Eastern District of New York

Earlier today, at the federal courthouse in Central Islip, New York, Vincent P. Vulaj, a resident of Bronx, New York, pleaded guilty to Theft of Government Property. When sentenced on December 16, 2014, Vulaj faces up to 10 years in prison. The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York and Jeremy Gauthier, Acting Special Agent in Charge of the Northeast Field Office, Naval Criminal Investigative Service (“NCIS”).

According to court filings and facts presented during the plea proceeding, between 2009 and 2013, while working as a Staff Sergeant at the 2nd Battalion, 25th Marine Regiment, Marine Corps Reserves Base in Garden City, New York, Vulaj stole property belonging to the Department of Defense worth more than $880,000, and sold it on eBay.com. The stolen items included tactical helmets, goggles, jackets, vests, sleep systems and backpacks. The Marine Corps Reserves discovered the thefts and reported it to NCIS for investigation. NCIS investigators then purchased some of the stolen equipment online and traced the transactions back to Vulaj. In September 2013, Vulaj was discharged to Individual Ready Reserve (“IRR”) status with the Marine Corps Reserve. Individuals placed on IRR status are subject to recall to active military service.

“As a non-commissioned officer with the Marine Corps Reserves, the defendant was charged with safeguarding the welfare of his fellow soldiers and the American public. Instead, he cast aside his duty and shamelessly stole equipment that was meant to provide safety and comfort to our troops in the field in order to line his own pockets,” stated United States Attorney Lynch. Ms. Lynch thanked the Marine Corps Reserves for their assistance in this investigation.

“Vulaj abused his access and violated the trust placed in him to embezzle from the American people. Not only is there the matter of $800,000 of property he stole and sold, his actions also resulted in the expenditure of a considerable amount of time and effort on his case; resources which should have been put to better use elsewhere, keeping our communities and warfighters safe,” stated Acting Special Agent in Charge Gauthier.

The guilty plea proceeding was held before United States District Judge Sandra J. Feuerstein.

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

The Defendant:

Name: VINCENT P. VULAJ

Age: 32

Residence: Bronx, NY

Thomas Bannon, the president of Overseas Investors LLC and Overseas Investors International, Ltd. (collectively, “Overseas Investors”), pleaded guilty today in federal court in Brooklyn, New York, to one count of wire fraud for defrauding an individual entrepreneur of $5 million through, among other things, false representations about his access to hedge funds and wealthy investors. When sentenced on October 3, 2014, Bannon faces up to 20 years in prison and the payment of $5,001,949 in restitution to the defrauded entrepreneur. Co-defendant Theodore Sweeten pleaded guilty on June 19, 2013, to one count of wire fraud and was sentenced to 48 months in prison on January 7, 2014.1

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 (FBI), New York Field Office.

“Thomas Bannon claimed to be a money manager who had access to millions of dollars. In reality, Bannon was a con man and the only access he had was to the phony bank documents that he used to perpetrate this bold fraud,” stated United States Attorney Lynch. “This Office is unrelenting in its commitment to bring to justice those who seek to defraud unsuspecting investors through lies and deceit.” Ms. Lynch expressed her appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation.

Bannon falsely represented to the victim entrepreneur that Overseas Investors collaborated with hedge funds and wealthy investors who were willing, in exchange for a substantial fee, to “lease” funds and set up bank accounts in its clients’ names that contained the leased funds. Based on this and other misrepresentations, Bannon and his co-conspirators induced the victim to invest $5 million in order to “lease” a credit line of $100 million, which in turn would enable them to generate millions of dollars in profit through special investment programs. In furtherance of that scheme, Bannon and his co-conspirators falsely represented that the victim’s funds would be held in an attorney escrow account pending confirmation of the posting of $100 million in the leased-funds account. In fact, Bannon and his co-conspirators simply distributed the victim’s $5 million among themselves and falsely represented that a $100 million account had been created at HSBC by sending the victim fabricated bank documents on HSBC letterhead.

When the victim discovered that the bank documents on HSBC letterhead were phony, he requested a refund of the $5 million that he had deposited into the attorney escrow account. In response, Bannon and his co-conspirators told the victim that the money had been disbursed to the investors who created the $100 million account. In particular, Bannon concealed from the victim the fact that he had requested and received $600,000 of the escrowed funds prior to the issuance of the fabricated HSBC documents.

The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes and Marcia M. Henry.

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:

THOMAS BANNON

Age: 82

Residence: New York, New York

E.D.N.Y. Docket No. 12-CR-471

_________________________________________________________________________

1 The case against co-defendant Robert Bardey is pending and scheduled for trial. The charges against Bardey are merely allegations, and he is presumed innocent unless and until proven guilty.

Earlier today, following a two-week trial, a federal jury in Brooklyn, New York, returned a guilty verdict against former New York City Police Officer Jose Tejada on charges of armed robbery conspiracy and narcotics distribution conspiracy. Tejada was a 17-year veteran of the New York City Police Department (NYPD) who, at the time of the robberies, was assigned to the 28th Precinct in Harlem. These charges arose out of the defendant’s commission of multiple robberies and attempted robberies in Queens, Manhattan, and the Bronx in 2006 and 2007, some of which he committed while on duty and in uniform. When sentenced by United States District Judge John Gleeson, the defendant faces a maximum sentence of 80 years’ imprisonment.

The defendant was previously convicted in November 2013, following a jury trial, of two counts of obstruction of justice for his role in helping other members of his robbery crew avoid arrest.

The verdict 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 Division, and William J. Bratton, Commissioner of the New York City Police Department.

“Tejada dishonored his badge and his uniform when he crossed the line from cop to robber. Tejada and his crew targeted drug dealers, not to bring them to justice, but to steal their narcotics for their own profit. In the process, innocent citizens were terrorized and threatened,” stated United States Attorney Lynch. “We will continue to prosecute aggressively law enforcement officers who abuse their authority and violate the law.” Ms. Lynch expressed her thanks to the New York Drug Enforcement Task Force – comprising DEA special agents, NYPD officers, and New York State Police investigators – and the NYPD’s Internal Affairs Division, Police Impersonation Investigation Unit, which jointly led the investigation.

The evidence presented at trial showed that Tejada participated in multiple armed robberies and attempted robberies, which netted thousands of dollars in cash and multiple kilograms of cocaine.

During an attempted robbery on Schley Avenue in the Bronx, Tejada, while on duty and in uniform, used his status as a police officer to demand and gain access to a private residence. The robbery crew mistakenly believed the residents to be drug dealers. In fact, the residents were a family of three, including a teenager, who had no involvement in drug dealing. Tejada and two others unsuccessfully searched the premises for drugs, while Tejada brandished his service weapon to intimidate the innocent family and attempted to handcuff a victim.

In a robbery on Broadway in Upper Manhattan, Tejada, NYPD officer Jorge Arbaje-Diaz, and NYPD Auxiliary officer Yvan Tineo pulled over a car, handcuffed the driver, and stole five kilograms of cocaine hidden inside the car. In another robbery on Seaman Avenue in Upper Manhattan, Tejada and Tineo robbed a drug supplier of three kilograms of cocaine at gunpoint.

In an incident at John F. Kennedy International Airport in Queens, Tejada, Arbaje-Diaz, and Tineo staged the arrest of a corrupt airline employee who was part of a scheme to smuggle narcotics into the United States through incoming commercial flights. The corrupt airline employee wanted Tejada and others to pretend to arrest him at the arrivals terminal while he delivered a drug shipment to his confederates. This staged arrest yielded Tejada, Arbagje-Diaz, and Tineo at least five kilograms of cocaine.

The evidence at trial also showed that Tejada supplied members of the robbery crew with police equipment and paraphernalia to enable them to impersonate police officers.

In the November 2013 trial, the evidence showed that Tejada searched law enforcement databases to determine whether there were outstanding warrants for his own arrest, as well as for the arrest of other members of the robbery crew. Tejada then shared that information with his confederates in an effort to assist them in evading arrest.

Tejada’s conviction is the most recent of dozens of convictions in a set of interlocking cases brought in the Eastern District of New York against the members of violent drug robbery crews who impersonated police officers and frequently committed robberies with real officers. Tejada is the third NYPD officer to be convicted in these cases; two NYPD Auxiliary officers have been convicted as well. In total, 52 defendants have been convicted.

The government’s case is being prosecuted by Assistant United States Attorneys Alexander A. Solomon, Douglas M. Pravda, and Kenji M. Price.

The Defendant:

JOSE FELIX TEJADA

Age: 46

Mahopac, New York

E.D.N.Y. Docket No. 08-CR-242 (JG)

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1 Arbaje-Diaz was previously convicted of robbery conspiracy and narcotics distribution conspiracy, and was sentenced to 20 years’ imprisonment. Tineo was previously convicted of robbery conspiracy, narcotics distribution conspiracy, and unlawful use of a firearm, and is awaiting sentencing.

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Gabriel Gabella, a former client of the Swiss bank UBS AG, pleaded guilty today at the federal courthouse in Brooklyn, New York, to a felony information charging him with concealing ownership of his Swiss UBS AG bank account from the United States by willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR). When sentenced, Gabella faces a statutory maximum of five years’ incarceration for his crime. In the plea agreement he entered today, Gabella agreed to pay a civil penalty of $3,140,346, which is half the value of his unreported Swiss bank account in 2007, for the willful failure to file the FBAR. Gabella also agreed to make restitution of $239,012 to the Internal Revenue Service for federal income taxes he failed to pay for 2005, 2006 and 2007 by hiding his ownership of his UBS account.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Tamara W. Ashford, Acting Assistant Attorney General for the Justice Department’s Tax Division, and Shantelle P. Kitchen, Acting Special Agent-in-Charge, Internal Revenue Service - Criminal Investigation, New York.

As described in the information, United States citizens or residents with a financial interest in, or signatory authority over, a foreign financial account worth more than $10,000 in a particular year, must file a FBAR report with the Department of the Treasury disclosing such an account by June 30 of the following year.

“Those who willfully conceal assets abroad will be investigated and prosecuted, and those convicted of such conduct will not only face imprisonment but significant financial penalties as well,” stated United States Attorney Lynch.

IRS Special Agent-in-Charge Kitchen stated, “Offshore tax enforcement remains a top priority for the Internal Revenue Service and we continue to gain access to more and more information about individuals who hide money in bank accounts outside of the United States. Individuals who choose to conceal assets offshore expose themselves to a variety of criminal charges and severe penalties when they fail to notify the government about their foreign bank accounts or report the income from them.”

The guilty plea proceedings were held before United States Magistrate Judge James Orenstein.

This case was prosecuted by Assistant United States Attorney Michael Warren and

Senior Litigation Counsel Mark Daly of the Justice Department’s Tax Division.

The Defendant:

GABRIEL GABELLA

Age: 73

Residence: Manhattan

E.D.N.Y. Docket No. 14-CR-207 (JBW)

Earlier today, Barry Stephen Zornberg pleaded guilty at the federal courthouse in Central Islip, New York, to lying to federal investigators about his role in a million dollar foreclosure rescue fraud scheme. The scheme ensnared at least ten families, defrauding them of approximately $1.3 million in home equity and caused some of them to lose their homes. Zornberg faces up to five years of imprisonment. As a part of the plea agreement, Zornberg has agreed to pay a total of $1,261,149.50 to the victims of the foreclosure rescue fraud scheme.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director-in-Charge, New York Field Office Criminal Division, Federal Bureau of Investigation (FBI); and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the United States Postal Inspection Service (USPIS).

“The defendant, a disbarred attorney, has now admitted to a judge that he lied to federal investigators about the role that he played in this fraud scheme, which took advantage of people who were looking to save their homes from foreclosure. A license to practice law is not a license to steal or lie,” stated United States Attorney Lynch. “We are committed to protecting our communities from the abuses of fraud. I would like to thank our partners at the Federal Bureau of Investigation and the United States Postal Inspection Service for their hard work on this important investigation.”

The foreclosure rescue fraud was perpetrated out of Empire Property Solutions, LLC (AEmpire@) in Bethpage, New York. Empire held itself out to be a home foreclosure rescue specialist operated by John Rutigliano and Kenneth Kiefer. On November 4, 2011, a federal grand jury returned an indictment charging Rutigliano and Kiefer with conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349, and two counts of wire fraud, in violation of Title 18, United States Code, Section 1343. Rutigliano and Kiefer encouraged distressed homeowners to “refinance” their homes with Empire, when, in reality, the homeowner victims were tricked into transferring title in their homes to straw buyers and paying large fees to Empire. Zornberg conducted real estate closings and provided other legal services to Empire. Rutigliano and Kiefer used the escrow accounts of Zornberg’s law firm to hold and transfer funds during the scheme. Zornberg falsely told federal investigators that he advised the victims to not participate in the scheme when, in fact, he encouraged the victims to sign over their homes to Rutigliano and Kiefer, thereby losing title to their homes. Kiefer has since pleaded guilty to the charges.1

The guilty plea proceeding took place before United States Magistrate Judge William D. Wall.

The defendant’s sentencing has not yet been scheduled.

The government’s case is being prosecuted by Assistant United States Attorney Christopher A. Ott.

The Defendants:

BARRY STEPHEN ZORNBERG

Age: 54

Hauppauge, New York

_________________________________________________________________________

1 Rutigliano died while the charges were still pending.

Earlier today, Rex Maralit, a New York City Police Officer previously assigned to police headquarters in Manhattan, and his brother Wilfredo Maralit, a Customs and Border Protection Officer previously assigned to Los Angeles International Airport, pleaded guilty in Brooklyn federal court to violating the Arms Export Control Act. The two men were charged in connection with their respective roles in the export of high-powered weapons from the United States to the Philippines, without a license from the U.S. State Department.

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, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York; Craig W. Rupert, Special Agent-in-Charge of the Defense Criminal Investigative Service (DCIS), Northeast Field Office; Thomas J. Cannon, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), New York Field Division; and William J. Bratton, Commissioner, New York City Police Department (NYPD).

According to court filings and statements at today’s proceedings, between January 2009 and September 2013, the defendants engaged in a scheme to smuggle high-powered assault rifles, sniper rifles, pistols, and firearm accessories, such as high-capacity magazines, from the United States to the Philippines, where they were sold to overseas customers. Both of the defendants who pleaded guilty today are American law enforcement officers, who brazenly used their credentials and status to obtain extremely dangerous weapons and ship the weapons for export and resale, as well as to obtain discounts on various weapons from U.S.-based gun dealers. The firearms that the defendants illegally exported and sold included the Barrett M82A1 .50 caliber semi-automatic long range sniper rifle, the FN “SCAR” assault rifle, and the FN Herstal 5.7mm semi-automatic pistol. Many of the weapons the defendants exported are specifically designed to penetrate both hard and soft body armor.

The Arms Export Control Act requires exporters of firearms to first obtain the approval of the State Department before shipping weapons overseas. The United States Munitions List requires export licenses for firearms such as the military-style assault rifles, sniper rifles, and semi-automatic handguns exported by the defendants. Similarly, dealing in firearms is regulated by the ATF, which requires gun dealers to first obtain a federal firearms license before engaging in such a business.

“Today a New York Police Officer and a Customs and Border Protection Officer admitted their involvement in a serious federal crime. This is a sad day for American law enforcement. But make no mistake: the laws that are designed to regulate the trafficking of dangerous weapons apply with equal force to anyone who would dare to ignore them,” stated U.S. Attorney Lynch. “Criminal conduct by police officers, federal agents, and their confederates is intolerable. I commend our law enforcement partners who brought these men to justice though their diligence and professionalism.” Ms. Lynch expressed her grateful appreciation to HSI, DCIS, ATF, and the NYPD’s Internal Affairs Bureau, which worked closely together to investigate the case, and to the U.S. Attorney’s Offices for the Central District of California and the District of New Jersey for their assistance.

When sentenced on October 16, 2014, by the Hon. Allyne R. Ross, the defendants each face up to 20 years in prison, forfeiture, and a fine of up to $1,000,000.

The government’s case is being prosecuted by Assistant United States Attorneys Seth DuCharme and Sam Nitze, with assistance from Trial Attorney David Recker of the Department of Justice Counterespionage Section.

