Eastern District of New York

Earlier today, a four-count indictment was returned by a federal grand jury in the Eastern District of New York, charging Joseph P. Willner, a self-described day trader, with Conspiracy to Commit Wire Fraud, Conspiracy to Commit Securities Fraud and Computer Intrusions, Securities Fraud and Conspiracy to Commit Money Laundering.  As alleged in the indictment and other court filings, between September 2014 and May 2017, Willner engaged in a computer intrusion and securities fraud scheme, illegally profiting from a series of coordinated trades involving more than 50 hacked online brokerage accounts.  The defendant laundered the proceeds of his crimes using Bitcoin, a cryptocurrency.  Willner was arrested on a criminal complaint on June 13, 2017 in Ambler, Pennsylvania.   

Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Kenneth A. Blanco, Acting Assistant Attorney General for the Justice Department’s Criminal Division and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI) announced the charges. 

“Cybercriminals continue to come up with innovative ways to steal money from victims using the Internet, as in this case where defendant Willner’s co-conspirators allegedly hacked into the victims’ accounts in order to execute fraudulent short sales,” stated Acting United States Attorney Rohde.  “Regardless of what innovative ways fraudsters come up with, this Office, together with our law enforcement partners, will prosecute them to the fullest extent of the law.”  Ms. Rohde expressed her grateful appreciation to the United States Securities and Exchange Commission and the United States Commodity Futures Trading Commission for their significant assistance in the investigation.

 “This case involves a 21st Century cyber boiler room, except the buyers were not even aware they were purchasing shares of stock,” stated FBI Assistant Director-in-Charge Sweeney.  “As alleged, the scheme involved hacking into victims’ online securities brokerage accounts to make unauthorized trades that would benefit the defendant through the use of short sales.  The scheme ultimately led to a loss of over $2 million to victim accounts.  The FBI will continue to investigate and bring to justice those who commit securities fraud in an effort to ensure the fairness and integrity of our financial markets.”

As alleged in the indictment and other court filings, between September 2014 and May 2017, Willner and others conspired to hack into victims’ online securities brokerage accounts and used them to place unauthorized trades.  As a part of the conspiracy, Willner used brokerage accounts in his name to place “short sale” offers for publicly-traded companies’ stock at artificially high, above-market prices.  Simultaneously, Willner’s co-conspirators hacked into victims’ online brokerage accounts and used them to place buy orders for the stock at the artificially high prices, matching Willner’s short sale offers.  After using the victims’ accounts to purchase the stock, Willner and his co-conspirators then re-purchased the stock from the victims’ accounts at market or below-market prices.  This series of fraudulent trades usually took place within minutes, and Willner immediately profited based on the difference between his artificially high short sale price, and the lower price at which he subsequently re-purchased the stock.  While discussing the scheme in private messages on Twitter, one of Willner’s co-conspirators stated: “legal trading too hard.”  Willner responded that he would be a “good trading partner.”

As a result of Willner’s and his co-conspirators’ alleged actions, the affected brokerage firms lost more than $2 million.  If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment. 

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

The government’s case is being handled by the U.S. Attorney’s Office’s Business and Securities Fraud and National Security and Cybercrime Sections, and the Securities and Financial Fraud Unit of the Department of Justice, Fraud Section.  Assistant United States Attorneys Tiana A. Demas, Mark E. Bini and David Kessler and Trial Attorney Cory E. Jacobs of the Criminal Division’s Fraud Section are in charge of the prosecution. 

The Defendant:

JOSEPH P. WILLNER
Age: 42
Ambler, Pennsylvania

E.D.N.Y. Docket No. 17-CR-620 (LDH)

Earlier today, Osman Ak and Murat Ak pleaded guilty to drug trafficking charges before United States Magistrate Judge Steven I. Locke in federal court in Central Islip, New York.  A third defendant in the indictment, Mehmet Akpinar, previously pled guilty to drug trafficking.  The three defendants were arrested on September 28, 2017 in connection with a four-count indictment.  The defendants admitted to selling K-2, an illegal controlled substance, out of Eyup Gas & Convenience Store, Inc., d/b/a VS Food Mart, in Medford, New York. 

Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division, and George Beach, Superintendent, New York State Police (NYSP), announced the pleas.

According to court documents, the defendants trafficked K-2 or “spice” from the convenience store owned and operated by Osman Ak.  The sales were made out of a cigar boxes hidden behind the cash register. The K-2 was packaged in glitter bags with cartoon and cartoon-like characters including “Dopey,” one of Disney’s Seven Dwarfs, and names like “OMG,” “Hayze Peachy King,” “Joker” and “Hayze Hawaiian Ultra.”  K-2 is an illegal and dangerous DEA Schedule 1 drug with no medicinal use.

When they are sentenced, each of the defendants face up to 20 years’ imprisonment on the drug trafficking charge to which they pled guilty. 

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

The Defendant:

OSMAN AK
Holbrook, New York
Age: 45

MURAT AK
Holbrook, New York
Age: 35

MEHMET AKPINAR
Nesconset, New York
Age: 51

E.D.N.Y. Docket No. 17-CR- 527 (DRH)(SIL)

Earlier today at the federal courthouse in Brooklyn, John Howard was sentenced to 181 months’ imprisonment, to be followed by three years of supervised release, by United States District Judge Ann M. Donnelly for his participation in three violent carjackings.  Howard and his co-defendant, Donald Warren, previously pleaded guilty to carjacking and related firearms charges.  Warren was sentenced to 18 years’ imprisonment on September 14, 2017. 

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

“John Howard attacked innocent members of communities in Queens and Nassau Counties as they went about their daily lives, terrorizing them with the threat and use of lethal force,” stated Acting United States Attorney Rohde.  “With this sentence, Howard is being held accountable for his numerous violent crimes.”  Ms. Rohde also thanked the Nassau County Police Department, the Nassau County District Attorney’s Office and the Queens County District Attorney’s Office for their assistance during the investigation.

Carjacking, December 18, 2015

According to court filings and facts presented during the plea proceeding, on December 18, 2015, Howard approached a woman who was sitting in a parked Volkswagen Jetta in Valley Stream, New York. As the woman leaned over to retrieve her purse from the passenger side, Howard pressed a hard object against her back and said, “You know what this is.  If you want to see your family and not be on the news, give me your money.”  Howard stole the woman’s car and drove away in it. 

Carjacking, December 28, 2015

Howard and Warren confronted the driver of a Mercedes Benz in front of a Best Western hotel in Jamaica, New York.  Warren threatened the driver with a handgun and demanded his wallet.  Warren and Howard beat the man over the head, stole his wallet, and drove away in the Mercedes.

Carjacking and Shooting, January 21, 2016

Howard participated in another carjacking with Warren in which they stole a car parked outside a Hampton Inn hotel in South Ozone Park, New York.  A young woman was waiting for her mother in the passenger seat of a Hyundai parked in front of the hotel when Warren, armed with a loaded handgun, entered the vehicle and drove it around the hotel parking lot.  When the young woman’s mother left the hotel a few minutes later, Warren exited the vehicle and demanded the mother’s purse.  Warren shot the woman in the chest when she resisted.  Howard and Warren then fled the scene. 

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

The Defendant:

JOHN HOWARD
Age: 50
Residence: Brooklyn, New York

DONALD WARREN
Age: 55
Residence: Queens, New York

E.D.N.Y. Docket No. 16-CR-102 (AMD)

An indictment was unsealed today charging Mirsad Kandic, 36, a legal permanent resident of the United States who left the United States in 2013, with one count of conspiring to provide material support and resources to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization, resulting in death, and five counts of providing and attempting to provide material support and resources to ISIS, including personnel, equipment and false documentation and identification, including one count resulting in death.  The defendant was extradited to the United States from Bosnia and Herzegovina yesterday and is scheduled to be arraigned at 2:00 p.m. before U.S. District Judge Nicholas G. Garaufis at the federal courthouse in Brooklyn, New York.

Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York, Assistant Director in Charge William F. Sweeney, Jr., of the FBI’s New York Field Office and Commissioner James P. O’Neill of the NYPD announced the extradition and charges.

“As part of his support for ISIS, the defendant traveled overseas and, while abroad, recruited and facilitated the travel of foreign fighters to join the terrorist organization,” said Acting Assistant Attorney General Boente.  “The National Security Division will continue to use all its tools to disrupt the flow of foreign fighters and bring to justice those who provide material support to foreign terrorist organizations.”

“As alleged, defendant Kandic abandoned the United States, his adopted country, and joined ISIS, a violent terrorist organization opposed to the U.S. and its interests,” stated Acting U.S. Attorney Bridget M. Rohde.  “From Turkey, he proceeded to recruit others to join ISIS, swelling their ranks and helping them commit terrorist acts such as suicide bombings.  Together with our law enforcement partners, we will continue to prosecute ISIS members, as well as other terrorists, to the fullest extent of the law.”  Ms. Rohde thanked the authorities of Bosnia and Herzegovina, the FBI Legal Attaché’s Office in Sarajevo, and the Department of Justice’s Office of International Affairs, for their assistance in the investigation and effecting the defendant’s extradition.

“As alleged, at the same time Kandic lived freely among us in New York, he expressed a desire to travel overseas to kill or maim U.S. military forces,” stated Assistant Director in Charge Sweeney.   “Kandic eventually put his desire in action when he traveled to Turkey to join ISIS, and from there he set about recruiting others, including Jake Bilardi, to support his cause.  Just prior to Bilardi successfully detonating a suicide bomb in Ramadi, Kandic told Bilardi he hoped Bilardi’s victims’ organs would ‘implode,’ and just after the attack, Kandic publicized it on Twitter.  Kandic is now back in New York, no longer living freely among us, but rather in federal custody to face justice. ”

As alleged in the indictment and other court filings, prior to November 2013, while living in the Bronx and Brooklyn, Kandic expressed the desire to travel overseas to engage in “jihad” against U.S. military forces to obtain martyrdom.  In December 2013, Kandic traveled to Istanbul, Turkey, and joined ISIS.  From there, Kandic recruited individuals from the United States, the United Kingdom, Australia and elsewhere, to travel to ISIS-controlled territory in Syria and Iraq and serve as foreign fighters.  In online communications with an associate, Kandic stated he worked in ISIS’s Border Office in Turkey and was part of a team that conducted background checks of foreign fighters seeking to join ISIS in Syria.  Kandic told associates that he traveled to and from ISIS-controlled territory, including Raqqa, Syria, in connection with his work with ISIS.  In a recorded voice memo from Kandic to an associate, Kandic stated, “I have a lot of Mujahideen in Europe, a lot,” and “I sent out over 20,000 brothers . . . to Sham.”  “Mujahideen” refers to fighters.  “Sham” is frequently used by ISIS members to refer to the region of the Levant, including Syria.

One of the individuals Kandic assisted was Jake Bilardi, an 18-year-old Australian citizen who traveled from Melbourne, Australia, to Istanbul, Turkey, in August 2014.  A few days before Bilardi flew to Turkey, Kandic sent Twitter messages instructing Bilardi to stand in a particular section of an airport in Istanbul.  Kandic informed Bilardi that he would send someone to meet him there.  From Turkey, Bilardi traveled to ISIS-controlled territory in Syria and Iraq.  Kandic continued to communicate with Bilardi and encouraged him to follow through with his plan to commit a suicide attack in Iraq.  In early March 2015, Bilardi informed Kandic via Twitter that he “just went to look at my target today for my operation.”  Kandic replied, “May Allah reward you immensely.”  Kandic later added: “May Allah make there [sic] inner organs implode.”  On March 11, 2015, Bilardi committed a suicide bombing in Ramadi, Iraq.  Kandic publicized the attack via Twitter.   

Kandic also worked to further ISIS’s media and propaganda operations.  Kandic set up and used over 100 Twitter accounts to provide updates about ISIS attacks and territorial gains, which announcements were close in time to when the events occurred. 

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

Trial Attorneys Jennifer Levy and Jolie Zimmerman of the National Security Division’s Counterterrorism Section, and Assistant U.S. Attorneys Saritha Komatireddy, Tiana A. Demas and J. Matthew Haggans of the Eastern District of New York are prosecuting this case.

Earlier today, an indictment was unsealed in federal court in Brooklyn, New York, charging Mirsad Kandic, a legal permanent resident of the United States, with one count of conspiring to provide material support and resources to the Islamic State of Iraq and al-Sham (ISIS), a foreign terrorist organization, resulting in death, and five counts of providing and attempting to provide material support and resources to ISIS, including personnel, equipment and false documentation and identification.  The defendant was extradited to the United States from Bosnia and Herzegovina yesterday and is scheduled to be arraigned this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr., at the federal courthouse in Brooklyn. 

Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Dana J. Boente, Acting Assistant Attorney General for National Security, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office, and James P. O’Neill, Commissioner, New York City Police Department (NYPD), announced the extradition and charges.

“As alleged, defendant Kandic abandoned the United States, his adopted country, and joined ISIS, a violent terrorist organization opposed to the U.S. and its interests,” stated Acting U.S. Attorney Bridget M. Rohde.  “From Turkey, he proceeded to recruit others to join ISIS, swelling its ranks and helping it commit terrorist acts such as suicide bombings.  Together with our law enforcement partners, we will continue to prosecute ISIS members, as well as other terrorists, to the fullest extent of the law.”  Ms. Rohde thanked the authorities of Bosnia and Herzegovina, the FBI Legal Attaché’s Office in Sarajevo, and the Department of Justice’s Office of International Affairs, for their assistance in the investigation and effecting the defendant’s extradition.  

“As part of his support for ISIS, the defendant traveled overseas and, while abroad recruited, and facilitated the travel of foreign fighters to join the terrorist organization,” said Acting Assistant Attorney General Boente.  “The National Security Division will continue to use all its tools to disrupt the flow of foreign fighters and bring to justice those who provide material support to foreign terrorist organizations.”

“As alleged, at the same time Kandic lived freely among us in New York, he expressed a desire to travel overseas to kill or maim U.S. military forces,” stated FBI Assistant Director-in-Charge Sweeney.   “Kandic eventually put his desire in action when he traveled to Turkey to join ISIS, and from there he set about recruiting others, including Jake Bilardi, to support his cause.  Just prior to Bilardi successfully detonating a suicide bomb in Ramadi, Kandic told Bilardi he hoped Bilardi’s victims’ organs would ‘implode,’ and just after the attack, Kandic publicized it on Twitter.  Kandic is now back in New York, no longer living freely among us, but rather in federal custody to face justice. ”

As alleged in the indictment and other court filings, prior to November 2013, while living in the Bronx and Brooklyn, Kandic expressed the desire to travel overseas to engage in “jihad” against U.S. military forces to obtain martyrdom.  In December 2013, Kandic traveled to Istanbul, Turkey and joined ISIS.  From there, Kandic recruited individuals from the United States, the United Kingdom, Australia, and elsewhere to travel to ISIS-controlled territory in Syria and Iraq and serve as foreign fighters.  In online communications with an associate, Kandic stated he worked in ISIS’s Border Office in Turkey and was part of a team that conducted background checks of foreign fighters seeking to join ISIS in Syria.  Kandic told associates that he traveled to and from ISIS-controlled territory, including Raqqa, Syria, in connection with his work with ISIS.  In a recorded voice memo from Kandic to an associate, Kandic stated, “I have a lot of Mujahideen in Europe, a lot,” and “I sent out over 20,000 brothers . . . to Sham.”  “Mujahideen” refers to fighters.  “Sham” is frequently used by ISIS members to refer to the region of the Levant, including Syria.

One of the individuals Kandic assisted was Jake Bilardi, an 18-year-old Australian citizen who traveled from Melbourne, Australia, to Istanbul, Turkey in August 2014.  A few days before Bilardi flew to Turkey, Kandic sent Twitter messages instructing Bilardi to stand in a particular section of an airport in Istanbul.  Kandic informed Bilardi that he would send someone to meet him there.  From Turkey, Bilardi traveled to ISIS-controlled territory in Syria and Iraq.  Kandic continued to communicate with Bilardi and encouraged him to commit a suicide attack in Iraq.  In early March 2015, Bilardi informed Kandic via Twitter that he “just went to look at my target today for my operation.”  Kandic replied, “May Allah reward you immensely.”  Kandic later added: “May Allah make there inner organs implode.”  On March 11, 2015, Bilardi committed a suicide bombing in Ramadi, Iraq.  Kandic publicized the attack via Twitter.   

Kandic also worked to further ISIS’s media and propaganda operations.  Kandic set up and used over 100 Twitter accounts to provide updates about ISIS attacks and territorial gains, which announcements were close in time to when the events occurred. 

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

The government’s case is being handled by the Office’s National Security & Cybercrime Section.  Assistant United States Attorneys Saritha Komatireddy, Tiana A. Demas and J. Matthew Haggans are in charge of the prosecution, with assistance provided by Trial Attorneys Jennifer Levy and Jolie Zimmerman of the National Security Division’s Counterterrorism Section.

The Defendant:

MIRSAD KANDIC
Age:  36

E.D.N.Y. Docket No. 17-CR-449 (NGG)

A criminal complaint was unsealed today in federal court in Brooklyn charging Maksim Zaslavskiy with securities fraud conspiracy in connection with engaging in illegal unregistered securities offerings and fraudulent conduct and misstatements designed to deceive investors as part of two Initial Coin Offerings (ICOs).  Zaslavskiy conducted these ICOs through two of his companies, REcoin Group Foundation, LLC (REcoin) and DRC World, Inc., which was also known as Diamond Reserve Club (Diamond).  Zaslavskiy marketed RECoin as “The First Ever Cryptocurrency Backed by Real Estate,” and subsequently touted Diamond as an “exclusive and tokenized membership pool” that was hedged by physical diamonds.  The defendant was arrested this morning and his initial appearance is scheduled for this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr.  In a separate action, the United States Securities and Exchange Commission (SEC) filed civil charges against Zaslavskiy.

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

 “As alleged, Zaslavskiy and his associates enticed investors by promising returns using novel ICOs even though Zaslavskiy knew that no real estate or diamonds were actually backing the investments,” stated Acting United States Attorney Rohde.  “This Office and our partners at the FBI are committed to protecting investors and ensuring that the securities markets are free from manipulation.”  Ms. Rohde extended her grateful appreciation to the Securities and Exchange Commission, New York Regional Office, for their assistance in this case.

“As alleged, Zaslavskiy and associates led their victims to believe they were hedging their bets on cryptocurrency secured by real estate and diamond investments,” stated Assistant Director-in-Charge Sweeney. “Much like a diamond, however, their promises were flawed, and the investments didn't exist. Today’s charges are a reminder that we intend to prosecute those who exploit our markets by engaging in corrupt behavior.”

In connection with the two ICOs, Zaslavskiy, with the help of others working with him, allegedly sold virtual tokens or coins to investors under the pretense that the coins were backed by investments in real estate and diamonds, even though no such investments existed.  Virtual currency, such as that promoted in these ICOs, is a digital representation of value that can be digitally traded but does not have legal tender status, and functions only by agreement with the community of users of that particular currency.  Zaslavskiy and his cohorts promised substantial returns to investors even though neither company had any real operations.  With respect to REcoin, Zaslavskiy advertised that the company had a “team of lawyers, professionals, brokers and accountants” who would invest the proceeds from the REcoin ICO into real estate when in fact no such employees had ever been hired or even consulted, and no real estate investments were made.  Similarly, Zaslavskiy told prospective investors in Diamond that their investment in Diamond tokens was “hedged by physical diamonds,” even though Diamond had not actually purchased any diamonds or engaged in any business operations.

If convicted, the defendant faces up to five years’ imprisonment and a fine. The charges in the complaint 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 Julia Nestor is in charge of the prosecution.

The Defendant:

MAKSIM ZASLAVSKIY
Residence: Brooklyn, New York
Age: 38

E.D.N.Y. Docket No. 17-MJ-934

The Department of Justice and the United States Attorney’s Office for the Eastern District of New York announced today that it has entered into a settlement with the Board of Elections in the City of New York (NYCBOE), resolving the Department’s claims that the NYCBOE improperly removed New York City voters from voter registration rolls in violation of Section 8 of the National Voter Registration Act of 1993 (NVRA).  Under the terms of the settlement, the NYCBOE will ensure that the names of affected voters will be restored to the City’s voter registration list. 

