Task Force, which includes the FBI, the Suffolk County Police Department (SCPD), the Nassau County Police Department (NCPD), the Nassau County Sheriff’s Department (NCSD), the Suffolk County Sheriff’s Department (SCSD) and other partners.

In March 2018, three members and associates of the 18th Street gang were indicted for the murder of a fellow gang member they suspected of being an informant.  The defendants video recorded the murder and mutilation of the victim before burying the corpse in Turkey Point State Forest in Saugerties, New York.  A fourth defendant is charged with helping a co-defendant evade capture by law enforcement authorities after the murder.  The investigation was conducted with the Ulster County District Attorney’s Office and the FBI.

Since October of 2017, the Office has prosecuted over more than two dozen felon in possession of a weapon cases and more than 30 Hobbs Act robbery cases.

Firearms Trafficking Enforcement

In September 2018, two defendants were arrested for trafficking firearms from Virginia to Queens and Long Island.  The defendants are charged with selling an assault rifle, high-caliber handguns and several other firearms.  The investigation was conducted with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the FBI and the NCPD.

In June 2018, three defendants were arrested for trafficking firearms from Virginia to New York.  The defendants allegedly used Facebook to market and sell firearms illegally obtained by straw purchasers.  The investigation was conducted with the ATF and the NYPD.

Additional Federal Prosecutors Assigned

In June 2018, Attorney General Sessions announced 311 new Assistant United States Attorney (AUSA) positions throughout the country.  This was the largest increase in AUSAs in decades and, as part of that increase, the Attorney General allocated nine new prosecutors to the EDNY to focus on violent crime, civil enforcement and immigration crimes.

In addition, in January 2018, Attorney General Sessions selected the EDNY to receive two new AUSA positions to combat violent crime on Long Island.  The two additional federal prosecutors enhanced the Office’s ability to prosecute violent crimes committed by members and associates of MS-13 and other violent gangs such as the Crips, Bloods, Latin Kings, 18th Street gang and Outlaw motorcycle gangs, all of which have a significant presence in the district.

Community Partnerships and Grants

PSN funding has also been made available to provide direct support to local law enforcement agencies as well as prevention, education and awareness programs for at-risk young people and parents.  Presentations regarding gang awareness, internet safety and monitoring your child’s electronic devices all provide students and parents with necessary tools to more effectively avoid the dangers of violent crime. 

In September 2018, a federal award of $1,036,044 was granted to Suffolk County to oversee and implement various violent crime reduction strategies in Suffolk County, Nassau County and throughout the district.  Resources will be dedicated to enforcement and prevention efforts including, but not limited to, funding for prosecutors and police, providing technical training, promoting community outreach efforts and supporting existing gun and gang violence reduction programs.  

In addition, in October 2017, the Justice Department awarded a $500,000 grant to the Suffolk County Police Department for a violent gang and gun crime reduction program.  The grant supported enforcement strategies targeting individuals responsible for a disproportionate amount of violent crime and expanded community outreach programs for at-risk youth.

Charges in complaints and indictments are allegations, and defendants are presumed innocent unless and until proven guilty. 

A criminal complaint was unsealed today in federal court in Brooklyn charging Kaderrah Doyle, Cara Steinberg, Marina Golfo, Ego Onaga, Lyubov Beylina, Danielle Scopinich, Patricia Hakim and Enock Mensah with stealing more than $600,000 in funds from Medicaid and the New York City Department of Health and Mental Hygiene through fraudulent billing practices in connection with the New York State Early Intervention Program (EIP).  The EIP is a New York State program that provides remedial services to developmentally delayed children from birth to age three.  The defendants, all EIP therapists, were arrested earlier today and are scheduled to make their initial appearance this afternoon before United States Magistrate Judge Sanket J. Bulsara.

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 Mark G. Peters, Commissioner, New York City Department of Investigation (DOI), announced the charges.

“As alleged in the complaint, the defendants defrauded government agencies out of hundreds of thousands of dollars in public funds designated for therapeutic care for developmentally disabled children,” stated United States Attorney Donoghue.  “The victims of this fraud include not only the children and their families who were deprived of the therapeutic care that these defendants claimed to have performed, but ultimately the taxpayers whose taxes support Medicaid.  This Office and our law enforcement partners are committed to ensuring that those who defraud benefit programs will be held accountable.”  Mr. Donoghue also expressed his appreciation to the New York City Department of Health and Mental Hygiene for its assistance during the investigation.

“As we allege today, these defendants stole hundreds of thousands of government dollars from a program designed to aid some of our city’s most vulnerable residents,” stated FBI Assistant Director-in-Charge Sweeney.  “Rather than provide honest services, they chose to line their own pockets at the expense of taxpayers and the developmentally-delayed children and their families for whom these funds were targeted.  Today’s arrests should serve as a reminder that the FBI will continue to be vigilant in our effort to root out fraud and abuse in programs intended to serve the public when these programs are corrupted by greed.”

 “These eight therapists shamefully benefited by stealing hundreds of thousands of dollars in public funds while developmentally disabled and delayed children in their care were denied thousands of crucial therapy sessions, according to the charges,” stated DOI Commissioner Peters.  “DOI thanks the U.S. Attorney’s Office for the Eastern District of New York for its prosecution of these crimes.”

According to the complaint, between approximately 2012 and 2018, the defendants submitted thousands of fraudulent session notes and accompanying invoices for non-existent EIP therapy sessions.  As a direct result of their fraudulent submissions, the defendants received hundreds of thousands of dollars in reimbursements from Medicaid and the New York City Department of Health and Mental Hygiene.  On many occasions, the defendants were not present at the place where the therapy sessions supposedly occurred, including instances in which they were outside of New York State or even outside of the United States.  For example, Beylina allegedly submitted approximately 51 fraudulent invoices for EIP therapy sessions that purportedly occurred when she was in the Dominican Republic.  On other occasions, the defendants submitted documentation containing the forged signatures of the children’s caretakers, including parents, guardians, teachers and daycare providers.  In other instances, the defendants falsely claimed to have performed EIP therapy sessions for two different children at two different locations at the exact same time.  Many of the defendants also falsely claimed to have performed EIP therapy sessions when they were, in fact, at work elsewhere, including as full-time teachers with the New York City Department of Education.  

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

If convicted, the defendants face a statutory maximum of 10 years’ imprisonment.

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

The Defendants:

KADERRAH DOYLE
Age: 41
Bronx, New York

CARA STEINBERG
Age: 40
Old Bridge, New Jersey

MARINA GOLFO
Age: 44
North Pelham, New York

EGO ONAGA
Age: 45
Staten Island, New York

LYUBOV BEYLINA
Age: 30
Brooklyn, New York

DANIELLE SCOPINICH
Age: 35
Ozone Park, New York

PATRICIA HAKIM
Age: 54
Forest Hills, New York

ENOCK MENSAH
Age: 58
Mount Olive, New Jersey

E.D.N.Y. Docket No. 18-MJ-927

The Department of Justice announced today that AmerisourceBergen Corporation and its subsidiaries AmerisourceBergen Specialty Group (ABSG), AmerisourceBergen Drug Corporation (ABDC), Oncology Supply Company (OSC), and Medical Initiatives Inc. (MII) (collectively, “ABC”) have agreed to pay $625 million to resolve allegations arising from its operation of a facility that improperly repackaged oncology-supportive injectable drugs into pre-filled syringes and improperly distributed those syringes to physicians treating vulnerable cancer patients.  ABC is one of the nation’s largest wholesale drug companies and ranked number 11 on the Fortune 500 list.  The drugs involved in ABC’s scheme were Procrit®, Aloxi®, Kytril® and its generic form granisetron, Anzemet® and Neupogen®. 

Last year, AmerisourceBergen Specialty Group, a wholly-owned subsidiary of AmerisourceBergen Corporation, pled guilty to illegally distributing misbranded drugs and agreed to pay $260 million to resolve criminal liability for its distribution of these drugs from a facility that was not registered with the Food and Drug Administration (FDA).  The settlement announced today resolves ABC’s civil liability to the United States under the False Claims Act for causing false claims for the drugs it repackaged to be submitted to federal health care programs.  

“The $885 million combined civil and criminal resolution with ABC underscores our determination to utilize all tools at our disposal to pursue illicit schemes that seek to profit from circumvention of important safeguards designed to protect the nation’s drug supply,” said Assistant Attorney General Joseph H. Hunt of the Department of Justice’s Civil Division.  “We will continue to be particularly vigilant where these schemes put the health and safety of vulnerable patients at risk.” 

“ABC placed corporate profits over patients’ needs, endangering the health of vulnerable cancer patients,” stated United States Attorney Donoghue.  “This settlement, and the substantial penalty ABC has agreed to pay, reflect this Office’s firm commitment to protecting those in need of healthcare and holding to account those who put the health and safety of patients at risk.”  Mr. Donoghue expressed his appreciation to the Department of Veterans Affairs and the National Association of Medicaid Fraud Control Units for their assistance. 

The United States contends that ABC sought to profit from the excess drug product or “overfill” contained within the original FDA-approved sterile vials for these cancer supportive injectable drugs by establishing a pre-filled syringe program through a subsidiary that it claimed was a pharmacy.  The United States alleged that the “pharmacy” was in reality a repackaging operation that created and shipped millions of pre-filled syringes to oncology practices for administration to cancer-stricken patients.  As part of this operation, ABC purchased original vials from their respective manufacturers, broke their sterility, pooled the contents, and repackaged the drugs into pre-filled syringes. 

The United States alleged that ABC never submitted any safety, stability, or sterility data to the FDA to show that its operation ensured the safety and efficacy of the repackaged drug products.  It further alleged that, at times, these pre-filled syringes were prepared in non-sterile conditions, contaminated with bacteria and other unknown particles, and lacked the required quality and purity.

 

In addition, by harvesting the overfill, ABC was able to create more doses than it bought from the original vial manufacturers.  The United States alleged that ABC’s scheme enabled it to bill multiple health care providers for the same exact same vial of drug, causing some of those providers to bill the Federal Health Care Programs for the same vial more than once.  The scheme also allegedly enabled ABC to increase its market share by offering various product discounts, which it leveraged to obtain new customers and to keep existing customers buying its entire portfolio of oncology drugs.

The settlement also resolves allegations that ABC gave kickbacks to physicians to induce them to purchase Procrit through the pre-filled syringe program.  The alleged kickbacks were in the form of general pharmacy credits provided to customers, but which were not identifiable as specific to Procrit on the invoice.

Through these actions, the United States contended that ABC caused false claims to be submitted to the Centers for Medicare and Medicaid Services (“CMS”), the Department of Defense’s Defense Health Agency, which administers TRICARE, the Office of Personnel Management, which administers the Federal Employees Health Benefit Program, and the United States Department of Veterans Affairs (collectively, the “Federal Healthcare Payors”). Under the terms of today’s settlement, ABC will pay $581,809,006 plus accrued interest to the federal government and $43,190,994 plus accrued interest to state Medicaid programs.  

“Drug companies such as ABC that seek to boost profits at the expense of cancer patients unnecessarily put the health and safety of this vulnerable population at risk,” stated HHS-OIG Special Agent-in-Charge Lampert.  “Greed must never be a part of medical decision making.  HHS-OIG, along with our law enforcement partners, is committed to protecting patient quality of care, and this settlement should serve as a warning to drug companies that are tempted to shortchange patient well-being.”

The settlement resolves allegations contained in three separate actions filed against ABC under the qui tam, or whistleblower, provisions of the False Claims Act.  Under the act, private parties may sue on behalf of the government for false claims for government funds and to receive a share of any recovery.  The relator share of the federal portion of the civil settlement will be $93,089,441. 