The Defendants:

REX G. MARALIT

Lawrenceville, New Jersey

Age: 45

WILFREDO MARALIT

Garden Grove, California

Age: 49

A five-count indictment was unsealed this morning in federal court charging James M. Peister, a fund manager who resides in St. James, New York, with securities, wire and mail fraud in connection with his operation of a $17 million Ponzi scheme. The defendant is in custody and will be arraigned this afternoon before United States District Judge Joseph F. Bianco at the United States Courthouse in Central Islip, New York. In addition, the government seized the defendant’s Hummer sport utility vehicle and seeks to forfeit the home in St. James, New York, he paid for with the victims’ investments.

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 the indictment and other court filings, between January 2000 and June 2009, Peister raised more than $17 million from at least 74 investors in connection with an investment fund that he managed. He had assured those investors that their money would be invested safely in a variety of securities, including stocks, futures and fixed income instruments. Instead of investing the money as he had promised, Peister misappropriated the money to run a Ponzi scheme. Among other things, he used the investors’ money to pay millions of dollars in redemptions to his victim investors to keep the Ponzi scheme afloat and to purchase luxury items such as an expensive estate in St. James and a Hummer luxury vehicle. To avoid detection and continue the scheme, Peister sent phony account statements to investors that falsely showed that their funds were invested and performing well. Additionally, Peister submitted bogus financial statements to the investment fund’s independent auditor, causing the auditor to overstate the value and profits of the investment fund to the victim investors. As a result, investors believed that the funds were performing satisfactorily, and they continued to invest their money with Peister. Peister’s Ponzi scheme collapsed in the wake of the financial crisis in 2008, when he could no longer keep up with demands for redemptions from nervous investors.

“As alleged, Peister preyed upon innocent investors to construct his house of cards. But that house collapsed under the weight of his lies,” stated United States Attorney Lynch. “Peister promised investors that he would invest their money safely and responsibly. Instead, he stole their money to finance his personal life style. Now, he will be held to account for his crimes. This Office will aggressively investigate and prosecute those who commit financial crimes and victimize investors.” Ms. Lynch expressed her grateful appreciation to the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission for their cooperation and assistance in the investigation.

FBI Assistant Director-in-Charge Venizelos stated, “As alleged, for years Peister swindled and conned innocent investors out of their hard-earned money to support his lavish lifestyle. He made false representations about the success of the investment fund to keep the financial scheme afloat and unsuspecting investors at bay. His actions serve as an example of the unconscionable greed that fuels these all too common fraud cases. The FBI is committed to investigating those who prey upon trusting individuals for their own personal gain.”

The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment on each of the securities fraud, wire fraud and mail fraud counts. Additionally, if convicted, Peister may be fined up to $5,000,000 for the securities fraud count and $250,000 for each of the wire and mail fraud counts.

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

This prosecution was the result of efforts by President Barack 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, investigator 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:

JAMES M. PEISTER

Age: 62

St. James, New York

STATESBORO, GA – Earlier today, Aubrey Lee Price, 47, pleaded guilty to bank, securities and wire fraud to resolve charges brought in the Southern District of Georgia and the Eastern District of New York relating to a multi-million dollar fraud scheme that Price executed to defraud dozens of investors and a federally insured bank. Based upon his guilty pleas, Price now faces up to 30 years in prison, millions of dollars in fines, and millions of dollars in restitution to the victims of his fraud. Today’s guilty plea took place before the Honorable B. Avant Edenfield, Senior United States District Judge for the Southern District of Georgia.

Southern District of Georgia United States Attorney Edward J. Tarver and Eastern District of New York United States Attorney Loretta E. Lynch announced the guilty pleas.

According to court filings and evidence presented at the guilty plea hearing, in 2010, an investment group controlled by Price invested approximately $10 million in the failing Montgomery Bank & Trust (“MB&T”), an FDIC-insured financial institution in Ailey, Georgia. Price was then made a director of MB&T and put in charge of investing the bank’s capital. Price told MB&T officials that he would invest the bank’s capital in U. S. Treasury securities, but instead, over the next eighteen months, Price embezzled over $21 million in capital from MB&T, and lost much of it by investing in risky equity securities and options. To cover up his fraud, Price provided MB&T officials with bogus account statements and other false documents which falsely indicated the bank’s capital was safely held in an account at a financial services firm, when in truth, most of the money was gone.

A further investigation of Price revealed that between June 2009 and June 2012, Price also defrauded numerous individuals who had invested in two investment funds Price managed, PFG LLC (“PFG”) and the Montgomery Growth Fund (“Montgomery Growth”). Price raised approximately $51 million from approximately 115 investors from across the country, and unsuccessfully invested funds in various equity securities, options, and real estate, including farms in South America. To cover up his losses, Price posted fake account statements on a secure PFG web site that fraudulently reflected fictitious assets and fabricated investment returns.

In mid-June 2012, Price sent acquaintances “suicide letters” in which he admitted he had defrauded MB&T Bank and his PFG investors, and suggested that he planned to kill himself by throwing himself off a high-speed ferry boat after it left the coast of Florida. As a result of the suicide claim, the United States Coast Guard searched to no avail for Price’s body. Shortly after sending the letters, Price disappeared. After a several-month search, on December 31, 2013, Price was arrested after he presented a false identification to a member of the Glynn County Georgia Sheriff’s Department office during a routine traffic stop in Brunswick, Georgia.

U. S. Attorneys Tarver and Lynch credited the Federal Bureau of Investigation (FBI) in Georgia, under the direction of Special Agent in Charge Britt Johnson, and in New York, under the direction of Assistant Director in Charge George Venizelos, with the investigation leading to today’s guilty pleas. They also thanked the United States Attorney’s Office for the Southern District of Florida; the United States Attorney’s Office for the Northern District of Georgia; the Securities and Exchange Commission (SEC), Atlanta Regional Office; the Federal Deposit Insurance Corporation (FDIC); the Federal Reserve Board; the Office of Inspector General; the United States Coast Guard; the United States Department of Labor; the Lowndes County Georgia Sheriff’s Department; the Glynn County Georgia Sheriff’s Department; the Toombs County Georgia Sheriff’s Department; and the Marion County Florida Sheriff’s Department for their cooperation and assistance in the investigation and prosecution of Price.

The Government is represented by Assistant United States Attorneys Brian T. Rafferty, T. Shane Mayes, and First Assistant United States Attorney James D. Durham of the U. S. Attorney’s Office for the Southern District of Georgia, and Assistant United States Attorneys Shannon C. Jones and Brian Morris of the U. S. Attorney’s Office for the Eastern District of New York.

This prosecution was the result of efforts by President Barack 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. For more information on the task force, visit http://www.StopFraud.gov.

The Defendant:

AUBREY LEE PRICE

Age: 47

Valdosta, Georgia

S.D.G.A. Docket No. 612-CR-10

E.D.N.Y. Docket No. 13-CR-058

Earlier today, Victor Gordon was sentenced before Judge Kiyo A. Matsumoto in U.S. District Court in Brooklyn, New York, to 30 months’ imprisonment, to be followed by 2 years of supervised release, for smuggling elephant ivory into the United States. As part of that sentence, the court ordered Gordon to pay a fine of $7,500 and to forfeit $150,000, along with the approximately one ton of elephant ivory that was seized by agents from Gordon’s Philadelphia store in April 2009.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Honora Gordon, Special Agent in Charge of the U.S. Fish and Wildlife Service’s Northeast Region Office of Law Enforcement.

“The illicit trade in elephant ivory has created an environmental crisis in Africa and is fueling the development of organized criminal groups around the world,” said United States Attorney Lynch. “For this reason, the United States has committed itself, through international treaties and domestic law, to preventing the flow of illegal ivory through and within our borders. This prosecution – which resulted in the seizure and forfeiture of one of the largest known caches of illegal elephant ivory in the United States and the imprisonment of the person who acquired and attempted to profit from it – is emblematic of that commitment.” Ms. Lynch commended the agents and inspectors of the Fish and Wildlife Service for their outstanding efforts in leading the investigation.

As is described in the government’s sentencing memorandum, over a period of at least nine years, the Gordon acquired more than 400 pieces of carved elephant ivory, valued at approximately $800,000. On four occasions beginning in 2006, Gordon paid a smuggler to acquire ivory directly from Africa and then unlawfully secret it into the United States through John F. Kennedy International Airport. In some instances, Gordon stained the ivory and directed the smuggler to create false receipts in order to make it appear that the ivory had been lawfully acquired before international and U.S. law imposed strict regulations on the importation of elephant ivory in 1989. Over the years, Gordon sold tens of thousands of dollars of carved ivory to customers from his Philadelphia store, and prior to the search of the store in April 2009, was attempting to sell his business, including the ivory collection, for $20 million.

Gordon’s sentence caps an eight-year investigation that has yielded nine convictions in this district for smuggling and Lacey Act offenses relating to the illegal importation and sale of elephant ivory.

The government’s case was prosecuted by Assistant United States Attorneys Darren A. LaVerne and Claire Kedeshian.

The Defendant:

Victor Gordon

Age: 71

Penn Valley, Pennsylvania

E.D.N.Y. Docket No. CR-11-517 (KAM)

Earlier today at the federal courthouse in Brooklyn, Bartolomeo Vernace, a member of the administration of the Gambino organized crime family of La Cosa Nostra (the “Gambino family”), was sentenced to life imprisonment without parole plus ten years. On April 17, 2013, following a five-week jury trial before the Hon. Sandra L. Townes, Vernace was found guilty of a racketeering conspiracy spanning 1978 through 2011. The jury found that Vernace participated in all nine racketeering acts alleged as part of the conspiracy, including the 1981 double homicide of Richard Godkin and John D’Agnese, heroin trafficking, robbery, loansharking, and illegal gambling.

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 more than four decades, the defendant dedicated his life to committing crimes for the mafia. He rose through the ranks to become a powerful Gambino family leader by making money from crime and committing brutal acts of violence, including the 1981 murders of two innocent bar owners over a spilled drink. Though they were taken from their families long ago, Richard Godkin and John D’Agnese – two businessmen who also ran the local Boys’ Club – have not been forgotten,” stated United States Attorney Lynch. “We hope the victims’ families are able to take some measure of comfort from the fact that, with this life sentence, one of the killers has now been brought to justice.” Ms. Lynch expressed her grateful appreciation to the FBI, the agency that led the government’s investigation.

“After more than 33 years evading justice, Bartolomeo “Bobby Glasses” Vernace can hide no more. Vernace made a life of being a key player in the Gambino crime family where his activities led to his convictions for heroin trafficking, robbery, loansharking, gambling, firearms, as well the vicious double murder. Today’s life sentence ensures the rest of Bobby Glasses’s life will only be seen inside of a federal facility,” stated FBI Assistant Director-in-Charge Venizelos.

The evidence at trial established that Vernace, known by various aliases including “Bobby Glasses,” had a long career in the mafia that began in the early 1970s and culminated in his rise to the rank of a captain who served on the three-member ruling panel overseeing the Gambino family. Vernace was arrested on January 20, 2011, as part of a national sweep of almost 100 members and associates of organized crime led by the U.S. Department of Justice and Federal Bureau of Investigation.

Among the crimes he committed for the mafia, Vernace, together with two Gambino family associates, murdered Richard Godkin and John D’Agnese in the Shamrock Bar in the Woodhaven neighborhood of Queens on April 11, 1981, after a dispute arose between a Gambino family associate and others in the bar over a spilled drink. The associate left the bar and picked up Vernace and a third accomplice at a nearby social club. A short time later, the three men entered the bar and gunned down Godkin and D’Agnese – the owners of the bar – as the bar’s patrons fled for cover.

In the weeks after the murders, Vernace went into hiding. He did not reemerge until years later when, having successfully avoided state charges for the murders, Vernace returned to Queens and to an active role in the Gambino family. Over the next two decades, his power within the mafia grew, as he operated a large and profitable crew from a café on Cooper Avenue in the Glendale neighborhood of Queens.

In 1998, Vernace was charged in Queens County Supreme Court with the Godkin and D’Agnese murders, but was acquitted after trial in 2002. During testimony in the federal trial in 2013, an eyewitness to the murders testified that he had lied during the state trial about Vernace’s role in the murders out of fear of retribution. The eyewitness testified in the federal case that he recognized all three assailants but that he had been afraid to testify against them because, in his words, “two men were dead over a spilled drink. I think that was reason enough to be afraid.”

The government’s case was prosecuted by Assistant United States Attorneys Evan M. Norris, Amir H. Toossi, M. Kristin Mace, and Claire S. Kedeshian.

The Defendant:

BARTOLOMEO VERNACE

Age: 65

E.D.N.Y. Docket No. 11-CR-005 (SLT)

A criminal complaint was unsealed today in federal court in the Eastern District of New York charging Dr. Michael Randall with illegal distribution of thousands of prescription pain pills, including oxycodone, oxymorphone, methadone, and carisoprodol. Randall surrendered earlier today, and his initial appearance is scheduled for this afternoon before United States Magistrate Judge A. Kathleen Tomlinson at the United States Courthouse, 100 Federal Plaza, Central Islip, New York.

The charges were 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, New York (DEA), and Tom F. O’Donnell, Special Agent-in-Charge, U.S. Department of Human Services, Office of Inspector General, New York Region (HHS-OIG).

This morning, as part of a continuing federal and state prescription drug abuse initiative within the Eastern District of New York, Randall was arrested upon his surrender to members of a DEA Tactical Diversion Squad1 on charges of illegally distributing prescription pain pills between January 2009 and September 2013. According to the complaint, Randall, whose family medical practice, Middle Country Family Medical, P.C., is located in Centereach, New York, wrote hundreds of prescriptions for oxycodone, oxymorphone, methadone, and carisoprodol to patients on a continuing basis outside the usual course of professional practice and not for any legitimate medical purpose.

“By prescribing thousands of highly addictive pain pills without a legitimate medical purpose, Dr. Randall ignored the law and his own patients’ well-being,” stated United States Attorney Lynch. “We are committed to vigorous prosecution of doctors who abdicate their Hippocratic Oath, participate in the illegal distribution of prescription drugs, and contribute to the rise of drug abuse and addiction in our communities.” Ms. Lynch expressed her grateful appreciation to each of the agencies that participated in the government’s investigation.

DEA Acting Special Agent-in-Charge Hunt stated, “The adverse consequences of prescription drug abuse like theft, threats of violence, opiate addiction, and overdose deaths throughout America are growing in numbers. And today’s arrest of Dr. Randall shows law enforcement’s commitment to fighting the spread of opiate use and abuse by identifying and arresting those who, as alleged in the complaint, are responsible for supplying and distributing illegally prescribed medication.”

“The U.S. Department of Health and Human Services, Office of Inspector General, will continue to investigate physicians that illegally distribute narcotics like common drug dealers,” said HHS-OIG Special Agent-in-Charge O’Donnell. “Along with our law enforcement partners, today’s arrest reaffirms our commitment to protecting public safety, as well as the federally funded health care programs intended for the nation’s most vulnerable Americans.”

The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty. If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment and a $1 million fine.

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

The government’s case is being prosecuted by Assistant United States Attorney Charles N. Rose.

The Defendant:

MICHAEL RANDALL

Age: 47

South Setauket, New York

E.D.N.Y. Docket No. 14-MJ-464

_____________________________________________________________________________

1 The Tactical Diversion Squad comprises DEA agents and law enforcement officers with the Nassau County Police Department, the New York State Police, the Port Washington Police Department, and the Rockville Centre Police Department

NEWARK, N.J. B Three former longshoremen admitted today that they conspired to extort others in Local 1235 of the International Longshoremen’s Association (ILA) for Christmastime tribute payments, New Jersey U.S. Attorney Paul J. Fishman and Eastern District of New York U.S. Attorney Loretta E. Lynch announced.

Salvatore LaGrasso, 58, of Edison, N.J.; Michael Nicolosi, 45, of Staten Island, N.Y.; and Julio Porrao, 71, of Palm Coast, Fla. – all former supervisors on the New Jersey piers – pleaded guilty today to conspiring to extort Christmastime tributes from the union members – count three of the second superseding indictment against them. LaGrasso, Nicolosi and Porrao entered their guilty pleas before U.S. District Judge Claire C. Cecchi in Newark federal court.

According to documents filed in this case and statements made in court:

During their guilty plea proceedings, LaGrasso, Nicolosi and Porrao admitted that they conspired with each other and others to compel tribute payments from ILA union members, who made the payments based on actual and threatened force, violence and fear. The timing of the extortions typically coincided with the receipt by certain ILA members of “Container Royalty Fund” checks, a form of year-end compensation. LaGrasso and Nicolosi were suspended from their positions following their arrests in this case. Porrao had already retired from his employment on the New Jersey piers at the time of his arrest.

