Eastern District of New York

Earlier today, Luis Adorno, formerly the Supervisory Construction Project Manager of the Department of Architecture and Construction Engineering at the New York City Department of Housing Preservation and Development (HPD), was sentenced to a term of imprisonment of 18 months, followed by 300 hours of community service, for his corruption conviction for taking bribes.  As part of his sentence, Adorno also was ordered to forfeit $100,000 in bribery money to the government, representing the proceeds of his crime, and fined $10,000.  The sentence was imposed by United States District Judge Nina Gershon at the U.S. Courthouse in Brooklyn, 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); Daniel R. Petrole, Deputy Inspector General, United States Department of Labor (DOL) Office of Inspector General; and Rose Gill Hearn, Commissioner, New York City Department of Investigation (DOI).

Until his arrest in June 2012, Adorno was employed by HPD, the largest municipal developer of affordable housing in the nation.  Adorno was responsible for personally conducting inspections of HPD construction projects and also supervising other inspectors.  During 2008 and 2009, a contractor who worked on several HPD construction projects paid Adorno what amounted to a $100,000 bribe for Adorno’s assistance in getting the contractor additional work with HPD.  The bribe was structured in a sophisticated manner to ensure that actual cash did not pass through Adorno’s hands.  Rather, the contractor paid $100,000 to a real estate developer who was developing several HPD projects, and in return for the $100,000, the real estate developer agreed to give Adorno a 30 percent equity stake in the developer’s company.

Today’s sentencing proceeding is the latest stemming from the government’s wide-ranging investigation into corruption involving the affordable housing industry in New York City.  Four real estate developers and two other former HPD officials have pleaded guilty in this district to various charges, including racketeering conspiracy, fraud, and bribery, related to the development of affordable housing in the City.  Three additional defendants await trial.

“Luis Adorno admitted that he agreed to put his finger on the scale in favor of a contractor who paid him $100,000 in bribes.  By receiving payment in the form of an equity stake in a real estate development company, Adorno sought to create the bribe that would keep on giving.  Today’s sentence sends a clear message that any public servant, whether an elected legislator or an appointed official, who betrays the public trust will be prosecuted to the fullest extent of the law,” stated United States Attorney Lynch.  Ms. Lynch thanked the Internal Revenue Service, Criminal Investigation, New York; the United States Department of Housing and Urban Development, Office of Inspector General; and the New York City Police Department for their cooperation in this case.

DOI Commissioner Gill Hearn stated, “This ex-City employee lost his job and his bribe money and will soon take up residence in a prison cell.  That was not the nest egg he bargained for when he sold his office for a hidden stake in a real estate deal.  DOI thanks our federal partners for their shared determination to unearth the facts and demonstrate again that corruption is a losing strategy.”

The government’s case is being prosecuted by Assistant United States Attorneys Cristina M. Posa, Anthony M. Capozzolo, and Claire Kedeshian.

The Defendant

LUIS ADORNO
Residence: Scarsdale, New York
Age: 48

An indictment was filed this afternoon in federal court in the Eastern District of New York charging Andrea Sanderlin of Scarsdale, New York, with manufacturing and possessing marijuana with intent to distribute it and maintaining a drug-involved premises.  Sanderlin, 45, was arrested on May 20, 2013, when federal agents and detectives seized over 2,800 marijuana plants, large quantities of dried marijuana, and state-of-the-art marijuana growing equipment from a marijuana grow house in Maspeth, Queens.1

The indictment was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Brian R. Crowell, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York Division; James T. Hayes, Jr., Special Agent-in-Charge, Department of Homeland Security, Homeland Security Investigations (HSI); and Raymond W. Kelly, New York City Police Commissioner.

As charged in the indictment, Sanderlin operated a warehouse in Maspeth, Queens, which contained a sophisticated operation to grow and process marijuana.  The warehouse, which was located in a mixed industrial and residential neighborhood, contained state-of-the-art lighting, irrigation, electrical, and ventilation systems to facilitate growing the marijuana.  Initial estimates by the DEA indicate that the marijuana in the warehouse at the time of the search was worth in excess of $3 million.  The warehouse used unusually high amounts of electricity, in some cases generating bills exceeding $9,000 a month.  Law enforcement agents seized the equipment, approximately 2,800 marijuana plants, and large quantities of dried marijuana from the warehouse.

“Sanderlin could have focused her talents on building a legitimate business enterprise to support her family and serve as a role model for her children.  Instead, she allegedly chose to inhabit the shadowy underworld of large-scale drug dealers, using drug proceeds to maintain her family’s façade of upper middle class stability.  Sanderlin turned a commonplace warehouse in the heart of Queens into a sophisticated center for growing massive quantities of marijuana for distribution.  We are committed to investigating and prosecuting organized drug activity in our communities, no matter who runs the organization or how well it is hidden.  Those who use our neighborhoods to grow and introduce illegal drugs into the community will face the full force of the law,” stated United States Attorney Lynch.  Ms. Lynch expressed her grateful appreciation to the agents and detectives who investigated the case, and added that the government’s investigation is ongoing.

DEA Special Agent-in-Charge Crowell stated, “Hidden in a warehouse in Maspeth, Queens, this $3 million distribution operation was uncovered as part of a Strike Force investigation.  Andrea Sanderlin is alleged to have overseen this operation which produced close to 3,000 marijuana plants to be distributed throughout the New York area.  Marijuana is the most abused drug in the nation with 6.5% of high school seniors smoking marijuana on a daily basis.  The high THC purity continues to derail more and more teens and young adults into substance abuse programs due to its ever increasing potency.  I commend the joint Strike Force team for their steadfast work in identifying and removing this threat to our kids, our families, and our communities.”

“There’s really no difference whether you’re a suburban mom growing marijuana in a warehouse in Queens, or a cartel member making cocaine in the jungles of Colombia -- manufacturing and distributing illegal narcotics comes at a hefty price when you are caught by law enforcement,” said HSI Special Agent-in-Charge Hayes.  “While some may mistakenly perceive trafficking in narcotics as a path to a quick profit, this arrest demonstrates the serious consequences that await those who engage in the manufacture and sale of illegal drugs.”         

  The investigation was led by the DEA’s Organized Crime Drug Enforcement Task Force, which includes agents and officers from the DEA, HSI, New York City Police Department, New York State Police, Bureau of Alcohol, Tobacco, Firearms and Explosives, Internal Revenue Service, United States Marshal Service, United States Secret Service, and the Federal Bureau of Investigation.

If convicted, the defendant faces a minimum sentence of 10 years’ imprisonment and up to $10 million in fines.

The Defendant:

ANDREA SANDERLIN
Scarsdale, NY

_____________________________

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

Earlier today, Pedro Gautier Espada (“Gautier Espada”) was sentenced before Judge Frederic Block in U.S. District Court in Brooklyn, New York, to six months’ imprisonment, to be followed by six months’ home confinement and one year of supervised  release, for theft of federal funds from Bronx-based non-profit healthcare clinics, Soundview Healthcare Network (“Soundview”) and for failing to file a tax return for tax year 2009.  As part of that sentence, Judge Block ordered Gautier Espada to serve 100 hours of community service, restitution to the Internal Revenue Service in the amount of $15,628, and additional restitution to the victims of his thefts in an amount to be determined by the court.  Gautier Espada served the South Bronx as a New York City Councilman from 1997 to 2001 and as a New York State Assemblyman in 1996.    

On June 14, 2013, Judge Block sentenced Gautier Espada’s father, former New York State Senate Majority Leader Pedro Espada, Jr. (“Espada”), to five years’ imprisonment, to be followed by three years of supervised release, for theft of federal funds from Soundview, and lying on his 2005 personal tax return.  As part of that sentence, Judge Block ordered Espada to serve 100 hours of community service, restitution to the Internal Revenue Service in the amount of $118,531, restitution to the victims of his thefts in an amount to be determined, and forfeiture of $368,088.  The court remanded Espada to the custody of the Bureau of Prisons. 

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 Toni Weirauch, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS).   

On October 12, 2012, Gautier Espada pled guilty to one count of stealing federal funding from Soundview and one count of failing to file a tax return for 2009.  Gautier Espada was Soundview’s Director of Environmental Care and headed Soundview’s Compliance Committee. 

The government’s case was prosecuted by Assistant United States Attorneys Todd Kaminsky, Carolyn Pokorny and Claire Kedeshian. 

The Defendant

PEDRO GAUTIER ESPADA
Age: 39
Fairfield, CT

E.D.N.Y. Docket No. CR-10-985 (FB)

An indictment was unsealed this morning in federal court in the Eastern District of New York charging Carl Fiorentino, the former president of computer and electronics seller TigerDirect, with mail fraud, wire fraud and money laundering in connection with a scheme to defraud TigerDirect and its parent company, Systemax, Inc. (“Systemax”). Systemax is a publicly traded company with headquarters in Port Washington, New York. According to the indictment, the defendant personally took over $7 million in commercial bribes and kickbacks in return for steering over $230 million in business to the Taiwanese and California companies that paid the bribes and kickbacks.

The defendant was arrested by federal agents earlier today in Coral Gables, Florida, and a search warrant was executed at his $8 million residence, purchased with fraud proceeds. Later today, the defendant will appear for arraignment before United States Magistrate Judge Edwin Torres in the Southern District of Florida. The criminal case has been assigned to the Honorable Sandra J. Feuerstein, United States District Judge for the Eastern District of New York, in Central Islip, New York.

The arrest and 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; and Michael DePalma, Acting Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, Miami, Florida.

“As alleged in the indictment and court papers, Carl Fiorentino abused his position of trust, employing fraud and deceit to line his own pockets at the expense of his employer and its public shareholders. Fiorentino had it all – a lucrative job and a high-flying lifestyle. But as alleged in the indictment and court papers, his loyalties were neither to his employer nor its public shareholders but solely to himself. Fiorentino’s greed spanned the Pacific Ocean to pull companies from California to Taiwan into his bribery and kickback scheme,” stated United States Attorney Lynch. “We and our law enforcement partners will vigorously pursue and prosecute to the fullest extent of the law those who seek to profit by such fraud.” Ms. Lynch expressed her grateful appreciation to the FBI and IRS for their work on the investigation.

“As alleged, Fiorentino exploited his position to engage in blatant self-dealing. He accepted bribes to abuse his purchasing power and direct company business to specific suppliers. The suppliers’ lavish kickbacks helped finance Fiorentino’s multimillion-dollar home. The FBI will continue to police the kind of insider fraud that victimizes companies and their shareholders,” stated FBI Assistant Director-in-Charge Venizelos.

“IRS Criminal Investigation is committed to unraveling elaborate and complex money laundering schemes leaving no financial stones unturned,” stated Michael J. De Palma, Acting Special Agent-in-Charge of IRS-Criminal Investigation, Miami Field Office. “Those who abuse their position of trust to illegally enrich themselves will be held accountable for their actions.”

Beginning in January 2003 and continuing until April 2011, Fiorentino was the president of TigerDirect, a subsidiary of Systemax, Inc., that sold brand-name computers and its own line of Ultra computers in its retail stores and via mail-order catalogs and the Internet. In 2010 Systemax reported $3.5 billion in net sales according to its 2010 SEC 10K filing. Among his duties as company president, Fiorentino was responsible for selecting suppliers to provide computer components, peripherals and other products to TigerDirect. As alleged in the indictment, beginning in 2003, Fiorentino entered into an illegal agreement with the owner of a Taiwanese company to steer TigerDirect business to his company by directing TigerDirect to purchase the Taiwanese company’s computer components in exchange for bribes and kickbacks that totaled $6.5 million dollars over the course of the conspiracy. In addition, between 2003 and 2007, Fiorentino received another $570,000 in bribes and kickbacks from a California-based company that sold computer memory modules and flash memory products. Fiorentino received the bribes and kickbacks through checks and wire transfers payable to third party individuals and entities that he controlled. Fiorentino used the proceeds of the fraud scheme to buy, among other things, an $8 million home in Coral Gables, Florida.

As a result of the scheme, TigerDirect is alleged to have paid over $157,000,000 for the Taiwanese company’s products and $80,000,000 for the California company’s products. Fiorentino concealed the scheme and kickback payments by submitting false conflict of interest forms to Systemax and using a complex web of wire transfers and shell companies.

The charges announced today are merely allegations, and the defendant is presumed innocent unless and until proven guilty. The indictment charges Fiorentino with mail fraud, wire fraud, conspiracy to commit mail and wire fraud and money laundering conspiracy. If convicted, he faces a maximum sentence of 20 years’ imprisonment on each of those charges, forfeiture of the $8 million Coral Gables residence and over $7 million dollars, and a $250,000 fine.

The government’s case is being prosecuted by Assistant United States Attorney Demetri Jones.

The Defendant:

Name: CARL FIORENTINO
Age: 56

The United States and New York State have entered into settlement agreements with Parkshore Home Health Care, LLC, d/b/a Renaissance Home Health Care, Inc. (“Renaissance”), a Brooklyn-based licensed home health care services agency. These settlements resolve allegations that Renaissance provided unqualified home health aides to home health agencies, who in turn sent these unqualified aides into the homes of Medicaid recipients throughout New York City and then billed the Medicaid program for their services. Under the terms of the agreements, Renaissance will pay a total of $1,000,000. The settlement was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and New York State Attorney General Eric T. Schneiderman.

Under the New York State Medicaid program, home health aides – who primarily care for elderly patients, administer medication and provide services such as catheter care, colostomy care and wound care – are required to successfully complete a training program licensed by either the New York State Department of Health or the New York State Education Department. Today’s settlement resolves claims that between 2005 and 2007, Renaissance used home health aides who failed to receive the required training, resulting in Medicaid being billed for hundreds of thousands of dollars of services that these aides were not qualified to provide.

“When companies that provide home health aides fail to take the necessary steps to ensure the proper training for their aides, patients are the ones who can suffer,” said United States Attorney Lynch. “We will continue working to stop health care fraud from being committed on the Medicare and Medicaid programs, especially when the fraud can impact the care received by vulnerable patients.”

“This home health care agency hired workers with false training certificates who then went out into the community and into the homes of the vulnerable and elderly,” Attorney General Schneiderman said. “This was preventable and our investigations show that is a recurring problem in home health care. This office will continue to recover Medicaid funds from providers who do not protect the Medicaid program.”

The settlements resolve allegations that were contained in lawsuits filed under the whistleblower provisions of the Federal and New York State False Claims Acts. These provisions allow private citizens to file suit on behalf of the United States and State of New York, respectively, for fraud, and in certain circumstances to share in any recovery. 1

The United States’ case was handled by Assistant U.S. Attorneys Erin E. Argo and Kelly Horan Florio, who were assisted by Affirmative Civil Enforcement auditor Emily Rosenthal. New York State’s case was handled by Special Assistant Attorney General Jill Brenner.

_____________________________

1 In settling this case, Renaissance has not admitted liability.
 

BROOKLYN, NY – Earlier today, two indictments were unsealed charging eight men and one woman from Long Island, New York, with conspiring to commit wire fraud, stealing identities, and concealing and harboring illegal immigrants employed at 7-Eleven, Inc. (7-Eleven) franchise stores located throughout Long Island and Virginia.1  Through this scheme, the defendants, who owned, managed and controlled fourteen 7-Eleven franchise stores during the course of the conspiracies, allegedly hired dozens of illegal immigrants, equipped them with more than 20 identities stolen from United States citizens, housed them at residences owned by the defendants, and stole substantial portions of their wages.  If convicted, the defendants will face 20 years’ imprisonment on wire fraud conspiracy and alien harboring charges, as well as multiple counts of aggravated identity theft, which carries a mandatory, consecutive two-year term of incarceration.  In addition, all property used to facilitate the harboring of illegal immigrants, together with all proceeds of the wire fraud conspiracy and alien harboring charges, are subject to forfeiture.  The defendants will be presented for arraignment later today at the United States Courthouses in Central Islip, New York and Norfolk, Virginia.

The indictments, arrests and seizures are the result of one of the largest criminal immigrant employment investigations ever conducted by the Department of Justice and the Department of Homeland Security.  As set forth in court filings, the government has moved to forfeit the franchise rights to ten 7-Eleven stores in New York and four 7-Eleven stores in Virginia.  In the indictments, the government has also moved to forfeit five houses in New York worth over $1.3 million.  According to the Department of Homeland Security, the case announced today constitutes the largest criminal immigration forfeiture in its history.  In addition, earlier today, federal agents fanned out across the country to execute multiple search and seizure warrants and inspect approximately 30 7-Eleven franchise stores.  The actions taken are the initial results of an ongoing investigation into the employment and exploitation of illegal immigrants at 7-Eleven franchise stores nationwide.

The charges, arrests and seizures were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, New York Field Office (HSI); Edward Ryan, Special Agent-in-Charge, Social Security Administration, Office of the Inspector General (SSA-OIG); Joseph A. D’Amico, Superintendent, New York State Police; and Edward Webber, Commissioner, Suffolk County Police.

“As set forth in the indictments, the defendants used 7-Eleven as a platform from which to run elaborate criminal enterprises.  From their 7-Eleven stores, the defendants dispensed wire fraud and identity theft, along with Slurpees and hot dogs.  In bedroom communities across Long Island and Virginia, the defendants not only systematically employed illegal immigrants, but concealed their crimes by raiding the cradle and the grave to steal the identities of children and even the dead.  Finally, these defendants ruthlessly exploited their immigrant employees, stealing their wages and requiring them to live in unregulated boarding houses, in effect creating a modern day plantation system,” stated United States Attorney Lynch.  “As this case shows, we are committed to preserving the rule of law and protecting our communities from the abuses of corrupt businessmen seeking to gain illegal advantage.  I would like to thank our partners at HSI, New York State Police, Suffolk County Police and SSA-OIG for their hard work on this important investigation.”

“The 7-11 franchises seized today will be better known for their big fraud than their Big Gulp.  As alleged, the franchise owners knowingly and repeatedly employed an illegal workforce and abused and exploited that workforce for more than 13 years,” said HSI Special Agent-in-Charge Hayes.  “This charged criminal scheme had a vast detrimental effect on both the employees who were overworked and cheated out of wages, as well as the more than 25 American citizens whose lives were upended by the theft of their identities in furtherance of the scheme.”

New York State Police Superintendent D’Amico, stated, “As alleged in the indictment, these nine individuals took full advantage of illegal immigrants through a multi-state scheme that generated millions in profits for themselves while ignoring the common decency in the employer/employee relationship.  The defendants allegedly provided the illegal immigrants with false documentation, stole significant portions of their wages and set them up in living arrangements that left the individuals completely beholden to them.  I commend the unwavering dedication of the State Police Investigators who worked with our partners from federal, state and local law enforcement to make these defendants accountable for their actions.”

“As charged in the indictments, the defendants have been exploiting vulnerable individuals who, due to their immigration status, may have been afraid to come forward and report possible wrongdoing by their employers,” said Suffolk County Police Commissioner Webber.  “This multi-agency investigation illustrates our commitment to fighting against employers who abuse immigrant employees for their own financial gain.”

SSA-OIG Special Agent-in-Charge Ryan stated, “The Social Security Number System within the Social Security Administration (SSA) tracks individuals’ earnings throughout their work history to later determine the SSA retirement benefit they have earned.  The type of alleged actions of the individuals named in this indictment not only violates federal law, but  also  threatens the integrity of the Social Security Number System by causing wages to be erroneously posted to SSA’s system of records.  We appreciate the cooperation of the represented law enforcement agencies here today in our ongoing initiatives to prevent fraud, waste and abuse of SSA programs.”

The Illegal Conduct

According to the indictments and court papers filed in the Eastern District of New York, the defendants Farrukh and Bushra Baig are a married couple who owned, co-owned and/or controlled twelve of the 7-Eleven franchise stores, located on Long Island, New York and in Virginia.  Defendants Zahid Baig and Shannawaz Baig are Farrukh Baig’s brothers, who helped to manage and control the stores, assisted by defendants Malik Yousaf, Tariq Rana and Ramon Nanas.  Brothers Ahzar Zia and Ummar Uppal, indicted separately, owned and controlled two other Suffolk County 7-Eleven franchise stores.

As franchisees of 7-Eleven, the defendants received a license from the national company to utilize the 7-Eleven trademarks, specialized equipment (such as Slurpee and hot dog machines), and the stores’ physical structures and real property, which were owned or leased by 7-Eleven.  The defendants also received access to 7-Eleven’s automated payroll service, through which they inputted each employee’s personal identifying information and hours worked into the data terminals located at the stores, for electronic transmission to 7-Eleven corporate headquarters.  Working with the data provided by the defendants, 7-Eleven processed the payroll and, after subtracting certain expenses, issued wages in the form of checks, direct deposits or debit cards.

According to court filings, from 2000 until the present, the defendants collectively and systematically employed more than 50 illegal immigrants at fourteen 7-Eleven franchise stores in Long Island and Virginia.  Rather than transmitting the true identification information of the illegal immigrant employees to 7-Eleven headquarters for processing, the defendants allegedly used more than 20 stolen identities, submitting stolen names and Social Security numbers of United States citizens to conceal the presence of illegal immigrants on the 7-Eleven franchise store payrolls.  7-Eleven headquarters processed the payroll and sent the employees’ wages to the defendants for distribution.  The defendants then allegedly stole significant portions of the illegal immigrants’ wages, rather than paying the workers in full.  The defendants also required the illegal immigrant to live in residences owned by the defendants and to pay rent in cash to the defendants.

