Eastern District of New York

An indictment was unsealed today in federal court in Central Islip charging Derrick Hughes and Ronald Robinson with a gun trafficking conspiracy involving the sale of at least 19 firearms, including an AR-15 multi-caliber rifle.  The defendants were arrested today.  Hughes was arraigned this afternoon in federal court in Central Islip before United States Magistrate Judge A. Kathleen Tomlinson.  Robinson was arraigned this afternoon at the federal courthouse in Norfolk, Virginia.  Both defendants were ordered detained pending bail hearings.  

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, New York Field Division (ATF), 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 indictment.

“As alleged in the indictment, the defendants’ illegal trafficking of firearms brought deadly weapons to the streets of Long Island,” stated United States Attorney Donoghue.  “These arrests demonstrate the commitment by this Office and our law enforcement partners to save lives by stopping the flow of illegal firearms into New York.”  Mr. Donoghue thanked the Nassau County Sheriff’s Department, Suffolk County Sheriff’s Department, New York State Police and the Hempstead Police Department for their assistance during this investigation.

“Many gangs rely on illegal weapons to carry out criminal acts because they’re harder to trace,” stated FBI Assistant Director-in-Charge Sweeney.  “The two subjects in this investigation were allegedly trafficking illegal weapons along the 95 interstate corridor that leads directly onto Long Island. We are doing more and more every day with our law enforcement partner agencies to stop this pipeline, and keep deadly weapons out of the hands of people who shouldn’t have them.”

“The defendants as alleged were part of a scheme that put illegal firearms onto the streets of their community,” stated ATF Special Agent-in-Charge Benedict.  “ATF works with our federal, state and local counterparts to disrupt the flow of guns to our streets and prevent violent crime. I would like to thank all of our partners that made this case possible. I would also like to thank the United States Attorney’s Office for prosecuting the case.”

“The indictments of both defendants Hughes and Robinson for illegal firearms trafficking conspiracy is a clear example of the high level of interagency cooperation during this investigation,” stated NCPD Commissioner Ryder.  “Not only are we taking criminals off the streets, we are also decreasing the amount of illegal firearms that enter our state and county. Every illegal firearm that we confiscate is another positive step on how we protect our residents and Police Officers.  I would like to congratulate all of the investigative agencies and their dedicated members who played a role in this case.”

According to the indictment, the gun-trafficking operation involved at least seven illegal firearms transactions on Long Island between January 2018 and April 2018, with transactions taking place in Rosedale and Valley Stream.  Robinson allegedly purchased two to three firearms at a time in Virginia, and within days, transported them for distribution in New York.  Hughes arranged meetings with customers for the illegal sale of the firearms. 

If convicted, Hughes and Robinson face a maximum sentence of five years’ imprisonment.  The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.  Attorney General Jeff Sessions reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local and tribal law enforcement and the local community to develop effective, locally based strategies to reduce violent crime.

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

The Defendants:

RONALD ROBINSON
Age: 43
Hampton, Virginia

Derrick Hughes
Age: 47
Queens, New York

E.D.N.Y. Docket No. 18-CR-385 (JMA)

Earlier today, in federal court in Central Islip, Matthew Aichroth was sentenced by United States District Judge Denis R. Hurley to 18 years’ imprisonment for conspiring to possess and distribute cocaine and committing an arson in furtherance of that conspiracy.  The Court also ordered Aichroth to forfeit approximately $3.4 million as proceeds of the cocaine trafficking conspiracy.  Aichroth pleaded guilty to the charges in July 2017.

Richard P. Donoghue, United States Attorney for the Eastern District of New York; James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA) New York Division; Geraldine Hart, Commissioner, Suffolk County Police Department (SCPD); Errol D. Toulon, Jr., Suffolk County Sheriff; and Paul Johnson, Chief of Police, Hempstead Police Department (HPD), announced the sentence.

“Aichroth used arson, guns and threats of violence to perpetrate his crimes while he poured dangerous drugs into our communities,” stated United States Attorney Donoghue.  “Thanks to the outstanding work of our prosecutors and law enforcement partners, it’s his freedom and future that have now gone up in flames.”  Mr. Donoghue thanked the Suffolk County Police Department for their assistance during this investigation.

“This sentencing summarizes the gravity of Aichroth’s crimes,” stated DEA Special Agent-in-Charge Hunt.  “By heading a bi-coastal drug trafficking operation, Aichroth pushed product into Long Island communities and users’ hands.”

“Today’s sentencing is an example of the ongoing effort by the Suffolk County Police Department and our law enforcement partners, including the Eastern District of New York, to protect our residents from drug and firearm trafficking," stated SCPD Commissioner Hart.  "The Suffolk County Police Department has a zero tolerance policy towards this behavior, and those involved should know if they commit crimes in the county that they will be arrested and prosecuted to the fullest of the law. Today’s news provides closure to those who been affected by Mr. Aichroth’s actions as he is being held accountable for his crimes.”

 “This defendant utilized violence in furtherance of his drug trafficking activities,” stated Suffolk County Sheriff Toulon.  “The Suffolk County Sheriff’s Office is committed to continuing to work with our law enforcement partners in support of these types of investigations to help rid the community of the problems that have been plaguing our neighborhoods and our nation.”

“The defendant’s arrest demonstrates the hard work and dedication of our law enforcement officers,” stated HPD Chief Johnson.  “Keeping dangerous individuals off the street and protecting our citizens is our interminable mission.” 

 According to court filings and facts presented during court proceedings, between February 1, 2015 and September 26, 2016, Aichroth engaged in a bi-coastal cocaine trafficking conspiracy.  As part of the investigation, law enforcement officers tracked Aichroth and his associates from Long Island to California and observed a rental car that Aichroth used being loaded onto a car carrier in Downey, California.  The officers tracked that car to a shipping lot in New Jersey, where they observed Aichroth retrieve a duffle bag containing more than 10 kilograms of cocaine from the vehicle.  The cocaine was then transported by a co-conspirator to a residence in Islip, New York, where it was seized by law enforcement.  During the execution of a search warrant at the Islip location, law enforcement recovered seven firearms, ammunition, drug packaging material, numerous pills and approximately 200 grams of cocaine.  A search of an apartment that Aichroth used in California yielded 234 grams of cocaine, a 9-millimeter pistol and ammunition. 

During the conspiracy, Aichroth set fire to a vehicle parked in front of the residence of an associate in an attempt to intimidate the associate and prevent him from cooperating with law enforcement.  The fire also caused extensive damage to the associate’s residence. 

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

The Defendant:

MATTHEW AICHROTH
Age:  35
East Islip, New York

E.D.N.Y. Docket No. 16-CR-605 (S-1) (DRH)

A complaint was unsealed earlier today in federal court in Brooklyn charging Joseph Penatello, a former motor vehicle operator for the United States Postal Service (USPS), with making false statements to obtain federal employees’ compensation.  Penatello was arrested today and will make his initial appearance this afternoon before United States Magistrate Judge Vera M. Scanlon.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Matthew Modafferi, Special Agent-in-Charge, United States Postal Service, Office of the Inspector General (USPS-OIG), announced the arrest.

“As alleged, the defendant was employed at flea markets at the same time he falsely claimed to be incapable of working for the Postal Service due to a medical condition,” stated United States Attorney Donoghue.  “Such disability scams are nothing less than stealing from our taxpayers and will not be ignored.”

“The federal Workers’ Compensation program was created to help those who are recovering from injuries obtained on-the-job,” stated USPS-OIG Special Agent-in-Charge Modafferi.  “When a Postal Service employee defrauds the Workers' Compensation program, the Special Agents of the U.S. Postal Service Office of Inspector General will work tirelessly with the U.S. Attorney’s Office to protect the integrity of this federal benefit program.”

According to the complaint, Penatello began receiving workers’ compensation benefits in 2001, after he sustained a neck and back injury while working for the USPS.  In order to continue receiving those benefits, between March 2014 and April 2018, Penatello submitted documents to the Department of Labor falsely claiming that he was totally disabled and unable to work due to his medical condition.  Penatello also falsely claimed that he was not earning any income.  Unbeknownst to Penatello, on over 20 occasions between 2014 and 2018, USPS-OIG special agents video-recorded him working as an organizer at flea markets in Brooklyn and Manhattan.  The video also showed Penatello engaging in strenuous activities, such as carrying heavy objects, standing for long periods of time and driving a motor vehicle.  On one occasion, Penatello told an undercover special agent that he runs flea markets five days-a-week and up to 12 hours per day.  During the relevant time period, Penatello received more than $160,000 in workers’ compensation benefits.

The charges in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, the defendant faces a statutory maximum of five years’ imprisonment.

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

The Defendant:

JOSEPH PENATELLO
Age: 64
Residence: Brooklyn, New York

E.D.N.Y. Docket No. 18-MJ-807

Juan Ángel Napout, a high-level figure in international soccer, was sentenced today in federal court in Brooklyn by United States District Judge Pamela K. Chen to nine years’ imprisonment following his trial convictions of conspiratorial racketeering and two counts of wire fraud conspiracy.  The crimes of conviction related to Napout’s participation in schemes to accept millions of dollars in bribes in exchange for the media and marketing rights to various soccer tournaments.  The Court also ordered Napout to pay $3,374,025.88 in forfeiture and imposed a fine of $1 million.  A hearing on victim restitution is scheduled for October 4, 2018.

At the time of his arrest in December 2015, Napout was the president of CONMEBOL, the confederation responsible for soccer in South America, a FIFA Vice President and a member of the FIFA Executive Committee.  He had previously served as the president of the Paraguayan Soccer Federation, known as the Asociación Paraguaya de Fútbol, or APF.  Napout was convicted following a six-week trial in November and December of 2017.

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 R. Damon Rowe, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, Los Angeles Field Office (IRS CI), announced the sentence.

“Napout rose to the highest ranks of soccer, holding FIFA executive positions and running a powerful continental confederation, only to turn his back on the institutions and people he was entrusted to serve,” stated United States Attorney Donoghue.  “For years, Napout fed his greed, joining and furthering a rampant and deep-rooted culture of corruption in the sport.  Napout’s conviction, as well as the successful prosecution of other high-level soccer officials, has struck at the core of corruption in soccer and underscores the need for continued vigilance against fraud and bribery in the sport.”  Mr. Donoghue expressed his grateful appreciation to the governments of Switzerland, Brazil and Paraguay for their significant assistance in this case.  Mr. Donoghue also thanked the Office of International Affairs and the Organized Crime and Gang Section of the U.S. Department of Justice’s Criminal Division in Washington, D.C., for their assistance in this prosecution.

“Soccer officials spent years gleefully pocketing money handed to them by companies and agencies hoping to further their own agendas, and they did it thinking no one was looking,” stated FBI Assistant Director-in-Charge Sweeney.  “Now Mr. Napout, and other co-conspirators, are paying for their crimes in federal prisons, and the money they took must be repaid. Each investigation the FBI New York and our law enforcement partners brings to an end, we hope will restore a little piece of the game stolen by greed and arrogance.”
                    
“Juan Ángel Napout abused his position of trust and authority in the world of soccer and allowed his appetite for money to lead him into a life of crime,” said IRS-CI Special Agent-in-Charge Rowe.  “Soccer fans worldwide will be delighted to see their game cleansed of the exploitation that has marred it for years.”

As proved at trial, FIFA and its six continental confederations, together with affiliated regional federations, national member associations and sports marketing companies, constitute an enterprise of legal entities associated in fact for purposes of the federal racketeering laws.  The principal, and entirely legitimate, purpose of the enterprise is to regulate and promote the sport of soccer worldwide.  The enterprise financed its efforts in significant part by commercializing the media and marketing rights associated with various soccer events and tournaments, often through the sale of multi-year contracts covering multiple editions of the tournaments.

Evidence presented at trial, publicly filed documents and statements made in court established that Napout and his co-conspirators engaged in a conspiracy to corrupt the enterprise through racketeering activity.  Specifically, Napout and his co-conspirators corrupted the FIFA enterprise through the offer and receipt of tens of millions of dollars in bribes and kickbacks paid by sports marketing companies to soccer officials in exchange for the media and marketing rights to: (a) multiple editions of the CONMEBOL-sponsored Copa América soccer tournament played periodically by South American national teams, including the Copa América Centenario, a special edition of the tournament played in the United States in 2016; (b) multiple editions of the CONMEBOL-sponsored Copa Libertadores soccer tournament played annually by South American club teams and (c) two cycles of World Cup qualifying matches played by the Paraguayan national team and administered by the APF.

The government’s investigation is ongoing.

The government’s case is being handled by the Office’s FIFA Task Force.  Assistant United States Attorneys Samuel P. Nitze, M. Kristin Mace and Keith D. Edelman are in charge of the trial prosecution, with assistance from Assistant U.S. Attorneys Kaitlin T. Farrell and Brian D. Morris.

The Defendant:

JUAN ÁNGEL NAPOUT
Age: 60
Citizenship: Paraguay

E.D.N.Y. Docket No. 15-CR-252 (S-2) (PKC)

Earlier today, following more than three weeks of trial, a federal jury in Brooklyn returned guilty verdicts against Leonid “Lenny” Gershman and Aleksey Tsvetkov on charges of racketeering, including predicate acts of illegal gambling, loansharking, extortion, arson and marijuana distribution.  The charges arose out of the defendants’ membership in an Eastern European organized crime syndicate that operated predominantly in the Sheepshead Bay, Brighton Beach and Coney Island neighborhoods in Brooklyn.  Gershman was also convicted of conspiring to traffick firearms, and Tsvetkov of wire fraud for an insurance scheme at Aces Auto Bodyshop, which he co-owned.  When sentenced by United States District Court Judge Brian M. Cogan, the defendants each face up to life in prison.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration, New York Division (DEA), and James D. Robnett, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the verdicts.

“Today’s verdicts hold Gershman and Tsvetkov responsible for years of using intimidation, violence and their association with Russian organized crime to inflict crimes on our local communities, including carrying out beatings in broad daylight and committing arson in the dead of night, endangering the lives of tenants and New York City firefighters,” stated United States Attorney Donoghue. “This Office and our partners on the DEA Strike Force have dismantled the defendants’ criminal syndicate and will continue to work tirelessly to prevent organized crime elements from flourishing in the Eastern District of New York at the expense of our residents.”  Mr. Donoghue expressed his grateful appreciation to the DEA’s New York Organized Crime Drug Enforcement Strike Force, which is comprised of agents and officers of the Immigration and Customs Enforcement, Homeland Security Investigations, New York, the New York City Police Department, and the New York State Police for their roles in the investigation. Mr. Donoghue also thanked the New York City Fire Department for its investigation of the arson and its heroic efforts in rescuing residents who were trapped in the building.

“This investigation and trial illuminated clues that solved international and domestic crimes committed by members of an Eastern European organized crime syndicate operating in Brooklyn, NY,” stated DEA Special Agent-in-Charge Hunt.  “Gershman and Tsvetkov relied on their associates in Russian organized crime known as “Thieves in Law” for some of their criminal acts, which included violence.  The Strike Force and the Eastern District of New York should be commended for their professionalism that resulted in today’s convictions.”    

“Today’s conviction is a decisive blow against this transnational organized crime syndicate,” stated IRS-CI Special Agent-in-Charge Robnett.  “IRS-CI is committed, with our OCDETF partners, to disrupt the flow of ill-gotten gains that is the life-blood for these criminals and unravel their complex networks.”

As proven at trial, between 2011 and May 2017, Gershman and Tsvetkov, together with co-conspirators from states of the former Soviet Union, operated as a racketeering enterprise, committing a host of crimes to enrich themselves.  Members of the criminal syndicate were linked to high-level members of Russian organized crime known as “thieves in law.”  The “Thieves” authorized syndicate members to use violence to protect their criminal activities. 

Beginning in 2016, the defendants partnered in an illegal high-stakes poker game on Coney Island Avenue.  The Coney Island poker spot, where the bets wagered on a given night could exceed $800,000, generated substantial illicit profits for the defendants’ criminal syndicate.  In the spring of 2016 the defendants and other syndicate members agreed to eliminate a competing poker spot by having two co-conspirators, both of whom testified at trial, set fire to a residential building on Voorhies Avenue where the rival game took place on the ground floor.  Two residents of the building, including a young boy, were trapped in their apartment by the resulting fire and had to be rescued by firefighters.  Both residents and firefighters suffered smoke inhalation, and one firefighter’s injuries required surgeries. 

Additionally, the defendants’ criminal syndicate preyed upon numerous extortion victims in the Eastern District of New York and elsewhere.  For example, as the evidence at trial proved, Gershman enlisted the help of “Thieves” in Russia who tracked down the father of an extortion victim in Moscow in order to determine where his son, who owed the syndicate more than $40,000, was living.  After locating the victim, Gershman was recorded on a wiretap stating, the “Thieves have found him . . . in Israel,” and “they were at [his] place today.”  As another example, Tsvetkov attacked a victim outside Aces Auto Bodyshop.  The assault was captured on Aces’ surveillance video, and showed Tsvetkov punching the victim in the face, and continuing to attack him in the middle of the street as the victim lay on the ground.  After the videotaped beating, which Tsvetkov saved to his cell phone, he boasted to a co-conspirator about putting the victim “to sleep.”  Gershman and Tsvetkov were convicted of pistol-whipping an individual they suspected to have stolen marijuana from their stash house, shattering his teeth with the firearm.

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Matthew J. Jacobs, Andrey Spektor and Sarah Evans are in charge of the prosecution.

The Defendants:

LEONID GERSHMAN (also known as “Lenny”)
Age:  35
Brooklyn, New York

ALEKSEY TSVETKOV
Age:  39 
Brooklyn, New York

E.D.N.Y. Docket No. 16-CR-553 (S-4) (BMC)

Alfredo Rodriguez was arraigned this morning before United States Magistrate Judge Vera M. Scanlon at the federal courthouse in Brooklyn on a two-count indictment charging him with conspiring to distribute, and with attempting to possess with the intent to distribute, N-ethylpentylone, a Schedule I controlled substance analogue.  The indictment was filed on August 17, 2018, and the case is assigned to United States District Judge Nicholas G. Garaufis.  Rodriguez was arrested on August 2, 2018, and at his initial appearance in court on August 3, 2018 was ordered detained. 

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 (ICE), Homeland Security Investigations (HSI), New York, and Frank Russo, Acting Director, New York Field Office, U.S. Customs and Border Protection (CBP), announced the charges.

 “The proactive efforts of our law enforcement partners slammed the door shut on the defendant’s efforts to obtain this dangerous drug, shipped by mail from China, to be sold on our streets,” stated United States Attorney Donoghue.  “This indictment demonstrates the commitment by the Department of Justice and our partners in law enforcement to combat the drug epidemic in our nation, enforcing zero tolerance for controlled substances, whether they are grown in a field or created in a laboratory.”  Mr. Donoghue extended his grateful appreciation to ICE-HSI’s Border Enforcement Task Force and the U.S. Postal Inspection Service (USPIS) for their investigative work and assistance in the case. 

“This is another case where interagency cooperation has stopped the attempted international distribution of a dangerous ‘designer’ drug, in this case one mimicking Ecstasy,” stated ICE HSI Special Agent-in-Charge Melendez.  “Whether via the Internet or regular mail, HSI and cooperating agencies are penetrating these operations, no matter how big or how small, on a regular basis and bringing the individuals involved to justice.”

“This case serves as a great example of collaborative law enforcement efforts to combat international narcotics trafficking conspirators,” stated CBP Acting Director Russo.  “U.S. Customs and Border Protection thanks our partners at HSI and ICE for their continued cooperation.”

According to the indictment and other court filings, Rodriguez purchased what he believed to be “Molly” – the street name for 3,4-methylenedioxymethamphetamine, also commonly referred to as “MDMA” or “ecstasy” – from a supplier in China, which he intended to sell to another individual for distribution.  CBP intercepted the package when it arrived in the United States in July 2018, and upon examination found over 2,000 grams of N-ethylpentylone, a controlled substance analogue.  N-ethylpentylone can resemble Molly in appearance and has been sold on the street as such. 

After removing the N-ethylpentylone from the package and replacing it with a product that resembled the controlled substance, law enforcement personnel, including agents of the USPIS, delivered the package to an address in Jamaica, Queens, where Rodriguez was arrested after accepting the package. 

If convicted, Rodriguez faces a maximum sentence of 20 years’ imprisonment on each count of the indictment.

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 General Crimes Section.  Assistant United States Attorney Justina L. Geraci is in charge of the prosecution.

The Defendant:

Alfredo Rodriguez
Age:  33
Carteret, New Jersey

E.D.N.Y. Docket No. 18-CR-444 (NGG)

A New York man pleaded guilty today in U.S. District Court in the Southern District of New York to one count of cyberstalking, stemming from his extensive cyberstalking campaign that targeted a woman he dated for several months in 2013 and 2014.  The victim’s name is being withheld to protect her privacy.

Assistant Attorney Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Geoffrey S. Berman of the Southern District of New York made the announcement. 

David Waldman, 49, of Inwood, New York, was initially arrested and charged by complaint and then indicted by a grand jury on June 14, with one count of cyberstalking and six counts of sending interstate threats.  Waldman has been detained pending trial.   At his change of plea hearing today before U.S. District Court Magistrate Judge Robert W. Lehrburger, Waldman pleaded guilty to one count of cyberstalking.  His sentencing hearing is scheduled for Nov. 22, 2018.

According to the indictment to which Waldman pleaded guilty, Waldman engaged in an extensive cyberstalking campaign targeting a woman he briefly dated.  The campaign began in April 2014, shortly after Waldman and the victim ended their relationship, and continued intermittently until the date of Waldman’s arrest.  Over the course of almost four years, Waldman sent the victim hundreds of text messages, voicemail messages, and e-mail messages, and made voluminous posts on a variety of online platforms, in which he claimed, among other assertions, that she had been diagnosed with bipolar and narcissistic personality disorder, used drugs, and fabricated claims that she had been a victim of child sexual abuse.  In his online communications, Waldman also repeatedly threatened to show up at the victim’s apartment and office and threatened to injure, torture, and sexually assault her.  Waldman also sent email messages to the victim’s employers, accusing her of being a “habitual drug user” and claiming that he would sue her for defamation, theft, illegal trespass, violating HIPAA, and engaging in other “illegal behaviors.” 

