Southern District of New York

Edward Y. Kim, the Acting United States Attorney for the Southern District of New York, and Anne Milgram, the Administrator of the U.S. Drug Enforcement Administration (“DEA”), announced an Indictment charging XIANG GAO, OLEKSANDR KLOCHKOV, and IGORS KRICFALUSIJS with conspiring to distribute fentanyl and methamphetamine in the U.S., conspiring to import fentanyl precursor chemicals and a methamphetamine precursor chemical with intent to manufacture fentanyl and methamphetamine in the U.S., importing a fentanyl precursor chemical, and conspiring to commit money laundering.  GAO, KLOCHKOV, and KRICFALUSIJS were arrested in Morocco by Moroccan authorities on April 17, 2024, extradited to the U.S. on December 11, 2024, and made their initial appearances in the Southern District of New York before U.S. Magistrate Judge Robyn F. Tarnofsky on December 12, 2024.

Acting U.S. Attorney Edward Y. Kim said: “Fentanyl and fentanyl analogues continue to wreak catastrophic damage on the lives of New Yorkers.  The defendants are alleged to have aggressively pursued methods to circumvent our ability to stem the flow of the poisons into this country and to bring tons of potentially deadly chemicals to the United States.  This Office will continue to work relentlessly to detect and charge international drug traffickers bringing deadly drugs to our borders and to stop the danger long before it arrives.”

Attorney General Merrick B. Garland said: “Those responsible for flooding our country with fentanyl must answer for their crimes.  These three international chemical brokers are charged with conspiring to send fentanyl and methamphetamine precursor chemicals into the United States -- now they will face justice in an American courtroom.”

Deputy Attorney General Lisa Monaco said: “Today’s actions reflect our commitment to holding accountable those who peddle the poison responsible for fentanyl deaths in our communities, including those who import the precursor chemicals needed to manufacture these deadly drugs.  No matter where in the world these individuals operate, the Department will find them and bring them to justice.”

DEA Administrator Anne Milgram said: “Today’s announcement of charges against three high-level fentanyl chemical brokers highlights DEA’s commitment to attack every part of the global fentanyl supply chain.  The defendants indicted today brokered ton-quantities of fentanyl and methamphetamine precursor chemicals from China, knowing that these chemicals would be used to flood American communities with deadly drugs.  These defendants also coached drug traffickers on how to use different precursor chemicals to make finished fentanyl destined for the United States.  Today’s indictment should serve as a warning to drug traffickers operating across the globe that DEA will stop at nothing to save American lives and bring those responsible to justice.”

As alleged in the Indictment, other court filings, and statements made during court proceedings:[1]

Fentanyl is the single deadliest drug threat that the U.S. has ever encountered. It is the leading cause of death for Americans ages 18 to 49.  Fentanyl analogues, similar in chemical makeup and effect to fentanyl, can be even more potent and lethal than fentanyl.  Fentanyl and its analogues have ruined countless lives, devastated entire communities, and killed Americans at an unprecedented rate.

The manufacture of fentanyl and its analogues begins with raw chemicals, known as precursors.  Today, fentanyl precursor chemicals are principally sourced from China-based chemical manufacturers.  These China-based chemical manufacturers ship fentanyl-related precursor chemicals around the world, including to the U.S., Europe, and elsewhere, where clandestine laboratories use the precursor chemicals to synthesize finished fentanyl and fentanyl analogues at scale, and distribute the deadly narcotics into and throughout the U.S.

Aware of sanctions placed on chemical precursors by the U.S. and other nations, Chinese manufacturers have adapted to create and export fentanyl precursor chemicals that are not yet banned, but that are specifically designed to imitate other prohibited chemicals or that can produce finished fentanyl and other drugs.  The chemists working at such factories pursue chemical modifications to create new chemical compounds not yet subject to controls but capable of producing novel versions of narcotics that are as deadly or more than fentanyl.  These new chemical compounds are marketed to international drug traffickers through broker networks with direct access to the chemical manufacturers, who take custom orders from buyers seeking to create fentanyl and evade customs and law enforcement agencies around the world.

XIANG GAO, OLEKSANDR KLOCHKOV, and IGORS KRICFALUSIJS are international drug traffickers who used their connections with China-based chemical manufacturers to broker deals for fentanyl and methamphetamine precursor chemicals for further distribution in the U.S. and elsewhere.  During this investigation, GAO, KLOCHKOV, and KRICFALUSIJS conspired to sell ton-quantities of fentanyl precursor chemicals; provided more than five kilograms of fentanyl precursor chemicals and more than 50 kilograms of methamphetamine precursor chemicals; and shipped those chemicals to New York, Austria, and Spain, intending that the chemicals would be used to manufacture fentanyl and methamphetamine in New York for further distribution there.

Throughout the course of the conspiracy, the defendants repeatedly offered access to factories capable of producing tons of deadly narcotics precursors at a time, and consistently acknowledged that the precursors were designed to evade sanctions on narcotics importation but were purpose-built to make fentanyl and methamphetamine.  For example, during one meeting, when GAO acknowledged that fentanyl is illegal in the U.S. and China, KLOCHKOV explained that, as a result, fentanyl “must be created, not purchased.”  The defendants further provided instructions, including chemical formulas, to turn the precursors into finished fentanyl destined for distribution throughout New York.

*                *                *

GAO, 35, a Chinese national; KLOCHKOV, 34, a Ukrainian national; and KRICFALUSIJS, 32, a Latvian national, are charged in the Indictment with: one count of conspiracy to distribute fentanyl and methamphetamine, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; one count of conspiracy to import fentanyl precursor chemicals and a methamphetamine precursor chemical with intent to manufacture fentanyl and methamphetamine, which carries a maximum sentence of 20 years in prison; one count of importation of a fentanyl precursor chemical, which carries a maximum sentence of 20 years in prison; and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.

The minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Kim praised the outstanding efforts of the Bilateral Investigations Unit of the DEA Special Operations Division, the U.S. Department of Justice’s Office of International Affairs, and Moroccan and Spanish authorities for their ongoing assistance.

This case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorney Amanda C. Weingarten is in charge of the prosecution.

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

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and Complaint, and the description of the Indictment and Complaint set forth herein, constitute only allegations, and every fact described herein should be treated as an allegation.

Edward Y. Kim, the Acting United States Attorney for the Southern District of New York; Bryan Miller, the Special Agent in Charge of the New York Field Division for the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”); and Jessica Tisch, the Commissioner of the New York City Police Department (“NYPD”), announced that ROBERT FELIX-ARACENA was sentenced yesterday by U.S. District Judge George B. Daniels to 10 years in prison for conspiring to commit a series of gunpoint carjackings in Manhattan, the Bronx, and elsewhere in 2020, and for a related firearms offense.

Acting U.S. Attorney Edward Y. Kim said: “Robert Felix-Aracena and his co-defendants engaged in a violent, armed carjacking spree that endangered lives and terrorized victims.  Felix-Aracena, like his co-defendants, is now being held accountable for his actions. Today’s sentence is a reminder that this Office will relentlessly investigate and prosecute those who seek to inflict violence on our communities.”

ATF Special Agent in Charge Bryan Miller said: “This sentencing for these brazen armed carjackings should serve as a clear warning that such criminal acts will never be tolerated.  ATF remains steadfast in its commitment to working together with our partners to identify, investigate, and apprehend the most violent offenders in our communities.  I want to thank the men and women of the ATF/NYPD SPARTA Task Force, the NYPD Manhattan Robbery Squad, and the U.S. Attorney’s Office for the Southern District of New York for bringing these individuals to justice.  We will dedicate all necessary resources to continue collaboration with our local, state, and federal partners to ensure our streets remain safe.”

NYPD Commissioner Jessica S. Tisch said: “This sentencing marks the final dismantling of an organized criminal network that instilled fear in New York City motorists.  It is also a testament to the collaborative efforts of the dedicated NYPD investigators and ATF agents on the SPARTA task force.  Their tireless work, day and night, is making people safe, making them feel safe, and enhancing the quality of life for all New Yorkers.”

According to the Indictment and statements made in public court documents and proceedings: 

In October and November 2020, FELIX-ARACENA and a group of other individuals participated in a series of armed carjackings in Manhattan, the Bronx, and elsewhere.  That group also included co-defendant CHRISTIAN CRUZ, who was sentenced earlier this year to 10 years in prison; co-defendant ANDRES CAICEDO, who was sentenced last month to four years in prison; and co-defendant JOSE LAVANDIER, who was previously sentenced to three years in prison.  In particular:

• On October 22, 2020, CAICEDO and others participated in a gunpoint carjacking in the Bronx.  As a co-conspirator brandished a firearm at the victim, CAICEDO took marijuana, cash, and the victim’s car keys from the victim.
• On November 1, 2020, FELIX-ARACENA, CRUZ, and others participated in a gunpoint carjacking from two victims in the Bronx.  FELIX-ARACENA, armed with a TEC-9 firearm, and another carjacker took the vehicle from the victims, with FELIX-ARACENA brandishing a firearm and firing a shot near the foot of one of the victims in the process.
• On November 3, 2020, FELIX-ARACENA, CRUZ, and others participated in a gunpoint carjacking from two victims in Brooklyn.  The group was driving the vehicle they had carjacked two days earlier, and CRUZ was armed with, and brandished, the TEC-9.  That same day, the stolen vehicle was recovered in the Bronx by law enforcement, after FELIX-ARACENA, CRUZ, and the other carjackers fled from law enforcement in the stolen vehicle and on foot.
• On November 7, 2020, FELIX-ARACENA and others participated in a gunpoint carjacking from multiple victims in Manhattan.  The other carjackers, armed with a firearm, approached the victims and took their vehicle, while FELIX-ARACENA and another carjacker remained in the getaway vehicle.
• During the evening of November 10, 2020, and the early morning hours of November 11, 2020, FELIX-ARACENA, CRUZ, and others participated in three gunpoint carjackings and an attempted carjacking.
• Finally, on November 13, 2020, FELIX-ARACENA, LAVANDIER, and others participated in a gunpoint carjacking from two victims in Manhattan.  FELIX-ARACENA, armed with a defaced firearm, and another individual took the vehicle from the victims, while the other carjackers remained in the getaway vehicle.  The stolen vehicle was located a few hours later, at which time FELIX-ARACENA, LAVANDIER and the others attempted to flee in the stolen vehicle before crashing into a nearby parked car.  FELIX-ARACENA, LAVANDIER, and the others then fled on foot.

*               *                *

In addition to the prison term, FELIX-ARACENA, 24, a citizen of the Dominican Republic residing in the Bronx, New York, was sentenced to three years of supervised release.

Mr. Kim praised the outstanding investigative work of the ATF and the NYPD, in particular, the Strategic Patterned Armed Robbery Technical Apprehension Task Force, which is composed of agents and officers of the ATF and the NYPD.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Adam Z. Margulies and Jonathan L. Bodansky are in charge of the prosecution.

Edward Y. Kim, the Acting United States Attorney for the Southern District of New York, and Nelson I. Delgado, the Acting Special Agent in Charge of the Federal Bureau of Investigation (“FBI”) Newark Field Office, announced the return today of a three-count Indictment charging DONOVAN HALL with making interstate threats and interstate stalking.  HALL was arrested on November 22, 2024, in Mesa, Arizona, and was subsequently presented in federal court in the District of Arizona.  The case has been assigned to U.S. District Judge Jennifer H. Rearden.

Acting U.S. Attorney Edward Y. Kim said: “Donovan Hall allegedly unleashed a campaign of terror against several Jewish New Yorkers, allegedly sending scores of hateful, violent, and antisemitic death threats.  No individual deserves to be at the receiving end of these types of threats or to be targeted because of their religion.  This Office is committed to aggressively prosecuting hate crimes of all kinds and seeking justice for the victims of these offensive and harmful acts.”

Acting Special Agent in Charge Nelson I. Delgado said: “We allege Hall used graphic and hate-filled rhetoric to terrorize several victims in New York City and around the U.S.  These malicious phone calls escalated to text messages brazenly displaying his weapons, furthering his victims' worst fears.  The FBI has ZERO tolerance for hate-filled speech, threats and violent actions. We will not rest until those who commit these types of crimes are held accountable.”

According to the Complaint, the Indictment, and other documents and statements in the public record:

Over a period of three months, HALL contacted several individuals  located in New York, New York, (the “Victims”) approximately 1,000 times and made anti-Semitic and violent threats to torture, mutilate, and murder them and their families.   In particular, starting in August 2024, HALL made dozens of threatening phone calls—many of which were anti-Semitic in nature—to the owner of a hotel located in Manhattan, the owner’s family members, and hotel staff.  During these calls, HALL threatened numerous times to kill the Victims.

In October 2024, HALL escalated his threatening conduct by texting photographs of two firearms and a machete to the hotel owner, along with threats to use those weapons to harm the owner and his family.  During a search of HALL’s residence in Arizona conducted on November 22, 2024, the firearms depicted in the text messages, among other weapons and ammunition, were recovered.  The two firearms—neither of which is registered in HALL’s name—were located alongside his wallet in his backpack.  One of the firearms was loaded.

HALL’s threats toward the Victims were part of a larger pattern of death threats sent to various other individuals.  The targets of his threats are located throughout the U.S.  In these communications, HALL consistently used violent and threatening language, and often targeted Jews.

*                *                *

HALL, 34, of Mesa, Arizona, has been charged with two counts of making interstate threats, which each carry a maximum sentence of five years in prison, and one count of interstate stalking, which carries a maximum sentence of five years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Kim praised the outstanding investigative work of the FBI’s Newark Field Office.  Mr. Kim also thanked the New York Police Department, the U.S. Attorney’s Office for the District of Arizona, the FBI Phoenix Field Office, the Mesa Police Department, and the Clifton Police Department in Clifton, New Jersey.

This case is being handled by the Office’s Civil Rights Unit in the Criminal Division.  Assistant U.S. Attorney Sam Adelsberg is in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Edward Y. Kim, the Acting United States Attorney for the Southern District of New York, announced that SHUKHRATJON MIRSAIDOV and SHUKHRAT ABDULLAEV were sentenced to one year and a day and 24 months in prison, respectively, for their roles in operating a money laundering scheme from June 2019 to February 2022, using the U.S. bank account of an international airline (“Airline-1”) with a hub at John F. Kennedy International Airport in New York, where MIRSAIDOV was the lead U.S.-based executive.  U.S. District Judge Loretta A. Preska imposed MIRSAIDOV’s sentence today and ABDULLAEV’s sentence on September 4, 2024, following the defendants’ guilty pleas to conspiracy to commit money laundering. 

Acting U.S. Attorney Edward Y. Kim said: “For years Shukhratjon Mirsaidov and Shukrat Abdullaev engaged in a scheme to launder healthcare fraud proceeds through the accounts of an international airline in order to conceal the illicit nature of these funds.  Laundering schemes that use real businesses to conceal crime proceeds are often particularly difficult for law enforcement to detect.  This case demonstrates that this Office will continue to root out money laundering, no matter how sophisticated, wherever it occurs and that those responsible will be held to full account."  

According to allegations in the Indictment, the criminal Complaint, public filings, and statements made in court: 

In the course of the money laundering conspiracy, MIRSAIDOV and ABDULLAEV used a U.S. company bank account for Airline-1 (the “Airline-1 Bank Account”) to operate a check-cashing scheme and to launder hundreds of thousands of dollars of healthcare fraud proceeds.  As a senior executive, MIRSAIDOV was one of two signatories for the Airline-1 Bank Account.  Between approximately June 2019 and August 2021, MIRSAIDOV deposited into the Airline-1’s Bank Account over 100 checks drawn from accounts controlled by seven shell companies that were used to launder the proceeds of healthcare fraud.  For example, the shell companies had received insurance payments for medical services purportedly provided by a doctor, but the doctor did not, in fact, provide such services.  The shell companies were primarily funded by payments from medical clinics, physicians, and medical diagnostic testing companies and had no relation whatsoever to the airline industry. 

MIRSAIDOV obtained the checks from the shell companies from ABDULLAEV, who was not an employee of Airline-1 and who obtained the checks from the perpetrators of the healthcare fraud scheme.  MIRSAIDOV and ABDULLAEV collected cash generated from Airline-1 ticket sales and fees, and instead of depositing that cash into Airline-1’s bank account, used the cash to illegally cash the shell company checks.  ABDULLAEV gave the cash generated from the airline ticket sales and fees to the perpetrators controlling the shell companies.

MIRSAIDOV and ABDULLAEV not only used the Airline-1 Bank Account to launder healthcare fraud proceeds from the shell companies, but also used the Airline-1 Bank Account to launder funds represented to be fraud proceeds in a series of sting transactions.  Between approximately June 2021 and February 2022, law enforcement, with the assistance of a confidential source (“CS-1”), conducted a series of sting money laundering transactions involving MIRSAIDOV, ABDULLAEV, and the Airline-1 Bank Account.  CS-1 asked ABDULLAEV to cash checks and transmit funds abroad and agreed to pay ABDULLAEV a four percent fee to do so.  ABDULLAEV told CS-1 a portion of the fee went to MIRSAIDOV.  During the transactions, CS-1 represented to ABDULLAEV that the funds were healthcare fraud proceeds.  Overall, CS-1 provided ABDULLAEV with 14 checks totaling $210,000 issued from a covert law enforcement account held in the name of a fictitious company.  MIRSAIDOV, working with ABDULLAEV, deposited 12 of the checks totaling $190,000 into the Airline-1 Bank Account.  CS-1 received cash from ABDULLAEV in exchange for the checks, and in one instance, ABDULLAEV coordinated the delivery of U.S. currency to an individual abroad in exchange for some of the checks.  During the course of these sting transactions, in a recorded conversation with CS-1, MIRSAIDOV admitted, in sum and substance, that he received many checks from ABDULLAEV and that MIRSAIDOV gave ABDULLAEV cash in exchange for the checks.  CS-1 informed MIRSAIDOV, in sum and substance, that the checks from CS-1 came from a medical company and that the company disguised the check payments in its financial reporting by claiming the check deposits were for business class flight tickets.  MIRSAIDOV nevertheless expressed a willingness to work directly with CS-1 to conduct check cashing using the Airline-1 Bank Account.       