 

The Justice Department’s investigation found that the NYCBOE removed approximately 117,000 voters from the voter registration list solely due to the voters’ failure to vote, something that federal law forbids.  The NYCBOE also failed to follow NVRA procedures designed to protect voters from wrongful removal from the voter registration list.

 

The NVRA includes requirements for maintaining voter registration lists in elections for federal office.  The NVRA requires that states make a reasonable effort to remove voters who may have become ineligible due to having died or moved.  At the same time, the NVRA has protections against wrongful removal, including specific procedures for voters who may have moved and a requirement that voters cannot be removed solely because he or she has not voted.

 

The settlement also requires the NYCBOE to develop and implement voter registration list maintenance procedures that comply fully with federal law and protect New York City voters from improper removal from voter registration lists in the future.  The parties will submit the settlement to a federal judge for court approval.

 

“Complete and accurate voter registration lists strengthen our democracy,” said Acting Assistant Attorney General John Gore of the Justice Department’s Civil Rights Division. “The Civil Rights Division commends the Board of Elections for working with the Division to ensure that New York City’s voter registration list accurately reflects its eligible registrants, as envisioned by the National Voter Registration Act.”

 

“The improper removal of voters from the rolls deprives voters of their voice in choosing their elected representatives,” said Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York. “The settlement in this case restores that voice and ensures that eligible voters will be heard in the future.”

 

More information about the National Voter Registration Act and other federal voting laws is available on the Department of Justice website at https://www.justice.gov/crt/voting-section. Complaints about voter registration practices may be reported to the Civil Rights Division at 1-800-253-3931.

BROOKLYN – The Department of Justice and the United States Attorney’s Office for the Eastern District of New York announced today that it has entered into a settlement with the Board of Elections in the City of New York (NYCBOE), resolving the Department’s claims that the NYCBOE improperly removed New York City voters from voter registration rolls in violation of Section 8 of the National Voter Registration Act of 1993 (NVRA).  Under the terms of the settlement, the NYCBOE will ensure that the names of affected voters will be restored to the City’s voter registration list. 

 

The Justice Department’s investigation found that the NYCBOE removed approximately 117,000 voters from the voter registration list solely due to the voters’ failure to vote, something that federal law forbids.  The NYCBOE also failed to follow NVRA procedures designed to protect voters from wrongful removal from the voter registration list.

 

The NVRA includes requirements for maintaining voter registration lists in elections for federal office.  The NVRA requires that states make a reasonable effort to remove voters who may have become ineligible due to having died or moved.  At the same time, the NVRA has protections against wrongful removal, including specific procedures for voters who may have moved and a requirement that a voter cannot be removed solely because he or she has not voted. 
 

The settlement also requires the NYCBOE to develop and implement voter registration list maintenance procedures that comply fully with federal law and protect New York City voters from improper removal from voter registration lists in the future.  The parties will submit the settlement to a federal judge for court approval.

 

“The improper removal of voters from the rolls deprives voters of their voice in choosing elected representatives,” said Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York. “The settlement in this case restores that voice and ensures that eligible voters will be heard in the future.”
 

“Complete and accurate voter registration lists strengthen our democracy,” said Acting Assistant Attorney General John Gore of the Justice Department’s Civil Rights Division. “The Civil Rights Division commends the Board of Elections for working with the Division to ensure that New York City’s voter registration list accurately reflects its eligible registrants, as envisioned by the National Voter Registration Act.”

 

More information about the National Voter Registration Act and other federal voting laws is available on the Department of Justice website at https://www.justice.gov/crt/voting-section. Complaints about voter registration practices may be reported to the Civil Rights Division at 1-800-253-3931.

Earlier today, in federal court in Brooklyn, former Cayman Islands soccer official Costas Takkas was sentenced to 15 months of incarceration by United States District Judge Pamela K. Chen following his money laundering conspiracy guilty plea on May 24, 2017.  Takkas was convicted of this offense in connection with his agreement to launder $3 million in bribes to be paid by sports marketing companies to Jeffrey Webb, the former president of CONCACAF, $2 million of which reached Webb through Takkas.  Takkas was also ordered to pay $3 million in restitution to the Caribbean Football Union, known as CFU, as part of his sentence.
 

Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and R. Damon Rowe, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, Los Angeles Field Office (IRS-CI) announced the sentence.

 

“The defendant Costas Takkas has now been held to account for using the U.S. financial system to launder millions of dollars in bribes as part of the corruption of international soccer,” stated Acting United States Attorney Rohde.  “This Office, together with our law enforcement partners at the FBI and IRS-CI, will continue to bring to justice those who seek to use the U.S. financial system to hide criminal conduct and its proceeds.”  Ms. Rohde also thanked the United States Department of Justice Office of International Affairs, Organized Crime and Gang Section and Money Laundering and Asset Recovery Section for their assistance in the case, and expressed her appreciation to the governments of the Cayman Islands, Switzerland, and St. Vincent and the Grenadines for their cooperation. 

“The soccer officials involved in all aspects of FIFA take an oath to adhere to a code of ethics, and they accept a responsibility to make sure monies go to the groups they represent, not to line their own pockets,” stated FBI Assistant Director-in-Charge Sweeney.  “The game of soccer will continue to be played in small neighborhood parks and in lavish stadiums around the world, but the FBI’s wide-ranging and vast investigation won’t end until everyone involved in every aspect of corruption and bribery are brought to justice.”

“Over a three-year period, Takkas undermined the process of fair and open competition when he conspired to secretly funnel bribe money to Webb through a series of transactions involving international wire transfers and U.S. financial institutions,” stated IRS-CI Special Agent-in-Charge Rowe.  “IRS Criminal Investigation is committed to aggressively investigating individuals who use offshore entities, foreign bank accounts, and wire transfer systems based in the U.S. to facilitate the laundering of illicit funds.  Working with our partners at the Department of Justice, we will continue to unmask money laundering intermediaries who enable corrupt practices to flourish.”     

Background[1]

 

The sport of soccer is governed worldwide by the Féderation Internationale de Football Association (FIFA), FIFA’s constituent continental confederations (including CONCACAF, the confederation covering North America, Central America and the Caribbean), and FIFA’s constituent national member associations (which are also known as federations).  Some confederations, such as CONCACAF, include regional football subgroups within them, including the Caribbean Football Union (CFU), which is composed of federations from the Caribbean region.  Since 2004, soccer officials have been bound by FIFA’s code of ethics, which, among other things, imposes a fiduciary duty on soccer officials in favor of the soccer organizations they represent. 

The CFU member federations owned the media and marketing rights to soccer matches played in their home territories during the qualifying stages for the men’s World Cup tournament.  Rather than sell portions of these rights separately as individual federations, the CFU federations agreed to bundle portions of their rights together for sale.  The CFU, like many other soccer governing bodies, typically sold these rights to sports marketing companies that served as middlemen, which in turn sold different portions of the rights to different broadcasters and media companies around the world. 

The CFU Rights Bribery and Laundering Scheme

 

The defendant was a longtime associate of Jeffrey Webb, who in 2012 was the president of the Cayman Islands Football Association (CIFA, which was a member of the CFU), a high-ranking official of the CFU, and the president of CONCACAF.  Around that time, an executive of Traffic USA, a sports marketing company based in Miami, began negotiations with Webb to purchase the bundled media and marketing rights to the CFU federations’ World Cup qualifier matches for the 2018 and 2022 cycles.  The defendant communicated on Webb’s behalf to the Traffic executive that Webb wanted a $3 million bribe in exchange for awarding these rights to Traffic.  The Traffic executive agreed, and a few months later, after Webb had appointed the Traffic executive to serve as secretary general of CONCACAF, Traffic and the CFU entered into a contract for the sale of these rights.  Meanwhile, the defendant began to work with the Traffic executive to determine how Traffic could pay Webb this bribe while disguising the true nature of the payments.      

 

The defendant had meetings with other Traffic executives both in Miami and in Brazil, where Traffic’s parent company was located, to make arrangements for Traffic to secretly make these bribe payments to Webb.  Following these meetings, in November 2012, Traffic wired $1.2 million from a bank account in Florida to a middleman’s bank account in Hong Kong, from which $1 million of these funds were wired to an account in the Cayman Islands owned by Kosson Ventures, Limited, a company the defendant controlled.  In December 2012, Traffic wired an additional $500,000 to the Caymanian bank account of CPL Limited, another company the defendant controlled.  In the course of receiving these funds, the defendant made false statements about them, and the accounts receiving them, to Caymanian bank employees.  The defendant also created bogus consulting contracts purportedly to justify the payments. 

 

After receiving these funds in the Caymanian accounts, the defendant conveyed them to Webb and the Traffic executive, or spent the funds for their benefit.  For example, after wiring some of the funds to a Citibank account he held in Florida in his own name, Takkas used funds in that account to pay for real estate in Georgia that Webb was purchasing, and for a swimming pool at Webb’s house in Georgia.  During the course of the scheme, the defendant lied to a Citibank employee about the payment for the swimming pool, saying that the swimming pool was a wedding gift for Webb.  Takkas also used these funds to pay for luxury leather goods and watches for Webb and the Traffic executive, and a kitchen remodeling and expensive painting for the Traffic executive. 

 

Also in 2012, Traffic entered an agreement with another Miami-based sports marketing company named Media World, whereby the two companies pooled the media and marketing rights they had obtained for World Cup qualifier matches in the CONCACAF region, and shared responsibility for associated costs.  As part of that agreement, Media World agreed to be responsible for half of the $3 million bribe that Traffic had agreed to pay Webb for the CFU media rights.  The defendant met with a Media World executive in Miami on several occasions to discuss how Media World could pay this bribe in a hidden manner.  Eventually, the defendant and Media World arranged for $500,000 to be sent from a Panamanian front company to various accounts in the United States, the Cayman Islands, and St. Vincent and the Grenadines, again using bogus consulting contracts to mask the true nature of the bribe payments.  The defendant spent some of these funds to benefit Webb before the scheme was stopped, first by concerns about the government’s investigation and then by the disclosure of the scheme in May 2015 by the initial indictment in this case. 

 

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

The Defendant:

 

COSTAS TAKKAS

Age: 60

Citizenship: United Kingdom

 

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

 

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[1] The information described below is set forth in various court filings and statements made during court appearances in this case and related cases.

Abdurasul Hasanovich Juraboev, 27, a citizen of Uzbekistan and resident of Brooklyn, New York, was sentenced to 15 years in prison for conspiring to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization.

 

Acting Assistant Attorney General for National Security Dana Boente, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office and Commissioner James P. O’Neill of the NYPD made the announcement, after sentencing by U.S. District Judge William F. Kuntz, II.

 

“The defendant had a clear desire to wage violence on behalf of ISIS, and was determined to do so, whether on U.S. soil or abroad,” said Acting Assistant Attorney General Boente.  “Thanks to the efforts of law enforcement, the defendant was stopped at JFK International Airport before his plans came to fruition, and with this sentence he will be held accountable.  Stemming the flow of foreign fighters and defending our nation against the threat of terrorism remains the highest priority of the National Security Division.”

 

“Today’s sentence holds Juraboev to account for his plans to join ISIS and engage in violent jihad overseas or carry out a terrorist attack in the United States if he was unable to travel to Syria,” stated Acting U.S. Attorney Rohde.  “This Office will continue to work tirelessly in collaboration with the FBI’s Joint Terrorism Task Force in New York to protect our city from terrorist attacks and prevent extremists from travelling abroad to join foreign terrorist organizations.”

 

“As a Brooklyn resident, Abdurasul Hasanovich Juraboev posted comments on an ISIS website in August 2014 about his desire to be a martyr and his willingness to kill President Obama,” stated Assistant Director in Charge Sweeney.  “Over the next few months, Juraboev and his co-conspirators continued to ramp up their allegiance to the terrorist group by discussing travel to Syria and proposals to wage violent jihad here in the United States.  Juraboev ultimately purchased a plane ticket to travel to Syria, an act in furtherance of his terrorist plans and intentions.  Those plans were thwarted and ended with today’s sentence, resulting in serious prison time.”

 

“The defendant in this case lived in Brooklyn while making plans to travel to Syria to support a designed terrorist organization,” stated Commissioner O’Neill.  “If that was not successful, the defendant schemed of bombing Coney Island or killing the President of the United States.  My thanks to the detectives, agents, prosecutors and federal judge whose work resulted in today’s sentence.”

 

According to previous court filings, in August 2014, Juraboev posted a threat on an Uzbek-language website to kill President Obama in an act of martyrdom on behalf of ISIS.  In subsequent interviews by federal agents, Juraboev stated his belief in ISIS’s terrorist agenda, including the establishment by force of an Islamic caliphate in Iraq and Syria.  Juraboev stated that he wanted to travel to Syria to fight on behalf of ISIS but lacked the means to travel.  He added that, if he were unable to travel, he would engage in an act of martyrdom on U.S. soil if ordered to do so by ISIS, such as killing the President or planting a bomb on Coney Island.

 

During the next several months, Juraboev and a co-conspirator discussed plans to travel to Syria to fight on behalf of ISIS, culminating in Juraboev’s purchase on Dec. 27, 2014, of a ticket to travel from John F. Kennedy International Airport in Queens, New York, to Istanbul, Turkey, on March 29, 2015.

 

The U.S. government intends to seek the defendant’s removal to Uzbekistan upon completion of his sentence of imprisonment. 

 

Assistant U.S. Attorneys Alexander Solomon, Douglas M. Pravda, Peter W. Baldwin and David K. Kessler of the Eastern District of New York, and Trial Attorney Steven Ward of the National Security Division’s Counterterrorism Section are prosecuting this case.

A 19-count indictment was unsealed today in federal court in Central Islip, New York, charging Vincent J. Trimarco, Jr., with conspiracies to commit mail fraud and wire fraud and money laundering, as well as related substantive counts. Trimarco was arrested this morning and will be arraigned this afternoon before United States Magistrate Judge A. Kathleen Tomlinson.

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

As detailed in the indictment, Trimarco was an attorney licensed to practice in New York State and, at times, a part-owner of the now closed Emporium, a nightclub and music venue in Patchogue, New York.  From October 2011 through August 2017, Trimarco and a Co-Conspirator orchestrated a scheme to defraud a minor, who was the Co-Conspirator’s grandchild, of more than $2 million in settlement proceeds stemming from a wrongful death action.  Using the settlement proceeds, Trimarco and the Co-Conspirator purchased luxury vehicles, including a Ferrari F430 Spider for $200,000 and a Jaguar XKR convertible for $57,000, as well as numerous pieces of property in Suffolk County, and invested approximately $800,000 in the Emporium.  Despite orders from the Suffolk County Surrogate’s Court in April 2012 and August 2012 restraining the disbursement of the settlement proceeds and, ultimately, directing the return of the settlement proceeds, Trimarco and the Co-Conspirator sold the assets obtained with the settlement funds and failed to return the proceeds to the rightful heir.  In addition, from October 2011 to the present, Trimarco orchestrated a scheme to defraud both the Co-Conspirator and the minor of these funds.  Trimarco obtained ownership interest in the vehicles, property and nightclub despite the fact that these items had been purchased with the settlement funds and Trimarco contributed little to no funds of his own.

“As alleged, by defrauding a co-conspirator’s grandchild of an inheritance from a wrongful death suit, the defendant violated the law as well as the trust placed in him as an attorney,” stated Acting United States Attorney Rohde.  “Protecting the public from those who, for personal gain, would abuse that trust and betray the laws they have sworn to uphold is a priority of this office.”

“When you peel back the layers of this alleged crime, it all boils down to this: Trimarco, a licensed attorney, is believed to have defrauded a minor of millions of dollars awarded in a wrongful death settlement,” stated FBI Assistant Director-in-Charge Sweeney.  “As if that wasn’t bad enough, he and a co-conspirator, whom he also defrauded, allegedly used this money to invest in a nightclub and purchase big-ticket items and pieces of property. When the scam was first uncovered, a court order was issued mandating they return the funds to their rightful owner, which they failed to do. Today, this high-speed lifestyle had been brought to an abrupt halt as Trimarco faces the consequences of his alleged actions.”        

If convicted, Trimarco faces a maximum term of imprisonment for 20 years for each mail fraud, wire fraud and money laundering charge, 10 years for each money laundering unlawful monetary transactions charge, and five years for each conspiracy charge. 

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 Long Island Criminal Division.  Assistant United States Attorneys Catherine M. Mirabile, Raymond A. Tierney and Charles P. Kelly are in charge of the prosecution with the assistance of Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division, which is responsible for the forfeiture of assets.

The Defendant:

 

VINCENT J. TRIMARCO, JR.

Age:  48

Smithtown, NY

 

E.D.N.Y. Docket No. 17-CR-583 (JMA)

Earlier today, in federal court in Central Islip, John C. McCormick, a former Planner/Estimator for the Department of Public Works of the United States Merchant Marine Academy, located in Kings Point, New York, was sentenced by United States District Judge Arthur D. Spatt to 36 months’ imprisonment, to be followed by three years of supervised release, for receiving a bribe as a public official.  The Court also imposed a $10,000 fine and a forfeiture order of $78,000 for funds illegally received by McCormick as part of the scheme.  McCormick pleaded guilty on January 20, 2017 in connection with his participation in a scheme to defraud the United States by steering maintenance and repair contracts to favored contractors in exchange for bribes. 

Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Douglas Shoemaker, Regional Special Agent-in-Charge, United States Department of Transportation, Office of the Inspector General (DOT-OIG), and James D. Robnett, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York Field Office (IRS-CI), announced the sentence.

Between 2000 and 2014 while McCormick was employed in the Department of Public Works of the United States Merchant Marine Academy, he solicited and submitted fake bids on contracts he supervised in order to steer the awarding of maintenance and repair contracts to favored contractors who paid him bribes.  McCormick, using his position, arranged, supervised or effected a majority of construction contracts at the Academy.  He became known among contractors as “Ten Percent McCormick,” in reference to the amount of bribe payments required to do business at the Academy.  McCormick accepted more than $150,000 in bribes, according to court filings.

                       

“McCormick abused his position of trust by putting government contracts up for sale in order to line his pockets with bribe money,” stated Acting U.S. Attorney Rohde.  “This Office, together with our law enforcement partners, will vigorously investigate and prosecute to the fullest extent of the law those who engage in public corruption that threatens the integrity of the contract procuring process.”  

 

“The sentence of Mr. John McCormick for bribery at the U.S. Merchant Marine Academy is a clear signal that those entrusted with the stewardship of taxpayer dollars will be held responsible for maintaining the highest level of integrity,” stated DOT-OIG Regional Special Agent-in-Charge Shoemaker.  “Accountability is a priority of the Secretary and OIG, and working with our law enforcement peers and prosecutorial colleagues, we will continue our vigorous efforts to protect the taxpayers’ investment in our nation’s transportation system from fraud, waste, abuse and violations of law.”

 

“The United States Merchant Marine Academy is one of the most elite institutions in the country responsible for training our young leaders of tomorrow,” stated IRS-CI Special Agent-in-Charge Robnett.  “Today’s sentence today should deter other public servants from engaging in such misdeeds.  IRS-CI is proud to lend our financial expertise to an investigation where the crimes harm all U.S. citizens.”   

The government's case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Burton T. Ryan, Jr. is in charge of the prosecution with the assistance of Assistant United States Attorney Madeline O’Connor of the Office’s Civil Division.

The Defendant:

JOHN C. McCORMICK

Age:  60

Residence: Atlantic Beach, New York

      

E.D.N.Y. Docket No. 15-CR-490 (ADS)

Earlier today, United States District Judge Raymond J. Dearie sentenced defendant Paul Cronin to 24 months’ imprisonment at the federal courthouse in Brooklyn, New York.  In May 2017, Cronin pleaded guilty to a criminal information charging him with one count of wire fraud and one count of making and subscribing a false tax return, in connection with his conduct as Chief Financial Officer (CFO) of United States Council for International Business (USCIB), a not-for-profit organization that advocates for international business and trade.  As part of the sentence imposed by the Court, Cronin was ordered to pay more than $1.3 million in restitution to USCIB and $229,364 in outstanding taxes.   

Bridget M. Rohde, Acting 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 Field Office (IRS-CI), announced the sentence.