Over the course of the alleged cyberstalking campaign, the victim obtained multiple state court orders of protection against Waldman.

Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Nicholas Chiuchiolo of the Southern District of New York are prosecuting the case. 

Earlier today, in federal court in Central Islip, Ronald Hardy and McArthur Jean pleaded guilty for their roles in connection with a $147 million scheme to defraud investors in publicly traded companies.  Hardy, who was a manager at My Street Research and its predecessors (collectively, the “boiler room”), pleaded guilty to conspiracy to commit securities fraud, conspiracy to commit wire fraud, conspiracy to commit money laundering and five counts of securities fraud.  Jean, a cold-caller at the boiler room, pleaded guilty to one count of conspiracy to commit securities fraud and agreed to forfeit more than $110,000.  When sentenced, Hardy faces a maximum of 20 years’ imprisonment on the top count of conviction and Jean faces a maximum of five years’ imprisonment.      

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the guilty pleas.  Mr. Donoghue expressed his appreciation to the United States Securities and Exchange Commission for their significant cooperation and assistance in the investigation.

Between January 2014 and July 2017, Hardy and Jean, together with their 14 co-defendants and others, engaged in a scheme to defraud investors and potential investors in publicly traded companies, including National Waste Management Holdings, Inc., trading under the ticker symbol NWMH; CES Synergies, Inc., trading under the ticker symbol CESX; Grilled Cheese Truck, trading under the ticker symbol GRLD; Hydrocarb Energy Corporation, trading under the ticker symbol HECC; and Intelligent Content Enterprises, Inc., trading under the ticker symbol ICEIF (collectively, the “manipulated public companies”).  The defendants executed this scheme by (a) artificially generating price movements and trading volume in the shares, (b) causing material misrepresentations and omissions in their communications with victim investors about the advisability of purchasing the shares and (c) fraudulently concealing their control of shares of the manipulated public companies that were held in brokerage accounts in the names of other individuals or entities.  In addition, Hardy and other defendants conspired to launder approximately $14,714,493 in proceeds of the stock manipulation scheme.

Hardy and Jean are among 16 defendants charged in this case, and the ninth and tenth defendants, respectively, to plead guilty.  The eight defendants who previously pleaded guilty to various charges for their participation in this scheme are Erik Matz, a manager at the Boiler Room, Boiler Room cold-callers Brian Heepke, Dennis Verderosa, Emin L. Cohen, Paul Ewer, Ashley Antos and Sergio Ramirez, and Robert Gilbert, a cold-caller operating from his own company.

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Alicyn L. Cooley, Patrick T. Hein and Whitman G.S. Knapp are in charge of the prosecution.  Assistant United States Attorney Tanisha R. Payne of the Office’s Asset Forfeiture Section is handling the forfeiture matters. 

The Defendants:

RONALD HARDY
Age:  42
Residence: Port Jefferson, New York

MCARTHUR JEAN, also known as “John McArthur”
Age:  34
Residence: Dix Hills, New York

ERIK MATZ
Age:  44
Residence: Mt. Sinai, New York

BRIAN HEEPKE, also known as “Brian Targis”
Age:  36
Residence: Farmingdale, New York

DENNIS VERDEROSA
Age:  67
Residence: Coram, New York

EMIN L. COHEN, also known as “Ian Grant”
Age:  33
Residence: Coram, New York

PAUL EWER
Age:  36
Residence: Massapequa, New York

ASHLEY ANTOS
Age:  26
Residence: Central Islip, New York

SERGIO RAMIREZ
Age:  44
Residence: East Meadow, New York

ROBERT GILBERT
Age:  51
Residence: Cold Spring Harbor, New York

E.D.N.Y. Docket No. 17-CR-372

Former Brazilian soccer federation president José Maria Marin was sentenced today, in federal court in Brooklyn, by United States District Judge Pamela K. Chen to four years’ imprisonment following his trial convictions of conspiratorial racketeering, wire fraud and money laundering offenses.  The crimes of conviction related to Marin’s participation in schemes to accept millions of dollars in bribes in exchange for the media and marketing rights to various soccer tournaments.  The Court also ordered Marin to pay $3,335,593 in forfeiture and imposed a fine of $1,200,000.  A hearing on victim restitution is scheduled for October 4, 2018.

At the time of his arrest in May 2015, Marin was the former head of the Brazilian soccer federation, known as the Confederação Brasileira de Futebol, or CBF, a member of various FIFA standing committees, and a representative to CONMEBOL, the confederation responsible for soccer in South America.  Marin was convicted of racketeering conspiracy, three counts of wire fraud conspiracy and two counts of money laundering conspiracy following a six-week trial in November and December of 2017.

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 R. Damon Rowe, Special-Agent-in-Charge, Internal Revenue Service Criminal Investigation, Los Angeles Field Office (IRS CI), announced the sentence.

“Marin, like his co-conspirators, sold out the sport he was meant to serve to satisfy his own greed,” stated United States Attorney Donoghue.  “Now he has been brought to justice and punished for his criminal conduct.  Today’s sentence shows that for all their power and prestige, the soccer officials who corrupted ‘the beautiful game’ are not above the law.”  Mr. Donoghue expressed his grateful appreciation to governments around the world, particularly the governments of Switzerland, Brazil and Paraguay for their significant assistance in this case.  Mr. Donoghue also thanked the Office of International Affairs and the Organized Crime and Gang Section of the U.S. Department of Justice’s Criminal Division in Washington, D.C., for their assistance in this prosecution.

“At each point along the food chain, these soccer officials had their fingers in the pot because they made millions of dollars, thinking no one noticed,” stated FBI Assistant Director-in-Charge Sweeney.  “But they’ve each reached the point where they got caught, and now they’re facing justice for their crimes. Today’s sentencing of Mr. Marin is just one step in a wide-ranging investigation of these corrupt officials, and shows the FBI and our law enforcement partners are continuing our pursuit of those who used the game of soccer to pad their bank accounts.”
                    
“Jose Maria Marin’s brazen attempts to hide the bribes he received while serving as a FIFA official, have come back full circle as he finds himself facing a prison sentence,” stated IRS-CI Special Agent-in-Charge Rowe. “As these sports officials are sentenced one-by-one, we are finally purging the game of soccer of the corruption that engulfed it for decades. IRS Criminal Investigation continues to investigate financial crimes and join their fellow national and international law enforcement partners to follow the money wherever it may lead.”

As proved at trial, FIFA and its six continental confederations, together with affiliated regional federations, national member associations and sports marketing companies, constitute an enterprise of legal entities associated in fact for purposes of the federal racketeering laws.  The principal, and entirely legitimate, purpose of the enterprise is to regulate and promote the sport of soccer worldwide.  The enterprise financed its efforts in significant part by commercializing the media and marketing rights associated with various soccer events and tournaments, often through the sale of multi-year contracts covering multiple editions of the tournaments.

Evidence presented at trial, publicly filed documents and statements made in court established that Marin and his co-conspirators engaged in a conspiracy to corrupt the enterprise through racketeering activity.  Specifically, Marin and his co-conspirators corrupted the FIFA enterprise through the offer and receipt of tens of millions of dollars in bribes and kickbacks paid by sports marketing companies to soccer officials.  Marin accepted, or agreed to accept, millions of dollars in bribes in exchange for the media and marketing rights to: (a) multiple editions of the CONMEBOL-sponsored Copa América soccer tournament played periodically by South American national teams, including the Copa América Centenario, a special edition of the tournament played in the United States in 2016; (b) multiple editions of the CONMEBOL-sponsored Copa Libertadores soccer tournament played annually by South American club teams and (c) multiple editions of the Copa do Brasil, a soccer tournament sponsored by the CBF for Brazilian soccer clubs.

The government’s investigation is ongoing.

The government’s case is being handled by the Office’s FIFA Task Force.  Assistant United States Attorneys Samuel P. Nitze, M. Kristin Mace and Keith D. Edelman are in charge of the trial prosecution, with assistance from Assistant U.S. Attorneys Kaitlin T. Farrell and Brian D. Morris.

The Defendant:

JOSÉ MARIA MARIN
Age: 86
Citizenship: Brazil

E.D.N.Y. Docket No. 15-CR-252 (S-2) (PKC)

Jakiw Palij, a former Nazi labor camp guard in German-occupied Poland and a postwar resident of Queens, New York, has been removed by U.S. Immigration and Customs Enforcement (ICE) to Germany, Attorney General Jeff Sessions of the U.S. Department of Justice, Secretary Kirstjen M. Nielsen of the U.S. Department of Homeland Security, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and ICE Deputy Director and Acting Director Ronald D. Vitiello announced today.  ICE removed Palij based on an order of removal obtained by the Department of Justice in 2004.

“The United States will never be a safe haven for those who have participated in atrocities, war crimes, and human rights abuses,” said Attorney General Sessions.  “Jakiw Palij lied about his Nazi past to immigrate to this country and then fraudulently become an American citizen.  He had no right to citizenship or to even be in this country.  Today, the Justice Department—led by Eli Rosenbaum and our fabulous team in the Human Rights and Special Prosecutions Section, formerly the Office of Special Investigations—successfully helped remove him from the United States, as we have done with 67 other Nazis in the past.  I want to thank our partners at the State Department and the Department of Homeland Security for all of their hard work in removing this Nazi criminal from our country.”

“Nazi war criminals and human rights violators have no safe haven on our shores,” said Secretary Kirstjen M. Nielsen of the U.S. Department of Homeland Security.  “We will relentlessly pursue them, wherever they may be found, and bring them to justice.  The arrest and removal of Jakiw Palij to Germany is a testament to the dedication and commitment of the men and women of ICE, who faithfully enforce our immigration laws to protect the American people.”

Palij, 95, was born in a part of Poland that is situated in present-day Ukraine, immigrated to the United States in 1949 and became a U.S. citizen in 1957. He concealed his Nazi service by telling U.S. immigration officials that he had spent the war years working until 1944 on his father’s farm in his hometown, which was previously a part of Poland and is now in Ukraine, and then in a German factory. 

As Palij admitted to Justice Department officials in 2001, he was trained at the SS Training Camp in Trawniki, in Nazi-occupied Poland, in the spring of 1943. Documents subsequently filed in court by the Justice Department showed that men who trained at Trawniki participated in implementing the Third Reich’s plan to murder Jews in Poland, code-named “Operation Reinhard.” On Nov. 3, 1943, some 6,000 Jewish men, women and children incarcerated at Trawniki were shot to death in one of the largest single massacres of the Holocaust. By helping to prevent the escape of these prisoners during his service at Trawniki, Palij played an indispensable role in ensuring that they later met their tragic fate at the hands of the Nazis.

On May 9, 2002, the Criminal Division’s then-Office of Special Investigations (OSI) and the U.S. Attorney’s Office of the Eastern District of New York filed a four-count complaint in the U.S. District Court for the Eastern District of New York, to revoke Palij’s citizenship.  The complaint was based primarily upon his wartime activities as an armed guard of Jewish prisoners at Trawniki, who were confined there under inhumane conditions.   Palij’s U.S. citizenship was revoked in August 2003 by a federal judge in the Eastern District of New York based on his wartime activities and postwar immigration fraud.  In November 2003, the government placed Palij in immigration removal proceedings.

In decisions issued on June 10 and Aug. 23, 2004, U.S. Immigration Judge Robert Owens ordered Palij’s deportation to Ukraine, Poland or Germany, or any other country that would admit him, on the basis of his participation in Nazi-sponsored acts of persecution while serving during World War II as an armed guard at the Trawniki forced-labor camp in Nazi-occupied Poland under the direction of the government of Germany and his subsequent concealment of that service when he immigrated to the United States. As Judge Owens wrote in his decision ordering Palij’s deportation, the Jews massacred at Trawniki “had spent at least half a year in camps guarded by Trawniki-trained men, including Jakiw Palij.”  In December 2005, the Board of Immigration Appeals denied Palij’s appeal.

The removal of Palij to Germany was effectuated through close cooperation between the Departments of Justice, Homeland Security and State. For nearly four decades, the Justice Department has vigorously pursued its mission to expel Nazi persecutors from the United States.  The Palij case was the product of the Department’s longtime efforts to identify, investigate and take legal action against participants in Nazi crimes of persecution who reside in the United States. Since OSI began operations in 1979, that office and its successor, the Human Rights and Special Prosecutions Section (HRSP) of the Justice Department’s Criminal Division, have won cases against 108 individuals who participated in Nazi crimes of persecution. In addition, attempts to enter the United States by more than 180 individuals implicated in wartime Axis crimes have been prevented as a result of the “Watch List” program initiated by OSI and enforced in cooperation with the Departments of State and Homeland Security. 

This removal was supported by ICE’s Enforcement and Removal Operations and Office of the Principal Legal Advisor as well as the Human Rights Violators and War Crimes Center (HRVWCC).  The HRVWCC is comprised of ICE HSI’s Human Rights Violators and War Crimes Unit, ICE’s Human Rights Law Section, FBI’s International Human Rights Unit and HRSP.  Established in 2009, the HRVWCC furthers the government’s efforts to identify, locate and prosecute human rights abusers in the United States, including those who are known or suspected to have participated in persecution, war crimes, genocide, torture, extrajudicial killings, female genital mutilation and the use or recruitment of child soldiers. The HRVWCC leverages the expertise of a select group of agents, lawyers, intelligence and research specialists, historians and analysts who direct the government’s broader enforcement efforts against these offenders.

The case was investigated, litigated and supervised over the years by a host of attorneys and historians in OSI, the U.S. Attorney’s Office in the Eastern District of New York, and HRSP, including Director Eli M. Rosenbaum, Senior Trial Attorney Susan L. Siegal and Chief Historian Dr. Jeffrey Richter, all of whom have served with HRSP since its 2010 creation. 

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The United States filed a civil complaint against Foo Yuan Food Products Company, Inc. (Foo Yuan) of Long Island City, New York, its Owner and President Hsing Chang, and its Secretary Susan Chang, to stop them from preparing and distributing adulterated seafood products in violation of federal law, the Department of Justice announced today.

The Department filed the complaint at the request of the U.S. Food and Drug Administration (FDA).

According to the complaint, defendants prepare, pack, hold and distribute refrigerated and frozen ready-to-eat fish balls, fried fish cakes and fried fish balls. The complaint, filed in the U.S. District Court for the Eastern District of New York, alleges that defendants failed to adequately control the risk of Clostridium botulinum and Listeria monocytogenes (L. mono.) growth and toxin formation in susceptible fish and fishery products. 

“The Department of Justice is committed to ensuring that food processors comply with laws designed to ensure food safety,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Department of Justice will continue to work with the FDA to ensure that Americans are protected from potentially unsafe food.” 

“When food processors ignore federal laws concerning the preparation of food, they subject the public to serious health risks,” stated United States Attorney Richard P. Donoghue for the Eastern District of New York. “The Department of Justice has asked the Court to stop the defendants from processing, packaging or distributing any more food until they establish that they can comply with federal laws and regulations designed to avert those health risks.  Today’s action demonstrates our commitment to protecting the public from potentially contaminated food.” 

FDA inspected Foo Yuan’s facility in 2014, 2016 and from December 2017 to January 2018.  According to the complaint, at each inspection, FDA documented significant deficiencies.  For example, as alleged in the complaint, during the most recent inspection, FDA observed a failure to maintain the cleanliness of food contact sources, and a failure to ensure that all persons working in direct contact with food, food contact surfaces and food-packing materials conform to hygienic practices to protect against food contamination. 

The complaint notes that, following the October 2014 inspection, FDA issued a warning letter notifying Foo Yuan and Hsing Chang that they were in violation of seafood Hazard Analysis and Critical Control Point and current Good Manufacturing Practice regulations, causing their products to be adulterated under the law.

The complaint alleges that defendants violated the Federal Food, Drug, and Cosmetic Act by causing adulterated food to be introduced into interstate commerce or delivered for introduction into interstate commerce.  It also alleges that the defendants further violated the law by causing food to become adulterated while it was being held for sale after the shipment of one or more of its components in interstate commerce.

The government is represented by Trial Attorney Monica Groat of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Edwin Cortes of the U.S. Attorney’s Office for the Eastern District of New York, with the assistance of Associate Chief Counsel for Enforcement Tara Boland of the FDA, Office of General Counsel, Department of Health and Human Services.

A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at 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 www.justice.gov/usao-edny.

The United States filed a civil complaint today in federal court in Brooklyn against Foo Yuan Food Products Company, Inc. (Foo Yuan) of Long Island City, New York, its Owner and President Hsing Chang, and its Secretary Susan Chang, seeking to permanently enjoin them from preparing and distributing adulterated seafood products in violation of federal law, the Department of Justice announced today.

According to the complaint filed at the request of the U.S. Food and Drug Administration (FDA), the defendants prepare, pack, hold and distribute refrigerated and frozen ready-to-eat fish balls, fried fish cakes and fried fish balls.  The United States alleges that defendants failed to adequately control the risk of Clostridium botulinum and Listeria monocytogenes (L. mono.) growth and toxin formation in susceptible fish and fishery products. 

“When food processors ignore federal laws concerning the preparation of food, they subject the public to serious health risks,” stated United States Attorney Richard P. Donoghue.  “The Department of Justice has asked the Court to stop the defendants from processing, packaging or distributing any more food until they establish that they can comply with federal laws and regulations designed to avert those health risks.  Today’s action demonstrates our commitment to protecting the public from potentially contaminated food.” 

“The Department of Justice is committed to ensuring that food processors comply with laws designed to ensure food safety,” stated Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “The Department of Justice will continue to work with the FDA to ensure that Americans are protected from potentially unsafe food.” 

The FDA inspected Foo Yuan’s facility in 2014, 2016 and from December 2017 to January 2018.  According to the complaint, at each inspection, the FDA documented significant deficiencies.  For example, during the most recent inspection, FDA observed a failure to maintain the cleanliness of food contact sources, and a failure to ensure that all persons working in direct contact with food, food contact surfaces and food-packing materials conformed to hygienic practices to protect against food contamination. 

The complaint alleges that defendants violated the Federal Food, Drug, and Cosmetic Act by causing adulterated food to be introduced into interstate commerce or delivered for introduction into interstate commerce.  It also alleges that the defendants further violated the law by causing food to become adulterated while it was being held for sale after the shipment of one or more of its components in interstate commerce.

The government is represented by Trial Attorney Monica Groat of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Edwin Cortes of the U.S. Attorney’s Office for the Eastern District of New York, with the assistance of Associate Chief Counsel for Enforcement Tara Boland of the FDA, Office of General Counsel, Department of Health and Human Services.

A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found 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, at the federal courthouse in Central Islip, New York, Josue Portillo, a member of the Leeward Locos Salvatruchas clique of La Mara Salvatrucha, also known as the MS-13, pleaded guilty to racketeering charges without a plea agreement with the government, relating to 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.

Portillo, who was 15 years and 11 months old at the time of the April 11 murders and is now 17 years old, was initially charged by a juvenile information that was filed under seal in the Eastern District of New York on July 10, 2017.  Portillo, an illegal alien from El Salvador, was in immigration custody in Virginia when charged, and he was subsequently transferred to the custody of the FBI’s Long Island Gang Task Force and transported to this district.  Thereafter, the government filed a motion to transfer Portillo to adult status for prosecution.  Following an evidentiary hearing, on August 6, 2018, Judge Bianco issued a Memorandum and Order granting the government’s transfer motion and ordering that Portillo be prosecuted as an adult. 

“Josue Portillo’s guilty plea today marks a milestone in the investigation of MS-13’s brutal murders of four young men lured to their violent deaths in a park on Long Island,” stated United States Attorney Donoghue.  “We hope the victims’ families can find some measure of solace in knowing that the perpetrators of these murders are now being held responsible for their crimes.  The Eastern District, together with our partners on the FBI’s Long Island Gang Task Force, will never tire nor relent in our efforts to dismantle MS-13 and bring to justice their members who have no respect for human life.” Mr. Donoghue expressed his appreciation to the U.S. Attorney’s Office for the Western District of Virginia for their assistance in the case.

“Whether young or old, the savagery of MS-13 gang members remains the same. Portillo and other members of MS-13 brutally beat and killed four young men, leaving them in an isolated wooden area,” stated FBI Assistant Director-in-Charge Sweeney.  “The FBI’s Long Island Gang Task Force’s continuous effort to eliminate the threat of MS-13 is shown today, as Portillo has now pled guilty for the cruel crime he committed. We hope today's news provides some measure of comfort to the families of the victims and the community as a whole.”

“The Suffolk County Police Department thanks the Eastern District of New York for their steadfast commitment to prosecute violent MS-13 gang members,” stated SCPD Commissioner Hart.  “Today’s news is an example of the ongoing effort by the Suffolk County Police Department and our law enforcement partners to protect the residents of Suffolk County from the scourge of gang violence.  Ridding our community of gangs is a long term commitment and one that we are strongly committed to.  Gang members should know that if they commit crimes in this county that they will be arrested and prosecuted to the fullest extent of the law.”

 “This investigation is a clear example of the important partnership and dedicated investigators that exist within the Long Island Gang Task Force,” stated NCPD Commissioner Ryder.  “These arrests are taking violent criminals off our streets, which equates to safer communities for our residents.  We will never tolerate murder, gang violence and drug dealing, thus making these crimes a priority.  I would like to congratulate all of the individuals who assisted with this lengthy and complex investigation.”

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 Portillo and other MS-13 members.  The victims were believed to be members of a rival gang who had disrespected the MS-13.  Portillo and several MS-13 members and associates met in a wooded area behind the park where they distributed weapons and discussed the plan to kill the victims.  The female MS-13 associates then arrived at the park, led the victims to a wooded area and sent Portillo a text message describing their location.  Portillo 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.  Portillo and his associates dragged the victims’ bodies to a more secluded spot and fled.  The victims’ bodies were discovered the following evening.