Participants in the underlying healthcare fraud scheme who laundered their crime proceeds with the assistance of MIRSAIDOV and ABDULLAEV using the Airline-1 Bank Account have been charged by this Office in U.S. v. Tariverdi, et al, No. 24 Cr. 599 (JPO).

*                *                *

In addition to the prison sentence, MIRSAIDOV, 46, of Fort Lee, New Jersey, was ordered to pay forfeiture in the amount of $674,171.  ABDULLAEV, 39, of Brooklyn, New York, was sentenced to three years of supervised release and was ordered to pay forfeiture in the amount of $704,171.   

Mr. Kim praised the outstanding work of the Federal Bureau of Investigation. 

The case is being handled by the Office’s Illicit Finance and Money Laundering Unit.  Assistant U.S. Attorneys Cecilia Vogel, Christopher Brumwell, and Vladislav Vainberg are in charge of the prosecution.

Edward Y. Kim, the Acting United States Attorney for the Southern District of New York, announced today the guilty plea of RAFAEL ALVAREZ, a/k/a “the Magician,” to a two-count Superseding Information charging ALVAREZ with one count of conspiracy to defraud the U.S. and steal government funds and one count of aiding and assisting in the preparation of a false and fraudulent U.S. individual income tax return.  The charges arise from ALVAREZ’s orchestration of a decade-long, $145 million tax fraud scheme to file tens of thousands of federal individual income tax returns that included false information designed to fraudulently reduce the individuals’ tax burden.  As part of today’s guilty plea, Alvarez agreed to pay the Internal Revenue Service (“IRS”) $145 million in restitution and forfeit over $11.84 million in fraudulent proceeds he received from his criminal conduct.  ALVAREZ pled guilty today before U.S. District Judge J. Paul Oetken.

Acting U.S. Attorney Edward Y. Kim said: “Rafael Alvarez became known as ‘the Magician’ by his customers for his supposed ability to make their tax burden disappear.  But, as today’s guilty plea shows, there was no magic to what Alvarez was doing – he was committing a serious federal crime by falsifying tens of thousands of tax returns and, in the process, depriving the IRS of $145 million in tax revenue.  Today’s guilty plea, in one of the largest ever tax frauds by a return preparer, should serve as an important reminder to tax professionals that this Office will vigorously investigate and prosecute tax offenses.”

As alleged in the Indictment and Superseding Information and statements made in public filings and court proceedings:

From at least in or about 2010, up to and including in or about 2020, ALVAREZ was the CEO, owner, and manager of ATAX New York, LLC, also doing business as ATAX New York-Marble Hill, ATAX Marble Hill, ATAX Marble Hill NY, and ATAX Corporation (together, “ATAX”).  ATAX was a high-volume tax preparation company located in the Bronx, New York, which prepared approximately 90,000 federal income tax returns for its customers during this period.  ALVAREZ both prepared tax returns for ATAX customers and recruited, supervised, and directed other ATAX personnel who in turn prepared tax returns for customers.  During this period, ALVAREZ oversaw a sweeping fraudulent scheme, whereby he and his employees submitted false information to the IRS in ATAX customers’ tax returns. This false information, which included, among other things, bogus itemized tax deductions, made-up capital losses, phony business expenses, and fraudulent tax credits, served to fraudulently reduce the customers’ tax liability and increase the customers’ tax refunds from the IRS.

In total, ALVAREZ oversaw ATAX’s fraudulent submission of tax returns on behalf of customers that deprived the IRS of $145 million in tax revenue.  ALVAREZ was so consistent at falsifying ATAX customer tax returns that he became known to ATAX’s customers as “the Magician.”  Additionally, ALVAREZ agreed as part of his plea agreement that he was a leader of the scheme and attempted to obstruct or impede the administration of justice with respect to the investigation of the tax fraud scheme when he and an ATAX employee made false statements to an IRS Revenue Agent.  ALVAREZ’s operation of ATAX helped the company generate approximately $12 million in fraudulent proceeds over the duration of the fraud.

*                *                *

ALVAREZ, 61, of Cortland Manor, New York, pled guilty to one count of conspiracy to defraud the U.S. and steal government funds, which carries a maximum sentence of five years in prison, and one count of aiding and assisting in the preparation of a false and fraudulent U.S. individual income tax return, which carries a maximum sentence of three years in prison.  ALVAREZ is scheduled to be sentenced by Judge Oetken on April 11, 2025.   

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the IRS, Criminal Investigation, the Federal Bureau of Investigation, and the Treasury Inspector General for Tax Administration in this case.

This case is being handled by the Office’s Illicit Finance and Money Laundering Unit.  Assistant U.S. Attorney David R. Felton is in charge of the prosecution. 

Edward Y. Kim, the Acting United States Attorney for the Southern District of New York, announced today that RUI-SIANG LIN, a/k/a “Ruisiang Lin,” a/k/a “林睿庠,” a/k/a “Pharoah,” a/k/a “faro,” pled guilty to narcotics conspiracy, money laundering, and conspiracy to sell adulterated and misbranded medication in connection with LIN’s operation and ownership of “Incognito Market,” an online dark web narcotics marketplace that enabled its users to buy and sell illegal narcotics anonymously around the world. LIN pled guilty today before U.S. District Judge Colleen McMahon and is scheduled to be sentenced on March 27, 2025.

Acting U.S. Attorney Edward Y. Kim said: “Rui-Siang Lin led a prolific online narcotics bazaar that sold more than $100 million of narcotics around the world.  While Lin profited millions of dollars from his sophisticated scheme, the community suffered.  Lin and his “Incognito Market” exacerbated the opioid and fentanyl crisis and put the community in danger.  Lin now faces a lengthy term in prison.”

According to the allegations contained in the Indictment, Complaint, and statements made in public filings and in public court proceedings:

Incognito Market was an online narcotics bazaar that existed on the dark web.  Incognito Market formed in October 2020.  Since that time, and through its closing in March 2024, Incognito Market sold more than $100 million of narcotics — including hundreds of kilograms of cocaine and methamphetamines.  Incognito Market was available globally to anyone with internet access and could be accessed using the Tor web browser on the “dark web” or “darknet.”  LIN operated the Incognito market under the online pseudonym “Pharoah” or “faro.”  As “Pharoah” — the leader of Incognito market — LIN supervised all of its operations, including its employees, vendors, and customers, and had ultimate decision-making authority over every aspect of the multimillion-dollar operation.

Incognito Market was designed to foster seamless narcotics transactions across the internet and across the world and incorporated many features of legitimate e-commerce sites such as branding, advertising, and customer service.  Upon visiting the site, users were met by a splash page and graphic interface, which is pictured below:

After logging in with a unique username and password, users were able to search thousands of listings for narcotics of their choice.  Incognito Market sold illegal narcotics and misbranded prescription medication, including heroin, cocaine, LSD, MDMA, oxycodone, methamphetamines, ketamine, and alprazolam. An example of listings on Incognito market is below:

Listings included offerings of prescription medication that was advertised as being authentic but was not.  For example, in November 2023, an undercover law enforcement agent received several tablets that purported to be oxycodone, which were purchased on Incognito Market.  Testing on those tablets revealed that they were not authentic oxycodone at all and were, in fact, fentanyl pills.

Each listing on Incognito Market was sold by a particular vendor.  To become an Incognito Market vendor, each vendor was required to register with the site and pay an admission fee.  In exchange for listing and selling narcotics as a vendor on Incognito Market, each vendor paid 5% of the purchase price of every narcotic sold to Incognito Market. That revenue funded Incognito Market’s operations, including paying “employee” salaries and for computer servers.  LIN collected millions of dollars of profits from Incognito.  To facilitate these financial transactions, Incognito Market had its own “bank,” which allowed its users to deposit cryptocurrency on the site into their own “bank accounts.” After a narcotics transaction was completed, cryptocurrency from the buyer’s “bank account” was transferred to the seller’s “bank account,” less the 5% fee that Incognito collected.  The bank enabled buyers and sellers to stay anonymous from each other.  The bank’s graphic interface is pictured below:

On March 12, 2020, before Incognito Market launched, LIN emailed himself a rough diagram of a darknet marketplace.  That diagram, which is pictured below, contains features consistent with the operation of Incognito Market.

*                *                *

RUI-SIANG LIN, 23, of Taiwan, pled guilty to one count of narcotics conspiracy, which carries a mandatory minimum sentence of 10 years in prison and a maximum potential sentence of life in prison; one count of money laundering, which carries a maximum potential sentence of 20 years in prison; and one count of conspiracy to sell adulterated and misbranded medication, which carries a maximum potential sentence of five years in prison.

The statutory minimum and maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Kim praised the investigative work of the Federal Bureau of Investigation, Homeland Security Investigations, the Drug Enforcement Administration, the U.S. Food and Drug Administration Office of Criminal Investigations, and the New York City Police Department.  

This effort is part of an Organized Crime Drug Enforcement Task Forces (“OCDETF”) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the U.S. using a prosecutor-led, intelligence-drive, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Ryan B. Finkel and Nicholas Chiuchiolo are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York; Lisa F. Garcia, the Regional Administrator for Region 2 of the U.S. Environmental Protection Agency (“EPA”); Matthew Ammon, the U.S. Department of Housing and Urban Development (“HUD”) Office of Lead Hazard Control and Healthy Homes; and Rae Oliver Davis, the Inspector General of the HUD Office of the Inspector General (“HUD OIG”), announced today that the United States, together with the State of New York, filed a civil lawsuit against LILMOR MANAGEMENT LLC (“LILMOR”), MORRIS LIEBERMAN (“LIEBERMAN”), and related LLCs (the “LLC DEFENDANTS”) (collectively, the “Defendants”), alleging that since 2012 the Defendants have violated federal law relating to lead-based paint safety and maintained a public nuisance in approximately 2,700 apartments, including more than 2,500 still owned by the LLC Defendants and more than 2,400 apartments currently managed by LILMOR and LIEBERMAN.  Among other things, the U.S. and the State of New York allege that the Defendants’ apartments are riddled with peeling lead paint and lead dust; infested by rats, mice, and roaches; damp from perpetual leaks and covered with growing mold; and otherwise a danger to human health.  More than 130 children living in the Defendants’ apartments have tested positive for elevated blood-lead levels since 2012.

The parties simultaneously filed a Consent Decree that would resolve the lawsuit and impose extensive relief, including requiring the Defendants to pay $3.575 million in penalties and $2.925 million in restitution to affected tenants, and requiring Defendants to identify and abate all lead-based paint (at an estimated cost of $10 million) and remediate substandard housing conditions across more than 2,500 apartments, subject to the oversight of an independent Housing Specialist selected by the U.S. and New York State. 

U.S. Attorney Damian Williams said: “New Yorkers are entitled to protection from lead-paint hazards and other unsafe conditions in their homes. Landlords must comply with federal lead paint laws, and they cannot neglect their residential properties in ways that create a public nuisance.  The consent decree we filed today, if entered by the Court, would provide the most extensive relief ever achieved in a case of this kind, including requiring the defendants to make 2,500 apartments safe and sanitary and to pay $6.5 million, including nearly $3 million in restitution to impacted tenants.”

EPA Regional Administrator Lisa F. Garcia said: “Our message to housing authorities, landlords, and renovators is loud and clear – Follow The Law – if you persist in cutting corners and putting public health at risk, we will pursue a violation and you will pay a hefty fine.  There is no excuse for these violations. Rather than protecting children from lead poisoning, Lilmor Management Company LLC and the other named defendants systematically violated lead paint safety regulations.  EPA appreciates the partnership with HUD, the U.S. Department of Justice and New York State officials on this action that underscores our joint commitment to protect our children and families from lead hazards.” 

HUD Director Matthew Ammon said: “Today’s settlement means that thousands of families in New York City will have their apartments tested for lead and made lead safe. HUD’s partnering with DOJ and EPA on this case is part of the whole-of-government approach that is vital for addressing lead hazards in homes nationally.”

HUD-OIG Inspector General Rae Oliver Davis said: “The defendants’ failure to maintain safe and healthy living conditions for tenants, particularly the hundreds of children who have tested positive for elevated blood-lead levels, is simply unacceptable.  This consent decree holds the defendants accountable for its egregious conduct.  It provides important relief for victims and will require the defendant to take meaningful action to protect tenants from future exposure to health hazards.  My office will continue to work with DOJ, HUD, EPA, and our local partners such as the New York Attorney General in addressing critical health and safety issues and safeguarding the well-being of families nationwide from preventable hazards such as lead poisoning.”

Exposure to lead-based paint dust is the most common cause of lead poisoning, which can lead to severe, irreversible health problems, particularly in children.  Lead poisoning can affect children’s brains and developing nervous systems, causing reduced IQ, learning disabilities, and behavioral problems.  Federal law seeks to protect tenants from these grave threats.  In particular, the federal Lead Disclosure Rule requires landlords and their agents to inform tenants about the risks of lead exposure in their apartments before entering lease agreements and to disclose known facts about the presence of lead paint and lead paint hazards in their housing. The federal Renovation, Repair, and Painting Rule (“RRP Rule”) provides work-practice standards and related requirements to minimize the risk of lead exposure during renovation projects. 

As alleged in the U.S. and New York State’s Complaint filed in the district court, LIEBERMAN is the co-owner and principal of LILMOR, which currently manages a portfolio of more than 2,400 apartments and previously managed others. Many of the apartments are owned by the LLC DEFENDANTS.  The apartments are largely located in communities where families have low to moderate incomes and are disproportionately burdened by environmental and other health hazards.  For years, the Defendants systematically failed to provide their tenants with disclosures about lead-based paint and lead-based paint hazards in their apartments, as required by the Lead Disclosure Rule.  LILMOR and LIEBERMAN also failed to protect tenants when conducting renovation work as required by the RRP Rule, creating risks of exposure to toxic dust. Furthermore, the Defendants failed to properly maintain their residential properties, leading to apartments that were so unsafe and unsanitary as to present a public nuisance.

*                *                *

In the Consent Decree, LILMOR and LIEBERMAN admit, acknowledge, and accept responsibility for the following, among other things:  

• Defendants own, control, or manage, in whole or in part, 49 residential buildings containing 2,539 units in New York City, all of which were built prior to 1978.
• Government records show that, since 2012, more than 130 children have tested positive for elevated blood-lead levels while living in an apartment owned or controlled by one or more of the Defendants.

Disclosures

• Prior to November 2020, LILMOR and LIEBERMAN failed to provide tenants entering new and renewal leases with known information relating to lead-based paint or lead-based paint hazards and/or records in the possession or control of the Defendants relating to lead-based paint or lead-based paint hazards, as required by the federal Lead Disclosure Rule.
• In hundreds of apartments they rented, LILMOR and LIEBERMAN knew of lead-based paint or previous lead-based paint hazards because of prior lead-based paint hazard violations issued by the New York City Department of Housing Preservation and Development (“HPD”) or the New York City Department of Health and Mental Hygiene (“DOHMH”), but LILMOR and LIEBERMAN did not disclose this fact to tenants as required by the Lead Disclosure Rule.
• Prior to the dates upon which government records show that children tested positive for elevated blood-lead levels while residing in the Defendants’ apartments, LILMOR and LIEBERMAN had received citations for lead-based paint hazard violations from HPD or DOHMH for at least 18 of these apartments but did not disclose the fact that these apartments contained lead-based paint to the tenants when they signed their leases or lease renewals.

Lead-Safe Work Practices

• LILMOR and LIEBERMAN lacked federal certification to conduct repairs and renovations that required lead-safe work practices pursuant to the RRP Rule, did not provide maintenance staff with equipment necessary to perform RRP-Rule-compliant work, and did not train maintenance staff on lead-safe work practices.  LILMOR and LIEBERMAN provided no instructions to its maintenance staff to prevent them from conducting work that was required to be performed in accordance with lead-safe work practices.  Their work-order database nevertheless reflects that work subject to the RRP Rule was conducted by their maintenance staff.
• Through at least 2020, LILMOR and LIEBERMAN failed to follow lead-safe work practices required by federal and local law in covered repair and renovation projects for which they engaged an entity that worked solely or principally for them.  During this time, the entity did not employ lead-safe work practices.
• Furthermore, although LILMOR had arranged for this entity to receive EPA certifications required by the RRP Rule in 2010 and 2020, the entity was not certified to conduct work covered by the RRP Rule from 2015 to 2020.
• In a period spanning from 2019 to the present, HPD issued violations to Defendants under applicable housing code provisions:
• more than 966 times for lead-based paint hazards,
• more than 2331 times for rodent or roach infestations,
• more than 1465 times for mold,
• more than 1492 times for leaks, and
• more than 85 times for lack of heat.

The Consent Decree agreed upon by the parties requires the Defendants, among other things, to do the following:

• Identify and abate all lead-based paint across 49 buildings containing more than 2,500 apartments.
• Eliminate substandard conditions throughout this housing portfolio.
• Engage an independent Housing Specialist, selected by the U.S. and the State of New York, to oversee the Defendants’ work under the consent decree.
• Pay a $3.25 million civil penalty to the U.S.
• Pay $3.25 million to New York State, of which $325,000 will be a civil penalty and $2.925 million will be used to pay restitution to tenants harmed by Defendants’ conduct.
• Provide rent-abatement credits for tenants affected by lead-based paint violations and substandard conditions.
• Provide tenant education efforts to tenants related to the hazards of lead-based paint.

To provide public notice and afford members of the public the opportunity to comment on the Consent Decree, the decree will be lodged with the District Court for a period of at least 30 days before it is submitted for the Court’s approval.

Mr. Williams thanked EPA and HUD attorneys and staff and HUD OIG for their critical work in this matter.  Mr. Williams also thanked the Housing Protection Unit of the New York Attorney General’s Office for coordinating in pursuing the federal and state claims resolved in the Consent Decree.

