Eastern District of New York

BROOKLYN, NY – Earlier today, defendant Dr. Okon Umana, 68, was sentenced to 24 months in prison for his role as the “no show” doctor in a $13 million health care fraud scheme.  Umana previously pleaded guilty to health care fraud conspiracy on December 1, 2014.  As part of the sentence, the court entered an order directing Umana to pay $6,429,330 in restitution and to forfeit $6,550,036.  The sentencing proceeding was held before U.S. District Judge John Gleeson.

The sentence was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; Scott Lampert, Special Agent-in-Charge, Health of Human Services, Office of Inspector General (HHS-OIG), New York Region; and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

From 2009 to 2012, Umana was the medical director of Cropsey Medical Care PLLC (Cropsey), a health care clinic located in Bensonhurst, Brooklyn.  In connection with his guilty plea, Umana admitted that many of Cropsey’s medical services were provided by a physician’s assistant who was acting without supervision by a medical doctor, and that Cropsey nevertheless billed Medicare and Medicaid for the services using Umana’s provider number.  In addition, Umana admitted that in seeking reimbursement for costs purportedly incurred transporting certain beneficiaries to and from Cropsey by ambulette, he falsely certified that transportation by ambulette was medically necessary.

Between November 2009 and October 2012, Cropsey submitted more than $13 million in claims to Medicare and Medicaid for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests.  Medicare and Medicaid reimbursed Cropsey more than $6 million for the claimed services and procedures.  Eight other individuals charged in connection with the scheme previously pleaded guilty.  To date, one other individual has been sentenced.

“Rather than using his license to practice medicine, Dr. Umana used it to fraudulently bill Medicare and Medicaid for services he did not provide,” stated Acting United States Attorney Currie.  “Protecting taxpayer funded programs such as Medicaid and Medicare is a priority of this Office and the Department of Justice.”   Mr. Currie extended his grateful appreciation to HHS-OIG and the FBI for their work on the investigation.

The government’s case is being prosecuted by Assistant U.S. Attorney Shannon C. Jones of the Eastern District of New York and Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section.

This case is being investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

The Defendant:

OKON UMANA
Age:  68
West Haven, Connecticut

E.D.N.Y. Docket No. 12 CR 617 (S-1)(JG)

Agron Hasbajrami, 31, an Albanian citizen and resident of Brooklyn, New York, was sentenced to 16 years in prison for attempting and conspiring to provide material support to terrorists.  Pursuant to the terms of his plea agreement, Hasbajrami will be removed from the United States at the conclusion of his sentence.  The sentencing proceeding was held before U.S. District Judge John Gleeson of the Eastern District of New York.

Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI New York Field Office and Commissioner William J. Bratton of the New York City Police Department (NYPD) made the announcement.

As stated during the guilty plea and sentencing proceedings, and according to court filings, in September 2011, Hasbajrami attempted to travel to the Federally Administered Tribal Areas of Pakistan (the FATA) for the purpose of joining a radical jihadist insurgent group.  In addition, he sent over $1,000 in multiple wire transfers abroad to support terrorist activities in Pakistan and Afghanistan.  In pursuing his goal of fighting jihad, the defendant exchanged email messages with an individual in Pakistan who said he was a member of an armed group that had murdered American soldiers and kidnapped Westerners.  In one email message, Hasbajrami stated that it was difficult to ask for money from fellow Muslims because they became apprehensive “when they hear it is for jihad.”  In another email, he stated that he wished to travel overseas, using jihadist rhetoric to describe his desire to die as a martyr.

On Sept. 5, 2011, Hasbajrami purchased a one-way airline ticket to travel to Turkey the following day.  Based on Hasbajrami’s email communications, he intended to travel from Turkey to the FATA to join a jihadist group.  On Sept. 6, 2011, the defendant was arrested at John F. Kennedy International Airport.  At the time of his arrest, he was carrying a tent, boots and cold weather gear.  A search of the defendant’s residence revealed, among other items, a note reading “Do not wait for invasion, the time is martyrdom time.”

“This case, like many others before it, has shown that the application of lawful surveillance can allow the United States government to detect and neutralize a terrorist in the United States,” said Acting U.S. Attorney Currie.  “The sentence imposed today leaves no question as to the defendant’s role in a very serious offense and helps ensure that he will no longer pose a threat to the United States and our allies.”

“Hasbajrami is yet another individual in the U.S. who was inspired to commit acts of violence in the name of jihad,” said Assistant Director in Charge Rodriguez.  “He used technology to propagate terrorist messages and create a plan to attack U.S. interests.  Due to the excellent collaboration and work of all our law enforcement partners on the Joint Terrorism Task Force, we stopped his travel abroad to fight with a foreign terrorist organization.  These threats remain among the highest priorities for the FBI and the Intelligence Community as a whole.  Through his guilty plea and today’s sentence, once completed, he will no longer be able to remain in the U.S. while trying to harm us.”

“The sentence imposed today sends a clear message: members of Manhattan-based Joint Terrorism Task Force will work tirelessly to uncover and stop any efforts to  provide material support to organizations built to kill Americans,” said Commissioner Bratton.

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

The case was prosecuted by Assistant U.S. Attorneys Seth D. DuCharme, Saritha Komatireddy, Peter Baldwin and Matthew Amatruda of the Eastern District of New York, and Trial Attorney Danya Atiyeh of the National Security Division’s Counterterrorism Section.

Earlier today, at the United States District Court for the Eastern District of New York in Brooklyn, Agron Hasbajrami, an Albanian citizen and resident of Brooklyn, was sentenced to 16 years in prison based on his June 2015 guilty plea to attempting and conspiring to provide material support to terrorists.  Pursuant to the terms of his plea agreement, Hasbajrami will be removed from the United States at the conclusion of his sentence.  The sentencing proceeding was held before United States District Judge John Gleeson.

The sentence was announced by Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Assistant Attorney General for National Security John P. Carlin, 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.

As stated during the guilty plea and sentencing proceedings, and according to court filings, in September 2011, Hasbajrami attempted to travel to the Federally Administered Tribal Areas of Pakistan (the FATA) for the purpose of joining a radical jihadist insurgent group.  In addition, he sent over $1,000 in multiple wire transfers abroad to support terrorist activities in Pakistan and Afghanistan.  In pursuing his goal of fighting jihad, the defendant exchanged email messages with an individual in Pakistan who said he was a member of an armed group that had murdered American soldiers and kidnapped Westerners.  In one email message, Hasbajrami stated that it was difficult to ask for money from fellow Muslims because they became apprehensive “when they hear it is for jihad.”  In another email, he stated that he wished to travel overseas, using jihadist rhetoric to describe his desire to die as a martyr.

On September 5, 2011, Hasbajrami purchased a one-way airline ticket to travel to Turkey the following day.  Based on Hasbajrami’s email communications, he intended to travel from Turkey to the FATA to join a jihadist group.  On September 6, 2011, Hasbajrami was arrested at John F. Kennedy International Airport.  At the time of his arrest, he was carrying a tent, boots, and cold weather gear.  A search of the defendant’s residence revealed, among other items, a note reading “Do not wait for invasion, the time is martyrdom time.”

“This case, like many others before it, has shown that the application of lawful surveillance can allow the United States government to detect and neutralize a terrorist in the United States,” said Acting U.S. Attorney Currie.  “The sentence imposed today leaves no question as to the defendant’s role in a very serious offense and helps ensure that he will no longer pose a threat to the United States and our allies.”

“Hasbajrami is yet another individual in the U.S. who was inspired to commit acts of violence in the name of jihad.  He used technology to propagate terrorist messages and create a plan to attack U.S. interests.  Due to the excellent collaboration and work of all our law enforcement partners on the Joint Terrorism Task Force, we stopped his travel abroad to fight with a foreign terrorist organization.  These threats remain among the highest priorities for the FBI and the Intelligence Community as a whole.  Through his guilty plea and today’s sentence, once completed, he will no longer be able to remain in the U.S. while trying to harm us,” stated FBI Assistant Director-in-Charge Rodriguez.

“The sentence imposed today sends a clear message:  members of Manhattan-based Joint Terrorism Task Force will work tirelessly to uncover and stop any efforts to  provide material support to organizations built to kill Americans,” said Police Commissioner Bratton.

Assistant Attorney General Carlin joined Acting U.S. Attorney Currie 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 was prosecuted by the office’s National Security & Cybercrime Section.  Assistant U.S. Attorneys Seth D. DuCharme, Saritha Komatireddy, Peter Baldwin, and Matthew Amatruda of the Eastern District of New York, and Trial Attorney Danya Atiyeh of the National Security Division’s Counterterrorism Section, are in charge of the prosecution.

The Defendant

AGRON HASBAJRAMI
Age: 31
Docket No.: 11 CR 623 (S2) (JG)

Lawal Olaniyi Babafemi, 35, a Nigerian citizen, was sentenced today to 22 years in prison for conspiring to provide and providing material support to a designated foreign terrorist organization, al-Qaeda in the Arabian Peninsula (AQAP).  The sentence was imposed by the U.S. District Judge John Gleeson of the Eastern District of New York.

Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI New York Field Office and Commissioner William J. Bratton of the New York City Police Department (NYPD) made the announcement. 

Babafemi pleaded guilty to providing and conspiring to provide material support to AQAP on April 29, 2014.  According to previous court filings, between approximately January 2010 and August 2011, the defendant traveled twice from Nigeria to Yemen to meet and train with leaders of AQAP, the Yemen-based branch of al-Qaeda that has been linked to a number of plots targeting the U.S. homeland over the past decade.  AQAP leaders trained Babafemi in the use of weapons, including AK-47 assault rifles, and taught him the importance of AQAP’s English-language media operations to its mission of inspiring “lone-wolf” style attacks abroad in the name of AQAP.  Babafemi assisted in AQAP’s English-language media operations, which include the publication of the online Inspire Magazine, and worked closely with Samir Khan, the founder of Inspire and a U.S. citizen.  Babafemi’s photograph, alongside Khan and other AQAP members, each holding an AK-47, was published in Issue 5 of Inspire; he also wrote rap lyrics on behalf of the group, hoping to extend its appeal to young Westerners.  At the direction of the now-deceased senior AQAP leader Anwar al-Aulaqi, AQAP provided Babafemi with the equivalent of almost $9,000 in cash to recruit other English-speakers from Nigeria to join the terrorist organization.  Babafemi attempted to recruit other Nigerians to join AQAP, but was arrested before he could complete that mission and conduct further activities on behalf of the organization.

“With this sentence, Lawal Olaniyi Babafemi is being held accountable for conspiring with members of al-Qaeda in the Arabian Peninsula and providing material support to the foreign terrorist organization,” said Assistant Attorney General Carlin.  “Babafemi travelled to Yemen to receive weapons training and to learn how to contribute to AQAP’s English-language media operation, in addition to receiving money to recruit others to join AQAP’s ranks.  Counterterrorism is the National Security Division’s highest priority and we will continue our efforts to detect, deter and hold accountable those who provide material support to designated foreign terrorist organizations.”

“The defendant traveled to Yemen twice to seek out and commit himself to the radical terrorist organization AQAP and its goal of causing mass devastation in the West,” said Acting U.S. Attorney Currie.  “He undertook his journey soon after his fellow countryman’s notorious, albeit failed, attempt on behalf of AQAP to detonate a bomb concealed in his underwear in U.S. airspace.  Babafemi received weapons training and worked with AQAP’s English-language media organization to recruit Westerners to its murderous mission.  The investigation, prosecution, and conviction of Babafemi exemplifies the tireless efforts of the FBI’s Joint Terrorism Task Forces in New York and San Diego to identify and bring to justice those intent on joining and supporting violent terrorist organizations around the globe.  This case is especially important as it relates to efforts to prosecute individuals who both engage in physical violence themselves and who create and disseminate violent terrorist propaganda worldwide in an effort to convince others to do so.”

The case is being prosecuted by Assistant U.S. Attorneys Zainab Ahmad and Hilary Jager of the Eastern District of New York, with assistance from Trial Attorney Annamartine Salick of the Justice Department’s Counterterrorism Section.

WASHINGTON –Lawal Olaniyi Babafemi, 35, a Nigerian citizen, was sentenced today to 22 years in prison following his guilty plea to conspiring to provide and providing material support to a designated foreign terrorist organization, al-Qaeda in the Arabian Peninsula (AQAP).  The sentence was imposed by the U.S. District Judge John Gleeson of the Eastern District of New York.

The charges were announced by Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI New York Field Office and Commissioner William J. Bratton of the New York City Police Department (NYPD).

According to previous court filings, between approximately January 2010 and August 2011, the defendant traveled twice from Nigeria to Yemen to meet and train with leaders of AQAP, the Yemen-based branch of al-Qaeda that has been linked to a number of plots targeting the U.S. homeland over the past decade.  AQAP leaders trained Babafemi in the use of weapons, including AK-47 assault rifles, and taught him the importance of AQAP’s English-language media operations to its mission of inspiring “lone-wolf” style attacks abroad in the name of AQAP.  Babafemi assisted in AQAP’s English-language media operations, which include the publication of the online Inspire Magazine, and worked closely with Samir Khan, the founder of Inspire and a U.S. citizen.  Babafemi’s photograph, alongside Khan and other AQAP members, each holding an AK-47, was published in Issue 5 of Inspire; he also wrote rap lyrics on behalf of the group, hoping to extend its appeal to young Westerners.  At the direction of the now-deceased senior AQAP leader Anwar al-Aulaqi, AQAP provided Babafemi with the equivalent of almost $9,000 in cash to recruit other English-speakers from Nigeria to join the terrorist organization.  Babafemi attempted to recruit other Nigerians to join AQAP, but was arrested before he could complete that mission and conduct further activities on behalf of the organization.

“With this sentence, Lawal Olaniyi Babafemi is being held accountable for conspiring with members of al-Qaeda in the Arabian Peninsula and providing material support to the foreign terrorist organization,” said Assistant Attorney General Carlin.  “Babafemi travelled to Yemen to receive weapons training and to learn how to contribute to AQAP’s English-language media operation, in addition to receiving money to recruit others to join AQAP’s ranks.  Counterterrorism is the National Security Division’s highest priority and we will continue our efforts to detect, deter, and hold accountable those who provide material support to designated foreign terrorist organizations.”

“The defendant traveled to Yemen twice to seek out and commit himself to the radical terrorist organization AQAP and its goal of causing mass devastation in the West,” stated Acting United States Attorney Currie.  “He undertook his journey soon after his fellow countryman’s notorious, albeit failed, attempt on behalf of AQAP to detonate a bomb concealed in his underwear in U.S. airspace.  Babafemi received weapons training and worked with AQAP’s English-language media organization to recruit Westerners to its murderous mission.  The investigation, prosecution, and conviction of Babafemi exemplifies the tireless efforts of the FBI’s Joint Terrorism Task Forces in New York and San Diego to identify and bring to justice those intent on joining and supporting violent terrorist organizations around the globe.  This case is especially important as it relates to efforts to prosecute individuals who both engage in physical violence themselves and who create and disseminate violent terrorist propaganda worldwide in an effort to convince others to do so.”

The case is being prosecuted by Assistant U.S. Attorneys Zainab Ahmad and Hilary Jager of the Eastern District of New York, with assistance from Trial Attorney Annamartine Salick of the Justice Department’s Counterterrorism Section.

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Dr. Vikas Desai (Desai), the principal of Desai MD, P.C. d/b/a East Islip Family Care (EIFC), and Dr. Robert Maccone, a physician who was previously affiliated with EIFC, have entered into separate civil settlement agreements in which they have collectively agreed to pay the United States a total of $1,120,299 to resolve allegations that they submitted claims to Medicare for nerve conduction studies (NCVs) that were not medically necessary.

The settlement was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; Scott Lampert, Special Agent-in-Charge of New York’s Office of the Inspector General for the Department of Health and Human Services (HHS-OIG); and Scott Rezendes, Special Agent-in-Charge of New York’s Office of Personnel Management, Office of the Inspector General, Field Operations (OPM).

The government alleged that Dr. Desai, Dr. Maccone, and the late Dr. Edmond Ross – all of whom were at various times affiliated with EIFC – ordered and rendered NCVs on patients for whom those studies were not medically necessary.  NCVs involve the electrical stimulation of a patient’s nerves and muscles to measure the conduction speed of electric impulses and proper nerve and muscle function.  Because NCVs involve the administration of low levels of electric current, or shocks, to a patient, the tests can be uncomfortable and even painful.  Specifically, the government alleged that Drs. Desai, Ross, and Maccone ordered the subject NCV studies despite the lack of apparent indications in the medical charts, and that when NCV studies were indicated, they were not performed in conformance with those indications (e.g., patients with arm complaints were inexplicably given leg NCV studies).  The government contended that there was no medically necessary reason for the subject studies, and that accordingly, defendants falsely submitted thousands of claims for those studies to Medicare and OPM.

Dr. Desai has agreed to settle the government’s allegations regarding medically unnecessary billings made by both Dr. Desai and the late Dr. Ross from January 1, 2009 (the year that Dr. Desai purchased the EIFC from Drs. Ross and Maccone) to December 31, 2012, for the sum of $302,208.00.  Dr. Maccone has agreed to settle the government’s allegations regarding his medically unnecessary billings from November 1, 2007 to December 31, 2011, for the sum of $818,091.33.

The investigation that led to the settlements began after Rosemarie Hennessey, a receptionist at EIFC, filed a complaint on behalf of the United States in the Eastern District of New York.   The government recently intervened in that matter and is resolving it consistent with the terms set forth herein.  Under the federal False Claims Act, a private individual who has uncovered fraud against the federal government may file a suit in federal court on behalf of the United States.  If the United States is successful in resolving those claims, the individual who filed the complaint may receive a share of the recovery.

“We are committed to battling health care fraud, especially in situations where the allegations involve doctors making testing and treatment decisions that do not benefit patients, only themselves, and harm the Medicare program,” stated Acting United States Attorney Currie.  Mr. Kelly extended his grateful appreciation to HHS-OIG and OPM for their assistance in this matter.

 

The government’s case was handled by Assistant U.S. Attorney Erin E. Argo, with assistance from Affirmative Civil Enforcement Auditor Emily Rosenthal.

 

E.D.N.Y. Docket No. 10-CV-3851

Knife-Wielding Defendants Allegedly Attacked Federal Law Enforcement Officers

Yesterday, a federal grand jury in the Eastern District of New York returned an indictment charging Munther Omar Saleh, 20, of Queens, New York, with conspiring and attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), and assault and conspiracy to assault federal officers.  The same indictment also charges Fareed Mumuni, 21, of Staten Island, New York, with conspiring and attempting to provide material support to ISIL, assault and conspiracy to assault federal officers and attempted murder of federal officers. 

The charges were announced by Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI New York Field Office and Commissioner William J. Bratton of the New York City Police Department (NYPD). 

The defendants’ arraignments are scheduled for Aug. 20, 2015, at 11:00 a.m. EDT, before U.S. Magistrate Judge James Orenstein of the Eastern District of New York at the U.S. Courthouse in Brooklyn, New York. 

As alleged in the indictment and in other court filings, during the conspiracy, the defendants expressed fervent support for ISIL.  Saleh and Mumuni conspired to conduct an attack in the United States, including plotting to use a pressure cooker bomb in the New York metropolitan area on behalf of ISIL.  On June 13, 2015, Saleh and another individual were arrested in Queens after they approached a federal agent while armed with knives.  On June 17, 2015, during the execution of a search warrant at his residence in Staten Island, Mumuni was arrested after repeatedly stabbing an FBI agent in the torso with a large kitchen knife.  Fortunately, the knife did not penetrate the agent’s body armor.  During a search of the vehicle used by Mumuni, investigators recovered a second large knife.

“According to the indictment, Munther Omar Saleh and Fareed Mumuni conspired to provide material support to ISIL and devised a plan to conduct an attack in New York.  During his arrest, Mumuni stabbed an FBI agent numerous times, but thankfully the agent’s body armor protected him from the defendant’s attack and the defendant was safely apprehended by law enforcement,” said Assistant Attorney General Carlin.  “Counterterrorism is the National Security Division’s highest priority and we will continue to seek justice against those who conspire to provide material support to designated foreign terrorist organizations – and we will relentlessly pursue any individuals who attempt to harm the brave law enforcement officials who risk their lives to protect us.”

“Both Munther Omar Saleh and Fareed Mumuni allegedly conspired to provide material support to ISIL.  Both men also attacked law enforcement officers who work to keep our communities safe,” said Acting U.S. Attorney Currie.  “The officers exercised extraordinary skill and restraint in safely subduing the defendants, who will now face the full force of justice in federal court.”

“These indictments remind us of the dangers faced by law enforcement and the community alike,” said Assistant Director in Charge Rodriguez.  “The FBI remains vigilant in its pursuit against violence and restrained in its apprehension of such offenders.  We are grateful for the safety of our agents and will continue to work to eliminate threats to our country with the help of our law enforcement partners.”

“Stabbing an FBI agent and providing ‎material support to a designated terrorist organization are a recipe for indictment, as alleged,” said Commissioner Bratton.  “I commend the agents and detectives from the Manhattan-based Joint Terrorism Task Force and prosecutors in the Eastern District for their work on this case.”

If convicted, Mumuni faces a maximum sentence of 85 years’ imprisonment and Saleh faces a maximum sentence of 65 years’ imprisonment.  The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The case is being prosecuted by Assistant U.S. Attorneys Alexander A. Solomon, Douglas M. Pravda and Ian C. Richardson of the Eastern District of New York, with assistance provided by Trial Attorney Robert Sander of the Justice Department’s Counterterrorism Section.

Saleh and Mumuni Indictment

WASHINGTON – Yesterday, a federal grand jury in the Eastern District of New York returned an indictment charging Munther Omar Saleh, of Queens, New York, with conspiring and attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), and with assaulting and conspiring to assault federal officers.  The same indictment also charges Fareed Mumuni, of Staten Island, New York, with conspiring and attempting to provide material support to ISIL, assaulting and conspiring to assault federal officers, and with attempted murder of federal officers.  The defendants’ arraignments are scheduled for August 20, 2015 at 11 a.m. EDT before United States Magistrate Judge James Orenstein at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges were announced by Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI New York Field Office, and Commissioner William J. Bratton of the New York City Police Department (NYPD).

As alleged in the indictment and in other court filings, during the conspiracy, the defendants expressed fervent support for ISIL.  Saleh and Mumuni conspired to conduct an attack in the United States, including plotting to use a pressure cooker bomb in the New York metropolitan area on behalf of ISIL.  On June 13, 2015, Saleh and another individual were arrested in Queens after they charged at a federal officer while armed with knives.  On June 17, 2015, during the execution of a search warrant at his residence in Staten Island, Mumuni was arrested after repeatedly stabbing an FBI agent in the torso with a large kitchen knife.  Fortunately, the knife did not penetrate the agent’s body armor.  During a search of the vehicle used by Mumuni, investigators recovered a second large knife.

“According to the indictment, Munther Omar Saleh and Fareed Mumuni conspired to provide material support to ISIL and devised a plan to conduct an attack in New York.  During his arrest, Mumuni stabbed an FBI agent numerous times, but thankfully the agent’s body armor protected him from the defendant’s attack and the defendant was safely apprehended by law enforcement,” said Assistant Attorney General Carlin.  “Counterterrorism is the National Security Division’s highest priority and we will continue to pursue justice against those who seek to provide material support to designated foreign terrorist organizations.”

“Both Munther Omar Saleh and Fareed Mumuni allegedly conspired to provide material support to ISIL.  Both men also attacked law enforcement officers who work to keep our communities safe,” said Acting U.S. Attorney Currie.  “The officers exercised extraordinary skill and restraint in safely subduing the defendants, who will now face the full force of justice in federal court.”

“These indictments remind us of the dangers faced by law enforcement and the community alike.  The FBI remains vigilant in its pursuit against violence and restrained in its apprehension of such offenders.  We are grateful for the safety of our agents and will continue to work to eliminate threats to our country with the help of our law enforcement partners,” said FBI Assistant Director in Charge Rodriguez.

“Stabbing an FBI agent and providing material support to a designated terrorist organization are a recipe for indictment, as alleged.  I commend the agents and detectives from the Manhattan-based Joint Terrorism Task Force and prosecutors in the Eastern District for their work on this case,” said Police Commissioner Bratton.  

If convicted, Mumuni faces a maximum sentence of 85 years’ imprisonment and Saleh faces a maximum sentence of 65 years’ imprisonment.  The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The case is being prosecuted by Assistant U.S. Attorneys Alexander A. Solomon, Douglas M. Pravda, and Ian C. Richardson of the Eastern District of New York, with assistance provided by Trial Attorney Robert Sander of the Justice Department’s Counterterrorism Section.

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15-CR-393 (EDNY)

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NEWARK, N.J. –  Nine people were charged in two indictments unsealed today in Brooklyn, New York, and Newark federal court with an  international scheme to hack into three business newswires and steal yet-to-be published press releases containing non-public financial information that was then used to make trades that allegedly generated approximately $30 million in illegal profits.

U.S. Attorney Paul J. Fishman, District of New Jersey, and Acting U.S. Attorney Kelly T. Currie, Eastern District of New York, announced the indictments today, along with U.S. Secretary of Homeland Security Jeh Johnson; U.S. Secret Service Director Joseph P. Clancy; FBI Assistant Director-in-Charge Diego Rodriguez, New York Field Office; and U.S. Securities Exchange Commission (SEC) Chair Mary Jo White.  The SEC also unsealed a civil complaint today charging the nine indicted defendants and several other individuals and entities.

The indictments unsealed today charge the defendants with hacking into the newswires and stealing confidential information about companies traded on the NASDAQ and NYSE in what is the largest scheme of its kind ever prosecuted.  The defendants allegedly stole approximately 150,000 confidential press releases from the servers of the newswire companies.  They then traded ahead of more than 800 stolen press releases before their public release, generating millions of dollars in illegal profits.

“The defendants were a well-organized group that allegedly robbed the newswire companies and their clients and cheated the securities markets and the investing public by engaging in an unprecedented hacking and trading scheme,” U.S. Attorney Fishman said.  “The defendants launched a series of sophisticated and relentless cyber attacks against three major newswire companies, stole highly confidential information and used to enrich themselves at the expense of public companies and their shareholders.”

“As alleged, the defendants and their co-conspirators formed an alliance of hackers and securities industry professionals to systematically steal valuable inside information and profit by trading ahead of authorized disclosures to the investing public,” stated Acting United States Attorney Currie.  “Today’s sweeping indictments are the result of a cutting edge investigation by law enforcement to combat twenty-first century criminal schemes.”