When sentenced, Portillo, faces a maximum sentence 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, the New York State Police, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

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

The Defendant:

JOSUE PORTILLO (“Sparky” and “Curioso”)
Age:  17
Central Islip, New York

E.D.N.Y. Docket No. 17-CR-366 (S-1) (JFB)

Earlier today, in federal court in Brooklyn, Evan Greebel, a former partner at the New York office of Katten Muchin Rosenman LLP who served as outside counsel to Retrophin, Inc., a biopharmaceutical company, was sentenced by Judge Kiyo A. Matsumoto to 18 months’ imprisonment for conspiracy to commit wire fraud and conspiracy to commit securities fraud, to be followed by three years’ supervised release.  The Court also ordered Greebel to pay $116,462.03 in forfeiture and $10,447,979 in restitution.  Greebel was convicted by a federal jury in December 2017, following an 11-week trial, for his role in two interrelated fraud schemes with Retrophin CEO Martin Shkreli and others, in which Greebel, Shkreli and others stole millions of dollars in cash and stock from Retrophin and manipulated the price and trading volume of Retrophin stock.

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.

“Today’s sentence reinforces our message that attorneys who facilitate crimes will be held accountable for their actions,” stated United States Attorney Donoghue.  “Evan Greebel leveraged his legal training and the trust placed in him by Retrophin’s Board of Directors to commit serious crimes, including the theft of millions of dollars in cash and stock from the very company he was hired to represent.  In doing so, Greebel broke the law and violated the ethical duties he owed to his client.”  Mr. Donoghue expressed his thanks to the United States Securities and Exchange Commission (SEC), New York Regional Office, and the Financial Industry Regulatory Authority, Inc., Criminal Prosecution Assistance Group (FINRA CPAG), for their significant cooperation and assistance in this case.

“As an attorney well-versed in the law, Greebel was expected to abide by it – not violate it,” stated FBI Assistant Director-in-Charge Sweeney.  “Instead he used his professional expertise to prepare illegitimate agreements, allowing him and others to carry out their illegal activity.  His sentencing today serves as a reminder to others that there are consequences for this type of behavior.”   

Between 2011 and 2014, Greebel conspired with Shkreli and others to misappropriate Retrophin’s assets in order to pay off defrauded investors in Shkreli’s hedge funds, MSMB Capital Management LP (MSMB Capital) and MSMB Healthcare Management LP (MSMB Healthcare).  Specifically, Greebel negotiated and prepared so-called settlement agreements with various of the defrauded investors, causing Retrophin to reimburse them more than $2 million in cash and stock.  Greebel also arranged for other defrauded investors to enter into sham consulting agreements with Retrophin as a means to settle liabilities owed by Shkreli and the hedge funds. 

In addition, between 2012 and 2014, Greebel and Shkreli schemed to defraud investors in Retrophin by attempting to control illegally the price and trading volume of Retrophin’s stock.  As part of the scheme, they concealed Shkreli’s beneficial ownership and control of most of Retrophin’s free-trading shares, recruited associates of Shkreli to be nominee holders of those shares and prevented the nominees from selling the shares.  Some of the shares were used to settle liabilities owed by the MSMB hedge funds and Shkreli.     

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Alixandra Smith, David Pitluck and David K. Kessler are in charge of the prosecution.  

The Defendant:

EVAN GREEBEL
Age: 45
Scarsdale, New York

E.D.N.Y. Docket No. 15-CR-637 (KAM)

 

 Earlier today, in federal court in Central Islip, Osman Ak was sentenced by United States District Judge Denis R. Hurley to a year and one day in prison, to be followed by three years’ supervised release, for selling the illegal drug K2, also known as “spice” and synthetic marijuana, from his convenience store in Medford, New York.  Ak pleaded guilty in November 2017.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division, and George Beach II, Superintendent, New York State Police (NYSP), announced the sentence.

 “Osman Ak is going from his convenience store to prison for selling dangerous drugs over the counter, placing the community at risk to the dangers associated with this synthetic hallucinogen and its unpredictable side effects,” stated United States Attorney Donoghue.  “This Office is working tirelessly with our law enforcement partners to prosecute drug traffickers and dealers at all levels and hold them responsible for their crimes.”

“Ingesting K2 is like playing Russian roulette, and Osman AK was the person responsible for enticing the young people of Long Island to play,” stated DEA Special Agent-in-Charge Hunt.  “Today AK is being held accountable for peddling this extremely dangerous and potentially life threatening synthetic cannabinoid into our communities.  I commend the agents and officers assigned to our DEA Long Island District Office, our partners at the New York State Police, and the prosecution team at the Eastern District of New York for their hard work on this investigation.”

"As we have seen time and again, synthetic drugs endanger the health of users and have no place being sold in our neighborhoods,” stated NYSP Superintendent Beach.  “This case sends a strong message that we will not tolerate the sale of synthetic drugs anywhere in New York State, and those who sell these illegal substances at the detriment of our communities will be held fully accountable.”

The defendant owned and operated the convenience store, Eyup Gas & Convenience Store, Inc. d/b/a US Food Mart in Medford where, between April 2017 and May 29, 2017, he sold the illegal drugs during business hours.  According to court filings, the K2 was packaged in glitter bags bearing cartoon characters and brand names such as “OMG,” “AK47,” “Joker” and “Hayze Peachy King.”  The drugs were kept in cigar boxes hidden behind the cash register.  Store videotapes seized by law enforcement for the relevant time period showed bags of K2 being sold to customers, most of whom appeared to be young adults. 

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:

 OSMAN AK
Age:  45
Holbrook, New York

E.D.N.Y. Docket No. 17-CR-527  (DRH)

Earlier today, at the federal courthouse in Brooklyn, Francisco Canizales-Ramirez, who transported heroin for a violent Mexican drug trafficking organization known as “H-2,” was sentenced by United States District Judge Carol Bagley Amon to 68 months’ imprisonment.  In April 2018, Canizales-Ramirez pleaded guilty to conspiring to distribute and possess with intent to distribute heroin.  Upon completion of his sentence, the defendant will be deported to Mexico.

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

“With today’s sentence, Canizales-Ramirez has been held responsible for his role as a smuggler for a large-scale Mexican drug trafficking organization that relies on criminals like the defendant to receive imported heroin and distribute it into our country,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners are responding to the opioid epidemic by vigorously investigating and prosecuting all traffickers, large and small.”  Mr. Donoghue extended his grateful appreciation to the United States Attorney’s Office for the Southern District of Ohio; Las Vegas District Office, Columbus District Office and New York Division of the U.S. Drug Enforcement Administration; Ohio State Highway Patrol; and a number of Ohio police departments, specifically, the Columbus Division of Police, Narcotics Bureau, Franklin County Sheriff’s Office, Westerville Police Department and Upper Arlington Police Department, for their assistance in the investigation and prosecution.

According to court filings and facts presented during court proceedings, the defendant agreed to receive and transport a kilogram of heroin on behalf of “H-2,” which is based in Nayarit and Sinaloa, Mexico.  The defendant subsequently received the heroin from a drug courier in Columbus, Ohio, and transported the drugs to Brooklyn for distribution.

The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section.  Assistant United States Attorneys Alicia N. Washington, G. Karthik Srinivasan, Ryan C. Harris, Craig R. Heeren and Michael P. Robotti are in charge of the prosecution. 

The Defendant:

FRANCISCO CANIZALES-RAMIREZ
Age: 35
Columbus, Ohio

E.D.N.Y. Docket No. 16-CR-658 (CBA)

Five members of La Mara Salvatrucha (also known as MS-13), Ruendy Jhonatan Hernandez-Vasquez, Jhonny Contreras, Reynaldo Lopez-Alvarado, Jeffrey Amador and Ronald Catalan, are scheduled to be arraigned this morning before United States District Judge Joseph F. Bianco, at the federal courthouse in Central Islip, New York.  The 75-count sixth superseding indictment was unsealed on August 8, 2018 and charges more than two dozen members of MS-13, a transnational criminal organization, with racketeering and related offenses. 

 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 charges.

The superseding indictment adds one new defendant, Hernandez-Vasquez, in connection with the October 10, 2016 murder of Javier Castillo in Freeport, and a conspiracy to distribute cocaine and marijuana.  The indictment also adds racketeering offenses and related charges of murder and conspiracy to commit murder in aid of racketeering against previously charged defendants Contreras, Lopez-Alvarado and Amador in connection with the November 19, 2015 murder of Cesar Rivera-Vasquez in Babylon, and racketeering offenses against Catalan for a June 23, 2009 shooting in Brentwood.  In total, 16 murders committed by MS-13 members have been charged in this superseding indictment and underlying indictments in this case.

In addition, INTERPOL issued a Red Notice for Hernandez-Vasquez relating to an arrest warrant for a murder he allegedly committed in El Salvador before he illegally entered the United States.

 “The MS-13’s mission to commit senseless and vicious acts of violence, terrorizing our communities in the process, is evident from the charges announced today,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will continue our unyielding pursuit to ensure that all members of this brutal gang are held accountable for every crime they have committed and that neighborhoods on Long Island are kept safe and free from gang violence.”  Mr. Donoghue expressed his sincere thanks to all the members of the FBI’s Long Island Gang Task Force for their work on the investigation.

 “MS-13 members feed on brutal, ruthless attacks threatening the safety of our communities,” stated FBI Assistant Director-in-Charge Sweeney.  “With such a violent gang tormenting the neighborhoods of Long Island, it is essential that we work closely with our fellow law enforcement agencies to continue to round up the individuals committing these violent crimes. The persistence of the FBI’s Long Island Gang Task Force will never weaken—our investigations into MS-13 will not cease until this gang is eradicated.” 

“The Suffolk County Police Department continues to work with all our partners and serves on the Long Island FBI Gang Task Force to eradicate MS-13,” stated SCPD Commissioner Hart.  “This indictment sends another strong message to MS-13 members that their actions will not be tolerated and justice will be served.  We applaud the Eastern District of New York for their ongoing and relentless commitment to prosecute violent gang members and will continue to work together to ensure that our communities are safe.”

“Today’s indictment of MS-13 member Ruendy Jhonatan Hernandez-Vasquez on charges of murder, conspiracy to commit murder and distribution of cocaine and marijuana clearly shows how the work of our law enforcement agencies is a constant in our relentless efforts to remove gang members from our streets,” stated NCPD Commissioner Ryder.  “Our determined and dedicated approach keeps our communities safe and I would like to thank all involved in the FBI Long Island Task Force for bringing these gang members to justice.”

2009 Attempted Murder of John Doe #1 in Brentwood

As set forth in court filings, including a detention memorandum filed earlier today, on June 23, 2009, Catalan and two other MS-13 members, all of whom were new members of the Brentwood Locos Salvatruchas clique, armed themselves with handguns and drove through Brentwood, hunting for rival gang members to attack and kill in order to increase their standing and solidify their membership in the MS-13 gang.  They observed a group of males on Barleau Street, whom they believed to be members of the Bloods street gang.  The MS-13 members got out of their car, approached the group and started firing.  John Doe #1 was struck in the armpit and back as he tried to run.  Catalan and the others ran back to the car and fled the scene.  John Doe #1 underwent surgery and ultimately survived the attack.

2015 Murder of Cesar Rivera-Vasquez in Babylon

Contreras, Lopez-Alvarado and Amador are charged in this indictment with the November 19, 2015 murder of Cesar Rivera-Vasquez, who was killed because the MS-13 members suspected that he was a member of a rival Mexican gang, Raza Loca.  The MS-13 members convinced the victim to go with them to a secluded area adjacent to the Long Island Railroad station in Babylon to smoke marijuana.  Once there, Contreras, Lopez-Alvarado, Amador and two other MS-13 members attacked Rivera-Vasquez with knives and a baseball bat before Lopez-Alvarado took a knife and cut the victim’s throat.  The MS-13 members buried his body near a large mound of dirt, and the body was not discovered until April 2018.   

2016 Murder of Javier Castillo in Freeport

Hernandez-Vasquez has been added to previously charged offenses in this case in connection with the October 10, 2016 murder of Javier Castillo.  The MS-13 members suspected Castillo of being a member of the rival 18th Street gang and convinced him to go with them to Cow Meadow Park in Freeport.  Once there, they attacked and killed him with a machete and buried his body in a shallow grave near a saltwater marsh.  Castillo’s body was not recovered until October 2017.  The sixth superseding indictment also adds marijuana and cocaine conspiracy charges against Hernandez-Vasquez.

In addition to the Rivera-Vasquez and Castillo murders, 14 other murders previously were charged in this case, including, the May 26, 2013 murder of Derrick Mayes, the May 28, 2013 murder of Keenan Russell, the July 14, 2014 murder of Jose Lainez-Murcia, the June 30, 2015 murder of Jonathan Cardona-Hernandez, the April 29, 2016 murder of Oscar Acosta, the June 3, 2016 murder of Jose Pena, the September 13, 2016 murders of Kayla Cuevas and Nisa Mickens, the October 13, 2016 murder of Dewann Stacks, the January 30, 2017 murder of Esteban Alvarado-Bonilla, and the April 11, 2017 murders of Justin Llivicura, Michael Lopez, Jorge Tigre and Jefferson Villalobos, as well as numerous attempted murders and assaults. 

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

Today’s superseding indictment is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13.  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, SCPD, NCPD, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Office, 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.

New Defendant:

RUENDY JHONATAN HERNANDEZ-VASQUEZ (“Solido”)
Age: 22
Roosevelt and Freeport, New York

Previously Indicted Defendants Facing Additional Charges:

JHONNY CONTRERAS (“Muerte” and “Reaper”)
Age:  25
Brentwood, New York

REYNALDO LOPEZ-ALVARADO (“Mente”)
Age:  26
Brentwood, New York

JEFFREY AMADOR (“Cruel”)
Age:  22
Brentwood, New York

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

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

 

Earlier today, in federal court in Brooklyn, six indictments and one criminal complaint were unsealed charging a total of 22 defendants with illegally bringing into the United States millions of dollars of Chinese-manufactured goods by smuggling them through ports of entry on the East and West Coasts.  The defendants were arrested this morning, and their initial appearances and arraignments are scheduled this afternoon before United States Magistrate Judge Lois Bloom.

The charges include conspiracy to traffic, and trafficking, in counterfeit goods; conspiracy to smuggle, and smuggling, counterfeit goods into the United States; money laundering conspiracy; immigration fraud and unlawful procurement of naturalization.  In addition, the government restrained nine real properties in Queens, Staten Island and Brooklyn, New York, belonging to the defendants.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Brian A. Benczkowski, Assistant Attorney General for the U.S. Department of Justice’s Criminal Division, Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York, and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the charges.

“As alleged, the defendants used many forms of deception to smuggle large quantities of counterfeit luxury brand goods from China into the United States, and then profited by distributing and selling the fake merchandise,” stated United States Attorney Donoghue.  “This Office, working with our law enforcement partners, is committed to securing our country’s ports of entry, as well as to protecting the integrity of intellectual property upon which free and fair international trade and markets depend.”  Mr. Donoghue extended his grateful appreciation to the HSI Intellectual Property Group and the HSI Border Enforcement Security Task Force and the NYPD.  Mr. Donoghue also extended his thanks to U.S. Customs and Border Protection, the New York State Police and the Brooklyn District Attorney’s Office for their assistance.

“The defendants allegedly smuggled millions of dollars of counterfeit luxury goods into our country, depriving companies of their valuable and hard-earned intellectual property,” stated Assistant Attorney General Benczkowski.  “The illegal smuggling of counterfeit goods poses a real threat to honest businesses, and I commend our federal prosecutors and partners at HSI and the NYPD for their outstanding work on this important investigation.  The Department of Justice is committed to holding accountable those who seek to exploit our borders by smuggling counterfeit goods for sale on the black market.”

“This investigation exposed the global nature of intellectual property crimes, allegedly being executed by those arrested today. Counterfeit goods manufactured and smuggled from China with a suggested value north of half a billion dollars, were intended to make its way into U.S. markets and into the hands of unsuspecting consumers,” said HSI Special Agent-in-Charge Melendez. “This investigation should be a crystal clear message that counterfeiting and intellectual property rights violations is anything but a victimless crime as it harms legitimate businesses, consumers and governments.”

“Today’s indictments demonstrate our resolve to ensure a level playing field for all, and serve as a reminder that selling fake goods is never a victimless crime,” stated NYPD Commissioner O’Neill.  “Everything about these activities undermines public trust. And the NYPD, in close collaboration with all of our local, state, and federal law enforcement partners, will continue to aggressively combat and prosecute the evasive practices of the individuals and companies who attempt to operate outside our laws and regulations.”

According to the court filings, the defendants played various roles in the trafficking of counterfeit goods manufactured in China, brought by ocean-going ships to the United States in 40-foot shipping containers, smuggled through ports of entry disguised as legitimate imports and distributed throughout the country.  The counterfeit goods included items such as fake Louis Vuitton and Tory Burch handbags, Michael Kors wallets, Hermes belts and Chanel perfume.  The defendants’ roles included:

Importers

Qi Feng Liang, Wo Qi Liu, Zhi Ming Zhang and Yu Ming Wong served as shipping container importers.  They arranged to smuggle counterfeit goods into the United States through the Port of New York/New Jersey and elsewhere.  They fraudulently used the names, addresses and other identifying information of legitimate import companies and falsified the descriptions of the containers’ contents on U.S. customs paperwork associated with the containers of counterfeit goods.  They used “burner” phone numbers and “burner” email accounts—obtained by using false or incomplete information—in order to conceal their true identities.  The counterfeit goods were transported by trucks to self-storage facilities in Brooklyn, Queens and Long Island, New York, where the goods were unloaded and stored.  Qi Feng Liang, Wo Qi Liu, Zhi Ming Zhang and Yu Ming Wong smuggled or attempted to smuggle 23 40-foot shipping containers into the country loaded with counterfeit items.  The estimated Manufacturers’ Suggested Retail Price of these items, had they been genuine, would have been more than $450 million.

Wholesale Distributors

Josstina Lin, Xue Wei Qu, Xi Quan Huang, Yun Lei Huang, Yun Wu Huang, Si Lung Chung, Le Wei Zheng, Xiao Ying Huang, Qiong Chan Mu, Ren Zhong Zhu, Cheng Xu Yu, Jin Hua Zhang, Jian Hua Zhu, Yong Lin Dong and Cai Ying Lin managed the receipt, storage and distribution of counterfeit goods smuggled into the United States by the importers.  They resold the counterfeit items to other wholesale and retail sellers in New York, California and elsewhere in the United States.

Domestic Shippers

Wei Mei Gao, Sheng Miao Xia and Jie Mei Chen used private shipping businesses they controlled to distribute the counterfeit goods smuggled into the United States by the importers and handled by the wholesale distributors.  The domestic shippers also facilitated payments by the wholesale and retail counterfeit goods sellers to the wholesale distributors.

As alleged in the indictments, some defendants additionally conspired to launder the proceeds from the sale of counterfeit goods, and others illegally concealed their involvement in the trafficking of counterfeit goods when applying for immigration benefits.

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

The government’s cases are being prosecuted by Assistant United States Attorneys William P. Campos and Temidayo Aganga-Williams of the Eastern District of New York, Special Assistant United States Attorney Robert Kaftal of the Brooklyn District Attorney’s Office and Senior Counsel James S. Yoon of the U.S. Department of Justice, Criminal Division Computer Crime and Intellectual Property Section (CCIPS).  Assistant United States Attorney Claire S. Kedeshian is handling the forfeiture aspect of this case.  The investigation was previously led by Senior Counsel Evan Williams of CCIPS.

The Department of Justice’s Task Force on Intellectual Property (IP Task Force) contributed to this case.  The IP Task Force is led by the Deputy Attorney General to combat the growing number of domestic and intellectual property crimes, to protect the health and safety of American consumers and to safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work.  To learn more about the IP Task Force, go to https://www.justice.gov/iptf.  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. 

The Defendants:

 QI FENG LIANG (also known as “Alex” and “Mike Sotire”)
Age: 34
Brooklyn, New York

WO QI LIU (also known as “Louis,” “Qi,” “Woqi” and “Big Elephant”)
Age: 43
Brooklyn, New York

ZHI MING ZHANG (also known as “Jordan” and “Four B”)
Age: 43
Staten Island, New York

JOSSTINA LIN (also known as “Tina”)
Age: 42
Brooklyn, New York

XUE WEI QU
Age: 51
Queens, New York

E.D.N.Y. Docket No. 18-CR-419 (WFK)

XI QUAN HUANG
Age: 58
Queens, New York

YUN LEI HUANG
Age: 32
Queens, New York

YUN WU HUANG
Age: 34
Queens, New York

WEI MEI GAO
Age: 35
Queens, New York

SHENG MIAO XIA
Age: 44
Queens, New York

E.D.N.Y. Docket No. 18-CR-408

SI LUNG CHUNG (also known as “Allan”)
Age: 42
New York, New York

LE WEI ZHENG
Age: 42
New York, New York

E.D.N.Y. Docket No. 18-CR-407 (CBA)

XIAO YING HUANG (also known as “Linda”)
Age: 53
Nassau County, New York

QIONG CHAN MU (also known as “Rosanna”)
Age: 26
Nassau County, New York

REN ZHONG ZHU
Age: 31
Nassau County, New York

E.D.N.Y. Docket No. 18-CR-423 (DLI)

YONG LIN DONG
Age: 43
Queens, New York

CAI YING LIN
Age: 43
Queens, New York

CHENG XU YU (also known as “Vic”)
Age: 29
Queens, New York

JIAN HUA ZHU
Age: 52
Queens, New York

JIN HUA ZHANG
Age: 55
Queens, New York

E.D.N.Y. Docket No. 18-CR-396 (JBW)

JIE MEI CHEN (also known as “Jenny”)
Age: 33
Queens, New York

E.D.N.Y. Docket No. 18-CR-409 (BMC)

YU MING WONG
Age: 36
Queens, New York

E.D.N.Y. Docket No. 18-MJ-752

Earlier today, six indictments and one criminal complaint were unsealed in federal court in Brooklyn, New York, charging a total of 22 defendants with illegally bringing into the United States millions of dollars of Chinese-manufactured goods by smuggling them through ports of entry on the East and West Coasts.  One defendant is also charged with unlawful procurement of naturalization.  Twenty-one defendants were arrested this morning, and their initial court appearances and arraignments are scheduled before U.S. Magistrate Judge Lois Bloom.