As alleged in court documents, the victims of the identity theft hail from seven states, range in age from 8 to 78 years old, and include a child, three dead people and a Coast Guard cadet.  In addition, the defendants, together with others, caused the 7-Eleven payroll service to transmit this false information, including the stolen identity information, to United States regulatory agencies, such as the Internal Revenue Service and the Social Security Administration.

During the scheme, the defendants allegedly generated over $182 million in proceeds from the 7-Eleven franchise stores.  Profits from those stores were shared by the defendants and 7-Eleven.

The first status conferences in this case are scheduled for Wednesday, July 17, 2013, at 11:15 A.M., before United States District Judge Sandra J. Feuerstein, at the federal courthouse in Central Islip, New York.                         

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

Tips and Information

HSI encourages the public to report suspected labor trafficking, forced labor or the exploitation of undocumented workers through its toll-free hotline at 1-866-347-2423 (from the U.S. and Canada), or from anywhere in the world at 1-802-872-6199, or online at www.ice.gov/tips.

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

The Defendants

FARRUKH BAIG
Citizenship: Naturalized United States Citizen
Age: 57
Head of Harbor, New York

BUSHRA BAIG
Citizenship: Naturalized United States Citizen
Age: 49
Head of Harbor, New York

MALIK YOUSAF
Citizenship: Naturalized United States Citizen
Age: 51
South Setauket, New York

ZAHID BAIG
Citizenship: Naturalized United States Citizen
Age: 52
Chesapeake, Virginia

SHANNAWAZ BAIG
Citizenship: Naturalized United States Citizen
Age: 62
Virginia Beach, Virginia

TARIQ RANA
Citizenship: Pakistan
Age: 34
Chesapeake, Virginia

RAMON NANAS
Citizenship: Republic of the Philippines
Age: 49                                  
Great River, New York

AZHAR ZIA
Citizenship: Naturalized United States Citizen
Age: 49
Great River, New York

UMMAR UPPAL
Citizenship: Pakistan
Age: 48
Islip Terrace, New York

_____________________________

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

Earlier today, at the federal courthouse in Central Islip, New York, a jury convicted the defendant Daniel Sheehan of attempting to extort Home Depot, the national home-improvement chain, and using a destructive device, specifically a pipe bomb, in furtherance of the extortion plot. Sheehan faces a 30-year mandatory minimum sentence for planting the pipe bomb at a Huntington, New York, Home Depot store in October 2012, in furtherance of the extortion plot. Sentencing is scheduled before United States District Judge Denis R. Hurley on October 2, 2013.

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

The evidence at trial established that in mid-October, 2012, Sheehan, a former Home Depot employee, sent an anonymous letter to the Home Depot store in Huntington, warning that a bomb had been placed in the store’s lighting department as a demonstration of his ability to place a bomb in the store without detection and demanded $2 million. Then, in a second letter, Sheehan warned that if Home Depot did not pay the extortion demand, Sheehan would shut down all of Home Depot’s Long Island stores on Black Friday, the day after Thanksgiving, by detonating three pipe bombs, each armed with a pound of roofing nails, in three separate Home Depot locations. On October 15, 2012, law enforcement authorities located a functional pipe bomb inside of a light fixture box on a shelf in the lighting department of the Huntington Home Depot. Bomb technicians from the Suffolk County Police Department moved the pipe bomb from a shelf to an area that could withstand the blast from a potential detonation, and they rendered the bomb harmless through a controlled render safe procedure.

On November 7, 2012, after an intensive federal, state and local law enforcement investigation, Sheehan was identified as the sender of the anonymous letters and arrested. At that time, agents seized from Sheehan the cellular phone he used to make two extortion calls to Home Depot.

“Though motivated by greed, not political ideology, this crime was an attempt to commit an act of terrorism, pure and simple. The swift, round the clock efforts of many law enforcement officers and agents put an end to the defendant’s plot to hold the people of our community for ransom,” stated United States Attorney Lynch. Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation, Suffolk County District Attorney’s Office, the Suffolk County Police Department, the Nassau County Police Department, and the Suffolk County Probation Department for their invaluable cooperation and assistance in the investigation.

The government’s case was tried by Assistant United States Attorney Lara Treinis Gatz.

The Defendant:

DANIEL SHEEHAN
Age: 50
Residence: Deer Park, New York

Earlier today, Pedro Espada, Jr. was sentenced before Judge Frederic Block in U.S. District Court in Brooklyn, New York, to five years’ imprisonment, to be followed by three years of supervised release, for theft of federal funds from Bronx-based non-profit healthcare clinics, and lying on his 2005 personal tax return.  As part of that sentence, Judge Block ordered Espada to serve 100 hours of community service, restitution to the Internal Revenue Service in the amount of $118,531, restitution to the victims of his thefts in an amount to be determined, and forfeiture of $368,088.  The court remanded Espada to the custody of the Bureau of Prisons.  Espada is a former New York State Senator for the 33rd Senate District in the Bronx, who served as the New York State Senate Majority Leader from 2009 to 2010. 

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 Toni Weirauch, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York (IRS).   

“The people of the Bronx trusted Pedro Espada, Jr. to have their best interests at heart.  Instead, he abused that trust to the tune of more than half a million dollars.  Under obligation to use the funds he received for the benefit of people sorely in need of quality health care, he chose instead to benefit himself and his family at their expense.  Espada embezzled funds to finance his personal lifestyle and lavish gifts on friends and family members at the expense of taxpayers and underprivileged members of the Bronx community who were deprived of needed health services and medical equipment.  He continued his campaign of lying and fraud on his tax returns,” stated United States Attorney Lynch.  “Espada has finally been held to account for his crimes.”  Ms. Lynch expressed her grateful appreciation to the FBI and IRS, the agencies responsible for leading the government’s investigation, and thanked the Office of New York State Attorney General Eric T. Schneiderman for its assistance.

On May 14, 2012, a federal jury in Brooklyn returned a guilty verdict against Espada on four counts of stealing from non-profit medical clinics in the Bronx that received federal funding.  On October 12, 2012, Espada pled guilty to making false statements on his 2005 personal tax return and agreed not to appeal or otherwise challenge the jury’s verdict.  That same day, Espada’s son and co-defendant, Pedro Gautier Espada, pled guilty to guilty to one count of stealing federal funding from non-profit medical clinics and one count of failing to file a tax return in 2009, and his sentencing has been scheduled for June 18, 2013, also before Judge Block.

FBI Assistant Director-in-Charge Venizelos stated, “Over thirty years ago, Pedro Espada, Jr. helped establish the Soundview Health Center, but his own greed and self-dealing undermined that good work.  Espada’s embezzlement of federal funds diverted money meant to serve the health needs of the people of the South Bronx.  In lining his own pockets, he betrayed those people and stole from U.S. taxpayers in the process.  There is a price to pay for these betrayals.”

The successful outcome of the collaborative effort in this investigation demon- strates the government’s resolve in investigating and prosecuting public corruption.  Today’s sentences mark the end of a long period of criminal activity that harmed the patients of the not-for-profit clinics, who depended on the services the clinics provided and law abiding American taxpayers, who have to pick up the slack whenever others deliberately do not pay their fair share.  IRS Criminal Investigation is proud of its partnership with the FBI and the U.S. Attorney’s Office,” stated IRS Special Agent-in-Charge Weirauch.

The government’s case was prosecuted by Assistant United States Attorneys Todd Kaminsky, Carolyn Pokorny and Claire Kedeshian. 

The Defendants

PEDRO ESPADA, JR.
Age: 58
Mamaroneck, NY

PEDRO GAUTIER ESPADA
Age: 39
Fairfield, CT

E.D.N.Y. Docket No. CR-10-985 (FB)

BROOKLYN, NY – Earlier today, at the federal courthouse in Brooklyn, Roland Kaufmann, a Swiss citizen and CEO of Axius Inc., was sentenced to 16 months’ imprisonment for conspiring to bribe stock brokers.  As required by his plea agreement, Kaufmann forfeited $290,000, with a portion to be remitted to identified victims of related criminal conduct.  The court also imposed a fine of $450,000 and a $100 special assessment.  Previously, on January 11, 2013, Kaufmann pleaded guilty to one count of conspiracy to violate the Travel Act.  The sentencing proceeding was held before the Hon. John Gleeson, United States District Judge.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

According to court documents, Kaufmann controlled Axius, Inc., a purported holding company and business incubator located in Dubai.  As part of the scheme, the defendant and his co-conspirator, Jean Pierre Neuhaus, enlisted the assistance of an individual who they believed had access to a group of corrupt stock brokers, but who was, in fact, an undercover law enforcement agent.  Court documents reveal that they instructed the undercover agent to direct brokers to purchase Axius shares in return for a secret kickback of approximately 26 to 28 percent of the share price.  Kaufman and Neuhaus also instructed the undercover agent as to the price the brokers should pay for the stock and that the brokers were to refrain from selling the Axius shares they purchased on behalf of their clients for a one-year period.  By preventing sales of Axius stock, Kaufmann and Neuhaus intended to maintain the fraudulently inflated share price for Axius stock.

Kaufmann and Neuhaus were arrested on March 8, 2012.  On October 10, 2012, Neuhaus pleaded guilty to conspiracy to commit securities fraud and violate the Travel Act.  Neuhaus was in custody from his arrest through February 15, 2013, when he was sentenced to time served and a $10,000 fine.  

“Roland Kaufman sought to game the system from overseas by inflating the price of his company’s stock on U.S. capital markets,” said U.S. Attorney Lynch. “Instead of riches, he reaped prison time, as well as the forfeiture of his ill-gotten gains.”  Ms. Lynch extended her grateful appreciation to the FBI New York Field Office and the IRS New York Field Office, the agencies responsible for leading the government’s investigation, and Ms. Lynch and Acting Assistant Attorney General Raman thanked the Securities and Exchange Commission for its assistance in this matter.

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 case is being prosecuted by Assistant U.S. Attorney Ilene Jaroslaw and Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section, with assistance from Fraud Section Trial Attorney Nathan Dimock.

The Defendant:

ROLAND KAUFMANN
Age: 60

Earlier today, Antonio Rivera, the former owner of the bars Sonidos de la Frontera in Lake Ronkonkoma and La Hija del Mariachi in Farmingville, New York, was sentenced to 60 years’ imprisonment for his role in a sex trafficking and forced labor ring. Rivera’s co-defendants, John Whaley and Jason Villaman, were sentenced to 25 and 30 years, respectively. The sentences were imposed by United States District Judge Sandra J. Feuerstein at the United States Courthouse in Central Islip, New York. The three defendants were convicted after a four-week trial of multiple offenses including, conspiracy, sex trafficking, forced labor, alien harboring, and alien transportation.

The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Roy L. Austin, Jr., Deputy Assistant Attorney General, Civil Rights Division; James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York; Edward Webber, Commissioner, Suffolk County Police Department; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Toni Weirauch, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York.

The government’s evidence at trial established that the defendants and others recruited, hired, and harbored in the United States scores of undocumented Latin American immigrants to work as waitresses in Rivera’s bars. The women had come to the United States from Honduras, Guatelmala, Mexico, and El Salvador. Rivera placed ads and flyers seeking waitresses in Spanish language newspapers and at local businesses frequented by Spanish-speaking immigrants. After the women agreed to work as waitresses, Rivera directed them to solicit patrons to buy them alcoholic beverages, which the women were required to consume, and eventually forced them to engage in sexual acts with the patrons in exchange for money, which Rivera kept. Several witnesses testified that Rivera and others used violence, including rapes and beatings, as well as fraud and threats of deportation to compel the victims to continue to work for him and to prevent them from reporting the illegal activity to police.

One victim testified that she was raped by a bar patron inside Sonidos during business hours in full view of patrons and employees. Another victim testified that on one occasion she was transported by Villaman to a local hotel where she was raped while unconscious by a bar patron and awoke to find Villaman watching the assault. A third victim testified that Rivera raped her on multiple occasions and subsequently ordered a security guard to brutally beat her. According to the victim, the security guard drove her to a deserted parking lot after work and, once there, viciously beat her. According to other testimony, Whaley, who assisted Rivera in hiring waitresses, maintaining the bars, and transporting the waitresses to and from the two bars, sexually assaulted one of the victims whom he was supposed to drive home. Testimony also revealed that Villaman acted as a security guard at Sonidos de la Frontera and assisted Rivera in illegal acts against victims, including dumping an unconscious victim on the lawn outside her home after the he and Rivera had assaulted her. Several victims testified that their wages were often taken from them under the guise of being placed into a short-term group savings scheme called the “Society,” but were not returned to them as promised, which forced the victims to remain in Rivera’s employ in hopes of recouping their money.

“The defendants lured vulnerable young women to the United States with the promise of a better life and the ability to earn a living to support their families. Once here, the defendants then turned their American dream into a nightmare, subjecting them to unspeakable physical violence and emotional abuse, as well as threats of deportation, in order to line their own pockets. The lengthy sentences imposed today are fair and just punishment for the intolerable crimes that these defendants committed.” stated United States Attorney Lynch. “We will continue our efforts to ensure that the full protection of the law is provided to all our residents.” Ms. Lynch expressed her grateful appreciation to HSI, Suffolk County Police Department, FBI, and the IRS for their assistance in this case.

“These defendants preyed on some of the most vulnerable members of our society – young, undocumented women and girls seeking a better life – and brutally exploited them in a scheme driven by cruelty and greed,” stated Deputy Assistant Attorney General Austin. “Human trafficking is an affront to freedom and individual rights. The sentences handed down today affirm our commitment as a nation to bringing human traffickers to justice and restoring the rights and dignity of human trafficking victims.”

“The men sentenced today lured innocent women with dreams of good paying jobs that turned into a nightmare of forced prostitution backed by threats and violence. The victims of these heinous crimes have now begun the healing process they so justly deserve,” said HSI Special Agent in Charge Hayes. “HSI agents will continue to work with the Human Trafficking Task Force and other law enforcement agencies to identify victims and to pursue the criminals who prey on them.”

“These victims and other immigrants have the rightful expectation to be protected against those that may take advantage of their vulnerability. These three predators deserve the lengthy sentences they have received for the unforgivable acts they perpetrated against their victims,” said Suffolk County Police Commissioner Webber. “The Suffolk County Police Department will continue to work jointly with federal, state and local law enforcement partners to curb forced labor, violence and sex-trafficking within the county.”

FBI Assistant Director-in-Charge Venizelos stated, “The defendants have received sentences that reflect the gravity and depravity of the crimes they committed. No human being, regardless of immigration status, can be tormented the way the victims of these defendants were without the strongest possible response from our justice system. The horrific physical violence, sexual predation and emotional torment suffered by the victims cannot be undone, but long prison terms for the defendants mean they will not be in any position to inflict such torment again.”

IRS Special Agent-in-Charge Weirauch stated, “IRS-Criminal Investigation is grateful that we were able to support our law enforcement partners in this important investigation and prosecution. The victims in this case endured incredible physical, emotional and financial hardships. We sincerely hope they will be able to heal and move forward.”

The government’s case was prosecuted by Assistant United States Attorneys Demetri M. Jones and Licha Nyiendo, and Senior Litigation Counsel John Cotton Richmond of the Department of Justice, Civil Rights Division, Human Trafficking Prosecution Unit.

The Defendants:

ANTONIO RIVERA
Age: 38
Residence: Patchogue, NY

JOHN WHALEY
Age: 33
Residence: Bellport, NY

JASON VILLAMAN
Age: 34
Residence: Brentwood, NY

BROOKLYN, NY – Fredrick Douglas Scott, 29, was arrested this morning on charges that he engaged in a wire fraud conspiracy to steal hundreds of thousands of dollars from investors.  Scott was the Chief Executive Officer of ACI Capital Group LLC (ACI), an investment advisor registered with the Securities and Exchange Commission (SEC) since July 2011.  To implement his scheme, Scott allegedly lied to potential investors to induce them to wire funds to one of ACI’s bank accounts, which Scott then stole.  To date, investigators have identified at least $750,000 in investor losses caused by Scott.  If convicted, Scott faces up to 20 years’ imprisonment on the fraud charge, as well as a fine equal to double the investors’ losses and mandatory restitution to the victims.

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 complaint unsealed this afternoon, 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 Advisor 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 two related fraudulent schemes, causing hundreds of thousands of dollars in losses.

As detailed in the complaint, in connection with the first scheme, Scott worked with intermediaries or finders to locate potential victims.  Once a potential victim was identified, Scott promised victims a high rate of return for providing short-term financing to businesses purportedly associated with ACI.  In connection with the second scheme, Scott enticed his victims to make up-front deposits with ACI as collateral for favorable loans to the victims.  In both schemes, once victims wired money to ACI, Scott stole the funds for his personal use.  Bank records show that 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.  Bank records also show that Scott wired stolen client funds to his personal checking account.

“Fredrick Douglas Scott wanted a place in history, but tried to secure that spot with stolen money rather than honest work.  As alleged, instead of delivering real value to his clients, he devoted his energy to schemes to steal their money, using their investments as his own personal piggy bank.  Effective law enforcement action shut down his schemes, and the defendant will now face justice. We are committed to protecting the public from the effects of fraud,” stated United States Attorney Lynch.  “I would like to thank our partners at the FBI for their swift action and effective work on this important investigation.”

FBI Assistant Director-in-Charge Venizelos stated, “As alleged, the defendant was more creative in touting his own abilities as an investment strategist than he was at actually investing clients’ money.  In actuality, he was a con man who induced victims to part with their money by promising high returns, and then squandered their money on himself.”

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

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

Earlier today, Micheal Ledee, a 30-year-old Brooklyn resident, was sentenced to a term of imprisonment of 325 months following his conviction for conspiracy to sexually exploit a child, sexual exploitation of a child, and receipt of child pornography. The proceeding was held before United States District Judge Nicholas G. Garaufis, at the U.S. Courthouse in Brooklyn, New York.

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

The trial established that the defendant used Yahoo! Instant Messenger to direct the mother of a nine-year-old girl to molest her daughter while he watched the abuse live via a webcam. The government’s evidence included chat logs, the testimony of two computer forensic experts, a Yahoo! software engineer, as well as the minor victim. In determining the sentence, Judge Garaufis considered, among other things, the nature of the crimes and the impact on the victim’s life.

Ms. Lynch expressed her grateful appreciation to the New York Field Office of the FBI, the agency responsible for leading the government’s investigation.

The government’s case was prosecuted by Assistant United States Attorneys Tiana A. Demas, Hilary Ley Jager, Taryn Merkl, and Tyler Smith.

The Defendant:

MICHEAL LEDEE
Brooklyn, New York
Age: 31

Earlier today, Lisong Ma, a citizen of China, pled guilty at the federal courthouse in Brooklyn, New York, to violating the International Emergency Economic Powers Act by attempting to export weapons-grade carbon fiber from the United States to China. According to court filings and facts presented during the plea proceeding, Ma was arrested after attempting to close a deal to acquire and export the specialized materials, which have applications in the defense and aerospace industries and are therefore controlled for export by the United States Department of Commerce.

The plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement, Homeland Security Investigations (HSI), New York; Kenneth J. Siegler, Resident Agent-in-Charge of the Defense Criminal Investigative Service (DCIS), New York Resident Agency; and Sidney Simon, Special Agent-in-Charge, U.S. Department of Commerce (DOC), Office of Export Enforcement, New York Field Office.

During the investigation, federal agents tasked with protecting sensitive technology maintained a covert cyber-presence on web sites related to the brokering, purchase and sale of controlled commodities. In February 2013, the defendant, using the name “Ma Li,” e-mailed an undercover agent and indicated that he was interested in acquiring several different types of high-grade carbon fiber. Then, through various online communications, the defendant attempted to negotiate the purchase of five tons of carbon fiber. Based on a review of Internet Protocol log-in information, investigators discovered that the defendant was communicating from the People’s Republic of China.

On March 12, 2013, the defendant and undercover agents engaged in an online video teleconference session, which was recorded. During the teleconference, the defendant and the undercover agents discussed the license requirement to export certain types of carbon fiber from the United States. One of the agents told the defendant: “We can’t send this to China without an export license, otherwise we risk going to jail.” The defendant then told agents that he would soon be traveling to the United States, and arranged a meeting to further discuss the terms of a deal. On March 27, 2013, the defendant met with undercover agents in the United States. During the meeting, which was covertly recorded, the defendant requested a sample of carbon fiber, because it was “easier” and “safer” to ship, and later commented: “There is a greater chance that the authorities will arrest you if you get a third party involved. That is why it’s better to go directly from the U.S. to China.”

The defendant ultimately decided to ship a sample of weapons-grade, Toray-type T-800 carbon fiber from the United States to China. He paid the undercover agents and placed the material into a plain brown box. Ma falsely indicated on the waybill and invoice that the package contained “clothing.” After the defendant finished packing the box and completing the shipping forms, the package was transported to a courier service, to be shipped to China. The package was thereafter intercepted by agents before it could be exported. Agents also intercepted and arrested the defendant shortly thereafter, as he transited Los Angeles International Airport on his way to Shanghai. He was then removed in custody to Brooklyn.

