Eastern District of New York

Earlier today in federal court in Brooklyn, New York, Rafael Callejas, the president of the Honduran soccer federation (FENAFUTH) from 2002 to 2015, pleaded guilty to racketeering conspiracy and wire fraud conspiracy in connection with his receipt of bribes in exchange for the awarding of contracts for the media and marketing rights to FIFA World Cup qualifier matches.  Callejas, who served as the President of the Republic of Honduras from 1990 to 1994, also agreed to forfeit $650,000.  At sentencing, Callejas faces a maximum sentence of 20 years for each count.  Today’s plea proceeding took place before U.S. Magistrate Judge Robert M. Levy.

The guilty plea was announced by U.S. Attorney Robert L. Capers for the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez for FBI’s New York Field Office and Acting Special Agent in Charge Anthony J. Orlando for the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Los Angeles Field Office.

According to court filings and facts presented during the plea proceeding, Callejas negotiated and accepted bribes totaling hundreds of thousands of dollars in exchange for his agreement to exercise his influence as the president of FENAFUTH to award contracts to Media World, a Florida sports marketing company, for the media and marketing rights to the Honduran national soccer team’s home World Cup qualifier matches for the 2014, 2018 and 2022 editions of the World Cup.  Over a period of years, Media World transmitted these bribes from its U.S. bank accounts, through an intermediary, to the foreign bank accounts of the defendant and a co-conspirator.

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

Assistant U.S. Attorneys Evan M. Norris, Amanda Hector, Paul Tuchmann, Nadia Shihata, Keith D. Edelman and Brian D. Morris of the Eastern District of New York are in charge of today’s prosecution.

The government’s investigation is ongoing.

Earlier today in federal court in Brooklyn, Rafael Callejas, the president of the Honduran soccer federation (FENAFUTH) from 2002 to 2015, pleaded guilty to racketeering conspiracy and wire fraud conspiracy in connection with his receipt of bribes in exchange for the awarding of contracts for the media and marketing rights to FIFA World Cup qualifier matches.  Callejas, who served as the President of the Republic of Honduras from 1990 to 1994, also agreed to forfeit $650,000.  At sentencing, Callejas faces a maximum sentence of 20 years for each count.  Today’s plea proceeding took place before United States Magistrate Judge Robert M. Levy.

The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego G. Rodriguez, Assistant Director in Charge, FBI, New York Field Office; and Acting Special Agent in Charge Anthony J. Orlando, IRS Criminal Investigation, Los Angeles Field Office.

According to court filings and facts presented during the plea proceeding, Callejas negotiated and accepted bribes totaling hundreds of thousands of dollars in exchange for his agreement to exercise his influence as the president of FENAFUTH to award contracts to Media World, a Florida sports marketing company, for the media and marketing rights to the Honduran national soccer team’s home World Cup qualifier matches for the 2014, 2018, and 2022 editions of the World Cup.  Over a period of years, Media World transmitted these bribes from its U.S. bank accounts, through an intermediary, to the foreign bank accounts of the defendant and a co-conspirator.

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

Assistant U.S. Attorneys Evan M. Norris, Amanda Hector, Paul Tuchmann, Nadia Shihata, Keith D. Edelman, and Brian D. Morris of the Eastern District of New York are in charge of today’s prosecution.

The government’s investigation is ongoing.

 

The Defendant:

RAFAEL CALLEJAS
Age:  72
Nationality:  Honduras

E.D.N.Y. Docket No. 15 CR 252 (S-1)

Earlier today, Alhassane Ould Mohamed, also known as “Cheibani,” a citizen of Mali, pled guilty at the federal courthouse in Brooklyn, New York, to conspiring to murder a United States diplomat stationed in Niamey, Niger, in December 2000. 

The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation.

According to court filings and facts presented during the plea proceeding, in the early morning hours of December 23, 2000, the defendant and a co-conspirator accosted a group of employees of the United States Embassy in Niger as they left a restaurant in Niamey, Niger.  Carrying a pistol and an AK-47 assault rifle, the two men approached Department of Defense official William Bultemeier as he was about to enter his car, a white sport-utility vehicle bearing diplomatic license plates clearly indicating that it belonged to the United States Embassy.  After demanding that Mr. Bultemeier turn over the keys to the diplomatic vehicle, the defendant and his co-conspirator shot Mr. Bultemeier and Staff Sergeant Christopher McNeely, the Marine Detachment Commander for the United States Embassy in Niger at the time, who had run to Mr. Bultemeier’s aid.  The defendant and his fellow assailant then drove away in the United States Embassy vehicle.

Mr. Bultemeier died of the injuries inflicted by the gunshot wounds.  Staff Sergeant McNeely survived the shooting, and later retired from the Marine Corps as a Master Sergeant.

Today’s plea took place before United States District Judge William F. Kuntz, II.  When sentenced on April 26, 2016, the defendant faces an agreed-upon term of 25 years’ imprisonment.

The government’s case is being prosecuted by the Office’s National Security & Cybercrime Section.  Assistant United States Attorneys Zainab Ahmad, Margaret Lee, and Melody Wells are in charge of the prosecution, with assistance provided by Trial Attorney Jennifer Levy of the Justice Department’s Counterterrorism Section. 

The Defendant:

ALHASSANE OULD MOHAMED
Age:  46

E.D.N.Y. Docket No. 13-527 (WFK)

Yesterday, at the federal courthouse in Brooklyn, New York, Denis Nikolla pleaded guilty to two counts of Hobbs Act extortion conspiracy, one count of threatening physical violence in furtherance of an extortion plan, and one count of brandishing a firearm.  The proceeding took place before United States District Judge Eric N. Vitaliano.  When sentenced, Nikolla faces up to life in prison and a mandatory minimum sentence of seven years.  One of his co-defendants, Besnik Llakatura, who served as a police officer with the New York City Police Department during the charged crimes, previously pleaded guilty in this case.     

The plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, and William J. Bratton, Commissioner, New York Police Department.

According to prior court filings and facts presented during the plea proceeding, between May and November 2013, Nikolla, Llakatura and their co-defendant conspired and attempted to extort a Queens restaurant owner, demanding regular payments in exchange for so-called “protection.”  The extortion began shortly after the victim opened a restaurant in Astoria when he was visited by the co-defendant and told that he had opened a business in “our neighborhood” and, as a result, “you have to pay us” $4,000 per month.  The restaurant owner sought help from his friend Llakatura.  Unbeknownst to him, Llakatura, an NYPD officer in Staten Island since 2006, was conspiring with the co-defendant in the extortion.  Llakatura actively discouraged the restaurant owner from going to the police and sought to leverage his position of trust as a friend and a police officer to persuade the victim that he had no choice but to make the demanded payments, warning the victim that the co-defendant and his associates would physically harm him if he did not pay.  When the victim resisted, Nikolla threatened him with physical violence and chased him at gunpoint down the street in Queens.  Over the course of five months, each of the three defendants took turns collecting monthly payments from the Astoria restaurant owner, ultimately collecting $24,000 in so-called protection money. 

Between April 2012 and November 2013, Nikolla and the co-defendant also conspired and attempted to extort the proceeds of two nightclubs located in Queens, New York, and used a firearm in their efforts to do so.  In or about April 2012, around the time that one of the clubs was opened, Nikolla approached the owner with an extortion demand, indicating to the victim that other businesses in the area were paying him for so-called “protection.”  Nikolla demanded $200 per week from the owner for each of the two nightclubs.  After the owner refused to pay, Nikolla retrieved a firearm from the codefendant’s side, stuck the firearm in owner’s ribs, and informed the owner that if he wasn’t paid, Nikolla would come to the owner’s house and beat up the owner in front of the owner’s wife and children.

Finally, during 2013, Nikolla, Llakatura, and the co-defendant also conspired and attempted to extort a proprietor of two social clubs in Astoria.  Nikolla, accompanied by the co-defendant, made the initial extortion demand, seeking payments of $1,000 per week from the proprietor for so-called “protection.”  The proprietor refused to make the demanded payments and ceased going to his social clubs out of fear for his safety.  Court-authorized wiretaps of the defendants’ telephones revealed evidence of Nikolla’s participation in this extortion conspiracy with Llakatura and the co-defendant, and their attempts to locate the victim.  In one instance, Nikolla, Llakatura, and the co-defendant threatened, punched, and pulled a gun on a friend of the victim in an effort to make the friend locate the victim.  The victim ultimately fled to a foreign country for a period of time to avoid the defendants’ extortionate threats.   

Mr. Capers expressed his thanks to members of the Joint Organized Crime Task Force, which includes agents of the FBI and detectives of the NYPD, which led the investigation, as well as the NYPD’s Internal Affairs Division and the FBI’s Public Corruption squad for their cooperation and assistance in the investigation.

The co-defendant is scheduled to commence trial later this month.

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

The Defendant:

DENIS NIKOLLA
Age: 35
Brooklyn, New York

E.D.N.Y. Docket No. 13-CR-668 (ENV)

Earlier today at the federal courthouse in Brooklyn, New York, Yasser Ashburn, the leader of a set of the violent street gang Folk Nation operating primarily in the Crown Heights and East Flatbush neighborhoods of Brooklyn, was sentenced to two consecutive terms of life imprisonment.  On November 10, 2015, one of Ashburn’s co-defendants, Jamal Laurent, was sentenced to five consecutive life terms of imprisonment.  Prior to that, on November 6, 2015, co-defendant Trevelle Merritt was sentenced to 40 years of imprisonment.  On March 18, 2015, all three defendants were convicted, following a jury trial, of racketeering and racketeering conspiracy, including as racketeering acts the murders of Courtney Robinson, Brent Duncan, and Dasta James, and related crimes. 

The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office; and William J. Bratton, Commissioner, New York City Police Department (NYPD).

Ashburn led a Folk Nation set of 20 to 25 members that operated in the Ebbets Field Houses, a New York City public housing community in the Crown Heights neighborhood of Brooklyn.  From approximately 2007 until their arrests in 2011 and 2012, the defendants were responsible for numerous acts of gang-related violence, including homicides, non-fatal shootings, and robberies in Brooklyn and elsewhere in the tri-state area. 

The government’s evidence at trial established that, during the early morning hours of April 20, 2008, a fight erupted at a birthday party held in an apartment at the Ebbets Field Houses.  After Courtney Robinson entered the fight to protect his nephew who was being beaten by Folk Nation gang members, Ashburn left the melee and retrieved a handgun from the building stairwell where the gang typically stored weapons.  Ashburn then returned to the apartment and shot Robinson at point blank range in the back, killing him. 

The government’s case is being prosecuted by the Office’s Organized Crime & Gangs Section.  Assistant United States Attorneys Darren A. LaVerne, M. Kristin Mace, and Margaret Lee are in charge of the prosecution, assisted by EDNY Investigator Erik Nesbitt.

The Defendant:

YASSER ASHBURN, also known as “Indio” and “supa swerve 6”
Age: 32 
Brooklyn, NY

E.D.N.Y. Docket No. 11-CR-303 (NGG)

CENTRAL ISLIP, NY – Earlier today, David Bodian, a Long Island attorney, pleaded guilty to wire fraud for stealing more than $1.3 million from a trust fund for which he was the trustee.  Pursuant to his plea agreement with the government, Bodian has agreed that he is liable to pay restitution in the amount of $1,393,559 to the Lou Bacon Trust.  When sentenced, Bodian faces up to 20 years in prison.

The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service (USPIS).    

According to court filings and facts presented at the plea hearing, in approximately 2000, Bodian was appointed trustee of the Lou Bacon Trust, a trust fund that benefitted a number of individuals and charities.  At the time of his appointment, the trust held more than $1 million in total assets.  In approximately 2005, Bodian began looting the fund to pay for his personal expenses, including a car, high-end audio equipment, home renovations, and international vacations.  From approximately 2005 to 2015, Bodian stole almost the entirety of the trust’s funds, leaving the trust with a mere $10,000 in cash.  To perpetuate the scheme, Bodian lied to the beneficiaries of the trust about the amount of money in the accounts.  For example, when a beneficiary asked for a copy of a trust bank statement, Bodian borrowed $150,000 from a friend to deposit in the trust’s account to inflate the trust’s assets.  After providing a bank statement to the beneficiary that reflected the $150,000 Bodian had borrowed, he transferred the money back to his friend.

Today’s plea took place before United States Magistrate Judge Arlene R. Lindsay at the United States Courthouse in Central Islip, New York.  The case has been assigned to United States District Judge Arthur D. Spatt.

The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section.  Assistant United States Attorney Tyler Smith is in charge of the prosecution.

*          *          *

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established 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, please visit ww.StopFraud.gov.

The Defendant:

DAVID BODIAN
Age:  58
Dix Hills, New York

E.D.N.Y. Docket No. 16-CR-091 (ADS)

Earlier today in federal court in Brooklyn, Rodolfo Quiambao, the President and Chief Executive Officer of the engineering and design firm Rudell & Associates, Inc. (Rudell), pleaded guilty to two counts of federal programs bribery in connection with his scheme to pay bribes and kickbacks to supervisors at Consolidated Edison of New York (Con Ed) in exchange for receiving lucrative contracts and other benefits from the public utility services provider.  Quiambao also pleaded guilty to two counts of tax evasion.  As part of his plea agreement, Quiambao agreed to pay a total of over $5 million in forfeiture and restitution.  When sentenced, he faces up to 30 years in prison.  Today’s plea proceeding took place before United States District Judge Allyne R. Ross. 

The plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Custom Enforcement (ICE), Homeland Security Investigations (HSI), in New York; Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), New York; and Michael Nestor, Inspector General, The Port Authority of New York and New Jersey, Office of the Inspector General.

According to court filings and facts presented during the plea proceeding, starting in approximately 2000, Quiambao, whose company specializes in electrical design, surreptitiously and regularly gave Con Ed supervisors hundreds of thousands of dollars in cash and checks in exchange for securing work, including lucrative “sole source” contracts, for his company.  The defendant also engaged in tax evasion by first concealing and then deducting the bribe payments he paid to the Con Ed supervisors as business deductions on his companies’ tax returns.   

Quiambao’s guilty plea is the latest conviction in the government’s investigation of bribery and kickback schemes involving employees and contractors of Con Ed.  Since 2008, thirteen Con Ed supervisors and employees and three Con Ed contractors have been convicted.

In announcing the guilty plea, U.S. Attorney Capers extending his grateful appreciation to the participating law enforcement agencies.

The government’s case is being prosecuted by the Office’s Public Integrity Section.  Assistant United States Attorneys Lan Nguyen, Tali Farhadian, and Claire S. Kedeshian are in charge of the prosecution.

The Defendant:

RODOLFO QUIAMBAO
Age:  71
Queens, New York

E.D.N.Y. Docket No. 15-CR-0515

Robert L. Capers, United States Attorney for the Eastern District of New York, David A. Montoya, Inspector General for the Department of Housing and Urban Development, and Frederick W. Gibson, Acting Inspector General for the Federal Deposit Insurance Corporation today announced the settlement of claims against Continental Mortgage Bankers d/b/a Financial Equities and its president, Walter Stashin, in United States v. Rainy Day Holdings, LLC. et al., Civil Action No. CV-15-5576.  The case is pending in federal court in Central Islip before United States District Judge Joseph F. Bianco.         

Continental and Stashin participated in a federal program sponsored by the United States Department of Housing and Urban Development (HUD) that allowed the lenders to make mortgage loans that are insured by the Federal Housing Administration (FHA) in the event of default.  The complaint alleged that for at least eight loans, Continental and Stashin funneled payments on borrowers’ loans through a purported charitable organization, the Rainy Day Foundation, in order to avoid defaults and delinquencies that could trigger governmental investigation.  The funneled payments artificially suppressed Continental’s comparative delinquency and default rates, as compiled and computed by the FHA.  In the settlement, Continental and Stashin admitted to making the payments and that the payments altered the company’s delinquency and default rates.  Continental and Stashin agreed to pay three hundred thousand dollars ($300,000) in settlement of the United States’ claims.  

“The resolution of this matter, including the defendants’ admissions to wrongdoing, both help to restore  the integrity of the FHA mortgage insurance program as well as to serve as a warning to others who would abuse federal mortgage programs,” stated United States Attorney Capers.  “We will continue to vigorously pursue those who engage in such activity.  We thank the HUD Office of the Inspector General, HUD Office of Program Enforcement, and the FDIC Office of the Inspector General for their outstanding work and support in investigating this matter.”

HUD Inspector General Montoya stated, “This settlement brings to a close Continental Mortgage Bankers’ deceptive practices while a participant in the FHA Direct Endorsement Lender Program.  Their attempts to profit at the expense of unsuspecting investors and the public posed a risk to our mortgage insurance pool.  The HUD Office of Inspector General will continue to work with our partners at the U.S. Attorney’s Office to expose and pursue those who abuse HUD’s programs.”

FDIC Acting Inspector General Gibson said “The FDIC OIG is pleased to have supported the Department of Justice and the Department of Housing and Urban Development in bringing about today’s settlement.  By leveraging our resources, we can broaden the government's efforts to pursue damages resulting from misconduct that has harmed the nation's financial institutions and its mortgage markets.  The civil penalties imposed today should send a strong message to others that fraudulent practices like those perpetrated by Mr. Stashin and his firm will not be tolerated.”

The United States’ case in this matter is being litigated by Assistant United States Attorneys Edward Newman, John Vagelatos, and Robert Schumacher.

Earlier today, at the federal courthouse in Central Islip, New York, Arnolvin Umanzor Velasquez (aka “Momia” and “Lito”), a member of the Brentwood Locos Salvatruchas (BLS) clique of La Mara Salvatrucha, also known as the MS-13 street gang, pleaded guilty to his involvement in the December 18, 2011 execution-style murders of two brothers, Ricardo and Enston Ceron.  After committing the murders, Velasquez fled to El Salvador, and he later relocated to Georgia.  On May 19, 2015, he was found and arrested in Flowery Branch, Georgia, by a Federal Bureau of Investigation SWAT team and later transferred to the Eastern District of New York in custody.

The plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, FBI, New York Field Office, and Timothy Sini, Commissioner, Suffolk County Police Department.

“The Ceron brothers’ murders are another example of the senseless violence unleashed by the MS-13 on our communities, including the gang’s own members who violate the gang’s rules.  One brother was executed because he was trying to distance himself from the MS-13, and the other was killed, merely because of his relationship with the other victim,” stated United States Attorney Capers.  “As a result of the tenacious investigation by this Office and our partners with the FBI’s Long Island Gang Task Force, Velasquez and other MS-13 gang members who commit callous acts of violence will be held accountable and face justice.”

“The violence that often erupts between mutual and rival gang members not only affects the criminals involved in this insidious behavior, but innocent people living in the neighborhoods in which they operate.  The murders of Ricardo and Enston Ceron signify the unfortunate reality that gangs are responsible for a significant percentage of violent crime in many jurisdictions.  We’re dedicated to disrupting and dismantling gangs that pose a threat to the safety and stability of our communities and undermine the values we strive to uphold,” stated Assistant Director-in-Charge Rodriguez.

“Gang violence in Suffolk County threatens the very fabric of our communities, and we must do everything we can to disrupt gangs such as MS-13.  Today’s conviction sends a clear message that we will not tolerate gangs and the senseless violence they cause.  That is why the Suffolk County Police Department is committed to working with all of our law enforcement partners—particularly the United States Attorney’s Office and the FBI—to make Suffolk County an even safer County than it is already,” stated Commissioner Sini.

As set forth in prior court filings, a detention letter, and the defendant’s statements during his guilty plea, the BLS clique killed Enston Ceron because he was not attending meetings or “putting in work” for the gang, and the clique member were concerned that he might cooperate with law enforcement authorities if he were arrested.  The BLS clique also murdered his brother, Ricardo Ceron, who belonged to the Western clique of the MS-13, because they were concerned he would retaliate if he learned that the BLS killed his brother.  On December 18, 2011, Velasquez and Sergio Cerna (“Taz”), who had agreed to carry out the murders and were armed with .22 caliber and 9mm semi-automatic handguns, asked Enston and Ricardo Ceron for a ride home from a party.  When the car stopped in the vicinity of Lincoln Avenue and Stockton Streets in Brentwood, Velasquez and Cerna executed the Ceron brothers, shooting them in the head and torso at close range.  Velasquez and Cerna exited the car and when another vehicle approached the murder scene and stopped, Cerna fired multiple shots at the driver, striking him once in the chest.  The driver survived the shooting.

Today’s conviction is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent international criminal organization.  The MS-13’s leadership is based in El Salvador and Honduras, but the gang has thousands of members across the United States, comprised primarily of immigrants from Central America.  With numerous branches, or cliques, the MS-13 is the largest and most violent street gang on Long Island.  Since 2003, hundreds of MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in this district.  A majority of those MS-13 members have been convicted on federal racketeering charges for participating in murders, attempted murders, and assaults.  Since 2010 alone, this Office has obtained indictments charging MS-13 members with carrying out more than 30 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, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Department, Rockville Centre Police Department, and Suffolk County Police Department.