The charges include conspiracy to traffic, and trafficking, in counterfeit goods; conspiracy to smuggle, and smuggling, counterfeit goods into the United States; money laundering conspiracy; immigration fraud and unlawful procurement of naturalization.  In addition, the government restrained nine real properties in Queens, Staten Island and Brooklyn, New York belonging to the defendants.

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, Special Agent in Charge Angel M. Melendez of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) New York and Commissioner James P. O’Neill of the New York City Police Department (NYPD), announced the charges.

“The defendants allegedly smuggled millions of dollars of counterfeit luxury goods into our country, depriving companies of their valuable and hard-earned intellectual property,” said Assistant Attorney General Benczkowski.  “The illegal smuggling of counterfeit goods poses a real threat to honest businesses, and I commend our federal prosecutors and partners at HSI and the NYPD for their outstanding work on this important investigation.  The Department of Justice is committed to holding accountable those who seek to exploit our borders by smuggling counterfeit goods for sale on the black market.”

“As alleged, the defendants used many forms of deception to smuggle large quantities of counterfeit luxury brand goods from China into the United States, and then profited by distributing and selling the fake merchandise,” said U.S. Attorney Donoghue.  “This Office, working with our law enforcement partners, is committed to securing our country’s ports of entry, as well as to protecting the integrity of intellectual property upon which free and fair international trade and markets depend.”           

“This investigation exposed the global nature of intellectual property crimes, allegedly being executed by those arrested today.  Counterfeit goods manufactured and smuggled from China with a suggested value close to half a billion dollars, were intended to make its way into U.S. markets and into the hands of unsuspecting consumers,” said HSI Special Agent-in-Charge Melendez.  “This investigation should be a crystal clear message that counterfeiting and intellectual property rights violations is anything but a victimless crime as it harms legitimate businesses, consumers and governments.”

According to the court filings, the defendants played various roles in the trafficking of counterfeit goods manufactured in China, brought by ocean-going ships to the United States in 40-foot shipping containers, smuggled through ports of entry disguised as legitimate imports and distributed throughout the country.  The counterfeit goods included items such as fake Louis Vuitton and Tory Burch handbags, Michael Kors wallets, Hermes belts and Chanel perfume.  The defendants’ roles included:

Importers

Qi Feng Liang, Wo Qi Liu, Zhi Ming Zhang and Yu Ming Wong served as shipping container importers.  They arranged to smuggle counterfeit goods into the United States through the Port of New York/New Jersey and elsewhere.  They fraudulently used the names, addresses and other identifying information of legitimate import companies and falsified the descriptions of the containers’ contents on U.S. customs paperwork associated with the containers of counterfeit goods.  They used “burner” phone numbers and “burner” email accounts—obtained by using false or incomplete information—in order to conceal their true identities.  The counterfeit goods were transported by trucks to self-storage facilities in Brooklyn, Queens and Long Island, New York, where the goods were unloaded and stored.  Qi Feng Liang, Wo Qi Liu, Zhi Ming Zhang and Yu Ming Wong smuggled or attempted to smuggle 23 40-foot shipping containers into the country loaded with counterfeit items.  The estimated Manufacturers’ Suggested Retail Price of these items, had they been genuine, would have been more than $450 million. 

Wholesale Distributors

Josstina Lin, Xue Wei Qu, Xi Quan Huang, Yun Lei Huang, Yun Wu Huang, Si Lung Chung, Le Wei Zheng, Xiao Ying Huang, Qiong Chan Mu, Ren Zhong Zhu, Cheng Xu Yu, Jin Hua Zhang, Jian Hua Zhu, Yong Lin Dong and Cai Ying Lin managed the receipt, storage and distribution of counterfeit goods smuggled into the United States by the importers.  They resold the counterfeit items to other wholesale and retail sellers in New York, California and elsewhere in the United States.

Domestic Shippers

Wei Mei Gao, Sheng Miao Xia and Jie Mei Chen used private shipping businesses they controlled to distribute the counterfeit goods smuggled into the United States by the importers and handled by the wholesale distributors.  The domestic shippers also facilitated payments by the wholesale and retail counterfeit goods sellers to the wholesale distributors. Jie Mei Chen is also charged with unlawful procurement of naturalization.

As alleged in the indictments, some defendants additionally conspired to launder the proceeds from the sale of counterfeit goods, and others illegally concealed their involvement in the trafficking of counterfeit goods when applying for immigration benefits.

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

The investigation was conducted by HSI Intellectual Property Group and HSI Border Enforcement Security Task Force and the NYPD Border Security Enforcement Task Force.  Assistance was provided by U.S. Customs and Border Protection, the New York State Police and the Brooklyn District Attorney’s Office.  The government’s cases are being prosecuted by Senior Counsel James S. Yoon of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS), Assistant U.S. Attorneys William P. Campos and Temidayo Aganga-Williams of the Eastern District of New York and Special Assistant U.S. Attorney Robert Kaftal of the Brooklyn District Attorney’s Office.  Assistant U.S. Attorney Claire S. Kedeshian is handling the forfeiture aspect of this case.  The investigation was previously led by Senior Counsel Evan Williams of CCIPS.

The Department of Justice’s Task Force on Intellectual Property (IP Task Force) contributed to this case.  The IP Task Force is led by the Deputy Attorney General to combat the growing number of domestic and intellectual property crimes, to protect the health and safety of American consumers and to safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work.  To learn more about the IP Task Force, go to https://www.justice.gov/iptf. 

 

The Defendants:

QI FENG LIANG (aka “Alex” and “Mike Sotire”)
Age: 34
Brooklyn, New York

WO QI LIU (aka “Louis,” “Qi,” “Woqi” and “Big Elephant”)
Age: 43
Brooklyn, New York

ZHI MING ZHANG (aka “Jordan” and “Four B”)
Age: 43
Staten Island, New York

JOSSTINA LIN (aka “Tina”)
Age: 42
Brooklyn, New York

XUE WEI QU
Age: 51
Queens, New York

E.D.N.Y. Docket No. 18-CR-419 (WFK)

 

XI QUAN HUANG
Age: 58
Queens, New York

YUN LEI HUANG
Age: 32
Queens, New York

YUN WU HUANG
Age: 34
Queens, New York

WEI MEI GAO
Age: 35
Queens, New York

SHENG MIAO XIA
Age: 44
Queens, New York 

E.D.N.Y. Docket No. 18-CR-408

 

SI LUNG CHUNG (aka “Allan”)
Age: 42
New York, New York

LE WEI ZHENG
Age: 42
New York, New York

E.D.N.Y. Docket No. 18-CR-407 (CBA)

 

XIAO YING HUANG (aka “Linda”)
Age: 53
Nassau County, New York

QIONG CHAN MU (aka “Rosanna”)
Age: 26
Nassau County, New York

REN ZHONG ZHU
Age: 31
Nassau County, New York

E.D.N.Y. Docket No. 18-CR-423 (JBW)

 

YONG LIN DONG
Age: 43
Queens, New York

CAI YING LIN
Age: 43
Queens, New York

CHENG XU YU (aka “Vic”)
Age: 29
Queens, New York 

JIAN HUA ZHU
Age: 52
Queens, New York

JIN HUA ZHANG
Age: 55
Queens, New York

E.D.N.Y. Docket No. 18-CR-396 (JBW)

 

JIE MEI CHEN (aka “Jenny”)
Age: 33
Queens, New York

E.D.N.Y. Docket No. 18-CR-409 (BMC)

 

YU MING WONG
Age: 36
Queens, New York

E.D.N.Y. Docket No. 18-MJ-752

Earlier today, in federal court in Brooklyn, Ronald “Ronnie G” Giallanzo, an acting captain in the Bonanno organized crime family of La Cosa Nostra, was sentenced by Chief United States District Judge Dora L. Irizarry to a total of 14 years’ imprisonment for racketeering conspiracy, including predicate acts of extortionate extension and collection of credit, as well as a related violation of the conditions of supervised release imposed for a prior racketeering conviction.  As part of his plea agreement with the government, the Court also ordered Giallanzo to pay $1.25 million in forfeiture and sell his mansion in Howard Beach, Queens, which was constructed using the criminal proceeds of the defendant’s loansharking business.  Giallanzo was also ordered to pay $268,000 in restitution to his victims.  Giallanzo pleaded guilty in March and June 2018.

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

“Today’s sentence punishes a violent mobster for running a massive loansharking operation that victimized a community and earned him millions in illicit profits,” stated United States Attorney Donoghue.  “Giallanzo is headed to prison, forced to sell his mansion built on ill-gotten proceeds and held responsible for brazenly committing many of his crimes from behind bars while serving another organized crime-related sentence.  Together with our law enforcement partners, this Office will continue to vigorously investigate and prosecute members and associates of organized crime.”  Mr. Donoghue thanked the Queens County District Attorney’s Office, the New York City Police Department and the U.S. Probation Department of the Eastern District of New York for their assistance in the investigation.

“Members of these mafia families continue to prey upon the people of their communities, lining their pockets on the backs of victims through intimidation and acts of violence,” stated FBI Assistant Director-in-Charge Sweeney.  “While these criminals lead lavish lifestyles, their victims struggle through years of financial distress and the constant fear of what will happen to them when they can no longer pay. The FBI New York Joint Organized Crime Task Force has been doggedly tracking members of the mafia for decades, and our work to round them up and put them in prison will not stop.”

Between 1998 and 2017, including eight years while incarcerated on a prior racketeering conviction and for nearly two years while on supervised release, Giallanzo ran a loansharking operation in which he loaned millions of dollars in cash at exorbitant weekly interest rates.  Giallanzo then directed a crew of Bonanno family soldiers and associates to  enforce the collection of the debts through violence and threats of physical injury.  Giallanzo used more than $1 million of the extortion proceeds to purchase, reconstruct and furnish a mansion, which featured five bedrooms and five bathrooms, radiant heated floors, high-end appliances, a built-in aquarium, wine cellar, home gym, three kitchens and a salt water pool with a waterfall.

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

Defendant Sentenced Today:

RONALD GIALLANZO
Age:  48
Queens, New York

E.D.N.Y. Docket No. 17-CR-155 (S-1) and 06-CR-181 (DLI)

Defendants Previously Sentenced:

EVAN GREENBERG (also known as “The Jew”)
Age:  46
Queens, New York

RICHARD HECK (also known as “Richie”)
Age:  46
Queens, New York

MICHAEL HINTZE (also known as “Mike”)
Age:  52
Queens, New York

ROBERT TANICO (also known as “Chippy” and “Chip”)
Age:  50
Queens, New York

ANTHONY CUMINALE (also known as “Cubo”)
Age:  28
Queens, New York

E.D.N.Y. Docket No. 17-CR-155 (S-1) and 06-CR-181 (DLI)

Defendants Pending Sentence:

MICHAEL PADAVONA (also known as “Mike”)
Age:  50
Queens, New York

MICHAEL PALMACCIO (also known as “Mike”)
Age:  47
Queens, New York

CHRISTOPHER BOOTHBY (also known as “Bald Chris”)
Age:  39
Brooklyn, New York

NICHOLAS FESTA (also known as “Pudgie”)
Age:  40
Oceanside, New York

ROBERT PISANI (also known as “Rob”)
Age:  45
Queens, New York

ANGELO MOCCIA
Age:  44
Queens, New York

E.D.N.Y. Docket No. 17-CR-155 (S-1) (DLI)

An indictment was unsealed today in federal court in Central Islip charging Joseph Zanco with transportation and possession of child pornography.  The charges relate to images and videos of child pornography in Zanco’s Google account and on electronic devices found in his residence when members of law enforcement executed a search warrant.  Zanco was arrested today and will be arraigned this afternoon before United States Magistrate Judge Anne Y. Shields.

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 charges.

“As alleged, Zanco possessed and transported hundreds of images of child pornography, crimes that contribute to the victimization of minor children, while he was employed in a position of trust as a teacher,” stated United States Attorney Donoghue.  “The protection of innocent children is a priority for this Office and our law enforcement partners.  We will continue to make every effort to ensure that those who contribute to the victimization of children will be brought to justice.”  Mr. Donoghue extended his grateful appreciation to ICE-HSI’s Child Exploitation Group for its investigative work and assistance. 

“This case is particularly troubling because the defendant allegedly committed these crimes while employed as a teacher,” stated HSI Special Agent-in-Charge Melendez.  “HSI actively works with our law enforcement partners in the shared fight against those who are engaged in the spread of this content, especially those who have been entrusted with the education of our youth.”

According to court filings, beginning on April 13, 2018, Zanco, a teacher at Massapequa High School, began uploading hundreds of images of child pornography to the Google Drive storage feature of his Google account.  Google, in accordance with its policies and federal law, flagged these uploads, suspended Zanco’s account and notified law enforcement.  Thereafter, law enforcement obtained search warrants for Zanco’s residence and his Google account.  The search of the Zanco’s Google account uncovered child pornography, and the search of his laptop computer and cell phone revealed additional images and videos of child pornography. 

If convicted of the transportation of child pornography count, Zanco faces a mandatory minimum of five years’ imprisonment and a maximum of 20 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 Long Island Criminal Division.  Assistant United States Attorney Michael R. Maffei is in charge of the prosecution.

The Defendant:

JOSEPH M. ZANCO
Age:  43
Massapequa, New York

E.D.N.Y. Docket No. 18-CR-412 (JFB)

Earlier today at the federal courthouse in Central Islip, United States District Judge Joanna Seybert sentenced Pedro Benitez to 130 months’ imprisonment for his role in the September 20, 2017 gunpoint robbery of the Queens County Savings Bank in Fresh Meadows, Queens.  Benitez had previously pleaded guilty on March 20, 2018 to armed bank robbery and brandishing a firearm in furtherance of a crime of violence.  The sentence also included a term of three years of supervised release and $71,395 in restitution.

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

On September 20, 2017, Benitez entered the Queens County Savings Bank, ordered customers and employees of the bank to the floor at gunpoint and gained access to the area behind the tellers’ counter.  Once in the tellers’ area, Benitez stole over $50,000 in cash that had been delivered to the bank earlier in the day and was laid out on a table in a room adjacent to the teller’s area.  At his guilty plea, Benitez admitted that he had also participated in three additional robberies in Nassau County during the summer of 2017.  In each of those robberies, Benitez was the gunman who entered the banks and robbed the employees of the banks’ cash.  In total, Benitez and the crew stole over $70,000 from four banks between July and September of 2017.     

“Pedro Benitez thought committing armed bank robberies was a good way to get money, but he learned that it is just a good way to end up in prison,” stated United States Attorney Donoghue.  “The cooperative efforts of federal and local law enforcement agencies brought this crew to justice and prevented them from endangering other bank employees, customers, law enforcement officers and innocent bystanders.”

 “The value of a dollar was worth more to Benitez than the value of someone’s safety. For the sake of quick and easy cash, Benitez placed bank customers and employees in grave danger, displaying a gun at each robbery,” stated FBI Assistant Director-in-Charge Sweeney.  “After stealing over $70,000 with his crew, Benitez may have believed his actions proved him successful, but his prison sentence clearly proves otherwise. The FBI New York Joint Violent Crimes Task Force will rigorously investigate bank robberies, ensuring these robbers reap what they sow.”

 “The arrest and conviction of defendant Pedro Benitez is a classic example of the effective cooperation and information sharing between numerous law enforcement agencies,” stated NCPD Commissioner Ryder.  “Through our diligence, we have taken a violent felon off the streets, thus making our communities safer.  Defendant Benitez showed no regard for the safety of our residents and will now spend many years behind bars.”

Two other members of the bank robbery crew previously pled guilty and are awaiting sentence.  Two additional members of the robbery crew are 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:

PEDRO BENITEZ
Age:  21
Far Rockaway, New York

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

Earlier today, in federal court in Brooklyn, Peter Persaud, a former personal banker at JP Morgan Chase Bank, was sentenced by United States District Judge Eric N. Vitaliano to 48 months’ imprisonment for aggravated identity theft in connection with access device fraud.  Persaud pleaded guilty to these charges on March 7, 2017. 

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

“Persaud abused his position by victimizing unsuspecting customers, and will now pay the penalty for his fraudulent conduct,” stated United States Attorney Donoghue.  “This Office will continue to work closely with our law enforcement and industry partners to vigorously prosecute those who undermine the integrity of the financial system.”  Mr. Donoghue expressed his grateful appreciation to the Federal Bureau of Investigation, New York Field Office and the New York City Police Department, which jointly investigated the case.  

According to the publicly filed documents and facts presented at sentencing, from 2011 to 2015, Persaud sold personal identifying information and account information that belonged to bank customers to others, or used it himself, in order to make unauthorized withdrawals from the accounts.  Persaud’s scheme was exposed when he sold this information to a confidential informant in 2014 and to an undercover law enforcement officer in 2015.  Persaud told the undercover officer that he had to “take it easy” because Chase might notice he had accessed all of the bank accounts that “got hit.”  Persaud offered to sell the undercover officer identifying information for a client’s bank account that contained more than $180,000.  

The case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys Tiana Demas and Andrey Spektor are in charge of the prosecution.

The Defendant:

PETER PERSAUD
Age: 28
Queens, New York

E.D.N.Y. Docket No. 15-CR-0462 (ENV)

A 10-count superseding indictment was unsealed today in federal court in Brooklyn charging David Wickham with distributing fentanyl thereby causing the deaths of a man and a woman, distributing heroin and fentanyl thereby causing serious bodily injury to a man, and being a felon in possession of a firearm.  The indictment charges Katelyn Trampler with possessing with intent to distribute, conspiring to distribute and distributing fentanyl and heroin.  Wickham and newly added defendant Crystal Roberts are also charged with money laundering conspiracy.  Roberts was arrested today and was ordered detained.  Wickham and Trampler were previously arrested and are currently in custody.  The defendants were arraigned this afternoon before United States District Judge Allyne R. Ross.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Angel M. Melendez, Special Agent-in-Charge, United States Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York, and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the charges.

“As alleged, Wickham’s distribution of dangerous opioids resulted in the deaths of a man and a woman and the near-death of a second man,” stated United States Attorney Donoghue.  “The defendants sought to profit from other people’s addictions and put their own greed ahead of the public’s health and safety.  This Office and our law enforcement partners will not rest until drug dealers and their associates are stopped and brought to justice for their crimes.”  Mr. Donoghue expressed his grateful appreciation to the United States Bureau of Alcohol, Tobacco, Firearms and Explosives for its assistance in the investigation. 

“These alleged criminals operated out of greed with no regard for the safety, or even life, of those they dealt fentanyl,” stated HSI Special Agent-in-Charge Melendez.  “HSI understands the seriousness of the opioid epidemic and will continue to work with our partners to investigate and arrests those dealing this highly addictive and deadly drug within our communities.” 

“The NYPD’s efforts to combat the opioid crisis took a step forward today with this indictment,” stated NYPD Commissioner O’Neill.  “Our detectives, along with the professionals at HSI and the Eastern District of New York, will stop at nothing to keep New Yorkers safe by identifying, aggressively investigating and arresting anyone who traffics in illegal narcotics and the violence so often associated with such criminal behavior.” 

As alleged in the superseding indictment and other court filings, between January 2017 and February 2018, Wickham and Trampler distributed fentanyl and heroin.  On several occasions, Wickham represented the narcotics to be heroin—a much less potent narcotic—when he was actually distributing fentanyl.  On or about July 30, 2017, Wickham distributed fentanyl which resulted in the overdose deaths of a man and a woman.  Later, on December 13, 2017, Wickham distributed heroin and fentanyl, which resulted in the overdose of a man, who was seriously injured but revived with Narcan.  At the time of his arrest on February 27, 2018, Wickham, a convicted felon, possessed a Cobra Enterprises FS380 semi-automatic pistol. Between approximately October 2017 and February 2018, Wickham and Roberts conspired to wire money from the United States to Panama to further their narcotics trafficking and conceal the true nature and ownership of the drug money.

As part of the government’s investigation, agents recovered cellular telephones from the defendants, including Roberts’ telephone which contained several videos.  In one video dated February 20, 2018, after speaking with a customer Roberts and Wickham engaged in the following conversation:

ROBERTS:           He’s gonna end up dying.  He’s gonna kill himself. 

WICKHAM:         Yeah, you see it in his face?

ROBERTS:           Yup.  You ever known, you ever seen death in the face?

Later in the conversation, Roberts stated: “I’m saying before he tries to kill himself, he’s going to give me some bread.  I don’t have time for that.  You can kill yourself if you want to, I don’t want you to, but this is the game we play, and you’re going to have to give me some bread cause you took too much and your man’s took too much.” 

According to the Centers for Disease Control and Prevention (CDC) and the Department of Justice, drug overdoses have become the leading cause of death for Americans under the age of 50.  The increase in overdose deaths has been driven in large part by fentanyl—a drug that has been described as 50 to 100 times more potent than morphine.  In New York, from 2014 to 2015, fentanyl overdose deaths rose 135 percent, while heroin overdose deaths rose 28 percent.  According to the CDC’s latest report analyzing overdose deaths nationally, in 2016 synthetic opioid deaths—which includes fentanyl—more than doubled from 9,580 in 2015 to 19,413 in 2016.   

The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, Wickham faces a mandatory minimum sentence of 20 years’ imprisonment for both the death-resulting and the serious bodily injury-resulting charges and up to life imprisonment.  Roberts faces up to 20 years’ imprisonment and Trampler up to 40 years’ imprisonment.  