Certain types of carbon fiber, such as the type defendant Ma sought to acquire in this case, are closely controlled to protect national security. The regulation of carbon fiber falls under the jurisdiction of the Department of Commerce, which reviews and controls the export of certain goods and technology from the United States to foreign countries. In particular, the Commerce Department has placed restrictions on the export of goods and technology that it has determined could make a significant contribution to the military potential or nuclear proliferation of other nations, or that could be detrimental to the foreign policy or national security of the United States.

Carbon fiber composites are ideally suited to applications where strength, stiffness, lower weight, and outstanding fatigue characteristics are critical requirements. These composites also can be used in applications where high temperature, chemical inertness, and high damping are important. The two main applications of carbon fiber are in specialized technology, which includes aerospace and nuclear engineering, and in general engineering and transportation. In addition, certain carbon fiber-based composites, such as the material sought by the defendant, are used in military aircraft and unmanned aerial vehicles. Due to the scarcity of these types of materials, they command high prices on the open market and are highly sought after.

“The defendant tried to circumvent laws that protect our national security by preventing specialized technologies from falling into the wrong hands. The defendant was bent on exporting to China up to five tons of weapons-grade carbon fiber -- enough carbon fiber to stretch from Brooklyn to the Pacific Ocean,” stated United States Attorney Lynch. “Today’s conviction should leave no doubt that the United States will use every available technique, including covert cyber operations, to maintain the superiority of our nation’s armed forces.” Ms. Lynch praised the level of inter-agency cooperation in this case, and added that the government’s investigation is ongoing.

“Today’s conviction highlights the reality that even the most relentless of efforts to unlawfully acquire sensitive American technology will be foiled,” said HSI Special Agent in Charge Hayes. “This investigation provides a great example of how HSI and federal law enforcement are meeting the threat posed by tech savvy international smugglers head-on.”

“This plea demonstrates our resolve to investigate and prosecute those who choose to violate U.S. export control laws. We are proud to work with our law enforcement partners in protecting national security and leveling the playing field for legitimate commerce,” said DOC Special Agent-in-Charge Simon.

“This investigation demonstrates the continued commitment of the Defense Criminal Investigative Service, in cooperation with our law enforcement partners and the U.S. Attorney’s Office, to aggressively pursue those intent on acquiring and illegally exporting military grade materials. Too often these sensitive items find their way into the hands of adversaries and therefore present a potential threat to National Security and America’s war fighters.” stated DCIS Resident Agent-in-Charge Siegler.

Today’s plea took place before United States Magistrate Judge Vera Scanlon When sentenced, Ma faces up to 20 years in prison, as well as forfeiture and a fine of up to $1 million.

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

The Defendant:

LISONG MA
Age: 34

Alessandro Taloni, an alleged associate of the Montreal-based Rizzuto organized crime family of La Cosa Nostra, pled guilty earlier today before U.S. District Judge Raymond J. Dearie at the federal courthouse in Brooklyn to cocaine trafficking charges contained in a superseding indictment returned on April 3, 2013. When sentenced, Taloni will face a statutory mandatory minimum ten-year sentence and a maximum of life imprisonment, and a maximum fine of $10 million. 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 guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Brian R. Crowell, Special Agent-in-Charge of the Drug Enforcement Administration, New York (DEA).

Taloni was charged with narcotics and money laundering offenses as a part of an indictment in which ten members of a Montreal-based drug distribution organization affiliated with the Rizutto and Bonanno crime families, the Hells Angels, and the Sinaloa Cartel have been charged with trafficking over $1 billion worth of marijuana, cocaine, and ecstasy into the United States between 1998 and 2012. The organization allegedly 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.

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.

“Taloni was a major narcotics distributor who used his connections to powerful international organized crime groups to obtain and distribute tens of millions of dollars worth of deadly narcotics. His conviction highlights this Office’s commitment to the global fight against transnational organized crime,” stated United States Attorney Lynch. Ms. Lynch thanked the Laval Police Service, Laval, Quebec; Santa Ana, Beverly Hills, and Anaheim, California Police Departments; and Nassau County Police Department for their invaluable assistance during this multi-year international investigation.

“No borders will obstruct the DEA, Nassau County Police Department, and Laval Police Service from bringing international drug traffickers to justice. This international organized crime syndicate operated on both sides of the northern border and across our southern border,” said DEA Special Agent in Charge Crowel. “This plea was a direct result of the outstanding collaboration between the US Attorney’s Office Eastern District of New York, federal, state, and local law enforcement.”

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: 39

Later today, Freddy Mauricio Tellez-Buitrago and Adriana Gonzalez-Marquez will be arraigned at the federal courthouse in Brooklyn, New York, on obstruction of justice charges for stealing sensitive and confidential United States law enforcement information concerning prosecutions in the Eastern District of New York and selling that information to a narcotics trafficker. Prior to his arrest, Tellez-Buitrago was employed as an administrative services assistant at the International Affairs Office within the Attorney General’s Office in Colombia. Prior to her arrest, Gonzalez-Marquez, a former prosecutor at the Attorney General’s Office in Colombia, was practicing as a Colombian criminal defense attorney. Tellez-Buitrago and Gonzalez-Marquez were arrested in Colombia on provisional arrest warrants issued from the Eastern District of New York.1

The extradition was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; James T. Hayes, Jr., Special Agent-in-Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York; and Brian Crowell, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York. The investigation was conducted by HSI in Bogota, with assistance provided by HSI in New York, DEA in Bogota and New York, and local law enforcement authorities in Colombia.

The defendants’ extradition resulted from an investigation which revealed that through his employment at the Colombian Attorney General’s Office, Tellez-Buitrago had specialized access to law enforcement materials, including requests from the United States government for the extradition of alleged Colombian drug traffickers. Typically, the Colombian authorities treat such extradition requests as sensitive and confidential until the arrest of the individual whose extradition is sought. Tellez-Buitrago is charged with accepting bribes from Gonzalez-Marquez in exchange for leaking documents relating to EDNY extradition requests for narcotics traffickers. Gonzalez-Marquez, in turn, allegedly sold the information to a narcotics trafficker in exchange for the equivalent of approximately 30,000 in U.S. dollars.

“These defendants used their insiders knowledge of the Colombian Attorney General’s Office to steal confidential information that put lives at risk. The extradition of the defendants highlights the success of the international cooperation between the United States and Colombia. We will continue to take every step to target individuals who attempt to compromise the judicial process by obstructing justice here and in Colombia, placing the lives of law enforcement personnel in jeopardy,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the Colombian National Police and the Colombian Attorney General’s Office for their assistance in this case.

“Gonzalez-Marquez and Tellez-Buitrago allegedly used their connections within the Colombian government to provide sensitive information to members of drug trafficking organizations. This type of criminal espionage greatly threatens our efforts to capture criminals abroad and threatens the safety of American and Colombian law enforcement officers alike,” said HSI Special Agent in Charge Hayes. “HSI, working with our attachés and international and federal law enforcement partners, contributes to the disruption of drug trafficking organizations that line their pockets with millions of dollars in illicit proceeds.”

DEA Special Agent in Charge Crowell stated, “Today, as the defendants in this case stepped onto American soil, Freddy Mauricio Tellez-Buitrago and Adriana Gonzalez-Marquez realized the harsh reality that there is no amount of money worth their charged criminal acts. Federal, state, local and international law enforcement united their resources to expose the defendants’ obstruction of justice and extradited them to the U.S. to face our judicial system, a system they allegedly tried to endanger by selling sensitive information and supplying it to the enemies of cops everywhere – drug traffickers.”

If convicted, Tellez-Buitrago and Gonzalez-Marquez each face a maximum sentence of twenty years’ imprisonment, criminal forfeiture, and a fine of up to $250,000.

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

The Defendants:

ADRIANA GONZALEZ-MARQUEZ
Age: 33

FREDDY MARQUEZ TELLEZ-BUITRAGO
Age: 34

 

_____________________________

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

BROOKLYN, NY – Staten Island, New York, resident Saquib Khan, 51, waived indictment and pleaded guilty today to charges that he engaged in a bank fraud scheme that netted approximately $5 million from six New York City area banks insured by the Federal Deposit Insurance Corporation (“FDIC”). To implement his scheme, the defendant transferred more than $82 million among various bank accounts, using a complex web of worthless checks, which the banks initially credited, and wire transfers to cover his tracks. Khan pleaded guilty to eight counts of bank fraud and agreed to forfeit all of the proceeds of his fraud to make the banks whole. The defendant faces up to 30 years imprisonment on each count, as well as a $1,000,000 fine and restitution.

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

According to court documents, from November 2012 through December 2012, Khan, a businessman who owned and operated a wholesale cigarette and grocery business, as well as delicatessens in Staten Island, wrote checks for more than $82,000,000 from various bank accounts under his control. Those accounts did not have sufficient funds to cover the checks. However, upon depositing the worthless checks, the victim banks provided immediate credit for the entire amount of the checks even though the checks had not yet cleared. To cover these worthless checks, Khan wired most of the fraudulently obtained funds from the deposit accounts back to the accounts upon which they were drawn. During each round of these ever-increasing checks and wires, Khan withdrew a portion of the money. In this manner, Khan fraudulently extracted approximately $5 million from the victim banks in less than two weeks.

“As demonstrated by the bank fraud charges and the admissions at his guilty plea, Khan’s greed was matched only by his nerve. But law enforcement promptly shut down Khan’s $82 million check-kiting scheme, and he has now been brought to justice. We are committed to protecting the integrity of our banking system and protecting the public from the effects of fraud,” stated United States Attorney Lynch. “I would like to thank our partners at the FBI for their swift action and effective work on this important investigation. ”

FBI Assistant Director-in-Charge Venizelos stated, “As alleged, and as he has admitted, Khan was a con man. Taking advantage of the banks’ policy of crediting deposited checks before they clear, he stole approximately $5 million. What the scheme likely earned him in the long run is a significant prison term.”

The defendant’s guilty plea took place this morning before United States Magistrate Judge Ramon E. Reyes, Jr., at the federal courthouse in Brooklyn. Sentencing in this case is scheduled before United States District Judge Raymond J. Dearie on September 27, 2013.

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

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

The Defendant:

SAQUIB KHAN
Age: 51
Staten Island, New York

Earlier today, at the federal courthouse in Central Islip, New York, Robert D. Sand, the nation’s “Most Wanted Deadbeat Parent” according to law enforcement, was sentenced to 31 months in prison followed by one year of supervised release by United States District Judge Joseph F. Bianco. Sand previously pleaded guilty to two counts of traveling in interstate and foreign commerce with the intent to evade court ordered child support obligations totaling over $1 million including interest and penalties. Sand was also sentenced to restitution in the amount of his unpaid support obligations – $903,789.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Thomas O’Donnell, Special Agent in Charge of the New York Regional Office, Office of the Inspector General, United States Department of Health and Human Services (OIG-DHHS), and Charles Dunne, United States Marshal for the Eastern District of New York.

At the time of his plea, Sand admitted that he initially relocated from New York to Florida and then fled the United States in order to evade his support obligations following the issuance of arrest warrants in both state and federal court in 2000 and 2002. Sand further admitted that he had spent much of the past decade in the Kingdom of Thailand where he operated a business. Sand was arrested in late November 2012, upon entering the Republic of the Philippines from Thailand without proper identification documents, and on December 17, 2012, he was deported to Los Angeles, where he was taken into custody by deputies of the United States Marshals Service. During the time Sand was a fugitive, his support obligations continued to grow. At the time of his arrest, Sand owed more than $1 million in back child support including interest and penalties.

According to a complaint filed in federal court on April 8, 2002, the New York State Family Court in Nassau County issued an arrest warrant for Sand on November 22, 2000, following multiple contempt findings against him in child support proceedings. A federal arrest warrant was issued for Sand on April 8, 2002. On September 17, 2009, an indictment was filed in federal court in the Eastern District of New York charging Sand with two counts of failure to pay child support, and on February 17, 2010, a second federal warrant was issued for Sand’s arrest.

“Robert Sand literally fled the country to avoid his obligation to the children he brought into this world. But law enforcement did not turn their back on those children and what they were due. This Father’s Day will find Sand behind bars, finally being held to account for his abandonment. The sentence imposed today sends a message to those who would flee their lawful child support obligations that we will prosecute them to the fullest extent of the law,” stated United States Attorney Lynch. “As this investigation and prosecution demonstrate, flight from prosecution may delay, but will not deny justice.” Ms. Lynch expressed her grateful appreciation to the Office of the Inspector General, United States Department of Health and Human Services and the United States Marshals Service for their assistance in this case.

In January 2012, OIG-DHHS launched a child support enforcement web page (http://oig.hhs.gov/fraud/child-support-enforcement/) to seek the public’s help in ongoing federal efforts to bring fugitive “deadbeat parents” to justice. Sand was listed on the site as the number one “Most Wanted Deadbeat Parent” based upon his child support obligations totaling more than $1 million.

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

The Defendant:

Name: ROBERT D. SAND
Age: 51

Earlier today, Michael Provenzano, formerly Director of Construction Services for the New York City Department of Housing Preservation and Development (HPD), was sentenced to a term of imprisonment of 18 months followed by three years of supervised release, and ordered to pay $30,000 restitution to the City of New York and a $5,000 fine following his corruption conviction for taking bribes. As part of his sentence, Provenzano also was ordered to forfeit the $30,000 in bribery money to the government, representing the proceeds of his crime. The sentence was imposed by United States District Judge Nina Gershon at the federal courthouse in Brooklyn, 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); Robert Panella, Special Agent-in-Charge, United States Department of Labor (DOL) Office of Inspector General, Office of Labor Racketeering and Fraud Investigations; and Rose Gill Hearn, Commissioner, New York City Department of Investigation (DOI).

From approximately January 2007 through December 2009, Provenzano solicited and received $30,000 in bribe payments from a contractor who had extensive construction contracts with HPD, the largest municipal developer of affordable housing in the United States. The contractor paid Provenzano the bribes in return for, among other things, Provenzano leaking to the contractor confidential HPD inspection reports, which documented the number of workers at a given work site. The contractor was regularly and illegally employing additional workers at different work sites and paying them less than the legally-required prevailing wage. With these leaked inspection reports, the contractor was able to conform his invoices to match the reports, thereby avoiding detection by HPD for his illegal conduct in paying those additional workers less than the prevailing wage.

Today’s sentencing proceeding is the first stemming from the government’s wide-ranging investigation into fraud involving the affordable housing industry in New York City. Four real estate developers and two other former HPD officials have pleaded guilty to various charges including racketeering conspiracy, fraud, and bribery related to the development of affordable housing in New York City. Three additional defendants await trial.

“Provenzano admitted taking bribes to provide a developer with confidential information that helped that developer exploit his workers. Today’s sentence sends a clear message: any public servant, whether a legislator or an appointed official, who dips his hand in the public till will be prosecuted to the fullest extent of the law. Serving the public is a privilege, not an opportunity for unjust enrichment. We will continue to root out public corruption wherever we find it,” stated United States Attorney Lynch. Ms. Lynch thanked the Internal Revenue Service, Criminal Investigation, New York; the United States Department of Housing and Urban Development; and the New York City Police Department for their assistance in this case.

FBI Assistant Director-in-Charge Venizelos stated, “By his admission, Provenzano was for sale. For a fee, he provided information that benefitted a contractor rather than serving the interests of the city, his agency and the public.”

“Today’s sentencing highlights the Office of Inspector General’s commitment to combat fraud and corruption involving publicly funded construction contracts. The OIG will continue to work with our law enforcement partners to investigate those who facilitate the circumvention of prevailing wage laws for personal gain,” stated DOL/OIG Special Agent-in-Charge Panella.

DOI Commissioner Rose Gill Hearn said, “This defendant should have protected HPD’s construction process. Instead, he traded his integrity so he could pocket tens of thousands of dollars in bribes. Now, he reaps the serious consequences of his crimes: conviction, prison, and the loss of a valuable City job.”

The government’s case is being prosecuted by Assistant United States Attorneys Cristina M. Posa, Anthony Capozzolo, and Claire Kedeshian.

The Defendant:

MICHAEL PROVENZANO
Massapequa, New York
Age: 49

Earlier today, at the federal courthouse in Brooklyn, New York, Benito Lopez- Perez, Anastasio Romero-Perez and Jose Gabino Barrientos-Perez, brothers and citizens of Mexico, pled guilty to sex trafficking charges. According to the 25-count indictment and other court filings, the defendants were charged with sex trafficking, interstate prostitution, alien smuggling and money laundering offenses, involving victims as young as 14 years old.

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

The defendants were extradited from Mexico in December 2012, as part of the Office’s comprehensive anti-trafficking program, which has to date indicted 52 defendants in sex trafficking cases and rescued over 100 victims, including 17 minors. At the court proceeding today before United States District Judge Carol B. Amon, each defendant pled guilty to a sex trafficking charge that carries a mandatory minimum sentence of 10 years in prison, with a maximum sentence of life in prison. As part of their agreement with the government, two of the defendants, Benito Lopez-Perez and Anastasio Romero-Perez, stipulated that they would not advocate for a sentence less than 188 months in prison.

As alleged in affidavits submitted in connection with the extradition proceedings, Benito Lopez-Perez (“Lopez-Perez”), Jose Gabino Barrientos-Perez (“Barrientos-Perez”) and Anastasio Romero-Perez (“Romero Perez”), are brothers from Tenancingo in Tlaxcala, Mexico. Between January 2003 and August 2010, as part of a family-based organization, the defendants smuggled three young Mexican women, identified in the court documents as Jane Doe 1, Jane Doe 2 and Jane Doe 3, from Mexico to the United States, and then forced them to work as prostitutes in New York City and elsewhere. The defendants recruited and enticed the victims when they were just 14 and 15 years old and living in Mexico. After forcing one victim into prostitution by forcibly raping her, and luring the remaining victims into intimate relationships through false promises of romance and marriage, the defendants forced the victims to work for the defendants as prostitutes, initially in Mexico. The defendants beat and sexually assaulted the victims to compel them to work and punish them for not earning enough money, and the victims were required to turn over all of their earnings to the defendants. The defendants also threatened violence against the victims’ family members to prevent the victims from running away.

In July 2005, Lopez-Perez, Barrientos-Perez and Romero-Perez began smuggling the victims into the United States illegally to work as prostitutes. The defendants housed the victims in New York City. Each day, the victims were driven to locations throughout New York City to engage in prostitution. The three defendants worked together, frequently relying on each other to watch over the victims when any of the brothers returned to Mexico.

After the victims arrived in the United States, the defendants directed them to send the money they earned from prostitution to the defendants’ family members in Mexico. At the defendants’ direction, the victims went to various wire transfer service companies in New York City on a regular basis and sent sums of money ranging from a few hundred to a few thousand dollars to the defendants’ family members in Mexico. The defendants also directed the victims to use fake names when sending the money.

“The defendants not only pretended to embody these young victims’ dreams of romance and security, but also used violence to recruit a victim, all for the purpose of selling the victims into a nightmare of sexual slavery. The trafficking of innocent women and girls for sex is one of the most heinous crimes that we prosecute. This case, and our Office’s comprehensive anti-trafficking program, again demonstrate our resolve to investigate and prosecute those who would profit from exploitation of others,” stated U.S. Attorney Lynch.

“Today’s guilty pleas bring an end to the horrors these traffickers committed against their innocent victims,” said HSI Special Agent in Charge Hayes. “HSI will continue to devote all necessary resources, domestic and foreign, to vigorously target and prosecute members of sex trafficking organizations who prey on the innocence and trust of young women and children in order to enslave them for profit.”

The government’s case is being prosecuted by Assistant United States Attorneys Elizabeth Geddes, Licha Nyiendo and Erik Paulsen.

The Defendants:

BENITO LOPEZ-PEREZ
Age: 34

ANASTASIO ROMERO-PEREZ
Age: 40

JOSE GABINO BARRIENTO-PEREZ
Age: 52

Earlier today, following three weeks of trial, a federal jury in Brooklyn, New York, returned a guilty verdict against Rodney Watts, the former Chief Investment Officer of GDC Acquisitions, LLC (“GDC”), on charges of bank fraud, false statements and conspiracy to commit bank fraud.  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.  When sentenced by United States District Judge Kiyo A. Matsumoto, the defendant faces a maximum sentence of 30 years’ imprisonment on the most serious charge.  Watts’s co-defendant, Courtney Dupree, was convicted by a federal jury in December 2011, on the same charges.  Dupree, who served as GDC’s Chief Executive Officer, is also awaiting sentencing.

The government has already won two appeals before the Second Circuit in the case.  In one appeal, the government successfully defended its seizure of over $633,000 that Watts sought released to pay for his defense attorneys; that appeal was dismissed after a jury in the trial of Dupree determined that the funds were criminal proceeds.  In the other appeal, the government successfully appealed a decision relating to evidence that Dupree committed a crime while out on bail.

