Eastern District of New York

Credit Suisse (Hong Kong) Limited (CSHK), a Hong Kong-based subsidiary of Credit Suisse Group AG (CSAG), a Swiss-based issuer of publicly traded securities in the United States, reached a resolution with the Department of Justice and 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.

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

“Credit Suisse (Hong Kong) Limited engaged in a corrupt scheme to win business with Chinese state-owned entities by hiring friends and family of Chinese government officials, generating the bank at least $46 million in profits,” said Acting Assistant Attorney General Cronan. “These ‘relationship hires’ often lacked necessary technical skills, and offered fewer qualifications and significantly less relevant banking experience than other candidates for the jobs.  The Department of Justice remains steadfast in our commitment to combatting bribery and corruption in all its many forms, including where companies engage in corrupt hiring practices to gain the favor of foreign officials to generate improper business advantages and increase profits.”

“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,” said U.S. 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.”

“In the banking industry, not every undertaking is fair game,” said 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 government officials and executives of clients that were state-owned entities (SOEs).  The employment of these “relationship hires” or “referral hires” was part of a quid pro quo with the officials who referred the candidates for employment, whereby CSHK bankers sought to and did win 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 they 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 admitted.

The Department and CSHK entered into a non-prosecution agreement, and CSHK 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 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 pay 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.  Trial Attorney Katherine Nielsen and former Trial Attorney Allison Westfahl-Kong of the Criminal Division’s Fraud Section and 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 prosecuted the case.  The Fraud Section and U.S. Attorney’s Office appreciate the significant cooperation and assistance provided by the SEC in this matter.

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

The United States filed a civil complaint today in federal court in Brooklyn against IMC Eastern Corporation (“IMC”) and Island Transportation Corporation (“ITC”), seeking to recover the costs associated with the investigation and cleanup of groundwater contamination at the New Cassel/Hicksville Groundwater Contamination Superfund Site (“the Site”) in the towns of Hempstead, North Hempstead and Oyster Bay, in Nassau County, New York.  The Site is approximately 6.5 square miles and includes residential, commercial and industrial areas.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Peter D. Lopez, Regional Administrator, United States Environmental Protection Agency, Region 2 (EPA), announced the filing.

“Maintaining the safety of public water supply wells is essential to the health and well-being of our communities,” stated United States Attorney Donoghue.  “Today’s filing serves as a warning to those who pollute our environment but refuse to take financial responsibility for their actions.  This Office will seek the recovery of costs, and civil monetary penalties where appropriate, from those who cause or contribute to environmental contamination.”

“Superfund is a cornerstone of EPA’s core mission.  This action is necessary to advance cleanup efforts and protect public health,” stated EPA Regional Administrator Lopez.  “The Superfund program is intended to make sure that those who contributed to contamination help pay for its cleanup.  Simply stated, the complaint will help EPA seek reimbursement from the responsible parties for the taxpayer money it spent investigating the site.”

According to the complaint, IMC and ITC operated facilities within the New Cassel Industrial Area, an approximately 170-acre industrial and commercial area located north (hydrologically upgradient) of the part of the Site designated by EPA as Operable Unit 1 (OU1).  Specifically, IMC was a tenant at 570 Main Street, and ITC was a tenant at 299 Main Street, both located in Westbury, New York.   

As alleged, IMC and ITC used hazardous substances called volatile organic compounds (VOCs) in connection with their businesses.  These hazardous substances, which include tetrachloroethylene (PCE), trichloroethylene (TCE), and 1,1,1-trichloroethane (1,1,1-TCA), were released at IMC’s and ITC’s facilities and have migrated south (hydrologically downgradient) of these facilities, impacting Long Island’s sole source drinking water aquifer.  Exposure to high levels of VOCs such as PCE, TCE, and 1,1,1-TCA can cause a variety of adverse human health effects, such as damage to the nervous system, liver, kidneys, and reproductive system.  VOCs may also be harmful to unborn children and are considered possible carcinogens.  Consistent with the Safe Drinking Water Act that protects public drinking water supplies throughout the nation, the public water suppliers in the area of the Site monitor water quality regularly and have previously installed treatment systems to remove VOCs from groundwater prior to distribution to the public.

From 1953 through March 1992, IMC manufactured and sold motors and air movers, and used PCE, TCE, and 1,1,1-TCA in its manufacturing processes.  Soil and sediment sampling conducted in 1993, and groundwater sampling conducted in 1998 and 1999, each revealed VOC contamination, including PCE, TCE, and 1,1,1-TCA, at the 570 Main Street property.  From at least 1971 to 1979, ITC used its facility to wash and repair its trucks and to refuel them with gasoline.  ITC used TCE as part of its truck maintenance activities.  Groundwater sampling conducted in 2000, and soil sampling conducted in 2001, each revealed TCE contamination at the 299 Main Street property.

According to the complaint, contamination from defendants’ respective properties contributed to the groundwater contamination at the OU1 portion of the Site.

The complaint asserts claims under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as the Superfund statute.  The Superfund statute protects human health and the environment while safeguarding taxpayer dollars by holding parties that contributed to contamination responsible for cleaning it up.  Since 1980, EPA’s Superfund program has managed the cleanup of the nation’s high-priority hazardous sites and has responded to environmental emergencies, oil spills and natural disasters.

The government’s case is being handled by the Office’s Civil Division.  Assistant United States Attorney Alex S. Weinberg is in charge of the litigation with assistance from Sharon Kivowitz, Assistant Regional Counsel, EPA Region 2.

E.D.N.Y. Docket No. 18-CV-3818

A four-count indictment was unsealed today in federal court in Brooklyn, New York, charging commodity pool operator Harris Landgarten with commodities fraud, wire fraud and attempting to obstruct an official proceeding by the Commodity Futures Trading Commission (the “CFTC”) into his fraudulent conduct.  Landgarten was arrested on Saturday and is scheduled to be arraigned this afternoon before United States Magistrate Judge Sanket J. Bulsara.  If convicted of these charges, Landgarten faces a maximum sentence of 25 years’ imprisonment.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Peter R. Rendina, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS), and James McDonald, Director, Division of Enforcement, Commodity Futures Trading Commission (CFTC), announced the charges.

“As alleged in the indictment, Landgarten defrauded commodities investors by using their money to pay personal bills, and then compounded his crime by pressuring a victim investor to lie in an attempt to make the investigation go away,” stated United States Attorney  Donoghue.  “Our message is clear, those who engage in such crimes will be prosecuted to the fullest extent of the law.”

“Mr. Landgarten devised an audacious scheme to swindle his clients who placed their trust in him, then further victimized an investor by allegedly only returning funds if a complaint against him was withdrawn, a classic case of greed to fund his own personal lifestyle,” stated USPIS Inspector-in-Charge Rendina.  “Postal Inspectors will never tolerate abuse of the public trust, and will bring those to justice who violate the laws that protect the investing public.”

 “As this case shows, the CFTC will work vigilantly to root out fraud from our markets, and we will not be deterred by those who attempt to obstruct our investigations,” stated CFTC Director of Enforcement McDonald.  “To ensure both that our markets are protected from fraud and that wrongdoers are held accountable, we will continue to work in parallel with our law enforcement partners, and I am grateful for the work of the United States Attorney’s Office in this case.”   

According to court papers, Landgarten operated a commodity pool known as Tradeanedge Members Fund, L.P.  The fund’s three investors invested a total of approximately $150,000.  From approximately July 2014 to March 2017, Landgarten prepared and sent the investors balance statements that hid the fact that he had spent more than $100,000 of the investors’ money, including on personal expenses such as a home security alarm, cable television and internet service, cell phone, online book subscription and $1,250 monthly payments to himself.  After the CFTC initiated an investigation, Landgarten pressured a defrauded investor to submit a false statement to the CFTC and to withdraw the complaint the investor filed with the agency.  Landgarten conditioned the return of what remained of the investor’s money upon the investor’s withdrawal of his complaint.

The charges contained 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 Business and Securities Fraud section.  Assistant United States Attorney Hiral Mehta is in charge of the prosecution.

The Defendant: HARRIS LANDGARTEN
Age:  66
Glen Head, New York

E.D.N.Y. Docket No. 18-CR-328 (NGG)

Thirteen individuals, including five doctors, a chiropractor, three licensed physical and occupational therapists and two pharmacy owners have been charged for their participation in fraudulent schemes in connection with which Medicare and Medicaid programs were billed more than $163 million.  The charges filed in federal court in Brooklyn and Central Islip, New York, are part of a nationwide health care fraud takedown, led by the Medicare Fraud Strike Force, which resulted in criminal charges against 601 individuals for their alleged participation in health care fraud schemes involving approximately $2 billion in fraudulent claims.

The charges were announced by 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; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services - Office of Inspector General, Office of Investigations, New York Regional Office (HHS-OIG); James D. Robnett, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI); and Dennis Rosen, Inspector General, New York State Office of the Medicaid Inspector General (OMIG).  The results of the nationwide takedown were announced today by Attorney General Jeff Sessions; Alex M. Azar II, Secretary, HHS; Christopher Wray, Director, FBI; Robert W. Patterson, Acting Administrator, Drug Enforcement Administration (DEA); Daniel Levinson, Inspector General, HHS-OIG; Don Fort, Chief, IRS-CI; Seema Verna, Administrator, Centers for Medicare and Medicaid Services.

“As alleged, the defendants charged throughout the Eastern District of New York as a part of the nationwide health care takedown abused their positions to enrich themselves, while bilking Medicare and Medicaid.  They did so without regard to the elderly and vulnerable citizens whose health depends upon these essential programs.  Licensed medical professionals and others who cheat the system will be investigated and prosecuted to the full extent of the law,” stated United States Attorney Donoghue.  Mr. Donoghue extended his grateful appreciation to the U.S. Office of Personnel Management, Office of Inspector General (OPM-OIG), U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), the New York City Police Department (NYPD), the New York Attorney General’s Medicaid Fraud Control Unit (MFCU), the New York City Human Resources Administration and the New York City Health and Hospitals Corporation, Office of Inspector General, for their assistance in the investigations in this district.

“Turning a blind eye to the needs of Medicare and Medicaid recipients,

these medical officials set their sights on personal gain,” stated FBI Assistant Director-in-Charge Sweeney.  “Our doctors and healthcare professionals are entrusted to serve those in need, but these individuals used their occupations as leverage to fulfill their fraudulent scheme. By allegedly billing Medicare and Medicaid more than $163 million, the defendants selfishly diverted funds allocated to our most vulnerable citizens.  Devoted to protecting the welfare of our citizens, we will continue to uproot those who blatantly take advantage these programs.”

“Health care fraud depletes funds intended to provide care for our most vulnerable citizens,” stated HHS-OIG Special Agent-in-Charge Lampert.  “This takedown sends a clear message that criminals who engage in health care fraud schemes will be caught and face consequences for their actions.”

“Medical doctors and medical professionals should be some of the most trusted people in our lives,” stated IRS-CI Special Agent-in-Charge James Robnett.  “The financial expertise of IRS-Special Agents is needed to not only decipher the tax violations, but is necessary to unravel the sophisticated widespread financial fraud perpetrated against the safety net millions of Americans rely upon on a daily basis.”

“Medicaid fraud is not a victimless crime.  Those engaged in schemes like this prey on the most vulnerable New Yorkers, rob the health care system of vital resources, and waste taxpayer dollars,” stated OMIG Inspector General Rosen.  “My office will continue to work closely with our federal partners to hold wrongdoers fully accountable.”

The schemes charged in the Eastern District of New York, detailed in eight indictments and one criminal information, are as follows:

United States v. Wael Bakry, et al.:  The superseding indictment charges five health care professionals for their role in a wide-ranging health care fraud scheme in Brooklyn and Queens that billed the Medicare program for more than $116 million.  Wael Bakry, a physical therapist, Abraham Demoz, a physician, Victor Genkin, an occupational therapist, Mayura Kanekar, an occupational therapist, and Alexander Khavash, a chiropractor, were each charged with conspiracy to commit health care fraud, conspiracy to commit money laundering, conspiracy to pay health care kickbacks, conspiracy to defraud the United States by obstructing the lawful functions of the Internal Revenue Service, and subscribing to a false and fraudulent tax return.  Additionally, Bakry, Kanekar and Khavash were each separately charged with two false claims counts.  The charges stem from the defendants’ involvement in a scheme, run through multiple medical practices, in which the defendants paid illegal kickbacks for the referral of patients to their clinics.  These patients, in turn, subjected themselves to purported physical and occupational therapy and other services in return for kickbacks.  The superseding indictment was filed on June 20, 2018.  The case, which is pending before United States District Judge Sterling Johnson, Jr., is being prosecuted by Assistant Chief A. Brendan Stewart and Trial Attorney Andrew Estes of the Criminal Division’s Fraud Section. 

United States v. Artem Ashirov:  The indictment charges Artem Ashirov, a pharmacist and sole proprietor of ABO Pharmacy in Brooklyn, with five counts of violating the Anti-Kickback Statute.  The charges stem from a scheme in which Ashirov paid and offered to pay kickbacks for prescriptions filled at his pharmacy.  Between 2015 and 2018, Ashirov, through ABO Pharmacy, billed more than $14.9 million to Medicare and Medicaid.  Ashirov was arrested, and arraigned earlier today before United States Magistrate Judge Ramon E. Reyes, Jr., at the federal courthouse in Brooklyn.  The case is being prosecuted by Assistant United States Attorney Erin E. Argo of the U.S. Attorney’s Office for the Eastern District of New York. 

United States v. Gary Peresiper:  The indictment charges Gary Peresiper, a medical clinic business manager, with conspiracy to pay health care kickbacks.  The charge stems from Peresiper’s role at two Brooklyn clinics, Pulmonary Solutions, P.C., and Multi Care Medical NY PLLC.  Peresiper and co-conspirators submitted claims through these clinics for purported diagnostic testing and other services for beneficiaries who had been directed to the clinics in return for kickbacks.  From November 2010 to June 2013, the clinics billed Medicare approximately $10.2 million in claims, and were paid approximately $4.7 million on those claims.  Peresiper was arrested, and arraigned before United States Magistrate Judge Peggy Kuo at the federal courthouse in Brooklyn on June 4, 2018.  The case is being prosecuted by Trial Attorney Sarah Wilson Rocha of the Criminal Division’s Fraud Section.

United States v. Iouri Winogradov:  Iouri Winogradov, the operator of Brooklyn ambulette company Ambulette Star Trans, was charged with one count of conspiracy to violate the Anti-Kickback Statute and one count of conspiracy to commit money laundering.  The charges stem from Winogradov’s role in a kickback and money laundering scheme in which Winogradov and co-conspirators received and paid illegal kickbacks for the referral of patients to medical clinics.  The patients, who were transported to and from the clinics by Ambulette Star Trans, subjected themselves to purported physical and occupational therapy and other services.  Between 2010 and 2014, Ambulette Star Trans was paid approximately $7 million as a result of claims submitted to Medicaid.  The indictment was unsealed on June 27, 2018, and the defendant remains at large.  The case is being prosecuted by Andrew Estes of the Criminal Division’s Fraud Section.

United States v. Yuriy Barayev:  Yuriy Barayev, a pharmacy owner, was indicted on one count of health care fraud.  The charge stems from Barayev’s ownership of a Queens pharmacy, Woodhaven Rx Inc., through which he submitted claims for medications that were purportedly dispensed by his pharmacy, but in fact were never dispensed to beneficiaries.  From November 2013 to December 2015, Medicare reimbursed the pharmacy approximately $6.6 million for pharmaceutical claims.  Barayev was arrested, and arraigned before United States Magistrate Judge Steven L. Tiscione at the federal courthouse in Brooklyn on June 26, 2018.  The case is being prosecuted by Trial Attorney Sarah Wilson Rocha of the Criminal Division’s Fraud Section.

United States v. Yong Jun Kim:  The indictment charges Yong Jun Kim, a medical doctor who operated My Health Wellness Center in Flushing, New York, with one count of conspiracy to commit health care fraud and one count of violating the Anti-Kickback Statute.  The charges stem from Dr. Kim’s role in a scheme in which claims were submitted to Medicare for physical therapy services that were not medically necessary, not provided, or otherwise did not qualify for reimbursement.  Between 2012 and 2015, Dr. Kim billed Medicare approximately $5.6 million and was paid approximately $3.5 million on those claims.  Dr. Kim was arrested, and arraigned before United States Magistrate Judge Steven L. Tiscione at the federal courthouse in Brooklyn on June 27, 2018.  The case is being prosecuted by Senior Litigation Counsel Patricia Notopoulos of the U.S. Attorney’s Office for the Eastern District of New York.

United States v. Yekaterina Kleydman:  The indictment charges Yekaterina Kleydman, a medical doctor, with one count of health care fraud and three counts of making false claims.  The charges stem from a scheme in which Dr. Kleydman fraudulently billed Medicare and Medicaid for cosmetic dermatological procedures that did not qualify for reimbursement.  Between January 2015 and March 2018, Dr. Kleydman billed Medicare and Medicaid approximately $2.5 million and was paid approximately $700,000 on those claims.  Dr. Kleydman was arrested, and arraigned before United States Magistrate Judge Steven L. Tiscione at the federal courthouse in Brooklyn on June 25, 2018.  The case is being handled by Trial Attorney Debra Jaroslawicz of the Criminal Division’s Fraud Section.

United States v. Harold Bendelstein:  The indictment charges Harold Bendelstein, a medical doctor, with one count of health care fraud and two counts of making false claims.  The charges stem from a scheme in which Dr. Bendelstein billed Medicare and Medicaid for incision procedures to patients’ ears, when, in fact, Dr. Bendelstein either did not perform the procedure specified or performed no procedure at all.  Between January 2014 and February 2018, Dr. Bendelstein billed Medicare and Medicaid approximately $585,000 and was paid approximately $200,000 on those claims.  Dr. Bendelstein was arrested, and arraigned before United States Magistrate Judge Steven L. Tiscione at the federal courthouse in Brooklyn on June 27, 2018.  The case is being prosecuted by Trial Attorney Debra Jaroslawicz of the Criminal Division’s Fraud Section.

United States v. Hal Abrahamson:  The information charges Hal Abrahamson, a licensed podiatrist, with one count of health care fraud.  The charges stem from a scheme in which Dr. Abrahamson submitted claims to Medicare and private insurance companies for procedures he did not perform, including skin grafts and wound packing, among other false billings.  Between 2013 and 2017, Dr. Abrahamson caused a loss of approximately $869,000 to the Medicare program and other insurers.  Dr. Abrahamson was arraigned and pleaded guilty before United States District Judge Denis R. Hurley at the federal courthouse in Central Islip on June 26, 2018.  The case is being prosecuted by Assistant United States Attorney Charles Kelly of the U.S. Attorney’s Office for the Eastern District of New York. 

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

The Defendants:

WAEL BAKRY
Age:  46
Staten Island, New York

E.D.N.Y. Docket No. 17-CR-0353 (SJ)

Dr. Abraham Demoz
Age: 58
Oceanside, New York

E.D.N.Y. Docket No. 17-CR-0353 (SJ)

Victor Genkin
Age: 49
Brooklyn, New York

E.D.N.Y. Docket No. 17-CR-0353 (SJ)

Mayura Kanekar
Age: 43
Bayside, New York

E.D.N.Y. Docket No. 17-CR-0353 (SJ)

Alexander Khavash
Age: 41
Parkland, Florida

E.D.N.Y. Docket No. 17-CR-0353 (SJ)

Artem Ashirov
Age:  42
Rego Park, New York

E.D.N.Y. Docket No. 18-CR-0321 (WFK)

Gary Peresiper
Age:  52
East Rockaway, New York

E.D.N.Y. Docket No. 18-CR-0280 (SJ)

Iouri Winogradov
Age:  51
Brooklyn, New York

E.D.N.Y. Docket No. 18-CR-0317 (JBW)

Yuriy Barayev
Age:  43
Briarwood, New York

E.D.N.Y. Docket No. 18-CR-0318 (FB)

Dr. Yong Jun Kim
Age:  48
Roslyn, New York

E.D.N.Y. Docket No. 18-CR-0320 (ARR)

Dr. Yekaterina Kleydman
Age:  35
Staten Island, New York

E.D.N.Y. Docket No. 18-CR-0310 (NGG)

Dr. Harold Bendelstein
Age:  57
Far Rockaway, New York

E.D.N.Y. Docket No. 18-CR-0309 (SJ)

Dr. Hal Abrahamson
Age:  55
Melville, New York

E.D.N.Y. Docket No. 18-CR-0314 (DRH)

 

CVS Pharmacy, Inc. (“CVS”) has agreed to pay $1.5 million to resolve the United States’ investigation that certain of its pharmacy stores located in Nassau and Suffolk counties on Long Island violated the federal Controlled Substances Act (“CSA”) by failing to timely report the loss or theft of controlled substances, including hydrocodone, an opioid that is one of the most commonly diverted controlled substances.  The CSA requires pharmacies, such as CVS, to timely report the loss or theft of controlled substances so that DEA can promptly investigate.      