Velasquez faces a maximum sentence of life in prison when sentenced by United States District Judge Joseph F. Bianco on June 23, 2016.  The charges in the superseding indictment against the other defendants remain pending and are merely allegations.  Those defendants are presumed innocent unless and until proven guilty.

The government’s case is being prosecuted 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:

ARNOLVIN UMANZOR VELASQUEZ (“Momia” and “Lito”)
Age: 23
Brentwood, New York and Flowery Branch, Georgia

E.D.N.Y. Docket No. 15-CR-087 (S-2)(JFB)

A four-count indictment was unsealed today in United States District Court for the Eastern District of New York charging sixteen defendants with four narcotics trafficking conspiracies, including conspiracies to possess with intent to distribute cocaine, cocaine base (crack cocaine), ethylone (molly), and marijuana.  The defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Anne Y. Shields at the federal courthouse in Central Islip. 

The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA); and Michael Tangney, Commissioner, Long Beach Police Department (LBPD).

“This indictment should serve as notice to all gang members - we will not tolerate the flooding of our streets with illegal drugs.  We are committed to rooting out all drug trafficking and gang activity on Long Island,” stated United States Attorney Capers.  Mr. Capers thanked the FBI, DEA Long Island Drug Task Force and LBPD for their assistance with the government’s investigation.

“Today, 16 members and associates of the Latin Kings Gang are facing charges related to drug trafficking in parts of Long Island.  When criminal operatives and gangs bring in illegal drugs into our neighborhoods, they also bring violence, turf wars and other criminal activity.  The FBI will continue to work with our law enforcement partners to dismantle gang activity and keep our communities safe,” said FBI Assistant Director-in-Charge Diego Rodriguez.

DEA Special Agent-in-Charge Hunt stated, “Today’s arrests have dismantled an alleged drug gang that preyed upon the Long Beach community.  The indictment charges that this organization illegally distributed cocaine, crack cocaine, ethylone and marijuana; all of which furthered crime, addiction, and violence.  Law enforcement worked collaboratively to reclaim this neighborhood for the law abiding citizens who deserve to live without intimidation, fear, and drug trafficking.”

LBPD Commissioner Tangney stated, “The Long Beach Police Department is very appreciative of the assistance the FBI and DEA provided to the LBPD in this joint operation.  Removing these dangerous individuals from our streets makes this community that much safer.  This joint investigation was very successful and demonstrates that when federal and local law enforcement work together, great results are achieved.”

As alleged in the government’s detention memorandum, the indictment is the product of a two-year investigation during which law enforcement identified the most prolific narcotics traffickers in the Long Beach area, including numerous members and associates of the Latin Kings street gang.  Court-authorization was then obtained to intercept telephone communications between the defendants, all of whom were intercepted on multiple occasions engaging in narcotics trafficking activities.  The charged conspiracies involved over 50 kilograms of cocaine, five kilograms of crack cocaine, two kilograms of molly, and 500 pounds of marijuana.

If convicted of the charges in the indictment, Amparo, A. Andujar, R. Andujar, Cerda, Cobb, Curry, Diggs, Fernandez, Ojedis, Ramirez, and Rupay face a maximum of life imprisonment.  Ayala, Collins, Vanroten, and Wilson face a maximum of 40 years’ imprisonment, and Labella faces a maximum of 20 years’ imprisonment.  The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The government’s case is being prosecuted by the office’s Long Island Criminal Division.  Assistant United States Attorneys Lara Treinis Gatz, Mark E. Misorek, and Grace M. Cucchissi are in charge of the prosecution.

The Defendants:

Jose Giovanny Amparo
Age: 46
Bronx, New York      

Amanda Andujar
Age: 26
Baldwin, New York       

Roxanne Andujar
Age: 36
Baldwin, New York

Jordan Ayala 
Age: 20
Long Beach, New York         

Fernando Cerda
Age: 38
Long Beach, New York

Tysaun Cobb
Age: 24
Hempstead, New York

Arthur Collins
Age: 38
Island Park, New York

Travis Curry
Age: 37
Long Beach, New York

Sean Diggs
Age: 28
Long Beach, New York

Nelson Fernandez
Age: 35
Long Beach, New York         

Frank Labella
Age: 35
Oceanside, New York

Daniel Ojedis
Age: 37
Baldwin, New York

Anthony Ramirez
Age: 29
Hempstead, New York        

Ronald Rupay
Age: 35
Long Beach, New York

Gregory Vanroten
Age: 38
Baldwin, New York   

Sly Wilson
Age: 30
Long Beach, New York

Late this afternoon, following four days of trial, a federal jury in Brooklyn, New York, returned a guilty verdict against Oswald Lewis, on charges of assault of federal agents and New York City Detectives by use of a deadly weapon and related firearms offenses.   Lewis, also known as “Alexander Louis,” “Junior,” “Andrew Jackson,” “Andre Bernard Jackson,” “John Green,” “Leslie Howard” and “Dre,” faces a maximum sentence of life imprisonment when sentenced on June 23, 2016, by United States District Judge I. Leo Glasser.

The verdict was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Charles G. Dunne, United States Marshal for the Eastern District of New York; William J. Bratton, Commissioner, New York City Police Department; and Delano A. Reid, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives, New York Field Division.

Lewis had been wanted since 1991 on numerous drug charges filed in the United States District Court for the Eastern District of Virginia.  On August 26, 2014, the U.S. Marshals Service located Lewis in an apartment in the Springfield Gardens section of Queens, New York.  Later that evening, Deputy U.S. Marshals and New York City Police Department Detectives went to the apartment to arrest him.  When the Deputies entered the apartment, Lewis, who was wearing body armor, yelled that he was holding a hostage and began shooting, barely missing at least one Deputy by mere inches.  During the shooting spree, Lewis fired shots out his apartment window at members of the NYPD, who had surrounded the premises.  During the exchange of gunfire, Lewis was shot in the arm.  He eventually surrendered and was taken into custody.  No law enforcement officers were injured. 

“These dedicated Deputy U.S. Marshals and NYPD Detectives put their lives on the line every day to protect us from violent criminals such as the defendant Oswald Lewis.  His life on the run ended today, and our community is safer for it,” stated Unites States Attorney Capers.”

“Today, US Marshals around the country paused for a moment of silence to remember Deputy US Marshal Josie Wells who was shot and killed by an armed fugitive while serving a warrant in Louisiana one year ago today.  The circumstances of the two incidents are  similar – a violent fugitive armed with an illegal handgun shooting at law enforcement officers who came to bring him to justice.  We are very fortunate that the arrest in New York ended with only minor injuries to Mr. Lewis and no injuries to the law enforcement officers involved.  The US Marshals would like to thank the United States Attorney’s Office for the Eastern District of New York for prosecuting Mr. Lewis, and we would like to thank the New York City Police Department for their continued partnership as we work together to keep New York City safe,” stated United States Marshal Dunne.   

“ATF Special Agent in Charge Reid stated, “With today’s swift verdict, the defendant will now begin to realize that law enforcement and the criminal justice system remain vigilant and relentless in their pursuit of those who decide to run from their crimes.  Finally, Mr. Lewis will face the punishment he has successfully avoided for so many years and hopefully will learn that fugitives - especially those that decide to shoot at law enforcement instead of surrendering - have but one place in society: a jail cell.”

The government’s case is being prosecuted by Special Assistant United States Attorney Jonathan P. Lax.

 The Defendant:

OSWALD LEWIS
Age:  44
Queens, New York

E.D.N.Y. Docket No. 14-CR-523 (ILG)

Earlier today in Brooklyn federal court, Mair Faibish, the former Chief Executive Officer of Synergy Brands, Inc. (Synergy), was sentenced to 63 months’ imprisonment for his role in defrauding Signature Bank out of $26 million through a massive check kiting scheme, making false statements to the United States Securities and Exchange Commission (SEC), and defrauding investors by overstating the value of the company.  The sentencing proceeding was held before U.S. District Judge Eric N. Vitaliano.  Faibish was convicted after a three-week jury trial in March 2014.

The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.

“The defendant played fast and loose with the truth and with federally insured money, kiting checks back and forth across the Canadian border to defraud auditors, banks, and investors.  His actions have now landed him in federal prison,” stated United States Attorney Capers.  “We will aggressively investigate and prosecute those who exploit investors and banks.”  Mr. Capers extended his grateful appreciation to U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), which led the government’s criminal investigation, and the Nassau County Police Department.

Synergy was a publicly-held food products company that traded on the NASDAQ and Over-the-Counter exchanges and manufactured and distributed various food products.  As proven at trial, Faibish and his co-conspirators, on behalf of Synergy, funneled approximately $1.3 billion in checks that were not backed by sufficient funds through Signature Bank, Capital One Bank, and various Canadian bank accounts of associated food manufacturers and distributors in Canada.  The Canadian companies then sent checks in corresponding amounts, which were also not backed by sufficient funds, back to Faibish-controlled shell companies.  Because the banks made deposited funds immediately available for withdrawal, the scheme artificially inflated the companies’ account balances.  Faibish and his co-conspirators used Synergy’s inflated bank account balances to book millions of dollars in fictitious accounts receivable and revenue.

As a result of this fraud, FDIC-insured Signature Bank lost approximately $26 million that Faibish and his co-conspirators had withdrawn before the bank uncovered the scheme.  Following the scheme’s collapse, Synergy was taken into bankruptcy, and its publicly traded stock became essentially worthless, causing millions of dollars in investor losses.  On November 4, 2014, the Court ordered Faibish to pay $51,166,000 in forfeiture.

The trial evidence also established that Faibish falsely inflated the values of Synergy’s sales, cost of goods sold, and pre-paid expenses in filings with the SEC for the quarter ending June 30, 2008.  These material misrepresentations were breaches of the defendant’s fiduciary duties to investors.

This prosecution was the result of efforts by President Obama’s 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’s 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 prosecuted by the office’s Business and Securities Fraud Section.  Assistant United States Attorneys Sylvia S. Shweder and Jack Dennehy are in charge of the prosecution.  Assistant U.S. Attorney Brian D. Morris of the Office’s Civil Division is responsible for the forfeiture of assets.

The Defendant:

MAIR FAIBISH
Age:  55
Residence: Huntington Station, New York

E.D.N.Y. Docket No. 12-CR-265 (ENV)

Robert L. Capers, United States Attorney for the Eastern District of New York, announced today a settlement with Dr. William Sher, an otolaryngologist in Port Jefferson, New York, under title III of the Americans With Disabilities Act, 42 U.S.C. §  12181- 12189 (ADA).  Title III prohibits discrimination against people with disabilities in places of public accommodation such as hospitals.  Individuals with HIV fall within the protection of the ADA.

The settlement resolves claims made by J.P.[1], who is HIV positive, that Dr. Sher refused to operate on him after Dr. Sher learned that J.P. was HIV positive.  J.P. alleged that Dr. Sher was scheduled to perform a biopsy on a growth on his neck but cancelled minutes before the procedure was to begin, citing J.P.’s HIV status.  Approximately three weeks later, another physician performed the biopsy on the growth, which turned out to be cancerous.

            Under the settlement, Dr. Sher will pay $75,000 to J.P. and attend training on title III of the ADA, including training about HIV/AIDS and discrimination.   Under the terms of the settlement, Dr. Sher does not admit to violating J.P.’s rights under the ADA.

            “Discrimination against individuals with HIV is not permissible,” stated United States Attorney Capers.  “The ADA requires that doctors and other health care professionals provide appropriate care and treatment to patients without regard to their HIV status.  The settlement makes clear that this office will vigorously enforce the ADA against those who seek to discriminate against patients who fall under its protection.” 

            The matter was handled by Assistant U.S. Attorneys Jolie Apicella and Michael Goldberger.

 

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[1] J. P. has asked that his identity remain confidential.

Former U.S. Air Force Airplane Mechanic Convicted of Attempting to Provide Material Support to Terrorists and Obstruction of an Official Proceeding

A jury in the Eastern District of New York today found Tairod Nathan Webster Pugh, 48, of Neptune, New Jersey, a veteran of the U.S. Air Force, guilty of attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, and obstructing an official proceeding. 

The verdict was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York City Police Department.                 

“Pugh, an American citizen and former member of the U.S. Air Force where he served as an aircraft mechanic, attempted to travel to Syria to provide material support to ISIL,” said Assistant Attorney General Carlin.  “This is the first conviction after a trial by jury in the United States involving an individual who attempted to travel to Syria to join ISIL, and further demonstrates our commitment to bring to justice all those who seek to provide material support to terrorists.  I would like to thank all the members of law enforcement whose tireless efforts made this result possible.”

“Today’s verdict provides yet another example of a successful outcome in our national security effort, and demonstrates the crucial role that law enforcement action plays in that effort,” said U.S. Attorney Capers.  “The evidence presented at trial and the jury’s verdict instill confidence that our law enforcement agencies and their many important partners at home and abroad work effectively to disrupt and defeat the deadly siren’s call of terrorist groups around the globe.  Pugh has now been held accountable for his crimes by a jury and will not reach the terrorist group he sought to support.”        

“As presented in trial, Tairod Nathan Webster Pugh was willing to become a martyr, using his U.S. military training as a weapon for ISIL,” said Assistant Director in Charge Rodriguez.  “Instead, found guilty of his crimes, he is facing a lengthy incarceration.  We are pleased the jury found his actions confirmed his expressed desire to cause violence and destruction on behalf of this terrorist organization.  The FBI’s Joint Terrorism Task Forces continue to work globally with our partners to successfully stop such actions before they happen, keep communities safe and bring criminals to justice.”

“We applaud today’s verdict, finding the first ISIL defendant guilty after attempting to travel to Syria and wage jihad," said Commissioner Bratton.  "Those who adhere to ISIL’s deadly terrorist agenda should be on notice: reject this ideology or face swift justice in American courts. It is fitting that the first ISIL conviction case is here in the Eastern District of New York, which has prosecuted more terrorism cases than any other district in the country. It is to them — and the many others on the Joint Terrorism Task Force — that New Yorkers owe their gratitude for the relentless efforts to keep our city safe.” 

At trial, the government presented evidence that prior to traveling overseas to try to join ISIL, Pugh served in the Air Force as an avionics instrument system specialist and received training in the installation and maintenance of aircraft engines, navigation and weapons systems.  After leaving the Air Force, the defendant worked for a number of companies in the United States and Middle East as an airplane mechanic.  Pugh lived abroad for over a year before his arrest in this case.                   

On Jan. 10, 2015, the defendant traveled from Egypt to Turkey in an effort to cross the border into Syria to join ISIL to engage in violent “jihad.”  However, Turkish authorities denied the defendant entry and returned him to Egypt.  At the time of his detention, Pugh was carrying a laptop computer and four USB thumb drives that he had stripped of their plastic casings in an effort to destroy their contents and thereby make them unavailable to investigators.  The defendant also was carrying solar power chargers, compasses and a black ski mask.  Foreign government officials deported the defendant to the United States, where the FBI closely monitored him, relying in part on a covert undercover employee who encountered the defendant at John F. Kennedy Airport in New York.  The defendant was arrested on Jan. 16, 2015, in Asbury Park, New Jersey, and thereafter indicted in the Eastern District of New York.

At trial, the government presented evidence obtained from the defendant’s laptop computer and social media posts.  The defendant’s laptop contained Internet searches for “borders controlled by Islamic state.”  The government also introduced evidence of the defendant’s Internet searches for “Flames of War” (an ISIL propaganda video) as well as terrorist videos he had downloaded, including one horrific video showing ISIL members executing prisoners.  In addition, statements to coworkers and social media posts established Pugh’s empathy and support for ISIL’s cause and terrorist methods.

At trial, the government also introduced a letter drafted by Pugh on Jan. 5, 2015, shortly before he left Egypt for Turkey on his way to Syria.  In that letter, the defendant proclaimed, “I am a Mujahid.  I am a sword against the oppressor and a shield for the oppressed.  I will use the talents and skills given to me by Allah to establish and defend the Islamic State.  There is only 2 possible outcomes for me.  Victory or Martyr.” 

Based on his trial convictions, the defendant faces a maximum sentence of up to 35 years in prison.  Sentencing has not yet been scheduled, but is expected to occur later this year.

Assistant Attorney General Carlin joined U.S. Attorney Capers in extending his grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), as well as to the U.S. Department of State, U.S. Customs and Border Protection, the U.S. Attorney’s Office of the District of New Jersey, the Asbury Park Police Department and the Neptune Police Department.

The government’s case is being prosecuted by Assistant U.S. Attorneys Samuel P. Nitze, Tiana A. Demas and Mark Bini of the Eastern District of New York, with assistance provided by Trial Attorney Larry Schneider of the National Security Division’s Counterterrorism Section.

Today, a jury in Brooklyn returned a verdict finding defendant Tairod Nathan Webster Pugh, an American citizen and veteran of the United States Air Force, guilty of attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization, and obstruction of an official proceeding.  The defendant will be sentenced on September 16, 2016, by Judge Nicholas G. Garaufis at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The verdict was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; John P. Carlin, Assistant Attorney General for National Security; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and William J. Bratton, Commissioner, New York City Police Department.

“Today’s verdict provides yet another example of a successful outcome in our national security effort, and demonstrates the crucial role that law enforcement action plays in that effort,” stated U.S. Attorney Capers.  “The evidence presented at trial and the jury’s verdict instill confidence that our law enforcement agencies and their many important partners at home and abroad work effectively to disrupt and defeat the deadly siren’s call of terrorist groups around the globe.  Pugh has now been held accountable for his crimes by a jury and will not reach the terrorist group he sought to support.”  Mr. Capers extended his grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state, and local agencies from the region.  Mr. Capers also thanked the U.S. Department of State, U.S. Customs and Border Protection, the United States Attorney’s Office for the District of New Jersey, the Asbury Park, New Jersey Police Department, and the Neptune, New Jersey Police Department for their assistance.  Mr. Capers expressed his appreciation to the U.S. Marshals Service and the Federal Protective Service for providing security during the trial.

“Pugh, an American citizen and former member of the U.S. Air Force where he served as an aircraft mechanic, attempted to travel to Syria to provide material support to ISIL,” said Assistant Attorney General Carlin.  “This is the first conviction after a trial by jury in the United States involving an individual who attempted to travel to Syria to join ISIL, and further demonstrates our commitment to bring to justice all those who seek to provide material support to terrorists.  I would like to thank all the members of law enforcement whose tireless efforts made this result possible.”

“As presented in trial, Tairod Nathan Webster Pugh was willing to become a martyr, using his U.S. military training as a weapon for ISIL.  Instead, found guilty of his crimes, he is facing a lengthy incarceration.  We are pleased the jury found his actions confirmed his expressed desire to cause violence and destruction on behalf of this terrorist organization.  The FBI’s Joint Terrorism Task Forces continue to work globally with our partners to successfully stop such actions before they happen, keep communities safe, and bring criminals to justice,” stated FBI Assistant Director-in-Charge Rodriguez.

“We applaud today’s verdict, finding the first ISIL defendant guilty after attempting to travel to Syria and wage jihad.  Those who adhere to ISIL’s deadly terrorist agenda should be on notice: reject this ideology or face swift justice in American courts.  It is fitting that the first ISIL conviction case is here in the Eastern District of New York, which has prosecuted more terrorism cases than any other district in the country.  It is to them—and the many others on the Joint Terrorism Task Force—that New Yorkers owe their gratitude for the relentless efforts to keep our city safe,” said Police Commissioner Bratton.

At trial, the government presented evidence that, prior to traveling overseas to try to join ISIL, the defendant served in the U.S. Air Force as an avionics instrument system specialist and received training in the installation and maintenance of aircraft engines, navigation, and weapons systems.  After leaving the Air Force, the defendant worked for a number of companies in the United States and Middle East as an airplane mechanic.  The defendant lived abroad for over a year before his arrest in this case.

On January 10, 2015, the defendant traveled from Egypt to Turkey in an effort to cross the border into Syria to join ISIL to engage in violent “jihad.”  Turkish authorities denied the defendant entry, however, and returned him to Egypt.  At the time of his detention, the defendant was carrying a laptop computer and four USB thumb drives that he had stripped of their plastic casings in an effort to destroy their contents and thereby make them unavailable to investigators.  The defendant also was carrying solar power chargers, compasses, and a black ski mask.  Foreign government officials quickly deported the defendant to the United States, where the FBI closely monitored him, relying in part on a covert undercover employee who encountered the defendant at John F. Kennedy airport.  The defendant was arrested on      January 16, 2015, in Asbury Park, New Jersey, and thereafter indicted in the Eastern District of New York.