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

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 evidence included the testimony of GDC’s former Chief Financial Officer and two GDC accountants, all three of whom had previously pleaded guilty to fraud charges arising from the scheme.  At trial, the government proved defendant Rodney Watts 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 evidence proved that the conspirators inflated the accounts receivable by a variety of means, including by recording in the corporate books fake 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 defendant and others also sought to obtain an additional loan from C3 Capital, a mezzanine lender based in Kansas City, Missouri, based on GDC’s fraudulent books.  According to the trial testimony, 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.

“Using books and records that were no more than fairy tales, the defendant fleeced Amalgamated Bank of 21 million dollars.  The jury saw through his creative writing and web of lies, and he will now be held to account for his crimes,” stated United States Attorney Lynch.  “No matter their wealth, influence, or position, fraudsters can 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.

The government’s case is being prosecuted by Assistant United States Attorneys Michael L. Yaeger, Catherine M. Mirabile, David C. Woll and Brian Morris.

The 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.  For more information on the task force, visit www.stopfraud.gov.

The Defendants:

COURTNEY DUPREE
Age: 41

RODNEY WATTS
Age: 39

WASHINGTON, D.C. – The Department of Justice has filed a lawsuit and sought a preliminary injunction against N.Y. Fish Inc.; New York City Fish Inc.; Maxim Kutsyk, Pavel Roytkov, Leonid Staroseletesky, and Steven Koyfman under the federal Food, Drug, and Cosmetic Act (FDCA).  New York City Fish manufactures and distributes ready-to-eat fishery products, including smoked salmon and mackerel, and operates out of a food processing facility located at 738 Chester Street in Brooklyn. N.Y. Fish previously operated a similar fish processing business out of the same location, employing virtually all of the same employees.  Although N.Y. Fish has ceased manufacturing, FDA believes that N.Y. Fish products continue to be distributed and sold.  The complaint alleges that all defendants have a history of processing fishery products under insanitary conditions, with inadequate safety procedures.

“Consumers depend on food producers to follow the right procedures to make sure our food is safe to eat,” said Acting Assistant Attorney General for the Civil Division Stuart F. Delery.  “As this case demonstrates, the Department of Justice is committed to taking action against those who produce or process food under insanitary conditions or with inadequate safety procedures.”

“Inspectors who visited the defendants’ facility found more than Nemo; they found life-threatening bacteria.  Despite repeated warnings and direction to sanitize the facility, the defendants have failed to do so.  They cannot be allowed to continue to distribute potentially unsafe food to our families.  Those who store, package and sell the food that we eat must maintain basic standards of cleanliness in their facilities.  We are committed to protecting the public from health risks by ensuring that food manufacturers comply with federal laws prohibiting them from preparing, packing and holding food products under insanitary conditions,” stated Loretta E. Lynch, the U.S. Attorney for the Eastern District of New York. 

According to the complaint, FDA conducted seven inspections of the Chester Street facility between 2006 and 2013.  The inspections showed a repeated failure to minimize the risk of contamination by two dangerous types of bacteria: Listeria monocytogenes and Clostridium botulinum.  People who eat food contaminated with Listeria monocytogenes can contract the disease listeriosis, which can be serious, even fatal, for vulnerable groups such as newborns and those with impaired immune systems.  Complications from the disease can also lead to miscarriage.  Clostridium botulinum spores can produce the toxin that causes botulism.  Eating food tainted with this toxin can lead to paralysis and potentially death.

FDA’s most recent inspection occurred in February 2013, when New York City Fish was operating the Chester Street facility.  According to court filings, the company missed critical processing steps that are essential to prevent the growth and toxin production of Clostridium botulinum and to eliminate any Listeria monocytogenes contamination, including heating fish for a dangerously short time and using insufficiently salty brining solution. 

FDA previously investigated the facility in August 2012, when it was operated by N.Y. Fish.  FDA inspectors discovered widespread sanitation problems and a similar failure to meet critical steps necessary to prevent contamination.  They also found salmon products and production equipment contaminated with Listeria monocytogenes, even after the company attempted to clean and sanitize the facility. 

Further testing by the FDA revealed that certain strains of Listeria monocytogenes it found likely had persisted in the Chester Street facility for years.  FDA contends that the facility is so infiltrated with Listeria monocytogenes that New York City Fish must institute heightened monitoring and strict sanitation procedures to have any hope of eradicating this life-threatening organism, but that it has failed to do so. 

The lawsuit is being brought by Assistant U.S. Attorney Elliot M. Schachner of the Eastern District of New York, and Trial Attorney Adrienne Fowler of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel for Enforcement Julie Dohm of the FDA.

Four individuals, including two doctors, have been charged for their alleged participation in two separate schemes that falsely billed the Medicare and Medicaid programs for more than $17 million.1 The charges filed in Brooklyn, New York, are part of a nationwide takedown by the Medicare Fraud Strike Force operations that led to charges against 89 individuals for their alleged participation in schemes to collectively submit approximately $223 million in fraudulent claims.

The Brooklyn cases were announced by United States Attorney Loretta E. Lynch of the Eastern District of New York, George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), New York Field Office, and Thomas O’Donnell, Special Agent-in-Charge, Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations, New York. The results of the nationwide takedown were announced today by Attorney General Eric H. Holder, Health and Human Services Secretary Kathleen Sebelius, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, FBI Assistant Director Ron Hosko, Inspector General Daniel R. Levinson of HHS-OIG, and Centers for Medicare and Medicaid Services Deputy Administrator for Program Integrity Dr. Peter Budetti.

The two schemes charged in the Eastern District of New York, detailed in an indictment and a criminal complaint, and other documents filed by the government, are as follows:

Presman. Mikhail L. Presman, 55, a psychiatrist employed by the U.S. Department of Veterans Affairs (VA), was charged in a complaint with engaging in a scheme to submit false and fraudulent medicare claims while operating a private practice when not on duty at the VA. The complaint alleges that Presman submitted fraudulent claims to the Medicare program in excess of $4,000,000 for home medical visits for patients who were never seen by Presman, for patients whom Presman claimed to have treated when he was in fact away on vacation, and for patients who were confined in a hospital at the time that Presman claimed to have treated them. Presman received over $2,800,000 in Medicare payments as a result of this scheme. A search warrant was executed at Presman’s personal residence which purported to be his medical office. The Presman case is being prosecuted by Assistant United States Attorney Patricia E. Notopoulos and Trial Attorney Bryan Fields of the Criminal Division’s Fraud Section. The defendant is scheduled to be arraigned today before United States Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn, New York.

Lee, et al. The indictment charges Chang Ho Lee, 66, a medical doctor, Michelle Lee, 58, the manager of several medical clinics, and Francis Choi, 54, a medical biller, with conspiracy to commit health care fraud, conspiracy to pay health care kickbacks, and falsification of records. Chang Ho Lee and Francis Choi are charged with health care fraud. Chang Ho Lee is separately charged with paying health care kickbacks. The charges arise from an approximately $13 million Medicare fraud scheme that took place at three clinics – two in Flushing, New York, and one in Brooklyn, New York – from approximately March 2007 to May 2012, in which patients were offered massages, facials, and other inducements and, in return, the clinic billed those patients’ Medicare numbers for physical therapy, lesion removals, and other procedures that were medically unnecessary and not provided. According to the indictment, when Medicare audited the clinics and asked for patient records in support of claims, the defendants created false patient records to submit to Medicare. The Lee case is being prosecuted by Trial Attorney Bryan Fields and Senior Trial Attorney Nicholas Acker of the Criminal Division’s Fraud Section. The defendant is scheduled to be arraigned today before United States Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn, New York.

“As alleged, these two prosecutions have exposed corrupt doctors and medical professionals who defrauded the Medicare program out of millions of dollars for their personal gain. With so many patients in desperate need of medical care, it is particularly galling that these defendants allegedly arranged Medicare-funded facials and massages and billed while on vacation,” stated United States Attorney Lynch. “Today’s arrests demonstrate our continuing commitment to vigorously prosecute all who drain taxpayer funds from the Medicare program – funds which would otherwise pay for needed care for elderly and disabled Americans.” Ms. Lynch extended her grateful appreciation to the United States Department of Veterans Affairs, Office of Inspector General, the New York State Office of the Medicaid Inspector General, the New York Attorney General’s Office, the New York State Medicaid Fraud Control Unit, the New York State Department of Financial Services, the New York City Police Department, and New York City Human Resources Administration for their assistance in the investigations in this district.

FBI Assistant Director-in-Charge Venizelos stated, “The two cases present glaring examples of abuse of the Medicare program. As alleged in the indictment and complaint, the common thread is unscrupulous medical professionals billing this taxpayer-funded program for millions of dollars of services that were either medically unnecessary or not provided at all. Alarmingly, one doctor allegedly billed for home visits when the patients were hospitalized and therefore not home, or when he himself was on vacation and not working. Medicare fraud threatens the vitality of the program and unjustly enriches lawbreakers, and it won’t be tolerated.”

“Individuals continue to defraud the Medicare and Medicaid systems at an alarming rate, said HHS-OIG Special Agent-in-Charge O’Donnell. We will continue to aggressively investigate all heath care fraud schemes.”

The Defendants:

MIKHAIL PRESMAN
Brooklyn, NY

FRANCIS CHOI
Blauvelt, NY

CHANG LEE
Palisade Park, NJ

MICHELLE LEE
Palisade Park, NJ

_____________________________

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

Earlier today, at the federal courthouse in Brooklyn, former New York State Senator Shirley Huntley was sentenced to one year and one day in prison, followed by three years of supervised release. Huntley previously pleaded guilty to engaging in a mail fraud conspiracy. As part of her sentence, Huntley was ordered to make restitution of $87,700 to the New York State Department of Education for funds she embezzled, and $1,000 in connection with an unrelated bribery scheme involving a cargo-handling business at John F. Kennedy International Airport.

“The crux of this case has always been the defendant Shirley Huntley’s greed and self-interest. Promising to provide much needed assistance to the parents of New York City public schoolchildren, she set up a nonprofit organization that received state funding. Instead of serving the parents, Huntley helped herself and her family to state funds. Shirley Huntley violated the public trust and betrayed her constituents by stealing public funds for her own benefit,” stated United States Attorney Lynch. “Today’s sentence should send a clear message: we will bring to justice those who corrupt the system of laws upon which our community relies.”

Earlier today, at the federal courthouse in Central Islip, New York, Frank Telang, a Long Island doctor, was sentenced to 30 months in prison by United States District Court Judge Joseph F. Bianco. Telang previously pleaded guilty to illegally distributing oxycodone, a highly addictive prescription pain killer, outside the scope of his professional practice and not for any medical purpose, as well as income tax evasion for failing to report the cash income that he received from providing the oxycodone prescriptions. Telang was also ordered to forfeit $10,500.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Brian R. Crowell, Special Agent-in-Charge, Drug Enforcement Administration (DEA), New York, Thomas V. Dale, Commissioner, Nassau County Police Department, Joseph A. D’Amico, Superintendent, New York State Police, and Toni Weirauch, Acting Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York.

Between April 13, 2011 and October 20, 2011, Telang, who maintained offices in Bethpage and Port Jefferson Station, New York, sold prescriptions for oxycodone and other controlled substances to undercover DEA task force officers posing as patients without performing any medical examination. In addition, on the night of December 6, 2011, members of a DEA Tactical Diversion Squad, comprising DEA agents, Nassau County Police Department detectives, and New York State Police investigators, observed Telang meeting with a purported patient in a parking lot near the Long Island Expressway. When approached by law enforcement, Telang crumpled up a prescription that he had been holding and attempted to hide it in his vehicle. Telang was interviewed that night by law enforcement and subsequently returned to his office in Port Jefferson Station early the next morning where he altered the medical file of that purported patient.

Telang also failed to pay taxes on the cash he received for unlawfully providing the prescriptions.

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

“Telang abandoned his oath to ‘do no harm’ for the motto ‘where’s the money.’ His sale of prescriptions for this addictive and deadly drug in exchange for cash not only violated his oath but constituted a serious crime,” stated United States Attorney Lynch. “This sentence should serve as a warning to any physicians who would engage in such conduct.” Ms. Lynch thanked the Drug Enforcement Administration, the Nassau County Police Department, the New York State Police, and the Internal Revenue Service for their invaluable assistance in the investigation.

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 U.S. Department of Health and Human Services’ Centers for Disease Control and Prevention has called an epidemic increase in the abuse of so-called opioid analgesics. So far, the Initiative has brought over 120 federal and local criminal prosecutions, taken civil enforcement action against a pharmacy, removed prescription authority from numerous rogue doctors, and expanded information-sharing among enforcement agencies to better target and pursue drug traffickers. The Initiative also is involved in an extensive community outreach program to address the abuse of pharmaceuticals.

The government’s case was prosecuted by Assistant United States Attorney Allen L. Bode.

The Defendant:

Name: FRANK TELANG
Age: 58

A four-count federal indictment was unsealed in Brooklyn charging eight defendants with participating in two worldwide cyberattacks that inflicted $45 million in losses on the global financial system in a matter of hours.1 These defendants allegedly formed the New York-based cell of an international cybercrime organization that used sophisticated intrusion techniques to hack into the systems of global financial institutions, steal prepaid debit card data, and eliminate withdrawal limits. The stolen card data was then disseminated worldwide and used in making fraudulent ATM withdrawals on a massive scale across the globe. The eight indicted defendants and their co-conspirators targeted New York City and withdrew approximately $2.8 million in a matter of hours. The defendants are charged variously with conspiracy to commit access device fraud, money laundering conspiracy, and money laundering.

Seven of the eight defendants have been arrested on the charges in the indictment: the arrested defendants are Jael Mejia Collado, Joan Luis Minier Lara, Evan Jose Peña, Jose Familia Reyes, Elvis Rafael Rodriguez, Emir Yasser Yeje, and Chung Yu-Holguin, all residents of Yonkers, New York. Rodriguez was arrested on a criminal complaint on March 27, 2013, when he attempted to flee the United States for the Dominican Republic. Peña was arrested on a criminal complaint in Yonkers, New York, on April 3, 2013. Lara, Reyes, and Yeje surrendered to law enforcement authorities on April 15, 2013, and Collado and Yu-Holguin were arrested yesterday afternoon. The indictment also charges an eighth defendant, Alberto Yusi Lajud-Peña, also known as “Prime” and “Albertico,” who is reported to have been murdered on April 27, 2013, in the Dominican Republic. The case has been assigned to United States District Judge Kiyo A. Matsumoto.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Steven Hughes, Special Agent in Charge, United States Secret Service, New York Field Office, and James T. Hayes, Jr., Special Agent in Charge, U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), New York.

“As charged in the indictment, the defendants and their co-conspirators participated in a massive 21st century bank heist that reached across the Internet and stretched around the globe. In the place of guns and masks, this cybercrime organization used laptops and the Internet. Moving as swiftly as data over the Internet, the organization worked its way from the computer systems of international corporations to the streets of New York City, with the defendants fanning out across Manhattan to steal millions of dollars from hundreds of ATMs in a matter of hours,” stated United States Attorney Lynch. “Law enforcement is committed to moving just as swiftly to solve these cybercrimes and bring their perpetrators to justice.”

“New technologies and the rapid growth of the Internet have eliminated the traditional borders of financial crimes and provided new opportunities for the criminal element to threaten the world’s financial systems. However, as demonstrated by the charges and arrests announced today, the Secret Service and its law enforcement partners have adapted to these technological advancements and utilized cutting edge investigative techniques to thwart this cybercriminal activity,” said Secret Service Special Agent in Charge Hughes. “I want to take this opportunity to commend the dedicated men and women of the Secret Service and HSI for their extraordinary efforts in this investigation. This case is an excellent example of the impact that can be made when the law enforcement community works together.”

“The arrests today reflect the government’s joint efforts to bring a global cybercrime enterprise to justice,” said HSI Special Agent in Charge Hayes. “HSI is proud to be part of a proactive federal law enforcement initiative that uses its collective resources to pull the plug on those who attempt to use the Internet to commit bank robbery.”

The “Unlimited Operation”

As alleged in the indictment and other court filings, the cyberattacks employed by the defendants and their co-conspirators in this case are known in the cyber underworld as “Unlimited Operations” – through its hacking “operation,” the cybercrime organization can access virtually “unlimited” criminal proceeds.

The “Unlimited Operation” begins when the cybercrime organization hacks into the computer systems of a credit card processor, compromises prepaid debit card accounts, and essentially eliminates the withdrawal limits and account balances of those accounts. The elimination of withdrawal limits enables the participants to withdraw literally unlimited amounts of cash until the operation is shut down. “Unlimited Operations” are marked by three key characteristics: (1) the surgical precision of the hackers carrying out the cyberattack, (2) the global nature of the cybercrime organization, and (3) the speed and coordination with which the organization executes its operations on the ground. These attacks rely upon both highly sophisticated hackers and organized criminal cells whose role is to withdraw the cash as quickly as possible.

As alleged in court filings, “Unlimited Operations” are executed in the following manner: First, over the course of months, the hackers plan and execute sophisticated cyber intrusions to gain unauthorized access to the computer networks of credit card processors that are responsible for processing prepaid debit card transactions. They target databases of prepaid debit cards, which are typically loaded with finite funds; such cards are used by many employers in lieu of paychecks and by charitable organizations to distribute disaster assistance. The cybercriminals breach the debit card accounts’ security protocols, then dramatically increase the balances and effectively eliminate the withdrawal limits on the accounts. The elimination of withdrawal limits enables the participants to withdraw unlimited amounts of cash until the operation is shut down. Next, the cybercrime organization cashes in, by distributing the hacked prepaid debit card numbers to trusted associates around the world – the two cyberattacks charged in this case allegedly involved 26 countries. These associates operate cells or teams of “cashers,” who encode magnetic stripe cards, such as gift cards, with the compromised card data. When the cybercrime organization distributes the personal identification numbers (PINs) for the hacked accounts, the casher cells spring into action, immediately withdrawing cash from ATMs across the globe. Meanwhile, the cybercrime organization maintains access to the computer networks of the credit card processors they have hacked in order to monitor the withdrawals. At the end of an operation, when the cards are finally shut down, the casher cells launder the proceeds, often investing the operation’s proceeds in luxury goods, and kick money back up to the cybercrime organization’s leaders.

The Charged “Unlimited Operation” Cyberattacks

According to the government’s filings, between approximately October 2012 and April 2013, the defendants and their co-conspirators conducted two Unlimited Operations. The first operation, on December 22, 2012, targeted a credit card processor that processed transactions for prepaid MasterCard debit cards issued by the National Bank of Ras Al-Khaimah PSC, also known as RAKBANK, in the United Arab Emirates. After the hackers penetrated the credit card processor’s computer network, compromised the RAKBANK prepaid card accounts, and manipulated the balances and withdrawal limits, casher cells across the globe operated a coordinated ATM withdrawal campaign. In total, more than 4,500 ATM transactions were conducted in approximately 20 countries around the world using the compromised RAKBANK account data, resulting in approximately $5 million in losses to the credit card processor and RAKBANK. In the New York City area alone, over the course of just two hours and 25 minutes, the defendants and their co-conspirators conducted approximately 750 fraudulent transactions, totaling nearly $400,000, at over 140 different ATM locations in New York City.

As alleged in the indictment and other court filings, the second of these Unlimited Operations occurred on the afternoon of February 19 and lasted into the early morning of February 20, 2013. This operation again breached the network of a credit card processor that serviced MasterCard prepaid debit cards, this time issued by the Bank of Muscat, located in Oman. Again, after the cybercrime organization’s hackers compromised Bank of Muscat prepaid debit card accounts and distributed the data, the organization’s casher cells engaged in a worldwide ATM withdrawal campaign. This attack was particularly devastating: Over the course of approximately 10 hours, casher cells in 24 countries executed approximately 36,000 transactions worldwide and withdrew about $40 million from ATMs. From 3 p.m. on February 19 through 1:26 a.m. on February 20, the defendants and their co-conspirators withdrew approximately $2.4 million in nearly 3,000 ATM withdrawals in the New York City area.

As charged in the indictment and other filings, defendant Alberto Yusi Lajud-Peña was the leader of the New York cell of this organization, and in the wake of the charged Unlimited Operations, he and defendants Elvis Rafael Rodriguez and Emir Yasser Yeje laundered hundreds of thousands of dollars in illicit cash proceeds. In one transaction alone, nearly $150,000 in the form of 7,491 $20 bills, was deposited at a bank branch in Miami, Florida, into an account controlled by defendant Alberto Yusi Lajud-Peña. Cell members also invested the criminal proceeds in portable luxury goods, such as expensive watches and cars. To date, the United States has seized hundreds of thousands of dollars in cash and bank accounts, two Rolex watches and a Mercedes SUV, and is in the process of forfeiting a Porsche Panamera. The Mercedes and Porsche were purchased with $250,000 in proceeds of this scheme.

In announcing the charges, United States Attorney Lynch praised the extraordinary efforts of the Secret Service in responding so rapidly to these attacks and investigating both the complex network intrusions that occurred overseas and the criminal activity occurring locally. Ms. Lynch also thanked the Department of Homeland Security for its invaluable role in recent arrest and seizure operations, as well as MasterCard, RAKBANK, and the Bank of Muscat for their cooperation with this investigation. Ms. Lynch expressed gratitude for the timely and extensive assistance of law enforcement authorities in Japan, Canada, Germany, and Romania, and also thanked authorities in the United Arab Emirates, Dominican Republic, Mexico, Italy, Spain, Belgium, France, United Kingdom, Latvia, Estonia, Thailand, and Malaysia for their cooperation in this investigation.