Charges are still pending against five defendants in the superseding indictment, including a racketeering conspiracy charge against Stephen Depiro, 58, of Kenilworth, N.J. – a soldier in the Genovese organized crime family of La Cosa Nostra (Genovese family). Since at least 2005, Depiro has managed the Genovese family’s control over the New Jersey waterfront – including the nearly three-decades-long extortion of port workers in ILA Local 1, ILA Local 1235 and ILA Local 1478. Members of the Genovese family, including Depiro, are charged with conspiring to collect tribute payments from New Jersey port workers at Christmastime each year through their corrupt influence over union officials, including the last three presidents of Local 1235.

The charge to which LaGrasso, Nicolosi, and Porrao pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled for Sept. 17, 2014, for LaGrasso and Nicolosi and for Sept. 24, 2014, for Porrao.

U.S. Attorneys Fishman and Lynch credited the FBI in New Jersey, under the direction of Special Agent in Charge Aaron T. Ford, and in New York, under the direction of Assistant Director in Charge George Venizelos, as well as the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Acting Special Agent in Charge Cheryl Garcia, with the investigation leading to today’s guilty pleas.

The government is represented by Assistant U.S. Attorney Jacquelyn M. Kasulis of the U.S. Attorney’s Office, Eastern District of New York, and Assistant U.S. Attorney Anthony Mahajan, of the U.S. Attorney’s Office, District of New Jersey.

The charges and allegations against the remaining defendants are merely accusations and they are considered innocent unless and until proven guilty.

14-184 ###

Defense counsel: Peter Till Esq., Springfield, N.J.

Arthur L. Aidala Esq., Brooklyn, N.Y.

Erik Hassing Esq., Flanders, N.J.

Earlier today at the federal courthouse in Brooklyn, NY, Jeffrey Shalhoub was sentenced to 36 months’ imprisonment in connection with his operation of a $300,000 Ponzi scheme. Shalhoub solicited investors to invest money into his company, The 9 Group, Ltd., by telling them they would receive profits of up to 10% of their principal every week through investments in the commodity market. However, Shalhoub never held the required license to operate a commodities trading pool and, after receiving $300,000 from investors, Shalhoub embezzled over $150,000 and lost the remainder through bad investments. He concealed the theft and losses with fraudulent account statements showing that his investors’ accounts were earning returns of up to 5.2% each week. To perpetuate the fraud, Shalhoub used the money of new investors to pay off earlier investors.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Philip R. Bartlett, Inspector in Charge, United States Postal Inspection Service, New York.

“Shalhoub lured his victims in with promises of high returns from a business investment. All they got, however, were false promises and phony documents, as he used lies and deception to steal the money entrusted to him,” Ms. Lynch said. “While there may be no risk-free investment, all investors are entitled to honesty and fidelity.”

The sentence was imposed by the Hon. Sterling Johnson, Jr. As part of the sentence, Judge Johnson ordered Shalhoub to pay restitution of over $240,000.

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 Tyler Smith.

The Defendant:

JEFFREY SHALHOUB

Age: 38

Residence: Staten Island, New York

E.D.N.Y. Docket No. 13-CR-434 (SJ)

http://gotham-magazine.com/personalities/articles/50-most-powerful-women-in-new-york

Earlier today, Samuel Granados-Hernandez was sentenced before Judge Kiyo A. Matsumoto in U.S. District Court in Brooklyn, New York, to 15 years’ imprisonment, to be followed by five years of supervised release, for his involvement in sex trafficking.

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 took advantage of young women who were seeking a better life, tricking them into trusting him and then forcing them into sexual slavery. He also used violence to achieve his ends, including forcing one of his victims to have an abortion when she became pregnant,” stated United States Attorney Lynch. “This sentence sends a message to would-be traffickers that we will not tolerate trafficking of women and girls, and we stand firm in our commitment to eradicate human trafficking.” Ms. Lynch extended her grateful appreciation to the organizations that provided services and advocacy to the victims in this case, including Sanctuary for Families, Safe Horizon, My Sister’s Place, and the law firm of Steptoe & Johnson.

On July 24, 2012, Granados-Hernandez pled guilty to a superseding information charging that between October 2000 and April 2011, he smuggled three victims from Mexico illegally into the United States and forced each of them to engage in prostitution. Granados-Hernandez, who kept the prostitution proceeds earned by the victims, engaged in a pattern of abuse for over a decade.

According to court documents, Granados-Hernandez smuggled each of the victims with the intent to force then into prostitution. For example, soon after he smuggled the victim identified as Jane Doe #6 to New York from Mexico in early 2010, Granados-Hernandez insisted that she work as a prostitute. When she refused, Granados-Hernandez threatened her mother who was in Mexico. As a result of continued threats, Jane Doe #6 worked for the Granados-Hernandez in multiple states through the summer of 2010.

Similarly, in 2010, Granados-Hernandez smuggled the victim identified as Jane Doe #7 into the United States under the guise of a promise of a better life. After their arrival to New York, Granados-Hernandez told her that because of a debt owed to the smugglers, she had to work as a prostitute. Shortly after she began working as a prostitute, Jane Doe #7 became pregnant. Granados-Hernandez became violent, including choking and hitting her, and forced her to have an abortion.

In May 2010, Granados-Hernandez recruited Jane Doe #8 and smuggled her into the United States shortly thereafter. Similar to his other victims, she was forced into prostitution and worked for the Granados-Hernandez as a prostitute in New York, Maryland, and Virginia until January 2011.

At the sentencing, a letter written by a fourth victim of Granados-Hernandez was read to the Court. This victim described how Granados-Hernandez was “physically, verbally and sexually abusive,” and how Granados- Hernandez “took away my youth, my innocence and my ability to trust and caused me an immeasurable amount of pain.”

Granados-Hernandez’s brother Eleuterio Granados-Hernandez and his cousin, 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. Both pleaded guilty to sex trafficking. In September 2013, Cortez-Granados was sentenced to 15 years in prison. In March 2014, Eleuterio Granados-Hernandez was sentenced to 22 years in prison. In total, six members of the Granados family have been prosecuted and convicted in the United States.

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

The Defendant:

SAMUEL GRANADOS-HERNANDEZ

Age: 33

Mexico

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

Yesterday, following more than two weeks of trial, a federal jury in Brooklyn, New York, returned guilty verdicts against Anthony Mayes Jr. and Antoine Mayes on charges of racketeering – including, against Anthony Mayes Jr., three murders as racketeering acts – as well as multiple counts based on their trafficking in crack cocaine. Earlier today, the jury also rendered a special verdict authorizing the forfeiture of almost $64,000 in cash, several firearms, and more than 500 rounds of ammunition seized from the defendants’ Queens residence.

The charges arose out of the defendants’ long-time dominance of a drug crew that operated in the East New York neighborhood of Brooklyn, New York, and in Williamston, North Carolina. When sentenced by United States District Judge Allyne R. Ross, the defendants face mandatory sentences of life imprisonment.

The verdicts 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).

Between 1998 and 2010, the Mayes brothers led a group of violent drug dealers that sold crack cocaine and was based on Ashford Street in East New York. The criminal enterprise used violence and the threat of violence to maintain its source of income. Specifically, on June 18, 1999, Anthony Mayes Jr. shot and killed David Martin at a party in East New York, in retaliation for Martin having previously stabbed Mayes. This, and other acts of violence, were well known in the community and allowed the enterprise to dominate the local drug trade. After the Martin murder, Anthony Mayes Jr. moved to Williamston, North Carolina, where, using the alias Gus Rascoe Jr., he quickly came to dominate the drug trade in that area, selling crack-cocaine that he transported from New York and elsewhere. On January 27, 2003, Anthony Mayes Jr. murdered Eric Rayshawn Keel, and on February 29, 2004, he murdered Keith Cofield, both in North Carolina. Keel was murdered for purportedly stealing drugs belonging to the Mayes brothers’ criminal enterprise. Cofield was murdered because he owed a drug-related debt to the enterprise -- his corpse was dumped into a river.

Antoine Mayes was convicted of three separate counts of attempted murder based on enterprise’s drug and turf-related disputes in Brooklyn.

“For over a decade the Mayes brothers ran a violent and lucrative drug organization that held the residents of East New York hostage, forcing them to live in fear of violence. They expanded their operation to the State of North Carolina, dominating the drug trade in one corner of that state. The organization used murder as a management tool, killing those who threatened their source of income or just their stature on the street,” stated United States Attorney Lynch. “Today, their ability to earn money through crime comes to an end, and so does their rule of the streets. This verdict sends the message that that violence and drug-dealing have no place in our communities.” Ms. Lynch extended her grateful appreciation to Federal Bureau of Investigation, New York Field Office, the New York City Police Department, the North Carolina State Bureau of Investigation, the Williamston Police Department, the Martin County Sheriff’s Office, and the Edgecombe County Sheriff’s Office for their outstanding work in this case.

The government’s case was prosecuted by Assistant United States Attorneys Berit W. Berger, Richard M. Tucker, and Alicyn Cooley.

The Defendants:

ANTHONY MAYES JR.

Age: 33

Brooklyn, New York

ANTOINE MAYES

Age: 30

Brooklyn, New York

E.D.N.Y. Docket No. 12 CR 385 (ARR)

NEWARK, N.J. B Three former International Longshoremen’s Association (ILA) union officials admitted today that they conspired to extort ILA Local 1235 longshoremen on the New Jersey piers for Christmastime tribute payments, New Jersey U.S. Attorney Paul J. Fishman and Eastern District of New York U.S. Attorney Loretta E. Lynch announced.

Vincent Aulisi, 82, of West Orange, N.J., the president of ILA Local 1235 from approximately 2006 through 2007; Thomas Leonardis, 56, of Glen Gardner, N.J., the president of the union from approximately 2008 through 2011 and former ILA representative; and Robert Ruiz, 55, of Watchung, N.J., the delegate of the union from approximately 2007 through 2010 and former ILA representative, pleaded guilty today to conspiring to extort Christmastime tributes from ILA Local 1235 members – count three of the second superseding indictment against them. Aulisi, Leonardis and Ruiz entered their guilty pleas before U.S. District Judge Claire C. Cecchi in Newark federal court.

According to documents filed in this case and statements made in court:

During their guilty plea proceedings, Aulisi, Leonardis and Ruiz admitted that they conspired with each other and others to compel tribute payments from ILA union members, who made the payments based on actual and threatened force, violence and fear. The timing of the extortions typically coincided with the receipt by certain ILA members of “Container Royalty Fund” checks, a form of year-end compensation. Leonardis and Ruiz were suspended from their positions following their arrest in January 2011. Aulisi had already retired from his employment on the New Jersey piers at the time of his arrest.

Charges are still pending against eight defendants in the superseding indictment, including a racketeering conspiracy charge against Stephen Depiro, 58, of Kenilworth, N.J. – a soldier in the Genovese organized crime family of La Cosa Nostra. Since at least 2005, Depiro has managed the Genovese family’s control over the New Jersey waterfront – including the nearly three-decades-long extortion of port workers in ILA Local 1, ILA Local 1235, and ILA Local 1478. Members of the Genovese family, including Depiro, are charged with conspiring to collect tribute payments from New Jersey port workers at Christmastime each year through their corrupt influence over union officials, including the last three presidents of Local 1235.

Two of the three remaining Genovese family associates are former union officials: Albert Cernadas, 78, of Union, N.J., the president of ILA Local 1235 from approximately 1981 to 2006 and former ILA Executive vice president; and Nunzio LaGrasso, 63, of Florham Park, N.J., the former vice president of ILA Local 1478 and former ILA Representative. The third, Richard Dehmer, 78, of Springfield, N.J., is charged with illegal gambling conduct unrelated to the waterfront extortions.

The charge to which Aulisi, Leonardis and Ruiz pleaded guilty carries a maximum potential penalty of 20 years in prison and a $250,000 fine. Sentencing is currently scheduled for Sept. 4, 2014, for Ruiz and Sept. 9, 2014, for Aulisi and Leonardis.

U.S. Attorneys Fishman and Lynch credited the FBI in New Jersey, under the direction of Special Agent in Charge Aaron T. Ford, and in New York, under the direction of Assistant Director in Charge George Venizelos, as well as the U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Acting Special Agent in Charge Cheryl Garcia, with the investigation leading to today’s guilty pleas.

The government is represented by Assistant U.S. Attorney Jacquelyn M. Kasulis of the U.S. Attorney’s Office, Eastern District of New York, and Assistant U.S. Attorney Anthony Mahajan, of the U.S. Attorney’s Office, District of New Jersey.

The charges and allegations against the remaining defendants are merely accusations and they are considered innocent unless and until proven guilty.

Defense counsel: Joseph Fusella Esq., Bloomfield, N.J.

Michael N. Pedicini Esq., Chatham, N.J.

Marc Agnifilo Esq., New York, N.Y.

BROOKLYN, NY – Earlier today, an indictment was unsealed charging Chikwere Onyekwere and Uchechi Onyekwere, registered owners and officers of purported durable medical equipment (“DME”) companies located in Brooklyn, New York, with executing a scheme to submit over $13 million in fraudulent claims to a New York-based, government-sponsored managed care organization. The defendants were arrested earlier this morning and will be presented for arraignment later today at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York, before United States Magistrate Judge Joan M. Azrack.

The charges and arrests were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, David O’Neil, Acting Assistant Attorney General of the Justice Department’s Criminal Division, George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office, and Thomas O’Donnell, Special Agent in Charge, Department of Health and Human Services-Office of Inspector General (HHS-OIG).

According to the indictment, beginning in approximately 2008 and continuing through at least the end of 2013, the defendants formed a series of sham DME companies which they used to submit fraudulent claims to the managed care organization for reimbursement for DME that was purportedly provided to the organization’s members, many of whom were elderly or disabled and had insurance through Medicare Part C Advantage Plans or New York Medicaid Managed Care plans. In an effort to make their sham companies appear legitimate, the defendants obtained Tax Identification Numbers from the Internal Revenue Service, opened bank accounts and established phony business addresses for the sham companies at UPS Store locations and other addresses where the defendants lived. The defendants also gave names to the sham companies similar to DME companies that were approved providers in the managed care organization’s network of DME providers.

As part of the scheme, the defendants placed telephone calls in which they impersonated representatives of the approved DME providers to obtain preauthorization codes from the managed care organization for claim submissions. The defendants later submitted claim forms to the managed care organization referencing the preauthorization codes but sought payment in the name of the sham companies that they set up. The DME identified in the claim forms was not provided to the members of the managed care organization, many of whom called the managed care organization to complain. As alleged in the indictment, the sham DME companies associated with the defendants submitted over $13 million in fraudulent claims and were paid over $4 million for those claims.

“As alleged, the defendants used fictitious companies and fraudulent claims to steal very real healthcare dollars,” stated United States Attorney Lynch. “The Medicare and Medicaid systems serve our most vulnerable citizens, and those who seek to steal those tax dollars will be prosecuted to the fullest extent of the law.”

“Using cutting-edge, data-driven investigative techniques, we are bringing fraudsters to justice and saving the American taxpayers billions of dollars," said Acting Assistant Attorney General David A. O'Neil of the Justice Department's Criminal Division. "Overall, since its inception, the Department of Justice’s Medicare Fraud Strike Force has charged nearly 1,900 individuals involved in approximately $6 billion of fraud. We are committed to using every tool at our disposal to prevent, deter, and prosecute health care fraud.”

“Fraud against the government is fraud against every American taxpayer. We’ll continue to root out corruption wherever we find it,” stated FBI Assistant Director in Charge Venizelos

“The Brooklyn Strike Force will continue to vigorously investigate Medicare fraud at all levels,” said HHS-OIG Special Agent-in-Charge O’Donnell. “Sham DME companies need to be eradicated and the fraudsters need to be held accountable for their actions.”

The investigation has been conducted by the FBI and HHS-OIG, brought as part of the Medicare Fraud Strike Force, and supervised by the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section. The case is being prosecuted by Trial Attorney Turner Buford of the Criminal Division’s Fraud Section and Assistant United States Attorney Peter Baldwin of the U.S. Attorney’s Office for the Eastern District of New York.

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

Since their inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, has removed over 17,000 providers from the Medicare program since 2011.