At trial, the government presented evidence obtained from the defendant’s laptop computer and social media posts, among other exhibits.  The defendant’s laptop contained Internet searches for “borders controlled by Islamic state.”  The government also introduced evidence of the defendant’s Internet searches for “Flames of War” (an ISIL propaganda video) as well as terrorist videos he had downloaded, including one horrific video showing ISIL members executing prisoners.  In addition, statements to coworkers and social media posts established the defendant’s empathy and support for ISIL’s cause and terrorist methods.

The government also introduced into evidence at trial a letter, drafted by the defendant on January 5, 2015, shortly before he left Egypt for Turkey on his way to Syria.  In that letter, the defendant proclaimed, “I am a Mujahid.  I am a sword against the oppressor and a shield for the oppressed.  I will use the talents and skills given to me by Allah to establish and defend the Islamic State.  There is only 2 possible outcomes for me.  Victory or Martyr.”

Based on his trial convictions, the defendant faces a maximum sentence of up to 35 years in prison.

The government’s case is being handled by the Office’s National Security & Cybercrime Section.  Assistant United States Attorneys Samuel P. Nitze, Tiana A. Demas, and Mark Bini are in charge of the prosecution, with assistance provided by Trial Attorney Larry Schneider of the Counterterrorism Section of the Department of Justice.

The Defendant:

TAIROD NATHAN WEBSTER PUGH
Age:  48
Neptune, New Jersey

E.D.N.Y. Docket Nos. 15-CR-116 (NGG)

Earlier today in federal court in Brooklyn, Miguel Trujillo, a FIFA match agent and soccer consultant, pleaded guilty to one count of money laundering conspiracy and two counts of wire fraud conspiracy in connection with his participation in multiple schemes to bribe soccer officials.  Trujillo also pleaded guilty to one count of filing a false tax return under penalty of perjury and agreed to forfeit $495,000.  Today’s plea proceeding took place before United States District Judge Raymond J. Dearie.

The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego G. Rodriguez, Assistant Director-in-Charge, FBI, New York Field Office; and Acting Special Agent in Charge Anthony J. Orlando, IRS Criminal Investigation, Los Angeles Field Office.

As alleged in the criminal information to which he pleaded guilty, Trujillo, a citizen of Colombia and a U.S. legal permanent resident, was a Florida-based soccer consultant and a match agent licensed by FIFA to negotiate and arrange soccer matches between FIFA member associations.  Starting in approximately 2008 and acting variously on behalf of multiple sports marketing companies and his own soccer business, Trujillo paid hundreds of thousands of dollars in bribes to high-ranking officials of FIFA, CONCACAF, and four soccer federations in Central America and the Caribbean in furtherance of multiple schemes involving media and marketing contracts and international friendly matches.

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

Assistant U.S. Attorneys Evan M. Norris, Amanda Hector, Paul Tuchmann, Nadia Shihata, Keith D. Edelman, and Brian D. Morris of the Eastern District of New York are in charge of today’s prosecution.

The government’s investigation is ongoing.

The Defendant:

MIGUEL TRUJILLO
Age:  65
Nationality:  Colombia

E.D.N.Y. Docket No. 16 CR 108

Earlier today, Ercan Findikoglu, a Turkish citizen also known by the online nicknames “Segate,” “Predator,” and “Oreon,” pleaded guilty to computer intrusion conspiracy, access device fraud conspiracy, and effecting transactions with unauthorized access devices for his leadership role in organizing and carrying out three cyberattacks between 2011 and 2013 that inflicted more than $55 million in losses in a matter of hours on the global financial system.  Today’s guilty plea took place before United States District Court Judge Kiyo A. Matsumoto.  At sentencing Findikoglu faces 57.5 years of imprisonment.   

The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and David E. Beach, Special Agent in Charge, United States Secret Service, New York Field Office.

“By hacking into the computer networks of global financial institutions, the defendant and his co-conspirators were able to wreak havoc with the worldwide financial system by simultaneously withdrawing tens of millions of dollars.  Today’s guilty plea by a leader of these massive cyberattacks demonstrates this office’s commitment to pursue those who use the perceived safety and anonymity of their computers to steal from innocent victims,” stated United States Attorney Capers.  Mr. Capers praised the extraordinary efforts of the Secret Service in investigating these complex network intrusions.   

“The Secret Service is pleased to have participated in this criminal investigation. This case demonstrates by constricting this criminal enterprise, there is no such thing as anonymity in the cyber world.  The Secret Service’s New York Electronic Crimes Task Force continues to seek new and innovative ways to combat emerging cyber threats.  Our success in this case and other similar investigations is a result of our close work with our network of international law enforcement partners,” said Secret Service Special Agent in Charge Beach.  

Findikoglu’s organization used sophisticated intrusion techniques to hack into the systems of credit and debit card processing companies, stole data for prepaid debit cards, and eliminated withdrawal limits for those debit cards.  During these cyber-attacks, Findikoglu and other co-conspirators manipulated network administrator privileges at the victim card processing companies and stole the personal identification numbers (PINs) associated with the compromised debit cards.  Findikoglu and his co-conspirators then disseminated the stolen card data worldwide to the leaders of cashing crews and directed that their teams use the information to make fraudulent ATM withdrawals on a massive scale across the globe.  As a result of the effective elimination of withdrawal limits, these cyber-attacks were known as “unlimited operations.” 

In one operation on February 27 and 28, 2011, Findikoglu’s cashing crews withdrew approximately $10 million through approximately 15,000 fraudulent ATM withdrawals in at least 18 countries.  In a second operation on December 22, 2012, Findikoglu’s cashing crews withdrew approximately $5 million through more than 4,500 ATM in approximately 20 countries.  In a third operation on February 19 and 20, 2013, Findikoglu’s cashing crews in 24 countries executed approximately 36,000 transactions and withdrew approximately $40 million from ATMs.  During this third operation, in New York City alone, the crews withdrew approximately $2.4 million in nearly 3,000 ATM withdrawals over the course of less than 11 hours. 

Findikoglu was paid a significant portion of the illegal proceeds from these unlimited operations.    

Today’s guilty plea is the latest in a string of convictions of dozens of other members of the cybercrime organization, including members of a New York City cell charged in May 2013 in connection with their roles in two of the attacks.  See United States v. Collado, et al., 13 CR 259 (KAM).

The government’s case is being handled by the Office’s National Security & Cybercrime Section.  Assistant United States Attorneys Hilary Jager, Douglas M. Pravda, Richard M. Tucker, and Saritha Komatireddy are in charge of the prosecution.  Assistant United States Attorney Brian Morris of the Office’s Civil Division is responsible for the forfeiture of assets. 

The Defendant:

ERCAN FINDIKOGLU
Aliases: Segate, Predator, Oreon
Age: 34
Nationality:  Turkish

E.D.N.Y. Docket No. 13-CR-440 (KAM)

Defendant Exported High-Tech Material Used in Missile Production and Nuclear Applications

Earlier today Erdal Kuyumcu, 44, of Woodside, New York, was arrested on charges of illegally exporting a cobalt-nickel metallic powder from the United States to Iran, through an intermediary in Turkey.  Kuyumcu will make his initial appearance this afternoon before U.S. Magistrate Judge Ramon E. Reyes Jr. of the Eastern District of New York.

The arrest and charges were announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office 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.

The complaint alleges that Kuyumcu, a U.S. citizen and the CEO of Global Metallurgy LLC, twice exported a specialized metallic powder used in aerospace, missile production and nuclear applications.  Exporting this specialized powder to Iran without a license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) is illegal.  As detailed in the complaint, Kuyumcu and others conspired to obtain over a thousand pounds of the metallic powder from a U.S.-based supplier for export to Iran, without the requisite approval from OFAC.  To conceal the true destination of the goods from the U.S. supplier, Kuyumcu and a co-conspirator arranged for the items to be shipped first to Turkey and subsequently to Iran.  As described in the complaint, Kuyumcu and a co-conspirator used coded language when discussing Iran, such as calling Iran the “Neighbor,” referring to the fact that Turkey shares a border with Iran. 

“According to the complaint, Kuyumcu conspired with others to illegally send specialized U.S. technology – over a thousand pounds of metallic powder with nuclear and missile applications – to Iran via Turkey,” said Assistant Attorney General Carlin.  “In circumventing U.S. law, including the International Emergency Economic Powers Act, the defendant harmed our nation’s security.  The department will continue to vigorously pursue and hold accountable those who evade our export laws in pursuit of profit.”

“U.S. export laws exist to prevent potentially dangerous goods and technology from falling into the wrong hands,” said U.S. Attorney Capers.  “Those who seek to evade the scrutiny of the regulatory agencies by operating in the shadows present a danger to our national security and our allies abroad.  We will continue to use all of our law enforcement and national security tools to hold such individuals and corporations accountable.”    

“As alleged, Erdal Kuyumcu intentionally misrepresented illegal business transactions to make them appear legitimate, thereby threatening national security and violating federal statutes,” said Assistant Director in Charge Diego Rodriguez.  “The FBI works with our partners, such as the Department of Commerce, to keep weapons of mass destruction and other embargoed technologies from falling into the wrong hands, to protect national assets, and to strengthen the global threat picture.  Special thanks to the FBI special agents who uncovered the alleged conspiracy with their colleagues at the Departments of Commerce and Justice.”

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

The charges contained in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.  If convicted of the charges, Kuyumcu faces up to 20 years in prison a $1 million fine.

The case is being prosecuted by Assistant U.S. Attorneys Tiana A. Demas and Ameet B. Kabrawala of the Eastern District of New York, with assistance from Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section.

Kuyumcu Complaint

Earlier today, Erdal Kuyumcu of Woodside, New York, was arrested on federal charges of illegally exporting a cobalt-nickel metallic powder from the United States to Iran through an intermediary in Turkey.[1]  Kuyumcu is scheduled to make his initial appearance today at 3:00 p.m. at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York, before United States Magistrate Judge Ramon E. Reyes, Jr.

The arrest and charges were announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office 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.

The complaint alleges that Kuyumcu, a U.S. citizen and the CEO of Global Metallurgy LLC, twice exported a specialized metallic powder used in aerospace, missile production and nuclear applications.  Exporting this specialized powder to Iran without a license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) is illegal.  As detailed in the complaint, Kuyumcu and others conspired to obtain over a thousand pounds of the metallic powder from a U.S.-based supplier for export to Iran, without the requisite approval from OFAC.  To conceal the true destination of the goods from the U.S. supplier, Kuyumcu and a co-conspirator arranged for the items to be shipped first to Turkey and subsequently to Iran.  As described in the complaint, Kuyumcu and a co-conspirator used coded language when discussing Iran, such as calling Iran the “Neighbor,” referring to the fact that Turkey shares a border with Iran. 

“According to the complaint, Kuyumcu conspired with others to illegally send specialized U.S. technology – over a thousand pounds of metallic powder with nuclear applications – to Iran via Turkey,” said Assistant Attorney General Carlin.  “In circumventing U.S. law, including the International Emergency Economic Powers Act, the defendant harmed our nation’s security.  The department will continue to vigorously pursue and hold accountable those who evade our export laws in pursuit of profit.”

“U.S. export laws exist to prevent potentially dangerous goods and technology from falling into the wrong hands,” said U.S. Attorney Capers.  “Those who seek to evade the scrutiny of the regulatory agencies by operating in the shadows present a danger to our national security and our allies abroad.  We will continue to use all of our law enforcement and national security tools to hold such individuals and corporations accountable.”    

“As alleged, Erdal Kuyumcu intentionally misrepresented illegal business transactions to make them appear legitimate, thereby threatening national security and violating federal statutes.  The FBI works with our partners, such as the Department of Commerce, to keep weapons of mass destruction and other embargoed technologies from falling into the wrong hands, to protect national assets, and to strengthen the global threat picture.  Special thanks to the FBI special agents who uncovered the alleged conspiracy with their colleagues at the Departments of Commerce and Justice,” stated FBI Assistant Director-in-Charge Rodriguez.         

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

If convicted of the charges, Kuyumcu faces up to 20 years in prison a $1 million fine.

The case is being prosecuted by Assistant U.S. Attorneys Tiana A. Demas and Ameet B. Kabrawala of the Eastern District of New York, with assistance from Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section.

The Defendant:

ERDAL KUYUMCU
Age:  44
Woodside, New York

E.D.N.Y. Docket No. 16-0134M

 

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[1]  The charges contained in the complaint are allegations, and the defendant is presumed innocent unless and until proven guilty.

Earlier today, Paul Skiscim, President of Aerospec, Inc., was arrested on federal charges of supplying defective airplane parts to the federal government for use in its aircraft, including military aircraft. 

The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Kenneth J. Siegler, Resident Agent-in-Charge of the Defense Criminal Investigative Service (DCIS), New York Resident Agency.

According to the complaint, Aerospec had been a supplier of airplane parts to the United States from 2003 until 2013, when the company and Skiscim were debarred after supplying the government with defective airplane parts.  After his debarment, Skiscim allegedly continued to bid, contract, and supply defective airplane parts to the federal government through a series of shell companies using the names of relatives and fictitious people to mask his involvement from the United States Department of Defense, Defense Logistics Agency.  Since 2013, the shell companies received over $2.8 million for the supply of airplane parts, including parts that have been shown to be defective. 

“It is critical that federal aircraft, including military aircraft, be built with the best parts available.  The defendant’s alleged scheme of supplying defective parts not only violated the law but showed a callous disregard for the safety of federal employees and our military personnel,” stated United States Attorney Capers.  “I thank the DCIS, the agency responsible for leading the government’s investigation.” 

“America's warfighters deserve the very best to perform their jobs in these difficult times.  It is inexcusable that individuals endeavor to enrich themselves by stealing from the U.S. taxpayer through fraud, especially by denying critical goods to our service men and women combating terrorism in a hostile overseas environment.  The Defense Criminal Investigative Service remains resolute in our commitment to aggressively investigate these crimes and to support their prosecution to the fullest,” stated DCIS Resident Agent-in-Charge Siegler. 

The defendant is scheduled to be arraigned this afternoon before United States Magistrate Judge Anne Y. Shields at the federal courthouse in Central Islip.  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 prosecuted by Assistant United States Attorneys Charles P. Kelly and Robert Schumacher.

The Defendant:

PAUL SKISCIM
Age: 62
East Northport, New York

E.D.N.Y. Docket No. 16-0155M

Earlier today, at the federal courthouse in Central Islip, New York, James Burke, the former Chief of Department for the Suffolk County Police Department (SCPD), pleaded guilty to a civil rights violation and conspiracy to obstruct justice.  The civil rights violation related to Burke’s assault of a Smithtown man who had been arrested for breaking into Burke’s SCPD-issued vehicle and stealing his property on December 14, 2012.  Following that assault, over almost three years, Burke and other Suffolk County law enforcement authorities took actions to obstruct the federal civil rights investigation into the assault.  Burke was arrested and arraigned on December 9, 2015, and he has been in federal custody since that date.  

The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

“The defendant violated his oath and responsibilities as a law enforcement officer by exacting personal vengeance, assaulting a handcuffed suspect, and abusing his authority as the highest ranking uniformed member of the Suffolk County Police Department.  Despite the efforts of the defendant and his co-conspirators to obstruct the federal investigation, he has been brought to justice,” stated United States Attorney Capers.  “Our investigation is ongoing, and we will seek to hold accountable anyone who violates another’s civil rights or attempts to obstruct justice.”

FBI Assistant Director-in-Charge Rodriguez stated, “An honest government, trusted by the people, is imperative to protect our freedoms.  For these reasons, combating public corruption is the top criminal priority of the FBI.  In his guilty plea today, Burke has taken responsibility for his illegal conduct.  This begins the restoration of the public’s trust in the Suffolk County Police Department’s ability to protect their Constitutional freedoms.” 

According to the indictment, court filings, and statements during today’s guilty plea proceeding, on December 14, 2012, New York State Probation Department and SCPD officers arrested probationer Christopher Loeb at his mother’s home in Smithtown, New York, for a variety of probation violations.  During the arrest and search of the Loeb residence, officers discovered a large cache of merchandise stolen from over a dozen vehicles, including an SCPD-issued SUV operated by Burke.  Among the items taken from Burke’s SUV was his gun belt, several magazines of ammunition, a box of cigars, a humidor, and a canvas bag that contained toiletries, clothing, and other items.

Burke was permitted to enter the Loeb residence and retrieve the canvas bag and several other articles, even as the search was underway.  He then drove to the SCPD’s 4th Precinct in Smithtown where detectives had begun interrogating Loeb.  Burke entered the interrogation room where Loeb was handcuffed and chained to an eyebolt fastened to the floor.  Burke then punched and kicked Loeb in the head and body. 

Subsequently, Burke and others pressured the detectives who witnessed the assault to conceal the event.  Those efforts continued even after the FBI and the U.S. Attorney’s Office opened an investigation of the assault in 2013.  In one instance, Burke summoned detectives under his command to SCPD headquarters in Yaphank, New York, to persuade the detectives to agree to a false version of events that would conceal the assault.  In October 2013, one of those detectives testified falsely under oath in a state pretrial hearing in the Loeb prosecution, denying that Loeb had been assaulted.  

The guilty plea proceeding was held before United States District Judge Leonard D. Wexler.

The government’s case is being prosecuted 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 EDNY Investigator William Hessle.

The Defendant:

JAMES BURKE
Age:  51
Smithtown, New York

E.D.N.Y. Docket No. 15-CR-627 (LDW)

Earlier today, at the United States District Court in Central Islip, New York, the Hon. Denis R. Hurley sentenced Jason Keryc, a former broker of Agape World, Inc. (Agape), to 108 months’ imprisonment and ordered that he pay $179 million in restitution following his convictions on April 21, 2015, after a four-week jury trial, for securities fraud, conspiracy, mail fraud, and wire fraud.  These convictions arose out of the Keryc’s participation in a Ponzi scheme, in which he took $8.9 million in commission payouts for himself, which he spent on a Long Beach condominium, a million-dollar Montauk vacation home, jewelry, designer clothing, automobiles, and other items.  The defendant has been incarcerated since his conviction.

The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service (USPIS). 

“For years, Jason Keryc was the chief fundraiser for a Ponzi scheme that devastated the lives of thousands of middle class Americans whom Keryc and his co-conspirators deceived into investing in a scam,” stated United States Attorney Capers.  “Keryc will now pay the price for his self-enrichment and deceit.”  Mr. Capers expressed his grateful appreciation to the United States Securities and Exchange Commission for its assistance in the case.

“After being convicted of his crimes, Jason Keryc will now pay for his greed and deception with years of his life behind bars and restitution to the victims.  It is unfortunate the destruction his actions have caused.  Perhaps this sentence will serve as a warning to others that fraud and Ponzi schemes are serious offenses, not worth risking the cost to self, others, and society,” stated FBI Assistant Director-in-Charge Rodriguez.

“Today’s sentencing represents the continued commitment of United States Postal Inspectors to bring to justice all parties involved in Agape World who participated in an egregious Ponzi scheme defrauding hundreds of investors of their hard earned money,” stated Postal Inspector-in-Charge Bartlett.

Nicholas Cosmo founded Agape in August 2000, following 21 months in a federal prison for defrauding investors.  Between October 2005 and January 2009, Keryc played a critical role in the scheme, soliciting and obtaining hundreds of millions of dollars from investors.  To induce investments and discourage withdrawals, he misled investors by assuring them that their money would only be used to fund specific, short-term secured bridge loans to commercial borrowers, or to make short-term loans to small businesses; promising to pay investors unusually high rates of returns; and representing that investing in Agape carried little or no risk of loss.  As a result of these inducements, Keryc actually raised significantly more money than was needed for the loans, and for his efforts he made approximately $8.9 million – more than twice the $4 million that Cosmo personally profited from the scheme.

Keryc and his co-conspirators paid returns to Agape investors, not from any profits earned on investments, but rather from existing investors’ deposits or money paid by new investors.  They then took more than $370 million – approximately $55 million of which came from investors that Keryc or his sub-brokers convinced to invest in the Ponzi scheme – from approximately 5,000 investors.  Of that $370 million, only $22 million actually went to fund bridge loans.  Approximately $113 million of investors’ money was used to trade high risk futures and commodities, over 80 million dollars of which was lost in these markets. 

As the fraudulent scheme began to unravel, Keryc continued to deceive investors about Agape’s financial health.  On November 3, 2008, Keryc learned that all of Agape’s 2007 bridge loans were in default or on extension, but did not disclose this information to existing or new investors.  Instead, he continued to solicit money from investors, obtaining an additional $13 million.  Ultimately, approximately 3,800 investors sustained actual losses totaling more than $150 million.

On October 14, 2011, Cosmo was sentenced to a term of imprisonment of 25 years for his role in the scheme.  In addition to the convictions of Cosmo and Keryc, the government’s investigation led to the conviction of seven other defendants in the scheme, who are awaiting sentencing before Judge Hurley.

The government’s case is being prosecuted by the Office’s Long Island Criminal and Civil Divisions.  Assistant United States Attorneys Christopher C. Caffarone, Bradley T. King, Grace M. Cucchissi, and Vincent Lipari are in charge of the prosecution.

