Eastern District of New York

Elvin Hill was sentenced today to 43 years in prison at the federal courthouse in Brooklyn. In January 2014, following a jury trial, Hill was convicted of murdering Fredy Cuenca, a livery cab driver, during the course of a robbery on June 29, 1997, in Bushwick, Brooklyn.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office. The sentence was imposed by United States District Court Judge Kiyo A. Matsumoto.

“Almost 20 years ago, in a crime both senseless and brutal, Hill murdered an innocent man on a public street in broad daylight,” stated United States Attorney Lynch. “Now, thanks to the dogged efforts of federal investigators, he has been brought to justice for this brutal crime.”

On the afternoon of June 29, 1997, Hill and another individual were passengers in a livery cab driven by Cuenca. After directing Cuenca to park near a schoolyard on Eldert Street in Bushwick, Brooklyn, Hill bickered with Cuenca over the fare. Hill then drew a .380 caliber pistol that had been concealed on his person, and pointed it at Cuenca’s head. Cuenca, who spoke only broken English, pleaded for his life, pointing at a photo of his two young sons that he kept on the dashboard of his vehicle. Despite his pleas, Hill shot Cuenca in the head, and both he and his companion fled the scene. Cuenca’s brother-in-law, who was also a cab driver, found Cuenca bleeding in his cab a few minutes later and took him to a nearby hospital, where he died.

Although investigators identified the suspects shortly after the crime, there was insufficient evidence to charge them in 1997. Years later, a federal investigator who had previously been assigned to the case as a New York City Police Department detective obtained additional evidence. In March 2012, a federal grand jury returned an indictment against Hill.

Ms. Lynch extended her grateful appreciation to the FBI and to the New York City Police Department for their assistance in this prosecution.

The government’s case was prosecuted by Assistant United States Attorneys Daniel Silver and Seth DuCharme.

The Defendants:

ELVIN HILL

Age: 35

E.D.N.Y. Docket No. 12 CR 214

 

       

Today in Brooklyn federal court, Laron Spicer, also known as “Face,” a leader of the “Nine-Trey Gangsters” set of the Bloods street gang in Crown Heights, Brooklyn, was sentenced to a 30-year prison term for charges related to the set’s control of illegal activity on Sterling Place between Buffalo and Rochester Avenues for over 12 years. Throughout the period of Spicer’s leadership of the set, Sterling Place was beset by gang-related drive-by shootings, regular gunfire, slashings and drug dealing. As the set’s primary enforcer, Spicer was responsible for numerous acts of violence, including shootings and slashings, and held neighborhood residents in fear of violent retribution for questioning his authority or cooperating with law enforcement.

The sentencing was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office, and William J. Bratton, Commissioner, New York City Police Department.

“For over a decade, Spicer used violence and brutality to terrorize the streets of Crown Heights. Let today’s lengthy sentence be a message to other gang members victimizing their own communities – we will not tolerate violence and gang-related crimes,” stated United States Attorney Lynch. Ms. Lynch thanked the FBI, the NYPD, and the Kings County District Attorney’s Office for their assistance in this case.

In 2010, an investigation by the Federal Bureau of Investigation and the New York City Police Department led to the indictment and arrest of Spicer and 11 of the gang’s members and associates on charges including racketeering, drug distribution, murder and attempted murder. Among other acts, Spicer was charged with four non-fatal shootings and the 2008 murder of rival drug dealer William Singletary, who had set up a competing drug operation in the gang’s territory. During the period charged in the indictment, Spicer was arrested 30 times by New York City police officers and was convicted of, among other offenses, illegal gun possession on five occasions and witness tampering for threatening to kill a police officer who was testifying against him at a state court proceeding. On December 19, 2013, Spicer pled guilty to federal charges of racketeering, narcotics distribution conspiracy, and ordering the murder of Singletary.

The government’s case was prosecuted by Assistant United States Attorneys Matthew Amatruda, Nadia Shihata and Erik Paulsen.

The Defendant:

LARON A. SPICER

Alias: “Face”

Age: 34

Earlier today at the federal courthouse in Central Islip, New York, Adalberto Ariel Guzman, also known as “Gringo,” a member of La Mara Salvatrucha, also known as the MS-13 street gang, was sentenced to multiple terms of life in prison plus 35 years. Guzman was convicted, on September 9, 2013, following a three-week trial, on all counts, including two counts of murder in aid of racketeering, conspiracy to commit murders in aid of racketeering, and related firearms offenses, in connection with the February 5, 2010 slayings of 19-year-old Vanessa Argueta and her two-year-old son Diego Torres in Central Islip, New York.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Thomas C. Krumpter, Acting Commissioner of the Nassau County Police Department.

“The MS-13 has become infamous for unleashing ruthless violence on the streets of Long Island. However, even for the MS-13, the execution-style murders of a young mother and an innocent child, carried out by Guzman and his fellow gang members, were particularly senseless and cold-blooded crimes,” stated United States Attorney Lynch. “The tenacious investigation and prosecution by the FBI’s Long Island Gang Task Force and my Office, the jury’s guilty verdict last September, and today’s sentence send the unequivocal message that anyone who engages in such brutal and heinous crimes will spend the rest of his life in federal prison.” United States Attorney Lynch expressed her sincere gratitude to the FBI’s Long Island Gang Task Force for its tireless efforts to bring Guzman and his co-conspirators to justice.

At trial, the government proved that Guzman and other MS-13 members, including MS- 13 leader, Heriberto Martinez, also known as “Boxer,” Juan Garcia, also known as “Cruzito,” and Rene Mendez Mejia, also known as “Zorro,” plotted to kill Argueta because they believed she had disrespected the MS-13. On February 4, 2010, when Guzman, Garcia, and Mejia planned to kill Argueta, she was with her son, and the MS-13 members decided to murder him as well. Guzman, Garcia, and Mejia lured Argueta and Torres into a secluded wooded area in Central Islip, where they executed the mother and child, shooting Argueta in the head and chest, and Torres twice in the head. Specifically, the evidence at trial established that Guzman fired the fatal shots to Torres’s head. After they murdered Argueta and Torres, Guzman, Garcia, and Mejia fled to El Salvador, but Guzman was arrested on May 17, 2010, in Miami, Florida, when he attempted to return to the United States from El Salvador. Thereafter, Guzman was indicted and found guilty on all counts relating to the Argueta and Torres murders following a trial in August and September 2013.

Guzman’s three co-conspirators, Martinez, Garcia, and Mejia were also arrested and indicted in connection with the Argueta and Torres murders. Martinez was convicted in March 2013, following a six-week trial, and later sentenced to life in prison, plus 60 years. Mejia pled guilty to the murders and is pending sentence. Garcia, who surrendered to law enforcement authorities in Nicaragua, waived extradition, and was returned to the United States after being placed on the FBI’s Ten Most Wanted list in March 2014, is pending trial in the Eastern District.1

The convictions of Guzman and his codefendants are 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 20 murders in the Eastern District of New York, and has convicted more than 35 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, Rockville Centre Police Department, and Suffolk County Police Department.

The sentence was imposed by United States District Judge Joseph F. Bianco.

The government’s case is being prosecuted by Assistant United States Attorneys John J.

Durham and Raymond A. Tierney.

The Defendant:

ADALBERTO ARIEL GUZMAN, also known as “Gringo”

Central Islip, New York

Age: 22

__________________________________________________________________________

1 The charges contained in the indictment against Garcia are merely allegations, and he is

presumed innocent unless and until proven guilty.

William Conway, a medical doctor who formerly ran a practice in Baldwin, New York, was sentenced today to a term of eight years’ imprisonment for conspiring to illegally distribute the highly-addictive narcotic oxycodone, to be followed by three years of supervised release. The sentence was pronounced by United States District Judge Leonard D. Wexler, who ruled last month that the defendant was esponsible for the overdose death of a patient to whom he prescribed oxycodone for no legitimate medical purpose.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James J. Hunt, Acting Special Agent-in-Charge, Drug nforcement Administration (DEA), New York, and Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department (NCPD).

Conway was arrested in June 2012 following a state and federal investigation into the defendant’s practice of issuing oxycodone prescriptions at an average of 163 per month between 2009 and 2011 -- a rate that equated to the distribution of over 782,000 pills. Conway’s office files revealed only cursory, incomplete examinations of patients, overlapping prescriptions to the same patients, and as one government witness put it, no effort to “try and fix the patient’s condition rather than perpetuate the use of the narcotics.”

During a hearing before Judge Wexler in May, the government presented evidence that the defendant prescribed large quantities of oxycodone to a patient, Giovanni Manzella, for no legitimate medical purpose and that the illegal distribution caused Manzella’s overdose death on April 23, 2011. Records showed that Conway issued Manzella five

oxycodone prescriptions, totaling over 800 pills, over a six month period with little or no examination or diagnostic testing, such as an MRI, or any effort to ensure that the patient was not abusing the narcotic. Evidence also showed that Conway prescribed 180 oxycodone pills to Manzella on April 21, 2011, and then 24 hours later, prescribed Manzella an additional 270oxycodone pills without performing any medical evaluation. Manzella died the next day.

In an August 2014 writen opinion, Judge Wexler noted, “Incredibly, Dr. Conway wants this Court to find that, when Manzella was under his medical supervision, somehow he was practicing medicine and prescribing oxycodone for a legitimate medical purpose.” Instead, Judge Wexler found that the government’s evidence “amply demonstrates that he prescribed oxycodone to Manzella for no legitimate medical purpose, and that Manzella died as a result of using the oxycodone prescribed by him.”

In announcing today’s sentence, United States Attorney Lynch stated, “Instead of using his skills as a physician to ‘do no harm,’ Conway perpetuated pain and suffering, inundating our communities with a highly addictive narcotic and causing the death of a young man struggling with substance abuse. This case should serve as a warning that health care professionals engaged in such conduct face not merely the loss of their privilege to practice medicine, but their liberty as well.” Ms. Lynch extended her grateful appreciation to each of the law enforcement agencies for their assistance in this case.

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.

Conway’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 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 was prosecuted by Assistant United States Attorney Michael P. Canty.

The Defendant:

Name: William Conway

Age: 71

Residence: Baldwin, NY

Earlier today, William C. Lange, 66, a resident of Gig Harbor, Washington, pleaded guilty to two counts charging conspiracy to commit wire fraud and conspiracy to commit securities fraud and wire fraud for his leadership role in two separate schemes. In the first scheme, Lange, the founder and President of Harbor Funding Group, Inc. (“HFGI”), defrauded developers and their clients seeking to rebuild regions of the South devastated by Hurricane Katrina of more than $9 million through false representations, including that HFGI had the funds to provide millions of dollars in private financing in exchange for a ten percent down payment.

In the second scheme, Lange, the founder and secret controller of Black Sand Mine, Inc. (“BSMI”), induced investors to purchase stock in BSMI by lies about, among other things, the qualifications and experience of BSMI’s officers and directors, and by concealing, among other things, his leadership role with BSMI.

Pursuant to his plea agreement with the government, Lange has agreed to a forfeiture money judgment of $10 million and to forfeit his claim to three Harley Davidson motorcycles purchased using proceeds from the fraud. When sentenced, Lange faces up to 20 years in prison and the payment of approximately $10 million in restitution to the victims of his frauds. In March 2014, co-defendants Brad Russell and Kristofor Lange were convicted by a federal jury in Brooklyn, following a six-week trial, on all charged counts. The trial of co- defendant Frank Perkins is scheduled to begin on September 22, 2014.1

The guilty verdicts were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Philip R. Bartlett, Inspector in Charge, New York Division, U.S. Postal Inspection Service (USPIS), and Frank Montoya, Jr., Special Agent in Charge,

Federal Bureau of Investigation, Seattle Field Office (FBI).

Lange, the orchestrator of the advance fee scheme, told land developers and their clients that HFGI had lenders and millions of dollars in funds available to provide financing for their real estate projects. As a condition for financing, HFGI required investors to place ten percent of the loan amount in an attorney escrow account. Contrary to Lange’s representations, HFGI did not have lenders or funds available to finance the loans. As soon as the money was placed in escrow, Lange and his co-conspirators stole it, at times through the use of a sham escrow agreement. Through this scheme, Lange and his co-conspirators stole more than $9 million from approximately 300 individuals. The $9 million was spent on, among other things, salaries, fishing and hunting trips for Lange and his son, remodeling and landscaping for Lange’s new house, and other business ventures started by Lange.

After the $9 million was spent, Lange and his co-conspirators moved on to BSMI and the gold mine investment scheme. BSMI claimed that it would mine gold and other precious metals on Sitkinak Island in Alaska. Through the use of in-person presentations, cold calls, and “webinars,” Lange and his co-conspirators convinced investors to purchase BSMI stock by lying to them about the credentials of BSMI’s officers and directors, BSMI’s assets and liabilities, the intended use of investor funds, and by concealing their prior involvement in HFGI. Lange also concealed his own tarnished name and his leadership role in BSMI. Almost $1 million collected from investors in BSMI was spent on salaries and other personal expenses for Lange and his co- conspirators.

“Lange exploited the demand for housing caused by the destructive force of Hurricane Katrina to execute his devious advance fee scheme. Hiding behind his Brooklyn- based attorney, Lange deceived investors to the tune of $9 million with false representations and assurances that were not worth the price of the paper used to print the phony documentation. His voracious appetite for easy money then led him to bilk another million dollars from investors in the gold mine scheme. He will now be held to account for his crimes,” stated United States Attorney Lynch. Ms. Lynch thanked the USPIS and the FBI for their hard work and dedication through the course of this five-year investigation and prosecution. Ms. Lynch also extended her grateful appreciation to the United States Attorney’s Office for the Western District of Washington for its assistance in the case.

The government’s case is being prosecuted by Assistant United States Attorneys

Winston M. Paes, Alixandra E. Smith, and Melanie Hendry.

Today’s announcement is part of efforts underway 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 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. 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 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

The Defendant:

WILLIAM C. LANGE Age: 66

Residence: Gig Harbor, Washington

E.D.N.Y. Docket No. 10-CR-968 (DLI)

___________________________________________________________________________

1 The charges against Frank Perkins are merely allegations, and he is presumed innocent unless and until proven guilty.

A criminal complaint was unsealed earlier this week in federal court in the Eastern District of New York charging Fowzi Naji Tareb with misappropriating government permits from the United States Department of Agriculture, Food and Nutrition Service and facilitating more than $6 million in unauthorized food stamp transactions. Tareb was arrested on Tuesday and his initial appearance was held before United States Magistrate Judge Vera Scanlon at the federal courthouse in Brooklyn.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and William Squires, Special Agent-in-Charge, Northeastern Region, United States Department of Agriculture, Office of Inspector General.

The federal government, through the United States Department of Agriculture, Food and Nutrition Service (FNS), administers the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program. SNAP utilizes federal tax dollars to subsidize low-income households, affording such households the opportunity to achieve a more nutritious diet by increasing their food-purchasing power.

In New York, individuals who receive SNAP benefits (recipients) no longer redeem their benefits by using paper food stamp coupons, but rather redeem them electronically through the use of an Electronic Benefits Transfer (EBT) card, which operates much like ATM cards used by banks. The EBT cards may be used by recipients to purchase eligible food items at retail food stores that are authorized by FNS to participate in SNAP and have EBT terminals located in the stores. As a purchase is made, the retailer runs the EBT card through the terminal, and the amount of the purchase is deducted from the recipient’s EBT card. The purchase amount is then electronically credited to the retail food store owner’s bank account.

SNAP benefits may be accepted by authorized retailers only in exchange for eligible food items. Items such as beer, cigarettes, paper goods, and soaps are not eligible for purchase. SNAP benefits may not lawfully be exchanged for cash under any circumstances and may not lawfully be used to pay off credit accounts. SNAP benefits may be accepted only by retailers authorized to participate in SNAP by FNS.

The defendant Tareb allegedly used his position as an agent at Century Payments, a third-party vendor and distributor of EBT terminals, to provide EBT terminals capable of processing SNAP benefits and authorization codes to more than 25 retailers that were not authorized by FNS to accept SNAP benefits. In doing so, the defendant facilitated more than $6 million in unauthorized SNAP transactions. A number of the retail locations, which were searched by law enforcement over the past two days, are also alleged to have been involved in the unlawful exchange of SNAP benefits for cash.

“The government’s food stamp program enables law-abiding retailers to provide food and other essentials to low-income households and receive compensation from the government,” stated United States Attorney Lynch. “The defendant manipulated that program by misappropriating EBT terminals and codes of authorized retailers and giving them to unauthorized retailers -- allowing them to profit by engaging in millions of dollars in under-thetable transactions.” Ms. Lynch also thanked the New York City Police Department for assisting in the investigation.

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

The government’s case is being prosecuted by Assistant United States Attorney Saritha Komatireddy.

The Defendant:

FOWZI NAJI TAREB

Age: 43

Brooklyn, New York

E.D.N.Y. Docket No. 14-M-806

Earlier today, a five-count indictment was returned by a federal grand jury sitting in Brooklyn, New York, charging Oswald Lewis, also known as “Alexander Louis,” “Junior,” “Andrew Jackson,” “Andre Bernard Jackson,” “John Green,” “Leslie Howard” and “Dre,” with assault on a federal officer by use of a deadly weapon and related firearms offenses. Lewis was arrested on August 26, 2014, and has remained in custody since then. The case has been assigned to United States District Judge I. Leo Glasser.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Charles G. Dunne, United States Marshal for the Eastern District of New York; William J. Bratton, Commissioner, New York City Police Department (NYPD), and James S. Higgins, Acting Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), New York Field Division.

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

“As alleged, Oswald Lewis sought to extend his life on the lam by shooting his way out of a confrontation with law enforcement, endangering officers and civilians alike. As this case illustrates, the apprehension of armed fugitives like Lewis is a dangerous task,” stated United States Attorney Lynch. “We owe a great deal of gratitude to the United States Marshals Service, the New York City Police Department, and our other law enforcement partners, for their valiant and courageous efforts that, at long last brought Lewis to justice, and for safeguarding the communities that we call home. I also express thanks to the ATF for its participation in this investigation.”

“As alleged in the indictment, this incident shows just how dangerous fugitive work can be for the U.S. Marshals. This fugitive was wearing body armor, and he was armed with two illegal semi-automatic pistols‎ when he opened fire without warning. Fortunately, no law enforcement officers were injured. This could have ended much differently,” stated United States Marshal Dunne.

ATF Acting Special Agent-in-Charge Higgins stated, “Although the defendant was able to enjoy his freedom for a substantial period of time, he quickly learned to appreciate the relentlessness of law enforcement. The ATF is grateful that no officers or innocent civilians were injured during Lewis’s capture and are determined - alongside the U.S. Attorney’s Office and our law enforcement partners - to see this investigation to its end. Society deserves nothing less.”

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

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

The Defendant:

OSWALD LEWIS

Age: 44

Queens, New York

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

Thomas Torre, the former Chief Financial Officer of Metro Fuel Oil Corp. (“Metro Fuel”), located in Greenpoint, New York, has been charged in a two-count indictment with bank fraud and conspiracy for his participation 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. Metro Fuel later filed for bankruptcy after allegedly stealing over $30 million from the bank. The defendant is scheduled to be arraigned on Friday, September 26, 2014, at 11:00 a.m. before United States Magistrate Judge Vera M. Scanlon at the federal courthouse in Brooklyn.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

According to court filings, from approximately July 2007 to July 2012, the defendant and others falsely overstated the company’s accounts receivable on certificates submitted to the bank at least once per month. The bank used the information in the certificates to determine the amount Metro Fuel could borrow from the bank on its revolving line of credit. The defendant and others misrepresented the true accounts receivable by deliberately failing to account for the cash payments received from customers and by creating fictitious invoice amounts. By September 2012, the fuel company could no longer pay its bills and filed a voluntary petition for bankruptcy. At the time of the bankruptcy, the fuel oil company owed the bank more than $30 million.

“The defendant and his co-conspirators obtained tens of millions of dollars in loans from New York Commercial Bank under false pretenses, claiming both that they had real collateral and that they intended to pay the money back. Neither claim was true, and when Metro Fuel collapsed the bank was left holding the over $30 million bag. Those who perpetrate fraud against our financial institutions will be met with the full force of law enforcement,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.

If convicted, the defendant faces up to 30 years’ imprisonment on each count. The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

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. 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 government’s case is being prosecuted by Assistant United States Attorney William P. Campos.

The Defendant:

THOMAS TORRE

Age: 63

Albertson, New York

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

U.S. Attorney Loretta E. Lynch today announced that the United States and New York State have entered into a settlement agreement with Enzo Biochem, Inc., and one of its subsidiaries, Enzo Clinical Laboratories (collectively, “Enzo”), to resolve a case brought under the federal False Claims Act and the New York False Claims Act. The matter involves allegations that Enzo wrongfully input diagnosis codes into claim forms that it submitted for payment to the Centers for Medicare & Medicaid Services (“CMS”). Under the terms of the Settlement Agreement, Enzo will pay a total of $3,510,245.94 to resolve the investigation.