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

“The failure to promptly report the loss or theft of prescription drugs as required by law contributes to the opioid epidemic, which has caused devastating harm to individuals and our community,” stated United States Attorney Donoghue.  “The settlement with CVS demonstrates the resolve by this Office and the DEA to use all available tools to address this crisis at every level and reduce the availability of highly addictive, dangerous drugs.”

“This year, it is estimated that more than two million Americans will suffer from opioid addiction,” stated DEA Special Agent-in-Charge Hunt.  “Law enforcement, treatment professionals and educators are arming ourselves with strategies and actions to combat this growing crisis.  Through regulatory actions, DEA Diversion investigators and the EDNY identified that CVS violated the Controlled Substances Act.  This settlement is significant because it shows that big chain pharmacies, like CVS, are taking responsibility for violating federal law, which is a step in the right direction for curbing the opioid epidemic.”

CVS is a Rhode Island corporation with its corporate headquarters in Woonsocket, Rhode Island.  CVS, directly or through its retail pharmacy subsidiaries and affiliates, operates retail pharmacies in the State of New York that dispense prescription drugs, including controlled substances, to retail consumers. 

Opioid abuse has reached epidemic proportions throughout the United States.  According to the United States Department of Health & Human Services Centers for Disease Control and Prevention (“CDC”), on average 46 Americans died every day from an overdose involving prescription opioids in 2016.  In response to the overwhelming number of prescriptions, and the mounting number of overdoses and deaths, two months ago the CDC issued new guidelines recommending that doctors prescribe less addictive and less powerful pain relievers before prescribing highly addictive drugs, and that they prescribe limited amounts. 

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’s Long Island District Office Diversion Group D-11, in conjunction with the five District Attorneys in this district, the Nassau and Suffolk County Police Departments, the New York City Police Department and New York State Police, along with other key federal, state and local government partners, launched the Initiative to mount a comprehensive response to the increase in opioid abuse.  To date, the Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 22 health care professionals.  The Initiative also has resulted in civil enforcement actions against a hospital, a pharmacy and a pharmacy chain, the removal of prescription authority from numerous doctors and the expansion of information sharing among enforcement agencies to better target and pursue drug traffickers.

The United States’ case is being handled by Assistant United States Attorney Diane C. Leonardo of the Office’s Civil Division. 

Today, the Department of Justice also announced a national healthcare fraud takedown that resulted in charges against 601 individuals responsible for over $2 billion in fraud losses, which can be viewed at: https://www.justice.gov/opa/pr/national-health-care-fraud-takedown-results-charges-against-601-individuals-responsible-over.

 

Earlier today, in federal court in Brooklyn, Sergey Demidenko pleaded guilty to six counts of bank robbery before United States District Court Judge Pamela K. Chen.  When he is sentenced, Demidenko faces a statutory maximum sentence of 20 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 plea.

“Sergey Demidenko committed a string of robberies across Brooklyn, Long Island and New Jersey and then brazenly gambled away the stolen cash in Atlantic City,” stated U.S. Attorney Donoghue.  “Thanks to the efforts of the FBI and our state and local partners, Demidenko had no luck in getting away with these crimes, for which he has now pleaded guilty and will be held responsible.”

“After their month-long robbery spree, the defendants will now be brought to justice. Demidenko and his co-defendant strategically planned these robberies, just to gamble with their illegal proceeds in the end,” stated FBI Assistant Director-in-Charge Sweeney. “As shown by their guilty plea, they will now face the consequences of their self-driven actions.”

According to court filings and statements made during the guilty plea proceedings, between January 16, 2018 and January 26, 2018, Demidenko and his co-defendant James Boccanfusco robbed four banks, and attempted to rob two others in Brooklyn, Long Island and New Jersey.  In each instance, Demidenko presented a note demanding money from the tellers.  Demidenko’s co-defendant, Boccanfusco, waited outside the banks in a getaway car.  After the robberies, the two drove to Atlantic City, New Jersey, where they used the robbery proceeds to gamble at various casinos.  

The indictment charged Demidenko and Boccanfusco with the following robberies:

• Capital One Savings Bank branch in Brooklyn, New York, on January 16, 2018;
• Chase Bank branch in Manahawkin, New Jersey, on January 18, 2018;
• Wells Fargo Bank branch in Galloway Township, New Jersey, on January 24, 2018;
• Roslyn Savings Bank branch in Massapequa, New York, on January 25, 2018;
• Chase Bank branch in Brooklyn, New York, on January 25, 2018 (attempted), and
• Wells Fargo Bank branch in Manahawkin, New Jersey, on January 26, 2018 (attempted).

Demidenko’s co-defendant, Boccanfusco, previously pleaded guilty before Judge Chen on May 24, 2018 to four counts of bank robbery and two counts of attempted bank robbery.

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

The Defendants: SERGEY DEMIDENKO
Age: 39

JAMES BOCCANFUSCO
Age: 41

E.D.N.Y. Docket No. 18-CR-104

Earlier today, in federal court in Central Islip, John Derounian pleaded guilty to mail fraud in connection with a scheme to steal more than $1.2 million from the estate of the elderly victim (“Jane Doe”) by transferring Jane Doe’s assets into accounts controlled by the defendant.  Derounian also pleaded guilty to possessing child pornography.  The proceeding was held before United States Magistrate Judge Gary R. Brown.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Phillip Bartlett, Inspector-in-Charge, United States Postal Inspection Service, New York Division, announced the guilty plea.

As detailed in prior court proceedings and the superseding indictment, on November 12, 2015, Derounian claimed to have found the body of Jane Doe, Derounian’s tenant, at her apartment in his Sea Cliff home.  Subsequent to Jane Doe’s death, Derounian placed a series of telephone calls and sent emails to Morgan Stanley in an effort to drain Jane Doe’s financial accounts of over $200,000. 

In an effort to perpetuate the fraud, Derounian created a forged will naming himself as the executor and sole beneficiary of Jane Doe’s estate, aside from a comparatively small charitable donation.  Derounian then used the authority of the forged will to cremate Jane Doe’s body and sell her real property for over $1 million, which he transferred into bank accounts he controlled.  As a result of the investigation to date, funds totaling over $1.2 million have been seized from Derounian, and the indictment seeks forfeiture of those funds.

Derounian was arrested on June 26, 2016, and law enforcement officers recovered various electronic devices from his home that contained approximately 50 images of child pornography.

When sentenced, Derounian faces up to 20 years’ imprisonment for mail fraud and 20 years’ imprisonment for possession of child pornography.

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorney Mark E. Misorek is in charge of the prosecution.  Assistant United States Attorney Robert W. Schumacher of the Office’s Civil Division is handling matters relating to forfeiture.

The Defendant: JOHN DEROUNIAN
Age:  53
Sea Cliff, New York

E.D.N.Y. Docket No. 16-cr-412 (JMA)

Earlier today, in federal court in Brooklyn, Tyriek Hankins was sentenced to nine years’ imprisonment by United States District Judge Ann M. Donnelly for his role in a cocaine and crack distribution conspiracy operating in and around the Cypress Hills Houses (“Cypress”), a large New York City Housing Authority complex located in East New York.  Hankins pleaded guilty on April 20, 2017 to conspiring to distribute 500 grams or more of cocaine.  He was the last of the 10 defendants in this case to be sentenced.   

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

“By supplying large amounts of cocaine to distributors, Hankins and his co-conspirators contributed to the destructive impact that drug abuse has had on their own community in Brooklyn,” stated United States Attorney Donoghue.  “This Office is committed to dismantling drug organizations that endanger our community and the residents of public housing.” 

“Hankins and his co-conspirators had major influence over the deadly cycle of drugs, circulating cocaine and crack throughout the Cypress Hills Houses,” stated FBI Assistant Director-in-Charge Sweeney.  “As illustrated by both the current and previous investigations, the FBI NY Metro Safe Streets Task Force will continue to work closely with our law enforcement partners to rid our communities of the gang and drug-related threats.”

 “In close collaboration with our federal partners at the FBI and the Eastern District, the NYPD will remain relentless in our precise targeting of gangs and crews and the illegal behavior they engage in, in all of our neighborhoods,” stated NYPD Police Commissioner O’Neill.  “It remains our duty to dismantle criminal enterprises like this one as we keep striving to make the safest large city in the nation even safer.”

As alleged in public documents and presented at hearings, Cypress had long been plagued by gang and drug-related violence.  In response to the criminal activity, the FBI, the NYPD, and the U.S. Attorney’s Office conducted an investigation that revealed Hankins was at the center of a large-scale drug trafficking operation, which sold cocaine and other drugs in Cypress, upstate New York and in Maine.  Hankins and co-conspirators Anthony Brown and Isiah Sadler were suppliers of powder cocaine to mid-level distributors.  Other co-conspirators cooked and sold that cocaine as crack.  Brown, who pleaded guilty to charges in three separate federal cases for his role in heroin- and cocaine-trafficking, and Sadler, who pleaded guilty to conspiracy to distribute and possess with intent to distribute cocaine, were previously sentenced to, respectively, 192 months and 168 months’ imprisonment.

Hankins’ co-defendants also pleaded guilty to conspiracy to distribute cocaine and were sentenced as follows:  Anthony Keitt, to 36 months’ imprisonment; Michael Vailes, to 78 months’ imprisonment; Renee Belardo, to probation; Cherena Swain, to probation; Rafael Perez, to 41 months’ imprisonment; Ronald Jackson, to 70 months’ imprisonment; and Dimas Perez, to 60 months’ imprisonment. 

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 prosecuted by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Margaret Gandy, Andrey Spektor and David Gopstein are in charge of the prosecution. 

Defendant Sentenced Today:

TYRIEK HANKINS
Age:  31
Brooklyn, New York

Defendants Previously Sentenced:

RENEE BELARDO
Age:  32
Brooklyn, New York

ANTHONY BROWN
Age:  34
Brooklyn, New York

RONALD JACKSON
Age:  39
Utica, New York

ANTHONY KEITT
Age:  38
Brooklyn, New York

DIMAS PEREZ
Age:  40
Brooklyn, New York

RAFAEL PEREZ
Age:  52
Brooklyn, New York

ISIAH SADLER
Age:  33
Brooklyn, New York 

CHERENA SWAIN
Age:  31
Brooklyn, New York

MICHAEL VAILES
Age:  31
Brooklyn, New York 

E.D.N.Y. Docket No. 16-CR-297 (AMD)

Earlier today, in federal court in Brooklyn, Kensil Dexter Fender, also known as “English,” was sentenced by United States District Judge Kiyo A. Matsumoto to 25 years’ imprisonment for the murder of Rowan Clarke.  Fender previously pleaded guilty on December 14, 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, James P. O’Neill, Commissioner, New York City Police Department (NYPD) and George P. Beach II, Superintendent, New York State Police (NYSP) announced the sentence.

“More than a decade ago, Fender murdered a man while trying to commit a home invasion drug robbery.  With today’s sentence, he learns that justice does not forget and does not rest,” stated United States Attorney Donoghue.  “I commend our federal, state and local partners for working together to take this dangerous criminal off the street.”  Mr. Donoghue expressed his thanks to the United States Postal Inspection Service for their assistance during the investigation.

“This drug investigation demonstrates the inevitable link between drug trafficking and violent crime,” stated DEA Special Agent-in-Charge Hunt.  “In most of our cases, greed is the underlying force behind drug trafficking, and it is ironic that a piece of jewelry and DNA were key factors in bringing Rowan Clarke’s killer to justice.”

 “Today’s sentencing has been a long time in coming and is an appropriate, meaningful penalty for this career criminal,” stated NYPD Commissioner O’Neill.  “In partnership with the DEA and the Eastern District, the NYPD has a long memory and an even longer reach.  I commend everyone involved in this case for seeing it through to its successful conclusion.”

“Good police work and invaluable partnerships at the federal, state and local level were key in bringing this murderer to justice,” stated NYSP Superintendent Beach. “State Police and our partners will continue to work together to keep our communities safe from such criminals and the dangerous drug activity and violence that they perpetuate.”

According to court filings and statements made in court, on April 2, 2007, Fender and a co-conspirator attempted to rob Clarke, who they believed had illegal drugs and drug proceeds at his apartment in northern Manhattan.  As Fender and his co-conspirator attempted to push their way into the apartment, they struggled with Clarke and fatally shot him.  Law enforcement agents were able to identify Fender based on DNA on a piece of jewelry left behind at the murder scene.  In addition to his role in the murder, Fender was a drug distributor, buying and selling large amounts of marijuana.

Upon completion of his sentence, Fender, an illegal alien from Jamaica, faces deportation from the United States.

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

Defendant:

KENSIL DEXTER FENDER
Age:  36
Woodmere, New York

E.D.N.Y. Docket No. 16-124-(ENV)

 

Earlier today, in federal court in Brooklyn, Parveg Ahmed pleaded guilty before United States District Judge Ann M. Donnelly to one count of attempting to provide material support or resources to the Islamic State of Iraq and al Sham (“ISIS”), a designated foreign terrorist organization.  When he is sentenced, Ahmed faces a statutory maximum of 20 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.

As detailed in publicly filed court documents, Ahmed is a United States citizen who traveled to Saudi Arabia in June 2017, purportedly to celebrate an Islamic religious holiday.  Upon his arrival in Saudi Arabia, the defendant attempted to travel to Syria to join ISIS.  The defendant was detained in a Middle Eastern country during his attempted travel to ISIS-controlled territory and was deported back to the United States on August 28, 2017, where he was arrested at John F. Kennedy International Airport. 

Prior to his travel, the defendant had repeatedly expressed support on social media for ISIS and for individuals who provided support to the foreign terrorist organization’s mission of violent extremism.  On July 17, 2017, JTTF agents obtained a search warrant for the defendant’s personal computer, and learned, among other things, that the defendant had viewed or listened to recordings of radical Islamic clerics Anwar al-Awlaki and Abdullah el-Faisal.  Al-Awlaki was a United States-born cleric and prominent leader of the foreign terrorist organization al Qaeda in the Arabian Peninsula who was killed on or about September 30, 2011.  El-Faisal, a Jamaican-born cleric, was found guilty in the United Kingdom of, among other things, solicitation to commit murder, for preaching to followers to kill individuals, including Americans, because he deemed them to be enemies of Islam.  Additionally, agents learned that, on the same day the defendant left the United States for the Middle East, the defendant researched how to erase the data on his computer.

The government’s case is being handled by the Office’s National Security & Cybercrime Section.  Assistant United States Attorneys Craig R. Heeren and Margaret E. Lee are in charge of the prosecution, with assistance from Trial Attorney Joshua Champagne of the National Security Division’s Counterterrorism Section.

The Defendant:

PARVEG AHMED
Age:  22
Queens, New York

E.D.N.Y. Docket No. 17-CR-378 (AMD)

A complaint was unsealed earlier today in federal court in Brooklyn charging Igal Haimoff, a rabbi, and Mark Weissman with engaging in a scheme to extort $7 million from an individual in exchange for not providing purportedly incriminating information to law enforcement authorities.  Haimoff and Weismann were arrested today and made their initial appearance this afternoon before United States Magistrate Judge Cheryl L. Pollak.  The defendants were each released on a $250,000 bond.

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 D. Robnett, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the charges.

“As alleged, Haimoff and Weissman attempted to characterize the millions of dollars they expected to receive from their extortionate threat as a charitable donation,” stated United States Attorney Donoghue.  “This Office, along with our law enforcement partners, will vigorously investigate and prosecute those who seek to hide their criminal conduct behind the cloak of a charity.”  

“Charity of all kinds, especially related to children, is esteemed to be noble, honest, and true,” stated FBI Assistant Director-in-Charge Sweeney.  “By allegedly attempting to extort and blackmail this victim in the name of charity, Haimoff and Weissman gravely undermined these values. By the arrests of these individuals, it is clear that regardless of cunning cover-ups, all injustices will ultimately be revealed.”

“IRS Criminal Investigation takes criminal actions that undermine confidence in the Internal Revenue Code seriously.  Disguising illegally obtained funds as charitable donations is disgraceful,” stated IRS-CI Special Agent-in-Charge Robnett. “The allegations outlined in this criminal complaint are serious and we are obligated to use our financial expertise to unravel the scheme devised by Rabbi Haimoff and Mr. Weissman.”

According to the complaint, beginning in early 2017, Weissman advised the Victim that unless he paid $6 million, another individual (Person A) would provide incriminating information to law enforcement. Weissman enlisted Rabbi Haimoff to allow his charity to receive the extorted funds, as a way to disguise the purpose of the transaction.  Haimoff and Weissman ultimately created and transmitted a fraudulent charitable donation letter to the individual they believed would be sending the extorted funds from overseas. The letter, on the charity’s letterhead from Haimoff, stated:

Thank you so much for your pledge of $6,000,000 towards our building campaign. Your generous donation will enable us to complete the construction of our Yeshiva building which is so vital for the continued growth of our Queens community. It is the generosity of donors such as yourself that provide us with the strength and ability to continue being there for the community. Thank you for being our partner in this most important endeavor. For your convenience, you can fire (sic) the funds to our bank account as follows [bank account details].

In fact, when transmitting the letter, Haimoff and Weissman were actually communicating with an FBI agent acting in an undercover capacity.

Haimoff later indicated that Person A was increasing the demand to $7 million.  The victim indicated that he could provide these funds and Haimoff requested to be provided with a letter indicating why the “donation” was increasing to $7 million. On or about June 6, 2018, Haimoff and the undercover FBI agent, exchanged the following emails, which read in part:

Undercover FBI Agent: Dear Rabbi Haimoff, I have learned that there is additional structural work required for the construction of the Yeshiva building for the Charity. As such I would like to increase my pledge from $6,000,000 to $7,000,000 to assist you with the project…Kind regards…

Haimoff: …Thank you very much … that you doing with our yeshiva because of your good heart open hart (sic) for mitzvahs we will be able to expand our bldg to the maximum capacity now we don't have any more space for new kid’s (sic) to come after the construction will be done we will be able to double the amount of children!!...thank you so much. Rabbi haimoff.

The charges in the complaint are merely allegations, and the defendants are presumed to be innocent unless and until proven guilty.  If convicted, Haimoff and Weissman each face up to 5 years’ imprisonment.

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 Defendants:

IGAL HAIMOFF
Age:  67
Flushing, New York

MARK WEISSMAN
Age:  54
Lawrence, New York

E.D.N.Y. Docket No. 18-MJ-54

Earlier today, at the federal courthouse in Central Islip, Richard Jacobellis pleaded guilty to distributing heroin, further admitting that he distributed heroin that resulted in the death of 20-year-old Nicholas Weber in 2016 and serious bodily injury to Frances Theiling in 2015.  As part of his guilty plea, Jacobellis agreed to a specific sentence of 192 months’ imprisonment, to be followed by five years of supervised release, subject to the Court’s approval.  Today’s proceeding was held before United States District Judge Joanna Seybert.   

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

“Jacobellis admitted to poisoning people on Long Island by distributing heroin for years, even after his drugs took one life and nearly took another,” stated United States Attorney Donoghue.  “The defendant’s conviction in this case will not bring back Nicholas Weber, but it will send a message to others who may consider selling drugs that this Office will bring to justice those who contribute to the opioid epidemic and hold them accountable for the harm they cause.”  Mr. Donoghue thanked the Drug Enforcement Administration and the Suffolk County Police Department (“SCPD”) for their partnership and outstanding work on the case. 

According to court filings and the defendant’s statements during his guilty plea, Jacobellis was selling narcotics as early as 2012.  In 2015, the defendant provided heroin that nearly killed then-18-year-old Frances Theiling, who was saved by SCPD officers.  One year later, knowing that he had almost killed Theiling, Jacobellis sold the heroin that killed Nicholas Weber, a 20-year-old student.  Although Jacobellis was aware that his heroin had killed Weber, the defendant continued to sell heroin until shortly before his arrest in February 2017. 

Weber, a graduate of Kings Park High School, was a champion wrestler who attended Suffolk County Community College.  Before his death in May 2016, Weber had been admitted to Stony Brook University, where he intended to study physics, for the fall 2016 semester.

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

The Defendant:

RICHARD JACOBELLIS
Age: 24
Ridge, New York

E.D.N.Y. Docket No. 17-CR-052 (S-1)(JS)

WASHINGTON – Eleven Assistant United States Attorneys from the Eastern District of New York and two federal agent partners were among those recognized by Deputy Attorney General Rod Rosenstein and Director James Crowell, IV, of the Executive Office for U.S. Attorneys (EOUSA), at the 34th Director’s Awards Ceremony today, which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building.