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

The Defendants:

DAVID WICKHAM (also known as “Wick” and “Dogg”)
Age: 35
Queens, New York

KATELYN TRAMPLER
Age: 27
Queens, New York

CRYSTAL ROBERTS (also known as “Crystal Wickham”)
Age: 28
Queens, New York

E.D.N.Y. Docket No. 18-CR-72 (S-1) (ARR)

A three-count indictment was unsealed today in federal court in Brooklyn charging Donville Inniss, a former member of the Parliament of Barbados and the Minister of Industry, International Business, Commerce and Small Business Development of Barbados, with conspiracy to launder money and money laundering.  The charges stem from Inniss’s acceptance of bribes from a Barbadian insurance company in 2015 and 2016 when he was a public official.  Inniss was arrested Friday and was arraigned today before United States Magistrate Judge Julie Sneed in the Middle District of Florida at the federal courthouse in Tampa.  Inniss was released on a $50,000 bond.

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

According to the indictment, between August 2015 and April 2016, Inniss engaged in a scheme to accept approximately $36,000 in bribes from high-level executives of an insurance company headquartered in Barbados (“the Barbados Company”) and launder that money through the United States.  In exchange for the bribes, Inniss leveraged his position as the Minister of Industry to enable the Barbados Company to obtain two government contracts.  Inniss concealed the bribes by arranging to receive them through a dental company and a bank located in Elmont, New York.  Barbados Company executives transferred the funds to the dental company using an invoice falsely claiming that the payments were for consulting services.  During the time of the charged conspiracy, Inniss was a legal permanent resident of the United States residing in Tampa, Florida and Barbados. 

“As charged in the indictment, Inniss abused his position of trust as a government official by taking bribes from a Barbadian company, then laundered the illicit funds through a bank and a dental company located in the Eastern District of New York,” stated United States Attorney Donoghue.  “The Department of Justice will continue to hold accountable corrupt government officials here or abroad who use the U.S. financial system to facilitate their criminal conduct.”

“Donville Inniss allegedly used the U.S. financial system to launder bribes he received while serving as a government official in Barbados,” said Assistant Attorney General Benczkowski.  “These charges demonstrate the commitment of the Department and our law enforcement partners to hold accountable anyone who seeks to use our financial system to promote or launder the corrupt proceeds of their crimes.”

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

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

The Defendant:

DONVILLE INNISS
Age:  52
Barbados

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

The former Minister of Industry of Barbados was arrested Friday and had his initial court appearance today in connection with an indictment charging him with laundering bribes that he allegedly received from a Barbadian insurance company in exchange for official actions he took to secure government contracts for the insurance company.  
 
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 and Assistant Director-in-Charge William F. Sweeney Jr. of the FBI New York Field Office made the announcement.

Donville Inniss, 52, a U.S. legal permanent resident who resided in Tampa, Florida, and Barbados, was charged in an indictment with one count of conspiracy to launder money and two counts of money laundering.  The indictment was returned under seal by a federal grand jury sitting in Brooklyn, New York, on March 15.

“Donville Inniss allegedly used the U.S. financial system to launder bribes he received while serving as a government official in Barbados,” said Assistant Attorney General Benczkowski.  “These charges demonstrate the commitment of the Department and our law enforcement partners to hold accountable anyone who seeks to use our financial system to promote or launder the corrupt proceeds of their crimes.” 

“As charged in the indictment, Inniss abused his position of trust as a government official by taking bribes from a Barbadian company, then laundered the illicit funds through a bank and a dental company located in the Eastern District of New York,” said U.S. Attorney Donoghue.  “The Department of Justice will continue to hold accountable corrupt government officials here or abroad who use the U.S. financial system to facilitate their criminal conduct.”

The indictment alleges that in 2015 and 2016, Inniss took part in a scheme to launder into the United States approximately $36,000 in bribes that he received from high-level executives of a Barbadian insurance company.  At the time, Inniss was a member of the Parliament of Barbados and the Minister of Industry, International Business, Commerce, and Small Business Development of Barbados.  In exchange for the bribes, Inniss leveraged his position as the Minister of Industry to enable the Barbadian insurance company to obtain two government contracts.  To conceal the bribes, Inniss arranged to receive them through a U.S. bank account in the name of a dental company, which had an address in Elmont, New York.

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

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

Trial Attorney Gerald M. Moody Jr. of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Sylvia Shweder of the Eastern District of New York are prosecuting the case.  The Criminal Division’s Office of International Affairs provided significant assistance in this matter.

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

 

Earlier today, Melvi Amador-Rios, Santos Amador-Rios, Yan Carlos Ramirez and Antonio Salvador were charged in a four-count indictment with assault, murder conspiracy and attempted murder in-aid-of racketeering, along with a related firearms offense.  The defendants were arrested today and will be arraigned this afternoon before United States Magistrate Judge Marilyn D. Go at the federal courthouse in Brooklyn.

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

“As alleged, the defendants are members of MS-13, an international gang known for its culture of violence and murder,” stated United States Attorney Donoghue.  “They used their positions to direct, instruct and assist lower-level gang members to shoot and kill a suspected rival on the streets of Jamaica, Queens.  We will continue to work with our law enforcement partners to hold accountable those who spread fear in our communities by participating in such acts of violence.”  Mr. Donoghue thanked the Queens District Attorney’s Office for its assistance in the investigation.

“Since January 2016, the FBI Safe Streets Gang Task Forces in Queens and Long Island have arrested more than 45 of the most violent MS-13 members in the area and charged them with murder, attempted murder, arson, and assault,” stated FBI Assistant Director-in-Charge Sweeney.  “Today’s operation is a continuation of this coordinated and sustained effort.  The task force will not stand by while this gang engages in meaningless violence in an attempt to use fear to poison and control our communities.”

“Through close collaboration with our law enforcement partners at the FBI and the Eastern District of New York, the NYPD will continue to conduct aggressive, precisely-directed investigations into criminal groups like this,” stated NYPD Commissioner O’Neill.  “Such cases result in strong indictments that ultimately send these criminals to prison. And this important work stanches the violence – which is an essential step toward healing gang-plagued communities and fulfilling our duty to work with and protect all New Yorkers, in every neighborhood.”

According to court filings, the defendants are members of the La Mara Salvatrucha, or MS-13.  Melvi Amador-Rios is the leader of the Centrales Locos Salvatruchas (CLS) clique of MS-13, which operates in Jamaica, Queens.  On October 22, 2016, Amador-Rios directed a low-level CLS member, known as a “chequeo,” to obtain a firearm from his brother, Santos Amador-Rios, and use the firearm to murder a rival gang member.  The CLS chequeo obtained the firearm and enlisted two other CLS chequeos to assist in the murder.  Yan Carlos Ramirez and Antonio Salvador instructed the three CLS chequeos how to use the firearm to carry out the murder.  During the early morning hours of October 23, 2016, in Jamaica, Queens, the three CLS chequeos confronted the suspected member of the rival 18th Street gang, beat the victim and shot him in the head.  The victim survived the attack, but is now a paraplegic.

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

Today’s indictment is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent international criminal organization.  The MS-13’s leadership is based in El Salvador and Honduras, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America.  Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York.  A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders and assaults.  Since 2010, this Office has obtained indictments charging MS-13 members with carrying out more than 45 murders in the district, and has convicted dozens of MS-13 leaders and members in connection with those murders.  These prosecutions are the product of investigations led by our law enforcement partners including the FBI’s Safe Streets Task Force, comprising agents and officers of the FBI and NYPD.

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

The Defendants:

MELVI AMADOR-RIOS (also known as “Letal” and “Pinky”)
Age: 27
Briarwood, New York

SANTOS AMADOR-RIOS (also known as “Rayo”)
Age: 31
Jamaica, New York

YAN CARLOS RAMIREZ (also known as “Demente”)
Age: 28
Jamaica, New York

ANTONIO SALVADOR (also known as “Pantro”)
Age: 30
Jamaica, New York

E.D.N.Y. Docket No. 18-CR-398 (RRM)

Earlier today, in federal court in Brooklyn, Michael Foder, a former detective employed by the New York City Police Department (NYPD) at the time of the charged conduct, pleaded guilty to one count of perjury in connection with false statements he made under oath during a criminal proceeding.  The guilty plea was entered before United States District Judge Pamela K. Chen.  When sentenced, Foder faces a statutory maximum of five years in prison and a fine of up to $250,000.  Foder was arrested in February 2018 and resigned from the NYPD in August 2018.

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

“The defendant admitted that he falsely testified at a pre-trial proceeding in federal court, a gross violation of the oath he took as a sworn witness and as a law enforcement officer who must be held to the highest standard of integrity,” stated United States Attorney Donoghue.  “As demonstrated by Foder’s prosecution, this Office and our law enforcement partners are committed to holding accountable those who fail to respect the bedrock principle of truthful testimony upon which our justice system must depend.”

“As a former sworn NYPD detective, Michael Foder understood the solemnity of taking an oath,” stated FBI Assistant Director-in-Charge Sweeney.  “Whether vowing to protect his community or vowing to tell the whole truth, both oaths held mutual significance. Yet, Foder blatantly disregarded this by committing perjury during a criminal proceeding. Upholding the rule of law, the FBI will equally investigate those who break federal laws, irrespective of their profession.”

“It is imperative that New Yorkers are able to trust their police to tell the truth,” stated NYPD Commissioner O’Neill.  “Police officers swear an oath to hold themselves accountable to the highest standards of ethics and integrity. And when they intentionally violate that promise, they tarnish the reputation of all good cops, make their jobs much more difficult, and erode the trust we have worked so hard to earn in all of our communities.”

According to court filings and facts presented during the guilty plea proceeding, Foder, then assigned to the 70th Precinct in Brooklyn, falsely testified under oath at a December 29, 2016 hearing in connection with a federal prosecution about when and how he showed photographs of two robbery suspects to a victim of a carjacking.  Following the hearing, the government identified discrepancies in the photo array identifications, including when the identifications had occurred.  Handwritten notations indicated that the photo arrays had been completed on November 27, 2015 and February 14, 2016, as Foder had testified.  However, the photographs of fillers depicted in the photo arrays had been taken on dates subsequent to the dates Foder claimed he had shown them to the victim witness.  Foder acknowledged during his plea allocution that his testimony about when he had administered the photo arrays was false.

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

The Defendant:

MICHAEL FODER
Age:  42
Staten Island, NY

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

An eight-count indictment was unsealed today in federal court in Central Islip charging John Drago, the owner and compliance officer of the Kayla Companies, with multiple criminal violations of the Bank Secrecy Act, including failure to file required Currency Transaction Reports (“CTRs”) for customers receiving in excess of $10,000.  Drago is also charged in the indictment with failure to collect and pay taxes.  Drago was arrested today, and arraigned this afternoon before United States Magistrate Judge A. Kathleen Tomlinson.  Drago was released on a $500,000 bond.    

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Justin Campbell, Assistant Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS-CI), announced the indictment.

“As alleged in the indictment, Drago flagrantly violated his obligations as the owner of check cashing businesses to follow federal regulations designed to prevent such businesses from being used to facilitate money laundering; he also failed to fulfill his responsibility as an employer to pay the proper taxes,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners are committed to ensuring the integrity of financial institutions, including check cashing businesses.”

“Check cashers provide a valuable service to our community,” stated IRS-CI Assistant Special Agent-in-Charge Campbell.  “However, when they commit tax fraud, IRS-CI will aggressively investigate and seek prosecution of those involved.”  

 According to the indictment, Drago owned and operated check cashing businesses on Long Island, including Kayla Check Cashing Corp., North Island Check Cashing Corp., South Island Check Cashing Corp., East Island Check Cashing Corp., Bay Shore Check Cashing Corp. and Brentwood Check Cashing Corp. (collectively, the “Kayla Companies”).  The operation was administered from the offices of Kayla Check Cashing Corp. in Farmingdale, New York.  Hogwarts, Inc., was a management company owned by Drago through which employees of the Kayla Companies were paid.

Financial institutions are required to file a CTR for each transaction in cash in excess of $10,000.  In addition, a CTR is required to be filed by the financial institution when multiple checks, the total value of which exceeds $10,000, are cashed in a single day.

As alleged in the indictment, from January 2010 to October 31, 2013, Drago instructed employees to cash multiple checks in excess of $10,000 in a single day for certain customers without filing required CTRs.  Between August 1, 2010 and October 31, 2013, Drago directed employees to deposit and cash, over the course of several days, checks that had been submitted together on a single day in amounts in excess of $10,000.  Drago also instructed employees to tell certain customers who presented individual checks in amounts exceeding $10,000 to return with multiple checks in amounts that were less than $10,000 to avoid the reporting requirement for such financial transactions.  As a result of these practices, Drago is also charged with failing to file CTRs and failing to develop, implement and maintain an effective anti-money laundering program for the Kayla Companies.

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

The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, Drago faces a maximum sentence of 10 years’ imprisonment.

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

The Defendant:

JOHN DRAGO
Age:  54
St. James, New York

E.D.N.Y. Docket No. 18-CR-394 (SJF)

Earlier today, in federal court in Central Islip, Fred Towle, Jr., pleaded guilty to making and subscribing a false tax return for the calendar year 2012 that underreported business income in order to avoid paying the proper tax owed.  The guilty plea was entered before United States Magistrate Judge A. Kathleen Tomlinson.  When sentenced, Towle faces a statutory maximum of three years in prison and a fine of up to $250,000.  As part of his plea, Towle has agreed to pay $307,427 in restitution, the full amount of his tax liabilities.

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 Justin Campbell, Assistant Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the guilty plea.

“By his guilty plea, Fred Towle, Jr., has admitted cheating the United States out of hundreds of thousands of dollars owed in taxes by filing a false tax return that concealed a considerable amount of income he had earned from his businesses,” stated United States Attorney Donoghue.  “This Office, together with our partners at the FBI and the IRS, recognizes that tax evasion victimizes every law-abiding, taxpaying American and we will vigorously prosecute those like the defendant who believe they’re above the law.”

“Despite his attempt to evade tax payments, Towle could not evade the inevitable repercussions of his actions, as he will now have to repay everything he owes,” stated FBI Assistant Director-in-Charge Sweeney.  “For anyone under the misguided notion that our government can be successfully manipulated, today’s guilty plea evidently says otherwise. While maintaining a consistent partnership with the IRS, the FBI will not cease to investigate such manipulative individuals.”

“Federal income tax compliance should be equally shared among all Americans, especially those who have held a public trust position,” stated IRS-CI Assistant Special Agent-in-Charge Campbell.  “Mr. Towle’s plea today, serves as an important reminder that IRS-CI is committed along with the United States Attorney’s Office and our law enforcement partners in bringing to justice those who skirt their tax responsibilities.”

During the relevant time period, Towle was the sole owner of a company called East Coast Marketing, which was utilized by Towle to, among other things, consult with political candidates and assist homeowners in expediting approvals for permits made to various governmental entities in Suffolk County.  According to court documents filed in connection with the case, in 2012, Towle falsely reported no taxable income from businesses controlled by him, including East Coast Marketing, despite earning approximately $246,000 in taxable corporate income for that year.  In total, between tax years 2012 and 2014, Towle failed to declare approximately $1.2 million in income, resulting in a tax loss to the United States of approximately $307,427. 

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Raymond A. Tierney and Catherine M. Mirabile are in charge of the prosecution.

The Defendant:

FRED TOWLE, Jr.
Age:  52
Shirley, New York

E.D.N.Y. Docket No. 18-CR-368 (JMA)

Earlier today, at the federal courthouse in Central Islip, Harold Bendell and Bruce Bendell, the former senior managers of Major Automotive Companies, Inc., doing business as “Major World,” pleaded guilty to filing a false corporate tax return for the calendar year 2009 that underreported income and inflated expenses in order to avoid paying the proper taxes owed.  Major World operated automobile dealerships in Queens, New York, and throughout the New York Metropolitan area.  Prior to their guilty pleas, the defendants paid over $3,888,267 in restitution to the Internal Revenue Service and resigned from Major World.  The guilty pleas were entered before United States District Judge Joanna Seybert.

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

“By their pleas, Harold and Bruce Bendell admitted that they concealed millions of dollars of their company’s income and avoided paying their fair share of taxes to the United States government,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will continue to work together to ensure that individuals who attempt to evade their responsibilities as taxpayers are held responsible.”

“This great country of ours relies on a tax system based on voluntary compliance,” stated IRS-CI Special Agent-in-Charge Robnett.  “Harold and Bruce Bendell took unlawful advantage of the system that financially impacts all Americans.  Our special agents along with the U.S. Attorney’s Office are committed to protecting the system that contributes to our way of life.”

As stated in the charging and plea documents, on or about August 10, 2010, both defendants filed a corporation tax return Form 1120 for the calendar year 2009 that failed to report approximately $1,417,814 in gross receipts that Major Automotive had received and approximately $2,116,000 in cash payroll expense for which Major Automotive did not pay payroll taxes.

When sentenced, each defendant faces a maximum of three years in prison.

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

The Defendants:

HAROLD BENDELL
Age:  69
Englewood Cliffs, New Jersey

BRUCE BENDELL
Age: 64
Roslyn, New York

E.D.N.Y. Docket 17-CR-585 (JS)

Earlier today, Nagwa Elsilimy pleaded guilty at the federal courthouse in Brooklyn to disaster relief fraud in connection with obtaining more than $750,000 in disaster relief from New York City’s Build It Back program and the Federal Emergency Management Agency in the aftermath of Hurricane Sandy.  Today’s proceeding took place before United States District Judge Raymond J. Dearie.

Richard P. Donoghue, United States Attorney for the Eastern District of New York; Christina Scaringi, Special Agent-in-Charge, United States Department of Housing and Urban Development, Office of Inspector General (HUD OIG); Mark Tasky, Special Agent-in-Charge, Department of Homeland Security, Office of Inspector General, Washington Field Office (DHS OIG); and Mark G. Peters, Commissioner, New York City Department of Investigation, announced the guilty plea.

According to court filings and facts presented during the guilty plea proceeding, in the days and months following Hurricane Sandy, which struck New York and New Jersey on October 29, 2012, Elsilimy obtained and attempted to obtain federal funds appropriated for Sandy disaster relief by submitting material misrepresentations in her applications for relief.  Specifically, Elsilimy misrepresented that a home in Staten Island, which her family had abandoned months before the storm, was her primary residence at the time the hurricane devastated parts of New York and New Jersey.  In fact, she had been residing at a different address since at least March 2012.  Evidence obtained in the investigation established that Elsilimy fraudulently obtained federal and city aid totaling more than $750,000.

When sentenced, Elsilimy faces up to 30 years in prison, as well as a fine of up to $1,500,000.

The government’s case is being handled by the Office’s General Crimes Section.  Assistant United States Attorney Elizabeth Losey Macchiaverna is in charge of the prosecution.

The Defendant:

NAGWA ELSILIMY
Age:  60
Staten Island, NY

E.D.N.Y. Docket No. 17-CR-563

An indictment was unsealed today in federal court in Brooklyn charging Richard Wardell Johnson with nine counts of bank robbery.  Johnson, who was arrested on May 29, 2018 on a criminal complaint, is in federal custody and will be arraigned on a later date.

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

 “As alleged, Richard Wardell Johnson robbed and attempted to rob nine banks across three New York City boroughs in less than a month,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will ensure that criminals who endanger bank employees and members of our communities will be held responsible.”

“Over the course of nearly 30 days, Johnson allegedly carried out a string of robberies, accompanied with threats of violence,” stated FBI Assistant Director-in-Charge Sweeney.  “Focusing merely on a quick and easy profit, Johnson put innocent lives around him in danger. Now that his chain of robberies has come to an end, Johnson will rightfully be brought to justice.”
                       
“Shortly after Mr. Johnson’s last attempt to get some quick cash, our patrol cops got him – and he’s no longer a menace running around our neighborhoods,” stated NYPD Commissioner O’Neill. “By working closely with our federal partners at the FBI and the Eastern District of New York, the NYPD will continue to aggressively investigate and pursue all bank robbery cases to minimize the threat criminals like Mr. Johnson pose in our community.”

As detailed in publicly filed documents, between April and May of 2018, Johnson robbed six banks, and attempted to rob three others in Brooklyn, Queens and Manhattan.  During the May 18, 2018 robbery he entered an M&T Bank branch, on Atlantic Avenue in Brooklyn and presented a note to the teller, stating “DON’T TOUCH THAT ALARM! $2000.00 NO DUMMY PACK.  IF I SHOOT SOMEONE ITS ON YOU!”  The teller notified a security guard at the bank and pointed out the defendant.  The security guard exited the bank, followed Johnson on foot while he called 9-1-1 and reported the crime.  The NYPD apprehended Johnson nearby a short time later.

The indictment charges Johnson with the following robberies and attempted robberies:

• Chase Bank branch in Queens, New York, on April 23, 2018 (attempted);
• Chase Bank branch in Brooklyn, New York, on April 23, 2018;
• Chase Bank branch in Queens, New York, on April 30, 2018;
• Chase Bank branch in Brooklyn, New York, on May 2, 2018;
• Chase Bank branch in Manhattan, New York, on May 7, 2018;
• Citibank branch in Brooklyn, New York, on May 12, 2018;
• Chase Bank branch in Brooklyn, New York, on May 15, 2018 (attempted);
• HSBC Bank branch in Manhattan, New York, on May 17, 2018; and
• M&T Bank branch in Brooklyn, New York on May 18, 2018 (attempted).

The government’s case is being handled by the Office’s General Crimes Section.  Special Assistant United States Attorney Andrew D. Grubin is in charge of the prosecution. 

The Defendant:

RICHARD WARDELL JOHNSON
Age: 63          

EDNY Docket No.: 18-CR-386 (DLI)

A nine-count indictment was unsealed today in federal court in Central Islip, charging Steven Pagartanis, a formerly licensed financial advisor and affiliate of a registered broker-dealer, with securities fraud, mail and wire fraud conspiracies, as well as money laundering, for orchestrating a Ponzi scheme over the course of more than 18 years.  Pagartanis was arrested today, and will be arraigned this afternoon before United States Magistrate Judge Arlene R. Lindsay.      

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 charges.