The investigation established that, from at least January 1, 2004 through the present, Enzo unlawfully input diagnosis codes into claims forms it submitted to CMS. Specifically, when a physician ordered tests to be performed at Enzo but did not submit a diagnosis code to go along with the order, Enzo employees would select and assign codes which they believed would be most likely to lead to reimbursement from CMS. Enzo did not – as it was required to do – go back to the physician to obtain the missing code. Through this unlawful practice, Enzo wrongfully obtained reimbursement from CMS.

The settlement followed a joint investigation by the United States Attorney’s Office for the Eastern District of New York and the New York Attorney General’s Medicaid Fraud Control Unit, who worked in partnership to uncover the wrongdoing and reach a resolution. U.S. Attorney Lynch thanked Attorney General Schneiderman and his staff for their cooperation in this case.

“The investigation uncovered evidence that Enzo was falsifying information in the claim submission process in order to inflate and secure reimbursements from CMS,” stated United States Attorney Lynch. “The Medicare and Medicaid systems serve our most vulnerable citizens, and those who seek to maximize their own profits at the expense of these critically important programs will be pursued to the fullest extent of the law.”

The investigation commenced with the filing of a qui tam complaint by Relator O and U 2011 Partnership LLP. Under the federal and state False Claims Act statutes, a private individual who has uncovered fraud against the government may file a suit in federal court on behalf of the United States and the State of New York. If the United States and the State are successful in resolving those claims, the individual who filed the complaint may receive a share

of the recovery.

The United States’ investigation was handled by Assistant U.S. Attorney Kenneth M. Abell and Trial Attorney David M. Finkelstein of the Commercial Litigation Branch, United States Department of Justice, with assistance from Affirmative Civil Enforcement Auditor Emily Rosenthal and Special Agent Jason S. Villeco of the Department of Health and Human Service’s Office of Inspector General. The state investigation was handled by Special Assistant Attorney General Carolyn Ellis.

Earlier today, Frank E. Perkins, 54, a resident of La Grange, Kentucky, pleaded guilty to two counts charging conspiracy to commit wire fraud and conspiracy to commit securities fraud and wire fraud for his leadership role in two separate schemes. In the first scheme, Perkins, the Chief Financial Officer (“CFO”) of Harbor Funding Group, Inc. (“HFGI”), defrauded developers and their clients seeking to rebuild regions of the South devastated by Hurricane Katrina of more than $9 million through false representations, including that HFGI had the funds to provide millions of dollars in private financing in exchange for a ten percent down payment. In the second scheme, Perkins, the CFO, Secretary and Treasurer of Black Sand Mine, Inc. (“BSMI”), induced investors to purchase stock in BSMI by telling lies about, among other things, the qualifications and experience of BSMI’s officers and directors, and by concealing, among other things, his prior employment at HFGI. When sentenced, Perkins faces up to 20 years in prison and the payment of approximately $10 million in restitution to the victims of his frauds. In March 2014, co-defendants Brad Russell and Kristofor Lange were convicted by a federal jury in Brooklyn, following a six-week trial, on all charged counts. On September 19, 2014, co-defendant William Lange, the mastermind of both schemes, pleaded guilty to the same two counts as Perkins.

The guilty verdicts were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Philip R. Bartlett, Inspector in Charge, New York Division, U.S. Postal Inspection Service (USPIS), and Frank Montoya, Jr., Special Agent in Charge, Federal Bureau of Investigation, Seattle Field Office (FBI).

Perkins and his co-conspirators told land developers and their clients that HFGI had lenders and millions of dollars in funds available to provide financing for their real estate projects. As a condition for financing, HFGI required investors to place ten percent of the loan amount in an attorney escrow account. Contrary to Perkins’ representations, HFGI did not have lenders or funds available to finance the loans. As soon as the money was placed in escrow, Perkins and his co-conspirators stole it, at times through the use of a sham escrow agreement. Through this scheme, Perkins and his co-conspirators stole more than $9 million from approximately 300 individuals. As CFO, Perkins authorized the $9 million to be spent on, among other things, salaries, fishing and hunting trips for co-defendants William and Kristofor Lange, remodeling and landscaping for co-defendant William Lange’s new house, and other business ventures started by Perkins and his co-conspirators.

After the $9 million was spent, Perkins and his co-conspirators moved on to BSMI and the gold mine investment scheme. BSMI claimed that it would mine gold and other precious metals on Sitkinak Island in Alaska. Through the use of in-person presentations, cold calls, and “webinars,” Perkins and his co-conspirators convinced investors to purchase BSMI stock by lying to them about the credentials of BSMI’s officers and directors, BSMI’s assets and liabilities, the intended use of investor funds, and by concealing their prior involvement in HFGI. Perkins also concealed his prior involvement in HFGI. Almost $1 million collected from investors in BSMI was spent on salaries and other personal expenses for Perkins and his co-conspirators.

“Most Americans saw the devastation wrought by Hurricane Katrina and looked for ways to help the victims. Perkins and his co-defendants looked for ways to help themselves, devoting their energies not to rebuilding but to swindling millions of dollars from victims through their advance fee scheme. Instead of doing his duty as a CFO and ensuring the financial integrity of HFGI and BSMI, Perkins used his accounting experience to transfer almost $10 million of stolen money between various accounts, including the escrow account of a Brooklyn-based attorney. He will now be held to account for his crimes and for breaching his responsibilities to the victims,” stated United States Attorney Lynch. Ms. Lynch thanked the USPIS and the FBI for their hard work and dedication through the course of this five-year investigation and prosecution. Ms. Lynch also extended her grateful appreciation to the United States Attorney’s Office for the Western District of Washington for its assistance in the case.

The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes, Alixandra E. Smith, and Melanie Hendry.

Today’s announcement is part of efforts underway 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 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. 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 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

The Defendant:

FRANK E. PERKINS

Age: 54

Residence: La Grange, Washington

E.D.N.Y. Docket No. 10-CR-968 (DLI)

BROOKLYN, NY – Earlier today, Farrukh Baig, Malik Yousaf, Bushra Baig, Shahnawaz Baig, and Zahid Baig pleaded guilty at the federal courthouse in Central Islip, New York, to committing wire fraud and concealing and harboring illegal aliens employed at 7-Eleven, Inc. (7-Eleven) franchise stores located throughout Long Island and Virginia. When sentenced, Farrukh Baig and Malik Yousaf face up to 20 years’ imprisonment, and Bushra Baig, Shahnawaz Baig, and Zahid Baig face up to 10 years’ imprisonment.

The pleas were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James T. Hayes, Jr., Special Agent-in-Charge, Homeland Security Investigations, New York Field Office (HSI); Joseph A. D’Amico, Superintendent, New York State Police; Edward Webber, Commissioner, Suffolk County Police; and Irv Miljoner, District Director, United States Department of Labor.

“Using the 7-Eleven brand, the defendants dispensed wire fraud and identity theft, along with Big Gulps and candy bars. In our backyards, the defendants not only systematically employed illegal aliens, but concealed their employment by stealing the identities of children and even the dead. The defendants also exploited their alien employees, stealing their wages and requiring them to live in unregulated boarding houses,” stated United States Attorney Lynch. “We are committed to preserving the rule of law and protecting our communities from the abuses of corrupt businesses seeking to gain illegal advantage. I would like to thank our partners at HSI, New York State Police, Suffolk County Police and the United States Department of Labor for their hard work on this important and ongoing investigation.”

“These defendants knowingly hired illegal aliens to feed their greed, stole the identities of unsuspecting U.S. citizens, and swindled more than 2.6 million dollars in wages from their enslaved workers,” said HSI Special Agent-in-Charge Hayes. As a result of this investigation, HSI and its law enforcement partners have recorded the largest worksite enforcement forfeiture in the United States. This case serves notice to employers – that they will be severely punished

if they seek to profit on the back of an illegal workforce.”

According to court filings and facts presented in court, the defendants, who owned, managed, and controlled fourteen 7-Eleven franchise stores during the course of the conspiracies, allegedly hired dozens of illegal aliens, equipped them with more than 20 identities stolen from United States citizens, housed them at residences owned by the defendants, and stole substantial portions of their wages. During the scheme, the defendants generated over $182 million in proceeds from the 7-Eleven franchise stores. Profits from those stores were shared by the defendants and 7-Eleven.

These are the first convictions in the government’s ongoing inquiry, which is already one of the largest criminal alien employment investigations ever conducted by the Department of Justice and the Department of Homeland Security. The defendants have agreed to forfeit the franchise rights to ten 7-Eleven stores in New York and four 7-Eleven stores in Virginia, as well as five houses in New York worth over $1.3 million. According to the Department of Homeland

Security, the case announced today constitutes the largest criminal immigration forfeiture in its history. In addition, the defendants agreed to pay $2,621,114.97 in restitution for the back wages that they stole from their workers. Two additional defendants in this case have previously pleaded guilty.

The sentencing proceedings for these defendants have not yet been scheduled but will be held before United States District Judge Sandra J. Feuerstein, at the federal courthouse in Central Islip, New York. The pleas were taken by United States Magistrate Judge Steven I. Locke.

The government’s case is being prosecuted by Assistant United States Attorneys Christopher A. Ott, Brian Morris and Elliot M. Schachner.

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. 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.

Tips and Information

For questions or concerns about immigrant workers and job seekers, contact the New York State Department of Labor Division Policies and Affairs (DIPA) at its toll-free worker hotline (1-877-466-9757).

E.D.N.Y. Docket No. 14-CR-351(SJF)

The Defendants:

FARRUKH BAIG

Citizenship: Naturalized United States Citizen

Age: 58

Head of Harbor, New York

BUSHRA BAIG

Citizenship: Naturalized United States Citizen

Age: 50

Head of Harbor, New York

MALIK YOUSAF

Citizenship: Naturalized United States Citizen

Age: 52

South Setauket, New York

ZAHID BAIG

Citizenship: Naturalized United States Citizen

Age: 53

Chesapeake, Virginia

SHANNAWAZ BAIG

Citizenship: Naturalized United States Citizen

Age: 63

Virginia Beach, Virginia

Carmine G. Mandarano, a medical doctor whose practice is located in East Islip, New York, pleaded guilty today to the illegal distribution of oxycodone, a highly addictive prescription pain killer. Mandarano entered his plea before United States Magistrate Judge Gary R. Brown at the United States Courthouse located in Central Islip, New York. At sentencing, Mandarano faces a maximum of 20 years’ imprisonment and a $1 million fine. Mandarano has agreed to forfeit $150,000 in criminally-derived proceeds to the government.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James J. Hunt, Acting Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York; and Tom F. O’Donnell, Special Agent-in- Charge, Health and Human Services, Office of the Inspector General (HHS/OIG), New York Regional Office.

“Medical professionals who hand out prescriptions for narcotics when there is no legimate medical need to do so are drug dealers, pure and simple. Doctors who violate their oaths to do no harm, and the law, will continue to be held accountable,” Ms. Lynch said, extending her grateful appreciation to each of the law enforcement agencies for their assistance in this case.

During his plea, Mandarano admitted that in 2011 he issued a prescription for oxycodone to a patient that he knew was using illegal narcotics, had obtained multiple narcotics prescriptions from other medical professionals, and was abusing painkillers.

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.

Mandarano’s guilty plea 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 was prosecuted by Assistant United States Attorney Lara Treinis Gatz.

The Defendant:

Name: CARMINE G. MANDARANO

Age: 62

Residence: Northport, NY

Earlier today, a Brooklyn man who was convicted of wire fraud after defrauding a Hawaiian investor of $1 million was sentenced to 46 months of imprisonment to be followed by three years of supervised release and was ordered to pay $1 million in restitution. Telson Okhio, the vice president of Ohio Group Holdings, Inc. (“OGH”), an alleged investment firm, was sentenced by United States District Judge Roslynn R. Mauskopf at the federal courthouse in Brooklyn, New York. Okhio pleaded guilty to wire fraud in March 2012.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.

Between February and April 2009, Okhio, posing as an investment adviser, solicited $5 million from an investor in Hawaii. Okhio assured the investor that he would invest his money in a $100 million trading platform in the foreign currency exchange market. Okhio also assured the investor that his investment would earn a 200 percent profit in four weeks and that his investment would never be at risk.

Almost immediately after the victim wired $5 million from a bank account in Hawaii to OGH’s bank account at a branch of Bank of America in Queens, New York, Okhio wire-transferred $1 million of the investment to his personal account at JPMorgan Chase in Queens, New York. From there, Okhio withdrew the $1 million through a series of cash and ATM withdrawals and wire transfers to third parties. The scheme resulted in approximately $1,000,000 in losses to the investor.

Soon after Okhio pleaded guilty, he attempted to withdraw his guilty plea. Following a hearing that spanned several months, Judge Mauskopf found that Okhio had lied several times during his testimony and denied his request to withdraw his guilty plea.

“Outwardly, Okhio wore the persona of a trusted investment adviser. In reality his image was a fraud and his promises part of the web of lies he used to ensnare his victim. Okhio sought to continue the con even after his guilty plea, as he attempted to deceive the court with his repeated lies. He viewed the court as just another ‘mark.’ He was wrong. Those who exploit investors for financial gain will be held accountable for their crimes and will face significant prison sentences,” stated United States Attorney Lynch.

Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation, which led the government’s criminal investigation.

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. 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 government’s case is being prosecuted by Assistant United States Attorney Sylvia Shweder.

The Defendant:

TELSON OKHIO

Age: 52

Brooklyn, NY

E.D.N.Y. Docket No. 12-CR-179 (RRM)

WASHINGTON – A Wisconsin pharmacist and a Nevada pharmacologist were arraigned on an indictment today in federal court in Central Islip, New York, before United States Magistrate Judge Gary Brown. The defendants are charged with conspiring to supply at least four million misbranded and counterfeit pharmaceuticals to an illegal Internet pharmacy based in Costa Rica that catered to U.S. customers.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; United States Attorney Loretta E. Lynch of the Eastern District of New York; Assistant Director in Charge George C. Venizelos of the FBI’s New York Field Office; Acting Special Agent in Charge James Royal of the U.S. Food and Drug Administration (FDA), Office of Criminal Investigations’ New York Field Office and Special Agent in Charge James T. Hayes Jr. of Homeland Security Investigations’ (HSI) New York Field Office made the announcement.

The 10-count indictment charges Marla Ahlgrimm, 59, of Madison, Wisconsin, and Balbir Bhogal, 67, of Las Vegas, Nevada, with importing and distributing controlled substances and misbranded drugs, trafficking in counterfeit drugs, mail and wire fraud, smuggling and money laundering.

According to the indictment and information presented at the arraignment, from June 2007 through May 2010, Ahlgrimm and Bhogal, who is a dual U.S. and Indian citizen, allegedly arranged for the manufacture in India of millions of tablets of controlled substances, including alprazolam and phentermine, and prescription drugs, including carisoprodol and counterfeit Viagra. Although they did not hold an importer’s license from the Drug Enforcement Administration, the defendants allegedly arranged for the importation of the same drugs into the United States. Neither the incoming packages nor the tablets themselves were labeled or identified as controlled substances or prescription drugs.

The drugs were allegedly intended to supply an Internet pharmacy based in Costa Rica that catered to customers within the United States, including Brooklyn and Queens, New York. The Internet pharmacy used call centers and websites based outside the United States, but filled the orders from inside the United States using individuals who were not licensed pharmacists to bottle, label and drop-ship the drugs. To facilitate the operation, the defendants allegedly wired money from Costa Rica to the United States and then to India.

An indictment is merely an accusation, and the defendants are presumed innocent unless and until proven guilty.

The case was jointly investigated by the FBI, FDA’s Office of Criminal Investigations, and HSI. The case is being prosecuted by Senior Counsel Evan C. Williams of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney William P. Campos of the Eastern District of New York.

On September 12, 2014, Eric Aronson, the founder and head of Permapave Industries LLC and Permapave USA Corporation (“Permapave”), pleaded guilty to securities fraud for soliciting over $30 million from more than 200 investors for fraudulent Permapave promissory notes. Permapave marketed porous paving stones in the United States that were manufactured in Australia.

The guilty plea was announced by Loretta E. Lynch, United States attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

According to court filings and facts presented at the plea hearing, the defendant and his coconspirators issued promissory notes to investors and promised to use the proceeds to finance shipments of Permapave paving stones from Australia to the United States. In reality, the defendant, together with his coconspirators, operated a Ponzi scheme whereby some investors were paid returns on their investment from the funds the defendant obtained from other defrauded investors. From approximately August 2006 to December 2010, the defendant defrauded investors out of approximately $30 million through this scheme. The defendant and his coconspirators converted millions of dollars of investor funds for personal expenditures, including vacations, watches, jewelry, and automobiles.

“The defendant used the promise of sound securities investments to steal investor funds. He pretended to be a legitimate businessmen but he was no more than a common thief. Through his actions, the defendant caused the financial ruin of many, all the while enriching himself. This office will vigorously investigate and prosecute those who lie to, cheat, and steal from the investing public,” stated Unites States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.

Today’s guilty plea took place before Magistrate Judge Gary Brown at the federal courthouse in Central Islip, N.Y. Aronson faces a maximum sentence of 20 years’ incarceration.

The case is being prosecuted by Assistant United States Attorney William P. Campos.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The Task Force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The Task Force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The Defendant:

ERIC ARONSON

Age: 46

Syosset, New York

E.D.N.Y. Docket No. 12-CR-245

A multi-count indictment was unsealed this morning in federal court in Brooklyn, New York, against six individual defendants: Robert Bandfield, a U.S. citizen; Andrew Godfrey, a citizen of Belize; Kelvin Leach, a citizen of the Bahamas; Rohn Knowles, a citizen of the Bahamas; Brian De Wit, a citizen of Canada; and Cem Can, a citizen of Canada; and six corporate defendants: IPC Management Services, LLC; IPC Corporate Services Inc.; IPC Corporate Services LLC (collectively, IPC Corp); Titan International Securities, Inc. (Titan); Legacy Global Markets S.A. (Legacy); and Unicorn International Securities LLC (Unicorn).1 The charges include conspiracy to commit securities fraud, tax fraud, and money laundering. Bandfield’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for tomorrow at the Wilkie D. Ferguson Jr. United States Courthouse, 400 North Miami Avenue, Miami, Florida. The government will seek extradition for the other individual defendants.

The indictment was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Shantelle P. Kitchen, Acting Special Agent-in-Charge, United States Internal Revenue Service, Criminal Investigation, New York (IRS-CI); and James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York.

“As alleged, Bandfield and his co-conspirators devised not only a fraudulent scheme but an elaborate corporate structure based on lies and deceit designed to enable U.S. citizens to evade and circumvent our securities and tax laws. They set up sham companies with figureheads at the helm in an attempt to deceive U.S. law enforcement and regulators and bragged about their scheme to their clients,” stated United States Attorney Lynch. “Today’s sweeping indictment, charging the individuals and companies responsible for this $500 million scheme, closes this fraudulent offshore safe haven and sends a strong message to those who seek to abuse the financial markets in order to enrich themselves that we will investigate and prosecute them no matter where they set up shop.” Ms. Lynch expressed her grateful appreciation to the United States Securities and Exchange Commission (SEC) for its significant cooperation and assistance in the investigation. The SEC has filed a civil complaint in this case as well.

“As alleged, the defendants concocted an intricate scheme using sham companies to make money while repeatedly evading and violating U.S. securities and tax laws. The indictment of these defendants should serve as a stern reminder that such greed-based behavior comes at a cost. The FBI will continue to use its investigative expertise in working with law enforcement partners to identify, disrupt, and dismantle sophisticated fraud schemes to ensure the integrity and transparency of our financial markets,” stated FBI Assistant Director-in-Charge Venizelos.

“The investigation of offshore tax evasion and money laundering are top priorities for IRS-Criminal Investigation, and we are committed to using all of our enforcement tools to stop this abuse. The enactment of the Foreign Account Tax Compliance Act (FATCA) is yet another example of how it is becoming more and more risky for U.S. taxpayers to hide their money globally. Moreover, this partnership of IRS-CI, the FBI, HSI, and the U.S. Attorney’s Office demonstrates the government’s resolve to combat international crime,” stated IRS-CI Acting Special Agent-in-Charge Kitchen.

“Today’s arrests and charges disrupt an illicit offshore operation that was allegedly laundering money for corrupt clients and cheating the U.S. government out of half a billion dollars in tax revenue,” said HSI New York Special Agent-in-Charge Hayes. “The collaboration between HSI and its federal law enforcement partners serves as an example of law enforcement’s global reach to dismantle criminal organizations.”

As alleged in the indictment, between January 2009 and September 2014, this group of conspirators, masquerading as financial professionals, concocted three interrelated schemes to: (a) defraud new investors in various U.S. publicly traded companies through, among other things, fraudulent concealment of the defendants’ corrupt clients’ ownership interests in the U.S. publicly traded companies and their fraudulent manipulation of artificial price movements and trading volume in the stocks of those companies; (b) aid the corrupt clients to circumvent the IRS’s reporting requirements under, among other statutes, the Foreign Account Tax Compliance Act (FATCA); and (c) launder money for the corrupt clients through financial transactions to and from the United States involving proceeds of fraud in the sale of securities. As part of this fraudulent offshore scheme, the defendants laundered approximately $500 million for the corrupt clients – who included more than 100 U.S. citizens and residents.