The settlement was the result of close cooperation between the U.S. Attorney’s Office for the Eastern District of New York, the Civil Division, Commercial Litigation Branch, the Office of Inspector General of the Department of Health and Human Services, the Food and Drug Administration, the Department of Defense, the Office of Personnel Management, the Department of Veterans Affairs, and the state attorneys general and Medicaid Fraud Control Units.  The three cases are captioned United States ex rel. Michael Mullen v. AmerisourceBergen Corporation, et al., Civil Action No. CV-10-4856 (E.D.N.Y); United States ex rel. Omni Healthcare Inc. v. AmerisourceBergen, et al., Civil Action No. CV-12- 1178 (E.D.N.Y); United States ex rel. Daniel Sypula and Kelly Hodge v. AmerisourceBergen Drug Corporation, et al., Civil Action No. CV-14-5278 (E.D.N.Y.).

Excepted as otherwise admitted as part of its guilty plea or the statement of facts accompanying the civil settlement agreement, the claims resolved by the civil settlement are allegations only, and there has been no admission of liability.  

AmerisourceBergen Corporation (ABC), one of the nation’s largest wholesale drug companies, and its subsidiaries AmerisourceBergen Specialty Group (ABSG), AmerisourceBergen Drug Corporation (ABDC), Oncology Supply Company (OSC), and Medical Initiatives, Inc. (MII) (collectively, “ABC” or “the Company”), entered into a settlement with the United States in which it agreed to pay $625 million to resolve civil liability under the False Claims Act, 31 U.S.C. § 3730 et seq.  The claims against ABC arise from its repackaging and distributing of Pre-Filled Syringes (PFS) that were not approved for sale or use by the U.S. Food and Drug Administration (FDA).  The drugs involved in the scheme were Procrit®, Aloxi®, Kytril® and its generic form granisetron, Anzemet® and Neupogen®, all supportive drugs for cancer patients undergoing chemotherapy treatment (the PFS Drugs). 

As part of the civil settlement, ABC admitted that between January 2001 and January 2014, MII and OSC operated a program that created, packed and shipped millions of PFS to oncology practices for administration to vulnerable cancer patients (the PFS Program).  At MII, an ABC subsidiary located in Alabama, the drug product was removed from the original glass vials and multiple vials of the product were pooled in untested plastic containers.  Then the drug, including the overfill[1], was extracted and repackaged into syringes.  By harvesting the overfill, ABC was able to create more doses than it bought from the original vial manufacturers and avoid opening some of the vials.  ABC retained the unopened vials and sold them to other customers and to its subsidiary ABDC for resale.  During the 13 years the PFS Program was in operation, MII manufactured thousands of syringes daily, and eventually over one million syringes per year.  These syringes were sold throughout the United States.  Approximately 57% of the patients who were injected with the PFS were Federal Health Care Program beneficiaries.  The profit from the PFS Program was between $2.3 and $14.4 million annually for a total profit of at least $99.6 million.

ABC’s scheme enabled it to bill multiple health care providers for the same vial of drug, causing some of those providers to bill the Federal Health Care Programs for the same vial more than once.  The scheme also enabled ABC to increase its market share by offering various product discounts, which it leveraged to obtain new customers and to keep existing customers who purchased its entire portfolio of oncology drugs.  ABC excluded the entire PFS Program from its standard regulatory audit and pedigree compliance programs. 

This civil settlement brings to $885 million the total penalties that ABC has paid to resolve liability resulting from the PFS Program.  Previously, in September 2017, ABSG pleaded guilty to a criminal violation of 21 U.S.C. §§ 33l(a) and 333(a)(l) for the introduction of misbranded drugs into interstate commerce, as such drugs were manufactured and prepared at MII, an establishment not registered with the FDA pursuant to 21 U.S.C. § 360.  In connection with that guilty plea, ABSG paid $260 million in criminal fines and forfeiture. 

Richard P. Donoghue, U.S. Attorney for the Eastern District of New York; Joseph H. Hunt, Assistant Attorney General for the Civil Division of the Department of Justice; Mark S. McCormack, Special Agent-in-Charge, U.S. Food and Drug Administration, Office of Criminal Investigations (FDA-OCI); Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), New York Region; Bret D. Mastronardi, Special Agent-in-Charge, U.S. Office of Personnel Management, Office of the Inspector General (OPM-OIG); and Leigh-Alistair Barzey, Special Agent-in-Charge, Defense Criminal Investigative Service (DCIS), Northeast Field Office, announced the settlement.

“ABC placed corporate profits over patients’ needs, endangering the health of vulnerable cancer patients,” stated United States Attorney Donoghue.  “This settlement, and the substantial penalty ABC has agreed to pay, reflect this Office’s firm commitment to protecting those in need of healthcare and holding to account those who put the health and safety of patients at risk.”  Mr. Donoghue also expressed his appreciation to the Department of Veterans Affairs and the National Association of Medicaid Fraud Control Units for their assistance. 

“The $885 million combined civil and criminal resolution with ABC underscores our determination to utilize all tools at our disposal to pursue illicit schemes that seek to profit from circumvention of important safeguards designed to protect the nation’s drug supply,” said Assistant Attorney General Hunt.  “We will continue to be particularly vigilant where these schemes put the health and safety of vulnerable patients at risk.” 

“U.S. patients rely on the FDA to ensure that injectable chemotherapy drugs are safe and effective. When companies attempt to avoid FDA’s oversight authority, they endanger these vulnerable patients’ health,” stated FDA-OCI Special Agent-in-Charge McCormack. “We will continue to pursue and bring to justice those who violate the public’s trust.”

“Drug companies such as ABC that seek to boost profits at the expense of cancer patients unnecessarily put the health and safety of this vulnerable population at risk,” stated HHS-OIG Special Agent-in-Charge Lampert.  “Greed must never be a part of medical decision making.  HHS-OIG, along with our law enforcement partners, is committed to protecting patient quality of care, and this settlement should serve as a warning to drug companies that are tempted to shortchange patient well-being.”

“Ensuring that Federal employees, retirees, and their families are protected from the adulteration of drugs and other harmful practices is of the utmost importance to the OPM-OIG,” stated OPM-OIG Special-Agent-in-Charge Mastronardi.  “We will continue to aggressively investigate and prosecute all individuals who pursue profit at the expense of patient safety.  I’d like to thank our criminal investigators and their law enforcement partners for their hard work and dedication on this case.”

“Ensuring the integrity of TRICARE, the U.S. Department of Defense's health care plan, is of paramount importance to the Defense Criminal Investigative Service (DCIS),” stated DCIS Special Agent-in-Charge Barzey.  “Today’s settlement is the result of a joint agency effort to investigate pharmaceutical companies that manufacture and sell adulterated drugs that could threaten U.S. military members, retirees and their dependents.”

In its investigation, the United States determined that for each of the drugs that were converted into PFS, ABC failed to submit a New Drug Application or a Biologics License Application demonstrating the safety and efficacy of the PFS and did not receive FDA approval to manufacture the PFS.  For this reason, the PFS, distributed throughout the United States for 13 years, were unapproved new drugs.  In addition, ABC did not register MII with the FDA as a repackager.  By avoiding registration, ABC also evaded FDA inspection and important safety and sterility safeguards, including current good manufacturing practices (“cGMP”), required of repackagers to ensure that their drug products are safe and effective.  The United States contends that ABC was aware of the requirements to register, submit to inspection and prepare drugs in accordance with cGMP, but chose not to comply.  Instead, the government’s investigation revealed that ABC falsely represented to physician customers that MII was a pharmacy.  Through this claim, ABC sought to avoid FDA regulations because certain pharmacy practices are regulated under applicable state pharmacy laws.  However, MII did not comport itself as a pharmacy.  For example, MII did not obtain valid prescriptions, check for harmful potential drug interactions, or see or counsel patients.  As ABC admitted, on many occasions, MII assigned the name of an individual to a set of PFS, and OSC subsequently shipped PFS that were in a bag labeled with that individual’s name, despite the fact that the individual was not in fact a patient who was to be administered a PFS. In some instances, the individual's name assigned to the set of PFS was a staff member at a physician customer (such as a nurse or office manager); in others, the individual was no longer a patient of the physician customer, either because the individual was no longer receiving treatment and/or because the individual was deceased.  In addition, MII often filled orders that had been submitted with a single patient name, and/or assigned a single individual’s name to an order of PFS, far in excess of plausible and/or safe use of the drug product contained in the syringes.  In addition, the United States contends that ABC represented to physicians that its repackaging procedures followed aseptic technique and complied with all applicable laws.  The United States determined that the PFS were prepared in an unclean environment, were contaminated with actual filth, and were not of the quality or purity that ABC represented. 

The settlement also resolves allegations that ABC gave kickbacks to physicians to induce them to purchase drugs through the PFS program.  The alleged kickbacks were in the form of general pharmacy credits provided to the customer, which were not identifiable on an invoice as specific to Procrit®.  OSC billed customers for Procrit® at full price and at the end of the week or month added a “general credit” to the customers’ account.  Credits were not given for other drugs.  The pharmacy rebate was not listed on the invoice as related to Procrit®; it was listed as a pharmacy rebate for pharmacy sales.

With the exception of the facts contained in the Statement of Facts attached to the settlement agreement, the settlement is not an admission of wrongdoing by ABC.

The settlement is the culmination of a multi-year parallel civil and criminal investigation by this Office into allegations contained in three qui tam actions filed against ABC in the United States District Court for the Eastern District of New York.[2]  On August 31, 2017, the United States intervened in those actions, which were unsealed today.  The cases are U.S. ex rel Michael Mullen v. AmerisourceBergen, et al. No. 1:10-4856; U.S. ex rel Omni Healthcare Inc. v. AmerisourceBergen, et al. No. 12-CV-1178; and U.S. ex rel Daniel Sypula, RPH and Kelly Hodge v. AmerisourceBergen, et al., No. 1:14-5278.  All of the cases are pending before the Honorable Nina Gershon.  The criminal case was resolved through a plea agreement in September 2017.  United States v. AmerisourceBergen Specialty Group, LLC, CR. No. 17-507 (NG).  In connection with the settlement, ABC also entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”).  In addition, ABC and 43 States have an agreement in principle to resolve claims under the States’ false claims acts.

The civil investigation and settlement with ABC were handled by the Office’s Civil Division.  Assistant United States Attorneys Deborah B. Zwany and Matthew Silverman are in charge of these cases and were assisted by former Affirmative Civil Enforcement Coordinator Emily Rosenthal.  The Office of Criminal Investigation at FDA, the Offices of the Inspector General at the Department of Health and Human Services, the Department of Defense, the Office of Personnel Management and the Department of Veterans Affairs assisted in the investigation of these cases.  Sanjay Bhambhani, Department of Justice, Civil Frauds Section, and Jay Speers and Elizabeth Silverman, New York State Medicaid Fraud Control Unit assisted in the settlement of these cases.  The criminal case against ABC was prosecuted by Assistant United States Attorneys Alixandra E. Smith and Ameet B. Kabrawala of the Office’s Business and Securities Fraud Section. 

 

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[1] The term “overfill” is a frequently used term in the pharmaceutical industry generally meaning the amount of extra drug above and beyond the labeled dose that is contained in an FDA-approved vial of drug.  The overfill is not listed on the FDA-approved drug label.  The reason manufacturers put overfill in each vial of drug is to ensure that the health care provider administering the drug will be able to extract the full labeled dose from the vial to give to the patient.  See, e.g., 75 Fed. Reg. 73170, 73466-67 (Nov 29, 2010).  It is also not included in the price of the vial.

[2] United States ex rel. Daniel Sypula v. AmerisourceBergen Corp., was originally filed in the Eastern District of Michigan and transferred to the Eastern District of New York.