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

The Defendant:

CHIKWERE ONYEKWERE

Age: 28

Brooklyn, New York

UCHECHI ONYEKWERE

Age: 33

Queens, New York

E.D.N.Y. Docket No. 14-274

Earlier today, Adam J. Manson, 42, pleaded guilty to conspiracy to commit securities fraud for engaging in a $96 million Ponzi scheme with co-defendant and former investment fund manager Brian R. Callahan. Pursuant to his plea agreement with the government, Manson has agreed to forfeit all unsold units at the Panoramic View beachfront resort and residence development in Montauk, New York, valued in excess of $60 million, and an additional $3.9 million in criminal proceeds. When sentenced on October 3, 2014, Manson faces up to five years in prison and the payment of approximately $96 million in restitution to the victims of his fraud. Callahan pleaded guilty on April 29, 2014, to one count of securities fraud and one count of wire fraud and faces up to 40 years in prison when sentenced on August 8, 2014.

The guilty pleas 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); and Shantelle P. Kitchen, Acting Special Agent-in-Charge, United States Internal Revenue Service-Criminal Investigation, New York (IRS).

“Adam Manson assisted his brother-in-law Brian Callahan in orchestrating one of the largest Ponzi schemes in Long Island history by lying to independent auditors and lending institutions. Today’s guilty plea, together with Callahan’s guilty plea approximately two weeks ago, demonstrates this Office’s dedication and commitment to aggressively pursue those who seek to defraud the investing public through lies and deceit. We hope that the guilty pleas provide some measure of relief and closure to the defrauded investors,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the FBI, the IRS, Securities and Exchange Commission, and the British Virgin Islands Financial Investigation Agency for their cooperation and assistance in the investigation and prosecution of this case.

According to court filings and facts presented at the plea hearing, between December 2006 and February 2012, co-defendant Callahan raised more than $118 million from at least 40 investors in connection with four different investment funds that he managed. Callahan had assured those investors that their money would be invested in mutual funds, hedge funds, and other securities. Instead of investing the money as he promised, Callahan misappropriated approximately $96 million and began to operate the investment funds as a large-scale Ponzi scheme. Among other things, Callahan diverted millions of dollars towards the Panoramic View, an unprofitable 117-unit beachfront resort and residence development in Montauk, New York, which he owned with Manson. In furtherance of the scheme, Manson assisted Callahan in deceiving the independent auditors of the Callahan funds by submitting bogus promissory notes that overvalued the assets of the funds and by lying about the debts owed by the Panoramic View.

Today’s guilty plea took place before United States Magistrate Judge A. Kathleen Tomlinson.

The government’s case is being prosecuted by Assistant United States Attorneys Christopher C. Caffarone, Winston M. Paes, Brian D. Morris, and Karin K. Orenstein.

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:

ADAM J. MANSON

Age: 42

Old Westbury, New York

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

Earlier today, Sandra Hatfield, the former Chief Operating Officer of DHB Industries, Inc., was sentenced to 7 years in prison, to be followed by 3 years of supervised release, and ordered to forfeit some $1.8 million in illicit profits made during her fraudulent operation of a Long Island-based supplier of body armor to the U.S. military and law enforcement agencies. The sentence was imposed by United States District Judge Joanna Seybert in at the U.S. Courthouse 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 (FBI); and Shantelle P. Kitchen, Acting Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS).

Hatfield and her co-defendant DHB founder David H. Brooks were convicted in September 2010 on nine counts of conspiracy, insider trading, securities fraud, and obstruction of justice arising out of a $200 million fraud. Subsequently, Hatfield pleaded guilty to filing a false income tax return. The district court reserved its decision on how much Hatfield will be required to pay in restitution to the victims of her fraud. A decision is expected within 90 days.

“DHB made millions from supplying body armor to protect those who serve this country in the U.S. military and our law enforcement ranks. But, rather than honor the bravery of those who donned DHB’s products, Hatfield preyed upon investors, lied to them, and looted the company, all the while wrapping herself in the American flag,” stated United States Attorney Lynch. “And her lies did not stop there. She lied on her taxes and, when the SEC investigated, she lied to them too. Today, Hatfield was held accountable. This prosecution demonstrates my Office’s unwavering commitment to exposing and prosecuting corrupt executives.” Ms. Lynch thanked the FBI and IRS for leading the investigation and the Defense Criminal Investigative Service for its assistance in the case.

FBI Assistant Director-in-Charge Venizelos stated “Hatfield took advantage of her position as Chief Operating Officer at DHB to profit at the expense of honest and unsuspecting investors. She placed greed and entitlement above the law. Hatfield’s sentence should be a warning to those who engage in financial crimes that the consequences can be severe. We will continue to work with our law enforcement partners to investigate and present for prosecution those individuals who misuse their positions within the financial market for personal gain.”

IRS Acting Special Agent-in-Charge Kitchen stated, “The real shame is that DHB Industries provided vital products to the men and women of the U.S. military and to law enforcement, but Ms. Hatfield and Mr. Brooks used their positions in the company to satisfy their own voracious greed. Corporate officials hold positions of trust and that trust is broken when they abuse their power by committing crimes of selfishness. IRS-Criminal Investigation is committed to working with our law enforcement in vigorously investigating corporate officers who engage in financial crimes such as conspiracy, insider trading, securities fraud, and obstruction of justice, as well as tax crimes.”

During an eight-month trial, the government’s evidence proved that Hatfield and others conspired to loot DHB for personal gain. Hatfield helped her co-defendant Brooks conceal the related party status of Tactical Armor Products, a company supposedly run independently of DHB by Brooks’ wife, but in fact wholly controlled by Brooks. Through this scheme, Hatfield helped Brooks siphon more than ten million dollars from DHB to support a thoroughbred horse-racing business.

Hatfield also engaged in accounting fraud schemes designed to increase the net income and profits that DHB reported in its press releases and filings with the Securities and Exchange Commission by falsely inflating the value of DHB’s existing inventory, adding non-existent inventory to the company’s books and records, and fraudulently reclassifying expenses. Knowing that DHB’s stock price of $20 per share had been artificially-inflated through her many and varied schemes, Hatfield sold more than $5 million of DHB stock in late 2004. After those insider sales, DHB stock plummeted to pennies per share and the company was de-listed from the American Stock Exchange.

Hatfield resigned from DHB in November 2005 and Brooks was removed as DHB’s CEO in July 2006. In July 2006, DHB relocated its headquarters from Westbury, New York, to Pompano Beach, Florida, and on October 1, 2007, DHB changed its name to Point Blank Solutions, Inc. DHB stock was traded on the American Stock Exchange until trading was suspended on May 26, 2006, as the defendants’ schemes came to light

The government’s case was prosecuted by Assistant United States Attorneys Christopher Ott, Christopher Caffarone, James Knapp, Laura Mantell, Bonni Perlin, and Mary Dickman.

This prosecution was the result of efforts by President Barack 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. For more information on the task force, visit http://www.StopFraud.gov.

Lythcott Complaint
 

Earlier today, at the United States Courthouse in Brooklyn, New York, Alessandro Taloni, an alleged associate of the Montreal-based Rizzuto organized crime family of La Cosa Nostra, was sentenced to 10 years in prison, to be followed by 5 years of supervised release. In May 2013, Taloni pled guilty to cocaine trafficking charges contained in a superseding indictment returned on April 3, 2013. As part of his sentence, Taloni will also forfeit $2,663,191 that federal agents seized from multiple locations in California that Taloni used to store narcotics and drug proceeds.

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 of the Drug Enforcement Administration, New York (DEA).

“Taloni used his connections to powerful international organized crime groups to distribute deadly narcotics, worth tens of millions of dollars, across North America. His prosecution and sentence demonstrate this Office’s unrelenting commitment to swiftly pursuing and prosecuting transnational organized crime beyond state and national borders,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Drug Enforcement Administration, the Anaheim Police Department, and the Beverly Hills Police Department for their work on the case. Ms. Lynch also expressed her appreciation to the Laval Police Service for their invaluable assistance during this multi-year international investigation.

DEA Acting Special Agent-in-Charge Hunt stated, “This sentencing is the end result of international, federal, local and state law enforcement’s collaboration. Law enforcement’s effort to thwart organized crime led to identifying Taloni and his associates’ international drug network that facilitated the Sinaloa Cartel’s cocaine distribution network in the United States.”

Taloni and 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 narcotics and money laundering offenses in connection 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. Taloni was personally sent from Montreal to Los Angeles, California, to receive those drug proceeds and to purchase cocaine from the Mexican sources and export cocaine to Canada.

During the course of the government's investigation, federal agents seized approximately $1 million in drug proceeds and 49 kilograms of cocaine from searches of Taloni's Mercedes Benz sedan, Beverly Hills residence, and a stash house operated by Taloni in Beverly Hills. Search warrants executed at other stash houses operated by the organization in the Los Angeles area resulted in the seizure of an additional 34 kilograms of cocaine and approximately $1,600,000. In total agents seized more than $10,000,000 in narcotics proceeds from the organization.

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:

ALESSANDRO TALONI

Age: 38

Earlier today, Amner A. Borukhov, also known as “Alex Amner Borukhov” and “Avner Borikhov,” was sentenced to 57 months of imprisonment to be followed by 3 years of supervised release following his plea of guilty to conspiracy to commit mail and wire fraud. Last month, his brother, Markiel Borukhov, also known as “Mark Borukhov,” was sentenced to 24 months of imprisonment to be followed by one year of supervised release following his plea guilty to conspiracy to commit mail and wire fraud. The sentences were imposed in federal court in Central Islip, New York by United States District Judge Sandra J. Feuerstein. As part of their sentences, Judge Feuerstein ordered Amner Borukhov and Markiel Borukhov to pay restitution and forfeit approximately $2.2 million and $622,000, respectively.

The sentences 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 (FBI), New York Field Office.

“The defendants conned investors who were seeking to buy precious metals by using lies and deception to steal millions of their precious investment dollars,” stated United States Attorney Lynch. “When federal law enforcement began to close in on them, the defendants felt the heat and fled to Morocco, where they hid for over a year. But they soon learned what should serve as a lesson to all criminals: you can run, you can hide, but you cannot escape justice.” Ms. Lynch expressed her grateful appreciation to Moroccan authorities for Morocco’s cooperation and assistance with the extradition and successful prosecution of this case.

FBI Assistant Director-in-Charge Venizelos stated, “Instead of running a legitimate business, the defendants stole money by marketing bogus precious metals to unwitting investors. The long arm of the law stretched all the way to Morocco as the defendants found. This is the latest example of what happens when you steal and cheat from others to get ahead.”

According to court filings and facts presented during the court proceedings, between May 2009 and January 2011, the defendants induced approximately 60 investors to give them more than $2.2 million by promising to use their money to purchase palladium and other precious metals. The defendants, however, never gave those investors the metals that they promised to purchase, nor did they return any money to those individuals. Instead, the defendants used those funds to pay their personal expenses. In furtherance of their fraudulent scheme, the defendants used aliases and falsely told prospective investors that they were in a partnership with Jim Cramer, who hosts an investment program on CNBC called Mad Money.

In early 2011, the defendants learned that they were being investigated by the FBI. As a result, they bought one-way plane tickets to Casablanca, Morocco. They lived in Morocco for approximately 14 months while the U.S. Attorney’s Office, the FBI, and the Office of International Affairs worked with Moroccan authorities to locate, arrest, and return the defendants to the United States, so that they could be prosecuted for their crimes. In May 2012, Moroccan authorities located and arrested the defendants. Months later, the defendants were returned to the United States, where they have been in custody ever since. On October 9, 2013, the defendants pleaded guilty.

The government’s case was prosecuted by Assistant United States Attorney Christopher Caffarone. The Office of International Affairs in the Department of Justice’s Criminal Division provided assistance in this case.

This prosecution was the result of efforts by President Barack 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. For more information on the task force, visit http://www.StopFraud.gov.

The Defendants:

AMNER A. BORUKHOV

Also known as “Alex Amner Borukhov” and “Avner Borikhov”

Age: 34

Residence: Great Neck, New York

MARKIEL BORUKHOV

Also known as “Mark Borukhov”

Age: 30

Residence: Brooklyn, New York

Earlier today an indictment was unsealed charging six men with carrying out a $30 million bank fraud conspiracy by fraudulently inflating the prices of homes for sale and then obtaining mortgages that far exceeded the true collateral value of properties in Nassau and Suffolk Counties. Through his mortgage banking company, defendant Aaron Wider and his co-conspirators allegedly then re-sold these “toxic” mortgages to banks and other investors in the secondary mortgage market, causing millions in losses when the loans went into foreclosure. Four of the defendants were arrested this morning and will be presented for arraignment later today at the United States Courthouse in Central Islip, New York, before United State Magistrate Judge Gary R. Brown. Of the remaining two defendants, one was taken into custody in Florida, while another is scheduled to surrender to federal agents tomorrow in Central Islip.

The indictment 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.

“The conduct charged in the indictment is a prime example of the type of corrupt mortgage-lending practices that preceded the bursting of the real estate bubble, the loss of faith in securitized mortgage obligations, and the financial collapse of 2007 and 2008,” stated United States Attorney Lynch. “Instead of using their skills in banking, the law, and investing to assist individuals pursuing the American Dream, the defendants cooked up a sophisticated scheme that defrauded lenders and then fed toxic debt to the investigating public at large in the secondary mortgage market. I would like to thank the investigators at the Nassau County District Attorney’s Office and New York State Department of Financial Services for their invaluable assistance in this investigation.”

FBI Assistant Director-in-Charge Venizelos said, “As alleged in the indictment, during the height of the real estate boom, these defendants devised a scheme to turn a profit at the expense of unsuspecting lenders, investors and members of the public. Mortgage fraud poses a threat to our financial systems and to our economy. This case should send a clear message to all individuals who try to game our financial market: you will be identified and held accountable for your criminal acts. The FBI, along with our law enforcement partners, will continue to investigate those who orchestrate and participate in various mortgage fraud schemes in order to protect the public against those who seek to damage our economy.”

According to the indictment and other court filings, between 2003 and 2008, defendant Aaron Wider operated a New York State licensed mortgage bank in Garden City, New York, called HTFC Corp., which issued residential mortgages to borrowers. HTFC did not possess assets to fund these loans, but relied on funding from other banks and financial institutions, commonly known as “warehouse lenders.” The warehouse lenders relied on Wider and HTFC to ensure that home buyers were able to pay the mortgages and that the market value of the homes fully collateralized the loans.

Instead, Wider and the co-defendants allegedly engineered a complex series of same-day sham transactions, or “flips,” to artificially-inflate the prices of homes. Then they lied to the warehouse lenders to obtain mortgage funding that was 80-percent more than the actual value of the homes. Wider and co-defendants Manjeet Bawa, John Petiton, and Joseph Ferrara contracted to buy homes in Nassau and Suffolk counties from innocent sellers at market prices. The defendants then submitted fraudulent loan applications to the warehouse lenders that nearly doubled the true sales prices of the homes. The defendants also inflated their personal assets and concealed significant liabilities to get loan approval.

At each closing, Petiton, an attorney admitted to practice in New York State, oversaw the actual sales to innocent sellers, and simultaneously created sham trusts into which title to the properties was transferred for no money. He and the coconspirators then immediately transferred title back to the co-defendants at nearly double the price to create a false paper trail documenting the artificially-inflated prices. Meanwhile, real estate appraiser Joseph Mirando prepared false appraisal reports to justify the inflated prices, while HTFC closing attorney Eric Finger concealed the far lower, true sales price for properties by lying on federal-mandated settlement forms. Finger received wire transfers of funds from the warehouse lenders, and after paying the innocent third-party sellers, disbursed the surplus money fraudulently obtained in the mortgages to his fellow co-conspirators.

HTFC sold each of its mortgages in the secondary market. On paper, the loans appeared to be attractive investments because HTFC’s mortgages carried high rates of return that were supposedly fully collateralized by the market value of homes and the assets and incomes of the borrowers, or mortgagors. Upon buying mortgages from HTFC, the secondary market bank paid off the warehouse lenders, and then either collected the principal and interest, or bundled them into mortgage-backed securities that were sold to pension funds, hedge funds, and other investors seeking relatively secure, high-yield investments. When HTFCs mortgages went into foreclosure beginning in 2007 and 2008, the secondary market investors discovered that the actual value of the collateral was 80-percent less than the amount borrowed for each home.

The charges in the indictment are merely allegations, and the defendants presumed innocent unless and until proven guilty. If convicted, the defendants face up to 30 years’ imprisonment. The indictment unsealed today also seeks to forfeit 19 residential properties traced to the bank fraud or up to $30 million in a money judgment.