To facilitate these interrelated schemes, the defendants created shell companies in Belize and Nevis, West Indies, for the corrupt clients and placed nominees at the helm of these companies. This structure was designed to conceal the corrupt clients’ ownership interest in the stock of U.S. public companies, in violation of U.S. securities laws, and enable the corrupt investors to engage in trading under the nominee’s names through brokerage firms also set up in Belize. For example, this structure enabled the defendant De Wit and a U.S. corrupt client to manipulate the stock of Cannabis-Rx, Inc., a microcap or penny stock company which traded under the ticker symbol CANA, through a series of orchestrated transactions between March 27, 2014 and April 16, 2014. On March 28, 2014 alone, De Wit received at least five telephone calls from the corrupt client with specific instructions to fraudulently orchestrate the trading of CANA’s stock. That day, CANA’s stock, which had not traded since July 2, 2013, had a trading volume of 189,800 shares. Ultimately, CANA’s stock price plummeted from $13.77 per share on March 27, 2014 to $0.50 per share on April 16, 2014.

The defendants’ scheme also enabled the U.S. corrupt clients evade reporting requirements to the IRS by concealing the proceeds generated by the manipulated stock transactions through the shell companies and their nominees. For example, in response to a request received by a U.S. corrupt client from a U.S. transfer agent who had to determine whether the proceeds from manipulative stock trading transaction were taxable under U.S. law, the defendant Bandfield forwarded an IRS Form signed by co-defendant Godfrey as the nominee for the shell company which had been set up at the request of the client. At one point during the government’s investigation, Bandfield boasted to an undercover law enforcement agent that he had specifically designed this “slick” corporate structure to counter President Barack Obama’s new laws, a reference to FATCA.

An example of how the defendants’ scheme enabled U.S. corrupt clients to launder the proceeds from their fraudulent trading in U.S. public companies was the production of unidentifiable debit cards for the clients allowing them to freely transfer their proceeds back into the United States.

The government’s case is being prosecuted by Assistant United States Attorneys Jacquelyn M. Kasulis, Winston M. Paes, and Brian D. Morris.

Today’s announcement is part of efforts underway 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 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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit www.stopfraud.gov.

The Individual Defendants:

ROBERT BANDFIELD, also known as “Bob Bandfield”

Age: 70

Residence: Belize City, Belize

ANDREW GODFREY

Age: 51

Residence: Belize City, Belize

KELVIN LEACH

Age: 34

Residence: Belize City, Belize

ROHN KNOWLES

Age: 29

Residence: Belize City, Belize

BRIAN DE WIT

Age: 45

Residence: Belize City, Belize

CEM CAN, also known as “Jim Can”

Age: 44

Residence: Belize City, Belize

E.D.N.Y. Docket No. 14-CR-476 (ILG)

___________________________________________________________________________

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

Earlier today, Michael Figat was sentenced to 78 months’ imprisonment by United States District Judge Sandra J. Feuerstein in District Court in Central Islip, New York, for participating in a scheme to defraud the United States. As part of that sentence, the court also sentenced Figat to 3 years of supervised release and ordered him to forfeit $250,000. Restitution remains to be determined.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Shantelle P. Kitchen, Acting Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation (IRS), New York; Farrell Dolan, Resident Agent-in-Charge, United States Secret Service (USSS), Long Island Resident Office; Philip R. Bartlett, Inspector-in-Charge, United States Postal Inspection Service (USPIS), New York Division; and Rafael Medina, Special Agent-in-Charge, USPIS, Office of Inspector General (USPIS OIG), Northeast Area Field Office.

“Figat and his coconspirators stole the personal information of thousands of unsuspecting Puerto Rican citizens to enrich themselves at the expense of the United States and the tax-paying public,” stated United States Attorney Lynch. “We are committed to prosecuting those who take advantage of the federal tax system for personal profit. I want to commend my law enforcement partners for their outstanding efforts in leading this investigation.”

Natural born residents of the Commonwealth of Puerto Rico are, upon birth, automatically granted United States citizenship and are issued United States Social Security numbers upon application. Figat exploited tax laws that exempt Puerto Rican citizens from filing federal income tax returns provided they derive their incomes solely from sources within Puerto Rico. The defendant and his coconspirators illegally obtained identification information for Puerto Rican citizens, including names, dates of birth, and social security numbers. Then, between January 2011 and April 2012, they used that information to file thousands of fraudulent tax returns and obtained more than $16,000,000 in United States Treasury refund checks. As part of the scheme, Figat and his coconspirators bribed Postal Service employees to intercept tax refund checks from the mail. They also removed tax refund checks from the addressees’ mail boxes. Many of the checks in this scheme were sent to addresses in Shirley, Patchogue, Lindenhurst, and West Babylon, New York. The schemes were uncovered, in part, by a law enforcement officer working in an undercover capacity.

Today’s announcement is part of an on-going effort by the Identity Theft Task Force (ITTF), which the IRS created in mid-2012, to address the growing issue of identity theft in New York. The ITTF combines the resources of several agencies to investigate identity theft,including investigating the use of stolen identities to file fraudulent tax returns. The agencies currently participating in the ITTF include the IRS; the Federal Bureau of Investigation; USSS; USPIS; New York City Police Department; Bureau of Diplomatic Security, Department of State; Federal Deposit Insurance Corporation, Office of Inspector General; Federal Reserve Board, Office of Inspector General; USPIS OIG; Homeland Security Investigations, Immigration and Customs Enforcement; Social Security Administration, Office of Inspector General; Treasury Inspector General for Tax Administration, Department of Treasury, Office of Inspector General; and Department of Labor, Office of Inspector General.

The government’s case was prosecuted by Assistant United States Attorney

Christopher Caffarone.

The Defendant:

MICHAEL FIGAT

Age: 36

Shirley, New York

Earlier today at the federal courthouse in Central Islip, New York, Marcos Alonso Zea, also known as “Ali Zea,” an American citizen and resident of Brentwood, New York, pled guilty to attempting to provide material support to al-Qaeda in the Arabian Peninsula, also known as Ansar al-Sharia (collectively “AQAP”), and obstruction of justice.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; John Carlin, Assistant Attorney General, National Security Division; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office; and William J. Bratton, Commissioner, New York City Police Department (NYPD).

As set forth in the indictment and other court filings, beginning in the fall of 2011, Zea planned to travel overseas in order to wage violent jihad against the perceived enemies of Islam, which included the government of Yemen and its allies. In furtherance of his plot, on January 4, 2012, Zea boarded a flight at John F. Kennedy Airport (“JFK”) in Queens, New York to London, England, en route to Yemen. Zea was not permitted to transit onward from London, however, and was returned to the United States by British authorities. Zea was interviewed and closely surveilled by investigators following his return. Despite being prevented from traveling to Yemen, Zea continued to plot, including by encouraging and supporting his co-conspirator, Justin Kaliebe, who also was planning to travel to fight jihad. In January 2013, Kaliebe was arrested at JFK while attempting to travel to Yemen to join AQAP. Months later, after learning that he too was under investigation, Zea caused electronic media on his computer to be destroyed in an effort to obstruct the investigation. Despite his efforts, a forensic examination of Zea’s electronic media subsequently conducted by investigators revealed an assortment of violent Islamic extremist materials, including issues of Inspire magazine, part of AQAP’s English-language media operations.

“American citizens who offer support to terrorist organizations pose a grave threat to our national security and the security of our allies around the world,” stated U.S. Attorney Lynch. “In this case, the defendant not only attempted to join al-Qaeda in the Arabian Peninsula, but also tried to thwart an investigation by destroying evidence. We will continue our relentless efforts against terrorists, whether they hail from overseas or from our own homeland.” Ms. Lynch expressed her grateful appreciation to the Immigration and Customs Enforcement/Homeland Security Investigations (HSI), the New York City Police Department, the Nassau County Police Department, the Suffolk County Police Department, the New York State Police, and the Port Authority of New York & New Jersey Police Department for their work on the investigation.

“One of our highest priorities is to protect our nation by identifying, disrupting, and holding accountable those who provide or attempt to provide material support to foreign terrorist organizations,” said Assistant Attorney General for National Security Carlin. “This case serves unambiguous notice that attempting to travel abroad to engage in such conduct has significant consequences.”

FBI Assistant Director-in-Charge Venizelos stated, “As we are far too familiar, Zea attempted to travel to Yemen in support of a radical terrorist agenda. When he couldn’t get there to join al-Qaeda, he went to work recruiting others to go in his stead. And when Zea learned he was under investigation he made every attempt to destroy the incriminating evidence.”

“The Marcos Zea investigation is another clear example of those who are willing to travel overseas to follow al-Qaeda's narrative of violence," said Police Commissioner William J. Bratton. “This case is another example of the close cooperation between the NYPD's Intelligence Bureau and the FBI's JTTF to uncover these individuals and stop them before they pose a threat to US interests overseas, or at home when they return.”

Zea is scheduled to be sentenced by United States District Judge Sandra J. Feuerstein on January 14, 2015. He faces a sentence of up to 25 years in prison.

The government’s case is being prosecuted by Assistant United States Attorneys Seth D. DuCharme, John J. Durham, and Michael P. Canty, with assistance provided by Trial Attorney Kelli Andrews of the Counterterrorism Section of the Department of Justice.

The Defendant:

MARCOS ALONSO ZEA (a/k/a “Ali Zea”)

Age: 26

Brentwood, New York

Earlier today, following three weeks of trial, a federal jury in Brooklyn, New York, returned a guilty verdict against Shaun Taylor, also known as “S-Dot,” on charges of murder and narcotics trafficking. These charges arose from the defendant’s participation in a decade-long narcotics trafficking conspiracy in the Bushwick neighborhood of Brooklyn, in connection with which the defendant orchestrated two contract murders. When sentenced by United States District Judge Dora L. Irizarry, the defendant faces a mandatory life term of imprisonment. Taylor’s co-defendant, Timothy Pinkney, pleaded guilty on August 6, 2014, to the murder of Terrance Barnett, and is also awaiting sentencing.

The verdict was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

The evidence at trial showed that Taylor hired Pinkney to murder a man who had stolen Taylor’s “drug phone,” the cellular telephone Taylor used to conduct his lucrative narcotics business. Taylor paid Pinkney $1,500 to carry out the murder and mistakenly directed him to Terrance Barnett, who was visiting Brooklyn for the weekend and had no prior relationship with Taylor or Pinkney. On April 29, 2005, just before 10 p.m., Barnett was fatally shot as he stood with a friend on Putnam Avenue in Bushwick, Brooklyn. Two years later, Taylor hired two other men to kill Joseph Vargas. Taylor and his coconspirators targeted Vargas because they feared Vargas might turn against them after they stole a shipment of narcotics destined for Vargas. On June 20, 2007, at 6:20 p.m., at the direction of Taylor, one of the men hired by Taylor shot at Vargas and his brother on DeKalb Avenue in Bushwick. Vargas’s brother survived, but Vargas died at the scene.

“The defendant attempted to insulate himself by hiring young men to carry out brazen acts of violence at his behest, including the murders of Barnett and Vargas. We hope the victims’ families can take some measure of solace in knowing that the individual responsible for their sons’ murders has been brought to justice,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation; Drug

Enforcement Administration, Organized Crime Drug Enforcement Task Force Strike Force; and the New York City Police Department for their outstanding work in this case.

The government’s case is being prosecuted by Assistant United States Attorneys

Matthew Amatruda, David Pitluck, and Tali Farhadian.

The Defendant:

SHAUN TAYLOR

Age:

Brooklyn, NY

E.D.N.Y. Docket No. 10-CR-268

A civil complaint was filed yesterday in federal court in the Eastern District of New York to forfeit the fossilized skull and vertebrae of an Alioramus dinosaur (the “Dinosaur Skull”). The Alioramus was a dinosaur that lived in the late Cretaceous period, approximately 65 to 70 million years ago. It is related to the Tyrannosaurus Rex and Tarbosaurus. The Dinosaur Skull was falsely described as a French replica in January 2014 when it was shipped to the United States by Geofossiles, Inc., (“Geofossiles”) a French fossil dealer. Upon its arrival in the United States from France, the Dinosaur Skull was seized by U.S. Customs and Border Protection (CBP) with the assistance of Homeland Security Investigations (HSI). When Geofossiles petitioned for the Dinosaur Skull’s release, it conceded that the Dinosaur Skull was a genuine Mongolian fossil but attached forged Mongolian export documents. The complaint alleges that the Dinosaur Skull is the property of Mongolia and that it was imported into the United States contrary to law.

The complaint was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, HSI, New York.

“The extraordinary fossils that continue to be unearthed in Mongolia are not only a source of national pride for the Mongolian people, they are the property of the Mongolian people,” stated United States Attorney Lynch. “Property of cultural and historic significance that has been stolen from other countries will not find safe harbor in our ports. We are proud of our ongoing role in the repatriation of stolen and smuggled cultural property to its rightful owners.” Ms. Lynch thanked the Mongolian government and the Central Museum of Mongolian Dinosaurs for their assistance.

“Because of the diligent work of CBP officers and HSI special agents, this prehistoric fossilized skull from Mongolia was intercepted and removed from the stream of commerce,” said HSI Special Agent in Charge Hayes. “HSI works with its law enforcement partners to combat the smuggling of cultural property and return seized items to their rightful owners.”

When Geofossiles shipped the Dinosaur Skull to the United States, it falsely described the shipment as a low-value replica made in France. After the Dinosaur Skull was seized, Geofossiles petitioned CBP for its release. In the petition, Geofossiles conceded that the Dinosaur Skull was a genuine fossil, comprised of 70% original material and 30% cast to complete the skull. Geofossiles further admitted that the Dinosaur Skull’s country of origin was Mongolia, not France, and attached a contract to sell the piece for $250,000.

Under Mongolian law, significant fossil finds like the Dinosaur Skull are national property and, even if privately owned, cannot be sold to non-Mongolians or permanently exported. Nonetheless, Geofossiles attached to the petition several documents that purported to be Mongolian records authorizing the sale and export of the Dinosaur Skull from Mongolia to a Korean company in 2006. The records supplied by Geofossiles described the shipment as containing an incongruous combination of fossils and traditional Mongolian structures called “gers.” When Mongolian authorities located the original records for this shipment, they confirmed that only the gers were declared. Thus, the records supplied by Geofossiles were falsified to include fossils.

The government’s case is being handled by Assistant United States Attorney Karin Orenstein.

E.D.N.Y. Docket No. 14-CV-5198(BMC)

Earlier today, Diana Durand pleaded guilty to violating the Federal Election Campaign Act (FECA) by funneling campaign contributions through “straw donors” to the campaign committees of two candidates running for federal office. The guilty plea proceeding was held before Senior United States District Judge Sterling Johnson, Jr., at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, NY.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Office (FBI).

The defendant admitted to the Court that during the 2010 election cycle, she recruited “straw donors” who made political campaign contributions in excess of $10,000 to the campaign committees of two candidates for the House of Representatives, who are identified in the indictment as Candidate A and Candidate B. The defendant also admitted that in furtherance of this criminal activity, she either made advance payments to the straw donors who made the contributions, or reimbursed them after they made the contributions.

United States Attorney Lynch stated: “We and our partners in the FBI are committed to protecting the integrity of the electoral process and will aggressively pursue anyone who attempts to circumvent federal campaign financing laws. Enforcement of these laws ensures that all candidates compete on a level playing field and that the public knows the true source of a candidate’s campaign funds.”

Ms. Lynch expressed her grateful appreciation to the Public Integrity Section of the Department of Justice for its assistance throughout the investigation and prosecution of Durand.

The maximum term of imprisonment for the crime to which Durand pleaded guilty is two years.

The government’s case is being prosecuted by Assistant United States Attorneys Anthony M. Capozzolo, Robert L. Capers, and Marisa Megur Seifan.

The Defendant:

DIANA DURAND

Houston, Texas

Age: 48

Yesterday, at the federal courthouse in Brooklyn, New York, two Queens, New York residents pled guilty today in connection with importing more than 100,000 hazardous and counterfeit children’s toys from China for sale in the United States.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Special Agent in Charge James T. Hayes Jr. of Homeland Security Investigations (HSI) New York, Director Robert E. Perez of Customs and Border Protection (CBP) New York Field Operations, Chairman Elliott Kaye of the Consumer Product Safety Commission (CPSC) and Commissioner William J. Bratton of the New York City Police Department (NYPD) made the announcement.

“In a criminal twist on a toy story, the defendants made millions importing dangerous, knock-off toys that put children in harm’s way,” said Assistant Attorney General Caldwell. “The defendants used a continuously shifting series of corporate entities in an effort to stay one step ahead of law enforcement. But their game has now come to an end. The Department of Justice is committed to stopping those who would smuggle hazardous, counterfeit goods into the United States.”

“For eight years, the defendants lined their pockets while putting at risk the health of our children by smuggling dangerous and copyright-infringing toys into the United States. Today’s guilty pleas signify the end of this dangerous pipeline from China. We will continue to be vigilant and prosecute those who would smuggle dangerous and unlawful items into our country and neighborhoods,” said U. S. Attorney Lynch. Ms. Lynch extended her grateful appreciation to the HSI Intellectual Property Rights Group and the NYPD and thanked the Consumer Product Safety Commission and Customs and Border Protection for their assistance.

“The United States has some of the strongest toy standards and lowest lead limits in the world, specifically to keep children safe,” said CPSC Chairman Kaye. “We have no more important mission than protecting children. For that reason, the CPSC will continue to work with our federal partners to enforce toy safety requirements at the ports and in the marketplace.”

“The defendants in this case endangered thousands of American children by manufacturing for sale counterfeit toys made with unsafe amounts of lead and other hazardous chemicals,” said Special Agent in Charge Hayes Jr. “HSI focuses its efforts to protect intellectual property, first and foremost, on those counterfeit goods that present health and safety hazards to consumers.”

Chenglan Hu, 52, and Hua Fei Zhang, 53, of Bayside, New York, pleaded guilty in connection with importing children’s toys with copyright-infringing images and counterfeit trademarks of popular children’s characters, as well as unsafe lead levels, small parts that presented risks of choking or ingestion, easily-accessible battery compartments, and other potential hazards. Hu and Zhang were the last of nine defendants to plead guilty in this investigation; Guan Jun Zhang, Jun Wu Zhang, and five corporations – Family Product USA Inc., H.M. Import USA Corp., ZCY Trading Corp., Zone Import Corp. and ZY Wholesale Inc. – previously pleaded guilty to Consumer Product Safety Act (CPSA) and trademark counterfeiting charges. In pleading guilty to trafficking in hazardous consumer goods in violation of CPSA, Hu and Zhang also agreed to forfeit $700,000 and more than 120,000 unsafe children’s toys. The government previously seized three luxury vehicles and six bank accounts, and filed lis pendens against two real properties owned by Zhang in Queens, New York.

According to court filings and facts presented at the plea hearings, from July 2005 through January 2013, Hu, Zhang and the other individual defendants used the companies they owned to import toys from China and sell them from a storefront and warehouse in Ridgewood, New York, and other locations in Brooklyn and Queens. According to court documents, CBP seized toys imported by the defendants from shipping containers entering the United States from China on thirty-three separate occasions. Seventeen of the thirty-three seizures contained toys prohibited from import into the United States because of excessive lead content, excessive phthalate levels, small parts that presented risks of choking, aspiration or ingestion, and easily-accessible battery compartments. Sixteen of the thirty-three seizures contained toys bearing copyright-infringing images and counterfeit trademarks, including a wide variety of popular children’s characters, such as Winnie the Pooh, Dora the Explorer, SpongeBob SquarePants, Betty Boop, Teenage Mutant Ninja Turtles, Power Rangers, Spiderman, Tweety, Mickey Mouse, and Pokémon, as well as those from movies such as “Cars,” “Toy Story” and “High School Musical.”

Hu, Zhang and the other individual defendants changed their use of the companies, sometimes even forming new companies, and alternated their formal titles in order to conceal their continued importation and distribution of the hazardous and counterfeit toys.

Hu and Zhang pleaded guilty before U.S. Magistrate Judge James Orenstein of the Eastern District of New York.

The case was prosecuted by Assistant U.S. Attorneys William P. Campos and Claire Kedeshian of the Eastern District of New York and Senior Counsel Evan Williams of the Criminal Division’s Computer Crime and Intellectual Property Section. The case was jointly investigated by the HSI Intellectual Property Rights Group and the NYPD, through its participation in the New York Border Enforcement Security Taskforce, with the assistance of CPSC and CBP.

 

       

Earlier today, an indictment was unsealed charging the defendant, Byron Lopez, with conspiracy to commit murder in-aid-of racketeering, murder in-aid-of racketeering, obstruction-of-justice murder and firearms offenses.1 If convicted, Lopez will face mandatory life imprisonment. Lopez, who was arrested this morning, was presented for arraignment earlier today at the United States Courthouse in Brooklyn, New York.

The charges and arrest were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), New York Field Office; James Higgins, Acting Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Explosives and Firearms, New York Field Division (ATF); and William J. Bratton, Commissioner, New York City Police Department.