If convicted, the defendants face a maximum sentence of 10 years’ imprisonment on each of the money laundering charges and 7.5 years on the conspiracy to commit access device fraud charge, restitution, and up to $250,000 in fines. In addition, all property involved in the money laundering offenses and all proceeds of the conspiracy to commit access device fraud are subject to forfeiture.

The government’s case is being prosecuted by Assistant United States Attorneys Cristina M. Posa, Hilary Jager, Brian Morris, and Kevin Trowel.

The Defendants:

ALBERTO YUSI LAJUD-PEÑA (deceased)
Age: 23

JAEL MEJIA COLLADO
Age: 23

JOAN LUIS MINIER LARA
Age: 22

EVAN JOSE PEÑA
Age: 35

JOSE FAMILIA REYES
Age: 24

ELVIS RAFAEL RODRIGUEZ
Age: 24

EMIR YASSER YEJE
Age: 24

CHUNG YU-HOLGUIN
Age: 22

_____________________________

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

Loretta E. Lynch, United States Attorney for the Eastern District of New York, today announced the filing of a settlement agreement with the City of New York regarding allegations that the Fire Department (FDNY) violated the Americans with Disabilities Act (ADA) by failing to reasonably accommodate a disabled firefighter.  

The United States’ complaint was brought on behalf of Gerald Snell, a former FDNY fire captain who suffered irreversible lung damage while participating in search, rescue, recovery, and cleanup efforts at the World Trade Center site in New York City after September 11, 2001.  The complaint alleges that the FDNY failed to reasonably accommodate Mr. Snell’s disability and forced him to retire despite his desire to remain with the FDNY in a non-firefighting capacity. 

Under the Settlement Agreement, the FDNY has agreed to pay Snell back pay and to adjust his monthly pension payments.  In addition, the FDNY has agreed to create and implement written reasonable accommodation procedures that comply with the ADA, which will ensure that all disabled firefighters are offered the opportunity to obtain reasonable accommodation and not be forced to retire if they wish to remain with the FDNY and are qualified for available “off-line” positions that do not involve firefighting duty.

“All New York City firefighters with disabilities – and in particular, 9/11 first responders such as Mr. Snell – are entitled to the protections of the Americans with Disabilities Act,” stated U.S. Attorney Lynch.  “This includes the right to receive reasonable accommodation in the form of reassignment where appropriate, so that firefighters can continue to serve the people of New York City even if they are no longer physically able to fight fires. Their experience and expertise should not be lost.”

The government’s case is being litigated by Assistant U.S. Attorney Scott R. Landau.

An indictment was presented this morning in the United States Courthouse for the Eastern District of New York in Central Islip, New York, charging eight defendants with mail fraud and conspiracy to commit mail fraud in connection with a scheme to defraud multiple insurance companies. Named as defendants in the indictment are Shawnn McFadden, Roshon Cooke, Daniel Osborne, Daniel Thompson, Allah Brown, Byron Dudley, Shaquana Basnight and Clifford Hawkins. According to the indictment, the defendants staged accidents and later falsely claimed that they sustained physical injuries as a result of the accidents.1 The defendants are scheduled to be arraigned later today before the Honorable A. Kathleen Tomlinson, United States Magistrate Judge for the Eastern District of New York, at the federal courthouse in Central Islip.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Keith E. Mike, Acting Inspector-in-Charge, United States Postal Inspection Service, and Raymond W. Kelly, Commissioner of the New York City Police Department.

As alleged in the 14 count indictment, beginning in March 2009 and continuing until July 2011, the defendants rented vehicles from U-Haul International, Inc. (“U-Haul”) and drove with one or more coconspirators as passengers to locations in Kings and Nassau Counties where they either intentionally struck or were struck intentionally by vehicles driven and occupied by other coconspirators. After the accidents, the defendants and coconspirators responded to locations throughout the metropolitan area ostensibly to receive medical treatment for injuries purportedly suffered during the staged accidents. The defendants and others later filed insurance claims with U-Haul’s insurer Republic Western Insurance CompanyWest, as well as Travelers Insurance Company, Allstate Insurance Company, GMAC Insurance, GEICO, and Progressive Insurance which sought over $2 million, and the defendants obtained over $1 million in payment, for claimed injuries and medical treatment.

“As alleged, these defendants played bumper cars with the lives of unsuspecting New Yorkers, all to enrich themselves through insurance fraud. Insurance fraud through staged accidents presents a danger not only to the public health but also exacts a high cost to the public in the cost of insurance,” stated United States Attorney Lynch. “We and our law enforcement partners will vigorously pursue and prosecute those who seek to profit by such fraud.” Ms. Lynch expressed her grateful appreciation to the New York City Police Department and the New York State Department of Financial Services for their assistance.

Acting Postal Inspector-in-Charge Mike stated, “The arrests of these individuals for their alleged participation in a scheme to defraud insurance companies is an example of the commitment of Postal Inspectors to eliminate crime wherever it exists – keeping the mail safe and secure for the American public.”

The indictment charges all eight defendants with mail fraud and conspiracy to commit mail fraud. If convicted, they each face a maximum sentence of 20 years’ imprisonment, forfeiture of over a million dollars, and a $250,000 fine.

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

The Defendants:

Name: SHAWN McFADDEN
Age: 31
Residence: Uniondale, NY

Name: ROSHON COOKE
Age: 35
Residence: Hempstead, NY

Name: DANIEL OSBORNE
Age: 28
Residence: Uniondale, NY

Name: DANIEL THOMPSON
Age: 32
Residence: Norfolk, VA

Name: ALLAH BROWN
Age: 27
Residence: Roosevelt, NY

Name: BYRON DUDLEY
Age: 28
Residence: Baldwin, NY

Name: SHAQUANA BASNIGHT
Age: 30
Residence: Hempstead, NY

Name: CLIFFORD HAWKINS
Age: 25
Residence: Baldwin, NY

_____________________________

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

An indictment was unsealed this morning in federal court in Brooklyn charging New York State Senator John Sampson with two counts of embezzlement, five counts of obstruction of justice and two counts of making false statements to the Federal Bureau of Investigation.1 Since 1997, Sampson has served in the New York State Senate (the “Senate”) representing the 19th Senate District in southeastern Brooklyn. From June 2009 to December 2012, Sampson was the leader of the Democratic Conference of the Senate. From January 2011 to December 2012, Sampson was also the Senate Minority Leader. Sampson has also served as the chairman of the Senate Ethics Committee and the Senate Judiciary Committee. Sampson will be arraigned later today before United States Magistrate Judge Viktor V. Pohorelsky 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, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation (“FBI”), New York Field Office.

“The voters of New York State rightfully expect their elected officials to represent the voters’ interests, not to trade on their positions of power to line their own pockets,” stated United States Attorney Lynch. “As charged in the indictment, for years, Senator John Sampson abused his position of public trust to steal from New Yorkers suffering from home foreclosure and from the very county he was elected to represent. But the former Senate ethics leader didn’t stop there. Senator Sampson allegedly stole that money to fund his own ambition to become Brooklyn’s top state prosecutor, then engaged in an elaborate obstruction scheme to hide his illegal conduct, going so far as to counsel lies and the hiding of evidence.” United States Attorney Lynch thanked the FBI and the Federal Deposit Insurance Corporation Office of the Inspector General for their investigative efforts, as well as the Public Integrity Section and the Office of the Inspector General of the Department of Justice for their assistance in this case.

FBI Assistant Director-in-Charge Venizelos stated, “Today John Sampson has been added to the list of recently indicted New York elected officials. We could view this as an achievement for the FBI and federal prosecutors. But we share what may well be the concern of many New Yorkers that ‘incumbent’ and ‘defendant’ cannot be accepted as interchangeable. Elected officials are referred to as ‘public servants,’ and that should not be confused with ‘self-serving.’ The people of New York have a right to demand, at a bare minimum, that their elected representatives obey the law.”

I. The Embezzlement Scheme

As charged in the indictment, Sampson is an attorney licensed to practice law in the State of New York, and his law practice has included legal work involving the sale of foreclosed properties. Beginning in the late 1990’s, Sampson served as a court-appointed referee for foreclosure proceedings conducted by the Kings County Supreme Court. As referee, Sampson controlled escrow accounts holding proceeds of foreclosure sales of Brooklyn properties. Between 1998 and 2008, Sampson embezzled approximately $440,000 in surplus funds from the foreclosure sales of four Brooklyn properties. The prior owners of the Brooklyn properties, and other parties with a lawful interest, had a right to receive the funds embezzled by Sampson. Sampson indicated that he had illegally diverted the stolen funds to pay expenses arising from his unsuccessful run for Kings County District Attorney in 2005.

As alleged in the indictment, in July 2006, Sampson asked an associate who worked in the real estate industry (the “Associate”) for $188,500. The Associate agreed and, at Sampson’s direction, provided him with these funds in the form of three bank checks payable to third parties (the “Associate Transaction”). Sampson characterized the Associate Transaction to the Associate as a loan that he would repay, the proceeds of which he would use to cover the tracks of his embezzlement before it was uncovered. However, Sampson took this “loan” without written documentation or any rate of interest. Sampson never repaid the Associate. Further, Sampson concealed the Associate Transaction by lying on his Senate financial disclosure forms, falsely claiming that he had incurred no liabilities in excess of $5,000 or gifts or income in excess of $1,000.

The indictment further alleges that Sampson used a portion of the Associate Transaction funds to pay back some of the money he embezzled from two of the escrow accounts. However, Sampson never repaid any of the approximately $160,000 he stole from the two escrow accounts that are the subject of the embezzlement charges in the indictment.

II. John Sampson’s Obstruction of Justice

In the summer of 2011, the United States Attorney’s Office for the Eastern District of New York (the “USAO”) filed bank and wire fraud charges against the Associate in relation to a mortgage fraud scheme (the “Mortgage Fraud Case”). As charged in the indictment, after the Associate’s arrest, Sampson engaged in a multifaceted scheme to obstruct justice, so as to prevent the Associate from cooperating with law enforcement authorities and disclosing Sampson’s criminal conduct. Evidence of Sampson’s obstructive conduct includes intercepted phone calls from Sampson’s cellular telephone.

A. John Sampson’s Use of a USAO Employee to Obstruct Justice

According to the indictment, Sampson attempted to obtain confidential, nonpublic information regarding the Mortgage Fraud Case. Soon after the Associate’s arrest, Sampson informed the Associate that he knew an individual who, at that time, was an administrative employee in the USAO (the “Employee”). Sampson told the Associate that he could persuade the Employee to give inside information that would assist the Associate’s defense in the Mortgage Fraud Case.

As alleged in the indictment, Sampson then asked the Employee to determine whether the USAO was conducting a criminal investigation of Sampson and whether certain mortgage fraud defendants were cooperating with the government’s investigation. Sampson told the Associate that he was attempting to determine the identities of cooperating witnesses in the Mortgage Fraud Case, and that if they were able to identify those witnesses, Sampson could arrange to “take them out.”

According to the indictment, when the Associate asked Sampson about his efforts to use the Employee to obtain information about the Mortgage Fraud Case, Sampson was reluctant to discuss those illegal efforts over the telephone. For example, while meeting with the Associate in November 2011, Sampson stated, “I can’t talk on the phone . . . . From now on, our conversation is, ‘I don’t have no contacts, you don’t know nothing.’ When we talk, that’s how we talk.”

The indictment alleges that FBI agents later confronted the Employee concerning his contacts with Sampson. Immediately thereafter, agents searched the Employee’s office and located a slip of paper which contained the handwritten names of several individuals who were defendants in proceedings related to the Mortgage Fraud Case. The Employee was then suspended and subsequently terminated from his employment at the USAO.

B. John Sampson’s Witness and Evidence Tampering

As charged in the indictment, Sampson also obstructed justice by directing the Associate to withhold evidence regarding the Associate Transaction from the government. During a meeting on February 22, 2012, the Associate told Sampson that the federal government had subpoenaed the Associate’s business records, including a check register page that documented the Associate Transaction (the “Check Register Page”). Before disclosing the Check Register Page to the government, the Associate showed it to Sampson. At that time, Sampson took possession of the Check Register Page, examined it, and stated, “That’s a problem . . . I mean for me.”

Sampson instructed the Associate not to disclose the Check Register Page to the government. When the Associate stated that it might be a problem to withhold the document from the government, Sampson told the Associate to claim that the Associate did not maintain all of the Associate’s records. Sampson instructed, “Don’t say you don’t have it. Just say you don’t know. I don’t want you to lie, just say you don’t know.”

In addition, Sampson told the Associate to remove other items from the business records the Associate provided to the government, to make it appear as though the Associate’s records were incomplete. Sampson counseled the Associate to falsely claim that the Associate Transaction was payment for legal work Sampson had performed. Later during this conversation, Sampson instructed the Associate that, if the government asked whether the Associate ever loaned Sampson money, the Associate should say “No.” Sampson also suggested that, alternatively, the Associate could falsely claim that the Associate “forgave” the Associate Transaction “loan.” Sampson kept the Check Register Page during and after this meeting, and never returned it to the Associate.

III. John Sampson’s False Statements to the FBI

On July 27, 2012, FBI Special Agents interviewed Sampson outside his Brooklyn residence. When shown a copy of the Check Register Page, which he had taken from the Associate on February 22, 2012, Sampson stated that the document “didn’t ring a bell,” that he “didn’t have a recollection from it,” and that he did not recall seeing it previously. Sampson admitted that he had asked the Employee for information on the Mortgage Fraud Case, but claimed that he only requested public information from the Employee, such as the name of the judge assigned to the Mortgage Fraud Case. When asked why he would request public information from an employee of the USAO, when Sampson himself was an attorney, Sampson stated that he was not “good” with computers. At the conclusion of the interview, the agents advised Sampson that he had lied to federal agents, which constituted a federal crime. When asked whether he wished to revise his statement, Sampson stated, “Not everything I told you was false.”

If convicted, Sampson faces up to 10 years of imprisonment for each embezzlement charge, up to 10 years of imprisonment for a charge of obstruction of justice under 18 U.S.C. § 1503(a), up to 20 years of imprisonment for each of the remaining four charges related to obstruction of justice, and up to 5 years of imprisonment for each false statement charge, as well as restitution, forfeiture, and fines.

The government’s case is being prosecuted by Assistant United States Attorneys Daniel Spector, Paul Tuchmann, and Alexander Solomon.

The Defendant:

JOHN L. SAMPSON
Age: 47
Residence: Brooklyn, New York

_____________________________

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

John Venizelos, also known as “John V,” “Big Man” and “John from Staten Island,” an alleged associate of the Bonanno organized crime family of La Cosa Nostra, pled guilty earlier today before U.S. Magistrate Judge Joan M. Azrack at the federal courthouse in Brooklyn to drug trafficking charges contained in a superseding indictment returned on April 3, 2013. When sentenced, Venizelos will face a statutory mandatory minimum ten-year sentence and a maximum of life imprisonment. Venizelos will also face a maximum fine of $10 million and will forfeit $148,480 and two firearms that federal agents seized from his residence.

The guilty plea was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Brian R. Crowell, Special Agent-in-Charge of the Drug Enforcement Administration, New York (DEA).

According to the indictment and other court filings submitted by the government, Venizelos was a major Staten Island-based distributor of narcotics for a Canadian narcotics trafficking enterprise. Specifically, Venizelos was charged with narcotics and firearm-related offenses and witness tampering as a part of an indictment in which 10 members of a Montreal-based criminal enterprise that has connections with the Bonanno and Rizutto organized crime families and the Hell’s Angels have been charged with trafficking over $1 billion worth of marijuana and cocaine in the United States. Venizelos was charged with witness tampering in connection with his attempts to dissuade a co-conspirator from cooperating with law enforcement by, among other things, informing the co-conspirator about a $2 million “hit fund” set aside to murder or otherwise retaliate against any individuals who cooperated with the government.

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

“Venizelos used violence and intimidation to protect his position as a major narcotics distributor. Those who challenged him were threatened, tortured, and beaten. Venizelos’s conviction underscores this Office’s strong commitment to prosecuting drug traffickers who flood our communities with narcotics, especially when those individuals have chosen a life of organized crime,” stated United States Attorney Lynch.” Ms. Lynch extended her grateful appreciation to the Drug Enforcement Administration, the New York Police Department, and New York State Police for their work on the case.

DEA Special Agent-in-Charge Crowell stated, “This is a significant guilty plea. Venizelos chose a life of crime and was involved with an international trafficking organization resulting in the seizure of stolen handguns, 80 kilograms of cocaine, and $10 million in drug cash. Venizelos had his hand in several crimes affecting our communities, and I commend our NYPD Detectives, NYSP Investigators, and Special Agents for their diligence in targeting those responsible for threatening our neighborhoods with drugs and violence.”

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

The Defendant:

JOHN VENIZELOS
Age: 33

Earlier today, an indictment was unsealed charging Queens doctor Gracia L. Mayard with illegal distribution of oxycodone, a highly-addictive prescription medicine used to treat severe pain.1 Mayard is scheduled to be arraigned at 3:00 p.m. today before United States District Judge Joseph F. Bianco, at the United States Courthouse in Central Islip, New York.

The indictment was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Brian R. Crowell, Special Agent-in-Charge, Drug Enforcement Administration, New York, Thomas V. Dale, Commissioner, Nassau County Police Department, and Joseph A. D'Amico, Superintendent, New York State Police.

On March 20, 2013, as part of a federal and state prescription drug abuse initiative within the Eastern District of New York, Mayard was arrested by members of a DEA Tactical Diversion Squad, comprising DEA agents, Nassau County Police Department detectives, and New York State Police investigators, on charges of illegally distributing oxycodone between January 1, 2012 and March 15, 2013. Mayard has been in custody since his arrest.

According to court filings and records of the New York State Bureau of Narcotics Enforcement, during the first nine months of 2012, Mayard issued 2,953 oxycodone prescriptions for approximately 376,469 pills to numerous individuals without performing any meaningful medical examination and in exchange for cash. In some cases, Mayard allegedly issued the prescriptions without even meeting the purported patients. On February 6, 2013, members of the DEA Tactical Diversion Squad contacted Mayard concerning his prescription activity, at which time Mayard voluntarily surrendered his DEA registration that authorized him to prescribe controlled substances. However, as alleged in court filings, on February 28, 2013, Mayard nevertheless issued a prescription for oxycodone. On March 13, 2013, a pharmacist, in the presence of DEA agents, called Mayard about the prescription. During the call, Mayard confirmed that he had issued the prescription and provided his surrendered DEA registration number, all in an effort to persuade the pharmacist to fill the oxycodone prescription.

“Overdose deaths from prescription painkillers are now more frequent than those from heroin and cocaine combined – this is an epidemic,” stated United States Attorney Lynch. “The defendant looked at this epidemic and saw opportunity – not to save lives and heal suffering, but for personal profit. Rather than follow his oath to ‘do no harm,’ Mayard prescribed hundreds of thousands of highly addictive pills with complete disregard for where they would end up or who would take them.” Ms. Lynch expressed her grateful appreciation to the Drug Enforcement Administration, the Nassau County Police Department, and the New York State Police for their assistance in this investigation.

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 U.S. Department of Health and Human Services’ Centers 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 120 federal and local criminal prosecutions, taken civil enforcement action against a pharmacy, 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 Allen L. Bode.

The Defendant:

Name: GRACIA L. MAYARD
Age: 61

_____________________________

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

A second superseding indictment against New York State Assemblyman William F. Boyland, Jr. was filed today in the United States District Court for the Eastern District of New York. Boyland has served in the New York State Assembly representing the 55th District in Brooklyn since 2003. As alleged in the latest indictment, from July 2007 to September 2010, Boyland engaged in a scheme to defraud New York State by steering public funds to a Brooklyn-based non-profit organization (“Non-Profit A”) and then directing that a portion of those public funds be used to pay for community events promoting Boyland and on goods such as t-shirts imprinted with the slogan “Team Boyland” which were distributed at those events. 1

To conceal this scheme, Boyland allegedly directed members of his staff to instruct vendors involved in the community events to falsely list Non-Profit A, and not Boyland, as the purchaser on invoices for goods purchased for the events. A representative of Non-Profit A then submitted the fraudulent invoices to the New York State Office for the Aging (“NYSOFA”), which administered the public funds, without disclosing that these invoices were for events and goods promoting Boyland. In furtherance of the scheme, a representative of Non-Profit A also submitted Certification Forms to the NYSOFA that falsely stated, among other things, that the public funds would not be used for “partisan political activity,” and that Boyland had not and would not receive, either directly or indirectly, any financial benefit from Non-Profit A relating to the public funds.

The filing of the second superseding indictment was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office. Ms. Lynch expressed her grateful appreciation to the New York State Comptroller’s Office for its assistance in this phase of the investigation.

If convicted on the new mail fraud conspiracy, Boyland faces a maximum sentence of 20 years in prison, a $250,000 fine, and restitution.