In his prepared remarks, Deputy Attorney General Rosenstein told the awardees, “Today’s honorees earned the esteem of their colleagues.  But most importantly, they earned the gratitude of our fellow citizens — the people whose communities you made safer, whose lives you improved, and whose trust you rewarded. Today, we pause to honor and recognize a small portion of your work.

U.S. v. Deutsche Bank

Assistant United States Attorneys Matthew R. Belz, Edward K. Newman and Jeremy Turk, as well as former Assistant United States Attorney Ryan M. Wilson and Special Agent Jeffrey Fata, Federal Housing Finance Agency, Office of Inspector General, received the award for their exemplary performance in bringing about an historic $7.2 billion settlement against Deutsche Bank for its material misrepresentations in the sale of residential mortgage backed securities (RMBS). 

U.S. v. Paul Rivera, et al.

Criminal Division Deputy Chief Taryn A. Merkl, Business and Securities Fraud Section Deputy Chief Alixandra E. Smith and Assistant United States Attorney Michael Robotti received the award for their outstanding performance in the investigation and prosecution of United States v. Paul Rivera, et al.  In Rivera, the two leaders of the “TF Mafia,” a violent Brooklyn gang, were convicted after an 11-week trial of racketeering conspiracy; racketeering involving predicate acts of sex trafficking, sex trafficking of children, murder, narcotics trafficking, money laundering and witness tampering; and substantive offenses, including murder-in-aid-of racketeering and firearms charges. 

Disruption and Early Engagement Program

Criminal Division Chief Seth D. DuCharme, Assistant United States Attorney Melody Wells and Special Agent Joseph Rudnick of the Federal Bureau of Investigation’s New York Field Office, were recognized for their outstanding work in the development and implementation of the Disruption and Early Engagement Program (“DEEP”) counterterrorism and prevention initiative launched here in 2016 to meet growing challenges facing the New York Joint Terrorism Task Force and other law enforcement partners due largely to the rise of ISIS. 

Hobby Lobby

Cultural Property Coordinator Karin Orenstein was recognized for her outstanding accomplishments in using civil forfeiture to combat illicit cultural property trafficking, as well as her efforts to return smuggled antiquities to their country of origin through repatriation.  In United States v. 450 Ancient Cuneiform Tablets, she negotiated the forfeiture of thousands of Iraqi artifacts that were improperly imported by retailer Hobby Lobby Stores, Inc., including 3,450 cuneiform tablets and clay bullae, and an additional 144 cylinder seals that were forfeited as substitute assets. 

Operation Fallen Hero

Senior Litigation Counsel Andrea Goldbarg and her team members at the Narcotics and Dangerous Drugs Section in the Department of Justice’s Criminal Division were recognized for successfully investigating and prosecuting members of Los Zetas cartel who brutally murdered Homeland Security Investigations (HSI) Special Agent Jaime Zapata and wounded HSI Special Agent Victor Avila in February 2011 during an attempted carjacking in Mexico.  

EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country.  For more information on EOUSA and its mission, visit http://www.justice.gov/usao.  For more information about the United States Attorney’s Office for the Eastern District of New York, visit www.justice.gov/usao/nye.

On June 12, 2018, Thomas Ressler, 66, of Whitehall, Montana, was sentenced by the U.S. District Court in Helena to serve 36 months in prison for designing dozens of fraudulent solicitations used in an international mail-fraud scheme.  On February 22, 2018, Ressler pleaded guilty to conspiracy to commit mail fraud. 

“This defendant used his artistic abilities to advance a scheme that defrauded thousands of elderly victims,” said Acting Assistant Attorney General Chad Readler, head of the Justice Department’s Civil Division.  “The Department of Justice will continue to hold accountable those who knowingly facilitate fraud against America’s seniors.” 

Ressler created more than 200 fraudulent sweepstakes and prize-notification letters that falsely informed recipients they could claim cash or other valuable prizes by submitting a processing or delivery fee.  The letters appeared to come from official-sounding but fictitious entities with names like Cash Payout Disbursement Advisors, Progressive Winners Guarantors, and Vehicle Transport Company.  Many of the letters included the name and signature of a purported officer or representative of the fictitious entity.   

Ressler’s co-conspirators, Ryan Young and Ercan Barka, used the solicitations Ressler created to perpetrate their large-scale scheme, sending Ressler’s designed solicitations to victims throughout the United States and numerous foreign countries.  Although the solicitations appeared personally directed to each recipient, Barka and Young actually sent them to thousands of recipients identified on mailing lists bought from list brokers and corporate entities.  No victim who submitted a fee in response to a solicitation ever received the large cash prize or other valuable items touted in the solicitations.  At most, some victims received a report listing unrelated sweepstakes or a worthless piece of jewelry.

Ercan Barka and Ryan Young previously pleaded guilty in the Eastern District of New York to conspiracy to commit mail fraud.  They are awaiting sentencing.

The United States Postal Inspection Service investigated this case.   Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch is prosecuting it. 

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch. 

Earlier today, at the federal courthouse in Brooklyn, Kevin Paniagua (“Stomper”), a member of the Centrales Locos Salvatruchas clique of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, pleaded guilty to attempted murder and firearms charges in connection with his participation in the October 23, 2016 attempted murder of a then-16-year-old in Jamaica, Queens.  The proceeding was held before United States Magistrate Judge James Orenstein.

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

“Paniagua, a member of the MS-13 gang, admitted that he participated in the execution-style attempted murder of a sixteen-year-old youth, whom he left paralyzed,” stated United States Attorney Donoghue.  “MS-13 spreads fear throughout the community by killing suspected rival gang members and others who cross their path.  We will continue to work with our law enforcement partners to eradicate violent gangs and prevent our streets from turning into battlegrounds.”  Mr. Donoghue thanked the Federal Bureau of Investigation and the New York City Police Department for their partnership and outstanding work on the case.

According to court filings and the defendant’s statements during his guilty plea, Paniagua and other MS-13 members and associates orchestrated and attempted to murder a then sixteen-year-old boy because they suspected he was a member of the rival 18th Street gang.  In the early morning hours of October 23, 2016, Paniagua and his coconspirators sought out the victim and laid in wait to intercept him as he walked through the streets of Queens.  When the victim walked past Paniagua and his coconspirators, they beat him.  Paniagua then pulled out a gun and shot the victim in the face.  He then attempted to shoot the victim a second time, as he lay motionless on the ground.  The gun jammed, and Paniagua was not able to execute the victim, who was left paralyzed from his injuries. 

Paniagua faces a mandatory minimum sentence of 10 years’ imprisonment and a maximum sentence of life in prison when sentenced by United States District Judge Roslynn R. Mauskopf.  Upon completion of his sentence, the defendant 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.  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 Keith D. Edelman are in charge of the prosecution.

The Defendant:

KEVIN PANIAGUA (also known as “Stomper”)
Age:  19
Queens, New York

E.D.N.Y. Docket No. 17-CR-307 (RRM)

Earlier today, in federal court in Central Islip, Eric Smith, also known as “Esama” and “Esco,” a member of the Long Island-based Rollin’ 60s Crips street gang, was sentenced by United States District Judge Joanna Seybert to four consecutive terms of life in prison plus 30 years.  Smith was convicted by a federal jury on June 15, 2017, following five weeks of trial, on 11 counts including murder in-aid-of racketeering, racketeering, Hobbs Act robbery and conspiracy to commit murder.  These charges arose out of Smith’s participation in the Rollin’ 60s set of the Crips that for more than a decade engaged in violent criminal activity in Roosevelt, New York.

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

“Eric Smith took a life for his gang, and now he will be serving life in prison,” stated United States Attorney Donoghue.  “The violence committed by this defendant harmed not only his murder and shooting victims, but also the larger community, which is now significantly safer as a result of the efforts by this Office and our law enforcement partners to dismantle the Rollin’ 60 Crips.  We will continue to work tirelessly to prosecute violent gangs that plague Long Island communities like Roosevelt with violence, drugs and fear.”  Mr. Donoghue extended his grateful appreciation to the law enforcement agencies involved in the investigation, in particular, the FBI’s Long Island Gang Task Force and the Gang Investigations Squad of the NCPD. 

“Eric Smith showed no regard for the life of his victim, and he’ll now pay for his actions by spending the rest of his life in prison,” stated FBI Assistant Director-in-Charge Sweeney.  “Members of the community in Roosevelt, and neighboring communities, should be able to live in a safe environment, and not fear the endless violence this gang inflicted on them.  The FBI Long Island Gang Task Force has been dogged and diligent in successfully eradicating these criminals from communities that deserve better.”

 “The brutal Rollin’ 60s Crips terrorized the Roosevelt community, and our neighborhoods are safer with this murderer behind bars for life,” stated Nassau County District Attorney Singas.  “Law enforcement at the federal, state, and local levels is united in our commitment to rid Long Island of the violent gangs that have destroyed so many lives, and we will continue our unprecedented collaboration and partnership to keep our communities safe from these predators.”

 “The initial arrest and subsequent sentencing of defendant Smith is a clear sign that this type of gang activity will never be tolerated,” stated NCPD Commissioner Ryder. “The Roosevelt community is a safer place with this arrest and we will continue our efforts to keep all communities safe.  I would also like to thank all of the associated agencies and their investigators on a job well done.”

At trial, the government proved that Smith was a high-ranking member of the Rollin’ 60s set of the Crips, a racketeering enterprise based in Roosevelt that engaged in murder, attempted murder, narcotics trafficking and firearms trafficking to maintain control of their turf for nearly a decade.  Between 2003 and 2013, the gang followed an “on-sight” rule, created by the gang’s leader Raphael Osborne, which required members to attack members of the rival Bloods street gang in the Roosevelt community.  In observance of this rule, Smith participated in over a dozen shootings.  The evidence at trial also established Smith’s participation in robberies with fellow gang members to acquire cash and drugs to be resold on the streets of Roosevelt.  Smith was convicted for his role in two robberies that he committed in the fall of 2010 with fellow gang members.

Smith also was convicted of the December 15, 2010 murder of 19-year-old James McClenic, a member of the rival Bloods street gang.  After hours of searching for McClenic, Smith found him sitting in a parked car at a gas station in Hempstead.  Smith, wearing a black ski mask and armed with a .40 caliber semi-automatic pistol, crept up to McClenic and opened fire at close range killing him.  In the wake of McClenic’s murder, the Bloods retaliated against Smith and other members of the Crips street gang.  Smith and the leader of the Rollin’ 60s dispatched younger members of the Crips to strike back, igniting a gang war on the streets of Roosevelt.  

The government’s investigation has led to the arrest and conviction of more than 20 members and associates of the Rollin’ 60s Crips.  During the 10 months prior to the defendants’ arrests, Roosevelt averaged more than one shooting incident every two weeks.  Following the arrests of these individuals, Roosevelt, New York went 109 days without a shooting incident.  To date, 13 defendants, including Smith, have been sentenced:

• on June 21, 2016, Jahmani Hamilton was sentenced to 10 years’ imprisonment
   
• on August 4, 2016, Kurtis Philip was sentenced to 10 years’ imprisonment
   
• on August 5, 2016, Courtney Smith was sentenced to 10 years’ imprisonment
   
• on September 23, 2016, Merlyn Benitez was sentenced to 10 years’ imprisonment
   
• on October 13, 2016, Derick Hernandez was sentenced to a term of 20 years’ imprisonment that will run consecutively to a four-year state sentence he is presently serving
   
• on October 19, 2016, Kwame Lake was sentenced to a term of five years’ imprisonment  that will run consecutively to an eight-year state sentence he is presently serving 
   
• on November 4, 2016, Tyshawn Gitto was sentenced to 13 years’ imprisonment
   
• on January 13, 2017, Branden Short was sentenced to 30 months’ imprisonment
   
• on January 13, 2017, the gang’s leader Raphael Osborne was convicted after trial and sentenced to three life sentences plus 135 years
   
• on April 21, 2017, Rommel Lobban was sentenced to 15 years’ imprisonment
   
• on April 25, 2017, Daquanne Nunn was sentenced to  13 years’ imprisonment
   
• on January 12, 2018, Rudy Montour was sentenced to 15 years’ imprisonment that will run consecutively to a 13-year state sentence he is presently serving.

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

The Defendant

ERIC SMITH (also known as “Esama” and “Esco”)
Age:  29
Roosevelt, Long Island

E.D.N.Y. Docket No. 14-CR-264 (JS), 15-CR428 (JS)

RALEIGH — The Department of Justice today announced the arrest of more than 2,300 suspected online child sex offenders during a three-month, nationwide, operation conducted by Internet Crimes Against Children (ICAC) task forces. The task forces identified 195 offenders who either produced child pornography or committed child sexual abuse, and 383 children who suffered recent, ongoing, or historical sexual abuse or production of child pornography. 

The 61 ICAC task forces, located in all 50 states and comprised of more than 4,500 federal, state, local and tribal law enforcement agencies, led the coordinated operation known as “Broken Heart” during the months of March, April, and May 2018.  During the course of the operation, the task forces investigated more than 25,200 complaints of technology-facilitated crimes against children and delivered more than 3,700 presentations on Internet safety to over 390,000 youth and adults.  

"No child should ever have to endure sexual abuse," Attorney General Jeff Sessions said. "And yet, in recent years, certain forms of modern technology have facilitated the spread of child pornography and created greater incentives for its production. We at the Department of Justice are determined to strike back against these repugnant crimes. It is shocking and very sad that in this one operation, we have arrested more than 2,300 alleged child predators and investigated some 25,200 sexual abuse complaints. Any would-be criminal should be warned: this Department will remain relentless in hunting down those who victimize our children."

The operation targeted suspects who: (1) produce, distribute, receive and possess child pornography; (2) engage in online enticement of children for sexual purposes; (3) engage in the sex trafficking of children; and (4) travel across state lines or to foreign countries and sexually abuse children.

As part of Operation “Broken Heart”, United States Attorney for the Eastern District of North Carolina, Robert J. Higdon, Jr., announced that on May 16, 2018, a federal grand jury sitting in Raleigh, indicted ANDRE THORPE on seven counts involving child exploitation, including four counts of production of child pornography, two counts of transporting a minor interstate with intent to engage in criminal sexual activity, and one count of possession of child pornography. The alleged conduct involves years-long sexual abuse of a minor victim, and investigators have identified other alleged minor victims of THORPE as well. If convicted of all counts, THORPE faces not less than 15 years and up to life in prison.  This case was investigated by the Office of Homeland Security Investigation in Raleigh.  All defendants are innocent until proven guilty beyond a reasonable doubt.

The ICAC Program is funded through the Department’s Office of Juvenile Justice and Delinquency Prevention (OJJDP).  In 1998, OJJDP launched the ICAC Task Force Program to help federal, state, and local law enforcement agencies enhance their investigative responses to offenders who use the Internet, online communication systems or computer technology to exploit children. To date, ICAC Task Forces have reviewed more than 775,000 complaints of child exploitation, which resulted in the arrest of more than 83,000 individuals. In addition, since the ICAC program's inception, more than 629,400 law enforcement officers, prosecutors and other professionals have been trained on techniques to investigate and prosecute ICAC-related cases.

For more information, visit the ICAC Task Force webpage at: https://www.icactaskforce.org/.

Earlier today, in federal court in Brooklyn, former New York State Assemblywoman Pamela Harris pleaded guilty to two counts of wire fraud, one count of making false statements to the Federal Emergency Management Administration (FEMA), and one count of witness tampering.  The proceeding was held before United States Magistrate Judge Robert M. Levy.  Harris was arrested on January 9, 2018 and resigned from her position in the New York State Assembly on April 2, 2018.

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

“Elected by the people of her district to serve with honesty and integrity, Pamela Harris defrauded government programs out of tens of thousands of dollars, using the money for her personal benefit,” stated United States Attorney Donoghue.  “Harris stole grant money allocated for underprivileged children and young adults and lied to obtain funds set aside for those displaced by Hurricane Sandy, committing these crimes both before and after she was elected to serve in the New York State Assembly.  She then compounded her criminal conduct by pressuring witnesses to lie to the FBI.  The defendant’s guilty plea today clearly demonstrates that elected officials are not above the law and will be held responsible for their crimes.”  U.S. Attorney Donoghue thanked the FBI and DOI for their partnership and work on the case.

 “Amid the widespread destruction caused by Hurricane Sandy, former New York State Assemblywoman Pamela Harris sought to devise a destructive scheme of her own,” stated FBI Assistant Director-in-Charge Sweeney.  “As FEMA dedicated themselves to aid those affected by the storm, Harris saw this as the perfect opportunity to defraud this agency of tens of thousands of dollars. By defrauding an agency solely dedicated to the assistance of those in need, Harris showed no remorse for the many victims of this storm. Instead, she falsely victimized herself for mere personal gain. In an attempt to obstruct justice, Harris caused greater destruction by coercing individuals to lie to federal agents on her behalf. Despite her unjust acts against the community, Harris’s plea shows that justice will prevail in the end.” 

“This former state assemblywoman, now convicted criminal, defrauded city and federal programs out of tens of thousands of dollars, including pocketing funds designated for victims of Hurricane Sandy’s wrath, many of whom were from her district and hit hard during the storm,” stated DOI Commissioner Peters.  “She continued her corrupt schemes even as she sat in the state capitol, stealing public funds while she feigned to be in the service of her constituents.  Elected officials who deceive the public, break the law and steal taxpayer funds will be brought to justice.  DOI thanks the United States Attorney’s Office for the Eastern District of New York and the FBI for their partnership in working together to expose and prosecute these crimes.”

Between 2012 and 2014, Harris defrauded FEMA out of nearly $25,000 by falsely claiming that she had been forced out of her storm-damaged residence and into a temporary residence in Staten Island after Hurricane Sandy.  To support her claim for Hurricane Sandy funds, she submitted to FEMA fake lease agreements that she had purportedly entered into with the landlord of the Staten Island residence, as well as bogus rent payment receipts.  In reality, Harris continued to live at her Coney Island residence and pocketed the FEMA payments.

Between August 2014 and July 2015, Harris, who was at the time the Executive Director of a not-for-profit organization located in Brooklyn, defrauded the New York City Council of $22,800 in discretionary funding by falsely claiming that the not-for-profit would use the funds to rent a studio space.  As part of her scheme, Harris submitted to the New York City Department of Youth and Community Development, the government entity responsible for administering and disbursing the City Council’s discretionary funds, a forged lease agreement.  After the not-for-profit received the funding, Harris diverted the funds to her personal checking account and used the money to pay for personal expenses.

The following year, between approximately July 2015 and January 2017, when Harris was a sitting member of the New York State Assembly, she defrauded the NYC Council by claiming that funds for the not-for-profit would be spent on rental space.  After the funds were disbursed to the not-for-profit, Harris diverted an additional $22,800 for her personal use. 

During her guilty plea, Harris admitted that she pressured witnesses to lie to FBI agents conducting the Grand Jury investigation into her fraudulent schemes. 

When sentenced, Harris faces a maximum sentence of 30 years’ imprisonment on the charge relating to making false statements to FEMA and a maximum sentence of 20 years’ imprisonment on each of the wire fraud and witness tampering counts.    

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

The Defendant:

PAMELA HARRIS
Age:  57 
Brooklyn New York

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

A seventh defendant, Tysheim Warren, was arrested today in connection with a nine-count indictment filed in federal court in Brooklyn, also charging Javier Blackett, John Paul Balcazar, David Maldonado, Hassan McClean, Kevin Raphael and Andrew Rose with crimes stemming from their participation in a drug-trafficking organization that distributed more than 400 grams of crack cocaine in the Prospect Lefferts Gardens/Flatbush neighborhoods of Brooklyn.  The indictment was returned by a grand jury on May 10, 2018.  Blackett, Maldonado, Raphael and Rose were arrested on May 15, 2018.  Balcazar was arrested on May 18, 2018, and   McClean was arrested on May 22, 2018.  They were arraigned and ordered detained pending trial.  Warren was arraigned this afternoon before United States Magistrate Judge Steven M. Gold and ordered detained.

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

According to the indictment and court filings, the defendants’ drug-selling operations centered around several residential buildings approximately three blocks southeast of the Prospect Park ice skating rink.  Since March 2017, members of law enforcement made numerous controlled purchases totaling more than 400 grams of crack cocaine from the defendants’ organization and intercepted, pursuant to court order, communications discussing their distribution of significantly more narcotics.  Blackett, a member of the Eight Trey set of the Crips street gang, was the leader of the organization; Raphael was one of his principal suppliers; and Balcazar, Maldonado, McClean, Rose and Warren were workers. 

“The residents of Brooklyn are entitled to streets that are free of the dangerous drugs the defendants were allegedly selling,” stated United States Attorney Donoghue.  “This Office, together with our law enforcement partners, will continue to work tirelessly to put drug dealers out of business and hold them accountable for their crimes.”