“This Office has a long history of prosecuting and convicting members of the MS-13 gang, which for years has pursued its particularly brutal brand of violence and lawlessness in neighborhoods throughout Queens and Long Island,” stated U.S. Attorney Lynch. “This prosecution, which brings another member of the gang to justice for a murder that disrupted one of our communities earlier this year, is part of our ongoing mission to dismantle MS-13 wherever and whenever it rears its head in this district.” Ms. Lynch thanked the Suffolk County Police Department for its assistance with the investigation.

"Today’s arrest of Byron Lopez, a member of the violent MS-13 street gang who is alleged to have coordinated the murder of a fellow gang member and other violent crimes, is yet another step in the efforts of law enforcement to attack the leadership of MS-13 and put an end to their menacing criminal conduct," said James T. Hayes Jr., special agent in charge of HSI. “HSI is proud of its partnerships with law enforcement agencies in Suffolk County, the Suffolk County District Attorney’s Office and the United States Attorney’s Office for the Eastern District of New York that further investigations against violent criminal street gangs that present significant threats to public safety."

As alleged in court documents, Lopez is a member of the Jamaica, Queens chapter of the violent street gang La Mara Salvatrucha, also known as “MS-13.” On February 25, 2014, Lopez and other members of the gang directed the victim, fellow gang member Sidney Valverde, to travel to Long Island under the false pretense that they needed him to assist in gang business there. In fact, Lopez and his co-conspirators planned to kill Valverde because they believed that he was providing information about the gang’s activities to federal law enforcement. After Valverde traveled to Long Island, the conspirators shot him in the back of the head and left his body on Miller Place Beach in Suffolk County, where it was discovered by a beachcomber approximately two weeks later.

The indictment of Lopez 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 chapters, or “cliques,” through the United States, MS-13 has a significant presence in Queens and is the largest street gang in 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 20 murders in the Eastern District of New York, and has convicted more than 35 MS-13 members in connection with those murders.

The government’s case is being prosecuted by Assistant United States Attorneys Darren A. LaVerne and Alixandra E. Smith.

The Defendant:

BYRON LOPEZ, also known as “Viruz”

Age: 23

___________________________________________________________________________

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

Earlier today at the Brooklyn federal courthouse, Dontae Sebbern and Dexter Waiters were sentenced to life in prison for, among other crimes, the racketeering-related murder of gang leader Jermaine Dickersen, also known as “Big Den.” The defendants, members of a set of the Bloods known by various names including the “Gorilla Bloods,” were convicted after trial in December 2012 of racketeering, racketeering conspiracy, murder in-aid-of racketeering, narcotics trafficking, and other firearms charges.

The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James J. Hunt, Acting Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division.

“The defendants turned the streets of Staten Island into a war zone to perpetuate their gang feud. These defendants were not commissioned soldiers, however, but common criminals who used gang allegiance as an excuse for murder and mayhem. This sentencing closes one chapter in this Office’s ongoing investigations into gang and narcotics-related violence on Staten Island,” stated United States Attorney Lynch. “This Office and our federal and city law enforcement partners will not tolerate such senseless and heinous criminal conduct in our communities.” Ms. Lynch thanked the Drug Enforcement Administration, the Federal Bureau of Investigation, Immigration and Customs Enforcement, the New York City Police Department, and the Richmond County District Attorney’s Office for their assistance in the investigation.

In late 2009, a gang war erupted between the Gorilla Bloods and a rival criminal organization known as the “Arlington Crew,” comprised largely of Bloods gang members based in the Arlington neighborhood of Staten Island. Sebbern, Waiters, and their associate Earl Mangen sold drugs together and, prior to the war, were supplied by associates of the Arlington Crew. In the early morning of November 7, 2009, at a party on Arlington Avenue, a Gorilla Bloods leader started a fight with a member of the Arlington Crew. Dickersen, who at the time was one of the highest ranking Bloods on Staten Island, as well as Arlington Crew members Dion Nelson and Frankie Nelson joined in the fight. When a member of the Gorilla Bloods pulled out a knife, Dion Nelson drew a firearm and shot him in the lower back.1 About an hour after this shooting, Dickersen was shot and killed in a nearby parking lot. Moments later, Sebbern and Waiters were arrested jumping out of a car in possession of firearms, including the murder weapon, and wearing matching camouflage bullet-proof vests.2

Overall, as a result of a series of investigations begun in 2008 into drug and gang-related activity on the North Shore of Staten Island, more than 30 defendants have been convicted of racketeering, murder, narcotics trafficking, and firearms offenses.

The sentencing proceeding of Sebbern and Waiters was held before United States District Judge Sandra L. Townes.

The government’s case was prosecuted by Assistant United States Attorneys Shreve Ariail and Kevin Trowel.

The Defendants:

DEXTER WAITERS, also known as “Bugotti”

Age: 27

Staten Island, New York

DONTAE SEBBERN, also known as “K.D.”

Age: 26

Staten Island, New York

E.D.N.Y. Docket No. 10-CR-087

___________________________________________________________________________

1 In April 2013, Dion Nelson was sentenced to 25 years in prison following his guilty plea to discharging a firearm in connection with a narcotics trafficking offense.

2 One week later, Mangen was found dead outside his home, shot three times. Andre Collier, an associate of Dickerson’s and Mangen’s former drug supplier, subsequently pled guilty to premeditated homicide and was sentenced to 35 years in prison.

BROOKLYN, NY – Earlier today, at the federal courthouse in Brooklyn, Peter Liounis, a resident of Staten Island, was sentenced to 292 months in prison following his conviction on February 5, 2014, of six counts of wire fraud, one count of mail fraud, one count of wire and mail fraud conspiracy, and one count of securities fraud after a two-week trial. For nearly four years, Liounis and his co-conspirators ran three successive fraudulent investment schemes through which they obtained over $15 million from over 250 investors based on false promises about investment opportunities.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Philip R. Bartlett, Postal Inspector in Charge, U.S. Postal Inspection Service, New York Division; James T. Hayes, Jr., Special Agent-in-Charge, U.S. Department of Homeland Security, Homeland Security Investigations (HSI), New York; and Robert J. Sica, Special Agent-in-Charge, United States Secret Service. The sentence was imposed by United States District Judge I. Leo Glasser.

“Peter Liounis hid behind assumed identities to fleece unsuspecting investors. His two prior convictions didn’t teach him respect for the law, as he continued to cheat hundreds of innocent victims of millions of dollars. Liounis thought his third time in court would be a charm. Instead a federal jury saw him for the inveterate fraudster and con man he really is,” stated United States Attorney Lynch. “We will continue to pursue tirelessly those individuals who would victimize investors.”

At a pre-sentencing proceeding, Judge Glasser stated that the “scam was as sophisticated as any scam that I have had occasion to deal with in this courthouse in over 30 years.”

A. The Grayson Hewitt Scheme

As proven at trial, in March 2011, investors were contacted by a person identifying himself as “Mark Anderson from Grayson Hewitt.” “Anderson” told investors that Grayson Hewitt purchased plaintiffs’ rights to future recoveries in personal injury and other lawsuits, and promised a 15% return on their investments.

In a series of calls captured by a court-ordered wiretap, the son of an investor sought the return of his father’s money so that the son could place his father, who had suffered a heart attack, into an assisted living facility. Although the father had approximately $23,000 left in his Grayson Hewitt account, Liounis falsely told the son that his father had been depleting the account and had only $3,000 remaining. Liounis then sent the father and son a “get well fruit basket.” In another call, a Grayson Hewitt investor expressed skepticism about the company, noting, “I see this as a Bernie Madoff deal….” Liounis responded, “this is no way, no how, a Bernie Madoff … believe that! … You gotta understand, the amount of money we handle here, uh, we’d go away for a hell of a lot longer than Bernie did.”

The members of the scheme used investor funds to purchase gold, meals, clothing, and other consumer items. The Grayson Hewitt scheme resulted in over $4 million of losses to investors.

B. Prior Related Schemes

Liounis had also participated in two closely related prior schemes, as proven at a sentencing hearing.

From approximately December 2008 to November 2009, Liounis and his co-conspirators participated in a fraudulent investment scheme through a company called the Rockford Group. The Rockford Group marketed itself as a “leading private equity firm,” claimed to invest in plaintiffs’ rights to future recoveries in personal injury and other lawsuits, and promised a 15% return on their investments. The Rockford Group, however, never invested in any lawsuits. Instead, nearly all of the investor funds were wired to bank accounts overseas. Approximately 200 investors in the U.S. and Canada lost approximately $11 million as a result of this scheme.

In September 2010, an individual who had been solicited to invest in the Rockford Group by one of its representatives, “James Weston,” began receiving calls from someone who sounded like “Weston,” but was now identifying himself as “Andrew Black from UBS.” “Black” solicited multiple investors to invest in an initial public offering (IPO) of General Motors stock. Federal agents determined that there was no “Andrew Black” at UBS, and were able to halt this scheme in its early stages and return most of the investors’ funds.

Federal agents identified Liounis as the person who solicited the Rockford Group, General Motors IPO and Grayson Hewitt investors, using the names “James Weston,” “Andrew Black,” and “Mark Anderson.”

Prior to his most recent convictions at trial, Liounis had been convicted of federal fraud offenses three times before in 2001 and 2007.

The government’s case is being prosecuted by Assistant United States Attorneys Justin D. Lerer and Daniel A. Spector.

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. 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:

PETER LIOUNIS

Age: 42

Staten Island, NY

E.D.N.Y. Docket No. 12-CR-350

Attorney General Eric Holder and Associate Attorney General Tony West announced today that the Department of Justice has reached a $16.65 billion settlement with Bank of America Corporation – the largest civil settlement with a single entity in American history ­— to resolve federal and state claims against Bank of America and its former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch. As part of this global resolution, the bank has agreed to pay a $5 billion penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) – the largest FIRREA penalty ever – and provide billions of dollars of relief to struggling homeowners, including funds that will help defray tax liability as a result of mortgage modification, forbearance or forgiveness. The settlement does not release individuals from civil charges, nor does it absolve Bank of America, its current or former subsidiaries and affiliates or any individuals from potential criminal prosecution.

“This historic resolution - the largest such settlement on record - goes far beyond ‘the cost of doing business,’” said Attorney General Holder. "Under the terms of this settlement, the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue.”

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force and its Residential Mortgage-Backed Securities (RMBS) Working Group, which has recovered $36.65 billion to date for American consumers and investors.

“At nearly $17 billion, today’s resolution with Bank of America is the largest the department has ever reached with a single entity in American history,” said Associate Attorney General West. “But the significance of this settlement lies not just in its size; this agreement is notable because it achieves real accountability for the American people and helps to rectify the harm caused by Bank of America’s conduct through a $7 billion consumer relief package that could benefit hundreds of thousands of Americans still struggling to pull themselves out from under the weight of the financial crisis.”

The Justice Department and the bank settled several of the department’s ongoing civil investigations related to the packaging, marketing, sale, arrangement, structuring and issuance of RMBS, collateralized debt obligations (CDOs), and the bank’s practices concerning the underwriting and origination of mortgage loans. The settlement includes a statement of facts, in which the bank has acknowledged that it sold billions of dollars of RMBS without disclosing to investors key facts about the quality of the securitized loans. When the RMBS collapsed, investors, including federally insured financial institutions, suffered billions of dollars in losses. The bank has also conceded that it originated risky mortgage loans and made misrepresentations about the quality of those loans to Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).

Of the record-breaking $16.65 billion resolution, almost $10 billion will be paid to settle federal and state civil claims by various entities related to RMBS, CDOs and other types of fraud. Bank of America will pay a $5 billion civil penalty to settle the Justice Department claims under FIRREA. Approximately $1.8 billion will be paid to settle federal fraud claims related to the bank’s origination and sale of mortgages, $1.03 billion will be paid to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $135.84 million will be paid to settle claims by the Securities and Exchange Commission. In addition, $300 million will be paid to settle claims by the state of California, $45 million to settle claims by the state of Delaware, $200 million to settle claims by the state of Illinois, $23 million to settle claims by the Commonwealth of Kentucky, $75 million to settle claims by the state of Maryland, and $300 million to settle claims by the state of New York.

Bank of America will provide the remaining $7 billion in the form of relief to aid hundreds of thousands of consumers harmed by the financial crisis precipitated by the unlawful conduct of Bank of America, Merrill Lynch and Countrywide. That relief will take various forms, including principal reduction loan modifications that result in numerous homeowners no longer being underwater on their mortgages and finally having substantial equity in their homes. It will also include new loans to credit worthy borrowers struggling to get a loan, donations to assist communities in recovering from the financial crisis, and financing for affordable rental housing. Finally, Bank of America has agreed to place over $490 million in a tax relief fund to be used to help defray some of the tax liability that will be incurred by consumers receiving certain types of relief if Congress fails to extend the tax relief coverage of the Mortgage Forgiveness Debt Relief Act of 2007.

An independent monitor will be appointed to determine whether Bank of America is satisfying its obligations. If Bank of America fails to live up to its agreement by Aug. 31, 2018, it must pay liquidated damages in the amount of the shortfall to organizations that will use the funds for state-based Interest on Lawyers’ Trust Account (IOLTA) organizations and NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development. The organizations will use the funds for foreclosure prevention and community redevelopment, legal assistance, housing counselling and neighborhood stabilization.

As part of the RMBS Working Group, the U.S. Attorney’s Office for the District of New Jersey conducted a FIRREA investigation into misrepresentations made by Merrill Lynch to investors in 72 RMBS throughout 2006 and 2007. As the statement of facts describes, Merrill Lynch regularly told investors the loans it was securitizing were made to borrowers who were likely and able to repay their debts. Merrill Lynch made these representations even though it knew, based on the due diligence it had performed on samples of the loans, that a significant number of those loans had material underwriting and compliance defects - including as many as 55 percent in a single pool. In addition, Merrill Lynch rarely reviewed the unsampled loans to ensure that the defects observed in the samples were not present throughout the remainder of the pools. Merrill Lynch also disregarded its own due diligence and securitized loans that the due diligence vendors had identified as defective. This practice led one Merrill Lynch consultant to “wonder why we have due diligence performed” if Merrill Lynch was going to securitize the loans “regardless of issues.”

“In the run-up to the financial crisis, Merrill Lynch bought more and more mortgage loans, packaged them together, and sold them off in securities – even when the bank knew a substantial number of those loans were defective,” said U.S. Attorney Paul J. Fishman for the District of New Jersey. “The failure to disclose known risks undermines investor confidence in our financial institutions. Today’s record-breaking settlement, which includes the resolution of our office’s imminent multibillion-dollar suit for FIRREA penalties, reflects the seriousness of the lapses that caused staggering losses and wider economic damage.”

This settlement also resolves the complaint filed against Bank of America in August 2013 by the U.S. Attorney’s Office for the Western District of North Carolina concerning an $850 million securitization. Bank of America acknowledges that it marketed this securitization as being backed by bank-originated “prime” mortgages that were underwritten in accordance with its underwriting guidelines. Yet, Bank of America knew that a significant number of loans in the security were “wholesale” mortgages originated through mortgage brokers and that based on its internal reporting, such loans were experiencing a marked increase in underwriting defects and a noticeable decrease in performance. Notwithstanding these red flags, the bank sold these RMBS to federally backed financial institutions without conducting any third party due diligence on the securitized loans and without disclosing key facts to investors in the offering documents filed with the SEC. A related case concerning the same securitization was filed by the SEC against Bank of America and is also being resolved as part of this settlement.

“Today’s settlement attests to the fact that fraud pervaded every level of the RMBS industry, including purportedly prime securities, which formed the basis of our filed complaint,” said U.S. Attorney Anne M. Tompkins for the Western District of North Carolina. “Even reputable institutions like Bank of America caved to the pernicious forces of greed and cut corners, putting profits ahead of their customers. As we deal with the aftermath of the financial meltdown and rebuild our economy, we will hold accountable firms that contributed to the economic crisis. Today’s settlement makes clear that my office will not sit idly while fraud occurs in our backyard.”

The U.S. Attorney’s Office for the Central District of California has been investigating the origination and securitization practices of Countrywide as part of the RMBS Working Group effort. The statement of facts describes how Countrywide typically represented to investors that it originated loans based on underwriting standards that were designed to ensure that borrowers could repay their loans, although Countrywide had information that certain borrowers had a high probability of defaulting on their loans. Countrywide also concealed from RMBS investors its use of “shadow guidelines” that permitted loans to riskier borrowers than Countrywide’s underwriting guidelines would otherwise permit. Countrywide’s origination arm was motivated by the “saleability” of loans and Countrywide was willing to originate “exception loans” (i.e., loans that fell outside of its underwriting guidelines) so long as the loans, and the attendant risk, could be sold. This led Countrywide to expand its loan offerings to include, for example, “Extreme Alt-A” loans, which one Countrywide executive described as a “hazardous product,” although Countrywide failed to tell RMBS investors that these loans were being originated outside of Countrywide’s underwriting guidelines. Countrywide knew that these exception loans were performing far worse than loans originated without exceptions, although it never disclosed this fact to investors.

“The Central District of California has taken the lead in the department’s investigation of Countrywide Financial Corporation,” said Acting U.S. Attorney Stephanie Yonekura for the Central District of California. “Countrywide’s improper securitization practices resulted in billions of dollars of losses to federally-insured financial institutions. We are pleased that this investigation has resulted in a multibillion-dollar recovery to compensate the United States for the losses caused by Countrywide’s misconduct.”

In addition to the matters relating to the securitization of toxic mortgages, today’s settlement also resolves claims arising out of misrepresentations made to government entities concerning the origination of residential mortgages.

The U.S. Attorney’s Office for the Southern District of New York, along with the Federal Housing Finance Agency’s Office of Inspector General and the Special Inspector General for the Troubled Asset Relief Program, conducted investigations into the origination of defective residential mortgage loans by Countrywide’s Consumer Markets Division and Bank of America’s Retail Lending Division as well as the fraudulent sale of such loans to the government sponsored enterprises Fannie Mae and Freddie Mac (the “GSEs”). The investigation into these practices, as well as three private whistleblower lawsuits filed under seal pursuant to the False Claims Act, are resolved in connection with this settlement. As part of the settlement, Countrywide and Bank of America have agreed to pay $1 billion to resolve their liability under the False Claims Act. The FIRREA penalty to be paid by Bank of America as part of the settlement also resolves the government’s claims against Bank of America and Countrywide under FIRREA for loans fraudulently sold to Fannie Mae and Freddie Mac. In addition, Countrywide and Bank of America made admissions concerning their conduct, including that they were aware that many of the residential mortgage loans they had made to borrowers were defective, that many of the representations and warranties they made to the GSEs about the quality of the loans were inaccurate, and that they did not self-report to the GSEs mortgage loans they had internally identified as defective.

“For years, Countrywide and Bank of America unloaded toxic mortgage loans on the government sponsored enterprises Fannie Mae and Freddie Mac with false representations that the loans were quality investments,” said U.S. Attorney Preet Bharara for the Southern District of New York. “This office has already obtained a jury verdict of fraud and a judgment for over a billion dollars against Countrywide and Bank of America for engaging in similar conduct. Now, this settlement, which requires the bank to pay another billion dollars for false statements to the GSEs, continues to send a clear message to Wall Street that mortgage fraud cannot be a cost of doing business.”

The U.S. Attorney’s Office for the Eastern District of New York, together with its partners from the Department of Housing and Urban Development (HUD), conducted a two-year investigation into whether Bank of America knowingly made loans insured by the FHA in violation of applicable underwriting guidelines. The investigation established that the bank caused the FHA to insure loans that were not eligible for FHA mortgage insurance. As a result, HUD incurred hundreds of millions of dollars of losses. Moreover, many of Bank of America’s borrowers have defaulted on their FHA mortgage loans and have either lost or are in the process of losing their homes to foreclosure.

“As a Direct Endorser of FHA insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta E. Lynch for the Eastern District of New York. “It is a gatekeeper entrusted with the authority to commit government funds earmarked for facilitating mortgage lending to first-time and low-income homebuyers, senior citizen homeowners and others seeking or owning homes throughout the nation, including many who live in the Eastern District of New York. In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not just secured a meaningful remedy for the bank’s conduct, but have sent a powerful message of deterrence.”

“Bank of America failed to make accurate and complete disclosure to investors and its illegal conduct kept investors in the dark,” said Rhea Kemble Dignam, Regional Director of the SEC’s Atlanta Office. “Requiring an admission of wrongdoing as part of Bank of America’s agreement to resolve the SEC charges filed today provides an additional level of accountability for its violation of the federal securities laws.”

“Today’s settlement with Bank of America is another important step in the Obama Administration’s efforts to provide relief to American homeowners who were hurt during the housing crisis,” said U.S. Department of Housing and Urban Development (HUD) Secretary Julián Castro. “This global settlement will strengthen the FHA fund and Ginnie Mae, and it will provide $7 billion in consumer relief with a focus on helping borrowers in areas that were the hardest hit during the crisis. HUD will continue working with the Department of Justice, state attorneys general, and other partners to take appropriate action to hold financial institutions accountable and provide consumers with the relief they need to stay in their homes. HUD remains committed to solidifying the housing recovery and creating more opportunities for Americans to succeed.”