According to the indictment and other court documents, from January 2000 to March 2018, Pagartanis solicited elderly victims to invest in real estate-related investments, including those affiliated with a publicly traded Canadian company.  Pagartanis promised the victims that their principal would be secure and earn a fixed return, which he typically claimed to be between 4.5 to 8 percent annually.  At Pagartanis's direction, the victims wrote checks payable to an entity that was secretly controlled by Pagartanis.  Pagartanis utilized a network of bank accounts to launder the stolen funds, which he then used to pay personal expenses, buy luxury items and make the guaranteed “interest” or “dividend” payments to other victims. Pagartanis created fictitious account statements reflecting ownership interests in the purported investments to induce investment and conceal the scheme.  In all, the victims invested over $13 million and sustained actual losses of over $8 million.  Many lost substantial portions of their life savings as a result of the scheme.

 “As alleged, Pagartanis conned vulnerable members of the community who had entrusted him with their hard-earned savings,” stated United States Attorney Donoghue.  “Protecting the elderly and the community at large from predators like the defendant is a priority of this Office and the Department of Justice and with our law enforcement partners we will continue to pursue that mission.”  Mr. Donoghue also thanked the United States Securities and Exchange Commission and the Financial Industry Regulatory Authority for their assistance in the investigation.

“The elderly are among the most vulnerable members of society, as they are common targets of fraudulent schemes,” stated FBI Assistant Director-in-Charge Sweeney.  “As alleged, Pagartanis preyed on the elderly with his own interests in mind. While causing significant financial loss to his victims, Pagartanis experienced significant financial gain – allegedly paying personal expenses and making extravagant purchases. As we persistently investigate bogus Ponzi schemes, we aim to protect all targeted citizens from the threat of financial loss.”

 “The agents of IRS-CI along with our law enforcement partners will vigorously pursue fraudsters who allegedly victimize the elderly,” stated IRS-CI Special Agent-in-Charge Robnett.  “We will gladly dedicate our specialized skillset to such investigations to ensure those responsible are brought to justice.”  

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

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

The Defendant:

STEVEN PAGARTANIS
Age:  58
East Setauket, New York

E.D.N.Y. Docket No. 18-CR-374 (DRH)

Earlier today, Ali Saleh, a U.S. citizen, pleaded guilty at the federal courthouse in Brooklyn to two counts of attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS).  The proceeding took place before United States District Judge William F. Kuntz, II.  When sentenced, Saleh faces up to 35 years’ imprisonment.

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

“Ali Saleh attempted to travel to the Middle East to become an ISIS fighter, funded other foreign fighters, posted instructions to make explosive devices and transported explosive materials,” stated United States Attorney Donoghue.  “The defendant’s persistent efforts to aid ISIS were defeated by the outstanding work of law enforcement officers who stopped him before he could do harm.  This Office will continue to work closely with the FBI’s Joint Terrorism Task Force in New York to keep our city safe from terrorists and prevent extremists from travelling abroad to join foreign terrorist organizations.”

“Saleh was undeterred in his many attempts to travel to join ISIS, and although he failed in these efforts, he turned his attention to assisting others online to join ISIS’s murderous mission in Syria,” said Assistant Attorney General Demers.  “I am grateful to our partners in federal law enforcement and the prosecutors who were able to apprehend and charge Saleh before he could do more damage or harm innocent Americans.”

 “Ali Saleh was persistent in his efforts to become a foreign fighter, but his persistence did not exceed the diligence of law enforcement,” stated FBI Assistant Director-in-Charge Sweeney.  “The defendant went to great lengths to attempt to travel to the Middle East, while funding other foreign fighters in the process. As the FBI’s Joint Terrorism Task Force continuously strives to protect citizens from potential terrorist threats, today’s plea depicts one of the many efforts to achieve this goal.”

“New Yorkers continue to benefit from the NYPD’s robust counterterrorism capabilities and strong working relationships with our law enforcement partners on the Joint Terrorism Task Force,” stated NYPD Commissioner O’Neill.  “Today’s guilty plea shows that in collaboration with the FBI and the Eastern District of New York, our skilled investigators and analysts will stop at nothing to further the critical mission of defending society from acts of terrorism wherever and however, they are being planned.”

According to court filings, Saleh was arrested after repeatedly attempting to travel to the Middle East to become a foreign fighter for ISIS.  In 2013 and thereafter, Saleh became interested in the conflict in Syria, swore an oath of allegiance to ISIS and decided to travel to the Middle East in support of ISIS.  On August 25, 2014, Saleh stated online, “I’m ready to die for the Caliphate, prison is nothing.”  On August 28, 2014, Saleh stated online, “Lets be clear the Muslims in the khilafah [caliphate] need help, the one who is capable to go over and help the Muslims must go and help.”  That same day, Saleh made an airline reservation to travel from New York to Turkey, a country bordering Syria.  The defendant was ultimately prevented from traveling because his parents took away his passport.

Saleh then redirected his efforts to facilitating others’ support of ISIS.  In October 2014, the defendant communicated with an ISIS supporter in Mali through an online messaging platform and sent a wire transfer in the amount of $500 to fund that person’s travel to Syria.  Around the same time period, the defendant communicated with several other individuals in an effort to facilitate their support of ISIS, including known ISIS supporters in the United Kingdom and Australia. 

In July 2015, the defendant purchased fireworks containing explosive powder, hid them in a concealed compartment in the trunk of his car, and drove from Indiana towards New York City.  The fireworks contained approximately 1,196 grams of low explosive powder, consisting of both pyrotechnic material and black powder.  Law enforcement agents located a cellphone belonging to Saleh during the time frame when he acquired the explosive powder and discovered on the phone an electronic pamphlet titled, “Muslim Gangs: The Future of Muslims in the West (Ebook 1:  How to Survive in the West).”  The pamphlet provided detailed instructions regarding how to create a bomb using explosive powder from fireworks.  Saleh posted online the pamphlet’s image of a soda can hand grenade with instructions on how to build an improvised explosive device.  When Saleh’s car broke down on the way to New York City, he abandoned it.

Subsequently, on July 24, 2015, the defendant made a reservation to travel from New York to Egypt, a country bordering Libya, and went to JFK International Airport.  The defendant was ultimately denied boarding.  The defendant subsequently visited three additional international airports in Newark, Philadelphia and Indianapolis, but continued to encounter travel restrictions.  The defendant attempted to circumvent air travel restrictions by taking a train from Cleveland to Canada and flying to the Middle East.  After law enforcement intervention, however, the defendant did not board the train and instead returned to New York. 

After his encounters with law enforcement, Saleh changed his online social media moniker and expressed his support for ISIS under new usernames.  On August 24, 2015, the defendant stated online, “I am a terrorist.”  On September 1, 2015, the defendant stated online, “If they aren’t implementing shariah [Islamic law] grab ur gun and implement shariah and see how fast the world turns against u.”  That same day, the defendant also stated online, “Akhi [brother] if implementing sharia [Islamic law] is easy do it in ur neighborhood and defend it from kuffar [the infidels] and give bayah [an oath of allegiance] to IS.”

The government’s case is being handled by the Office’s National Security & Cybercrime Section.  Assistant United States Attorneys Saritha Komatireddy, Margaret E. Lee and Alexander F. Mindlin are in charge of the prosecution, with assistance provided by Trial Attorneys Lolita Lukose and Jacqueline Barkett of the Justice Department’s Counterterrorism Section.

The Defendant:

ALI SALEH
Age: 25
Queens, New York

E.D.N.Y. Docket No. 15-CR-517

A superseding indictment was unsealed today in federal court in Brooklyn charging Keith Raniere, Clare Bronfman, Allison Mack, Kathy Russell, Lauren Salzman and Nancy Salzman with racketeering conspiracy involving an array of crimes, including identity theft, extortion, forced labor, sex trafficking, money laundering, wire fraud and obstruction of justice.  Bronfman, Russell, Lauren Salzman and Nancy Salzman were arrested this morning.  Bronfman will be arraigned this afternoon before United States District Judge Nicholas G. Garaufis in Brooklyn.  Russell and the Salzmans will be arraigned before United States Magistrate Judge David J. Stewart in Albany, New York.  Raniere and Mack were previously arrested on the original indictment and will be arraigned on the superseding indictment tomorrow before Judge Garaufis in Brooklyn. 

Raniere, who founded several pyramid-structured organizations including Nxivm, a purported self-help organization for women, and various related entities, and Mack, a high-ranking member of Nxivm, were previously charged with sex trafficking and forced labor conspiracy in an indictment filed April 20, 2018.  Bronfman, a member of Nxivm’s executive board; Russell, Nxivm’s former bookkeeper; Lauren Salzman, a member of Nxivm’s executive board; and Nancy Salzman, the president of Nxivm, were charged for the first time in the superseding indictment.

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

“As alleged in the superseding indictment, for over a decade, Keith Raniere was the leader of a racketeering conspiracy in which he and members of his inner circle committed a broad range of serious crimes from identity theft and obstruction of justice to sex trafficking, all to promote and protect Raniere and Nxivm,” stated United States Attorney Donoghue.  “This Office and the FBI will continue to investigate and prosecute those who prey on others to such destructive effect.”  Mr. Donoghue expressed his grateful appreciation to the FBI for leading the investigation, and thanked the New York State Police, the FBI Albany Field Office, the New York State Office of the Attorney General, the New York State Department of Health, the Internal Revenue Service Criminal Investigation, New York Field Office, and the United States Attorney’s Office for the Northern District of New York for their assistance with the investigation.

“As alleged, this long-running conspiracy crossed multiple avenues of criminal activity, which included, among other things, electronic monitoring; identity theft; extortion; victim smuggling; and illegal trafficking of a victim after a period of unlawful confinement. The details of these alleged crimes become more and more grim as we continue to dig deeper into the conduct of this organization and its intended mission,” stated FBI Assistant Director-in-Charge Sweeney.  “Today’s superseding indictment highlights our commitment to bringing justice to Nxivm’s many victims.”

The superseding indictment alleges that from at least 2003 through the present, Raniere and his inner circle of co-defendants comprised an organized racketeering enterprise engaged in criminal activities with the aim of promoting, enhancing and protecting Raniere and members of the enterprise by recruiting others into Nxivm and DOS for financial and personal benefits.  Those criminal activities included the following:

• Raniere and Bronfman conspired to commit identity theft arising out of a scheme to obtain the e-mail usernames and passwords of perceived enemies and critics of Raniere in order to monitor their electronic communications. 

• Raniere and Bronfman participated in an identity theft conspiracy involving the use of credit card and banking information belonging to one of Raniere’s sexual partners after her death in November 2016.  Bronfman sent Raniere regular emails documenting expenses charged to the woman’s credit card for Raniere’s “review and approval.”  Those expenses included payments to a chiropractor for Raniere’s benefit, as well as thousands of dollars’ worth of clothing and shoe purchases for the mother of Raniere’s child.

• Bronfman encouraged and induced the illegal entry into the United States of an alien for Bronfman’s financial gain, engaging in international wire transfers to make it fraudulently appear that the victim had the financial resources to obtain an investor visa.

• Raniere and Lauren Salzman trafficked a victim, who was once a sexual partner of Raniere’s, for labor and services.  The victim was confined to a room in Clifton Park, New York, for nearly two years as punishment for having romantic feelings for a man who was not Raniere.  The victim was told that if she left the room she would be sent to Mexico without any identification documents.  As threatened, she was driven to Mexico and her family was instructed by co-conspirators, including Lauren Salzman, not to send the victim her identification documents.   

• Raniere and Lauren Salzman obtained property and services from their slaves through fraud and extortion.  After DOS was exposed, Salzman was one of the leaders of a disinformation campaign designed to spread lies about DOS and Nxivm members in order to discredit victims.
• Nancy Salzman, in her role as second-in-command to Raniere within Nxivm, conspired with Raniere and others to obstruct justice by altering records in connection with a civil lawsuit initiated by Nxivm against a former Nxivm student.  As part of the discovery in the former student’s countersuit, Nancy Salzman was ordered to turn over videos of courses the student had taken.  Nancy Salzman engaged in a scheme to edit videos of courses she had taught to remove materials that she and her co-conspirators believed would have supported the former student’s claims.
• Raniere and Russell conspired to commit identity theft as part of a scheme to smuggle an alien into the United States through Canada after the alien was denied entry.  Russell provided the alien with an identification card bearing the last name and birthday of a dead woman. 

The charges in the superseding indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, the defendants face up to 20 years’ imprisonment for racketeering conspiracy, forced labor conspiracy and wire fraud conspiracy charges, as well as a maximum of 15 years’ imprisonment for the identity theft conspiracy charge.  In addition, Raniere and Mack each face mandatory minimum sentences of 15 years’ imprisonment, and up to life imprisonment, on related charges of sex trafficking and sex trafficking conspiracy. 

The government’s investigation is ongoing. 

The government’s case is being handled by the office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Moira Kim Penza and Tanya Hajjar are in charge of the prosecution.  Assistant United States Attorney Karin Orenstein is in charge of forfeiture proceedings in connection with the case. 

The Defendants:

KEITH RANIERE (also known as “Vanguard”)
Age:  57
Waterford, New York

CLARE BRONFMAN
Age:  39
Clifton Park, New York

ALLISON MACK
Age:  35
Brooklyn, New York

KATHY RUSSELL
Age:  60
Clifton Park, New York

LAUREN SALZMAN
Age:  42
Clifton Park, New York

NANCY SALZMAN (also known as “Prefect”)
Age:  64
Clifton Park, New York

E.D.N.Y. Docket No. 18-CR-204 (NGG) (S-1)

Earlier today, in federal court in Central Islip, Bloods gang member Billy McLen, also known as “Rizo,” pleaded guilty to attempted murder in aid of racketeering and a weapons possession charge in connection with a shooting that occurred on October 21, 2014 in Hempstead, New York.  The proceeding took place before United States Magistrate Judge Arlene R. Lindsay.

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 facts presented during the guilty plea proceeding, in October 2014, the Bloods street gang was at war with members of the Crips street gang from the Parkside section of Hempstead.  On October 21, 2014, McLen obtained a handgun from a Bloods leader, Jonathan Mayzick, and later met with Bloods members Naree Barnes and Khalil Brown.  Together they proceeded to Peninsula Boulevard near Hempstead High School where they encountered a Crips gang member.  McLen, Brown and Barnes pulled out handguns and shot at their rival, firing numerous times across a major roadway during the late afternoon.  McLen and his associates then ran to the home of another Bloods member, and McLen placed several phone calls to Mayzick, reporting the shooting.  The calls were intercepted by members of law enforcement who were monitoring a court-authorized wiretap of Mayzick’s cell phone.  While these calls were taking place, McLen and his associates were located and arrested, and the guns used in the shooting were recovered.   

“McLen participated in a premeditated attack in furtherance of the Bloods’ violent feud with the Crips, with the intention of taking another human being’s life,” stated United States Attorney Donoghue.  “The defendant now faces a lengthy prison term for the choices he made and the actions he took – attempting to kill his victim and endangering other residents of the community.”  Mr. Donoghue extended his appreciation to the FBI’s Long Island Gang Task Force which investigated this case.

"Motivated by futile gang rivalry, McLen allowed violence to determine his actions, which in turn determined his fate, as he will now spend more than 10 years in prison for attempting to take someone’s life,” stated FBI Assistant Director-in-Charge Sweeney.  “Gang violence continues to be the dividing wedge in several of our communities, and the FBI’s Long Island Gang Task Force will not cease until this wedge is permanently removed.”

“The guilty plea of Bloods gang member Billy McLen, AKA Rizo, is a stark reminder of the violence that takes place between rival gangs,” stated NCPD Commissioner Ryder.  “The Nassau County Police, the United States Attorney’s Office and the FBI have worked tirelessly to ensure that these gang members are brought to justice and that our residents enjoy safe communities.  I would like to thank and congratulate all of the members who played an important role in this conviction”

When sentenced, McLen faces a mandatory minimum of 10 years in prison and a maximum sentence of life, as well as forfeiture and a fine of up to $250,000.  Barnes and Brown previously pled guilty to discharging firearms in furtherance of a crime of violence and were sentenced to 10 years’ imprisonment.  Mayzick was convicted of conspiracy to distribute crack cocaine and sentenced to 162 months in prison.

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

The Defendant:

BILLY MCLEN (also known as “Rizo”)
Age:  19
Hempstead, New York

E.D.N.Y. Docket No. 16-CR-429 (S-1) (SJF)

Defendants Previously Sentenced:

NAREE BARNES
Age: 22
Hempstead, New York

KHALIL BROWN
Age: 22
Hempstead, New York

E.D.N.Y. Docket No. 16-CR-428 (SJF)

JONATHAN MAYZICK
Age:  30
Hempstead, New York

E.D.N.Y. Docket No. 16-CR-28 (DRH)

Earlier today, Anthony “Ant” Pineda was arrested on charges related to methamphetamine distribution in Queens, New York, and California.  Pineda was arraigned this afternoon before United States Magistrate Judge Cheryl L. Pollak and ordered detained pending trial.  Fourteen additional defendants were previously arrested and arraigned on four indictments unsealed last month in federal court in Brooklyn. 

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), James P. O’Neill, Commissioner, New York City Police Department (NYPD), and Thomas Decker, Field Office Director, U.S. Immigration and Customs Enforcement (ICE), Enforcement and Removal Operations (ERO), announced the indictments.

“Drug dealers are trying to turn New York into the next methamphetamine wasteland,” stated United States Attorney Donoghue.  “The Eastern District will work tirelessly with our partners on long-term investigations such as this to prosecute those who poison our communities with this highly addictive and dangerous drug.”  Mr. Donoghue expressed his thanks to ICE Homeland Security Investigations and the United States Postal Inspection Service for their assistance during the investigation.

“Using his illegal gambling business as a foundation, Pineda allegedly orchestrated an illicit methamphetamine enterprise,” stated FBI Assistant Director-in-Charge Sweeney.  “Distributing on both a large scale and street level, Pineda and his co-defendants carelessly endangered our communities.  These individuals operated on opposite sides of the nation – but with the help of our fellow law enforcement agencies, today’s arrests show that expansiveness never inhibits justice.”

“The indictments show law enforcement’s resolve to arrest those involved in dealing drugs in our city,” said ERO Field Office Director Decker in New York.  “We will continue to assist our law enforcement partners in providing any information that will lead to an eventual criminal arrest.”

“The behavior outlined in these indictments, and the violence so often associated with such acts, will never be tolerated by the NYPD or any of our law enforcement partners,” stated NYPD Commissioner O'Neill.  “As we demonstrate time and again, we are patient and our collaborative forces have a long reach.  We will be relentless in removing these criminals from our streets, because New Yorkers expect and deserve nothing less than our very best efforts to not only keep them safe, but to ensure they feel safe too.”

According to the indictments, court documents and statements made in court, Anthony Pineda led a methamphetamine distribution organization from his illegal gambling parlors located in Flushing, Queens.  Pineda obtained large quantities of methamphetamine in California and transported the drugs to New York for wholesale and retail distribution.  His co-defendants include large-scale and street-level methamphetamine distributors, as well as Pineda’s partners in the illegal gambling operation. 

Pineda allegedly protected his illegal operations with threats and violence.  For example, in 2017, he threatened a competing gambling parlor owner with a gun and referred to a “high voltage cattle prod” that a co-conspirator could use to collect a debt.  When Pineda was arrested today at an apartment where he was staying, law enforcement officers recovered one pound of methamphetamine and approximately $27,000 in cash.

Pineda, Yunfeng Gao, Ting “Ting Ting” Li, Ivan Kaleda, Marco Rescino, Guanghua “Mao Mao” Shen, Jin Wang, Joung Hwa Yun, Lu “Chinese Ivan” Zhai and Nan Zhang are charged with conspiracy to distribute and possess with intent to distribute methamphetamine and methamphetamine distribution.  Min Li and Steven Torres are charged with conspiracy to distribute methamphetamine.  Davoud Haghighy is charged with methamphetamine distribution and firearms trafficking.  Si En Li is charged with operating an illegal gambling parlor.  Yuan Li is charged with extortion.  In addition, Pineda and Rescino are charged with money laundering conspiracy.

The charges in the indictments are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, the maximum sentences range from five years’ to life imprisonment.

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Nadia E. Moore and Drew Rolle are in charge of the prosecution with assistance provided by Assistant United States Attorney Claire Kedeshian of the Office’s Asset Forfeiture Unit.

The Defendants:

ANTHONY PINEDA
Age:  36
Queens, New York/San Francisco, California

YUNFENG GAO
Age:  33
Queens, New York

IVAN KALEDA
Age:  28
Queens, New York

SI EN LI
Age:  45
Brooklyn, New York

TING LI
Age:  30
Queens, New York

YUAN LI
Age:  34
Queens, New York

MARCO RESCINO
Age:  22
San Francisco, California

GUANGHUA SHEN
Queens, New York
Age: 45

JIN WANG
Age:  33
Queens, New York

JOUNG HWA YUN
Age:  40
Queens, New York

LU ZHAI
Age:  30
Queens, New York

NAN ZHANG
Age:  32
Queens, New York – E.D.N.Y. Docket No. 18-CR-302 (MKB)

MIN LI
Age:  40
Queens, New York – E.D.N.Y. Docket No. 18-CR-292 (MKB)

DAVOUD HAGHIGHY
Age:  33
Queens, New York – E.D.N.Y. Docket No. 18-CR-301 (ILG)

STEVEN TORRES
Age:  28
Queens, New York – E.D.N.Y. Docket No. 18-CR-300 (MKB)

A federal jury in Brooklyn today, following two weeks of trial, convicted Dr. Martin Tesher of 10 counts of unlawful distribution of oxycodone without legitimate medical purpose to five patients, one of whom died as a result two days after his last visit with the defendant.  When sentenced by United States District Judge Raymond J. Dearie, Dr. Tesher faces a mandatory minimum sentence of 20 years’ imprisonment and a maximum of life in prison.

Attorney General Jeff Sessions, 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 verdict.