“The defendant abused his position as Chief Financial Officer of a not-for-profit by misappropriating the very funds he was charged with managing,” stated Acting U.S. Attorney Rohde.  “Together with our law enforcement partners, this Office will prosecute individuals like the defendant to the fullest extent of the law.”

 “Cronin didn’t serve his organization with honor; he instead engaged in criminal activity to the detriment of its cause,” stated FBI Assistant Director-in-Charge Sweeney.  “Today’s sentence should send a message that this type of behavior won’t be tolerated, especially when those in positions of trust break the law.”  

“Stolen money is taxable in the United States,” stated IRS-CI Special Agent-in-Charge Robnett.  “Stealing money from an international business advocacy group and not paying tax on such income not only harms the citizens here at home, but has worldwide economic impact.  Today Mr. Cronin has been held accountable, and the IRS is proud to share its financial expertise to such a far reaching investigation.”

As detailed in court filings, Cronin abused his position as the CFO of USCIB to misappropriate more than $1.3 million in funds to pay for personal expenses.  Cronin perpetrated this scheme to defraud in several ways, specifically by using company funds to pay his personal credit card debts, writing checks from USCIB to himself, and making purchases on USCIB credit cards for personal purposes.  In order to conceal his illegal scheme, the defendant falsified entries in USCIB bookkeeping records.  Cronin further sought to conceal his criminal conduct by failing to report the embezzled funds as income to the Internal Revenue Service.  

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

The Defendant:

 

PAUL CRONIN

Age: 55

Daniel Island, South Carolina

 

E.D.N.Y. Docket No. 17-CR-190 (RJD)

Earlier today, at the federal courthouse in Brooklyn, Abdurasul Hasanovich Juraboev, a citizen of Uzbekistan and resident of Brooklyn, New York, was sentenced by United States District Judge William F. Kuntz, II, to 15 years’ imprisonment for conspiring to provide material support to a designated foreign terrorist organization, the Islamic State in Iraq and al-Sham (ISIS).  The U.S. government intends to seek his removal to Uzbekistan upon completion of his sentence of imprisonment. 

Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Dana Boente, Acting 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 sentence.  

According to previous court filings, in August 2014, Juraboev posted a threat on an Uzbek-language website to kill President Obama in an act of martyrdom on behalf of ISIS.  In subsequent interviews by federal agents, Juraboev stated his belief in ISIS’s terrorist agenda, including the establishment by force of an Islamic caliphate in Iraq and Syria.  Juraboev stated that he wanted to travel to Syria to fight on behalf of ISIS but lacked the means to travel.  He added that, if he were unable to travel, he would engage in an act of martyrdom on U.S. soil if ordered to do so by ISIS, such as killing the President or planting a bomb on Coney Island.  During the next several months, Juraboev and a co-conspirator discussed plans to travel to Syria to fight on behalf of ISIS, culminating in Juraboev’s purchase on December 27, 2014, of a ticket to travel from John F. Kennedy International Airport in Queens, New York, to Istanbul, Turkey, departing on March 29, 2015. 

“Today’s sentence holds Juraboev to account for his plans to join ISIS and engage in violent jihad overseas or carry out a terrorist attack in the United States if he was unable to travel to Syria,” stated Acting U.S. Attorney Rohde.  “This Office will continue to work tirelessly in collaboration with the FBI’s Joint Terrorism Task Force in New York to protect our city from terrorist attacks and prevent extremists from travelling abroad to join foreign terrorist organizations.”

“The defendant had a clear desire to wage violence on behalf of ISIS, and was determined to do so, whether on U.S. soil or abroad,” said Acting Assistant Attorney General Boente.  “Thanks to the efforts of law enforcement, the defendant was stopped at JFK International Airport before his plans came to fruition, and with this sentence he will be held accountable.  Stemming the flow of foreign fighters and defending our nation against the threat of terrorism remains the highest priority of the National Security Division.”

“As a Brooklyn resident, Abdurasul Hasanovich Juraboev posted comments on an ISIS website in August 2014 about his desire to be a martyr and his willingness to kill President Obama,” stated FBI Assistant Director-in-Charge Sweeney.  “Over the next few months, Juraboev and his co-conspirators continued to ramp up their allegiance to the terrorist group by discussing travel to Syria and proposals to wage violent jihad here in the United States. Juraboev ultimately purchased a plane ticket to travel to Syria, an act in furtherance of his terrorist plans and intentions.  Those plans were thwarted and ended with today’s sentence, resulting in serious prison time.”

“The defendant in this case lived in Brooklyn while making plans to travel to Syria to support a designed terrorist organization,” stated NYPD Commissioner O’Neill. “If that was not successful, the defendant schemed of bombing Coney Island or killing the President of the United States.  My thanks to the detectives, agents, prosecutors and federal judge whose work resulted in today’s sentence.”

The government’s case was handled by the Office’s National Security & Cybercrime Section.  Assistant United States Attorneys Alexander Solomon, Douglas M. Pravda, Peter W. Baldwin, and David K. Kessler of the Eastern District of New York are in charge of the prosecution, with assistance provided by Trial Attorney Steven Ward of the National Security Division’s Counterterrorism Section. 

The Defendant:

ABDURASUL HASANOVICH JURABOEV
Age: 27
Residence: Brooklyn, New York

E.D.N.Y. Docket No. 15 CR 95 (WFK)

A four-count indictment was returned this morning by a federal grand jury in the United States District Court for the Eastern District of New York charging Thomas J. Spota, the Suffolk County District Attorney, and Christopher McPartland, the Chief of Investigations and Chief of the Government Corruption Bureau of the Suffolk County District Attorney’s Office (SCDAO), with (1) Conspiracy to Tamper with Witnesses and Obstruct an Official Proceeding, (2) Witness Tampering and Obstruction of an Official Proceeding, (3) Obstruction of Justice, and (4) Accessory After the Fact to the Deprivation of Civil Rights.  The defendants are scheduled to be arraigned at 3:00 p.m. this afternoon before United States District Judge Leonard D. Wexler at the United States Courthouse in Central Islip, New York.
 

Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York (USAO-EDNY), and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the charges.

“Prosecutors swear oaths to pursue justice and enforce the law.  Instead of upholding their oaths, these defendants allegedly abused the power of the Suffolk County District Attorney’s Office, attempted to cover up the assault of an in-custody defendant, and attempted to thwart a federal grand jury investigation,” stated Acting United States Attorney Rohde.  “Abuses of power by law enforcement authorities cannot and will not be tolerated.  There are serious consequences to such actions.”
 

“While FBI agents were working to restore justice in a civil rights investigation, District Attorney Thomas Spota and Assistant District Attorney Christopher McPartland were conspiring to obstruct it, as alleged today.  The crimes they're charged with are rivaled only by the conduct they allegedly attempted to conceal.  Make no mistake about it, this type of activity will not be tolerated.  Today our message is clear: those seated at the highest levels of the law must still operate within its confines – there are no exceptions,” stated Assistant Director-in-Charge Sweeney. 

As set forth in the indictment and a bail letter filed earlier today, on December 14, 2012, an individual (John Doe) was arrested on suspicion of burglarizing motor vehicles, including a motor vehicle issued to and possessed by Burke.  Thereafter, John Doe was transported to the Fourth Precinct of the Suffolk County Police Department (SCPD), placed inside an interview room, and handcuffed to a permanent fixture inside the room.  Later that day, Burke and other members of the SCPD entered the interview room and assaulted John Doe.  Thereafter, John Doe confessed to the burglary of the vehicle.  Initially, the Government Corruption Bureau of the SCDAO, under the supervision of defendant McPartland, who reported directly to defendant Spota, handled the prosecution of John Doe.  Subsequently, John Doe alleged that his confession was involuntary because, in part, he had been assaulted by Burke, and a special prosecutor was then assigned to the prosecution.

In April 2013, the USAO-EDNY and the FBI initiated a federal grand jury investigation of the December 14, 2012 assault of John Doe.  Thereafter, the scope of the federal investigation was expanded to include the investigation of obstruction and attempted obstruction of justice offenses, which investigation continued until the date of today’s indictment.  On June 25, 2013, FBI special agents served members of the SCPD with federal grand jury subpoenas, and, that same day, defendants Spota and McPartland were informed of both the existence of the federal investigation and the service of the federal grand jury subpoenas, and began to attempt to obstruct that investigation.

As alleged in the indictment, between December 2012 and the present, defendants Spota and McPartland, together with others including Burke and other members of the SCPD, had numerous meetings and telephone conversations discussing the assault of John Doe, John Doe’s allegations against Burke, and the federal investigation.  During those meetings and telephone conversations, defendants Spota and McPartland and Burke and other members of the SCPD agreed to conceal Burke’s role in the assault and to obstruct and attempt to obstruct the federal investigation in order to protect Burke.  More particularly, defendants Spota and McPartland, Burke and others used the power of their positions with the SCDAO and SCPD to obstruct and attempt to obstruct the federal investigation by, among other means, using intimidation, threats and corrupt persuasion to pressure multiple witnesses, including co-conspirators, not to cooperate with the federal investigation, to provide false information, including false testimony under oath, and to withhold relevant information from the USAO-EDNY, FBI and the federal grand jury investigating the assault of John Doe.

Ultimately, the attempts to thwart the grand jury investigation were unsuccessful and, on February 26, 2016, Burke pleaded guilty to a deprivation of John Doe’s civil rights and conspiracy to obstruct justice.  Thereafter, on November 2, 2016, United States District Judge Wexler sentenced Burke to 46 months in prison, and he currently is serving that sentence. 

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

The government’s case is being handled by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Lara Treinis Gatz and John J. Durham are in charge of the prosecution assisted by Financial Analyst William J. Hessle. 

The Defendants:

THOMAS J. SPOTA
Age: 76 
Mount Sinai, New York

CHRISTOPHER MCPARTLAND
Age:  51
Northport, New York

E.D.N.Y. Docket No. 17-CR-587 (LDW)

Earlier today in federal court in Brooklyn, former Guatemalan soccer official Héctor Trujillo was sentenced by United States District Judge Pamela K. Chen to 8 months’ imprisonment following his convictions by guilty plea on June 2, 2017 of one count of wire fraud conspiracy and one count of wire fraud.  Trujillo was convicted of these crimes in connection with over $400,000 in bribes and kickbacks that he and other Guatemalan soccer officials received from an American company in connection with the sale of broadcast rights to World Cup qualifier matches.  Trujillo himself received nearly $200,000 of these illegal payments, and as part of his plea agreement he agreed to forfeit $175,000 to the government.  Also today, Judge Chen found that Trujillo was liable  for $415,000 in restitution to the Guatemalan soccer federation, known as “FENAFUTG.” Trujillo served as secretary of the FENAFUTG Executive Committee from approximately 2010 until his arrest in December 2015.  At the time of his arrest he also served as a judge on the Constitutional Court of Guatemala.

Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and R. Damon Rowe, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, Los Angeles Field Office (IRS), announced the sentence.

“Rather than uphold the standards of honesty and integrity expected of the leadership of international soccer, the defendant and his co-conspirators lined their pockets with hundreds of thousands of dollars in bribes,” stated Acting United States Attorney Rohde.  “The defendant has now been brought to justice.  This Office and its law enforcement partners at the FBI and IRS will continue to vigorously pursue those who would use leadership positions to engage in corruption, especially when it involves the U.S. banking system.”  Ms. Rohde also thanked the United States Department of Justice Office of International Affairs, Organized Crime and Gang Section and Money Laundering and Asset Recovery Section for their assistance in the case, and expressed her appreciation to the government of Guatemala for its cooperation. 

“It’s not hard to imagine the honest officials and businesses involved in World Cup Soccer make a lot of money because it’s the most popular sport around the world,” said FBI Assistant Director-in-Charge Sweeney. “But it seems that wasn’t enough for the subjects charged and many convicted in this sweeping corruption investigation.  They used their positions and power to use bribes and kickbacks to satiate their greed.  This conviction shows we’re not done with our work, and the FBI, Eastern District, IRS and our law enforcement partners won’t stop pursuing those who are abusing the system.”

“Today has seen the first sentencing in a long line of FIFA officials and sports marketing executives involved in systemic corruption in the governance of the world’s game,” stated IRS Criminal Investigation’s Special Agent-in-Charge Rowe.  “This defendant used his position of trust to line his pockets and cheat the National Football Federation of Guatemala of his fair and honest services.  IRS Criminal Investigation is proud to use our financial investigative expertise to root out the corruption which has plagued this sport for decades, while at the same time ensuring the integrity of the United States financial system.”

Background[1]

The sport of soccer is governed worldwide by the Féderation Internationale de Football Association (“FIFA”), FIFA’s constituent continental confederations (including CONCACAF, the confederation covering North America, Central America and the Caribbean), and FIFA’s constituent national member associations (which are also known as federations), including FENAFUTG.  Since 2004, officials of these soccer governing bodies were bound by FIFA’s code of ethics, which, among other things, imposes a fiduciary duty on soccer officials in favor of FIFA, the continental confederations, and the member associations, and prohibits soccer officials from taking bribes or kickbacks. 

FENAFUTG owned the media and marketing rights to soccer matches it played on its home territory during the qualifying stages for the men’s World Cup tournament.  FENAFUTG, like many other soccer governing bodies, typically sold these rights to sports marketing companies that served as middlemen, which in turn sold different portions of the rights to different broadcasters and media companies around the world. 

2018 World Cup Qualifier Cycle Bribes

In late 2009, Trujillo’s associate and co-defendant Brayan Jiménez was elected president of FENAFUTG, and Trujillo was selected to serve as secretary of the FENAFUTG executive committee.  Soon afterwards, in February 2010, Trujillo, Jiménez and Rafael Salguero, a Guatemalan member of the FIFA executive committee, traveled from Guatemala to Miami to meet with executives of Media World, an American sports marketing company based there.  During this meeting, Trujillo and Jiménez negotiated with the executives to sell Media World the overseas media and marketing rights to Guatemala’s home World Cup qualifier matches in advance of the 2018 World Cup. 

Also during this meeting in Miami, Trujillo and Jiménez agreed to accept from Media World $200,000 in bribe and kickback payments in connection with selling these rights to Media World, to be split between the two of them.  After Jiménez signed the contract on behalf of FENAFUTG, during the following months Media World wired a total of $195,000 from its bank account in Miami to the Panamanian bank account of an intermediary who then transferred the funds to Trujillo’s bank account in Guatemala.  On some occasions, the conspirators falsely described the payments in the wire transfer instructions as legal fees for Trujillo.  Trujillo distributed a little more than half of the $195,000 to Jiménez in Guatemala and kept the rest for himself.  Salguero also received a disguised $20,000 payment for his role in facilitating the deal.                          

2022 World Cup Qualifier Cycle Bribes

In 2013, a Media World executive traveled to Guatemala for negotiations with Jiménez and Trujillo to renew the contract for the overseas media rights to FENAFUTG’s World Cup qualifier matches, this time for the matches leading up to the 2022 World Cup.  Jiménez and Trujillo agreed to renew the contract, and again agreed to accept $200,000 in bribe and kickback payments in connection with selling these rights to Media World. 

To facilitate the hidden payment of these bribes, Trujillo made use of an acquaintance who lived in the United States and owned an American construction business.  Specifically, Trujillo directed a Media World executive to wire the $200,000 in bribe money to the construction company’s United States bank account, which Media World did, from its bank account in Miami.  To hide the true nature of the bribe payment, the conspirators fabricated a sham contract for construction services between the construction company and a Media World affiliate.  Trujillo’s associate transferred most of this money to a bank account in Guatemala, where Trujillo could withdraw it.  Trujillo again gave about half of the money to Jiménez and kept the rest for himself. 

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

The Defendant:

HÉCTOR TRUJILLO
Age: 63
Citizenship: Guatemala

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

 

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[1] The information described below is set forth in various court filings and statements made during court appearances in this case and related cases.

Earlier today, in federal court in Brooklyn, Dwayne C. Hans pleaded guilty to one count of wire fraud and one count of computer intrusion.  The charges arise from a series of frauds that Hans masterminded between July 2015 and October 2016, including by masquerading as an authorized representative of a U.S. financial institution and as a defense contractor.  Hans also accessed a website run by the U.S. General Services Administration (GSA) without authorization and then redirected money intended for the financial institution to his own bank account.  The guilty plea took place before United States Magistrate Judge Roanne L. Mann.

Bridget M. Rohde, Acting 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.

According to court filings, between July 2015 and December 2015, Hans submitted bids to the Defense Logistics Agency (DLA), an agency within the United States Department of Defense, for contracts in the name of two different companies he created.  Hans falsely claimed that those companies had numerous employees and were capable of filling the contracts.  The contracts on which Hans bid related to the provision of various items to the DLA, including electrical measurement equipment.  In reality, the companies had no employees and no ability to service the contracts.  The DLA awarded at least 52 contracts, worth approximately $533,209.70, to Hans’s two companies and sent at least $11,999.32 to those companies.

In early 2016, Hans created numerous bank accounts in the name of a U.S. financial institution (Financial Institution 1).  In April 2016, Hans accessed a website maintained by the GSA that allowed companies that worked with the U.S. government to provide information about how the government should disburse money to those companies.  Hans modified payment information in an entry associated with Financial Institution 1 in order to redirect payments to accounts he controlled.  As a result, a U.S. government agency transferred approximately $1.521 million to Hans instead of to Financial Institution 1.  Those transfers were ultimately detected and disrupted before the defendant withdrew or transferred the money.

In addition, between April 2016 and June 2016, Hans used a computer to initiate electronic transfers of approximately $134,000 from two corporate bank accounts held by Financial Institution 1.  Hans directed these fund transfers for various purposes, including to purchase publicly traded stock, to invest in real estate in Brooklyn, New York, and to pay utility bills.

Finally, between June 2016 and October 2016, Hans accessed a website maintained by the Pension Benefit Guaranty Corporation (PBGC), a U.S. government agency that insures certain pension plans, through which the administrators of pension plans could submit claims for reimbursements.  Hans, who was not the administrator of any pension plan, created an account on the PBGC website and then submitted requests to be reimbursed a total of $1.633 million for expenses related to three pension plans.  The three plans for which Hans requested reimbursements did not exist, and Hans had incurred no such expenses.  The PBGC detected the fraud before any payments were issued.

When sentenced, Hans faces up to 30 years’ imprisonment for the wire fraud charge and five years of prison for the computer intrusion charge, as well as a fine. 

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys David K. Kessler and Ian C. Richardson are in charge of the prosecution, with assistance from the DLA and PBGC Office of Inspector General.

The Defendant:

DWAYNE C. HANS
Age: 27
Residence: Richland, Washington

E.D.N.Y. Docket No. 17-CR-256 (SJ)

BROOKLYN, N.Y. – The United States filed a civil complaint against Riddhi USA Inc. of Ronkonkoma, New York, and its owner and President Mohd M. Alam to prevent the distribution of adulterated and misbranded dietary supplements in violation of federal law, the Department of Justice announced today.
 

The complaint, filed in the U.S. District Court for the Eastern District of New York, alleges that dietary supplements that the defendants manufactured, prepared, packed, repacked, labeled, held and distributed were adulterated and misbranded.  The complaint further alleges that these dietary supplements were prepared, packed, and held under conditions that do not comply with current good manufacturing practice regulations for these types of products.
 

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

“Dietary supplement manufacturers that do not comply with applicable laws and regulations designed to protect consumers put those consumers at risk,” said Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York. “Today’s action demonstrates the Department’s commitment to safeguarding the public from adulterated and misbranded products.”

 “The Department of Justice is committed to ensuring that dietary supplement manufacturers comply with laws designed to protect consumers,” said Acting Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division.  “The Department of Justice will continue to work with the FDA to protect the public from adulterated and misbranded products, and to ensure that dietary supplement manufacturers provide accurate information about what is in their products.”
 

According to the complaint, the FDA inspected the defendants’ facility in January 2017 and found numerous significant deviations from current good manufacturing practice regulations.  For example, as alleged in the complaint, the defendants failed to establish product specifications for identity, purity, strength, and composition of their finished dietary supplements, failed to conduct at least one appropriate test to verify the identity of a dietary ingredient, and failed to establish and follow written procedures for quality control operations.
 