The Defendant:

JASON KERYC
Age: 38
Wantagh, New York

E.D.N.Y. Docket No. 12-CR-357 (S-4)(DRH)

Earlier today, Jeffrey Suh, Richelle Munoz, Sophia Lin, Kang Young Chung, and Emily Shim were sentenced in federal court in Brooklyn for conspiring to commit health care fraud in a scheme where they fraudulently billed Medicare for more than $4 million.  Suh, the scheme’s organizer and leader, was sentenced to 42 months’ imprisonment.  Munoz, a licensed occupational therapist, and Lin, a licensed chiropractor, were sentenced to 16 and 13 months’ imprisonment, respectively.  Chung, a physical therapist assistant, was sentenced to a year and a day’s imprisonment.  Shim, the clinic manager, was sentenced to 8 months’ imprisonment.  As part of the sentences imposed, the defendants were ordered to pay $2,685,580 in restitution to Medicare.  Additionally, the court ordered the defendants to forfeit their ill-gotten gains as follows:  Suh was ordered to forfeit two properties, valued at more than $1,000,000 in total; Munoz was ordered to pay $565,594; Lin was ordered to pay $70,000; Chung was ordered to pay $985,501; and Shim was ordered to pay $115,136.  The defendants were charged as part of a nationwide Medicare Fraud takedown in June 2015.

The sentences were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Scott J. Lampert, Special Agent-in-Charge, U.S. Department of Health and Human Services, Office of the Inspector General, New York Region (HHS-OIG); and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

“Clinic owner Jeffrey Suh and his licensed medical professionals manipulated elderly Medicare patients by bribing them with services and induced them to receive medically unnecessary treatments and services.  By doing so, they defrauded a taxpayer funded program out of millions of dollars,” stated United States Attorney Capers.  “Those who defraud Medicaid and Medicare are on notice that they will be held accountable for their crimes.”  

 “The actions of these co-conspirators resulted in the diversion of scarce taxpayer funds from the Medicare program just for personal enrichment,” said HHS-OIG Special Agent in Charge Lampert.  “The HHS Office of Inspector General, together with our law enforcement partners, will continue to vigorously pursue those who steal from government health programs in such greed-fueled schemes.”

FBI Assistant Director-in-Charge Rodriguez stated, “Today’s sentencing should serve as a warning to those who seek to defraud the government.  Public health insurance programs, like Medicare, are not a personal pocketbook for criminals seeking to exploit a program designed to help.  The FBI is committed to working with our law enforcement partners to bring to justice those who defraud taxpayer funded programs.”

From approximately December 2010 through June 2013, the defendants submitted more than $4 million in false claims to Medicare for physical therapy, occupational therapy, and chiropractic services that were not medically necessary, were often not provided, and otherwise did not qualify for reimbursement.  Instead of evaluating and performing therapy and services on Medicare beneficiaries in the amount claimed, the defendants typically ushered them to unlicensed massage therapists for massages and other free goods and services.  On some occasions, the defendants submitted claims to Medicare for services ostensibly performed by a licensed professional when that licensed professional was not even in the United States, or submitted claims to Medicare for services performed on Medicare beneficiaries who were abroad. 

The scheme was carried out at a medical clinic located in Flushing, New York, owned by Suh and operated under the names Plaza Medi Group, Inc. and New Plaza Group, Inc.

The sentences were imposed by the Hon. Carol B. Amon, Chief United States District Judge.

The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Sylvia Shweder and Whitman Knapp are in charge of the prosecution, with assistance provided by Assistant United States Attorney Karin Orenstein of the Office’s Civil Division, which is responsible for the forfeiture of assets.

The Defendants:

JEFFREY SUH
Age:  56
Bayside, New York

RICHELLE MUNOZ
Age: 39
Brooklyn, New York

SOPHIA LIN
Age:  34
Rocky Point, New York

KANG YOUNG CHUNG
Age:  42
Woodside, New York

EMILY SHIM
Age:  40
Flushing, New York

E.D.N.Y. Docket No. 15-CR-300 (CBA)

Earlier today, Michael Conway, the President of Choice Office Solutions LLC, pleaded guilty to wire fraud in connection with a scheme where he forged numerous lease agreements to defraud an individual investor and De Lage Landen Financial Solutions Partner (DLLFSP) of more than $3.5 million.  Pursuant to his plea agreement with the government, Conway has agreed that he is liable to pay restitution in the amount of $3,555,493.40 to the individual investor and $1,203,516 to DLLFSP.  When sentenced, Conway faces up to 20 years in prison.

The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

“Through a web of lies, deceit and forgeries, Michael Conway induced an individual investor and a lending firm to invest millions of dollars with his company.  Conway presented his unsuspecting victims with forged lease agreements and represented to them that he had entered into lucrative contracts to lease office equipment with more than 50 companies, including law firms, universities, and a major league baseball franchise, when in reality, a number of these agreements were worthless,” stated United States Attorney Capers.

“Conway swindled investors to the tune of more than $3.5 million through a series of fraudulent business agreements and lies.  Today’s plea and agreement to pay restitution should serve as a warning to others who seek to profit through deception,” stated FBI Assistant Director-in-Charge Rodriguez.

According to court filings and facts presented at the plea hearing, between March 2014 to August 2015, Conway forged lease agreements with various companies in the business of leasing office equipment, and then used these fraudulent agreements to obtain financing from private investors.  As part of the scheme, he induced an individual investor to become partners with him in the leasing business.  Conway would then purportedly secure a lease from a company, present the signed lease and invoices to the individual investor, who would provide funds to purchase the office equipment to be leased.  In this manner, Conway presented the individual investor with leases from approximately 58 companies, including law firms, universities, hospitals, and hotels, and the individual investor paid Conway approximately $3.5 million to purchase office equipment.  In reality, most of the leasing agreements that Conway provided to the individual investor were fraudulent, and Conway pocketed most of the individual investor’s money.  

One of the fraudulent leasing agreements was purportedly with the New York Mets.  Relying on it, the individual investor wire transferred approximately $500,000 to Conway’s bank account to purchase office equipment.  Conway then used the same forged lease agreement, and a forged authorization letter from the New York Mets purportedly signed by Jeffrey Wilpon, the team’s Chief Operating Officer, to obtain financing from DLLFSP.  Based on these fraudulent documents, DLLFSP wire transferred a total of approximately $313,000 to Conway’s bank account.  Through this and other forgeries, Conway defrauded DLLFSP of more than $1 million.

Today’s guilty plea took place before United States District Judge William F. Kuntz. 

The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section.  Assistant United States Attorneys Winston Paes and David Pitluck are in charge of the prosecution.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established 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, please visit ww.StopFraud.gov.

The Defendant:

MICHAEL CONWAY
Age:  40
Verona, New Jersey

E.D.N.Y. Docket No. 16-CR-052 (WFK)

Wednesday evening, at the federal courthouse in Brooklyn, Cecil Franklin Speight, was sentenced by the Hon. Roslynn R. Mauskopf to 42 months in prison following his guilty plea to conspiracy to commit mail and securities fraud for defrauding 72 investors of $3.3 million by operating an Internet stock scheme.  As part of the sentence, Speight was ordered to pay $3.3 million in restitution to the victims of his fraud and $3.3 million in forfeiture.

Speight owned International Stock Transfer (IST), a registered transfer agent with the United States Securities and Exchange Commission (SEC).  According to court filings and facts presented at the sentencing hearing, Speight stole at least $3.3 million from victim investors and used the proceeds to pay personal expenses, including purchases at Mercedes Benz, Nordstrom, Netflix and Groupon. 

The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.    

“Rather than transferring capital to issuers, the defendant used the investors’ funds as his own.  His victims, from the Eastern District of New York and around the world, were conned into buying bogus securities that were not worth the paper they were printed on.  We will continue to pursue those who use our markets to enrich themselves through fraud,” stated United States Attorney Capers.  Mr. Capers extended his grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation, and thanked the Securities and Exchange Commission for its assistance.

IST was founded by Speight in 2004 with offices in Palm Beach, Florida.  Speight used cold callers and fake websites to entice victims into investing their money in allegedly high yield securities purportedly associated with IST.  Investors were directed to wire funds into purportedly secure attorney escrow accounts.  Once there, Speight typically stole the funds for his  own use.

This prosecution was the result of efforts by President Obama’s 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’s 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 prosecuted by the Office’s Business and Securities Fraud Section.  Assistant United States Attorney Jack Dennehy is in charge of the prosecution, with assistance provided by Assistant United States Attorney Brian D. Morris of the Office’s Civil Division, which is responsible for the forfeiture of assets.

The Defendant:

CECIL FRANKLIN SPEIGHT
Age: 54
West Palm Beach, FL

E.D.N.Y. Docket No. 14-CR-379

Earlier today, John R. Lakian and Diane W. Lamm, who managed Capital L Financial Group, LLC (Capital L) and Aegis Capital Fund, LLC (Aegis Capital), each pleaded guilty to two counts of securities fraud for defrauding investors out of millions of dollars in two separate schemes.  When sentenced, the defendants face a maximum sentence of 20 years’ imprisonment on each count.

Today’s guilty pleas were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

“The defendants played a confidence game, stealing investors’ hard-earned money through lies and deceit to use for their own purposes” stated United States Attorney Capers.  “We remain steadfast in our commitment to the investigation and prosecution of those who prey on investors and enrich themselves by means of financial fraud.” 

“Lakian and Lamm misled investors, and capitalized on their misfortune, in an effort to bolster their own financial portfolios.  The FBI and our partners will continue our efforts to bring to justice those who employ schemes to take advantage of unwitting victims,” stated FBI Assistant Director-in-Charge Rodriguez.

Between 2009 and 2013, the defendants were involved in two schemes to steal investors’ money.  In the first, the defendants obtained more than $11 million by promising Capital L investors that their money would be used to purchase, consolidate, and sell registered investment advisory businesses.  Instead, Lakian and Lamm diverted more than $3 million of it to themselves and to entities they owned and controlled.  In the second scheme, the defendants perpetrated their fraud through their management of the liquidation of Aegis Capital, a North Carolina-based investment fund.  Instead of returning investment proceeds to investors, Lakian and Lamm diverted more than $2 million of investors’ money to themselves and to restaurant businesses they controlled.

Today’s pleas took place before United States District Judge Frederic Block at the United States Courthouse in Brooklyn, New York. 

The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section.  Assistant United States Attorney Whitman Knapp is in charge of the prosecution.

This prosecution was the result of efforts by President Obama's 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’s 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 Defendants:

JOHN R. LAKIAN
Age: 73
New York, New York

DIANE W. LAMM
Age: 55
New York, New York

E.D.N.Y. Docket No. 15-CR-0043 (FB)

One Carjacking Victim Shot in the Chest

Earlier today, John Howard was arraigned before United States Chief Magistrate Judge Steven M. Gold in Brooklyn federal court.  Howard faces charges for a series of gunpoint carjackings in Queens and Long Island.  A criminal complaint charges the defendant with three counts of carjacking and using, carrying, brandishing, and discharging a firearm during and in relation to crimes of violence.   

The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Delano A. Reid, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), New York Field Office; and William J. Bratton, Commissioner of the New York City Police Department (NYPD).

As detailed in the complaint and a detention memorandum filed by the government, Howard, who has a history of violence, participated in a series of armed carjackings that took place beginning in December 2015. 

On December 18, 2015, Howard attempted to burglarize a home in Valley Stream, New York.  While fleeing the scene of the burglary, he pointed a gun at the driver of a white Volkswagen Jetta and threatened to shoot if the driver did not comply with his demands.  After forcing the driver from the car, Howard stole the car. 

Ten days later, on December 28, 2015, Howard struck again.  This time the victim was sitting in his parked Mercedes Benz and was approached by two males.  One male entered the car through the passenger side door.  The second male, subsequently identified as Howard, opened the driver’s side door and told the victim, in sum and substance, “Give me your wallet or I’m going to shoot you.”  Howard then hit the driver in the head, forced him out, and stole the driver’s wallet.

On January 21, 2016, Howard was involved in a third violent carjacking in which a fifty-three-year-old woman was shot in the chest.  The woman’s daughter was in the passenger seat of a Hyundai parked in front of the Hampton Inn at JFK International Airport waiting for her mother to check into the hotel when a masked and armed man entered the car.  The man demanded money and jewelry from the daughter and struck her in the head with his firearm.  As the man began driving the car, he told the daughter, in sum and substance, “If your mother has no money, then I’m going to shoot you.”  When the mother exited the hotel a few minutes later, the man demanded the mother’s purse.  When the mother refused, the man shot her in the chest and drove off in a white Volkswagen Jetta – which was the same make and model, and had the same features, as the Volkswagen Jetta carjacked by Howard on December 18, 2015.

Four days after the January 21 carjacking, Howard was arrested in possession of the stolen white Volkswagen Jetta.   

United States Attorney Capers stated, “As alleged in the complaint and other court filings, Howard’s targets were victims of harrowing crimes, the likes of which we have not seen in some time.  This violence simply will not be tolerated, as Howard will now face the consequences of his acts in federal court.”  Mr. Capers expressed his grateful appreciation to the ATF and NYPD’s Joint-Robbery Taskforce, who are responsible for leading the investigation, and thanked the Nassau County Police Department, the Nassau County District Attorney’s Office, the Queens District Attorney’s Office, the Kings County District Attorney’s Office, the NYPD’s Queens South Strategic and Tactical Command, and the 113 Precinct Detective Squad for their assistance.

ATF Special Agent in Charge Reid stated, “It is quite disturbing to think that an individual like the defendant was free to walk the streets as recently as two weeks ago.  As alleged, Howard was involved in multiple carjackings where he exhibited his total disregard for human life.  I am extremely grateful to the investigators and prosecutors on this case, who swiftly acted and removed such a dangerous individual from free society.  It is now time for the defendant to feel the full weight of the U.S. judicial system and to know that the severity of his punishment will likely be commensurate to the depravity of his criminal behavior.”

“These series of crimes demonstrate a disturbing level of depravity and complete disregard for the safety and well-being of the victims involved in these acts of violence,” said New York City Police Commissioner Bratton.  “As alleged, John Howard participated in a string of violent acts, including a carjacking where a 53 year-old mother was shot in cold blood when she refused to hand over her purse.  I commend the efforts of the Queens South Strategic and Tactical Command Investigative Operations and the 113th Precinct Detective Squad who made it a priority to take this dangerous individual off the streets and into police custody.”

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 prosecuted by Assistant United States Attorneys Moira Kim Penza and Tanya Hajjar.

The Defendant:

Name: John Howard
Age: 49
Brooklyn, New York

A Maryland man was sentenced to 10 years in prison today for transporting child pornography into the United States, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Robert L. Capers of the Eastern District of New York announced.

Victor Otubu, 50, previously pleaded guilty to transporting child pornography.  U.S. District Judge Dora L. Irizarry of the Eastern District of New York also ordered Otubu to serve 10 years of supervised release following his prison sentence.

In connection with his plea, Otubu admitted that when he arrived at John F. Kennedy International Airport on Sept. 6, 2014, from Nigeria, his suitcase contained an external hard drive and several DVDs containing hundreds of child exploitation files.  Otubu was arrested on Sept. 10, 2014, in Houston as he attempted to flee prosecution by boarding a flight back to Lagos, Nigeria. 

HSI’s Cyber Crimes Center Child Exploitation Investigations Unit and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) High Tech Investigations Unit investigated the case.  CEOS Trial Attorney Amy Larson and Assistant U.S. Attorney Ameet Kabrawala of the Eastern District of New York prosecuted the case.

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

Earlier today, a complaint was unsealed in Brooklyn federal court charging Eduardo Cornejo, a former officer with the New York City Police Department (NYPD) with transporting women in interstate commerce to engage in prostitution.[1]  Until his termination from the NYPD on January 15, 2016, Cornejo was an 11-year veteran of the NYPD who, at the time of the charged conduct, was on modified assignment and was, prior to that, assigned to the 79th Precinct in Brooklyn.  Cornejo is scheduled to be arraigned at 2 p.m. today before United States Magistrate Judge Steven M. Gold at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge of the Federal Bureau of Investigation (FBI), and William J. Bratton, Commissioner, NYPD. 

“As alleged, the defendant betrayed the trust of the residents of the city he swore to protect,” stated United States Attorney Capers.  “Rather than seeking to eradicate crime from the streets of the city, the defendant promoted prostitution and profited from his exploitation of women.”  Mr. Capers praised the joint investigative efforts of the FBI and the Internal Affairs Bureau of the NYPD.   

“Throughout his alleged criminal actions, Cornejo not only abused the public trust given to him as an NYPD officer, but he showed no human decency when he facilitated the exploitation of women for profit.  Police officers, like all public servants, are held to a higher standard, and should not violate the very same laws they are supposed to enforce,” said FBI Assistant Director-in-Charge Rodriguez. 

“I commend our Internal Affairs Bureau which takes a proactive role in investigating serious misconduct among the ranks of the NYPD and works closely with prosecutors in building cases against those who violate the very laws that they have sworn to enforce,” said NYPD Commissioner Bratton.

As detailed in the complaint, members of law enforcement observed Cornejo transporting at least ten different prostitutes he employed to motels throughout the New York metropolitan area, including parts of Long Island and New Jersey.  Cornejo often engaged in this conduct directly after leaving his work with the NYPD. 

As further detailed in the complaint, pursuant to a lawfully authorized wiretap, law enforcement intercepted statements by Cornejo that showed his commission of the crime.  For example, in one such statement Cornejo discussed the way he divides monetary proceeds with the prostitutes he employs and also stated that, if he were to stand outside a motel door with “a bunch of girls,” law enforcement would “know what’s up real quick.”

If convicted, Cornejo faces up to ten years of incarceration.

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

The Defendant:

EDUARDO CORNEJO
Age: 33
E.D.N.Y. Docket No. 16-M-69 (MDG)

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[1]  The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

Earlier today at the federal courthouse in Brooklyn, Mahdi Hashi was sentenced to nine years in prison by United States District Judge John Gleeson for conspiring to provide material support to al-Shabaab, a designated foreign terrorist organization.  The defendant traveled from the United Kingdom to Somalia to join the terrorist group, which has a long history of violence against civilians and others.  While in Somalia, the defendant was affiliated with the American jihadist, Omar Hamami and his band of American fighters, as well as individuals associated with al-Shabaab’s suicide bomber program. 

The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, John P. Carlin, Assistant Attorney General for National Security, and Diego Rodriguez, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office.

As stated in court today and according to court documents, between approximately December 2009 and August 2012, the defendant served as a member of al-Shabaab in Somalia where he conspired to support al-Shabaab and its violent extremist agenda.  In August 2012, the defendant was apprehended with others by local authorities in East Africa after he left Somalia, and then lawfully deported to the Eastern District of New York for prosecution in November 2012.

On November 14, 2012, the Federal Bureau of Investigation took custody of the defendant and brought him to the Eastern District of New York for prosecution.  He, along with two codefendants, pleaded guilty on May 12, 2015.

“This defendant left his family and his adopted home in the United Kingdom behind so he could offer himself in support of al-Shabaab, a violent terrorist organization that has demonstrated its capabilities and motives in numerous terrorist attacks and that has publicly called for attacks against the United States,” stated U.S. Attorney Capers.  “Today’s sentence sounds a warning to others who offer support to terrorist groups that pose a threat to the United States and our allies around the world.”

“Hashi travelled to Somalia to join and fight on behalf of al-Shabaab in their foreign terrorist fighter ranks,” said Assistant Attorney General Carlin.  “The National Security Division remains committed to detecting, thwarting, and bringing to justice those who seek to provide material support to and fight on behalf of designated foreign terrorist organizations.”

FBI Assistant Director-in-Charge Rodriguez stated, “Mahdi Hashi joined a foreign terrorist organization to be part of a group utilizing violence to fulfill their agenda.  He now finds himself isolated behind bars due to the criminality of his activities.  Through today’s sentence, we hope he can no longer be in a position to inflict, or support those who inflict, harm on others.  The FBI, in cooperation with our JTTF partners, will continue to work to identify and interrupt those engaged in terrorist activities globally and bring them to justice in the U.S.”

During the time of the charged conspiracy and thereafter, al-Shabaab successfully recruited individuals from around the world, such as the defendant, to come to Somalia and join the organization.  These individuals, known within al-Shabaab as “foreign fighters,” lived, trained, and often fought alongside other native Somali fighters.  The foreign fighters were especially valuable to al-Shabaab for several reasons.  For example, al-Shabaab frequently made Western foreign fighters the face of its fund-raising and propaganda efforts as part of a broader strategy of emphasizing that the conflict in Somalia was part of a global jihad aimed at creating an Islamic caliphate.  In addition, al-Shabaab assesses that Westerners have the potential to more easily cross certain international borders.  Because al-Shabaab frequently employs suicide bombings, as it did in the Kampala, Uganda, in 2010 resulting in 74 deaths, freedom of travel was particularly crucial to al-Shabaab’s external terror operations.