“Bank of America and the banks it bought securitized billions of dollars of defective mortgages,” said Acting Inspector General Michael P. Stephens of the FHFA-OIG. “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from Bank of America, Countrywide and Merrill Lynch not knowing about those defects. Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit.”

The attorneys general of California, Delaware, Illinois, Kentucky, Maryland and New York also conducted related investigations that were critical to bringing about this settlement. In addition, the settlement resolves investigations conducted by the Securities and Exchange Commission (SEC) and litigation filed by the Federal Deposit Insurance Company (FDIC).

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis. The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. Attorneys’ Offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.

The RMBS Working Group is led by Director Geoffrey Graber and five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Assistant Attorney General for the Criminal Division Leslie Caldwell, Director of the SEC’s Division of Enforcement Andrew Ceresney, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

Investigations were led by Assistant U.S. Attorneys Leticia Vandehaar of the District of New Jersey; Dan Ryan and Mark Odulio of the Western District of North Carolina; George Cardona and Lee Weidman of the Central District of Carolina; Richard Hayes and Kenneth Abell of the Eastern District of New York; and Pierre Armand and Jaimie Nawaday of the Southern District of New York.

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: www.stopfraud.gov .

Related Material:

Alejo Polanco was sentenced today to 27 years in prison to be followed by five years of supervised release by United States District Judge Raymond J. Dearie at the federal courthouse in Brooklyn. In August 2013, following a two-week trial, Polanco and co-defendant Emilino Vasquez were convicted of all counts against them, including participating in a ten-year conspiracy to commit armed home invasion robberies and to traffic in heroin, cocaine, and marijuana. In addition, Polanco and Vasquez were convicted of the June 2001 murder of Liliana Colmenares in Manhattan. On June 20, 2014, Vasquez was sentenced to 22 years’ incarceration for his role in the offense.

The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James J. Hunt, Acting Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division.

“Polanco, Vasquez, and their associates thought they had gotten away with murder,” stated United States Attorney Lynch. “For years, these defendants committed brazen armed robberies that terrorized our city. Thanks to the diligent efforts of the DEA’s experienced investigators, those responsible for this brutal murder have been brought to justice.”

Polanco and Vasquez were members of a violent robbery crew responsible for numerous robberies of narcotics traffickers in the New York metropolitan area. The crew often received inside information regarding the location of narcotics and money stashes, and then performed extensive surveillance of their intended targets before robbing them at gunpoint. The crew targeted narcotics traffickers because they were unlikely to call the police or cooperate with law enforcement investigations. Altogether, Polanco, Vasquez, and their co-conspirators stole hundreds of kilograms of cocaine, heroin, and marijuana, as well as hundreds of thousands of dollars in drug proceeds.

In the spring of 2001, the crew received information from a member of an international drug trafficking organization that there was a large quantity of heroin stored in an apartment located on Fort Washington Avenue in upper Manhattan. For months, the conspirators performed surveillance of the apartment and its occupants. On June 10, 2001, six members of the crew, including Polanco and Vasquez, assembled in the vicinity of the apartment. Communicating with each other via radio, they watched as the male occupant of the apartment briefly left the apartment to walk to a restaurant. When he returned, three members of the crew, including Polanco, each of whom was armed with a handgun, attempted to force their way into the apartment. A struggled ensued, and several shots were fired. Liliana Colmenares, a Colombian national who resided in the apartment and was unarmed, approached Polanco and briefly struggled with him. Polanco then shot Colmenares in the face, causing her to bleed to death within minutes. Colmenares was approximately five months pregnant at the time of her death.

After the shooting, the conspirators fled the scene in two vehicles, one of which was driven by Vasquez. The murder remained unsolved for several years until agents and investigators with the Drug Enforcement Administration’s New York Drug Enforcement Task Force identified several suspects and ultimately solved the case.

Ms. Lynch extended her grateful appreciation to the DEA and the New York State Police for their extraordinary assistance in this lengthy investigation.

The government’s case was prosecuted by Assistant United States Attorneys

Daniel Silver, Soumya Dayananda, and Nathan Reilly.

The Defendants:

ALEJO POLANCO

Age: 47

EMILINO VASQUEZ

Age: 59

E.D.N.Y. Docket No. 08-CR-65

Christopher Finazzo, the former Executive Vice President and Chief Merchandising Officer of national teenage clothing retailer Aéropostale, Inc. (“Aéropostale”), was sentenced in federal court in Brooklyn, New York, to 8 years in prison. In April 2013, Finazzo was convicted of all 16 counts of fraud and bribery, following a three-week jury trial, for directing more than $350 million in t-shirt and fleece business to South Bay Apparel Inc. (“South Bay”), a company owned by Hollywood movie producer Douglas Dey, in exchange for receiving more than $25 million in kickbacks from Dey. As part of the sentence, Finazzo was also sentenced to 3 years’ supervised release, ordered to forfeit more than $25 million to the government, and pay $13,690,822.94 in restitution to Aéropostale, a publicly traded company on the New York Stock Exchange. Dey pleaded guilty in September 2012 to conspiracy to violate the Travel Act through commercial bribery for his role in the scheme and was sentenced on August 6, 2014 to 42 months in prison.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

“For over a decade, Christopher Finazzo abused his position of power at Aéropostale and betrayed the trust placed in him by the company, its investors, and its employees by lining his own pockets at his employer’s expense. To succeed in this decade-long kickback scheme, Finazzo lied on numerous disclosure forms and caused Aéropostale to make false filings with the Securities and Exchange Commission. These lies and false representations compromised the financial well-being of a publicly-traded retail company. Those who seek to commit corporate fraud by abusing their positions of trust are on notice that they will be held accountable for their crimes,” stated United States Attorney Lynch. Ms. Lynch thanked the FBI and the Securities and Exchange Commission for their assistance.

Shortly after Finazzo was hired by Aéropostale in July 1996, he and Dey entered into a fraudulent scheme whereby Finazzo directed Aéropostale’s graphic t-shirt business to South Bay in exchange for splitting South Bay’s profits with Dey. From 1996 to 2006, Finazzo caused Aéropostale to buy more than $350 million in t-shirt and fleece merchandise from South Bay, often for significantly higher prices and lower quality than was available from other suppliers. In exchange, Dey paid Finazzo more than $25 million in bribes and kickbacks, equaling approximately 50% of South Bay’s profits. In 2005 alone, at the peak of the business between Aéropostale and South Bay, Dey paid Finazzo more than $13 million in kickbacks. The kickbacks were paid through C&D Retail Consultants, a shell consulting corporation set up by Finazzo, and through companies jointly-owned by Finazzo and Dey.

Finazzo’s lies and omissions about his relationship with Dey on numerous disclosure forms, which he was required to complete as a senior officer of Aéropostale, caused Aéropostale to make multiple false filings with the SEC. Finazzo completely controlled Aéropostale’s business with South Bay and favored Dey and South Bay to the detriment of Aéropostale’s profit margins. For example, Finazzo refused to comply with Aéropostale’s then Chief Executive Officer Julian Geiger’s directive to place 25% of the t-shirts orders with overseas vendors at a significantly lower cost than what Aéropostale paid South Bay, thereby costing Aéropostale approximately $6 million.

When Aéropostale’s employees sought to lower the price of t-shirts purchased from South Bay or hold South Bay accountable for poor quality and late deliveries, Finazzo stepped in and quashed their efforts. For example, when a graphic t-shirt merchant questioned South Bay’s cost structure, Finazzo emailed the head of Aéropostale’s men’s division and stated, “I would like to let you know that if I hear that [the merchant] is talking trash about South Bay to other people in the company, I will not tolerate that, and I will be swift in my actions.” Similarly, when other employees questioned South Bay’s effective monopoly on the t-shirt business, Finazzo sent an email to his senior staff stating, “Last night when I could not sleep I decided that as long as I’m here we will run the business as we started it with our key vendors … I will not change our vendor structure or the way we set up this business and I guess I can make that decision. I want South Bay to be the main t-shirt supplier.”

The sentence was imposed by United States District Judge Roslynn R. Mauskopf.

The government’s case was prosecuted by Assistant United States Attorneys Winston M. Paes and Claire Kedeshian.

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 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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.

The Defendant:

CHRISTOPHER FINAZZO

Age: 57

Garden City, New York

E.D.N.Y. Docket No. 10-CR-457

 

       

Jimmy Cournoyer, the leader of a massive international drug trafficking enterprise with ties to La Cosa Nostra, the Hells Angels, and the notorious Sinaloa Cartel in Mexico, was sentenced earlier today to 27 years in prison by the Hon. Raymond J. Dearie. Cournoyer previously pled guilty to being the leader of a continuing criminal enterprise, conspiracies to manufacture, import, and distribute marijuana, conspiracies to export and distribute cocaine, substantive cocaine distribution, and a conspiracy to launder the proceeds of narcotics trafficking. As part of his sentence, Cournoyer agreed to a $1 billion forfeiture money judgment and will forfeit $10,871,120 in narcotics proceeds that federal agents seized from multiple locations in New York, California, Pennsylvania, and Kansas during the multi-year investigation.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York and James J. Hunt, Acting Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division.

“With the assistance of our law enforcement partners across the United States and in Canada, the United States Attorney’s Office for the Eastern District of New York was able to bring to justice a prolific drug kingpin with ties to some of the most powerful organized crime groups in the world,” stated United States Attorney Lynch. “Jimmy Cournoyer used Native American Reservations to violate the security of our national borders and smuggled more than $1 billion worth of deadly narcotics and firearms between the United States, Canada, and Mexico. Today’s sentence sends a powerful message to those engaged in international organized crime: law enforcement is committed to tracking down and dismantling dangerous criminal organizations wherever they are located, and the penalty for engaging in such conduct is severe.”

DEA Acting Special Agent-in-Charge James Hunt praised the men and women of the U.S. Attorney’s Office, Eastern District of New York for their diligent work in this investigation and stated, "This sentence is a message to drug distributors who profit millions while pushing drugs and violence through our country and abroad. Today, law enforcement's efforts have led to twenty seven years in prison for Jimmy Cournoyer and mark the end of his drug empire."

According to the indictment and other court filings submitted by the government, Cournoyer was the principal leader of a Montreal-based drug distribution organization affiliated with the Rizutto and Bonanno crime families, the Hells Angels, and the Sinaloa Cartel. A superseding indictment charged Cournoyer with trafficking more than $1 billion worth of marijuana, cocaine, and ecstasy into the United States between 1998 and 2012. Cournoyer’s organization transported tens of thousands of pounds of marijuana from outdoor growers in British Colombia to Montreal, Canada, and controlled numerous warehouses in and around Montreal for the manufacture of ecstasy and hydroponic marijuana. The drugs were smuggled into the United States using transportation networks run by the Hells Angels and Native American co-conspirators from the Akwesasne Mohawk Reservation along the U.S./Canadian border. Once the drugs were sold in the United States, much of it by distributors tied to the Bonanno crime family in New York, the organization used millions of dollars in drug proceeds to purchase cocaine from the powerful Sinaloa Cartel in Mexico for exportation to and distribution in Canada by members and associates of the Rizzuto crime family. Cournoyer was also charged with witness tampering in connection with his attempts to dissuade co-conspirators from cooperating with law enforcement by, among other things, establishing a $2 million “hit fund” set aside to murder or otherwise retaliate against any individuals who cooperated with the government.

During the course of the government’s investigation, law enforcement agents in the United States and Canada seized hundreds of pounds of marijuana, 83 kilograms of cocaine, 60,000 MDMA pills, multiple firearms and ammunition, more than 800 marijuana plants, and nearly $11,000,000 in narcotics proceeds from Cournoyer’s criminal enterprise. In total, more than 100 defendants have pled guilty to narcotics trafficking charges since the investigation commenced in 2007.

United States Attorney Lynch extended her grateful appreciation to the Drug Enforcement Administration, the Nassau County Police Department, the Laval Police Service, Laval, Quebec, and the Department of Justice Office of International Affairs for their extraordinary work on this nearly seven-year investigation. Ms. Lynch further thanked the New York City Police Department; New York State Police; Surete Du Quebec; Montreal Police Department; Peel Regional Police Department, Ontario; Delta Police Department, British Colombia; Royal Canadian Mounted Police - Swift Current Division; Ontario Provincial Police; Akwesasne Mohawk Police Service; Akwesasne Tribal Police; Beverly Hills Police Department; Santa Ana Police Department; Anaheim Police Department; Costa Mesa Police Department; U.S. Border Patrol, and Philadelphia Police Department for their important contributions to the successful outcome.

The government’s case is being prosecuted by Assistant United States Attorneys Steven L. Tiscione, Amir H. Toossi and Tanisha Payne.

The Defendant:

JIMMY COURNOYER

Age: 34

Earlier today at the federal courthouse in Brooklyn, New York, John Venizelos, also known as “John V,” “Big Man,” and “John from Staten Island,” an alleged associate of the Bonanno organized crime family of La Cosa Nostra, was sentenced to 11 years in prison to be followed by five years of supervised release. In May 2013, Venizelos pled guilty to marijuana trafficking charges contained in a superseding indictment returned on April 3, 2013. As part of his sentence, Venizelos will also forfeit $148,480 and two firearms that federal agents seized from multiple locations in Staten Island where Venizelos stored narcotics and drug proceeds.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James Hunt, Acting Special Agent-in-Charge of the Drug Enforcement Administration, New York (DEA).

"Venizelos used violence and intimidation to protect his position as a major narcotics distributor. Those who challenged him were threatened, tortured, and beaten. Venizelos's conviction underscores our commitment to prosecuting drug traffickers who flood our communities with narcotics, especially when those individuals have chosen a life of organized crime,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Drug Enforcement Administration, the New York Police Department, and New York State Police for their work on the case. Ms. Lynch also expressed her appreciation to the Laval Police Service and the Department of Justice Office of International Affairs for their invaluable assistance during this multi-year international investigation.

“Today’s sentencing is a credit to the New York Drug Enforcement Task Force who worked diligently with the United States Attorney’s Office in order to keep our city and state crime free. John Venizelos was responsible for flooding American streets with thousands of pounds of marijuana while profiting millions of dollars. DEA is committed to identifying the drug kingpins that sit on the top of the drug trafficking chain and bringing them to justice,” stated DEA Acting Special Agent-in-Charge Hunt.”

According to the indictment and other court filings submitted by the government, Venizelos was a major Staten Island-based distributor of narcotics for a Canadian narcotics trafficking enterprise. Specifically, Venizelos was charged with narcotics and firearm-related offenses and witness tampering as a part of an indictment in which ten members of a Montreal-based drug distribution organization affiliated with the Rizzuto and Bonanno crime families, the Hells Angels, and the Sinaloa Cartel were charged with trafficking over $1 billion worth of marijuana, cocaine, and ecstasy into the United States between 1998 and 2012. The organization transported tens of thousands of pounds of marijuana from outdoor growers in British Colombia to Montreal, Canada, and controlled numerous warehouses in and around Montreal for the manufacture of ecstasy and hydroponic marijuana. The drugs were smuggled into the United States using transportation networks run by the Hells Angels and Native American co-conspirators from the Akwesasne Mohawk Reservation along the U.S./Canadian border. Once the drugs were sold in the United States, much of it by distributors tied to the Bonanno crime family in New York, the organization used millions of dollars in drug proceeds to purchase more cocaine from the powerful Sinaloa Cartel in Mexico for exportation to and distribution in Canada. Venizelos was charged with witness tampering in connection with his attempts to dissuade a co-conspirator from cooperating with law enforcement by, among other things, informing the co-conspirator about a $2 million “hit fund” set aside to murder or otherwise retaliate against any individuals who cooperated with the government.

During the course of the investigation, federal agents seized more than 80 kilograms of cocaine and approximately $10,000,000 in suspected drug proceeds. At the time of Venizelos’ arrest, agents discovered narcotics, multiple encrypted Blackberry devices, approximately $150,000 in drug proceeds, and multiple firearms in his residence and a second stash house used by Venizelos – including a loaded semi-automatic handgun that had been stolen from a law enforcement officer. During the search, federal agents also discovered several handwritten letters addressed to Venizelos by an incarcerated associate of organized crime discussing a myriad of violent crimes committed by the author with, or on behalf of, Venizelos, including “a broad daylight kidnaping” and “torture” of an individual Venizelos suspected of stealing his drugs, threats of violence, and vicious assaults against customers who owed Venizelos drug debts, and preventing a witness (through threats and intimidation) from positively identifying Venizelos for a crime that would have resulted in him serving “at least 7 years in jail.”

The government's case is being prosecuted by Assistant United States Attorneys Steven L. Tiscione, Gina M. Parlovecchio, Amir H. Toossi, and Tanisha Payne.

The Defendant:

JOHN VENIZELOS

Age: 35

Earlier today, Jair Estupinan-Montano was arraigned at the federal courthouse in Brooklyn, New York, on charges relating to international narcotics trafficking. Estupinan-Montano was arrested in Panama on October 14, 2013, on a provisional arrest warrant issued from the Eastern District of New York.

The arraignment was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James J. Hunt, Acting Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division.

According to court filings, prior to his arrest, Estupinan-Montano was the leader of a narcotics trafficking organization responsible for transporting shipments of cocaine from Colombia to locations in Central America and Mexico for ultimate delivery to the United States. Estupinan-Montano allegedly worked closely with the violent “Los Rastrojos” drug trafficking organization, a paramilitary organization that employed hundreds of individuals and controlled drug trafficking along the Pacific coast of Colombia. Estupinan-Montano was responsible for arranging boats and submarines that transported the cocaine from Colombia to other members of his organization in Central America, who then transported the cocaine north to be sold to Mexican cartels for eventual shipment to the United States. A detention memo filed today by the government details that, between 2010 and 2012, the United States Coast Guard seized two ships and a semi-submersible vessel that had been sent from Colombia by Estupinan-Montano. In total, those vessels contained over 7,200 kilograms of cocaine when they originally left South America.

“Evoking Jules Verne, the defendant Estupinan-Montano relied on boats and submarines to ferry his illegal cargo, and was an essential link in the flow of illegal narcotics from Colombia to the United States, ” stated United States Attorney Lynch. “The illegal narcotics trade is a scourge, both in the United States and throughout the world. With the help of our international allies, we will continue to strike at those who enrich themselves off this violent industry wherever they are found.” Ms. Lynch thanked the Drug Enforcement Administration, New York Division; the Drug Enforcement Administration’s Bogota Country Office and Panama Express Task Force; the United States Coast Guard; the Department of Justice Office of International Affairs; and the Republic of Panama for their help in investigating and capturing Estupinan-Montano.

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

The government’s case is being prosecuted by Assistant United States Attorneys Tyler Smith, Amir Toossi, Justin Lerer, and Robert Polemeni.

The Defendant:

JAIR ESTUPINAN-MONTANO

Age: 31

COLOMBIA

E.D.N.Y. Docket No. 12-CR-793 (SLT)

Estupinan Montano Arraignment Press Release Submarine Photo
Estupinan Montano Arraignment Press Release Submarine Photo 2
 

Loretta E. Lynch, United States Attorney for the Eastern District of New York, Sam Hirsch, Acting Assistant Attorney General, United States Department of Justice, Environment and Natural Resources Division, Judith A. Enck, Regional Administrator, United States Environmental Protection Agency Region 2, Eric T. Schneiderman, Attorney General for the State of New York, and Dr. Howard Zucker, New York State Acting Commissioner of Health, announced today that the United States and the State have reached agreement with New York City to modify the Consent Decree entered in November 1998 which required the City to construct a filtration plant for its Croton drinking water supply. Under the Third Supplement to the Consent Decree, lodged today in U.S. District Court in Brooklyn, the City completed construction of the filtration plant on April 15, 2014 and will commence operation of the filtration plant at its selected site, the Mosholu Golf Course Site in the Bronx, no later than May 17, 2015. If the City fails to meet the May 17, 2015 deadline, the Consent Decree provides for stipulated penalties in the amount of $65 million. Under the Consent Decree, the City is required to conduct interim measures including monitoring the quality and safety of the Croton System and implementing watershed protection measures.

The need for this modification arose when the City failed to meet certain deadlines under the Second Supplement to the Consent Decree, including completion of construction. The City has paid $5,064,000 in penalties to date for missed deadlines associated with the delays in the project schedule.

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 by July 1, 1996, and operate a filtration plant by June 1, 2000. The City failed to comply with the stipulation and, in 1997, the United States brought suit against New York City to enforce the filtration requirements. 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.

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. Drinking water from the Croton System does not pose an immediate threat to public health, but filtration is necessary to assure the continued long term safety of water delivered from the Croton System.

The City has not used of the Croton System since 2008 due to the ongoing construction of the filtration plant. With the completion of the filtration plant and when the Croton drinking water supply system is fully reactivated, the City will have the ability to deliver 290 million gallons of high-quality water each day from the Croton System. The City has stated that use of the Croton drinking water supply system will be critical in ensuring that the City can continue to meet the City’s drinking water needs during the shutdown of the Delaware Aqueduct. The Croton drinking water supply system will also supplement the city’s water supply during future drought conditions.