  The complaint further alleges that many of the current good manufacturing practice deviations observed during the FDA’s January 2017 inspection were the same or similar to those observed by the FDA during a previous inspection of the defendants’ facility that occurred in January 2016.  The complaint noted that following the January 2016 inspection, the FDA issued a warning letter to the defendants detailing violations of current good manufacturing practice regulations observed during the 2016 inspection.  The complaint alleges that the current good manufacturing practice violations noted in the warning letter were the same as or similar to those observed during the FDA’s subsequent 2017 inspection.
 

The complaint also alleges that the defendants misbranded their dietary supplements by failing to comply with the relevant labeling provisions of the federal Food, Drug, and Cosmetic Act.  For example, as noted in the complaint, the defendants’ products are fabricated from two or more ingredients but fail to declare any ingredients on their product labels or labeling.  Food, including dietary supplements, is also misbranded if its label or labeling fails to declare the major food allergen “soy” as defined in the law.  The complaint alleges that the defendants’ Neuroxygen dietary supplement product is misbranded because it is manufactured using soy lecithin, which contains “soy,” but the defendants fail to list soy on the product label.  Some of the defendants’ dietary supplement labels or labeling, including its labels or labeling for its Prenatal Formula, Osteo Gest, Neuroxygen, Inflam-Ease, and Aller-Ease products, fail to declare the place of business of the manufacturer, packer, or distributor as required by law.

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

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

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

The United States filed a civil complaint against Riddhi USA Inc. of Ronkonkoma, New York, and its owner and President Mohd M. Alam to prevent the distribution of adulterated and misbranded dietary supplements in violation of federal law, the Department of Justice announced today.

The complaint alleges that Riddhi USA Inc. (Riddhi) and Mr. Alam engage in manufacturing, preparing, labeling, packing, repacking, holding, and distributing dietary supplements and are contract manufacturers of dietary supplements distributed under other companies’ names. The complaint, filed in the U.S. District Court for the Eastern District of New York, alleges that dietary supplements that defendants manufactured, prepared, packed, repacked, labeled, held and distributed were adulterated and misbranded.  The complaint further alleges that these dietary supplements were prepared, packed, and held under conditions that do not comply with current good manufacturing practice regulations for these types of products.

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

“The Department of Justice is committed to ensuring that dietary supplement manufacturers comply with laws designed to protect consumers,” said Acting Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division.  “The Department of Justice will continue to work with the FDA to protect the public from adulterated and misbranded products, and to ensure that dietary supplement manufacturers provide accurate information about what is in their products.”

“Dietary supplement manufacturers that do not comply with applicable laws and regulations designed to protect consumers put those consumers at risk,” said Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York. “Today’s action demonstrates the Department’s commitment to safeguarding the public from adulterated and misbranded products.”

According to the complaint, FDA inspected the defendants’ facility in January 2017 and found numerous significant deviations from current good manufacturing practice regulations.  For example, as alleged in the complaint, defendants failed to establish product specifications for identity, purity, strength, and composition of their finished dietary supplements, failed to conduct at least one appropriate test to verify the identity of a dietary ingredient, and failed to establish and follow written procedures for quality control operations.

  The complaint further alleges that many of the current good manufacturing practice deviations observed during FDA’s January 2017 inspection were the same or similar to those observed by FDA during a previous inspection of defendants’ facility that occurred in January 2016.  The complaint noted that following the January 2016 inspection, FDA issued a warning letter to defendants detailing violations of current good manufacturing practice regulations observed during the 2016 inspection.  The complaint alleges that the current good manufacturing practice violations noted in the warning letter were the same as or similar to those observed during FDA’s subsequent 2017 inspection.

The complaint also alleges that the defendants misbranded their dietary supplements by failing to comply with the relevant labeling provisions of the federal Food, Drug, and Cosmetic Act.  For example, as noted in the complaint, defendants’ products are fabricated from two or more ingredients but fail to declare any ingredients on their product labels or labeling.  Food, including dietary supplements, is also misbranded if its label or labeling fails to declare the major food allergen “soy” as defined in the law.  The complaint alleges that defendants’ Neuroxygen dietary supplement product is misbranded because it is manufactured using soy lecithin, which contains “soy,” but defendants fail to list soy on the product label.  In addition, the complaint alleges that some of the defendants’ products, including Prenatal Formula, Osteo Gest, Neuroxygen, Inflam-Ease, and All-Ease, are misbranded in that the products’ label or labeling fail to declare the place of business of the manufacturer, packer, or distributor.

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

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

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

The former head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), was found guilty today for his role in a scheme to defraud an HSBC client through a multimillion-dollar scheme commonly referred to as “front running.” 

 

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation (FDIC) and Assistant Director in Charge Andrew Vale of the FBI’s Washington Field Office made the announcement.    

 

Mark Johnson, 51, a United Kingdom citizen with residences both in the U.K. and the United States, was found guilty after a four-week jury trial of one count of conspiracy to commit wire fraud and eight counts of wire fraud.  Sentencing date has not been scheduled.  U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York presided over the trial.  Johnson was arrested on a criminal complaint in July 2016 and indicted in August 2016.

 

“This verdict makes clear that the defendant corruptly manipulated the foreign exchange market for the benefit of his bank and his bonus pool, to the detriment of the bank’s client,” said Acting Assistant Attorney General Blanco.  “This case demonstrates the Criminal Division’s commitment to protecting the financial system from harm, and holding corporate executives, including at the world’s largest and most sophisticated financial institutions, responsible for their crimes.”

 

 “The jury found that former HSBC banker Mark Johnson exploited confidential information provided by a client of the bank to execute trades that were intended to generate millions of dollars in profits for him and the bank at the expense of their client,” said Acting U.S. Attorney Rohde.  “This Office, together with its law enforcement partners, will continue to vigorously investigate and prosecute those who would so abuse their client relationships and, more generally, undermine public confidence in the operation of the financial markets by engaging in fraudulent schemes.”

 

“This case involved a complex fraud scheme to ‘front run’ a foreign exchange transaction in order to generate millions of dollars in illicit profits for HSBC, which also indirectly benefited individual traders,” said Inspector General Lerner. “Such cases are challenging, but important, to bring against bank insiders who misuse their positions and undermine the integrity of a major international financial institution.”

 

“Mark Johnson misused confidential information to manipulate currency prices and defrauded a client out of more than $7 million,” said Assistant Director in Charge Vale.  “The American people need to be assured that we are working vigorously to ensure integrity is upheld in financial services industries.  We will continue to work with our law enforcement partners to investigate and prosecute those who engage in illegal business practices.”

 

According to the evidence presented at trial, in November and December 2011, Johnson cheated an HSBC client out of millions of dollars by misusing information provided to him by a client that hired HSBC to execute a foreign exchange transaction related to a planned sale of one of the client’s foreign subsidiaries.  HSBC was selected to execute the foreign exchange transaction – which was going to require converting approximately $3.5 billion in sales proceeds into British Pound Sterling – in October 2011.  HSBC’s agreement with the client required the bank to keep the details of the client’s planned transaction confidential.  Instead, Johnson misused confidential information he received about the client’s transaction to cheat the client out of millions of dollars, the evidence showed. 

 

Shortly before the transaction, which occurred in December 2011, Johnson and other traders acting under his direction purchased Pound Sterling for their own benefit in their HSBC “proprietary” accounts.  Johnson then caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to “ramp,” or drive up, the price of the Pound Sterling, benefiting their proprietary positions and HSBC at the expense of their client.

 

As part of their scheme, Johnson and his co-conspirators made misrepresentations to the client about the transaction that concealed the self-serving nature of their actions.  In total, Johnson and the traders he supervised generated HSBC profits of roughly $7.5 million from the execution of the FX  transaction for the victim company.    

           

The investigation was conducted by the FDIC’s Office of Inspector General and the FBI’s Washington Field Office.  The Criminal Division’s Office of International Affairs provided significant support.  Assistant Chiefs Carol Sipperly and Brian Young and Trial Attorney Blake Goebel of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Lauren Elbert of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case.

 

The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country, focusing on cases of national significance and international scope.  Fraud Section prosecutors have vast experience in investigating and prosecuting securities and financial fraud, health care fraud and foreign corruption.  The Section is routinely the national leader in large, sophisticated white collar investigations and prosecutions, frequently in partnership with U.S. Attorneys’ Offices and in coordination with foreign law enforcement agencies.  Learn more about the Criminal Division’s Fraud Section at: https://www.justice.gov/criminal-fraud.

BROOKLYN, N.Y. – Mark Johnson, the former head of global foreign exchange cash trading at HSBC Bank plc, a subsidiary of HSBC Holdings plc (collectively HSBC), was found guilty today for his role in a scheme to defraud an HSBC client through a multimillion-dollar scheme commonly referred to as “front running.” 

 

Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation (FDIC), and Assistant Director-in-Charge Andrew Vale of the FBI’s Washington Field Office made the announcement.      

 

Johnson, a United Kingdom citizen with residences both in the U.K. and the United States, was found guilty after a four-week jury trial of one count of conspiracy to commit wire fraud and eight counts of wire fraud.  A sentencing date has not been scheduled. United States District Judge Nicholas G. Garaufis of the Eastern District of New York presided over the trial. Johnson was arrested on a criminal complaint in July 2016 and indicted in August 2016.

 

 “The jury found that former HSBC banker Mark Johnson exploited confidential information provided by a client of the bank to execute trades that were intended to generate millions of dollars in profits for him and the bank at the expense of their client,” said Acting U.S. Attorney Rohde.  “This Office, together with its law enforcement partners, will continue to vigorously investigate and prosecute those who would so abuse their client relationships and, more generally, undermine public confidence in the operation of the financial markets by engaging in fraudulent schemes.”

 

“This verdict makes clear that the defendant corruptly manipulated the foreign exchange market for the benefit of his bank and his bonus pool, to the detriment of the bank’s client,” said Acting Assistant Attorney General Blanco. “This case demonstrates the Criminal Division’s commitment to protecting the financial system from harm, and holding corporate executives, including at the world’s largest and most sophisticated financial institutions, responsible for their crimes.”

 

“This case involved a complex fraud scheme to ‘front run’ a foreign exchange transaction in order to generate millions of dollars in illicit profits for HSBC, which also indirectly benefited individual traders,” said FDIC Inspector General Lerner. “Such cases are challenging, but important, to bring against bank insiders who misuse their positions and undermine the integrity of a major international financial institution,” 

 

“Mark Johnson misused confidential information to manipulate currency prices and defrauded a client out of more than $7 million,” said FBI Assistant Director-in-Charge Vale. “The American people need to be assured that we are working vigorously to ensure integrity is upheld in financial services industries. We will continue to work with our law enforcement partners to investigate and prosecute those who engage in illegal business practices.” 

 

As established by the evidence presented by the government at trial, HSBC was selected to execute a foreign exchange (FX) transaction related to a planned sale of one of a client’s foreign subsidiaries – which would require converting approximately $3.5 billion in sales proceeds into British Pounds Sterling.  HSBC’s agreement with the client required the bank to keep the details of the planned transaction confidential.  Instead, Johnson defrauded the client out of millions of dollars by misusing that confidential information. 

 

Shortly before the transaction, which occurred in December 2011, Johnson and other traders acting under his direction purchased Pounds Sterling for their own benefit in their HSBC “proprietary” accounts.  Johnson then caused the $3.5 billion foreign exchange transaction to be executed in a manner that was designed to “ramp,” or drive up, the price of the Pounds Sterling, benefiting their proprietary positions and HSBC at the expense of their client.

 

As part of their scheme, Johnson and his co-conspirators made misrepresentations to the client about the transaction that concealed the self-serving nature of their actions.  In total, Johnson and the traders he supervised generated HSBC profits of roughly $7.3 million from the execution of the FX transaction for the victim company. 

 

The investigation was conducted by the FDIC’s Office of Inspector General and the FBI’s Washington Field Office.  Assistant Chiefs Carol Sipperly and Brian Young and Trial Attorney Blake Goebel of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Lauren Elbert of the Eastern District of New York’s Business and Securities Fraud Section are prosecuting the case.

 

The Defendant:

 

Mark Johnson

Age:  51

United Kingdom

 

E.D.N.Y. Docket No. 16-CR-457

Nabiu Mansaray, a member of a Coney Island-based gang known variously as “Mermaid Boys,” “Mermaids,” “Rival Impact,” “R.I.,” and “33rd Street Crew,” will be arraigned this afternoon in federal court in Brooklyn, New York, on a superseding indictment charging him with crimes including racketeering, murder in aid of racketeering, narcotics trafficking and unlawful use of firearms.  Mansaray’s co-defendant, Frank Smith, was previously arraigned on similar charges in the Eastern District of New York after his arrest on the underlying indictment on July 7, 2016, and is charged with additional racketeering acts in the superseding indictment.  Mansaray will be arraigned before United States Magistrate Judge Steven L. Tiscione, following his removal from Maryland, where he was arrested by agents from the Federal Bureau of Investigation on September 15, 2017, pursuant to the superseding indictment.

 

The charges were announced by Bridget M. Rohde, Acting 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).

 

As detailed in the superseding indictment, between January 2000 and January 2014, to maintain Rival Impact’s power and hold in the Coney Island section of Brooklyn, the defendants and their gang engaged in widespread narcotics distribution and violence, including the October 4, 2010 murders of Terrance Serrano and Rashawn Washington, in addition to various attempted murders, robberies, assaults and acts of intimidation.  Serrano and Washington, who were members of a rival gang known as “Thirty-O,” were shot and killed while sitting in their car after leaving a nightclub in Manhattan, just north of Union Square.

 

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

 

The Defendants:

 

FRANK SMITH (“Fresh,” “Freez,” and “Freezee”)

Age: 32

Staten Island, New York

 

NABIU MANSARAY (“Monchichi” and “Chich”)

Age: 33

Germantown, Maryland

 

EDNY Docket No. 16-CR-346 (FB)

Earlier today, Ira Shapiro, the former Chief Executive Officer of CodeSmart Holdings, Inc. (“CodeSmart”), a publicly-traded company, and Darren Ofsink, a Manhattan attorney and founder of Ofsink LLC, pleaded guilty to one count of conspiracy to commit securities fraud for their participation in a $86 million market manipulation scheme involving CodeSmart, which traded under the ticker symbol ITEN.  The plea was entered before United States District Judge Eric N. Vitaliano at the federal courthouse in Brooklyn.

The guilty pleas were announced by Bridget M. Rohde, Acting 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).

According to court filings, in early May 2013, the defendants, along with their 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, the co-conspirators on two occasions fraudulently inflated CodeSmart’s share price and trading volume and then sold their shares at a profit when the price reached desirable levels ­­— a scheme commonly referred to as a “pump and dump.”  The first pump and dump occurred between approximately May 13, 2013 and August 21, 2013.  During this period, the co-conspirators manipulated CodeSmart’s stock price by raising it from $1.77 to a high of $6.94, before causing it to drop to $2.19.  The second pump and dump occurred between approximately August 21, 2013 and September 20, 2013.  During this period, the defendants and their co-conspirators manipulated CodeSmart’s stock price by raising it from $2.19 to a high of $4.60, before causing it drop to $2.13.

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

When sentenced, Shapiro and Ofsink each face up to five years in prison, a fine and the forfeiture of criminal proceeds.  They will also be required to make full restitution to their victims.   

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

The Defendants:

IRA SHAPIRO
Age:  56
Residence: Congers, New York

DARREN OFSINK
Age:  48
Residence: Merrick, New York

E.D.N.Y. Docket No. 14-CR-399 (S-1) (ENV)

Earlier today at the federal courthouse in Central Islip, Gerard Terry pleaded guilty to one count of tax evasion for the tax years 2000 through 2015 in the amount of $992,057.  The proceeding took place before United States District Judge Joanna Seybert. When he is sentenced, Terry faces a maximum of five years’ imprisonment, a fine of up to $100,000 and mandatory restitution to the Internal Revenue Service.

The plea was announced by Bridget M. Rohde, Acting 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 Field Office (IRS-CI).

According to court filings and facts presented during the plea proceedings, Terry, an attorney licensed to practice in New York State, attempted to evade substantial income tax due and owed by him, even though he 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, despite earning over $250,000 per year, Terry has failed to pay a federal tax debt of over $1.4 million which includes additional fees, interest and penalties. 

During the period charged in the indictment, Terry routinely 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.  Moreover, Terry has still failed to file returns for tax years 2009 and 2010.  Terry also evaded the IRS’s attempts at levy collection by 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 depositing those checks into his bank account, Terry did so in the minimum amounts necessary to cover checks and payments for his own personal expenses and luxury items, thereby making sure there were insufficient funds upon which the IRS could levy.  In his communications with the IRS, Terry routinely provided false, misleading and incomplete information to obstruct internal revenue laws.  For example, Terry created and utilized a checking account in the name of a corporate nominee so as to conceal income and avoid levy collection.  Additionally, Terry had one of his employers make direct payments to his credit card rather than issuing him a paycheck, allegedly to avoid levy collection by the IRS.

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 
Residence: Roslyn, New York

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

A four-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Salvatore Demeo, an alleged member of the Genovese organized crime family of La Cosa Nostra, with tax evasion and failure to file tax returns.

The charges were announced by William J. Muller, Executive Assistant 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).

As detailed in the indictment, in two separate real estate transactions in 2013 and 2014, Demeo sold his shares in valuable real estate in Downtown 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, even though Demeo had multiple bank accounts, he chose to not deposit the proceeds into them, and instead 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.  In addition, he endorsed another of the checks, in the amount of approximately $355,944, to an individual who operated an unlicensed check-cashing business, who then withdrew from the accounts 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, Demeo avoided payment of federal taxes in excess of $365,000.

“Today’s arrest reflects our continued commitment to prosecuting alleged members of the mafia with every tool available to us,” stated Executive Assistant United States Attorney Muller.  “Tax crimes like those charged in the indictment harm our government and every American citizen.  Organized crime members are on notice that this Office and its law enforcement partners will hold them accountable for such economic crimes no less than for their traditional schemes and offenses.”

“Regardless of your occupation, we Americans all must file and pay our income taxes,” stated IRS-CI Special Agent-in-Charge Robnett.  “The allegations of tax evasion spelled out in this indictment are what IRS Criminal Investigation Special Agents have been investigating for almost 100 years.”  

The defendant is scheduled to be arraigned this afternoon before United States  Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn.  The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

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

The Defendant:

SALVATORE DEMEO
Age:  77
Brooklyn, New York 

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

A federal grand jury in Brooklyn, New York, returned indictments this week separately charging two tax return preparation business owners with stolen identity tax refund fraud, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York.

 

The first indictment charges Hakeem Bamgbala, a Brooklyn resident and owner of Kaybamz Inc., a tax preparation business in Brooklyn; Afolabi Ajelero, a Queens resident; and Michael Campbell, a Brooklyn resident, with conspiring to commit aggravated identity theft and aggravated identity theft.  Bamgbala and Ajelero also are charged with wire fraud. 

 

The indictment alleges that Bamgbala and Ajelero used stolen IDs to file tax returns with the Internal Revenue Service (IRS) and obtain refunds to which they were not entitled.  Bamgbala and Ajelero allegedly purchased tax refund products that allowed them to print client refund checks drawn on a bank account into which the IRS directly deposited the refunds.  Bamgbala, Ajelero and Campbell allegedly conspired to deposit these checks into a second bank account and then withdrew the funds. 

 

If convicted, Bamgbala, Ajelero and Campbell face a statutory maximum sentence of five years in prison on the conspiracy charge and a mandatory minimum sentence of two years in prison for the aggravated identity theft counts.  Bamgbala and Ajelero also face a statutory maximum sentence of 20 years in prison on each of the wire fraud counts.  The three defendants also face a period of supervised release, restitution and monetary penalties.

 

The second indictment charges Oyeniyi Jaiyesimi, the owner of Pace Financial Services, a tax return preparation business located in Springfield Gardens, with wire fraud, aggravated identity theft and filing fraudulent tax returns.  According to the indictment, Jaiyesimi used stolen IDs to file fraudulent tax returns with the IRS and obtain refunds to which he was not entitled.  The indictment also alleges that Jaiyesimi filed tax returns for clients that used stolen IDs to fraudulently claim dependents and inflate deductions.

 

If convicted, Jaiyesimi faces a statutory maximum sentence of 20 years in prison for each count of wire fraud, a mandatory minimum sentence of two years in prison for each count of aggravated identity theft and a statutory maximum sentence of three years in prison for each count of filing a fraudulent return.  He also faces a period of supervised release, restitution and monetary penalties.