“Today’s announcement is a testament to the countless hours of hard work and dedication by law enforcement and other personnel across government, including the Secret Service investigative team.  In today’s day and age, criminals are using computers instead of guns to steal money and threaten the safety and security of our cyber networks,” Secretary Johnson said.  “In matters of cybersecurity, the Department of Homeland Security has a major law enforcement role, and our work to counter cyber threats is a critical priority for the Secret Service because of the substantial threat it poses to this nation’s financial infrastructure.”

The 23-count District of New Jersey indictment charges five defendants – Ivan Turchynov, 27; Oleksandr Ieremenko, 24; and Pavel Dubovoy, 32; all of Ukraine, and Arkadiy Dubovoy, 51, and Igor Dubovoy, 28, of Alpharetta, Georgia – with wire fraud conspiracy, securities fraud conspiracy, wire fraud, securities fraud, and money laundering conspiracy.  Turchynov and Ieremenko are additionally charged with computer fraud conspiracy, computer fraud, and aggravated identity theft.

The Eastern District of New York indictment charges four defendants: Vitaly Korchevsky, 50, of Glen Mills, Pennsylvania; Vladislav Khalupsky, 45, of Brooklyn, New York; and Odessa, Ukraine; Leonid Momotok, 47, of Suwanee, Georgia; and Alexander Garkusha, 47, of Cummings and Alpharetta, Georgia, with wire fraud conspiracy, securities fraud conspiracy, securities fraud, and money laundering conspiracy.

Earlier today, the government seized 17 bank and brokerage accounts containing more than $6.5 million of alleged criminal proceeds.  The government also took steps to restrain 12 properties, a shopping center located in Pennsylvania, an apartment building located in Georgia, and a houseboat, all worth more than $5.5 million.

Five of the nine defendants named above were arrested this morning: Arkadiy Dubovoy, Igor Dubovoy, Momotok, and Garkusha were all arrested at their homes in Georgia, and are scheduled to appear this afternoon before U.S. Magistrate Judge Alan J. Baverman in federal court in Atlanta, Georgia.  Korchevsky was arrested at his home in Glenn Mills, Pennsylvania, and is scheduled to appear this afternoon before U.S. Magistrate Judge Linda K. Caracappa in federal court in Philadelphia, Pennsylvania.  Turchynov, Ieremenko, Pavel Dubovoy, and Khalupsky remain in Ukraine, and international arrest warrants were issued today for their arrests.

According to the indictments:

Between February 2010 and August 2015, Turchynov and Ieremenko, computer hackers based in Ukraine, gained unauthorized access into the computer networks of Marketwired L.P., PR Newswire Association LLC (PRN), and Business Wire.  They used a series of sophisticated cyber attacks to gain access to the computer networks.  The hackers moved through the computer networks and stole press releases about upcoming announcements by public companies concerning earnings, gross margins, revenues, and other confidential and material financial information.

At one point, one of the hackers sent an online chat message in Russian to another individual stating, “I’m hacking prnewswire.com.”  In another online chat, Ieremenko told Turchynov that he had compromised the log-in credentials of 15 Business Wire employees.

The hackers shared the stolen press releases with traders Arkadiy Dubovoy, Korchevsky, Momotok, Igor Dubovoy, Pavel Dubovoy, Khalupsky, Garkusha, and others, using overseas computer servers that they controlled.  In a series of emails, the hackers even shared “instructions” on how to access and use an overseas server where they shared the stolen releases with the traders, and the access credentials and instructions were distributed amongst the traders.  In an email sent by one of the traders, the instructions for accessing the overseas server suggested that users conceal their Internet Protocol address when accessing the server as a precaution to avoid detection.  The traders created “shopping lists” or “wish lists” for the hackers listing desired upcoming press releases from Marketwired and PRN for publicly traded companies.  Trading data obtained over the course of the investigation showed that, after one of the shopping lists or wish lists was sent, the traders and others traded ahead of several of the press releases listed on it.

The traders generally traded ahead of the public distribution of the stolen releases, and their activities shadowed the hackers’ capabilities to exfiltrate stolen press releases.  In order to execute their trades before the releases were made public, the traders sometimes had to execute trades in extremely short windows of time between when the hackers illegally accessed and shared information and when the press releases were disseminated to the public by the newswires, usually shortly after the close of the markets.  Frequently, all of this activity occurred on the same day.  Thus, the trading data often showed a flurry of trading activity around a stolen press release just prior to its public release.  The defendants illegal trading resulted in gains of more than $30 million, of which Korchevsky accounted for more than $17 million and Arkadiy Dubovoy accounted for more than $11 million.

The traders traded on stolen press releases containing material nonpublic information about publicly traded companies that included, among hundreds of others: Align Technology Inc.; Caterpillar Inc.; Hewlett Packard; Home Depot; Panera Bread Co.; and Verisign Inc.

The traders paid the hackers for access to the overseas servers based, in part, on a percentage of the money the traders made from their illegal trading activities.  The hackers and traders used foreign shell companies to share in the illegal trading profits.

“This is the story of a traditional securities fraud scheme with a twist—one that employed a contemporary approach to a conventional crime. In this case the defendants allegedly traded on nonpublic information, ultimately benefitting from more than $30 million in illegal profits over the course of three years,” Assistant Director-in-Charge Rodriguez said. “But just as criminals continue to develop relationships with one another in order to advance their objectives, the law enforcement community has developed a collaborative approach to fighting these types of crimes.”

 “Cyber cases such as this are a vital part of the Secret Service's integrated mission,” Joseph P. Clancy, Director of the U.S. Secret Service, said. “This is yet another example of the successful investigative work being done in coordination with our partners in the global law enforcement community.”

The wire fraud conspiracy and substantive wire fraud counts with which all defendants are charged carry a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense.  The securities fraud conspiracy count with which all defendants are charged carries a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense.  The substantive securities fraud counts with which all defendants are charged carry a maximum potential penalty of 20 years in prison and a $5 million fine, or twice the gain or loss from the offense.  The money laundering conspiracy count with which all defendants are charged carries a maximum potential penalty of 20 years in prison and a $500,000 fine, or twice the value of the funds involved in the illegal transfers.  The computer fraud counts with which the alleged hackers are charged carry a maximum potential penalty of five years’ imprisonment and a $250,000 fine, or twice the gain or loss from the offense.  The aggravated identity theft counts with which the hackers are charged carry a mandatory consecutive term of imprisonment of 24 months.

U.S. Attorney Fishman and Acting U.S. Attorney Currie credited special agents of the U.S. States Secret Service, Criminal Investigations, under the direction of Director Clancy, and the Newark Field Office under the direction of Special Agent in Charge Carl Agnelli; and special agents of the FBI, New York Field Office, under the direction of Assistant Director Diego Rodriguez, for the investigation leading to today’s arrests and indictments.  They thanked the U.S. Securities and Exchange Commission, for its significant cooperation and assistance in the investigation and the newswires, which cooperated with law enforcement over the course of the investigation.

In the District of New Jersey, the government is represented by Assistant U.S. Attorneys Andrew S. Pak, Daniel V. Shapiro, and David M. Eskew of the Economic Crimes Unit, Computer Hacking & Intellectual Property Section, Assistant U.S. Attorney Svetlana M. Eisenberg of the Office’s Civil Division, and Special Assistant U.S. Attorney Sarah Devlin of the Asset Forfeiture and Money Laundering Unit.

In the Eastern District of New York, the government’s case is being prosecuted by the Business and Securities Fraud Section and the National Security and Cybercrime Section.  Assistant U.S. Attorneys Christopher A. Ott, Christopher L. Nasson, and Richard M. Tucker are in charge of the prosecution.  Assistant U.S. Attorneys Brian D. Morris and Tanisha Payne of the Office’s Civil Division are responsible for the forfeiture of assets.

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

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.

15-305                                                             ###

                     

On Friday, July 31st, Andrew Smith, also known as “Back-it,” was arrested by members of the United States Marshals Service New York/New Jersey Regional Fugitive Task Force; the United States Marshals Service Southern Ohio Fugitive Apprehension Strike Team; Immigration and Customs Enforcement and Removal; and the Cincinnati Police Department.  Smith was arrested with the assistance of a K-9 unit at approximately 1:30 a.m. in Cincinnati, Ohio, after a brief stand-off.

Smith is allegedly a member of the violent Fatherless Crew marijuana trafficking organization, which for years used violence and intimidation to control drug trafficking in portions of Queens, New York.

The capture was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, and Charles Dunne, United States Marshal for the Eastern District of New York.

Smith has been a fugitive since October 2010.  He narrowly escaped arrest when, following a year-long investigation, federal, state, and local law enforcement officers conducted a search of the Fatherless Crew’s stash house in Queens.  That search resulted in the arrest of more than a dozen individuals and the seizure of nearly 300 pounds of marijuana, three loaded handguns, and a variety of drug trafficking paraphernalia, including electronic scales, heat-sealing machines, and a vehicle outfitted with a with a hydraulic trap for concealing firearms.  Smith was allegedly responsible for both the distribution of marijuana at the organization’s stash house and the use of violence against rival drug dealers.  In March 2010, Smith was also allegedly involved in a shootout with a rival drug gang during a baby shower in St. Albans, Queens.  Detectives from the NYPD recovered more than 30 shell casings and bullets, including one bullet that ricocheted off the door of a neighboring daycare center.  One individual was shot in the chest during the gunfight but survived.

To date, more than 15 members and associates of the Fatherless Crew have been convicted, including four who were convicted following a five week trial in early 2012.

“Andrew Smith thought he could evade justice by living his life on the run.  He learned today that he was wrong,” stated Acting United States Attorney Currie.  “Law enforcement will work cooperatively and tirelessly to find and capture violent fugitives.”  Mr. Currie expressed his appreciation to each of the agencies that participated in the arrest and thanked the Drug Enforcement Administration, United States Postal Inspection Service, New York City Police Department, and U.S. Attorney’s Office for the Southern District of Ohio for their assistance in this case.

“This fugitive was located because multiple federal, state and local law enforcement agencies cooperated with each other over a period of several years‎ through the United States Marshals Service’s Fugitive Task Forces both in New York and Ohio.  These Task Forces produce results like this every day,” stated United States Marshall Dunne.”

The defendant was arraigned on Friday afternoon before United States Magistrate Judge Stephanie Bowman at the federal courthouse in Cincinnati, Ohio, and was ordered to be removed to the Eastern District of New York to face drug tracking and firearms charges.  The defendant was remanded without bail.  The charges 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 International Narcotics and Money Laundering Section.  Assistant United States Attorneys Steven Tiscione, Gina Parlovecchio, and Tyler Smith are in charge of the prosecution.

 

The Defendant:

ANDREW SMITH
Age:  41

 

E.D.N.Y. Docket No. 10-CR-809 (KAM)

Earlier today, defendant Thomas Donovan, 67, was sentenced to 55 months of incarceration for his guilty plea to wire fraud conspiracy on May 31, 2013.  The District Court also entered an order directing Donovan to forfeit more than $31 million that he received and to pay more than $31 million in restitution.

The sentence was announced by Kelly T. Currie, Acting 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 court filings and facts presented during the sentencing proceeding, Donovan was the co-owner of Private Capital Group that invested in sub-prime mortgages.  Private Capital Group’s main investor was Ficus Investments, Inc., which invested more than $300 million.  Rather than investing those funds as agreed upon, the owners of Private Capital Group, Thomas Donovan and Lawrence Cline, took more than $31 million for themselves and concealed that theft by providing his investors with false and misleading financial reports.  Cline and Private Capital Group’s chief financial officer, Christopher Chalavoutis, previously  pleaded guilty and have been sentenced.

“Under the guise of rehabilitating and reselling distressed mortgages, Donovan lied to his investors and stole their money.  Donovan took advantage of the residential mortgage crisis for his personal financial gain, and he has now been held to account,” stated Acting United States Attorney Currie.  Mr. Currie extended his grateful appreciation to the FBI, who led the government’s investigation.

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

The sentence was imposed by the Honorable Joanna Seybert at the federal courthouse in Central Islip, New York.

This prosecution was the result of efforts by President Obama’s Financial Fraud Enforcement Task Force 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.  Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants.  For more information on the task force, visit http://www.StopFraud.gov.

 

The Defendant:

Thomas DONOVAN
Age:  67
Huntington, NY

 

E.D.N.Y. Docket No. 12-CR-196

 

 

Earlier today, Long Island educator and coach Kevin Barry O’Connell, 54, pleaded guilty to receiving child pornography at his residence in Patchogue, New York.  The plea proceeding was conducted before U.S. District Judge Leonard D. Wexler at the federal courthouse in Central Islip, NY.  O’Connell faces a minimum penalty of five years in prison and a maximum of 20 years, and a fine of $250,000.

Today’s guilty plea was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, and Raymond R. Parmer, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York.

“Charged by profession with caring for children, the defendant instead acted to foster their victimization by receiving numerous images of the abuse of children,” stated Acting United States Attorney Currie.  Mr. Currie thanked the U.S. Immigration and Customs Enforcement, HSI for its investigation of this case.

According to court filings and admissions made in court at the time he entered the plea, O’Connell downloaded video files of the rape and abuse of children as young as eight years old which he kept on thumb drives in his Patchogue home.  During a court-ordered search of his residence on October 15, 2012, O’Connell initially lied to HSI agents and denied that he possessed child pornography until agents found three thumb drives in the pocket of a jacket at the house.  O’Connell then admitted that he had hidden the drives in the jacket.

Following his arrest, O’Connell was suspended from his employment as an Assistant Superintendent for Secondary Education in the Roosevelt Union Free School District.  O’Connell had previously served as the Principal of Bellport Senior High School in the South Country Central School District and an Assistant Principal at Walter G. O’Connell Copiague High School.  O’Connell was the Varsity Baseball Coach from 1990 to 2001 at William Floyd High School.

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

The government’s case is being prosecuted by Assistant United States Attorney Allen Bode.

 

The Defendant:

Kevin Barry O’Connell
Age:  54
Patchogue, New York

 

E.D.N.Y. Docket No. 12-CR-715 (LDW)

Earlier today, following four weeks of trial, a federal jury in Brooklyn, New York, returned guilty verdicts against New York State Senator John Sampson, for one count of obstruction of justice and two counts of making false statements to federal agents.  Since 1997, Sampson has served in the New York State Senate representing the 19th Senate District in southeastern Brooklyn.  From June 2009 to December 2012, Sampson was the leader of the Democratic Conference of the Senate, and from January 2011 to December 2012, he was also the Senate Minority Leader.  Sampson has also served as the chairman of the Senate Ethics Committee and the Senate Judiciary Committee.  When sentenced by United States District Judge Dora L. Irizarry, Sampson faces a sentence of up to 20 years in prison.

The verdict was announced by Kelly T. Currie, Acting 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.

“Today’s verdict stands as a vindication of the efforts of this office and the FBI to aggressively root out corruption undertaken by a public official in New York,” stated Acting United States Attorney Currie.  “Sampson, a lawyer, New York State Senator, Senate leader, and one time chair of the Senate Ethics Committee, abused his power and violated his oath undermining the very system of laws he was sworn to uphold.  He will now be held accountable for his crimes.”  Mr. Currie expressed his grateful appreciation to the Federal Deposit Insurance Corporation, Office of the Inspector General; the Public Integrity Section of the Department of Justice; and the Office of the Inspector General of the Department of Justice for their assistance in this case.

FBI Assistant Director-in-Charge Rodriguez stated, “Sampson’s decision to engage in corrupt and illegal behavior was further aggravated by his efforts to conceal the scheme from FBI agents charged with investigating his misconduct.  As this case proves, we, along with our partners, will continue to root out obstruction of justice in all forms and at all levels of government.”

The evidence at trial and publicly filed documents in the case established that, among other things, Sampson, as an attorney practicing in Brooklyn, embezzled funds he held in escrow from the sale of real estate properties.  Concerned that his theft might be discovered by law enforcement, in 2006 Sampson asked an associate for $188,500 to replenish the stolen funds.  In exchange, Sampson used his position as a Senator to assist the associate’s real estate business interests.

In the summer of 2011, the associate was arrested and charged by this office with bank and wire fraud.  Sampson feared that the associate might cooperate with the government and disclose Sampson’s embezzlement, so Sampson contacted a close personal friend, who was also a supervisory paralegal in this office, and asked him to find out if Sampson was under investigation and to obtain confidential information about the associate’s case, including the identities of cooperating witnesses.  The paralegal agreed and reported his findings to Sampson.

Sampson told his associate about his source and added that if they could determine the identities of cooperating witnesses in the associate’s case, they could “take them out.”  Sampson also suggested that they hire a private investigator to do the “dirty work.” 

Sampson then directed his associate to withhold from the government evidence regarding the $188,500 payment.  At a February 2012 meeting, the associate told Sampson that the government had subpoenaed the associate’s business records, including a check register page documenting the payment.  The Associate showed the page to Sampson, who examined it and stated, “That’s a problem . . . I mean for me.”  Sampson kept the page and instructed his associate not to disclose it to the government.

On July 27, 2012, FBI Special Agents interviewed Sampson, and he denied being familiar with the check register page.  Sampson also falsely denied directing his Senate staffers to take certain actions relating to regulatory issues for a liquor store in which Sampson held an ownership interest.  At the conclusion of the interview, the agents advised Sampson that he had lied to federal agents, which constituted a federal crime. When asked whether he wished to revise his statement, Sampson stated, “Not everything I told you was false.”

The government’s case is being prosecuted by the Office’s Public Integrity Section.  Assistant United States Attorneys Paul Tuchmann, Alexander Solomon, and Marisa Seifan are in charge of the prosecution.

The Defendant:

JOHN L. SAMPSON
Age: 50

E.D.N.Y. Docket No. 13-CR-269 (DLI)

The United States and New York State have entered into a civil settlement agreement with Haroutyoun Margossian, a Board Certified Obstetrician and Gynecologist (OB/GYN).  Margossian maintains an OB/GYN subspecialty in urogynecology and is the sole practitioner at NY Urogynecology & Reconstructive Pelvic Surgery, P.C. with a main office located in Brooklyn.  The agreement resolves an investigation under the federal False Claims Act and the New York False Claims Act involving allegations that, in contravention of Medicare and Medicaid regulations, Margossian utilized an unlicensed and often unsupervised staff to treat women suffering from urinary incontinence.  Under the terms of the civil settlement agreement, Margossian will pay a total of $8,047,291.06.  Contemporaneously with the execution of the civil settlement agreement, the government filed a criminal charge against Margossian for making false statements to Medicare and entered into a deferred prosecution agreement with him.

The civil settlement agreement, criminal charge, and deferred prosecution agreement were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, Scott J. Lampert, Special Agent-in-Charge, Health and Human Services, Office of Inspector General (HHS-OIG), New York Region, and Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

The government’s investigation revealed that between approximately January 1, 2007 and December 31, 2013, the primary focus of Margossian’s practice was the treatment of woman suffering from incontinence.  Patients received urodynamics testing and underwent pelvic floor rehabilitation by an unlicensed staff without proper physician supervision.  Margossian was often absent from the office while conducting surgery at area hospitals and, at times, on vacation out of the country.  Medicare and Medicaid rules required that these procedures be performed by a licensed physician or licensed physical therapist, or a properly trained medical provider under the physician’s direct supervision.  Furthermore, Margossian used improper billing codes to bill Medicare for the pelvic floor rehabilitation, which substantially increased Margossian’s Medicare reimbursement.

The deferred prosecution agreement requires Margossian to install an independent billing monitor of his practice.  As part of the deferred prosecution agreement, Margossian is obligated to comply with the terms of the civil settlement agreement under which he is paying the government over $8 million.  If Margossian abides by all of the terms of the deferred prosecution agreement for two years, the government will then seek dismissal of the charge.

“Those who jeopardize the health and safety of their patients, while at the same time knowingly submitting false claims to Medicare, Medicaid, and other government health care programs, will be pursued to the full extent of the law,” stated United States Attorney Currie.  Mr. Currie thanked HHS-OIG, the FBI, and the New York Attorney General’s Medicaid Fraud Control Unit for their assistance in the investigation.

 “It is distressing to learn that a physician would be so driven by profit that he allowed his unlicensed employees to conduct testing and provide treatment to patients when he was not present, and at times, when he was out of the country.  HHS-OIG and our law enforcement partners will not tolerate this behavior, and we will remain vigilant in our efforts to protect patients’ welfare,” said HHS-OIG Special Agent-in-Charge Lampert.

 “Health care fraud is ultimately a financial crime, which can lead to significant loss to both victims and government programs.  Through successful engagement with our partners, the FBI is protecting potential victims and ensuring Medicare billing is utilized within the boundaries of the law,” said FBI Assistant Director-in-Charge Rodriguez.

The United States’ civil case was handled by Assistant U.S. Attorney Kenneth M. Abell, with assistance from Kaitlyn L. Dunn of the Office of Counsel to HHS-OIG.  The criminal investigation was handled by U.S. Attorney Patricia E. Notopoulos.  The state case was handled by Special Assistant Attorney General Jill D. Brenner.

The Defendant:

HAROUTYOUN MARGOSSIAN
Age: 55
Residence: Staten Island, NY

 

 

Earlier today in federal court in Brooklyn, former United States Congressman Michael Grimm was sentenced to a term of incarceration of eight months of incarceration in connection with his conviction for aiding and assisting the preparation of a false tax return.  Grimm served as a member of the United States House of Representatives representing New York’s 11th Congressional District, which includes the borough of Staten Island and parts of the borough of Brooklyn, from January 2011 to January 2015.  Grimm was sentenced by the Honorable Pamela K. Chen, United States District Judge, Eastern District of New York.  The Court also sentenced the defendant to 200 hours of community service.[1]

The sentence was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office, and Richard Weber, Chief, IRS- Criminal Investigation.

“This prosecution and sentence should be a reminder to those in positions of trust that we and our partners in the FBI and IRS will vigorously pursue whomever commits fraud,” said Acting U.S. Attorney Currie.  Mr. Currie expressed his grateful appreciation to the Public Integrity Section of Department of Justice, the Northern Criminal Enforcement Section of the Tax Division of the Department of Justice, the New York State Insurance Fund, the New York State Department of Taxation and Finance, and the New York State Department of Labor for their assistance in the investigation.

FBI Assistant Director-in-Charge Rodriguez stated,  “Grimm didn’t serve his community with honor; he instead engaged in criminal activity to the detriment of the public trust.  Today’s sentence should send a message that this type of behavior will not be tolerated, especially when public officials break the law. The FBI and our partners at the IRS will continue our efforts to identify fraudulent practices carried out by elected representatives and free the system from the consequences of their actions.”

“Former Congressman Grimm made a conscious decision to break the law and benefit personally by underreporting $900,000 in restaurant gross receipts and lowering payroll taxes through 'off-the-book' payments, then lying under oath to conceal his criminal activity,” said IRS-Criminal Investigation Chief Weber.  “Tax crimes are not victimless crimes and Grimm’s actions harmed the very citizens he was elected to serve.  We expect all taxpayers to follow the law—whether you are a business owner, individual, or elected official—we all must play by the same rules.”

In connection with his guilty plea on December 23, 2014, Grimm entered into a stipulation of facts acknowledging the scope of his criminal conduct.  As part of that stipulation of facts, Grimm admitted that:

• From 2007 through 2009, Grimm was a member in Healthalicious, a Manhattan restaurant.  During that time period, Grimm oversaw the day-to-day operations of the restaurant, which included the reporting and distribution of the restaurant’s payroll.
• Grimm under-reported the true amount that Healthalicious earned, using a portion of those unreported receipts to pay the restaurant’s workers “off the books” in cash.  With Grimm’s knowledge, the restaurant employed those who were not lawfully admitted to the United States and who were not authorized to work in this country.
• In total, Grimm concealed over $900,000 in Healthalicious’ gross receipts from the accountant who prepared and filed the restaurant’s tax returns.  That accountant used the false information provided by Grimm to prepare and file false federal and state tax returns for Healthalicious.
• Grimm also failed to report the “off the books” cash wages he was paying to Healthalicious workers, which resulted in the restaurant paying lower federal and state payroll taxes.  Some Healthalicious employees received at least half of their wages in cash, while other workers were paid entirely in cash.  Grimm tracked these payments in electronic spreadsheets, but failed to provide accurate information about the restaurant’s payroll to the payroll processing companies employed by the restaurant.  As a result, Grimm caused the payroll processing companies to report to the IRS and the NYS Tax Department less than half of the wages Healthalicious actually paid its employees.                        
• Additionally, Grimm under-reported Healthalicious’ payroll to the New York State Insurance Fund (“NYSIF”), lowering the monthly workers’ compensation premium the restaurant paid to NYSIF.
• As part of his scheme, Grimm caused numerous false documents to be filed with federal and state tax authorities between 2007 and 2010.  In total, Grimm’s conduct caused federal and New York State tax and NYSIF premium losses between $80,000 and $200,000.

• While a Member of Congress in January 2013, Grimm was deposed under oath by the attorney of a former employee in connection with a civil lawsuit relating to the labor practices at Healthalicious in which Grimm was a defendant.  The lawsuit was pending in the United States District Court for the Southern District of New York.  Grimm admitted to testifying during the deposition to things that, at the time, he knew to be false.  Specifically, Grimm testified during the deposition that Healthalicious employees had not been paid in cash, when he knew that restaurant employees had in fact been paid “off the books” in cash.  Similarly, Grimm testified that, to the extent he used email in operating Healthalicious, he used a Yahoo account to which he no longer had access.  Grimm also admitted that, at the time of the deposition, he in fact had access to an AOL account which he had used for Healthalicious related business and which contained many emails related to the restaurant.

 The government’s case is being prosecuted by the Office’s Public Integrity Section.  Assistant United States Attorneys James Gatta and Nathan Reilly are in charge of the prosecution.

The Defendant:

MICHAEL GRIMM
Age: 45
Staten Island, New York

E.D.N.Y. Docket No. 14-CR-248 (PKC)

 

---

[1]In addition to the term of incarceration, the Court ordered Grimm to pay restitution to the Internal Revenue Service (IRS), the New York State Department of Taxation and Finance, and the New York State Insurance Fund (NYSIF) in a total amount to be determined after sentencing.

 

Earlier today, after a three-day trial, a federal jury in Brooklyn, New York, returned guilty verdicts against Dale Harper, Joachim Pierre Louis, Luc Desmangles, Beayeah Kamara, and Tanael Daniel for their participation in a scheme to enable applicants for commercial driver’s licenses (CDLs) to cheat on required tests for those licenses in exchange for money.  When sentenced by United States District Judge Raymond J. Dearie, the defendants each face a sentence of up to 20 years in prison.

The guilty verdicts were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, New York State Inspector General Catherine Leahy Scott,  Raymond R. Parmer, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, New York (HSI), and Douglas Shoemaker, Department of Transportation, Office of the Inspector General (DOT-OIG), Regional Special Agent-in-Charge.