“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. Despite many hurdles in siting and challenges in construction and contracting, we have vigorously enforced the Consent Decree 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 in the very near future,” said United States Attorney Lynch. Ms. Lynch promised continued vigorous enforcement and oversight of the requirements of the Consent Decree as supplemented.

“Ensuring that people have a safe source of drinking water is essential to protecting public health,” said EPA Regional Administrator Enck. “EPA required the city to build a filtration plant because the New Yorkers who drink Croton water deserve to have the highest quality water possible. The Safe Drinking Water Act was designed to protect people from Giardia and Cryptosporidium, which can affect the water supply and cause serious illness. The Croton system is vulnerable to these types of contamination, which makes filtration imperative.”

“Water from the Croton system has been critical to New Yorkers since the first Croton aqueduct was put in operation in 1842. Completion of the filtration plant, as required under the Third Supplement, will help ensure that water from the Croton watershed will remain safe, available, and integral to New York City’s supply. My office will continue to work with our federal, state, and local partners to confirm the Consent Decree is followed and the filtration plant is completed and operational as soon as possible,” said New York Attorney General Schneiderman.

“Drinking water is a vital resource, and the New York State Department of Health is committed to ensuring that New Yorkers have a safe dependable supply. The Croton water filtration plant will play an important role in this effort now and well into the future,” said Acting New York State Health Commissioner Zucker.

The proposed settlement will be published in the Federal Register for a 30-day public comment period and to become effective must be approved by United States District Judge Nina Gershon of the Eastern District of New York, who is overseeing enforcement of the Consent Decree. 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.

Mr. Chairperson, distinguished members of the committee, and representatives of civil society, it is an honor to be a part of the U.S. delegation and share some of the highlights of the Department of Justice’s efforts to eliminate racial discrimination and uphold human rights in the area of criminal justice.

Attorney General Eric Holder – and all of us at the Department of Justice who work on criminal justice issues – take seriously our obligation to protect the safety of all Americans and the security of our nation; to safeguard civil and human rights; to prevent and combat violent crime, financial fraud, and threats to the most vulnerable members of society; and to strengthen collaboration among government, law enforcement and our community partners.

As part of this mission, the department has made great progress in reforming America’s criminal justice system. Our focus is not just on the prosecution of crime, but on eradicating its root causes as well as providing support for those re-entering society after having paid their debt to it.

There is, of course, much work still to be done. Currently our country imprisons approximately 2.2 million people, disproportionately people of color. This situation is a drain on both precious resources and human capital. The Attorney General is committed to reform of this aspect of our criminal justice system.

Last August the Attorney General announced the “Smart on Crime” initiative. Under this initiative, we’re ensuring that stringent mandatory minimum sentences for certain federal drug crimes will now be reserved for the most serious criminals. This is not an abandonment of prison as a means to reduce crime, but rather a recognition that, quite often, less prison can also work to reduce crime. We’re advancing alternative programs in place of incarceration in appropriate cases. And we’re committed to providing formerly incarcerated people with fair opportunities to rejoin their communities and become productive, law-abiding citizens.

As part of this effort, the Attorney General has directed every component of the Justice Department to review proposed rules, regulations or guidance with an eye to whether they may impose collateral consequences that may prevent reintegration into society. He has called upon state leaders to do the same, with a particular focus on enacting reforms to restore voting rights to those who have served their debt to society, thus ending the chain of permanent disenfranchisement that visits many of them.

To further ensure that the elimination of discrimination is an ongoing priority, the Attorney General has created a Racial Disparities Working Group, led by the U.S. Attorney community, to identify policies that result in unwarranted disparities within criminal justice and to eliminate those disparities as quickly as possible

From the reduction of the use of solitary confinement, to the expansion of the federal clemency program, to our support for the retroactive reduction of penalties for non-violent drug offenders to the reduction in the sentencing disparity between crack and powder cocaine, we have worked to improve our criminal justice system in furtherance of our human rights treaty obligations. We look forward to the future and the opportunity to do even more.

Thank you for the opportunity to discuss these issues with you. Our next speaker is my friend and colleague, Mark Kappelhoff, of the department’s Civil Rights Division.

See more photos here: https://www.flickr.com/photos/us-mission/

USA Lynch- Senior U.S. Gov't Delegation
USA Lynch speaking w/ civil society reps at UN Office at Geneva
USA Lynch Consultation with US Civil Society
 

Douglas Dey, the owner of South Bay Apparel, Inc. (“South Bay”), a former major supplier of t-shirts and fleece merchandise for national teenage clothing retailer Aéropostale, Inc., was sentenced today in federal court in Brooklyn, New York, to 42 months in prison, to be followed by 3 years’ supervised release. Dey and was also ordered to forfeit $7.5 million to the government, and pay $13,690,822.94 in restitution to Aéropostale, a publicly traded company on the New York Stock Exchange.

On September 27, 2012, Dey pled guilty to conspiracy to violate the Travel Act through commercial bribery for paying more than $25 million in kickbacks to Christopher Finazzo, Aéropostale’s former Executive Vice President and Chief Merchandising Officer, to obtain over $350 million in business. Finazzo was convicted on all 16 counts of fraud and commercial bribery for his role in the scheme following a three-week jury trial in April 2013, and is scheduled to be sentenced on August 20, 2014.

Dey’s sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

“For over a decade, Dey used bribes and kickbacks to gain an unfair and illegal advantage for his t-shirt and fleece business. By doing so, he fleeced Aéropostale and its investors out of tens of millions of dollars and damaged the financial well-being of a publicly-traded retail company. Today’s sentence sends a strong message to those who commit corporate fraud that they will be held accountable for their crimes,” stated United States Attorney Lynch. Ms. Lynch thanked the FBI and the Securities and Exchange Commission for their assistance.

Shortly after Finazzo was hired by Aéropostale in July 1996, he and Dey entered into a fraudulent scheme whereby Finazzo directed Aéropostale’s graphic t-shirt business to South Bay in exchange for splitting South Bay’s profits with Dey. From 1996 to 2006, Finazzo caused Aéropostale to buy more than $350 million in t-shirt and fleece merchandise from South Bay, often for significantly higher prices and lower quality than was available from other suppliers. In exchange, Dey paid Finazzo more than $25 million in bribes and kickbacks, equaling approximately 50% of South Bay’s profits. In 2005 alone, at the peak of the business between Aéropostale and South Bay, Dey paid Finazzo more than $13 million in kickbacks. The kickbacks from Dey to Finazzo were paid through C&D Retail Consultants, a shell consulting corporation set up by Finazzo, and through companies jointly-owned by Finazzo and Dey.

The sentence was imposed by United States District Judge Roslynn R. Mauskopf.

The government’s case was prosecuted by Assistant United States Attorneys Winston M. Paes and Claire Kedeshian.

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 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. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants. For more information on the task force, visit http://www.StopFraud.gov.

The Defendant:

DOUGLAS DEY

Age: 57

New York, New York

E.D.N.Y. Docket No. 10-CR-457

 

       

Earlier today, Louis Grasso and Richard Riccardi were sentenced before Judge John Gleeson in U.S. District Court in Brooklyn, New York, to 38 and 36 years in prison, respectively, for the robbery and murder of James Donovan on July 2, 2010. The defendants were convicted after trial in March 2014.

The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James J. Hunt, Acting Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division.

“For more than 20 years, these defendants have preyed on our community by engaging in narcotics and firearms trafficking, burglary, and, most recently, robbery and murder,” stated United States Attorney Lynch. “The sentences imposed appropriately reflect both the seriousness of the crimes of conviction and the long history of crimes that these recidivist offenders have committed.”

According to the government’s trial evidence, and as recounted in the government’s sentencing memorandum, the defendants, along with two other associates, robbed and murdered Donovan, who operated a check-cashing business, in front of an auto body shop in the Gravesend section of Brooklyn. The plan to rob Donovan was hatched by Riccardi, who recruited Grasso and two other men into the scheme. Riccardi supplied the men with loaded firearms to use in the robbery and agreed to drive the “crash car,” used to block off or delay law enforcement pursuing the robbery crew.

During the course of the robbery, the defendant Grasso, with a co-conspirator, ambushed Donovan, pointed a gun at him, and grabbed a bag full of cash and checks from Donovan’s car. When Donovan tried to flee, the co-conspirator shot him in the leg, severing Donovan’s femoral artery. Donovan died of his wounds later that day. Grasso, Riccardi, and the co-conspirators sped off with approximately $200,000 in cash, which they later divided among themselves.

Law enforcement subsequently recovered from Riccardi’s home firearms, ammunition, a ballistic vest, and narcotics trafficking paraphernalia, among other items. A search of Grasso’s home and garage also yielded firearms, ammunition, masks, and a list of police radio codes. Riccardi has prior federal convictions for narcotics trafficking and possession of firearms. Grasso has prior federal convictions for bank larceny, burglary, and narcotics trafficking.

The government’s case was prosecuted by Assistant United States Attorneys Nicole M. Argentieri and Darren LaVerne.

The Defendants:

RICHARD RICCARDI

Age: 41

LOUIS GRASSO

Age: 46

BROOKLYN, NY – Yesterday, Cecil Franklin Speight, also known as Frank Speight, pleaded guilty to conspiracy to commit mail fraud and securities fraud for engaging in a conspiracy to steal over three million dollars from investors. Speight was the sole owner, officer, and director of International Stock Transfer (IST), a registered transfer agent with the United States Securities and Exchange Commission (SEC) since May 2004. According to court filings and facts presented at the plea hearing, Speight stole at least $3.3 million from victim investors and used the proceeds to pay personal expenses, including purchases at Mercedes Benz, Nordstrom, Netflix, and Groupon. Speight faces up to five years’ imprisonment, at least $3.3 million in restitution, and a fine equal to double the investors’ losses.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

“Rather than transferring capital to issuers, the defendant used the investors’ funds as his own, including financing his lifestyle in Florida. His victims, from the Eastern District of New York and around the world, were conned into buying bogus securities that were not worth the paper they were printed on. Now, he will be held to account for his crimes,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation, and thanked the Securities and Exchange Commission for its assistance.

“Speight tricked his victims into thinking their money would be invested in high-yield securities, but he was essentially using their investments to fund his own lifestyle to the tune of several million dollars. People have the right to trade in an uncorrupted market, and today’s guilty plea is proof of the FBI’s continued determination to root out those who unlawfully interfere with this process,” stated FBI Assistant Director-in-Charge Venizelos.

IST was founded by Speight in 2004 as a transfer agent registered with the SEC with offices in Palm Beach, Florida. Speight used “cold callers” and other means to entice victims into investing their money in allegedly high yield securities. Speight promised the victims a high rate of return if they invested in securities that were purportedly associated with IST. Speight and his coconspirators directed the victims to wire their investment funds into purportedly secure attorney escrow accounts. Once the victims wired money to those escrow accounts, Speight typically stole the funds for his personal use, including the purchase of a Mercedes Benz automobile. Speight also withdrew over $350,000 of investors’ funds in cash.

Today’s guilty plea took place before United States Magistrate Judge Roanne L. Mann at the federal courthouse in Brooklyn, N.Y.

The government’s case is being prosecuted by Assistant United States Attorney Jack Dennehy.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The Defendant:

CECIL FRANKLIN SPEIGHT

Age: 53

West Palm Beach, FL

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

Earlier today, following a two week trial, a federal jury in Brooklyn, New York, returned a guilty verdict against Bebars Baslan on charges of travel with intent to engage in sexual acts with a child under 12, conspiracy to produce child pornography, attempted production of child pornography, and attempted coercion and enticement of a child to engage in illegal sexual conduct. The charges relate to the defendant’s plot to sexually abuse three children, who were the sons and niece of an individual who became a government informant. The conviction was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office, and William J. Bratton, Commissioner, New York City Police Department.

The evidence at trial showed that in January 2013, the informant reported the defendant’s sexual interest in children to the government. Over the course of the next month, the informant made numerous recordings of the defendant plotting to sexually abuse children. The evidence showed that Baslan wanted to take photographs and video of his girlfriend giving oral sex to a 3-month old in order to use that photograph as blackmail to prevent her from going to the police. The defendant planned to use his girlfriend’s history of working with children to entice parents to allow her to babysit their children, whom the defendant would then drug and sexually abuse.

The evidence showed that the defendant’s plan was halted when the government set up a sting in which its informant offered the defendant the opportunity to sexually abuse his two sons and 7-year-old niece at a Jersey City hotel on March 19, 2013. On that day, the defendant provided the informant with children’s Benadryl and instructed the informant to give his niece an excessive dose in order to “knock her out” so that the defendant could sexually abuse her. Later that night, Baslan and his girlfriend then traveled to the Jersey City hotel armed with an array of camera equipment to photograph the sexual abuse. As they attempted to enter the room that they believed the informant to be in, agents of the FBI arrested them.

“The protection of children from sexual predators is one of our highest priorities. Let this be a warning to those who would prey on the most vulnerable among us; we will use every means to ensure that those who seek to sexually exploit children are prosecuted to the fullest extent of the law,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation and New York City Police Department who investigated this case.

At sentencing, the defendant faces a minimum of 30 years’ imprisonment and maximum of life imprisonment.

The government’s case is being prosecuted by Assistant United States Attorney Tyler Smith, Tiana Demas, and Robert Polemeni.

The Defendant:

Name: BEBARS BASLAN

Age: 36

Brooklyn, New York

E.D.N.Y. Docket No. 13-220 (RJD)

Earlier today, at the federal courthouse in Central Islip, New York, Long Island doctor Leonard I. Stambler was sentenced to 10 years in prison by United States District Court Judge Joseph F. Bianco. Stambler was convicted by a jury in October 2013 following three weeks of trial of conspiracy to distribute oxycodone and distribution of oxycodone, a highly addictive prescription pain killer, in connection with prescriptions that he provided to patients outside the scope of his professional practice and not for any medical purpose. At the time of the verdict, the defendant’s bail was revoked, and he was ordered detained pending sentencing.

The conviction was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James J. Hunt, Acting Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York; Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department (NCPD); Joseph A. D’Amico, Superintendent, New York State Police (NYSP); and Shantelle P. Kitchen, Acting Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York (IRS).

“Rather than ‘Do No Harm,’ Dr. Stambler acted as a drug dealer, putting thousands of oxycodone pills onto the streets of Long Island for no valid medical reason, even going so far as to drive his patient-friends to a drug deal,” stated United States Attorney Lynch. “This conviction and sentence should serve as a warning to any health care professionals engaged in such conduct that in addition to losing their license to practice medicine, they will face prison for such conduct.” Ms. Lynch extended her grateful appreciation to each of the law enforcement agencies for their assistance in this case.

At trial, the government’s evidence established that Stambler provided prescriptions for hundreds of oxycodone pills to two of his patients without a legitimate medical purpose and outside the course of a professional medical practice, and also conspired with those patients and assisted them in the sale of pills that he prescribed. On November 21, 2011, investigators with the DEA Task Force observed Stambler driving his patient, Christopher Adams, to a pharmacy in East Rockaway, New York, where Stambler and Adams filled a prescription that Stambler had written in the name of Adams’s girlfriend, Nancy Cook. As investigators watched, Stambler then drove Adams to a nearby location to meet with a third individual where some of the oxycodone pills were exchanged for cash. Investigators stopped Stambler’s vehicle shortly after the drug deal. On a separate occasion, Stambler drove Cook, who was also Stambler’s patient, to a home in East Rockaway where she sold oxycodone pills to the same individual involved in the November 21, 2011, drug deal. Both Adams and Cook testified at trial about Stambler’s participation in the drug transactions as well as their own destructive addiction to oxycodone.

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.

Stambler’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 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 was prosecuted by Assistant United States Attorney Allen Bode.

The Defendant:

Name: LEONARD I. STAMBLER

Age: 63

Residence: Baldwin Harbor, NY

An indictment was unsealed earlier today charging individuals with bank fraud and conspiracy arising from a scheme to take advantage of plans by an all-girls high school in Hempstead, New York, to expand its campus and build an athletic field for students.

The defendants, two couples, including a real estate attorney and the officer of a real property corporation, were arrested earlier today by special agents of the Federal Bureau of Investigation and will be arraigned this afternoon before United States Magistrate Judge William D. Wall at the United States Courthouse in Central Islip, New York. If convicted, each defendant faces up to 30 years of imprisonment, fines, and the forfeiture of $539,000 in allegedly illegal profits arising from the scheme.1

The charges and arrests were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

As set forth in the indictment, defendants Sofia Atias, Joseph Atias, and Nicholas Pellegrini conspired to defraud Bank of America of over half a million dollars by fraudulently avoiding foreclosure on a home through a fraudulent “short sale” of the property to a straw buyer -- defendant and co-conspirator Paula Berckhoff, also known as “Paula Pellegrini” -- and then profiting from the home’s re-sale or “flip” to Sacred Heart Academy, a Catholic all-girls high school that paid the conspirators almost $1 million for the property to accomplish long-sought plans to improve and expand its facilities.

Early in 2011, defendant Sophia Atias had defaulted on some $750,000 in a mortgage and home equity loan secured by a home she owned at 83 Cathedral Avenue, Hempstead, New York, which sat adjacent to the high school. As Bank of America began foreclosure proceedings, defendants Sophia Atias, Joseph Atias, and Nicholas Pellegrini, acting as the couple’s attorney, negotiated with representatives of Sacred Heart Academy and ultimately won a commitment from the school to buy the property for $925,000 -- an amount that would have been enough to repay the Atias’ debts to the bank.

Instead, the defendants allegedly conspired to induce Bank of America to agree to a short sale of the Cathedral Avenue property. Short sales are an alternative to lengthier and often costly foreclosure proceedings. In a short sale, a bank agrees to accept whatever price a defaulting borrower can get on the immediate or short sale of a property in foreclosure. As the bank did here, lenders may also release the borrower from any obligation to repay any remaining balances owed on the original mortgage or loans.

Knowing that Sacred Heart Academy had already agreed to buy the Cathedral Avenue home for $925,000, the defendants nonetheless induced Bank of America to agree to a short sale of the house for only $480,000 to Jefferson Real Property Corporation, whose secretary and treasurer was defendant Nicholas Pellegrini’ s wife. As part of their agreement with the bank, Mrs. Pellegrini, using the name Paula Berckhoff, and Mrs. Atias, both falsely represented that neither would receive any undisclosed proceeds from the transaction and further claimed that the short sale was not an attempt to “flip” or use “straw buying” to avoid repayment of Atias’ debt.

In fact, as charged in the indictment, several months after the fraudulent short sale, the Atiases and Pellegrinis did re-sell or “flip” the Cathedral Avenue home to Sacred Heart Academy for the previously agreed price of $925,000. Given the fraudulent inducement to accept the short sale, Bank of America was defrauded of almost $540,000.

“Through a web of lies and false documents, the defendants took advantage of a school’s desires to improve its students’ athletic facilities, lied to win concessions from a bank, and then lied again by ‘flipping’ the property and defrauding the bank of over half a million dollars. This is not a case about tough bargaining. This is fraud, pure and simple,” stated United States Attorney Lynch.

FBI Assistant Director-in-Charge Venizelos stated, “As alleged in the indictment, while the defendants did not brandish a weapon, they stole over half a million dollars from Bank of America based upon their false misrepresentations and filing of false documents with the victim-lender. Bank fraud burdens lenders with bad loans and weakens our financial markets. Individuals who engage in this criminal activity should be reminded that they will be vigorously investigated and held accountable.”

The government’s case is being prosecuted by Assistant United States Attorney Charles P. Kelly.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The Defendants:

Name: SOFIA ATIAS

Age: 44 years old

Residence: Great Neck, NY

Name: JOSEPH ATIAS

Age: 50 years old

Residence: Great Neck, NY

Name: NICHOLAS A. PELLEGRINI

Age: 51 years old

Residence: Garden City, NY

Name: PAULA BERCKHOFF

Age: 34 years old

Residence: Garden City, NY

__________________________________________________________________________

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

A ten-count indictment was unsealed this morning in federal court in Brooklyn, New York, against seven defendants, Abraxas J. Discala, also known as “AJ Discala,” the Chief Executive Officer of OmniView Capital Advisors LLC (“OmniView”); Marc Wexler, the Managing Director of OmniView; Ira Shapiro, the Chief Executive Officer of CodeSmart Holdings, Inc. (“CodeSmart”), a publicly traded company; Matthew Bell, a registered broker and investment adviser representative; Craig Josephberg, a registered broker; Kyleen Cane, an attorney; and Victor Azrak, the Vice President and Director of Excel Corp., a publicly traded company.1 The charges include securities fraud, wire fraud and conspiracy to commit securities fraud, mail fraud and wire fraud in connection with the fraudulent market manipulation of four publicly traded companies -- CodeSmart, trading under the ticker symbol ITEN; Cubed, Inc. (“Cubed”), trading under the ticker symbol CRPT; StarStream Entertainment Inc. (“StarStream”), trading under the ticker symbol SSET; and The Staffing Group, Ltd. (“Staffing Group”), trading under the ticker symbol TSGL. In addition, the government restrained Discala’s residence in Norwalk, Connecticut, worth over $1 million, and seized a dozen bank and brokerage accounts containing criminal proceeds.