“It is incredible but true that some medical professionals have chosen to violate their oaths and exploit our nation's drug epidemic for profit, even at the cost of human lives,” stated Attorney General Sessions.  “This doctor knowingly took advantage of drug addicts and even contributed to the death of a young man.  The Department of Justice is relentlessly pursuing criminals like him: we have charged more than 200 doctors with opioid-related crimes since the beginning of last year.  We are going to keep pursuing these cases because they help cut off the supply of drugs and stop fraudsters from exploiting vulnerable people.  I want to thank the DEA, our partners at IRS, four local police departments and especially our fabulous prosecutors Jennifer Sasso and Penelope Brady for their hard work in this case.  I believe that they have helped prevent many more New Yorkers from falling into addiction and death.”

 “Dr. Tesher dispensed opioids to patients whom he knew were abusing illegal drugs and the tragic result was an overdose death,” stated United States Attorney Donoghue.  “Today, the jury held Dr. Tesher responsible for the part he played in fueling the opioid epidemic by abandoning his responsibilities as a medical professional and for acting as a drug dealer with a prescription pad.  This Office and our law enforcement partners will continue to work tirelessly to combat the opioid epidemic on all fronts, including prosecuting corrupt doctors who disregard the well-being of their patients by prescribing highly addictive drugs without legitimate medical purpose.”

“DEA doesn’t tell doctors how to practice medicine, DEA is a watchdog to ensure doctors’ prescriptions are written for the right reason and betterment of their patient’s health,” stated DEA Special Agent-in-Charge Hunt.  “This trial brings to light how opioid traffickers can hide in plain sight, like Dr. Tesher; and how heartbreaking drug addiction is to families and friends of substance abusers.   I commend the U.S. Attorney’s Office for the Eastern District of New York and the DEA’s Long Island District Office Tactical Diversion Squad on their diligent work throughout this investigation.  DEA will continue to work with our federal, state and local law enforcement partners to battle opioid traffickers and suppliers at all levels.” 

The evidence at trial established that between June 2013 and January 2017, Dr. Tesher, a medical doctor specializing in general family care, prescribed oxycodone and fentanyl on a continuing basis without a legitimate medical purpose to patients after he learned, or had reason to believe, that these patients were addicted to drugs.  The five patients either told Dr. Tesher that they had a drug addiction, had previously been treated for drug addiction, or tested positive for illegal drugs such as cocaine or heroin during the course of their treatment by the defendant.  While under Dr. Tesher’s care, Nicholas Benedetto, 27, tested positive for cocaine, heroin and methadone in addition to oxycodone and fentanyl.  Dr. Tesher continued to prescribe oxycodone and fentanyl to Benedetto despite indicators that he was abusing those drugs.  Benedetto was found dead of a fatal combination of oxycodone and fentanyl on March 5, 2016, two days after he had been prescribed oxycodone and fentanyl patches by Dr. Tesher.  According to a government expert witness, none of the patients for whom Tesher is charged in the superseding indictment had verified medical conditions that would require the prescription of Schedule II opioids.

The government’s investigation was led by the DEA’s Long Island Tactical Diversion Squad, which is comprised of agents and officers of the DEA, Internal Revenue Service, Nassau County Police Department (NCPD), Suffolk County Police Department, Port Washington Police Department and Rockville Centre Police Department.  The DEA Tactical Diversion Squad also worked in conjunction with officers and agents of the New York City Police Department, Criminal Enterprise Investigations, the Department of Health & Human Services, Office of Inspector General, the New York City Department of Investigation and NCPD’s Asset Forfeiture and Intelligence Bureau. 

This case is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative.  In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this district, the Nassau and Suffolk County Police Departments, the New York City Police Department and the New York State Police, along with other key federal, state and local government partners, launched the Initiative to mount a comprehensive response to what the United States Department of Health and Human Services Centers for Disease Control and Prevention called an epidemic increase in the abuse of so-called opioid analgesics.  To date, the Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 19 health care professionals; taken civil enforcement actions against a hospital, a pharmacy and pharmacy chain; removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers.  The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.

The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section.  Assistant United States Attorneys Jennifer M. Sasso and Penelope Brady are in charge of the prosecution.

The Defendant:

DR. MARTIN TESHER
Age:  82
Manhattan, New York

E.D.N.Y. Docket No. 17-CR-523 (RJD)

The United States District Court for the Eastern District of New York entered a consent decree and permanent injunction against defendants Euroline Foods, LLC, Royal Seafood Baza, Inc., the companies’ owner/operators Eduard Shnayder, Syoma Shnayder and Albert Niyazov, and operator Oleg Polischouk to prevent insanitary conditions at a food distribution facility, including practices that increase the risk of contamination with Listeria monocytogenes (L. mono), the Department of Justice announced today. 

The consent decree approved by U.S. District Judge Brian M. Cogan follows a May 2018 civil complaint the Department filed at the request of the U.S. Food and Drug Administration (FDA).  The complaint alleged that the defendants’ food preparation at their facility at 175 Lake Avenue, Staten Island, New York (“Defendants’ Facility”) violated the Federal Food, Drug and Cosmetic Act (FDCA) by processing and distributing ready-to-eat fish and fishery products, vegetable salads and cheese products in a facility with chronic insanitary conditions.  The complaint alleged that FDA inspections found L. mono at the companies’ facility and that the defendants failed to put in place adequate measures to reduce the risk of health hazards such as L. mono, Clostridium botulinum and scombrotoxin.  

The defendants agreed to settle the litigation and be bound by a consent decree of permanent injunction.  As part of the settlement, the defendants represented that they currently receive, hold and distribute only food that remains enclosed in a container while at the Defendants’ Facility.  If the defendants intend to resume food processing and preparation of any non-prepackaged food at the Defendants’ Facility, they must first notify FDA in writing at least 90 days in advance of resuming such operations, comply with specific remedial measures set forth in the injunction and permit FDA to inspect the facility.  The injunction also provides safeguards in the event that, in the future, the defendants engage in food processing at another food preparation facility. 

“In response to the government’s lawsuit, the defendants have ceased their at-risk processing operations and destroyed affected food preparation equipment,” stated United States Attorney Richard P. Donoghue for the Eastern District of New York.  “Going forward, they are permanently barred by the consent decree from processing any foods, other than prepackaged foods that will remain in their original containers, at their Staten Island facility, and any foods that might present a Listeria monocytogenes hazard at any other facility until they establish that they can comply with all applicable laws and regulations.  This Office is committed to protecting the public from the dangers of food exposed to bacterium like L. mono or otherwise contaminated.”

“The Department of Justice is committed to ensuring that food processors adhere to laws enacted to protect consumers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “The Department of Justice and the FDA will continue to work together to make sure that the food that consumers receive is safe.” 

According to the complaint, the defendants failed to adequately implement effective sanitation controls to comply with current Good Manufacturing Practice (CGMP) requirements.  In addition, the complaint alleged that the defendants failed to comply with seafood Hazard Analysis and Critical Control Point (HACCP) regulations, which are designed to mitigate food safety hazards associated with the processing of fish and fishery products.

This matter is being handled by Assistant U.S. Attorney Gail A. Matthews of the United States Attorney’s Office for the Eastern District of New York, and Trial Attorney James T. Nelson of the Civil Division’s Consumer Protection Branch, with the assistance of Associate General Counsel for Enforcement Jennifer C. Argabright of the FDA’s Office of the Chief Counsel.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found 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 .

A federal court in Brooklyn entered a permanent injunction against defendants Euroline Foods, LLC, Royal Seafood Baza, Inc., the companies’ owner/operators Eduard Shnayder, Syoma Shnayder, and Albert Niyazov, and operator Oleg Polischouk to prevent insanitary conditions, including practices that increase the risk of contamination with Listeria monocytogenes (L. mono), the Department of Justice announced today.  

The entered consent decree of permanent injunction follows a May 2018 complaint filed by the Department for the U.S. Food and Drug Administration (FDA) in the U.S. District Court for the Eastern District of New York.  The complaint alleged that the defendants’ food preparation at their Lake Avenue, Staten Island, New York facility (“Defendants’ Facility”), violated the Federal Food, Drug and Cosmetic Act (FDCA) by processing and distributing ready-to-eat fish and fishery products, vegetable salads, and cheese products in a facility with chronic insanitary conditions.  Specifically, the complaint alleged that FDA inspections found L. mono at the companies’ facility and that the defendants lacked adequate measures to reduce the risk of health hazards such as L. mono, Clostridium botulinum, and scombrotoxin.  The complaint also alleged that the defendants failed to comply with current Good Manufacturing Practice (CGMP) requirements or with seafood Hazard Analysis and Critical Control Point (HACCP) regulations, which are designed to mitigate food safety hazards associated with the processing of fish and fishery products.

The defendants agreed to settle the litigation by the entered consent decree of permanent injunction.  As part of the settlement, the defendants represented that they currently receive, hold, and distribute only food that remains enclosed in a container while at Defendants’ Facility.  Under the permanent injunction, if the defendants intend to resume food processing and preparation of any non-prepackaged food at Defendants’ Facility, they must first notify FDA in writing at least ninety days in advance of resuming such operations, comply with specific remedial measures set forth in the injunction, and permit FDA to inspect the facility.  The injunction also provides safeguards in the event that, in the future, the defendants engage in food processing at another food preparation facility.  

“The Department of Justice is committed to ensuring that food processors follow laws that protect consumers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “The Department of Justice and the FDA will continue to work to ensure that prepared food sold to consumers is safe.”  

“In response to the government’s lawsuit, the defendants have ceased their at-risk processing operations and destroyed affected food preparation equipment,” stated United States Attorney Richard P. Donoghue for the Eastern District of New York.  “Going forward, they are permanently barred by the consent decree from processing any foods, other than prepackaged foods that will remain in their original containers, at their Staten Island facility, and any foods that might present a Listeria monocytogenes hazard at any other facility until they establish that they can comply with all applicable laws and regulations.  This Office is committed to protecting the public from the dangers of food exposed to bacterium like L. mono or otherwise contaminated.”

Trial Attorney James T. Nelson of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Gail A. Matthews of the U.S. Attorney’s Office for the Eastern District of New York represented the United States along with the assistance of Associate Chief Counsel for Enforcement Jennifer A. Kang of the FDA’s Office of the Chief Counsel.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at 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 www.justice.gov/usao-edny.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and John Gore, Acting Assistant Attorney General for Civil Rights, today announced a proposed settlement with the City of New York to compensate City-employed registered nurses and midwives who were subjected to discrimination because they are women.  The United States Attorney’s Office for the Eastern District of New York filed the proposed settlement along with a complaint in federal district court.  According to the allegations of the complaint, the City failed to recognize that the work of predominantly-female registered nurses and midwives was “physically taxing,” while deeming other predominantly-male occupations, including in the health care field, physically taxing.  As a result, City employees in the predominantly-male physically taxing jobs were allowed to retire with full pensions as early as age 50, while registered nurses and midwives, who are predominantly female, could not retire with full pensions until age 55 or 57.

“City nurses and midwives care for sick and injured adults, juveniles and infants through long days and nights under difficult circumstances, and rightfully should be recognized as doing physically taxing work,” said U.S. Attorney Donoghue.  “Equal treatment under law means just that, equal treatment and this Office is committed to ensuring that women are treated fairly and equitably in the workplace.”  He also thanked the Equal Employment Opportunity Commission (“EEOC”) for its investigative work prior to referring this matter to the U.S. Attorney’s Office.

“This Settlement Agreement will provide significant relief to a class of female nurses and midwives employed by the City of New York who were harmed by the City’s discriminatory employment practices,” said Acting Assistant Attorney General John Gore.  “We applaud the United States’ Attorney’s Office for the Eastern District of New York for prosecuting this matter and acknowledge the City of New York’s commendable efforts in ensuring that this matter was brought to resolution without protracted litigation.” 

Beginning in 1968, the City allowed certain City employees with 25 years of service the option of retiring with full pensions beginning at the age of 50, if the employees worked in jobs the City deemed physically taxing. At that time, the City refused to recognize the work of registered nurses and midwives, which was performed mostly by women, as physically taxing, but did recognize as physically taxing work performed mostly by men in occupations such as Emergency Medical Specialist - EMT, Exterminator, Motor Vehicle Dispatcher, Window Cleaner, Foremen and Plumbers.

  Beginning in 2004, the New York State Nurses Association (NYSNA), a labor union representing City-employed registered nurses and midwives, began requesting that the City recognize the work of registered nurses and midwives  as physically taxing and also allow NYSNA’s qualifying members the option of retiring as early as age 50.  The City denied that request in 2004, and again in 2006 and 2008.  Thereafter, NYSNA and four of its members filed complaints with the EEOC.  The EEOC determined there was reason to believe that the City had discriminated against the nurses when it failed to recognize registered nurse and midwife occupational titles as “physically taxing” in 1968, and again when NYSNA made its requests in 2004, 2006 and 2008.  The EEOC then referred the matter to the U.S. Attorney’s Office.

The settlement applies to a proposed class of approximately 1,665 registered nurses and midwives hired by the City from September 15, 1965, through March 31, 2012.  Subject to court approval, the City would pay these registered nurses and midwives, who would otherwise have been eligible to retire at an earlier age, between $1,000 and $99,000, depending upon their years of qualifying service and the number of years earlier they would have been eligible to retire.  The settlement also provides for the City to pay attorney’s fees and an additional $100,000 to the four nurses who initiated the EEOC complaint which led to today’s result.  

This matter was handled by Eastern District of New York Assistant United States Attorneys John Vagelatos and Michael J. Goldberger.

 

E.D.N.Y. Docket No. 18-CV-4100 (WFK)

An indictment was unsealed today in federal court in Brooklyn charging Rafal Ziolkowski, the owner of Oliwa Construction, Inc., in Queens, with seven counts of willfully failing to collect and pay taxes, one count of conspiracy to defraud the United States and one count of making false statements to federal agents.  Ziolkowski was arrested earlier today and is scheduled to be arraigned this afternoon before United States Magistrate Judge Cheryl L. Pollak.   

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

 “As alleged in the indictment, Ziolkowski defrauded the United States by not reporting cash wages paid to his company’s employees,” stated United States Attorney Donoghue.  “Today’s indictment serves as notice that this Office is committed to prosecuting those who seek to profit at the expense of the United States and honest taxpayers.”

“As alleged, evading Employment Taxes has an impact on all taxpayers not only in the present but the future as well,” stated IRS-CI Special Agent-in-Charge Robnett.  “Both retired citizens and some dependent children depend on this assistance, which plays a critical role in the financial security of all Americans.” 

According to the indictment, between January 2010 and December 2013, Ziolkowski failed to pay a total of approximately $650,000 in Federal Insurance Contributions Act (FICA) taxes by understating the wages paid to Oliwa employees.  To avoid his tax liability, Ziolkowski paid Oliwa’s workers millions of dollars in cash obtained by cashing commercial checks.  When the IRS confronted Ziolkowski about his scheme, he falsely denied having ever visited a check cashing establishment. 

If convicted of these charges, Ziolkowski faces a maximum sentence of 45 years’ imprisonment.

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

The government’s case is being handled by the Office’s General Crimes Section.  Assistant United States Attorney Nicholas J. Moscow is in charge of the prosecution.

The Defendant:

Rafal Ziolkowski
Age:  41
Ridgewood, New York

E.D.N.Y. Docket No. 18-CR-347 (FB)

Earlier today, at the federal courthouse in Central Islip, Ronald Bishop pleaded guilty to conspiring to distribute crack cocaine on Long Island between 2014 and 2016 and illegally possessing 10 firearms in furtherance of his narcotics trafficking operation.  The proceeding took place before United States Magistrate Judge Gary R. Brown.

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, New York Field Division, and Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD), announced the guilty plea.

According to court filings and facts presented during the plea proceeding, in January 2016 the NCPD Gang Investigation Squad executed a search warrant at a residence Bishop operated as a stash house and recovered 10 firearms, including four pistols, three revolvers, a shotgun, two assault rifles, high capacity magazines, hundreds of rounds of ammunition, over seven grams of crack cocaine, assorted pills, drug paraphernalia and cash.

“Ronald Bishop’s stash house contained an arsenal of firearms as well as illegal drugs, posing a great danger to the community,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will continue to work tirelessly to bring to justice armed drug dealers who put our communities at risk.”  Mr. Donoghue expressed his thanks to the NCPD for their efforts in the investigation and the ATF for their assistance in the prosecution of the case. 

“Ronald Bishop conspired to deal in deadly illegal narcotics and possessed illegal firearms,” stated ATF Special Agent-in-Charge Benedict.  “ATF and its law enforcement partners stand united in the fight to keep communities safe from those who seek to do harm to their fellow residents. I would like to thank the Special Agents and Task Force Officers of the ATF Long Island Field Office and the NCPD for their collaborative efforts on this case. I would also like to extend my gratitude to the United States Attorney’s Office for their work in prosecuting the case.”

When sentenced, Bishop faces up to life in prison with a mandatory minimum of 10 years in prison, as well as forfeiture and a fine of up to $5,000,000.

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

The Defendant:

RONALD BISHOP
Age: 36
Hempstead, New York

E.D.N.Y. Docket No. 16-CR-494 (SJF)

Earlier today, at the federal courthouse in Brooklyn, Sean Jack pleaded guilty to a Hobbs Act robbery conspiracy and multiple Hobbs Act robberies as well as to brandishing firearms during the commission of robberies.  The charges arise from Jack’s role in robbing six gas stations and convenience stores in Queens, New York.  Today’s plea took place before United States Magistrate Judge Vera M. Scanlon.

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, New York Field Division (ATF), and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the plea.

“As he has now admitted, Sean Jack participated in numerous armed robberies including one in which an employee of a gas station was pistol-whipped,” stated United States Attorney Donoghue.  “Combatting gun-related crime is a priority of this Office and, together with our law enforcement partners, we will work tirelessly to prosecute criminals like the defendant who terrorize hard-working citizens of our community.”

Each of the robberies followed the same pattern.  The defendant and a co-conspirator would enter the store or gas station and shop for various items.  After bringing their selections to the counter, one of the robbers would brandish a firearm while the second robber would take money from the cash register.  In each of the robberies, one or both of the robbers wore a wig.  

When sentenced, Jack faces up to life and a minimum of seven years in prison.

The government’s case is being handled by the Office’s General Crimes Section.  Assistant United States Attorneys Nicholas Moscow and Erin Reid are in charge of the prosecution.

The Defendant:

SEAN JACK
Age: 36
Jamaica, New York

E.D.N.Y. Docket No. 17-CR-569 (RRM)

 

A 12-count indictment was unsealed today in federal court in Central Islip charging Tully Lovisa, Shaun Sullivan and Lorraine Chalavoutis with mail fraud and money laundering for their participation in a fraudulent mass-mailing scheme that tricked hundreds of thousands of consumers, many of them elderly, into paying at least $30 million in fees for falsely promised cash prizes.  The defendants were arrested today and are scheduled to be arraigned this afternoon before United States Magistrate Judge A. Kathleen Tomlinson.

Attorney General Jeff Sessions, Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Peter R. Rendina, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), announced the indictment.

“Earlier this year, when we announced the largest elder fraud sweep in history, we sent a clear message:  we will hold perpetrators of elder fraud schemes accountable wherever they are,” said Attorney General Jeff Sessions.  “When criminals steal the hard-earned life savings of older Americans, we will respond with all the tools at the Department’s disposal – criminal prosecutions to punish offenders, civil injunctions to shut the schemes down, and asset forfeiture to take back ill-gotten gains.  Today’s indictment shows we are following through on this promise, and fraudsters everywhere should take note of it.”

“As alleged in the indictment, the defendants perpetrated a cruel hoax on their victims, many of them elderly and vulnerable, by sending promotional mailings that falsely claimed they would receive tens of thousands of dollars in prize money if they paid a fee,” stated United States Attorney Donoghue.  “In so doing, Lovisa violated prior court orders directing him to stop engaging in mass mailing operations and his co-conspirators were well aware of prior enforcement action to stop this conduct.  Protecting the elderly from brazen predators like the defendants is a priority of this Office and the Department of Justice.”

“These defendants showed a willingness to stop at nothing to bilk unwitting victims of their hard earned cash; many who were deliberately targeted because of their vulnerability,” stated USPIS Inspector-in-Charge Rendina.  “Postal Inspectors remind you, if you have to pay to play, it’s a scam.”

According to the indictment, the defendants’ prize-promotion mailings claimed that recipients could receive a large cash prize in exchange for paying a modest fee and, in fact, none of them did.  The scheme began after the Federal Trade Commission (“FTC”) sued Lovisa in 2010 for sending deceptive prize-promotion mailings.  In response to that suit, a federal court in the Northern District of California enjoined Lovisa in December 2010 and April 2012 from any involvement with prize-promotion mailings.  Despite these orders, Lovisa conspired with Sullivan and Chalavoutis to set up numerous prize-promotion companies using straw owners and aliases to continue defrauding consumers.  Chalavoutis, who provided operational services, including opening companies and bank accounts in the name of straw owners, helped conceal the involvement of Lovisa and Sullivan in controlling the operation.

The indictment also charges Lovisa with perjury for submitting a false compliance report to the FTC in which he claimed not to be involved in prize-promotion mailings.  The additional wire fraud and money laundering charges involve Lovisa’s further deception of the FTC related to the court-ordered sale of a house he owned in Las Vegas.  According to the indictment, Lovisa arranged a sham sale of the house for $155,500 in September 2012 that allowed him to maintain control of it and only give the FTC proceeds of that sale.  Lovisa sold the house in April 2015 for $540,000.

If convicted, the defendants face up to 20 years’ imprisonment for mail fraud, wire fraud and conspiracy.  Each charge also carries a statutory maximum fine of $250,000 or twice the gross gain or gross loss from the offense.

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

The case is being prosecuted by Assistant United States Attorney Charles P. Kelly of the Office’s Long Island Criminal Division, with Trial Attorneys Daniel Zytnick and Timothy Finley of the Justice Department’s Consumer Protection Branch.

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.