The evidence at trial demonstrated that drivers of certain commercial vehicles, such as school buses, tractor trailers, vehicles transporting hazardous waste, ambulettes, and heavy transportation trucks, must possess a CDL, which is issued by the DMV, pursuant to the regulations set forth by the United States Department of Transportation.  Before obtaining a CDL, all applicants must pass tests covering various subjects related to safely driving such large vehicles.  The defendants Daniel, Harper, Pierre Louis, and Desmangles brought CDL applicants to the DMV office on Greenwich Street in Manhattan.  After applicants entered the testing area, the defendant Kamara, who was employed as a security guard, signaled to the applicants to leave the testing area with their answer sheets.  Upon leaving the testing area, those applicants were met by Daniel, Pierre Louis, and Desmangles, who took the exam to be completed by another co-conspirator, Marie Daniel, outside the DMV office.[1]  The test was then returned to the applicant, who re-entered the DMV office and submitted the exam for grading.  Kamara received cash bribes for his role in the scheme.  The applicants were charged approximately $1,400 to $2,500 for the defendants’ assistance with cheating on the CDL exam.  The evidence further showed that the defendants enabled over 40 people to fraudulently obtain or attempt to obtain CDLs, during the period April 1, 2013 through September 25, 2013.

“Today’s verdict demonstrates our commitment to aggressively prosecute and investigate anyone who compromises public safety,” stated Acting United States Attorney Currie.  “The greed of these defendants jeopardized passengers and pedestrians on our roads.  Together with our law enforcement partners, we will bring to justice those who endanger the public by committing such crimes.”

“These individuals chose corruption and greed over the safety of the general public,” said Inspector General Leahy Scott.  “These convictions send a message to those who put innocent people at risk as a result of their criminal acts … they will be investigated and prosecuted.  I will use the full force of my office to relentlessly pursue anyone who violates the public trust and resorts to criminal measures to circumvent laws intended to ensure that those who are licensed by the State of New York are properly qualified to drive on our highways.”

“These individuals convicted today jeopardized public safety by using fraudulent means to obtain commercial driver’s licenses that would have given the defendants the ability to drive school buses and other large vehicles,” said HSI New York Special Agent-in-Charge Parmer. “HSI will work with our law enforcement partners and use every tool at our disposal to arrest those who threaten public safety of any variety."

“As evidenced by the guilty verdicts handed down against Dale Harper, Joachim Pierre Louis, Luc Desmangles, Beayeah Kamara, and Tanael Daniel, ensuring safety on the Nation’s roadways  remains a high priority for both the Office of Inspector General (OIG) and the Department of Transportation,” said DOT OIG Regional Special Agent-in-Charge Shoemaker.  “Working with our law enforcement and prosecutorial colleagues, we will continue our vigorous efforts to prevent, detect, and prosecute violations of laws and regulations, CDL and otherwise, designed to ensure the public’s safety.”

Mr. Currie expressed his grateful appreciation to the Office’s partners in the investigation, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), the U.S. Department of Transportation-Office of Inspector General (DOT-OIG), and the Office of the New York State Inspector General (NYS-OIG).  In addition, Mr. Currie thanked the New York State Attorney General’s Office; the New York City Police Department, Internal Affairs Bureau; New York County District Attorney’s Office; and the New York State Department of Motor Vehicles for their cooperation and assistance in the investigation.

The government’s case is being prosecuted by the Office’s Public Integrity Section.  Assistant United States Attorneys Michael Warren and Lauren Howard Elbert are in charge of the prosecution.

The Defendants:

DALE HARPER
Age: 49
Residence: Bronx, New York

JOACHIM PIERRE LOUIS
Age: 33
Residence: Brooklyn, New York

LUC DESMANGLES
Age: 28
Residence: Brooklyn, New York

BEAYEAH KARMARA
Age: 26
Residence: Staten Island, New York

TANAEL DANIEL
Age: 37
Residence: Brooklyn, New York

 

---

[1] In January 2015, Marie Daniel pled guilty for her role in this scheme.

 

A ten-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Luca DiMatteo and his nephew, Lukey DiMatteo, with racketeering conspiracy, extortion, loansharking, and operating an illegal gambling business.  The indictment was returned under seal by a federal grand jury sitting in Brooklyn, New York, on July 9, 2015, and relates to the defendants’ alleged criminal activities in Brooklyn and elsewhere between January 2009 and June 2015.

The charges were announced by Kelly T. Currie, Acting 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 in the indictment and detention memorandum, Luca DiMatteo is a long-time member of the Colombo organized crime family of La Cosa Nostra, and has served for several years as the acting captain in charge of a crew of the crime family’s members and associates.

As alleged, both Luca DiMatteo and Lukey DiMatteo participated in the extortion of a local business owner for more than ten years that lasted until the business owner closed down the business last month.  The business owner paid the DiMatteos $100 to $200 every two weeks based on his fear of these defendants and the potential consequences of not paying.  The DiMatteos are also charged separately in loansharking counts.  Lukey DiMatteo is separately charged in an additional extortion count, as well as in counts alleging the operation of illegal gambling businesses – based on his operation of a gambling club in Brooklyn, along with co-defendant John Shields and others – and sports betting.

 “Along with our partners at the FBI, we are committed to defeating organized crime,” stated Acting United States Attorney Currie.  “We will not tolerate the use of violence or threats of violence to extort local business people, and we will shut down illegal gambling businesses in our neighborhoods.”

“As alleged, Luca DiMatteo and Lukey DiMatteo picked up a check every couple of weeks from a local business for more than ten years, but it wasn’t a paycheck—rather they picked up a shakedown check.  In addition to facing charges of racketeering conspiracy, extortion, and loansharking, Lukey DiMatteo and John Shields are charged with allegedly operating an illegal gambling business.  The FBI will continue to work to protect victims and root out any and all organized crime activity—wherever we may find it,” stated FBI Assistant Director-in-Charge Rodriguez.

Two of the defendants, Luca DiMatteo and John Shields, were arraigned yesterday before United States Magistrate Judge Cheryl L. Pollak at the federal courthouse in Brooklyn.  The third defendant, Lukey DiMatteo, is scheduled to be arraigned this afternoon before United States Magistrate Judge Ramon E. Reyes, Jr., at the federal courthouse in Brooklyn.  The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

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

The Defendants:

LUCA DIMATTEO
Age: 70
Merrick, New York

LUCA DIMATTEO (“Lukey Dimatteo”)
Age: 46
Brooklyn, New York

John Shields (“Scott Greco”)
Age: 46
East Atlantic Beach, New York

E.D.N.Y. Docket No. 15 CR 334 (ILG)

 

Earlier today, Sandy Winick pleaded guilty at the federal courthouse in Brooklyn, New York, to conspiring to commit wire fraud for running an international advance fee scheme.  According to court filings and facts presented during the plea proceeding, Winick was the leader of the multi-million dollar scheme, which used call centers around the world to defraud victims.  Winick, a Canadian citizen, was extradited from Thailand to face charges here.

The guilty plea was announced by Kelly T. Currie, Acting 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).

In announcing the guilty plea, Mr. Currie extended his grateful appreciation to the FBI, which led the government’s investigation, and thanked the Internal Revenue Service, Criminal Investigation, New York; Homeland Security Investigations, Department of Homeland Security, Buffalo; Treasury Inspector General for Tax Administration; and the Royal Canadian Mounted Police and law enforcement authorities in England, Thailand, and China for their assistance.

Winick is the seventh defendant to plead guilty in this case to date.  Nine defendants were charged in two related schemes that Winick led from 2008 through 2013.  In the first scheme, several defendants, including Winick, were charged with engaging in an international “pump and dump” operation,  fraudulently inflating the share price of worthless penny stocks, and then dumping billions of shares on unsuspecting victim investors across the globe.  In the second scheme, the defendants, including Winick, were charged with operating boiler rooms in four countries, inducing investors in penny stocks, including many of the victims in the first scheme, to pay advance fees that the defendants promised would enable them to sell the stocks and recover any losses they incurred.  In reality, Winick and his co-conspirators simply stole the fees without providing any services, fraudulently extracting more than five million dollars from their victims.  As part of this scheme, Winick established and operated boiler rooms or call centers in various locations around the world, including Canada, Thailand, and China, to solicit fees from the victims.  Winick also planned to open a call center in Brooklyn.

When sentenced by United States District Judge Eric N. Vitaliano, Winick faces a maximum sentence of 20 years.

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 Security Fraud Section.  Assistant United States Attorneys Christopher A. Ott and Sylvia Shweder are in charge of the prosecution, with assistance provided by Assistant United States Attorney Melanie Hendry of the Office’s Civil Division, which is responsible for the forfeiture of assets.

The Defendant:

SANDY WINICK
Citizenship: Canada
Age: 57
Ontario, Canada

E.D.N.Y. Docket No. 13-CR-452 (S-2)(ENV)

 

A 75-count superseding indictment was unsealed today in United States District Court for the Eastern District of New York charging alleged members and associates of the Outlaw Gangsta Crips (OGC) with crimes including racketeering conspiracy, murder conspiracy, attempted murder, bank fraud, narcotics trafficking, and firearms offenses.  The indictment was returned under seal by a federal grand jury on July 15, 2015, and charges the defendants with crimes committed in New York, Connecticut, and West Virginia between August 9, 2013 and May 12, 2015.

The charges were announced by Kelly T. Currie, Acting 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 Kenneth P. Thompson, District Attorney, Kings County District Attorney’s Office (KCDA).

“This prosecution effectively ends OGC’s reign of terror over East Flatbush,” stated Acting United States Attorney Currie.  “We are committed to dismantling these criminal gangs and making our communities safe.”  Mr. Currie thanked the FBI, NYPD, U.S. Marshal Service, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Postal Inspection Service, Martinsburg, West Virginia Police Department, and the Norwich, Connecticut Police Department for their assistances in the investigation.

FBI Assistant Director-in-Charge Rodriguez stated, “The FBI remains committed to working with our law enforcement partners to eliminate violent criminal gangs like OGC while protecting our communities.  The profits OGC allegedly obtained by peddling poison and committing bank fraud allowed them to purchase weapons in support of their illegal operations.  Their crimes, alleged herein, run the gamut from racketeering conspiracy and drug distribution to robbery, assault, murder conspiracies, and attempts.  We would like to thank all the agencies noted above for their participation in this investigation.”

Police Commissioner Bratton stated, “The members of OGC and their associates allegedly operated their violent gang on the streets of Brooklyn and beyond the borders of New York City, but with these arrests and indictments we send a message–the NYPD and our law enforcement partners will work tirelessly to bring you to justice and remove you from our communities. I want to commend the hard work of the investigators of Gang Squad Brooklyn South and the many law enforcement agencies who contributed to this investigation.”

District Attorney Thompson stated, “With this indictment, we are returning the streets of East Flatbush to the people of East Flatbush – who should not have to live in the midst of gun violence, murder plots, and drug dealing.”

OGC was based in and around the East Flatbush neighborhood of Brooklyn, and comprised a set, or subgroup, of the Crips street gang that included an offshoot known as Shoota Gang, which in turn included members and associates of OGC as well as members and associates of other gangs, including the Eight Trey Gangsta Crips (Eight Trey), Bosses In Business, and the Bloods.  As alleged in the superseding indictment and the government’s detention memorandum, 16 of the defendants – including the leaders of OGC, Conell Brogdon, Courtney Coy, and Parris Desuze – participated in the affairs of OGC through a variety of crimes.  The charged crimes of violence included robberies, gang shootouts, and displays of power over gang turf:

• On October 9 and 10, 2013, Solomon Artis and others conspired to break into and rob at gunpoint a check-cashing store at 1446 Nostrand Avenue.  They entered a vacant apartment above the check-cashing business and began cutting a hole in the floor.  Their plan was to enter the store during the day and to force an employee – at gunpoint – to open the safe.  The plan was thwarted when an employee noticed damage to the ceiling.

• On October 12, 2013, Brogdon shot victims identified in the indictment as John Doe #2 and John Doe #3 in front of 1404 Nostrand Avenue.  The shootings were part of an ongoing dispute with rivals of OGC.

• On June 3, 2014, Brogdon, Malik Campbell, Brandon Greenidge, Jeffrey Joseph, and Stephon Rene attempted to murder a victim identified as John Doe #1.  The defendants surrounded John Doe #1 inside of the Big Boy Deli at 1452 Nostrand Avenue in Brooklyn and attempted to steal his chain.  During the confrontation, Brogdon handed Campbell a gun, and Campbell shot John Doe #1 multiple times.

• On July 19, 2014, Cordero Passley and others assaulted and stabbed – in the torso, throat, and neck – a victim identified as John Doe #4 in front of 116 Lenox Road.  The incident began when Passley ordered a woman to stop playing a song by alleged rival gang member Ackquille Jean Pollard, better known as the rapper “Bobby Shmurda.”  When John Doe #4 defended the woman, which Passley viewed as disrespectful, Passley and others attacked him, sending him to the hospital.

Significantly, the government’s investigation, which included a judicially-authorized wiretap, thwarted a conspiracy to murder two individuals.  In January 2014, a member of OGC named Kareem Mitchell, also known as “Pop,” was murdered.  OGC members believed that John Doe #5 and John Doe #6, and a third individual, were responsible for the murder.  On May 12, 2015, Artis, Leonard Barletto, Coy and Desuze discussed in a series of intercepted telephone calls their belief that John Does #5 and #6 were in a specific location in East Flatbush, and Barletto, Coy, and Desuze confirmed that they had guns.  Later that day, law enforcement observed Barletto, Coy, and Andre Holman in a car parked on the block where they expected to find the intended victims.  After the three defendants stepped out of the car and walked around the corner, Barletto and Coy were arrested along with Desuze, who was with them; Artis was arrested one block away in his home.  A search of the car revealed three firearms.  Holman was arrested on May 24, 2015.

The members and associates of OGC also profited by narcotics trafficking and bank fraud.  The bank fraud charges allege that Derrick Bienaime, Davon Brown, Passley, Gabriel Patterson, and Akeem Watson conspired to defraud financial institutions between January 6, 2014 and January 20, 2015, and that they participated in schemes to defraud Bank of America, Citibank, JPMorgan Chase, and TD Bank.  The schemes involved numerous transactions in New York and elsewhere and, conservatively, caused losses in excess of $500,000.  In each instance a scheme began with a member or associate of OGC – including Eight Trey members Brown and Passley, who were closely affiliated with OGC – obtaining a paycheck and then using the information on that check to create phony checks that appeared to be written by business entities.  The phony checks were deposited into various individuals’ bank accounts, and money was then quickly withdrawn before the checks could be determined to be fraudulent.

If convicted of the charges in the superseding indictment, Artis, Barletto, Derrick Bienaime, Brogdon, Campbell, Stanley Cherenfant, Steven Cherenfant, Coy, Desuze, Greenidge, Cory Harris, Jamar Harry, Holman, Silbert Nicholson, Joseph, and Rene each face a maximum sentence of life.

Thirteen of the defendants are scheduled to be arraigned this afternoon before United States Magistrate Judge Cheryl L. Pollak at the federal courthouse in Brooklyn.  Greenidge was arraigned earlier today at the federal courthouse in Martinsburg, West Virginia, and Passley will be arraigned this afternoon at the federal courthouse in Atlanta, Georgia.   The charges in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The government’s case is being prosecuted by the office’s Organized Crime & Gangs Section.  Assistant United States Attorneys Allon Lifshitz and Rena Paul are in charge of the prosecution.

The Defendants:

SOLOMON ARTIS
Age: 25
Residence: Brooklyn, New York

LEONARD BARLETTO
Age: 27
Residence: Brooklyn, New York

DERRICK BIENAIME
Age: 20
Residence: Brooklyn, New York

CONELL BROGDON
Age: 28
Residence: Brooklyn, New York

DAVON BROWN
Age: 21
Residence: Brooklyn, New York

MALIK CAMPBELL
Age: 27
Residence: Brooklyn, New York

STANLEY CHERENFANT
Age: 24
Residence: Brooklyn, New York

STEVEN CHERENFANT
Age: 23
Residence: Brooklyn, New York

COURTNEY COY
Age: 28
Residence: Brooklyn, New York

PARRIS DESUZE
Age: 26
Residence: Brooklyn, New York

BRANDON GREENIDGE
Age: 29
Residence: Brooklyn, New York

CORY HARRIS
Age: 26
Residence: Brooklyn, New York

JAMAR HARRY
Age: 26
Residence: Brooklyn, New York

ANDRE HOLMAN
Age: 27
Residence: Brooklyn, New York

JEFFREY JOSEPH
Age: 30
Residence: Brooklyn, New York

SILBERT NICHOLSON
Age: 23
Residence: Brooklyn, New York

CORDERO PASSLEY
Age: 20
Residence: Brooklyn, New York

GABRIEL PATTERSON
Age: 20
Residence: Brooklyn, New York

STEPHON RENE
Age: 18
Residence: Brooklyn, New York

AKEEM WATSON
Age: 23
Residence: Brooklyn, New York

E.D.N.Y. Docket No. 15 CR 287 (S-1) (WFK)

Following ten weeks of trial, a federal jury in Central Islip, New York, today returned a verdict convicting Phillip A. Kenner, a financial advisor, and Tommy C. Constantine, a part-time race car driver, on charges of wire fraud, wire fraud conspiracy, and money laundering conspiracy arising from the defendants’ pocketing of millions of dollars raised from Long Island businessmen and professional athletes ostensibly for the purpose of funding the development of land in Hawaii and a start-up credit card business based in Arizona.  Sentencing has been scheduled for November 20, 2015.  The defendants face a maximum of 20 years’ imprisonment on each count of conviction as well as forfeiture of up to $30 million in proceeds derived from the frauds.

The verdict was announced by Kelly T. Currie, Acting 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 Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS).

The evidence from 39 government witnesses and hundreds of exhibits, including audio recordings made by several investor victims of each of the defendants as they struggled to comprehend the extent of their losses, established that as early as 2004, Kenner and Constantine used a labyrinth of holding companies to siphon millions in investor dollars away from their intended use and into companies, real estate, and other ventures that solely benefitted the defendants.

“Driven by personal greed, Kenner and Constantine spent years lying to investors and stealing their money, and then attempted to conceal their fraud by repeatedly and brazenly avoiding responsibility, shifting blame, and scapegoating others.  Today, their scheme has been brought to an end,” stated Acting United States Attorney Currie.  Mr. Currie expressed his grateful appreciation to the United States Attorney’s Office for the District of Arizona, the FBI and IRS Phoenix Offices, and the Scottsdale Police Department for their assistance in this prosecution.

"After defrauding victim investors out of millions of dollars over many years, the lies, deception, and criminal behavior of Kenner and Constantine have caught up with them today. The FBI thanks all of our partners for their assistance with this case," said FBI Assistant Director-in-Charge Rodriguez.

“Hopefully, today’s verdict will bring some closure to the victims of Kenner and Constantine,” said IRS Special Agent-in-Charge Kitchen.  “Their success in defrauding so many individuals reinforces how important it is to use care when investing, no matter how much confidence you have in the individual or company you are investing with.  Fortunately, federal law enforcement strives to be vigilant in uncovering fraud schemes and thorough in its investigation of them.”

As a college hockey player at Renssellaer Polytechnic Institute in Troy, New York, Kenner befriended then-teammate and future Olympian and National Hockey League (NHL) star Joe Juneau, who testified during the trial that after college he helped introduce Kenner to a number of other NHL players in the 1990’s as Kenner began working as a financial advisor in Boston.  Through those early contacts, Kenner developed a clientele that included one-time New York Islanders forward Michael Peca, 1995 first-round draft pick and U.S. Olympian Bryan Berard, and Stanley Cup champions Darryl Sydor, Bill Ranford, and Sergei Gonchar, among other NHL players, whose careers blossomed just as Kenner took over greater and greater control of their finances and wealth.

The Hawaii Real Estate Investment Scheme

Beginning in 2003, Kenner convinced Peca, Berard, and several other clients to invest $100,000 each for the development of land in Hawaii into luxury estates.  Kenner also had the players open lines of credit, collateralized by their personal stock, bond, and savings accounts, worth at least $10 million.  Witness after witness testified that Kenner assured them that the credit lines would be used only to pay for initial development costs associated with the Hawaii project, and would be fully replenished after Lehman Brothers Holdings, Inc. agreed to loan the project up to $105 million in August 2006.  In fact, the government’s evidence established that Kenner borrowed nearly all of his clients’ lines of credit and used the money to purchase his personal interest in unrelated real estate projects in Hawaii and Mexico, transfer funds to his partner in crime Constantine, and fund both his and Constantine’s personal expenses.

Meanwhile, Kenner and Constantine negotiated sweetheart deals that also dissipated the players’ assets and diverted millions to the defendants’ various pet projects.  In one such deal, Constantine brokered a loan from an Arizona businessman for $3.5 million, ostensibly to close on a certain Hawaii parcel of land.  The loan would have been unnecessary but for the fact that Kenner had already stolen millions through the player lines of credit.  Worse, the loan agreement included a $2 million prepayment penalty at a time when the Lehman funding deal was all but certain to trigger the penalty.  Although he put up no money of his own, Constantine walked away from that single loan with some $2 million that represented the diverted player assets.  Bank records established that Constantine almost immediately kicked back a portion of the loan repayment proceeds to Kenner.

The Eufora LLC Scheme

During the conspiracy, Constantine operated Eufora, LLC, a prepaid debit card business which he founded in 2002.   Between February 2008 and May 2009, as Eufora’s operating balances were in the red and Constantine testified in civil depositions that the company was nearly worthless, Kenner urged his clients to invest in Eufora.  Approximately $700,000 of player investments was immediately wired out of Eufora to Kenner-controlled accounts.  Another $725,000 in funds were similarly diverted to accounts that Constantine controlled and was used to cover the costs of Kenner’s and Constantine’s personal mortgages, credit card bills, and other debts.

In December 2009, Constantine fraudulently convinced a Long Island electrician, who had previously worked on a Kenner real estate project, to invest another $200,000 in Eufora, an investment that Constantine subsequently disavowed.  In a recorded phone conversation played for the jury, Constantine offered a series of contradictory explanations refusing to acknowledge that the $200,000 was to have bought the victim a 1.5 percent interest in the company, which included a refusal to admit receiving the money, an admission that the investment had been received but not approved by Eufora’s board of directors, and even a suggestion that the victim should have asked for the money back before it was spent, even though records show that victim’s money was diverted and spent by the defendant within a day of being wired into Constantine’s control.

The Global Settlement Fund Scheme

In early 2009, Kenner’s player-clients who had opened lines of credit for the Hawaii venture received notices that their lines of credit were in default.  For years, Kenner concealed that he had wiped out most of his clients’ savings by borrowing against one line of credit to pay monthly interest charges for another.  By late 2008, the concealment scheme collapsed.  Rather than admit to the diversions, Kenner and Constantine used the crisis to engineer a new phase of their fraud conspiracy by persuading the players to contribute new money towards something they termed the Global Settlement Fund or GSF. 

At trial, the victims testified that Constantine and Kenner told them that the reason for their losses was the purported failure to repay loans by the managing partner of a Mexican resort known as Diamante Cabo San Lucas (DCSL).  None of the players had previously been told that funds intended for the Hawaii land deal had been loaned to another developer in Mexico.  Furthermore, documentary evidence at trial showed that much of the money that Kenner stole from the Hawaii project ended up being used to buy Kenner a personal 39 percent stake in DCSL.

Convinced that the only hope to recoup their losses lay in contributing to the Global Settlement Fund to fund litigation against the DCSL partner, Constantine and Kenner raised more than $2.9 million from the players.  However, only $225,000 in contributions to the GSF were used for litigation.  Instead, the vast majority of the money was again diverted to the defendants’ personal use, which included Constantine buying his personal home out of foreclosure, Kenner and Constantine paying legal bills related to Kenner’s personal investment in a tequila company in Mexico, defending Constantine in Florida litigation over his race car sponsorship activities, and an aborted effort by Constantine to buy Playboy Enterprises.

The Sag Harbor Scheme

In a separate scheme, Kenner acquired a 25 percent interest in real property in Sag Harbor, New York, without using any of his own money.  To achieve this result, Kenner took $395,000 from Michael Peca’s line of credit, without Peca’s knowledge or permission, while at the same time convincing Berard to pay $375,000 for a supposed 50 percent interest, when in fact Kenner diluted Berard’s stake by half and pocketed the excess money.  In early 2010, the investors realized Kenner had not contributed any of his own money, and they sold the property at a loss.

The government’s case is being prosecuted by the Office’s Long Island Criminal Division.  Assistant United States Attorneys James M. Miskiewicz, Saritha Komatireddy, and Diane Leonardo are in charge of the prosecution.

The Defendants:

PHILLIP KENNER
Age: 46
Scottsdale, AZ

TOMMY CONSTANTINE
Age: 48
Scottsdale, AZ

E.D.N.Y. Docket No. 13-CR-607 (JFB)

Earlier today, a total of 12 members and associates of the Bloods street gang located in Queens, New York, including Covel Duncan, a New York City Corrections Officer at Riker’s Island, were arrested on narcotics trafficking charges.  The defendants’ initial appearances are scheduled this afternoon before United States Magistrate Judge James Orenstein at the federal courthouse in Brooklyn.[1]

The charges and arrests were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, Raymond R. Parmer, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, New York (HSI), and James J. Hunt, Special Agent-in-Charge, Drug Enforcement Agency, New York.

As charged in the criminal complaint, between November 2014 and June 2015, the defendants Kamel Lambus, Stanley Fuller, Shavona Trappier, Shakeem Powell, Tyran Trotter, Henry Curry, Sean Brabram, Tiheem Crocker, Scott Williams, Earl Davis, Michael Scott, and Andre Mitchell, and others, conspired to distribute over a kilogram of heroin.  Lambus and Fuller are allegedly leaders of a sect of the Bloods gang called the Paper Chasing Goons (PCG) or POV City, and used a network of distributors, some of whom are also members of PCG/POV City, to sell hundreds of glassines of heroin daily to customers throughout Queens and elsewhere.  The glassines were marked with labels including “Sweet Dreams,” “First Take,” “Pepsi,” and “Coca Cola.” Duncan was charged separately in a criminal complaint charging her with possessing heroin with intent to distribute.

The gang had several stash houses used to store narcotics and the proceeds of narcotics sales.  This morning, search warrants were executed at three stash houses in Queens located at 119-26 165th Street, 107-53 Watson Place, and Lambus’s residence.  Law enforcement agents seized 40 glassines of heroin labeled “Coca Cola” and “Sweet Dreams” and over $5,000 in U.S. currency from Lambus’s residence.  Additionally, law enforcement agents seized approximately 500 glassines of heroin bearing the labels “Coca Cola” and “Sweet Dreams” and approximately $7,000 in U.S. currency from the residence where Trappier and Duncan were arrested, and 250 glassines of heroin bearing the label “Coca Cola” from the residence where Mitchell was arrested.