This case is being handled by the Environmental Protection Unit of the Office’s Civil Division.  Assistant U.S. Attorneys Zack Bannon and Jacob Lillywhite are in charge of the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced that Corey Gilmore, a former NYCHA superintendent, was convicted of bribery and extortion under color of official right for taking thousands of dollars from contractors in exchange for awarding those contractors no-bid contracts or approving payment on previously awarded contracts at NYCHA developments for approximately six years. The verdict followed a four-day trial before U.S. District Judge Lewis J. Liman.

U.S. Attorney Damian Williams said: “Corruption is an insidious crime—difficult to detect, corrosive in its effect on government agencies, and damaging to the public’s trust in government institutions.  As a NYCHA Superintendent, Corey Gilmore abused his position of public trust by demanding thousands of dollars of bribes from contractors, betraying his duty to NYCHA residents, the City of New York, and taxpayers.  The jury’s unanimous verdict sends a clear message that those who use their public offices for personal gain will be held accountable.”

According to the evidence presented in court during the trial:

NYCHA is the largest public housing authority in the country, providing housing to New Yorkers across the City and receiving over $1.5 billion in federal funding from the U.S. Department of Housing and Urban Development (“HUD”) every year.  When repairs or construction work at NYCHA housing require the use of outside contractors, services must typically be purchased via a bidding process.  However, when the value of a contract was under a certain threshold, designated staff at NYCHA developments, including superintendents, could hire a contractor of their choosing without soliciting multiple bids.  With either type of contract, a NYCHA employee needed to certify that the work was satisfactorily completed in order for the contractor to receive payment from NYCHA.

GILMORE, a superintendent at three NYCHA developments in the Bronx between 2016 and 2023—Bronx River Houses, Eastchester Gardens, and Forest Houses—demanded and received cash in exchange for NYCHA contracts. GILMORE typically demanded $1,000 for each contract he awarded. In total, GILMORE demanded and received tens of thousands of dollars in bribes in exchange for hundreds of thousands of dollars in NYCHA contracts.

Of the 70 individual NYCHA employees charged with bribery and extortion offenses in February 2024, 59 have pled guilty, and three have been convicted after trial.

If you believe you have information related to bribery, extortion, or any other illegal conduct by NYCHA employees, please contact OIGNYCHA@doi.nyc.gov or (212) 306-3356. If you were involved in such conduct, please consider self-disclosing through the SDNY Whistleblower Pilot Program at USANYS.WBP@usdoj.gov.

*                *                *

GILMORE, 46, of Garnerville, New York, was convicted of one count of federal program bribery, which carries a maximum term of 10 years in prison, and one count of extortion under color of official right, which carries a maximum term of 20 years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the New York City Department of Investigation, U.S. Department of Homeland Security – Homeland Security Investigations (“HSI”), the HUD Office of Inspector General, and the U.S. Department of Labor – Office of Inspector General, which work together collaboratively as part of the HSI Document and Benefit Fraud Task Force, as well as the special agents and task force officers of the U.S. Attorney’s Office for the Southern District of New York.

This prosecution is part of an Organized Crime Drug Enforcement Task Forces (“OCDETF”) operation. OCDETF identifies, disrupts, and dismantles criminal organizations using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.

This case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Emily Deininger, Matthew King, and Derek Wikstrom are in charge of the prosecution, with the assistance of Paralegal Specialist Braden Florczyk.

Haji Abdul Satar Abdul Manaf, 59, of Afghanistan, also known as Haji Abdul Sattar Barakzai, was sentenced to 30 in prison for attempting to import heroin into the U.S., engaging in narco-terrorism for the benefit of the Taliban, attempting to engage in narco-terrorism for the benefit of the Haqqani Network, and witness tampering offenses. Manaf was convicted after a two-week jury trial that concluded in August.

According to court documents, evidence at trial, and statements made in public court proceedings, the Treasury Department sanctioned Manaf in June 2012, pursuant to the U.S.’ terrorism sanctions authority, Executive Order No. 13224, for storing or moving money for the Taliban. Upon announcing the sanctions against Manaf, the Treasury Department stated that Manaf “donated thousands of dollars to the Taliban to support Taliban activities in Afghanistan and has distributed funds to the Taliban” and provided money “to aid the Taliban’s fight against Coalition Forces.”   

Beginning in at least January 2018, Manaf attempted to import large quantities of heroin into the United Sates; paid benefits to the Taliban to support his heroin trafficking; and attempted to provide financial support to the Haqqani Network, a violent faction of the Taliban. Specifically, Manaf participated at in-person meetings, recorded telephone calls, and electronic communications with five individuals whom Manaf understood to be affiliated with an international drug trafficking organization. During those meetings, Manaf helped arrange to import large quantities of heroin into the U.S. with the assistance of — and recognizing that some of the proceeds of that narcotics trafficking would be provided to — the Taliban and the Haqqani Network. Four of these individuals were, in fact, DEA confidential sources. The fifth was an undercover DEA agent (the UC).

The Haqqani Network and the Taliban have committed highly public acts of terrorism against U.S. interests, including U.S. and coalition forces in Afghanistan. In August 2018, Manaf sold the UC a ten-kilogram shipment of heroin in Afghanistan, after the UC told Manaf that the heroin would ultimately be imported into the United States for sale in New York. Manaf repeatedly told the UC that Manaf had paid the Taliban in connection with the production of the ten-kilo shipment and reported that heavily armed members of the Taliban would guard and transport future heroin shipments for Manaf and the UC. In August 2018, Manaf facilitated the transfer of thousands of dollars of what he believed to be narcotics proceeds through his money-remitting business to individuals Manaf had been advised were members of the Haqqani Network. Manaf subsequently agreed to supply the UC with thousand-kilogram loads of heroin for importation into the United States.

Following his arrest overseas and subsequent extradition, while incarcerated in New York pending trial in this case, Manaf directed members of his family in Afghanistan to kidnap and threaten a DEA source — a witness to his crimes — in an effort to silence him. Specifically, in a series of recorded prison calls in February and March 2019, Manaf directed his brothers to bring the source to Manaf’s family home, to “not let him go even for a minute,” to take the source’s phone, and to hand the source over to a “security chief” who would make the source “confess like a parrot” and “tell the whole story in two minutes.” Manaf’s brothers did just as he directed — they kidnapped that DEA source at gunpoint in Afghanistan and threatened to kill him.

In addition to the prison term, Manaf was sentenced to five years of supervised release and ordered to forfeit the proceeds of his crimes.

The DEA Special Operations Division’s Bilateral Investigations Unit; the DEA European Regional Director; the DEA Copenhagen, Canberra, Dubai, Islamabad, Kabul, New Delhi, and Sydney Country Offices; the Government of Estonia; and the Australian Criminal Intelligence Commission investigated the case.

Assistant U.S. Attorneys Sam Adelsberg, Nicholas S. Bradley, and Kimberly J. Ravener for the Southern District of New York are prosecuting the case with assistance from Trial Attorney Joshua Champagne of the National Security Division’s Counterterrorism Section.

Damian Williams, the United States Attorney for the Southern District of New York, and Anne Milgram, the Administrator of the U.S. Drug Enforcement Administration (“DEA”), announced today that HAJI ABDUL SATAR ABDUL MANAF, a/k/a “Haji Abdul Sattar Barakzai,” was sentenced to 30 years in prison for attempting to import heroin into the U.S., engaging in narco-terrorism for the benefit of the Taliban, attempting to engage in narco-terrorism for the benefit of the Haqqani Network, and witness tampering offenses.  MANAF was convicted after a two-week jury trial that concluded in August 2024.  The sentence was imposed by U.S. District Judge Jed S. Rakoff, who also presided over the trial.

U.S. Attorney Damian Williams said: “Haji Abdul Satar Abdul Manaf was in the business of peddling poison.  He leveraged the help of terrorists—the Taliban—to advance his drug business and to expand his drug trafficking operation to the United States.  And he did not hesitate to order the kidnapping of a critical witness at gunpoint in an effort to silence him.  Thankfully, our law enforcement allies, in partnership with the career national security prosecutors of this Office, put an end to his years of narco-terrorism.”

DEA Administrator Anne Milgram said: “Haji Abdul Satar Abdul Manaf used heroin as a weapon of war, funding the Taliban and Haqqani Network to spread terror and death.  His poison targeted our streets while his profits fueled violence against U.S. coalition forces.  Today's sentence sends a clear message: narco-terrorists who bankroll terror and threaten American lives will be brought to justice, no matter where they hide.”

According to the Complaint, Indictment, evidence at trial, and statements made in public court proceedings:

In June 2012, the U.S. Treasury Department sanctioned MANAF pursuant to the U.S.’s terrorism sanctions authority, Executive Order No. 13224, for storing or moving money for the Taliban.  In announcing the sanctions against MANAF, the Treasury Department stated that MANAF “donated thousands of dollars to the Taliban to support Taliban activities in Afghanistan and has distributed funds to the Taliban” and provided money “to aid the Taliban’s fight against Coalition Forces.”    

Beginning in at least January 2018, MANAF attempted to import large quantities of heroin into the U.S.; paid benefits to the Taliban to support his heroin trafficking; and attempted to provide financial support to the Haqqani Network, a violent faction of the Taliban.  Specifically, MANAF participated in in-person meetings, recorded telephone calls, and electronic communications with five individuals whom MANAF understood to be affiliated with an international drug trafficking organization.  During those meetings, MANAF helped arrange to import large quantities of heroin into the U.S. with the assistance of—and recognizing that some of the proceeds of that narcotics trafficking would be provided to—the Taliban and the Haqqani Network.  Four of these individuals were, in fact, DEA confidential sources.  The fifth was an undercover DEA agent (the “UC”).

The Haqqani Network and the Taliban have committed highly public acts of terrorism against U.S. interests, including U.S. and coalition forces in Afghanistan.  In August 2018, MANAF sold the UC a ten-kilogram shipment of heroin (the “Ten Kilo Shipment”) in Afghanistan, after the UC told MANAF that the heroin would ultimately be imported into the United States for sale in New York.  MANAF repeatedly told the UC that MANAF had paid the Taliban in connection with the production of the Ten Kilo Shipment, and reported that heavily armed members of the Taliban would guard and transport future heroin shipments for MANAF and the UC.  In August 2018, MANAF facilitated the transfer of thousands of dollars of what he believed to be narcotics proceeds through his money-remitting business to individuals MANAF had been advised were members of the Haqqani Network.  MANAF subsequently agreed to supply the UC with thousand-kilogram loads of heroin for importation into the United States. 

Following his arrest overseas and subsequent extradition, and while incarcerated in New York pending trial in this case, MANAF directed members of his family in Afghanistan to kidnap and threaten a DEA source—a witness to his crimes—in an effort to silence him.  Specifically, in a series of recorded prison calls in February and March 2019, MANAF directed his brothers to bring the source to MANAF’s family home, to “not let him go even for a minute,” to take the source’s phone, and to hand the source over to a “security chief” who would make the source “confess like a parrot” and “tell the whole story in two minutes.”  MANAF’s brothers did just as he directed—they kidnapped that DEA source at gunpoint in Afghanistan and threatened to kill him.

*               *                *

In addition to the prison term, MANAF, 59, of Afghanistan, was sentenced to five years of supervised release.

Mr. Williams praised the outstanding investigative efforts of the DEA’s Special Operations Division’s Bilateral Investigations Unit; the DEA European Regional Director; the DEA Copenhagen, Canberra, Dubai, Islamabad, Kabul, New Delhi, and Sydney Country Offices; the Government of Estonia; and the Australian Criminal Intelligence Commission.

This prosecution is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Sam Adelsberg, Nicholas S. Bradley, and Kimberly J. Ravener are in charge of the prosecution, with assistance from Trial Attorney Joshua Champagne of the Counterterrorism Section.

Damian Williams, the United States Attorney for the Southern District of New York, and Anne Milgram, the Administrator of the U.S. Drug Enforcement Administration (“DEA”), announced today that MAXIMILIANO DAVILA-PEREZ, a/k/a “Macho,” was extradited from Bolivia and arrived in the U.S. this morning to face federal charges for conspiring to import cocaine into the U.S. and conspiring to use and possess machineguns in connection with this cocaine importation conspiracy.  DAVILA-PEREZ will make his initial appearance in the Southern District of New York this afternoon before the Honorable Robyn F. Tarnofsky.  DAVILA-PEREZ’s case is assigned to U.S. District Court Judge Denise L. Cote.

U.S. Attorney Damian Williams said: “As alleged, Maximiliano Davila-Perez abused his position as the head of Bolivia’s anti-narcotics law enforcement agency to instead aid the very narcotics traffickers he was entrusted to investigate and arrest.  Along the way, he sought to use Bolivian law enforcement officers to guard and transport cocaine shipments and participate in the shipment of massive quantities of cocaine.  While this conduct is abhorrent, it is sadly not shocking; instead, this is the latest example of our work with the DEA’s Special Operations Division in rooting out this type of cocaine-fueled corruption around the globe.  Let this be another loud message to those who would abuse their positions to send ton-quantities of cocaine to the United States: our reach is global, our memory is long, and we will not allow you to continue to flood our country with cocaine without punishment.  I commend the work of the career prosecutors of this Office, who have investigated and prosecuted these cases alongside the Special Operations Division for years and will continue to do so for as long as remains necessary.”

DEA Administrator Anne Milgram said: “Maximiliano Davila-Perez was supposed to fight the drug trade, but instead he fueled it.  As the head of Bolivia's anti-narcotics agency, he turned law enforcement into a cocaine trafficking machine, seeking to flood our streets with poison.  His betrayal of public trust ends here.  Let this extradition serve as a warning: no corrupt official is untouchable, and the DEA will stop at nothing to bring criminals to justice, no matter where they hide.”

According to the allegations contained in the Superseding Indictment, other court filings, and statements made during court proceedings:[1]

Until in or about November 2019, DAVILA-PEREZ was the Director of Bolivia’s chief anti-narcotics law enforcement agency, Fuerza Especial de Lucha Contra el Narcotráfico (“FELCN”).  In DAVILA-PEREZ’s role as Director of FELCN, he exploited his official position in furtherance of large-scale cocaine trafficking activities, including by seeking to divert resources away from investigating traffickers supported by DAVILA-PEREZ, and by providing heavily armed FELCN officers under his command as security for cocaine shipments.  DAVILA-PEREZalso worked in partnership with large-scale cocaine suppliers who operated cocaine labs in Bolivia and agreed to ship more than a thousand kilograms of Bolivian cocaine to New York.

In or around July 2019, while DAVILA-PEREZ was still the Director of FELCN, DAVILA-PEREZ and his co-conspirators were recorded while they discussed a plot to send over one ton of cocaine to the U.S. via airplane from Bolivia.  During that meeting, DAVILA-PEREZ suggested using particular airfields in Bolivia at which he controlled airport security and could divert law enforcement resources to provide cover while the aircraft was loaded with ton-quantities of cocaine.  DAVILA-PEREZ also committed to providing uniformed FELCN officers armed with machineguns to guard the plane during loading and before takeoff.  DAVILA-PEREZ explained that he charged by-the-kilogram rates for the protection of the cocaine load.

In November 2019, DAVILA-PEREZ was demoted from his post at FELCN but continued to use his political influence and law enforcement authority while he conspired to import ton-quantities of cocaine from Bolivia to the U.S. and provide armed paramilitary protection for those cocaine shipments.   Indeed, between November 2019 and February 2020, during a series of recorded meetings and calls, DAVILA-PEREZ and his co-conspirators continued to arrange the anticipated cocaine shipment.  During those meetings, DAVILA-PEREZ discussed the drug competition in the New York market; his continued promise to provide armed protection for the cocaine shipment; and the successful delivery of a 10-kilogram sample of cocaine in Lima, Peru, which was delivered on or about December 10, 2019, in anticipation of the larger cocaine shipment that DAVILA-PEREZ and his co-conspirators intended to import to the U.S. under DAVILA-PEREZ’s protection.

*               *                *

DAVILA-PEREZ, 60, of Bolivia, is charged with: conspiring to import cocaine into the U.S., which carries a mandatory minimum sentence of 10 years in prison and a maximum term of life in prison; and conspiring to use and carry machineguns during, and to possess machineguns in furtherance of, the cocaine importation conspiracy, which carries a maximum term of life in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.   

Mr. Williams praised the outstanding efforts of the Special Operations Division of the DEA Bilateral Investigations Unit for its ongoing assistance. He also thanked the DEA Southern Cone Division, the DEA Newark Field Division, the DEA Aviation Division, and the U.S. Department of Justice’s Office of International Affairs for securing extradition of DAVILA-PEREZ.

This prosecution is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Sam Adelsberg, Matthew J.C. Hellman, and David J. Robles are in charge of the prosecution.

The charges in the Superseding Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
 

[1] As the introductory phrase signifies, the entirety of the text of the Superseding Indictment, and the description of the Indictment and court filings set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, and Kristen Clarke, Assistant Attorney General for the Department of Justice’s Civil Rights Division, announced today that the Department of Justice, following a comprehensive investigation, has concluded that the Mount Vernon Police Department (“MVPD”) engages in a pattern or practice of conduct that deprives people of rights secured by the U.S. Constitution and federal law.

Specifically, the Department of Justice finds that MVPD:

• Uses excessive force in numerous ways, including by unnecessarily escalating minor encounters, and by excessive use of tasers and closed-fist strikes, particularly against individuals who have already been taken to the ground, are controlled by many officers, or are already fully or partially restrained;
• Conducted unlawful strip searches and body cavity searches of individuals until at least 2023; and
• Makes arrests without probable cause.

The Department also identified serious concerns with MVPD’s vehicle stop and evidence collection practices, as well as serious concerns about discriminatory policing in predominantly Black neighborhoods.  Deficiencies in policies, training, supervision, and accountability systems contribute to MVPD’s unlawful practices.