Assistant Attorney General Carlin joined U.S. Attorney Capers in thanking the federal, state, and local law enforcement agencies who participate in the FBI’s Joint Terrorism Task Force in New York.

The government’s case is being handled by Assistant U.S. Attorneys Shreve Ariail, Seth D. DuCharme, and Richard M. Tucker of the Eastern District of New York, along with Trial Attorney Annamartine Salick of the National Security Division’s Counterterrorism Section.  The Department of Justice’s Office of International Affairs also provided invaluable assistance.

The Defendant:

MADHI HASHI
Age: 26
Nationality: Somali

Earlier today, Nicholas Giovatto, a New York State Court Officer, who had been assigned to the Bronx County Supreme Court, was arrested and charged with robbery conspiracy and related firearm charges by members of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the New York City Police Department’s (NYPD) Police Impersonation Investigation Unit.[1]  The defendant’s initial appearance is scheduled this afternoon before United States Magistrate Judge Steven I. Locke, at the United States Courthouse, 100 Federal Plaza, Central Islip, New York.

The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Delano A. Reid, Special Agent in Charge, New York Field Division, ATF, and William J. Bratton, Commissioner, NYPD.

“Law enforcement officers who violate their oath to protect the public, whether inside or outside the courthouse, will be held accountable for their actions.  No one is above the law,” stated United States Attorney Capers. 

“As alleged, the defendant - on more than one occasion - misused his position of trust when he posed as a law enforcement officer to commit home invasion robberies.  The defendant apparently believes that a life of crime would be more beneficial than one of protecting and serving.  I suspect that now that he has been indoctrinated into the federal judicial system, he will quickly realize he made the wrong choice,” stated ATF Special Agent in Charge Reid.

“This arrest demonstrates that there is no tolerance for corruption at any level.  I commend the work of the members of the NYPD Police Impersonation Investigation Unit, the agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the prosecutors of the United States Eastern District who are involved in this investigation,” said Police Commissioner Bratton.  

According to the complaint, between December 2011 and March 2012, Giovatto was a member of a robbery crew that conspired to commit armed home invasion robberies of narcotics dealers on Long Island and in Queens.  On December 20, 2011, Giovatto and another member of his crew entered a residence in Queens, New York, by falsely identifying themselves as police officers and claiming they had a search warrant for the premises.  Upon entering the residence, Giovatto brandished a firearm, while his co-conspirator handcuffed the victim.  They then ransacked the premises and stole more than $30,000 and several pieces of jewelry.  Giovatto and his co-conspirator targeted this location for robbery because one of the residents was believed to be a narcotics trafficker.

Similarly, the complaint charges that, on March 10, 2012, Giovatto and another member of the robbery crew attempted to enter a residence in Queens, New York, in order to rob the occupants who they believed were involved in marijuana trafficking.  Giovatto and his co-conspirator falsely identified themselves as police officers but were denied access to the residence by the intended robbery victims.

The government’s case is being prosecuted by the Office’s Long Island Criminal Division.  Assistant United States Attorneys Lara Treinis Gatz and Grace M. Cucchissi are in charge of the prosecution.

The Defendant:

NICHOLAS GIOVATTO
Age: 37
New York, New York

E.D.N.Y. Docket No. 16-MJ-51 (AKT)

 

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[1]  The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

Earlier today, Rafael Astacio, a former detective with the New York City Police Department, was sentenced to 72 months of imprisonment by United States District Judge Joseph F. Bianco, to be followed by three years of supervised release.  As part of the sentence, the court entered a $200,000 forfeiture money judgment and restitution in the amount of $1.8 million.  Previously, Astacio pleaded guilty to conspiracy to commit interstate transportation of stolen property and filing a fraudulent tax return. 

The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York. 

According to court filings and statements at today’s court proceeding, between 2010 and 2012, Astacio was a member of a burglary crew that committed approximately three dozen commercial burglaries and ten residential burglaries in the Eastern District of New York stealing approximately $8,000,000 in cash and property.  Astacio personally participated in six of the commercial burglaries and five residential burglaries stealing more than $5.3 million in cash and property.  The crew used traditional burglary tools, such as blow torches, crowbars, wire cutters, and sledge hammers, as well as cell phone jammers, police scanners, and an automobile tracking device to commit these crimes.  Astacio also used his position with the NYPD to locate potential burglary targets’ home addresses.

“For years, Astacio and his crew invaded Long Island homes and businesses and stole money and property.  By victimizing the very same people he took an oath to serve and protect, the defendant compounded his criminal acts,” stated United States Attorney Capers.  Mr. Capers extended his grateful appreciation to the Nassau County District Attorney’s Office; the Federal Bureau of Investigation, New York Field Office; the Nassau County Police Department; the Internal Revenue Service-Criminal Investigation, New York; and New York City Police Department for their assistance in this case.

The government’s case is being prosecuted by the Office’s Long Island Criminal Division.  Assistant United States Attorney Christopher C. Caffarone and Special Assistant United States Attorney Rick Whelan are in charge of the prosecution.

The Defendant:

RAFAEL ASTACIO
Age: 43
Copiague, New York

E.D.N.Y. Docket No. 13-CR-640 (JFB)

Defendant Received Military-Type Training from al-Qaeda and then Went to Afghanistan with the Taliban to Fight against U.S. Forces

Ali Alvi al-Hamidi, 31, a Yemeni national, pleaded guilty today to conspiring to murder U.S. nationals abroad, conspiring to provide material support to al-Qaeda and receiving military-type training from al-Qaeda.  The guilty plea took place before U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York.  At sentencing, al-Hamidi faces a maximum of life imprisonment.

The guilty plea was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York and Assistant

Director in Charge Paul M. Abbate of the FBI’s Washington, D.C., Field Office.

“Ali Alvi al-Hamidi went to the FATA to join al-Qaeda, received training from the terrorist organization, and later fought alongside the Taliban against coalition forces in Afghanistan,” said Assistant Attorney General Carlin.  “With this plea, he will be held accountable for his terrorist activity, including conspiring to kill members of our military.  The highest priority of the National Security Division is countering terrorist threats, and we will continue to use all tools available to bring justice to those who seek to harm American servicemen and women who bravely risk their lives in defense of our nation.”

“Today’s significant guilty plea demonstrates this office’s unwavering commitment to bring to justice those who fight against U.S. forces or assist al-Qaeda and others in their efforts to kill Americans at home or abroad,” said U.S. Attorney Capers.

“As we witnessed today, those who support designated foreign terrorist organizations like al Qaeda and seek to harm people will be held fully accountable under the law,” said Assistant Director in Charge Abbate.  “On a daily basis, the FBI and its partners face the challenge of an ever evolving threat environment.  Through our partnerships, both international and domestic, the FBI continues to track down those who aid and abet terrorist groups and ensure that they are brought to justice.”

In early 2008, al-Hamidi traveled to the Federally Administered Tribal Areas (FATA) of Pakistan to join al-Qaeda.  Once there, he received training from al-Qaeda in the use of weapons, explosives and detonators.  During late spring and summer of 2008, al-Hamidi moved on to Afghanistan with Taliban forces for the purpose of fighting members of the U.S. military and coalition forces stationed there. 

The defendant also aided Bryant Neal Vinas, a U.S. citizen, in joining al-Qaeda.  Vinas traveled to Pakistan from Long Island, New York, hoping to join al-Qaeda and fight U.S. military forces in Afghanistan.  After participating in al-Qaeda’s military training program, Vinas and senior al-Qaeda external operations leadership devised a plan to conduct an attack on the Long Island Railroad in New York.  Vinas was arrested in 2008 before he could carry out this attack, and pleaded guilty in 2009 to conspiracy to murder U.S. nationals, providing material support to a foreign terrorist organization and receiving military-type training from a foreign terrorist organization.  Vinas is currently incarcerated pending sentence.

Assistant Attorney General Carlin joined U.S. Attorney Capers in extending his grateful appreciation to the FBI’s Washington Field Office.  The case is being prosecuted by Assistant U.S. Attorneys Zainab Ahmad, Michael P. Canty and Douglas M. Pravda of the Eastern District of New York, with assistance provided by Trial Attorney Josh Parecki of the National Security Division’s Counterterrorism Section.

Earlier today, Ali Alvi al-Hamidi, a Yemeni national, pleaded guilty to conspiring to murder U.S. nationals abroad, conspiring to provide material support to al-Qaeda, and receiving military-type training from al-Qaeda.  Today’s guilty plea took place before United States District Judge Nicholas G. Garaufis.  At sentencing, al-Hamidi faces a maximum of life imprisonment.

The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, John P. Carlin, Assistant Attorney General for National Security, and Paul M. Abbate, Assistant Director in Charge, Federal Bureau of Investigation, Washington Field Office.

“Today’s significant guilty plea demonstrates this office’s unwavering commitment to bring to justice those who fight against U.S. forces or assist al-Qaeda and others in their efforts to kill Americans at home or abroad,” stated United States Attorney Capers.  Mr. Capers extended his grateful appreciation to the FBI’s Washington Field Office for their efforts. 

“Ali Alvi al-Hamidi went to the FATA to join al-Qaeda, received training from the terrorist organization, and later fought alongside the Taliban against coalition forces in Afghanistan.  With this plea, he will be held accountable for his terrorist activity, including conspiring to kill members of our military,” said Assistant Attorney General Carlin.  “The highest priority of the National Security Division is countering terrorist threats, and we will continue to use all tools available to bring justice to those who seek to harm American servicemen and women who bravely risk their lives in defense of our nation,” said Assistant Attorney General Carlin. 

“As we witnessed today, those who support designated foreign terrorist organizations like al Qaeda and seek to harm people will be held fully accountable under the law,” said FBI Assistant Director in Charge, Abbate.  “On a daily basis, the FBI and its partners face the challenge of an ever evolving threat environment.  Through our partnerships, both international and domestic, the FBI continues to track down those who aid and abet terrorist groups and ensure that they are brought to justice.” 

In early 2008, al-Hamidi traveled to the Federally Administered Tribal Areas (FATA) of Pakistan to join al-Qaeda.  Once there, he received training from al-Qaeda in the use of weapons, explosives, and detonators.  During late spring and summer 2008, al-Hamidi moved on to Afghanistan with Taliban forces for the purpose of fighting members of the United States military and coalition forces stationed there. 

Alvi also aided U.S. citizen Bryant Neal Vinas entry into al-Qaeda.  Vinas had traveled to Pakistan from Long Island hoping to join al-Qaeda and fight U.S. military forces in Afghanistan.  After participating in al-Qaeda’s military training program, Vinas and senior al-Qaeda external operations leadership devised a plan to conduct an attack on the Long Island Railroad in New York.  Vinas was arrested in 2008 before he could carry out this attack. Vinas pleaded guilty in 2009 to conspiracy to murder U.S. nationals, providing material support to a foreign terrorist organization, and receiving military type training from a foreign terrorist organization.  He is currently incarcerated pending sentence.

The government’s case is being prosecuted by the Office’s National Security & Cybercrime Section.  Assistant United States Attorneys Zainab Ahmad, Michael P. Canty, and Douglas M. Pravda are in charge of the prosecution, with assistance provided by Trial Attorney Josh Parecki of the National Security Division’s Counterterrorism Section.

The Defendant:

ALI ALVI AL-HAMIDI
Age: 31
Nationality: Yemeni

E.D.N.Y. Docket No. 15-CR-56

BROOKLYN, N.Y. – Earlier today, Michael J. Dodd and James Robert Shipman, Jr. pleaded guilty to charges that they conspired to launder more than two million dollars, which they believed to be proceeds of a penny stock fraud scheme.  The money was, in fact, provided to the defendants by an undercover law enforcement agent who posed as a criminal stock promoter as part of an FBI sting operation.   A third defendant, Kenneth Landgaard, pleaded guilty to the same charges on January 15, 2016.  Defendants Landgaard and Shipman were arrested after flying to an airport in New York on a private jet to take possession of $2,200,000 in cash, which they had agreed to launder through banks in Panama and Belize.  Dodd was arrested a few hours later at a Manhattan restaurant where he had expected to meet with the undercover agent.  Prior to their arrests, the defendants had already laundered $400,000 in cash previously provided by the undercover agent.

The guilty pleas were announced by Robert L. Capers, United States Attorney for the Eastern District of New York. 

“The defendants agreed to transport millions of dollars represented to be stock fraud proceeds on private jets to Panama and then engage in a series of financial transactions designed to conceal the illegal source of the funds.  They did so with the intention of lining their own pockets without regard for the law,” stated United States Attorney Capers.  “We are committed to stopping the laundering of money through offshore safe havens and prosecuting those who would abuse the financial markets to enrich themselves.”  Mr. Capers thanked the Federal Bureau of Investigation (FBI), the Internal Revenue Service, Criminal Investigation (IRS-CI) and the U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI) for their hard work and dedication through the course of the investigation and prosecution.

In his dealings with the defendants, the undercover agent represented himself to be a middleman working with corrupt stock brokers who artificially inflated prices for worthless stocks in exchange for high commissions.  Despite being made aware this, the defendants agreed to launder $2,600,000 in exchange for a 13% to 15% fee.  Immediately prior to their arrest, Landgaard and Shipman accepted $2,200,000 from the undercover agent, which they believed to be proceeds from the penny stock fraud.  In conversations which were recorded by the FBI, the defendants explained in detail the measures they took to avoid detection of their money laundering scheme by law enforcement – Dodd insisted that the undercover agent download and use encryption software for online chats and voice communications, Landgaard insisted that the cash be provided in expensive Louis Vuitton duffel bags, and Shipman explained their reasoning, “You know why they do that?  Because cops can’t get the authority to buy a Louis Vuitton bag, it’s too expensive ….”  Landgaard and Shipman also insisted that the undercover agent buy a “throwaway” or “burner” phone on which to speak to them about the scheme.

The guilty pleas took place before United States District Judge John Gleeson at the United States Courthouse in Brooklyn, New York.  When sentenced, the defendants each face a maximum sentence of 20 years’ imprisonment.

The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section.  Assistant United States Attorney Jack Dennehy is in charge of the prosecution.  Assistant United States Attorneys Brian Morris and Karin Orenstein of the Office’s Civil Division are responsible for the forfeiture of assets.

*          *          *

This prosecution was the result of efforts by President Obama's 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’s 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 Defendants:

Name: Michael Dodd, also known as "Michael Stanley"
Age: 65
Panama City, Panama

Name: Kenneth Landgaard
Age: 46
Alexandria, Minnesota

Name: James Robert Shipman, Jr.
Age: 64
Hollywood, Florida

E.D.N.Y. Docket No. 15-CR-552 (JG)

Ali Yasin Ahmed, aka Ismail, 31, and Mohamed Yusuf, aka Abu Zaid, Hudeyfa and Mohammed Abdulkadir, 33, were each sentenced to 11 years in prison by U.S. District Judge John Gleeson of the Eastern District of New York for conspiring to provide material support to al-Shabaab, a designated foreign terrorist organization.

The sentences were announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York and Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office.

As stated in court today and according to court documents, between approximately December 2008 and August 2012, the defendants served as members of al-Shabaab in Somalia, where they supported al-Shabaab and its extremist agenda.  In early August 2012, the defendants were apprehended in East Africa by local authorities while on their way to Yemen.  On Nov. 14, 2012, the FBI took custody of the defendants and brought them to the Eastern District of New York for prosecution.  They pleaded guilty on May 12, 2015. 

“Ahmed and Yusuf travelled to Somalia to fight on behalf al-Shabaab as part of the terrorist organization's cadre of foreign fighters,” said Assistant Attorney General Carlin.  “The National Security Division remains committed to identifying, disrupting and holding accountable all who seek to provide material support to and fight on behalf of designated foreign terrorist organizations.”

“These defendants left their adopted European homes to support al-Shabaab, a violent terrorist organization that has demonstrated its capabilities and motives in numerous terrorist attacks overseas and has publicly called for attacks against the United States,” said U.S. Attorney Capers.  “Today’s significant sentences reflect the seriousness of the defendants’ criminal conduct and will serve as a strong deterrent to others considering the path to violence.”

“The guilty plea and sentencing of these men for providing material support to al-Shabaab, demonstrates the U.S. government’s commitment and leadership in prosecuting persons whose intention is to violently assault societies different than their own,” said Assistant Director in Charge Rodriguez.  “We remain steadfast in identifying and stopping such attacks.  We will continue to work within the framework of the U.S. justice system to hold terrorists accountable for their malicious intentions and criminal actions.  Special thanks to all our law enforcement and intelligence community partners on the JTTF, whose joint efforts keep us safe. We are also grateful for the international cooperation we received to bring these terrorism subjects to justice.”

The defendants, both naturalized Swedish citizens, traveled to Somalia intending to wage violent jihad on the U.N.-sanctioned African Union Mission in Somalia (AMISOM) and Somali government forces that were attempting to bring stability to that war-torn country.  Once in Somalia, the defendants participated in numerous attacks on government forces.  Yusuf is featured in an al-Shabaab propaganda video in which he encourages young men to travel to Somalia and join al-Shabaab and threatened a cartoonist who had depicted the prophet Mohammad.  A third defendant, Madhi Hashi, is scheduled to be sentenced on Jan. 29, 2016.

Assistant Attorney General Carlin joined U.S. Attorney Capers in thanking the federal, state and local law enforcement agencies who participate in the FBI’s Joint Terrorism Task Force in New York.

The prosecution is being handled by Assistant U.S. Attorneys Shreve Ariail, Seth D. DuCharme and Richard M. Tucker of the Eastern District of New York, along with Trial Attorney Annamartine Salick of the National Security Division’s Counterterrorism Section.  Trial Attorney Shanna Batten of the Department of Justice’s Office of International Affairs and Dan Stigall of the National Security Division also provided invaluable assistance.

Earlier today at the federal courthouse in Brooklyn, Ali Yasin Ahmed and Mohamed Yusuf were sentenced to 11 years in prison by United States District Judge John Gleeson for conspiring to provide material support to al-Shabaab, a designated foreign terrorist organization. The defendants, both naturalized Swedish citizens, traveled to Somalia intending to wage violent jihad on the U.N.-sanctioned AMISOM and Somali government forces that were attempting to bring stability to that war-torn country.  Once in Somalia, the defendants participated in numerous attacks on government forces, and Yusuf appeared in an al-Shabaab recruiting video aimed at inducing young Muslim men in Western countries to leave their homes and join the terrorist organization.

The sentences were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, John P. Carlin, Assistant Attorney General for National Security, and Diego Rodriguez, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office.

As stated in court today and according to court documents, between approximately December 2008 and August 2012, the defendants served as members of al-Shabaab in Somalia, where they agreed with others to support al-Shabaab and its extremist agenda.  In early August 2012, the defendants were apprehended in East Africa by local authorities while on their way to Yemen.  On November 14, 2012, the Federal Bureau of Investigation took custody of the defendants and brought them to the Eastern District of New York for prosecution.  They pleaded guilty on May 12, 2015. 

“These defendants left their adopted European homes to support al-Shabaab, a violent terrorist organization that has demonstrated its capabilities and motives in numerous terrorist attacks overseas and has publicly called for attacks against the United States,” stated U.S. Attorney Capers.  “Today’s significant sentences reflect the seriousness of the defendants’ criminal conduct and will serve as a strong deterrent to others considering the path to violence.”

“Ahmed and Yusuf travelled to Somalia to fight on behalf al Shabaab as part of the terrorist organization's cadre of foreign fighters,” said Assistant Attorney General Carlin.  “The National Security Division remains committed to identifying, disrupting, and holding accountable all who seek to provide material support to and fight on behalf of designated foreign terrorist organizations.”

FBI Assistant Director-in-Charge Rodriguez stated, “The guilty pleas and sentencing of these men for providing material support to al-Shabaab demonstrates the U.S. government’s commitment and leadership in prosecuting persons whose intention is to violently assault societies different than their own.  We remain steadfast in identifying and stopping such attacks.  We will continue to work within the framework of the U.S. justice system to hold terrorists accountable for their malicious intentions and criminal actions.  Special thanks to all our law enforcement and intelligence community partners on the JTTF, whose joint efforts keep us safe.  We are also grateful for the international cooperation we received to bring these terrorism subjects to justice.”

During the time of the charged conspiracy (and thereafter), al-Shabaab successfully recruited individuals from around the world, such as the defendants, to come to Somalia and join the organization.  These individuals, known within al-Shabaab as “foreign fighters,” lived, trained, and often fought alongside other native Somali fighters.  The foreign fighters were especially valuable to al-Shabaab for several reasons.  For example, al-Shabaab frequently made Western foreign fighters the face of its fund-raising and propaganda efforts as part of a broader strategy of emphasizing that the conflict in Somalia was part of a global jihad aimed at creating an Islamic caliphate.  Indeed, one of the defendants, Yusuf, is featured in an al-Shabaab propaganda video in which he encouraged young men to travel to Somalia and join al-Shabaab and threatened a cartoonist who had depicted the prophet Mohammad.  In addition, Yusuf and Ahmed fought in battles in Somalia against African Union forces.  A third defendant, Madhi Hashi, is scheduled to be sentenced on January 29, 2016.