The government’s case is being prosecuted by Assistant United States Attorneys Robert Capers and Lan Nguyen.

The Defendant:

WILLIAM F. BOYLAND, JR.
Age: 42

_____________________________

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

Romanian nationals Cristea Mircea, Ion Pieptea, and Nicolae Simion will make their first appearance before United States District Judge Edward R. Korman later today following their extradition to the United States from Romania. The defendants are charged with participating in a sophisticated multimillion dollar cyber fraud scheme that targeted consumers on U.S.-based Internet marketplace websites such as eBay.com. Their extradition followed a coordinated international takedown in December 2012, during which law enforcement officials in Romania, the Czech Republic, the United Kingdom, and Canada, acting at the request of the United States, arrested six Romanian nationals, including Mircea, Pieptea and Simion.1 The Bucharest Appeals Court ordered the extraditions of Mircea, Pieptea, and Simion on February 2, 2013. The defendants were subsequently transported to the Eastern District of New York and arraigned on March 27, 2013.

The extraditions 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, New York Field Office

As alleged in the indictment, the defendants and their coconspirators saturated Internet marketplace websites, such as eBay.com, Cars.com, AutoTrader.com, and CycleTrader.com, with detailed advertisements for cars, motorcycles, boats, and other high-value items generally priced in the $10,000 to $45,000 range. Unbeknownst to the buyers, however, the merchandise did not exist. The so-called sellers corresponded with the victim buyers by email, sending fraudulent certificates of title and other information designed to lure the victims into parting with their money. Sometimes, they pretended to sell cars from nonexistent auto dealerships in the United States and even created phony websites for these fictitious dealerships.

The indictment further describes how, after the purported sellers reached an agreement with the victim buyers, they would often email them invoices purporting to be from Amazon Payments, PayPal, or other online payment services, with wire transfer instructions. However, these invoices were also fraudulent – the members of the conspiracy used counterfeit service marks in designing the invoices so that they would appear identical to communications from legitimate payment services. The fraudulent invoices directed the buyers to send money to American bank accounts that had been opened by foreign nationals in the United States, known as “arrows.” Finally, the “arrows” would collect the illicit proceeds and send them to the defendants in Europe by wire transfer and other methods. For example, the “arrows” forwarded defendant Pieptea $18,000 cash in fraud proceeds hidden inside hollowed-out audio speakers.

According to court filings, the defendants and their coconspirators allegedly defrauded their victims of at least $2 million during the course of the conspiracy. Notwithstanding the scope of the fraud, however, one of the coconspirators boasted, in a recorded conversation, that “criminals will not be extradited from Romania to the U.S.A. . . . it will never happen.”

Each defendant is charged with conspiracy to commit substantives offenses against the United States, wire fraud, and money laundering. The defendants face a maximum sentence of 20 years’ imprisonment on each count of conviction.

“These three defendants allegedly reached across the globe to defraud Americans, pretending to be legitimate online vendors and payment providers. In reality, they were con men with a computer. The defendants’ extraditions to the United States should make clear that our efforts to protect Internet consumers do not stop at our borders,” stated United States Attorney Lynch. “Thanks to our strong international partnerships, the notion that cybercriminals will never be extradited to the United States is merely a criminal’s fantasy.” Ms. Lynch extended her grateful appreciation to the FBI for its assistance.

The Romanian government, particularly the Ministry of Justice, the Romanian Internal Intelligence Service, and the Directorate for Combating Organized Crime, provided significant assistance and support during the investigation, arrest, and extradition of the defendants. The Department of Justice’s Office of International Affairs worked with its counterparts in Romania to effect the extraditions, and the U.S. Marshals Service coordinated and transported the defendants to the United States.

The government’s case is being prosecuted by Assistant United States Attorneys Cristina Posa, Nadia Shihata. and Claire Kedeshian, and Trial Attorney Carol Sipperly of the Criminal Division’s Computer Crimes and Intellectual Property Section.

The Defendants:

CRISTEA MIRCEA
Age: 30
Romanian

ION PIEPTEA
Age: 36
Romanian

NICOLAE SIMION
Age: 37
Romanian

_____________________________

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

A criminal complaint was unsealed today in federal court in the Eastern District of New York charging Michael Meneses with hacking into the computer network of a company that manufactures high-voltage power supplies, causing the company over $90,000 in damage. Meneses was arrested earlier today in Smithtown, Long Island, and his initial appearance is scheduled for this afternoon before United States Magistrate Judge Gary Brown 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 and George C. Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office.

According to the complaint, until January 2012, Meneses was employed at the victim company as a software programmer and system manager specializing in developing and customizing the software that the company used to run its business operations. A specialist in “enterprise resource planning” who had worked at the victim company for years, Meneses was one of two employees who were primarily responsible for ensuring that the software that drove the company’s manufacturing business - including its production planning, purchasing, and inventory control - operated efficiently. Meneses’s responsibilities gave him high-level access to the company’s computer network.

As alleged in the complaint, Meneses, who had voiced displeasure at having been passed over for promotions, tendered his resignation from the victim company in late December 2011, giving two weeks’ notice. After his network access was terminated, Meneses launched a three-week campaign to inflict damage on the company by gaining unauthorized access to its network and sabotaging the company’s business. Meneses employed various high-tech methods to hack into the victim company’s network and steal his former colleagues’ security credentials, including writing a program that captured user log-in names and passwords. Meneses then used the security credentials of at least one former colleague to remotely access the network via a virtual private network (VPN) from Meneses’s home and from a hotel located near his new employer, corrupting the network. Meneses’s efforts ranged from using a former colleague’s email account to discourage new applicants from taking Meneses’s position, to sending commands to alter the business calendar by one month, disrupting the company’s production and finance operations. The victim company suffered over $90,000 in damages as a result of Meneses’s intrusions.

“As the complaint alleges, the defendant engaged in a 21st Century campaign of cyber-vandalism and high-tech revenge, hacking into the computer network of his former employer to disrupt its operations, thereby causing tens of thousands of dollars in damage,” stated United States Attorney Lynch. “We will hold accountable any individual who victimizes others by exploiting computer network vulnerabilities.”

FBI Assistant Director in Charge Venizelos stated, “Bent on revenge, the defendant exploited his access and his technical know-how to sabotage his former employer. As alleged, he caused significant disruption and monetary damage. The FBI is committed to vigorous enforcement of laws governing computer intrusions.”

If convicted, the defendant faces a statutory maximum sentence of 10 years’ imprisonment, a $250,000 fine and restitution.

The government’s case is being prosecuted by Assistant United States Attorneys Cristina M. Posa and Charles N. Rose.

The Defendant:

MICHAEL MENESES
Age: 41
Residence: Smithtown, Long Island

CENTRAL ISLIP, NY – Smithtown, New York, resident Alexander Swanson, 48, waived indictment and pleaded guilty this morning to felony charges that he engaged in a wire fraud scheme to steal retirement savings from individuals in New York, New Jersey, and elsewhere. Through his investment fraud scheme, the defendant stole approximately $3.1 million from his victims. When sentenced, the defendant faces up to 20 years’ imprisonment on each of the three counts to which he pled guilty. Pursuant to his guilty plea, the defendant must also forfeit the proceeds of his fraud.

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, New York Field Office.

According to the criminal charges filed today in the Eastern District of New York, Swanson misrepresented his job, background, and investment experience to his victims, and then provided the victims with false reports touting his investments’ performance. These misrepresentations fraudulently induced the victims to invest with Swanson, who stole and squandered their retirement savings for his own benefit, including gambling his victims’ savings on sporting events.

“Today, Swanson admitted that he constructed a false persona, lying about his job, background, and investment expertise, all for the purpose of bilking unsuspecting individuals out of their hard earned retirement savings. Promising them secure investments, he instead provided fraudulent reports that lured them deeper into his web of lies and deceit. Just as Swanson played fast and loose with the truth, he also played with his victims’ money, gambling much of it away on sporting events. Due to the combined efforts of law enforcement, the real Swanson will now receive the only payout his actions deserve: fraud charges, a guilty plea, and the prospect of a significant jail sentence,” stated United States Attorney Lynch. “I would like to thank our partners at the FBI for their hard work on this important investigation.”

FBI Assistant Director-in-Charge Venizelos stated, “Swanson preyed upon a particularly vulnerable class of victims. Investment fraud always victimizes the trusting investor, but Swanson targeted retirees who parted with portions of their savings. The FBI is determined to protect all investors from unscrupulous schemes.”

The defendant’s guilty plea took place this morning before United States Magistrate Judge Gary Brown, at the federal courthouse in Central Islip. United States District Judge Denis R. Hurley has not yet scheduled the sentencing hearing in this case.

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

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

The Defendant:

ALEXANDER SWANSON
Age: 48
Smithtown, New York

Christopher Finazzo, the former Executive Vice President and Chief Merchandising Officer of Aéropostale, Inc., a national mall-based specialty clothing retailer headquartered in Manhattan, was convicted today by a federal jury in Brooklyn on all sixteen counts for defrauding Aéropostale and receiving more than $25 million in kickbacks from Douglas Dey, the owner of South Bay Apparel, Inc. (“South Bay”), previously a major clothing supplier of Aéropostale. The jury’s verdict followed a three-week long trial in United States District Court in Brooklyn, New York, before the Honorable Roslynn R. Mauskopf. Finazzo was convicted of one count of conspiracy, fourteen counts of mail fraud, and one count of wire fraud. On Monday, April 29, 2013, the government will present its case to forfeit more than $21 million, two investment accounts, and four pieces of real property from Finazzo. Co-defendant Douglas Dey pleaded guilty on September 27, 2012, to conspiracy to bribe Finazzo.

Finazzo’s verdict and Dey’s guilty plea 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, New York Field Office.

The evidence at trial established that Finazzo and Dey entered into a fraudulent scheme in which Finazzo caused Aéropostale to buy more than $350 million in t-shirt and fleece merchandise from South Bay in exchange for payments from Dey of approximately 50% of South Bay’s profits. Finazzo was Aéropostale’s head merchant from July 1996 until his termination by Aéropostale on November 7, 2006. While receiving approximately $20 million in salary, bonus, and stock options for the approximately 10 years that Finazzo worked at Aeropostale, Finazzo received more than $25 million in kickbacks from approximately June 2002 through November 2006 from Dey through C&D Retail Consultants, Inc., a company controlled by Finazzo, and through other companies Finazzo jointly owned with Dey. In 2005 alone, at the peak of the business between Aéropostale and South Bay, Finazzo received more than $13 million in kickbacks from South Bay. Throughout the course of the scheme, Finazzo and Dey concealed the kickbacks from Aéropostale and its employees, causing Aéropostale to lose profits and negatively impacting employee bonus amounts. Additionally, because Finazzo falsely stated in numerous company questionnaires that he was not engaged in any related-party transactions, Aéropostale falsely reported in its SEC filings that the company did not engage in such transactions. Aéropostale is a publicly traded company on the New York Stock Exchange.

At trial, the government proved that Finazzo defrauded Aéropostale by preventing Aéropostale from seeking lower prices for merchandise it purchased from South Bay, preventing Aéropostale from selecting other vendors who had better price and quality, and by causing Aéropostale to pay higher prices on merchandise it purchased from South Bay. For example, Finazzo’s unyielding commitment to placing t-shirt orders with South Bay caused him to repeatedly rebuff Aéropostale’s CEO’s direction that 25% of the t-shirt orders be placed with overseas vendors at a much lower cost. Finazzo did this to maintain his illegal kickbacks from South Bay.

“We have all heard the saying ‘money does not buy happiness,’ and today’s verdict is case in point for that maxim. Christopher Finazzo had a great job that paid him millions of dollars, but this honest living was apparently not enough to satisfy his greed. As the evidence at trial showed, he schemed to steal from Aéropostale and to receive more than $25 million in illegal kickbacks from a supplier,” stated United States Attorney Lynch. “As today’s verdict shows, we will vigorously pursue corporate fraudsters who double-deal to enrich themselves and bring them to justice.” Ms. Lynch extended her grateful appreciation to the FBI and the Securities and Exchange Commission for their assistance.

When sentenced by Judge Mauskopf, Christopher Finazzo faces a sentence of up to 20 years’ imprisonment for each of the fourteen counts of mail fraud and the one count of wire fraud, and up to five years’ imprisonment for the conspiracy count. Co-defendant Douglas Dey faces a maximum sentence of five years’ imprisonment.

The government’s case is being prosecuted by Assistant United States Attorneys Winston M. Paes, John P. Nowak, and Claire Kedeshian.

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

The Defendants: CHRISTOPHER FINAZZO
Age: 57

DOUGLAS DEY
Age: 56

Earlier today, Christian Tarantino, the owner of Synergy Fitness clubs on Long Island and New York City, was sentenced to three terms of life imprisonment without the possibility of parole for his role in the murders of three men between 1994 and 2003. The sentence was imposed by the Honorable Joanna Seybert, United States District Judge for the Eastern District of New York, at the United States Courthouse in Central Islip, New York.

The sentence was 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.

Today’s proceeding marks the culmination of a lengthy investigation and prosecution by the U.S. Attorney’s Office, the FBI, the Nassau County Police Department (NCPD), and New York City Police Department (NYPD). Following jury trials in 2011 and 2012, Tarantino was convicted of participating in an armored car robbery in June 1994 during which a 47-year-old guard was shot and killed; orchestrating the August 1994 murder of an associate in that robbery, whose body Tarantino dumped from a boat several miles off the coast of Long Island; and, conspiring to murder a long-time confidant, who had threatened to take evidence of the first two murders to the FBI.

On June 23, 1994, Tarantino, Louis Dorval, and two others ambushed guards of the Mid-Island Check Cashing company as they delivered cash to a business in Syosset, New York. As Tarantino and his associates handcuffed one guard, Dorval shot and killed Julius Baumgardt in the back of the head as he lay face down on the pavement. Six weeks later, when federal law enforcement sought to arrest Dorval on charges in an unrelated racketeering indictment, Tarantino lured Dorval to his own death and with the help of others stuffed Dorval’s body in a plastic tool trunk that he then dumped at sea. A U.S. Coast Guard vessel pulled Dorval’s body out of the Atlantic several days later, but the investigations into both killings remained open.

In 2000, the U.S. Attorney’s Office, FBI, and NCPD, began to gather DNA evidence from several individuals. FBI forensic examiners subsequently found a match between Tarantino’s mitochondrial DNA and a hair fragment recovered six years earlier by the NCPD from a getaway car abandoned near the scene of the Baumgardt murder. The investigation also led to the arrest of an associate of Tarantino, who pled guilty in 2001 to engaging in a racketeering murder conspiracy to kill Dorval.

The collection of DNA evidence also led Tarantino’s long-time confidant, Vincent Gargiulo, to secretly tape-record a September 2000 conversation with Tarantino in an apparent effort to secure evidence that would prevent Tarantino or others from falsely implicating Gargiulo in either the Baumgardt or Dorval murders. In that recording, Tarantino implicated himself in both the Baumgardt murder and the killing and disposal of Dorval’s body. In 2003, Gargiulo revealed the existence of the recording to Tarantino and others and threatened to make the tape available to the FBI if he was not compensated for businesses losses. Thereafter, Garguilo wrote the FBI a letter offering to produce a tape that would prove Tarantino’s guilt in the two 1994 killings. However, before the FBI obtained the tape, Tarantino hired a Synergy Fitness gym employee to kill Gargiulo for $35,000. On the morning of August 18, 2003, as Gargiulo walked to work at a construction site Manhattan, that employee approached his victim and fired a single shot from a .22 caliber target pistol into the bridge of Gargiulo’s nose. Gargiulo was pronounced dead a short time later in Bellevue Hospital.

Several months later, Gargiulo’s tape recording was anonymously mailed to the homicide detectives of the NYPD. Analysis by the FBI’s forensic audio lab in Quantico, Virginia, confirmed its authenticity, and at the subsequent trials, juries heard Tarantino admit to his role in the armored car robbery and the subsequent dumping of Dorval’s body at sea.

In May 2011, a jury convicted Tarantino of participating in the murders of Julius Baumgardt and Louis Dorval, but failed to reach a verdict on the Gargiulo murder charges. Following a retrial, in May 2012, a second jury convicted Tarantino of conspiracy to murder Gargiulo to obstruct justice. Each of the counts of conviction carried mandatory life terms of imprisonment.

“For almost a decade, Christian Tarantino was a one man crime spree, engaging in armed robbery, murder, and murder conspiracy to cover his tracks. He controlled his confederates the old-fashioned way - by murdering them. As this investigation and prosecution demonstrate, law enforcement will never halt its efforts to ensure that murderers are brought to justice,” stated United States Attorney Lynch. “Tarantino thought that human life was his to take. He will now spend the rest of his life contemplating the just results of his actions.” Ms. Lynch extended her grateful appreciation to the Nassau County Police Department, the New York City Police Department, the New York County District Attorney’s Office, and the New York State Department of Corrections, Office of the Inspector General, for their assistance.

FBI Assistant Director-in-Charge Venizelos stated, “Because he ruthlessly took the lives of three others, Tarantino will spend the rest of his life behind bars. One victim was an innocent man doing his job, murdered in cold blood during a robbery. One was a robbery confederate of Tarantino whom he killed for fear of cooperation with the government. The third victim was also killed to silence him, when he threatened to expose Tarantino. This murderous conduct has been met with stern justice.”

The government’s case was prosecuted by Assistant United States Attorneys James M. Miskiewicz, Sean C. Flynn, and Carrie N. Capwell.

The Defendant:

CHRISTIAN GERALD TARANTINO
Age: 46

Ralph Lauren Corporation (RLC), a New York based apparel company, has agreed to pay an $882,000 penalty to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA) by bribing government officials in Argentina to obtain improper customs clearance of merchandise, announced Mythili Raman, the Acting Assistant Attorney General for the Criminal Division, and Loretta E. Lynch, the United States Attorney for the Eastern District of New York.

According to the agreement, the manager of RLC’s subsidiary in Argentina bribed customs officials in Argentina over the span of five years to improperly obtain paperwork necessary for goods to clear customs; permit clearance of items without the necessary paperwork and/or the clearance of prohibited items; and on occasion, to avoid inspection entirely. RLC’s employee disguised the payments by funneling them through a customs clearance agency, which created fake invoices to justify the improper payments. During these five years, RLC did not have an anti-corruption program and did not provide any anti-corruption training or oversight with respect to its subsidiary in Argentina.

In addition to the monetary penalty, RLC agreed to cooperate with the Department of Justice in its ongoing investigation, to report periodically to the department concerning RLC’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations. If RLC abides by the terms of the agreement, the department will not prosecute RLC in connection with the conduct.

The agreement acknowledges RLC’s extensive, thorough, and timely cooperation, including voluntarily making employees available for interviews, making voluntary document disclosures, conducting a world-wide risk assessment, and making multiple presentations to the Department of Justice on the status and findings of the internal investigation and the risk assessment. In addition, RLC has engaged in early and extensive remediation, including conducting extensive FCPA training for employees world-wide, enhancing the company’s existing FCPA policy, implementing an enhanced gift policy as well as other enhanced compliance, control, and anti-corruption policies and procedures, enhancing its due diligence protocol for third-party agents, terminating culpable employees and a third-party agent, instituting a whistleblower hotline, and hiring a designated corporate compliance attorney.

In a related matter, RLC reached a settlement with the SEC and agreed to pay $734,846 in disgorgement and prejudgment interest. The SEC settlement was filed today.

The case is being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant United States Attorney Sarah Coyne, Chief of the Business and Securities Fraud Section from the Eastern District of New York. The case was investigated by the FBI’s New York Field Office. The department acknowledges and expresses its appreciation for the assistance provided by the SEC’s Division of Enforcement.

Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Earlier today, at the United States District Court for the Eastern District of New York in Central Islip, New York, Grigoriy Dekhkanov, a Queens resident, was sentenced to 72 months in prison for his role in a mail fraud conspiracy and aggravated identity theft.

The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Michael E. Seremetis, United States Secret Service (“USSS”), Long Island Resident Office, Resident Agent in Charge; and Edward J. Ryan, Special Agent in Charge, Social Security Administration, Office of the Inspector General (“SSA-OIG”).

According to court filings and the government’s factual recitation at the guilty plea and sentencing proceedings, between May 1, 2011 and July 20, 2011, when the scheme was broken up by law enforcement, defendant Grigoriy Dekhkanov, together with co-conspirators Rohit Gulati, Monish Patel, and others, stole personal identity information (names, addresses, dates of birth, social security numbers, and credit information) for 26,000 individuals from a medical billing company operated by Patel’s father, located in New Hyde Park, New York. Approximately 200 of these identities were used to apply for credit cards. “Runners” employed by the conspirators then used the credit cards to buy high-end electronic equipment and devices, mobile telephones, gift cards, and gold, which items were resold for cash. On July 21, 2011, when USSS and SSA-OIG agents executed a search warrant at a Sands Point rental home used by the organization, agents found envelopes containing fraudulently obtained credit cards and fake driver’s licenses in the names of identity theft victims, as well as gift cards and receipts showing that the organization had taken in $28,000 over the four days preceding the search. Agents also recovered a mobile phone containing the identity data for all 26,000 victims.