 

An indictment merely alleges that crimes have been committed. A defendant is presumed innocent until proven guilty beyond a reasonable doubt.

 

Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Rohde commended special agents of IRS Criminal Investigation, who conducted the investigations, and Trial Attorneys Mark McDonald and Eric Powers of the Tax Division, who are prosecuting these cases.

 

Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.

A New York businessman was arrested today for overseeing a scheme to forge hundreds of thousands of counterfeit documents containing improperly obtained personal information, which he allegedly sold to his clients, who then allegedly provided this information to telemarketers.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Special Agent in Charge Richard T. Thornton of the FBI’s Minneapolis Field Office, Special Agent in Charge Christopher Combs of the FBI’s San Antonio Field Office and FBI Assistant Director in Charge William F. Sweeney, Jr. of the New York Field Office made the announcement.

William Patrick Nanry, 55, of Pearl River, New York, was charged on Tuesday, October 3, in an indictment filed in the Eastern District of New York with one count of conspiracy to commit wire and mail fraud, one count of mail fraud, one count of identity theft and one count of aggravated identity theft. 

According to the indictment, Nanry operated a business selling “sweepstakes leads,” which are documents listing the phone numbers and personal information of individuals who have responded to mass mailings notifying recipients that they may have won, or were likely to win, expensive prizes and enormous cash payouts.  Such information is highly valued by fraudulent telemarketers, who seek to identify individuals who may be susceptible to questionable pitches. 

The indictment alleges that beginning in approximately 2009, Nanry acquired lists of names and contact information for hundreds of thousands of people—primarily senior citizens— and used this information to create fake sweepstakes leads, which he then sold to his clients as authentic.  The indictment further alleges that Nanry directed a team of employees and associates to write the personal information of the victims onto the counterfeit sweepstakes forms, even though the victims had not agreed to this use, and even though many of the victims had never responded to a sweepstakes mailing.  Nanry allegedly directed these employees and associates to vary their handwriting, to use a large number of pens in varying colors, and to take other actions to make the fake leads appear authentic.  According to the indictment, the counterfeit sweepstakes leads were then sold to Nanry’s clients, who provided them to telemarketers, who then contacted the people named in the leads.  Many of these fake sweepstakes leads allegedly ended up in the hands of telemarketers who attempted to defraud the victims.  Some of the individuals who had their information misused by Nanry were ultimately defrauded by scam telemarketers. 

Over the duration of the scheme, Nanry earned over $1.7 million by selling fake sweepstakes leads to his clients, the indictment alleges. 

An indictment is merely an allegation and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The FBI is investigating this matter.  Timothy A. Duree and Tracee Plowell of the Criminal Division’s Fraud Section are prosecuting the case

CENTRAL ISLIP, NY – Today, Attorney General Jeff Sessions announced that as part of several Department of Justice actions to reduce the rising tide of violent crime in America, the Suffolk County Police Department has been awarded a $500,000 grant through the Project Safe Neighborhoods (PSN) initiative to reduce gun and gang-related violence in high crime areas.  The grant will support enforcement strategies targeting individuals responsible for a disproportionate amount of violent crime as identified through evidence-based research and analysis, and expand community outreach programs for at-risk youth.
 

The awarding of the grant was announced by Jeff Sessions, United States Attorney General, Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and Timothy D. Sini, Commissioner, Suffolk County Police Department (SCPD).

 

“The Department of Justice today announces the foundation of our plan to reduce crime: prioritizing Project Safe Neighborhoods, a program that has been proven to work,” stated Attorney General Sessions.  “Let me be clear – Project Safe Neighborhoods is not just one policy idea among many. This is the centerpiece of our crime reduction strategy.  Taking what we have learned since the program began in 2001, we have updated it and enhanced it, emphasizing the role of our U.S. Attorneys, the promise of new technologies, and above all, partnership with local communities. With these changes, I believe that this program will be more effective than ever and help us fulfill our mission to make America safer.”

 

“The Project Safe Neighborhoods grant will strengthen the Suffolk County Police Department’s efforts to identify, arrest and prosecute those offenders responsible for doing the most harm in communities plagued by gang-related violence, as well as support prevention programs for youths who are at risk for gang recruitment,” stated Acting United States Attorney Rohde.  “This Office is committed to helping communities develop resiliency against gang recruitment so as to diminish gangs, their number and strength, as well as to continuing our prosecutive efforts directed at those who choose the wrong path and engage in gang violence.”
 

“The Suffolk County Police Department and its law enforcement partners have implemented an extremely aggressive strategy to eradicate MS-13 from our communities,” stated SCPD Commissioner Sini.  “This grant will further those efforts. On behalf of Suffolk County, I want to thank the Department of Justice for its continued partnership.”  

 

Crime analysis has identified several street gangs, including MS-13, Bloods, and Crips, which have been responsible for gang and gun crime in “hot spot” communities in Suffolk County. The PSN project has three objectives: utilize “hot spot” policing to coordinate and narrow the focus of intervention strategies in communities identified by the SCPD Criminal Intelligence section including Wyandanch, North Amityville, Central Islip, Brentwood and Huntington Station; target the small number of persons responsible for a disproportionate amount of violent crime; and provide alternatives to gang and criminal activity through mentoring and truancy programs, including the Brentwood Youth Recovery Initiative that was started in response to the murders of Brentwood High School students Nisa Mickens and Kayla Cuevas on September 13, 2016 allegedly by MS-13 gang members.

 

Project Safe Neighborhoods is a nationwide commitment to reduce gun and gang crime in America by networking existing local programs and providing additional tools to these programs. The United States Attorney’s Office for the Eastern District of New York has partnered with the district attorney’s offices in Queens, Brooklyn, Richmond and Nassau Counties to reduce and prevent gun violence.
 

The grant is part of a recommitment to PSN announced today by Attorney General Sessions in a memo directing United States Attorneys to implement an enhanced violent crime reduction program that incorporates the lessons learned since the initiative was launched in 2001.

 

The Attorney General also announced the following Department of Justice initiatives to help reduce violent crime nationwide:

• Additional Assistant United States Attorney Positions to Focus on Violent Crime –The Department is allocating 40 prosecutors to approximately 20 United States Attorney’s Offices to focus on violent crime reduction.

• More Cops on the Streets (COPS Hiring Grants) – As part of our continuing commitment to crime prevention efforts, increased community policing, and the preservation of vital law enforcement jobs, the Department will be awarding approximately $98 million in FY 2017 COPS Hiring Grants to state, local, and tribal law enforcement agencies.
   
• Organized Crime and Drug Enforcement Task Force’s (OCDETF) National Gang Strategic Initiative –The National Gang Strategic Initiative promotes  creative enforcement strategies and best practices that will assist in developing investigations of violent criminal groups and gangs into enterprise-level OCDETF prosecutions.  Under this initiative, OCDETF provides “seed money” to locally-focused gang investigations, giving state, local, and tribal investigators and prosecutors the resources and tools needed to identify connections between lower-level gangs and national-level drug trafficking organizations.

• Critical Training and Technical Assistance to State and Local Partners –The Department has a vast array of training and technical assistance resources available to state, local and tribal law enforcement, victims groups, and others.  To ensure that agencies in need of assistance are able to find the training and materials they need, Office of Justice Programs will make available a Violence Reduction Response Center to serve as a “hot line” to connect people to these resources. 

• Crime Gun Intelligence Centers (CGIC) – The Department has provided grant funding to support a comprehensive approach to identifying the most violent offenders in a jurisdiction, using new technologies such as gunshot detection systems combined with gun crime intelligence from NIBIN, eTrace, and investigative efforts.  These FY 2017 grants were awarded to Phoenix, AZ, and Kansas City, MO.
   
• Expand ATF’s NIBIN Urgent Trace Program – The Department will expand ATF’s NIBIN Urgent Trace Program nationwide by the end of the year.  Through this program, any firearm submitted for tracing that is associated with a NIBIN “hit” (which means it can be linked to a shooting incident) will be designated an “urgent” trace and the requestor will get information back about the firearm’s first retail purchaser within 24 hours, instead of five to six business days.

A federal jury in Brooklyn, New York, returned a guilty verdict today against Muhanad Mahmoud Al-Farekh on nine counts, including conspiracy to murder U.S. nationals, conspiracy to use a weapon of mass destruction, conspiracy to bomb a government facility and conspiracy to provide material support to terrorists.  Farekh faces up to life in prison when he is sentenced by United States District Judge Brian M. Cogan.

The verdict was announced by Acting Assistant Attorney General for National Security Dana J. Boente, Acting United States Attorney Bridget M. Rohde for the Eastern District of New York, Assistant Director in Charge William F. Sweeney. Jr. of the FBI’s New York Field Office and Commissioner James P. O’Neill of the NYPD.

“Muhanad Mahmoud Al Farekh is an al Qaeda terrorist who conspired to kill Americans overseas.  The trial evidence showed that he was involved in a variety of terrorist activity, including a VBIED attack on a U.S. military installation in Afghanistan in 2009.  With today’s guilty verdict, Farekh is being held accountable for his crimes,” said Acting Assistant Attorney General Boente.  “Counterterrorism is the highest priority of the National Security Division, and we will continue to use all tools available across the globe to bring to justice those who seek to harm Americans, including our brave servicemen and women who risk their lives in defense of our nation.”

“Today, an American al-Qaeda member was brought to justice in a U.S. courtroom,” said Acting United States Attorney Rohde.  “The jury’s verdict on all nine counts of the indictment established Farekh’s responsibility for a violent attack on members of our armed forces, his efforts to murder Americans and his commitment to one of the world’s most infamous terrorist organizations.  The defendant now faces the prospect of life imprisonment for the commission of these serious federal crimes.”

“Today’s verdict is justice for the harm and destruction Al Farekh intended to cause when he conspired with others to bomb a U.S. military base in Afghanistan,” said Assistant Director inCharge Sweeney.  “The FBI stands alongside our military and law enforcement partners to hold criminals accountable for their actions no matter where they are in the world.”

“The defendant in this case faces up to life in prison after being found guilty of conspiring to bomb a government facility, use a weapon of mass destruction, murder U.S. nationals and provide material support to terrorists,” said Commissioner O’Neill.  “While Farekh’s crimes occurred in Pakistan and Afghanistan, the defendant’s co-conspirator trained Najibullah Zazi and others who also intended to attack New York City’s subway system. I want to thank all involved in today’s verdict, from the investigators and prosecutors to the jury and judge.”

At trial, the government presented evidence that prior to traveling overseas to join al Qaeda, Farekh was a student at the University of Manitoba in Canada. In 2007, Farekh and two fellow students traveled to Pakistan with the intention of fighting against American forces overseas. Farekh and his co-conspirators had become radicalized watching video recordings encouraging violent jihad, listened to jihadist lectures, including lectures by now-deceased al Qaeda in the Arabian Peninsula leader Anwar al-Awlaki. They traveled to the Federally Administered Tribal Areas of Pakistan, an area in the northern part of Pakistan that borders Afghanistan and is home to al Qaeda’s base of operations, where they joined and received training from al Qaeda.

One of Farekh’s co-conspirators, Ferid Imam, provided weapons and military-type training at an al Qaeda training camp in Pakistan in September 2008. Among Imam’s trainees were Najibullah Zazi, Zarein Ahmedzay and Adis Medunjanin, of Queens, New York, who intended to return to New York City to carry out a suicide attack in the subway system. During the trial, Ahmedzay testified that Imam as his weapons trainer. Zazi and Ahmedzay pleaded guilty pursuant to cooperation agreements and have yet to be sentenced. Medunjanin was convicted after trial and sentenced to life imprisonment. Imam has been indicted for his role in the plot.

The government proved Farekh’s participation in the building of a vehicle-borne improvised explosive device (VBIED) that was used in an attack against Forward Operating Base Chapman (FOB Chapman) on Jan. 19, 2009 in Khost, Afghanistan.  The evidence at trial showed that two vehicles approached the fence line of FOB Chapman. The operator of the first vehicle, a pickup-sized truck, detonated a VBIED at the gate. The second vehicle, a truck carrying 7,500 pounds of explosives, became stuck in the blast crater. The driver fled without detonating the second, more powerful VBIED, and was shot and killed by local security personnel.  Forensic technicians in Afghanistan recovered 18 fingerprints from the adhesive packing tape wrapped around the undetonated bomb that were matched to the defendant. A hair follicle was also recovered and analysis indicated that the follicle’s mitochondrial DNA was consistent with that of the defendant.

Assistant United States Attorneys Richard M. Tucker, Douglas M. Pravda and Saritha Komatireddy of the Eastern District of New York, and Trial Attorney Alicia Cook of the National Security Division’s Counterterrorism Section are prosecuting this case.

A federal jury in Brooklyn, New York, returned a guilty verdict today against Muhanad Mahmoud Al Farekh on nine counts, including conspiracy to murder United States nationals, conspiracy to use a weapon of mass destruction, conspiracy to bomb a government facility and conspiracy to provide material support to terrorists.  Farekh faces up to life in prison when he is sentenced by United States District Judge Brian M. Cogan.

The verdict was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Dana J. Boente, Acting Assistant Attorney General for National Security, William F. Sweeney. Jr., Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office, and James P. O’Neill, Commissioner, New York City Police Department (NYPD).

“Today, an American al-Qaeda member was brought to justice in a U.S. courtroom,” stated Acting United States Attorney Rohde.  “The jury’s verdict on all nine counts of the indictment established Farekh’s responsibility for a violent attack on members of our armed forces, his efforts to murder Americans and his commitment to one of the world’s most infamous terrorist organizations.  The defendant now faces the prospect of life imprisonment for the commission of these serious federal crimes.”

 “Muhanad Mahmoud Al Farekh is an al-Qaeda terrorist who conspired to kill Americans overseas,” stated Acting Assistant Attorney General Boente.  “The trial evidence showed that he was involved in a variety of terrorist activity, including a VBIED attack on a U.S. military installation in Afghanistan in 2009.  With today’s guilty verdict, Farekh is being held accountable for his crimes.  Counterterrorism is the highest priority of the National Security Division, and we will continue to use all tools available across the globe to bring to justice those who seek to harm Americans, including our brave servicemen and women who risk their lives in defense of our nation.”

“Today’s verdict is justice for the harm and destruction Al Farekh intended to cause when he conspired with others to bomb a U.S. military base in Afghanistan,” stated FBI Assistant Director-in-Charge Sweeney.  “The FBI stands alongside our military and law enforcement partners to hold terrorists accountable for their actions no matter where they are in the world.”

“The defendant in this case faces up to life in prison after being found guilty of conspiring to bomb a government facility, use a weapon of mass destruction, murder U.S. nationals and provide material support to terrorists,” stated NYPD Commissioner O’Neill.  “While Farekh’s crimes occurred in Pakistan and Afghanistan, the defendant’s co-conspirator trained Najibullah Zazi and others who also intended to attack New York City’s subway system. I want to thank all involved in today’s verdict, from the investigators and prosecutors to the jury and judge.”

At trial, the government presented evidence that prior to traveling overseas to  join al-Qaeda, Farekh was a student at the University of Manitoba in Canada. In 2007, Farekh and two fellow students traveled to Pakistan with the intention of fighting against American forces overseas. Farekh and his co-conspirators had become radicalized watching video recordings encouraging violent jihad, listened to jihadist lectures, including lectures by now-deceased al-Qaeda in the Arabian Peninsula leader Anwar al-Awlaqi. They traveled to the Federally Administered Tribal Areas of Pakistan, an area in the northern part of Pakistan that borders Afghanistan and is home to al-Qaeda’s base of operations, where they joined and received training from al-Qaeda.

One of Farekh’s co-conspirators, Ferid Imam, provided weapons and military-type training at an al-Qaeda training camp in Pakistan in September 2008. Among Imam’s trainees were Najibullah Zazi, Zarein Ahmedzay and Adis Medunjanin, of Queens, New York, who intended to return to New York City to carry out a suicide attack in the subway system. During the trial, Ahmedzay testified that Imam was his weapons trainer. Zazi and Ahmedzay pleaded guilty pursuant to cooperation agreements and have yet to be sentenced. Medunjanin was convicted after trial and sentenced to life imprisonment. Imam has been indicted for his role in the plot.

The government proved Farekh’s participation in the building of a vehicle-borne improvised explosive device (VBIED) that was used in an attack against Forward Operating Base Chapman (FOB Chapman) on January 19, 2009 in Khost, Afghanistan.  The evidence at trial showed that two vehicles approached the fence line of FOB Chapman. The operator of the first vehicle, a pickup-sized truck, detonated a VBIED at the gate. The second vehicle, a truck carrying 7,500 pounds of explosives, became stuck in the blast crater. The driver fled without detonating the second, more powerful VBIED, and was shot and killed by local security personnel.  Forensic technicians in Afghanistan recovered 18 fingerprints from the adhesive packing tape wrapped around the undetonated bomb that were matched to the defendant. A hair was also recovered and analysis indicated that the hair’s mitochondrial DNA was consistent with that of the defendant.

The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Richard M. Tucker, Douglas M. Pravda and Saritha Komatireddy are in charge of the prosecution with assistance provided by Trial Attorney Alicia Cook of the National Security Division’s Counterterrorism Section.

 

The Defendant:

 

MUHANAD MAHMOUD AL FAREKH, also known as “Abdullah al-Shami” and “Abdallah al-Shami”

Age: 31

Nationality: United States

 

E.D.N.Y. Docket No. 15-CR-268 (BMC)

 

A four-count indictment was unsealed today in federal court in Central Islip, New York, charging Osman Ak, Murat Ak and Mehmet Akpinar, with drug trafficking conspiracy and substantive acts of drug trafficking in connection with their sale of controlled substances from 2013 through 2015 at Eyup Gas & Convenience Store, Inc. d/b/a VS Food Mart, in Medford, New York, owned by Osman Ak.  The defendants were arrested this morning and their initial appearances are scheduled for this afternoon before United States Magistrate Judge Steven I. Locke.  

The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division, and George Beach, Superintendent, New York State Police (NYSP).

 “As alleged, the defendants sold K2 over the counter of a convenience store, putting the community at risk to the dangers associated with this synthetic hallucinogen and its unpredictable side-effects,” stated Acting United States Attorney Rohde.  “This Office and our law enforcement partners will work tirelessly to hold traffickers like the Aks and Akpinar accountable for their actions, which threaten public safety.”

Ms. Rohde extended her grateful appreciation to the DEA and the NYSP for their assistance in this case.

“Known on the streets as K2 or synthetic marijuana, this dangerous drug can cause brain damage, hallucinations, seizures and death,” stated Special Agent-in-Charge Hunt.  “Parents should be forewarned that synthetic cannabinoid traffickers package their poison to resemble legal goods, which in this case, it is alleged that the defendants brazenly peddled to users in their convenience store.”

“The strong partnership the State Police has with both federal and local law enforcement agencies is key to combatting the distribution of illegal synthetic drugs in New York State,” stated NYSP Superintendent Beach.  “These drugs are lethal with unpredictable side effects, yet are marketed and sold as apparently legal substances in colorful packages that appeal to young people.  As these arrests show, New York State and its law enforcement partners do not tolerate those who seek to traffic illicit and harmful synthetic drugs.”

If convicted, the defendants face up to 20 years’ imprisonment on the drug trafficking conspiracy charge, as well as on the drug trafficking charges.  The United States is also pursuing forfeiture of the convenience store where the alleged activity took place. 

An indictment is merely an allegation, and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. 

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

The Defendant:

OSMAN AK
Holbrook, New York
Age: 45

MURAT AK
Holbrook, New York
Age: 35

MEHMET AKPINAR
Nesconset, New York
Age: 51

E.D.N.Y. Docket No. 17-CR-527  ( DRH )

Earlier today in federal court in Brooklyn, Hani Kabbara, a Canadian citizen, was sentenced by United States District Judge Margo K. Brodie to 30 months’ imprisonment for conspiracy to commit wire fraud.  Kabbara was originally arrested and charged in August 2016, after traveling to the United States from Canada, and pleaded guilty in April 2017.  In addition, as part of the sentence the court ordered Kabbara to pay $8,000 in restitution.

The sentence was announced by Bridget M. Rohde, Acting 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 Field Office (IRS-CI).