“These dealers are alleged to have operated very close to a place where families go, where children play and where people find sanctuary in the city,” stated FBI Assistant Director-in-Charge Sweeney.  “When doing business with gang members and drug dealers, violence inevitably follows and innocent people could have been caught up in it.  The FBI Metro Safe Streets Task Force works every day to protect the community from these dangerous gang members and preventing them from proliferating their deadly drugs.”

 “The NYPD’s efforts to eradicate drug trafficking are greatly strengthened by our close partnerships with the FBI and the U.S. Attorney for the Eastern District,” stated NYPD Commissioner O’Neill.  “I commend everyone involved in this case, particularly the investigators who put themselves directly in harm’s way.  Those who illegally deal in narcotics should be prepared for the full weight of our nation’s best law enforcement professionals to bear down upon them.”

If convicted of the conspiracy charge, the defendants face a mandatory minimum sentence of 10 years’ imprisonment and up to life in prison.  The charges in the indictment are merely 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 prosecuted by Assistant United States Attorneys Mathew S. Miller and Sarah Evans. 

The Defendants:

JAVIER BLACKETT (also known as “Gutta” and Cito”)
Age:  35
Brooklyn, New York

JOHN PAUL BALCAZAR (also known as “Johnny”)
Age:  21
Brooklyn, New York

DAVID MALDONADO
Age:  30
Brooklyn, New York

HASSAN McCLEAN (also known as “Freak”)
Age:  19
Brooklyn, New York

KEVIN RAPHAEL (also known as “Millz” and “M”)
Age:  39
Brooklyn, New York

ANDREW ROSE (also known as “Nice”)
Age:  29
Brooklyn, New York

TYSHEIM WARREN (also known as “Ty”)
Age:  18
Brooklyn, New York

E.D.N.Y. Docket No. 18-CR-245 (PKC)

A 73-count fifth superseding indictment was unsealed today in the United States District Court for the Eastern District of New York in Central Islip, New York, charging two dozen members of La Mara Salvatrucha, also known as the MS-13, a transnational criminal organization, with racketeering and related offenses.  This indictment adds eight additional defendants, seven of whom are in custody, and offenses in connection with the April 29, 2016 murder of Oscar Acosta in Brentwood, the July 18, 2016 attempted murder of two suspected rival gang members in Brentwood, the August 10, 2016 attempted murder of rival gang members in Brentwood, the September 12, 2016 arson of two vehicles in Brentwood, the October 10, 2016 murder of Javier Castillo in Freeport, the October 13, 2016 murder of Dewann Stacks in Brentwood, the December 18, 2016 assault outside Super Taco restaurant in Brentwood, and a conspiracy to distribute marijuana.  In total, 15 murders committed by MS-13 members have been charged in the fifth superseding indictment and underlying indictments in this case.

Seven of the newly added defendants are scheduled to be arraigned this afternoon before United States District Judge Joseph F. Bianco at the federal courthouse in Central Islip, and the previously charged defendants will be arraigned at their next scheduled court appearances. 

Attorney General Jeff Sessions, 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 Department of Justice will not allow MS-13 to terrorize our citizens or control our communities,” said Attorney General Jeff Sessions.  “With more than 10,000 members across 40 states, MS-13 is one of the most dangerous groups in America.  The day that I was sworn in as Attorney General, President Trump ordered me to focus on dismantling transnational criminal organizations like MS-13, which is based in El Salvador. We have followed that order, working with our allies to arrest or charge thousands of MS-13 members across the Western Hemisphere since then.  When I visited Long Island last year, people told me about how the MS-13 threat was inflicting violence and fear on the community. And so I want to thank our Assistant U.S. Attorneys John Durham, Paul Scotti, Michael Keilty, and Raymond Tierney as well as our state and local law enforcement partners in New York for all of their hard work on this case and so many other MS-13 cases. Today’s indictment is our next step toward taking this despicable gang off the streets for good.”

“The charges in this indictment further demonstrate the utter brutality of the MS-13 and the havoc the gang inflicts on our communities,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will continue to combat the MS-13’s violence with relentless perseverance until the gang is dismantled and its members are brought to justice.”  Mr. Donoghue expressed his sincere thanks to all the members of the FBI’s Long Island Gang Task Force, as well as the Drug Enforcement Administration for their outstanding work on the investigation.

“The charges and arrests detailed here show our relentless efforts to dismantle and eradicate MS-13 in communities on Long Island,” stated FBI Assistant Director-in-Charge Sweeney.  “The unbelievable partnerships and relationships we’ve built with the law enforcement agencies on our Long Island Gang Task Force have allowed us to make a huge dent in the havoc created in recent years by MS-13.  Our work isn’t over, and we won’t stop our pursuit until the community no longer fears the violence and deadly attacks by this gang.”

“MS-13 gang activity and the accompanying senseless acts of violence will not be tolerated in Suffolk County, and these developments ensure that these dangerous individuals will no longer be a threat to our communities,” stated SCPD Commissioner Hart. ”The Suffolk County Police Department will continue its partnership with the FBI’s Long Island Gang Task Force as part of its multi-pronged approach and unrelenting pursuit to dismantle MS-13.” 

“This Indictment is another clear example of how the members of MS-13 have disrupted the communities that they live in,” stated NCPD Commissioner Ryder.  “So many lives have been negatively affected and the loss of life at their hands will never be tolerated.  I would like to congratulate all of the investigating agencies and their members for their dedication and professionalism.  Every member of MS-13 that is involved in criminality and is eventually incarcerated, is another step to creating a safer environment for our residents and their children.”

As set forth in court filings, including a detention memorandum filed earlier today, a majority of the new charges pertain to a series of crimes committed by members of the Sailors Locos Salvatruchas Westside (“Sailors”) clique during 2016, including the murders of Oscar Acosta, Javier Castillo and Dewann Stacks. 

Kevin Torres, the leader of the Sailors clique in New York, and Alexi Saenz, the leader of the Brentwood chapter of the Sailors clique, authorized Acosta’s murder because he was suspected of being a rival 18th Street gang member.  On April 29, 2016, Nelson Argueta-Quintanilla and other MS-13 members encountered Acosta, beat him with tree limbs, tied him up, and called co-defendants Alexi Saenz, Jairo Saenz, Jonathan Hernandez and others, who met them.  The gang members loaded Acosta into the trunk of a car, drove to a more isolated wooded area in Brentwood, stabbed and slashed Acosta to death with a machete and buried his body, which was not recovered until September 2016.

On October 10, 2016, Alexi Saenz, Jairo Saenz, Wilber Adalberto Fernandez-Vasquez, Frank Alexander Ventura-Ramirez, and other MS-13 members murdered Javier Castillo, who they also suspected of being a rival 18th Street gang member.  The defendants lured Castillo, who lived in Central Islip, to Cow Meadow Park in Freeport, where 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. 

On October 13, 2016, only three days after the Castillo murder, Alexi Saenz, Jairo Saenz, Enrique Portillo, Ever Flores and other MS-13 members murdered Dewann Stacks, who they suspected was a rival gang member.  While Alexi Saenz and other members of the gang conducted surveillance from one car, Portillo, Flores and another MS-13 gang member attacked and killed Stacks with a baseball bat and machetes before returning to the getaway vehicle driven by Jairo Saenz.

Various members of the Sailors clique are newly charged with four non-fatal violent crimes that occurred during 2016.  On July 18, 2016, Alexi Saenz, Jairo Saenz and Portillo attempted to murder two rival gang members in Brentwood.  One of those men was shot, and the other man was both shot and repeatedly slashed with a machete, leaving him permanently disfigured.  On August 10, 2016, Alexi Saenz, Jairo Saenz, Argueta-Quintanilla, Hernandez and Marlon Serrano attempted to murder rival gang members in Brentwood, where numerous shots were fired, but no one was wounded.  On September 12, 2016, Alexi Saenz, Jairo Saenz, Portillo and Serrano set fire to two vehicles at the residence of an individual who had a dispute with the MS-13.  On December 18, 2016, Jose Suarez and Flores assaulted two men who were disrespectful toward the MS-13 outside a Super Taco restaurant in Brentwood. 

Finally, the fifth superseding indictment adds marijuana and cocaine conspiracy charges against Suarez, Argueta-Quintanilla, Fernandez-Vasquez, Flores, Hernandez, Serrano, Torres and Ventura-Ramirez, and separate marijuana conspiracy charges against Jerlin Villalta, a member of the Freeport Locos Salvatruchas clique of the MS-13.

In addition to the three new murders, 12 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 June 3, 2016 murder of Jose Pena, the September 13, 2016 murders of Kayla Cuevas and Nisa Mickens, 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 fifth superseding indictment are merely 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, a violent international criminal organization.  The MS-13’s leadership is based in El Salvador and Honduras, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America.  With numerous branches, or “cliques,” the MS-13 is the largest and most violent street gang on Long Island.  Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York.  A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders and assaults.  Since 2010, this Office has obtained indictments charging MS-13 members with carrying out more than 45 murders in the Eastern District of New York, and has convicted dozens of MS-13 leaders and members in connection with those murders.  These prosecutions are the product of investigations led by the FBI’s Long Island Gang Task Force, comprising agents and officers of the FBI, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Immigration and Customs Enforcement – Homeland Security Investigations, SCPD, NCPD, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Department, Rockville Centre Police Department and the New York State Police.

The government’s case is being prosecuted 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 Defendants:

NELSON ARGUETA-QUINTANILLA (“Mendigo”)
Age: 21
Brentwood, New York

WILBER ADALBERTO FERNANDEZ-VASQUEZ (“Asiatico”)
Age: 22
Roosevelt, New York

EVER FLORES (“Negro” and “Grone”)
Age: 26
Brentwood, New York

JONATHAN HERNANDEZ (“Travieso” and “Kraken”)
Age: 20
Brentwood, New York

MARLON SERRANO (“Flaco” and “Little Extrano”)
Age: 20
Brentwood, New York

KEVIN TORRES (“Quieto” and “Inquieto”)
Age: 22
Roosevelt, New York

FRANK ALEXANDER VENTURA-RAMIREZ (“Olvidado”)
Age: 19
Freeport, New York

Previously Indicted Defendants Facing Additional Charges:

ENRIQUE PORTILLO (“Oso” and “Turkey”)
Age:  20
Central Islip, New York

ALEXI SAENZ (“Blasty” and “Plaky”)
Age:  23
Brentwood, New York

JAIRO SAENZ (“Funny”)
Age:  21
Brentwood, New York

JERLIN VILLALTA
Age:  21
Brentwood, New York

JOSE SUAREZ (“Chompira”)
Age:  24
Central Islip, New York

E.D.N.Y. Docket No. 16-403 (S-5)(JFB)

Earlier today, in federal court in Central Islip, Andre Chandler, a Bloods street gang leader, also known as “Mac Dre,” was sentenced by United States District Judge Joan M. Azrack to 366 months’ imprisonment for conspiracy to distribute crack and heroin, discharging a firearm in connection with that conspiracy, illegal possession of three firearms, and possession with intent to distribute crack, heroin, oxycodone, and hydrocodone, and a related violation of the conditions of his supervised release.  Chandler was convicted by a federal jury in October 2016 following a two-week trial.

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), Ashan M. Benedict, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), New York Field Division, and Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD), announced the sentence.

 “Any gang member who thinks they can sell drugs and commit acts of violence on Long Island without consequence should think about where Andre Chandler will spend the next 30 years,” stated United States Attorney Donoghue.  “This Office and our partners are completely committed to relentlessly pursuing and prosecuting gang members to protect our community.” Mr. Donoghue thanked the FBI Long Island Gang Task Force, NCPD Gang Investigations Squad and Nassau County District Attorney’s Office Special Operations Bureau for their assistance in the investigation.  The FBI Long Island Gang Task Force also includes the Nassau County Sheriff’s Department, Suffolk County Police Department, Suffolk County Sheriff’s Department, Rockville Center Police Department, Suffolk County Probation Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives, Hempstead Police Department, New York State Police and U.S. Immigration and Customs Enforcement – Homeland Security Investigations.

“The belief these drug dealers and gang members have that they control territory, and have to defend their turf by shooting, and killing rivals defies comprehension,” stated FBI Assistant Director-in-Charge Sweeney.  “While they’re playing at who is the nastier, meaner gangster, people are developing debilitating and deadly additions to their wares.  The FBI Long Island Gang Task Force has proven with several of these gang investigations that we will do all we can to safeguard the community from more violence by going after the leadership, and keeping them from returning to their so-called turf.”

“Chandler as alleged showed no regard for life or the rule of law. Today’s sentence sends a strong message to those like him who choose that reckless and dangerous path,” stated ATF Special Agent-in-Charge Benedict.  “I would like to thank our federal, state and local law enforcement partners that stand with ATF as one united front to protect our citizens from individuals who look to do harm to their fellow citizens. I would also like to extend my gratitude to the United States Attorney’s Office for their work in prosecuting the case.”

According to evidence presented at trial and court filings, Chandler began selling heroin and crack shortly after his release from prison in July 2014, declaring parts of Hempstead, New York, to be “my blocks, my streets.”  On December 13, 2014, Chandler carried out a plan to hunt down a rival drug dealer, luring the dealer to his car and then shooting him repeatedly with a 9mm. semiautomatic handgun.  Several weeks later, in January 2015, officers from the United States Probation Department searched Chandler’s residence and car, discovering heroin, cocaine base, oxycodone, hydrocodone, equipment for packaging narcotics for sale, and multiple firearms, including the same 9mm. semiautomatic pistol that Chandler had used to shoot the rival dealer.  Law enforcement officers found that handgun hidden under the mattress in a young child’s bedroom.

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. Attorneys’ Offices to work in partnership with federal, state, local and tribal law enforcement and the local community to develop effective, locally based strategies to reduce violent crime.

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

The Defendant:

ANDRE CHANDLER
Age:  34
Hempstead, New York

E.D.N.Y. Docket No. 15-CR-131 (S-1)

Earlier today, at the federal courthouse in Brooklyn, Todd Macaluso, a former attorney, was sentenced by United States District Judge I. Leo Glasser to 15 years’ imprisonment, following his November 2017 jury trial conviction for participating in an international cocaine distribution conspiracy.  Macaluso was also ordered by the court to pay a $10,000 fine. 

Richard P. Donoghue, United States Attorney for the Eastern District of New York; Robert F. Lasky, Special Agent-in-Charge, Federal Bureau of Investigation, Miami Field Office (FBI); Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York; James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division; James P. O’Neill, Commissioner, New York City Police Department (NYPD); and George P. Beach, Superintendent, New York State Police (NYSP), announced the sentence.

“Todd Macaluso orchestrated a scheme with drug cartel members to smuggle 1,500 kilograms of cocaine worth tens of millions of dollars from Ecuador to Honduras in his private jet for ultimate distribution here in the United States,” stated United States Attorney Donoghue.  “Today’s sentence puts international drug traffickers and their associates on notice that we will bring the full weight of the law to bear on those that play any role in bringing dangerous drugs into our communities.”  

“There is no doubt that Macaluso was driven by greed when he decided to transport 1,500 kilograms of cocaine in his private jet,” stated FBI Special Agent-in-Charge Lasky.  “Instead of profiting from this poison, his illicit career was brought to an abrupt end through close cooperation with our law enforcement partners.”

 “Macaluso’s illegal actions are indicative of his ignorance in knowing the law.  And, this sentencing shows that there is no difference if you are a drug dealer, pilot or attorney when you have been arrested and convicted on federal drug charges,” stated DEA Special Agent-in-Charge Hunt.  “This sentencing is a result of hard work by multiple law enforcement agencies at a local, federal and international level.”

“Macaluso’s crime is made even more egregious by the fact that he knew the law better than most as a former attorney, and yet chose to participate in an international conspiracy to distribute cocaine,” stated HSI Special Agent-in-Charge Melendez. “HSI used its multifaceted investigative authorities with its partners to pursue and dismantle this drug trafficking operation, in the process showing that no individual is above the law.”

 “Today’s sentencing proves again that our multi-agency, multi-jurisdictional partnerships have a very long reach,” stated NYPD Police Commissioner O’Neill. “When a crime is committed, particularly one of this size and scope, we are relentless in bringing those responsible to justice.”

 “This individual is someone who was sworn to uphold the law and conspired to break it,” stated NYSP Superintendent Beach. “I applaud our law enforcement officials at all levels for their strong police work in this case and for their continued dedication to preventing the trafficking of cocaine and other harmful narcotics within our communities.  The culmination of this investigation and the disruption of this international illegal drug trafficking operation sends a clear message that we will find and punish the people who are responsible for putting these illegal substances in the hands of our youth and others.”

The evidence at trial established that in exchange for $200,000 Macaluso agreed with members of an international drug cartel to provide and pilot a private Falcon 10 airplane to transport 1,500 kilograms of cocaine worth tens of millions of dollars from Ecuador to Honduras, where the cocaine would be sold to Mexican drug traffickers and then imported into the United States.  In furtherance of the scheme, Macaluso met repeatedly with drug traffickers in Tijuana, Mexico.  On November 2016, Macaluso flew his jet to Haiti, met with the drug traffickers and agreed to transport the cocaine the following day.  However, before Macaluso could transport the drugs, he was arrested and extradited to the United States for prosecution.

The government’s case is being handled by the Office’s International Narcotics and Money Laundering Section.   Assistant United States Attorneys Ryan C. Harris, Hiral D. Mehta and Keith D. Edelman are in charge of the prosecution.  

The Defendant:

TODD MACALUSO
Age:  55
Residence: San Diego, California

E.D.N.Y. Docket No. 16-CR-609

An indictment was unsealed today in federal court in Brooklyn charging Joseph Johnson, Brianna Glee and Tyshon Stevens as members of a gun trafficking conspiracy that used straw gun buyers to purchase more than 40 firearms from dealers in Virginia between April 2017 and May 2018.  Johnson and Stevens were also charged with being felons in possession of a firearm.  According to court filings, multiple firearms that were illegally acquired and distributed by the defendants were recovered by law enforcement officers in the New York area.

Johnson and Glee were arrested today and are scheduled to be arraigned this afternoon at the federal courthouse in Norfolk, Virginia.  Stevens is currently in Virginia state custody, and will be presented in federal court in Brooklyn at a later date.

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

“As alleged in the indictment, the defendants’ illegal trafficking of firearms put deadly weapons into the hands of criminals,” stated United States Attorney Donoghue.  “This Office is working tirelessly with our partners to stop the flow of illegal firearms through the Interstate 95 corridor by individuals who traffic in firearms and the straw buyers who enable their business.”  Mr. Donoghue thanked the ATF and the NYPD’s Brooklyn South Gang Squad for their outstanding efforts during this investigation.

“The defendants allegedly took part in a scheme to traffic illegal firearms thus endangering the lives of each and every citizen on the street,” stated ATF Special Agent-in-Charge Benedict.  “ATF remains committed to combating violent crime by aggressively identifying, investigating, and arresting individuals who seek to put dangerous firearms into the hands of individuals that should not possess them.  I would like to thank the personnel from our multiagency cooperative working group at ATF’s New York Field Division Crime Gun Intelligence Center, ATF’s Washington Field Division and our local partners at NYPD’s Brooklyn South Gang Squad. I would also like to extend my gratitude to the United States Attorney’s Office for their work in prosecuting the case.”

“This case underscores some disturbing truths: Illegal guns proliferate and circulate in higher-crime neighborhoods that still need our help,” stated NYPD Commissioner O’Neill. “In lockstep with our federal partners at the ATF and the Eastern District, the NYPD will continue to perform the incredibly dangerous work of preventing these firearms from getting into criminals’ hands.”

As set forth in the indictment and other filings by the government, the gun-trafficking operation was run by Johnson, who enlisted straw buyers including Glee to purchase multiple firearms.  As part of the scheme, the straw buyers lied on ATF Forms 4473 by falsely certifying that they were not purchasing the firearms on behalf of others.  Johnson then used Facebook to market those firearms to multiple individuals with gang ties in Brooklyn.  In June 2017, Johnson contacted a potential buyer in Brooklyn on Facebook sending images of an array of firearms.  Johnson also relied on Stevens and others to find buyers for the firearms in New York City.  Stevens, using Facebook, communicated with Johnson about his inventory and prices.  Two firearms obtained by Johnson’s straw purchasers were subsequently seized by the NYPD from previously convicted felons in New York.

If convicted, Johnson and Stevens face a maximum sentence of 20 years’ imprisonment.  Glee faces up to five years’ imprisonment on each count.  The charges in the indictment are merely 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 prosecuted by Assistant United States Attorney Drew G. Rolle.