U.S. Attorney Damian Williams said: “Our investigation has found reasonable cause to believe that MVPD engages in a pattern or practice of conduct that violates the constitutional rights of the citizens it has sworn to protect.  The systemic deficiencies we identified have resulted in a pattern of MVPD officers using excessive force; making illegal arrests; and, for many years, regularly conducting unlawful strip searches and body cavity searches.  We are encouraged by the recent steps the City of Mount Vernon and the MVPD have taken that evince a commitment to constitutional policing, and we look forward to continued cooperation to ensure that MVPD keeps its community safe from crime while respecting its citizens’ constitutional rights.”

Assistant Attorney General Kristen Clarke said: “Our investigation into the Mount Vernon Police Department reveals a pattern and practice of unlawful conduct that can and must be addressed.  While officials have undertaken preliminary actions to address some areas of concern, the city and police department must institute comprehensive measures that will fully and finally bring an end to these unconstitutional practices.  It will require commitment and hard work by the leadership of the city and the police department as well as by rank-and-file officers. We stand ready to work with Mount Vernon officials to achieve constitutional policing and to strengthen community trust. Police reform will not happen overnight.  Across the country, the department’s investigations, findings reports and resulting reform measures help law enforcement agencies become the departments that their citizens need and deserve.”

The Department of Justice opened this investigation on December 3, 2021.  The investigation was conducted by career attorneys and staff in the Civil Division of the U.S. Attorney’s Office for the Southern District of New York and the Civil Rights Division’s Special Litigation Section.  The Department interviewed MVPD command staff and supervisors, patrol officers, police union representatives, Mount Vernon residents, prosecutors from the Westchester County District Attorney’s Office, defense attorneys, and local civic associations.  The Department also reviewed MVPD’s arrest reports, use-of-force reports, stops, search, and arrest data, policies, training materials, and internal affairs files. 

The Department met regularly throughout the investigation with City of Mount Vernon and MVPD officials to provide feedback on the observations of the Department and the Department’s policing experts.

The Department conducted this investigation pursuant to 34 U.S.C. § 12601 (Section 12601), which prohibits law enforcement officers from engaging in a pattern or practice of conduct that deprives people of rights protected by the Constitution or federal law.

The Department will be conducting outreach to members of the Mount Vernon community for input on remedies to address the investigation’s findings.  Individuals may also submit recommendations by email at community.mvpd@usdoj.gov or by phone at 1-866-985-1378.

This is one of 12 investigations into law enforcement agencies opened by the Department of Justice under Section 12601 since April 2021.  The Department has issued Section 12601 findings reports regarding seven of those investigations: the Louisville, Kentucky, Metro Police Department; Minneapolis, Minnesota, Police Department; the Phoenix, Arizona, Police Department; the Lexington, Mississippi, Police Department; the Trenton, New Jersey, Police Department; the Memphis, Tennessee, Police Department; and the Worcester, Massachusetts, Police Department.  The four other investigations cover the Louisiana State Police; New York City Police Department’s Special Victims Division; the Oklahoma City, Oklahoma, Police Department; and Rankin County, Mississippi, Sheriff’s Department. 

The U.S. Attorney’s Office for the Southern District of New York specifically has handled four investigations since the passage of the Violent Crime Control and Law Enforcement Act of 1994, now known as Section 12601.  The Southern District of New York successfully concluded its investigation with police practice reforms to the Beacon Police Department in 2010 and to the Yonkers Police Department in 2024.  In addition to announcing its findings with regard to the MVPD, the Southern District is continuing its investigation into the New York City Police Department’s Special Victims Division announced on June 30, 2022.

Additional information about the U.S. Attorney’s Office for the Southern District of New York is available at https://www.justice.gov/usao-sdny.  Additional information about the Civil Rights Division is available on its website at https://www.justice.gov/crt.  Information specific to the Civil Rights Division’s Police Reform Work can be found here: https://www.justice.gov/crt/file/922421/download.    

The Justice Department will hold a virtual community meeting on December 16, 2024, at 6:00 p.m. E.T.  Members of the public are encouraged to attend to learn more about the findings.

Please register to join the meeting at: www.zoomgov.com/webinar/register/WN_jxTvdftFR_KZtUwFvH1ADQ.

The case is being handled by the Civil Rights Unit in the Civil Division of the U.S. Attorney’s Office for the Southern District of New York and the Special Litigation Section of the Civil Rights Division, in Washington, D.C.  Assistant U.S. Attorneys Lucas Issacharoff and Jacob Lillywhite and Trial Attorney Nicole Porter are in charge of the case.      

Note: View the superseding indictment here.

WASHINGTON — A superseding indictment was unsealed today charging Alexey Komov, 53, of Russia, with conspiracy and violations of U.S. sanctions arising from his assistance to sanctioned Russian oligarch Konstantin Malofeyev, who was previously charged with sanctions violations in April 2022.

As alleged, Komov conspired with Malofeyev to recruit and employ an American citizen, Jack Hanick, who worked for Malofeyev in launching and operating a television network in Russia. Komov also conspired with Malofeyev, Hanick, and others to illegally transfer a $10 million investment that Malofeyev had made in a U.S. bank to a business associate in Greece, in violation of the sanctions blocking Malofeyev’s assets from being transferred.

“The indictment alleges Alexey Komov played an essential role in a multi-faceted scheme to violate and evade U.S. sanctions imposed on a significant financier of Russian aggression in Ukraine,” said Co-Director Menno Goedman of Task Force KleptoCapture. “Task Force KleptoCapture will continue to disrupt schemes perpetrated by Komov and other sanction evaders, whenever and wherever they may hide.”

“As alleged, Alexey Komov facilitated the efforts of Konstantin Malofeyev — an oligarch closely tied to Russian aggression in Ukraine who has been determined by the Department of Treasury’s Office of Foreign Assets Control (OFAC) to have been one of the main sources of financing for the promotion of Russia-aligned separatist groups operating in the sovereign nation of Ukraine — to flout U.S. sanctions,” said U.S. Attorney Damian Williams for the Southern District of New York. “The unsealing today of the indictment against Komov is yet another reminder that this office will continue to hold those accountable that seek to undermine the United States’ national security goals.”

In 2014, the president issued Executive Order 13660, which declared a national emergency with respect to the situation in Ukraine. To address this national emergency, the president blocked all property and interest in property that came within the United States or the possession or control of any U.S. person, of individuals determined by the Secretary of the Treasury to be responsible for or complicit in, or who engaged in, actions or policies that threatened the peace, security, stability, sovereignty, or territorial integrity of Ukraine, or who materially assist, sponsor, or provide financial, material, or technological support for, or goods and services to, individuals or entities engaging in such activities. Executive Order 13660, along with certain regulations issued pursuant to it (the Ukraine-Related Sanctions Regulations) prohibits, among other things, making or receiving any funds, goods, or services by, to, from, or for the benefit of any person whose property and interests in property are blocked.

On Dec. 19, 2014, OFAC designated Malofeyev as a Specially Designated National (SDN) pursuant to Executive Order 13660. OFAC’s designation of Malofeyev explained that he was one of the main sources of financing for Russians promoting separatism in Crimea, and has materially assisted, sponsored, and provided financial, material, or technological support for, or goods and services to or in support of the so-called Donetsk People’s Republic, a separatist organization in the Ukrainian region of Donetsk.

As alleged in the indictment, beginning in at least 2012, Komov assisted Malofeyev in recruiting and hiring a U.S. citizen named Jack Hanick to work on a new Russian cable television news network that Malofeyev was creating. As part of Komov’s recruitment of Hanick, Komov travelled to Manhattan to meet with Hanick and subsequently introduced Hanick to Malofeyev in Russia. With Komov’s knowledge, Malofeyev negotiated directly with Hanick regarding Hanick’s salary, payment for Hanick’s housing in Moscow, and Hanick’s Russian work visa. Malofeyev paid Hanick through two separate Russian entities through the end of 2018.

After OFAC designated Malofeyev as a SDN in December 2014, Malofeyev continued to employ Hanick on the Russian TV Network, with Komov’s assistance and input, and in violation of the Ukraine-Related Sanctions Regulations. For example, prior to the launch of the Russian TV Network on the air in Russia in April 2015, Komov wrote an email to Malofeyev, Hanick, and another employee, referencing their prior discussion with Malofeyev earlier that day and instructing Hanick to create two types of programs and allocate staff. Komov further wrote, “Hopefully Konstantin will be providing general direction and guidance for both projects. Looking forward to our long-term co-operation on those exciting endeavors!” In turn, Hanick requested Komov to serve as a moderator for the first broadcast, writing “KM [i.e. Malofeyev] and I agree that we need you on this the first show on [the Russian TV Network]!!!”

With Komov’s participation, Malofeyev also employed Hanick to assist Malofeyev in transferring a shell company that Malofeyev owned to a Greek associate of Malofeyev. In 2014, Malofeyev, assisted by Komov, had used the shell company to make a $10 million investment in a Texas-based bank holding company. Komov helped set up the deal, emailing a Texas-based attorney (Individiual-1), “I plan to come to the US with two of my close friends Konstantin Malofeev [sic] and [another individual] on Feb 4-9, 2014 . . . I’d like the three of us to meet with you to discuss our cooperation, and also joint investment projects (please propose attractive investment opportunities with reliable partners for $50-100 mln participation from our side)”. On or about March 25, 2014, Komov wrote to Individual-I, “Konstantin has confirmed today that he goes ahead with the 10 mln investment in the bank project.”

Beginning in or about March 2015, with Komov’s assistance, Malofeyev began making plans to transfer ownership of the shell company to the Greek Business Associate, in violation of the Ukraine-Related Sanctions Regulations. On or about March 4, 2015, Komov wrote to Individual-1, “I need to discuss with you several things: previous investment in the bank project (we want to consider selling it)”. On or about March 17, 2015, Komov wrote to Individual-1 about the Texas Bank Interest, in part, “We want to keep it where it is now, only the owner from our side changes.” Consistent with that plan, in or about May 2015, Malofeyev’s attorney drafted a sale and purchase agreement that purported to transfer the shell company to the Greek Business Associate in exchange for one U.S. dollar. In June 2015 Malofeyev had Hanick physically transport a copy of Malofeyev’s certificate of shares in the Texas Bank from Moscow to Athens to be given to the Greek Business Associate. Malofeyev signed the sale and purchase agreement in June 2015, but the agreement was fraudulently backdated to July 2014 to make it appear that the transfer had taken place prior to the imposition of U.S. sanctions. Malofeyev’s attorney then falsely represented to the Texas Bank that the transfer had taken place in July 2014, even though Malofeyev and his attorney well knew that the transfer of the shell company was executed in June 2015.

The United States seized and forfeited approximately $5.4 million in the property traceable to Malofeyev’s Texas Bank investment, which had been converted by the Texas Bank in 2016 to cash held in a blocked U.S. bank account. In February 2023, the U.S. Attorney General authorized a transfer of these forfeited funds to the State Department to support Ukrainian veterans.

Malofeyev and Komov are believed to be in Russia and remains at large. Komov is charged with one count of violating the International Emergency Economic Powers Act and one count of conspiring to do the same, each of which carry a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI is investigating the case with assistance from the Justice Department’s Office of International Affairs.

Assistant U.S. Attorneys Vladislav Vainberg, Thane Rehn, and Jessica Greenwood for the Southern District of New York and Trial Attorney Scott Claffee of the National Security Division’s Counterintelligence and Export Section are prosecuting the case.

The investigation was coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls and economic countermeasures that, beginning in 2014, the United States, along with its foreign allies and partners, has imposed in response to Russia’s unprovoked military invasion of Ukraine. Announced by the Attorney General on March 2, 2022, and under the leadership of the Office of the Deputy Attorney General, the Task Force will continue to leverage all of the department’s tools and authorities to combat efforts to evade or undermine the collective actions taken by the U.S. government in response to Russian military aggression.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Damian Williams, the United States Attorney for the Southern District of New York, Menno Goedman, the Co-Director of Task Force KleptoCapture, and James E. Dennehy, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a Superseding Indictment charging ALEXEY KOMOV with conspiracy and violations of U.S. sanctions arising from his assistance to sanctioned Russian oligarch KONSTANTIN MALOFEYEV, who was previously charged in April 2022.  As alleged, KOMOV conspired with MALOFEYEV to recruit and employ an American citizen, Jack Hanick, who worked for MALOFEYEV in launching and operating a television network in Russia.  KOMOV also conspired with MALOFEYEV, Hanick, and others to illegally transfer a $10 million investment that MALOFEYEV had made in a U.S. bank to a business associate in Greece, in violation of the sanctions blocking MALOFEYEV’s assets from being transferred. 

U.S. Attorney Damian Williams said: “As alleged, Alexey Komov facilitated the efforts of Konstantin Malofeyev – an oligarch closely tied to Russian aggression in Ukraine who has been determined by OFAC to have been one of the main sources of financing for the promotion of Russia-aligned separatist groups operating in the sovereign nation of Ukraine – to flout U.S. sanctions.  The unsealing today of the Indictment against Komov is yet another reminder that this Office will continue to hold those accountable that seek to undermine the United States’ national security goals.”

KleptoCapture Co-Director Menno Goedman said: “The indictment alleges Alexey Komov played an essential role in a multi-faceted scheme to violate and evade U.S. sanctions imposed on a significant financier of Russian aggression in Ukraine.  Task Force KleptoCapture will continue to disrupt schemes perpetrated by Komov and other sanction evaders, whenever and wherever they may hide.”

FBI Assistant Director in Charge James E. Dennehy said: “Alexey Komov, a Russian national, allegedly conspired with an American citizen and a sanctioned Russian oligarch to develop a Russian cable network to promote anti-Western propaganda. This alleged conspiracy violated laws designed to protect the national security of the United States and our allies. The FBI remains committed to apprehending foreign nationals who employ our citizens to satisfy their odious agenda.”

According to the Indictment unsealed today in Manhattan federal court:[1]

In 2014, the President issued Executive Order 13660, which declared a national emergency with respect to the situation in Ukraine.  To address this national emergency, the President blocked all property and interest in property that came within the U.S. or the possession or control of any U.S. person, of individuals determined by the Secretary of the Treasury to be responsible for or complicit in, or who engaged in, actions or policies that threatened the peace, security, stability, sovereignty, or territorial integrity of Ukraine, or who materially assist, sponsor, or provide financial, material, or technological support for, or goods and services to, individuals or entities engaging in such activities.  Executive Order 13660, along with certain regulations issued pursuant to it (the “Ukraine-Related Sanctions Regulations”) prohibits, among other things, making or receiving any funds, goods, or services by, to, from, or for the benefit of any person whose property and interests in property are blocked.

On December 19, 2014, the Department of Treasury’s Office of Foreign Assets Control (“OFAC”) designated MALOFEYEV as a Specially Designated National (“SDN”) pursuant to Executive Order 13660.  OFAC’s designation of MALOFEYEV explained that he was one of the main sources of financing for Russians promoting separatism in Crimea, and has materially assisted, sponsored, and provided financial, material, or technological support for, or goods and services to or in support of the so-called Donetsk People’s Republic, a separatist organization in the Ukrainian region of Donetsk.

As alleged in the Indictment, beginning in at least 2012, KOMOV assisted MALOFEYEV in recruiting and hiring a U.S. citizen named Jack Hanick to work on a new Russian cable television news network (the “Russian TV Network”) that MALOFEYEV was creating.  As part of KOMOV’s recruitment of Hanick, KOMOV travelled to Manhattan to meet with Hanick and subsequently introduced Hanick to MALOFEYEV in Russia.  With KOMOV’s knowledge, MALOFEYEV negotiated directly with Hanick regarding Hanick’s salary, payment for Hanick’s housing in Moscow, and Hanick’s Russian work visa.  MALOFEYEV paid Hanick through two separate Russian entities through the end of 2018.

After OFAC designated MALOFEYEV as a SDN in December 2014, MALOFEYEV continued to employ Hanick on the Russian TV Network, with KOMOV’s assistance and input, and in violation of the Ukraine-Related Sanctions Regulations.  For example, prior to the launch of the Russian TV Network on the air in Russia in April 2015, KOMOV wrote an e-mail to MALOFEYEV, Hanick, and another employee, referencing their prior discussion with MALOFEYEV earlier that day and instructing Hanick to create two types of programs and allocate staff. KOMOV further wrote, “Hopefully Konstantin will be providing general direction and guidance for both projects. Looking forward to our long-term co-operation on those exciting endeavors!”  In turn, Hanick requested KOMOV to serve as a moderator for the first broadcast, writing “KM [i.e. MALOFEYEV] and I agree that we need you on this the first show on [the Russian TV Network]!!!”

With KOMOV’s participation, MALOFEYEV also employed Hanick to assist MALOFEYEV in transferring a shell company that MALOFEYEV owned to a Greek associate of MALOFEYEV (the “Greek Business Associate”).  In 2014, MALOFEYEV, assisted by KOMOV, had used the shell company to make a $10 million investment in a Texas-based bank holding company (the “Texas Bank”).  KOMOV helped set up the deal, emailing a Texas-based attorney (“Individiual-1”), “I plan to come to the US with two of my close friends Konstantin Malofeev [sic] and [another individual] on Feb 4-9, 2014 . . . I’d like the three of us to meet with you to discuss our cooperation, and also joint investment projects (please propose attractive investment opportunities with reliable partners for $50-100 mln participation from our side)”. On or about March 25, 2014, KOMOV wrote to Individual-I, “Konstantin has confirmed today that he goes ahead with the 10 mln investment in the bank project.”