During the investigation, law enforcement intercepted numerous telephone communications which revealed that Lambus and Fuller sent samples of heroin to their distributors to test for quality, and supplied the members of their gang, as well as other narcotics traffickers, with heroin on a daily basis.

Acting United States Attorney Currie stated, “Members of street gangs who distribute heroin are on notice that they will be held strictly accountable for their actions.  We and our partners in law enforcement are committed to ending the scourge of illegal narcotics in our communities.”  Mr. Currie expressed his grateful appreciation to the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms & Explosives, the New York City Police Department, the Internal Revenue Service, and the New York State Department of Corrections and Supervision for their assistance in the investigation.      

“Today’s arrests help dismantle a violent gang responsible for flooding the streets of New York with heroin,” said HSI Special Agent-in-Charge Parmer.  “Working alongside our law enforcement partners, HSI will continue to use its unique authorities to ensure gangs and their members are brought to justice.”

DEA Special Agent-in-Charge Hunt stated, “These alleged gang members were distributing heroin with brand names such as “Sweet Dreams,” “Pepsi,” and “Coca Cola” – three things that appeal to America’s youth.  The CDC reported the heroin death rate has quadrupled in a decade, and today’s collaborative efforts demonstrate law enforcement’s commitment to arresting those responsible for trafficking heroin which ultimately opens the door to increased heroin abuse, addiction, crime, and violence.”

“This investigation is an example of multiple law enforcement agencies working together toward a common objective, which is to protect our communities from individuals who would compromise the safety and well-being of our neighborhoods through the trafficking of illegal narcotics,” said Police Commissioner William J. Bratton. “I would like to thank the NYPD Gang Squad Queens and our many law enforcement partners whose work in this investigation resulted in the charges and arrests of these alleged gang members.”

ATF Special Agent in Charge Delano A. Reid states: "The ATF is grateful to the United States Attorneys Office as well as our law enforcement partners for their assistance and investigative expertise in dismantling what once was allegedly a structured and organized heroin ring. The arrests of these alleged gang members will hopefully create a ripple effect inside their ranks and remind them that when they decide to engage in narcotics trafficking, the full weight of law enforcement will be there at every turn. "

IRS-CI Special Agent-in-Charge Shantelle P. Kitchen said, “IRS Criminal Investigation is proud to work with our partner law enforcement agencies in the investigation of crimes that directly impact our communities, including narcotics, illegal firearms, and gang activities.  We are always ready to apply our expertise to the financial aspects of investigations of criminal organizations.”

If convicted, the defendants each face a maximum sentence of life imprisonment and a $10 million fine.[2]

The government’s case is being prosecuted by the Office’s International Narcotics and Money Laundering Section.  Assistant United States Attorneys Kenji Price, Lauren Elbert, and Michael Robotti are in charge of the prosecution.

 

The Defendants:

Name: COVEL DUNCAN
Age: 30
Residence: Queens, New York

Name: KAMEL LAMBUS
Age: 32
Residence: Queens, New York

Name: STANLEY FULLER
Age: 40
Residence: Queens, New York

Name: SHAVONA TRAPPIER
Age: 25
Residence: Queens, New York

Name: SHAKEEM POWELL
Age: 26
Residence: Queens, New York

Name: TYRAN TROTTER
Age: 20
Residence: Queens, New York

Name: HENRY CURRY
Age: 26
Residence: Queens, New York

Name: SEAN BRABRAM
Age: 46
Residence: Queens, New York

Name: TIHEEM CROCKER
Age: 40
Residence: Queens, New York

Name: SCOTT WILLIAMS
Age: 30
Residence: Queens, New York

Name: EARL DAVIS
Age: 50
Residence: Queens, New York

Name: MICHAEL SCOTT
Age: 45
Residence: Queens, New York

Name: ANDRE MITCHELL
Age: 28
Residence: Queens, New York

 

---

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

 [2] Duncan faces a maximum term of imprisonment of 20 years and no minimum term of imprisonment.

Michael J. Dodd, also known as “Michael Stanley,” Kenneth Ardell Landgaard, and James Robert Shipman, Jr. were arrested today on charges that they conspired to launder over two million dollars of proceeds from what they thought to be 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 a sting operation.  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 they had agreed to launder through banks in Panama and Belize.  The defendants had already laundered $400,000 in cash previously provided by the undercover agent.  Dodd was arrested a few hours later at a Manhattan restaurant where he expected to meet with the undercover agent.

The charges were announced by Kelly T. Currie, Acting 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); Shantelle P. Kitchen, Special Agent-in-Charge, United States Internal Revenue Service, Criminal Investigation, New York (IRS-CI); and Raymond R. Parmer Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, New York (HSI).

“As charged in the criminal complaint, these defendants agreed to transport millions of dollars of stock fraud proceeds on private jets to Panama and then engage in a series of financial transactions.  They did so with the intention of laundering the money, evading federal tax and banking laws, and lining their own pockets,” stated Acting United States Attorney Currie.  “Today’s arrests have grounded these defendants, and will serve as a warning to others who are similarly inclined.  We are committed to closing fraudulent offshore safe havens and prosecuting those who seek to abuse the financial markets to enrich themselves.”

“As alleged, the defendants willingly entered a scheme to transport more than $2 million of stock fraud profits out of the United States using private jets and financial transactions in exchange for a 13 to 15 percent fee. The FBI is committed to working with our law enforcement partners to investigate and bring those who seek to evade federal tax and banking laws to justice.” stated FBI Assistant Director-in-Charge Rodriguez.

“Conspiring to launder millions of dollars on a private jet may have seemed like a great idea to evade law enforcement but we have proven this method does not fly,” said HSI New York Special Agent-in-Charge Parmer.  “HSI and its partners will continue to investigate and prosecute those who attempt to conceal and launder illicit proceeds, no matter what the method.”

“Although it is not primarily thought about from this perspective, consider how money laundering erodes our nation's tax system,” said IRS-CI Special Agent-in-Charge Kitchen.  “This is why money laundering investigations are important to the Internal Revenue Service‎ and why we work with our law enforcement partners to dissect all types of complex money laundering schemes, including those with international ramifications.”

According to the complaint unsealed this afternoon and other documents filed in the Eastern District of New York, the defendants used private jets and off-shore bank accounts in Panama to launder cash for an undercover FBI agent who posed as a corrupt stock promoter.  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 stock in exchange for high commissions.  In exchange for a 13% to 15% fee, the defendants agreed to launder $2,600,000.  Immediately prior to their arrest earlier today, 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 … they can’t get the authorization to buy a Louis Vuitton bag.  And if you think about it, it’s very smart.”  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 defendants are scheduled to be arraigned on Thursday, July 9, 2015 before a United States Magistrate Judge at the federal courthouse in Brooklyn.  The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.  If convicted, the men 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 will be responsible for the forfeiture of assets.

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:

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

Earlier today, Matthew Rosencrans was arraigned on a felony information and pled guilty at the federal courthouse in Central Islip, New York, to committing a multi-million dollar mail fraud scheme in connection with his ownership and operation of Community Coupons, an advertising business located in Glen Cove, New York.

The charge and plea were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, and Philip R. Bartlett, Postal Inspector in Charge, New York Division, U.S. Postal Inspection Service.

Community Coupons printed coupon booklets and flyers that advertised for a fee its customers’ special promotions and discounted services and mailed those materials through the United States Postal Service at a discounted bulk mail rate via a permit. From approximately July 2010 to August 2013, Rosencrans conducted a scheme to defraud the Postal Service by submitting over 15 million pieces of bulk mail for distribution throughout the New York metropolitan area, although he only paid for delivery of approximately 3.4 million pieces of bulk mail. The fraud deprived the Postal Service of over $2,000,000 in payments that should have been paid by Community Coupons.

“In these financially difficult times for the Postal Service, the defendant failed to pay millions of dollars owed for services rendered,” stated Acting United States Attorney Currie. “Although he was in the business of providing his customers’ discounted services to consumers, Rosencrans cannot discount the law for his own financial gain.” Postal Inspector in Charge Bartlett stated, “A theft from the Postal Service is a theft from the American Public. Postal Inspectors will vigorously pursue and bring to justice anyone who cheats the Postal Service of revenue.”

Today’s plea took place before United States District Judge Joanna Seybert. When sentenced, Rosencrans faces up to 20 years in prison, as well as criminal forfeiture and restitution payable to the United States Postal Service in the amount of $2,101,278.33.

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

The Defendant:

MATTHEW ROSENCRANS

Age: 50

Glen Cove, New York

E.D.N.Y. Docket No. 15-CR-315 (JS)

Earlier today at the federal courthouse in Brooklyn, Qendrim Dobruna, a member of an international cybercrime syndicate, was sentenced to 50 months’ imprisonment and restitution in the amount of $14 million for his role in hacking into the computer systems of U.S.-based financial institutions, stealing prepaid debit card data, and eliminating withdrawal limits. The stolen card data was then disseminated worldwide and used in making fraudulent ATM withdrawals in excess of $14 million in a single weekend. The sentencing was held before U.S. District Judge I. Leo Glasser. Dobruna pleaded guilty to bank fraud on July 11, 2014.

The sentence was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, and Robert J. Sica, Special Agent in Charge, United States Secret Service, New York Field Office.

“The defendants and his co-conspirators participated in a massive 21st century heist that stretched around the globe. Using sophisticated methods, the organization reached into the computer systems of American-based corporations and transmitted illegally obtained private financial information to confederates in 18 different countries who stole millions of dollars from hundreds of ATMs in a matter of hours,” stated Acting United States Attorney Currie. “Today’s sentence serves as a warning to cybercriminals around the world that law enforcement is committed to solving these cybercrimes, no matter how sophisticated, and bringing the perpetrators to justice, wherever they may be found.”

“This operation demonstrates that combining international law enforcement resources sends a strong message to criminals, that there is no such thing as anonymity in the cyber world. Secret Service agents utilize state-of-the-art investigative techniques to identify and pursue cyber criminals around the world. The adverse impact this individual and other transnational organized criminal groups have on our nation's financial infrastructure is significant and should not be underestimated," said Secret Service Special Agent in Charge Robert J. Sica.”

Between approximately February 27, 2011 and March 1, 2011, the defendant and his co-conspirators conducted an “Unlimited Operation,” which begins when the cybercrime organization hacks into the computer systems of a credit card processor, compromises prepaid debit card accounts, and essentially eliminates the withdrawal limits and account balances of those accounts. The elimination of withdrawal limits enables the hackers and their co-conspirators to withdraw unlimited amounts of cash until the operation is shut down. Next, the cybercrime organization cashes in, by distributing the hacked prepaid debit card numbers to trusted associates around the world, who then immediately withdraw cash from ATMs across the globe. At the end of an operation, when the cards are finally shut down, the casher cells launder the proceeds – often investing the operation’s proceeds in luxury goods – and kick back money to the cybercrime organization’s leaders. On February 27, 2011, hackers targeted a credit card processor that processed transactions for prepaid debit cards issued by the American Red Cross for disaster relief victims. After the hackers penetrated the credit card processor’s computer network, compromised the American Red Cross prepaid card accounts, and manipulated the balances and withdrawal limits, casher cells across the globe operated a coordinated ATM withdrawal campaign. In total, more than 15,000 ATM transactions were conducted in approximately 18 countries around the world using 21 compromised American Red Cross disaster relief prepaid cards, resulting in approximately $14 million in losses to the credit card processor and the American Red Cross.

The defendant, from his apartment in Stuttgart, Germany, participated in the cyber-attack by obtaining account information from the co-conspirators who directly hacked into the U.S.-based financial institution’s database and selling that account information to other co-conspirators over the Internet, including to an individual in Brooklyn, New York.

In announcing the guilty plea, Acting United States Attorney Currie praised the extraordinary efforts of the Secret Service in responding so rapidly to these attacks and investigating both the complex network intrusions that occurred overseas and the criminal activity occurring locally. Mr. Currie also thanked the American Red Cross for their cooperation with this investigation.

The government’s case is being prosecuted by Assistant United States Attorney Amir H. Toossi.

The Defendant:

QENDRIM DOBRUNA

Age: 29

Agron Hasbajrami, 31, an Albanian citizen and resident of Brooklyn, New York, pleaded guilty today to attempting and conspiring to provide material support to terrorists before U.S. District Judge John Gleeson of the Eastern District of New York. At sentencing on July 30, 2015, the defendant faces up to 20 years in prison.

The guilty plea was announced by Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Kelly T. Currie 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.

As part of the plea, Hasbajrami agreed to be deported from the United States at the conclusion of his sentence, and the government agreed to allow the defendant to preserve his right to challenge on appeal the lawfulness of surveillance obtained or derived from the FISA Amendments Act of 2008 (FAA), a question of first impression in the Second Circuit. The U.S. District Court of the Eastern District of New York ruled in February 2015 that the fruits of FISA surveillance in this case were admissible.

“This case, like many others before it, has shown that the application of lawful surveillance can allow the United States government to detect and disrupt a terrorist in the United States,” said Acting U.S. Attorney Currie. “The defendant’s plea today leaves no question as to his role in a very serious terrorism offense, and if he chooses to bring an appeal, we are confident we will prevail in the appellate court as well.”

“Today’s guilty plea is the result of a thorough investigation conducted by the New York FBI’s Joint Terrorism Task Force. I want to thank all of the agencies that participate on the FBI JTTF. Together we are able to use our combined legal and investigative tools to quickly identify and disrupt threats to our community,” stated FBI Assistant Director-in-Charge Rodriguez.

“This case is another example that shows that when people in the New York area conspire with, attempt to join, or fund a terrorist organization, even in the Tribal Area of Pakistan, they will be uncovered by the agents and detectives of the JTTF, and they will face the full consequences of the law,” said Police Commissioner Bratton.

According to court documents and statements made in court today, in September 2011, Hasbajrami attempted to travel to the Federally Administered Tribal Areas of Pakistan (the FATA) for the purpose of joining a radical jihadist insurgent group. In addition, he sent over $1,000 in multiple wire transfers abroad to support terrorist activities in Pakistan and Afghanistan. In pursuing his goal of fighting jihad, the defendant exchanged email messages with an individual in Pakistan who told him that he was a member of an armed group that had murdered American soldiers and kidnapped Westerners. In one email message, Hasbajrami stated that it was difficult to ask for money from fellow Muslims because they became apprehensive “when they hear it is for jihad.” In another email, he stated that he wished to travel abroad to “marry with the girls in paradise,” using jihadist rhetoric to describe a reference to his desire to die as a martyr himself.

On Sept. 5, 2011, Hasbajrami purchased a one-way airline ticket to travel to Turkey the following day. Based on Hasbajrami’s email communications, he intended to travel from Turkey to the FATA to join a jihadist group. On Sept. 6, 2011, the defendant was arrested at John F. Kennedy International Airport. At the time of his arrest, he was carrying a tent, boots and cold weather gear. A search of the defendant’s residence revealed, among other items, a note reading “Do not wait for invasion, the time is martyrdom time.”

Upon receiving notice that evidence in his case had been obtained or derived from surveillance conducted pursuant to the FAA, Hasbajrami was permitted by the District Court to withdraw his prior plea, and he thereafter moved to suppress the fruits of such evidence, arguing that certain provisions of the act were unconstitutional. On Feb. 20, 2015, the District Court denied the defendant’s motion, ruling that the fruits of the FAA surveillance, including the defendant’s post-arrest statements, were admissible. Under the terms of the plea agreement, Hasbajrami preserved his right to appeal the District Court’s decision on his suppression motion to the Second Circuit Court of Appeals.

Assistant Attorney General Carlin joined Acting U.S. Attorney Currie 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 prosecuted by Assistant U.S. Attorneys Seth D. DuCharme, Saritha Komatireddy, Peter Baldwin and Matthew Amatruda of the Eastern District of New York, and Trial Attorney Danya Atiyeh of the National Security Division’s Counterterrorism Section.

The Defendant

AGRON HASBAJRAMI

Age: 31

Docket No.: 11 CR 623 (S2) (JG)

 

       

Earlier today, following approximately eight weeks of trial, a federal jury in Brooklyn, New York, returned guilty verdicts against Paul Rivera and Michael Garrett on charges of racketeering, murder, sex trafficking, narcotics trafficking, money laundering, and witness tampering. These charges arose out of the defendants’ participation in and leadership of a gang known as “Together Forever” or the rap group “TF Mafia” (also referred to as “TF”) that for many years engaged in narcotics trafficking, sex trafficking, gang activity, and related violence in areas including the Brownsville neighborhood of Brooklyn, New York, an area victimized by a high rate of gang and drug related violent crime. When sentenced by United States District Judge Kiyo A. Matsumoto, both defendants face a mandatory minimum sentence of life imprisonment on the most serious charge.

The verdicts were announced by Kelly T. Currie, Acting 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).

“With this verdict, the jury sent a message that our community will not stand for those who prey upon young, vulnerable girls for their own financial gain and supply our neighborhoods with dangerous narcotics,” stated Acting United States Attorney Currie. “We also hope that this verdict brings some closure to the family of Robert Barber, who was gunned down by these defendants in their effort to protect their illegal enterprise.” Mr. Currie extended his thanks to the Internal Revenue Service – Criminal Investigation, New York City Police Department, the Pennsylvania State Police, the New Jersey State Police, and the United States Attorney’s Office for the Middle District of Pennsylvania.

As proven at trial, the defendants’ were leaders of TF Mafia, a Brooklyn-based rap group, and Together Forever, a group that has operated in various neighborhoods of Brooklyn since the 1980s. The gang had members engaged in criminal activity in Brooklyn as well as in other parts of New York and in Pennsylvania. In connection with their leadership of TF, Rivera and Garrett plotted to kill — and killed — Robert Barber in the summer of 2011 because they perceived Barber, who was a member of a rival gang, as a threat to TF’s control of narcotics sales in Brownsville. On the evening of August 22, 2011, Rivera observed Barber walking outside the tattoo shop run by Rivera, which was located at 361 Sutter Avenue in Brownsville. Rivera took a firearm that had been supplied by Garrett, stood in the entrance to the tattoo shop, and shot Barber once, killing him. Garrett subsequently provided Rivera with payment, in the form of money and heroin, for the murder.

The jury also found the defendants guilty of interstate prostitution and sex trafficking, including sex trafficking by force, fraud, or coercion, and sex trafficking of one or more minors, which activities were committed as part of TF’s illegal activities. At trial, two victims testified about their involvement with TF, including one victim who became involved with TF when she was 14 years old, and another who testified that she began working as a prostitute for the defendants shortly after she met them, which, as proven at trial, was when she was 15 years old.

The jury found also found the defendants guilty of narcotics trafficking conspiracy, involving cocaine base, heroin, cocaine, and marijuana, and firearms offenses, including use of a firearm to cause the death of Robert Barber. Garrett was also convicted on money laundering, and Rivera was convicted of witness tampering and attempted obstruction of justice related to his efforts to convince a witness to cease cooperating with the government.

The government’s case is being prosecuted by Assistant United States Attorneys Taryn Merkl, Alixandra Smith, and Michael Robotti.

The Defendants:

PAUL RIVERA

Age: 48

Brooklyn, NY

MICHAEL GARRETT

Age: 40

Brooklyn, NY

E.D.N.Y. Docket No. 13-149 (KAM)

Earlier today, at the federal courthouse in Central Islip, New York, Melvin Cwibeker, a doctor of chiropractic medicine from Nassau County, New York, pled guilty to healthcare fraud and obstruction of a federal audit, and he agreed to pay restitution and a $500,000 forfeiture.

The plea was announced by Kelly T. Currie, Acting 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 Scott Lampert, Special Agent-in-Charge, Health of Human Services, Office of Inspector General (HHS-OIG), New York Region.

“Dr. Cwibeker violated his oath and the law by hiring individuals to create fictitious patient records which were submitted to Medicare to obstruct its audit of his chiropractic billings,” stated Acting United States Attorney Currie. “Health care providers who falsely bill for care are on notice that they will face serious consequences.”

FBI Assistant Director-in-Charge Rodriguez stated, “Financial crimes, like the ones allegedly committed by Dr. Cwibeker when he fictitiously billed Medicare for treatments not provided, may appear victimless. However, these crimes impact society, through rising costs and diminishing services provided. By allegedly profiting over $4.3 million through illegitimate claims, Dr. Cwibeker put greed above his license and patient care.”

“Dr. Cwibeker engaged in a greed-fueled fraud scheme that undermined our health care system and the vulnerable individuals it serves,” said HHS-OIG Special Agent-in-Charge Lampert. “HHS-OIG, together with our law enforcement partners, will continue to vigorously pursue those who steal from government health programs for personal gain.”

Between 2006 and 2012, Dr. Cwibeker and his co-conspirators fraudulently billed Medicare more than $7 million for treatments never given to residents of assisted living facilities, and Dr. Cwibeker received over $4.5 million from such billings. On one day alone, New Year’s Eve in 2006, Dr. Cwibeker billed Medicare for chiropractic treatments he purportedly gave to 133 patients at various assisted living facilities. Between 2009 and 2012, Dr. Cwibeker employed three other chiropractors to provide chiropractic care to residents of adult homes and assisted living facilities in Brooklyn, Queens, and Westchester – and trained those chiropractors not to provide the patient care that was required under Medicare. Those three chiropractors were indicted with Dr. Cwibeker and previously pled guilty to health care fraud charges. Each time Dr. Cwibeker was audited by Medicare, he hired others to create fictitious patient records to support his earlier billings and then then sent the fictitious records to Medicare.

Dr. Cwibeker is scheduled to be sentenced on November 6, 2015 before United States District Judge Joanna Seybert, and he faces a maximum of 15 years in prison together with restitution, a forfeiture of $500,000, and potential fines of twice the gross gain from his scheme.

The government’s case is being prosecuted by the Office’s Long Island Criminal Division. Assistant United States Attorney Charles P. Kelly and Senior Investigation Counsel Burton T. Ryan, Jr. are in charge of the prosecution.

The Defendant:

Name: MELVIN CWIBEKER

Age: 60

Residence: Cedarhurst, New York

E.D.N.Y. Docket No.: 12-CR-632 (JS)

Earlier today, an indictment was unsealed in a Brooklyn, New York federal court charging Ercan Findikoglu, a Turkish citizen also known as “Segate,” with organizing three worldwide cyberattacks that inflicted $55 million in losses on the global financial system in a matter of hours.  The defendant’s organization used sophisticated intrusion techniques to hack into the systems of global financial institutions, steal prepaid debit card data and eliminate withdrawal limits.  The stolen card data was then disseminated worldwide and used in making fraudulent ATM withdrawals on a massive scale across the globe.  The charges announced today follow charges previously brought against other members of the organization, including members of a New York City cell charged in May 2013 in connection with their roles in two of the attacks.  The defendant is scheduled to be arraigned at 11 a.m. today before U.S. Magistrate Judge Lois Bloom at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges were announced by Acting U.S. Attorney Kelly T. Currie for the Eastern District of New York and Special Agent in Charge Robert J. Sica of the U.S. Secret Service New York Field Office. 

“Cybercriminals, and especially hackers as this defendant is alleged to be, wreak havoc and steal millions of dollars by breaching our information systems and networks with clicks and keystrokes from the perceived anonymity of their computers at locations all over the globe,” said Acting U.S. Attorney Currie.  “However, in doing so they leave traces in digital space that allow law enforcement to identify, apprehend and ultimately hold them accountable for their crimes.” 

Acting U.S. Attorney Currie praised the extraordinary efforts of the Secret Service in investigating these complex network intrusions and thanked the authorities in Germany for their assistance in effecting the defendant’s extradition.   

“For the past twenty years, Special Agents assigned to the Secret Service New York Electronic Crimes Task Force have worked closely with our law enforcement partners, the business community and our partners in academia to pursue cybercriminals who have taken aim at our homeland’s financial infrastructure.  Today, we recognize our international law enforcement partners who were instrumental in the extradition of Ercan Findikoglu,” said Special Agent in Charge Sica.  “The significance of this case cannot be understated as Findikoglu is the alleged mastermind behind the global ATM cashout operations which plagued the financial services sector from 2010 until his capture in late 2013.  The Secret Service and its international partners remain committed to solving complex financial crimes as well as tracking down and bringing to justice significant cybercriminals who pose a threat to payment systems worldwide.”

As detailed in the indictment and other court filings, Findikoglu gained unauthorized access to, or “hacked,” the computer networks of at least three payment processors for various types of credit and debit card transactions (the Victim Processors).  He then targeted Visa and MasterCard prepaid debit cards serviced by the Victim Processors, breached the security protocols that enforce withdrawal limits on those cards, and then dramatically increased the account balances on those cards to allow withdrawals far in excess of the legitimate card balances. 

Findikoglu allegedly managed a trusted group of co-conspirators who disseminated the stolen debit card information to leaders of “cashing crews” around the world; they, in turn, used the stolen information to conduct tens of thousands of fraudulent ATM withdrawals.  During these operations, Findikoglu allegedly maintained access to the computer networks of the Victim Processors in order to monitor the withdrawals.  These coordinated, calculated cyberattacks are known in the cyber-underworld as “Unlimited Operations,” because the manipulation of withdrawal limits enables the withdrawal of literally unlimited amounts of cash until the operation is shut down. 

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

Once the funds were extracted, Findikoglu and high-ranking members of the conspiracy allegedly received the proceeds from other co-conspirators in various forms, including by wire transfer, electronic currency and the personal delivery of U.S. and foreign currency.  On one occasion, members of a New York City cashing crew transported approximately $100,000 to co-conspirators in Romania.  Findikoglu directed a co-conspirator to destroy evidence of their criminal activities after learning that a member of a New York cashing crew had been arrested.

On Dec. 18, 2013, Findikoglu was arrested in Frankfurt, Germany, and yesterday was extradited to the United States.                       

The government’s case is being handled by the U.S. Attorney’s Office of the Eastern District of New York’s National Security & Cybercrime Section.  Assistant U.S. Attorneys Hilary Jager, Douglas M. Pravda, Richard M. Tucker and Saritha Komatireddy are in charge of the prosecution.  Assistant U.S. Attorney Brian Morris of the Office’s Civil Division is responsible for the forfeiture of assets.  Additional assistance was provided by Marcus Busch and Cristina M. Posa of the Justice Department’s Office of International Affairs.

Earlier today, an indictment was unsealed in Brooklyn federal court charging Ercan Findikoglu, a Turkish citizen also known as “Segate,” with organizing three worldwide cyberattacks that inflicted $55 million in losses on the global financial system in a matter of hours.1 The defendant’s organization used sophisticated intrusion techniques to hack into the systems of global financial institutions, steal prepaid debit card data, and eliminate withdrawal limits. The stolen card data was then disseminated worldwide and used in making fraudulent ATM withdrawals on a massive scale across the globe. The charges announced today follow charges previously brought against other members of the organization, including members of a New York City cell charged in May 2013 in connection with their roles in two of the attacks. The defendant is scheduled to be arraigned at 11 a.m. today before United States Magistrate Judge Lois Bloom at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, and Robert J. Sica, Special Agent in Charge, United States Secret Service, New York Field Office.