The case is being prosecuted by Assistant U.S. Attorney James Miskiewicz.

The Defendants:

MANJEET BAWA

Age 46

Dix Hills, New York

JOSEPH FERRARA,

Age 70

Long Beach, New York

ERIC FINGER,

Age 48

Miami, Florida

JOSEPH MIRANDO,

Age 54

Centereach, NY

JOHN PETITON

Age 68

Garden City, New York

AARON WIDER

Age 50

Copiague, New York

Eric Jacobson, a Great Neck, New York, physician, pled guilty today in United States District Court for the Eastern District of New York, to 19 counts of the illegal distribution of the highly addictive painkiller oxycodone. When sentenced, Jacobson faces up to nine years in prison. The defendant previously relinquished his license to practice medicine.

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 Field Office, and Shantelle P. Kitchen, Acting Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York. The plea was entered before the Honorable Joseph F. Bianco at the United States Courthouse in Central Islip.

“Instead of providing needed medical services to his community, Dr. Jacobson directly contributed to the tragedy of prescription drug abuse that has swept across our district and our nation. Today’s conviction reflects our office’s continued commitment to ending the illegal distribution of prescription painkillers in our community, and should serve as a warning to those who would violate their oath as medical professionals to do no harm: if you illegally distribute prescription drugs, you will be held accountable,” stated United States Attorney Lynch. “I want to thank our partners at the DEA and the Internal Revenue Service for their outstanding work in investigating this case.”

Jacobson was arrested on June 6, 2012, as part of the Eastern District of New York’s Prescription Drug Initiative, led by the United States Attorney’s Office and the DEA, working with the Nassau County Police Department, the New York State Police, and numerous other local, state, and federal law enforcement agencies. He has been held in custody since the arrest.

The investigation revealed that, from December 2009 through June 2012, the defendant illegally distributed oxycodone to individuals he knew were either abusing or re-selling oxycodone pills to addicts. According to court filings, the defendant charged these individuals, known in the industry as “doctor-shoppers,” various amounts of money – in cash – for each prescription issued. The doctor-shoppers then either re-sold oxycodone to addicts and other users for profit or abused the pills themselves. During the execution of a federal search warrant at his office on December 1, 2011, Jacobson surrendered his DEA license authorizing him to prescribe controlled substances. Despite that surrender, Jacobson continued to engage in the illegal distribution of oxycodone by personally writing prescriptions following the surrender and then, used other healthcare professionals to continue to distribute drugs illegally. Pursuant to his plea agreement with the government, Jacobson agreed to forfeit $250,000 in money and property representing the illegal narcotics proceeds he earned as a result of his illegal distribution of oxycodone.

The Prescription Drug Initiative is a joint effort led by the United States Attorney’s Office for the Eastern District of New York, the DEA, and the five District Attorneys in Kings, Nassau, Queens, Richmond, and Suffolk Counties, working in conjunction with the New York City Police Department and the Nassau and Suffolk County Police Departments, as well as the Department of Health and Human Services, the Internal Revenue Service, New York/New Jersey HIDTA, the New York State Department of Health, and the New York State Medicaid Inspector General. The Prescription Drug Initiative is a broad and comprehensive approach to the epidemic of prescription drug trafficking and abuse, involving not only criminal investigation and prosecution at the federal, state, and local level, but also the targeted use of civil law enforcement, regulatory action, and community outreach. The Initiative has expanded information-sharing among federal and state enforcement agencies to better identify and target suspected traffickers and ensure greater use of criminal, civil, forfeiture, injunctive, and other tools.

The government’s case is being prosecuted by Assistant United States Attorneys Lara Treinis Gatz, Catherine M. Mirabile, and Kenneth Abell.

The Defendant:

ERIC JACOBSON

Age: 51

Huntington, NY

E.D.N.Y. Docket No. 12-CR-452 (S-2) (JFB)

A 73-count indictment was unsealed this morning in federal court in Central Islip, NY, charging William Scully and Shahrad Rodi Lameh – President and Vice President, respectively, of Pharmalogical, Inc., d/b/a Medical Device King in Great Neck, New York – with multiple counts of conspiracy, mail fraud, wire fraud, distribution of misbranded and counterfeit prescription drugs, trafficking in counterfeit goods, and smuggling.1 The defendants were arrested earlier today and will appear for arraignment before U.S. Magistrate Judge William D. Wall at 2 pm at the federal courthouse in Central Islip.

The arrests were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Mark Dragonetti, Special Agent-in-Charge, Food and Drug Administration, Office of Criminal Investigation, New York Field Office (“FDA OCI”).

As alleged in the indictment, the defendants operated the illegal schemes since March, 2009, and the counterfeit cancer treatment medication was sold to an oncology practice in Iowa. The defendants sold in the United States other drugs and devices including, Mirena brand intrauterine birth control implant devices (“IUDs”) manufactured in Finland that were not approved by the United States Food and Drug Administration for use in the United States. The unapproved IUDs were sold throughout the country to women's clinics and health care providers. The defendants also sold a variety of other unapproved prescription drugs during the course of the scheme and grossed over $17 million.

“As alleged, instead of seeing an opportunity to alleviate suffering and cure disease, Scully and Lameh saw a chance to make money off the backs of those already fighting for their lives, selling counterfeit cancer medication to an unsuspecting clinic. The defendants deliberately and repeatedly flouted the laws enacted to protect our citizens, all in order to flood the market with counterfeit and unapproved drugs and medical devices just so they could line their own pockets,” stated United States Attorney Lynch. "We and our law enforcement partners will vigorously pursue and prosecute those who seek to profit from the illness of others by such fraud."

FDA OCI Special Agent-in-Charge Dragonetti stated, "The FDA will remain vigilant in our efforts against those who would threaten the integrity of the prescription drug supply chain by introducing counterfeit and unapproved products for their own financial gain. We commend the work by the U.S. Attorney's Office, and together we will continue to pursue those who jeopardize the health of the public."

If convicted, each defendant faces a maximum sentence of 20 years of imprisonment, asset forfeiture of more than $17 million, and a $250,000 fine.

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

The Defendants:

Name: WILLIAM SCULLY

Age: 45

Residence: Commack, N.Y.

Name: SHAHRAD RODI LAMEH

Age: 40

Residence: Manhasset, N.Y.

___________________________________________________________________________

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

Earlier today, Brian R. Callahan, 44, pleaded guilty to one count of securities fraud and one count of wire fraud for operating a $96 million Ponzi scheme through his various offshore investment funds. Pursuant to his plea agreement with the government, Callahan has agreed to the forfeiture of $67.4 million, which includes proceeds from the sale of his former residence in Old Westbury, New York and a beachfront condominium in Westhampton, New York. When sentenced, Callahan faces up to 40 years in prison and the payment of approximately $96 million in restitution to the victims of his fraud.

The guilty plea 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); and Shantelle P. Kitchen, Acting Special Agent-in-Charge, United States Internal Revenue Service, Criminal Investigation, New York (IRS).

“Callahan used six offshore entities to perpetrate one of the largest investment frauds in Long Island history. Through lies and deceit, he misled investors and stole investor funds, including investments from a local fire department, to support a lavish lifestyle and operate a multi-million dollar Ponzi scheme. Today’s guilty plea marks the end of Callahan’s schemes and his lavish lifestyle and demonstrates this Office’s steadfast commitment to protect the investing public from fraud,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the FBI, the IRS, Securities and Exchange Commission, and the British Virgin Islands Financial Investigation Agency for their cooperation and assistance in the investigation and prosecution of this case.

According to court filings and facts presented at the plea hearing, between December 2006 and February 2012, Callahan raised more than $118 million from at least 40 investors in connection with four different investment funds that he managed. He had assured those investors that their money would be invested in mutual funds, hedge funds, and other securities. Instead of investing the money as he promised, Callahan misappropriated approximately $96 million and began to operate the investment funds as a large-scale Ponzi scheme. Among other things, Callahan diverted millions of dollars towards the Panoramic View, an unprofitable 117-unit beachfront resort and residence development in Montauk, New York, that he owned with his brother-in-law and co-defendant, Adam Manson.1 He also commingled the money from the various investment funds and used it to pay tens of millions of dollars in partial redemptions to his victim investors to keep the Ponzi scheme afloat, and to purchase luxury items such as expensive cars and homes in Old Westbury and Westhampton, New York. To avoid detection and continue the scheme, Callahan sent fake account statements to investors that falsely showed that their funds were invested and performing well, and he repeatedly lied to his investors about both the nature and status of their investments.

Today’s guilty plea took place before United States Magistrate Judge A. Kathleen Tomlinson.

The government’s case is being prosecuted by Assistant United States Attorneys Christopher C. Caffarone, Winston M. Paes, Brian D. Morris and Karin K. Orenstein.

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:

BRIAN R. CALLAHAN

Age: 44

Old Westbury, New York

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

___________________________________________________________________________

1 The charges against co-defendant Manson are merely allegations, and he is presumed innocent unless and until proven guilty.

Earlier today, Lawal Olaniyi Babafemi, a Nigerian citizen, pleaded guilty to conspiring to provide and providing material support to a designated foreign terrorist organization, al-Qaeda in the Arabian Peninsula (“AQAP”). Today’s plea took place before United States District Judge John Gleeson. At sentencing, Babafemi faces a maximum of 30 years in prison.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and John P. Carlin, Assistant Attorney General for National Security.

“The defendant traveled to Yemen to put himself at the disposal of a violent terrorist organization that has repeatedly demonstrated its determination to inflict bodily and economic harm on the United States and its citizens,” stated United States Attorney Lynch. “After meeting and training the defendant, senior leaders of al Qaeda in the Arabian Peninsula dispatched him back to Nigeria with instructions and funding to recruit others to join the terrorist group. The defendant’s guilty plea to terrorism charges is a testament to the tireless work of the FBI’s Joint Terrorism Task Forces in New York and San Diego in gathering evidence around the world in order to bring the defendant to justice.” Ms. Lynch also expressed her grateful appreciation to the government of Nigeria for its assistance and cooperation in this extradition.

According to previous court filings, between approximately January 2010 and August 2011, the defendant traveled twice from Nigeria to Yemen to meet and train with leaders of AQAP, the Yemen-based branch of al-Qaeda. Babafemi assisted in AQAP’s English-language media operations, which include the publication of the magazine “Inspire.” At the direction of the now-deceased senior AQAP commander Anwar al-Aulaqi, Babafemi was provided by AQAP leadership with the equivalent of almost $9,000 in cash to recruit other English-speakers from Nigeria to join that group. While in Yemen, Babafemi also received weapons training from AQAP.

The government’s case is being prosecuted by Assistant United States Attorneys Zainab Ahmad and Hilary Jager, with assistance from Trial Attorneys William M. Narus and Annamartine Salick of the Justice Department’s Counterterrorism Section, as well as from the Justice Department’s Office of International Affairs.

The Defendant:

LAWAL OLANIYI BABAFEMI

Age: 33

A 20-count indictment was unsealed this morning in federal court in Brooklyn charging Michael Grimm with five counts of mail fraud, five counts of wire fraud, three counts of aiding and assisting in the preparation of false federal tax returns, one count of conspiring to defraud the United States, one count of impeding the Internal Revenue Service, one count of health care fraud, one count of engaging in a pattern or practice of hiring and continuing to employ unauthorized aliens, two counts of perjury and one count of obstructing an official proceeding.1 Since 2011, Grimm has served as a member of the United States House of Representatives, representing New York’s 11th Congressional District, which includes the borough of Staten Island and parts of the borough of Brooklyn, in New York City. Grimm will be arraigned later today before United States Magistrate Judge James Orenstein at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

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), and Richard Weber, Chief, Internal Revenue Service-Criminal Investigation (IRS-CI).

“In 2007, Michael Grimm, former Marine, former FBI agent, accountant and attorney, was poised for success as a small business owner. Instead, as alleged, Grimm made the choice to go from upholding the law to breaking it. In so doing he turned his back on every oath he had ever taken. Even after his return to public service, when called to account for his actions and questioned under oath Grimm went for the cover up, and lied about his role in his own business,” stated United States Attorney Lynch. “The obligation to deal honestly and testify truthfully is shared by everyone in our society. We will continue to work with our law enforcement partners to enforce our laws across the board.”

“As a former FBI agent, Representative Grimm should understand the motto: fidelity, bravery, and integrity. Yet he broke our credo at nearly every turn. In this twenty-count indictment, Representative Grimm lived by a new motto: fraud, perjury, and obstruction. We demand the best from our political leaders. Yet today, we again find ourselves expecting and rightfully wanting more. And as citizens of this great nation we rightfully demand it,” stated FBI Assistant Director-in-Charge Venizelos.

“While occupying a position of trust in the community, Mr. Grimm is alleged to have committed a multitude of criminal violations,” said Chief, IRS Criminal Investigation Weber. “No matter your political position, how much power you have, how much money you make, or who you know, IRS-CI investigates all allegations of tax fraud. The American public expects and deserves the equitable enforcement of our tax laws.”

I. Background

As alleged in the indictment, Grimm was one of the owners and the managing member of “Healthalicious,” a fast food restaurant located in Manhattan. From 2007 through 2010, Grimm oversaw the day-to-day operations of the restaurant, which included the reporting and distribution of the restaurant’s payroll. Specifically, Grimm set the employees’ rates of pay, reported their pay-rates and hours worked to the companies that Healthalicious retained to manage its payroll and withhold taxes due and owing to the federal and New York State governments (the “Payroll Processing Companies”), and distributed wages to employees. When Grimm was not present at the restaurant to perform these tasks himself, he delegated those responsibilities to managers under his supervision and control.

Grimm is charged with engaging in schemes to fraudulently under-report the wages he paid his workers – many of whom did not have legal status in the United States – and fraudulently under-report the true amount of money the restaurant earned to both federal and New York State tax and insurance authorities. Specifically, Grimm paid a large portion of Healthalicious’ employees’ wages in cash and did not report those cash wages to federal and state authorities, thereby lowering the restaurant’s payroll tax costs. Grimm also under-reported the true amount of Healthalicious’ payroll to the New York State Insurance Fund (“NYSIF”), allowing him to receive lower monthly workers’ compensation premiums. In addition, Grimm substantially under-reported the amount of gross receipts Healthalicious earned to both the federal and New York State governments, thereby dramatically lowering the federal and state tax the restaurant owed and paid. In total, Grimm concealed over $1 million in Healthalicious sales and wages, fraudulently depriving the federal and state governments of sales, income, and payroll taxes. Further, when Grimm was deposed by an attorney representing a former Healthalicious employee in 2013 as part of a federal lawsuit, Grimm lied under oath about his business practices, including falsely denying that he paid workers cash wages.

II. The Scheme to Fraudulently Under-Report Healthalicious’ Payroll

As alleged in the indictment, Grimm paid a significant portion of Healthalicious’ employees’ wages in cash. Many employees received approximately half of their weekly pay in cash and the other half by check or through direct deposit into a bank account, while others received their entire weekly pay in cash. Grimm handed out cash payments to his employees on numerous occasions, and those cash payments were taken from the daily cash receipts of Healthalicious. Further, Grimm hired and continued to employ workers who did not have legal status and accordingly did not have valid authorization to work inside the United States.

To execute his scheme, Grimm lied, or directed others to lie, to the Payroll Processing Companies by concealing the cash wages paid to the Healthalicious employees. The Payroll Processing Companies had no record of those employees who received the entirety of their pay in cash, or the amounts of pay those employees had received. By under-reporting employee hours and concealing the existence of some employees, Grimm ensured that the Payroll Processing Companies – which were responsible for filing numerous state and federal tax returns on behalf of the restaurant – calculated and then reported less than half of the wages actually paid to the employees. To further his scheme, Grimm maintained electronic spreadsheets detailing the true payroll information pertaining to Healthalicious, which included cash wages paid to Healthalicious employees, and concealed them from the Payroll Processing Companies, among others.

By concealing the off-the-books wages from the Payroll Processing Companies and from an accountant Grimm retained to file other state and federal tax returns for the restaurant (the “Healthalicious Accountant”), Grimm caused a number of false filings to occur, resulting the in underpayment of state and federal taxes as well as an artificially-reduced monthly workers’ compensation insurance premium. Those false filings and misrepresentations included:

1) Federal quarterly payroll tax returns that did not report the true wages Healthalicious employees earned and that did not withhold the proper amount of Federal Insurance Contributions Act (“FICA”) taxes due and owing to the federal government;

2) Federal partnership tax returns filed with the IRS for tax years 2008, 2009, and 2010 that did not accurately report the correct total wages Grimm paid his employees; and

3) False payroll statements submitted to NYSIF by the Payroll Processing Companies and the Healthalicious Accountant during audits conducted by NYSIF that fraudulently lowered the monthly workers’ compensation premiums paid by Healthalicious.