Beginning in or about March 2015, with KOMOV’s assistance, MALOFEYEV began making plans to transfer ownership of the shell company to the Greek Business Associate, in violation of the Ukraine-Related Sanctions Regulations.  On or about March 4, 2015, KOMOV wrote to Individual-1, “I need to discuss with you several things: previous investment in the bank project (we want to consider selling it)”.  On or about March 17, 2015, KOMOV wrote to Individual-I about the Texas Bank interest, in part, “We want to keep it where it is now, only the owner from our side changes.”  Consistent with that plan, in or about May 2015, MALOFEYEV’s attorney drafted a Sale and Purchase Agreement that purported to transfer the shell company to the Greek Business Associate in exchange for one U.S. dollar.  In June 2015 MALOFEYEV had Hanick physically transport a copy of MALOFEYEV’s certificate of shares in the Texas Bank from Moscow to Athens to be given to the Greek Business Associate.  MALOFEYEV signed the Sale and Purchase Agreement in June 2015, but the agreement was fraudulently backdated to July 2014 to make it appear that the transfer had taken place prior to the imposition of U.S. sanctions.  MALOFEYEV’s attorney then falsely represented to the Texas Bank that the transfer had taken place in July 2014, even though MALOFEYEV and his attorney well knew that the transfer of the shell company was executed in June 2015.

The U.S. seized and forfeited approximately $5.4 million in the property traceable to MALOFEYEV’s Texas Bank investment, which had been converted by the Texas Bank in 2016 to cash held in a blocked U.S. bank account.  In February 2023, the U.S. Attorney General authorized a transfer of these forfeited funds to the State Department to support Ukrainian veterans.

MALOFEYEV, of Russia, is believed to be in Russia and remains at large.

*                *                *

KOMOV, 53, a Russian national, is charged with conspiracy to violate and substantive violation of International Emergency Economic Powers Act, each of which carry a maximum potential sentence of 20 years in prison.

The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the FBI and thanked the support and expertise of the Department of Justice’s National Security Division and Office of International Affairs in the conduct of this matter.

The prosecution is being handled by the Office’s Illicit Finance and Money Laundering Unit.  Assistant U.S. Attorneys Vladislav Vainberg, Thane Rehn, Jessica Greenwood, and Trial Attorney Scott Claffee of the National Security Division’s Counterintelligence and Export Section are in charge of the prosecution. 
 

[1] The entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Following a comprehensive investigation, the Justice Department announced today that the Mount Vernon, New York, Police Department (MVPD) engages in a pattern or practice of conduct that deprives people of rights secured by the U.S. Constitution and federal law.

Specifically, the Justice Department finds that MVPD:

• Uses excessive force in numerous ways, including by unnecessarily escalating minor encounters and by overusing tasers and closed-fist strikes, particularly against individuals who have already been taken to the ground, are controlled by many officers or are already fully or partially restrained;
• Conducted unlawful strip searches and body cavity searches of individuals until at least 2023; and
• Makes arrests without probable cause.

The department also identified serious concerns with MVPD’s practices regarding vehicle stops and evidence collection, as well as serious concerns that MVPD practices may result in discriminatory policing. Deficiencies in policies, training, supervision and accountability systems contribute to MVPD’s unlawful practices.

“Our investigation into the Mount Vernon Police Department reveals a pattern and practice of unlawful conduct that can and must be addressed,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “While officials have undertaken preliminary actions to address some areas of concern, the city and police department must institute comprehensive measures that will fully and finally bring an end to these unconstitutional practices. It will require commitment and hard work by the leadership of the city and the police department as well as by rank-and-file officers. We stand ready to work with Mount Vernon officials to achieve constitutional policing and to strengthen community trust. Police reform will not happen overnight. Across the country, the department’s investigations, findings reports and resulting reform measures help law enforcement agencies become the departments that their citizens need and deserve.”

“Our investigation has found reasonable cause to believe that MVPD engages in a pattern or practice of conduct that violates the constitutional rights of the citizens it has sworn to protect,” said U.S. Attorney Damian Williams for the Southern District of New York. “The systemic deficiencies we identified have resulted in a pattern of MVPD officers using excessive force; making illegal arrests; and, for many years, regularly conducting unlawful strip searches and body cavity searches.  We are encouraged by the recent steps the City of Mount Vernon and the MVPD have taken that evince a commitment to constitutional policing, and we look forward to continued cooperation to ensure that MVPD keeps its community safe from crime while respecting its citizens’ constitutional rights.”

The Justice Department opened this investigation on Dec. 3, 2021. The investigation was conducted by career attorneys and staff in the Civil Rights Division’s Special Litigation Section and U.S. Attorney’s Office for the Southern District of New York. The department interviewed MVPD command staff and supervisors, patrol officers, police union representatives, Mount Vernon residents, prosecutors from the Westchester County District Attorney’s Office, defense attorneys and local civic associations. The department also reviewed MVPD’s arrest reports, use-of-force reports, stops, search, and arrest data, policies, training materials and internal affairs files.

The department met regularly throughout the investigation with city and MVPD officials to provide feedback on the observations by the department and the department’s policing experts. The city and MVPD cooperated throughout the investigation.

The department conducted this investigation pursuant to 34 U.S.C. § 12601 (Section 12601), which prohibits law enforcement officers from engaging in a pattern or practice of conduct that deprives people of rights protected by the Constitution or federal law.

MVPD has implemented a number of changes since the opening of the investigation. For example, MVPD is working with the city to equip all officers with body-worn cameras and less-lethal weapons. MVPD also has made progress in connection with strip and cavity searches, including by revising its policy and offering training on it. The department’s findings report outlines additional remedial measures necessary to address its findings.

The City has pledged to work cooperatively with the Justice Department to address the findings.

The Justice Department will be conducting outreach to members of the Mount Vernon community for input on remedies to address the investigation’s findings. Individuals may also submit recommendations by email at community.mvpd@usdoj.gov or by phone at 1-866-985-1378.

Since January 2021, the Justice Department has opened 12 investigations into law enforcement agencies pursuant to 34 U.S.C. § 12601, and has been actively monitoring over a dozen agreements with law enforcement agencies that were secured prior to that period. Since 2021, the department has successfully concluded agreements and portions of consent decrees with the Yonkers, New York Police Department; the Albuquerque, New Mexico, Police Department; the Suffolk County, New York, Police Department; the Portland, Oregon, Police Bureau; and the Seattle Police Department.  The department has issued findings reports concerning several agencies including: Louisville, Kentucky, Metro Police Department; the Minneapolis, Minnesota, Police Department; the Phoenix, Arizona, Police Department; the Lexington, Mississippi, Police Department; the Trenton, New Jersey, Police Department; the Memphis, Tennessee, Police Department; and the Worcester, Massachusetts, Police Department.  Investigations are ongoing regarding the Louisiana State Police; the New York City Police Department’s Special Victims Division; the Oklahoma City, Oklahoma, Police Department; and the Rankin County, Mississippi, Sheriff’s Department.

Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt. Additional information about the U.S. Attorney’s Office for the Southern District of New York is available at www.justice.gov/usao-sdny.

The Justice Department will hold a virtual community meeting on Dec. 16 at 6 p.m. ET. Members of the public are encouraged to attend to learn more about the findings. Please register to join the meeting at www.zoomgov.com/webinar/register/WN_jxTvdftFR_KZtUwFvH1ADQ.

Damian Williams, the United States Attorney for the Southern District of New York, and Amaleka McCall-Brathwaite, the Special Agent in Charge of the Eastern Regional Office of the U.S. Small Business Administration, Office of Inspector General (“SBA-OIG”), announced that the United States has filed and settled a civil fraud lawsuit against STEFANO MARONI for including false information in applications for Paycheck Protection Program (“PPP”) loans he submitted on behalf of two related New York City-based companies he owned and operated, in violation of the False Claims Act.  The settlement resolves claims that MARONI improperly obtained separate first-draw and second-draw PPP loans for GMI USA Corp. (“GMI”) and Belovefine, Ltd. (“Belovefine”), when the two entities in fact operated essentially the same footwear design and importation business during the relevant timeframe, using a single office space and sharing the same employees.  The U.S. alleged, among other things, that MARONI inflated payroll figures in the PPP loan and forgiveness applications by double-counting the salaries of shared employees when only one entity paid these employees’ salaries a at a given time, and improperly sought loan forgiveness for certain payroll costs in excess of allowable forgiveness amounts.

Under the settlement agreement approved by U.S. District Judge Jennifer H. Rearden on December 9, 2024, MARONI will pay the U.S. $1,470,085.65 and has agreed to the entry of a consent judgment in that amount.  As part of the settlement, MARONI admitted and accepted responsibility for certain conduct alleged in the Government’s Complaint, including that he misrepresented and inflated the total payroll and employee headcounts in Belovefine’s and GMI’s first and second-draw PPP applications and loan forgiveness applications, which increased the amount of the PPP loans received and the amounts forgiven.  Belovefine and GMI are no longer doing business or in operation.

The PPP was an emergency loan program established by Congress in March 2020 under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act and administered by the SBA.  The PPP was created to provide forgivable loans to support small businesses struggling to pay employees and other business expenses during the COVID-19 pandemic.  Under the PPP, eligible businesses could obtain SBA-guaranteed loans to spend on payroll costs, rent or mortgage, and other specified business expenses.  The amount of PPP funds a business was eligible to receive was determined by the number of individuals employed by the business and average payroll costs.  When applying for PPP loans, borrowers were required to certify that they were eligible for the requested loan and that the information provided in the loan application was true and accurate.  To receive forgiveness, borrowers were required to submit signed loan forgiveness applications and documents containing certain information and certifications.  In December 2020, Congress approved funding for a second round of PPP loans, which became available to borrowers beginning in January 2021.

U.S. Attorney Damian Williams said: “Stefano Maroni submitted false information and false certifications to receive Paycheck Protection Program loans to which he and his businesses were not entitled.  PPP loans were intended to help small businesses stay afloat and retain their employees during the COVID-19 pandemic.  This Office will continue its efforts to root out fraud and misconduct in the PPP and other pandemic-related assistance programs and hold those responsible accountable.”

As alleged in the Complaint filed in Manhattan federal court:

Belovefine and GMI operated essentially the same footwear business from the same office space in Manhattan.  At various times, MARONI alternately used Belovefine or GMI as the corporate entity performing certain business functions.  During the relevant period, MARONI repeatedly transferred employees of the footwear business from GMI’s payroll to Belovefine’s payroll, or the reverse, even though there was no material difference in employees’ job functions when they were paid by one company as opposed to the other. 

MARONI sought and received first-draw and second-draw PPP loans on behalf of both Belovefine and GMI as though they were two distinct businesses, each with its own separate employee payroll.  MARONI personally signed the PPP loan and forgiveness applications on behalf of Belovefine and GMI.  In total, the companies received more than $1 million in PPP loan funds, nearly all of which was forgiven by the SBA.

MARONI misrepresented and inflated the total payroll and employee headcounts of Belovefine and GMI in their PPP applications and loan forgiveness applications, which increased the amount of the PPP loans received and the amounts forgiven. MARONI essentially double-counted the salaries of shared employees of both GMI and Belovefine, when in fact only one of these entities paid these employees’ salaries and payroll taxes at a given time.

MARONI falsely certified in Belovefine’s PPP loan applications that Belovefine had employees for whom it paid salaries and payroll taxes as of February 15, 2020, which was a PPP loan eligibility requirement.  However, between January and April 2020, MARONI paid all employees of the footwear business through GMI’s payroll.  Belovefine had no employee payroll during this period and was thus ineligible to receive PPP loans.

Moreover, in GMI’s first-draw PPP loan forgiveness application, MARONI misrepresented and inflated the total payroll amounts eligible for forgiveness because GMI had reduced covered employees’ total wages by amounts in excess of 25 percent of the total salary or wages of the employee during the most recent full quarter that preceded the relevant period covered by the loan.

           As part of the settlement, MARONI admits, acknowledges, and accepts responsibility for the following conduct:

• MARONI was the sole owner and CEO of GMI and Belovefine.  Both entities operated the same footwear business and shared the same leased office space in Manhattan.  In 2019, the footwear business’s employees were all paid by Belovefine.  In early 2020, prior to applying for PPP loans, MARONI transferred all of the footwear business’s employees to GMI’s payroll.
• MARONI personally signed the PPP loan and forgiveness applications on behalf of Belovefine and GMI.  These applications included certain inaccurate information. Prior to signing both the PPP loan and forgiveness applications, MARONI recklessly failed to confirm the accuracy of the information contained in the applications and that the applications complied with the PPP program’s rules.
• During all periods covered by Belovefine and GMI’s first-draw and second-draw PPP loans, the two companies shared the same office space at 3 Columbus Circle, Suite 2410, New York, New York.  GMI listed this address in its PPP loan applications.  However, Belovefine incorrectly listed a different suite number in its loan applications, which gave the impression that the entities were distinct and operated in separate locations.
• In order to be eligible for a PPP loan, the applicant needed to be in operation as of February 15, 2020, and have employees for whom it paid salaries and payroll taxes. The first and second-draw PPP applications submitted on behalf of Belovefine misrepresented that the company had employees for whom it paid salaries and payroll taxes as of February 15, 2020.  As noted above, Belovefine actually had no employee payroll between January and April 2020, because all employees of the footwear business were being paid by GMI. Belovefine did not file an Employer’s Quarterly Federal Tax Return for the first quarter of 2020.
• In Belovefine’s and GMI’s first- and second-draw PPP applications and loan forgiveness applications, MARONI misrepresented and inflated their total payroll and employee headcounts, which increased the amount of the PPP loans received and the amounts forgiven.  During the periods covered by the loans, MARONI repeatedly transferred employees from one entity’s payroll to the other’s payroll.  MARONI included the wages of the employees in both Belovefine’s and GMI’s PPP loan and forgiveness applications, when in fact only one entity was paying salaries and payroll taxes to employees of the footwear business at a given time.
• In GMI’s first-draw PPP loan forgiveness application, MARONI falsely certified that GMI “did not reduce salaries or hourly wages of any employee by more than 25 percent for any employee during the Covered Period compared to the most recent quarter before the Covered Period.”  In fact, during the covered period for the forgiveness application, GMI had reduced the salaries of multiple covered employees by 50% as compared to their pay during the first quarter of 2020, the most recent quarter preceding the relevant covered period.  Thus, MARONI misrepresented and inflated the GMI payroll costs that were eligible for forgiveness under the first-draw PPP loan.
• As a result of the above-referenced conduct and misrepresentations, MARONI requested and received PPP loans on behalf of Belovefine and GMI for amounts substantially in excess of what the footwear business was entitled to receive.

In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act.

*                *               *

Mr. Williams praised the SBA-OIG for its assistance with this case.

The case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorney Samuel Dolinger is in charge of the case.

Damian Williams, the United States Attorney for the Southern District of New York, Tyler Amon, the Special Agent in Charge of the U.S. Environmental Protection Agency’s Criminal Investigation Division, New York (“EPA-CID”), and Jocelyn E. Strauber, the Commissioner of the New York City Department of Investigation (“DOI”), announced today that JOSE CORREA, a New Jersey-based contractor, pled guilty to one count of negligently causing the release of asbestos into the ambient air, thereby placing other persons in imminent danger of death and serious bodily injury, in violation of the Clean Air Act.  CORREA pled guilty before U.S. Magistrate Judge Robyn F. Tarnofsky.  The case is assigned to U.S. District Judge John P. Cronan.

U.S. Attorney Damian Williams said: “As he admitted in court today, Jose Correa decided to cut corners by failing to hire an asbestos abatement contractor to safely remove floor tiles and mastic from a supermarket in East Harlem.  Correa instead had construction workers complete this dangerous work—without providing them with basic safety equipment—and put in harm’s way those he had a responsibility to protect.  This Office remains committed to protecting all individuals from the harms caused by environmental crimes.”

EPA-CID Special Agent in Charge Tyler Amon said: “Asbestos exposure can cause cancer, lung disease, and other serious respiratory diseases.  In this case, General Contractor Correa failed to hire trained and certified asbestos abatement professionals. Defendant Correa did the work ‘on the cheap,’ negligently putting workers and others at risk.”

DOI Commissioner Jocelyn E. Strauber said: “Abatement of asbestos poses serious safety risks to workers and to the public if handled improperly, and federal regulations governing abatement are intended to reduce those risks.  Today, the general contractor responsible for an illegal abatement at a Harlem supermarket pleads guilty to a felony, showing that flouting those regulations has serious consequences.  I thank the NYC Department of Environmental Protection for notifying DOI and prompting this investigation, and the U.S. Attorney’s Office for the Southern District of New York and the Criminal Investigation Division of the U.S. Environmental Protection Agency for their partnership on this case.”

According to the Information that was filed today in Manhattan federal court as well as other public statements made in court:

From at least in or about November 2022 to in or about December 2022, CORREA was employed as the general contractor for a construction project at a supermarket in East Harlem, Manhattan.  CORREA removed asbestos-containing floor tiles and mastic from the supermarket floor without hiring an asbestos abatement contractor to perform the work.  CORREA instead used his own construction workers to remove the floor tiles and mastic and failed to provide the workers with protective gear such as masks and protective suits.  CORREA’s actions caused the release of asbestos material into the ambient air and placed the construction workers in imminent danger of death and serious bodily injury.

*                *                *

CORREA, 66, of Englewood, New Jersey, pled guilty to one count of negligently causing the release of asbestos into the ambient air, which carries a maximum sentence of one year in prison.

The maximum potential sentence is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Williams praised the outstanding investigative work of the EPA-CID and DOI.

The prosecution of this case is being handled by the Office’s Civil Rights Unit in the Criminal Division.  Assistant U.S. Attorney Alexandra Rothman is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and James E. Dennehy, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Jessica S. Tisch, Commissioner of the New York City Police Department, announced the return today of a three-count Indictment charging ALON ALEXANDER, OREN ALEXANDER, and TAL ALEXANDER (the “ALEXANDER BROTHERS”), with sex trafficking offenses. The defendants were arrested this morning in the Southern District of Florida and will be presented in federal court in Miami, Florida.  The case has been assigned to U.S. District Judge Valerie E. Caproni. 