The Defendants:

Joseph Johnson
Age: 34
Virginia Beach, Virginia

Brianna Glee
Age: 25
Virginia Beach, Virginia

Tyshon Stevens
Age: 34
Brooklyn, New York

E.D.N.Y. Docket No. 18-CR-279 (MKB)

Earlier today, in federal court in Brooklyn, Christian Mizell, a correction officer employed by the New York City Department of Corrections (“DOC”), pleaded guilty to participating in a bribery conspiracy with other correction officers.  As part of his guilty plea allocution, Mizell admitted that he smuggled contraband to inmates at the Manhattan Detention Center in exchange for thousands of dollars in cash payments.  Today’s plea was held before United States District Judge Pamela K. Chen. 

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

As alleged in the indictment and statements made in court, Mizell conspired with others, through text messages and phone calls, to arrange with co-conspirators to deliver marijuana covertly to Mizell and other correction officers.

When sentenced, Mizell faces up to five years in prison, as well as a fine of up to $250,000. 

The government’s case is being handled by Assistant United States Attorney Erik Paulsen of the Office’s Public Integrity Section and Nomi Berenson of the Office’s International Narcotics and Money Laundering Section.

The Defendant:

Christian Mizell
Age: 48
Queens, New York

E.D.N.Y. Docket No. 18-CR-60 (PKC)

Société Générale S.A. (Société Générale), a global financial services institution based in Paris, France, and its wholly owned subsidiary, SGA Société Générale Acceptance N.V., have agreed to pay a combined total penalty of more than $860 million to resolve charges with  law enforcement authorities in the United States and France, including $585 million relating to a multi-year scheme to pay bribes to officials in Libya and $275 million for violations arising from its manipulation of the London InterBank Offered Rate (LIBOR), one of the world’s leading benchmark interest rates.  Together with approximately $475 million in regulatory penalties and disgorgement that Société Générale has agreed to pay to the Commodity Futures Trading Commission (CFTC) in connection with the LIBOR scheme, the total penalties to be paid by the bank exceed $1 billion.

In related proceedings, Société Générale reached a settlement with the Parquet National Financier (PNF) in Paris relating to the Libya corruption scheme.  The United States will credit $292,776,444 that Société Générale will pay to the PNF under its agreement, equal to 50 percent of the total criminal penalty otherwise payable to the United States.  This is the first coordinated resolution with French authorities in a foreign bribery case.

SGA Société Générale Acceptance N.V. is scheduled to plead guilty in connection with the resolution of the foreign bribery case and Société Générale will enter into a deferred prosecution agreement on Tuesday afternoon in federal court in Brooklyn before Chief United States District Judge Dora L. Irizarry.  The plea agreement and the deferred prosecution agreement are subject to court approval by Chief Judge Irizarry.

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, Matthew J. DeSarno, Special Agent-in-Charge, Federal Bureau of Investigation (FBI), Washington Field Office, Criminal Division, and Eric Hylton, Deputy Chief, Internal Revenue Service-Criminal Investigation (IRS-CI), made the announcement.

“The resolution announced today by the Department with Societe Generale and a subsidiary, which includes a guilty plea, admissions of wrongdoing, significant corrective measures and hundreds of millions of dollars in penalties, sends a powerful message to financial institutions that engage in corruption and manipulation in the financial markets that they will be held accountable,” stated United States Attorney Donoghue.  “The United States will vigorously protect the integrity of financial markets by holding responsible to the full extent of the law those banks, corporations and individuals who seek to corrupt government officials to enrich themselves.” 

“For years, Société Générale undermined the integrity of global markets and foreign institutions by issuing false financial data and by fraudulently securing contracts through bribery,” said Acting Assistant Attorney General Cronan.  “Today’s resolution – which marks the first coordinated resolution with France in a foreign bribery case – sends a strong message that transnational corruption and manipulation of our markets will be met with a global and coordinated law enforcement response.”

“Today’s resolution demonstrates that fraudulently manipulating LIBOR and deceiving the financial market has severe consequences, and the FBI will not tolerate this type of criminal activity,” said FBI Special Agent-in-Charge DeSarno. “The FBI remains committed to holding institutions accountable for their actions in breaking the law and manipulating the global benchmark interest rate. The personnel of the FBI Washington Field Office have dedicated significant time and resources to investigating complex financial fraud schemes such as this one, and I want to thank them for their tireless efforts as well as our colleagues at the Department of Justice Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York for their hard work.”

“Today’s announcement resulted from the unraveling of international financial transactions orchestrated by Société Générale and its agents to facilitate illegal payments to foreign government officials in Libya,” said IRS-CI Deputy Chief Hylton. “IRS-CI is a trusted partner in pursuit of those who use pervasive bribery schemes to circumvent the law. We are committed to maintaining fair competition, free of corrupt practices, through global teamwork and our robust financial investigative talents.”                                   

The FCPA Case

According to the companies’ admissions, between 2004 and 2009, Société Générale paid bribes through a Libyan “broker” in connection with 14 investments made by Libyan state-owned financial institutions.  For each transaction, Société Générale paid the Libyan broker a commission of between one and a half and three percent of the nominal amount of the investments made by the Libyan state institutions.  In total, Société Générale paid the Libyan broker over $90 million, portions of which the Libyan broker paid to high-level Libyan officials in order to secure the investments from various Libyan state institutions for Société Générale.  As a result of the corrupt scheme, Société Générale obtained 13 investments and one restructuring from the Libyan state institutions worth a total of approximately $3.66 billion, and earned profits of approximately $523 million.

Société Générale will enter into a deferred prosecution agreement in connection with a criminal information charging the company with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of transmitting false commodities reports.  Additionally, Société Générale’s subsidiary, SGA Société Générale Acceptance N.V., will plead guilty to a one-count criminal information filed today in federal court in Brooklyn charging the company with a conspiracy to violate the anti-bribery provisions of the FCPA.  Pursuant to its agreement, Société Générale will pay a total criminal penalty of $860 million to the Department of Justice.  Société Générale also agreed to continue to cooperate with the Department’s investigation and adopt and maintain enhanced compliance procedures.                  

The Department of Justice entered into this resolution in part due to Société Générale’s failure to voluntarily self-disclose the companies’ misconduct to the Department; the seriousness of the companies’ conduct, including the high value of the bribes paid to foreign officials; the company’s substantial, though not full, cooperation with the Department; and the company’s significant remediation which, together with the company’s risk profile and ongoing monitoring by L’Agence Française Anticorruption, resulted in the Department determining that a monitor was not necessary in this case.

The LIBOR Case

As admitted by the company, between May 2010 and at least October 2011, Société Générale promulgated falsely deflated U.S. Dollar (USD) LIBOR submissions to make it look as though Société Générale was able to borrow money at more favorable interest rates than it was actually able to do so.  This downward manipulation allowed Société Générale to create the appearance that it was stronger and more creditworthy than it was. 

The USD LIBOR manipulation scheme was ordered by senior executives of Société Générale, who tasked the managers of the company’s Treasury Department with overseeing the execution of the deflation effort.  Several employees within Société Générale’s Treasury Department ensured that the company’s USD LIBOR submissions were altered in accordance with the deflation directive.  Société Générale’s misconduct frequently altered the daily rate at which USD LIBOR was set, which affected financial products worldwide, including interest rate swaps, futures contracts and other derivative financial products.

Further, in 2006, certain Société Générale employees in London and Tokyo worked together to manipulate Société Générale’s Japan Yen (JPY) LIBOR submissions.  These employees endeavored to manipulate JPY LIBOR in order to benefit the trading positions of a Société Générale employee.  This employee had numerous deals tied to JPY LIBOR, and manipulation of JPY LIBOR improved the profitability of the employee’s trading book.

By the terms of the agreement, Société Générale will pay a fine of $275 million to resolve the LIBOR misconduct matter.  Additionally, in August 2017, two individuals—former Société Générale Global Treasury Head Danielle Sindzingre and former Paris Treasury Head Muriel Bescond—were indicted for their roles in the scheme.  Both individuals remain at large.

The FBI’s New York Field Office and IRS-Criminal Investigation’s New York office are investigating the case. 

Assistant U.S. Attorneys David C. Pitluck and James P. McDonald of the Eastern District of New York, and Trial Attorneys Gerald M. Moody Jr. and Dennis R. Kihm of the Criminal Division’s Fraud Section are prosecuting the FCPA case.  Assistant U.S. Attorney Matthew S. Amatruda of the Eastern District of New York and Assistant Chief Carol Sipperly, Trial Attorneys Timothy A. Duree and Gary A. Winters of the Criminal Division’s Fraud Section are prosecuting the LIBOR case.  The Criminal Division’s Office of International Affairs provided significant assistance in this matter.

The Department appreciates the significant cooperation and assistance provided by the U.S. Securities and Exchange Commission and the CFTC in this matter.  The PNF, the United Kingdom’s Serious Fraud Office, the Federal Office of Justice in Switzerland and the Office of the Attorney General in Switzerland also provided significant cooperation.

E.D.N.Y. Docket No. 18-CR-274 (DLI)

E.D.N.Y. Docket No. 18-CR-253 (DLI)

Société Générale S.A. (Société Générale), a global financial services institution based in Paris, France, and its wholly owned subsidiary, SGA Société Générale Acceptance N.V., have agreed to pay a combined total penalty of more than $860 million to resolve charges with criminal authorities in the United States and France, including $585 million relating to a multi-year scheme to pay bribes to officials in Libya and $275 million for violations arising from its manipulation of the London InterBank Offered Rate (LIBOR), one of the world’s leading benchmark interest rates.  SGA Société Générale Acceptance N.V. will plead guilty in the Eastern District of New York in connection with the resolution of the foreign bribery case.  Together with approximately $475 million in regulatory penalties and disgorgement that Société Générale has agreed to pay to the Commodity Futures Trading Commission (CFTC) in connection with the LIBOR scheme, the total penalties to be paid by the bank exceed $1 billion. 

In related proceedings, Société Générale reached a settlement with the Parquet National Financier (PNF) in Paris relating to the Libya corruption scheme.  The United States will credit $292,776,444 that Société Générale will pay to the PNF under its agreement, equal to 50 percent of the total criminal penalty otherwise payable to the United States.  This is the first coordinated resolution with French authorities in a foreign bribery case.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Richard P. Donoghue of the Eastern District of New York, Special Agent in Charge Matthew J. DeSarno of the FBI Washington Field Office's Criminal Division, Assistant Director in Charge William F. Sweeney Jr. of the FBI New York Field Office and Deputy Chief Eric Hylton of IRS Criminal Investigation made the announcement.

“For years, Société Générale undermined the integrity of global markets and foreign institutions by issuing false financial data and by fraudulently securing contracts through bribery,” said Acting Assistant Attorney General Cronan.  “Today’s resolution – which marks the first coordinated resolution with France in a foreign bribery case – sends a strong message that transnational corruption and manipulation of our markets will be met with a global and coordinated law enforcement response.”

“The resolution announced today by the Department with Societe Generale and a subsidiary, which includes a guilty plea, admissions of wrongdoing, significant corrective measures and hundreds of millions of dollars in penalties, sends a powerful message to financial institutions that engage in corruption and manipulation in the financial markets that they will be held accountable,” said U.S. Attorney Donoghue.  “The United States will vigorously protect the integrity of financial markets by holding responsible to the full extent of the law those banks, corporations and individuals who seek to corrupt government officials to enrich themselves.” 

“Today’s resolution demonstrates that fraudulently manipulating LIBOR and deceiving the financial market has severe consequences, and the FBI will not tolerate this type of criminal activity,” said FBI Special Agent in Charge DeSarno. “The FBI remains committed to holding institutions accountable for their actions in breaking the law and manipulating the global benchmark interest rate. The personnel of the FBI Washington Field Office have dedicated significant time and resources to investigating complex financial fraud schemes such as this one, and I want to thank them for their tireless efforts as well as our colleagues at the Department of Justice Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York for their hard work.”

“When financial institutions convince foreign officials to accept bribes in return for lucrative business deals, their actions directly threaten the international free market system, not to mention our national security," said FBI Assistant Director in Charge Sweeney. "But being geographically out of sight doesn’t mean you’re out of reach from prosecution. No matter who you are, where you are, or how much money you have, the FBI will continue to use all resources at our disposal to find you, uncover your crimes, and reveal them for what they really are. Many thanks to the hardworking men and women of the FBI’s New York Field Office for leading the effort to expose this scheme and bring its perpetrators to justice.”

“Today’s announcement resulted from the unraveling of international financial transactions orchestrated by Société Générale and its agents to facilitate illegal payments to foreign government officials in Libya,” said IRS-CI Deputy Chief Hylton. “IRS-CI is a trusted partner in pursuit of those who use pervasive bribery schemes to circumvent the law. We are committed to maintaining fair competition, free of corrupt practices, through global teamwork and our robust financial investigative talents.”                                             

The FCPA Case

According to the companies’ admissions, between 2004 and 2009, Société Générale paid bribes through a Libyan “broker” in connection with 14 investments made by Libyan state-owned financial institutions.  For each transaction, Société Générale paid the Libyan broker a commission of between one and a half and three percent of the nominal amount of the investments made by the Libyan state institutions.  In total, Société Générale paid the Libyan Intermediary over $90 million, portions of which the Libyan broker paid to high-level Libyan officials in order to secure the investments from various Libyan state institutions for Société Générale.  As a result of the corrupt scheme, Société Générale obtained 13 investments and one restructuring from the Libyan state institutions worth a total of approximately $3.66 billion, and earned profits of approximately $523 million.

Société Générale will enter into a deferred prosecution agreement in connection with a criminal information charging the company with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of transmitting false commodities reports.  Additionally, Société Générale’s subsidiary, SGA Société Générale Acceptance N.V., will plead guilty to a one-count criminal information filed today in the Eastern District of New York charging the company with a conspiracy to violate the anti-bribery provisions of the FCPA.  Pursuant to its agreement with the Department, Société Générale agreed to pay a total criminal penalty of $585 million to the Department.  Société Générale also agreed to continue to cooperate with the Department’s investigation and adopt and maintain enhanced compliance procedures.  The guilty plea is scheduled to take place on Tuesday, June 5, before U.S. District Judge Dora L. Irizarry of the Eastern District of New York.                                                                                                                  

The Department entered into this resolution in part due to Société Générale’s failure to voluntarily self-disclose the companies’ misconduct to the Department; the seriousness of the companies’ conduct, including the high value of the bribes paid to foreign officials; the company’s substantial, though not full, cooperation with the Department; and the company’s significant remediation which, together with the company’s risk profile and ongoing monitoring by L’Agence Française Anticorruption, resulted in the Department determining that a monitor was not necessary in this case.

The LIBOR Case

As admitted by the company, between May 2010 and at least October 2011, Société Générale promulgated falsely deflated U.S. Dollar (USD) LIBOR submissions to make it look as though Société Générale was able to borrow money at more favorable interest rates than it was actually able to do.  This downward manipulation allowed Société Générale to create the appearance that it was stronger and more creditworthy than it was. 

The USD LIBOR manipulation scheme was ordered by senior executives of Société Générale, who tasked the managers of the company’s Treasury Department with overseeing the execution of the deflation effort.  Several employees within Société Générale’s Treasury Department ensured that the company’s USD LIBOR submissions were altered in accordance with the deflation directive.  Société Générale’s misconduct frequently altered the daily rate at which USD LIBOR was set, which affected financial products worldwide, including interest rate swaps, futures contracts and other derivative financial products.

Further, in 2006, certain Société Générale employees in London and Tokyo worked together to manipulate Société Générale’s Japan Yen (JPY) LIBOR submissions.  These employees endeavored to manipulate JPY LIBOR in order to benefit the trading positions of a Société Générale employee.  This employee had numerous deals tied to JPY LIBOR, and manipulation of JPY LIBOR improved the profitability of the employee’s trading book.

By the terms of the agreement, Société Générale will pay a fine of $275 million to resolve the LIBOR misconduct matter.  Additionally, in August 2017, two individuals—former Société Générale Global Treasury Head Danielle Sindzingre and former Paris Treasury Head Muriel Bescond—were indicted for their roles in the scheme.  Both individuals remain at large.  An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

The deferred prosecution agreement and the plea agreement are subject to court approval.

The FBI’s Washington and New York Field Offices and IRS-Criminal Investigation’s New York office are investigating the case.  Trial Attorneys Gerald M. Moody Jr. and Dennis R. Kihm of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys David C. Pitluck and James P. McDonald of the Eastern District of New York are prosecuting the FCPA case.  Assistant Chief Carol Sipperly, Trial Attorneys Timothy A. Duree and Gary A. Winters of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Matthew S. Amatruda of the Eastern District of New York are prosecuting the LIBOR case.  The Criminal Division’s Office of International Affairs provided significant assistance in this matter.

The Department appreciates the significant cooperation and assistance provided by the U.S. Securities and Exchange Commission and the CFTC in this matter.  The PNF, the United Kingdom’s Serious Fraud Office, the Federal Office of Justice in Switzerland and the Office of the Attorney General in Switzerland also provided significant cooperation.

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

Legg Mason, Inc. (Legg Mason), a Maryland-based investment management firm, has entered into a non-prosecution agreement with the Department of Justice and agreed to pay $64.2 million to resolve the Department’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) in connection with Legg Mason’s participation, through a subsidiary, in a Libyan bribery scheme.

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, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Eric Hylton, Deputy Chief, Internal Revenue Service Criminal Investigation (IRS-CI), made the announcement.

According to Legg Mason’s admissions, between 2004 and 2010, a Legg Mason subsidiary, Permal Group Ltd. (Permal), partnered with Société Générale S.A. (Société Générale), a multinational bank headquartered in Paris, France, to solicit business from state-owned financial institutions in Libya.  During this time, Société Générale paid bribes through a Libyan “broker” in connection with 14 investments made by Libyan state-owned financial institutions.  For each transaction, Société Générale paid the Libyan broker a commission of between one and a half and three percent of the nominal amount of the investments made by the Libyan state institutions.  In connection with seven of the transactions, Société Générale paid commissions to the Libyan broker to benefit Legg Mason, through its subsidiary Permal, which managed funds invested by the Libyan state institutions.  In total, Société Générale paid the Libyan Intermediary over $90 million, portions of which the Libyan broker paid to high-level Libyan officials in order to secure the investments from various Libyan state institutions for Société Générale.  As a result of the corrupt scheme, Société Générale obtained 13 investments and one restructuring from the Libyan state institutions worth a total of approximately $3.66 billion, and earned profits of approximately $523 million.  Legg Mason, through Permal, managed seven of these investments and earned profits of approximately $31.6 million.

Legg Mason entered into a non-prosecution agreement and agreed to pay $64.2 million to resolve the matter.  This payment includes a penalty of $32.625 million to be paid to the U.S. Treasury within five days of the agreement, and disgorgement of $31.617 million, which will be credited against disgorgement paid to other law enforcement authorities within the first year of the agreement.  As part of the non-prosecution agreement, Legg Mason has agreed to continue to cooperate with the Department in any ongoing investigations and prosecutions relating to the conduct, including of individuals, to enhance its compliance program and to report to the Department on the implementation of its enhanced compliance program. 

The Department reached this resolution based on a number of factors, including that Legg Mason did not voluntarily and timely disclose the conduct at issue, but fully cooperated in the investigation and fully remediated.  Moreover, Legg Mason’s misconduct involved only mid-to-lower level employees of Permal, a subsidiary company, and was not pervasive throughout Legg Mason or Permal; Société Générale – and not Legg Mason or Permal – maintained the relationship with the Libyan broker and was responsible for originating and leading the scheme; the profits earned by Legg Mason and Permal were less than one-tenth of the profits earned by Société Générale; and neither Legg Mason nor Permal has a history of similar misconduct. 

The FBI’s New York Field Office and IRS-CI’s New York office are investigating the case. 

Assistant U.S. Attorneys David C. Pitluck and James P. McDonald of the Eastern District of New York, and Trial Attorneys Dennis R. Kihm and Gerald M. Moody, Jr. of the Criminal Division’s Fraud Section are prosecuting the case.  The Criminal Division’s Office of International Affairs provided significant assistance in this investigation.

The Department appreciates the significant cooperation and assistance provided by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission in this matter.  France’s Parquet National Financier, the United Kingdom’s Serious Fraud Office, the Federal Office of Justice in Switzerland and the Office of the Attorney General in Switzerland also provided significant cooperation.

Legg Mason Inc. (Legg Mason), a Maryland-based investment management firm, has entered into a non-prosecution agreement with the Department of Justice and agreed to pay $64.2 million to resolve the Department’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) in connection with Legg Mason’s participation, through a subsidiary, in a Libyan bribery scheme.

 

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Richard P. Donoghue of the Eastern District of New York, Assistant Director in Charge William F. Sweeney Jr. of the FBI New York Field Office and Deputy Chief Eric Hylton of IRS Criminal Investigation made the announcement.