The Defendants:

LORRAINE CHALAVOUTIS
Age:  61
Greenlawn, New York

TULLY LOVISA
Age:  55
Huntington Station, New York

SHAUN SULLIVAN
Age:  37
Merrick, New York

A 32-count indictment was unsealed today in federal court in Brooklyn charging two inducted members and two associates of the Colombo organized crime family (the “Colombo family”) with racketeering, including predicate acts of extortion, extortionate collection, money laundering and illegal gambling.  The indictment also charges one inducted member of the Gambino organized crime family of La Cosa Nostra (the “Gambino family”) with extortionate collection and a related conspiracy.  The indictment relates to the defendants’ alleged criminal activities in Brooklyn, Staten Island and elsewhere between December 2010 and June 2018. 

The defendants—Jerry Ciauri, also known as “Fat Jerry,” a member of the Colombo family, Vito Difalco, also known as “Victor” and “The Mask,” a member of the Colombo family, Salvatore Disano, also known as “Sal Heaven,” an associate of the Colombo family, Anthony Licata, also known as “Anthony Suits,” a member of the Gambino family, and Joseph Maratea, an associate of the Colombo family—were arrested today and are scheduled to be arraigned this afternoon before Magistrate Judge Ramon E. Reyes, Jr.

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

 “This investigation shows that members of La Cosa Nostra continue to prey on members of our community, enriching themselves and their criminal network by making extortionate loans and using threats of violence to collect,” stated United States Attorney Donoghue.  “Rooting out traditional organized crime’s dangerous and corrupting influence continues to be a high priority for this Office and our law enforcement partners.”

“As alleged in the indictment, these defendants instilled fear in the hearts of their victims through threats of violence,” stated FBI Assistant Director-in-Charge Sweeney.  “These extortionate threats are the trademark of the mafia’s power, but in the end all it does is expose their weakness.  While criminal organizations such as La Costa Nostra continue to work hard to imbed fear and danger within our communities, the FBI New York Joint Organized Crime Task Force is working even harder to ensure the public’s safety and security.”

“The mob is certainly diminished, but it is not dead,” stated NYPD Police Commissioner O’Neill.  “These groups require our constant vigilance.  By working in close collaboration with our law enforcement partners in the FBI and the Eastern District, the NYPD will continue to ensure public safety through aggressive investigation and the dismantling of these types of organized-crime organizations.”

As alleged in the indictment and court filings, Ciauri is charged with making extortionate loans and with using extortionate means to collect debts from six victims, as well as laundering the proceeds of his loansharking business in order to conceal his involvement. 

Disano is charged with using extortionate means to collect debts from three victims and with assisting Ciauri in laundering the proceeds.  On one occasion, Ciauri threatened to shoot a loansharking partner who had fallen behind making payments to Ciauri.  He subsequently recruited another associate to stalk that partner.  On another occasion, Ciauri enlisted an associate to slash a victim’s tires in the middle of the night.  

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

Maratea is charged with using extortionate means to collect debts from five victims.  To ensure that Maratea and Difalco could find their debtors, Difalco and Maratea required debtors to provide a copy of their driver’s licenses and contact information.

Each of the defendants faces a maximum of 20 years’ imprisonment on the racketeering, money laundering and extortionate collection offenses.  The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. 

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

The Defendants:

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

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

SALVATORE DISANO (also known as “Sal Heaven”)
Age:  48
Brooklyn, New York

ANTHONY LICATA (also known as “Anthony Suits”)
Age:  49
Brooklyn, New York

JOSEPH MARATEA
Age:  42
Brooklyn, New York

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

Earlier today, in federal court in Brooklyn, US Imagina, LLC (“Imagina US”) pleaded guilty to a criminal information (the “Information”) charging it with two counts of wire fraud conspiracy in connection with the participation of two of its senior executives in schemes to pay more than $6.5 million in bribes to high-ranking officials of the Caribbean Football Union (“CFU”) and four Central American national soccer federations to secure media and marketing rights to those federations’ World Cup qualifier matches.  Imagina US, which was previously known as MediaWorld, is a privately held Florida corporation engaged in the businesses of media content creation and audiovisual production, and also has a unit devoted to buying and selling the media and marketing rights to sports events, principally soccer matches.  Imagina US is majority-owned by Imagina Media Audiovisual SL (“Imagina Media”), a privately held company based in Barcelona, Spain that is engaged worldwide in the businesses of media content creation, audiovisual production and the purchase and sale of media and marketing rights to sporting events.  Also today, Imagina Media, which is also known as MediaPro, entered into a non-prosecution agreement with the government in connection with one its three co-Chief Executive Officers’ (“co-CEOs”) participation in this criminal conduct.     

Pursuant to a plea agreement with the government, Imagina US agreed to forfeit $5,279,000 in criminal proceeds from these schemes.  Imagina US was also sentenced to pay $3 million in restitution to the CFU, $1.7 million in restitution to the Honduran soccer federation (“FENAFUTH”), $790,000 in restitution to the Guatemalan soccer federation (“FENAFUTG”), $600,000 in restitution to the Costa Rican soccer federation (“FEDEFUT”), and $565,000 in restitution to the Salvadoran soccer federation (“FESFUT”).  Imagina US was further sentenced to pay a fine of $12,883,320, which Imagina Media agreed to pay on behalf of Imagina US pursuant to the non-prosecution agreement.  Today’s guilty plea and sentencing proceedings took place before United States District Judge Pamela K. Chen.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and R. Damon Rowe, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, Los Angeles Field Office (IRS CI), announced the guilty plea and non-prosecution agreement.

 “Corporations that operate in the United States have a responsibility to ensure that their officers do not engage in corrupt conduct and to take steps to root out corrupt conduct as soon as they are put on notice of it,” stated U.S. Attorney Donoghue.  “Those that fail to do so will face significant consequences, while those that effectively remediate will receive positive consideration.” 

“Using bribery as part of your business plan is a well-known red flag, and this behavior has no place as part of any legitimate business strategy,” stated FBI Assistant Director-in-Charge Sweeney.  “US Imagina, LLC is paying the penalty for their activity which only contributes to the erosion of trust between businesses and their clients. We will continue to bring dishonest companies to justice, and hope this plea serves as an example to other corporations who think they can operate using similar moves.”

“Today’s guilty plea is a clear demonstration of IRS Criminal Investigation’s continued commitment to dismantling the corruption that has plagued the world of international soccer,” stated IRS-CI Special Agent-in-Charge Rowe.  “Working with our partners at the Department of Justice, we will continue to investigate corporate entities that profit from crooked practices and use the U.S. financial system in the process.”

The Criminal Schemes

According to facts presented during court proceedings in this case and in related cases, the Imagina US and Imagina Media senior executives bribed soccer officials in the Confederation of North, Central America and Caribbean Association Football (“CONCACAF”) region in exchange for the media and marketing rights to World Cup qualifier matches.  The executives often used false invoices and contracts to disguise the true nature of the bribe payments and, for the same reason, they often transmitted the bribes through bank accounts held by intermediaries in third countries. 

With respect to the bribery scheme related to the CFU’s World Cup qualifier rights, one of Imagina Media’s three co-CEOs (identified as Co-Conspirator #1 in the Information) agreed that Imagina Media would be responsible for paying half of a $3 million bribe that Imagina US’s then-partner, the Miami-based sports marketing company Traffic USA, had previously agreed to pay Jeffrey Webb, a senior official of the CFU and the president of CONCACAF.  The $3 million bribe was in exchange for a contract awarding Traffic USA the media and marketing rights to CFU members’ home World Cup qualifier matches for the 2018 and 2022 qualification cycles.  Co-Conspirator #1 and Imagina US’s CEO, Roger Huguet, then made a $500,000 payment towards Imagina US’s $1.5 million share of the bribe by having an intermediary send a false invoice from a Panamanian shell company to Imagina Media’s Portuguese subsidiary, Medialuso.  Co-Conspirator #1 then directed senior executives at Imagina Media and Medialuso, both of whom reported to Co-Conspirator #1, to make the payment.         

Many of the executives and soccer officials who paid or received the bribes described in the Information, and their intermediaries, have already pleaded guilty to participating in these bribery schemes, including Roger Huguet, Fabio Tordin, Miguel Trujillo, Jeffrey Webb, Costas Takkas, Alfredo Hawit, Rafael Callejas, Brayan Jiménez, Héctor Trujillo and Eduardo Li.  Reynaldo Vasquez of the Salvadoran soccer federation has been indicted for receiving bribes as part of this scheme but has not yet appeared before the Court.  Traffic USA has also pleaded guilty.     

Imagina Media’s Initial Failure to Conduct an Internal Investigation

On May 27, 2015, an indictment in the Eastern District of New York captioned United States v. Jeffrey Webb et al., 15-CR-252 (PKC) (the “First Indictment”) was unsealed.  The First Indictment charged Webb and others with participating in the CFU World Cup qualifiers scheme and also alleged that additional, anonymized co-conspirators were involved in the scheme.  According to the non-prosecution agreement, within days after the First Indictment was unsealed, Imagina Media’s senior management knew that these additional anonymized co-conspirators were Co-Conspirator #1 and Huguet, and that Imagina Media had been anonymously identified in the First Indictment as “Sports Marketing Company C.”  Co-Conspirator #1 denied to other members of Imagina Media’s senior management that he had been involved in a scheme to pay bribes to Webb or anyone else. 

For months after the First Indictment was unsealed, Imagina Media’s management did not conduct an internal investigation or make any serious inquiry to determine whether any of the allegations in it relating to Co-Conspirator #1 or Huguet were true.  In July 2015, Imagina Media issued a press release, in English and Spanish, in which it denied that there was any evidence that it was the “Sports Marketing Company C” named in the First Indictment, even though it knew that it was in fact Sports Marketing Company C.  In the same press release, Imagina Media denied that it paid any bribes.         

In December 2015, promptly after a superseding indictment and the guilty pleas of Huguet and Imagina US executive Fabio Tordin were unsealed, Imagina Media suspended and then terminated Co-Conspirator #1, Huguet, and Tordin, and retained counsel to conduct an internal investigation.    

The Non-Prosecution Agreement

Pursuant to the non-prosecution agreement it entered today, Imagina Media has accepted responsibility for its criminal conduct and that of its subsidiary Imagina US, and has also accepted responsibility for its failure to conduct a prompt internal investigation upon learning of the allegations against its agents in the First Indictment.  Imagina Media has accepted responsibility by, among other things: (a) causing Imagina US to plead guilty to the two counts in the Information and honor all of the terms of Imagina US’s plea agreement with the government, and (b) agreeing to pay the criminal penalty of $12,883,320 imposed on Imagina US as part of its sentence.  In consideration of this acceptance of responsibility, Imagina Media’s remedial actions to date, including the termination of Co-Conspirator #1, Roger Huguet and Fabio Tordin and the hiring of a new CEO, Chief Financial Officer and General Counsel, among others, at Imagina US, and its commitment to, among other things:  (a) accept and acknowledge responsibility for its conduct; (b) continue its cooperation; (c) implement enhanced internal controls and a rigorous corporate compliance program that includes policies and procedures at Imagina US, Imagina Media and Imagina Media’s other subsidiaries and affiliates designed to detect and deter violations of all applicable federal, state and foreign anti-corruption laws, the government entered a non-prosecution agreement with Imagina Media and agreed to a 10 percent reduction from the low end of the applicable Sentencing Guidelines fine range.  If Imagina Media violates the non-prosecution agreement, it is subject to full criminal prosecution.

The guilty plea and non-prosecution agreement announced today are part of an investigation into corruption in international soccer led by the U.S. Attorney’s Office for the Eastern District of New York, the FBI New York Field Office, and the IRS CI Los Angeles Field Office.  The prosecutors in Brooklyn are receiving considerable assistance from attorneys in various parts of the Justice Department’s Criminal Division in Washington, D.C., including the Office of International Affairs, the Organized Crime and Gang Section, the Money Laundering and Asset Recovery Section, and the Fraud Section, as well as from INTERPOL Washington. 

The government’s case is being handled by the Office’s FIFA Task Force and the Business and Securities Fraud Section.  Assistant United States Attorneys Paul Tuchmann, David Pitluck, Samuel P. Nitze and Brian D. Morris of the Eastern District of New York are in charge of the prosecution. 

The government’s investigation is ongoing.

The Defendant: US IMAGINA, LLC
Place of Organization:  Florida

E.D.N.Y. Docket No. 18-CR-311 (PKC)

Vitaly Korchevsky, a former hedge fund manager, and Vladislav Khalupsky, a securities trader, were convicted today in federal court in Brooklyn of conspiracy to commit wire fraud, conspiracy to commit securities fraud and computer intrusion, conspiracy to commit money laundering and two counts of securities fraud in connection with their roles in an international scheme to hack into three business newswires and steal yet-to-be published press releases containing non-public financial information, which was then used to make trades that generated approximately $30 million in illegal profits.  The verdicts followed a four-week trial before United States District Judge Raymond J. Dearie.  When sentenced, each defendant faces a maximum of 20 years’ imprisonment.

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

“The defendants teamed up with cybercriminal co-conspirators to hack pre-distribution press releases and then traded in the stock market based on that stolen information, making massive profits as a result,” stated United States Attorney Donoghue.  “Today’s verdict sends a powerful message that this Office, together with our law enforcement partners, will work tirelessly to disrupt any scheme, no matter how sophisticated, that threatens the integrity and fairness of our markets.”  Mr. Donoghue expressed his grateful appreciation to the United States Attorney’s Office for the District of New Jersey (USAO-DNJ), the Department of Homeland Security (DHS) and the U.S. Securities and Exchange Commission (SEC) for their significant cooperation and assistance in this case.

“Conspiring with hackers overseas, Korchevsky and Khalupsky worked swiftly to trade on stolen press releases, illegally profiting millions of dollars,” stated FBI Assistant Director-in-Charge Sweeney.  “Such a massive criminal operation called for massive cover-ups, but their attempts to cover their tracks were done in vain.  Devoting much time to the execution of this sneaky scheme, upon sentencing, the defendants will now rightfully face time in prison.”

“This case represents the core of the U.S. Secret Service’s commitment and strategy to aggressively pursue cyber-enabled financial criminal enterprises through our proven taskforce model of global partnerships,” stated USSS Deputy Assistant Director Breslin.  “The guilty verdict delivered today represents a win for the country and for all law enforcement agencies who worked together to ensure that justice was served.”

The evidence at trial established that between February 2010 and August 2015, computer hackers based in the Ukraine gained unauthorized access into the computer networks of Marketwired L.P., PR Newswire Association LLC, and Business Wire, via a series of sophisticated cyberattacks.  At one point, one of the hackers sent an online chat message in Russian to another individual stating, “hacking prnewswire.com.”  The hackers moved through the computer networks and stole press releases about upcoming announcements by public companies concerning earnings, revenues and other material non-public information.  Over the course of the scheme, the hackers stole more than 100,000 press releases.

In order to monetize the material non-public information in the stolen press releases, the hackers shared those stolen press releases with a network of traders, including Korchevsky and Khalupsky, via overseas computer servers controlled by the hackers and/or through secure email accounts.  Once they received the stolen press releases, Korchevsky and Khalupsky generally traded ahead of the public distribution of the stolen releases.  In order to execute their trades before the releases were made public, Korchevsky and Khalupsky often had to execute trades in extremely short windows of time between when the hackers illegally accessed and shared information, and when the press releases were disseminated to the public by the newswires, usually shortly after the close of the markets.  As a result, the trading data often showed a flurry of trading activity around a stolen press release just prior to its public release.  The defendants traded on stolen press releases containing material nonpublic information about publicly traded companies that included, among hundreds of others: Align Technology Inc.; CA Technologies; Caterpillar Inc.; Hewlett Packard; Home Depot; Panera Bread Co.; and Verisign Inc.

The illegal trading by the criminal network resulted in gains of more than $30 million, much of which was routed back to the hackers.  Korchevsky traded on the stolen press releases both in accounts that benefited the criminal network as well as in his own personal accounts, and ultimately netted more than $15 million in profits over the course of the scheme.  Khalupsky primarily traded in accounts that benefited the criminal network, and received a percentage of the profits he generated by trading on the stolen press releases, totaling at least $500,000 over the course of the scheme. 

The evidence at trial also demonstrated that the defendants went to great lengths to conceal their roles in the criminal scheme.  The conspirators used separate phones, computers and hotspots to conduct their illegal trading activity, and routinely deleted emails and/or destroyed hardware that contained evidence of their crimes.  The conspirators also directed that payments received for the illegal profits they generated for the criminal network be made to offshore shell companies.

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

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

The Defendants:

VITALY KORCHEVSKY
Age: 53
Glen Mills, Pennsylvania

VLADISLAV KHALUPSKY
Age: 47
Brooklyn, New York and Odessa, Ukraine

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

WASHINGTON – Credit Suisse (Hong Kong) Limited (Credit Suisse Hong Kong or CSHK), a Hong Kong-based subsidiary of Credit Suisse Group AG (Credit Suisse or CSAG), a Swiss-based issuer of publicly traded securities in the United States, has agreed to pay a $47 million criminal penalty for its role in a scheme to corruptly win banking business by awarding employment to friends and family of Chinese officials in violation of the Foreign Corrupt Practices Act.

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

“Credit Suisse Hong Kong’s practice of employing friends and family members of Chinese government officials as a quid pro quo for lucrative business opportunities was both profitable and corrupt and now the company will pay the price for that corruption,” stated United States Attorney Donoghue.  “This Office is committed to holding companies that conduct business in the United States accountable when they or their subsidiaries corruptly influence foreign government officials for financial gain.”

“Bribery, in all its forms, must be stopped,” said Acting Assistant Attorney General Cronan.  “Thanks to the prosecutors and investigators in this case, the Department has placed banks and other companies on notice that we will hold them accountable for all types of corrupt payments, including corrupt hiring practices.”

“In the banking industry, not every undertaking is fair game,” said FBI Assistant Director-in-Charge Sweeney.  “Trading employment opportunities for less-than-qualified individuals in exchange for lucrative business deals is an example of nepotism at its finest. The criminal penalty imposed today provides explicit insight into the level of corruption that took place at the hands of Credit Suisse Group AG’s Hong Kong-based subsidiary.”

According to CSHK’s admissions, between 2007 and 2013, several senior CSHK managers in the Asia Pacific (APAC) region engaged in a practice to hire, promote, and retain candidates referred by or related to Chinese government officials and executives of Chinese state-owned entities (SOE).  The employment of these “relationship” or “referral hires” was part of a quid pro quo with the officials who referred the candidates for employment, whereby CSHK bankers sought and obtained business from the referral sources.  Employees of other subsidiaries of CSAG were aware of the referral hires and facilitated the conduct. 

According to admissions made in connection with the resolution, CSHK bankers discussed and approved the hiring of close friends and family of Chinese officials in order to secure business for CSHK.  For example, one SOE executive emailed a senior CSHK banker to refer a candidate who had a “very good and close relationship” with senior management at the SOE, and wrote that hiring the referral hire would “bring [CSHK] the big surprise in the near future if [CSHK] could … arrange a position in CS team in Beijing.”  The senior CSHK banker later told a colleague about an impending deal that the SOE was pursuing and explained that the referring SOE official “was focused on having us make a relationship hire and said it was very important for us to win future business with [the SOE].”  In another email to colleagues, a CSHK employee explained that “[r]elationship hires have to translate to $” or “the relationship is worthless to our organization.”

CSHK further admitted that referral hires were less qualified than other employees hired at the same level, they were less stringently vetted, and were given benefits throughout the course of their employment due to the provision of business to CSHK by their referral sources.  For example, in relation to the interview process for one referral hire, a senior CSHK banker cautioned colleagues “not too many interviews,” as this referral hire was “a princess [who was] not used to too many rounds of interview.”  CSHK employees also noted that they had to “be a bit ‘creative’ in filling” in this referral hire’s resume, before sending it to other CSHK employees.  In another example, when a CSHK banker asked a high-ranking executive of a client SOE to “push for [CSHK’s] incentive,” the high-ranking executive “reminded [the CSHK banker] that [CSHK] need[ed] to pay [the SOE’s] relationship hire … well at the year end bonus.” 

The corrupt scheme netted CSHK at least $46 million in profits from business mandates with Chinese SOEs.

CSHK entered into a non-prosecution agreement and agreed to pay a criminal penalty of $47,029,916 to resolve the matter.  As part of the agreement, CSHK and its parent company Credit Suisse AG also agreed to continue to cooperate with the Department in any ongoing investigations and prosecutions relating to the conduct, to enhance their compliance programs, and to report to the Department on the implementation of their enhanced compliance programs.  The Department reached this resolution based on a number of factors, including that CSHK did not voluntarily and timely disclose the conduct at issue.  CSHK received partial credit for its and its parent company’s cooperation with the criminal investigation, including making foreign-based employees available for interviews in the United States and producing documents to the government from foreign countries in ways that did not implicate foreign data privacy laws.  However, CSHK did not receive additional cooperation credit because its cooperation was reactive and not proactive.  Additionally, CSHK did not receive full credit for remediation because it failed to sufficiently discipline employees who were involved in the misconduct.  Based on these considerations, the company received a non-prosecution agreement and an aggregate discount of 15 percent off of the bottom of the U.S. Sentencing Guidelines fine range.

In related proceedings, Credit Suisse Group AG also settled with the U.S. Securities and Exchange Commission (SEC).  Under the terms of its resolution with the SEC, Credit Suisse Group AG agreed to a total of $24,989,843 in disgorgement of profits and $4,833,961 in prejudgment interest.

The FBI’s New York Field Office investigated the case.  Assistant U.S. Attorneys Alicyn Cooley, Alixandra Smith and James P. McDonald of the Eastern District of New York’s Business and Securities Fraud Section, and Trial Attorney Katherine Nielsen and former Trial Attorney Allison Westfahl-Kong of the Criminal Division’s Fraud Section prosecuted the case.  The U.S. Attorney’s Office and the Fraud Section appreciate the significant cooperation and assistance provided by the SEC in this matter.

Attachment(s): 

Download Credit Suisse NPA with Statement of Facts