Assistant Attorney General Carlin joined U.S. Attorney Capers in thanking the federal, state, and local law enforcement agencies who participate in the FBI’s Joint Terrorism Task Force in New York.

The government’s case is being handled by the Office’s National Security and Cybercrime Section.  Assistant United States Attorneys Shreve Ariail, Seth D. DuCharme, and Richard M. Tucker, along with Trial Attorney Annamartine Salick of the Department of Justice’s Counterterrorism Section, are in charge of the prosecution.  Trial Attorney Shanna Batten of the Department of Justice’s Office of International Affairs, and Dan Stigall, Counsel to the Assistant Attorney General for the National Security Division, also provided invaluable assistance.

The Defendants:

ALI YASIN AHMED, also known as “Ismail”
Age: 31
Nationality: Swedish

MOHAMED YUSUF, also known as “Abu Zaid,” “Hudeyfa” and “Mohammed Abdulkadir”
Age: 33
Nationality: Swedish

Defendant Allegedly Responsible for a Vehicle-Borne Improvised Explosive Device Attack against U.S. Military Base in Afghanistan in January 2009

A superseding indictment was obtained today in federal court in the Eastern District of New York, adding charges against Muhanad Mahmoud Al Farekh, 30, an American citizen, for conspiracy to murder U.S. nationals, use of explosives, conspiracy to use a weapon of mass destruction and conspiracy to bomb a government facility.  These new charges arise out of Farekh’s participation in an attack on a U.S. military base in Afghanistan in January 2009.  As set forth in the superseding indictment and in other publicly available information, Farekh assisted in the preparation of a vehicle-borne improvised explosive device (VBIED) for use in the attack.  On or about Jan. 19, 2009, two co-conspirators drove vehicles to the U.S. military base in Afghanistan.  The first co-conspirator detonated the VBIED in his vehicle during the attack on the military base.  The second co-conspirator drove a truck containing a second VBIED to the military base, but did not detonate that device.  Farekh’s fingerprints were subsequently recovered from packing tape on the VBIED that did not detonate.

The superseding indictment also charges that, between December 2006 and September 2009, Farekh provided, attempted to provide and conspired to provide material support to al-Qaeda.  The superseding indictment includes the charges from the original indictment, unsealed on May 28, 2015, that Farekh provided, attempted to provide and conspired to provide material support to terrorists.  The defendant is scheduled to be arraigned on the new charges on Jan. 7, 2016, at 12 p.m. EST at the U.S. District Court for the Eastern District of New York, before U.S. District Judge Brian M. Cogan of the Eastern District of New York.

The superseding indictment was announced today by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York City Police Department (NYPD).

“Muhanad Mahmoud Al Farekh is charged with conspiring to kill Americans overseas for his role in a VBIED attack on a U.S. military installation in Afghanistan,” said Assistant Attorney General Carlin.  “Counterterrorism is the highest priority of the National Security Division, and we will continue to use all tools available to bring to justice those who seek to harm American servicemen and women who bravely risk their lives in defense of our nation.”

“Farekh, a citizen of the United States, allegedly turned his back on our country and tried to kill U.S. soldiers in the course of executing their sworn duty to keep us safe,” said U.S. Attorney Capers.  “Today’s charges demonstrate that the patriotism and service of the members of our armed forces will never be forgotten and that we will make every effort to prosecute those who would harm our country and our armed forces to the full extent of the law.”

“This indictment demonstrates justice has no bounds and the United States government will seek to investigate and prosecute crimes against Americans, no matter where they take place,” said Assistant Director in Charge Rodriguez.  “The FBI stands alongside our military and law enforcement partners to hold criminals accountable for their actions.  Special thanks to the FBI agents and NYPD detectives on our JTTF, who have conducted a thorough global investigation.”

“This superseding indictment demonstrates the NYPD and FBI's commitment to arrest those who commit acts of terror--from Arthur Avenue to Afghanistan,” said Commissioner Bratton.  “This thwarted plot is strikingly familiar ‎to the attack that killed Detective Lemm last week in Afghanistan. We will continue working on every corner of the globe to arrest and charge those who attack our men and women in uniform.”

As alleged in other publicly-filed documents, in approximately 2007, Farekh and two co-conspirators departed Canada for Pakistan with the intention of fighting against American forces.  They did not inform their families of their plan before departing, but called a friend in Canada upon arrival to let him know that he should not expect to hear from them again because they intended to become martyrs.  One of Farekh’s co-conspirators – Ferid Imam – subsequently provided weapons and other military-type training at an al-Qaeda training camp in Pakistan in approximately September 2008, according to public testimony in previous EDNY criminal trials.  Among Imam’s trainees were three individuals – Najibullah Zazi, Zarein Ahmedzay and Adis Medunjanin – who intended to return to the United States to conduct a suicide attack on the New York City subway system.  Zazi and Ahmedzay pleaded guilty pursuant to cooperation agreements and have yet to be sentenced; Medunjanin was convicted after trial and sentenced to life in prison.  Ferid Imam has also been indicted for his role in the plot.

If convicted, the defendant faces a mandatory minimum sentence of seven years in prison and a maximum sentence of life imprisonment.  Any potential sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal history, if any, the defendant’s role in the offense and the characteristics of the violation.

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

Assistant Attorney General Carlin joined U.S. Attorney Capers in extending his grateful appreciation to the FBI’s Joint Terrorism Task Force.  The case is being prosecuted by Assistant U.S. Attorneys Zainab Ahmad, Richard M. Tucker and Douglas M. Pravda of the Eastern District of New York, with assistance provided by Trial Attorney Kiersten Korczynski of the National Security Division’s Counterterrorism Section.

Farekh Superseding Indictment

A superseding indictment was obtained today in federal court in the Eastern District of New York, adding charges against Muhanad Mahmoud Al Farekh, an American citizen, for conspiracy to murder United States nationals, use of explosives, conspiracy to use a weapon of mass destruction, and conspiracy to bomb a government facility.  These new charges arise out of Farekh’s participation in an attack on a U.S. military base in Afghanistan in January 2009.  As set forth in the superseding indictment and in other publicly available information, Farekh assisted in the preparation of a vehicle-borne improvised explosive device (“VBIED”) for use in the attack.  On or about January 19, 2009, two co-conspirators drove vehicles to the U.S. military base in Afghanistan.  The first co-conspirator detonated the VBIED in his vehicle during the attack on the military base.  The second co-conspirator drove a truck containing a second VBIED to the military base, but did not detonate that device.  Farekh’s fingerprints were subsequently recovered from packing tape on the VBIED that did not detonate.

The superseding indictment also charges that, between December 2006 and September 2009, Farekh provided, attempted to provide, and conspired to provide material support to al-Qaeda.  The superseding indictment includes the charges from the original indictment, unsealed on May 28, 2015, that Farekh provided, attempted to provide, and conspired to provide material support to terrorists.

The defendant is scheduled to be arraigned on the new charges on January 7, 2016, at 12 p.m. at the United States District Court for the Eastern District of New York, before United States District Judge Brian M. Cogan.

The superseding indictment was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; John P. Carlin, Assistant Attorney General for National Security; Diego G. Rodriguez, Assistant Director in Charge, Federal Bureau of Investigation (FBI), New York Field Office; and William J. Bratton, Commissioner, New York City Police Department (NYPD).

“Farekh, a citizen of the United States, allegedly turned his back on our country and tried to kill U.S. soldiers in the course of their executing their sworn duty to keep us safe,” stated United States Attorney Capers.  “Today’s charges demonstrate that the patriotism and service of the members of our armed forces will never be forgotten and that we will make every effort to prosecute those who would harm our country and our armed forces to the full extent of the law.”  Mr. Capers extended his grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state, and local agencies from the region. 

“Muhanad Mahmoud Al Farekh is charged with conspiring to kill Americans overseas for his role in a VBIED attack on a U.S. military installation in Afghanistan,” said Assistant Attorney General Carlin.  “Counterterrorism is the highest priority of the National Security Division, and we will continue to use all tools available to bring to justice those who seek to harm American servicemen and women who bravely risk their lives in defense of our nation.”

“This indictment demonstrates justice has no bounds and the United States government will seek to investigate and prosecute crimes against Americans, no matter where they take place. The FBI stands alongside our military and law enforcement partners to hold criminals accountable for their actions.  Special thanks to the FBI agents and NYPD detectives on our JTTF, who have conducted a thorough global investigation,” said FBI Assistant Director in Charge Rodriguez. 

“This superseding indictment demonstrates the NYPD and FBI's commitment to arrest those who commit acts of terror – from Arthur Avenue to Afghanistan. This thwarted plot is strikingly familiar ‎to the attack that killed Detective Lemm in Afghanistan. We will continue working on every corner of the globe to arrest and charge those who attack our men and women in uniform,” said Police Commissioner William J. Bratton.

As alleged in other publicly filed documents, in approximately 2007, Farekh and two co-conspirators departed Canada for Pakistan with the intention of fighting against American forces.  They did not inform their families of their plan before departing, but called a friend in Canada upon arrival to let him know that he should not expect to hear from them again because they intended to become martyrs.  One of Farekh’s co-conspirators – Ferid Imam – subsequently provided weapons and other military-type training at an al-Qaeda training camp in Pakistan in approximately September 2008, according to public testimony in previous EDNY criminal trials.  Among Imam’s trainees were three individuals – Najibullah Zazi, Zarein Ahmedzay, and Adis Medunjanin – who intended to return to the United States to conduct a suicide attack on the New York City subway system.  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.  Ferid Imam has also been indicted for his role in the plot (see EDNY Docket Number 10-CR-019 (S-4) (RJD)).

If convicted, the defendant faces a statutory mandatory minimum sentence of 7 years’ imprisonment and a maximum sentence of life imprisonment.            

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

The government’s case is being prosecuted by the Office’s National Security & Cybercrime Section.  Assistant United States Attorneys Zainab Ahmad, Richard M. Tucker, and Douglas M. Pravda are in charge of the prosecution, with assistance provided by Trial Attorney Kiersten Korczynski of the Justice Department’s Counterterrorism Section.

The Defendant:

MUHANAD MAHMOUD AL FAREKH
Age: 30
Nationality: United States

E.D.N.Y. Docket No. 15-CR-268 (S-1)

Robert L. Capers, United States Attorney for the Eastern District of New York, and Vanita Gupta, Principal Deputy Assistant Attorney General for Civil Rights, announced the filing today of a federal Fair Housing Act complaint against Coney Island, New York cooperative Trump Village Section IV Inc. and Igor Oberman, a former President of its Board of Directors, for violation of the Fair Housing Act, 42 U.S.C. §§ 3604(f) and 3617.  Trump Village Section IV Inc. is a 1,144-unit cooperative apartment complex in Brooklyn, New York.  The owners of the complex are shareholders in the cooperative, and have proprietary leases for their residential units.  The complaint alleges that between May 2012 and March 2015, defendants engaged in a pattern or practice of discrimination by denying Trump Village residents with disabilities emotional support animals.

According to the government’s complaint, defendants refused to allow four residents of the cooperative to live with emotional support dogs and commenced eviction proceedings against three of them when they refused to give up their animals.  As further set forth in the complaint, defendants took some of these actions even after they entered into a conciliation agreement with the United States Department of Housing and Urban Development in which they agreed that Trump Village would permit individuals to live with emotional support animals.  The complaint seeks monetary damages for the victims of the discrimination as well as injunctive relief barring defendants from discriminating against individuals with disabilities.

“The law is clear that reasonable accommodations must be granted to individuals with disabilities when those accommodations are necessary to afford them the equal opportunity to use and enjoy their homes.  This includes the right to live with an emotional support animal.  Those responsible for refusing to grant such accommodations or retaliating against individuals with disabilities who try to enforce their rights under the Fair Housing Act will be held accountable,” stated United States Attorney Capers.  Mr. Capers extended his appreciation to the United States Department of Housing and Urban Development Office of Fair Housing and Equal Opportunity for its assistance with the investigation. 

“Emotional support animals provide critical care and therapeutic aid for people with disabilities,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “The department will continue to enforce fair housing laws to ensure that housing providers make reasonable accommodations for individuals who rely on assistance animals in their homes.”

The government’s case is being handled by Assistant United States Attorney Melanie D. Hendry. 

E.D.N.Y. Docket No: 15-cv-7306 (NGG)(PK)

Later today, Tirso Martinez-Sanchez will be arraigned at the federal courthouse in Brooklyn, New York, on charges that he was the head of an international drug cartel that imported tens of thousands of kilograms of cocaine into the United States from Mexico.  Martinez-Sanchez was arrested in Mexico on February 2, 2014, based on a provisional arrest warrant issued from the Eastern District of New York.  He was extradited from Mexico to the United States on December 17, 2015. 

The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York and Acting Special Agent in Charge, Glenn Sorge, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI), New York.

As alleged in the indictment and other court documents, Martinez-Sanchez was the leader of an extensive transnational narcotics importation, distribution, and transportation organization that is responsible for the importation and distribution of tens of thousands of kilograms of cocaine.  In particular, the organization obtained multi-ton shipments of cocaine from Colombian sources of supply.  Martinez-Sanchez then organized the importation of that cocaine from outside of the United States, into the United States, by using an elaborate transportation network of trains, tractor trailers, and other vehicles.  Once the cocaine was in the United States, Martinez-Sanchez directed organization members to transport the cocaine overland to large distribution centers, including some areas located in the Los Angeles, New York, and Chicago metropolitan areas.  Martinez-Sanchez directed organization members to coordinate the logistics of storing the cocaine in the organization’s stash warehouses and transporting the cocaine to the organization’s distributors and customers throughout New York and elsewhere in the United States, including California and Illinois.  

The investigation further revealed that Martinez-Sanchez used a network of large warehouses to store and distribute the cocaine in the United States.  Martinez-Sanchez directed members of the organization to establish and maintain numerous front companies to purchase or lease these stash warehouses and vehicles to transport cocaine, and to purchase “cover loads,” or legitimate goods that were stored and transported with the cocaine to mask the cocaine shipment. 

Martinez-Sanchez also oversaw the collection of the organization’s proceeds from the sale of cocaine in the United States.  After the cocaine was sold, the proceeds were collected and stored in the organization’s stash warehouses.  At Martinez-Sanchez’s direction, the organization’s couriers smuggled some of the drug proceeds to organization members outside of the United States using the same transportation network of tractor trailers and trains that had been used to smuggle the cocaine into the United States.  The investigation further revealed that Martinez-Sanchez invested a considerable amount of narcotics proceeds in money laundering ventures, such as the purchase of professional soccer teams, and a chain of high-end clothing boutiques.  Martinez-Sanchez also invested the narcotics proceeds back into the instrumentalities of the organization itself, such as purchasing or leasing stash warehouses, vehicles, and front businesses.

Martinez-Sanchez had been designated a Consolidated Priority Organization Target or CPOT by the Organized Crime Drug Enforcement Task Force (OCDETF).  In addition to coordinating the distribution of his own organization’s cocaine, Martinez-Sanchez also transported and distributed narcotics for members of other Mexican Drug Cartels, including the Sinaloa Cartel, led by CPOTs Joaquin “El Chapo” Guzman and Ismael “Mayo” Zambada; the Juarez Cartel, led by CPOT Vicente Carillo-Fuentes and the Beltran-Leyva Cartel, led by brothers Arturo, Hector and Alfredo Beltran-Leyva.

During the course of the investigation, law enforcement agents seized approximately 500 kilograms of cocaine from a residence in Deer Park, New York; approximately 2,000 kilograms of cocaine from a warehouse in Brooklyn, New York; approximately 2,000 kilograms of cocaine hidden inside a railroad car in Queens, New York; approximately 1,100 kilograms of cocaine from a warehouse in El Paso, Texas; and approximately 1,900 kilograms of cocaine from a warehouse in Chicago, Illinois.   

“The charges announced today reflect our ongoing efforts to target and dismantle the largest drug trafficking organizations in the world, whose multi-billion dollar criminal networks funnel drugs onto our streets and spread violence into our communities,” said U.S. Attorney Capers.  “We will continue to work together with our law enforcement partners in Mexico to root out the leaders of these insidious cartels wherever they may be found and bring them to justice.”  Mr. Capers extended his grateful appreciation to the Department of Homeland Security, Homeland Security Investigations (HSI) New York Office, the agency responsible for leading the investigation, and to the invaluable assistance provided by the HSI Mexico Country Office, the Drug Enforcement Administration Task Force, the DEA Mexico Country Office and the Department of Justice’s Office of International Affairs.

“This is yet another example of HSI and its partners relentlessly pursuing and dismantling drug trafficking organizations from top to bottom,” said Glenn Sorge, acting special agent in charge HSI New York.  “This team of agents and prosecutors are committed to stopping the flow of prohibited drugs into the United States, and accomplishing one of HSI's priorities to ensure public safety.”

The government’s case is being prosecuted by the Office’s International Narcotics and Money Laundering Section.  Assistant United States Attorneys Steven L. Tiscione and Erik D. Paulsen are in charge of the prosecution.

The Defendants:

TIRSO MARTINEZ-SANCHEZ
Age:  51
Mexico

E.D.N.Y. Docket No. 04-CR-874 (ERK)

Yesterday, United States Judge Arthur D. Spatt of the Eastern District of New York entered a decree ordering the forfeiture of approximately $40 million in net proceeds from the sale of a Montauk beachfront property.  The sale of approximately 9,606 shares of 93 Old Montauk Owners, Inc., the sole owner of the Panoramic View Resort & Residences, a 117-unit resort and residence development in Montauk, New York, closed on December 7, 2015.  The shares were sold to Panoramic Partners LLC, an affiliate of BLDG Management Co., Inc., for $63.9 million.

Distinctive Ventures, LLC had purchased the Panoramic View in 2007 using proceeds of a $96 million Ponzi scheme orchestrated by former investment fund manager Brian R. Callahan.  Distinctive Ventures is wholly owned by Distinctive Investments, which in turn is owned by Callahan’s brother in-law, Adam Manson.  After Callahan fraudulently diverted money from investment funds he managed to the Panoramic View, Manson helped Callahan hide the fraud from the funds’ independent auditors. 

In April 2012, the United States filed a civil forfeiture action against Distinctive Venture’s shares in the Panoramic View and other assets traceable to Callahan and Manson’s fraud.  Judge Spatt directed the sale of the Panoramic View shares to preserve their potential value for the government and, in turn, for the victims of the fraud.

The sale of the Panoramic View and forfeiture of the net proceeds were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, and Shantelle P. Kitchen, Special Agent-in Charge, Internal Revenue Service, New York Field Office.

“Brian Callahan, assisted by Adam Manson, orchestrated one of the largest Ponzi schemes in Long Island history.  Today we announce the liquidation of the proceeds of that scheme,” stated United States Attorney Capers.  “This unprecedented sale exemplifies the importance of using civil forfeiture to ensure that assets will be available to repay fraud victims.  Due to the hard work of prosecutors in this Office, assisted by the investigating agencies and the U.S. Marshals Service, we were able to maximize the pool of funds potentially available for distribution to victims of this fraud.”  Mr. Capers thanked the 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.

“Instead of investing victim funds as intended, Callahan and Manson entered into a quid-pro-quo arrangement that served to advance each other’s interests.  We have a responsibility to uphold the public’s confidence in the integrity of our financial markets.  Today’s court order brings us one step closer to restoring assets to the victims of this fraud,” said FBI Assistant Director-in-Charge Rodriguez.

“Victims of Ponzi schemes are seldom made whole, both emotionally and financially,” said IRS Special Agent-in-Charge Kitchen.  “It is our hope, however, that the proceeds from this forfeiture bring some financial relief to the victims, along with a measure of closure.”

In January 2007, Distinctive Ventures purchased the Panoramic View for $38 million.  To acquire the resort, Callahan diverted more than $12.1 million from investment funds he operated to Distinctive Investments.  In addition, Distinctive obtained a $35 million acquisition loan and $10 million construction loan from a commercial lender secured by Distinctive’s shares and proprietary leases on unsold units (together, “Loan #1”).  From May 2008 through November 2011, Callahan diverted at least $17 million of investors’ money to make payments on Loan #1. 

In March 2011, Callahan and his wife acquired shares from Distinctive Ventures in connection with entering into a proprietary lease for a newly renovated Panoramic View unit (the “Callahan Shares”).  To complete the purchase, Callahan used approximately $450,000 of investors’ money as a downpayment on the Callahan Shares and obtained a $2.3 million mortgage from a second lender (“Loan #2”). 