Shapiro, Josephberg and Azrak will be arraigned later today before Magistrate Judge Robert M. Levy, at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York. Discala, Wexler and Cane’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for this afternoon at the United States Courthouse, 333 S. Las Vegas Blvd., Las Vegas, Nevada. Bell’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for this afternoon at the United States Courthouse, 655 E. Cesar E. Chavez Blvd., San Antonio, Texas.

The indictment was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI).

“Discala and his company insiders, registered brokers, investment advisers, an attorney and corrupt investors designed an elaborate but fraudulent scheme built on lies, deceit and manipulated trading activity to defraud the securities markets and the investing public. They took companies with essentially no assets or activity and deceived the market into believing they were worth hundreds of millions of dollars through a dizzying round of insider and unauthorized trades. When the defendants stopped their criminal game of musical shares it was the unsuspecting investors who were left holding the bag. The defendants abused their positions of trust and preyed upon unsuspecting and elderly investors, oftentimes placing worthless stocks in their retirement accounts, to perpetrate this far-reaching fraud,” stated United States Attorney Lynch. “Today’s seven arrests, across five states, reflect the scope of this fraud and our commitment to aggressively locate and bring to justice those who abuse our financial markets in order to fraudulently enrich themselves.” Ms. Lynch expressed her grateful appreciation to the FBI, the United States Securities and Exchange Commission and the Texas State Securities Board for their significant cooperation and assistance in the investigation.

“As outlined in the indictment, the defendants engaged in a coordinated and sophisticated scheme to manipulate the share price and trading volume of four publicly traded stocks for personal gain. This lucrative scheme to manipulate our financial markets made the defendants money, while draining the bank accounts of innocent investors. Their client-victims trusted them to manage their money as if it were their own, not to steal it. Together with our partners in both law enforcement and the private sector, to include the Securities and Exchange Commission, we remain vigilant in identifying and bringing to justice those who look to profit at the expense of hard-working Americans,” stated FBI Assistant Director-in-Charge Venizelos.

I. Overview

As alleged in the indictment and other court filings, between October 2012 and July 2014, the defendants, together with others, agreed to defraud investors and potential investors in four public companies: CodeSmart, Cubed, StarStream and Staffing Group (collectively, the “Manipulated Public Companies”) by artificially controlling the price and volume of traded shares in the Manipulated Public Companies through, among other things: (a) false and misleading press releases; (b) false and misleading SEC filings; (c) fraudulent concealment of the defendants’ and their co-conspirators’ ownership interests; (d) engineering price movements and trading volume in the stocks; and (e) unauthorized purchases of stock in accounts of unwitting investors.

II. The CodeSmart Manipulation Scheme

In early May 2013, Discala and his co-conspirators engineered a reverse merger of CodeSmart, a private company, with a shell public company. After gaining control of CodeSmart’s three million unrestricted shares, Discala and his co-conspirators, on two occasions, fraudulently inflated CodeSmart’s share price and trading volume and then sold the unrestricted CodeSmart stock at a profit when the share price reached desirable levels -- a scheme commonly referred to as a “pump and dump.” The first pump and dump occurred between approximately May 13, 2013 and August 21, 2013. During this period, Discala and his co-conspirators manipulated CodeSmart’s stock price by raising it from $1.77 to a high of $6.94, before causing it to drop to $2.19. The second pump and dump occurred between approximately August 21, 2013 and September 20, 2013. During this period, Discala and his co-conspirators manipulated CodeSmart’s stock price by raising it from $2.19 to a high of $4.60, before causing it drop to $2.13.

CodeSmart’s market capitalization at its highest closing price of $6.94 per share on July 12, 2013 was $86,347,800. However, that same day, CodeSmart filed with the SEC an amended Form 10-K, signed by Shapiro, in which CodeSmart listed only $6,000 in total assets, $7,600 in revenue and a net loss of $103,141. By December 30, 2013, CodeSmart’s stock was trading at $0.66 per share, and on July 9, 2014, CodeSmart’s stock closed at $0.01 per share. On one occasion, Discala boasted that his manipulation of CodeSmart’s stock “should be in the hall of shame.”

To successfully orchestrate the two pumps and dumps, Discala and his co-conspirators coordinated their trading activity with the issuance of company press releases and public filings with the SEC, a number of which contained false and misleading information. Shapiro played a leading role in disseminating such information to the public. During the pump phase of the first pump and dump, CodeSmart issued a press release which stated that it was “the exclusive strategic partner” to provide medical coding and consulting services to the State University of New York at Binghamton. Contrary to this representation, CodeSmart was not the “exclusive strategic partner” for ICD-10 education courses at Binghamton University -- the university also offered courses through other providers and had no plans to exclusively market CodeSmart University to its students.

Similarly, during the pump phase of the second pump and dump, CodeSmart filed with the SEC a Form 8-K, signed by Shapiro, in which CodeSmart announced that Shapiro, its Chief Executive Officer, had purchased 25,000 shares of the company’s stock from the public market at the market value of $3.21 per share for a cost of $80,250. In this SEC filing, Shapiro extolled his purchase of CodeSmart stock, stating that it was “symbolic of [his] confidence in the Company and its mission.” In reality, Shapiro did not actually pay for the 25,000 CodeSmart shares purchased in his brokerage account -- the same day he paid $81,278 from his personal bank account to his brokerage firm for the 25,000 shares, Discala transferred $81,278 to Shapiro’s personal bank account.

Shapiro’s role in this scheme is further illustrated by his fluctuating revenue forecasts in SEC filings. After estimating $10 million in revenue over the next twelve months during the first pump, approximately one month later, on August 19, 2013, Shapiro stated that CodeSmart did not have sufficient funds and “may need to curtail or cease [its] operations” until it obtained sufficient funds. As the second pump began, a mere seven days later, Shapiro announced, “If we continue on the track we are on, I believe we will achieve our revenue and profit goals that were previously disclosed for 2013 and beyond.”

Discala and his co-conspirators profited by selling CodeSmart stock, issued to them at pennies, to investment adviser representative Bell’s clients and broker Josephberg’s customers. On some occasions, the CodeSmart shares were sold to Bell’s clients and Josephberg’s customers without their clients’ and customers’ knowledge and consent. Additionally, Bell and Josephberg were selling CodeSmart shares in their personal trading accounts at the same time that they were purchasing CodeSmart stock in their clients’ and customers’ accounts. During the first pump and dump, Discala and his co-conspirators sold approximately 800,000 shares of CodeSmart in their personal accounts while Bell and Josephberg purchased virtually the identical amount in their clients’ and customers’ accounts.

III. The Cubed Manipulation Scheme

In March 2014, Discala and his co-conspirators took Cubed public through an asset purchase agreement. On April 22, 2014, Cubed’s stock began trading in earnest. Between April 22, 2014 and April 30, 2014, Discala and his co-conspirators concocted trading volume in this stock by purchasing more than 50% of the total number of Cubed shares purchased during this period.

Between May 2, 2014 and June 29, 2014, law enforcement authorities conducted a judicially-authorized wiretap of Discala’s cellular telephone (the “Discala Wiretap”). The Discala Wiretap revealed that Discala, Wexler, Bell, Josephberg, Cane and Azrak, together with others, fraudulently manipulated Cubed’s stock by artificially controlling the price and volume of that stock through, among other things, wash trades and match trades.2 Rather than generating significant market interest and causing a quick pump and dump that would elicit regulators’ scrutiny this time, the defendants gradually increased the price of Cubed’s stock to give it the appearance of a legitimate company with genuine and steady market demand for the security. For example, on May 6, 2014, while Cubed was in a period of gradual increase from $5.20 on April 22, 2014 to $5.42 on May 22, 2014, Discala sent a text message to Josephberg stating, “Go 531. Please.” That day, Cubed’s stock closed at $5.32 per share.

The defendants used an escrow account maintained by Cane to successfully control the price and volume of Cubed’s stock. For example, on May 20, 2014, during a telephone call between Discala and Azrak, Discala emphasized his control over Cubed’s share price through the use of the escrow account, stating, “I’m the [expletive] brake and the gas, [expletive]. If I take my foot off the brake it’s 55 [dollars] tomorrow (laughter).”

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

IV. The StarStream and Staffing Group Manipulation Schemes

In addition to the CodeSmart and Cubed stocks, Discala and his co-conspirators were simultaneously fraudulently manipulating StarStream’s and Staffing Group’s stocks by artificially controlling the price and volume of the stocks through the use of, among other things, text messages and telephone calls. Below are examples of text messages intercepted on the Discala Wiretap.

A. StarStream Manipulation

On May 7, 2014, Wexler sent a text message to Discala, stating, “We may need to buy SSET at close. I think EJA has some $. Got get it to 15 cents. LOL what a joke.” That day, StarStream’s stock price closed at $0.30 on 41,100 trading volume, a significant decrease from the previous day’s closing price of $0.48 on 16,200 trading volume. The following day, on May 8, 2014, StarStream’s stock price closed at $0.15 per share, exactly the price proposed by Wexler. Similarly, on May 13, 2014, before trading commenced, Discala sent a text message to Bell, stating, “We got good stuff going. Sset. Should be over a buck today.” That day, StarStream’s stock price, which opened at $0.35 per share, reached an intraday high of $1.05 per share, before closing at $0.80 per share.

B. Staffing Group Manipulation

On May 7, 2014, Bell sent a text message to Discala, stating, “TSGL is tanking. We still good?” In response, Discala stated, “Yes. Buy all u can at 20 or better. We’re cleaning it up.” That day, Staffing Group’s stock price closed at $0.25 on 178,300 trading volume, a significant decrease from the previous day’s closing price of $0.36 on no trading volume. Similarly, on May 30, 2014, Discala sent a text message to Wexler, stating, “Buy 5k more ts [TSGL] market im gonna get this thing flying.” That day, Staffing Group’s stock price closed at $0.42 per share on 187,300 trading volume, which was almost double the closing price of $0.23 on 6,000 trading volume on the previous day.

The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes, Walter M. Norkin, Shannon C. Jones and Claire Kedeshian.

Today’s announcement is part of efforts underway 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 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. 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 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

The Defendants:

ABRAXAS J. DISCALA, also known as “AJ Discala”

Age: 43

Residence: Norwalk, Connecticut

MARC WEXLER

Age: 52

Residence: Colts Neck, New Jersey

IRA SHAPIRO

Age: 53

Residence: Congers, New York

MATTHEW BELL

Age: 47

Residence: Boerne, Texas

CRAIG JOSEPHBERG

Age: 41

Residence: New York, New York

KYLEEN CANE

Age: 59

Residence: Las Vegas, Nevada

VICTOR AZRAK

Age: 32

Residence: Brooklyn, New York

E.D.N.Y. Docket No. 14-CR-399

___________________________________________________________________________

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

2 Wash trades are purchases and sales of securities that match each other in price, volume and time of execution, and involve no change in beneficial ownership. For example, a wash trade occurs when Investor A buys 100 shares at $5.00 of Company A through Broker A while simultaneously selling 100 shares at $5.00 of Company A through Broker B. Match trades are similar to wash trades but involve a related third person or party who places one side of the trade. For example, a match trade occurs when Investor A buys 100 shares at $5.00 of Company A through a broker, while Investor B, who coordinates with Investor A, simultaneously sells 100 shares at $5.00 of Company A through a broker. Both wash trades and match trades are used to create the appearance that the stock price rose as a result of genuine market demand for the securities.

WASHINGTON – The Justice Department, along with federal and state partners, today announced a $7 billion settlement with Citigroup Inc. to resolve federal and state civil claims related to Citigroup’s conduct in the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities (RMBS) prior to Jan. 1, 2009. The resolution includes a $4 billion civil penalty – the largest penalty to date under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). As part of the settlement, Citigroup acknowledged it made serious misrepresentations to the public – including the investing public – about the mortgage loans it securitized in RMBS. The resolution also requires Citigroup to provide relief to underwater homeowners, distressed borrowers and affected communities through a variety of means including financing affordable rental housing developments for low-income families in high-cost areas. The settlement does not absolve Citigroup or its employees from facing any possible criminal charges.

This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group, which has recovered $20 billion to date for American consumers and investors.

“This historic penalty is appropriate given the strength of the evidence of the wrongdoing committed by Citi,” said Attorney General Eric Holder. “The bank's activities contributed mightily to the financial crisis that devastated our economy in 2008. Taken together, we believe the size and scope of this resolution goes beyond what could be considered the mere cost of doing business. Citi is not the first financial institution to be held accountable by this Justice Department, and it will certainly not be the last.”

The settlement includes an agreed upon statement of facts that describes how Citigroup made representations to RMBS investors about the quality of the mortgage loans it securitized and sold to investors. Contrary to those representations, Citigroup securitized and sold RMBS with underlying mortgage loans that it knew had material defects. As the statement of facts explains, on a number of occasions, Citigroup employees learned that significant percentages of the mortgage loans reviewed in due diligence had material defects. In one instance, a Citigroup trader stated in an internal email that he “went through the Diligence Reports and think[s] [they] should start praying . . . [he] would not be surprised if half of these loans went down. . . It’s amazing that some of these loans were closed at all.” Citigroup nevertheless securitized the loan pools containing defective loans and sold the resulting RMBS to investors for billions of dollars. This conduct, along with similar conduct by other banks that bundled defective and toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.

“Today, we hold Citi accountable for its contributing role in creating the financial crisis, not only by demanding the largest civil penalty in history, but also by requiring innovative consumer relief that will help rectify the harm caused by Citi's conduct,” said Associate Attorney General Tony West. “In addition to the principal reductions and loan modifications we've built into previous resolutions, this consumer relief menu includes new measures such as $200 million in typically hard-to-obtain financing that will facilitate the construction of affordable rental housing, bringing relief to families pushed into the rental market in the wake of the financial crisis.”

Of the $7 billion resolution, $4.5 billion will be paid to settle federal and state civil claims by various entities related to RMBS: Citigroup will pay $4 billion as a civil penalty to settle the Justice Department claims under FIRREA, $208.25 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $102.7 million to settle claims by the state of California, $92 million to settle claims by the state of New York, $44 million to settle claims by the state of Illinois, $45.7 million to settle claims by the Commonwealth of Massachusetts, and $7.35 to settle claims by the state of Delaware.

Citigroup will pay out the remaining $2.5 billion in the form of relief to aid consumers harmed by the unlawful conduct of Citigroup. That relief will take various forms, including loan modification for underwater homeowners, refinancing for distressed borrowers, down payment and closing cost assistance to homebuyers, donations to organizations assisting communities in redevelopment and affordable rental housing for low-income families in high-cost areas. An independent monitor will be appointed to determine whether Citigroup is satisfying its obligations. If Citigroup fails to live up to its agreement by the end of 2018, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.

The U.S. Attorney’s Offices for the Eastern District of New York and the District of Colorado conducted investigations into Citigroup’s practices related to the sale and issuance of RMBS between 2006 and 2007.

“The strength of our financial markets depends on the truth of the representations that banks provide to investors and the public every day,” said U.S. Attorney John Walsh for the District of Colorado, Co-Chair of the RMBS Working Group. “Today's $7 billion settlement is a major step toward restoring public confidence in those markets. Due to the tireless work by the Department of Justice, Citigroup is being forced to take responsibility for its home mortgage securitization misconduct in the years leading up to the financial crisis. As important a step as this settlement is, however, the work of the RMBS working group is far from done, we will continue to pursue our investigations and cases vigorously because many other banks have not yet taken responsibility for their misconduct in packaging and selling RMBS securities.”

“After nearly 50 subpoenas to Citigroup, Trustees, Servicers, Due Diligence providers and their employees, and after collecting nearly 25 million documents relating to every residential mortgage backed security issued or underwritten by Citigroup in 2006 and 2007, our teams found that the misconduct in Citigroup’s deals devastated the nation and the world’s economies, touching everyone,” said U.S. Attorney of the Eastern District of New York Loretta Lynch. “The investors in Citigroup RMBS included federally-insured financial institutions, as well as a host of states, cities, public and union pension and benefit funds, universities, religious charities, and hospitals, among others. These are our neighbors in Colorado, New York and around the country, hard-working people who saved and put away for retirement, only to see their savings decimated.”

This settlement resolves civil claims against Citigroup arising out of certain securities packaged, securitized, structured, marketed, and sold by Citigroup. The agreement does not release individuals from civil charges, nor does it release Citigroup or any individuals from potential criminal prosecution. In addition, as part of the settlement, Citigroup has pledged to fully cooperate in investigations related to the conduct covered by the agreement.

Michael Stephens, Acting Inspector General for the Federal Housing Finance Agency said, “Citigroup securitized billions of dollars of defective mortgages, after which investors suffered enormous losses by purchasing RMBS from Citi not knowing about those defects. Today’s settlement is another significant step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit in the lead up to the financial crisis, and is a necessary step toward reviving a sound RMBS market that is crucial to the housing industry and the American economy. We are proud to have worked with the Department of Justice, the U.S. Attorneys’ Offices in the Eastern District of New York and the District of Colorado. They have been great partners and we look forward to our continued work together.”

The underlying investigation was led by Assistant U.S. Attorneys Richard K. Hayes, Kevin Traskos, Lila Bateman, John Vagelatos, J. Chris Larson and Edward K. Newman, with the support of agents from the Office of the Inspector General for the Federal Housing Finance Agency, in conjunction with the President’s Financial Fraud Enforcement Task Force’s RMBS Working Group.

The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis. The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. Attorneys’ Offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state Attorneys General offices around the country.

The RMBS Working Group is led by its Director Geoffrey Graber and its five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Assistant Attorney General for the Criminal Division Leslie Caldwell, Director of the SEC’s Division of Enforcement Andrew Ceresney, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.

Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: www.stopfraud.gov.

Citi - Settlement Agreement SIGNED
Citi - SOF FINAL
Citi - Appendix 1 SOF
Citi - Annex 2 (Consumer Relief) FINAL (2)
Citi - Annex 3 (Deal List) FINAL

Earlier today at the federal courthouse in Brooklyn, Qendrim Dobruna, a member of an international cybercrime organization that was responsible for a cyberattack that inflicted millions of dollars in losses on the global financial system over the course of two days in 2011, pleaded guilty to bank fraud. The defendant, who was extradited from Germany, and his co-conspirators hacked into the systems of a U.S.-based credit and debit card payment processor that processed debit card transactions for the American Red Cross in connection with disaster relief victims. The stolen card data was then disseminated worldwide and used in an “unlimited operation” that made $14 million in fraudulent withdrawals from ATMs across the globe.

The guilty plea was announced by Loretta E. Lynch, 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 defendant and his associates hacked into the global financial system and helped themselves to funds using prepaid debit cards meant for the needy and vulnerable,” stated United States Attorney Lynch. “We will continue to work with our private sector partners to solve these 21st century heists and bring the perpetrators, no matter where in the world they may hide, to justice.”

“Our success in this case and other similar investigations is a result of our close work with our law enforcement partners,” said Secret Service Special Agent in Charge Sica. “The Secret Service worked closely with the Department of Justice and INTERPOL to share information and resources that ultimately brought Qendrim Dobruna to justice. This case demonstrates there is no such thing as anonymity for those engaging in data theft and fraudulent schemes.”

As described in the indictment, court filings in related cases, and public court proceedings, the cyberattack employed by the defendant and his co-conspirators is known in the cyber underworld as an “Unlimited Operation” – through its hacking “operation,” the cybercrime organization can access virtually “unlimited” criminal proceeds.

The “Unlimited Operation” begins when the cybercrime organization hacks into the computer systems of a payment card processor, compromises prepaid debit card accounts, essentially eliminates the withdrawal limits of those accounts, and manipulates the security protocols that would alert the victim to the attack. The compromised card data is then distributed to cells worldwide that use the data to encode magnetic stripe cards to use at ATMs. These sophisticated techniques enable the participants to withdraw literally unlimited amounts of cash until the operation is finally detected and shut down. “Unlimited Operations” are marked by three key characteristics: (1) the surgical precision of the hackers carrying out the cyberattack, (2) the global nature of the cybercrime organization, and (3) the speed and coordination with which the organization executes its operations on the ground. These attacks rely upon both highly sophisticated hackers and organized criminal cells whose role is to withdraw the cash as quickly as possible.

In February 2011 the defendant and his co-conspirators targeted a publicly traded credit and debit card processing company based in the United States that processed transactions for prepaid debit cards issued by the American Red Cross for disaster relief victims. After the hackers penetrated the payment 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 using the compromised disaster relief prepaid cards, resulting in $14 million in financial loss worldwide.

The defendant, also known by the aliases “cl0sEd” and “cL0z,” participated in the cyber-attack from overseas by obtaining account information from co-conspirators who directly hacked into the payment card processor’s database and selling that account information to other co-conspirators over the Internet, including to an individual in Brooklyn, New York. The defendant was arrested in an apartment in Stuttgart, Germany in March 2012 by the German federal criminal police and subsequently extradited to the United States.

In announcing the guilty plea, United States Attorney Lynch praised the extraordinary efforts of the Secret Service in investigating this complex network intrusion. Ms. Lynch also thanked the Department of Justice’s Office of International Affairs, INTERPOL, and the authorities in Germany for their assistance in effecting the defendant’s extradition.