“Cybercriminals, and especially hackers as this defendant is alleged to be, wreak havoc and steal millions of dollars by breaching our information systems and networks with clicks and keystrokes from the perceived anonymity of their computers at locations all over the globe. However, in doing so they leave traces in digital space that allow law enforcement to identify, apprehend, and ultimately hold them accountable for their crimes,” stated Acting United States Attorney Currie. Mr. Currie praised the extraordinary efforts of the Secret Service in investigating these complex network intrusions and thanked the authorities in Germany for their assistance in effecting the defendant’s extradition.

“For the past twenty years, Special Agents assigned to the Secret Service New York Electronic Crimes Task Force have worked closely with our law enforcement partners, the business community, and our partners in academia to pursue cybercriminals who have taken aim at our homeland’s financial infrastructure. Today, we recognize our international law enforcement partners who were instrumental in the extradition of Ercan Findikoglu,” said Secret Service Special Agent in Charge Sica. “The significance of this case cannot be understated as Findikoglu is the alleged mastermind behind the global ATM cashout operations which plagued the financial services sector from 2010 until his capture in late 2013. The Secret Service and its international partners remain committed to solving complex financial crimes as well as tracking down and bringing to justice significant cybercriminals who pose a threat to payment systems worldwide.”

As detailed in the indictment and other court filings, Findikoglu gained unauthorized access to, or “hacked,” the computer networks of at least three payment processors for various types of credit and debit card transactions (the “Victim Processors”). He then targeted Visa and MasterCard prepaid debit cards serviced by the Victim Processors, breached the security protocols that enforce withdrawal limits on those cards, and then dramatically increased the account balances on those cards to allow withdrawals far in excess of the legitimate card balances.

Findikoglu allegedly managed a trusted group of co-conspirators who disseminated the stolen debit card information to leaders of “cashing crews” around the world; they, in turn, used the stolen information to conduct tens of thousands of fraudulent ATM withdrawals. During these operations, Findikoglu allegedly maintained access to the computer networks of the Victim Processors in order to monitor the withdrawals. These coordinated, calculated cyberattacks are known in the cyber-underworld as “Unlimited Operations” because the manipulation of withdrawal limits enables the withdrawal of literally unlimited amounts of cash until the operation is shut down.

In one operation on February 27 and 28, 2011, 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, 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, cashing cells in 24 countries executed approximately 36,000 transactions and withdrew approximately $40 million from ATMs. During this third operation, in New York City alone, cashing crews withdrew approximately $2.4 million in nearly 3,000 ATM withdrawals over the course of less than 11 hours.

Once the funds were extracted, Findikoglu and high-ranking members of the conspiracy allegedly received the proceeds from other co-conspirators in various forms, including by wire transfer, electronic currency, and the personal delivery of United States and foreign currency. On one occasion, members of a New York City cashing crew transported approximately $100,000 to co-conspirators in Romania. Findikoglu directed a co-conspirator to destroy evidence of their criminal activities after learning that a member of a New York cashing crew had been arrested.

On December 18, 2013, Findikoglu was arrested in Frankfurt, Germany, and yesterday was extradited to the United States.

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. Additional assistance was provided by Marcus Busch and Cristina M. Posa of the Justice Department’s Office of International Affairs.

The Defendant:

ERCAN FINDIKOGLU

Alias: Segate

Age: 33

Nationality: Turkish

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

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

BOGOTA, COLOMBIA --Wifredo A. Ferrer, United States Attorney for the Southern District of Florida (SDFL), Kelly T. Currie, Acting United States Attorney for the Eastern District of New York (EDNY) and Jay Bergman, Regional Director of the Andean Region for the U.S. Drug Enforcement Administration (DEA), announced today the unsealing of five indictments in U.S. federal courts in Brooklyn, New York and Miami, Florida charging 17 alleged leaders and associates of Colombia’s largest and most influential BACRIM (banda criminal or criminal group), CLAN USUGA (formerly referred to as Los Urabeños). The alleged leaders and other high-ranking members of CLAN USUGA are charged with operating continuing criminal enterprises, participating in international cocaine trafficking conspiracies, and using firearms in furtherance of drug trafficking crimes. CLAN USUGA and many of its principal leaders have been previously designated by the President of the United States and the U.S. Department of the Treasury, Office of Foreign Assets Control as specially designated narcotics traffickers pursuant to the Foreign Narcotics Kingpin Designation Act. The U.S. Department of State has posted a $5 million reward for information leading to the arrest and/or conviction of alleged CLAN USUGA principal leader Dairo Antonio Usuga David, also known as Otoniel.

“The indictments announced today are the result of a sweeping national and international effort to stem the flow of drugs across the world and into our communities,” said Kelly T. Currie, Acting U.S. Attorney for the Eastern District of New York. “We stand united with our partners in Colombia in our unwavering commitment to root out the leaders of drug trafficking criminal enterprises wherever they may be found.”

“The cases referenced today demonstrate that the U.S. government, in collaboration with our international law enforcement partners, continues to successfully combat leaders and associates of BACRIM criminal enterprises that seek to supply narcotics to the United States,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “Together, the U.S. Attorney’s Offices and the Colombian authorities strive to systematically dismantle one BACRIM structure after another and eliminate the threat they pose to our communities.”

Mr. Currie and Mr. Ferrer extended their grateful appreciation to the Drug Enforcement Administration’s New York Field Division, Miami Field Division, and the Bogota Country Office as well as the Department of Homeland Security, Homeland Security Investigations (HSI) New York El Dorado Task Force, and the Colombian National Police, the agencies responsible for leading the investigations. Mr. Currie and Mr. Ferrer also expressed their gratitude for the invaluable assistance provided by the Colombian Fiscalia General and the U.S. Department of Justice Office of International Affairs.

“These indictments are the culmination of years of work and far too often heartfelt sacrifice by the brave men and women of the Colombian National Police and the Office of the Prosecutor General of Colombia,” said DEA Regional Director Jay Bergman. “These indictments represent the United States’ steadfast bilateral commitment to conclusively dismantle what is the largest and arguably the last of the nationally structured criminal bands in Colombia.”

“Today’s indictments illustrate our commitment, along with our international law enforcement partners to disrupt a criminal network responsible for smuggling tons of cocaine into the United States,” said Luis Sierra, country attaché for HSI in Colombia. “HSI will continue to use its unique customs authorities to attack and dismantle these types of organizations, and will aggressively pursue leads, regardless of where that information may lead us.”

Six of the CLAN USUGA leaders were charged in both Brooklyn and Miami. Dairo Antonio Usuga-David, also known as “Otoniel,” “Mao,” “Gallo,” and “Mauricio-Gallo,” is alleged to be the principal leader of CLAN USUGA. Roberto Vargas Gutierrez, also known as “Gavilan,” Carlos Alberto Moreno Turberquia, also known as “Nicolas,” Aristides Manuel Mesa Paez, also known as “El Indio,” and Cesar Daniel Anaya Martinez, also known as “Tierra,” are alleged commanders of CLAN USUGA responsible for collecting drug taxes, managing armed combatants, and maintaining control over specific territorial areas within Colombia. Also charged in Brooklyn and Miami is an alleged manager of CLAN USUGA, Ramiro Caro Pineda, also known as “Nolasco,” who was in charge of collecting drug taxes, coordinating drug shipments, and maintaining control over airstrips and ports on the coast of Colombia.

The Brooklyn indictments also charge seven other cartel leaders, including Daniel Rendon-Herrera, also known as “Don Mario,” the original founder and prior leader of CLAN USUGA; Luis Orlando Padierna Pena, also known as “Inglaterra,” and Jobanis de Jesus Avila Villadiego, also known as “Chiquito” and “Chiquito Malo,” commanders of CLAN USUGA; and Jhoni Alberto Grajales, also known as “Guajiro,” Orlando Gutierrez-Rendon, also known as “Negro Orlando,” Gustavo Palomino Araujo, also known as “Camilo,” and Eduard Fernando Cardoza-Giraldo, also known as “Boliqueso” – alleged leaders of drug collections offices and paramilitary armed groups aligned with CLAN USUGA.

A Miami indictment unsealed today, United States v. Dairo Antonio Usuga-David, et. al., 15 CR 20403-WPD, charges Dairo Antonio Usuga-David, also known as “Otoniel,” “Mao,” and “Mauricio,” Jairo De Jesus Durango Restrepo, also known as “Gua Gua,” Roberto Vargas Gutierrez, also known as “Gavilan,” Aristides Manuel Mesa Paez, also known as “El Indio,” Alverio Feo Alvarado, also known as “Benevides,” Oscar David Pulgarin-Ganan, also known as “Nino” and “Coroso,” Ramiro Caro-Pineda, also known as “Nolasco” and “Hugo,” Cesar Daniel Anaya Martinez, also known as “Tierra,” and Eduardo Luis Vargas Gutierrez, also known as “Pipon,” with conspiring to distribute 5 kilograms or more of cocaine, knowing that it would be imported into the United States. Specifically, the defendants are charged with the distribution from as early as 2002 through June 2015, in Colombia, Venezuela, Ecuador, Guatemala, Panama, Honduras, Costa Rica, Nicaragua, Mexico, and elsewhere.

According to a previously unsealed superseding indictment out of Miami, United States v. Lopez Londono, et. al., 10 CR 20763 – Lenard (DE 9), beginning around October 2006 through February 10, 2012, defendants Henry De Jesus Lopez Londono, also known as “Mi Sangre,” “Salvador,” “Carlos Mario,” “Brother,” “Krackin,” and “Federico,” Jhon Fernando Giraldo Usuga, also known as “Simon,” and “Revenlino,” Arley Usuga Torres, also known as “07,” “Siete,” and “Samuel,” Jose Carlos Londono Robledo, also known as “Tito” and “Wolverine,” Carlos Antonio Moreno Tuberquia, also known as “Nicholas,” Edison Gomez Molina, also known as “El Doctor,” and Juan Diego Giraldo Usuga, also known as “Menor” and “Camilo,” are charged with conspiring to distribute 5 kilograms or more of cocaine knowing that it would be imported into the United States. Gomez Molina, Giraldo Usuga, and Fernando Usuga pled guilty to the superseding indictment on November 26, 2013, March 20, 2014, and May 8, 2014, respectively (DE 72, 98, 110). According to their stipulated factual proffers (DE 74, 101, 112), from at least October 2006 through February 2012, Gomez Molina, Giraldo Usuga, and Fernando Usuga, along with others, used airplanes and other means of transportation to ship multiple loads of cocaine from Colombia to Central America. The loads ranged anywhere from 300 to 600 kilograms each. From there, the cocaine would be delivered to representatives of other organizations, who would take the cocaine and ultimately import it into the United States. Each defendant admitted that he was responsible for the shipment or attempted shipment of at least 150 kilograms of cocaine and knew that the cocaine would ultimately be imported into the United States. Gomez Molina was sentenced to 63 months in prison on February 4, 2014 (DE 90). Girlado Usuga was sentenced to 63 months’ imprisonment on June 9, 2014 (DE 124). Fernando Usuga was sentenced to 168 months’ imprisonment on August 29, 2014 (DE 139).

In another Miami indictment, United States v. Victor Alfonso Mosquera Perez, 14 CR 20332 – Moore/McAliley (DE 1), Victor Alfonso Mosquera Perez, also known as “Negro,” is charged with conspiring to distribute 5 kilograms or more of cocaine, knowing that it would be imported into the United States. Specifically, the distribution allegedly occurred from as early as 2008 until approximately May 9, 2014, in Colombia, Honduras, Nicaragua, and elsewhere.

According to another indictment, United States v. Andres Fernandez Perez-Restrepo, 14 CR 20333 – Ungaro/Otazo-Reyes (DE 1), Andres Fernandez Perez-Restrepo, also known as “Anthrax,” is charged with conspiring to distribute 5 kilograms or more of cocaine, knowing that it would imported into the United States. Specifically, the defendant is alleged to have committed the distribution from at least as early as July 2012 through March 2, 2014, in Colombia, Honduras, and elsewhere.

As detailed in one of the Brooklyn indictments, United States v. Usuga-David et al., 14 CR 625 (S-2) (DLI), between June 2003 and December 2014, Usuga-David, Vargas Gutierrez, Moreno Turberquia, Padierna Pena, Avila Villadiego, Anaya Martinez, and others, as leaders of CLAN USUGA, conspired to import more than 73 metric tons of cocaine into the United States. CLAN USUGA coordinated the production, purchase, and transfer of multi-ton shipments of cocaine, as well as the receipt of shipments of cocaine in Mexico and Central America, for ultimate importation into the United States. CLAN USUGA also controlled territory in various areas in Colombia and imposed a tax on any drug traffickers operating in those territories – a set fee for every kilogram of cocaine that was manufactured, stored, or transported through areas under their control. The indictment further alleges that these defendants employed sicarios, or hitmen, who carried out acts of violence including murders, assaults, kidnappings, and assassinations to collect drug debts, maintain discipline, control and expand drug territory, and to promote and enhance the position of the organization.

In a second of the indictments unsealed in Brooklyn, United States v. Gutierrez-Rendon, 14 CR 607 (CBA), Orlando Gutierrez-Rendon, also known as “Negro Orlando,” is charged with leading the Gutierrez-Rendon drug trafficking organization, a cocaine trafficking and cocaine-debt collection organization based in Cali, Colombia that was aligned with CLAN USUGA. According to the indictment, the Gutierrez-Rendon’s organization was involved in multi-ton shipments of cocaine from Colombia to Mexico, El Salvador, and Panama for ultimate importation into the United States. The organization is also alleged to have acted as a collection agency, using violence and murder to collect payments and outstanding debts related to cocaine shipments on behalf of CLAN USUGA. In exchange for its role in collecting funds, the organization received ownership interests in the cocaine shipments. Gutierrez-Rendon is also charged with conspiring to murder rival drug traffickers, including the murder of Samir Garcia. Between January 2006 and May 2013, Gutierrez-Rendon allegedly imported more than 30,000 kilograms of cocaine into the United States.

In a third Brooklyn indictment, United States v. Palomino-Araujo, 15 CR 162 (CBA), Gustavo Palomino Araujo, also known as “Soldado,” “Zarco,” and “Camilo,” is charged with leading the Palomino Araujo an organization responsible for cocaine trafficking, cocaine-debt collection, and a paramilitary organization based in Cali, Colombia that was aligned with CLAN USUGA. The organization allegedly facilitated the transfer of multi-ton shipments of cocaine from Colombia to Mexico and Central America for importation into the United States, controlled territory in various areas in Colombia, imposed a tax on any drug traffickers operating in regions under its control, and employed sicarios, or hitmen, to collect debts. Palomino Araujo is also charged with conspiring to murder numerous drug rivals.

In the fourth Brooklyn indictment, United States v. Cardoza-Giraldo, 15 CR 305 (KAM), Eduard Fernando Cardoza-Giraldo, also known as “Boliqueso,” is charged with international cocaine trafficking in connection with his role in controlling a drug debt collection office aligned with CLAN USUGA.

In all, 25 individuals have been charged in the investigations coordinated between the U.S. Attorneys’ Offices in Brooklyn and Miami. All of the defendants face a maximum sentence of life in prison if convicted of the charges against them. Certain individuals named in indictments unsealed today have also been charged by other U.S. Attorneys’ Offices around the country. These cases are the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership between federal, state and local law enforcement agencies. The OCDETF mission is to identify, investigate, and prosecute high level members of drug trafficking enterprises, bringing together the combined expertise and unique abilities of federal, state and local law enforcement.

The cases in the Eastern District of New York are being prosecuted by Assistant U.S. Attorneys Steven L. Tiscione, Gina M. Parlovecchio, and Margaret Lee from the Office’s International Narcotics and Money Laundering Section.

The cases in the Southern District of Florida are being prosecuted by Assistant U.S. Attorney Michael Nadler from the Office’s Narcotics Section.

An indictment is a formal charging document notifying the defendant of the charges. All persons charged in an indictment are presumed innocent until proven guilty.

 BACRIM.Clan Usuga Joint PR Spanish version

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Londono, Henry De Jesus Lopez, et al Indictment

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usuga.indictment (S-2) (signed)

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Gregg R. Mulholland, a dual U.S. and Canadian citizen, was arrested at Phoenix International Airport earlier today during a layover of his flight from Canada to Mexico on charges of securities fraud conspiracy and money laundering conspiracy for fraudulently manipulating the stocks of numerous U.S. publicly-traded companies and then laundering approximately $300 million in profits through at least five offshore law firms. Mulholland was the secret owner of Legacy Global Markets S.A. (Legacy), an offshore broker-dealer and investment management company based in Panama City, Panama and Belize City, Belize, which was indicted in September 2014 (United States v. Bandfield, et al., 14-CR-476 (ILG)). The defendant’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for tomorrow before United States Magistrate Judge Eileen Willett at the Sandra Day O’Connor United States Courthouse in Phoenix, Arizona.

The charges were announced by Kelly T. Currie, Acting 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); Shantelle P. Kitchen, Special Agent-in-Charge, United States Internal Revenue Service, Criminal Investigation, New York (IRS-CI); and Raymond R. Parmer Jr., Special Agent-in-Charge, Department of Homeland Security, Homeland Security Investigations, New York (HSI).

“As charged in the criminal complaint, Mulholland used an elaborate offshore corporate structure built on lies and deceit to defraud U.S. investors in publicly-traded companies and profited to the tune of $300 million. He concealed his leadership role in this fraudulent network, which included stock promoters, lawyers, and broker-dealers, by using aliases and sham companies, and fled the United States when his secretly-owned brokerage firm was indicted last summer,” stated Acting United States Attorney Currie. “We are committed to closing fraudulent offshore safe havens and prosecuting those who seek to abuse the financial markets to enrich themselves.” Mr. Currie thanked the Securities and Exchange Commission and the Justice Department’s Office of International Affairs for their cooperation and assistance in the investigation.

“Mulholland’s alleged sophisticated scheme for ill-gotten gains included everything from lies, fraud, and offshore firms. It all caught up with him today when he was arrested and charged with securities fraud conspiracy and money laundering conspiracy. The FBI will continue to work with our partners to police our markets and ensure they are legal, fair, and equitable,” stated FBI Assistant Director-in-Charge Rodriguez.

“The use of overseas accounts and other offshore mechanisms to conceal income and assets is obviously of great interest to the Internal Revenue Service,” stated IRS-CI Special Agent-in-Charge Kitchen. “Investment fraud schemes that incorporate these means to hide proceeds ultimately make the Internal Revenue Service an unwitting, additional victim. In response, IRS-Criminal Investigation, working with our law enforcement partners, will follow the global financial trail to unravel such crimes.”

“Mulholland’s arrest puts an end to an alleged money laundering and security fraud scheme that was motivated by greed,” said HSI New Special Agent in Charge Parmer. “HSI will work with our law enforcement partners and use every tool at our disposal to combat financial crimes that cost tax payers millions of dollars.”

According to the complaint unsealed this morning in Brooklyn federal court, between 2010 and 2014, Mulholland controlled a group of individuals (the Mulholland Group) who together devised three interrelated schemes to: (a) induce U.S. investors to purchase stock in various thinly-traded U.S. public companies through fraudulent promotion of the stock, concealment of their ownership interests in the companies, and fraudulent manipulation of artificial price movements and trading volume in the stocks of those companies; (b) circumvent the IRS’s reporting requirements under the Foreign Account Tax Compliance Act (FATCA); and (c) launder the fraudulent proceeds from the stock manipulation schemes to and from the United States through five offshore law firms. Through this scheme, the Mulholland Group laundered approximately $300 million in fraudulent proceeds.

To facilitate these interrelated schemes, the complaint charges that the Mulholland Group used shell companies in Belize and Nevis, West Indies, which had nominees at the helm. This structure was designed to conceal the Mulholland Group’s ownership interest in the stock of U.S. public companies, in violation of U.S. securities laws, and enabled the Mulholland Group to engage in numerous “pump and dump” schemes. This structure enabled the Mulholland Group to manipulate the stock of Cynk Technology Corp, which traded on the U.S. OTC markets under the ticker symbol CYNK. Using aliases such as “Stamps” and “Charlie Wolf,” Mulholland was intercepted on a court-authorized wiretap in May 15, 2014, admitting to his ownership of “all the free trading” or unrestricted shares of CYNK. Prior to this May 15, 2014 conversation between Mulholland and his trader at Legacy, there had been no trading in CYNK stock for 24 trading days. Over the next two months, the stock of CYNK rose from $0.06 per share to $13.90 per share, a more than $4 billion stock market valuation for a company that had no revenue and no assets.

Mulholland used the services of a U.S.-based lawyer to launder the $300 million generated through his stock manipulation of CYNK and other U.S. companies – directing the fraud proceeds to five law firm accounts and transmitting them back to members of the Mulholland Group and its co-conspirators. These concealment schemes enabled Mulholland to evade reporting requirements to the IRS.

The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, Mulholland faces 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 Jacquelyn Kasulis and Winston Paes are in charge of the prosecution. Assistant United States Attorney Brian Morris of the Office’s Civil Division will be responsible for the forfeiture of assets.

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 Defendant:

GREGG R. MULHOLLAND

Age: 45

San Juan Capistrano, California

Vancouver, Canada

Earlier today, at the federal courthouse in Central Islip, New York, Gracia L. Mayard, a Queens doctor, was sentenced to 54 months in prison and $20,000 forfeiture by United States District Judge Joseph F. Bianco. Mayard pleaded guilty to conspiring to illegally distribute oxycodone, a highly addictive prescription pain killer, on September 16, 2014.

The sentence was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration, New York; Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department; Joseph A. D’Amico, Superintendent, New York State Police; and Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York.

“Dr. Mayard violated his oath and the law by illegally providing vast quantities of these powerful painkillers without medical necessity. Even after surrendering his DEA registration, he wrote a backdated prescription for oxycodone in an attempt to illegally provide pills,” stated Acting United States Attorney Currie. “Health care providers who act as drug dealers are on notice that they will face serious consequences.” Mr. Currie extended his grateful appreciation to each of the law enforcement agencies for their assistance in this case.

During his guilty plea allocution in September 2014, Mayard admitted that in 2012 and 2013, he provided prescriptions to a co-conspirator for patients he had not examined in exchange for cash and continued to write prescriptions after surrendering his DEA registration to prescribe controlled substances on February 7, 2013.

Oxycodone is a scheduled controlled substance that may be dispensed by medical professionals only for a legitimate medical purpose in the usual course of a doctor’s professional practice. It is a powerful and highly addictive drug and is increasingly abused because of its potency when crushed into a powder and ingested, leading to a heroin-like euphoria.

Mayard’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 as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this jurisdiction, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Prescription Drug Initiative to mount a comprehensive response to what the United States Department of Health and Human Services’ Center for Disease Control and Prevention has called an epidemic increase in the abuse of so-called opioid analgesics. So far, the Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 15 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, and a pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.

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

The Defendant:

Name: GRACIA L. MAYARD

Age: 63

Residence: Queens, NY

CENTRAL ISLIP, NY – Earlier today, Paul Sullivan, a Long Island-based investment advisor, was sentenced in federal court to 55 months’ imprisonment. In November 2013, Sullivan pleaded guilty to wire fraud for engaging in a Ponzi scheme that defrauded investors of approximately $1.9 million. As part of the sentence, Sullivan was also sentenced to 3 years’ supervised release and ordered to pay $1.9 million in restitution to the victims of his fraud.

The sentence was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; Raymond R. Parmer, Jr., Special Agent-in-Charge, U.S. Department of Homeland Security, Homeland Security Investigations (DHS-HSI), New York; and Shantelle P. Kitchen, Special-Agent-in-Charge, Internal Revenue Service, Criminal Investigation (IRS-CI), New York.

“Sullivan abused the trust placed in him by his clients, many of whom considered him a close friend. Sullivan then dug a deeper hole for himself and his clients by orchestrating a Ponzi scheme that ensnared even more victims,” stated Acting United States Attorney Currie. “We are committed to bringing to justice those who seek to defraud the investing public.” Mr. Currie thanked DHS-HSI and the IRS-CI for their cooperation and assistance in the investigation and prosecution of this case.

Sullivan, a licensed financial advisor, made investments without his clients’ authorization that resulted in significant losses. When these losses were discovered, Sullivan admitted his misconduct to some clients and attempted to prevent them from alerting the authorities by promising to reimburse the clients for their losses. However, in order to obtain the money to reimburse these clients, Sullivan stole funds belonging to other clients. Sullivan falsely told the clients from whom he stole funds that he was investing their money in special private investments with high rates of return. When one of the Sullivan’s defrauded clients confronted him using a hidden camera, Sullivan admitted that he had used the client’s funds to repay another client’s investment losses, stating: “What I did was completely illegal, completely wrong . . . everything I’ve done was wrong, was illegal, I have nothing to say.”

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.

Today’s sentence was imposed by United States District Judge Leonard D. Wexler.

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

The Defendant:

PAUL SULLIVAN

Age: 50

Franklin Square, New York

E.D.N.Y. Docket No. 12-CR-642

Earlier today, a second superseding indictment was unsealed charging Akmal Zakirov with attempt and conspiracy to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization. The defendant, who is charged with four Brooklyn residents whose arrests have previously been announced, is scheduled to be arraigned at 2:00 p.m. today before United States Magistrate Judge Viktor V. Pohorelsky at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges were announced by Kelly T. Currie, Acting 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; William J. Bratton, Commissioner, New York City Police Department (NYPD); and Raymond R. Parmer, Jr., Special Agent-in-Charge, Homeland Security Investigations (HSI), New York.

As alleged in the indictment and other court filings, the investigation began last year when Abdurasul Hasanovich Juraboev, one of Zakirov’s co-defendants, came to the attention of law enforcement. Juraboev posted on an Uzbek-language website that propagates ISIL’s ideology his offer to engage in an act of martyrdom on U.S. soil on behalf of ISIL, such as killing the President of the United States. The investigation subsequently revealed that Juraboev and another co-defendant, Akhror Saidakhmetov, planned to travel to Turkey and then to Syria for the purpose of waging violent jihad on behalf of ISIL. Saidakhmetov was arrested on February 25, 2015, at John F. Kennedy International Airport where he was attempting to board a flight to Istanbul, Turkey. Juraboev previously purchased a plane ticket to travel from New York to Istanbul and was scheduled to leave the United States in March 2015.