Gary Davis, Joel Lee Faison and Tamien Trent were arraigned late yesterday afternoon before United States District Court Judge Joseph F. Bianco at the federal courthouse in Central Islip on a 13-count indictment charging them with conspiring to distribute and possess with intent to distribute controlled substances, including heroin and fentanyl, using firearms in connection with these drug trafficking crimes and related charges.  At their initial appearances on September 27, 2018, each defendant was ordered permanently detained.    

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 (FBI), New York Field Office; Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York; Timothy D. Sini, District Attorney for Suffolk County; and Geraldine Hart, Commissioner, Suffolk County Police Department (SCPD), announced the charges. 

“As alleged in the indictment, these defendants sold tremendous amounts of heroin, fentanyl and fentanyl analogues throughout Long Island, flooding our streets with life-threatening drugs and enriching themselves at the expense of those suffering from addiction,” stated United States Attorney Donoghue.  “The Eastern District and our partners will continue the fight to protect our communities from those who deal heroin and other deadly drugs seeking to profit from the opioid epidemic.”  Mr. Donoghue extended his grateful appreciation to the New York National Guard Counter Drug Task Force for their assistance in the investigation.  

“We know these mixtures of fentanyl and heroin are killing people every day in our communities,” stated FBI Assistant Director-in-Charge Sweeney.  “One of the subjects in this case actually bragged about how potent the drugs were that he was selling.  The FBI and the agencies we’ve partnered with on the FBI Long Island Gang Task Force work each day to stop the proliferation of these deadly drugs, and we won’t stop until we round up every dealer who looks to make money on the pain and suffering of people.”

“The charges against the defendants illustrate the law enforcement community’s shared and unwavering commitment to ridding the community of deadly drugs and bringing to justice those who distribute this poison in our communities,” stated HSI Special Agent-in-Charge Melendez. 

“What is particularly sickening about these defendants is that they used as a selling point the fact that the drugs were causing overdoses. They did so by selling fentanyl analogs – synthetic narcotics that are specifically designed by drug dealers to evade law enforcement,” stated Suffolk County District Attorney Sini.  “The message here is clear: we will not tolerate individuals peddling this poison in our communities and no matter what steps they take to evade law enforcement, we will find them. I thank our partners in the FBI, ICE, and the Suffolk County Police Department for continuing to partner with my office to target drug dealers and help end our community's opioid crisis. Most of all, I appreciate the outstanding work done by the United States Attorney's Office for the Eastern District of New York and its great prosecutors.”

“Taking these three high-level suppliers off the streets will make a significant impact on the amount of drugs that are available for sale,” stated SCPD Commissioner Hart.  “These three unabashedly fed the addictions of countless individuals, ruining the lives of not only those addicted, but of their families as well. We should all be proud of the work of everyone involved in not only this case but all the detectives and investigators who dedicate their efforts to fighting the drug epidemic that’s impacting our communities.”

According to the indictment and court filings, from approximately September 2014 until their arrests on September 27, 2018, the defendants distributed in excess of 100 kilograms of heroin, fentanyl and fentanyl analogues, as well as crack cocaine across Long Island. Trent boasted to a government witness that the narcotics he was selling were rendering people unconscious and, on at least one occasion, he forwarded photographs to another person of unconscious drug customers to demonstrate the potency of the drugs.  The government’s investigation revealed that the defendants used firearms to protect their organization and distribution chain from rivals.  Search warrants executed at the time of the defendants’ arrests resulted in the recovery of a substance that field-tested positive for heroin, a handgun, two shotguns and United States currency.      

If convicted, the defendants face a maximum sentence of lifetime imprisonment.

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

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

The Defendants:

GARY DAVIS (also known as “G”) 
Age: 38
Residence: Mastic Beach, New York

JOEL LEE FAISON  (also known as “Face”)
Age: 42
Residence: Mastic Beach, New York

TAMIEN TRENT (also known as “Taim”)
Age: 36
Residence: Mastic Beach, New York

EDNY Docket No. 18-CR-1221 (JFB)

 

Andres Lopez Elorez pleaded guilty today before United States Magistrate Judge Robert M. Levy in federal court in Brooklyn to conspiring to import heroin into the United States.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division, announced the guilty plea.

Elorez and his co-conspirators, based in Colombia, smuggled heroin into the United States using various methods to conceal narcotics from law enforcement, including the surgical implantation of liquid heroin into the bellies of puppies.  When the puppies arrived in the United States from Colombia, the heroin was surgically removed from their bodies.  Between September 8, 2004 and January 1, 2005, Elorez and his co-conspirators imported one kilogram or more of heroin into the United States.  Elorez was extradited from Spain to the United States in May 2018.

When sentenced, Elorez faces a mandatory minimum sentence of 10 years’ imprisonment and a maximum of life imprisonment.  Upon completion of his sentence, Elorez faces deportation from the United States. 

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. 5-CR-835 (S-1) (SJ)

Earlier today, in federal court in Central Islip, Ralph Colamussi pled guilty before United States District Judge Denis R. Hurley to forced labor of employees at the Thatched Cottage, a catering and wedding venue in Centerport, New York.  When sentenced, Colamussi faces up to 20 years in prison, as well as restitution and a fine of up to $250,000.

Richard P. Donoghue, United States Attorney for the Eastern District of New York; Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York; Michael Mikulka, Special Agent-in-Charge, U.S. Department of Labor, Office of Inspector General, New York; and Thomas M. Cioppa, District Director, United States Citizenship and Immigration Services (USCIS), announced the guilty plea.

Colamussi formerly owned and operated the Thatched Cottage.  At the plea proceeding, Colamussi admitted that workers were brought from the Philippines to the United States on H-2B visas that expired shortly after their arrival here.  Once their H-2B visas expired, Colamussi coached workers how to apply for student visas by fraudulently representing that they intended to attend school full-time and had sufficient resources to support themselves during school.  Colamussi admitted that at times, he deposited funds into the workers’ bank accounts to give the appearance of ample resources and then withdrew the funds once the student visas were approved.  Colamussi further admitted that when workers objected to performing certain jobs, working consecutive shifts or not being paid promptly, he threatened to report them to immigration authorities. 

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:

RALPH COLAMUSSI
Age:  64
Huntington, New York,

E.D.N.Y. Docket No. 17-0592 (DRH)

An indictment was unsealed today in federal court in Brooklyn charging Yehuda Belsky, also known as “Jay Bell,” the owner of Brooklyn-based Y Trading, LLC, with mail fraud, failure to register as a commodities trading advisor, and misappropriation of customer funds.  Belsky was arrested today and is scheduled to be arraigned this afternoon before United States Magistrate Judge Steven L. Tiscione.

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 McDonald, Director, Division of Enforcement, U.S. Commodity Futures Trading Commission (CFTC), announced the charges.

According to the indictment, in 2008 Belsky was permanently barred by the CFTC from trading in commodity futures transactions and options.  Nonetheless, from March 2014 to June 2018 Belsky presented himself as an experienced commodities trader and promised investors he would invest their money in binary options, a type of investment in which investors are promised an opportunity to be paid predetermined amounts based upon the particular price of securities, commodities or other investments at particular points in time.  Belsky further enticed investors by showing them fraudulent monthly account statements from the North American Derivatives Exchange that purported to show his successful history of commodities trading.  Instead, he stole the investors’ money for his personal use and to repay other customers who he had fraudulently induced to trust him with investment funds. 

“As alleged in the indictment, Belsky lured commodities investors with false promises of his trading success, and then betrayed them by embezzling their money,” stated United States Attorney Donoghue.  “This Office, together with our law enforcement partners, is committed to vigorously investigating and prosecuting those who seek to use commodities markets as a means to illegally enrich themselves at the expense of investors.”

“Investors often turn to an advisor when they don’t know the ins and outs of the market trusting that the advisor will honestly assist investing their money.  Unfortunately, that was not the case with Mr. Belsky who was already barred from trading, but nevertheless allegedly continued to defraud unsuspecting investors,” stated FBI Assistant Director-in-Charge Sweeney.  “The FBI and our law enforcement partners investigate cases each day hoping to stop the next scheme from impacting investors who have to put faith in traders.”  

 “This action shows the CFTC’s continued commitment to working in parallel with our law enforcement partners to identify, investigate, and hold accountable bad actors in our markets,” stated CFTC Director McDonald.

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

The government’s case is being prosecuted by Trial Attorney Sarah Wilson Rocha of the Criminal Division’s Fraud Section under the supervision of the United States Attorney’s Office for the Eastern District of New York’s Business and Securities Fraud Section. 

The Defendant:

YEHUDA BELSKY (also known as “Jay Bell”)
Age:  46
Brooklyn, New York

E.D.N.Y. Docket No. 18-CR-504 (ARR)

Earlier today, in federal court in Central Islip, Troy Tavares pleaded guilty before United States District Judge Joanna Seybert to armed bank robbery and a firearms possession charge related to his role as the getaway driver in the gunpoint robbery of the Bridgehampton Savings Bank in Hewlett, New York.  When sentenced, Tavares faces up to 25 years’ imprisonment for the bank robbery and a minimum of seven years’ imprisonment and up to life in prison for the firearms charge.

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 guilty plea.

According to court filings and prior public proceedings in the case, on August 21, 2017, Tavares drove a coconspirator, Pedro Benitez, to the Bridgehampton Savings Bank.  While Tavares waited outside in the vehicle, Benitez entered the bank and ordered customers and employees of the bank to the floor at gunpoint and demanded money from bank employees.   After Benitez fled the bank with over $12,000, Tavares drove him to a nearby location where they met with other conspirators to split the proceeds.  At his guilty plea, Tavares admitted that he had also participated in two additional robberies that the crew committed during the summer of 2017, one in Nassau County and one in Queens.  In each of those robberies, Tavares had acted as the getaway driver for Benitez, who entered the banks and robbed the bank employees of the banks’ cash.  In total, the robbery crew stole over $70,000 from four banks between July and September of 2017.

In March 2018, Benitez pleaded guilty to armed bank robbery and brandishing a firearm.  He has been sentenced to 130 months’ imprisonment.  Two other members of the bank robbery crew also pleaded guilty and are awaiting sentence.  One other member of the robbery crew is awaiting trial.

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 Defendant:

TROY TAVARES
Age:  22
Far Rockaway, New York

E.D.N.Y. Docket No. 17-572 (S-1) (JS)

A superseding indictment was unsealed today in federal court in Brooklyn charging Queens-based criminal defense attorney John Scarpa, Jr., and Charles Gallman, also known as “T.A.,” with violating the Travel Act by bribing a witness who testified in a double-homicide trial in Suffolk County Supreme Court.  Scarpa was arrested earlier today and will be arraigned this afternoon in federal court in Brooklyn before United States Magistrate Judge Steven L. Tiscione.  Gallman 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 Richard A. Brown, District Attorney of Queens County, announced the charges. 

 “As alleged, the defendants bribed a witness to commit perjury in an effort to help Scarpa’s client, who had committed two execution-style murders, escape justice,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will never tolerate the rigging of a trial and will vigorously prosecute attorneys or anyone else who seeks to undermine the integrity of the judicial process by witness tampering.”   Mr. Donoghue also expressed his grateful appreciation to the Office of the Suffolk County District Attorney for its assistance during the investigation.

“Defense attorneys do all they can to help their clients fight criminal charges, which is everyone’s right by law,” stated FBI Assistant Director-in-Charge Sweeney.  “However, Mr. Scarpa allegedly broke the law trying to get his client off the hook for murder charges by bribing a witness.  Everyone accused deserves the best defense, but attorneys cannot use illegal methods to win in court.”  