Today’s plea took place before Senior United States District Judge I. Leo Glasser. When sentenced on October 24, 2014, the defendant faces up to 30 years in prison, a fine of up to $1 million, and forfeiture of the proceeds of his crimes.

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

The Defendant:

QENDRIM DOBRUNA

Age: 27

E.D.N.Y. Docket No. 12 CR 300 (ILG)

Following a three-day trial, a federal jury in Brooklyn, New York, today found Gregory John Schaffer guilty of enticement to travel to engage in illegal sexual activity, enticement of a minor to engage in illegal sexual activity, attempted enticement to travel to engage in illegal sexual activity, and enticement of a minor to engage in illegal sexual activity.

The convictions were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James T. Hayes, Jr., Special Agent-in-Charge, U.S. Department of Homeland Security, Homeland Security Investigations (HSI), New York Field Office.

Using the website Craigslist, the defendant lured the victim, a 15-year-old girl from Brooklyn, to his Jersey City, New Jersey, office with false promises of a job. Once there, however, the defendant convinced her to try on several provocative swimsuits, filming her as she changed into them, and repeatedly touched the victim’s breasts, buttocks and groin. The defendant also tricked her into signing a contract that, he claimed, obligated her to have sex with him. When the victim asked to be let out of the contract, the defendant threatened to sue her and her family for breach of contract. The defendant then told the victim that he would be willing to change the contract if she had sex with him. The defendant then had sex with the victim and warned her not to tell anyone about the sex because of an alleged confidentiality agreement in the contract.

“We are committed to protecting children and adolescents from online predators,” stated United States Attorney Lynch. “The defendant created a fake document and spurious legal obligation in order to confuse and exploit a vulnerable young girl. Those who sexually exploit children will be prosecuted to the full extent of the law.” Ms. Lynch expressed her grateful appreciation to the New York Field Office of HSI, the agency responsible for leading the government’s investigation, and the New York Police Department, for assisting in the investigation.

When sentenced by United States District Judge Allyne R. Ross, the defendant faces a mandatory minimum sentence of 10 years’ imprisonment and a maximum term of life imprisonment on each of the four counts of the indictment.

The government’s case was prosecuted by Assistant United States Attorney Peter W. Baldwin.

The Defendant:

GREGORY JOHN SCHAFFER

Age: 34

 

       

Randall Martinez was sentenced today to 264 months in prison by United States District Judge Sandra L. Townes at the federal courthouse in Brooklyn. Previously, Martinez pleaded guilty to robbery conspiracy, cocaine trafficking conspiracy, and firearm charges.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and James J. Hunt, Acting Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division.

Martinez was a member of a violent robbery crew responsible for more than 100 robberies of narcotics traffickers in the New York metropolitan area and elsewhere that netted more than 250 kilograms of cocaine and $1 million in drug proceeds. Beginning in approximately January 2001, crew members posed as law enforcement officers, staged fake arrests of the traffickers, and then forcibly seized the traffickers’ contraband. Members of the robbery crew restrained victims with handcuffs, rope, or duct tape. The crew members often brandished firearms and physically assaulted victims. Crew members sold the stolen drugs and divided the proceeds among themselves.

Martinez participated in at least 22 separate robberies and attempted robberies. During these crimes, Martinez personally entered the residences and, on at least nine occasions, Martinez or his fellow crew members brandished firearms. On one occasion, Martinez brought two firearms to the scene of a robbery and acted as the lookout for the robbery crew while a victim was strangled to death in the residence. The robberies and attempted robberies in which Martinez directly participated involved at least 600 kilograms of cocaine and approximately $434,000 in drug proceeds. Agents seized 107 kilograms of cocaine from these robberies.

Ms. Lynch extended her grateful appreciation to the DEA, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, and the New York City Police Department.

The government’s case is being prosecuted by Assistant United States Attorneys Sylvia Shweder and Alexander Solomon.

The Defendant:

RANDALL MARTINEZ

Age: 33

Bronx, NY

E.D.N.Y. Docket Nos. 08-CR-242 and 12-CR-91

S.D.N.Y. Docket No. 10-CR-955 (removed to E.D.N.Y. for purposes of sentencing)

Earlier today, a federal jury returned verdicts of guilty against Mohammad Ajmal Choudhry of conspiring to commit murder in a foreign country, transmitting threats via interstate communications, and immigration fraud. The verdict followed a nine-day trial at the federal courthouse in Brooklyn, New York. The verdict was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York, and David Schnorbus, Special Agent-in-Charge, New York Field Office, U.S. Department of State’s Diplomatic Security Service.

The evidence at trial established that the defendant’s daughter, Amina Ajmal, was held against her will in Pakistan for more than three years by relatives at her father’s direction. During that time, Ajmal, a U.S. citizen, was forced into an arranged marriage with a Pakistani national. Ajmal eventually escaped Pakistan and returned to the United States with the assistance of a Pakistani man and U.S. State Department officials. During subsequent recorded telephone calls between Ajmal and the defendant, the defendant threatened to orchestrate the murder of the man who helped Ajmal flee if Ajmal, whose whereabouts remained unknown to the defendant, did not return immediately to the family home in Brooklyn. On February 25, 2013, after Ajmal refused to return home, the father and sister of the man who helped Ajmal flee were shot and killed in Pakistan. According to eyewitnesses, the defendant’s brother and other relatives were observed standing over the victims, holding guns, and desecrating the bodies.

“Choudhry placed himself and his honor above the lives of anyone who dared to thwart his plans. From the front seat of his yellow taxicab as he drove the streets of New York City, the defendant planned, directed, and executed the murders of family members of the man who offended his honor by helping his daughter leave Pakistan,” stated United States Attorney Lynch. “A clash of cultures can never be resolved with murder.” Ms. Lynch expressed her grateful appreciation to U.S. Immigration and Customs Enforcement, Homeland Security Investigations, and the U.S. State Department’s Diplomatic Security Service, which worked closely together to investigate the case.

At sentencing, the defendant faces up to life imprisonment.

The government’s case is being prosecuted by Assistant United States Attorneys Amanda Hector, Richard M. Tucker, and Margaret E. Gandy.

The Defendant:

MOHAMMAD AJMAL CHOUDHRY

Age: 61

E.D.N.Y. Docket No. 13 CR 150 (WFK)

Mira Consent Decree
Mira-Complaint-06-05-14

Earlier today, following a month-long trial, Ronald Herron, also known as “Ra Diggs,” was convicted of all counts, including racketeering and three homicides, arising from his leadership of a violent set of the Bloods Street Gang that operated in the Gowanus Housing Development in Brooklyn. The verdict was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office, and William J. Bratton, Commissioner, New York City Police Department.

“Ronald Herron and his gang of thugs preyed on their community while glorifying their criminal lifestyle,” stated United States Attorney Lynch. “He styled himself a rap artist, but the jury’s verdict makes clear who Herron really is, a drug dealer and murderer who sought power through fear and intimidation.” Ms. Lynch expressed her thanks to the agents and investigators from the FBI and NYPD who worked for years to dismantle this violent gang and bring Herron to justice.

Since 1998, Herron committed numerous crimes of violence in support of his drug trafficking operation in and around the Gowanus Houses and Wyckoff Gardens, two New York City public housing communities located in the Boerum Hill section of Brooklyn. In 2001, Herron murdered Frederick Brooks. Herron was acquitted of that murder in state court after witnesses refused to testify because they were threatened by Herron and his associates. After being released from state custody and consolidating his control over the drug trade in Gowanus and Wyckoff Gardens, Herron murdered Richard Russo in 2008 and Victor Zapata in 2009.

Herron boasted about his exploits in songs and videos in which he identified himself as the leader of the “Murderous Mad Dogs” set of the Bloods Street Gang and claimed that he had previously “beat a body.” The jury rejected Herron’s claim that the videos were simply exaggerations and that he was an aspiring rap artist rather than a murderer.

Herron’s conviction follows dozens of successful prosecutions over the past ten years conducted by the U.S. Attorney’s Office, along with the FBI and NYPD, of violent gang members and drug dealers from the Gowanus Housing Development. When he is sentenced, Herron faces a mandatory term of life imprisonment without the possibility of parole.

The government’s case was prosecuted by Assistant United States Attorneys Shreve Ariail, Sam Nitze, and Rena Paul.

The Defendant:

RONALD HERRON, also known as “Ra Diggs”

Age: 32

E.D.N.Y. Docket No. 10 CR 615 (NGG)

Earlier today, Rafael Astacio, a former detective with the New York City Police Department, pleaded guilty in Central Islip federal court to conspiracy to commit interstate transportation of stolen property and filing a fraudulent tax return. When sentenced, Astacio faces up to eight years in prison, a forfeiture money judgment of $200,000, and a fine of up to $500,000.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Kathleen M. Rice, Nassau County District Attorney, George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department (NCPD), Shantelle P. Kitchen, Acting Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS), and William J. Bratton, Commissioner, New York City Police Department (NYPD).

“For three years, Astacio and his band of thieves invaded people’s homes and businesses and stole millions of dollars. What makes Astacio’s crimes even more disgraceful is that he committed them while he was a NYPD detective who took an oath to protect and serve our community,” stated United States Attorney Lynch. “Today’s plea demonstrates that no one is above the rule of law. I want to thank my law enforcement partners for their hard work and unwavering commitment to ensure that Astacio was brought to justice.”

According to the indictment, court filings,and statements at today’s proceeding, between 2009 and 2012, Astacio was a member of a burglary crew that committed approximately three dozen commercial burglaries and ten residential burglaries in the Eastern District of New York stealing approximately $10,000,000 in cash and property. The crew used traditional burglary tools, such as blow torches, crowbars, wire cutters, and sledge hammers, as well as modern technology, including cell phone jammers and police scanners, to commit those burglaries. In addition, they often conducted surveillance of their burglary victims to determine when the victims would be out of their homes and businesses. On at least one occasion, they even installed a tracking device on a victim’s car to assist in that endeavor.

On April 29, 2010, Astacio’s co-conspirators burglarized a business in Plainview, New York, entering that commercial establishment while Astacio and another co-conspirator monitored a police scanner and acted as lookouts. Astacio’s co-conspirators spent approximately three and a half hours in the business and stole more than 45,000 pairs of Under Armour, Hobie, and other sunglasses that were worth approximately $3,000,000. After the burglary, Astacio and his co-conspirators transported the stolen property across state lines and sold some of the sunglasses on the Internet. In another instance, Astacio and his crew stole approximately $2,000,000 in cash from a plastic surgeon’s office located in Nassau County.

The government’s case is being prosecuted by Assistant United States Attorney Christopher C. Caffarone and Special Assistant United States Attorney Rick Whelan.

The Defendant:

RAFAEL ASTACIO

Age: 41

Copiague, New York

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

Earlier today, Antonio Lira-Robles was sentenced before Judge Kiyo A. Matsumoto in U.S. District Court in Brooklyn, New York, to 188 months’ imprisonment, to be followed by five years of supervised release, for the sex trafficking of one victim and restitution in the amount of approximately $1.2 million dollars.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York and James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York.

“This defendant is the final defendant to be sentenced in this case, which sought to end the Granados-Herndandez’s long standing family business of preying on young women and luring them to the United States, only to be forced into the violent world of prostitution,” stated United States Attorney Lynch. “Although no prosecution can remedy the egregious harms that the victims of sex trafficking suffer, we sincerely hope that this prosecution brought some closure to the many victims of the Granados-Hernandez organization.” Ms. Lynch extended her grateful appreciation to the organizations that provided services and advocacy to the victims in this case, including Sanctuary for Families and the law firm of Simpson, Thacher and Bartlett, LLP.

On December 19, 2013, Lira-Robles pled guilty to one count of a superseding indictment, which charged that between October 2000 and April 2011, he smuggled a victim from Mexico illegally into the United States and forced her to engage in prostitution. Over approximately ten years, Lira-Robles was a member of the Granados-Hernandez sex trafficking organization (the “Organization”). As part of the trafficking scheme engaged in by the Organization, Lira-Robles and his co-conspirators started romantic relationships with females in Mexico and then lured them to the United States with the false promise of a better life. Each of these victims was transported by a member of the Organization, with the intent that they would engage in prostitution. Once in the United States, the Organization forced victims into prostitution by threats, coercion, and violence. For each of the victims, the Organization kept all of the proceeds from the prostitution.

Lira-Robles was responsible for the sex trafficking of Jane Doe #1 and the recruitment of Jane Doe #4. Lira-Robles conduct towards both of these victims shows the same pattern of criminal conduct and abuse. In 1999, Lira-Robles recruited Jane Doe #1 in Tenancingo, Mexico, soon began a relationship with her and moved her into his parents’ home. Shortly thereafter, Jane Doe #1 became pregnant and Lira-Robles forced her to abort the child. Lira-Robles then forced Jane Doe #1, through threats and physical violence, to begin prostituting in Mexico City. In June 2000, Lira-Robles and Jane Doe #1 travelled to Queens, New York. Upon their arrival, Jane Doe #1 stated that she did not want to work as a prostitute to which Lira-Robles responded by physically assaulting her. As a result of the defendant’s violence towards her, Jane Doe #1 worked for Lira-Robles in New York and Boston from 2001 to 2010 and gave all the prostitution proceeds to him.

During the same time period as his involvement with Jane Doe #1, Lira-Robles recruited Jane Doe #4. Similar to his relationship with Jane Doe #1, Lira-Robles began a romantic relationship with Jane Doe #4 and suggested they travel to the United States. Upon their arrival to here, Lira-Robles told Jane Doe #4 that in order to pay off the smuggling debt she had to work as a prostitute. Jane Doe #4 worked for Lira-Robles from approximately 2004 until 2010.

At the sentencing, Jane Doe #1 stated that, “I was a victim of sex trafficking and forced into prostitution because of Antonio [Lira Robles].” Jane Doe #1 described in detail the extreme abuse she suffered under the control of Lira-Robles, stating that “He did not treat me like a human being. He treated me like a sexual robot.” Jane Doe #1 further stated: “For years I cried in silence. I carried the scars of Antonio’s abuse every day, but I can no longer be silent. I am here today so Antonio and his family will no longer be able to force another woman into prostitution.”

Lira-Robles’ cousins, Samuel Granados-Hernandez, Eleuterio Granados-Hernandez and Angel Cortez-Granados, also smuggled young women from Mexico illegally into the United States, forced them to work as prostitutes in New York City and elsewhere, and collected profits from their activities. Each of the three defendants pleaded guilty to sex trafficking. In September 2013, Cortez-Granados was sentenced to 15 years in prison, in a separate case. In March 2014, Eleuterio Granados-Hernandez was sentenced to 22 years in prison for the sex trafficking of five victims. In May 2014, Samuel Granados was sentenced to 15 years for the sex trafficking of three victims.

The government’s case was prosecuted by Assistant United States Attorney Soumya Dayananda.

The Defendant:

ANTONIO LIRA-ROBLES

Age: 38

Mexico

E.D.N.Y. Docket No. CR-11-297 (S-5) (KAM)

BROOKLYN, NY – A six-count indictment was unsealed this morning in federal court in Brooklyn charging mortgage broker Alex Barrett, property manager Barthelemy Adjavehoude, title agent Michelle Baker, property manager and self-described foreclosure specialist James Bayfield, and property managers Samuel Terrell Bell and Dirk Hall with engaging in a bank and wire fraud conspiracy to steal millions of dollars from financial lending institutions.1 Defendants Adjavehoude, Baker, Bayfield, and Bell were arrested and will be arraigned this afternoon before United States Magistrate Judge Lois Bloom at the United States Courthouse in Brooklyn, New York. The defendants face penalties of up to 30 years’ imprisonment if convicted.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Michael Stephens, Acting Inspector General, Federal Housing Finance Agency, Office of Inspector General (FHFA-OIG); Christina Scaringi, Special Agent-in-Charge, Northeast Region, U.S. Department of Housing and Urban Development, Office of Inspector General (HUD-OIG); and Derek Evans, Special Agent-in- Charge, Federal Deposit Insurance Corporation-Office of Inspector General, New York Region.

According to the indictments unsealed this morning, the defendants and other participants in the scheme (“the conspirators”) caused mortgage loan applications with false information to be submitted to lending institutions in connection with the purchase of residential properties located within the Eastern District of New York. These applications contained fraudulently inflated purchase prices and appraisals for the properties, as well as false information about the assets and income of the purchasers of the properties, many of whom were being compensated as part of the scheme to act as straw purchasers. The conspirators also falsified HUD forms and provided false down payment checks to make it appear as if the straw purchasers and the other borrowers had made down payments in connection with the purchase of the properties, which was a condition of the lending institutions for issuing the mortgage loans.

To carry out their scheme, the conspirators allegedly often conducted simultaneous purchases and sales of the properties, sometimes called “flips,” in an effort to conceal their criminal involvement and to inflate the value of the properties. For example, a conspirator would purchase a property from a homeowner. That same day, the conspirator would sell the property to a straw purchaser at an inflated value. The conspirators, through the use of backdated and falsified documents, concealed from the lending institutions the fact that the purchase and sale had occurred on the same day and made it appear as if the transaction between the homeowner and the conspirator had occurred over 60 days prior to the sale from the conspirator to the straw purchaser.

As a result of the false applications and appraisals, the lending institutions were fraudulently induced to issue millions of dollars of mortgage loans secured by properties that had inflated appraisal values to individuals who had insufficient income and assets to qualify for the mortgage loan. In many instances, the straw purchasers and the other borrowers failed to make required mortgage payments to the lending institutions, which caused the mortgage loans to be placed into default status.

At approximately the time of the closings of the properties, the conspirators diverted for their own use the portion of the loan proceeds that exceeded the actual value of the properties. The conspirators collectively caused the financial lending institutions to loan out over $5.5 million, of which over $2.7 million was the conspirators’ profit from the scheme. The investigation identified at least 17 properties in the scheme, including locations in Cambria Heights, Far Rockaway, Brooklyn, Laurelton, Jackson Heights, Jamaica, Hempstead, Rosedale, and Hollis, New York.

“Through a web of lies and false documentation, these real estate professionals allegedly stole millions from banks, which they used to line their own pockets,” stated United States Attorney Lynch. “The size and scope of the conspiracy were noteworthy, but the charges announced today are the result of an even more impressive collaboration between all the agencies that worked tirelessly to bring the defendants to account for these crimes. This is a clear message to anyone who contemplates engaging in mortgage fraud: do not even attempt it because you will be caught.”

FBI Assistant Director-in-Charge Venizelos stated, “In an elaborate scheme between brokers, appraisers, straw buyers, and others, it is alleged that these defendants conspired to shake down and defraud banks. The scheme not only victimized those institutions, but millions of consumers who either paid higher rates or could not get a loan.”

HUD-OIG Special Agent-in-Charge Christina Scaringi stated, “The arrests and charges announced today serve to remind the public that we will continue the important work of investigating mortgage industry professionals who deceive and defraud homeowners, the Federal Housing Administration, and mortgage lending institutions to satisfy their own personal enrichment. As alleged, the conduct of these defendants is particularly troubling as it is yet another reminder of the fraud and difficulties many endured in the aftermath of the recent housing crisis. We wish to thank our law enforcement partners at the FBI, FHFA-OIG, FDIC-OIG, and the U.S. Attorney's Office for their perseverance and steadfast efforts in ensuring these defendants are brought to justice.”

FDIC-OIG Special Agent-in-Charge Derek Evans stated, “The Federal Deposit Insurance Corporation Office of Inspector General is committed to its partnerships with others in the law enforcement community as we address mortgage fraud cases throughout the country. Today’s arrests illustrate that the government is working to ensure integrity in the financial services and housing industries and that those involved in criminal activities that undermine that integrity will be held accountable if ultimately found guilty.”

FHFA Acting Inspector General Michael Stephens stated, “As alleged, the individuals charged in this scheme operated with impunity under the flawed belief that as industry insiders they could better cover their tracks to avoid detection. However, as evidenced by today’s charges, no fraudulent plan is foolproof. We are proud to have worked with our law enforcement partners and will continue our collaborative efforts to bring those who cheat our financial institutions, and ultimately American taxpayers, to justice.”

The government’s case is being prosecuted by Assistant United States Attorney Walter M. Norkin.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency task force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The Defendants:

ALEX BARRETT

Age: 47

Residence: Farmingville, New York

BARTHELEMY ADJAVEHOUDE

Age: 54

Residence: Baldwin, New York

GEORGE ALDERDICE

Age: 42

Residence: Manhasset, New York

MICHELLE BAKER

Age: 47

Residence: Jamaica, New York

JAMES BAYFIELD

Age: 42

Residence: Jamaica, New York

SAMUEL TERRELL BELL

Age: 33

Residence: North Babylon, New York

DIRK HALL

Age: 39

Residence: Jamaica, New York

SHARIF RASHED

Age: 32

Residence: Jamaica, New York

__________________________________________________________________________

1 The charges announced today are merely allegations, and the defendants are presumed innocent unless and until proven guilty. Previously, co-conspirators George Alderdice, an attorney, and Sharif Rashed, an appraiser, pled guilty to conspiring to commit bank and wire fraud for their respective participation in the scheme.

Barrett.Alderdice.InformationSIGNED
Barrett Indictment
Barrett.Rashed.InformationSIGNED