Zakirov, co-defendant Abror Habibov, and others, allegedly helped to fund Saidakhmetov’s efforts to join ISIL. Specifically, Zakirov and Habibov discussed providing their own money to purchase Saidakhmetov’s plane ticket and to cover his travel expenses, and they also solicited money for that purpose from other individuals. In the week leading up to Saidakhmetov’s scheduled departure, several individuals transferred a total of approximately $2,400 into Zakirov’s personal bank account, which funds were intended to facilitate Saidakhmetov’s travel to join ISIL.

“Zakirov is the fifth to be charged as part of the network of individuals alleged to have conspired and attempted to provide material support to ISIL,” stated Acting United States Attorney Currie. “Our efforts to investigate terrorist support groups are ongoing -- we are committed to disrupting and deterring those who seek to support ISIL, whether by lending themselves or their funds to ISIL’s cause.” Mr. Currie extended his grateful appreciation to the FBI’s Joint Terrorism Task Force, which comprises a large number of federal, state, and local agencies from the region, and to the FBI Norfolk Division.

“Any material support of a terrorist organization not only threatens our national security but violates federal law. In this case, Zakirov is alleged to have been part of a team committed to financing terrorist efforts. Fortunately, the FBI’s Joint Terrorism Task Force identified and stopped such activity. We will continue to work with our partners to uphold our mission and proactively protect the people of the U.S., both home and abroad, through these types of intelligence-based investigations,” said FBI Assistant Director-in-Charge Rodriguez.

“This indictment illustrates the NYPD’s ongoing commitment to stem the efforts of organizations such as ISIL who do not hesitate to promote their violent ideology both here and abroad,” said Police Commissioner Bratton. “I would like to commend the efforts of the Joint Terrorism Task Force investigators, along with our many law enforcement partners, who continue to thwart the efforts of those who would advance a terrorist agenda.”

“Providing material support to terrorist organizations that seek to do us harm represents a clear and present danger to the United States,” said HSI Special Agent-in-Charge Parmer. “Today’s indictment should serve as a warning to all those who attempt to assist ISIL and other terrorist organizations that no stone will go unturned to identify, apprehend, and have them prosecuted to the fullest extent of the law.”

If convicted, Zakirov faces a maximum sentence of 30 years in prison. The charges in the indictment are allegations, and the defendants are presumed innocent unless and until proven guilty.

The government’s case is being handled by the Office’s National Security & Cybercrime Section. Assistant United States Attorneys Alexander A. Solomon, Douglas M. Pravda, and Peter W. Baldwin are in charge of the prosecution, with assistance provided by Trial Attorney Danya Atiyeh of the Justice Department’s Counterterrorism Section.

The Defendant:

AKMAL ZAKIROV

Age: 29

Nationality: Uzbeki

E.D.N.Y. Docket No. 15-CR-095 (WFK)

David Denenberg, a former New York attorney and former Nassau County Legislator, was sentenced today before U.S. District Judge Joanna Seybert at the federal courthouse in Central Islip to three months’ imprisonment and three months’ home confinement for defrauding a former client of over $2 million. Denenberg previously pleaded guilty to eight counts of mail fraud in connection with this fraud scheme.

Today’s sentencing was announced by Kelly T. Currie, Acting 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).

“Mr. Denenberg stole his client’s money and violated his oath as a member of the bar. Today’s sentence should serve as a reminder that in our nation, no one is above the law,” stated Acting U.S. Attorney Kelly T. Currie.

“Denenberg diverted funds from his client’s checkbook into his own pockets through the false representation of legal services. Today we remind everyone of our commitment to identify those who misuse their position to take advantage of unsuspecting consumers; those responsible will not go unpunished,” stated FBI Assistant Director-in-Charge Rodriguez.

As detailed in the defendant’s guilty plea allocution and court filings, between November 2006 and June 2014, Denenberg was a partner in the Garden City law firm Davidoff Hutcher & Citron LLP (DHC), formerly Davidoff Malito & Hutcher LLP (DMH), and sent fraudulent bills to a client for legal services that he never rendered. The client, a corporation based in Port Washington, New York, relied on Denenberg’s false billings and paid DHC/DHM $2,265,004.46.

During the same time period, Denenberg also sent fraudulent expense billings to the client for purported expenses incurred in furtherance of the legal representation, which expenses were never incurred, totaling $126,071.43.

In all, the client paid DHC/DHM $2,342,607.64 for legal services never rendered and expenses never incurred. Denenberg has made full restitution to the client.

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

The Defendant:

DAVID DENENBERG

Age: 51

Merrick, New York

E.D.N.Y. Docket No. 14-CR-594 (JS)

Rodolfo Quiambao, the President and Chief Executive Officer of the engineering and design firm Rudell & Associates, Inc. (Rudell), was arrested this morning on charges of providing over $6.9 million in bribes and kickbacks to supervisors of Consolidated Edison of New York (Con Ed) in exchange for receiving lucrative contracts from the public utility services provider. The defendant’s initial appearance is scheduled later today before United States Magistrate Judge Marilyn D. Go, at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges and arrest were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; Raymond R. Parmer, Jr., Special Agent-in-Charge of 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.

Quiambao’s arrest is the latest part of the government’s continuing investigation of bribery and kickback schemes involving employees of Con Ed. In January 2009, ten Con Ed supervisors and one employee were charged with collectively receiving more than $1 million in kickbacks from contractors; all eleven later pled guilty to federal offenses.

As alleged in the criminal complaint unsealed today, for over a decade beginning in as early as 2000, Quiambao, whose company specializes in electrical design, surreptitiously and regularly provided three Con Ed supervisors with over $6.9 million in cash and checks in exchange for securing contracting work for his company.

From at least 2007 to 2011, Quiambao – acting through his company, Rudell – allegedly provided over $6.5 million in checks to a company owned by a Con Ed Section Manager who oversaw various projects within Con Ed’s Electrical/Controls Systems Design section. In 2007 and 2008, Rudell issued approximately 120 checks to the Section Manager’s company, totaling approximately $2.7 million. Beginning in January 2009 – after the announcement of the arrests of Con Ed supervisors for taking kickbacks – Quiambao is alleged to have attempted to conceal his illegal payments, instead issuing checks from Rudell to Rudicon Power Corp. (Rudicon), another company that Quiambao owned and which did no work for Con Ed, and then issuing checks from Rudicon to the Section Manager’s company in the same amount as the checks from Rudell to Rudicon. Throughout 2009 and 2010, Rudicon paid the Section Manager’s company approximately $3.7 million in some 146 checks. The memo lines of the Rudell to Rudicon checks, and the corresponding Rudicon to the Section Manager’s company checks, often listed the same Con Ed project.

Throughout the same years, the Section Manager steered Con Ed work to Rudell, supported the awarding of lucrative Con Ed contracts to Rudell, and reviewed and authorized payments to Rudell under those contracts. During this time period, Rudell received approximately $30 million in payments from Con Ed that were approved by the Section Manager.

The complaint also alleges that, from approximately 2003 to 2010, Quiambao provided approximately $200,000 in cash kickbacks to a Con Ed Section Manager in the Construction Public Improvement (CPI) unit. The CPI Section Manager oversaw engineering construction projects and had influence over the awarding of contracts to outside contractors like Rudell. Approximately once per month or every two months, Quiambao provided the CPI Section Manager with an envelope of cash. In exchange, the CPI Section Manager reviewed, edited, and provided advice regarding Rudell’s bid proposals before Rudell submitted them to Con Ed. The CPI Section Manager also steered Con Ed work to Rudell and supported the awarding of “sole source” contracts to Rudell.

The complaint further alleges that, from approximately 2000 to 2010, Quiambao provided at least $240,000 in kickbacks to a Con Ed Engineering Supervisor in the Mapping Department. During that time period, Rudell was awarded numerous Mapping Department contracts in the amount of approximately $6.9 million. Approximately once per month, Quiambao gave the Engineering Supervisor checks from Rudell – and, after the January 2009 arrests, from Rudicon, which had received the same amounts from Rudell – made out to a company owned by the Engineering Supervisor and which Quiambao had suggested and assisted in setting up to facilitate the illegal payments. Consistent with the defendant’s modus operandi, the memo lines of the Rudell to Rudicon checks, and the corresponding Rudicon to the Engineering Supervisor’s company checks, often listed the same Con Ed projects, projects which were supervised by the Engineering Supervisor. The Engineering Supervisor steered Con Ed projects to Rudell, supported the awarding of sole source contracts to Rudell, and recommended Rudell to other Con Ed employees.

“For more than a decade, Rodolfo Quiambao allegedly played dirty to make sure he received the contracts, and millions of dollars, that he wanted. And, ordinary New Yorkers, who rely on Con Ed for electricity, gas, and steam, bore the costs,” stated Acting United States Attorney Currie.

“Today’s arrest is one more domino to fall in a long line of Con Ed employees and contractors involved in systematic corruption that has left the consumer to foot the bill through higher rates,” said HSI New York Special Agent-in-Charge Parmer. “HSI remains committed to working with our law enforcement partners to investigate and expose money laundering activities regardless of the scheme.”

“Like any other purchaser of goods or services, Con Ed customers expect to pay fair rates for their utilities. Customers ultimately pay for corrupt bidding practices in the form of higher prices, or in the case of utilities, higher rates. Just as IRS Criminal Investigation is committed to ensuring that everyone pays their fair share of taxes, we will work with our law enforcement partners on bribery and kickback scheme investigations, sharing our financial investigative expertise to ensure that businesses play fairly and that customers get what they pay for,” stated Special Agent-in-Charge Kitchen of IRS-CI.

“The conduct charged against Quiambao, the subject in today’s announcement, is egregious in its nature, duration, and its scope. Further, the conduct was particularly brazen in that he allegedly took steps to hide his scheme, and yet continue the scheme, even while others were arrested in this investigation. The Port Authority Inspector General will continue to work cooperatively with its law enforcement partners to root out systematic corruption in the construction industry,” stated Inspector General Nestor of The Port Authority.

If convicted, Quiambao faces a maximum sentence of ten years’ imprisonment and a $250,000 fine.

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

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

The Defendant:

RODOLFO QUIAMBAO

Age: 71

Queens, New York

E.D.N.Y. Docket No. 15 M 475

WASHINGTON – Assistant United States Attorneys James McGovern and Celia Cohen of the U.S. Attorney’s Office for the Eastern District of New York were two of 160 members of the Department of Justice recognized by Attorney General Loretta E. Lynch, Deputy Attorney General Sally Quillian Yates, and Executive Office for U.S. Attorneys (EOUSA) Director Monty Wilkinson at the 31st Director’s Awards Ceremony today in Washington D.C.

The Eastern District of New York was one of 31 districts represented at the ceremony which was held in the Great Hall at the Robert F. Kennedy Department of Justice Building.

In her prepared remarks, Attorney General Lynch told the awardees, “Our honorees include career executives and supervisors; Assistant U.S. Attorneys and Special Assistant U.S. Attorneys; appellate attorneys and law enforcement officials; administrators, paralegals, and public affairs officers. These individuals, and so many others, have faced daunting and sometimes dangerous challenges. They have dedicated their leadership and their expertise, their time and their energy, to the service of their mission. And they have remained devoted, at all times, to the high ideals and deeply-held values that animate our country and our cause.”

Assistant Unites States Attorneys McGovern and Cohen were honored for securing a death sentence, for a second time, against Ronell Wilson, a high-ranking member of the violent Bloods gang, who committed the execution-style murders of New York City Police Department Detectives James V. Nemorin and Rodney “Jay” Andrews during an undercover weapons transaction in Staten Island, New York, on March 10, 2003. After the Second Circuit Court of Appeals reversed Wilson’s 2007 death sentence, the prosecutors undertook what many believed to be the insurmountable task of convincing a New York jury to impose the death penalty, again. Proving that will, skill, and commitment can overcome most obstacles, the prosecutors worked tirelessly and masterfully to defeat a newly contrived intellectual disability claim and to build a case for the death penalty, vastly different from that offered in the 2007 proceeding. As a result of their efforts, Wilson was returned to death row in September 2013.

EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country. For more information on EOUSA and its mission, visit http://www.justice.gov/usao.

A two-count indictment was unsealed this morning in federal court in Brooklyn, New York, charging William Michael Quigley, the former Chief Compliance Officer of a registered broker-dealer in Woodbury, New York, with conspiracy to commit wire fraud and money laundering conspiracy in connection with a fraudulent investment scheme. Quigley will be arraigned later today before Magistrate Judge Arlene R. Lindsay at the United States Courthouse in Central Islip, New York.

The charges were announced by Kelly T. Currie, Acting 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).

“Quigley and his co-conspirators allegedly engaged in a coordinated and sophisticated scheme built on lies and deceit to defraud overseas investors. Rather than use his training and expertise to protect these investors who were told that their money would be invested in well-known U.S. companies and funds, Quigley helped his co-conspirators steal the funds by transferring them to the Philippines and using them for his personal use,” stated Acting United States Attorney Currie. “We are committed to holding accountable those who abuse their positions of trust to deceive the investing public.” Mr. Currie thanked the Securities and Exchange Commission for its significant cooperation and assistance in the investigation.

“Operating under false pretenses, Quigley and his co-conspirators assumed the role of registered brokers who were working in close coordination with regulatory authorities here in the United States. In doing so, they allegedly carried out a scheme to siphon funds from victim investors overseas – a scheme that fueled their own greedy desires. Today’s indictment is a step forward in restoring the public’s trust and a reminder that this type of dishonorable behavior will not go unpunished,” stated FBI Assistant Director-in-Charge Rodriguez.

As alleged in the indictment, the defendant Quigley, together with his co-conspirators, represented to overseas investors that they were brokers at firms registered with the National Association of Securities Dealers (NASD) or the Financial Institution Regulatory Authority Inc. (FINRA) and that they would invest the investors’ money in companies and investment funds such as Dell, Berkshire Hathaway, and BlackRock. In reality, Quigley and his co-conspirators were not registered brokers and did not invest the funds as promised. Instead, Quigley personally opened several bank accounts in New York to receive the investors’ funds, and he and his co-conspirators transferred more than $500,000 of the $800,000 investor funds from these accounts to accounts in the Philippines. Quigley immediately withdrew more than $42,000 in cash for his personal use and made dozens of trips to different banks in an effort to conceal his cash withdrawals.

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

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

The Defendant:

WILLIAM MICHAEL QUIGLEY

Age: 47

Seaford, New York

E.D.N.Y. Docket No. 15 CR 258

The Defendants Include Two Current FIFA Vice Presidents and the Current and Former Presidents of the Confederation of North, Central American and Caribbean Association Football (CONCACAF); Seven Defendants Arrested Overseas; Guilty Pleas for Four Individual Defendants and Two Corporate Defendants Also Unsealed

A 47-count indictment was unsealed early this morning in federal court in Brooklyn, New York, charging 14 defendants with racketeering, wire fraud and money laundering conspiracies, among other offenses, in connection with the defendants’ participation in a 24-year scheme to enrich themselves through the corruption of international soccer.  The guilty pleas of four individual defendants and two corporate defendants were also unsealed today.

The defendants charged in the indictment include high-ranking officials of the Fédération Internationale de Football Association (FIFA), the organization responsible for the regulation and promotion of soccer worldwide, as well as leading officials of other soccer governing bodies that operate under the FIFA umbrella.  Jeffrey Webb and Jack Warner – the current and former presidents of CONCACAF, the continental confederation under FIFA headquartered in the United States – are among the soccer officials charged with racketeering and bribery offenses.  The defendants also include U.S. and South American sports marketing executives who are alleged to have systematically paid and agreed to pay well over $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.

The charges were announced by Attorney General Loretta E. Lynch, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Director James B. Comey of the FBI, Assistant Director in Charge Diego W. Rodriguez of the FBI’s New York Field Office, Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Erick Martinez of the IRS-CI’s Los Angeles Field Office.

Also earlier this morning, Swiss authorities in Zurich arrested seven of the defendants charged in the indictment, the defendants Jeffrey Webb, Eduardo Li, Julio Rocha, Costas Takkas, Eugenio Figueredo, Rafael Esquivel and José Maria Marin, at the request of the United States.  Also this morning, a search warrant is being executed at CONCACAF headquarters in Miami, Florida.

The guilty pleas of the four individual and two corporate defendants that were also unsealed today include the guilty pleas of Charles Blazer, the long-serving former general secretary of CONCACAF and former U.S. representative on the FIFA executive committee; José Hawilla, the owner and founder of the Traffic Group, a multinational sports marketing conglomerate headquartered in Brazil; and two of Hawilla’s companies, Traffic Sports International Inc. and Traffic Sports USA Inc., which is based in Florida.

“The indictment alleges corruption that is rampant, systemic, and deep-rooted both abroad and here in the United States,” said Attorney General Lynch.  “It spans at least two generations of soccer officials who, as alleged, have abused their positions of trust to acquire millions of dollars in bribes and kickbacks.  And it has profoundly harmed a multitude of victims, from the youth leagues and developing countries that should benefit from the revenue generated by the commercial rights these organizations hold, to the fans at home and throughout the world whose support for the game makes those rights valuable.  Today’s action makes clear that this Department of Justice intends to end any such corrupt practices, to root out misconduct, and to bring wrongdoers to justice – and we look forward to continuing to work with other countries in this effort.” 

Attorney General Lynch extended her grateful appreciation to the authorities of the government of Switzerland, as well as several other international partners, for their outstanding assistance in this investigation.

“Today’s announcement should send a message that enough is enough,” said Acting U.S. Attorney Currie.  “After decades of what the indictment alleges to be brazen corruption, organized international soccer needs a new start – a new chance for its governing institutions to provide honest oversight and support of a sport that is beloved across the world, increasingly so here in the United States.  Let me be clear: this indictment is not the final chapter in our investigation.”  

Acting U.S. Attorney Currie extended his thanks to the agents, analysts and other investigative personnel with the FBI New York Eurasian Joint Organized Crime Squad and the IRS-CI Los Angeles Field Office, as well as their colleagues abroad, for their tremendous effort in this case.

“As charged in the indictment, the defendants fostered a culture of corruption and greed that created an uneven playing field for the biggest sport in the world,” said Director Comey.  “Undisclosed and illegal payments, kickbacks, and bribes became a way of doing business at FIFA.  I want to commend the investigators and prosecutors around the world who have pursued this case so diligently, for so many years.”

“When leaders in an organization resort to cheating the very members that they are supposed to represent, they must be held accountable,” said Chief Weber.  “Corruption, tax evasion and money laundering are certainly not the cornerstones of any successful business.  Whether you call it soccer or football, the fans, players and sponsors around the world who love this game should not have to worry about officials corrupting their sport.  This case isn't about soccer, it is about fairness and following the law.  IRS-CI will continue to investigate financial crimes and follow the money wherever it may lead around the world, leveling the playing field for those who obey the law.”

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

The Enterprise

FIFA is composed of 209 member associations, each representing organized soccer in a particular nation or territory, including the United States and four of its overseas territories.  FIFA also recognizes six continental confederations that assist it in governing soccer in different regions of the world.  The U.S. Soccer Federation is one of 41 member associations of the confederation known as CONCACAF, which has been headquartered in the United States throughout the period charged in the indictment.  The South American confederation, called CONMEBOL, is also a focus of the indictment. 

As alleged in the indictment, FIFA and its six continental confederations, together with affiliated regional federations, national member associations and sports marketing companies, constitute an enterprise of legal entities associated in fact for purposes of the federal racketeering laws.  The principal – and entirely legitimate – purpose of the enterprise is to regulate and promote the sport of soccer worldwide.

As alleged in the indictment, one key way the enterprise derives revenue is to commercialize the media and marketing rights associated with soccer events and tournaments.  The organizing entity that owns those rights – as FIFA and CONCACAF do with respect to the World Cup and Gold Cup, their respective flagship tournaments – sells them to sports marketing companies, often through multi-year contracts covering multiple editions of the tournaments.  The sports marketing companies, in turn, sell the rights downstream to TV and radio broadcast networks, major corporate sponsors and other sub-licensees who want to broadcast the matches or promote their brands.  The revenue generated from these contracts is substantial: according to FIFA, 70% of its $5.7 billion in total revenues between 2011 and 2014 was attributable to the sale of TV and marketing rights to the 2014 World Cup.

The Racketeering Conspiracy

The indictment alleges that, between 1991 and the present, the defendants and their co-conspirators corrupted the enterprise by engaging in various criminal activities, including fraud, bribery and money laundering.  Two generations of soccer officials abused their positions of trust for personal gain, frequently through an alliance with unscrupulous sports marketing executives who shut out competitors and kept highly lucrative contracts for themselves through the systematic payment of bribes and kickbacks.  All told, the soccer officials are charged with conspiring to solicit and receive well over $150 million in bribes and kickbacks in exchange for their official support of the sports marketing executives who agreed to make the unlawful payments.

Most of the schemes alleged in the indictment relate to the solicitation and receipt of bribes and kickbacks by soccer officials from sports marketing executives in connection with the commercialization of the media and marketing rights associated with various soccer matches and tournaments, including FIFA World Cup qualifiers in the CONCACAF region, the CONCACAF Gold Cup, the CONCACAF Champions League, the jointly organized CONMEBOL/CONCACAF Copa América Centenario, the CONMEBOL Copa América, the CONMEBOL Copa Libertadores and the Copa do Brasil, which is organized by the Brazilian national soccer federation (CBF).  Other alleged schemes relate to the payment and receipt of bribes and kickbacks in connection with the sponsorship of CBF by a major U.S. sportswear company, the selection of the host country for the 2010 World Cup and the 2011 FIFA presidential election.

The Indicted Defendants

As set forth in the indictment, the defendants and their co-conspirators fall generally into three categories: soccer officials acting in a fiduciary capacity within FIFA and one or more of its constituent organizations; sports media and marketing company executives; and businessmen, bankers and other trusted intermediaries who laundered illicit payments.

Nine of the defendants were FIFA officials by operation of the FIFA statutes, as well as officials of one or more other bodies:

• Jeffrey Webb: Current FIFA vice president and executive committee member, CONCACAF president, Caribbean Football Union (CFU) executive committee member and Cayman Islands Football Association (CIFA) president.

• Eduardo Li: Current FIFA executive committee member-elect, CONCACAF executive committee member and Costa Rican soccer federation (FEDEFUT) president.

• Julio Rocha: Current FIFA development officer.  Former Central American Football Union (UNCAF) president and Nicaraguan soccer federation (FENIFUT) president.

• Costas Takkas: Current attaché to the CONCACAF president.  Former CIFA general secretary.

• Jack Warner: Former FIFA vice president and executive committee member, CONCACAF president, CFU president and Trinidad and Tobago Football Federation (TTFF) special adviser.

• Eugenio Figueredo: Current FIFA vice president and executive committee member.  Former CONMEBOL president and Uruguayan soccer federation (AUF) president.

• Rafael Esquivel: Current CONMEBOL executive committee member and Venezuelan soccer federation (FVF) president.

• José Maria Marin: Current member of the FIFA organizing committee for the Olympic football tournaments.  Former CBF president.

• Nicolás Leoz: Former FIFA executive committee member and CONMEBOL president.

            Four of the defendants were sports marketing executives:

• Alejandro Burzaco: Controlling principal of Torneos y Competencias S.A., a sports marketing business based in Argentina, and its affiliates.

• Aaron Davidson: President of Traffic Sports USA Inc. (Traffic USA).

• Hugo and Mariano Jinkis: Controlling principals of Full Play Group S.A., a sports marketing business based in Argentina, and its affiliates.

And one of the defendants was in the broadcasting business but allegedly served as an intermediary to facilitate illicit payments between sports marketing executives and soccer officials:

• José Margulies:  Controlling principal of Valente Corp. and Somerton Ltd.

The Convicted Individuals and Corporations

The following individuals and corporations previously pleaded guilty under seal:

On July 15, 2013, the defendant Daryll Warner, son of defendant Jack Warner and a former FIFA development officer, waived indictment and pleaded guilty to a two-count information charging him with wire fraud and the structuring of financial transactions. 

On Oct. 25, 2013, the defendant Daryan Warner waived indictment and pleaded guilty to a three-count information charging him with wire fraud conspiracy, money laundering conspiracy and the structuring of financial transactions.  Daryan Warner forfeited over $1.1 million around the time of his plea and has agreed to pay a second forfeiture money judgment at the time of sentencing.

On Nov. 25, 2013, the defendant Charles Blazer, the former CONCACAF general secretary and a former FIFA executive committee member, waived indictment and pleaded guilty to a 10-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy, income tax evasion and failure to file a Report of Foreign Bank and Financial Accounts (FBAR).  Blazer forfeited over $1.9 million at the time of his plea and has agreed to pay a second amount to be determined at the time of sentencing. 

On Dec. 12, 2014, the defendant José Hawilla, the owner and founder of the Traffic Group, the Brazilian sports marketing conglomerate, waived indictment and pleaded guilty to a four-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy and obstruction of justice.  Hawilla also agreed to forfeit over $151 million, $25 million of which was paid at the time of his plea.

On May 14, 2015, the defendants Traffic Sports USA Inc. and Traffic Sports International Inc. pleaded guilty to wire fraud conspiracy.

All money forfeited by the defendants is being held in reserve to ensure its availability to satisfy any order of restitution entered at sentencing for the benefit of any individuals or entities that qualify as victims of the defendants’ crimes under federal law.

* * * *

The indictment unsealed today has been assigned to U.S. District Court Judge Raymond J. Dearie of the Eastern District of New York.

The indicted and convicted individual defendants face maximum terms of incarceration of 20 years for the RICO conspiracy, wire fraud conspiracy, wire fraud, money laundering conspiracy, money laundering and obstruction of justice charges.  In addition, Eugenio Figueredo faces a maximum term of incarceration of 10 years for a charge of naturalization fraud and could have his U.S. citizenship revoked.  He also faces a maximum term of incarceration of five years for each tax charge.  Charles Blazer faces a maximum term of incarceration of 10 years for the FBAR charge and five years for the tax evasion charges; and Daryan and Daryll Warner face maximum terms of incarceration of 10 years for structuring financial transactions to evade currency reporting requirements.  Each individual defendant also faces mandatory restitution, forfeiture and a fine.  By the terms of their plea agreements, the corporate defendants face fines of $500,000 and one year of probation.

The government’s investigation is ongoing.

The government’s case is being prosecuted by Assistant U.S. Attorneys Evan M. Norris, Amanda Hector, Darren A. LaVerne, Samuel P. Nitze, Keith D. Edelman and Brian D. Morris of the Eastern District of New York, with assistance provided by the Justice Department’s Office of International Affairs and Organized Crime and Gang Section.