“As part of an international cybercrime scheme, Kabbara and his co-conspirators deceived elderly victims in the United States by, for example, falsely claiming that a grandchild was in jail and needed money for bail,” stated Acting United States Attorney Rohde.  “Today’s sentence sends the message that predators like Kabbara, even those who hide behind the anonymity of the internet and online monikers, will be brought to justice for their criminal acts.”

“Kabbara believed he was safe from U.S. laws in Canada and devised a series of schemes using social engineering and the services of other cybercriminals to rob innocent elderly victims out of hundreds of thousands of dollars,” stated FBI Assistant Director-in-Charge Sweeney. “Today’s sentencing shows that international cybercriminals are never beyond the reach of U.S. authorities who are engaged with their international law enforcement partners.”

“Today’s announcement highlights IRS Special Agents’ intense focus on the pursuit of identity thieves and cyber criminals,” stated IRS-Criminal Investigation Special Agent-in-Charge Robnett.  “Kabbara took part in an elaborate scheme driven by greed and a blatant disregard for the damage inflicted on innocent victims.  Rest assured that those involved in this criminal behavior will be held fully accountable.”

As alleged in the indictment and described in court filings, between February 2014 and August 2016, the defendant ran a sophisticated scheme that used social engineering and overseas call centers to steal from unsuspecting, elderly victims in the United States.  Kabbara and his co-conspirators used various threats and deceit to demand payment from his victims, for example, telling them that a grandchild had been arrested and the victim needed to send money immediately in order for the grandchild to be released from jail.  Kabbara and his co-conspirators demanded money in the form of MoneyPaks, which are vouchers that can be loaded with cash and then used to fund prepaid debit cards.  The defendant sold the MoneyPaks in online criminal forums and, with his co-conspirators, transferred the funds onto prepaid debit cards, which themselves were obtained using stolen identities and were later cashed at ATM machines.  The defendant and his network of co-conspirators communicated with each other anonymously in cyberspace through dark web forums and encrypted chat applications, then used a crew of “workers,” in the New York area to withdraw funds from the debit cards, consolidate the cash and send it back to the defendant in Canada.

 In connection with his guilty plea, the defendant also admitted to attempting to participate in a massive tax refund fraud using stolen personally identifiable information of millions of victims, and to his participation in a 2011 global cyber heist in which he and his co-conspirators used hacked account information to drain ATMs around the world of more than $10 million. 

The government’s case is being handled by the Office’s National Security & Cybercrime Section.  Assistant United States Attorney Una A. Dean is in charge of the prosecution.

The Defendant:

 

HANI KABBARA

Age: 32

Nationality:  Canadian

 

E.D.N.Y. Docket No. 16-CR-472 (MKB)

Earlier today, at the federal courthouse in Brooklyn, New York, former New York City Police Department officer Eduardo Cornejo was sentenced to 66 months in prison, five years of supervised release, and sex offender registration, following his September 21, 2016 guilty plea to conspiracy to engage in sex trafficking of a minor.  Cornejo was ordered to pay $5,000 in forfeiture.  The sentence was imposed by United States District Judge Brian M. Cogan.

The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), and James P. O’Neill, Commissioner, NYPD.

“Cornejo conspired to engage in the sex trafficking of a 16-year-old girl during his off-duty time, a violation of his oath to protect the community and uphold the law,” stated Acting United States Attorney Rohde.  “Together with our law enforcement partners, this Office will continue to address and bring to justice those who occupy positions of trust at any level and who engage in criminal conduct.” 

“The subject in this case used information he knew from being a sworn member of law enforcement to elude officers who would know he was doing something illegal,” stated Assistant Director-in-Charge Sweeney.  “He was aware of the laws, and continued to break them even after being arrested.  We wear badges as law enforcement to serve and protect our communities, not to endanger and exploit children for financial gain.”

According to court documents, then-NYPD police officer Cornejo engaged in an interstate prostitution scheme that involved at least 10 different women.  Cornejo transported the women to motels throughout the New York metropolitan area, including New Jersey and Long Island, often immediately upon completing a tour of duty with the NYPD.  Judicially authorized interceptions of communications inside Cornejo’s vehicle confirmed the illegal purpose of his activities.  For example, Cornejo stated, “The girls is at the [a motel] so it nice and clean, it’s picking up now it was alright last night.”  Soon thereafter, he stated, “That might make it hot though, standing outside with a bunch of girls. . . . [Members of law enforcement] going to know what’s up real quick.” 

In January 2016, members of law enforcement observed that at least one of the women transported by Cornejo (“Jane Doe”) appeared to be particularly young.  Concerned about the possibility that Cornejo might be trafficking a minor, members of law enforcement interviewed Jane Doe shortly after members of law enforcement observed Cornejo transport her to a motel.  Jane Doe presented an identification document reflecting that she had turned 18 years old approximately two months earlier.  Further investigation revealed that Cornejo began transporting Jane Doe to participate in prostitution activity when she was just 16 years old and that she engaged in commercial sexual acts at Cornejo’s direction.  In his post-arrest statement, Cornejo confirmed that he had transported Jane Doe for numerous months with the intent that she engage in prostitution. 

Cornejo has been in custody since August 10, 2016, when Judge Cogan revoked Cornejo’s bond.  After his arrest and release on bond, Cornejo had been continuing to promote prostitution by driving multiple women to motels throughout the New York metropolitan area.

The government’s case is being handled by the Office’s Public Integrity Section.   Assistant U.S. Attorney Alexander A. Solomon is in charge of the prosecution. 

The Defendant:

EDUARDO CORNEJO
Age:  35
Staten Island, New York

E.D.N.Y. Docket No. 16-CR-96 (BMC)

Earlier today, at the federal courthouse in Brooklyn, New York, AmerisourceBergen Specialty Group (ABSG), a wholly-owned subsidiary of AmerisourceBergen Corporation (NYSE: ABC), one of the nation’s largest wholesale drug companies and number 11 on the Fortune 500 list, pled guilty to illegally distributing misbranded drugs.  ABSG agreed to pay a total of $260 million to resolve criminal liability for its distribution of oncology supportive-care drugs from a facility that was not registered with the Food and Drug Administration (FDA).  The guilty plea and sentencing took place before United States District Judge Nina Gershon. 

The criminal resolution was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York; Mark S. McCormack, Special Agent-in-Charge, FDA Office of Criminal Investigations Metro Washington Field Office;  Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS OIG), New York Region; Leigh-Alistair Barzey, Special Agent-in Charge, Defense Criminal Investigative Service (DCIS), Northeast Field Office; and Scott Rezendes, Special Agent-in-Charge,  Office of Personnel Management, Office of Inspector General (OPM-OIG).

“Today’s guilty plea demonstrates our commitment to investigating and holding accountable any pharmaceutical company that fails to ensure the health and safety of the public.  This Office will continue to work actively with the FDA to ensure that those responsible for America’s drug supply scrupulously comply with the law and provide safe products that doctors and patients can trust,” said Acting United States Attorney Rohde.  Ms. Rohde expressed her grateful appreciation to the Department of Justice Consumer Protection Branch, the FDA Office of the Chief Counsel and the Alabama Board of Pharmacy.      

“Injectable drugs prescribed for patients – especially vulnerable cancer patients – must be pure, sterile and produced in an FDA-compliant facility that is within the supply chain that FDA oversees,” stated Special Agent-in-Charge McCormack. “We will continue to pursue and bring to justice those manufacturers who would violate the public’s trust and endanger their health by attempting to avoid FDA’s oversight authority.”

 

“Companies that sell oncology drugs from a facility not registered with the FDA threaten the health and safety of cancer patients,” stated HHS OIG Special Agent-in-Charge Lampert.  “We will continue to work closely with our law enforcement partners to protect patients from such shortcuts.”
 

“The illegal misbranding and distribution of drugs threatens the health and safety of U.S. military members, retirees and their dependents,” stated DCIS Special Agent-in-Charge Barzey.  “Today’s guilty plea is demonstrative of DCIS’s ongoing commitment to work jointly with the USAO EDNY, FDA, HHS OIG and OPM-OIG, in order to protect members of the Armed Forces and to ensure the integrity of the Defense Department’s TRICARE healthcare system.”

 

“OPM-OIG agents will continue to work with our law enforcement partners to protect Federal employees, annuitants and their families from companies that would put the health of vulnerable cancer patients at risk,” stated OPM-OIG Special Agent-in-Charge Rezendes.

 

As set forth in court records, between 2001 and 2014, two of ABSG’s Alabama-based subsidiaries, Medical Initiatives Inc. (MII) and Oncology Supply Company (OSC), prepared millions of syringes that had been pre-filled with oncology supportive care drugs — specifically, Aloxi®, Anzemet®, generic versions of granisetron injection, Kytril®, Neupogen® and Procrit®.  Those syringes were shipped to oncology centers, medical practices and physicians for administration to immunocompromised cancer patients undergoing chemotherapy treatment in all 50 states, including to approximately 37 healthcare providers located in the Eastern District of New York. 

 

To prepare pre-filled syringes (PFS), MII removed FDA-approved drug products from their original glass vials and repackaged them into plastic syringes through a process that allowed MII to access and sell excess drug product in the vials, known as “overfill,” that MII was able to extract from the vials.  As alleged in the Information, however, MII prepared PFS in an unclean, unsterile environment.   Accordingly, MII’s process for creating PFS resulted in some PFS that contained particles or foreign matter, which MII employees identified and termed “floaters.”  PFS were also at times not of the quality or purity that MII and OSC represented them to be to their customers. 

 

MII’s business model was to combine the contents of multiple vials in a process known as “pooling.”  However, as set forth in the Information, many of the vials used by MII to prepare PFS were designated by the drug manufacturer as “single use” vials, meaning that the manufacturer could not guarantee the sterility of the drug product if the vials were breached.  However, in the pooling process, MII’s technicians frequently breached drug vials multiple times, thereby increasing the risk of contamination.

 

In order to avoid the FDA’s regulatory oversight, ABSG did not register MII as a re-packager or manufacturer with the FDA as required by the Federal Food, Drug and Cosmetic Act.  Instead, ABSG inaccurately portrayed MII to its customers and to state agencies as a state-regulated pharmacy in the business of dispensing drugs pursuant valid prescriptions and claimed that MII was otherwise in compliance with state pharmacy laws.  By holding MII out as a pharmacy, ABSG unlawfully exploited an exemption to the FDA registration requirement that is reserved for legitimate pharmacies, not for manufacturers or re-packagers. 

 

In connection with the guilty plea, ABSG filed a Statement of Facts setting forth those facts which it is admitting.  

 

As part of its guilty plea, ABSG has agreed to pay a $208 million criminal fine, plus $52 million in criminal forfeiture, for a total financial penalty of $260 million.  In addition, ABSG has entered into an agreement with the Office and the Department of Justice’s Consumer Protection Branch to maintain a compliance and ethics program designed to increase accountability of individuals and corporate board members, to increase transparency, and to strengthen ABSG’s compliance with the FDCA.  The compliance and ethics program requires corporate board members to review annually the effectiveness of the company’s compliance program and for ABSG to maintain a hotline that will receive and process complaints about any improper practices.

 

The government’s case is being handled by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Alixandra E. Smith and Ameet B. Kabrawala are in charge of the prosecution.  Senior Litigation Counsel Patrick Jasperse of the Department of Justice Consumer Protection Branch also provided assistance.

The owner of two Brooklyn, New York, medical clinics was sentenced today to 84 months in prison for her role in a $55 million health care fraud scheme.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Special Agent in Charge Scott Lampert of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS OIG) Office of Investigations, Special Agent in Charge James D. Robnett of the IRS Criminal Investigation’s (IRS-CI) New York Field Office and Inspector General Dennis Rosen of the New York State Office of the Medicaid Inspector General (OMIG) made the announcement.

Valentina Kovalienko, 47, of Brooklyn, and the owner of Prime Care on the Bay LLC and Bensonhurst Mega Medical Care P.C., was sentenced by U.S. District Judge Roslynn R. Mauskopf of the Eastern District of New York, who also ordered Kovalienko to forfeit $29,336,497. Kovalienko pleaded guilty in October 2015 to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering.

As part of her guilty plea, Kovalienko acknowledged that her co-conspirators paid cash kickbacks to patients to induce them to attend her two clinics.  Kovalienko also admitted that she submitted false and fraudulent claims to Medicare and Medicaid for services that were induced by prohibited kickback payments to patients or that were unlawfully rendered by unlicensed staff.  Kovalienko also wrote checks from the clinics’ bank accounts to third-party companies, which purported to provide services to the clinics, but which in fact were not providing services, and the payments were instead used to generate the cash needed to pay the illegal kickbacks to patients, she admitted.

Twenty other individuals have pleaded guilty in connection with this case, including the former medical directors of Prime Care on the Bay LLC and Bensonhurst Mega Medical Care P.C., six physical and occupational therapists, three ambulette drivers, the owner of several of the sham companies used to launder the money and a former patient who received illegal kickbacks. 

HHS-OIG, IRS-CI and OMIG investigated the case, which was brought as part of the Medicare Fraud Strike Force, under the supervision by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.  Acting Assistant Chief A. Brendan Stewart of the Fraud Section and Assistant U.S. Attorney F. Turner Buford of the Eastern District of New York, formerly a Fraud Section trial attorney, are prosecuting the case. 

The Criminal Division’s Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,500 defendants who have collectively billed the Medicare program for more than $12.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

BROOKLYN, N.Y. – The owner of two medical clinics in Brooklyn, New York, was sentenced today to seven years in prison for her role in a $55 million health care fraud scheme.

Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, Acting Assistant Attorney General Kenneth A. Blanco of the Department of Justice Criminal Division, Special Agent-in-Charge Scott Lampert of the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) Office of Investigations New York Region, Special Agent-in-Charge James D. Robnett of the IRS Criminal Investigation (IRS-CI) New York Field Office, and Inspector General Dennis Rosen of the New York State Office of the Medicaid Inspector General (OMIG) made the announcement.

Valentina Kovalienko, 47, the owner of Prime Care on the Bay LLC and Bensonhurst Mega Medical Care P.C., was sentenced by U.S. District Judge Roslynn R. Mauskopf of the Eastern District of New York, who also ordered Kovalienko to pay $29,336,497.27 in restitution and to forfeit $29,336,497.27. Kovalienko pleaded guilty in October 2015 to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering.

As part of her guilty plea, Kovalienko acknowledged that her co-conspirators paid cash kickbacks to patients to induce them to attend her two clinics.  Kovalienko also admitted that she submitted false and fraudulent claims to Medicare and Medicaid for services that were induced by prohibited kickback payments to patients or that were unlawfully rendered by unlicensed staff.  Kovalienko also wrote checks from the clinics’ bank accounts to third-party companies, which purported to provide services to the clinics, but which in fact were not providing services, and the payments were instead used to generate the cash needed to pay the illegal kickbacks to patients, she admitted.

“The defendant made stealing from Medicare and Medicaid her full time business by agreeing with others to pay cash kickbacks to patients, submit fraudulent claims to Medicare and Medicaid, and write checks to sham companies to disburse the proceeds of the illegal scheme,” stated Acting United States Attorney Rohde. “This Office and our law enforcement partners are committed to protecting precious taxpayer dollars from unscrupulous providers seeking to defraud federal health care programs.”  

“The fraud scheme that Ms. Kovalienko and others engaged in was motivated by nothing more than personal greed,” said HHS OIG Special Agent-in-Charge Lampert.  “This sentencing should serve as a warning to any health care provider that dares to put personal profit ahead of proper patient care. HHS OIG, along with our law enforcement partners, will continue to aggressively pursue those who seek to undermine the federally funded health care programs intended for our most vulnerable Americans.”

“Affordable Healthcare is a phrase the American people have heard over and over for the past decade,” said IRS-CI Special Agent-in-Charge Robnett.  “It is schemes such as this that keep costs high for all American citizens. As Criminal Investigators for the IRS, we are happy to lend our financial expertise in uncovering fraud that hurts all of us.”

“Individuals who commit Medicaid fraud prey on the most vulnerable New Yorkers, and the impacts - fewer health care resources and waste of taxpayer dollars - affect all of us,” stated OMIG Inspector General Rosen. “My office will continue to work closely with our state and federal partners to hold wrongdoers fully accountable.”

Twenty other individuals have pleaded guilty in connection with this case, including the former medical directors of Prime Care on the Bay LLC and Bensonhurst Mega Medical Care P.C., six physical and occupational therapists, three ambulette drivers, the owner of several of the sham companies used to launder the money and a former patient who received illegal kickbacks. 

HHS OIG, IRS-CI and OMIG investigated the case, which was brought as part of the Medicare Fraud Strike Force, under the supervision by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.  Assistant Chief A. Brendan Stewart of the Fraud Section and Assistant U.S. Attorney F. Turner Buford of the Eastern District of New York, formerly a Fraud Section trial attorney, are prosecuting the case. 

The Criminal Division’s Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 3,500 defendants who have collectively billed the Medicare program for more than $12.5 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

The Defendant:

VALENTINA KOVALIENKO
Age: 47
Residence: Brooklyn, New York

E.D.N.Y. Docket No. 11-CR-106 (RRM)

Earlier today, at the federal courthouse in Central Islip, New York, Senior United States District Judge Arthur D. Spatt sentenced Brian R. Callahan to 12 years’ imprisonment and three years’ supervised release, and ordered that he pay approximately $67.6 million in restitution following his April 29, 2014 guilty plea to securities fraud and wire fraud.

The sentence was announced by Bridget M. Rohde, Acting 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).

 “For years, Brian Callahan peddled lies to unsuspecting investors, causing some to lose their life savings, and to delay their retirements,” stated Acting United States Attorney Rohde.  “Callahan has now been held to account for his deceit and the harm he caused.”  Ms. Rohde expressed her grateful appreciation to the Internal Revenue Service, Securities and Exchange Commission, and the British Virgin Islands Financial Investigation Agency for their cooperation and assistance in the investigation and prosecution of this case.

“Callahan not only stole money from his investors, but their trust as well,” stated FBI Assistant Director-in-Charge Sweeney.  “It’s disheartening to think there are people out there who would deliberately take from others for their own personal gain, but today’s sentence reminds us how this game plays out in the end. May it be a message to other crooks that this type of behavior won’t be tolerated.” 

According to court filings and statements made in court, between December 2006 and February 2012, Callahan raised more than $118 million from at least 40 investors in connection with four different investment funds that he managed.  He had assured those investors that their money would be invested in mutual funds, hedge funds, and other securities.  Instead of investing the money as he promised, Callahan misappropriated approximately $96 million and began to operate the investment funds as a large-scale Ponzi scheme.  Among other things, Callahan diverted millions of dollars towards the Panoramic View, an unprofitable 117-unit beachfront resort and residence development in Montauk, New York, that he owned with his brother-in-law and co-defendant, Adam Manson.  He also commingled the money from the various investment funds and used it to pay tens of millions of dollars in partial redemptions to his victim investors to keep the Ponzi scheme afloat. He paid himself approximately $6 million, which he used to purchase luxury homes in Old Westbury and Westhampton, New York, and luxury cars, including a Range Rover and a BMW, and to pay large credit card bills and dues associated with his golf club. To avoid detection and continue the scheme, Callahan sent fake account statements to investors that falsely showed that their funds were invested and performing well, and he repeatedly lied to his investors about both the nature and status of their investments.

In December 2015, Judge Spatt entered a decree ordering the forfeiture of approximately $40 million in net proceeds from the sale of the Montauk property.

This prosecution was the result of efforts by the Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets, and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, visit http://www.StopFraud.gov.

The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys Christopher C. Caffarone, Brian D. Morris and Karin K. Orenstein are in charge of the prosecution.

The Defendant:

 

BRIAN R. CALLAHAN

Age: 48

Old Westbury, New York

 

E.D.N.Y. Docket No. 13-CR-453

A criminal complaint was unsealed today in federal court in Brooklyn charging Nagwa Elsilimy and Ahmed Arafa with fraud by making false statements to the Federal Emergency Management Agency (FEMA) and the United States Department of Housing and Urban Development (HUD) in connection with their obtaining more than $750,000 in disaster relief from New York City’s Build It Back program (BIB) and FEMA in the aftermath of Hurricane Sandy.  The defendants allegedly misrepresented that a home in Staten Island, which they had abandoned months before the storm, was their primary residence at the time the superstorm devastated New York and New Jersey.  The defendants unlawfully obtained over $750,000 in aid intended for people displaced by the storm.  Elsilimy was arrested this morning, and her initial appearance is scheduled for this afternoon before United States Chief Magistrate Judge Roanne L. Mann.