On April 17, 2012, the United States filed a civil forfeiture action against Distinctive Venture’s shares and the Callahan Shares and other assets traceable to Callahan and Manson’s fraud, ensuring that these assets would be available for forfeiture.   In July 2012, however, Distinctive Ventures defaulted on Loan #1 and began accruing interest in the amount of over $2.2 million annually.  On February 22, 2014, Judge Spatt granted the government’s motion to sell Distinctive’s shares, ruling that a sale on commercially reasonable terms was necessary and appropriate to preserve the value of the Panoramic View.  On March 27, 2014, Judge Spatt accepted the government’s proposal to maximize the sale price of Distinctive’s shares through a bidding process.  Pursuant to the government’s proposal, a bid package and contract of sale was distributed to interested parties.  The final bid deadline was August 12, 2015.  After review of the bids received, Panoramic Partners, LLC was selected as the winning bid.

Callahan and Manson, who were charged in July 2013 with securities fraud and wire fraud offenses, consented to the forfeiture of the Panoramic View as part of their guilty pleas in April and May 2014, respectively.  Pursuant to his plea, Callahan conveyed the Callahan Shares back to Distinctive Ventures so they could be included in the interlocutory sale.

The sale of Distinctive’s shares to Panoramic Partners, LLC closed on Monday, December 7, 2015.  At the closing, the lenders for Loan #1 and Loan #2 were paid pursuant to the terms of a court-ordered stipulation.  Pursuant to the decree of forfeiture issued by Judge Spatt today, the net proceeds of the sale, or approximately $40.3 million, were forfeited to the government, ensuring their availability to repay victims of Callahan and Manson’s fraud through the Department of Justice’s remission procedures.

This prosecution was the result of efforts by President Obama's 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’s 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 prosecuted by Assistant United States Attorneys Brian D. Morris, Karin K. Orenstein, Christopher C. Caffarone, and Winston M. Paes. 

The Defendants:

BRIAN R. CALLAHAN
Age: 45
Old Westbury, New York

ADAM J. MANSON
Age: 43
Old Westbury, New York

E.D.N.Y. Docket Nos: 12-CV-1880 (ADS) and 13-CR-453(ADS)

BROOKLYN, N.Y. – A seven-count indictment was unsealed this morning in federal court in Brooklyn, New York, charging Martin Shkreli, the founder and managing member of hedge funds MSMB Capital Management LP (MSMB Capital) and MSMB Healthcare Management LP (MSMB Healthcare) and former Chief Executive Officer of Retrophin Inc. (Retrophin), a biopharmaceutical company that trades under the ticker symbol RTRX; and Evan Greebel, a former partner at the New York office of Katten Muchin Rosenman LLP who served as outside counsel to Retrophin.[1]  Shkreli is charged with securities fraud, securities fraud conspiracy, and wire fraud conspiracy for orchestrating three interrelated schemes: schemes to defraud investors in MSMB Capital and MSMB Healthcare and a scheme to misappropriate Retrophin’s assets.  Greebel is charged with wire fraud conspiracy for his role in the Retrophin scheme.  Shkreli and Greebel will be arraigned later today before United States Magistrate Judge Robert M. Levy, at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).       

“As alleged, Martin Shkreli engaged in multiple schemes to ensnare investors through a web of lies and deceit.  His plots were matched only by efforts to conceal the fraud, which led him to operate his companies, including a publicly traded company, as a Ponzi scheme, where he used the assets of the new entity to pay off debts from the old entity.  When regulators and auditors questioned Shkreli’s decisions, he joined forces with Evan Greebel, who used his law license and training to conceal and further the scheme,” stated United States Attorney Capers.  “The charges and arrests announced today reflect our commitment to hold accountable corporate executives and licensed professionals who betray their positions of trust in order to fraudulently enrich themselves.”  Mr. Capers thanked the Securities and Exchange Commission, New York Regional Office (SEC), and the Financial Industry Regulatory Authority, Inc., Criminal Prosecution Assistance Group (FINRA CPAG), for their significant cooperation and assistance during the investigation.

“The charges announced today describe a securities fraud trifecta of lies, deceit, and greed.  As charged, Martin Shkreli targeted investors and retained their business by making several misrepresentations and omissions about key facts of the funds he managed.  He continued to lie about the success of the investments and used assets from Retrophin to payoff MSMB investors.  In the end, Shkreli and Greebel used a series of settlement and sham consulting agreements that resulted in Retrophin and its investors suffering a loss in excess of $11 million.  While the charges announced today are significant, they are but one example of what’s left to come as the FBI continues this investigation,” stated FBI Assistant Director-in-Charge Rodriguez.

As detailed in the indictment and below, between September 2009 and September 2014, Shkreli, together with others, orchestrated three interrelated fraudulent schemes: (i) a scheme to defraud investors and potential investors in MSMB Capital, (ii) a scheme to defraud investors and potential investors in MSMB Healthcare, and (iii) a scheme to defraud Retrophin. 

The MSMB Capital Hedge Fund Scheme

Between September 2009 and January 2011, Shkreli and his co-conspirators falsely represented to potential investors, among other things, that: (i) MSMB Capital was a transparent investment vehicle for sophisticated investors with monthly liquidity; (ii) Shkreli would only receive a one percent management fee per year based on net assets of the partnership; (iii) Shkreli was entitled to receive twenty percent of the limited partners’ net profits for the year; and (iv) MSMB Capital had retained independent certified public accountants as auditors who would issue an audit report on the annual financial statements.  Shkreli also failed to disclose to investors that he had lost all the money he managed in Elea Capital, his prior hedge fund, and that Lehman Brothers had a $2.3 million default judgment against him.  Finally, Shkreli lied to his biggest investor telling him that MSMB Capital had $35 million in assets under management, when in fact MSMB Capital had less than $700 in its bank and brokerage accounts.  Based on these and other false representations, Shkreli and his co-conspirators induced approximately $3 million in investments from eight investors.

In February 2011, MSMB Capital failed to settle a short position of more than 11 million shares of Orexigen Therapeutics, Inc. (OREX) that Merrill Lynch ultimately closed at a loss of over $7 million.  At this time, MSMB Capital also suffered more than $1 million in other trading losses.  Based on these trading losses, the value of assets in MSMB Capital’s bank and brokerage accounts, not including the OREX losses at Merrill Lynch, declined from more than $1.12 million on January 31, 2011 to $58,500 at the end of February 2011.  MSMB Capital did not engage in any trading after February 2011.

For months following the complete loss of the investments in MSMB Capital and the end of trading activity, Shkreli continued to send fabricated performance updates to investors that touted profits of as high as forty percent since inception.  In September 2012, more than eighteen months after MSMB Capital had lost all its assets, Shkreli sent an email to MSMB Capital investors informing them that he was winding down the fund and that “original MSMB investors (2009) have just about doubled their money net of fees.”  Shkreli also misappropriated funds from MSMB Capital by withdrawing more than $200,000 from MSMB Capital, which was far in excess of the one percent management fee and the twenty percent net profit incentive allocation permitted by the partnership agreement. 

The MSMB Healthcare Hedge Fund Scheme

Following the collapse of MSMB Capital after the failed OREX trades, from approximately February 2011 to November 2012, Shkreli solicited investments in MSMB Healthcare from potential investors while concealing from them his disastrous past performance as a portfolio manager for MSMB Capital and Elea Capital and the $7 million liability that Shkreli owed Merrill Lynch for the February 2011 OREX trades.  Shkreli also falsely represented that MSMB Healthcare had $55 million in assets under management.  Based on these and other false representations, Shkreli and his co-conspirators induced approximately $5 million in investments from thirteen investors.

As with MSMB Capital, Shkreli provided MSMB Healthcare investors with performance updates that were based, in large part, on an internal inflated valuation of Retrophin, his private biopharmaceutical company that had received investments from MSMB Healthcare.  Here again, Shkreli misappropriated funds by withdrawing money from MSMB Healthcare that was far in excess of the one percent management fee and the twenty percent net profit incentive allocation permitted by the partnership agreement.  Additionally, without the investors’ knowledge or consent, Shkreli improperly used MSMB Healthcare assets to pay for obligations that were not the responsibility of MSMB Healthcare, including using at least $900,000 to settle claims brought by Merrill Lynch in connection with the failed OREX trades. 

The Retrophin Misappropriation Scheme

Between March 2011 and September 2014, Shkreli and Greebel, together with others, engaged in a scheme to defraud Retrophin by misappropriating Retrophin’s assets in an effort to pay off Shkreli’s personal and unrelated professional debts and obligations.  Specifically, Shkreli and Greebel defrauded Retrophin by causing it to: (i) transfer Retrophin shares to MSMB Capital even though MSMB Capital never invested in Retrophin; (ii) enter into settlement agreements with defrauded MSMB Capital and MSMB Healthcare investors to settle liabilities owed by Shkreli and the funds; and (iii) enter into sham consulting agreements with other defrauded MSMB Capital, MSMB Healthcare, and Elea Capital investors as an alternative means to settle liabilities owed by Shkreli and his hedge funds.

In December 2012, despite the fact that Retrophin’s books and records did not reflect any investments by MSMB Capital, Shkreli and Greebel engaged in a series of fraudulent and backdated transactions to create the appearance of an investment by MSMB Capital in Retrophin.  They orchestrated these transactions, in part, to support Shkreli’s false representations to the U.S. Securities and Exchange Commission in November 2012 that MSMB Capital was still in operation and had $2.6 million in assets under management. 

Between February 2013 and August 2013, Shkreli and Greebel, together with others, caused Retrophin to enter into settlement agreements with MSMB Capital and MSMB Healthcare investors to resolve their claims and threats of claims which were based on Shkreli’s false representations about the exceptional performance of the funds.  Notably, Shkreli and Greebel did not seek authorization from the Board prior to entering into these fraudulent settlements.  Shkreli and Greebel caused Retrophin to pay more than $3.4 million in cash and RTRX stock to settle claims with seven MSMB Capital and MSMB Healthcare investors. 

In August 2013, when Retrophin’s external auditor questioned the settlement agreements and determined that Retrophin was not responsible for the claims resolved in the settlement agreements, Shkreli and Greebel caused MSMB Capital and MSMB Healthcare to execute indemnification agreements and promissory notes for the benefit of Retrophin even though they knew that the funds had no assets.  Shkreli and Greebel, together with others, then devised an alternative approach to settle with the remaining defrauded hedge fund investors, namely, settlement agreements under the guise of consulting agreements.  On October 16, 2013, when Shkreli initially questioned this new approach, Greebel explained, “We can call it a settlement agreement, but given [the auditor’s] recent behavior they may require it to be disclosed in the financials.  I was trying to prevent that issue.”  Between September 2013 and March 2014, Shkreli and Greebel caused Retrophin to enter into four sham consulting agreements with defrauded investors from the funds.  Retrophin did not receive any legitimate consulting services based on these sham agreements, but paid more than $7.6 million in cash and RTRX stock to settle claims that the auditors had previously determined were not the responsibility of Retrophin. 

*          *          *

The criminal case has been assigned to United States District Judge Kiyo A. Matsumoto.  If convicted, Shkreli and Greebel each face a maximum sentence of 20 years’ imprisonment.

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

*          *          *

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established 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, please visit www.StopFraud.gov.

The Defendants:

MARTIN SHKRELI
Age: 32
Residence: New York, New York

EVAN GREEBEL
Age: 42
Residence: Scarsdale, New York

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

 

---

 

[1] The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

A pediatrician was sentenced to 30 years in prison to be followed by lifetime supervised release for sexual exploitation of minors, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Robert L. Capers of the Eastern District of New York announced today.

In April 2014, Rakesh K. Punn, 57, of Bethpage, New York, pleaded guilty to producing child pornography.  In connection with his plea, Punn admitted that in September 2007, he sexually exploited a minor pediatric patient during a medical appointment at his home-office in Bethpage.  Punn falsely diagnosed the child with an illness so that he could obtain unfettered access to her without her parents being present and then drugged and secretly photographed the girl.  At sentencing, the court found that Punn engaged in a pattern of similar conduct with other patients and enhanced his sentence accordingly.

Punn awaits sentencing on state charges also related to this conduct.

Trial Attorney Amy Larson of the Justice Department’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Allen L. Bode of the Eastern District of New York prosecuted this case.

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

Earlier today, Rakesh K. Punn, a licensed medical doctor and pediatrician, was sentenced to thirty years’ incarceration, lifetime supervised release, and sex offender registration for sexual exploitation of children.  Today’s sentencing took place before United States District Judge Joanna Seybert.  

The sentence was announced by Robert L. Capers, United States Attorney for the Eastern District of New York.

“Doctor Punn abused the trust of the community, parents, and his patients.  He betrayed his oath as a licensed physician to do no harm and instead victimized children for his own sexual purposes.”   Mr. Capers thanked the Federal Bureau of Investigation, the Nassau County District Attorney’s Office, the Nassau County Police Department, and the Department of Justice Criminal Division’s Child Exploitation and Obscenity Section (“CEOS”) and High Technology Investigative Unit for their joint investigation leading up to this case.

“Doctors swear an oath to do no harm, but this defendant perverted his job as a physician in the most despicable ways by drugging and then sexually abusing young girls while they were unconscious. Thanks to the efforts of our federal partners and Nassau prosecutors, this defendant will spend decades behind bars,” stated Acting DA Madeline Singas.           

Between September 6, 2007 and January 21, 2008, Punn sexually exploited three minor pediatric patients, under the guise of medical treatment, at his home-office in Bethpage, New York, and recorded the activities.  Punn lied about diagnoses for these children so he could have access to them without their parents being present, drugged them, and secretly photographed them.  Punn also submitted fraudulent insurance claims for the purported treatment of the three children and three other pediatric patients, when, in fact, the purported treatments had not been conducted for any medically accepted purpose, but rather, solely for the sexual gratification of the defendant.

Nassau County law enforcement authorities initially arrested Punn on July 15, 2010, and subsequently filed an indictment that charged Punn with multiple counts of violating New York State sexual abuse and fraud laws based on his conduct, which allegedly included recording sexually explicit activity involving his minor patients during their visits to his office.  On September 5, 2014, Punn pleaded guilty in Nassau County Court to two counts of criminal sale of a prescription for a controlled substance and one count of first-degree sexual abuse.  He awaits sentencing on those charges.  On January 4, 2012, a federal indictment was filed that charged Punn with sexual exploitation of children and health care fraud.  Punn has remained in custody since his initial arrest.   

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

The government’s case was prosecuted by the Office’s Long Island Criminal Division.  Assistant United States Attorney Allen L. Bode and Department of Justice Trial Attorney Amy Larson are in charge of the case.

The Defendant:

RAKESH K. PUNN
Age:  57
Bethpage, New York

E.D.N.Y. Docket No. 12-CR-0011(JS)

Earlier today, in federal court in Brooklyn, New York, three brothers were sentenced to prison terms following their pleas of guilty to sex trafficking charges.  Jorge Estrada-Tepal and Victor Leonel Estrada-Tepal were each sentenced to 17½ years of imprisonment to be followed by five years of supervised release, and Ricardo Estrada-Tepal was sentenced to 15 years of imprisonment to be followed by five years of supervised release.  The defendants were also ordered to pay, jointly and severally, $1,033,336 in restitution to the victims. 

The defendants, who are Mexican nationals, transported Mexican females from Mexico to the United States illegally, forcing them to work as prostitutes in New York City and elsewhere.  They were arrested in Queens, New York, in January 2014 and pled guilty to trafficking charges in January 2015.  Today’s sentences are the latest in the Office’s comprehensive anti-trafficking program, which has to date indicted over 65 defendants in sex trafficking cases and provided assistance to over 130 victims, including 36 minors.

The sentences were announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Glenn Sorge, Acting Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York.

“The lengthy sentences imposed today reflect the seriousness of the defendants’ crimes and underscore our Office’s resolve to seek justice for their victims,” stated United States Attorney Capers.  “The defendants have now been held to account for the daily horrors they inflicted on their victims for years.  We hope that these sentences bring some measure of closure to the victims and their families.”  Mr. Capers thanked HSI and other entities that assisted with the successful prosecution of this case.

“The defendants received sentences commensurate with their heinous crimes, abusing and exploiting innocent victims to satisfy their own greed,” said Glenn Sorge, acting special agent in charge of HSI New York.  “It is a priority of HSI to rescue and assist victims of human trafficking while making every effort to destroy these international criminal syndicates that show little respect for basic human rights.”

The sex trafficking involved at least five victims (identified as Jane Does 1 through 5), and the defendants used various means to cause these women to work in prostitution, including threats of violence, assaults, and psychological coercion.  During the guilty plea proceedings in January 2015, defendant Jorge Estrada-Tepal admitted that, starting in 2007, he and his brothers entered into a conspiracy to transport women from Mexico to Queens to engage in prostitution and that threats of force were used against the victims.  Ricardo Estrada-Tepal admitted that he and his brothers did not tell the women the truth about why they were coming to the United States.  Victor Leonel Estrada-Tepal admitted that he agreed with his brothers to force women to work in prostitution, including Victor’s wife, Jane Doe 4, who was 17 years old at the time he brought her from Mexico to Queens. 

Jane Doe 1 was primarily trafficked by her husband, the defendant Jorge Estrada-Tepal (“Jorge”).  After marrying in Mexico, Jorge forced Jane Doe 1 to work in prostitution in Mexico.  After being smuggled into the United States, Jane Doe 1 was required to work in prostitution almost daily for a period of approximately four years.  Jorge used a variety of means to force Jane Doe 1 to work, including physical assaults and threats.  Jane Doe 1 was required to give Jorge all of the money she earned.  In addition, Jorge forced Jane Doe 1 to take pills to induce abortions on two occasions even though she wanted to keep her children.

Jane Doe 2 was recruited by the defendant Ricardo Estrada-Tepal (“Ricardo”), who engaged in a romantic relationship with her, despite already being in a relationship with another victim in the case, Jane Doe 3.  After becoming involved with Ricardo in Mexico, Jane Doe 2 was forced into prostitution and then smuggled into the United States.  In Queens, Jane Doe 2 resided with defendant Victor Leonel Estrada-Tepal, who also pressured her to work in prostitution by demanding repayment of Jane Doe 2’s smuggling debt.  Ricardo also threatened to harm Jane Doe 2’s family if she did not work in prostitution.  Jane Doe 2 worked in prostitution for approximately two months before she was able to escape.  During that time, Ricardo raped Jane Doe 2, threatened her, and forced her to give him all of her earnings.

Jane Doe 3 was recruited by the defendant Ricardo Estrada-Tepal (“Ricardo”), who was engaged in a romantic relationship with her.  Ricardo pressured her into working in prostitution, in part by verbally abusing and physically assaulting her.  She worked in prostitution in Mexico for several years before becoming pregnant with Ricardo’s child in 2011.  After the birth of her child, Ricardo pressured Jane Doe 3 to move to the United States, assuring her that she would be able to work in a restaurant.  She was smuggled into the United States in April 2013 and lived in Queens with Ricardo.  Shortly after her arrival, Ricardo informed Jane Doe 3 that she had to start working in prostitution.  When she balked, Ricardo threatened to hit her.  Out of fear, Jane Doe 3 began working in prostitution until she was located by HSI agents at the time of the defendants’ arrests in January 2014.  During the periods of time Jane Doe 3 worked in prostitution, Ricardo took virtually all of the money that she earned.

Jane Doe 4 was a minor when she was trafficked to the United States by her husband, Victor Leonel Estrada-Tepal.  After her arrival in the United States, Jane Doe 4 worked as a prostitute and also provided information about how to work as a prostitute to other victims of the Estrada-Tepal brothers.

Jane Doe 5 was recruited in Mexico to work in prostitution by the defendants’ brother, Juan Carlos Estrada-Tepal (“Juan Carlos”), with whom Jane Doe 5 became romantically involved in approximately 2009, when Jane Doe 5 was 19.  Subsequently, Juan Carlos told Jane Doe 5 that she had to start working in prostitution, telling her that his brothers’ women worked as prostitutes, and they made more money than she did.  Jane Doe 5 felt that she had no choice because Juan Carlos was violent.  She then worked in prostitution for a period of time in Mexico prior to coming to the United States with Jane Doe 2 in the summer of 2011, at which time she left her son with Juan Carlos in Mexico.  After Jane Doe 5’s arrival in the United States, she worked in prostitution for approximately two years.  During this time, she gave birth to Juan Carlos’s daughter, after which she was instructed to send her daughter to Mexico to live with Juan Carlos.  She ultimately sent her daughter to Mexico out of fear that refusing to do so would cause her never to see her son again.  Thereafter, Juan Carlos threatened Jane Doe 5 that she would not be able to see her children again if she did not continue working in prostitution and sending him money.