III. The Scheme to Fraudulently Under-Report Healthalicious’ Gross Sales

Grimm also fraudulently concealed from the Healthalicious Accountant a significant amount of the cash sales that the restaurant generated from April 2007 through August 2010. As a result, Grimm filed numerous false tax returns with the federal government and the State of New York through the Healthalicious Accountant. These false filings, among other things, concealed over $1 million of income that Healthalicious earned but did not report to New York State, causing a substantial sales tax loss to the state.

Specifically, those false tax returns included:

1) New York State Form ST-100 quarterly sales tax returns filed with the New York State Tax Department from June 2007 through August 2010; and

2) Federal partnership tax returns for Healthalicious for tax years 2008, 2009, and 2010. Each false return did not report the true amount of Healthalicious’ gross receipts for each tax year. As a result of Grimm’s fraudulent concealment of the restaurant’s income, Healthalicious’ true earnings were not reported on those tax returns. Consequently, those earnings did not flow through to the partners of the business and were not reflected on the personal income tax returns of the partners, including Grimm.

IV. Perjury and Obstruction of Justice

Two former Healthalicious employees filed a federal civil lawsuit against Grimm in the Southern District of New York, alleging that he did not pay them the minimum wage or overtime pay pursuant to the Fair Labor Standards Act and the New York Labor Laws. In January 2013, an attorney representing a plaintiff deposed Grimm, who answered questions under oath relating to his ownership and operation of the restaurant. Specifically, during the deposition, Grimm was questioned concerning his ownership of Healthalicious, what duties he performed there, how he paid and set the hours and rates of pay for his employees, and whether he maintained emails or other records pertaining to those issues, among other things. To conceal his illegal actions, Grimm allegedly lied about several material matters in connection with the lawsuit such as: (a) whether he paid his employees in cash; (b) whether he had interacted with the Payroll Processing Companies; (c) whether he corresponded regarding Healthalicious business through email; and (d) whether he still had access to such an email account.

If convicted, Grimm faces a term of imprisonment of up to 20 years for each mail and wire fraud charge and for the obstruction charge, up to 10 years of imprisonment for the health care fraud charge, and up to five years of imprisonment for the charge of conspiring to defraud the United States and for each perjury charge. Grimm further faces a term of imprisonment of up to three years for each charge of aiding and assisting in the preparation of a false and fraudulent tax return and for the charge of obstructing and impeding the due administration of the Internal Revenue Laws. Finally, Grimm faces up to six months of imprisonment for engaging in a pattern or practice of hiring and continuing to employ unauthorized aliens, as well as forfeiture, restitution, and fines.

Ms. Lynch expressed her appreciation to the Public Integrity Section of Department of Justice, the Northern Criminal Enforcement Section of the Tax Division of the Department of Justice, the New York State Department of Taxation and Finance, New York State Insurance Fund and the New York State Department of Labor, for their assistance in the investigation.

The government’s case is being prosecuted by Assistant United States Attorneys Anthony M. Capozzolo, Todd D. Kaminsky, and Nathan Reilly.

The Defendant:

MICHAEL GRIMM

Age: 44

Staten Island, New York

E.D.N.Y. Criminal Docket No. 14-248

____________________________________________________________________________

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

Grimm Indictment 14-CR-248
 

Earlier today, Dino Saracino, a soldier in the Colombo organized crime family of La Cosa Nostra (the “Colombo Family”), was sentenced to 50 years in prison at the United States Courthouse in Brooklyn, New York. In May 2012, a jury convicted Saracino of racketeering conspiracy spanning nearly two decades including two murder conspiracies, the extortionate extension and collection of credit, and witness tampering as predicate racketeering acts. The jury also convicted Saracino of conspiring to make extortionate extensions of credit, witness tampering, and obstructing an official proceeding.1

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 (FBI), New York Field Office.

United States Attorney Lynch stated, “Dino Saracino was a member of one of the most lethal and feared crews of criminals in La Cosa Nostra. His ruthless adherence to the mafia’s code of violence may have earned him a position as a soldier in the Colombo Family but today’s sentence ensures that he will pay for his crimes with years in prison.” Ms. Lynch praised the FBI and the New York City Police Department for their partnership in the government’s investigation and prosecution and also thanked the Nassau County District Attorney’s Office, the New York County District Attorney’s Office, and the Nassau County Police Department for their assistance.

The evidence at trial established Saracino’s involvement in a racketeering conspiracy that spanned from 1991 through 2008. The jury found that between 1991 and 1993, Saracino – as part of a faction of the Colombo Family that was loyal to jailed boss Carmine Persico – conspired to kill members of a faction loyal to then acting family boss Victor Orena. The two factions were engaged in a bloody struggle, known as the Colombo Family War, for control of the criminal enterprise. The jury also found that Saracino plotted to kill Michael Burnside, who Saracino and others believed was responsible for Saracino’s brother’s death in 1998. In addition, the jury found that Saracino violently attempted to collect a loanshark debt owed by an individual known as “Peter Risk,” conspired to extend extortionate credit himself, and attempted to obstruct the government’s investigation into his activities and the other members of his criminal crew in 2008 through witness tampering, all as part of the racketeering conspiracy. The jury further convicted Saracino of substantive counts of conspiring to make extortionate extensions of credit, preventing testimony, withholding testimony and records from the grand jury, and obstructing an official proceeding, specifically, the grand jury’s investigation of Saracino and his crew.

Today’s sentencing signifies the culmination of a lengthy investigation and prosecution by the U.S. Attorney’s Office and the FBI. Since Saracino’s arrest with Colombo Family street boss Thomas Gioeli and others in June 2008, over 70 members and associates of the Colombo Family, including its leadership, have been arrested, prosecuted, and convicted.

The sentencing proceeding was held before the Honorable Brian M. Cogan, United States District Judge for the Eastern District of New York. During the sentencing proceeding, Judge Cogan found that, in addition to the crimes found proved by the trial jury, the government had proved by clear and convincing evidence that Saracino had participated in the 1995 murder of Richard Greaves, a Colombo Family associate, the 1997 murder of New York City Police Officer Ralph Dols, and the 1999 murder of Colombo Family underboss William “Wild Bill” Cutolo.

The government’s case was prosecuted by Assistant United States Attorneys Elizabeth A. Geddes, James D. Gatta and Cristina M. Posa.

The Defendant:

DINO SARACINO

Age: 41

____________________________________________________________________________

1 Saracino’s co-defendant, Colombo Family street boss Thomas Gioeli, was also convicted at trial of racketeering conspiracy, including three murder conspiracies. On March 19, 2014, Gioeli was sentenced to 224 months in prison.

Earlier today, Rakesh K. Punn, a licensed medical doctor and pediatrician, pleaded guilty to child sexual exploitation. Today’s plea took place before United States District Judge Joanna Seybert. At sentencing, Punn faces a mandatory minimum sentence of 15 years in prison and a maximum of 30 years in prison.

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

“We trust doctors – especially pediatricians – to care for our children. The defendant took advantage of that trust in the most egregious manner,” stated United States Attorney Lynch. “He took advantage of children who came to him for medical help. In doing so, he not only violated the criminal law, but betrayed his oath as a licensed physician to do no harm.” Ms. Lynch thanked the Federal Bureau of Investigation, the Nassau County District Attorney’s Office, the Nassau County Police Department, and the Department of Justice Criminal Division’s Child Exploitation and Obscenity Section (“CEOS”) and High Technology Investigative Unit (“HTIU”) for their joint investigation leading up to this case.

According to previous court filings, between September 6, 2007 and January 21, 2008, Punn sexually exploited three minor pediatric patients, under the guise of medical treatment, at his home-office in Bethpage, New York, and recorded the activities. Punn also submitted fraudulent insurance claims for the purported treatment of those three children and three other pediatric patients, when, in fact, the purported treatments had not been conducted for any medically accepted purpose, but rather, solely for the sexual gratification of the defendant.

Nassau County law enforcement authorities initially arrested Punn on July 15, 2010, and subsequently filed an indictment that charged Punn with multiple counts of violating New York State sexual abuse and fraud laws, based on his conduct, which allegedly included recording sexually explicit activity involving his minor patients during their visits to his office, located in his home in Bethpage, New York. Those charges remain pending. On January 4, 2012, a federal indictment was filed that charged Punn with sexual exploitation of children and health care fraud. Punn has remained in custody since his initial arrest.

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

The government’s case is being prosecuted by Eastern District of New York Assistant United States Attorney Allen L. Bode and Department of Justice Trial Attorney Amy Larson.

The Defendant:

RAKESH K. PUNN

Age: 56

Bethpage, New York

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

BROOKLYN, NY – Rodney Watts, 42, the former Chief Investment Officer of GDC Acquisitions, LLC (“GDC”), was sentenced today in federal court in Brooklyn, New York, to 37 months in prison to be followed by 5 years of supervised release. As part of the sentence, Watts was ordered to pay more than $15 million in restitution and $18 million in forfeiture. In May 2013, the defendant was convicted, following three weeks of trial, by a federal jury on charges of bank, mail and wire fraud, conspiracy to commit bank, mail and wire fraud, and false statements. Watts also served as the Chief Financial Officer of GDC at one time. These charges arose out of the defendant’s scheme to defraud Amalgamated Bank, GDC’s asset-based lender, of $21 million in fraudulent loans. Watt’s co-defendant, Courtney Dupree, the former Chief Executive Officer of GDC, was convicted by a federal jury in December 2011 of similar charges. In June 2013, Dupree was sentenced to 84 months’ imprisonment to be followed by 5 years’ supervised release. As part of the sentence, Dupree was ordered to pay more than $15 million in restitution and $18 million in forfeiture.

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 (FBI), and Philip Bartlett, Inspector-In-Charge, United State Postal Inspection Service (“USPIS”), New York Division.

“Instead of building their company through hard work and drive, Watts and his cohorts created the illusion of success for GDC based on lies and deceit. Watts then spent years propping up that illusion and using it to defraud a bank out of millions of dollars,” stated United States Attorney Lynch. “Executives who play fast and loose with corporate financial information should expect to be investigated and prosecuted to the full extent of the law.” Ms. Lynch extended her grateful appreciation to the Federal Bureau of Investigation and the Postal Inspection Service, the agencies responsible for leading the government’s criminal investigation.

GDC, based in Long Island City, Queens, is a holding company that owns various subsidiaries, including JDC Lighting, a lighting distributor; Unalite Electric and Lighting, a lighting maintenance company; and Hudson Bay Environments Group, a furniture distributor. The defendant helped orchestrate a scheme to defraud Amalgamated Bank and C3 Capital, a mezzanine lender based in Kansas, City, Missouri, by obtaining and attempting to obtain loans on the basis of false financial statements and other material misrepresentations. He and others gave Amalgamated Bank false financial information for GDC in which they had fraudulently inflated the company’s accounts receivable in order to obtain initially, and then maintain, credit lines totaling approximately $21 million. The defendant and his co-conspirators inflated the accounts receivable by a variety of means, including by recording in the corporate books sales that had never taken place. For example, the defendant represented to Amalgamated Bank in writing in November 2009 that GDC had $25.2 million in accounts receivable when, in fact, it had only approximately $9 million. In addition, the defendant and others defrauded Amalgamated Bank by causing GDC to acquire a company covertly, contrary to the terms of their loan agreement, and by concealing the acquisition from the bank. The scheme unraveled when one of the accountants turned himself into the FBI and cooperated in the government’s investigation in an undercover capacity for approximately two months.

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 Attorneys Catherine M. Mirabile and Brian Morris.

The Defendant:

RODNEY WATTS

Age: 42

Bronxville, NY

E.D.N.Y. Docket No. 10-CR-627 (S-2) (KAM)

A nine-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Naquan Reyes with the murder of Nicole Thompson to prevent her from communicating with federal law enforcement officials. Reyes was also charged with bank fraud, bank fraud conspiracy, aggravated identity theft and related offenses. The indictment was returned under seal by a federal grand jury sitting in Brooklyn, New York, on April 16, 2014.

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); and Brian A. Swain, Acting Special Agent-in-Charge, United States Secret Service, New York Field Office.

As alleged in the indictment and detention memorandum, since 2008, Reyes has perpetrated a scheme to defraud various banks. As part of the scheme, Reyes created counterfeit checks and recruited others to deposit those checks into their and others’ bank accounts. Reyes and his coconspirators then attempted to withdraw the funds from the bank accounts before the banks learned the checks were counterfeit. Among those he recruited to make the deposits was Nicole Thompson. On July 16, 2010, Thompson was arrested by the New York City Police Department in connection with her role in the scheme, and she immediately decided to cooperate with law enforcement. Just eight days after her arrest, on July 24, 2010, Thompson's body, duct taped and wrapped in garbage bags, was found in a dumpster in Landover, Maryland. When Reyes learned of Thompson's plans to cooperate and thereby jeopardize his ongoing fraud scheme, Reyes murdered her and then traveled from New York to Maryland to dispose of her body. Thompson was 24 years old at the time of her murder.

“As alleged, Naquan Reyes sat atop a scheme to defraud multiple banks using counterfeit checks, recruiting others to help perpetrate the scheme. When one of his recruits began to cooperate with law enforcement, Reyes decided that her life was forfeit, and killed her to protect the flow of ill-gotten gains. Today’s arrest should send a message to those who in any way tamper with witnesses to evade detection by law enforcement,” stated United States Attorney Lynch. “We will relentlessly continue our investigation of such individuals until they are brought to justice.” Ms. Lynch expressed her grateful appreciation to the Prince George's County, Maryland Police Department, New York City Police Department, and Bronx County District Attorney’s Office for their significant cooperation and assistance in the investigation.

“Tampering with a witness is a serious crime. Murdering a witness in a vain attempt to obstruct justice is another matter altogether,” stated FBI Assistant Director-in-Charge Venizelos.

“The Secret Service works in concert with federal, state, and local law enforcement to ensure our resources are being targeted to those criminal activities that are of high concern to local communities. We worked closely with the Federal Bureau of Investigation, New York City Police Department, and the Prince George’s County, MD Police Department to bring justice in this case. This investigation is just one example that proves the power of agency partnerships at every level in combating financial crimes,” said Secret Service Acting Special Agent-in-Charge Swain.

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

The government’s case is being prosecuted by Assistant United States Attorneys Elizabeth Kramer, Elizabeth Geddes, Samuel Nitze, and Karin Orenstein.

The Defendant:

NAQUAN REYES

Age: 29

Brooklyn, NY

E.D.N.Y. Docket No. 14-CR-0227

Earlier today, at the federal courthouse in Brooklyn, New York, Sant Singh Chatwal pleaded guilty to conspiring to violate the Federal Election Campaign Act (the “Election Act”) by making more than $180,000 in federal campaign donations to three candidates1 through straw donors who were reimbursed, and to witness tampering. When sentenced, Chatwal faces up to 25 years in prison. As part of his plea agreement with the government, Chatwal agreed to forfeit $1 million to the United States.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; David A. O’Neil, Acting Assistant Attorney General of the Criminal Division of the U.S. Department of Justice; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Richard Weber, Chief, Internal Revenue Service-Criminal Investigation.

“The Election Act’s spending limits are in place to limit financial influence in federal elections and to ensure transparency as to the identity of donors. Chatwal sought to buy access to power through unlimited and illegal campaign contributions, funneling money from the shadows through straw donors. Chatwal’s scheme sought to subvert the very purpose of the Election Act,” stated United States Attorney Lynch. “Chatwal then rolled the dice to stymie the government’s investigation, thinking he could corruptly convince witnesses to his federal election crimes to stay silent. That gamble did not pay off. Today’s conviction sends a clear message that this office is committed to vigorously investigating and prosecuting individuals who are responsible for committing crimes in connection with federal campaign donations and witness tampering.”

“Chatwal admitted that he used straw donors to secretly funnel money to political campaigns so that he could gain access to the politicians, and he coerced another person to hide his crime,” said Acting Assistant Attorney General O’Neil. “Chatwal went to great lengths to undermine both election laws and our system of justice. Today’s guilty plea shows our vigilance and determination to prosecute those who damage the integrity of elections by masking the true sources of campaign contributions.”