The Indicted Defendants:

ALEJANDRO BURZACO

Age:  50

Nationality: Argentina

AARON DAVIDSON

Age:  44

Nationality: USA

RAFAEL ESQUIVEL

Age:  68

Nationality: Venezuela

EUGENIO FIGUEREDO

Age:   83

Nationality: USA, Uruguay

HUGO JINKIS

Age:   70

Nationality: Argentina

MARIANO JINKIS

Age:   40

Nationality: Argentina

NICOLÁS LEOZ

Age:   86

Nationality: Paraguay

EDUARDO LI

Age:   56

Nationality: Costa Rica

JOSÉ MARGULIES, also known as José Lazaro

Age:   75

Nationality: Brazil

JOSÉ MARIA MARIN

Age:   83

Nationality: Brazil

JULIO ROCHA

Age:   64

Nationality: Nicaragua

COSTAS TAKKAS

Age:   58

Nationality: United Kingdom

JACK WARNER

Age:   72

Nationality: Trinidad and Tobago

JEFFREY WEBB

Age:   50

Nationality: Cayman Islands

The Convicted Defendants:

CHARLES BLAZER

Age:   70

Nationality: USA

JOSÉ HAWILLA

Age:   71

Nationality: Brazil

DARYAN WARNER

Age:   46

Nationality: Trinidad and Tobago, Grenada

DARYLL WARNER

Age:   40

Nationality: USA, Trinidad and Tobago

TRAFFIC SPORTS INTERNATIONAL INC.

Registered:  British Virgin Islands

TRAFFIC SPORTS USA INC.

Registered:  USA

E.D.N.Y. Docket Numbers:

United States v. Daryll Warner, 13 Cr. 402 (WFK)

United States v. Daryan Warner, 13 Cr. 584 (WFK)

United States v. Charles Blazer, 13 Cr. 602 (RJD)

United States v. José Hawilla, 14 Cr. 609 (RJD)

United States v. Traffic Sports International, Inc., 14 Cr. 609 (RJD)

United States v. Traffic Sports USA, Inc., 14 Cr. 609 (RJD)

United States v. Jeffrey Webb et al., 15 Cr. 252 (RJD)

Documents:

Webb et al. Indictment (12.25 MB)

Daryan Warner Information (320.77 KB)

Daryll Warner Information (2.26 MB)

Hawilla et al. Information (2.98 MB)

Charles Blazer Information (4.45 MB)

FIFA Graphic (490 KB)

BROOKLYN, N.Y. – A 47-count indictment was unsealed early this morning in federal court in Brooklyn charging 14 defendants with racketeering, wire fraud, and money laundering conspiracies, among other offenses, in connection with the defendants’ participation in a 24-year scheme to enrich themselves through the corruption of international soccer. The guilty pleas of four individual defendants and two corporate defendants were also unsealed today.

The defendants charged in the indictment include high-ranking officials of the Fédération Internationale de Football Association (FIFA), the organization responsible for the regulation and promotion of soccer worldwide, as well as leading officials of other soccer governing bodies that operate under the FIFA umbrella. The defendants Jeffrey Webb and Jack Warner – the current and former presidents CONCACAF, the continental confederation under FIFA headquartered in the United States – are among the soccer officials charged with racketeering and bribery offenses. The defendants also include U.S. and South American sports marketing executives who are alleged to have systematically paid and agreed to pay well over $150 million in bribes and kickbacks to obtain lucrative media and marketing rights to international soccer tournaments.

The charges were announced by Attorney General Loretta E. Lynch; Kelly T. Currie, Acting U.S. Attorney for the Eastern District of New York; James B. Comey, Director, Federal Bureau of Investigation (FBI); Diego W. Rodriguez, Assistant Director-in-Charge, FBI, New York Field Office; Richard Weber, Chief, Internal Revenue Service (IRS) Criminal Investigation; and Special Agent in Charge Erick Martinez, IRS Criminal Investigation, Los Angeles Field Office.

Also earlier this morning, Swiss authorities in Zurich arrested seven of the defendants charged in the indictment, the defendants Jeffrey Webb, Eduardo Li, Julio Rocha, Costas Takkas, Eugenio Figueredo, Rafael Esquivel, and José Maria Marin, at the request of the United States.1

The guilty pleas of the four individual and two corporate defendants that were also unsealed today include the guilty pleas of Charles Blazer, the long-serving former general secretary of CONCACAF and former U.S. representative on the FIFA executive committee; José Hawilla, the owner and founder of the Traffic Group, a multinational sports marketing conglomerate headquartered in Brazil; and two of Hawilla’s companies, Traffic Sports International, Inc. and Traffic Sports USA, Inc., which is based in Florida.

“The indictment alleges corruption that is rampant, systemic, and deep-rooted both abroad and here in the United States,” said Attorney General Lynch. “It spans at least two generations of soccer officials who, as alleged, have abused their positions of trust to acquire millions of dollars in bribes and kickbacks. And it has profoundly harmed a multitude of victims, from the youth leagues and developing countries that should benefit from the revenue generated by the commercial rights these organizations hold, to the fans at home and throughout the world whose support for the game makes those rights valuable. Today’s action makes clear that this Department of Justice intends to end any such corrupt practices, to root out misconduct, and to bring wrongdoers to justice – and we look forward to continuing to work with other countries in this effort.” Attorney General Lynch extended her grateful appreciation to the authorities of the government of Switzerland, as well as several other international partners, for their outstanding assistance in this investigation.

“Today’s announcement should send a message that enough is enough. After decades of what the indictment alleges to be brazen corruption, organized international soccer needs a new start – a new chance for its governing institutions to provide honest oversight and support of a sport that is beloved across the world, increasingly so here in the United States. Let me be clear: this indictment is not the final chapter in our investigation,” stated Acting United States Attorney Currie. Mr. Currie extended his thanks to the agents, analysts, and other investigative personnel with the FBI New York Eurasian Joint Organized Crime Squad and the IRS Criminal Investigation Los Angeles Field Office, as well as their colleagues abroad, for their tremendous effort in this case.

“As charged in the indictment, the defendants fostered a culture of corruption and greed that created an uneven playing field for the biggest sport in the world. Undisclosed and illegal payments, kickbacks, and bribes became a way of doing business at FIFA. I want to commend the investigators and prosecutors around the world who have pursued this case so diligently, for so many years,” said FBI Director Comey.

“When leaders in an organization resort to cheating the very members that they are supposed to represent, they must be held accountable,” said IRS Criminal Investigation Chief Weber. “Corruption, tax evasion, and money laundering are certainly not the cornerstones of any successful business. Whether you call it soccer or football, the fans, players, and sponsors around the world who love this game should not have to worry about officials corrupting their sport. This case isn’t about soccer, it is about fairness and following the law. IRS CI will continue to investigate financial crimes and follow the money wherever it may lead around the world, leveling the playing field for those who obey the law.”

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

The Enterprise

FIFA is composed of 209 member associations, each representing organized soccer in a particular nation or territory, including the United States and four of its overseas territories. FIFA also recognizes six continental confederations that assist it in governing soccer in different regions of the world. The U.S. Soccer Federation is one of 41 member associations of the confederation known as CONCACAF, which has been headquartered in the United States throughout the period charged in the indictment. The South American confederation, called CONMEBOL, is also a focus of the indictment.

As alleged in the indictment, FIFA and its six continental confederations, together with affiliated regional federations, national member associations, and sports marketing companies, constitute an enterprise of legal entities associated in fact for purposes of the federal racketeering laws. The principal – and entirely legitimate – purpose of the enterprise is to regulate and promote the sport of soccer worldwide.

As alleged in the indictment, one key way the enterprise derives revenue is to commercialize the media and marketing rights associated with soccer events and tournaments. The organizing entity that owns those rights – as FIFA and CONCACAF do with respect to the World Cup and the Gold Cup, their respective flagship tournaments – sells them to sports marketing companies, often through multi-year contracts covering multiple editions of the tournaments. The sports marketing companies, in turn, sell the rights downstream to TV and radio broadcast networks, major corporate sponsors, and other sub-licensees who want to broadcast the matches or promote their brands. The revenue generated from these contracts is substantial: according to FIFA, 70% of its $5.7 billion in total revenues between 2011 and 2014 was attributable to the sale of TV and marketing rights to the 2014 World Cup.

The Racketeering Conspiracy

The indictment alleges that, between 1991 and the present, the defendants and their co-conspirators corrupted the enterprise by engaging in various criminal activities, including fraud, bribery, and money laundering. Two generations of soccer officials abused their positions of trust for personal gain, frequently through an alliance with unscrupulous sports marketing executives who shut out competitors and kept highly lucrative contracts for themselves through the systematic payment of bribes and kickbacks. All told, the soccer officials are charged with conspiring to solicit and receive well over $150 million in bribes and kickbacks in exchange for their official support of the sports marketing executives who agreed to make the unlawful payments.

Most of the schemes alleged in the indictment relate to the solicitation and receipt of bribes and kickbacks by soccer officials from sports marketing executives in connection with the commercialization of the media and marketing rights associated with various soccer matches and tournaments, including FIFA World Cup qualifiers in the CONCACAF region, the CONCACAF Gold Cup, the CONCACAF Champions League, the jointly organized CONMEBOL/CONCACAF Copa América Centenario, the CONMEBOL Copa América, the CONMEBOL Copa Libertadores, and the Copa do Brasil, which is organized by the Brazilian national soccer federation (CBF). Other alleged schemes relate to the payment and receipt of bribes and kickbacks in connection with the sponsorship of CBF by a major U.S. sportswear company, the selection of the host country for the 2010 World Cup, and the 2011 FIFA presidential election.

The Indicted Defendants

As set forth in the indictment, the defendants and their co-conspirators fall generally into three categories: soccer officials acting in a fiduciary capacity within FIFA and one or more of its constituent organizations; sports media and marketing company executives; and businessmen, bankers, and other trusted intermediaries who laundered illicit payments.

Nine of the defendants were FIFA officials by operation of the FIFA statutes, as well as officials of one or more other bodies:

Jeffrey Webb: Current FIFA vice president and executive committee member, CONCACAF president, Caribbean Football Union (CFU) executive committee member, and Cayman Islands Football Association (CIFA) president.

Eduardo Li: Current FIFA executive committee member-elect, CONCACAF executive committee member, and Costa Rican soccer federation (FEDEFUT) president.

Julio Rocha: Current FIFA development officer. Former Central American Football Union (UNCAF) president and Nicaraguan soccer federation (FENIFUT) president.

Costas Takkas: Current attaché to the CONCACAF president. Former CIFA general secretary.

Jack Warner: Former FIFA vice president and executive committee member, CONCACAF president, CFU president, and Trinidad and Tobago Football Federation (TTFF) special adviser.

Eugenio Figueredo: Current FIFA vice president and executive committee member. Former CONMEBOL president and Uruguayan soccer federation (AUF) president.

Rafael Esquivel: Current CONMEBOL executive committee member and Venezuelan soccer federation (FVF) president.

José Maria Marin: Current member of the FIFA organizing committee for the Olympic football tournaments. Former CBF president.

Nicolás Leoz: Former FIFA executive committee member and CONMEBOL president.

Four of the defendants were sports marketing executives:

Alejandro Burzaco: Controlling principal of Torneos y Competencias S.A., a sports marketing business based in Argentina, and its affiliates.

Aaron Davidson: President of Traffic Sports USA, Inc. (Traffic USA).

Hugo and Mariano Jinkis: Controlling principals of Full Play Group S.A., a sports marketing business based in Argentina, and its affiliates.

And one of the defendants was in the broadcasting business but allegedly served as an intermediary to facilitate illicit payments between sports marketing executives and soccer officials:

José Margulies: Controlling principal of Valente Corp. and Somerton Ltd.

The Convicted Individuals and Corporations

The following individuals and corporations previously pled guilty under seal:

On July 15, 2013, the defendant Daryll Warner, son of defendant Jack Warner and a former FIFA development officer, waived indictment and pled guilty to a two-count information charging him with wire fraud and the structuring of financial transactions.

On October 25, 2013, the defendant Daryan Warner, son of defendant Jack Warner and a businessman, waived indictment and pled guilty to a three-count information charging him with wire fraud conspiracy, money laundering conspiracy, and the structuring of financial transactions. Daryan Warner forfeited over $1.1 million around the time of his plea and has agreed to pay a second forfeiture money judgment at the time of sentencing.

On November 25, 2013, the defendant Charles Blazer, the former CONCACAF general secretary and a former FIFA executive committee member, waived indictment and pled guilty to a 10-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy, income tax evasion, and failure to file a Report of Foreign Bank and Financial Accounts (FBAR). Blazer forfeited over $1.9 million at the time of his plea and has agreed to pay a second amount to be determined at the time of sentencing.

On December 12, 2014, the defendant José Hawilla, the owner and founder of the Traffic Group, the Brazilian sports marketing conglomerate, waived indictment and pled guilty to a four-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy, and obstruction of justice. Hawilla also agreed to forfeit over $151 million, $25 million of which was paid at the time of his plea.

On May 14, 2015, the defendants Traffic Sports USA, Inc. and Traffic Sports International, Inc. pled guilty to wire fraud conspiracy.

All money forfeited by the defendants is being held in reserve to ensure its availability to satisfy any order of restitution entered at sentencing for the benefit of any individuals or entities that qualify as victims of the defendants’ crimes under federal law.

The indictment unsealed today has been assigned to the Honorable Raymond J. Dearie, United States District Judge for the Eastern District of New York.

The indicted and convicted individual defendants face maximum terms of incarceration of 20 years for the RICO conspiracy, wire fraud conspiracy, wire fraud, money laundering conspiracy, money laundering, and obstruction of justice charges. In addition, the defendant Eugenio Figueredo faces a maximum term of incarceration of 10 years for a charge of naturalization fraud and could have his U.S. citizenship revoked. He also faces a maximum term of incarceration of 5 years for each tax charge. The defendant Charles Blazer faces a maximum term of incarceration of 10 years for the FBAR charge and 5 years for the tax evasion charges; and the defendants Daryan and Daryll Warner face maximum terms of incarceration of 10 years for structuring financial transactions to evade currency reporting requirements. Each individual defendant also faces mandatory restitution, forfeiture, and a fine. By the terms of their plea agreements, the corporate defendants face fines of $500,000 and one year of probation.

The government’s investigation is ongoing.

The government’s case is being prosecuted by Assistant United States Attorneys Evan M. Norris, Amanda Hector, Darren A. LaVerne, Samuel P. Nitze, Keith D. Edelman, and Brian D. Morris, with assistance provided by the Justice Department’s Office of International Affairs and Organized Crime and Gang Section.

The Indicted Defendants:

ALEJANDRO BURZACO

Age: 50

Nationality: Argentina

AARON DAVIDSON

Age: 44

Nationality: USA

RAFAEL ESQUIVEL

Age: 68

Nationality: Venezuela

EUGENIO FIGUEREDO

Age: 83

Nationality: USA, Uruguay

HUGO JINKIS

Age: 70

Nationality: Argentina

MARIANO JINKIS

Age: 40

Nationality: Argentina

NICOLÁS LEOZ

Age: 86

Nationality: Paraguay

EDUARDO LI

Age: 56

Nationality: Costa Rica

JOSÉ MARGULIES, also known as José Lazaro

Age: 75

Nationality: Brazil

JOSÉ MARIA MARIN

Age: 83

Nationality: Brazil

JULIO ROCHA

Age: 64

Nationality: Nicaragua

COSTAS TAKKAS

Age: 58

Nationality: United Kingdom

JACK WARNER

Age: 72

Nationality: Trinidad and Tobago

JEFFREY WEBB

Age: 50

Nationality: Cayman Islands

The Convicted Defendants:

CHARLES BLAZER

Age: 70

Nationality: USA

JOSÉ HAWILLA

Age: 71

Nationality: Brazil

DARYAN WARNER

Age: 46

Nationality: Trinidad and Tobago, Grenada

DARYLL WARNER

Age: 40

Nationality: USA, Trinidad and Tobago

TRAFFIC SPORTS INTERNATIONAL, INC.

Registered: British Virgin Islands

TRAFFIC SPORTS USA, INC.

Registered: USA

E.D.N.Y. Docket Numbers:

United States v. Daryll Warner, 13 Cr. 402 (WFK)

United States v. Daryan Warner, 13 Cr. 584 (WFK)

United States v. Charles Blazer, 13 Cr. 602 (RJD)

United States v. José Hawilla, 14 Cr. 609 (RJD)

United States v. Traffic Sports International, Inc., 14 Cr. 609 (RJD)

United States v. Traffic Sports USA, Inc., 14 Cr. 609 (RJD)

United States v. Jeffrey Webb et al., 15 Cr. 252 (RJD)

_______________________________________________________________________

1. Also this morning, a search warrant is being executed at CONCACAF headquarters in Miami, Florida.

 

Attachments

• UNITED STATES V. CHARLES BLAZER 
• UNITED STATES V. DARYAN WARNER
• UNITED STATES V. DARYLL WARNER
• UNITED STATES V. JOSE HAWILLA ET AL
• FIFA Press Visuals.05.27.2015
• FIFA Indictment - Certified Copy_Clean_Reduced Size_Redacted (2)

Earlier today, Saddiq al-Abbadi, a Yemeni national, pleaded guilty to conspiring to murder U.S. nationals abroad, providing and conspiring to provide material support to al-Qaeda, and using a machine gun in furtherance of those crimes. The guilty plea proceeding took place before United States District Judge Nicholas G. Garaufis. At sentencing, al-Abbadi faces a maximum of life imprisonment.

The guilty plea was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; John P. Carlin, Assistant Attorney General for National Security; and Andrew G. McCabe, Assistant Director in Charge, Federal Bureau of Investigation, Washington Field Office.

“The defendant was a high-level al-Qaeda operative with ties to the terrorist group’s senior leadership in both Pakistan and Yemen. He fought in battles against U.S. troops in Iraq and Afghanistan, tried to kill U.S. troops in Afghanistan by luring them to a compound rigged with explosives, and helped an American citizen gain entry to al-Qaeda,” stated Acting United States Attorney Currie. “We stand resolute in our commitment to bring to justice those who would try to harm members of our military or who assist al-Qaeda’s efforts to kill Americans at home or abroad.”

“With the guilty plea entered today, Saddiq al-Abbadi will be held accountable for conspiring to kill Americans overseas and providing material support to al-Qaeda,” said Assistant Attorney General Carlin. “Seeking to identify, thwart, and hold accountable those who target U.S. citizens and interests around the world will remain a top priority of the National Security Division.”

“With today’s guilty plea, Al-Abbadi admitted to directly supporting the mission of a designated terrorist organization through planning an operation designed to kill U.S. forces and for engaging in recruitment efforts on behalf of al-Qaeda,” said FBI Assistant Director in Charge McCabe. “This plea is due in no small part to the many FBI Special Agents, intelligence analysts, and linguists from the Washington and New York Field Offices as well as our interagency and international partners who spent countless hours investigating terrorism actors and al-Abbadi’s actions. The FBI will not rest until we find and hold accountable those who provide support to terrorist groups and ensure that they are brought to justice.”

According to court filings, al-Abbadi traveled from his home country of Yemen to Iraq where, from approximately late 2005 through early 2007, he fought alongside al-Qaeda affiliated battalions against U.S. troops stationed in Iraq.

In early 2008, al-Abbadi traveled to the Federally Administered Tribal Areas (“FATA”) of Pakistan in order to fight for al-Qaeda in Pakistan and Afghanistan. While in the FATA, al-Abbadi – who had longstanding ties to senior members of al-Qaeda’s Yemen-based affiliate, known as al-Qaeda in the Arabian Peninsula or AQAP – engaged directly with senior al-Qaeda leadership in Pakistan, including Sheikh Saeed al-Masri, at the time the third-ranking member of al-Qaeda.

During late spring and summer 2008, Al-Abbadi crossed from Pakistan into Afghanistan for the purpose of fighting and killing members of the United States military stationed in Afghanistan. In June 2008, he planned an operation designed to lure U.S. forces to a compound in Ghazni, Afghanistan, that was rigged with explosives set to detonate upon their entry. When U.S. forces arrived at the compound, they found rocket-propelled grenades and artillery rounds littered about. One soldier observed wiring running from the exterior gate to the inside of the compound and recognized the trap. The military evacuated and subsequently leveled the compound.

In addition to fighting against the U.S. military, al-Abbadi used his connections with al-Qaeda’s leadership to help U.S. citizen Bryant Neal Vinas gain entry into al-Qaeda. Vinas had traveled to Pakistan from Long Island in the hopes of joining al-Qaeda and fighting against U.S. military forces in Afghanistan. As a result of al-Abbadi’s assistance, Vinas was allowed to join al-Qaeda. After participating in al-Qaeda’s military training program, Vinas developed a plan with senior al-Qaeda external operations leadership to conduct an attack on the Long Island Railroad in New York. Vinas was arrested before he could carry out this attack.

The 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 Justice Department’s Counterterrorism Section and by the Office of International Affairs.

The Defendant:

SADDIQ AL-ABBADI

Age: 40

Nationality: Yemeni

E.D.N.Y. Docket No. 15-CR-124 (NGG)

A federal grand jury indicted Smithtown, New York, doctor Mitchel Fagin this morning on charges that he illegally distributed oxycodone, methodone and alprazalom, highly addictive prescription pain medications.1 The defendant is scheduled to be arraigned this afternoon before United States District Judge Joanna Seybert at the United States Courthouse located in Central Islip, New York.

The charges were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York and James J. Hunt, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York.

Fagin surrendered this morning to the Long Island District Office Tactical Diversion Squad, which is comprised of federal agents and officers of the Nassau County, Rockville Centre, and Port Washington police departments. The 12-count indictment and public filings allege that between May 2010 and September 2014, Fagin, a pain management doctor, issued mutltiple controlled substance prescriptions without a legitimate medical purpose to individuals he knew were addicts. Fagin is also alleged to have issued controlled substance prescriptions in exchange for sexual favors from female patients. Fagin was previously investigated by the Office of Professional Medical Conduct resulting in at least one suspension of his medical license.

Acting United States Attorney Currie stated, “Dr. Fagin allegedly used his prescription-writing privileges not to heal, as was his duty, but to victimize vulnerable patients. Doctors who issue prescriptions without a legitimate medical need are violating the law and will be held accountable.” Mr. Currie extended his grateful appreciation to each of the law enforcement agencies for their assistance in this case.

DEA Special Agent-in-Charge Hunt stated, “As detailed in the indictment, Dr. Fagin’s house was a medicine chest for opioid addicts to fuel their addiction. Dr. Fagin allegedly abused his position as a medical practitioner and prescribed medications for non-medical needs. I commend the Long Island District Office Tactical Diversion Squad and the U.S. Attorney’s Office, Eastern District of New York, for their diligent work throughout this investigation.”

If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment and a $1 million fine.

This case is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York as part of the Prescription Drug Initiative. In January 2012, this Office and the DEA, in conjunction with the five District Attorneys in this jurisdiction, the Nassau and Suffolk County Police Departments, the New York City Police Department, and New York State Police, along with other key federal, state, and local government partners, launched the Prescription Drug Initiative to mount a comprehensive response to what the United States Department of Health and Human Services’ Center for Disease Control and Prevention has called an epidemic increase in the abuse of so-called opioid analgesics. So far, the Prescription Drug Initiative has brought over 160 federal and local criminal prosecutions, including the prosecution of 15 health care professionals, taken civil enforcement actions against a hospital, a pharmacy, and a pharmacy chain, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.

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

The Defendant:

Name: MITCHEL FAGIN

Age: 63

Residence: Smithtown, New York

______________________________________________________________________________

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

 

       

A 29-count superseding indictment was unsealed yesterday in federal court in Central Islip, New York, charging MS-13 members Edwin Acosta-Martinez (“Scarface”), Sergio Cerna (“Taz” and “Lechon”), and Arnolvin Umanzor Velasquez (“Momia” and “Lito”), with the November 2, 2011 murder of Brandon Sotomayor in Baywood, NY, the December 18, 2011 double-murder of two brothers, Enston and Ricardo Ceron, in Brentwood, NY, four attempted murders which took place between May and December 2011, and multiple racketeering offenses related to those murders and attempted murders. The superseding indictment was returned under seal by a federal grand jury on May 13, 2015.

Velasquez was arrested yesterday morning in Flowery Branch, Georgia, by a Federal Bureau of Investigation SWAT team, and he was arraigned before United States Magistrate Judge E. Clayton Scofield, III, at the federal courthouse in Atlanta, where he was ordered to be removed in custody to the Eastern District of New York. Cerna and Acosta-Martinez are already in federal custody and will be arraigned this afternoon and next week, respectively, before United States District Judge Joseph F. Bianco at the federal courthouse in Central Islip.

The charges were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge, FBI, New York Field Office.

“The execution-style killings of Brandon Sotomayor and the Ceron brothers, as well as the attempted murders charged in this superseding indictment, demonstrate the callous depravity of the MS-13,” stated Acting United States Attorney Currie. “This Office and the FBI’s Long Island Gang Task Force will continue to investigate and prosecute the MS-13 to ensure that the gang members are held accountable for their brutal acts.” Mr. Currie expressed his appreciation for the assistance provided by the United States Attorney’s Office for the Northern District of Georgia and the FBI’s Atlanta Field Office.

“MS-13 is a scourge on our communities. As alleged, the three defendants charged today with murder demonstrate the extraordinary violence of this gang. We continue to work with prosecutors and local law enforcement on Long Island to arrest and prosecute members of MS-13,” stated Assistant Director-in-Charge Rodriguez.

Cerna was charged in the underlying indictment with racketeering and firearms offenses relating to the May 12, 2011 and September 11, 2011 attempted murders of two suspected rival gang members, and an October 23, 2011 conspiracy to murder rival gang members which resulted in two men being shot and wounded. The superseding indictment adds charges against Cerna and Velasquez in connection with the December 18, 2011 murders of the Ceron brothers, Enston and Ricardo. As set forth in prior court filings and a detention letter, the Brentwood clique of the MS-13 (“BLS”) killed Enston Ceron because he was distancing himself from the gang by not attending meetings or “putting in work” for the gang, and they 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, Cerna and Velasquez, who volunteered to carry out the murders and were armed with 9mm and .22 caliber 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, Cerna and Velasquez executed them, shooting them in the head and torso at close range. Cerna and Velasquez 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.

Following the Ceron brothers’ murders, the BLS clique blamed the killings on the rival Latin Kings street gang and plotted a retaliation shooting with members of the Huntington clique of the MS-13, including Acosta-Martinez. On December 22, 2011, Acosta-Martinez and two other MS-13 members observed two suspected members of the Latin Kings in Brentwood. Acosta-Martinez, who was armed with a 9mm semi-automatic handgun, is charged with shooting one of the men in the arm before the suspected Latin Kings members fled. The victim survived that shooting.