The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Christina Scaringi, Special Agent-in-Charge, United States Department of Housing and Urban Development Office of Inspector General (HUD OIG), Mark Tasky, Special Agent-in-Charge, Department of Homeland Security Office of Inspector General (DHS OIG), Washington Field Office, and Mark G. Peters, Commissioner, New York City Department of Investigation (DOI).  

“Taking advantage of funds intended for disaster relief misappropriates taxpayer dollars, reduces monies available to true victims and erodes public confidence in relief programs,” stated Acting United States Attorney Rohde. “This Office will continue to work with our law enforcement partners to root out such alleged illegal behavior.”

“The Defendants’ alleged conduct is disturbing, especially during this time when the public is reminded of the devastation that historic storms leave with thousands of victims,” stated HUD OIG Special Agent-in-Charge Scaringi.  “The taxpayer has no tolerance for those who would steal from Federal public aid – the sole goal of which is to help victims rebuild and move forward with their lives.  We, along with our federal and state law enforcement and prosecution partners, will continue to aggressively pursue fraudsters who engage in such unacceptable behavior to both the public and their neighbor.”

“DHS OIG will continue to target fraudsters who seek to turn the tragedy of a natural disaster into an opportunity of personal gain at the expense of taxpayers,” stated DHS OIG Special Agent-in-Charge Tasky.  “Today’s arrest is a tangible step of our commitment with our law enforcement partners who work tirelessly to identify, investigate, and pursue prosecution of fraudulent activities that undermine federal programs.”

“Hurricane Sandy ravaged shoreside communities and displaced hundreds of thousands of New Yorkers from homes made uninhabitable by the storm,” stated DOI Commissioner Peters. “While homeowners applied for aid to rehabilitate and rebuild, these defendants were capitalizing on the destruction, collecting benefits to which they were not entitled and exploiting federal funds to restore property they didn’t live in, according to the charges. DOI has monitored the City’s rebuilding effort since its inception, and will continue to investigate the programs and those dishonest homeowners who take advantage of finite disaster relief funds.”

According to the complaint, in the days and months following Hurricane Sandy, which struck New York and New Jersey on October 29, 2012, the defendants obtained and attempted to obtain federal funds appropriated for Sandy disaster relief by submitting material misrepresentations in their applications for disaster relief. Specifically, the defendants falsely represented that a home they had abandoned before the storm was their primary residence at the time Sandy hit the Eastern District of New York. The defendants had been residing at a different address since at least March 2012, and, at the time Sandy struck Staten Island, the defendants’ alleged primary residence was vacant, and had been vacant for at least seven months. Evidence obtained in the investigation suggests that the defendants fraudulently obtained federal aid totaling more than $750,000 based upon their misrepresentations in applications to FEMA, HUD and BIB, the New York City program established with federal funds to aid residents in rebuilding private homes damaged or destroyed due to Hurricane Sandy.

The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, the defendants face a statutory maximum of 30 years’ imprisonment for major disaster relief fraud and five years’ imprisonment for making false statements to a federal agency.

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 Defendants:

 

NAGWA ELSILIMY

Age: 59

Staten Island, NY

 

AHMED ARAFA

Age: 59

Staten Island, NY

 

E.D.N.Y. Docket No. 17-MJ-805

 Earlier today at the federal courthouse in Brooklyn, New York, United States District Judge Ann M. Donnelly sentenced the defendant Donald Warren to 18 years’ imprisonment, to be followed by three years of supervised release, for shooting a woman  during the course of a carjacking in Queens, New York, and participating in another carjacking as well.  Warren and his co-defendant, John Howard, previously pleaded guilty to carjacking and related firearms charges. Howard is scheduled to be sentenced next month. 

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

According to court filings, Warren and Howard participated in a string of violent carjackings between December 2015 and January 2016 in which the victims were threatened, robbed, and forced from their vehicles at gunpoint.  As part of his plea agreement, Warren admitted that he participated in a carjacking on December 28, 2015, with Howard during which they stole a Mercedes Benz in front of the Best Western hotel in Jamaica, New York.  Warren had threatened the driver with a gun, stole his wallet and forced him out of his car. 

On January 21, 2016, Warren and Howard participated in an armed carjacking outside the Hampton Inn located in South Ozone Park, New York, that resulted in the shooting of a 53-year-old woman.  The woman’s daughter was waiting in the passenger seat of a car parked in front of the hotel when Warren, armed with a loaded gun, entered the vehicle.  Warren threatened the daughter and drove the car, with the daughter trapped inside it, around the hotel parking lot.  When her mother left the hotel a few minutes later, Warren exited the vehicle and demanded the mother’s purse.  After the mother refused and struck Warren in the face, he shot her in the chest.  Howard and Warren then fled the scene.  The shooting victim survived, but her injuries required hospitalization and surgery. 

“Donald Warren committed violent carjackings culminating in the callous shooting of a woman for refusing to hand over her purse,” stated Acting United States Attorney Rohde.  “Today’s sentence punishes him for the disregard he showed for human life.”  Ms. Rohde extended her grateful appreciation to the Nassau County Police Department, the Nassau County District Attorney’s Office and the Queens District Attorney’s Office for their assistance during the investigation.

“Donald Warren and John Howard would prowl neighborhoods in Nassau and Queens looking for unsuspecting victims to carjack or rob at gunpoint,” stated ATF Special Agent-in-Charge Benedict.  “Their pattern of violent crime escalated in a short period to the shooting of an innocent 53-year-old woman seeking to protect herself while Warren brandished a handgun and threatened her.  After shooting the victim, Warren and Howard used a car previously stolen at gunpoint as a getaway vehicle.  Warren deserves every day of the sentence received, and we hope his lengthy imprisonment provides some solace to the victims of his crimes.  I would like to extend my gratitude to the ATF Special Agents and NYPD Detectives assigned to the ATF Strategic Pattern Armed Robbery Technical Apprehension (SPARTA) Joint Robbery Task Force, and to the United States Attorney’s Office for their outstanding work in bringing a violent offender to justice.”

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

The Defendants:

DONALD WARREN
Age: 55
Queens, New York

E.D.N.Y. Docket No. 16-CR-102 (AMD)

Earlier today, at the federal courthouse in Central Islip, New York, Khalif House was sentenced to 10 years’ imprisonment and three years’ supervised release by United States District Judge Joan M. Azrack, based on his guilty plea last December to conspiracy to commit armed robberies in Nassau, Suffolk and Queens Counties. 

 

The sentence was announced by Bridget M. Rohde, Acting 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),  Patrick J. Ryder,  Acting Commissioner, Nassau County Police Department (NCPD), Timothy D. Sini, Commissioner, Suffolk County Police Department (SCPD), and James P. O’Neill, Commissioner, New York City Police Department (NYPD).

   

According to court filings and statements made in court, beginning in February 2015, the defendant and co-conspirators committed or attempted to commit 40 separate armed robberies throughout Nassau, Queens and Suffolk Counties.  The defendants exclusively targeted commercial locations, including Carvel, Dunkin Donuts, Subway and 7-Eleven stores.  On almost every occasion, House robbed commercial stores wearing mismatched gloves, with his face covered, while brandishing a knife.  During the April 26, 2016 robbery of a Carvel located in Commack, House chased down a fleeing employee, dragging her back into the store to prevent her escape.  On February 24, 2015,  House cut an employee of Evans Corner Store, located in Valley Stream, who attempted to disarm House during the robbery.  House was ultimately apprehended hiding in a van on June 8, 2016 in Floral Park following a manhunt conducted by hundreds of members of law enforcement.   

 

House’s arrest and conviction were the result of a joint investigation conducted by the FBI’s Long Island Gang Task Force, the NCPD, SCPD and the NYPD.  Ms. Rohde extended her grateful appreciation to all of the participating law enforcement agencies, including the Floral Park Police Department.

 

“The defendant Khalif House stole from dozens of businesses in a number of our communities, terrorizing hard-working employees by threatening their lives during his crime spree,” stated Acting United States Attorney Rohde.  “Thanks to the tireless work and collaboration of our federal and local law enforcement partners, House has been held accountable for his crimes,” stated Acting United States Attorney Rohde. 

 

“The suspect in this case not only terrified business owners fearing they’d be robbed next, but assaulted and terrorized employees during the crimes,” stated FBI Assistant Director-in-Charge Sweeney.   “He believed hiding his face, and covering his hands would protect his identity.  But after dogged investigation by agents and detectives, his disguise didn’t prevent his getting caught.  This case is a great example of law enforcement working together to stop a criminal and bring him to justice.”

“The investigation, arrest and conviction of defendant House is a testament to exceptional police and detective investigative techniques by all of the collaborating agencies and their members,”  stated NCPD Acting Commissioner Ryder. “This robbery spree placed residents at risk, became one of our highest priorities and thus, this type of criminal conduct can never be accepted.  A great job by all involved and I would like to thank all of the professionals who assisted with this extensive investigation.”

 

“Yet another dangerous criminal has been taken off our streets because of the collaboration and partnership between the Suffolk County Police Department and our fellow law enforcement agencies,” SCPD Commissioner Sini said. “I thank the United States Attorney’s Office for the Eastern District of New York for successfully prosecuting this individual and continuing to keep our residents, our businesses and our communities safe.”

 

The government’s case is being prosecuted by the Office’s Long Island Criminal Division.  Assistant United States Attorney Mark Misorek is in charge of the prosecution.

 

The Defendant:

 

Name: KHALIF HOUSE

Age: 24

Residence: Hempstead, New York

 

E.D.N.Y. Docket No. 16-CR-370 (JMA)

BROOKLYN, N.Y. – MediSys Health Network, Inc., which owns and operates Jamaica Hospital Medical Center and Flushing Hospital Medical Center, two hospitals in Queens, New York, has agreed to pay $4 million to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Department of Justice announced today.   

The settlement was announced by Bridget M. Rohde, Acting U.S. Attorney for the Eastern District of New York, Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division, and Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG), New York Region.

The government’s investigation revealed that defendants submitted false claims to the Medicare Program for services rendered to patients referred by physicians with whom defendants had improper financial relationships.  These relationships took the form of compensation and office lease arrangements that did not comply with the requirements of the Stark Law, which restricts the financial relationships that hospitals may have with doctors who refer patients to them.  The allegations were brought to the government’s attention through the filing of a complaint pursuant to the qui tam provisions of the False Claims Act.  Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. 

“Health care providers who enter into improper financial relations with referring physicians compromise the referral process and encourage over-utilization of services, to the potential detriment of both patients and taxpayers.  We will hold health care providers accountable for their violations of federal law,” stated Acting U.S. Attorney Rohde.  Ms. Rohde thanked DOJ’s Civil Division and HHS-OIG for their assistance in the investigation.

“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers,” said Acting Assistant Attorney General Readler of the Justice Department’s Civil Division.

“When hospital operators provide financial incentives to doctors for patient referrals, individuals rightfully wonder whose best interests are being served,” said HHS-OIG Special Agent-in-Charge Lampert. “We will continue to investigate such entities who fraudulently bill government health programs.”  

The United States’ case was handled by Assistant U.S. Attorney Kenneth M. Abell of the United States Attorney’s Office for the Eastern District of New York, with assistance from Senior Trial Counsel David T. Cohen from DOJ’s Civil Division’s Commercial Litigation Branch and Associate Counsel David Fuchs from HHS-OIG.

MediSys Health Network Inc., which owns and operates Jamaica Hospital Medical Center and Flushing Hospital and Medical Center, two hospitals in Queens, New York, has agreed to pay $4 million to settle allegations that it violated the False Claims Act by engaging in improper financial relationships with referring physicians, the Justice Department announced today.

 

The settlement resolves allegations that the defendants submitted false claims to the Medicare program for services rendered to patients referred by physicians with whom the defendants had improper financial relationships. These relationships took the form of compensation and office lease arrangements that did not comply with the requirements of the Stark Law, which restricts the financial relationships that hospitals may have with doctors who refer patients to them.

 

“This recovery should help to deter other health care providers from entering into improper financial relationships with physicians that can taint the physicians’ medical judgment, to the detriment of patients and taxpayers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

 

The lawsuit was filed by Dr. Satish Deshpande under the qui tam, or whistleblower, provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the United States and share in any recovery. Dr. Deshpande will receive $600,000 as his share of the recovery.

 

“Health care providers who enter into improper financial relations with referring physicians compromise the referral process and encourage over-utilization of services, to the potential detriment of both patients and taxpayers,” said Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York. “We will hold health care providers accountable for their violations of federal law.”

 

“When hospital operators provide financial incentives to doctors for patient referrals, individuals rightfully wonder whose best interests are being served,” said Special Agent in Charge Scott J. Lampert for U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will continue to investigate such entities who fraudulently bill government health programs.”

 

The case, United States ex rel. Deshpande, et al. v. The Jamaica Hospital Medical Center, et al., Case No. 13-cv-4030 (E.D.N.Y.), was handled by Senior Trial Counsel David T. Cohen of the Civil Division’s Commercial Litigation Branch, Assistant U.S. Attorney Kenneth M. Abell of the U.S. Attorney’s Office for the Eastern District of New York and Associate Counsel David Fuchs from HHS-OIG. The claims settled by this agreement are allegations only, and there has been no determination of liability.

Earlier today at the federal courthouse in Central Islip, New York, Anibel Rondolpho Rodriguez, a member of La Mara Salvatrucha, also known as MS-13, an international criminal organization, was sentenced by United States District Judge Joseph F. Bianco to 45 years’ imprisonment following the defendant’s March 30, 2017 guilty plea to racketeering charges including two murder conspiracies, two attempted murders, and threatening to commit assault.

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

“The defendant, and other members of the Hempstead clique of the MS-13, unleashed a wave of violence in Nassau County that included murders and vicious assaults,” stated Acting United States Attorney Rohde.  “Today’s sentence sends a strong message that this Office and our federal, state and local law enforcement partners will work together to ensure that all those who threaten our communities are brought to justice.”  Ms. Rohde also extended her appreciation to the members of the FBI’s Long Island Gang Task Force for their tireless efforts during the investigation.

“It is disturbing and unsettling to investigate a group of people and keep discovering in case after case that they truly have no respect for human life,” stated FBI Assistant Director-in-Charge Sweeney.  “MS-13 gang members actually revel in killing anyone who crosses them, regardless our Long Island Gang Task Force continues to work with the community to keep the gang from wreaking havoc on innocent people.  We will use every tool we have to decimate MS-13 and keep them from rebuilding their ranks.”

“The arrest, conviction and sentencing of defendant Anibel Rondolpho Rodriguez is an excellent example of the professionalism and dedication of numerous law enforcement agencies that have worked tirelessly and collaborated on this case,” stated NCPD Commissioner Ryder.  “Our residents and communities will be safer with defendant Rodriquez incarcerated along with his other co-conspirators.  Gangs and their heinous crimes can never be tolerated in any community and we are taking a proactive approach to keep our residents and police safe.”

Conspiracy to Murder Miguel Perez

According to court documents previously filed in the case, on August 9, 2012, Rodriguez, also known as “Peluche,” agreed with two co-conspirators to kill Miguel Perez, who was associated with the Zulu Nation gang.  The Zulu Nation gang had an ongoing dispute with members of the Hempstead Locos Salvatruchas clique of the MS-13.  While the defendant was talking to Perez outside the victim’s house in Freeport, New York, a co-conspirator fatally shot Perez three times with a 9mm. handgun.

Conspiracy to Murder Jose Ivan Reyes-Lainez and Attempted Murder of Jane Doe

On October 6, 2013, in Hempstead, New York, the defendant and six co-conspirators confronted Jose Ivan Reyes-Lainez about his suspected membership in a rival gang. The defendant and his co-conspirators decided to kill Reyes-Lainez, as well as Jane Doe, who had accompanied Reyes-Lainez, to prevent her from being a witness to the murder.  Reyes-Lainez was fatally stabbed more than two dozen times, and Jane Doe was stabbed 18 times but she survived her injuries. 

Attempted Murder of John Doe No. 1

On September 14, 2013, a group of MS-13 members including the defendant confronted John Doe No. 1 and another individual who they believed to be members of the rival Bloods street gang in Roosevelt, New York.  The defendant grabbed a baseball bat from the individual and struck John Doe No. 1.  The defendant’s co-conspirators also struck John Doe No. 1 with a wooden board, stabbed him with a screwdriver, and punched and kicked him.

Assault of John Doe No. 2

On October 6, 2013, in Hempstead, MS-13 members including the defendant approached John Doe No. 2 and asked him whether he was a gang member, questioning him about a tattoo on his arm.  John Doe No. 2 denied any gang membership and was walking away from the group when he was stabbed and kicked by the MS-13 members, including the defendant.

The conviction of Rodriguez is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent international criminal organization.  The MS-13’s leadership is based in El Salvador and Honduras, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America.  With numerous branches, or cliques, the MS-13 is the largest and most violent street gang on Long Island.  Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in this district.  A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders and assaults.  Since 2010 alone, this Office has obtained indictments charging MS-13 members with carrying out more than 40 murders, 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, NCPD, Suffolk County Police Department, Nassau County Sheriff’s Office, Suffolk County Probation, Suffolk County Sheriff’s Department, Rockville Centre Police Department and New York State Police.

The government’s case is being handled by the Office’s Long Island Criminal Division. Assistant United States Attorneys John J. Durham, Raymond A. Tierney and Paul G. Scotti are in charge of the prosecution.

The Defendant:

 

ANIBEL RONDOLPHO RODRIGUEZ

Age:  29

Residence: Freeport, New York

 

E.D.N.Y. Docket No. 14-CR-68 (JFB)

BROOKLYN – The United States today filed a civil complaint in federal court in Brooklyn, New York, against Paul Mangione, former Deutsche Bank head of subprime trading.  In its complaint, the United States alleges that Mangione engaged in a fraudulent scheme to misrepresent the characteristics of loans backing two residential mortgage-backed securities (RMBS) that Deutsche Bank sold to investors that resulted in hundreds of millions of dollars in losses.  This suit is brought pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and seeks an appropriate civil penalty.

 

The filing was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division, and Rene Febles, Deputy Inspector General for Investigations for the Federal Housing Finance Agency Office of the Inspector General.

 

As alleged in the complaint, Mangione engaged in a fraudulent scheme to sell ACE 2007-HE4 (“HE4”) -- a $ 1 billion security -- and ACE 2007-HE5 (“HE5”) -- a $400 million security -- by misleading investors about the quality of the loans backing the securitizations.  The complaint further alleges that Mangione also misled investors about the origination practices of Deutsche Bank’s wholly-owned subsidiary, DB Home Lending LLC (DB Home) (f/k/a Chapel Funding, LLC), which was the primary originator of loans included in the deals.  Mangione approved offering documents for HE4 and HE5 even though he knew they misrepresented key characteristics of the loans, including compliance with lending guidelines, borrowers’ ability to pay, borrowers’ fraud and appraisal accuracy.

 

The HE4 and HE5 offering documents also falsely represented that DB Home had “developed internal underwriting guidelines that it believe[d] generated quality loans” and that DB Home had instituted a quality control process that “monitor[ed] loan production with the overall goal of improving the quality of loan production,” among numerous other representations designed to instill in investors trust in DB Home’s underwriting processes.  As alleged in the complaint, Mangione knew that these statements were false.

 

“The defendant fraudulently induced investors, including pension plans, religious organizations, financial institutions and government-sponsored entities, to name only a few, to invest nearly a billion and a half dollars in HE4 and HE5 RMBS, and caused them to suffer extraordinary losses as a result,” stated Acting United States Attorney Rohde.  “We will hold accountable those who seek to deceive the investing public through fraud and misrepresentation.” 

“The government’s complaint alleges that Mr. Mangione knew that certain of Deutsche Bank’s RMBS contained unsound mortgages that did not meet the credit or appraisal standards that the bank represented,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “By allegedly misleading investors about the riskiness of these securities, Mr. Mangione prioritized his and his employer’s bottom line over principles of honesty and fair dealing.  The Department of Justice will continue to pursue those who engage in fraud as a way to conduct business.”