FBI Assistant Director-in-Charge Venizelos stated, “Attempting to buy elections through illegal campaign contributions is unacceptable. It is also illegal. Americans rightfully expect that elections will be free and fair. The FBI will continue investigating every case of abuse, wherever we find it.”

“Mr. Chatwal admitted his actions were designed to circumvent the Election Act,” said Chief Weber, IRS Criminal Investigation. “IRS-CI’s ability to adapt our financial investigative skills to cases where they are needed uniquely equips our agents to defend and uphold America’s trust in the fairness of the electoral process.”

The Election Act limits the amount and source of money that can be contributed to a federal candidate or to an individual candidate’s political campaign committee and multi-candidate political campaign committees, commonly referred to as “political action committees” (“PACs”). For example, in 2008, the Election Act limited primary and general election campaign contributions in a calendar year to $2,300 per campaign, for a total of $4,600, from any one individual to any one candidate. In 2010, the Election Act limited primary and general election campaign contributions in a calendar year to $2,400 per campaign, for a total of $4,800, from any one individual to any one candidate. The Election Act also prohibits making a campaign contribution in the name of another person, including giving funds to a “straw donor,” or a conduit, for the purpose of having the straw donor pass the funds to a federal candidate as the straw donor’s own contribution.

According to court filings and facts presented during the plea proceeding, Chatwal operated several businesses, including restaurants, hotels, and a hotel management company. From 2007 to 2011, Chatwal used his employees, business associates, and contractors who performed work on his hotels (the “Chatwal Associates”), to solicit campaign contributions on Chatwal’s behalf in support of various candidates for federal office and PACs, collect these contributions, and pay reimbursements for these contributions, in violation of the Election Act.

Chatwal and the Chatwal Associates induced straw donors to make these campaign contributions, promising them that they would be reimbursed. Chatwal orchestrated a scheme to make approximately $188,000 in campaign contributions to three candidates for federal office via straw donors, and he often arranged for the straw donors to be reimbursed through the Chatwal Associates, ultimately paying for the reimbursed contributions with funds belonging to Chatwal or one of Chatwal’s companies.

The evidence against Chatwal includes an October 2010 recorded conversation between Chatwal and a business associate who became an informant, in which Chatwal underscored his view as to the importance of political campaign contributions, stating that without campaign contributions, “nobody will even talk to you. . . . That’s the only way to buy them, get into the system. . . . What, what else is there? That’s the only thing.”

Chatwal also sought to obstruct the grand jury investigation into his Election Act scheme by tampering with a witness, a person whose business performed construction work for Chatwal and Chatwal’s companies, and who had recruited straw donors at Chatwal’s direction. In a June 2012 recorded conversation, Chatwal told that individual that if FBI and IRS agents approached him or his family, they should not speak with the agents and should instead refer them to a lawyer Chatwal would provide. During this conversation, the individual said that he would not tell agents that Chatwal gave him money to reimburse straw donors. Chatwal replied, “Never, never.”

A few days later, in a July 2012 recorded conversation, Chatwal directed the same individual to lie to agents about the Election Act scheme. Chatwal said he would pay for the individual’s legal fees in connection with the investigation, and offered to conceal the money within a payment for work the individual’s company had performed for Chatwal. During the conversation, they discussed that investigators were seeking copies of campaign checks in the individual’s possession, and they then discussed that it was helpful that some of the straw donors had been reimbursed with cash. Chatwal added, “cash has no proof.”

The guilty plea proceeding took place before United States District Judge I. Leo Glasser.

The government’s case is being prosecuted by Assistant United States Attorneys Martin Coffey, Carolyn Pokorny, Robert Capers and Brian Morris, and Trial Attorney Marquest Meeks of Public Integrity Section of the Department of Justice.

The Defendant:

SANT SINGH CHATWAL

Age: 70

Residence: New York, NY

_____________________________________________________________________________

1 There is no allegation that the candidates participated in, or were aware of, Chatwal’s scheme.

Western District Press Release- Joseph Romano
 

Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Jocelyn Samuels, Acting Assistant Attorney General for Civil Rights, announced today that the United States has commenced an action against the Town of Oyster Bay on Long Island for violating the Fair Housing Act, 42 U.S.C. § 3601 et seq. In its complaint, the United States alleges that two housing programs to develop below-market rate housing for first time homeowners and senior citizens discriminate against African-Americans because the programs give preference to residents of the Town, which is predominantly white.

“Housing programs designed to help young families and senior citizens purchase homes should be available to people of all races, including African Americans,” stated United States Attorney Lynch. “To the extent residency preferences prevent families and senior citizens from purchasing homes because of race, ethnicity or color, the preferences violate federal law and cannot be tolerated.”

Acting Assistant Attorney General for Civil Rights Samuels, stated, “The Fair Housing Act protects the right of all individuals, regardless of their race, to choose where to live and to have equal access to affordable housing. Today’s lawsuit is a reminder that if municipalities wish to adopt residency preferences such as those imposed by the defendants, they must do so in a way that does not discriminate against people based on race.”

At issue are two Town zoning incentive programs. The “Next Generation” housing program encourages developers to build below-market rate housing for first time homebuyers, generally young families. The “Golden Age” housing program similarly offers incentives for the construction of below-market rate housing for senior citizens. Developers who build housing under the programs receive zoning variances which allow them to build housing more densely than under current zoning restrictions in exchange for lower sale prices for certain units. Both programs require developers to award units constructed under the programs to residents and children of residents of the Town.

According to the United States’ complaint, the residency preferences discriminate against African Americans because very few African Americans reside in the Town and even fewer are eligible for the program as compared to the population of African Americans in surrounding communities, which are significantly more diverse. For example, African Americans constituted less than 1% of families living in the Town of Oyster Bay who were income eligible and otherwise qualified to purchase housing under the Next Generation program. Conversely, whites made up as much as 90% of the pool of eligible families. The eligible population of Nassau County and Suffolk County residents was approximately 10% African American and between 70% and 75% white. The eligible population in the New York City metropolitan area was approximately 20.5% African-American and approximately 48% white.

Also named as defendants are John Venditto, the Oyster Bay Town Supervisor, in his official capacity, and Long Island Housing Partnership (“LIHP”), the not-for-profit organization which is responsible for administering the Next Generation housing program, including implementing the residency preferences for the Town.

The complaint was filed with an accompanying settlement between the United States and LIHP. LIHP has agreed to injunctive relief pursuant to which LIHP will ensure that residency preferences it administers are analyzed so that they do not violate fair housing laws. LIHP will also provide education and training to localities, banks and individuals on Long Island regarding the requirements of fair housing laws.

This case is being handled by Eastern District of New York Assistant U.S. Attorneys Michael J. Goldberger and Thomas A. McFarland, and Trial Attorney Neta Borshansky of the Civil Rights Division Housing and Civil Enforcement Section.

Earlier today, at the federal courthouse in Central Islip, New York, Steven Bertuglia was sentenced to 15 years in prison by United States District Judge Joseph F. Bianco. On October 3, 2012, Bertuglia pleaded guilty to committing two bank robberies in Nassau and Suffolk Counties while on release to a halfway house for convictions stemming from a string of 14 bank robberies he committed in 2007.

The sentence 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 (FBI), New York Field Office, Thomas C. Krumpter, Acting Commissioner, Nassau County Police Department (NCPD), and Edward Webber, Commissioner, Suffolk County Police Department (SCPD).

"Having refused to learn from his mistakes, this serial bank robber will now have the next 15 years to contemplate the consequences of his actions. We stand committed to protecting the public from dangerous repeat offenders," stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the FBI, the NCPD, and the SCPD for their participation in this case.

On June 16, 2008, United States District Judge Jack B. Weinstein, in federal court in Brooklyn, sentenced Bertuglia to five years in prison for committing 14 bank robberies in 2007 in Nassau, Suffolk, and Queens Counties, and in New Jersey and Connecticut. On May 3, 2011, Bertuglia was released from prison to live in a halfway house in Brooklyn, where he was scheduled to finish serving the remainder of the 2008 sentence, which would have ended on January 13, 2012.

During his guilty plea proceeding before Judge Bianco, Bertuglia admitted that in June 2011, he committed two bank robberies in Nassau and Suffolk Counties while on release at the Brooklyn halfway house. Specifically, on June 9, 2011, Bertuglia rented a car, drove to an Atlantic Bank branch in Hicksville, New York, presented the teller with a threatening note, and made off with cash. Nearly four years earlier in June 2007, Bertuglia had robbed that same Atlantic Bank branch while armed with a pellet gun. On June 16, 2011, Bertuglia again used a threatening note to rob a TD Bank branch in Farmingville, New York.

On January 13, 2012, Bertuglia was arrested by the FBI, with assistance from NCPD and SCPD.

The government's case was prosecuted by Assistant United States Attorney Charles N. Rose.

The Defendant:

STEVEN BERTUGLIA

Age: 41

Earlier today, United States District Judge Raymond J. Dearie sentenced Edward Byam, Derrick Dunkley, and Akeem Montsalvatge each to serve 32 years of imprisonment for the violent armed robberies of two Queens check-cashing stores. Following a two-week trial that ended on August 9, 2013, the defendants were each found guilty of robbery conspiracy, two counts of robbery, and two counts of using a firearm in connection with those robberies.

The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Thomas J. Canon, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), New York.

“This armed robbery crew terrorized the hard-working employees of Queens in pursuit of a quick buck,” stated United States Attorney Lynch. “They used masks and costumes to elude law enforcement, but, as they have learned today, their disguises could not shield them from justice.” Ms. Lynch thanked the ATF, the agency that led the government’s investigation, and expressed her grateful appreciation to the New York City Police Department’s Police Impersonation Unit, which assisted in the government’s investigation at all stages, and the United States Marshals Service, for its crucial assistance in apprehending these violent criminals.

The government’s evidence at trial established that the defendants committed two armed robberies of separate Pay-O-Matic check cashing stores in Queens, New York. In 2010, the three defendants stole over $40,000 from a Pay-O-Matic after one of the defendants gained entry through the roof into the secure teller area. Wearing hooded sweatshirts and cloth masks, the defendants held the victim teller at gunpoint, handcuffed him and beat him with a metal chair before making off with the stolen cash. In 2012, the defendants robbed another Pay-O-Matic check cashing store at gunpoint, while wearing New York City Police Department jackets, badges, and life-like Hollywood-style special effects masks that concealed their identities and made them appear to be three white men. During this robbery, the defendants gained entry to the secure teller area by showing one of the tellers a picture of her own home and then forced a second teller to let the defendants into the area where the safe was located. Once inside, the defendants held the tellers at gunpoint and stole over $200,000.

The government’s witnesses included the victim tellers who were held at gunpoint during the robberies, as well as the owner of the company that manufactured the life-like special effects masks used by the defendants during the 2012 robbery. The government’s evidence also included telephone and cell site records placing the defendants at the scenes of both crimes, DNA evidence, text messages among the defendants discussing how they would spend the robbery proceeds, and records showing the defendants bought thousands of dollars of luxury items from high-end luxury boutiques with the money they had stolen.

The government’s case is being prosecuted by Assistant United States Attorneys Tyler Smith, Tiana Demas, and Maria Cruz Melendez.

The Defendants:

EDWARD BYAM

Age: 26

Queens, New York

DERRICK DUNKLEY

Age: 26

Queens, New York

AKEEM MONTSALVATGE

Age: 38

Queens, New York

E.D.N.Y. Docket No. 12-CR-586 (RJD)

http://video.cnbc.com/gallery/?video=3000262923

Earlier today, Geraldo Elainor, a member of the violent Brooklyn street gang the “Six Tre Outlaw Gangsta Disciples Folk Nation,” also known as the “Folk Nation,” pleaded guilty to racketeering, including the 2008 murder of Anthony Thomas as a predicate racketeering act, and discharge of a firearm in connection with the racketeering offense. Today’s plea took place before United States District Judge Nicholas G. Garaufis. If the Court accepts the defendant’s guilty plea, the defendant will be sentenced to 25 years in prison.

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

“In this senseless murder, the defendant brazenly took the life of Anthony Thomas, who unwittingly made the fatal mistake of exercising in a playground controlled by Folk Nation members,” stated United States Attorney Lynch. “Acting on the gang’s mandate to kill those they believed to be rival gang members, the defendant chased the victim out of the Ebbets Field playground without provocation or justification and killed him. We hope the victim’s family can take some measure of solace in knowing that the individual responsible for their son’s murder has been brought to justice.” Ms. Lynch thanked the FBI and the New York City Police Department for their joint investigation leading up to this case.

Throughout most of its existence, the Six Tre Folk Nation was the dominant gang in the Ebbets Field Houses in the Flatbush area of Brooklyn and took threatening and violent actions to deter residents of those projects from associating with rival gangs. On August 9, 2008, Anthony Thomas was exercising in a neighborhood playground when the defendant Geraldo Elainor, believing Thomas was a rival gang member, approached and began firing at him. Elainor chased Thomas as he ran away and continued shooting at him, hitting him once in the chest. Thomas eventually reached the parking lot of a nearby McDonalds, where he collapsed and died of his wound.

Elainor is one of nine defendants charged by the United States Attorney’s Office for the Eastern District of New York for crimes they committed as members of the Folk Nation. His co-defendant, Devon Rodney, was sentenced last month to 20 years’ imprisonment for his role in directing the gang’s violent activities.

The government’s case was prosecuted by Assistant United States Attorneys Berit Berger, Zainab Ahmad and Kristin Mace.

The Defendant:

Geraldo Elainor

Brooklyn, New York

Age: 24

Earlier today, an indictment was unsealed charging Poppi Metaxas, the former Chief Executive Officer (“CEO”) and President of Gateway Bank, FSB (“Gateway”), with bank fraud, bank fraud conspiracy and perjury. According to the indictment, in 2009, Metaxas fraudulently caused Gateway to execute a sham “round trip” transaction in which the bank self-funded a down payment to make it appear that Gateway had sold toxic, non-performing mortgage loans. This morning, the defendant surrendered to federal agents in California and was arraigned at the federal courthouse in San Francisco, California.

The arrest 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), Christy Romero, Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”), and David A. Montoya, Inspector General of the Department of Housing and Urban Development, Office of Inspector General (“HUD-OIG”).

The indictment alleges that in February and March 2009, Metaxas engaged in a scheme to defraud Gateway in connection with Gateway’s sale of non-performing mortgage loans to three entities in exchange for $15 million. Specifically, Metaxas caused Gateway to enter into a sham agreement to loan money to Ideal Mortgage Bankers Ltd. d/b/a Lend America (“Lend America”), a mortgage lender and Gateway’s largest mortgage lending client. Lend America in turn provided that money to the three entities that were planning to purchase the non-performing mortgage loans. Thus, Metaxas and others, through a series of wire transfers, used the proceeds of the sham loan to Lend America to satisfy the 25% down payment that the three entities owed to Gateway in connection with the sale of the mortgage loans, in order to deceive observers and regulators into believing that Gateway had successfully removed these toxic assets from its books. To conceal the fraudulent “round trip” of the loan funds, in October 2009, Metaxas provided false testimony to the Office of Thrift Supervision when she was asked about the source of the down payment.

“As alleged in the indictment, Poppi Metaxas placed herself above the interests of the bank, her board of directors, and the regulators, and lied to and misled those around her. She abused the trust placed in her by the bank, and committed fraud,” stated United States Attorney Lynch. “Other executives who mislead their company’s board or regulators should be on notice. Working with our law enforcements partners, both federal and local, we will find you, and we will hold you accountable in a court of law.” Ms. Lynch expressed her grateful appreciation to New York State Department of Financial Services and the Office of Comptroller of the Currency.

“As alleged, Metaxas engaged in a scheme to defraud her employer using lies and misrepresentations in connection with the sale of non-performing mortgage loans. The FBI, along with its law enforcement partners, remains committed to investigating those who prey upon our financial institutions and their customers. Those who engage in this type of financial fraud will be identified and held accountable,” stated FBI Assistant Director-in-Charge Venizelos.

“In the last number of years, we have seen enormous and damaging developments in the mortgage and housing markets. Indictments such as this set an important precedent that bad banker behavior will not be tolerated and will be aggressively pursued. We are deeply committed to working in partnership with other federal, state, and local authorities to ensure that corrupt individuals do not use their positions to enrich themselves at the expense of the government,” said HUD-OIG Inspector General Montoya.

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 Martin Coffey, Walter Norkin, and John Nowak.