U.S. Attorney Damian Williams said: “As alleged in the Indictment, for more than a decade, the Alexander Brothers, alone and together, repeatedly and violently sexually assaulted and raped dozens of female victims. Today, the defendants are charged with multiple sex trafficking offenses.  Our investigation is far from over.  If you have been a victim of the alleged sexual violence perpetrated by Alon Alexander, Oren Alexander, or Tal Alexander – or if you know anything about their alleged crimes – we urge you to come forward.”

FBI Assistant Director in Charge James E. Dennehy said: “The Alexander brothers allegedly conspired using their wealth and status to prey on innocent women, coercing them into engaging in sexual acts.  We will not allow this type of alleged behavior to go unimpeded. Predators forcefully coercing victims into sexual acts cannot and will not be tolerated.  The FBI’s investigations into these types of cases are only possible because of the bravery victims show in coming forward.  The FBI, along with our law enforcement partners, are committed to investigating sex trafficking and ensuring anyone attempting to engage in it is held accountable in the criminal justice system.”

NYPD Commissioner Jessica S. Tisch said: “The charges outlined in this indictment reflect some of the most heinous and dehumanizing crimes of sexual exploitation that our NYPD detectives investigate.  I applaud all the members of our joint FBI-NYPD Child Exploitation and Human Trafficking Task Force for their unwavering dedication to identifying, investigating, and holding accountable those who allegedly prey on vulnerable individuals in such despicable ways.”

According to the Indictment, Superseding Indictment, and other documents and statements in the public record:

From at least in or about 2010, up to and including at least in or about 2021, the ALEXANDER BROTHERS worked together and with others to engage in sex trafficking, including by repeatedly drugging, sexually assaulting, and raping dozens of female victims.  The ALEXANDER BROTHERS, who reside primarily in New York and Miami, Florida, have considerable social and financial connections, including through OREN ALEXANDER and TAL ALEXANDER’s positions as prominent real estate agents focused on ultra-luxury markets.  The ALEXANDER BROTHERS used their wealth and prominent positions in real estate to create and facilitate opportunities to sexually assault women.  

To carry out and facilitate their sex trafficking scheme, the ALEXANDER BROTHERS used deception, fraud, and coercion to cause victims to travel with them or meet them in private locations for various trips and events.  The ALEXANDER BROTHERS and others identified women to invite to these events through, among other things, social media, dating applications, in person encounters, or through the use of party promoters who would recruit women for these events.

The ALEXANDER BROTHERS used the promise of luxury experiences, travel, and accommodations to lure and entice women to these events, and then—on multiple occasions—forcibly raped and sexually assaulted women who attended.  At times, multiple men, including one or more of the ALEXANDER BROTHERS, participated in these assaults.  In some instances, the defendants physically restrained and held down their victims during the rapes and sexual assaults and ignored screams and explicit requests to stop.

In advance of the events, the ALEXANDER BROTHERS and others procured drugs that they agreed to provide to the women, including, among other things, cocaine, mushrooms, and GHB.  On multiple occasions during these events and trips, the ALEXANDER BROTHERS and others surreptitiously drugged women’s drinks.  Some of the victims experienced symptoms of impaired physical and mental capacity, including limitations of movement and speech and incomplete memories of events.  This prevented the victims from being able to fight back or escape during the rapes and sexual assaults.

The agreement between the ALEXANDER BROTHERS encompassed numerous other acts of sexual violence in addition to the sexual assaults during planned trips and events.  On numerous occasions, one or more of the ALEXANDER BROTHERS drugged and raped or sexually assaulted women they encountered by chance, including women they met at bars and nightclubs, social events, and on dating applications.

If you have been victimized by the ALEXANDER BROTHERS in any way or have any additional information about their alleged illegal behavior, please call the FBI at 1-800-CALL-FBI, or reach out to us at alexander-case@fbi.gov.

*                *                *

ALON ALEXANDER, 37, OREN ALEXANDER, 37, and TAL ALEXANDER, 38, all of Miami, Florida, are each charged with one count of engaging in a sex trafficking conspiracy, which carries a maximum sentence of life in prison; and one count of sex trafficking by force, fraud, or coercion, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 15 years in prison.  TAL ALEXANDER is additionally charged with a second count of sex trafficking by force, fraud, or coercion, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 15 years in prison.

The statutory maximum and mandatory penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the FBI-NYPD Child Exploitation and Human Trafficking Task Force in New York, as well as the assistance of FBI Miami, the U.S. Attorney’s Office for the Southern District of Florida, the Miami-Dade County State Attorney’s Office, and the Miami Beach Police Department.

This case is being handled by the Office’s Civil Rights Unit in the Criminal Division. Assistant U.S. Attorneys Kaiya Arroyo, Elizabeth A. Espinosa, and Andrew W. Jones are in charge of the prosecution.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that RICHARD ZEITLIN, the owner of a telemarketing call center business, was sentenced to 121 months in prison for his leadership role in a scheme to defraud donors of certain political action committees (“PACs”) through false and misleading fundraising calls.  The sentence was imposed by U.S. District Judge Lewis A. Kaplan following the defendant’s guilty plea to one count of conspiracy to commit wire fraud on September 10, 2024. 

U.S. Attorney Damian Williams said: “Richard Zeitlin’s actions represent a profound breach of trust, as represented by today’s sentencing.  The integrity of donor contributions is essential, and this Office will continue to pursue justice against those who undermine it.”

According to the allegations in the Indictment, court filings, and statements made in Court:

PACs are entities registered with the Federal Election Commission that may be tax-exempt and collect money to advocate on behalf of or against certain causes and political candidates.  By contrast, charities, unlike PACs, typically provide direct services to communities or causes. 

From at least in or about 2017 up to and including in or about 2020, ZEITLIN used his telemarketing call center business and various associated entities to defraud numerous donors of millions of dollars by providing misleading and false information about how the donors’ money would be spent and the nature of the organizations to which they were giving.  Specifically, ZEITLIN directed his employees to alter the call scripts used when calling potential donors on behalf of certain PACs in order to mislead potential donors into believing that they would be giving to a direct-services organization (i.e., a charity), rather than to a political advocacy organization (i.e., a PAC).  ZEITLIN directed that these lies, misleading statements, and misrepresentations be made so that donors would be more likely to give money, thereby increasing the funds raised and profits for his businesses – which typically received approximately 90% of the funds donated.  In some instances, ZEITLIN’s businesses retained 100% of the funds donated with none of the money going to the causes described in telemarketing calls to donors. When one PAC treasurer confronted ZEITLIN with complaints from donors that solicitation calls falsely represented a PAC as a charity, ZEITLIN falsely denied that the calls were being made, acknowledged that such calls would be inappropriate, and refused to give the treasurer any call recordings that would have revealed his fraud. 

ZEITLIN lied under oath to conceal his fraud.  In December 2020, while testifying under oath during a deposition in connection with a federal civil matter, ZEITLIN falsely stated, in substance and in part, that neither he nor his employees provided input as to the call scripts used by ZEITLIN’s telemarketing call centers when making fundraising calls on behalf of PACs.  In truth and in fact, ZEITLIN and his employees frequently provided input on and changed call scripts, including by adding false and misleading statements into the call scripts.  In March 2022, in a declaration filed under penalty of perjury to a federal judge, ZEITLIN falsely stated that, among other things, he was not associated with and did not direct, supervise, or control certain business entities relating to ZEITLIN’s telemarketing business when, in truth and in fact, ZEITLIN controlled all of the entities by exercising ultimate authority over managerial, operational, and financial decisions, including at the time he signed this declaration. 

In or about May 2022, after ZEITLIN learned that he and his businesses were under federal investigation, ZEITLIN directed his employees to delete electronic messages relating to his businesses. 

*                *                *

In addition to the prison sentence, ZEITLIN, 54, of Las Vegas, Nevada, was sentenced to five years of supervised release and was ordered to pay forfeiture in the amount of $8,906,760.00, which represents ZEITLIN’s proceeds from the crime, and restitution in the amount of $8,906,760.00.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.   

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Jane Kim, Emily Deininger, and Rebecca T. Dell are in charge of the prosecution.

McKinsey and Company Africa (Pty) Ltd (McKinsey Africa), which operates in South Africa as a wholly owned and controlled subsidiary of international consulting firm McKinsey & Company Inc. (McKinsey), will pay over $122 million to resolve an investigation by the Justice Department into a scheme to pay bribes to government officials in South Africa between 2012 and 2016. The guilty plea of a former McKinsey senior partner who participated in the bribery scheme was also unsealed. The Justice Department’s resolution is coordinated with prosecutorial authorities in South Africa.

McKinsey Africa entered into a three-year deferred prosecution agreement (DPA) with the department in connection with a criminal information filed in the Southern District of New York charging the company with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). Vikas Sagar, a former senior partner of McKinsey who worked in McKinsey Africa’s South Africa office, previously pleaded guilty to one count of conspiracy to violate the FCPA.

According to court documents and admissions, McKinsey Africa, acting through a senior partner and for the benefit of McKinsey, agreed to pay bribes to then-officials at Transnet SOC Ltd. (Transnet), South Africa’s state-owned and state-controlled custodian of ports, rails, and pipelines, and at Eskom Holdings SOC Ltd. (Eskom), South Africa’s state-owned and state-controlled energy company. Between at least 2012 and 2016, McKinsey Africa obtained sensitive confidential and non-public information from Transnet and Eskom regarding the award of lucrative consulting contracts and submitted proposals for multimillion-dollar consulting engagements, while knowing that South African consulting firms with which McKinsey Africa had partnered would pay a portion of their fees as bribes to officials at Transnet and Eskom. As a result of the bribery scheme, McKinsey and McKinsey Africa earned profits of approximately $85,000,000.

“McKinsey Africa bribed South African officials in order to obtain lucrative consulting business that generated tens of millions of dollars in profits,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “As a consequence, McKinsey Africa has agreed to pay a criminal penalty of more than $122 million. The resolution announced today — the department’s third coordinated resolution with South African authorities in only two years — is evidence that our International Corporate Anti-Bribery (ICAB) initiative, which we announced in November 2023, is bearing fruit. Through the ICAB, the Criminal Division remains committed to strengthening its international partnerships, including in South Africa, to combat corruption.”

“McKinsey Africa participated in a yearslong scheme to bribe government officials in South Africa and unlawfully obtained a series of highly lucrative consulting engagements that netted McKinsey Africa and its parent entity McKinsey & Company approximately $85 million in profits,” said U.S. Attorney Damian Williams for the Southern District of New York. “The scheme was carried out by a senior partner at McKinsey and allowed McKinsey Africa to repeatedly get awarded consulting contracts through corruption and bribes at two different state-owned entities in South Africa. This office and our law enforcement partners will continue our fight against American companies that seek to gain an unfair business advantage by supporting corrupt political officials overseas, no matter the industry, no matter the country, and no matter how prominent or profitable those companies may be.”

“This settlement underscores our unwavering commitment to holding companies accountable that willfully engage in corrupt activities around the world,” said Assistant Director Chad Yarbrough of the FBI Criminal Investigative Division. “McKinsey Africa engaged in a serious and long-running bribery scheme to secure contracts by corrupting government officials. This misconduct is a blatant violation of law and a breach of public trust. No matter what country the crime occurs in, the FBI will always work closely with our international partners to root out corruption.”

“McKinsey Africa will pay over $122 million, a clear indication that corruption comes at a significant cost,” said Inspector in Charge Eric Shen of the U.S. Postal Inspection Service (USPIS) Criminal Investigations Group. “The resolution of this case underscores that justice has no borders, and those who engage in bribery and conspire to commit crimes will be held accountable. The Postal Inspection Service is committed to ensuring that government resources and international partnerships serve the public good and are never exploited for personal or corporate gain.”

Pursuant to the DPA, McKinsey Africa has agreed to pay a criminal penalty of $122,850,000. The Justice Department has agreed to credit up to one-half of the criminal penalty against amounts McKinsey pays to authorities in South Africa in related proceedings. In addition, both McKinsey and McKinsey Africa have agreed to, among other things, continue cooperating with the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of New York in any ongoing or future criminal investigation arising during the term of the DPA. McKinsey and McKinsey Africa have also agreed to enhance their compliance program where necessary and appropriate and to report to the government regarding remediation and implementation of their enhanced compliance program.

The Justice Department reached this resolution with McKinsey Africa based on a number of factors, including, among others, the nature and seriousness of the offense. McKinsey Africa received credit for its cooperation with the department’s investigation, which included (i) immediately and proactively cooperating from the inception of the department’s investigation; (ii) making numerous factual presentations to the department over the course of its investigation, derived from information obtained through the company’s internal investigation; (iii) collecting, reviewing, and producing voluminous records, including those located abroad, in response to requests from the department; (iv) promptly reporting the discovery of document-deletion efforts by the McKinsey partner involved in the conduct found during its internal investigation, taking additional investigative steps to uncover information and evidence regarding those efforts, and producing such information and evidence to the department; (v) reporting, in real time, newly discovered information and documents that allowed the department to preserve and obtain evidence as part of its independent investigation; (vi) tracing complex internal accounting money-flows and currency exchange-information in response to requests from the department; (vii) preserving, collecting, and producing to the department documents located abroad, and engaging a third-party forensics consultant to analyze key electronic devices and providing to the department the results of that analysis; (viii) collecting and producing to the department personal email and bank account information of the McKinsey partner involved in the conduct relevant to the department’s investigation; (ix) engaging with the department in response to a deconfliction request to preserve the integrity of the department’s investigation; and (x) making company officers and employees available for interviews.

McKinsey and McKinsey Africa also engaged in timely remedial measures, including: (i) putting the McKinsey partner involved in the criminal scheme on leave when it learned of the partner’s role in the scheme, subsequently separating that partner from McKinsey after discovering his deletion activity, and requiring that partner’s continued cooperation post-separation; (ii) conducting additional anti-corruption training for employees in South Africa and elsewhere in Africa, and ceasing work with all state-owned enterprises (SOEs) for a period of time while it conducted its internal investigation; (iii) enhancing due diligence processes for third-party partners, including instituting controls to ensure that due diligence is completed before work begins on an engagement and imposing a more rigorous risk-review for public sector clients; (iv) carrying out an enhanced review process for all sole-source work that requires advance-approval before the engagement can begin; and (v) voluntarily repaying, in 2018 and 2021, all revenues that McKinsey and McKinsey Africa received from potentially tainted contracts to the SOEs in South Africa from which they received contracts as a result of the criminal scheme.

In light of these considerations as well as McKinsey’s prior history, the criminal penalty calculated under the U.S. Sentencing Guidelines reflects a 35% reduction off the fifth percentile of the otherwise applicable guidelines fine range.

FBI’s Los Angeles International Corruption squad and USPIS are investigating the case.

Trial Attorneys William E. Schurmann and Alexandra P. Swain of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Andrew K. Chan and Nicholas Chiuchiolo for the Southern District of New York are prosecuting the case.

The Justice Department’s Office of International Affairs and authorities in South Africa provided assistance in this matter.

The Criminal Division’s Fraud Section is responsible for investigating and prosecuting FCPA and Foreign Extortion Prevention Act matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

View the Deferred Prosecution Agreement.

View the Information.

Damian Williams, United States Attorney for the Southern District of New York; Nicole M. Argentieri, Principal Deputy Assistant Attorney General for the Criminal Division of the U.S. Department of Justice (“DOJ”); Akil Davis, Assistant Director in Charge of the Federal Bureau of Investigation (“FBI”) Los Angeles Field Office; and Eric Shen, Inspector in Charge of the U.S. Postal Inspection Service (“USPIS”) Criminal Investigations Group, announced today that MCKINSEY AND COMPANY AFRICA (PTY) LTD (“MCKINSEY AFRICA”), a wholly-owned and controlled subsidiary of McKinsey & Company, Inc. (“McKinsey”), a multinational strategy and management consulting firm headquartered in the U.S., will pay over $120 million to resolve an investigation by the DOJ into a scheme to bribe government officials in South Africa in exchange for lucrative consulting contracts at multiple state-owned and state-controlled entities.  MCKINSEY AFRICA entered into a deferred prosecution agreement (“DPA”) in connection with a criminal information filed today in the Southern District of New York charging the company with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act ("FCPA").  The case has been assigned to U.S. District Judge Colleen McMahon.

Also unsealed today is the guilty plea of VIKAS SAGAR, a former Senior Partner at McKinsey & Company, who pled guilty to participating in a conspiracy to violate the Foreign Corrupt Practices Act before U.S. District Judge Laura Taylor Swain on December 16, 2022.

U.S. Attorney Damian Williams said: “McKinsey Africa participated in a yearslong scheme to bribe government officials in South Africa and unlawfully obtained a series of highly lucrative consulting engagements that netted McKinsey Africa and its parent entity McKinsey & Company approximately $85 million in profits. The scheme was carried out by a senior partner at McKinsey and allowed McKinsey Africa to repeatedly get awarded consulting contracts through corruption and bribes at two different state-owned entities in South Africa.  This Office and our law enforcement partners will continue our fight against companies that seek to gain an unfair business advantage by supporting corrupt political officials overseas, no matter the industry, no matter the country, and no matter how prominent or profitable those companies may be.”

Principal Deputy Assistant Attorney General Nicole M. Argentieri said: “McKinsey Africa bribed South African officials in order to obtain lucrative consulting business that generated tens of millions of dollars in profits.  As a consequence, McKinsey Africa has agreed to pay a criminal penalty of more than $122 million.  The resolution announced today — the department’s third coordinated resolution with South African authorities in only two years — is evidence that our International Corporate Anti-Bribery ("ICAB") initiative, which we announced in November 2023, is bearing fruit.  Through the ICAB, the Criminal Division remains committed to strengthening its international partnerships, including in South Africa, to combat corruption.”

USPIS Inspector in Charge Eric Shen said: “McKinsey Africa will pay over $122 million, a clear indication that corruption comes at a significant cost.  The resolution of this case underscores that justice has no borders, and those who engage in bribery and conspire to commit crimes will be held accountable.  The Postal Inspection Service is committed to ensuring that government resources and international partnerships serve the public good and are never exploited for personal or corporate gain.”