In April 2012, Dekhkanov pled guilty in federal district court in Central Islip to mail fraud conspiracy and aggravated identity theft. United States District Judge Joseph F. Bianco imposed sentence earlier today.

In November 2011 and April 2012, respectively, Dekhkanov’s principal co-conspirators, Monish Patel and Rohit Gulati, each pled guilty to mail fraud conspiracy and aggravated identity theft. Gulati was sentenced on March 8, 2013, to three years’ imprisonment. Patel is awaiting sentence.

“This identity theft scheme was stopped in its tracks only a few months after it began, by the quick action of dedicated law enforcement agents. Because the agents promptly discovered and put a stop to the fraud, only 200 out of the 26,000 stolen identities were compromised. Nevertheless, the amount of the loss – $749,000 – from the use of the 200 of the stolen identities is staggering.” stated United States Attorney Lynch. “This case exemplifies how law enforcement works to protect consumers in the digital age.” Ms. Lynch thanked the United States Secret Service and the Social Security Administration, Office of the Inspector General for their work on the case.

USSS Resident Agent in Charge Seremetis stated, “The U.S. Secret Service recognizes the consequences to those affected by identity theft and is committed to combating this criminality with the assistance of agency partnerships at every level.”

SSA-OIG Special Agent in Charge Ryan stated, “This office is pleased to have brought this case to a successful conclusion, and grateful to the U.S. Secret Service and the U.S. Attorney for their perseverance. The integrity of the Social Security Number (SSN) is among our highest priorities, and as this case demonstrates, the SSN is often a key tool in the commission of large-scale financial institution fraud. SSN misuse can have devastating consequences for the true SSN holder, and has a significant impact on corporate America. Concerted efforts such as we have seen in this case send a strong message that SSN misuse will not be tolerated and that drastic consequences await those who commit such crimes.”

The government’s case was prosecuted by Assistant United States Attorney Allen L. Bode.

The Defendant:

Name: GRIGORIY DEKHKANOV
Age: 26

Following a five-week trial, a federal jury in Brooklyn today found Bartolomeo Vernace, a member of the administration of the Gambino organized crime family of La Cosa Nostra (the “Gambino family”), guilty of a racketeering conspiracy spanning 1978 through 2011. As part of the racketeering conspiracy, the jury found that Vernace participated in all nine racketeering acts alleged in the indictment, including the 1981 double homicide of Richard Godkin and John D’Agnese, heroin trafficking, robbery, loansharking, and illegal gambling.

The verdict was 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, New York Field Office.

The evidence at trial established that Vernace, also known as “Bobby Glasses,” “Pepe,” and “John Canova,” had a long career in the mafia beginning in the early 1970s and culminating in his induction and rise to become a powerful Gambino family captain who served on the three-member ruling panel overseeing the family that was established in 2008. 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 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 while one of his close associates, Ronald “Ronnie One-Arm” Trucchio, a rising star in the Gambino family who would later become a powerful captain, sought to question witnesses from the Shamrock Bar that night, placing those witnesses in fear. While in hiding, Vernace was indicted under the alias “Pepe” in the Southern District of New York on heroin trafficking charges. Years later, Vernace, who had avoided state charges for the murders and who had never been identified in connection with the heroin trafficking indictment, 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 became actively involved in robbery, loansharking, and gambling, while operating 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 from the first week of the federal trial, an eyewitness to the murders testified that he had lied during the state trial about Vernace’s role in the murders due to fear of retribution. In the federal case, the eyewitness testified he recognized all three assailants but that 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 eyewitness further described how, moments before the murders, he saw Vernace pointing a gun at Godkin’s head and taunting him, and that he saw one of Vernace’s accomplices threatening D’Agnese with a gun. According to the medical examiner, Godkin was killed by a gunshot to the chest fired from point-blank range, and D’Agnese died from a gunshot to the face.

In addition to the Godkin and D’Agnese murders, the jury found the other seven racketeering acts proved, including heroin trafficking, robbery, loansharking, and gambling, and found the defendant guilty of separate firearms and illegal gambling charges as well.

“Organized crime has been depicted by Hollywood as a group of criminals with honor. This case shows what organized crime is really all about - murder, mayhem, and making money off of the weaknesses and addictions of others. Today’s racketeering conspiracy conviction of a powerful Gambino family leader demonstrates, yet again, this Office’s unwavering commitment to holding individuals who choose a life of organized crime accountable, regardless of the age of their crimes,” stated United States Attorney Lynch. “The defendant spent the last forty years pursuing a career of crime, including the vicious double murder, as well as traditional mafia rackets. With this verdict, Vernace has finally been brought to justice and will be held to account for the destruction and pain he has inflicted on his victims and their families. We sincerely hope that today’s verdict helps bring a measure of closure for the families of Vernace’s murder victims, for whom justice has too long been denied.” Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation, the agency responsible for leading the government’s investigation, and to the United States Marshals Service for its assistance during trial.

FBI Assistant Director-in-Charge Venizelos stated, “The thirty-two years since Vernace took part in the ruthless double murder of two good men represent half his lifetime. They have not been years spent atoning for those murders. It has been time spent living the life of a mob soldier, capo, and overseer – half a lifetime committing and directing crimes for the Gambino crime family. We expect that Vernace’s remaining years will be spent behind bars where he belongs. There is no expiration date on the FBI’s resolve to see justice done.”

When sentenced by United States District Judge Sandra L. Townes, Bartolomeo Vernace faces a sentence of up to life imprisonment.

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

The Defendant:

BARTOLOMEO VERNACE
Age: 64

Loretta E. Lynch, United States Attorney for the Eastern District of New York, today announced the unsealing of a civil complaint and the seizure of approximately $1,000,000 worth of food products from V.I.P. Foods, Inc. (“V.I.P.”) pursuant to a warrant issued by United States District Judge Nicholas G. Garaufis.  The complaint alleges that V.I.P. violated the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301, et seq.  The suit seeks forfeiture and condemnation of the adulterated food products.

V.I.P., based in Ridgewood, New York, is a manufacturer, warehouse, and repacker of various formulated dried mixes and bases such as chicken soup base, blueberry muffin mix, pancake mix, and flavored mashed potatoes.  V.I.P.’s products are distributed under various names including V.I.P. Foods, VIP Foods, and KoJel.  V.I.P. also distributes products under private label.  The government’s claims arose from an investigation conducted by the FDA which revealed widespread rodent infestation, other insanitary conditions, and issues with V.I.P.’s building structure which provide entryway for insects and rodents.  The complaint alleges that FDA inspectors observed live and dead rodents, rodent-gnawed containers of food, rodent nests within pallets of food and packaging materials, rodent excreta pellets too numerous to count scattered throughout V.I.P.’s premises, and rodent urine stains on and around food product and food product packaging.

“VIP’s warehouse was a picnic ground for rodents, and the company failed utterly in its obligation to provide food deemed safe for human consumption.  Those who store, package, and sell the food we serve our families have a responsibility to maintain basic standards of cleanliness in their facilities.  We are committed to protecting the public from health risks and ensuring that food manufacturers comply with the federal laws prohibiting them from preparing, packing, and holding food products under unsanitary conditions,” stated United States Attorney Lynch.  

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

Earlier today, Helene Michel, an owner and officer of Medical Solutions Management, Inc. (“MSM”), was sentenced to 12 years in federal prison by United States District Judge Joseph F. Bianco at the federal courthouse in Central Islip, New York. Michel was convicted after a three-week jury trial in August 2012 of conspiracy to commit health care fraud, health care fraud, and HIPAA identity theft crimes. At today’s sentencing, Judge Bianco also ordered that Michel forfeit $1.3 million that was seized by the government at the time of her indictment.

The sentences were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Thomas O’Donnell, Special Agent in Charge, United States Department of Health & Human services, Office of Inspector General, Office of Investigations (“HHS OIG”), and George C. Venizelos, Assistant Director in Charge, Federal Bureau of Investigation (“FBI”), New York Field Office.

According to the evidence at trial, between approximately April 2003 and March 2007, Helene Michel owned and operated MSM, a medical equipment company located in Hicksville, New York. Michel used her position as a medical equipment company owner to enter nursing homes in Nassau, Suffolk, Queens, Kings, and Dutchess Counties in order to access and steal patient records, in violation of the Health Insurance Portability and Accountability Act (“HIPAA”). During the scheme, Michel also falsely assumed a number of roles, including posing at various times as a doctor, a nurse practitioner, and a wound care expert. At times, in her false roles, Michel even accompanied doctors on patient evaluation rounds. Thereafter, Michel used the records that she stole to create and submit $10 million in false billings to Medicare for medical supplies and products that were either not required or not delivered. For example, in one instance, Michel used fraudulent drawings and measurements to support a Medicare claim for the cost of fitted boots for a legless patient. In another, Michel submitted false claims for the purchase of expensive wound care bandages to treat patients who never had such wounds. In the event that Medicare denied an MSM claim, Michel submitted an appeal of the denial supported by additional stolen and altered patient records.

Michel spent the Medicare funds that she stole through false claims and identity theft on her own personal interests, including a multi-million dollar home on Long Island’s North Shore, a half-million dollar pension account, and personal items such as luxury cars and designer handbags. Michel’s co-defendant Etienne Allonce, the co-owner of MSM, was also charged in the indictment and is believed to have fled from the United States. He remains a fugitive, listed on HHS OIG’s Most Wanted List.

“Helene Michel brazenly roamed the halls of dozens of nursing homes, pretending to be, among other things, a doctor, a nurse practitioner, and a wound care expert, even going so far as to join patient evaluations. In reality she was a con woman, deceiving patients and administrators alike as she trolled for the information she used to submit fraudulent claims to Medicare to support her extravagant lifestyle. Through her scheme she violated the privacy of over a thousand patients and stole Medicare funds dedicated to preserving the health of our seniors and other citizens,” stated United States Attorney Lynch. “We and our law enforcement partners will vigorously pursue and prosecute those who seek to profit by such despicable crimes.” Ms. Lynch expressed her grateful appreciation to HHS OIG, the FBI, and the Nassau County District Attorney’s Office.

The government’s case was prosecuted by Assistant United States Attorneys Charles P. Kelly and Burton T. Ryan, Jr.

The Defendant:

Name: HELENE MICHEL
Age: 45

Earlier today, Hector Lopez, the former president of the Metal Polishers Union (Local 8A-28A) and Chairman of the Board of Trustees of the Local 8A-28A welfare fund, pled guilty to charges of conspiracy to commit mail and wire fraud and tax evasion. The guilty plea proceeding was held before United States District Judge Allyne R. Ross, at the U.S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The defendant admitted to engaging in several schemes to obtain money from the union welfare fund, including:

(1) accepting kickbacks from the third-party administrator of the welfare fund in exchange for ensuring the continued retention of that administrator,

(2) accepting kickbacks from the employer trustee of the local’s welfare fund (“the employer trustee”) in exchange for authorizing the welfare fund to pay inflated invoices for a union hall renovation, and

(3) accepting a kickback from the employer trustee in exchange for rigging the bidding process to ensure that a sprinkler installation job was awarded to a company controlled by the employer trustee.

“As a union official, Lopez was charged with looking out for the welfare of his members. Instead, he put himself first and brazenly stole money that was intended to pay for healthcare expenses of union members and their beneficiaries,” stated United States Attorney Lynch. “Our office is committed to combating union corruption and safeguarding union funds.” Ms. Lynch expressed her grateful appreciation to the U.S. Department of Labor, Office of the Inspector General, Office of Labor Racketeering and Fraud Investigations, New York; the Department of Labor Office of Labor-Management Standards, New York; Internal Revenue Service, Criminal Investigation, New York; and the Employee Benefits Security Administration, New York, for their assistance in this investigation.

When sentenced, Lopez faces a maximum of 25 years’ imprisonment.

The government’s case is being prosecuted by Assistant United States Attorneys Charles Kleinberg and Marisa Megur Seifan.

The Defendant:

Name: HECTOR LOPEZ
Age: 54
Residence: Oakland, NJ

Gustave Drivas, M.D., a medical doctor and resident of Staten Island, was convicted today of two felony counts for his role in a $77 million Medicare fraud scheme. The jury’s verdict followed an eight-week long trial in United States District Court in Brooklyn, New York, before the Honorable Nina Gershon. The conviction was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and Mythili Raman, Acting Assistant Attorney General of the United States for the Department of Justice.

The evidence at trial showed that Drivas, a medical doctor licensed in the State of New York, knowingly authorized his coconspirators at a medical clinic in Brooklyn, New York, to use his Medicare billing number to charge Medicare for more than $20 million in medical procedures and services that were never performed. In return he received more than $500,000 for his role in the scheme. The evidence established that Drivas was a “no show” doctor, who almost never visited the clinic. The evidence also showed that the medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $77 million in services that were medically unnecessary and never provided.

The government’s investigation included the use of a court-ordered audio/video recording device hidden in a room at the clinic, in which the conspirators paid cash kickbacks to corrupt Medicare beneficiaries. The conspirators were recorded paying approximately $500,000 in cash kickbacks during a period of approximately six weeks from April to June 2010. This room was marked “PRIVATE” and featured a Soviet-era poster of a woman with a finger to her lips and the words “Don’t Gossip” in Russian. The purpose of the kickbacks was to induce the beneficiaries to receive unnecessary medical services or to stay silent when services not provided to the patients were billed to Medicare.

To generate the large amounts of cash needed to pay the patients, the conspirators used a network of external money launderers. The owners and operators of the clinic wrote clinic checks to numerous shell companies that were controlled by money launderers. These checks did not represent payment for any legitimate service at, or for, the medical clinics. Rather, the checks were written to launder the medical clinics’ fraudulently obtained Medicare proceeds. Two of the external money launderers, Anatoly Kraiter and Larisa Shelabadova, pleaded guilty prior to trial. Irina Shelikhova and her son Maksim Shelikhov, who directed the money laundering operation from inside the clinic, also pleaded guilty prior to trial to conspiracy to commit money laundering.

Drivas was convicted today of health care fraud conspiracy and health care fraud. He was acquitted of kickback conspiracy. At sentencing before U.S. District Judge Nina Gershon of the Eastern District of New York, scheduled for July 9, 2013, Drivas faces a maximum penalty of 20 years in prison. Drivas also faces mandatory restitution to be paid jointly and severally with his co-defendants of up to $50 million, and a fine of up to $100 million.

This is the 13th conviction in this case. Prior to trial, 12 defendants pleaded guilty. At trial, Alexander Zaretser, 32, Vladimir Kornev, 53, and Yelena Galper, 40, were acquitted.

“Gustave Drivas sold his license and his ethics for cold, hard cash, and was the linchpin in a scheme that defrauded the Medicare system of millions. Medicare fraud weakens a vitally important program which millions of our citizens rely upon. We will continue to be vigilant in bringing those who seek to steal from Medicare to justice,” stated United States Attorney Lynch. Ms. Lynch thanked the Federal Bureau of Investigation and Health and Human Services for their hard work in connection with this investigation that led to the defendant’s arrest and conviction.

The case was brought together with the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section. The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009, between the Department of Justice and Health and Human Services to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

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.

The government’s case is being prosecuted by Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section, and Assistant U.S. Attorneys William C. Campos and Shannon C. Jones.

The Defendant:

Gustave Drivas, M.D.
Age: 50

A superseding indictment was unsealed yesterday evening in federal court in Brooklyn charging New York City Police Officer Jose Tejada with armed robbery conspiracy, narcotics distribution conspiracy, and the unlawful use of a firearm.1 Tejada is 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 and committed at least one of the robberies while on duty and in uniform. Tejada will be arraigned later today before United States Magistrate Judge Marilyn D. Go at the U.S. 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, Brian R. Crowell, Special Agent-in-Charge, Drug Enforcement Administration, New York, and Raymond W. Kelly, Commissioner, New York City Police Department.

The superseding indictment added Tejada as a defendant to a previously filed indictment against a violent crew responsible for more than one hundred armed robberies of narcotics traffickers in the New York City metropolitan area that netted more than 250 kilograms of cocaine and $1 million in drug proceeds. As detailed in the superseding indictment and a detention letter filed by the government, beginning in 2001, members of the robbery crew, posing as police officers, staged arrests of drug traffickers, using fake arrest and search warrants, and then forcibly took drugs and money from the traffickers. Members of the crew restrained the drug traffickers with handcuffs, rope, and duct tape. During some of these robberies, crew members brandished firearms and assaulted their victims. The crew included actual officers, such as Tejada, who is the third member of law enforcement to be charged in the case.

According to the government’s filings, Tejada personally participated in three robberies in 2006 and 2007, which netted thousands of dollars in cash and multiple kilograms of cocaine. During one of the robberies, Tejada, while on duty and in uniform, used his status as a police officer to demand and gain access to a private residence in the Bronx. The 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 at the family. During another robbery in Upper Manhattan, Tejada and other crew members dressed in NYPD uniforms – including a second, actual NYPD officer – pulled over a car, handcuffed the driver, and stole five kilograms of cocaine hidden inside the car.

According to the government’s filings, Tejada helped robbery crew members pose as police officers by supplying them with NYPD equipment and paraphernalia. Tejada also searched confidential law enforcement databases to determine whether there were outstanding warrants in the names of his confederates.

Twenty-one members of the robbery crew, including a second NYPD officer and an auxiliary NYPD officer, have previously been convicted in the case. At the time of the robberies, Tejada was assigned to the 28th Precinct in Harlem. Currently, he is assigned to Police Service Area 7 of the NYPD Housing Bureau, located in the Bronx.

United States Attorney Lynch thanked the Drug Enforcement Administration and the NYPD Internal Affairs Bureau for their work on the case, and the New York State Police, United States Customs and Border Protection and Homeland Security Investigations for their assistance.

If convicted, Tejada faces a maximum sentence of life imprisonment on the narcotics and firearms charges.

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

The Defendant:

JOSE TEJADA
Age: 45

_____________________________

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

Earlier today, FBI agents arrested Gershon Barkany based on a criminal complaint alleging that the Far Rockaway man defrauded investors by promising to use their money in “risk-free” deals to purchase, and then immediately re-sell at a profit, large real estate properties located in New York City and New Jersey. In fact, the complaint alleges that no such deals existed and the defendant defrauded victims of over $50 million.

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 (“FBI”), New York Field Office. The defendant’s initial appearance is scheduled for this afternoon before United States Magistrate Judge A. Kathleen Tomlinson at the United States Courthouse in Central Islip, New York. 1

According to the criminal complaint that was unsealed this morning, Barkany induced at least five investors to wire transfer large sums of money supposedly to purchase real estate in Manhattan, Queens, the Bronx and Atlantic City, New Jersey. According to one of the investor victims, Barkany claimed that the sellers of these properties would only close on the real estate sales contracts after Barkany had located a purchaser who would be willing to buy the property from Barkany at a higher price. In that way, Barkany assured the victim that the real estate deals would be “risk free.”

In fact, the real estate deals did not exist. As part of Barkany’s Ponzi scheme, he diverted some of the funds he received to pay investors whom he had earlier defrauded. The defendant also lost some of the funds in gambling and otherwise used the money for his own benefit.

“Barkany’s victims sought the security of investing in real estate. Instead, they were taken for millions by the defendant’s lies and deception,” stated United States Attorney Lynch. “As alleged, the promised high returns were only for him, as he used his victims’ money to gamble and keep his scheme afloat. Today’s arrest demonstrates the Department of Justice’s commitment to investigate and prosecute financial crimes.” Ms. Lynch added that the government’s investigation is continuing.

FBI Assistant Director-in-Charge Venizelos stated, “As alleged, Barkany promised a get-rich-quick investment scheme that really had potential to enrich only him. There were no investment properties, just a house of cards built on a foundation of lies. There may be no truly risk-free investments, but investors are entitled to honesty.”

If convicted, the defendant faces a maximum sentence of 20 years’ imprisonment.

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

The Defendant:

GERSHON BARKANY
Far Rockaway, New York
Age: 29

_____________________________

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

A criminal complaint was unsealed this morning in Brooklyn federal court charging Port Authority Police Officer Christopher Inserra, a five-year veteran of the Port Authority Police Department (“PAPD”), with mail fraud in connection with his scheme to defraud American Family Life Assurance Company of New York (“AFLAC”) by falsely claiming that he had suffered a debilitating work-related injury to his right arm.1 In furtherance of the scheme, Inserra lied to Port Authority medical staff (“PAMS”), falsely claiming that he suffered from excruciating pain and, at times, loss of mobility to his right arm. As a result, Inserra was classified by the PAPD as injured on duty (“IOD”) and out sick with full pay for nearly two years, from June 1, 2010 until his return to full duty in March 2012. During this time period, Inserra fraudulently filed two claims with AFLAC for short-term disability payments, based upon his alleged inability to return to work. AFLAC approved the claims and mailed two checks to Inserra totaling $31,486.66. Christopher Inserra is scheduled to be arraigned later today before United States Magistrate Judge Robert M. Levy at the U. S. Courthouse, Brooklyn, New York.

The arrest was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Keith E. Milke, Acting Inspector-in-Charge, United States Postal Inspection Service, New York, and Robert Van Etten, Inspector General for the Port Authority of New York and New Jersey.