“We will continue to work with our federal partners to root out corruption in the criminal justice system wherever it is found,” stated Queens District Attorney Brown.  “I will say again that integrity is the foundation of our criminal justice system.  These allegations go to the core of that foundation and are prejudicial to the administration of justice.  The charges today send a strong message to those who would undermine that integrity that they will be held accountable.  I commend the United States Attorney’s Office for the Eastern District and the Federal Bureau of Investigation, the Suffolk County District Attorney’s Office and my Rackets, Special Victims and District Attorney’s Detective Bureaus for their vigorous pursuit of justice in this matter.”

As alleged in the indictment and detailed in court filings, the charges stem from an investigation conducted by the Queens County District Attorney’s Office.  Court-authorized intercepted communication between Scarpa and Gallman showed how the two men plotted to bribe a witness, Luis Cherry, in a Suffolk County criminal trial against Reginald Ross.  Scarpa represented Ross, who was ultimately convicted of the unrelated murders of two men:  Raymond Hirt, a road crew flagman killed at his jobsite in May 2010 because Ross was upset about traffic, and John Williams, whom he shot to death in October 2010 as Williams was going to work, mistaking Williams for his brother.  Cherry participated in the Williams murder, and had pleaded guilty to that murder as well as another. 

On January 13, 2015, Gallman visited Cherry at Downstate Correctional Facility and spoke to him about testifying at Ross’s trial.  Thereafter, Gallman reported to Scarpa:  “Anything we need, he’s willing.  Whichever way you wanna play it, he’s willing.”  Later in the conversation Scarpa asked, “So this guy is willing to do whatever?”  And Gallman confirmed, “Whatever you need, John.  Whatever you need.”  Gallman added that there was a “bunch of stuff I wrote down that [Cherry] wants.” 

Scarpa called Cherry as a defense witness at trial and led Cherry through perjurious testimony relevant to the Williams murder.  For example, Cherry claimed that he had committed the murder alone after he crawled from the driver’s seat and exited through the passenger side of his vehicle with firearms in both hands despite physical evidence that clearly indicated two gunmen were involved.  When asked on cross-examination about meeting Gallman, Cherry falsely denied that they had talked about the murder case.

The charges in the superseding indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, Scarpa and Gallman face up to five years’ imprisonment on each count.

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

The Defendants:

JOHN SCARPA, JR.
Age: 65
Queens, New York

Charles gallman (also known as “t.a.”)
Age:  56
Queens, New York

E.D.N.Y. Docket No. 18-CR-123 (S-1) (CBA)

Aleah Mohammed, the owner of four pharmacies in Queens, New York, will be arraigned today in federal court in Brooklyn on an indictment charging her with submitting millions of dollars in claims as part of a scheme to defraud Medicare and Medicaid.  The proceeding will take place before United States Magistrate Judge Steven L. Tiscione at 11:00 a.m.

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; William F. Sweeney, Jr., Assistant Director-in-Charge,  Federal Bureau of Investigation, New York Field Office (FBI); and Scott J. Lampert, Special Agent-in-Charge, the U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations, New York Region (HHS-OIG), announced the indictment.

“As alleged in the indictment, Mohammed used her pharmacies to steal from publicly funded health care programs and fund her lavish lifestyle,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners are committed to holding accountable fraudsters who seek to enrich themselves at the expense of vital taxpayer-funded programs upon which so many Americans rely.”

“According to the allegations in the indictment announced today, Aleah Mohammed defrauded the taxpayer-funded Medicare and Medicaid programs by submitting millions of dollars of phony reimbursement claims, and then used the stolen money to purchase luxury items such as cars and jewelry,” stated Assistant Attorney General Benczkowski.  “This case is another example of the outstanding work of the Department’s Medicare Fraud Strike Forces, which are focused on safeguarding federally funded health care programs and vigorously prosecuting those who seek to defraud them.”

“These investigations matter because the subjects are stealing money each and every one of us pays in taxes to fund these programs,” stated FBI Assistant Director-in-Charge Sweeney.  “What adds insult to injury, defrauding the government and stealing money is rarely about anything more than spending money on frivolous things like pricy jewelry and fast cars.  Our ultimate goal is to stop these fraudsters from wasting the millions they steal so it can go to the patients and taxpayers who depend on it.”

“Ms. Mohammed’s alleged fraud scheme was motivated by nothing more than personal greed,” stated HHS-OIG Special Agent-in-Charge Lampert.  “This indictment should serve as a warning to any health care provider daring to use Medicare and Medicaid as a vehicle to steal money. We will continue to work with our law enforcement partners to aggressively pursue those who seek to undermine taxpayer-funded health care programs intended for our most vulnerable Americans.”

As alleged in the indictment, Aleah Mohammed, also known as “Aleah Haniff,” was the owner and operator of Superdrugs Inc., Superdrugs I Inc., Superdrugs II Inc. and S&A Superdrugs II Inc.  Beginning in approximately May 2015 and continuing through June 2018, Mohammed executed a scheme in which she and others submitted fraudulent claims to Medicare Part D plans and Medicaid for reimbursement for prescription drugs that were not dispensed, prescribed as claimed or medically necessary.  The fraudulent claims included claims for prescription drugs for the treatment of the human immunodeficiency virus (HIV).  Through this scheme, Mohammed’s pharmacies received approximately $7.9 million in reimbursements from Medicare and Medicaid.  The indictment further alleges that Mohammed used the proceeds of the scheme to purchase, among other things, luxury items including a Porsche and jewelry.

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

If convicted of health care fraud, Mohammed faces a maximum sentence of 10 years’ imprisonment.

The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force under the supervision by the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section.  Trial Attorney Andrew Estes of the Fraud Section is in charge of the prosecution.

The Defendant:

ALEAH MOHAMMED (also known as “Aleah Haniff”)
Age:  33
Residence: Queens, New York

E.D.N.Y. Docket No. 18-CR-509 (ENV)

The owner of four pharmacies in Queens, New York, will be arraigned later today in federal court in Brooklyn on an indictment charging her with submitting millions of dollars in claims as part of a scheme to defraud Medicare and Medicaid.  The proceeding will take place before U.S. Magistrate Judge Steven L. Tiscione at 11:00 a.m.

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, Assistant Director in Charge William F. Sweeney Jr. of the FBI New York Field Office and Special Agent in Charge Scott J. Lampert of U.S. Department of Health and Human Services Office of Inspector General New York Region (HHS-OIG), announced the indictment.

As alleged in the indictment, Aleah Mohammed, aka “Aleah Haniff,” 33, of Queens, New York, was the owner and operator of Superdrugs Inc., Superdrugs I Inc., Superdrugs II Inc. and S&A Superdrugs II Inc.  Beginning in approximately May 2015 and continuing through June 2018, Mohammed executed a scheme in which she and others submitted fraudulent claims to Medicare Part D plans and Medicaid for reimbursement for prescription drugs that were not dispensed, prescribed as claimed, or medically necessary.  The allegedly fraudulent claims included claims for prescription drugs for the treatment of the human immunodeficiency virus (HIV).  From approximately May 2015 through January 2018, Mohammed’s pharmacies received approximately $7.9 million in reimbursements from Medicare and Medicaid.  The indictment further alleges that Mohammed used the proceeds of the scheme, among other things, to purchase luxury items such as a Porsche and jewelry.  Mohammed was previously arrested on a complaint in July 2018. 

“According to the allegations in the indictment announced today, Aleah Mohammed defrauded the taxpayer-funded Medicare and Medicaid programs by submitting millions of dollars of phony reimbursement claims, and then used the stolen money to purchase luxury items such as cars and jewelry,” said Assistant Attorney General Benczkowski.  “This case is another example of the outstanding work of the Department’s Medicare Fraud Strike Forces, which are focused on safeguarding federally funded health care programs and vigorously prosecuting those who seek to defraud them.”

“As alleged in the indictment, Mohammed used her pharmacies to steal from publicly funded health care programs and fund her lavish lifestyle,” said U.S. Attorney Donoghue.  “This Office and our law enforcement partners are committed to holding accountable fraudsters who seek to enrich themselves at the expense of vital taxpayer-funded programs upon which so many Americans rely.”

“These investigations matter because the subjects are stealing money each and every one of us pays in taxes to fund these programs,” said FBI Assistant Director-in-Charge Sweeney.  “What adds insult to injury, defrauding the government and stealing money is rarely about anything more than spending money on frivolous things like pricy jewelry and fast cars.  Our ultimate goal is to stop these fraudsters from wasting the millions they steal so it can go to the patients and taxpayers who depend on it.”

“Ms. Mohammed’s alleged fraud scheme was motivated by nothing more than personal greed,” stated HHS-OIG Special Agent-in-Charge Lampert.  “This indictment should serve as a warning to any health care provider daring to use Medicare and Medicaid as a vehicle to steal money. We will continue to work with our law enforcement partners to aggressively pursue those who seek to undermine taxpayer-funded health care programs intended for our most vulnerable Americans.”

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

The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force, under the supervision by the Criminal Division’s Fraud Section and U.S. Attorney’s Office for the Eastern District of New York.  Trial Attorney Andrew Estes of the Fraud Section is in charge of the prosecution.

The Criminal Division’s Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in 12 cities across the country, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. 

The United States has entered into an agreement to settle civil fraud claims with Dr. Mark Fleckner, a Board Certified Ophthalmologist who maintains a practice in Garden City, New York.  The agreement resolves allegations that, in contravention of Medicare regulations and in violation of the federal False Claims Act, Dr. Fleckner administered certain pharmaceutical products that he had purchased overseas, which the U.S. Food and Drug Administration (“FDA”) had not evaluated nor approved for use in the United States (“Unapproved Drugs”).  These products included aflibercept (“Eylea”) and ranibizumab (“Lucentis”), which Dr. Fleckner used to treat patients who had wet, age-related macular degeneration or other diseases and conditions of the eye.  The United States contends that the Unapproved Drugs were not eligible for reimbursement by Medicare.  Under the terms of the civil settlement agreement, Dr. Fleckner will pay a total of $6,955,240.80. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York; Jeffrey J. Ebersole, Special Agent-in-Charge, Food and Drug Administration, Office of Criminal Investigations (FDA-OCI), New York Field Office; and Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), New York Region, announced the settlement. 

“Dr. Fleckner bypassed the FDA’s regulatory authority by purchasing and administering unapproved pharmaceutical products in violation of Medicare regulations,” stated United States Attorney Donoghue.  “The settlement holds Dr. Fleckner accountable for his actions and ensures that Medicare funds will only be used for FDA-approved pharmaceuticals.”

“FDA’s oversight of prescription drugs protects consumers from illicit medicines obtained from unauthorized foreign sources,” stated FDA-OCI Special Agent-in-Charge Ebersole.  “We will continue to pursue and bring to justice those who place profits over their patients’ safety.”

“FDA approval provides confidence to millions of patients that drugs are safe when prescribed appropriately,” stated HHS-OIG Special Agent-in-Charge Lampert.  “Those administering unapproved medications – as contended in this case – put patients at risk and burden taxpayers.” 

The government’s investigation revealed that from at least July 1, 2014 to June 27, 2017, Dr. Fleckner purchased the Unapproved Drugs because they were less expensive than drugs that were approved by the FDA for marketing in the United States.  Medicare reimburses physician-administered drugs at a set rate based on the average sales price of the respective FDA approved, physician-administered drug in the United States.  Dr. Fleckner was thus able to profit from the “spread” between the reimbursement rates he received based on FDA-approved drugs and the lower amounts he paid for the Unapproved Drugs.  The United States contends that the Unapproved Drugs were not eligible for reimbursement by Medicare.  The settlement is not an admission of wrongdoing by Dr. Fleckner.

The United States’ investigation was handled by former Assistant U.S. Attorney Kenneth M. Abell of the Office’s Civil Division.