FBI Assistant Director in Charge Akil Davis said: “McKinsey Africa’s corruption seemed to pay off for a time, yielding millions in government contracts.  Those actions have now cost the company dearly.  Individuals and companies who collude to thwart free market competition have a direct and negative impact on communities and the American consumer.  This agreement demonstrates the commitment of the FBI and our partners to investigate anti-competitive behavior, and we will continue to work with foreign governments, including South Africa, to hold accountable those who try to cheat the system for their own benefit and profit.” 

According to court documents and admissions:

Between at least 2012 and 2016, MCKINSEY AFRICA, acting through McKinsey Senior Partner SAGAR, agreed to pay bribes to then-officials at Transnet SOC Ltd ("Transnet"), South Africa’s state-owned and state-controlled custodian of ports, rails, and pipelines, and at Eskom Holdings Limited ("Eskom"), South Africa’s state-owned and state-controlled energy company.  As part of the scheme, MCKINSEY AFRICA obtained sensitive confidential and non-public information from Transnet and Eskom regarding the award of lucrative consulting contracts and submitted proposals for multimillion-dollar consulting engagements, while knowing that South African consulting firms with which MCKINSEY AFRICA had partnered would pay a portion of their fees as bribes to officials at Transnet and Eskom.  As a result of the bribery scheme, McKinsey and MCKINSEY AFRICA earned profits of approximately $85,000,000.

As part of the DPA, MCKINSEY AFRICA has agreed to pay a criminal penalty of $122,850,000.  The Department has agreed to credit up to one-half of the criminal penalty against amounts McKinsey pays to authorities in South Africa in related proceedings. In addition, both McKinsey and MCKINSEY AFRICA have agreed, among other things, to continue cooperating with the U.S. Attorney’s Office for the Southern District of New York and the Criminal Division’s Fraud Section and in any ongoing or future criminal investigation arising during the term of the DPA.  In addition, McKinsey and MCKINSEY AFRICA have agreed to enhance their compliance program where necessary and appropriate, and to report to the government regarding remediation and implementation of their enhanced compliance program.

The Department reached this resolution with MCKINSEY AFRICA based on a number of factors, including, among others, the nature and seriousness of the offense.  MCKINSEY AFRICA received credit for its cooperation with the Department’s investigation, which included  immediately and proactively cooperating from the inception of the Offices’ investigation; making numerous factual presentations to the Offices over the course of their investigation, derived from information obtained through the Company’s internal investigation; collecting, reviewing, and producing voluminous records, including those located abroad, in response to requests from the Offices; promptly reporting the discovery of document-deletion efforts by the McKinsey partner involved in the conduct found during its internal investigation, taking additional investigative steps to uncover information and evidence regarding those efforts, and producing such information and evidence to the Offices; reporting, in real time, newly discovered information and documents which allowed the Offices to preserve and obtain evidence as part of their independent investigation; tracing complex internal accounting money-flows and currency exchange-information in response to requests from the Offices; preserving, collecting, and producing to the Offices documents located abroad, and engaging a third-party forensics consultant to analyze key electronic devices and providing to the Offices the results of that analysis; collecting and producing to the Offices personal email and bank account information of the McKinsey partner involved in the conduct relevant to the Offices’ investigation; engaging with the Offices in response to a deconfliction request to preserve the integrity of the Offices’ investigation; and making Company officers and employees available for interviews. 

McKinsey and MCKINSEY AFRICA also engaged in timely remedial measures, including: putting the McKinsey partner involved in the criminal scheme on leave when it learned of the partner’s role in the scheme, subsequently separating that partner from McKinsey after discovering his deletion activity, and requiring that partner’s continued cooperation post-separation; conducting additional anti-corruption training for employees in South Africa and elsewhere in Africa, and ceasing work with all SOEs for a period of time while it conducted its internal investigation; enhancing due diligence processes for third-party partners, including instituting controls to ensure that due diligence is completed before work begins on an engagement and imposing a more rigorous risk-review for public sector clients; carrying out an enhanced review process for all sole-source work that requires advance-approval before the engagement can begin; and voluntarily repaying, in 2018 and 2021, all revenues that McKinsey and MCKINSEY AFRICA received from potentially tainted contracts to the SOEs in South Africa from which it received contracts as a result of the criminal scheme.

In light of these considerations as well as McKinsey’s prior history, the criminal penalty calculated under the U.S. Sentencing Guidelines reflects a 35% reduction off the fifth percentile of the otherwise applicable guidelines fine range.

*                *                *

The FBI’s International Corruption Unit and the USPIS are investigating the case as part of the IRS Global Illicit Financial Team in Washington, D.C.

SAGAR, 56, of Johannesburg, South Africa, pled guilty to participating in a conspiracy to violate the Foreign Corrupt Practices Act.

Mr. Williams praised the outstanding work of the FBI and USPIS.  Mr. Williams also thanked the Department of Justice’s Office of International Affairs and authorities in South Africa for their assistance in this matter.

The case is being prosecuted by Assistant U.S. Attorneys Andrew K. Chan and Nicholas Chiuchiolo of the Southern District of New York; and Trial Attorneys William E. Schurmann and Alexandra P. Swain of the Criminal Division’s Fraud Section. 

Damian Williams, the United States Attorney for the Southern District of New York; and James E. Dennehy, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a Complaint charging FRED MASTROIANNI and DOREEN MASTROIANNI with cyberstalking, extortion, and conspiracy to commit extortion.  DOREEN MASTROIANNI and FRED MASTROIANNI will be presented in White Plains federal court before U.S. Magistrate Judge Victoria Reznik on December 11, 2024, at 3:00 p.m.

U.S. Attorney Damian Williams said: “As alleged, Fred and Doreen Mastroianni have cyberstalked and conspired to extort victims by threatening to release compromising images of them to the public, allegedly engaging in this conduct even though Fred is already serving a 35-year prison sentence for receiving, distributing, and producing child pornography.  This Office will continue to protect the community from those who repeatedly try to harm and exploit vulnerable citizens.”

FBI Assistant Director in Charge James E. Dennehy said: “The Mastroianni siblings allegedly preyed on individuals who were victimized by Fred Mastroianni; stalking and conspiring to extort them for the siblings’ financial benefit.  Victimization by sexual exploitation is beyond appalling and will not be tolerated.  FBI New York will work tirelessly to hold accountable anyone attempting to utilize stalking and extortion for financial gain."

As alleged in the Complaint unsealed today:[1]

FRED MASTROIANNI (“FRED”) is currently serving a 35-year sentence imposed by the Honorable Philip M. Halpern, U.S. District Judge for the Southern District of New York, on August 15, 2024, for receiving and distributing child pornography and for the sexual exploitation of a minor. DOREEN MASTROIANNI (“DOREEN”) is FRED’s sister.

Since at least October 2024, FRED and DOREEN have engaged in a plot to extort victims by threatening to release sexually explicit images and videos of the victims that FRED has saved.  The extortion attempts are designed to compel victims to contribute money to FRED’s commissary account in prison and to fund the purchase of an insurance policy against DOREEN’s life for the benefit of FRED.  FRED has used another inmate’s email account to send DOREEN draft extortion threats in furtherance of this scheme.  At FRED’s direction, DOREEN has forwarded those extortion threats to victims on FRED’s behalf.

There may be more victims of this alleged conduct.  If you have information to report, contact the FBI through its toll-free Tip Line at 1-800-CALL-FBI (225-5324) or https://tips.fbi.gov. 

*                *               *

FRED, 54, formerly of White Plains, New York, and DOREEN, 69, of Yorktown Heights, New York, are each charged with one count of cyberstalking, which carries a maximum sentence of five years in prison; one count of interstate extortion, which carries a maximum sentence of two years in prison; and one count of conspiracy to commit interstate extortion, which carries a maximum sentence of five years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Williams praised the work of the FBI’s Westchester Safe Streets Task Force.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Ryan W. Allison, Margaret N. Vasu, and Courtney Heavey are in charge of the prosecution.

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

[1] As the introductory phase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced the guilty plea today of JERRIN PENA, a/k/a “Rooga,” a/k/a “Perry,” in connection with his criminal activities as a member of the violent gang Own Every Dollar (“OED”), including the 2019 murder of Hector Cruz.  PENA pled guilty today to several charges, including racketeering conspiracy, before U.S. Magistrate Judge Henry J. Ricardo. 

U.S. Attorney Damian Williams said: “On April 14, 2019, Jerrin Pena murdered Hector Cruz, an innocent bystander to gang violence.  That murder is just one of the many acts of violence that members and associates of Own Every Dollar have committed that have terrorized Washington Heights and surrounding communities.  This Office will not stop its pursuit of dangerous gangs, and violent gang members will be apprehended and prosecuted to the fullest extent of the law.”

As alleged in the Indictment and statements made in public filings and public court proceedings:

PENA is a member of the violent gang OED, a subset of the Trinitarios gang based in and around the Washington Heights area of Manhattan.  The Indictments in this case charge 24 members and associates of OED with numerous violent crimes, including five murders and 15 attempted murders.

On April 14, 2019, in the early evening, PENA and others drove to West 135th Street in Manhattan to shoot at members of a rival gang.  PENA exited the car and shot at a rival gang member on West 135th Street and Amsterdam Avenue.  He missed the rival gang member but struck bystander Hector Cruz—then age 57—in the liver.  Cruz died of the gunshot wound approximately one month later.

PENA also pled guilty to an attempted murder on February 28, 2023, when he and several other inmates stabbed another inmate in the Metropolitan Detention Center; a gunpoint robbery of a drug dealer on January 22, 2022, in the vicinity of Riverside Drive and West 145th Street in Manhattan; conspiring to traffic more than four kilograms of fentanyl; and trafficking firearms from Pennsylvania to New York.

13 other OED defendants have previously pled guilty in the case, including MAYOVANEX RODRIGUEZ, who was sentenced to 25 years in prison for a 2022 murder.

*               *                *

PENA, 23, of New York, New York, pled guilty to one count of racketeering conspiracy, which carries a maximum sentence of life in prison; one count of attempted murder, which carries a maximum sentence of 20 years in prison; one count of Hobbs Act robbery, which carries a maximum sentence of 20 years in prison; one count of discharging a firearm during a crime of violence, which carries a maximum sentence of life in prison; one count of narcotics conspiracy, which carries a maximum sentence of life in prison; and one count of firearms trafficking, which carries a maximum sentence of five years in prison. 

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  PENA is scheduled to be sentenced by U.S. District Judge J. Paul Oetken on March 4, 2025.

Mr. Williams praised the outstanding work of the New York City Police Department and the Drug Enforcement Administration.

This case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Sarah L. Kushner, Kevin Mead, Alexandra S. Messiter, and Ashley C. Nicolas are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Kristen Clarke, the Assistant Attorney General of the Justice Department’s Civil Rights Division, announced today the successful conclusion of the United States’ long-running investigation into the Yonkers Police Department (YPD) under the Violent Crime Control and Law Enforcement Act of 1994, and the Omnibus Crime Control and Safe Streets Act of 1968.  In November 2016, the U.S., the City, and YPD entered into an agreement to implement and improve upon policies and procedures in the areas of use of force, citizen complaints, use-of-force and misconduct investigations, supervisory oversight, and training.  Today, the U.S. agreed to terminate the agreement and commends the City and YPD on their achievements.

U.S. Attorney Damian Williams said: “Since the commencement of our investigation in 2007, the Yonkers Police Department has worked assiduously and cooperatively to implement significant reforms which ensure that its officers are well trained, well informed, and guided on appropriate uses of force, and that a thorough and robust review system is in place to identify potentially problematic incidents, officers, training, and tactics.  The Yonkers Police Department has achieved substantial compliance with all provisions of the agreement and established policies and programs that demonstrate a dedication and commitment to serving the community and ensuring its safety and well-being.  I commend the Yonkers Police Department for its efforts.”

Assistant Attorney General Kristen Clarke said: “The success of Yonkers and the Yonkers Police Department under this agreement demonstrates the fundamental truth that fair, constitutional and effective policing can enhance public safety and promote trust between police and the community they are sworn to protect and serve.  Through this agreement, the city and YPD have significantly decreased settlement payouts on excessive force claims, and from 2017 to 2023, violent crimes in Yonkers also fell substantially.  We commend YPD leadership, including former YPD Commissioners Charles Gardner and John Mueller, current YPD Commissioner Christopher Sapienza, as well as civilian staff and officers for their commitment to ensure constitutional policing for the people of Yonkers.  Our settlements with police departments are of little utility unless real work and effort is put in to ensure that reforms are brought to life and successfully implemented.”

The successful conclusion of the agreement between the U.S., the City of Yonkers, and the YPD resolves a long-running investigation into YPD.  In 2009, the U.S. issued a technical assistance letter highlighting concerns regarding the overall content and structure of YPD’s policies and procedures manual, with specific focus on YPD’s use-of-force policies, investigations of its officers’ use of force, the lack of supervisory oversight, its training program and materials, community relations, and its recruitment and evaluation of personnel.  After issuing the 2009 technical assistance letter, the U.S. conducted further reviews of YPD’s revised policies and procedures, use-of-force reports, and citizen complaint investigations through early 2015.  These reviews indicated that the concerns underlying the recommendations in the 2009 letter had not been sufficiently addressed.

Following extensive negotiations, in November 2016, the U.S., the City, and YPD entered into an agreement requiring YPD to: maintain and implement clear policies to avoid using excessive and unreasonable force; timely document and review uses of force; maintain and implement clear and appropriate policies on investigatory stops and detentions, as well as searches and arrests; develop a system to collect data on all investigatory stops and searches, except stops purely for traffic enforcement; ensure the transparency and accessibility of the misconduct complaint process and investigate all misconduct complaints fully and fairly; continue the development and implementation of a computerized risk management system to identify and respond to potentially problematic incidents, officers, units, training and tactics; continue to maintain and build community relationships and engage constructively with the community; develop a survey to measure officer outreach to a cross-section of community members in each precinct; and ensure that officers and supervisors receive appropriate levels of training in constitutional policing.  The agreement also required YPD to ensure the First Amendment rights of onlookers or bystanders to witness, observe, record, and/or comment on officer conduct.  The agreement further provided that consultants retained by the Justice Department would conduct compliance reviews to ensure that YPD has implemented the measures required by the agreement.  Finally, the agreement provided for termination once the U.S. agreed that YPD had achieved substantial compliance with all provisions and had maintained substantial compliance for 12 months.

Since the agreement was executed, the U.S. and its consultant, Charles Reynolds, the former president of the International Association of Chiefs of Police, have had full access to YPD and its records.  The U.S. has requested, reviewed, and commented on: YPD’s revised use-of-force policies and procedures, and policies protecting the public’s right to observe and record officer conduct; use-of-force reporting and command-level reviews of use-of-force reports at all levels of force; misconduct complaint investigations; stop and search reports; the implementation and use of YPD’s Risk Management System; training materials; and community policing initiatives.

Over the period the agreement has been in place, there are substantial indicia that the agreement has led to improvements in the constitutionality and effectiveness of YPD’s policing.  The City of Yonkers has experienced a significant reduction in excessive force settlement payouts due to a marked decrease in allegations of unlawful uses of force.  Additionally, YPD’s Internal Affairs Department has dramatically improved its average times to complete critical use-of-force investigations, from 245 days in 2019, down to 69 days in 2023. Similarly, YPD’s Internal Affairs Department has significantly reduced its average times for completing civilian misconduct complaint investigations, from 236 days in 2019, to 72 days in 2023.  The City of Yonkers has also experienced a 22% reduction in violent crimes over the last five years.

YPD has also implemented or enhanced programs beyond what is required by the agreement.  In August 2020, YPD instituted a trial body-worn camera program, which has been expanded to require that all Field Services Division officers, as well as officers designated by the Commissioner, use body-worn cameras. YPD has also substantially increased the length of its Field Training Officer program, by mandating that recruits undergo 256 field training hours to be certified as an officer.  YPD also maintains a Crisis Negotiation Team that is one of the largest of its kind in the New York City metropolitan area, and whose core mission is to use de-escalation techniques to resolve volatile life-threatening situations without the use of force.  YPD’s Community Affairs Division is also actively engaged in multiple programs, outreach, and community-based cooperative projects.  YPD is currently engaged in over 40 outreach programs and participates in over 70 school events every year.

YPD’s leadership has been instrumental in making these changes.  U.S. Attorney Williams praised the work of former YPD Commissioners Charles Gardner and John Mueller, current YPD Commissioner Christopher Sapienza, and the civilian staff and sworn officers of the Yonkers Police Department.

The case is being handled by the Office’s Civil Rights Unit in the Civil Division.  Assistant U.S. Attorney Tomoko Onozawa is charge of the case.                    

Damian Williams, the United States Attorney for the Southern District of New York, announced that defendants DAVID BREND and GUSTAVO RODRIGUEZ were sentenced to 10 years and eight years in prison, respectively, for their roles in the large-scale cryptocurrency Ponzi scheme known as IcomTech.  The sentences were imposed by the Honorable Jennifer L. Rochon following a two-week trial in March of this year, in which BRENDand RODRIGUEZ were both convicted of conspiracy to commit wire fraud.

U.S. Attorney Damian Williams said: “David Brend and Gustavo Rodriguez were central to the IcomTech Ponzi scheme – Rodriguez as the chief architect of its sham website, Brend as a face-to-face salesman who peddled the bogus enterprise and its supposed lucrative returns for investors.  Together with others, Brend and Rodriguez defrauded thousands of people out of millions of dollars.  Both were found guilty by a unanimous jury.  Now they will serve substantial prison sentences for their crimes.”