 

According to Legg Mason’s admissions, between 2004 and 2010, a Legg Mason subsidiary, Permal Group Ltd. (Permal), partnered with Société Générale S.A. (Société Générale), a multinational bank headquartered in Paris, France, to solicit business from state-owned financial institutions in Libya.  During this time, Société Générale paid bribes through a Libyan “broker” in connection with 14 investments made by Libyan state-owned financial institutions.  For each transaction, Société Générale paid the Libyan broker a commission of between one and a half and three percent of the nominal amount of the investments made by the Libyan state institutions.  In connection with seven of the transactions, Société Générale paid commissions to the Libyan broker to benefit Legg Mason, through its subsidiary Permal, which managed funds invested by the Libyan state institutions.  In total, Société Générale paid the Libyan Intermediary over $90 million, portions of which the Libyan broker paid to high-level Libyan officials in order to secure the investments from various Libyan state institutions for Société Générale.  As a result of the corrupt scheme, Société Générale obtained 13 investments and one restructuring from the Libyan state institutions worth a total of approximately $3.66 billion, and earned profits of approximately $523 million.  Legg Mason, through Permal, managed seven of these investments and earned profits of approximately $31.6 million.

 

Legg Mason entered into a non-prosecution agreement and agreed to pay $64.2 million to resolve the matter.  This payment includes a penalty of $32.625 million to be paid to the U.S. Treasury within five days of the agreement, and disgorgement of $31.617 million, which will be credited against disgorgement paid to other law enforcement authorities within the first year of the agreement.  As part of the non-prosecution agreement, Legg Mason has agreed to continue to cooperate with the Department in any ongoing investigations and prosecutions relating to the conduct, including of individuals, to enhance its compliance program and to report to the Department on the implementation of its enhanced compliance program. 

 

The Department reached this resolution based on a number of factors, including that Legg Mason did not voluntarily and timely disclose the conduct at issue, but fully cooperated in the investigation and fully remediated.  Moreover, Legg Mason’s misconduct involved only mid-to-lower level employees of Permal, a subsidiary company, and was not pervasive throughout Legg Mason or Permal; Société Générale – and not Legg Mason or Permal – maintained the relationship with the Libyan broker and was responsible for originating and leading the scheme; the profits earned by Legg Mason and Permal were less than one-tenth of the profits earned by Société Générale; and neither Legg Mason nor Permal has a history of similar misconduct. 

 

The FBI’s New York Field Office and IRS-CI’s New York office are investigating the case.  Trial Attorneys Dennis R. Kihm and Gerald M. Moody Jr. of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys David C. Pitluck and James P. McDonald of the Eastern District of New York are prosecuting this matter.  The Criminal Division’s Office of International Affairs provided significant assistance in this investigation.

 

The Department appreciates the significant cooperation and assistance provided by the U.S. Securities and Exchange Commission in this matter.  France’s Parquet National Financier, the United Kingdom’s Serious Fraud Office, Switzerland’s Office of the Attorney General and Federal Office of Justice also provided significant cooperation.

 

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

A federal jury in Brooklyn returned a guilty verdict today against Frank Smith, also known as “Fresh,” a member of a Coney Island-based street gang known as “Rival Impact,” on charges of racketeering and two counts each of murder-in-aid-of racketeering and causing a death through the use of a firearm.  The verdict followed a three-week trial before United States District Judge Frederic Block.  When sentenced, Smith faces two mandatory terms of life imprisonment for the murders of Terrance Serrano and Rashawn Washington.

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

“With today’s jury verdict, Frank Smith has been held accountable for murders and drug dealing arising out of his allegiance to a violent Brooklyn street gang,” stated United States Attorney Donoghue.  “This Office and our law enforcement partners will continue to work tirelessly to dismantle violent street gangs and to eradicate the menace they pose to our communities.”  Mr. Donoghue thanked the agents and detectives from the Federal Bureau of Investigation, New York Field Office, and the New York City Police Department for their outstanding investigative work on the case.

Between January 2000 and January 2014, Smith was a member of the Rival Impact street gang, a racketeering enterprise based at the Mermaid Houses in Coney Island.  For more than a decade, the gang engaged in heroin and crack distribution and violence, including murders, attempted murders, robberies and assaults.  Rival Impact had been at war for some time with members of “Thirty-O,” a street gang based in and around the Coney Island Houses.  After a Rival Impact gang member Vincent Carmona was slain by “Thirty-O” crew members,  Smith plotted killing members of Thirty-O, specifically Terrance Serrano and Rashawn Washington, whom he believed shot Carmona.  On October 4, 2010, Smith and a Rival Impact gang member drove to East 19th Street in Manhattan where they found a parked car belonging to Serrano and Washington.  After Serrano and Washington approached and entered the car, Smith ran to the car and opened fire, killing both men sitting inside.

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 Organized Crime & Gangs Section.  Assistant United States Attorneys Maria Cruz Melendez, Jennifer M. Sasso and Josh Hafetz are in charge of the prosecution.

The Defendant:

FRANK SMITH (also known as “Fresh”)
Age:  33
Brooklyn, New York

E.D.N.Y. Docket No. 16-CR-346 (FB)

Attorney General Jeff Sessions and Richard P. Donoghue, United States Attorney for the Eastern District of New York, announced today that the Department of Justice is taking a dramatic step to increase resources to combat violent crime, enforce our immigration laws, and help roll back the devastating opioid crisis.

In the largest increase in decades, the Department of Justice is allocating 311 new Assistant United States Attorneys (AUSAs) to assist in priority areas. Those allocations are as follows: 190 violent crime prosecutors, 86 civil enforcement prosecutors, and 35 additional immigration prosecutors. Many of the civil enforcement AUSAs will support the newly created Prescription Interdiction & Litigation Task Force that targets the opioid crisis at every level of the distribution system.

“Under President Trump's strong leadership, the Department of Justice is going on offense against violent crime, illegal immigration, and the opioid crisis—and today we are sending in reinforcements,” said Attorney General Jeff Sessions. “We have a saying in my office that a new federal prosecutor is ‘the coin of the realm.’  When we can eliminate wasteful spending, one of my first questions to my staff is if we can deploy more prosecutors to where they are needed. I have personally worked to re-purpose existing funds to support this critical mission, and as a former federal prosecutor myself, my expectations could not be higher. These exceptional and talented prosecutors are key leaders in our crime fighting partnership. This addition of new Assistant U.S. Attorney positions represents the largest increase in decades.”

In the Eastern District of New York, five of these AUSAs will focus on violent crime, two on civil enforcement, and two on prosecuting immigration cases. 

“The addition of nine new Assistant U.S. Attorneys in the Eastern District of New York will accelerate our Office’s efforts to bring prosecutions against the most violent criminals in our communities, including gang members, international narcotic traffickers and terrorists; secure our ports of entry and communities against illegal immigration and immigration fraud and increase our civil enforcement efforts against opioid abuse, elder fraud, health care fraud and other financial crimes,” stated United States Attorney Donoghue.  “Today’s announcement underscores the Department of Justice’s commitment to make the Eastern District of New York a safer place by providing new resources to address the unique and complex challenges we face.”

Earlier today, in federal court in Central Islip, New York, John Ambrosio, also known as “Johnny Boy,” a member of the Gambino organized crime family of La Cosa Nostra, pleaded guilty to racketeering conspiracy, admitting his involvement in acts of loansharking and illegal gambling.

Ambrosio, an acting captain in the Gambino family, is the last defendant to plead guilty in a superseding indictment that charged him and six members and associates of the Gambino family and a member of the Bonanno organized crime family of La Cosa Nostra. Co-conspirators Frank Salerno, also known as “Frankie Boy,” a soldier in the Bonanno family, as well as Thomas Anzalone, Alessandro Damelio, also known as “Sandro,” Joseph Durso, Anthony Rodolico and Anthony Saladino, associates of the Gambino family, have previously entered pleas of guilty to racketeering conspiracy.  Today’s proceeding was held before United States Magistrate Judge Gary R. Brown.

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 Division; Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, New York; Geraldine Hart, Commissioner, Suffolk County Police Department; and James P. O’Neill, Commissioner, New York City Police Department, announced the guilty pleas.

As detailed in the superseding indictment and other court filings, between January 2014 and December 2017, Ambrosio and his co-conspirators engaged in a racketeering conspiracy, which included predicate crimes of loansharking, operating illegal gambling businesses, narcotics distribution conspiracy and obstruction of justice conspiracy.  At his guilty plea, Ambrosio admitted to participating in the affairs of the Gambino family by collecting an extortionate loan from one victim, and supervising a gambling business involving poker games, electronic gaming machines and sports betting.  As part of his plea agreement with the government, Ambrosio will forfeit $100,000, including $66,116 in cash that was seized from his home in Huntington, New York, at the time of his arrest.

When Ambrosio and his co-conspirators were arrested on December 12, 2017, law enforcement agents executed numerous search warrants at various locations, including a storage facility in Nassau County, and recovered gambling and loan sharking records, electronic gaming machines, narcotics and narcotics paraphernalia, and numerous firearms, including an AR-15, a .38 caliber revolver and a sawed-off shotgun.  Law enforcement agents also recovered letters addressed to Ambrosio from Bonanno family boss Michael “The Nose” Mancuso and former Gambino family boss John Gotti.

When sentenced, Ambrosio, Anzalone, Damelio, Durso and Rodolico each face a maximum sentence of 20 years’ imprisonment.  Saladino and Salerno each face a mandatory minimum of five years’ imprisonment and up to 40 years’ imprisonment for cocaine distribution conspiracy offenses.

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.

Defendant Who Pleaded Guilty Today:

JOHN AMBROSIO (also known as “Johnny Boy”)
Age: 74
Huntington, New York

Defendants Who Have Previously Pleaded Guilty: THOMAS ANZALONE
Age: 44
Queens, New York

ALESSANDRO DAMELIO (also known as “Sandro”)
Age: 49
Queens, New York

JOSEPH DURSO
Age: 26
Glen Cove, New York

ANTHONY RODOLICO
Age: 46
Huntington, New York

ANTHONY SALADINO
Age: 67
Glen Cove, New York

FRANK SALERNO (also known as “Frankie Boy”)
Age: 43
Queens, New York

E.D.N.Y. Docket No. 17-CR-522 (S-1)(SJF)

Earlier today, a complaint was unsealed in federal court in Brooklyn charging Michael Poyin Chang, a medical doctor, with engaging in a scheme to steal wages in connection with his employment by the New York City Fire Department (FDNY) at World Trade Center Monitoring Clinics in Orange County, New York, and Queens, New York.  Dr. Chang was arrested today and is scheduled to make his initial appearance this afternoon before United States Magistrate Judge Sanket J. Bulsara.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and Mark G. Peters, Commissioner, New York City Department of Investigation (DOI), announced the arrest.

“Dr. Chang allegedly stole taxpayer money designated for the medical care of FDNY first responders who put their lives and health at risk in order to save others endangered by the World Trade Center terrorist attack,” stated United States Attorney Donoghue.  “This Office will continue to root out fraud such as this, to ensure that these funds are spent on addressing the health needs of those who answered the call without hesitation on 9/11.” 

“Physicians take an oath to do no harm, but this Fire Department physician violated that code by collecting more than $150,000 in public funds for nearly a year's worth of work he didn't perform, according to the charges,” stated DOI Commissioner Peters.  “Instead of providing care to FDNY first responders involved in World Trade Center rescue and recovery efforts, this defendant allegedly manipulated City timekeeping records, including taking undocumented vacation days.  Stealing time is fraud, and DOI will continue to pursue City employees who alter these payroll records for their own personal gain.”

According to the complaint, from June 2010 through December 16, 2016, Dr. Chang was a part-time employee of the FDNY.  Dr. Chang’s duties included performing physical examinations of active FDNY members and retirees, as well as follow-up treatments including the prescribing of medication to patients.  Dr. Chang was paid based upon the entries he made reporting his work hours in the CityTime electronic database.  Dr. Chang falsely represented that he had worked 81 days between January 2011 and October 2016, when he was scheduled to be on vacation and the World Trade Center Orange County Annex was closed.  Dr. Chang’s travel records, obtained from the United States Customs and Border Protection Service, show that he was travelling outside the United States on at least 34 of those 81 days.  Dr. Chang reported via CityTime that he had worked an additional 220 days when his prearranged work schedules maintained by the FDNY Deputy Chief Medical Officer showed that he was neither scheduled to work nor see patients.  In total, Dr. Chang received $156,757 for work that he did not perform.  The World Trade Center Monitoring Clinic and its annexes were partially funded by the federal Center for Disease Control in each of the years Dr. Chang was employed by the FDNY.

The charges in the complaint are merely allegations, and the defendant is presumed to be innocent unless and until proven guilty.  If convicted, Dr. Chang faces up to 10 years’ imprisonment.

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

The Defendant:

MICHAEL POYIN CHANG
Age:  59
Residence: Paramus, New Jersey

E.D.N.Y. Docket No. 18-MJ-470

Earlier today, in federal court in Central Islip, Gerard Terry, former Chairman of the Democratic Party in North Hempstead and head of the Nassau County Board of Elections, was sentenced to three years’ imprisonment, to be followed by three years’ supervised release, $992,057 in restitution and $31,000 in forfeiture, following his guilty plea on October 12, 2017 to tax evasion.  The sentencing proceeding was held before United States District Judge Joanna Seybert.

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

“Gerard Terry lived by a different standard than the taxpayers he served, taking money from them in payment for the numerous governmental and quasi-governmental jobs he held, while failing to pay the taxes he owed on those jobs,” stated United States Attorney Donoghue.  “Together with our law enforcement partners, we will continue to work to ensure that there is one standard and one standard only — that taxpayers, regardless of who they are, will have to pay their fair share or be held to account.”

“While reaping the benefits of a salary funded by taxpayer dollars, Gerard Terry rendered himself exempt from paying taxes on this earned income,” stated FBI Assistant Director-in-Charge Sweeney. “It seems today he has learned his lesson—the time to pay up has come.”  

 “Our politicians and county officials hold positions of trust in the eyes of the public,” stated IRS-CI Special Agent-in-Charge Robnett.”  “Mr. Terry, a licensed attorney, went to great lengths to evade his tax obligations with the United States, but he ultimately hurt all American citizens who work for a living and pay their fair share for the government services and protections we enjoy.”

Terry, an attorney licensed to practice in New York State, willfully evaded substantial income tax owed by him, having earned income from numerous government and quasi-government positions in Nassau County, including the Democratic Party in the Town of North Hempstead, the Nassau County Board of Elections, the Town of North Hempstead, the Long Beach Housing Authority, the North Hempstead Housing Authority, the Freeport Community Development Agency, the Roosevelt Public Library, the Village of Port Washington, and the Village of Manorhaven.  Since January 2000, Terry has failed to pay a federal tax debt of almost $1.4 million, despite earning over $250,000 per year. 

According to court documents, during the period charged in the indictment, Terry failed to file personal Form 1040 tax returns, filing years later and only after vigorous pursuit by the IRS.  Even then, Terry filed Forms 1040 that contained false information and failed to report income.  Terry has still failed to file returns for tax years 2009 and 2010. 

Terry also evaded the IRS’s attempts at levy collection, cashing hundreds of wage and compensation checks worth over $500,000, rather than depositing them into checking or savings accounts where they could be seized.  When he did deposit checks into his checking account, he did so in the minimum amounts necessary to cover checks and payments for his own personal expenses, making sure there were not sufficient funds upon which the IRS could levy.  Terry also created and utilized a checking account in the name of a corporate shell and had one of his employers make direct payments to his credit card rather than issuing him a paycheck.  He also pressured colleagues at his various government and publicly funded jobs not to report wages paid to him and not to comply with IRS notices of levy.

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:

GERARD TERRY
Age:  62
Roslyn, New York

E.D.N.Y. Docket No. 17-CR-37 (JS)

John Servider, an attorney admitted to practice law in the State of New York since 1988, was convicted today by a federal jury in Brooklyn of two counts of an indictment charging him with conspiracy to alter, and alteration of, records for use in a grand jury investigation in the Eastern District of New York.  The verdict followed a seven-day trial before United States District Judge Eric N. Vitaliano.  When sentenced, Servider faces up to 20 years’ imprisonment as to each count of the indictment.

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

 “Servider served as the fixer in a corrupt attorney-client scheme to obstruct a federal grand jury investigation by falsifying evidence,” stated United States Attorney Donoghue.  “This Office, together with our law enforcement partners, will hold accountable attorneys who violate their oaths and the law by obstructing justice.” 

Mr. Donoghue expressed his thanks to the agents and investigators of the Internal Revenue Service-Criminal Investigation, New York Field Office; the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud; the Federal Bureau of Investigation, New York Field Office; and the Port Authority of New York and New Jersey, Office of Inspector General, for their outstanding investigative work in the case.

The evidence at trial established that between March 2013 and April 2015, Servider learned that his client Vincent Vertuccio, who secretly controlled the activities of a construction company called Crimson Corp. (Crimson), was the subject of a grand jury investigation.  Several law enforcement agencies, including the IRS, were investigating the flow of funds from Crimson to businesses that had supplied goods and services to Vertuccio.  Vertuccio had not reported those goods and services as taxable income on his federal personal income tax return.  After a grand jury subpoena was served on the jewelry store where Vertuccio purchased jewelry with Crimson funds, Servider and Vertuccio agreed to falsify the jewelry store receipts and invoices by removing any mention of Vertuccio’s name.   

In April 2017, Vertuccio pleaded guilty to filing a false tax return and conspiracy to obstruct justice.  He is awaiting sentencing.

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

The Defendant:

JOHN SERVIDER
Age: 56
Residence: Patterson, New York

E.D.N.Y. Docket No. 15-CR-174 (ENV)

Earlier today, in federal court in Brooklyn, Louis Petrossi, a former registered broker, was sentenced by United States District Court Judge Brian M. Cogan to 44 months’ imprisonment, to be followed by three years’ supervised release, for his role in the fraudulent market manipulation of ForceField Energy Inc. (ForceField), a publicly-traded company previously listed on the NASDAQ under the ticker symbol “FNRG.”  The Court also ordered Petrossi to pay $8 million in restitution and $335,748.78 in forfeiture.  On May 2, 2017, following a two-week trial, a federal jury convicted Petrossi of conspiracy to commit securities fraud, conspiracy to commit wire fraud, money laundering conspiracy and securities fraud.

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. 

Between 2009 and 2015, Petrossi and others engaged in a scheme to defraud investors in ForceField, a purported worldwide distributor and provider of LED lighting products and solutions, by artificially controlling the price and volume of traded shares of ForceField through, among other means: (1) using nominees to purchase and sell ForceField stock without disclosing this information to investors and potential investors, (2) orchestrating the trading of ForceField stock to create the misleading appearance of genuine trading volume and interest in the stock, and (3) concealing secret payments to stock promoters and broker dealers who promoted and sold ForceField stock to investors and potential investors while falsely claiming to be independent of the company.  The fraudulent scheme caused a loss of approximately $131 million to the investing public.           

Specifically, between December 2009 and April 2015, Petrossi received secret cash payments from a ForceField executive in exchange for promoting the sale of ForceField stock to investors while representing himself to investors as the CEO of an investment research firm, “Wealth Research Institute.”  He did not disclose these payments.  Petrossi also engaged in manipulative trading of ForceField stock at the direction of the same ForceField executive. 

On March 9, 2018, Petrossi was convicted in the United States District Court for the Middle District of Pennsylvania of committing a separate fraud scheme, in which he participated from January 2015 through January 2017.  This scheme, which involved the misappropriation of over $1 million in investor funds, continued after Petrossi was arrested and placed on pretrial release in the ForceField case.

Today’s proceeding is the eighth sentencing to take place in connection with the fraud in ForceField securities.  One remaining defendant awaits sentencing.

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Mark E. Bini and Lauren H. Elbert are in charge of the prosecution.

The Defendant:

LOUIS PETROSSI
Age:  77
Residence: Reno, Nevada

E.D.N.Y. Docket No. 16-CR-234 (BMC)

A federal jury in Central Islip today, following five weeks of trial, convicted Dr. Michael Belfiore of two counts of illegal distribution of oxycodone causing the deaths of two patients and 26 counts of illegal distribution of oxycodone.   After the verdict, Dr. Belfiore was remanded to custody pending sentencing by United States District Judge Joseph F. Bianco.  The defendant faces a mandatory minimum sentence of 20 years’ imprisonment, a $10 million fine and forfeiture in an amount to be determined by the Court.

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 Patrick J. Ryder, Commissioner, Nassau County Police Department (NCPD), announced the verdict.