The Defendant:

DR. MARK FLECKNER
Garden City, New York

Earlier today, in federal court in Brooklyn, Darryl Odom and Lashawn Williams pleaded guilty to Hobbs Act Robbery and brandishing a firearm during a crime of violence in connection with the May 25, 2017 gunpoint robbery of a jewelry store located at 60 Court Street in  Brooklyn.  Odom also pleaded guilty to the February 10, 2017 Hobbs Act Robbery of Eleven, another jewelry store located in Brooklyn.  The plea proceeding took place before Magistrate Judge Lois Bloom.  Previously, co-defendant Kenneth Davis pleaded guilty to Hobbs Act Robbery and use of a firearm during a crime of violence, and Shaka Davis pleaded guilty to Hobbs Act Robbery, for their roles in the 60 Court Street robbery.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Ashan M. Benedict, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), New York Field Division, and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the guilty pleas.

At approximately 5:15 p.m. on May 25, 2017, Williams and Odom entered the 60 Court Street store disguised as construction workers.  Kenneth Davis, also disguised as a construction worker, stood watch outside, and Shaka Davis waited in a getaway car.  Inside the store, one of the robbers pistol-whipped the store owner, and the robbers stole hundreds of thousands of dollars in cash and jewelry.  

When sentenced, Odom and Williams each face a mandatory minimum of seven years in prison and up to life in prison.  Kenneth Davis faces a mandatory minimum of five years in prison and up to life in prison. Shaka Davis faces up to 20 years’ imprisonment.

The case is being handled by the Office’s General Crimes Section.  Assistant United States Attorney Josh Hafetz is in charge of the prosecution. 

The Defendants:

DARRYL ODOM
Age: 54
Residence: Bronx, New York

LASHAWN WILLIAMS (also known as “Ron Johnson”)
Age: 50
Residence: Bronx, New York

KENNETH DAVIS
Age: 53
Residence: Brooklyn, New York

SHAKA DAVIS
Age: 30
Residence: Brooklyn, New York

E.D.N.Y. Docket No. 17-CR-432 (S-1)

Earlier today in federal court in Brooklyn, Sean Price was sentenced to 35 years’ incarceration and 10 years’ supervised release by United States District Judge Nicholas G. Garaufis, following his conviction after trial in December 2017 on four charges: interstate and foreign enticement to engage in sexual activity, interstate and foreign transportation of a minor to engage in sexual activity, a Mann Act violation and attempted sexual exploitation of a child. Restitution to Jane Doe’s guardians will be determined at a later date.  

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 (ICE), Homeland Security Investigations (HSI), New York, announced the sentence.

“Sean Price preyed upon the vulnerabilities of a young teenage girl, luring her across the world and away from her home for his own illicit purposes.  With today’s sentence Price has been accountable for that predatory conduct,” stated United States Attorney Donoghue.  “The Price case sends the message that this Office, together with our law enforcement partners, will work tirelessly to identify abusers like Price and prosecute those who would sexually exploit minors to the fullest extent of the law.”  Mr. Donoghue expressed his appreciation to the Australian Federal Police, the New South Wales Police Force and the NYPD for their assistance in the investigation and prosecution of this matter, and commends the Australian authorities and the NYPD on the investigation and cooperation that ultimately led to the recovery of the missing girl.

 “Now a convicted sexual predator, Sean Price admittedly lured a teenage girl from Australia to Queens, taking advantage of her young spirit and susceptibility,” stated HSI Special Agent-in-Charge Melendez. “Today’s sentencing should send a strong message to those who seek to sexually exploit children – borders and oceans will not impede the efforts of the global law enforcement community in safeguarding our children and bringing predators to face justice.”

As established during court proceedings, in the fall of 2016, Price established an online relationship with a 16-year-old girl who lived in Australia.  By January 2017, they were communicating with each other daily through messages on Facebook, with much of the discussion concerning Price’s desire to engage in sex with the girl, and how she could travel from Australia to join Price in New York City without law enforcement or her parents finding out.  The Facebook chat messages demonstrated that Price, who was 39-years-old at the time, openly discussed the girl’s age with her, and Price told her repeatedly that he wanted to be sexually intimate with her.

Price and the girl also discussed obtaining a fake passport so the girl could travel internationally, and Price offered to impersonate the girl’s father to help her get through airport security in the United States.  In chat messages, Price told the girl that they would soon be laughing at her parents and when she told Price that she did not need parental permission to fly internationally, Price responded: “So you coming to papa?”  After months of planning, Price wired the girl over $900 to purchase a plane ticket to fly to Los Angeles in late March of 2017.  Shortly afterwards, on April 11, 2017, the girl flew on a roundtrip ticket from Sydney, Australia to Los Angeles, California, where Price was waiting for her arrival.  Price hired a rental car, and drove across the country to Price’s home in Jamaica, Queens. 

Price admitted in a post-arrest statement that he and Jane Doe were involved sexually during their cross-country trip and while they were living in Queens until she was found by law enforcement in his home four weeks later.  Following her successful recovery by officers of the NYPD, Jane Doe was returned to her family in Australia.  In a recent submission to the Court, Jane Doe’s mother recounted the trauma Jane Doe and her family continue to struggle with in the aftermath of the defendant’s actions.

The government’s case is being prosecuted by Assistant United States Attorneys Taryn A. Merkl and Monica K. Castro.  Assistant United States Attorney Karin Orenstein of the Office’s Civil Division is in charge of the forfeiture.

The Defendant:

SEAN PRICE
Age: 40
Residence: Queens, New York

E.D.N.Y. Docket No. 17-CR-301 (NGG)

Earlier today, at the federal courthouse in Central Islip, New York, Freiry Martinez, a member of the Herndon City Locos Salvatruchas clique of La Mara Salvatrucha, also known as the MS-13, pleaded guilty to racketeering charges in connection with his participation in the April 11, 2017 murders of Justin Llivicura, Michael Lopez, Jorge Tigre and Jefferson Villalobos.  The guilty plea was entered before United States District Judge Joseph F. Bianco.

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 guilty plea.

Martinez, who is now 17 years old and was 15 years and 11 months old at the time of the April 11 murders, initially was charged by a juvenile information that was filed under seal in the Eastern District of New York on July 10, 2017.  Martinez fled from New York to Virginia and later to Maryland after the April 11 murders, and remained a fugitive until November 21, 2017, when he was arrested in Montgomery County, Maryland.  Martinez, an illegal alien from El Salvador, subsequently was turned over to the Federal Bureau of Investigation and removed to the Eastern District of New York in custody by the United States Marshals Service.  Following the government’s application to transfer Martinez to adult status for prosecution, the motion was granted today by Judge Bianco. 

“Prosecution by prosecution, defendant by defendant, we are dismantling the MS-13 through an effort that will not end until they are ended,” stated United States Attorney Donoghue.  “The unwavering resolve of the Eastern District, the FBI’s Long Island Gang Task Force and all our law enforcement partners will bring justice for the victims and the perpetrators alike.” Mr. Donoghue extended his sincere appreciation to the United States Marshals Service Fugitive Task Force, United States Attorney’s Office for the Eastern District of Virginia, United States Attorney’s Office for the District of Maryland, Montgomery County Police Department and Montgomery County State’s Attorney’s Office for assisting in this investigation.

“Most 15-year-olds are worried about a chemistry test at school or making the football team, not plotting a grotesque attack and murder of four other teenagers,” stated FBI Assistant Director-in-Charge Sweeney.  “Our work with our law enforcement partners on the FBI Long Island Gang Task Force is proof a combined and concentrated effort to combat the evil that is MS-13 will work to stop more senseless murders.  We want to assure the community we won’t let up in our pursuit of rounding up these gang members and stopping them from terrorizing neighborhoods on Long Island.”

 “This guilty plea is a result of the dedicated work and collaboration of the Suffolk County Police Department, the Long Island Gang Task Force and the Eastern District,” stated SCPD Commissioner Hart.  “We applaud the effort of prosecutors to ensure that Martinez would be tried as an adult to face the stiffest penalties possible. The deaths of these four young men committed at the hands of MS-13 gang members is incomprehensible and we hope today’s plea will send a clear message to gang members that we will not waver or tire from our commitment to dismantle gangs in Suffolk County. It is our hope that holding these perpetrators accountable will bring some measure of comfort and healing to the victims’ friends and families.”

“Due to the exceptional work by all of the law enforcement investigators involved and their agencies, Defendant Freiry Martinez will not be able to terrorize our communities and residents any longer,” stated NCPD Commissioner Ryder.  “We have four families that have lost loved ones to the hands of MS-13 in these brutal and senseless killings.  Rest assured, we will continue to engage this violence with our zero tolerance approach and will continue to remove these offenders from our streets.”

According to court filings and statements by the defendant at the guilty plea proceeding, on the evening of April 11, 2017, two female associates of the MS-13 lured five young men, including the four victims, to a community park in Central Islip at the direction of Martinez and other MS-13 members.  The MS-13 members believed the victims to be members of a rival gang who were disrespectful toward the MS-13.  Martinez and several MS-13 members and associates met in a wooded area behind the park where they distributed weapons, discussed the plan to kill the victims and then awaited their arrival.  Once the female MS-13 associates arrived at the park, they led the victims to a wooded area and sent the MS-13 members a text message describing their location.  Pursuant to their previously devised plan, Martinez and the other MS-13 members and associates surrounded the victims and killed Llivicura, Lopez, Tigre and Villalobos using machetes, knives and wooden clubs.  The fifth intended victim escaped.  After the attack, Martinez and his associates dragged the victims’ bodies to a more secluded spot and fled.  The victims’ bodies were discovered the following evening.

When sentenced, Martinez faces a maximum of life in prison.  Upon completion of his sentence, he faces deportation from the United States.

Today’s conviction is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent 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.  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 this district.  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 this 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, New York State Police and 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, Michael T. Keilty and Raymond A. Tierney are in charge of the prosecution.

The Defendant:

FREIRY MARTINEZ (also known as “Discreto,” “Sovietico” and “Freddy”)
Age:  17
Brentwood, New York

E.D.N.Y. Docket No. 17-CR-364 (S-1)(JFB)

Etienne Allonce is scheduled to be arraigned today before United States District Judge Joseph F. Bianco at the federal courthouse in Central Islip on charges of health care fraud and conspiracy, for allegedly defrauding Medicare and Medicaid out of millions of dollars.  Allonce was expelled from Haiti to face the charges in the indictment pending here, and turned over to the custody of law enforcement agents.  Prior to his return to the United States, Allonce was placed on the Most Wanted list of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). 

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 Scott J. Lampert, Special Agent-in-Charge, HHS-OIG, Office of Investigations, New York Region, announced the charges.

According to the indictment returned in 2007, Allonce and his wife, Helen Michel, were co-owners and operators of Medical Solutions Management, Inc. (MSM), a medical equipment company located in Hicksville, New York.  MSM provided durable medical equipment and supplies to nursing homes.  Between April 2003 and March 2007, Allonce and Michel allegedly submitted $10 million in false claims to Medicare and Medicaid seeking payment for medical supplies purportedly provided to patients at nursing homes, when those medical supplies had not been provided.  Allonce fled the United States hours before federal agents arrested Michel.  Michel was tried and convicted by a jury in August 2012 and she was sentenced in April 2013 to 12 years’ imprisonment and ordered to forfeit $1.3 million that had been seized by the government.  Michel served her sentence and was released from prison in December 2017.

“Today begins the process of holding Allonce responsible for his crimes, more than a decade after he was indicted for healthcare fraud and left the United States,” stated United States Attorney Donoghue.  “The prosecution of Allonce demonstrates the resolve of this Office and our law enforcement partners to bring to justice those who defraud vital benefit programs relied upon by millions of Americans.”