Acosta-Martinez was also indicted in connection with his participation in the November 2, 2011 murder of Brandon Sotomayor and a series of armed robberies in 2011 and 2012. On the night of the Sotomayor murder, Acosta-Martinez and another MS-13 member, who was a juvenile at the time, agreed to “put in work” for the MS-13 by killing a rival gang member. Acosta-Martinez and his co-conspirator were armed with the same 9mm and .22 caliber semi-automatic handguns used to murder the Ceron brothers. While in the vicinity of Reilly Street in Baywood, Acosta-Martinez and his co-conspirator saw a car with three people, including Sotomayor, who was wearing a red hat and who they believed to be a member of the rival Bloods street gang. Acosta-Martinez and his co-conspirator approached the car and fired numerous shots at Sotomayor, striking him multiple times in the neck and torso and killing him.

The defendants are also charged with additional racketeering offenses, including assaults, obstruction of justice, armed robbery, and related firearms and conspiracy counts.

The superseding indictment is the latest in a series of federal prosecutions by the United States Attorney’s Office for the Eastern District of New York targeting members of the MS-13, a violent international street gang comprised primarily of immigrants from El Salvador and Honduras. With numerous branches, or “cliques,” the MS-13 is the largest street gang on Long Island. Since 2003, more than 250 MS-13 members, including dozens of clique leaders, have been convicted on federal felony charges in the Eastern District of New York. More than 150 of those MS-13 members have been convicted on federal racketeering charges. Since 2010 alone, this Office has obtained indictments charging MS-13 members with carrying out more than 25 murders in the Eastern District of New York, and has convicted dozens of MS-13 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, and Rockville Centre Police Department.

The charges in the superseding indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendants face life in prison or the death penalty.

The government’s case is being prosecuted by Assistant United States Attorneys John J. Durham and Raymond A. Tierney of the Long Island Criminal Division.

The Defendants:

EDWIN ACOSTA-MARTINEZ (“Scarface”)

Age: 26

Huntington Station, New York

SERGIO CERNA (“Taz” and “Lechon”)

Age: 31

Brentwood, New York

ARNOLVIN UMANZOR VELASQUEZ (“Momia” and “Lito”)

Age: 22

Brentwood, New York and Flowery Branch, Georgia

E.D.N.Y. Docket No. 15-CR-087 (S-1)(JFB)

Hunter Roberts Construction Group, LLC (“Hunter Roberts”), one of the largest construction companies in New York City, has entered into a non-prosecution agreement and agreed to pay more than $7 million in penalties to the federal government and restitution to victims to resolve a criminal investigation into the company’s past fraudulent billing practices. In addition, pursuant to the non-prosecution agreement, Hunter Roberts will provide continuing cooperation and maintain far-reaching corporate reforms.

The resolution was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; Michael Nestor, Inspector General, Port Authority of New York and New Jersey; Robert Erickson, Acting Inspector General, General Services Administration, Office of the Inspector General; Cheryl Garcia, Special Agent-in-Charge, Department of Labor, Office of Inspector General; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Mark G. Peters, Commissioner, New York City Department of Investigation.

“Hunter Roberts defrauded its clients by fraudulently billing them for work that was not performed and at rates that were higher than contracted. Today’s resolution marks a significant step in our continued effort to eliminate fraud in New York City’s construction industry and also recognizes Hunter Roberts’s decision to timely accept full responsibility, provide complete cooperation, and take remedial measures to enforce best industry practices,” stated Acting U.S. Attorney Currie. Mr. Currie thanked the investigative agencies for their outstanding commitment and dedication over the course of this six-year industry investigation.

“Responsible for overseeing billions of dollars of publicly funded construction throughout the region, the Port Authority’s Office of Inspector General is committed to ensuring that industry participants operate with integrity and accountability,” stated Inspector General Nestor. Inspector General Nestor thanked his law enforcement partners for their dedication and professionalism in investigating these practices.

“We will continue working with our law enforcement partners on important construction contract fraud cases such as this, ensuring that the United States always gets what it bargained for,” said Acting Inspector General Erickson.

“Contractors that inflate invoices for union labor threaten the integrity of collective bargaining agreements and the viability of federally funded projects and private development. We will continue to work with our law enforcement partners to identify practices that jeopardize the employment opportunities for American workers,” stated Special Agent-in-Charge Garcia.

“Both public and private projects across the New York City metropolitan area were victims of Hunter Roberts’ fraudulent billing practices for more than eight years. Today’s restitution settlement of more than $7 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.

Commissioner Peters said, “This fraudulent overbilling scheme was insidious – bilking publicly-funded vendors and, in the end, taxpayers paid the ultimate cost. DOI will continue to work with its law enforcement partners to expose and stop these crimes because fraud has no business in New York City.”

Pursuant to the non-prosecution agreement signed today, Hunter Roberts acknowledged and accepted responsibility for engaging in an eight-year-long fraudulent overbilling scheme that impacted virtually all of its projects. Specifically, from 2006 through 2011, Hunter Roberts 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 (“Local 79”). Hunter Roberts effectuated this overbilling by systemically adding one to two hours of unworked or unnecessary overtime per day to the labor foremen’s time sheets and falsely listing unworked hours as worked when labor foremen were absent for vacation days, sick days, and major holidays. Additionally, from 2010 through November 2013, without seeking advance approval from its clients, Hunter Roberts paid a select group of labor foremen, and billed its clients, at wage rates that exceeded those specified in Hunter Roberts’ contracts with its clients. In admitting responsibility, Hunter Roberts acknowledged that it engaged in fraudulent overbilling on a wide number of public and private projects across the New York City metropolitan area. These projects included the Dormitory Authority of the State of New York’s Queens Hospital Center Ambulatory Care Pavilion, the Harvey Theater at the Brooklyn Academy of Music, the Borough of Manhattan Community College’s Fiterman Hall, and the PAVE Academy Charter School in Red Hook, Brooklyn.

In light of Hunter Roberts’ comprehensive internal investigation, prompt and complete acceptance of responsibility for the full breadth of its unlawful conduct, exemplary cooperation and far-reaching remedial measures, the government has agreed not to prosecute Hunter Roberts for its criminal conduct, provided that Hunter Roberts complies for two years with all the terms of the agreement executed today. Significantly, this agreement secures immediate compensation for victimized companies who were overbilled on their projects.

This resolution was the result of efforts by 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 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.

HRCC NP, Stmt of Fact & Bd Cert -- FULLY EXECUTED

Earlier today, Thomas Torre, the former Chief Financial Officer of Metro Fuel Oil Corp., pled guilty to conspiracy to commit bank fraud. According to court filings and facts presented during the plea proceeding, Torre conspired in a scheme to overstate Metro Fuel’s accounts receivable in order to draw from a revolving line of credit issued by New York Commercial Bank. The fuel company later filed for bankruptcy after fraudulently obtaining over $30 million from the bank.

The guilty plea was announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, and Diego Rodriguez, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office.

“Through his deceit and trickery, Torre defrauded New York Commercial Bank in an amount exceeding $30 million,” stated Acting United States Attorney Currie. “We will remain alert to such schemes and will aggressively prosecute those who would steal from our financial institutions.” Mr. Currie extended his grateful appreciation to the Federal Bureau of Investigation, the agency which led the government’s investigation.

From approximately July 2007 to July 2012, Torre and others falsely overstated the company’s accounts receivable on certificates submitted to the bank at least once per month by not recording cash payments from customers and by creating fictitious invoice amounts. The bank relied on this misinformation in determining the amount Metro Fuel could borrow on its revolving line of credit. By September 2012, Metro Fuel could no longer pay its bills and filed a voluntary petition for bankruptcy.

Today’s guilty plea took place before United States District Judge Pamela K. Chen. When sentenced, Torre faces up to 30 years in prison, as well as forfeiture and a fine. The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorney William P. Campos is in charge of the prosecution. Assistant United States Attorney Brian D. Morris is handling the forfeiture aspect of the case.

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’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, please visit www.StopFraud.gov.

The Defendant:

THOMAS TORRE

Age: 63

Albertson, New York

E.D.N.Y. Docket No. 14 - CR - 514 (PKC)

Earlier today, Madhi Hashi, Ali Yasin Ahmed and Mohamed Yusuf pleaded guilty to conspiring to provide material support to al-Shabaab, a designated foreign terrorist organization. Today’s plea took place before United States District Judge John Gleeson. At sentencing, each of the defendants faces a maximum of 15 years in prison and automatic removal from the United States.

The guilty pleas were announced by Kelly T. Currie, Acting 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.

“The defendants were committed supporters of 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 Acting U.S. Attorney Kelly T. Currie. “We will use every tool at our disposal to combat terrorist groups, deter terrorist activity, and incapacitate individual terrorists around the world. Today’s convictions demonstrate that criminal prosecution is an effective tool in our efforts to combat international terrorism.”

“Hashi, Ahmed and Yusuf all pleaded guilty to conspiring to provide material support to a designated foreign terrorist organization, al-Shabaab,” 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 terrorists both at home and abroad. I would like to thank all of the agents, analysts and prosecutors who are responsible for this case.”

During the time of the charged conspiracy (and thereafter), al-Shabaab successfully recruited individuals from around the world, like the defendants, to come to Somalia and join the organization. These individuals, known within al-Shabaab as “foreign fighters” and muhajireen, lived, trained, and often fought separately from, but in coordination with, other al-Shabaab fighters. They were also 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, Mohamed 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 defendant Ali Yasin Ahmed fought in battles in Somalia against African Union forces. Defendant Madhi Hashi was a close associate of American-born al-Shabaab leader Omar Hammami.

Assistant Attorney General Carlin joined Acting U.S. Attorney Currie 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 Attorneys Shanna Batten and Dan Stigall of the Department of Justice’s Office of International Affairs also provided invaluable assistance.

The Defendants:

MADHI HASHI, also known as “Talha”

Age: 25

Nationality: Somali

ALI YASIN AHMED, also known as “Ismail”

Age: 30

Nationality: Swedish

MOHAMED YUSUF, also known as “Abu Zaid,” “Hudeyfa” and “Mohammed Abdulkadir”

Age: 32

Nationality: Swedish

Earlier today, Damion Hardy, also known as “World,” and Aaron Granton, also known as “E-Bay,” were each sentenced to six terms of life imprisonment following their April 29, 2015 conviction after trial on charges of murder in-aid-of racketeering and related offenses. The sentence was imposed by United States District Judge Frederic Block.

The sentences were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; Diego G. Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Raymond R. Parmer Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York; and William J. Bratton, Commissioner, New York City Police Department.

“Gang members and would-be gang members are on notice that we will never cease in our efforts to bring murderous criminals to justice and to make communities like Lafayette Gardens safe for its law abiding residents,” stated Acting United States Attorney Currie. “I thank the FBI, HSI, and the New York City Police Department for their extraordinarily hard work and total dedication to bringing these most violent gang members to justice.”

From 1991 until August 2004, Hardy was the leader of a criminal enterprise known as the “Cash Money Brothers” (CMB) based in the Lafayette Gardens houses in Brooklyn, New York. Granton was a member of CMB and one of its top enforcers. From the time the crack-cocaine epidemic began in the late 1980s, Lafayette Gardens was a central and lucrative hub for the distribution of cocaine base. At that time, the young men who would later form CMB acted as street dealers under the direction of the senior drug dealers who controlled Lafayette Gardens. In approximately 1991, after CMB was formed under the leadership of the defendant Hardy and his brother, Myron Hardy, also known as “Wise,” the CMB ousted the senior dealers and seized control of the Lafayette Gardens crack trade for themselves.

CMB maintained control of Lafayette Gardens through acts of violence that included near-daily gun battles with rival organizations and numerous murders. For example, in 1998, Hardy ordered a junior gang member to shoot and kill Michael Colon because Hardy believed Colon disrespected and humiliated him at a roller skating rink. In 1999, while Hardy was incarcerated, his brother Myron was shot and killed in Lafayette Gardens. Hardy and other CMB members believed that a rival drug dealer named Ivery “Peanut” Davis and other members of Davis’s drug organization were responsible for the murder. While Hardy lay wounded in the hospital, Damion Hardy, from his prison cell, directed his gang members to exact revenge and ordered CMB members to murder Darryl Baum, James Hamilton, Tyrone Baum, and Ivery Davis – each was murdered by Granton. Davis’s killing also resulted in the death of an innocent bystander, Johan Camitz.

Through his murderous work with CMB, Granton earned a reputation as an effective and ruthless killer. As a result, he was recruited in 2001 by a separate gang, the “Supreme Team,” to kill Troy Singleton – who was then shot multiple times in the back and head as he left a nightclub in Queens, New York.

The government’s case is being prosecuted jointly by the Office’s International Narcotics & Money Laundering Section and Organized Crime & Gangs Section. Assistant United States Attorneys Matthew Amatruda, Soumya Dayananda, and Rena T. Paul are handling the prosecution.

The Defendants:

DAMION HARDY

Age: 40

Brooklyn, NY

AARON GRANTON

Age: 40

Brooklyn, NY

E.D.N.Y. Docket No. 04-CR-0706

Kelly T. Currie, Acting United States Attorney for the Eastern District of New York, Judith A. Enck, Regional Administrator, United States Environmental Protection Agency Region 2, and Eric T. Schneiderman, Attorney General for the State of New York, announced today that the City of New York, in compliance with the Consent Decree and Supplements entered in this action, began distribution of filtered drinking water from its Croton Water Filtration Plant. Through the Croton Water Filtration Plant, the City of New York will have the ability to deliver 290 million gallons of high-quality drinking water each day to residents of the City. If the City had failed to meet the May 17, 2015 deadline for commencement of operation of the Croton Water Filtration Plant, the Consent Decree provided for stipulated penalties in the amount of $65 million.

In 1997, the United States brought suit against New York City to enforce the filtration requirements for its Croton System. Soon thereafter, the State of New York and its Commissioner of Health intervened in the suit as plaintiffs and are parties to the Consent Decree as supplemented. New York City is required to filter its Croton System under the Safe Drinking Water Act and the Surface Water Treatment Rule (SWTR), as well as the New York State Sanitary Code. Under the SWTR, the City was required to implement filtration for its Croton System by June 29, 1993. By stipulation with the State of New York, the City agreed to begin construction of a filtration plant by July 1, 1996. When the City failed to comply with the Stipulation, the United States filed its suit to compel filtration of the Croton System. The United States and the State of New York have vigorously enforced the terms of the Consent Decree, resulting in the City constructing the Croton Filtration Plant and paying $5,064,000 in penalties to date for missed deadlines associated with the delays in the project schedule. Under the Consent Decree, the City was also required to conduct interim measures including monitoring the quality and safety of the Croton System and implementing watershed protection measures.

Filtering drinking water obtained from surface water sources, such as the Croton System, reduces the risk of waterborne disease. These sources are susceptible to potential contamination from disease causing organisms such as Giardia and Cryptosporidium which can easily get into surface water supplies from human activity and animals. Filtration, coupled with disinfection and source water protection, is the best means of ensuring the safety of drinking water from the City’s Croton water supply.

“The United States brought this action in 1997 to ensure that New York City residents are provided with safe drinking water from the Croton Water Supply. Through many years of litigation, enforcement and negotiation, this office has persevered to ensure that construction of the filtration plant was completed and that filtered water will be available to New York City residents from the Croton System. I am pleased that our enforcement efforts have come to fruition and the residents of New York City will have a high quality filtered drinking water supply,” said Acting United States Attorney Currie.

“New Yorkers deserve to have the highest quality water possible," said EPA Regional Administrator Judith A. Enck. "The EPA required New York City to build a filtration plant to protect people from Giardia and Cyrptosporidium, both of which can cause serious illness. The Croton Water Filtration plant will provide millions with a safe source of drinking water, which is essential to protecting public health.”

“Water from the Croton Watershed system has been critical to New Yorkers for more than a century, since the Croton Aqueduct began operating in 1842. Bringing this water filtration plant on-line is a major step forward in ensuring that drinking water from the watershed remains safe and available to New York City residents. It is also a critically-needed investment in New York's public infrastructure. My office will continue to work with our federal, state, and local partners to ensure that the city's compliance with the remaining obligations of the consent decree,” said New York Attorney General Schneiderman.

The action is entitled United States and State of New York v. City of New York and New York City Department of Environmental Protection, Civil Action No. 97-CV-2154 (Gershon, J.) (Gold, M.J.). The action was litigated and the Consent Decree was negotiated by Assistant United States Attorney Deborah B. Zwany, Elizabeth Yu, U. S. Department of Justice, Environment and Natural Resources Division, and Andrew Gershon, New York State Attorney General’s Office, with assistance from EPA Region 2, Phyllis Feinmark, Regional Counsel’s Office, Doughlas McKenna, Chief of the Water Compliance Branch, and Nicole Kraft, Chief of the Ground Water Compliance Section, and the New York State Department of Health’s Bureau of Water Supply Protection.

Earlier today, following four weeks of trial, a federal jury in Brooklyn, New York, returned a guilty verdict against Muzaffar Nadeem, the owner of SM&B Construction Co., Inc. (SM&B), and co-defendants Zainul Syed, Afzaal Chaudry, and Irfan Muzaffar for their participation in a scheme to pay SM&B’s workers a fraction of the prevailing wage on projects funded by the New York City School Construction Authority (SCA), as SM&B was legally and contractually required to do. Specifically, Nadeem was convicted on charges of mail and wire fraud, structuring financial transactions, federal programs bribery, making illegal cash payments to a union official, money laundering, unlawful monetary transactions over $10,000, subscribing to false tax returns, and multiple related conspiracy charges. Syed, Chaudry, and Muzaffar were convicted of various crimes for their participation in the scheme. When sentenced by United States District Judge Brian M. Cogan, Nadeem, Syed, and Chaudry face sentences of up to 20 years in prison, and Muzaffar faces a sentence of up to five years in prison.

The verdicts were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; Shantelle P. Kitchen, Special-Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York; and Special Agent-in-Charge Cheryl Garcia, New York Regional Office of the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations.

“The message to those who win and perform public works contracts in New York City and New York State is loud and clear – if you want to reap the benefits that come from being awarded those contracts, you will be held to following the rules,” stated Acting United States Attorney Currie. “You must pay your workers the wages to which they are entitled, rather than rig the system with bribes and then scheme to hide your income from the government. Those who do not follow the rules will be vigorously prosecuted.”

Mr. Currie expressed his grateful appreciation to the Office of the New York State Attorney General and that office’s Organized Crime Task Force, the New York City Department of Investigation, the New York City School Construction Authority, Office of Inspector General, the New York City Police Department, and the New York County District Attorney’s Office for their assistance in the investigation and prosecution of the defendants.

Nadeem owned and operated SM&B, which received over $36 million in fraud-induced payments from the SCA since 2007. Chaudry and Syed worked as a foreman and office manager, respectively, at SM&B. Muzaffar is Nadeem’s son, and also worked in SM&B’s office.

Both New York State Labor Law and the terms of its contracts with the SCA required SM&B to pay workers on SCA-funded projects a prevailing wage rate, which was set by the New York City Comptroller. Instead, SM&B paid workers, including bricklayers and laborers, cash wages on its projects at rates that were a small fraction of the prevailing wage. Nadeem, Chaudry, and Syed then falsely certified to the SCA that the workers had been paid the prevailing wage, thereby committing mail fraud, wire fraud, and conspiracy to commit those crimes.

To conceal the charged fraud scheme, and to obtain cash to pay the illegally low wages to workers, Nadeem, Syed, and Muzaffar engaged in illegal structuring, cashing multiple checks, each for less than $10,000 on a single day, for a total amount of more than $10,000, in an effort to avoid the required filing of Currency Transaction Reports (CTRs). Since July 2006, Nadeem and others acting his direction wrote more than $4.1 million in structured checks on SM&B’s account.

Nadeem and Syed also arranged for the payment of $30,000 in cash bribes to an undercover SCA Inspector, and over $7,000 in cash bribes to a shop steward for the Local 1 Bricklayers Union, Russell Argila. Argila has previously pleaded guilty to accepting those bribes. Nadeem also laundered approximately $7 million in proceeds of the charged fraud scheme by funneling it through shell companies and sent millions of dollars through these shell companies to Pakistan to invest in an amusement park and resort complex named “Wayzgoose Park.”

Finally, Nadeem filed false tax returns for SM&B and himself that fraudulently inflated SM&B’s business expenses and reduced its profits by more than $4 million.

At sentencing, the defendants also face forfeiture of substantial assets and cash.

The government’s case is being prosecuted by the Office’s Public Integrity Section. Assistant United States Attorneys Lan Nguyen, Gina M. Parlovecchio, and Nathan Reilly are in charge of the prosecution. Assistant United States Attorney Claire Kedeshian is handling the forfeiture aspects of the case.

The Defendants:

MUZAFFAR NADEEM

Age: 59

Brooklyn, New York

ZAINUL SYED

Age: 40

Brooklyn, New York

AFZAAL CHAUDRY

Age: 48

Brooklyn, New York

IRFAN MUZAFFAR

Age: 31

Brooklyn, New York

E.D.N.Y. Docket No. 13-CR-424 (BMC)

 

       

Queens Defendants Also Charged with Possessing Illegal Firearms

A six-count superseding indictment was unsealed yesterday in Brooklyn federal court charging husband and wife defendants Gregorio and Eleonora Gigliotti, their son Angelo Gigliotti, and a relative who is an Italian citizen, Franco Fazio, with conspiracy to import cocaine, conspiracy to possess with intent to distribute cocaine, importation of cocaine, and attempted possession of cocaine. In addition, the Gigliotti defendants were charged with unlawful use and possession of firearms. The charges arise from the defendants’ participation in an international narcotics-trafficking operation between July 1, 2014 and March 11, 2015.

The charges were announced by Kelly T. Currie, Acting United States Attorney for the Eastern District of New York; Raymond R. Parmer, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York; and Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

The unsealing of the superseding indictment coincides with the arrest of thirteen defendants in Italy today on related drug-trafficking charges resulting from the collaboration between the United States and Italian law enforcement agencies. Among those arrested by the Italian authorities was Franco Fazio, who will face charges in Italy before the United States seeks his extradition to face the charges contained in the Brooklyn superseding indictment. The Gigliotti defendants, who remain in custody in the United States, were also charged with narcotics-trafficking offenses by the Italian authorities.

“This case is a powerful example of the impact of international cooperation in combatting criminal organizations whose activities transcend national borders,” stated Acting United States Attorney Currie. Mr. Currie extended his grateful appreciation to Homeland Security Investigations and the Federal Bureau of Investigation, and thanked our law enforcement partners in Italy, including the Prosecutor of the Republic of Reggio Calabria; the Italian National Police (INP), and in particular, the Squadra Mobile of Reggio Calabria and the Servizio Centrale Operativo; the Direzione Centrale per i Servizi Antidroga; and the Direzione Nazionale Antimafia. Mr. Currie also expressed his gratitude to the U.S. Department of Justice Attaché and the Offices of the HSI and FBI Legal Attaché at the U.S. Embassy in Rome, who coordinated extensive evidence-sharing and coordinated operations.

“The arrests in New York and Italy dismantle a global network of alleged drug smugglers believed responsible for importing more than 50 kilograms of cocaine into the U.S.,” said HSI New York Special Agent-in-Charge Parmer. “This investigation is another example of the collective efforts of our federal and international law enforcement partners to bring down those responsible for the proliferation of illegal drugs in our communities, no matter where in the world they hide.”

“Using their family’s businesses in New York as a front for a narcotics trafficking operation, the defendants, as alleged, sought to establish a global cocaine ring. We also used a global team to take on this case, working closely with our partners in Italy,” said FBI Assistant Director-in-Charge Rodriguez. “As today’s arrests show, we are committed to working together to disrupt and dismantle organized criminal enterprises.”

The charges detailed in the Brooklyn indictment are the product of a lengthy investigation by HSI and the FBI that involved the use of court-authorized wiretaps and physical surveillance, and revealed that between October and December 2014 alone, the defendants imported over 55 kilograms of cocaine into the United States from Costa Rica, which was recovered by law enforcement.

As alleged, Gregorio and Eleonora Gigliotti owned and operated several businesses in New York City that were used to facilitate their narcotics-trafficking operation, including Cucino Amodo Mio, an Italian restaurant and pizzeria in Corona, Queens, and Fresh Farms Export Corp., an import/export company. In October 2014, law enforcement intercepted a shipment of cassava (a starchy root) that was shipped to the United States from Costa Rica and bound for Farm Fresh Export Corp. in New York. The shipment was found to contain approximately 40 kilograms of cocaine secreted inside cardboard boxes of cassava. Earlier, Eleonora Gigliotti allegedly traveled to Costa Rica with approximately $400,000 in cash that she delivered to the sources of supply. In September 2014, Franco Fazio allegedly traveled from Italy to New York and then to Costa Rica to deliver another $170,000 in cash to the sources of supply.

In December 2014, law enforcement intercepted a second shipment of cassava bound for Fresh Farms Export Corp. in New York that had also been shipped from Costa Rica and seized approximately 15 kilograms of cocaine secreted within the cardboard boxes of produce. Prior to the arrival of this shipment of cocaine, defendant Franco Fazio allegedly made two additional trips to Costa Rica to meet with the sources of supply.

The Gigliotti defendants were arrested on March 11, 2015, in New York. That same day, law enforcement searched Cucino Amodo Mio and Gregorio and Eleonora Gigliotti’s residence. In the restaurant they seized one 12 gauge shotgun; one loaded .357 magnum Trooper revolver; one loaded .22 caliber Colt pistol; one loaded .38 caliber Charter Arms revolver; one 9 mm Keltec pistol; one .762 Czech pistol; one .38 caliber Derringer that had a defaced serial number; ammunition magazines; loose ammunition; two handgun holsters; brass knuckles; and more than $100,000 in cash. In the Gigliotti residence agents recovered a loaded .45 caliber Llama handgun and more than $18,000 in cash.

The charges in Italy relate to the defendants’ narcotics trafficking distribution ring in that country – as a quantity of the cocaine imported into the United States was destined for exportation to and distribution in Italy. Based in part upon the U.S. investigation, Italian law enforcement disabled a narcotics distribution ring allegedly operating in Calabria on behalf of the U.S.-based defendants.

The charges in the superseding indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, they face a potential mandatory minimum sentence of 15 years’ imprisonment. The Brooklyn defendants will be arraigned at a later date before United States District Judge Raymond J. Dearie.

The government’s case is being prosecuted jointly by the Office’s Organized Crime & Gangs Section and the Long Island Criminal Section. Assistant United States Attorneys James Miskiewicz, Nicole M. Argentieri and Margaret E. Gandy are in charge of the prosecution.

The Defendants:

GREGORIO GIGLIOTTI

Age: 59

Malba, New York

ELEONORA GIGLIOTTI

Age: 54

Malba, New York

ANGELO GIGLIOTTI

Age: 34

Woodside, New York

FRANCO FAZIO

Age: 56

Calabria, Italy

E.D.N.Y. Docket No. 15-CR-204 (RJD)