Since 2009, the Department of Justice and ICE’s Homeland Security Investigations (HSI) have collaborated with Mexican law enforcement counterparts in a Bilateral Human Trafficking Enforcement Initiative aimed at strengthening high-impact prosecutions under both U.S. and Mexican law.  The initiative is aimed at dismantling human trafficking networks operating across the U.S.-Mexico border, bringing human traffickers to justice, reuniting victims with their children, and restoring the rights and dignity of human trafficking victims held under the trafficking networks’ control.  These efforts have resulted in successful prosecutions in both Mexico and the United States, including U.S. federal prosecutions of over 50 defendants in multiple cases in New York, Georgia, Florida, and Texas since 2009, and numerous Mexican federal and state prosecutions of associated sex traffickers. 

United States Attorney Capers extended his grateful appreciation to the Department of Justice’s Office of International Affairs for its assistance in the investigation of the case and the Government of Mexico for its assistance in locating and rescuing Jane Doe 5’s children, with whom she was reunited as a result of law enforcement’s efforts in this case.  Mr. Capers also thanked the many victim service providers and advocates for their dedicated efforts to restore and improve the lives of survivors of trafficking, in particular, Sanctuary for Families, the Urban Justice Center, Safe Horizon, LifeWay Network, the New York City Bar Justice Center, RestoreNYC, New York Presbyterian - Weill Cornell Medical Center, the law firm of Simpson Thacher & Bartlett LLP and the Law Offices of Anthony Scarpati.

The sentences were imposed by United States District Judge Margo K. Brodie.

The government’s case was prosecuted by Assistant United States Attorneys Taryn A. Merkl and Melody Wells.

The Defendants:

RICARDO ESTRADA-TEPAL
Age: 34
Queens, NY

VICTOR LEONEL ESTRADA-TEPAL
Age: 30
Queens, NY

JORGE ESTRADA-TEPAL
Age: 38
Queens, NY

E.D.N.Y. Docket No. CR-14-105 (MKB)

Earlier today, Besnik Llakatura pled guilty at the federal courthouse in Brooklyn, New York, to two counts of Hobbs Act extortion conspiracy and one count of brandishing a firearm in relation to an extortion conspiracy.  The proceeding took place before United States District Judge Eric N. Vitaliano.  At the time of the offenses, Llakatura was an active-duty police officer with the New York City Police Department (NYPD) assigned to the 120th Precinct in Staten Island, New York.  He was suspended without pay upon his arrest in December 2013.  When sentenced, Llakatura faces up to life in prison and a mandatory minimum sentence of seven years.  As part of his plea agreement with the government, Llakatura agreed to a $24,000 money judgment payable to the United States to be paid in part through forfeiture of $11,123 in cash seized during a search of his residence following his arrest. 

The plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and William J. Bratton, Commissioner, NYPD.

According to court filings and facts presented during the plea proceeding, between May and November 2013, Llakatura and co-defendants Redinel Dervishaj and Denis Nikolla conspired and attempted to extort a Queens restaurant owner and a Queens social club proprietor, demanding regular payments from each of these victims in exchange for so-called “protection.”  The extortion of the restaurant owner began shortly after the victim opened a restaurant in Astoria when he was visited by Dervishaj and told that he had opened a business in “our neighborhood” and, as a result, “you have to pay us” $4,000 per month.  The restaurant owner sought help from his friend Llakatura.  Unbeknownst to him, Llakatura, an NYPD officer in Staten Island since 2006, was conspiring with Dervishaj in the extortion.  Llakatura actively discouraged the restaurant owner from going to the police and sought to leverage his position of trust as a friend and a police officer to persuade the victim that he had no choice but to make the demanded payments, warning the victim that Dervishaj and his associates would physically harm him if he did not pay.  When the victim resisted, he was threatened with physical violence and chased at gunpoint down the street in Queens by Nikolla.  Over the course of five months, each of the three defendants took turns collecting monthly payments from the Astoria restaurant owner, ultimately collecting $24,000 in so-called protection money.  Throughout the conspiracy, Llakatura presented an outward façade of friendship to the restaurant owner, all the while secretly working with Dervishaj and Nikolla to convey threats of violence and intimidation to ensure the conspiracy’s success.

During the same time period, Llakatura and his co-defendants also conspired and attempted to extort a proprietor of two social clubs in Astoria, where gambling occurred.  Nikolla, accompanied by Dervishaj, made the initial extortion demand, seeking payments of $1,000 per week from the proprietor for so-called “protection.”  The proprietor refused to make the demanded payments and ceased going to his social clubs out of fear for his safety.  Court-authorized wiretaps of the defendants’ telephones revealed evidence of Llakatura’s participation in this extortion conspiracy with Dervishaj and Nikolla, and their attempts to locate the victim.  In one instance, Llakatura and his co-defendants threatened, punched, and pulled a gun on a friend of the victim in an effort to have the friend locate the victim for them.  The victim ultimately fled to a foreign country for a period of time to avoid the defendants’ extortionate threats.   

“Through his participation in these extortion schemes, Besnik Llakatura turned his back on his badge and his community, choosing instead to break the laws he was sworn to uphold, rather than enforce them, and to thereafter extort members of the community he was sworn to protect,” stated United States Attorney Robert L. Capers.  “Today’s guilty plea should serve as a reminder that no one is above the law.  Those who use threats, intimidation, and violence to instill fear in our communities will be vigorously prosecuted.”  Mr. Capers expressed his thanks to members of the Joint Organized Crime Task Force, which includes agents of the FBI and detectives of the NYPD, which led the investigation, as well as the NYPD’s Internal Affairs Division and the FBI’s Public Corruption squad for their cooperation and assistance in the investigation.

“Besnik Llakatura abused his powers and conspired with co-conspirators to extort innocent business owners in Queens.  Not only did he not honor the oath he took to serve and protect, but he violated the public trust, especially of the victim who came to him as a police officer to report a crime.  Today's guilty plea shows that public trust is not to be abused,” stated Assistant Director-in-Charge, Diego Rodriguez.

“I have no tolerance for corruption at any level in this department. Any member of the NYPD who violates the law, which we are explicitly charged with upholding, will be held fully responsible for their actions,” said Police Commissioner William J. Bratton.  

The charges in the indictment against co-defendants Redinel Dervishaj and Denis Nikolla are merely allegations, and these defendants are presumed innocent unless and until proven guilty.  Dervishaj and Nikolla are scheduled to commence trial in March 2016.

The government’s case is being prosecuted by the Office’s Organized Crime and Gangs Section.  Assistant United States Attorneys Nadia Shihata, M. Kristin Mace, and Patrick Hein are in charge of the prosecution.

The Defendant:

Besnik Llakatura, a/k/a “Besi” and “Nick”
Age: 36
Staten Island, New York

E.D.N.Y. Docket No. 13-CR-668 (ENV)

A 13-count indictment was unsealed today in United States District Court for the Eastern District of New York charging eight members and associates of the Zheng Organization with crimes including racketeering, narcotics trafficking, extortion offenses, illegal gambling, and soliciting assaults.  The defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn. 

The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), William J. Bratton, Commissioner, New York City Police Department (NYPD), and Christopher Shanahan, Field Office Director, U.S. Immigration and Customs Enforcement (ICE), Enforcement and Removal Operations (ERO).

“For years, Zheng and his associates committed violent acts to make money, protect their territory, and as retribution for perceived slights.  Violent gangs are a blight on our neighborhoods, and we will do all in our power to prevent them from casting a shadow of violence over our streets,” stated United States Attorney Capers.  “The arrests and charges announced today are a testament to our commitment to dismantling violent criminal organizations and making our communities safe.”  Mr. Capers thanked the Joint Asian Organized Crime Taskforce, which is comprised of members of the FBI, NYPD, and ERO, for their help with the government’s investigation.

“The Zheng Organization used violence and an array of criminal activities to enhance their power and protect their territory.  It’s gang related activity like this that infects our communities with an illness that kills our neighborhoods’ safety and growth.  However, there is an antidote to this that is made of law enforcement working at both the federal and local level to get gangs like this off the street,” said Assistant Director-in-Charge, Diego Rodriguez.

“These arrests demonstrate our dedication to protecting our communities from the shake downs and intimidation this gang carried out across the city,” said Police Commissioner William J. Bratton. “This case is the latest example of the utility of the task force model in rooting out violence in all of its forms. I applaud the work of the prosecutors from the US Attorney’s Office in the Eastern District and the FBI agents and NYPD detectives on the Joint Eurasian Organized Crime Task Force for their dedication on this case and the many others.”

The Zheng Organization was based in and around the Sunset Park neighborhood of Brooklyn and the Flushing neighborhood of Queens.  As alleged in the indictment and the government’s detention memorandum, the defendants participated in the affairs of the Zheng Organization through a variety of crimes.  The charged crimes of violence included extortions and assaults for hire: 

• In or about August 2013, Qian Zheng hired two individuals to assault victims identified in the indictment as John Doe 3 and Jane Doe.Zheng sought to have one of the victim’s leg broken and the other victim’s face scarred.

• In or about October 2013, Billy Chen and Jiang extorted a victim identified in the indictment as John Doe 1.In or about December 2013, Zheng conspired with Chen to further extort John Doe 1.Zheng hired two individuals to carry out the extortion and instructed them to beat John Doe 1 and fire shots into his restaurant so that he would pay an alleged debt.

• In or about October 2014, Zheng and Guifu Gao solicited the assault of a victim identified in the indictment as John Doe 4.Gao made clear that John Doe 4 needed to be crippled and that he should be beaten until he was half dead. Zheng similarly instructed those hired to carry out the beating to beat John Doe 4 severely.

• On May 28, 2015, Zheng sent his underlings, including Xin Lin, Kai Huan Huang, and Xue Jiang Gao, to collect money from a victim identified in the indictment as John Doe 2 at his gambling parlor.When John Doe 2 insisted that he did not owe any money, Lin, Huang, and Jiang Gao beat him with their fists and wooden stools, breaking a bone in John Doe 2’s hand.

The members and associates of the Zheng Organization also profited by narcotics trafficking and illegal gambling. 

If convicted of the charges in the indictment, Zheng faces a maximum sentence of 164 years’ imprisonment; Hui Chen, Lin, Huang, and Jiang Gao each face a maximum sentence of 40 years’ imprisonment; Billy Chen and Jiang face a maximum sentence of 20 years’ imprisonment; and Gao faces a maximum sentence of 16 years’ imprisonment.

The government’s case is being prosecuted by the office’s Organized Crime and Gangs Section.  Assistant United States Attorney Nadia E. Moore is in charge of the prosecution.

The Defendants:

QIAN ZHENG, also known as “Cash”
Age: 44

GUIFU GAO, also known as “Chicken Feather”
Age: 35

XIN LIN, also known as “Blackie”
Age: 33

ALLEN HUI CHEN, also known as “Yi Hui”
Age: 43

KAI HUAN HUANG, also known as “Shen Shen”
Age: 25

BILLY CHEN, also known as “Lo Di”
Age: 42

JIAYO JIANG, also known as “Yi Qiang”
Age: 45

XUE JIANG GAO, also known as “Xue Zhang”
Age: 30

Earlier today, the U.S. Attorney’s Office for the Eastern District of New York (“the Office”) filed fraud charges in Brooklyn federal court against Tishman Construction Corporation (“Tishman Construction”), one of the largest construction companies in New York City.  Tishman Construction is charged with mail and wire fraud conspiracy for improperly billing its clients more than $5 million over a ten-year period for hours not worked and at rates that were in excess of the agreed upon contract rate.  Also, Tishman Construction entered into a deferred prosecution agreement with the Office in which Tishman Construction admitted to fraudulently overbilling clients and agreed to pay more than $20 million in restitution to victims and penalties to the federal government.  The company has additionally instituted far-reaching corporate reforms designed to eliminate future problems and enforce best industry practices. 

Today’s deferred prosecution agreement marks the third resolution by the Office aimed at rooting out fraud in the construction industry.  In April 2012, Lend Lease (US) Construction LMB Inc. (formerly Bovis Lend Lease LMB Inc.) was charged with defrauding its clients, entered into a deferred prosecution agreement, and paid $56 million in restitution and penalties for engaging in a ten-year overbilling scheme.  More recently, in May 2015, Hunter Roberts Construction Group, LLC entered into a non-prosecution agreement and agreed to pay more than $7 million in restitution and penalties for engaging in an eight-year fraudulent overbilling scheme.

The charge and disposition were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Michael Nestor, Inspector General, Port Authority of New York and New Jersey; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; Carol Fortine Ochoa, Inspector General, General Services Administration, Office of the Inspector General; Cheryl Garcia, Special Agent-in-Charge, Department of Labor, Office of Inspector General; and Mark G. Peters, Commissioner, New York City Department of Investigation.

“Through a systemic practice, Tishman Construction bilked its clients by charging them for unworked time and at rates higher than those bargained for by their clients.  By doing so, Tishman Construction defrauded its clients and abused the trust placed in it to provide construction services on some of New York’s most storied buildings.  Today’s criminal action and resolution is another example of our steadfast efforts in combating and eliminating fraud in New York City’s construction industry,” stated U.S. Attorney Capers.  Mr. Capers thanked the investigative agencies for their outstanding commitment and dedication over the course of this multi-year industry investigation.

“Tishman’s conduct that perpetuated an industry-wide fraud for more than a decade has come to an end.  Government contracting agencies, and private clients alike, deserve to be billed strictly for what they bargained for, not duped into overpaying for gratuitous or phantom services.  Responsible for overseeing one of the largest government contracting agencies in the region, the Port Authority Office of Inspector General will continue to uproot fraud and corruption within the area’s construction industry,” stated Inspector General Nestor.  Mr. Nestor thanked his law enforcement partners for their dedication and professionalism in investigating these practices.

“Over ten years, Tishman Construction improperly billed millions from its clients representing both public and private projects across the New York City area.  Today’s restitution settlement of more than $20 million should help make right on a practice so wrong.  The FBI is committed to working with our law enforcement partners to investigate and bring justice to those who seek to profit from fraudulent schemes, especially those in the city’s construction industry,” stated Assistant Director-in-Charge Rodriguez.

 “Tishman Construction is being held responsible for defrauding the United States and others,” said Inspector General Ochoa. “I appreciate the hard work of our GSA OIG agents and law enforcement partners on this important construction fraud case that uncovered deceitful billing practices.” 

“Fraudulent billing practices threaten to stymie the growth and development of New York City’s construction industry.  Integrity in public and private contracting ensures a level playing field for employment opportunities.  We will continue to work with our investigative partners to identify corrupt practices affecting the American workforce,” stated Special Agent-in-Charge Garcia of the New York Regional Office, U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.

“This overbilling scheme padded daily work logs and falsified overtime - all at a cost to taxpayers and the public.  This type of fraud needlessly drives up construction costs and undermines integrity at these sites.  DOI thanks the hard work of our law enforcement partners on this investigation, and we will continue to work together to root out and stop this type of corruption,” stated Commissioner Peters.

The Overbilling Scheme

As alleged in the felony information filed today, Tishman Construction, a New York based construction firm, engaged in a fraudulent overbilling scheme that impacted its projects for at least a ten-year period.  These projects included the World Trade Center Towers One (the “Freedom Tower”), Three, Four and Seven; the World Trade Center PATH Transportation Hub; the Plaza Hotel renovation; the Javits Convention Center Expansion and Renovation Project; the Aqueduct Casino in Queens, and scores of other projects. 

Tishman Construction’s role on construction projects was typically that of a construction manager, which often required it to supervise the work done by subcontractors or trade contractors.  From at least 1999 through approximately October 2009, Tishman Construction billed clients, including government contracting and funding agencies, for hours that were not worked by labor foremen from Local 79 Mason Tenders’ District Council of Greater New York.  Tishman Construction carried out this fraudulent overbilling by: (a) adding one to two hours of unworked or unnecessary “guaranteed” overtime per day to the time sheets for the labor foremen; (b) providing five hours of guaranteed overtime per day, whether worked or not, for a particular senior labor foreman; and (c) allowing labor foremen to be absent from work for sick days, major holidays, and one or two weeks of vacation per year.  In furtherance of this overbilling scheme, Tishman Construction completed and submitted time sheets to its clients as though the labor foremen had worked those days.  Additionally, from approximately 2005 through 2009, without seeking advance approval from its clients, Tishman Construction paid a particularly senior labor foreman, and billed its clients, at wage rates that exceeded those specified in Tishman Construction’s contracts with its clients.

The Deferred Prosecution Agreement

Pursuant to the deferred prosecution agreement filed today, Tishman Construction accepted responsibility for its fraudulent billing practices and agreed to offer restitution to its clients in the amount of $5,650,917.97 and pay a penalty of $14,580,000.00 to the government over a two-year period.  In consideration of Tishman Construction’s remedial actions to date and its commitment to, among others: (a) accept and acknowledge responsibility for its conduct; (b) continue its cooperation; (c) make restitution available to victims; and (d) make the payment of a financial penalty to the government; the government agreed to defer the prosecution for a period of 24 months and to obtain an exclusion of time to allow Tishman Construction to demonstrate good conduct and compliance with the terms of this agreement.[1]  Tishman’s remedial measures include the creation of the position of Compliance Director at the company, the adoption of a new Code of Conduct, and the revision of time sheet recording and client billing policies. 

*          *          *

The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section.  Assistant United States Attorney Whitman Knapp and Special Assistant United States Attorney Jonathan P. Lax are in charge of the prosecution. 

The Defendant:

TISHMAN CONSTRUCTION CORPORATION
New York, New York

EDNY Docket No.: 15-CR-617 (CBA)

 

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[1]  The request for the exclusion of time is pending before the Honorable Carol B. Amon.

A two-count indictment was unsealed today in United States District Court for the Eastern District of New York charging former Suffolk County Police Chief of Department James Burke with assaulting and thereby violating the civil rights of a Smithtown man arrested for breaking into Burke’s department-issued vehicle and stealing his property on December 14, 2012.  Burke is also charged with conspiracy to obstruct a federal civil rights investigation into the assault.  The indictment was returned by a federal grand jury sitting in Central Islip, New York, on December 8, 2015.  The defendant was arrested this morning.

The indictment was announced by Robert L. Capers, United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

According to the indictment and court filings, on December 14, 2012, New York State Probation Department and Suffolk County Police Department (SCPD) officers arrested probationer Christopher Loeb at his mother’s home in Smithtown, New York, for a variety of probation violations.  During the arrest and search of the Loeb residence, officers discovered a large cache of merchandise stolen from over a dozen vehicles, including an SCPD-issued SUV operated by Burke.  Among the items taken from Burke’s SUV was his gun belt, several magazines of ammunition, a box of cigars, a humidor, and a canvas bag that contained toiletries, clothing, and other items.

Burke was permitted to enter the Loeb residence and retrieve the canvas bag and several other articles, even as the search was underway.  He then drove to the SCPD’s Fourth Precinct in Smithtown where detectives had begun interrogating Loeb.  Burke entered the interrogation room where Loeb was handcuffed and chained to an eyebolt fastened to the floor.  Burke then allegedly punched and kicked Loeb in the head and body. 

Subsequently, Burke and others allegedly pressured the detectives who witnessed the assault to conceal the event.  Those efforts continued even after the FBI and the U.S. Attorney’s Office opened an investigation of the assault in May 2013.  In one instance, Burke summoned detectives under his command to SCPD headquarters in Yaphank, New York, to persuade the detectives to agree on a false version of events that would conceal the assault.  In October 2013, one of those detectives allegedly testified falsely under oath in a state pretrial hearing in the Loeb prosecution, denying that Loeb had been assaulted.  

“We entrust our law enforcement officials with the tremendous responsibility to uphold the Constitution and protect the communities they serve as they enforce the law.  Wearing a badge is a privilege and honor – not a license to exact retribution and corrupt the administration of justice,” stated United States Attorney Capers.  “We will protect the rights of all no matter where the evidence may lead, and those who break the law will be held to account regardless of their rank and status.” 

“Today, former Suffolk County Police Chief James Burke finds himself on the opposite end of the very laws he was sworn to uphold.  When caught at a crossroads between right and wrong, Burke took a shortcut on the path to justice.  When an officer’s actions threaten to obstruct the integrity of an investigation, they unjustly call into question the reputation of those among them who respectfully adhere to the code of ethics so valued by the law enforcement community.  We vow never to forget our obligation to remove from the criminal justice system those who don’t uphold the tenets of the legal system,” stated FBI Assistant Director-in-Charge Rodriguez. 

The defendant is scheduled to be arraigned this afternoon before United States District Judge Leonard D. Wexler at the federal courthouse in Central Islip.  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 prosecuted by the Office’s Long Island Criminal Division.  Assistant United States Attorneys James Miskiewicz and Lara Treinis Gatz are in charge of the prosecution, assisted by EDNY Investigators William Hessle, Michael Cassidy, and Steven Kaplan.

The Defendant:

JAMES BURKE
Age:  51
Smithtown, New York

E.D.N.Y. Docket No. 15-CR-627(LDW)