“Mr. Allonce allegedly thought he could escape his crimes by leaving the United States, and hiding as a fugitive for more than a decade, leaving his wife behind to answer for their defrauding American taxpayers,” stated Assistant Director-in-Charge Sweeney.  “Regardless of the crime, be it healthcare fraud or bank robbery, if criminals break the law and are charged, they will be held accountable.”

 “We are committed to investigating those responsible for health care fraud, including this former HHS-OIG Most Wanted fugitive, who stole scarce taxpayer money intended to pay for legitimate patient care,” stated HHS-OIG Special Agent-in-Charge Lampert.  “The pursuit and arrest of Mr. Allonce is a reflection of our determination, and that of our law enforcement partners, to hold fraudsters accountable for their crimes no matter where they run or try to hide.”

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

The government’s case is being prosecuted by Assistant United States Attorneys Charles P. Kelly, Burton T. Ryan, Jr. and Madeline O’Connor.

The Defendant:

ETIENNE ALLONCE
Age:  55
Port au Prince, Haiti

E.D.N.Y. Docket No. 07-889(JFB)

An indictment was unsealed today in federal court in Central Islip charging Suzanne Silva with embezzling over $465,000 during her seven-year tenure as Chief Operating Officer of Winthrop University Hospital Employees Federal Credit Union located in Mineola, New York (hereinafter Winthrop).  Silva was arrested today, and her initial appearance is scheduled for this afternoon before United States Magistrate Judge Arlene R. Lindsay.

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 in the indictment, Silva abused her authority as Chief Operating Officer and stole hundreds of thousands of dollars from the credit union, which she used to fund an extravagant lifestyle,” stated United States Attorney Donoghue.  “Today’s arrest demonstrates that this Office will hold executives at financial institutions accountable for abrogating their duties and using their access to line their pockets.”

“Greed surfaces at all levels when criminals see a payday, and they think no one is watching,” stated FBI Assistant Director-in-Charge Sweeney.  “In this investigation, someone noticed nearly half a million dollars was gone and now the COO faces criminal charges.  This should serve as an example to others who believe their title enables them to escape notice when engaging in illegal behavior.”

As alleged in the indictment and court filings, between March 2011 and June 2018, Silva took advantage of her position at Winthrop to make unauthorized transfers totaling hundreds of thousands of dollars from operating accounts of Winthrop to personal accounts in her name and the names of family members.  Silva used the funds to take Caribbean cruises, travel to Cancun and pay thousands of dollars a month for purchases from Amazon and Etsy.  Silva’s employment was terminated by Winthrop in June 2018. 

If convicted, Silva faces a maximum of 30 years’ imprisonment.

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

The government’s case is being prosecuted by Assistant United States Attorneys Charles P. Kelly and Madeline O’Connor.

The Defendant:

Suzanne Silva
Age:  35
Carle Place, New York,

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

Earlier today, a grand jury returned a superseding indictment against Victor Kingsley, a Brooklyn resident, adding a charge of attempted use of a weapon of mass destruction based on a fully assembled explosive device that police found in his apartment when he was arrested in February 2018.  The new indictment includes the original charges for the use of a weapon of mass destruction that resulted in the death of a Queens resident on July 28, 2017, and for the unlawful transportation of explosive materials.  Kingsley will be arraigned at a later date in federal court in Brooklyn.

Richard P. Donoghue, United States Attorney for the Eastern District of New York; John C. Demers, Assistant Attorney General for the National Security Division; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and James P. O’Neill, Commissioner, New York City Police Department, announced the charges.

As alleged in court filings, Kingsley built the explosive device used in the July 28, 2017 murder as part of his broader effort to retaliate violently against several police officers who were part of an NYPD unit that had arrested him in January 2014.  Despite the 2014 arrest eventually resulting in the dismissal of charges, Kingsley sought revenge against the officers.  Ultimately, he arranged for the explosive device to be placed outside of the Queens residence where Kingsley mistakenly believed one of his target officers resided.  The building owner inadvertently detonated the device when he tried to open it, and he died as a result of his injuries.  Thereafter, Kingsley continued to acquire explosive device parts. 

Kingsley was arrested at his Brooklyn residence on February 28, 2018.  During the search of his residence, agents seized another fully assembled destructive device contained in a mailing tube identical to the one used for the July 2017 device, as well as large quantities of incendiary powder.  This additional destructive device is the basis for the new charge in the superseding indictment. 

If convicted on all counts, Kingsley faces a maximum sentence of life in prison or death.  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 National Security & Cybercrime Section.  Assistant United States Attorneys Margaret Lee and Michael Keilty are in charge of the prosecution.

The Defendant:

Victor C. Kingsley
Age: 37
Brooklyn, New York

E.D.N.Y. Docket No. 18-CR-128 (S-1) (SJ)

An indictment was unsealed today in federal court in Brooklyn charging Jonathan Deutsch, a teacher at Leon M. Goldstein High School for the Sciences, with five counts of sexual exploitation of a child.  The charges relate to sexually explicit images and videos of children that the defendant allegedly requested and received from minors who he targeted on Facebook.  Deutsch was arrested today, and will be arraigned this afternoon before United States Magistrate Judge Robert M. Levy.

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, Jonathan Deutsch, a Brooklyn high school teacher, solicited and received sexually explicit material from minors he contacted on Facebook,” stated United States Attorney Donoghue.  “The protection of innocent children is an utmost priority for this Office and our law enforcement partners.  We will continue to make every effort to ensure that those who contribute to the exploitation and victimization of children will be brought to justice.”  Mr. Donoghue extended his grateful appreciation to the FBI New York Child Exploitation and Human Trafficking Task Force, which is made up of FBI and New York City Police Department investigators, for its investigative work and assistance in the case. 

“Our children deserve to grow up in a world where they don't have to face overcoming the horrors and scars of sexual abuse,” stated FBI Assistant Director-in-Charge Sweeney.  “The fact that this suspect was a teacher makes this crime even more egregious.  Parents, working with law enforcement, are the first line of defense against sexual predators who can now reach into your child's bedroom from anywhere in the world.  The FBI New York Child Exploitation and Human Trafficking Task Force encourages anyone who may believe their child could be a victim to call our office at 212-384-1000.”

According to court filings, beginning around January 2017, Deutsch targeted Facebook users who appeared from their profiles to be minors, and then contacted them using Facebook messenger in an attempt to develop a relationship.  As part of his broader effort to groom these minors for sexual exploitation, Deutsch often disclosed his status as a teacher. Deutsch contacted hundreds of apparent minors on Facebook and had communications of a sexual nature with at least 45 of them.  Deutsch requested and received sexually explicit images or videos from at least four minors, whom the FBI has identified.  Those victims range in age from 10 to 16 years old.  Deutsch often instructed minors to perform sexually explicit acts and to send him videos and photos of those acts.  Deutsch also sent minors sexual photos that he represented to be of himself. 

If convicted of any of the five counts of sexual exploitation of a child, Deutsch faces a mandatory minimum of 15 years’ imprisonment.

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

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 and the Department of Justice Child Exploitation and Obscenity Section, 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 General Crimes Section. Assistant United States Attorney Megan E. Farrell is in charge of the prosecution.

The Defendant:

Jonathan Deutsch
Age:  34
Brooklyn, New York

E.D.N.Y. Docket No. 18-CR-502

A criminal complaint was unsealed today in federal court in Brooklyn charging Keith Wyche, Allen O’Neil and Kyron Graham, alleged members of the Bloods street gang, with conspiracy to distribute and possession with intent to distribute heroin and fentanyl on Staten Island.  Wyche and O’Neil were also charged with distribution of narcotics that caused death and serious bodily injury.  The defendants were arrested today and are scheduled to make their initial appearances this afternoon before United States Magistrate Judge Robert M. Levy.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Gregory W. Ehrie, Special Agent-in-Charge, Federal Bureau of Investigation, Newark Field Office (FBI), and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the arrests.  Mr. Donoghue thanked the United States Attorney’s Office for the District of New Jersey for their substantial assistance in the investigation, as well as the Richmond County District Attorney’s Office. 

“As alleged, the defendants sold large amounts of dangerous narcotics, including pure fentanyl to unsuspecting buyers, for their own profit and without concern for the deadly consequences of their actions,” stated United States Attorney Donoghue.  “Together with the FBI and the NYPD, our Office is working tirelessly to identify and prosecute those drug traffickers responsible for the opioid crisis.”

“Today's arrests are a direct result of the hard work and dedication shared between state, local and federal authorities in their efforts to combat gang members who distribute dangerous drugs like heroin and fentanyl in our communities,” stated FBI Special Agent-in-Charge Ehrie.  “This was a tragic incident which caused the death of one individual and seriously injured another.  The FBI and our partners will continue to pursue investigations into individuals and groups who have furthered the scourge of opioids in our communities.”

“Abuse of heroin and the deadly additive fentanyl has cut a wide swath across our nation, affecting neighborhoods throughout New York City and people in every walk of life,” stated NYPD Police Commissioner O’Neill. “To combat this scourge, we look to not just make arrests, but to shut down the supply and, ultimately, to save lives. NYPD detectives investigate every overdose to determine how the drugs were obtained, and it was those efforts that led to today’s charges. I commend the investigators in this case, and the strong collaboration of the NYPD and our law enforcement partners, all of whom are helping stem the opioid crisis.”

As alleged in court documents, between February 2017 and the present, Wyche and O’Neil sold heroin and fentanyl on Staten Island almost daily.  Wyche and Graham shared a cell phone from which they sent messages to buyers in the morning notifying them who was selling narcotics that day.  In some instances, even though the buyer had sought to purchase heroin, Wyche and O’Neil sold glassine envelopes containing a mixture of heroin and fentanyl and, on occasion, only fentanyl.  They regularly traveled to the Bronx to meet Graham to pick up supplies of narcotics

 Wyche and O’Neil sold drugs to at least two victims who experienced overdoses shortly after purchasing the drugs, including an April 2017 sale that resulted in the death of a Staten Island resident and the near fatal overdose of a second victim in October 2017 in which medical personnel resuscitated the victim who had stopped breathing.   

The arrests were the result of a series of long-term investigations by the NYPD’s Drug Overdose Task Force.

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

If convicted, Wyche and O’Neil face a mandatory minimum sentence of 20 years’ imprisonment and Graham faces up to 20 years’ imprisonment.

The government’s case is being handled by the Office’s General Crimes Section.  Assistant United States Attorney James P. McDonald is in charge of the prosecution. 

The Defendants:

KEITH WYCHE
Age: 34
Union, New Jersey

ALLEN O’NEIL
Age:  27
Somerset, New Jersey

KYRON GRAHAM
Age:  27
Bronx, New York

E.D.N.Y. Docket No. 18-MJ-862

An indictment was unsealed today in federal court in Central Islip charging chiropractor Raymond R. Pellegrino with health care fraud.  The indictment alleges that Pellegrino billed Anthem Blue Cross Blue Shield over $2 million for health care services that were never performed.  Pellegrino was arrested today in Texas, and will be arraigned at a later date in the Eastern District of New York.

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.

 “Pellegrino abused his position as a licensed medical professional by brazenly stealing millions of dollars in fraudulent billings,” stated United States Attorney Donoghue.  “Today’s arrest demonstrates the resolve of this Office and the FBI to hold accountable health care fraudsters who line their pockets at the expense of insurance companies and, ultimately, consumers, who pay the cost of higher premiums.” Mr. Donoghue expressed his grateful appreciation to the New York State Department of Financial Services for its assistance in the case.

“Defrauding our healthcare system, regardless of the amount of money stolen or nature of the crime, eventually harms all of us,” stated FBI Assistant Director-in-Charge Sweeney.  “The FBI and our law enforcement partners are aggressively searching out practitioners, suppliers and fraudsters to stop their illegal behavior, and keep the bills we each pay from ballooning out of control.”