“Dr. Belfiore was acting not as a healer, but as a drug dealer with a prescription pad,” stated United States Attorney Donoghue.  “The defendant lined his pockets with cash from patients in exchange for illegally prescribing oxycodone, a particularly dangerous and addictive drug, with lethal results.  The Department of Justice recognizes the importance of holding corrupt medical professionals like Dr. Belfiore accountable for their role in fueling the opioid epidemic.”  The case was investigated by the DEA’s Long Island Tactical Diversion Squad comprising agents and officers of the DEA, Nassau County Police Department, Rockville Centre Police Department, Suffolk County Police Department, Port Washington Police Department and Internal Revenue Service.   

“From the time he was arrested, to today’s conviction, it was abundantly clear that Dr. Belfiore’s actions were not those of a medical doctor, but those of a drug dealer,” stated DEA Special Agent-in-Charge Hunt.  “Lives were lost at the hands of Dr. Belfiore whose practice enabled addiction and overdose – both of which contribute to the current opioid crisis our nation is facing.  I commend the diligent work of the DEA Tactical Diversion Squad in Long Island and the U.S. Attorney’s Office, Eastern District of New York, on this investigation and trial.”

“The conviction of defendant Dr. Michael Belfiore is a clear example of our zero tolerance approach toward dealing with the illegal prescribing of Oxycodone,” stated NCPD Commissioner Ryder.  “We have seen all too often how these prescriptions have had serious and fatal effects on our communities and residents. I would like to congratulate all of the investigative agencies for their hard work and dedication during this investigation.”

The evidence at trial established that Dr. Belfiore, a doctor of osteopathic medicine who primarily operated out of an office in Merrick, illegally distributed oxycodone outside the usual course of professional practice and not for a legitimate medical purpose.  Oxycodone is a powerful and highly addictive drug that is increasingly abused because of its potency when crushed into a powder and ingested.  It is a scheduled controlled substance that may be dispensed by medical professionals only to patients suffering from significant pain that is documented through medical exams, diagnostic testing—such as x-rays and MRIs—and other objective proof.  Although oxycodone is commonly prescribed in five milligram tablets, the trial evidence showed that Dr. Belfiore wrote thousands of 30 milligram prescriptions for oxycodone in quantities of up to 180 pills per month.  Specifically, as proved at the trial: 

On February 28, 2013, Dr. Belfiore gave an illegal prescription for 120 30 mg oxycodone pills to 42-year-old Edward Martin.  On March 5, Mr. Martin overdosed and died in his bed after snorting the oxycodone obtained from Dr. Belfiore’s prescription. 

On or about April 12, 2013, Dr. Belfiore gave an illegal prescription for 150 30 mg oxycodone to 32-year-old John Ubaghs, a veteran of the United States Marine Corps who served in the infantry during the war in Iraq.  On April 13, 2013, Mr. Ubaghs was found unresponsive after overdosing on oxycodone prescribed by Dr. Belfiore, and was pronounced dead at the hospital. 

Between March 2013 and August 2013, Dr. Belfiore intentionally dispensed six prescriptions of oxycodone without a legitimate medical purpose to an undercover detective with the NCPD’s Narcotics Vice Squad.  Undercover surveillance videos demonstrated that Dr. Belfiore created fake medical charts to justify those prescriptions and that during office meetings with the detective, Dr. Belfiore’s “treatment” consisted of a discussion of the doctor’s $175,000 Porsche, a recent trip to San Diego and his interest in helicopters, yachts and cigarette boats.   

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

The Defendant:

MICHAEL BELFIORE
Age:  52
Residence: Westbury, New York

E.D.N.Y. Docket No. 15-CR-242 (JFB)

The United States has filed a civil complaint in federal court in Brooklyn seeking to permanently enjoin two companies that own and operate a Staten Island facility from manufacturing and distributing adulterated food, the Department of Justice announced today.

According to the complaint filed at the request of the U.S. Food and Drug Administration (FDA), the United States alleges that Euroline Foods, LLC, and Royal Seafood Baza, Inc., 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.  Inspectors from the FDA  found Listeria monocytogenes (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 complaint also named as defendants the companies’ owner/operators Eduard Shnayder, Syoma Shnayder and Albert Niyazov, and operator Oleg Polischouk.

“Food processors and distributors must identify and eliminate food safety hazards and develop meaningful plans for preventing such hazards in order to protect consumers,” stated United States Attorney Donoghue.  “Those who fail to do so must come into compliance or be shut down.  We have, and will continue, to use all means at our disposal to protect the public from the dangers of harmful pathogenic bacteria, including bacteria that cause listeriosis and other serious illnesses.”

“L. mono presents a significant danger to public health and can prove fatal to vulnerable individuals,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The food consumers purchase must be safe to eat, and we will continue to work with FDA to take action against companies that refuse to improve dangerously substandard practices.”

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

Three FDA inspections of the defendants’ facility in March 2015, February to March 2016, and November to December 2016, as well as a follow-up investigation in November 2017, all uncovered cGMP and HACCP violations.  The FDA issued a Warning Letter to Royal Seafood in 2015, and FDA inspections in 2016 detected listeria contamination in several areas of the facility. 

The complaint seeks an order by the Court to permanently enjoin the defendants from violating the FDCA and to prevent them from manufacturing or distributing food unless they comply with specific remedial measures including developing and executing an effective sanitation program. 

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.

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, 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.

The United States filed a complaint seeking to permanently enjoin two companies that own and operate a Staten Island facility from manufacturing and distributing adulterated food, the Department of Justice announced today.

In a complaint filed today, at the request of the U.S. Food and Drug Administration (FDA), the United States alleged that Euroline Foods, LLC, and Royal Seafood Baza, Inc., 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 alleges that FDA inspections found Listeria monocytogenes (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 complaint, filed in U.S. District Court for the Eastern District of New York, also named as defendants the company’s owner/operators Eduard Shnayder, Syoma Shnayder and Albert Niyazov, and operator Oleg Polischouk.

“L. mono presents a significant danger to public health and can prove fatal to vulnerable individuals,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The food consumers purchase must be safe to eat, and we will continue to work with FDA to take action against companies that refuse to improve dangerously substandard practices.” 

According to the complaint, the defendants failed to adequately implement effective sanitation controls that complied with current Good Manufacturing Practices (cGMP) requirements. In addition, the complaint alleges 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. 

Three FDA inspections of the defendants’ facility in March 2015, February to March 2016, and November to December 2016, as well as a follow-up investigation in November 2017, all uncovered cGMP and HACCP violations. The FDA issued a Warning Letter to Royal Seafood in 2015, and FDA inspections in 2016 detected listeria contamination in several areas of the facility.  

“Food processors and distributors must identify and eliminate food safety hazards and develop meaningful plans for preventing such hazards in order to protect consumers,” stated United States Attorney Richard P. Donoghue for the Eastern District of New York.  “Those who fail to do so must come into compliance or be shut down.  We have, and will continue, to use all means at our disposal to protect the public from the dangers of harmful pathogenic bacteria, including bacteria that cause listeriosis and other serious illnesses.”

The complaint seeks an order by the court to permanently enjoin the defendants from violating the FDCA and to prevent them from manufacturing or distributing food unless they comply with specific remedial measures including developing and executing an effective sanitation program.  

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.

This matter is being handled by 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, 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.

Earlier today, in federal court in Brooklyn, Jeff Roselien was sentenced to 10 years’ imprisonment by Chief United States District Judge Dora L. Irizarry for his role in four gunpoint robberies of pharmacies.  Roselien had previously pleaded guilty on November 15, 2017 to Hobbs Act robbery conspiracy and brandishing a firearm during the conspiracy.  On August 4, 2017, co-conspirator Wensley Paul was sentenced to 108 months’ imprisonment; on January 25, 2018, Gregory St. Juste was sentenced to 100 months’ imprisonment; and on April 12, 2018, Max Narcisse, Jr. was sentenced to 117 months’ imprisonment following their guilty pleas to the same charges.

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

“In a matter of weeks, the defendants committed numerous gunpoint robberies of pharmacies in Brooklyn, terrorizing the employees and stealing powerful opioids to resell them on the street,” stated United States Attorney Donoghue.  “The defendants have now been held accountable for contributing to the deadly opioid epidemic and endangering the community. This Office, together with our law enforcement partners, will continue to vigorously prosecute those who seek to profit from this epidemic.”  Mr. Donoghue thanked the Special Agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and New York City Police Department Detectives assigned to the ATF Joint Robbery Task Force for their outstanding work on the case.

According to court filings and statements, in August and September 2016, the defendants and their co-conspirators conducted a series of gunpoint robberies of pharmacies in Brooklyn.  On August 16, 2016, two co-conspirators entered the Mill Basin Pharmacy on Avenue T.  While inside, the perpetrators held the store employees, one of whom was pregnant, at gunpoint in a back room.  The robbers made off with over $4,000 in prescription pills and merchandise and escaped in a car driven by Roselien.  On September 8, 2016, St. Juste and a co-conspirator entered This Way Pharmacy on Quintin Road.  Inside the store, the robbers brandished a firearm, stole oxycodone pills and cash and fled in a getaway car driven by Roselien.  On September 13, 2016, St. Juste and two co-conspirators entered the Living Word Pharmacy located on Utica Avenue.  The robbers made off with oxycodone pills, employees’ cell phones and cash, and left in a getaway car driven by Roselien.

On September 26, 2016, St. Juste, Paul and Naricisse robbed the Mill Park Pharmacy on Avenue U.  Upon entering the pharmacy, St. Juste pulled out a firearm and forced a store clerk to go behind a counter, demanding to know where the “oxy” was and threatening to shoot the clerk.  The three men fled in a car driven by Roselien.  Shortly after the perpetrators left the scene, NYPD officers recognized Roselien’s car from the prior robberies and pulled it over, arresting the four defendants.  Upon searching the car, officers recovered a loaded, stolen .45 caliber pistol, as well as cash and the stolen merchandise.

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

Defendant Sentenced Today:

JEFF ROSELIEN
Age: 31
Brooklyn, New York

Defendants Previously Sentenced:

MAX NARICSSE, JR.
Age: 25
Brooklyn, New York

GREGORY ST. JUSTE
Age:  21
Brooklyn, New York

WENSLEY PAUL
Age: 25
Brooklyn, New York

E.D.N.Y. Docket No. 16-CR-554 (DLI)

Earlier today, Salvatore Demeo, an alleged member of the Genovese organized crime family of La Cosa Nostra, pled guilty at the federal courthouse in Brooklyn to attempted tax evasion.  At the guilty plea proceeding, Demeo admitted that he attempted to evade paying taxes on more than $1.6 million he earned in capital gains through a real estate transaction in 2014.  As part of his guilty plea, Demeo agreed to pay the Internal Revenue Service $367,673, which represents the tax he owed for the 2014 real estate transaction and another one in 2013. 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, and James Robnett, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS-CI), announced the guilty plea.

As detailed in the indictment and other court filings, in two separate real estate transactions in 2013 and 2014, Demeo sold his shares in valuable real estate in Brooklyn, earning him more than $2 million in capital gains.  Rather than report this income as he was required to do, Demeo took a series of measures designed to conceal the proceeds from the IRS.  For example, he instructed his attorney to issue his shares to him in eight separate bank checks: three checks for the first transaction and five checks for the second transaction.  In addition, the defendant enlisted the assistance of others to help conceal the funds.  First, he endorsed two checks, amounting to $1 million, to a plumbing business, despite the fact that he has no apparent ownership interest in it, or other business relationship with it.  Demeo endorsed another of the checks, in the amount of approximately $355,944, to an individual who operated an unlicensed check-cashing business, and withdrew approximately five cashier’s checks in smaller amounts, which were then cashed at licensed check-cashing establishments in exchange for a fee.  As a result of Demeo’s fraud, the defendant avoided payment of federal taxes in excess of $365,000.

When sentenced, Demeo faces up to five years in prison, as well as a fine of up to $250,000.

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

The Defendant:

SALVATORE DEMEO
Age:  78
Brooklyn, New York 

E.D.N.Y. Docket No. 17-CR-545 (KAM)

Earlier today, at the federal courthouse in Central Islip, Terrance Belford pleaded guilty to conspiracy to distribute oxycodone, a Schedule II controlled substance.  Belford was arrested in June 2017 for his participation in an oxycodone distribution ring active on Long Island and elsewhere in 2016.  The guilty plea was entered before United States District Judge Joanna Seybert.  When sentenced, Belford faces up to 30 years in prison and a fine of up to $2 million.

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

“Using stolen prescription forms to acquire his drug supply, Belford distributed opioids in our community and beyond, fueling the opioid crisis to his financial benefit,” stated United States Attorney Donoghue.  “This Office will continue to vigorously prosecute opioid dealers like the defendant who are motivated by greed and have no respect for the lives of others.”  Mr. Donoghue expressed his gratitude to all the alert and responsible pharmacists nationwide, including those in Enterprise, Alabama, whose reports of the suspicious prescription forms presented by Belford and his co-conspirators were integral to the success of this prosecution.

“Belford didn’t have too much to hide since he boldly posted his drug trafficking activities on social media,” stated DEA Special Agent-in-Charge Hunt.  “Too often, criminal organizations try to hide behind new communication platforms with false bravado that no one is watching, but in this case, law enforcement was watching.  Today’s plea is a result of drug law enforcement’s commitment to investigating those who enable drug addiction and misuse.” 

According to court filings and facts presented during the plea proceeding, beginning in late 2016 and continuing into early 2017, the DEA learned of a large number of New York State prescription forms that had been stolen and later filled at various pharmacies located within the Eastern District of New York, as well as in North Carolina, South Carolina and Alabama, among other locations.  Belford and his co-conspirators filled out the stolen prescription forms and used them to obtain controlled substances, typically 30 milligram oxycodone tablets.  They then sold the fraudulently acquired opioids at a substantial profit.

In December 2016, Belford attempted to fill one of the stolen prescriptions in Enterprise, Alabama, under a false name.  An employee of the pharmacy refused to fill the prescription and called the local police, resulting in Belford’s arrest.  Further investigation revealed that, via his Facebook account, Belford boasted of his ability to obtain multiple controlled substances unlawfully, including oxycodone, Percocet and powder cocaine.  Belford stated on Facebook that, if he had not been intercepted in Alabama, he would have made up to $2,000 for each forged prescription through the resale of oxycodone.

This case was investigated by the DEA’s Long Island Tactical Diversion Squad comprising agents and officers of the DEA, Nassau County Police Department, Rockville Centre Police Department, Suffolk County Police Department, Port Washington Police Department and Internal Revenue Service. 

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

The Defendant:

TERRANCE BELFORD
Age: 36
Bellport, New York

E.D.N.Y. Docket No. 17-CR-399 (JS)

Earlier today, at the federal courthouse in Brooklyn, Roland Bedwell, the business manager of United Plant and Production Workers Local 175, was sentenced by United States District Judge Nicholas G. Garaufis to five years’ imprisonment and three years’ supervised release, following his guilty plea to extorting a construction business owner.  Bedwell was arrested on the charges in December 2016 and pleaded guilty in August 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 Michael C. Mikulka, Special Agent-in-Charge, New York Region, U.S. Department of Labor, Office of Inspector General (DOL OIG), announced the sentence.

“Unions exist to protect workers, not to serve as vehicles for extortion.  This sentence ends Bedwell’s career of extorting business owners and sends a clear message that others who attempt do so will suffer the same fate,” stated United States Attorney Donoghue.  “This Office, working closely with our law enforcement partners, is committed to protecting hard-working business owners and ensuring that unions are not turned into criminal organizations.”

“For many of the cases investigated by our FBI New York Joint Organized Crime Task Force, the general public doesn’t see the real life impact of organized crime groups and their criminal acts,” stated FBI Assistant Director-in-Charge Sweeney.  “But this case illustrates how extortion and threats stopped progress at a public works project at one of the busiest airports in our region.  The subject boasted about how he didn’t understand why he wasn’t in jail.  After an outstanding investigation with our law enforcement partners, that’s exactly where he is going.”

 “As the top union official of United Plant and Production Workers  Local 175, Business Manager Roland Bedwell abused his position by threatening business owners with physical harm if they did not sign collective bargaining agreements with Local 175,”  stated DOL OIG Special Agent-in-Charge Mikulka.  “The U.S. Department of Labor Office of Inspector General will continue to work with our law enforcement partners to ensure that union officials lawfully represent the interests of their members and that  businesses can operate in a fair and just environment, free from illegal extortionate demands.”

According to court filings and statements made in court, the extortion for which Bedwell was sentenced today was partly captured during a recorded conversation the defendant had at a restaurant in Queens with an individual who owned a construction business (the “victim’).  Bedwell explained to the victim the financial pain he had previously inflicted on others when, for example, a delivery truck transporting trees was blocked causing the trees to die.  Bedwell then warned the victim that if he did not employ Local 175 members, Bedwell would use a crew of 15 “ex-military” men, who were unafraid to serve time in prison, to interfere with the victim’s business, resulting in the loss of a “tremendous amount of money.”  Bedwell added, “Honestly, whatever they do or don’t do – pretty much up to them . . . either you’re gonna sign the contract . . . or these boys are gonna do it again.”  The business owner relented, making his workers sign with Local 175.

In connection with his guilty plea, Bedwell also admitted that he attempted to extort another construction business owner, telling him that he would not get asphalt delivered to a LaGuardia Airport job site if he did not agree to employ Local 175 members.  When the owner refused to sign an agreement with Local 175, Bedwell and his co-conspirators stopped the asphalt-delivery trucks, harassed the drivers and slashed their tires.

The extortion and attempted extortion were part of a pattern in which Bedwell referred to his ties to a member and then-associate of the Gambino organized crime family of La Cosa Nostra, as well as his own reputation as a “muscle man,” to intimidate businesses into signing labor contracts with Local 175.  Bedwell’s co-conspirators also physically assaulted workers associated with contractors who refused to sign with Local 175.   

The government’s case is being handled by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Nadia Shihata, Andrey Spektor and Nicholas J. Moscow are in charge of the prosecution. 

The Defendant: ROLAND BEDWELL
Age: 57
Residence:  Freeport, New York

E.D.N.Y. Docket No. 16-CR-608 (S-2) (NGG)

Earlier today, at the federal courthouse in Central Islip, Fernando Clarke, a former investigator with the New York City Department of Correction, was sentenced by United States District Judge Arthur D. Spatt to 10 years’ imprisonment, following his March 2018 jury trial conviction on seven counts of transportation, receipt and possession of child pornography.  Clarke was also sentenced to pay a $13,682.43 fine, a special assessment of $5,600 and five years’ supervised release to follow his prison sentence, during which time he must register as a sex offender and will not be allowed unsupervised contact with minors.  A restitution request from one of the victims depicted in child pornography images Clarke collected will be determined by the Court on or before June 1, 2018.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, and Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York, announced the sentence.

“As the trial established, Clarke collected child pornography at his home for years, using a peer-to-peer file sharing system that allowed others to download child pornography from him,” stated United States Attorney Donoghue.  “When his crimes came to light, Clarke lied and attempted to hide behind his badge, claiming that he had accessed child pornography for his job as an investigator for the New York City Department of Correction.  This Office is committed to aggressively investigating and prosecuting consumers of child pornography.”  Mr. Donoghue extended his grateful appreciation to the New York City Department of Investigation, Inspector General, Board of Correction, and the Department of Justice Criminal Division’s Child Exploitation and Obscenity Section and High Technology Investigative Unit for their assistance in this case.

“For years, and while entrusted to serve and protect society, Fernando Clarke compiled and shared thousands of images and videos of children being sexually abused and exploited,” said Acting Assistant Attorney General Cronan.  “With every horrific file Clarke downloaded or shared with others, he compounded the unspeakable harm endured by these vulnerable victims.  Thanks to the outstanding efforts of our dedicated law enforcement partners and federal prosecutors, Clarke is now being held accountable for his crimes.”

“Individuals who take pleasure in watching videos and photos of children being sexually exploited should learn from the outcome of this case that we will find you and prosecute you to the fullest extent of the law, no matter who you are,” stated HSI Special Agent-in-Charge Melendez.  “The fact that this individual used his law enforcement status to try to shield his crimes is particularly heinous, and a betrayal of all we stand for in protecting the children in our communities. But his knowledge of online sharing systems and assumption he could go undetected was undone by the excellent investigative team in this case.” 

According to court filings and evidence introduced at trial, Clarke downloaded thousands of video files of the sexual abuse of pre-teen children, which he kept on computer equipment in his home.  During a court-ordered search of his home on July 28, 2015, Clarke initially claimed that he was downloading child pornography in connection with his employment as a Department of Correction investigator.  Clarke subsequently admitted during the search that he was not authorized to access or download child pornography for his employment.  Clarke was fired from the Department of Correction after his conviction. 

The government’s case is being prosecuted by Assistant United States Attorney Allen L. Bode of the Office’s Long Island Criminal Division and Department of Justice Trial Attorney Lauren Kupersmith.