This prosecution was the result of efforts by President Barack 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. For more information on the task force, visit http://www.StopFraud.gov.

The Defendant:

POPPI METAXAS

Age: 60

Hillsborough, CA

E.D.N.Y. Docket No. 14-CR-190 (JFB)

BROOKLYN, NY – Fredrick Douglas Scott, 29, the Chief Executive Officer of ACI Capital Group LLC (“ACI”), an investment adviser registered with the Securities and Exchange Commission (“SEC”), was sentenced today in federal court in Brooklyn, New York, to 63 months in prison to be followed by three years of supervised release. As part of the sentence, Scott was ordered to pay more than $1,388,190 in restitution to the defrauded victims. In September 2013, Scott waived indictment and pleaded guilty to engaging in a wire fraud conspiracy to steal over a million dollars from investors, and lying to officials from the SEC who were conducting a regulatory examination of ACI.

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 Filed Office (“FBI”).

“Fredrick Douglas Scott claimed to be a part of history. In reality he was a con man and a thief who fleeced unsuspecting retail investors, his so-called clients, out of more than a million dollars. Rather than help his clients invest their hard earned money, Scott stole their money for his own personal use to buy expensive dinners, clothes, and other goods and services. Scott then lied to SEC examiners who were investigating his firm. Instead of a place in the history books, Scott’s crimes bought him a room with the Bureau of Prisons for 63 months. We remain committed to protecting the retail investor from the effects of fraudsters like Scott,” stated United States Attorney Lynch. Ms. Lynch thanked the FBI, the agency responsible for leading the government’s investigation, and the SEC, Division of Enforcement in New York, for their assistance in this case.

ACI was founded by Scott in 2009 and purported to be an investment banking and advisory firm with an office located at 477 Madison Avenue, New York, New York. ACI registered as an Investment Adviser with the SEC in July 2011 and, pursuant to its most recent regulatory filing, claimed to manage $3.7 billion in assets. While Scott touted his bona fides as an investor to potential clients, including distributing the May 2010 issue of Ebony magazine, which described him as “the youngest African American hedge fund founder in history,” in reality, Scott used ACI to execute his fraudulent scheme, causing over a million dollars in losses.

In connection with his scheme, Scott worked with intermediaries or finders to locate potential victims. Once a potential victim was identified, Scott promised a high rate of return for providing short-term financing to businesses purportedly associated with ACI. Once victims wired money to ACI, Scott stole the funds for his personal use. Scott used client funds to purchase personal items at Louis Vuitton, the Apple Store, Starbucks, Fair Bail Bonds, True Religion Jeans, Tao Restaurant, the Hampton Inn SoHo, and Dizzy’s Coca-Cola Club, among others. Scott also wired stolen client funds to his personal checking account.

The sentencing proceeding was held before U.S. District Judge Roslynn R. Mauskopf.

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 government’s case is being prosecuted by Assistant United States Attorney James P. Loonam.

The Defendant:

FREDRICK DOUGLAS SCOTT

Age: 29

Garcia Capture Release
 

A criminal complaint was unsealed today in federal court in the Eastern District of New York charging Benjamin Castellazzo, Jr., Rocco Giangregorio, Glenn LaChance, Rocco Miraglia, also known as “Irving,” and Anthony Turzio, also known as “the Irish Guy,” with conspiring to defraud the Newspaper and Mail Deliverers’ Union (“NMDU”) and Hudson News in order to obtain a union card and employment at Hudson News for Castellazzo, Jr.

In addition, a three-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Thomas Leonessa, also known as “Tommy Stacks,” with wire fraud, wire fraud conspiracy, and theft and embezzlement from employee benefit plans, in an unrelated scheme. The indictment was returned under seal by a federal grand jury sitting in Brooklyn, New York, on March 6, 2014, and relates to Leonessa’s alleged “no show” job as a delivery driver for the New York Post.

Castellazzo, Jr., Giangregorio, LaChance, Miraglia, Turzio, and Leonessa were arrested earlier today, and their initial appearances are scheduled for this afternoon before United States Magistrate Judge Robert M. Levy at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

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

As alleged in the complaint, the NMDU is an independent union that represents approximately 1,500 employees involved in the newspaper industry in New York, New Jersey, and Connecticut. NMDU members deliver newspapers for the New York Times, the Wall Street Journal, the New York Daily News, the New York Post, and El Diario.

Between June 2009 and October 2009, Miraglia, who was a foreman at the New York Daily News – as well as an alleged associate of the Colombo organized crime family of La Cosa Nostra and the son of a deceased soldier in the Colombo family – conspired with officials of the NMDU and with Turzio, who was an employee of El Diario, to get an NMDU union card for Castellazzo, Jr. and place him in a job at Hudson News. Castellazzo, Jr. is the son of Benjamin Castellazzo, the alleged underboss of the Colombo family. Giangregorio and LaChance, who were Business Agents for the NMDU, also are charged with participating in this scheme.

As alleged in the indictment, Leonessa was employed by the New York Post to deliver newspapers by truck from a New York Post warehouse in the Bronx, New York, to New Jersey. He was also a member of the NMDU, which maintained offices, including offices for its welfare and pension funds, in Queens, New York. From about December 2010 to about September 2011, Leonessa had a “no show job” at the New York Post, that is, a job for which he was paid wages and benefits, but which he did not perform. When Leonessa did not complete his required deliveries, he was nevertheless, based on his fraudulent representations, paid wages by the New York Post and accorded benefits from employee pension and welfare funds managed by the NMDU.

“Today’s arrests indicate that the NMDU and the newspaper delivery industry are, sadly, still subject to the influence of organized crime,” stated United States Attorney Lynch. “We cannot tolerate corruption in that industry, which is relied on by newspaper readers throughout New York City and beyond. We will prosecute anyone who seeks to obtain employment – or to maintain “no show” employment – in that industry by trading on the power of organized crime. Such acts not only lead to ill-gotten gains, but they also displace innocent, hard-working union members and would-be union members from jobs they have rightfully earned. We thank our partners at the Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, for their tremendous efforts to identify and root out these corrupt practices.” Ms. Lynch also extended her grateful appreciation to the New York City Police Department, the New York County District Attorney’s Office, and Waterfront Commission of New York Harbor for their assistance.

“As alleged, a paycheck in exchange for a hard day’s work was a foreign concept to these defendants. Instead, they engaged in a scheme to defraud the NMDU and Hudson News for easy money and personal gain. The FBI, along with its law enforcement partners, will continue to pursue allegations of corruption and fraud all levels,” stated FBI Assistant Director-in-Charge Venizelos.

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

The government’s case is being prosecuted by Assistant United States Attorneys Elizabeth A. Geddes and Allon Lifshitz and by Trial Attorney Joseph Wheatley of the Department of Justice’s Organized Crime and Gangs Section.

The Defendants:

BENJAMIN CASTELLAZZO, JR.

Age: 48

Manahawkin, NJ

ROCCO GIANGREGORIO

Age: 39

Dumont, NJ

GLENN LACHANCE

Age: 50

Oceanside, NY

ROCCO MIRAGLIA

Age: 43

Staten Island, NY

ANTHONY TURZIO

Age: 78

New York, NY

THOMAS LEONESSA

Age: 52

High Bridge, NJ

E.D.N.Y. Docket Nos. 14-CR-120 and 14-M-282

FBI NY - MAN WANTED FOR MURDER OF YOUNG MOTHER & HER TWO-YEAR-OLD
FBI Top Ten Most Wanted Poster- Garcia
 

BROOKLYN, NY - A criminal complaint was unsealed this morning in Brooklyn federal court charging Dr. Syed Imran Ahmed, 49, with healthcare fraud in connection with his submission of millions of dollars in false Medicare billings. Seizure warrants seeking millions of dollars of the defendant’s alleged ill-gotten gains, including the contents of seven bank accounts, were also unsealed. In addition, a civil forfeiture complaint was also filed today against the defendant’s residence located in Muttontown, New York, valued at approximately $4 million. Further, earlier today search warrants were executed at six locations in New York, Michigan and Nevada. The defendant’s initial appearance is scheduled this afternoon before United States Magistrate Judge Marilyn Go, at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, David O’Neil, Acting Assistant Attorney General of the Justice Department’s Criminal Division, George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office, and Thomas O’Donnell, Special Agent in Charge, Department of Health and Human Services-Office of Inspector General (HHS-OIG).

As alleged in the complaint, Ahmed engaged in a scheme to submit claims to Medicare for surgical procedures that were not in fact performed. The complaint cites multiple instances in which either patients told law enforcement officers that they never had the procedures that were billed, or hospital medical records did not contain any evidence that the procedures were actually performed. From January 2011 through mid-December 2013, Medicare was billed at least $85 million for surgical procedures by Ahmed, a sole practitioner.

“As alleged, Ahmed created phantom medical procedures to steal very real taxpayer money. The defendant sought to enrich himself and fund his lifestyle through billing Medicare for services he never performed,” stated United States Attorney Lynch. “We are committed to protecting these taxpayer-funded programs and prosecuting those who steal from them.”

“The Medicare system entrusts doctors to provide patients with the care and services they need,” said Acting Assistant Attorney General O’Neil. “The charges unsealed today allege that Dr. Ahmed billed millions of dollars to Medicare for surgical procedures that he did not actually perform. These charges are yet another example of the Department of Justice’s determination to hold accountable those who abuse the trust placed in them and steal from the system for personal gain.”

FBI Assistant Director in Charge Venizelos stated, “Fraudulently billing the government defrauds every American taxpayer. We will investigate cases of graft and greed to protect important programs for those who need them.”

“For a single physician, the alleged conduct in this case is among the most serious I’ve seen in my law enforcement career,” said SAC for HHS-OIG O’Donnell. “Being a Medicare provider is a privilege, not a right. When Dr. Ahmed allegedly billed Medicare for procedures he never performed, he violated the basic trust that taxpayers extend to healthcare providers.”

The investigation has been conducted by the FBI and HHS-OIG, brought as part of the Medicare Fraud Strike Force, and supervised by the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section. The case is being prosecuted by Trial Attorney Turner Buford of the Criminal Division’s Fraud Section and Assistant United States Attorneys William Campos and Erin Argo of the U.S. Attorney’s Office for the Eastern District of New York.

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

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

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

The Defendant:

SYED IMRAN AHMED

Age: 49

Glen Head, New York

E.D.N.Y. Docket No. 14-274

Earlier today, at the United States Courthouse in Brooklyn, New York, Thomas Harris, a member of the Crips gang, was sentenced to 168 months in prison. On January 5, 2013, Harris pled guilty to charges of robbery conspiracy and brandishing of a firearm.1

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Thomas J. Cannon, Special Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), New York Field Office.

“Harris and his fellow gang member, Wendell Jenkins, terrorized the communities of Brooklyn and Queens by committing a spree of carjackings,” stated U.S. Attorney Lynch. “His senseless acts of violence have now earned him a home in a federal prison for the next 14 years.”

As part of his plea agreement, Harris admitted that he participated in six carjackings or attempted carjackings and two home invasion robberies between April 10, 2010 and February 28, 2011. According to the government’s sentencing memorandum, during one attempted carjacking in Jamaica, Queens, Harris and Jenkins forced a woman to give them her ATM cards and ATM PINs, and then forced the victim into the trunk of her car as they drove to nearby ATMs, where they stole $2,000 from her bank accounts. They then left her abandoned on the side of the road.

In another instance, the defendants attempted to carjack a mother and her young child in the drive-through of a McDonald’s restaurant in East Flatbush, Brooklyn. The defendants fled only after the woman panicked, took her foot off the car brake, and hit another car. Undeterred, the team then committed an armed carjacking of an elderly man a few blocks away.

After the arrest of his co-defendant Jenkins, Harris fled to Oakland, California, where he was arrested by Deputy U.S. Marshals. Harris possessed two kilograms of marijuana, 2.9 grams of methamphetamine and three firearms, including an assault-style rifle, at the time of his arrest.

The sentencing proceeding was held before the Honorable Frederic Block, United States District Judge for the Eastern District of New York.

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

The Defendant:

THOMAS HARRIS

Age: 31

___________________________________________________________________________

1 On October 5, 2013, co-defendant Wendell Jenkins was sentenced to 154 months in prison following his guilty plea to charges of robbery conspiracy and possession of a firearm.

BROOKLYN, N.Y. —U.S. Attorney Loretta E. Lynch announced today that following a two-week trial, a federal jury convicted Richard Riccardi, 41, of Manalapan, N.J., and Louis Grasso, 46, of Staten Island, N.Y., of the robbery and murder of James Donovan on July 2, 2010. The defendants face a minimum penalty of 10 years in prison, a maximum penalty of life in prison, and a fine of over $250,000 when they are sentenced in August.

“The defendants plotted this brazen robbery and took the life of James Donovan because of their unrelenting greed. After lying in wait for Donovan, the defendants coldly robbed him, shot him, and left him to die in the street. The jury saw through their attempts to shift responsibility for their actions and held them accountable for Mr. Donovan’s senseless death,” said U.S. Attorney Lynch.

According to the Government’s trial evidence, the defendants plotted to rob Donovan, who operated a check cashing business in Brooklyn, believing he would be carrying large amounts of cash. The defendants, together with several of their associates, followed Donovan in the weeks leading up to the robbery to learn his daily routines. Riccardi agreed to supply the guns that everyone in robbery team planned to carry for the robbery.

On July 2, 2010, the robbery team, armed with revolvers and semi-automatic firearms, headed to a shop in Gravesend, Brooklyn, where they expected Donovan. At approximately 2:15 p.m., James Donovan arrived at the shop, and the robbery team sprang into action. During the course of the robbery, one of the defendants’ coconspirators shot him. Donovan, who was hit in the leg, shortly thereafter collapsed in the street, where he lay slowly bleeding to death. Grasso stole a bag of cash from Donovan’s car, and the team fled. Donovan, whose femoral artery was severed by the bullet, died as a result of his wound.

The robbery team divided up the approximately $200,000 in cash they had stolen from Donovan. Grasso took the guns used in the robbery and said he was going to have them melted down at a friend’s auto body shop. On November 3, 2011, law enforcement searched Riccardi’s car and New Jersey residence, and recovered a .38 caliber revolver and a 9 millimeter pistol.

Ms. Lynch thanked the Drug Enforcement Administration, the New York City Police Department, the Business Integrity Commission and the Kings County District Attorney’s Office for their outstanding investigative efforts. The government’s case is being prosecuted by Assistant United States Attorneys Nicole M. Argentieri and Darren LaVerne.

The Defendants:

RICHARD RICCARDI

Age: 41

LOUIS GRASSO

Age: 46

Earlier today, in federal court in Brooklyn, Taleek Brooks, a former teacher's aide at a public elementary school in Brooklyn, was sentenced to 50 years’ imprisonment following his conviction for the production and distribution of child pornography.

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.

“Today’s sentence stands as a strong warning to child predators, especially those who take advantage of the trust that the public and parents place in them to educate and protect our children, that we will not tolerate the victimization of our children,” stated United States Attorney Lynch. "The prevention of sexual exploitation remains a priority of this office and child predators are on notice that we will prosecute them to the fullest extent of the law." Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation.

Brooks, a former teacher’s aide at Public School 243, The Weeksville School, in Brooklyn, regularly downloaded and traded videos and images depicting child pornography over the Internet through GigaTribe, a peer-to-peer file sharing program. In December 2011, Brooks accepted a "friend" request from an undercover FBI special agent with the FBI’s Crimes Against Children Unit, which permitted the agent to observe and download several videos and images depicting child pornography that Brooks had designated for sharing with his GigaTribe "friends." During a subsequent search of the defendant’s Brooklyn residence, agents recovered computer equipment that contained nearly 2,000 videos and images depicting child pornography.

A FBI forensic examination of the equipment revealed that Brooks had produced child pornography. In a folder that Brooks had labeled "Special," investigators recovered videos of a young boy performing sexually explicit acts at Brooks' direction. Brooks can be seen and heard on the videos directing the child to masturbate, and on one of the videos the defendant himself is seen molesting the victim child. Investigators later confirmed that the young boy was a former student at Public School 243 and that Brooks produced the videos on at least seven different occasions between 2010 and 2011. All of the videos were produced in school classrooms.

The sentencing proceeding was held before United States District Judge Roslynn R. Mauskopf.

The government’s case was prosecuted by Assistant United States Attorney Robert T. Polemeni.

The Defendant:

TALEEK BROOKS

Brooklyn, New York

Age: 43