As alleged in the complaint, beginning on June 1, 2010 and continuing until his return to duty in March 2012, Inserra repeatedly and falsely claimed to medical personnel that, while on duty, he suffered a debilitating injury to the lower bicep and elbow region of his right arm. Inserra further falsely claimed that the injury caused him excruciating pain and difficulty moving his right arm.

As alleged in the complaint, during the same time when Inserra was classified as IOD and collecting disability payments from AFLAC, he performed as the lead singer of a Brooklyn based “punk rock” group originally named “At The End Of The World,” and later renamed “Cousin Sleaze.”2 In photographs and video footage of his band’s numerous performances during this time period, Inserra frequently moved his right arm in a violent back and forth manner inconsistent with the severe level of pain and loss of mobility that Inserra had falsely reported to medical personnel.

For example, as alleged in the complaint, in September 2011, some fifteen months after falsely claiming that he was severely injured, and while still classified as IOD, Inserra told treating medical personnel, in substance, that he continued to be in constant pain, had difficulty using his right hand, and could not fully bend his right arm at the elbow. Inserra also claimed, in substance, that his pain level was an eight (8) on a scale of one (1) to ten (10), with ten (10) representing the highest level of pain.

However, during that same month, Cousin Sleaze embarked on a tour entitled the “Miles of Mayhem Tour,” in which they performed at multiple venues spread across the mid-Atlantic and Southeast regions of the United States. Law enforcement agents located and downloaded multiple photographs and video footage of Cousin Sleaze’s performances at the Sidebar Tavern in Baltimore, Maryland on September 21, 2011, the Coffeehouse in Murfreesboro, North Carolina on September 22, 2011, the Burro Bar in Jacksonville, Florida on September 23, 2011, the Surfer’s Pub in Cocoa Beach, Florida on September 24, 2011, and the Caledonia Lounge in Athens, Georgia on September 26, 2011.3 In the photographs and video footage, Inserra was observed holding a microphone in his right hand; extending his right arm out; curling his right arm back and forth; repeatedly bending his right arm at a ninety degree angle; and violently flailing and thrashing his right arm in an up and down and back and forth fashion. Notably, one of the PAMS medical personnel who had examined Inserra on multiple occasions during the course of his claimed injury reviewed the videotaped footage of the “Miles of Mayhem Tour” and concluded that the movements that Inserra performed with his right arm were inconsistent with Inserra’s stated medical complaints.

“As alleged in the complaint, this officer dishonored himself and his department by sliding down the slippery slope of deception and fraud. This prosecution demonstrates that such a violation of the public’s trust will not be tolerated,” stated United States Attorney Lynch. Ms. Lynch extended her grateful appreciation to the USPIS and the PANYNJ OIG, the agencies responsible for leading the government’s investigation.

Inspector General Van Etten stated “I commend United States Attorney Loretta Lynch and her staff for bringing this prosecution resulting in today’s arrest of a Port Authority Police Officer, who stands accused of violating his solemn oath of office to protect the public. As alleged in the complaint, for more than two years, Officer Inserra lied to medical staff and his fellow police officers at the Port Authority claiming he had a painful and debilitating work-related injury, while performing in a punk rock band and fraudulently collecting short-term disability payments from an insurance policy. Such conduct undermines the dedicated and hard-working officers who put their lives on the line each day. Thanks to our colleagues at the US Postal Inspection Service for their participation in this investigation. The Office of the Inspector General will continue to aggressively pursue and prosecute all those Port Authority employees, including police officers, who engage in deceptive and fraudulent conduct.”

The complaint charges Inserra with mail fraud. If convicted, he faces a maximum sentence of 20 years’ imprisonment and a $250,000 fine.

The government’s case is being prosecuted by Assistant U. S. Attorney Robert L. Capers.

The Defendant:

CHRISTOPHER INSERRA
Age: 31

_____________________________

1The charge in the complaint is merely an allegation, and the defendant is presumed innocent unless and until proven guilty.

_____________________________

2A schedule of Cousin Sleaze’s performances was obtained from the band’s website.
 

_____________________________

3 Some of the video footage obtained during the course of this investigation was downloaded from http://www.YouTube.com/user/cousinsleaze . Many of the photographs of performances by Cousin Sleaze were downloaded from various Facebook sites that contained photo footage from those performances.
 

 

 

Abdel Hameed Shehadeh, a United States citizen and former resident of Staten Island, was convicted today of making false statements in a matter involving international terrorism. The jury’s verdict followed a week-long trial in United States District Court in Brooklyn, New York before the Honorable Eric N. Vitaliano. The conviction was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York.

According to court filings and the evidence introduced at trial, in early 2008 Shehadeh devised a plan to travel to the Federally Administered Tribal Areas of Pakistan in order join al Qaeda or the Taliban. In furtherance of his plan, on June 13, 2008, Shehadeh flew on a one-way airline ticket from John F. Kennedy International Airport to Islamabad, Pakistan. After Pakistani officials denied him entry, Shehadeh told investigators from the FBI’s Joint Terrorism Task Force (“JTTF”) that he had traveled to Pakistan to visit a university. However, the true purpose of Shehadeh’s trip was to wage violent jihad against United States military forces.

Several weeks after Shehadeh was denied entry to Pakistan, he attempted to enlist in the United States Army at the Times Square recruiting station in Manhattan. Shehadeh’s application was denied when it was discovered that he had concealed his trip to Pakistan on his application. Though Shehadeh claimed that he had tried to enlist for career opportunities and benefits, his true motive was to deploy overseas, where he would commit treason by defecting and fighting alongside insurgent forces. Over the next several months, in subsequent interviews with members of the JTTF, Shehadah continued to lie about the true purpose of his travel. However, in 2010 Shehadah confessed to FBI agents that he had sought to join a jihadist fighting group. Shehadah was arrested in Honolulu, Hawaii in October 2010.

“Time and again, Shehadeh sought to travel overseas to wage violent jihad against U.S. military forces, going so far as to attempt to infiltrate the U.S. Army,” stated United States Attorney Lynch. “When confronted with his attempts to join a terrorist group and kill American soldiers, he repeatedly lied about his actions and his intentions. Due to the tireless work of our law enforcement partners, the defendant did not succeed in his jihadist goals. We will continue to be vigilant in bringing those who seek to commit terrorist acts to justice.” Ms. Lynch thanked the FBI’s New York and Honolulu Field Offices, as well as the New York City Police Department, for their substantial contributions to the multi-year investigation that led to the defendant’s arrest and conviction.

When sentenced, Shehadeh faces a maximum sentence of twenty-one years’ imprisonment.

The government’s case was prosecuted by Assistant United States Attorneys Alexander Solomon, David Sarratt and James Loonam.

The Defendant:

Abdel Hameed Shehadeh
Age: 23

Following six weeks of trial, a federal jury in Central Islip today returned a verdict convicting Salvadoran street gang members, Heriberto Martinez, also known as “Boxer,” and Carlos Ortega, also known as “Silent” or “Silencio,” on federal criminal charges, including murder, assault with a dangerous weapon, firearms offenses, and conspiracy. Both defendants are facing mandatory life sentences as a result of their convictions. Sentencing is scheduled for September 10, 2013 before United States District Judge Joseph F. Bianco.

The convictions 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, and Thomas V. Dale, Commissioner of the Nassau County Police Department.

At trial, the government proved that the defendants Martinez and Ortega, along with their fellow MS-13 gang members, killed multiple victims between February and March of 2010:

(1) Martinez was convicted in connection with the execution-style murder of Vanessa Argueta, a 19-year-old woman, in Central Islip, New York, on February 5, 2010. Martinez also was convicted of being an accessory after-the-fact in the murder of Argueta and her 2-year-old son, Diego Torres, who was shot and killed during the same incident. Martinez , the leader of the Coronados Clique of the MS-13, authorized the murder of Argueta and then helped three of his co-conspirators evade arrest in New York and flee to El Salvador after the commission of the murders. The bodies of Argueta and Torres were found in a secluded wooded area in Central Islip. Argueta had been shot in the head and chest, and Torres had been shot twice in the head.

(2) Ortega was convicted in connection with the murder of 21-year-old David Sandler and the attempted murder of 20-year-old Aaron Galan in Brentwood, New York on February 17, 2010. Ortega and his fellow MS-13 gang members lured Sandler, whom the MS-13 believed was a member of the rival Latin Kings street gang, to Timberline Drive in Brentwood, under the pretext of wanting to buy marijuana from him. Once Sandler arrived, Ortega shot him in the face at close range, killing him. Ortega also shot Sandler’s close friend, Galan, who was with Sandler at the time, in the face. Miraculously, Galan survived.

(3) Martinez also was convicted in connection with the execution-style murder of 23-year-old Nestor Moreno, a security guard at El Rancho Bar and Grill in Hempstead, New York on March 6, 2010. In late February 2010, Heriberto Martinez and several other members of the MS-13 were involved in a dispute with El Rancho employees over an unpaid bar tab. The dispute escalated into a physical altercation during which Martinez was sprayed with pepper spray. Prior to leaving El Rancho, Martinez identified himself as an MS-13 member to the victim and told him, “It’s not going to end like this.” On March 6, 2010, Martinez, along with four co-conspirators, returned to El Rancho and carried out that threat, shooting Moreno in the head at point-blank range. The gun that Martinez used to kill Moreno was the same semi-automatic handgun used to kill Argueta and her son, one month earlier.

(4) Both Martinez and Ortega were convicted in the March 17, 2010 murder of Mario Alberto Canton Quijada in Far Rockaway, New York. Quijada, who was a fellow member of the MS-13, was killed because of his reluctance to “put in work,” or attack rival gang members on behalf of the MS-13. On March 17, 2010, Quijada was lured to the beach in Far Rockaway under the guise of attacking rival gang members. Once alone on the beach, the MS-13 gang members tried to shoot Quijada in the head with the same semi-automatic handgun used in murders of Moreno, and Argueta and her son. However, the gun jammed. Undeterred, Martinez, Ortega and the other MS-13 members set upon Quijada with knifes and machetes and hacked him to death.

The convictions of Martinez and Ortega are the latest in a series of federal prosecutions by this Office targeting New York members of the MS-13, a violent international street gang comprised primarily of immigrants from El Salvador, Honduras and Guatemala. With numerous branches, or “cliques,” the MS-13 is the largest street gang on Long Island. Since 2002, more than 200 MS-13 members, including more that two dozen clique leaders, have been convicted on federal felony charges in the Eastern District of New York. More than 50 of those MS-13 members have been convicted on federal racketeering charges. Seventeen of those defendants have received sentences of 10 years or more, and more than a dozen MS-13 defendants have been sentenced or are awaiting sentencing on murder convictions. These prosecutions are the product of investigations led by the FBI Long Island Gang Task Force, comprised of agents and officers of the FBI, Nassau County Police Department, Nassau County Sheriff’s Department, Suffolk County Probation, Suffolk County Sheriff’s Department and the Rockville Centre Police Department.

“Instead of working to lift up their immigrant community, Martinez and Ortega chose to join the killing machine known as MS-13,” stated United States Attorney Lynch. “They devoted their energies to spreading senseless violence through the neighborhoods of Long Island, destroying their victims’ lives and the peace in the community. The range of victims, from a bouncer doing his job, to the cases of mistaken identity, to the fellow gang member who didn’t want to kill, to a young mother and her toddler, underscores these defendants’ callous disregard for human life. They will soon spend the rest of their own lives contemplating the choices they made. This case demonstrates the on-going commitment of this Office and the FBI’s Long Island Gang Task Force to combat the violence perpetrated by the MS-13 and other gangs.” Ms. Lynch extended her grateful appreciation to each of the law enforcement agencies for their assistance in this case.

FBI Assistant Director-in-Charge Venizelos stated, “The wanton disregard for human life displayed by Martinez and Ortega is a graphic reminder of why MS-13 poses a threat to public safety on Long Island. The crimes for which they have been convicted include four murders committed in a six-week period in 2010. The FBI will continue to place a high priority on policing and curtailing gang violence on Long Island.”

Nassau County Police Commissioner Dale stated, “ In Nassau County we have zero tolerance for gang activity. These two defendants are particularly vicious gang members who were brought to justice by the Long Island Gang Task Force and the United States Attorney for the Eastern District of New York. The Nassau County Police Department’s participation in this task force is critical for ensuring that the most dangerous predators will be removed from our communities.”

The government’s case is being prosecuted by Assistant United States Attorneys John J. Durham, Raymond A. Tierney and Carrie N. Capwell.

The Defendants:

Heriberto Martinez, also known as “Boxer”
Age: 26

Carlos Ortega, also known as “Silencio” and “Silent”
Age: 23

A Queens doctor was arrested this morning pursuant to a complaint charging him in federal court in Long Island with distribution of oxycodone, a highly-addictive prescription medicine used to treat severe pain.1 Dr. Gracia L. Mayard is scheduled to be arraigned this afternoon before United States Magistrate Judge Gary R. Brown at the U.S. Courthouse, Central Islip, New York.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, Brian R. Crowell, Special Agent-in-Charge, Drug Enforcement Administration, New York and Thomas V. Dale, Commissioner, Nassau County Police Department.

This morning, as part of a federal and state prescription drug abuse initiative within the Eastern District of New York, Mayard was arrested by members of a DEA Tactical Diversion Squad, comprised of DEA agents and Nassau County Police Department detectives, on charges of illegally distributing oxycodone between January 1, 2012 and March 15, 2013. According to the complaint, during the first nine months of 2012, Mayard issued 2,953 oxycodone prescriptions – 376,469 pills – to numerous individuals, without performing any meaningful medical examination and in exchange for cash. In some cases, Mayard issued the prescriptions without even meeting the purported patients. On February 6, 2013, when members of the DEA Tactical Diversion Squad contacted Mayard, he voluntarily surrendered his DEA registration authorizing him to prescribe controlled substances. However, the complaint alleges that three weeks later, on February 28, 2013, Mayard nevertheless issued a prescription for oxycodone. On March 13, 2013, a pharmacist, in the presence of DEA agents, called Mayard about the prescription. During the call, Mayard confirmed that he had issued the prescription and provided his surrendered DEA registration number, all in an effort to persuade the pharmacist to fill the oxycodone prescription.

“Instead of abiding by the charge to ‘do no harm,’ Mayard allegedly operated under the credo ‘where’s the money,’ placing profits above patient safety,” stated United States Attorney Lynch. “When doctors participate in the diversion of addictive prescription drugs from their intended use they fuel drug abuse and addiction. We are committed to vigorous prosecution of this growing problem.” Ms. Lynch expressed her grateful appreciation to the Drug Enforcement Administration, the Nassau County Police Department and the New York State Police for their assistance in this investigation.

DEA Special Agent-in-Charge Brian R. Crowell stated, “Illegal prescribing is the white collar money making crime of the decade. We allege Dr. Mayard, with no regard to public safety, abused his position as a licensed doctor by prescribing pain medications to people with no legitimate medical need in exchange for cash. It is estimated that Dr. Mayard wrote prescriptions for over 9,000 pills of oxycodone per week affecting the availability of diverted medications in our community and on our streets. Over 26% of first time drug users began with non-medical use of prescription drugs and it is law enforcement’s concerted efforts to thwart both the supply and the demand.”

Nassau County Police Commissioner Dale stated, “Addiction to prescription opiates is a burgeoning problem here on Long Island. In Nassau County, overdoses from these types of medications almost doubles that of overdoses from heroin. Our partnership in the DEA Tactical Diversion Squad and with the United States Attorney for the Eastern District of New York ensures that law enforcement is doing their part to keep these illegally prescribed drugs out of our communities.”

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 U.S. Department of Health and Human Services’ Centers 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 120 federal and local criminal prosecutions, taken civil enforcement action against a pharmacy, 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 Allen L. Bode.

The Defendant:

Name: GRACIA L. MAYARD
Age: 61

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

BROOKLYN, N.Y. – A six-count indictment was unsealed today in United States District Court for the Eastern District of New York charging Ibrahim Suleiman Adnan Adam Harun, also known as “Spin Ghul,” with conspiracy to murder American military personnel in Afghanistan, conspiracy to bomb American diplomatic facilities in Nigeria, conspiracy to provide material support to al-Qaeda, providing material support to al-Qaeda, and related firearms and explosives counts.1   The indictment was returned under seal by a federal grand jury sitting in Brooklyn, New York on February 21, 2012, and relates to Harun’s alleged activities in Afghanistan, Pakistan, and Africa beginning in 2001.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; John Carlin, Acting Assistant Attorney General for National Security; George Venizelos, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Raymond W. Kelly, Commissioner, New York City Police Department.

According to court documents, Harun, who was born in Saudi Arabia but claims citizenship in Niger, was extradited from Italy to the United States on October 4, 2012, and arraigned in a sealed proceeding in federal court in Brooklyn, New York on October 5, 2012.  The case is scheduled for a public status conference before United States District Judge Edward R. Korman at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, N.Y, on March 22, 2013 at 2:30 p.m.

Harun is charged with crimes related to his alleged terrorist activities on behalf of al-Qaeda beginning in 2001.  According to the indictment and other court documents, beginning in 2001, the defendant traveled from Saudi Arabia to Afghanistan with the intent to fight violent jihad.  He arrived in Afghanistan shortly before the September 11, 2001 attacks.  He then joined al-Qaeda, received military-type training at al-Qaeda training camps, and ultimately fought against United States and Coalition forces in Afghanistan with an al-Qaeda fighting group based in Pakistan.  According to the indictment, Harun allegedly attempted to kill United States military personnel in Afghanistan between 2002 and 2003.  In 2003, in Pakistan, Harun received further al-Qaeda training and traveled to Africa with the intent to conduct attacks on United States diplomatic facilities in Nigeria.  While in Nigeria, Harun allegedly conspired with others to bomb such facilities.

According to the indictment and other documents, after the arrest of a co-conspirator, the defendant traveled to Libya, en route to Europe, but was apprehended in early 2005.  The defendant then remained in Libyan custody until June 2011, when he was released by the Libyan government.  He was then arrested by Italian authorities after assaulting officers on board a refugee ship bound for Italy.  As noted, the defendant was indicted in the United States on February 21, 2012, and charged with (1) conspiring to murder United States nationals; (2) conspiring to bomb United States government facilities; (3) conspiring to provide material support to al-Qaeda; (4) providing material support to al-Qaeda; (5) using firearms in furtherance of crimes of violence; and (6) using explosives in furtherance of one or more felonies.

On July 5, 2012, the Naples Court of Appeals found the defendant extraditable to face the charges in the indictment pending against him in U.S. federal court, pursuant to the bilateral extradition treaty between the United States and Italy.  On September 14, 2012, the Italian Minister of Justice ordered the defendant extradited.  Federal agents took the defendant into custody in Italy on October 4, 2012, and he arrived in the United States on that same day.

If convicted of all the charges in the indictment, Harun faces a maximum possible sentence of life in prison.

“As alleged in the indictment, the defendant was a prototype al-Qaeda operative, trained by al-Qaeda in terrorist tradecraft, deployed to fight American servicemen, and dispatched to commit terrorist attacks throughout the world,” said United States Attorney Lynch.  “Whether they try to attack our servicemen on the battlefield, or scheme to kill our diplomats and citizens in embassies abroad, terrorists will find no refuge.  The United States will use every tool at our disposal to protect our nation’s security and stop terrorist attacks before they happen.”  Ms. Lynch expressed her gratitude to the law enforcement personnel who took part in the investigation, including Department of Defense Army investigators.  She also thanked the Italian Ministry of Justice, the Prosecutor’s Office in Palermo, Italy, and other Italian police authorities in their support of the investigation and extradition of the defendant.

“The indictment unsealed today seeks to hold accountable an alleged al-Qaeda operative who targeted U.S. personnel and diplomatic facilities across two continents. His arrest and extradition to the United States are important milestones in our ongoing counterterrorism efforts. I thank the many agents, analysts and prosecutors who brought about this significant case,” said Acting Assistant Attorney General for National Security Carlin.

FBI Assistant Director-in-Charge Venizelos said, “Vowing allegiance to al-Qaeda and training to commit violent jihad are not the worst of Harun’s alleged crimes. The allegations include actually attacking U.S troops and plotting to use explosives to kill U.S. diplomats. As alleged, Harun not only intended to, but did commit acts of terrorism against Americans. Now he is subject to the American justice system. We remain committed to protecting the safety of Americans and our national security.”

Police Commissioner Kelly said, “As more al-Qaeda operatives continue to be flushed from hiding, the NYPD remains vigilant to the fact that terrorists have repeatedly since 9/11 plotted to kill more Americans. We are determined not to let that happen.  I want to commend our federal partners and the U.S. Attorney in the prosecution of this important case.”

The government’s case is being prosecuted by Assistant United States Attorneys David Bitkower, Shreve Ariail and Amanda Hector of the United States Attorney’s Office for the Eastern District of New York.  Assistance was provided by Alamdar Hamdani, Joseph Kaster, and Annamartine Salick of the Counterterrorism Section of the Justice Department’s National Security Division, and by William Nardini of the Justice Department’s Office of International Affairs.

The Defendant:

IBRAHIM SULEIMAN ADNAN ADAM HARUN, also known as “Spin Ghul”
Age:  43

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