The Defendant:

FERNANDO CLARKE
Age:  64
East Meadow, New York

E.D.N.Y. Docket No. 15-CR-426(S-1) (ADS)(AKT)

Earlier today, an investigator with the New York City Correction Department was sentenced to 120 months in prison at the federal courthouse in Central Islip, New York following his March 5 jury trial conviction on seven counts of transportation, receipt and possession of child pornography involving conduct at his East Meadow, New York residence.

 

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Richard P. Donoghue for the Eastern District of New York and Special Agent-in-Charge Angel M. Melendez of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) New York, made the announcement.

 

Fernando Clarke, 64, of East Meadow, New York, was sentenced by U.S. District Judge Arthur D. Spatt, who also ordered him to pay a $13, 682.43 fine and serve a five year term of supervised release to follow his prison sentence, during which time he must register as a sex offender and will not be allowed unsupervised contact with minors.

 

“For years, and while entrusted to serve and protect society, Fernando Clarke compiled and shared thousands of images and videos of children being sexually abused and exploited,” said Acting Assistant Attorney General Cronan.  “With every horrific file Clarke downloaded or shared with others, he compounded the unspeakable harm endured by these vulnerable victims.  Thanks to the outstanding efforts of our dedicated law enforcement partners and federal prosecutors, Clarke is now being held accountable for his crimes.”

 

“As the trial established, Clarke collected child pornography at his home for years, using a peer-to-peer file sharing system that allowed others to download child pornography from him,” said U.S. Attorney Donoghue.  “When his crimes came to light, Clarke lied and attempted to hide behind his badge, claiming that he had accessed child pornography for his job as an investigator for the New York City Department of Correction.  This Office is committed to aggressively investigating and prosecuting consumers of child pornography.” 

 

“Individuals who take pleasure in watching videos and photos of children being sexually exploited should learn from the outcome of this case that we will find you and prosecute you to the fullest extent of the law, no matter who you are,” said Angel Melendez, Special Agent in Charge, Homeland Security Investigations (HSI), New York. “The fact that this individual used his law enforcement status to try to shield his crimes is particularly heinous, and a betrayal of all we stand for in protecting the children in our communities. But his knowledge of online sharing systems and assumption he could go undetected was undone by the excellent investigative team in this case.”

 

According to court filings and evidence introduced at trial, over several years Clarke downloaded thousands of video files of the sexual abuse of pre-teen children, including sadistic material, which he kept on computer equipment in his home.  Clarke knew that these video files, some of which he watched repeatedly, also were available on his computers for others to download.   During a court-ordered search of his home on July 28, 2015, Clarke initially claimed that he was downloading child pornography in connection with his employment as a Correction Department investigator.  Clarke admitted at the time of the search that he was not authorized to access or download child pornography for his employment.  Clarke was arrested at the time of the search and subsequently fired from the Department of Correction after his conviction. 

 

The New York City Department of Investigation, Inspector General, Board of Correction, and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and High Technology Investigative Unit assisted in the investigation.  The government’s case is being prosecuted by Trial Attorney Lauren Kupersmith of the Criminal Division’s CEOS and Assistant U.S. Attorney Allen L. Bode of the U.S. Attorney’s Office’s Long Island Criminal Division.

Earlier today, at the federal courthouse in Brooklyn, Tyvon Bannister, also known as “Turtle,” a member of the Crips-affiliated Cypress Gangsta Crips (CGC) street gang, pleaded guilty to a firearms-related murder charge in connection with his July 2014 fatal shooting of Rayvon Henriques.  The guilty plea was entered before United States District Judge Brian M. Cogan.

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

As set forth in prior court filings and statements in court, Bannister is a member of the CGC, which is comprised of individuals residing in and around the Cypress Hills Houses (“Cypress”), a large New York City Housing Authority complex in East New York, Brooklyn.  Cypress has been plagued by gang and drug-related violence arising largely from a long-standing feud between the CGC, who hail from the “Backside” (buildings on Linden Boulevard) and “Teamside” (buildings on the western end of Sutter Avenue and the northern end of Fountain Avenue), and the Bloods-affiliated gang members who reside in the “Frontside” (buildings on the eastern end of Sutter Avenue).  This feud dates to at least 2010, when a person from the Frontside was believed to have killed a member of the Backside. 

On July 8, 2014, Bannister and another gang member shot and killed Henriques in front of a nightclub in East New York.  Henriques, who was 26-years-old at the time of his death, was targeted because of his association with the CGC’s chief rivals, the Bloods-affiliated gang members from the “Frontside” section of Cypress.     

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 Organized Crime and Gangs Section.  Assistant United States Attorneys Margaret E. Gandy and Andrey Spektor are in charge of the prosecution.

The Defendant:

TYVON BANNISTER
Age:  25
Brooklyn, New York

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

Earlier today, following six days of trial, a federal jury in Brooklyn returned guilty verdicts against Michael Crumble and Ramell Markus on charges of kidnapping conspiracy, kidnapping and committing physical violence in furtherance of an extortion.  The charges are contained in an indictment arising from an abduction, assault and extortion committed by the defendants on December 18, 2017.  When sentenced by United States District Judge Allyne R. Ross, the defendants face a maximum of life 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 James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the verdict.

“As the jury found, Crumble and Markus abducted the victim and took him to a location in Brooklyn that became a torture chamber, where he was beaten and burned with a hot iron in an attempt to extract drugs, money and information to settle a drug dispute,” stated United States Attorney Donoghue.  “The defendants will now be held responsible for their ruthless conduct.  I commend our partners in the New York City Safe Streets Task Force, which is comprised of agents of the FBI and detectives from the NYPD, for their outstanding investigative work.”  

The evidence presented at trial established that Crumble, Markus, and a co-conspirator kidnapped the victim outside his home in Queens, forcing him into a vehicle.  Markus pistol-whipped the victim, seeking a package of narcotics believed to be in his home.  The defendants and the co-conspirator drove the victim to a residence in Brooklyn, and demanded that he give them narcotics, money, and the address of a location that the perpetrators believed contained additional money, as well as jewelry.  To force the victim to comply, Markus broke a glass on his face, and the co-conspirator repeatedly burned both of the victim’s arms with a hot clothing iron.  After the victim’s fiancée provided the defendants with money and drugs, the defendants and the co-conspirator transported the victim to a hotel in Brooklyn where he was held captive while the defendants waited for another individual to provide the address they were seeking.  The defendants held the victim captive for more than eight hours. 

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 Organized Crime and Gangs Section.  Assistant United States Attorneys Keith D. Edelman and Lindsay K. Gerdes are in charge of the prosecution. 

The Defendants:

MICHAEL CRUMBLE
Age:  34
Residence: Brooklyn, New York,

RAMELL MARKUS (also known as “Rah,” “Dollah” and “Smooth”)
Age:  35
Residence: Brooklyn, New York

E.D.N.Y. Docket No. 18-CR-32 (ARR)

A federal grand jury in Brooklyn has returned an indictment against Rena Beduya Avendula, the owner and managing executive of Professional Placement & Recruitment, Inc. (PPRI), charging her with a visa fraud scheme that brought Filipino citizens into the United States for financial profit.  Avendula is charged with five counts of visa fraud and with conspiring to defraud the United States, commit visa fraud and illegally bring aliens into the United States.  Avendula was arrested Friday, arraigned before United States Magistrate Judge Ramon E. Reyes, Jr., and released on a $75,000 bond.

Richard P. Donoghue, United States Attorney for the Eastern District of New York, and William B. Gannon, Special Agent-in-Charge, United States Department of State, Diplomatic Security Service (DSS), Boston Field Office, announced the charges.

“As alleged in the indictment, Avendula engineered a fraud scheme for personal profit by creating fake job positions to deceive a government program that allows a limited number of foreign nationals to enter the United States temporarily to fill highly specialized positions,” stated United States Attorney Donoghue.  “We will continue to protect the integrity of our immigration process by ensuring that only qualified people receive these visas.”

“The Diplomatic Security Service is firmly committed to working with the U.S. Attorney’s Office and our other law enforcement partners to investigate allegations of crime related to passport and visa fraud and to bring those who commit these crimes to justice,” stated DSS Special Agent-in-Charge Gannon.  Mr. Gannon also praised the efforts of the DSS New York Field Office, which provided outstanding investigative assistance during this case. 

As alleged in the indictment, Avendula engaged in a scheme from October 2009 to February 2015 to bring Filipino citizens into the United States illegally by fraudulently claiming to the United States Citizenship and Immigration Services (USCIS) that the foreign nationals would be employed in “specialty occupations,” thereby qualifying for H-1B visas.  The H-1B nonimmigrant visa classification allows foreign nationals to enter the United States temporarily for the specific purpose of working for the employer in a “specialty occupation.”  A “specialty occupation” requires certain specialized knowledge and a bachelor’s or higher level degree for entry into the occupation within the United States labor market.  General registered nurses (RNs) typically do not qualify as beneficiaries for H-1B visas.  A sponsoring U.S. employer must submit a USCIS Form I-129 Petition for a Nonimmigrant Worker, along with supporting documentation, attesting that the visa beneficiary will be employed in a specialty occupation and paid at least the local prevailing wage paid to similarly qualified U.S. citizens and legal permanent residents working in the area.  A limited number of H-1B visas are issued each year. 

As alleged in the indictment, Avendula used PPRI, based in Woodside, New York, to further her visa fraud scheme.  PPRI specialized in providing nursing care to elderly patients.  Avendula, in an effort to secure some of the limited number of H-1B visas that are available each year, falsely stated that foreign nurses would be working in specialized nursing at prevailing wage rates.  In fact, they were going to work as licensed practical nurses or RNs at significantly lower rates of pay, mostly at nursing homes and rehabilitation centers.  The defendant sponsored dozens of fraudulent applications and profited from the filing fees she collected from the nurses and from the health care facilities that paid PPRI. 

The charges announced today are merely allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted, the defendant faces a statutory maximum of 10 years’ imprisonment for the visa fraud charges, and 10 years’ imprisonment for each foreign national she induced to reside in the United States in connection with the visa fraud conspiracy.

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: RENA BEDUYA AVENDULA
Age: 50
Woodside, New York

E.D.N.Y. Docket No. 18-CR-246 (DLI)

Earlier today, a federal jury in Brooklyn returned a guilty verdict against Eugenio Perez, a federal correctional officer employed by the United States Bureau of Prisons, on charges of deprivation of civil rights, aggravated sexual abuse, sexual abuse, sexual abuse of a ward, attempted sexual abuse of a ward and abusive sexual contact.  The 23-count indictment covered sexual abuse by Perez of five women who were inmates at the Metropolitan Detention Center (MDC) where the defendant was a lieutenant.  The verdict followed a two-week trial before United States District Judge Kiyo A. Matsumoto.  When sentenced, Perez faces a maximum sentence of up to life in prison.

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

“Perez was a calculating predator who brazenly abused the authority of his position and betrayed his oath as a correctional officer when he sexually abused women under his control and entrusted to his care,” stated United States Attorney Donoghue.  “Today’s verdict sends a strong message that this Office, together with our law enforcement partners in the Department of Justice, will aggressively investigate corrupt officers like Perez who commit sex crimes in correctional institutions, using fear and intimidation to try to silence their victims.  We hope that today’s verdict brings some measure of closure and justice to the victims of Perez’s crimes.”

“Today’s verdict is a testament to the courage of the victims who came forward to ensure that justice was served,” stated OIG Special Agent-in-Charge Gardella.  “It sends a powerful message that no correctional officer is above the law.  The OIG takes allegations of abuse and civil rights violations seriously and we will continue to vigorously investigate those who, like Perez, abuse their power.”

“Perez violated the civil rights of several women who reasonably believed he could adversely exercise disciplinary authority over them should they not obey his demands,” stated FBI Assistant Director-in-Charge Sweeney.  “Sexual abuse—in any form or fashion—is an inexcusable crime, especially when it involves such disgraceful behavior committed by a federal employee.”

The evidence at trial established that over a three-year period between January 2013 and September 2016, Perez used his position as a lieutenant at the MDC to engage in sexual acts and contact with five female inmates under his supervisory and disciplinary authority.  The victims, identified in the indictment as “Jane Doe #1” through “Jane Doe #5,” testified that Perez lured them into isolated situations by arranging for them to clean the lieutenants’ office area at night.  Their testimony and other evidence at trial proved that Perez used physical force and intimidation to compel the victims to engage in various sexual acts with him, including oral sex, and used his authority over them to ensure that they did not report the abuse.

The government’s case is being handled by the Office’s Public Integrity Section.  Assistant United States Attorneys Nadia I. Shihata and Taryn A. Merkl are in charge of the prosecution.  

The Defendant:

EUGENIO PEREZ
Age:  47
Residence: Brooklyn, New York

E.D.N.Y. Docket No. 17-CR-280 (KAM)

 

Earlier today, Joshua Padmore pleaded guilty at the federal courthouse in Brooklyn to a conspiracy to distribute crack, heroin and fentanyl, robbery conspiracy and possessing a handgun as a convicted felon for his role in an armed robbery of a drug stash house.  Today’s plea took place before United States District Judge Edward R. Korman.  When sentenced, Padmore faces a mandatory minimum sentence of five years’ imprisonment and a maximum of 40 years’ imprisonment for the drug conspiracy charge, up to 20 years’ imprisonment for the robbery charge, and up to 10 years’ imprisonment for possessing a handgun as a convicted felon.  Padmore is the final of six defendants to plead guilty in the case.

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 guilty plea.

According to court documents, on February 7, 2016, Padmore, Andre Shanks, Carlos Welch, Jr., and Qualese Welch planned to rob a drug stash house located in Flushing.  Carlos Welch, Jr., first went to the stash house posing as a marijuana buyer.  After leaving the stash house, Carlos Welch, Jr., called Padmore, whose phone was being monitored pursuant to a court order, and reported that he had observed “pounds” of marijuana inside the house.  Law enforcement agents intercepted Padmore, Shanks and Carlos Welch, Jr., discussing their plans for carrying out the robbery.  While monitoring Padmore’s phone and surveilling the stash house, law enforcement agents observed a car previously used by Padmore circling the stash house.  Agents stopped the car, arrested Padmore, Shanks and Qualese Welch, and recovered a loaded revolver from under Padmore’s seat.  Carlos Welch, Jr., who had been in a second car, was arrested several days later in Easton, Pennsylvania.

Padmore, along with Barrington Diles, were the leaders of a crew that sold crack cocaine, heroin and fentanyl in Brooklyn.  Shanks and Joseph Bergman also conspired with Padmore to sell cocaine base.  Diles and Bergman previously pleaded guilty to drug trafficking charges.  Shanks previously pleaded guilty to robbery and drug trafficking charges.  Carlos Welch, Jr., and Qualese Welch previously pleaded guilty to robbery-related charges.

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 prosecuted by Assistant United States Attorneys Mathew S. Miller and Moira Kim Penza.

Defendant Who Pleaded Guilty Today:

JOSHUA PADMORE (also known as “JJ” and “Kutty”)
Age:  35
Brooklyn, New York

Defendants Who Previously Pleaded Guilty:

ANDREW SHANKS
Age:  24
Brooklyn, New York

CARLOS WELCH, JR.
Age:  25
Queens, New York

QUALESE WELCH
Age:  25
Gainesville, Georgia 

BARRINGTON DILES
Age:  35
Brooklyn, New York

JOSEPH BERGMAN
Age:  Not Available
Brooklyn, New York

E.D.N.Y. Docket No. 17-CR-126 (S-1) (ERK)

Abraxas J. Discala, also known as “AJ Discala,” the Chief Executive Officer of OmniView Capital Advisors LLC, was convicted today of eight counts in the indictment by a federal jury in Brooklyn.  Discala was convicted of conspiracy to commit securities fraud, conspiracy to commit mail fraud and wire fraud, and two securities fraud counts related to the publicly-traded companies CodeSmart Holdings, Inc. and Cubed, Inc., and four counts of wire fraud related to Cubed and the publicly-traded company StarStream Entertainment Inc.  The verdicts followed a five-week trial before United States District Judge Eric N. Vitaliano.  When sentenced, Discala faces a maximum of 20 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 verdict.

“Discala and his network of company insiders, brokers and others executed a scheme designed to dupe investors into believing that companies with little in the way of assets were worth hundreds of millions of dollars by manipulating trading activity.  At the end of the day, the defendant’s criminal game of musical shares cost unsuspecting investors millions,” stated United States Attorney Donoghue.  “Today’s verdict sends a powerful message that this Office, together with our law enforcement partners, will hold corporate executives accountable when they use their expertise to facilitate the commission of crimes.”  Mr. Donoghue expressed his appreciation to the Securities and Exchange Commission, New York Regional Office, and the Financial Industry Regulatory Authority, Inc., Criminal Prosecution Assistance Group, for their assistance in this case.

“Investors know they’re taking a chance when purchasing stock and other securities, but they don’t anticipate the odds being stacked against them from the start,” stated FBI Assistant Director-in-Charge Sweeney.  “In so many cases, we see criminals in the white collar world autonomously controlling other people’s money and diverting it for their own benefit.  Stealing is stealing, in whatever form or fashion, and today’s conviction proves just that.”

The evidence at trial established that in May 2013, Discala, along with separately charged co-conspirators, engineered a reverse merger of CodeSmart, a private company, with a public shell company.  After gaining control of CodeSmart’s three million purportedly unrestricted shares, Discala and his co-conspirators on two occasions fraudulently inflated share price and trading volume of CodeSmart, which traded under the ticker symbol ITEN, and then sold their shares at a profit when the price reached desirable levels — a  scheme commonly referred to as a “pump and dump.” 

The first pump and dump occurred between May 13, 2013 and August 21, 2013.  During this period, the co-conspirators manipulated CodeSmart’s stock price causing it to rise from $1.77 to a high of $6.94, before “dumping” their shares thereby causing it to drop to $2.19.

The second pump and dump occurred between August 21, 2013 and September 20, 2013.  During this period, the defendant and his co-conspirators manipulated CodeSmart’s stock price causing it to rise from $2.19 to a high of $4.60, before selling, or “dumping,” their shares causing it drop to $2.13.  During the entire period, Discala and his co-conspirators coordinated their trading activity to artificially control CodeSmart’s stock price.  Evidence at trial established that Discala made more than $2.8 million in trading profits from the CodeSmart pump and dumps, while investors lost millions of dollars.

CodeSmart’s market capitalization at its highest closing price of $6.94 per share on July 12, 2013 was $86,347,800.  That same day, CodeSmart filed with the U.S. Securities and Exchange Commission an amended Form 10-K, in which it listed only $6,000 in total assets, $7,600 in revenue and a net loss of $103,141.  By December 30, 2013, CodeSmart’s stock was trading at $0.66 per share, and on July 9, 2014, its stock closed at $0.01 per share.

The evidence at trial also established that in early 2014, Discala and his co-conspirators defrauded investors and potential investors in Cubed, which traded under the ticker symbol CRPT.  Discala and his co-conspirators gradually increased the price of Cubed’s stock to give it the appearance of a legitimate company with genuine and steady market demand for the security.  The conspirators used an “escrow account” to successfully control the price and trading volume of Cubed’s stock, and to conceal the defendant’s and their co-conspirators’ ownership interests.  In a telephone call intercepted pursuant to a judicially authorized wiretap, Discala boasted to a co-conspirator about his control over Cubed’s stock price through the use of the escrow account, stating, “I’m the [expletive] brake and the gas . . . .  If I take my foot off the brake it’s 55 [dollars] tomorrow.”  At the same time the defendant and their co-conspirators were touting Cubed to prospective investors, Discala stated on an intercepted call that, “We’ll be out before [expletive] company will even see if the Cube works, ok?”

On June 23, 2014, Cubed reached its highest closing price of $6.75 per share, resulting in a market capitalization of approximately $200 million.  Previously, Cubed filed with the SEC a Form 10-Q that reported less than $1,500 in cash holdings, zero revenue, negative stockholders’ equity, a net loss of $15,000 and accrued professional fees of $131,824.

The evidence at trial also established that, in addition to manipulating the stock of CodeSmart and Cubed, between October 2013 and July 2014, Discala also fraudulently manipulated the stock of StarStream Entertainment Inc. and The Staffing Group, Ltd.  StarStream was a Nevada corporation with its principal place of business in Monterey, California.  It was promoted as a company that produced, promoted, supported and developed motion pictures, and it traded under the ticker symbol SSET.  The Staffing Group was a Nevada corporation with its principal place of business in New Orleans, Louisiana.  It was promoted as a company that recruited, hired, employed and managed skilled workers for clients, and it traded under the ticker symbol TSGL.

The jury also acquitted Discala of two wire fraud counts.  Separately charged defendant Kyleen Cane was acquitted of the three counts against her.

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

The Defendant:

ABRAXAS J. DISCALA (also known “AJ Discala”)
Age: 47
Scarsdale, New York

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