“As alleged in today’s filing, this individual knowingly took steps during the lead up to the financial crisis to sell defective mortgage loans while hiding the poor quality of the loans from investors,” stated Deputy Inspector General for Investigations Febles, “This conduct was deliberately fraudulent and resulted in significant losses for the investors.  We are committed to working with the U.S. Department of Justice and the U.S. Attorney’s Office for the Eastern District of New York to hold accountable those who engaged in fraud in the secondary market for mortgages.” 

In January 2017, the Department of Justice settled a related RMBS matter with Deutsche Bank.

 

The United States’ case is being handled by Assistant United States Attorneys Edward K. Newman and Ryan M. Wilson. Ms. Rohde thanked the Office of the Inspector General for the Federal Housing Finance Administration for its assistance in conducting the investigation in this matter.

          

The Defendant:

 

PAUL MANGIONE 

Residence:  Scarsdale, New York

 

E.D.N.Y. Docket No. 17-CV-5305 (NGG)

Download Mangione Complaint

The United States today filed a civil complaint in federal court in Brooklyn, New York, against Paul Mangione, former Deutsche Bank head of subprime trading. In its complaint, the United States alleges that Mangione engaged in a fraudulent scheme to misrepresent the characteristics of loans backing two residential mortgage-backed securities (RMBS) that Deutsche Bank sold to investors that resulted in hundreds of millions of dollars in losses. This suit is brought pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and seeks an appropriate civil penalty.

As alleged in the complaint, Mangione engaged in a fraudulent scheme to sell ACE 2007-HE4 (HE4) -- a $ 1 billion security -- and ACE 2007-HE5 (HE5) -- a $400 million security -- by misleading investors about the quality of the loans backing the securitizations. The complaint further alleges that Mangione also misled investors about the origination practices of Deutsche Bank’s wholly-owned subsidiary, DB Home Lending LLC (DB Home) (f/k/a Chapel Funding LLC), which was the primary originator of loans included in the deals. Mangione approved offering documents for HE4 and HE5 even though he knew they misrepresented key characteristics of the loans, including compliance with lending guidelines, borrowers’ ability to pay, borrowers’ fraud and appraisal accuracy.

The HE4 and HE5 offering documents also falsely represented that DB Home had “developed internal underwriting guidelines that it believe[d] generated quality loans” and that DB Home had instituted a quality control process that “monitor[ed] loan production with the overall goal of improving the quality of loan production,” among numerous other representations designed to instill in investors trust in DB Home’s underwriting processes. As alleged in the complaint, Mangione knew that these statements were false.

“The defendant fraudulently induced investors, including pension plans, religious organizations, financial institutions and government-sponsored entities, to name only a few, to invest nearly a billion and a half dollars in HE4 and HE5 RMBS, and caused them to suffer extraordinary losses as a result,” stated Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York. “We will hold accountable those who seek to deceive the investing public through fraud and misrepresentation.”

“The government’s complaint alleges that Mr. Mangione knew that certain of Deutsche Bank’s RMBS contained unsound mortgages that did not meet the credit or appraisal standards that the bank represented,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “By allegedly misleading investors about the riskiness of these securities, Mr. Mangione prioritized his and his employer’s bottom line over principles of honesty and fair dealing. The Department of Justice will continue to pursue those who engage in fraud as a way to conduct business.”

“As alleged in today’s filing, this individual knowingly took steps during the lead up to the financial crisis to sell defective mortgage loans while hiding the poor quality of the loans from investors,” said Deputy Inspector General for Investigations Rene Febles for the Federal Housing Finance Agency Office of the Inspector General. “This conduct was deliberately fraudulent and resulted in significant losses for the investors. We are committed to working with the U.S. Department of Justice and the U.S. Attorney’s Office for the Eastern District of New York to hold accountable those who engaged in fraud in the secondary market for mortgages.”

In January 2017, the Department of Justice settled a related RMBS matter with Deutsche Bank.

The United States’ case is being handled by Assistant U.S. Attorneys Edward K. Newman and Ryan M. Wilson. Acting U.S. Attorney Bridget M. Rohde and Acting Assistant Attorney General Readler thanked the Office of the Inspector General for the Federal Housing Finance Administration for its assistance in conducting the investigation in this matter.

The Case number is E.D.N.Y. Docket No. 17-CV-5305 (NGG).

Earlier today, Paul Skiscim, the President of Aerospec, Inc., a company located in Kings Park, New York, was sentenced before Judge Arthur D. Spatt in U.S. District Court in Central Islip, New York, to 26 months’ imprisonment, to be followed by three years of supervised release, for his fraud in continuing to provide airplane parts to the United States Department of Defense (DoD) despite the fact that he and his company had been debarred from entering into contracts with the DoD in 2013.  Skiscim was also ordered to pay restitution of $420,000 and forfeit monies and properties to the government, with a total value of approximately $1 million.

The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York and Leigh-Alistair Barzey, Special Agent-in Charge of the Defense Criminal Investigative Service (DCIS), Northeast Field Office.

"The defendant’s scheme not only violated the law but showed a disregard for the safety of military personnel. We will continue to work collaboratively with our law enforcement partners to successfully interdict schemes like this one,” stated Acting United States Attorney Rohde.    

“The defendant’s sentencing earlier today is the direct result of a joint effort by DCIS and the U.S. Attorney’s Office, Eastern District of New York, to identify, investigate and prosecute individuals who engage in fraudulent activity targeting the DoD and seek to profit at the expense of taxpayers,” stated Special Agent-in-Charge Barzey.  “DCIS will continue to partner with the U.S. Department of Justice to protect the integrity of the DoD procurement system and protect members of the U.S. military.”

According to court documents, Aerospec, Inc. had been a supplier of airplane parts to the DoD from 2003 until 2013, when the company and Skiscim were debarred after supplying the government with defective airplane parts. As Skiscim admitted in pleading guilty on September 7, 2016, to Count One of an indictment which charged fraud involving aircraft parts, he nevertheless continued to bid, contract, and supply airplane parts to the federal government following this debarment through a series of shell companies using the names of relatives and fictitious people to mask his involvement from the DoD’s Defense Logistics Agency. Since 2013, the shell companies received over $2.8 million for the supply of airplane parts.                   

The government’s case was prosecuted by Assistant United States Attorneys Charles P. Kelly and Robert Schumacher. 

The Defendant

 

Name: PAUL SKISCIM

Age: 63

Residence: East Northport, NY

 

E.D.N.Y. Docket No. CR-16-190 (ADS)

Erdal Kuyumcu, 45, of Woodside, N.Y., and the chief executive officer of the Woodside-based Global Metallurgy, LLC, was sentenced to 57 months in prison following his June 14, 2016 guilty plea to conspiracy to violate the International Emergency Economic Powers Act (IEEPA) by exporting specialty metals from the U.S. to Iran.

Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Division and Special Agent in Charge Jonathan Carson of the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement’s New York Field Office made the announcement.

“With this sentence, the defendant is being held accountable for conspiring with others to send specialized U.S. technology – over a thousand pounds of metallic powder with nuclear and missile applications – to Iran via Turkey,” said Acting Assistant Attorney General Boente.  “The National Security Division will aggressively prosecute those who seek to unlawfully provide dangerous material and technology to Iran, a state sponsor of terrorism.”  

“This Office, together with our law enforcement partners, will continue to use every tool available, including U.S. export laws, to prevent goods with potentially dangerous uses from falling into the wrong hands and jeopardizing our national security,” said Acting U.S. Attorney Rohde.  “Here, the defendant exported a metallic powder that has potential military and nuclear applications to Iran, a state sponsor of terrorism.”

“Laws exist to keep groups and governments from buying materials in support of doing harm. Iran has demonstrated in this case it is willing to use whatever means necessary to hide the end user of the materials, to include utilizing a U.S. citizen to carry out their proliferating activities,” stated Assistant Director in Charge Sweeney. “The FBI New York and its foreign and domestic partners work every day to investigate and interdict adversaries from procuring these items and materials to build nuclear and other weapons of mass destruction, which could end up in dangerous hands.”

“Today's sentencing is the result of outstanding collaborative work by the Justice Department, the Commerce Department and the FBI to break up a network whose aim was to illegally ship sophisticated U.S.-origin technology to Iran,” said Special Agent in Charge Carson. “We will continue to pursue violators wherever they may be.”

According court documents, Kuyumcu, a U.S. citizen, conspired to export from the U.S. to Iran a metallic powder primarily composed of cobalt and nickel, without having obtained the required license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).  As established during a two-day presentencing evidentiary hearing, the metallic powder has potential military and nuclear applications.  Such specialized metals are regulated by the U.S. Department of Commerce to combat nuclear proliferation and terrorism, and exporting them without the required license is illegal.

In furtherance of the illegal scheme, Kuyumcu and others plotted to obtain more than one thousand pounds of the metallic powder from a U.S.-based supplier.  To hide the true destination of the goods from the supplier, Kuyumcu arranged for the metallic powder to be shipped first to Turkey and then to Iran.  Kuyumcu used coded language when discussing shipment of the powder with a Turkey-based co-conspirator, such as referring to Iran as the “neighbor.”  Shortly after one of the shipments was sent from Turkey to Iran, a steel company in Iran sent a letter-sized package to Kuyumcu’s Turkey-based co-conspirator.  The Iranian steel company had the same address as an OFAC-designated Iranian entity under the Weapons of Mass Destruction proliferators sanctions program that was associated with Iran’s nuclear and ballistic missile programs.

Assistant U.S. Attorneys Tiana A. Demas and Ameet B. Kabrawala and Trial Attorney David Recker from the National Security Division’s Counterintelligence and Export Control Section are prosecuting this case.

Earlier today, at the federal courthouse in Brooklyn, New York, Erdal Kuyumcu, the chief executive officer of Global Metallurgy, LLC, based in Woodside, New York, was sentenced to 57 months in prison following his June 14, 2016 guilty plea to conspiracy to violate the International Emergency Economic Powers Act by exporting specialty metals from the United States to Iran.  The sentencing proceeding was held before Chief United States District Judge Dora L. Irizarry.

 

The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Dana J. Boente, Acting Assistant Attorney General for National Security, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), and Jonathan Carson, Special Agent-in-Charge of the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement’s New York Field Office.
 

“This Office, together with our law enforcement partners, will continue to use every tool available, including U.S. export laws, to prevent goods with potentially dangerous uses from falling into the wrong hands and jeopardizing our national security,” stated Acting United States Attorney Rohde. “Here, the defendant exported a metallic powder that has potential military and nuclear applications to Iran, a state sponsor of terrorism.”

 

“With this sentence, the defendant is being held accountable for conspiring with others to send specialized U.S. technology – over a thousand pounds of metallic powder with nuclear and missile applications – to Iran via Turkey,” stated Acting Assistant Attorney General Boente.  “The National Security Division will aggressively prosecute those who seek to unlawfully provide dangerous material and technology to Iran, a state sponsor of terrorism.”  

 

“Laws exist to keep groups and governments from buying materials in support of doing harm.  Iran has demonstrated in this case it is willing to use whatever means necessary to hide the end user of the materials, to include utilizing a U.S. citizen to carry out their proliferating activities,” stated Assistant Director-in-Charge Sweeney.  “The FBI New York and its foreign and domestic partners work every day to investigate and interdict adversaries from procuring these items and materials to build nuclear and other weapons of mass destruction, which could end up in dangerous hands.”

 

“Today's sentencing is the result of outstanding collaborative work by the Justice Department, the Commerce Department and the FBI to break up a network whose aim was to illegally ship sophisticated U.S.-origin technology to Iran,” said Special Agent-in-Charge Carson.  “We will continue to pursue violators wherever they may be.”

 

According to court documents, Kuyumcu, a U.S. citizen, conspired to export from the United States to Iran a metallic powder primarily composed of cobalt and nickel, without having obtained the required license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).  As established during a two-day presentencing evidentiary hearing, the metallic powder has potential military and nuclear applications.  Such specialized metals are regulated by the U.S. Department of Commerce to combat nuclear proliferation and terrorism, and exporting them without the required license is illegal. 

 

In furtherance of the illegal scheme, Kuyumcu and others plotted to obtain more than 1,000 pounds of the metallic powder from a U.S.-based supplier.  To hide the true destination of the goods from the supplier, Kuyumcu arranged for the metallic powder to be shipped first to Turkey and then to Iran.  Kuyumcu used coded language when discussing shipment of the powder with a Turkey-based co-conspirator, such as referring to Iran as the “neighbor.”  Shortly after one of the shipments was sent from Turkey to Iran, a steel company in Iran sent a letter-sized package to Kuyumcu’s Turkey-based co-conspirator.  The Iranian steel company had the same address as an OFAC-designated Iranian entity under the Weapons of Mass Destruction proliferators sanctions program that was associated with Iran’s nuclear and ballistic missile programs. 

 

The government’s case is being handled by the Office’s National Security & Cybercrime Section.   Assistant U.S. Attorneys Tiana A. Demas and Ameet B. Kabrawala, and Trial Attorney David Recker from the National Security Division’s Counterintelligence and Export Control Section, are in charge of the prosecution. 

The Defendant:

 

ERDAL KUYUMCU

Age:  45

Woodside, New York

 

E.D.N.Y. Docket No. 16-CR-308 (DLI)

A 33-count superseding indictment was unsealed today in United States District Court for the Eastern District of New York charging six defendants with new racketeering predicate acts including assault in aid of racketeering, arson, extortion and unlawful firearms dealing.  Five of the defendants are in custody and one—Viktor Zelinger—remains at large. Defendant Artiom Pocinoc was arrested yesterday and will be arraigned this afternoon before United States Magistrate Judge James Orenstein in federal court in Brooklyn. Defendant Vyacheslav Malkeyev, who previously pled guilty to marijuana distribution conspiracy as charged in the original indictment, was rearrested yesterday on new charges and will be also be arraigned before Judge Orenstein. 

The charges were announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), Angel M. Melendez, Special Agent-in-Charge, Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI), James D. Robnett, Special Agent-in-Charge, Criminal Investigation Division, Internal Revenue Service (IRS-CID), James P. O’Neill, Commissioner, New York City Police Department (NYPD) and George Beach, Superintendent, New York State Police (NYSP).  The arrests resulted from a long-term investigation by the DEA’s New York Organized Crime Drug Enforcement Strike Force.[1]  Ms. Rohde also thanked the New York City Fire Department for its investigation of the arson and its heroic efforts in rescuing the residents.

 As alleged in the superseding indictment and other court documents filed by the government, the defendants were members of an Eastern European organized crime syndicate that operated in the Brighton Beach and Coney Island neighborhoods of Brooklyn, as well as overseas.  Syndicate members in Brooklyn were linked to high-level members of organized crime, known as “thieves in law” or “Thieves,” based in various former states of the Soviet Union and Israel.  The Thieves helped the defendants extort money from individuals living abroad and authorized the use of physical force by the defendants in the United States.    

Defendants Zelinger, Malkeyev, Leonid Gershman and Aleksey Tsvetkov are charged with crimes related to the arson of a residential building at 2220 Voorhies Avenue in Brooklyn.  The defendants—who allegedly operated an illegal high-stakes poker game at 2663 Coney Island Avenue—conspired to burn down the Voorhies building because it housed a rival poker game on the ground floor.  The second and third floors of the building contained residences.

As alleged, shortly after 1:00 a.m. on May 2, 2016, members of the Syndicate broke into the building and set fire to it.  The building quickly went up in flames, leaving two  residents trapped in a third-floor apartment.  Their rescue by New York City Fire Department firefighters was recorded on amateur video.  The footage shows a firefighter climbing a ladder through dense smoke to pull the trapped teens out of a window and down the ladder to safety.  Both residents and five firefighters were injured in the fire, with one firefighter suffering burns to his face.  The building, and every apartment inside it, were destroyed.

Gershman, Tsvetkov and Malkeyev are charged with other crimes of violence, including the pistol-whipping and beating of an individual suspected of stealing from a narcotics “stash” house operated by members of the Syndicate.  Violence and threats of violence were also a key feature of the extortion-related crimes committed by Gershman, Tsvetkov and Pocinoc.   Court filings quote Gershman on a recorded telephone call describing Pocinoc to a victim as a “boxer with cauliflower ears” who would be collecting the victim’s payments.  Pocinoc is also charged with participating in the beating of a victim and with extorting two others.  Gershman is also charged with illegally selling one or more firearms to two buyers between 2008 and 2013. 

Three of the defendants—Zelinger, Gershman and Malkeyev—are naturalized U.S. citizens who immigrated to the United States from Eastern European countries.  Tsvetkov is a citizen of Ukraine, Pocinoc is a citizen of Moldova, and Rivera is a U.S. citizen by birth.

The charges contained in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted of all counts, Zelinger faces a mandatory minimum sentence of 17 years’ imprisonment and a maximum sentence of 40 years;  Gershman, Tsvetkov and Malkeyev face a mandatory minimum sentence of 27 years’ imprisonment and a maximum term of life; Librado Rivera faces a mandatory minimum of five years’ imprisonment and a maximum term of 40 years; and Pocinoc faces a maximum sentence of 20 years’ imprisonment.

Five other defendants charged previously in this case have entered pleas of guilty to racketeering and related crimes. 

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

The Defendants:

VIKTOR ZELINGER, also known as “Vitya” and “Vityok”

Age: 38

Residence: Brooklyn, New York

 

LEONID GERSHMAN, also known as “Lenny,” “Lenny G.,” “Lyonchik” and “Lyonya”

Age: 34

Residence: Brooklyn, New York

 

ALEKSEY TSVETKOV, also known as “Pelmin,” “Lesha” and “Lyosha”

Age: 39

Residence: Brooklyn, New York

 

VYACHESLAV MALKEYEV, also known as “Steve Bart”

Age: 33

Residence: Manhattan, New York

 

ARTIOM POCINOC

Age: 28

Residence: Brooklyn, New York

 

LIBRADO RIVERA, also known as “Macho” and “Max”

Age: 36

Residence: Brooklyn, New York

 

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

 

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[1]  The DEA’s New York Organized Crime Drug Enforcement Strike Force is comprised of agents and officers of the DEA, NYPD, ICE-HSI, NYSP, IRS, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Secret Service, U.S. Marshals Service, New York National Guard, Clarkstown Police Department, U.S. Coast Guard, Port Washington Police Department and New York State Department of Corrections and Community Supervision.  The Strike Force is partially funded by the New York/New Jersey High Intensity Drug Trafficking Area, which is a federally funded crime fighting initiative and part of the Organized Crime Drug Enforcement Task Force program.

Earlier today, Jonathan Galicia, pled guilty at the federal courthouse in Brooklyn, New York, to one count of soliciting and accepting a bribe as a public official.  The proceeding took place before United States District Judge Eric N. Vitaliano.  At the time of the offense, Galicia was a correctional officer at the Metropolitan Detention Center in Brooklyn, New York (MDC), and has since resigned from his position. 

The plea was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, and Ronald G. Gardella, Special Agent-in-Charge, United States Department of Justice, Office of the Inspector General, New York Field Office (DOJ OIG).

According to court filings and facts presented during the plea proceeding, in June 2016, while a correctional officer at the MDC, Galicia accepted a $3,700 bribe payment to smuggle an Apple iPhone into the MDC and provided the contraband phone to an inmate, who thereafter used the phone while incarcerated at the MDC.

 “Motivated by greed, Galicia abused his position of trust within the federal correctional system,” stated Acting United States Attorney Rohde.  “Introducing a smart phone into a federal detention center is a serious dereliction of duty, as it provides an opportunity for inmates to communicate with others on an unmonitored device in order to potentially continue criminal activity, obstruct justice and intimidate witnesses.” 

“When prison staff smuggles a cell phone into prison, they put their colleagues, inmates, and the community at risk,” stated DOJ OIG Special Agent-in-Charge Gardella.  “The OIG will continue to assist the Federal Bureau of Prisons in its efforts to stop contraband from entering federal prisons, and to catch and bring to justice any Justice Department employee involved in a smuggling scheme.”

 At sentencing, Galicia faces up to 15 years in prison, as well as forfeiture of $3,700 and a fine.

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

The Defendant:
 

JONATHAN GALICIA

Age:  34

Bronx, New York

 

E.D.N.Y. Docket No. 17-CR-321 (ENV)