As alleged in the indictment and court filings, Pellegrino operated chiropractic offices in West Hempstead and Hicksville, New York.  Pellegrino 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 2003 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 charge in the indictment is an allegation, and the defendant is presumed innocent unless and until proven guilty.

If convicted of health care fraud, Pellegrino faces up to 10 years’ imprisonment.

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, following a three day trial, a federal jury in Brooklyn returned a guilty verdict against Clyde Miller on charges of conspiring to distribute and possess with intent to distribute heroin, possessing a firearm during a drug trafficking crime and being a felon in possession of a firearm.  Miller and others had agreed to sell three kilograms of heroin to an undercover police office for over $170,000.  When sentenced by United States District Judge Margo K. Brodie, Miller faces a mandatory minimum sentence of 15 years’ imprisonment and maximum sentence of life imprisonment. 

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

“As the jury found, Clyde Miller was armed with a gun when he showed up for a heroin deal at a hotel near JFK International Airport,” stated United States Attorney Donoghue.  “Through the outstanding work of our prosecutors and law enforcement officers, a source for dangerous drugs was shut down and a deadly weapon was taken out of the hands of a convicted felon and off the street.”  Mr. Donoghue expressed his grateful appreciation to the Broward County Sheriff’s Office in Florida for their assistance in the investigation.

“It is estimated that 70,000 people died as a result of drug abuse last year in the United States,” stated DEA Special Agent-in-Charge Hunt.  “This conviction sends a message to traffickers that law enforcement is committed to bringing opioid traffickers to justice.  I commend the agents and prosecutors on their hard work.” 

Evidence presented at trial, including undercover recordings and physical surveillance, established that on April 17, 2017, Miller and his co-conspirators drove to the Hilton Hotel near JFK International Airport to complete the sale of three kilograms of heroin for more than $170,000.  Unbeknownst to Miller, the purchaser of the heroin was an undercover police officer.  At approximately 3:00 p.m., Miller and his co-conspirators arrived in the hotel parking lot in a 2013 white Dodge Durango.  A co-conspirator approached the undercover officer and handed him a black bag, which contained a brick of heroin. DEA agents observing the transaction moved in and arrested Miller and his co-conspirators. A loaded .380-caliber semi-automatic handgun was found tucked in the back of Miller’s waistband.  Miller had previously been convicted of a felony.

The government’s case is being handled by the Office’s General Crimes Section.  Assistant United States Attorney Temidayo Aganga-Williams is in charge of the prosecution.

The Defendant:

CLYDE MILLER (also known as “Quan Miller”)
Age:  41
Oil City, Pennsylvania

E.D.N.Y. Docket No. 17-CR-415 (S-1) (MKB)

 

Centers Plan for Healthy Living (“Centers Plan”), a Staten Island-based company that provides services to people who are chronically ill or who need long-term health care services, has agreed to pay $1,650,000 to settle civil fraud allegations that Centers Plan billed the Medicaid Program for services that it did not provide to Medicaid beneficiaries.  The settlement agreement, which resolved claims under both the Federal and New York State False Claims Acts, was approved yesterday by United States District Judge Eric N. Vitaliano.  

“When health care providers engage in fraudulent billing practices to improperly obtain Medicaid funds, they jeopardize the very integrity of Medicaid, a critical program that provides health coverage to millions of Americans,” stated United States Attorney Donoghue.  “This Office will continue to vigorously prosecute those who seek to exploit Medicaid for their own enrichment.”  Mr. Donoghue thanked the Medicaid Fraud Control Unit of the Office of the New York State Attorney General and the Office of the Inspector General of the U.S. Department of Health and Human Services for their assistance in the investigation.

The government’s investigation revealed that, from April 2013 through December 2015, Centers Plan fraudulently enriched itself at the expense of Medicaid by knowingly and systematically submitting false claims for payment to Medicaid.  In one scheme, Centers Plan improperly enrolled into its managed long-term health care plan individuals who were actually only eligible for Social Adult Day Care or transportation services.  In another scheme, Centers Plan failed to disenroll members from its managed long-term health care plan who were no longer receiving qualified community-based long-term care services.

The allegations were brought to the government’s attention through the filing of a complaint pursuant to the qui tam provisions of the False Claims Act.  Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery.

The United States’ case is being handled by Assistant United States Attorney Joseph A. Marutollo of the Office’s Civil Division.

E.D.N.Y. Docket No. 14-CV-6129 (ENV)

Earlier today in federal court in Brooklyn, Adrian Baron, the former Chief Business Officer and former Chief Executive Officer of Loyal Bank Ltd, an off-shore bank with offices in Budapest, Hungary and Saint Vincent and the Grenadines, pleaded guilty to conspiring to defraud the United States by failing to comply with the Foreign Account Tax Compliance Act (FATCA).  Baron was extradited to the United States from Hungary in July 2018.  The guilty plea was entered before United States District Judge Kiyo A. Matsumoto.

Richard P. Donoghue, United States Attorney for the Eastern District of New York; Richard E. Zuckerman, Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and James D. Robnett, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the guilty plea.  Mr. Donoghue thanked the U.S. Securities and Exchange Commission (SEC), both the New York Regional Office and the Washington, D.C. Office; the City of London Police; the U.K.’s Financial Conduct Authority and the Hungarian National Bureau of Investigation for their significant cooperation and assistance during the investigation.                         

FATCA is a federal law enacted in 2010 that requires foreign financial institutions to identify their U.S. customers and report information (FATCA Information) about financial accounts held by U.S. taxpayers either directly or through a foreign entity.  FATCA’s primary aim is to prevent U.S. taxpayers from using foreign accounts to facilitate the commission of federal tax offenses.               

According to court documents, in June 2017, an undercover agent met with Baron and explained that he was a U.S. citizen involved in stock manipulation schemes and was interested in opening multiple corporate bank accounts at Loyal Bank.  The undercover agent informed Baron that he did not want to appear on any of the account opening documents for his bank accounts at Loyal Bank, even though he would be the true owner of the accounts.  Baron responded that Loyal Bank could open such accounts and provide debit cards linked to them.

In July 2017, the undercover agent again met with Baron and described how his stock manipulation scheme operated, including the need to circumvent the IRS’s reporting requirements under FATCA.  During the meeting, Baron stated that Loyal Bank would not submit a FATCA declaration to regulators unless the paperwork indicated “obvious” U.S. involvement.  Subsequently, in July and August 2017, Loyal Bank opened multiple bank accounts for the undercover agent.  At no time did Baron or Loyal Bank request or collect FATCA Information from the undercover agent. 

Baron’s guilty plea represents the first-ever conviction for failing to comply with FATCA.  When sentenced, Baron faces a maximum of five years in prison.

Baron is the second defendant to plead guilty in this case.  On July 26, 2018, Arvinsingh Canaye, formerly the General Manager of Beaufort Management Services Ltd. in Mauritius, pleaded guilty to conspiracy to commit money laundering. 

The case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Jacquelyn M. Kasulis, Michael T. Keilty and David Gopstein are in charge of the prosecution.  The Criminal Division’s Office of International Affairs provided significant assistance in this matter.

The Defendant:

ADRIAN BARON
Age: 63
Residence: Budapest, Hungary

E.D.N.Y. Docket No. 18-CR-102 (S-1) (KAM)

Today, before United States Magistrate Judge Vera M. Scanlon, suspended attorney Christopher Davies was arraigned on a four-count indictment charging securities fraud, conspiracy to commit securities fraud, wire fraud, and aggravated identity theft in connection with a market manipulation scheme.  A federal grand jury in Brooklyn returned the indictment on August 30, 2018.  Davies was previously arrested on a complaint in April 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 Edward Gallashaw, Assistant Postal Inspector-in-Charge of the New York Division of the U.S. Postal Inspection Service (USPIS), announced the indictment. 

“As alleged in the indictment, Davies used both sophisticated means and some of the oldest tricks in the book, including backdating documents and forging signatures, to deceive the investing public and manipulate the price and ownership of a public company’s stock,” stated United States Attorney Donoghue.  “The defendant’s scheme ultimately failed as a result of the outstanding investigative work by our prosecutors and our law enforcement partners, who are committed to protecting the integrity of public markets.”  Mr. Donoghue also expressed his gratitude to the New York Office of the United States Securities and Exchange Commission for its assistance during the investigation. 

“Criminals take what isn’t theirs and have no regard for victims they harm in the process,” stated FBI Assistant Director-in-Charge Sweeney.  “Mr. Davies allegedly pumped up the price of the stock for a public company because he controlled the information being made public, he knew exactly when to sell to make the most money, leaving other investors in the lurch.  Instead of enjoying the large sum of money he made, he now faces time in prison.”

“This is a classic case of greed overcoming honest business practices,” stated USPIS Assistant Postal Inspector-in-Charge Gallashaw.  “Mr. Davies allegedly used his knowledge of the market to ‘increase’ the value of stock he knew was worth pennies, taking money from investors he knew would result in a loss. While Mr. Davies tried to cover his illegal tracks with bogus documents, he couldn’t cover-up his crimes from Postal Inspectors and their law enforcement partners.”

Davies, an attorney whose law license was suspended, controlled a publicly traded company, American Transportation Holdings Inc. (“ATHI”), and manipulated the price of its stock in a pump-and-dump scheme.  Beginning in 2012, Davies exercised secret control over ATHI and its predecessor companies (collectively “ATHI” or the “company”) through a series of nominal Chief Executive Officers.  As a part of his scheme, Davies accumulated a large number of shares in the company by fraudulently converting corporate debt into stock at no cost.  To effect these fraudulent debt-to-stock conversions, Davies forged the signatures of purported ATHI board members and backdated documents.  After accumulating large amounts of ATHI stock, Davies artificially increased the price of ATHI’s stock through false and misleading press releases claiming that ATHI had developed proprietary gaming and live-streaming app technology.  Although ATHI’s stock had historically traded for pennies, its price rose to $12 per share at the height of the pump, resulting in a market capitalization of over $3 billion.  Davies’ coconspirators then dumped ATHI stock at a profit, causing heavy losses to investors.

The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted of wire fraud, the top count in the indictment, Davies 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 Attorneys Kaitlin Farrell and Mark Bini are in charge of the prosecution.

The Defendant: CHRISTOPHER DAVIES
Parkland, Florida
Age: 50

E.D.N.Y. Docket No. 18-CR-479 (FB)

Earlier today, in federal court in Brooklyn, Boris Rubizhevsky, the former Chief Executive Officer (“CEO”) of BioCube, Inc. (“BioCube”), was sentenced by Judge Roslynn R. Mauskopf to 36 months’ imprisonment for conspiracy to commit securities fraud.  Rubizhevsky’s conviction arose out of his participation in a scheme to pump and dump BioCube’s stock, which traded under the ticker symbol BICB.  The defendant and his co-conspirators planned to acquire BioCube stock at a low price, artificially inflate its price through manipulative and deceptive means, and then sell it at a higher price—all to the detriment of BioCube’s other stockholders.  Rubizhevsky was arrested in April 2017 and pleaded guilty in January 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 Robnett, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the sentence.

“With today’s sentence, Boris Rubizhevsky has been held responsible for abusing his former position as CEO of BioCube to help devise a pump and dump of the company’s stock designed to defraud BioCube’s own stockholders,” stated United States Attorney Donoghue.  “This Office is committed to protecting the investing public and the integrity of the financial market from fraudulent schemes.”  Mr. Donoghue also expressed his thanks to the United States Securities and Exchange Commission (“SEC”), New York Regional Office, for its assistance in the case. 

“Rubizhevsky defaced his former official title as CEO when he aimed to defraud those who invested their money and trust in Biocube, Inc.,” stated FBI Assistant Director-in-Charge Sweeney.  “Fraudulent conspiracies and schemes are not a route to success – but a gateway to prison, as manifested by today’s sentence. Still, the work of the FBI and our law enforcement partners does not stop here, as we will be relentless in investigating those who deviously plot against the securities industry.”

“The stock market is a crucial component to our economy and investors must have faith in the CEO’s of those publicly traded companies,” stated IRS-CI Special Agent-in-Charge Robnett.  “The special agents of IRS-CI are proud to lend their financial expertise with investigations that protect the integrity of our financial systems.”     

According to court documents, Rubizhevsky engaged in a scheme to defraud BioCube’s investors and potential investors by concealing a co-conspirator’s beneficial ownership and control of BioCube shares, so that the co-conspirator could exercise control over the price and trading volume of BioCube’s stock.  Rubizhevsky’s co-conspirator had a history of being sanctioned by regulatory authorities and being banned from the securities industry by the SEC.  The plans to pump and dump BioCube’s stock after the co-conspirator gained control of the stock were captured in conversations between Rubizhevsky and the co-conspirator on a wiretap recording.  The scheme was thwarted by law enforcement before investors could suffer significant losses. 

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Alicyn L. Cooley, Tyler Smith, and Kaitlin T. Farrell are in charge of the prosecution.

The Defendant:

BORIS RUBIZHEVSKY
Age:  67
Closter, New Jersey

E.D.N.Y. Docket No. 17-CR-339

A 19-count superseding indictment was unsealed today in federal court in Brooklyn charging five new defendants, and four previously charged defendants, for their participation in a drug-trafficking enterprise based in Brooklyn and Queens, referred to in the indictment as the “Bushwick Crew.”  Eight defendants are charged with racketeering conspiracy, including predicate acts of murder, kidnapping, robbery, extortion conspiracy and heroin distribution conspiracy, and a ninth defendant is charged with murder in aid of racketeering. 

Maurice Brown, Jaquan Cooper and Tyquan Griem were arrested yesterday and today and are scheduled to be arraigned this afternoon before United States Magistrate Judge Peggy Kuo at the Brooklyn federal courthouse.  Norman Marrero was arraigned earlier today before United States Magistrate Judge Martin C. Carlson at the federal courthouse in Harrisburg, Pennsylvania, and ordered detained.  Lance Goodwin was arrested today and is scheduled to be arraigned this afternoon before United States Magistrate Judge Dennis L. Howell at the federal courthouse in Asheville, North Carolina.  

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.     

“As alleged, the defendants were part of a violent crew that beat, tortured and killed in furtherance of their heroin trafficking,” stated United States Attorney Donoghue.  “These charges demonstrate the commitment by this Office and our law enforcement partners to rid our community of the extreme violence associated with drug dealing.”  Mr. Donoghue expressed his appreciation to the New York Metropolitan Safe Streets Task Force, which is comprised of FBI special agents and NYPD detectives, for their participation and assistance in the investigation.

“Not only are these gang members pushing deadly drugs in our most vulnerable communities, they’re allegedly killing rivals and bystanders in their attempts to maintain power and control,” stated FBI Assistant Director-in-Charge Sweeney.  “We’ve stated before the FBI Metro Safe Streets Task Force will continue our pursuit of the leadership in these gangs, and stop their violent and illegal trafficking enterprise before more and more people die from either addiction or at the hands of the gang members.”

“The behavior this crew engaged in will never be tolerated by New Yorkers, and I thank our federal partners at the FBI and the Eastern District for strengthening the NYPD’s efforts to rid our streets of these criminals,” stated NYPD Commissioner O’Neill.  “We will remain relentless in our mission to dismantle groups like this by precisely focusing on the drivers of violence in our city, and we will see their cases through to appropriate and meaningful prison sentences – those who live and work in all of our neighborhoods deserve nothing less.”

As alleged in the superseding indictment and court filings by the government,

the Bushwick Crew was involved in a large-scale heroin trafficking organization with Mexican cartel connections.  Various members of the crew served as enforcers to protect its interests by arming themselves to escort drug traffickers, forcibly collecting drug debts and committing acts of violence against anyone who interfered with the crew’s operations or offended its members.  The crimes alleged include:

Murder of Donte Williams

On August 18, 2012, defendant Lance Goodwin and other members of the crew were involved in a street altercation in Bushwick.  During the fight, Goodwin fatally shot Donte Williams in the stomach to advance his own standing within the crew.  When arrested one week later, Goodwin was carrying the murder weapon.

Murders of Gary Lopez and Rudy Superville 

On March 5, 2013, Gary Lopez and Rudy Superville attempted to rob one of the Bushwick Crew’s main heroin distributors at the distributor’s apartment.  Lopez and Superville were shot and wounded by the distributor.  Defendants Maurice Brown, Peter Vasquez, Luis Lopez, Jason Pantojas and his brother Miguel Pantojas were summoned by the distributor to the apartment where they beat and tortured Gary Lopez and Superville.  Gary Lopez called 911 to plead for help and was shot dead by Brown.  Superville attempted to flee the apartment and was fatally stabbed by Jason Pantojas.  The bodies were doused with bleach and ammonia, wrapped in plastic and driven to a field in Queens by defendants Brown, Luis Lopez and Vasquez, as well as other crew members.  At the field, the bodies were soaked with gasoline and ignited.

Murder of Kelvin Johnson

On September 20, 2014, defendant Tyquan Griem and the above-mentioned heroin distributor went to a nightclub in Queens where a fight broke out.  Griem retrieved a handgun stashed in a secret trap in the distributor’s car and opened fire, killing Kelvin Johnson.

Other Violent Crimes

Defendant Norman Marrero is charged with participating in the shooting of a drug customer to extort him for a drug debt owed to the Bushwick Crew.  Defendant Jaquan Cooper is charged with committing a gunpoint robbery at a barbershop in Queens as customers were getting their hair cut. 

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

If convicted of the murder charges, defendants Brown, Goodwin, Griem, Lopez, Jason Pantojas, Miguel Pantojas and Vasquez face mandatory life sentences.  If convicted of the drug and gun-related charges, defendants Cooper and Marrero face mandatory minimum sentences of 17 years’ and 20 years’ imprisonment, respectively, and a maximum of life imprisonment.

The superseding indictment is the product of an ongoing investigation into gang and narcotics-related violence in Brooklyn and Queens, among other locations, which has resulted in the filing of federal narcotics-and weapons-related charges in this district against more than 25 individuals in the past three years. 

This case is also 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.

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Lindsay K. Gerdes, Jennifer M. Sasso and Andrey Spektor are in charge of the prosecution, with assistance provided by Assistant United States Attorney Brian D. Morris of the Office’s Asset Forfeiture Unit. 

The New Defendants:

MAURICE BROWN (also known as “Spaz”)
Age: 27
Brooklyn, New York

JAQUAN COOPER (also known as “J-Gunna”)
Age: 30
Brooklyn, New York

LANCE GOODWIN (also known as “Ty Mucka”)
Age: 29
Brooklyn, New York

TYQUAN GRIEM (also known as “Ty Goon”)
Age: 28
Brooklyn, New York

NORMAN MARRERO (also known as “Tito”)
Age: 35
Harrisburg, Pennsylvania

Previously Charged Defendants Facing New Charges:

LUIS LOPEZ (also known as “Lou”)
Age: 36
Brooklyn, New York

JASON PANTOJAS (also known as “Tuli”)
Age: 30
Brooklyn, New York

MIGUEL PANTOJAS (also known as “Miggs”)
Age: 31
Brooklyn, New York

PETER VASQUEZ (also known as “Pete”)
Age: 31
Brooklyn, New York

E.D.N.Y. Docket No.  17-CR-390 (S-3) (RJD)

Earlier today, in federal court in Brooklyn, Michael Morris, a registered broker and managing director of Halcyon Cabot Partners, Ltd. (“Halcyon”), pleaded guilty to one count of conspiracy to commit securities fraud for his participation in an $86 million market manipulation scheme involving the publicly traded company CodeSmart Holdings, Inc. (“CodeSmart”), which traded under the ticker symbol ITEN.  The proceeding was before United States District Judge Eric N. Vitaliano.

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.

In early May 2013, Morris’s co-conspirators engineered a reverse merger of CodeSmart, a private company, with a public shell company.  After gaining control of CodeSmart’s three million purportedly unrestricted shares, Morris and his co-conspirators fraudulently inflated CodeSmart’s share price and trading volume, and then sold their shares at a profit when the price reached desirable levels—a scheme commonly referred to as a “pump and dump.”  The first pump and dump occurred between approximately May 13, 2013 and August 21, 2013.  During this period, Morris’s co-conspirators manipulated CodeSmart’s stock price by raising it from $1.77 to a high of $6.94, before causing it to drop to $2.19.  The second pump and dump occurred between approximately August 21, 2013 and September 20, 2013.  During this period, Morris and his co-conspirators manipulated CodeSmart’s stock price by raising it from $2.19 to a high of $4.60, before causing it to drop to $2.13.

On July 12, 2013, when CodeSmart’s inflated share price was at its highest, CodeSmart’s market capitalization was $86,347,800.  However, that same day, CodeSmart filed with the U.S. Securities and Exchange Commission an amended Form 10-K, in which it listed only $6,000 in total assets, $7,600 in revenue, and a net loss of $103,141.  By December 30, 2013, CodeSmart’s stock was trading at merely $0.66 per share and, on July 9, 2014, its stock closed at $0.01 per share.

When sentenced, Morris faces a maximum of five years in prison.   

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Shannon C. Jones, Patrick T. Hein and Mark Bini are in charge of the prosecution with assistance provided by Assistant United States Attorney Claire Kedeshian of the Office’s Civil Division, which is responsible for the forfeiture of assets.

The Defendant:

MICHAEL MORRIS
Age:  65
Residence: Merrick, New York

E.D.N.Y. Docket No. 14-CR-399 (S-2) (ENV)

A criminal complaint was unsealed today in federal court in Central Islip charging Kwesi T. Bovell with wire fraud during his tenure as chief financial officer of The Mulholland Group, a real estate company located in Manhasset, Long Island (hereinafter Mulholland).  The complaint alleges that Bovell stole over $3.5 million from Mulholland during his three years there.  Bovell was arrested today, and his initial appearance is scheduled for this afternoon before United States Magistrate Judge A. Kathleen Tomlinson.

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 in court filings, Bovell had signature authority over multiple bank accounts of Mullholland, and since December 2015, fraudulently transferred more than $3.5 million from those accounts to his own corporate entity, Southgate Holding L.L.C.  Bovell used the stolen funds to purchase two homes, including an apartment in Manhattan, and luxury goods.  The government’s investigation was prompted, in part, by complaints from Mulholland that between January 2018 and August 2018, Bovell spent approximately $145,000 on unauthorized personal expenditures using Mulholland’s Platinum American Express Card. 

 “As alleged in the complaint, Bovell abused his authority as a CFO, using the company like an ATM machine to fund a lavish lifestyle,” stated United States Attorney Donoghue.  “Today’s arrest should put fraudsters like the defendant on notice that this Office will hold them accountable for such criminal conduct.”

“We all want to win the lottery and live lavish lifestyles.  However, Mr. Bovell allegedly decided he would rather just take millions of dollars that wasn’t his, and buy the lifestyle he wanted,” stated FBI Assistant Director-in-Charge Sweeney.  “The FBI works tirelessly to track down criminals regardless of how high up the thief sits in a company, and to serve justice on those who believe no one is watching.”

The charges in the complaint are allegations, 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 Charles P. Kelly is in charge of the prosecution.

The Defendant:

KWESI T. BOVELL
Age:  35
Valley Stream, New York,

E.D.N.Y. Docket No. MJ-18-813