According to the Indictment, public filings, public court proceedings, and the evidence presented at trial:

IcomTech launched in mid-2018, when codefendant David Carmona hired RODRIGUEZ to build a website for the scheme.  IcomTech was a purported cryptocurrency mining and trading company that promised to earn its victim-investors (“Victims”) profits in exchange for their purchase of purported cryptocurrency-related investment products.  Carmona, BREND, and the other promoters of IcomTech, falsely promised their respective Victims, among other things, that profits from the companies’ cryptocurrency trading and mining would result in guaranteed daily returns on Victims’ investments.  In reality, IcomTech did not engage in cryptocurrency trading or mining for its Investors, and BREND and IcomTech’s other promoters used Victim funds to pay other Victims, to further promote the schemes, and to enrich themselves.

IcomTech promoters, including BREND, traveled throughout the U.S. and abroad, where they hosted lavish expos and small community presentations aimed at luring Victims to invest in the schemes, including in the Southern District of New York.  During larger-scale events, IcomTech promoters presented on purported investment products and the compensation plan, encouraged Victims to invest as a means of achieving financial freedom, and boasted about the amount of money they were earning. IcomTech promoters often showed up at larger-scale events in expensive cars and wearing luxury clothing as a way of exhibiting their purportedly legitimate success from IcomTech.

Victims invested in the IcomTech by purchasing investment products from promoters using cash, checks, wire transfers, and actual cryptocurrency.  Following a Victim’s investment, a Victim would be provided with access to an online portal where the Victim could monitor the purported returns.  While Victims saw “profits” accumulate on the online portal, most Victims were unable to withdraw any of these so-called profits and ultimately lost their entire investments.  By contrast, IcomTech’s promoters, including BREND, siphoned off, in some cases, hundreds of thousands of dollars in Victim funds, which they withdrew as cash, spent on IcomTech promotional expenses, and used for personal expenditures such as luxury goods and real estate.

RODRIGUEZ worked with Carmona to run IcomTech’s website and online portal, where Victims were provided with personal accounts.  Carmona and RODRIGUEZ discussed how to structure IcomTech’s compensation plan and investment products; for example, RODRIGUEZ advised Carmona on where Carmona should set the purported daily returns on Victims’ investment packages and on the size of the investment packages that Carmona should offer for sale.

At least as early as August 2018, Victims who attempted to withdraw money from their online portal accounts had difficulty doing so and, when they complained to promoters, they were met with excuses, delays, and hidden fees, if they were able to make any withdrawals at all.  Despite these complaints, IcomTech promoters, including BREND, continued to promote IcomTech and accept Victims’ investments, and RODRIGUEZ continued to maintain the website.  As complaints mounted, IcomTech began offering a proprietary crypto-tokens for sale as a means of injecting liquidity into IcomTech.  Promoters of the schemes claimed that these tokens, known as “Icoms”, would eventually be worth a significant amount of money when they were accepted by companies for payment for goods and services.  This was false.  In reality, “Icoms” were essentially worthless and resulted in further financial loss to Victims.  By in or about the end of 2019, IcomTech stopped making payments to Victims and IcomTech collapsed.

*                *                *

In addition to the prison sentences, RODRIGUEZ, 48, of North Hollywood, California, was ordered to pay forfeiture in the amount of $40,000, which represent RODRIGUEZ’s direct proceeds from the crime, and restitution to victims in an amount to be determined.  BREND, 50, of Tampa, Florida, was also ordered to pay forfeiture and restitution in amounts to be determined by Judge Rochon at future proceedings.

Mr. Williams praised the outstanding investigative work of Special Agents from Homeland Security Investigations’ El Dorado Task Force.  Mr. Williams also thanked the Securities and Exchange Commission and the Commodity Futures Trading Commission for their assistance.

The case is being handled by the Office’s Illicit Finance and Money Laundering Unit. Assistant U.S. Attorneys Michael D. Maimin, T. Josiah Pertz, Benjamin A. Gianforti, and Cecilia E. Vogel are in charge of the prosecution. 

The Justice Department announced today the successful conclusion of its agreement with the City of Yonkers, New York, and the Yonkers Police Department (YPD). The agreement required YPD to improve its policies and practices regarding the use of force, stops, searches, and arrests, the protection of First Amendment rights, misconduct investigations and discipline, and community policing. Over the past eight years, the city and YPD have implemented all of the reforms required by the agreement and sustained those reforms for more than a year. Today, the Justice Department agreed to terminate the agreement and commends the city and YPD on their achievements.

“The success of Yonkers and the Yonkers Police Department under this agreement demonstrates the fundamental truth that fair, constitutional and effective policing can enhance public safety and promote trust between police and the community they are sworn to protect and serve,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Through this agreement, the city and YPD have significantly decreased settlement payouts on excessive force claims, and from 2017 to 2023, violent crimes in Yonkers also fell substantially. We commend YPD leadership, including former YPD Commissioners Charles Gardner and John Mueller, current YPD Commissioner Christopher Sapienza, as well as civilian staff and officers for their commitment to ensure constitutional policing for the people of Yonkers.  Our settlements with police departments are of little utility unless real work and effort is put in to ensure that reforms are brought to life and successfully implemented.”

“Since the commencement of our investigation in 2007, the Yonkers Police Department has worked assiduously and cooperatively to implement significant reforms which ensure that its officers are well trained, well informed and guided on appropriate uses of force, and that a thorough and robust review system is in place to identify potentially problematic incidents, officers, training and tactics,” said U.S. Attorney Damian Williams for the Southern District of New York. “The Yonkers Police Department has achieved substantial compliance with all provisions of the agreement and established policies and programs that demonstrate a dedication and commitment to serving the community and ensuring its safety and well-being. I commend the Yonkers Police Department for its efforts.”

Over the period the agreement has been in place, there are substantial indications that the agreement has led to improvements in the constitutionality and effectiveness of YPD’s policing.

• The city has experienced a significant reduction in excessive force settlement payouts due to a marked decrease in allegations of unlawful uses of force.
• YPD’s Internal Affairs Department has dramatically improved its average times to complete critical use-of-force investigations, from 245 days in 2019, down to 69 days in 2023.
• YPD’s Internal Affairs Department has significantly reduced its average times for completing civilian misconduct complaint investigations, from 236 days in 2019, to 72 days in 2023.
• The City of Yonkers has also experienced a 22% reduction in violent crimes over the last five years.

The Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the Southern District of New York jointly handled the matter.  

The Justice Department’s investigations have led to significant reforms of law enforcement agencies nationwide. For example, the Seattle Police Department reduced the use of serious force by 60%, and Seattle officers now use force in less than one-quarter of 1% of all events to which they respond. In Baltimore, the independent consent decree monitor found that officers use force less often and the force they do use is more likely to be consistent with department policy and the law. And under the consent decree in Albuquerque, use of force declined by 25% and violations of the force policy fell by half.

The technical assistance letter for Yonkers can be found here.

The settlement agreement with Yonkers can be found here.

Additional information about the Civil Rights Division’s work can be found here.   

Damian Williams, the United States Attorney for the Southern District of New York, announced today that ALEXANDER MASHINSKY, the founder and former Chief Executive Officer of Celsius Network LLC and their affiliated entities (collectively, “Celsius”), pled guilty to one count of committing commodities fraud and one count of committing securities fraud in connection with two fraudulent schemes at Celsius, the purported “bank” of the crypto industry.  In the first scheme, MASHINSKY misled Celsius’s customers about core aspects of the company he founded, including Celsius’s success and profitability and the nature of the investments Celsius made using customer funds.  In the second scheme, MASHINSKY illicitly manipulated the price of CEL, Celsius’s proprietary crypto token, while he was secretly selling his own CEL token at artificially inflated prices.  As part of his plea, MASHINSKY has agreed to forfeit over $48 million in proceeds from his illegal schemes.  MASHINSKY pled guilty today before U.S. District Judge John G. Koeltl.

U.S. Attorney Damian Williams said: “Alexander Mashinsky orchestrated one of the biggest frauds in the crypto industry.  He lured ordinary, retail crypto investors into investing billions of dollars in Celsius with false promises that their investments were low-risk. Using catchy slogans like ‘Unbank Yourself,’ Mashinsky promised that Celsius would keep customers’ crypto as safe as money in a bank, but that, unlike a bank, Celsius returned most of the profits from its business back to users. In reality, Celsius was never profitable.  To disguise the flaws in his business model, Mashinsky put investors’ money into riskier and riskier bets, and secretly used customer money to prop up the price of CEL token.  Mashinsky made tens of millions of dollars selling his own CEL at artificially high prices, while his customers were left holding the bag when the company went bankrupt.  Today’s convictions reflect this Office’s commitment to holding fraudsters like Mashinsky accountable for their crimes.”

According to the allegations contained in the Indictment and statements made in public filings and in public court proceedings:

Celsius was a crypto asset platform that, among other things, allowed its customers to earn returns on their crypto assets in the form of weekly “rewards” payments, to take loans secured by their crypto assets, and to custody their crypto assets.  Celsius billed itself as the “safest place for your crypto” and urged potential customers to “unbank” themselves by moving their crypto assets to Celsius.  Celsius’s primary public offering was its “Earn” program, through which Celsius offered to deploy customers’ crypto assets to generate investment returns.  In addition to its Earn program, Celsius offered retail investors a “Custody” program and a “Borrow” program, which allowed customers to receive retail loans in exchange for posting their crypto assets as collateral with Celsius.

MASHINSKY directly marketed Celsius to retail customers located in the U.S. and abroad.  Throughout his tenure as CEO of Celsius, MASHINSKY repeatedly made public misrepresentations regarding core aspects of Celsius’s business and financial condition in order to induce retail customers to provide their crypto assets to Celsius and continue to use Celsius’s services. MASHINSKY misrepresented, among other things, the safety of Celsius’s yield-generating activities, Celsius’s profitability, the long-term sustainability of Celsius’s high rewards rates, and the risks associated with depositing crypto assets with Celsius.

As MASHINSKY falsely portrayed Celsius as a safe and secure institution, Celsius’s customer base grew exponentially.  Many of those customers were retail investors rather than large institutions.  By in or about the fall of 2021, Celsius had grown to become one of the largest crypto platforms in the world, purportedly holding approximately $25 billion in assets at its peak.

MASHINSKY and others working at Celsius also orchestrated a yearslong scheme to mislead customers and market participants regarding the market value and interest in Celsius’s proprietary crypto token CEL.  They did so by manipulating the price of CEL through causing Celsius to spend hundreds of millions of dollars purchasing CEL in the open market with the objective of artificially supporting and inflating the price of CEL.  At various times during MASHINSKY’s tenure, MASHINSKY and his co-conspirators also caused Celsius to use its own customer deposits to fund these market purchases of CEL in order to prop up CEL’s price, without disclosing this fact to Celsius’s customers.

Without Celsius’s aggressive and illegal price manipulation, the price of CEL would have been drastically lower. As Roni Cohen-Pavon, Celsius’s Chief Revenue Officer who previously pled guilty to illegally manipulating the price of CEL, wrote to MASHINSKY in a private message exchanged during the scheme: “[T]he issue is that people are selling [CEL] and no one is buying except for us,” adding, “[t]he main problem was that the value was fake and was based on us spending millions (~8M a week and even more until February 2020) just to keep it where it is.”

To further the scheme to manipulate CEL, MASHINSKY also repeatedly made false and misleading public statements concerning the nature of Celsius’s market activity and the extent to which Celsius itself was responsible for artificially supporting and inflating the price of CEL.  In certain instances, MASHINSKY and other Celsius executives also personally purchased CEL for the purpose of artificially supporting CEL’s price.

Artificially inflating the price of CEL allowed MASHINSKY to sell his own CEL holdings for a substantial profit.  MASHINSKY personally reaped approximately $48 million in proceeds from his sales of CEL.  At various times, MASHINSKY made false and misleading public statements about his own sales of CEL, claiming that he was not selling CEL, when, in reality, he was taking advantage of the upward price manipulation he had orchestrated by contemporaneously selling huge quantities of his CEL on the market, including, on occasion, to Celsius itself.

In the lead up to the June 12, 2022 “Pause” of Celsius customer withdrawals, MASHINSKY continued to assure Celsius customers that Celsius was in a strong financial position and had sufficient liquidity to meet all customer withdrawal demands.  Even as he made these statements, however, MASHINSKY had removed approximately $8 million worth of his own non-CEL crypto assets from the Celsius platform.

On June 12, 2022 Celsius announced it was halting all customer withdrawals from the Celsius platform, at which time hundreds of thousands of Celsius customers—many of whom were retail investors—still had approximately $4.7 billion worth of crypto assets on the Celsius platform, none of which they could access.  On or about July 13, 2022, Celsius filed for Chapter 11 bankruptcy.

If you believe you have been a victim of the schemes described above, and you wish to provide information to law enforcement with connection to sentencing or to receive additional information, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office of the Southern District of New York, at 866-874-8900 or wendy.olsen@usdoj.gov.

*                *                *

MASHINSKY, 58, of New York, New York, pled guilty to one count of commodities fraud and one count of securities fraud, which combined carry a maximum sentence of 30 years in prison.

The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  MASHINSKY is scheduled to be sentenced by Judge Koeltl on April 8, 2024.

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation.  Mr. Williams also thanked the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, each of which has filed a parallel civil action.

The case is being overseen by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Peter J. Davis, Adam S. Hobson, Allison Nichols, and Noah Solowiejczyk are in charge of the prosecution.

Note: View the complaint here.

A civil forfeiture complaint was filed today for $3.4 million in proceeds from the sale of a music studio in Burbank, California. The complaint alleges that the proceeds, which are beneficially owned by Russian oligarch Oleg Deripaska, are the proceeds of sanctions violations. An indictment charging Deripaska with sanctions violations had been unsealed on Sept. 29, 2022, and Deripaska remains at large.

“As the allegations in the complaint once again demonstrate, those who have illicitly accumulated great wealth in support of lawlessness and international chaos invariably turn to the safety and stability of the United States’ rule of law principles in order to preserve their ill-gotten gains. It is predictable, hypocritical, and illegal,” said Co-Director Michael Khoo of Task Force KleptoCapture. “We are nearly three years into Russia’s unprovoked further invasion of Ukraine, but today’s actions show that Task Force KleptoCapture remains vigilant and fully engaged in its mission to protect the American financial system against the abuses of criminal actors.”

“Today’s filing of a civil forfeiture complaint against over $3 million in illicit proceeds of Oleg Deripaska exemplifies this office’s commitment to utilizing all available legal remedies to enforce our critical sanctions program,” said U.S. Attorney Damian Williams for the Southern District of New York. “We remain committed to piercing the opaque financial networks utilized by sanctioned oligarchs attempting to illegally transact business in U.S. dollars.”

“As alleged, Oleg Deripaska, an OFAC Specially Designated National, through a series of companies and associates attempted to earn over $3 million in proceeds from the sale of a California-based music studio,” said Acting Special Agent in Charge James E. Dennehy of the FBI. “Today’s forfeiture filing shows the FBI’s commitment to stopping individuals from obfuscating their activities to violate sanctions. The FBI will continue to enforce the national security laws of the United States and will ensure any violation of these laws and sanctions is punished accordingly.”

According to the court documents, on April 6, 2018 (the Designation Date), the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Oleg Deripaska as a Specially Designated National (SDN) in connection with its finding that the actions of the Government of the Russian Federation in Ukraine constitute an unusual and extraordinary threat to the national security and foreign policy of the United States. Deripaska was sanctioned for his support of the Russian government and for his activity in the Russian energy sector. On or about the same date, OFAC also designated Basic Element Limited, EN+ Group and other entities for being owned or controlled by, directly or indirectly, Deripaska.

On Sept. 29, 2022, an indictment returned by a grand jury sitting in the Southern District of New York was unsealed, charging Deripaska and his associates Olga Shriki and Natalia Mikhaylovna Bardakova with a conspiracy to violate sanctions.

As alleged in the indictment, for over four years after Deripaska was sanctioned in 2018, and in violation of those sanctions, Deripaska paid Shriki to provide various services for his benefit in the United States. These services included the sale of a music studio in Burbank, California, in 2019, as well as hundreds of thousands of dollars’ worth of other services to aid in Deripaska’s efforts to have two of his children be born in the United States in 2020 and 2022, and to purchase goods for Deripaska from the United States.

Prior to his designation by OFAC, in or about 2008, Deripaska, through a series of shell companies, acquired the music studio for over $3 million. The direct owner of the studio was an entity named Ocean Studios California LLC, which held a bank account at Wells Fargo (the Ocean Studios Account).

Between in or about 2013 and in or about 2018, Shriki lived in the United States and worked for Deripaska’s entity Basic Element in its Manhattan office. Before and after the designation date, Shriki and Deripaska’s cousin Pavel Ezubov, among others, helped to operate and fund the music studio on behalf of Deripaska, and made clear that Deripaska was the ultimate decisionmaker with regard to the music studio.

In or about July 2018, approximately three months after OFAC designated Deripaska as an SDN, Shriki created a consulting business named Global Consulting Services LLC (GCS). Through GCS, Shriki coordinated with associates of Deripaska, including Ezubov and Bardakova, to continue providing services to and for the benefit of Deripaska and to continue receiving funds from Deripaska or entities controlled by Deripaska. GCS opened a bank account at a bank in Manhattan. Between August 2018 and September 2019, the GCS account received wires totaling over $500,000 from two entities associated with Deripaska, one of which entered into a separate agreement with an indicted co-conspirator to manage other Deripaska properties abroad after the designation date.

Beginning in July 2019, the Ocean Studios account received approximately $69,000 of transfers from Shriki’s GCS account, which in turn was funded by overseas accounts tied to Deripaska, as noted above.

In or about June 2019, Shriki effectuated a sale of the contents of the music studio for more than $500,000. In December 2019, more than a year after the designation date, while employed by Deripaska, Shriki assisted with the sale of the music studio by Ocean Studios California LLC in various ways, such as preparing the property for sale, coordinating with the accounting firm for the music studio, communicating with the real estate broker to approve the sale, facilitating the payment of outstanding taxes and bills for the music studio, signing over the property deed, and liquidating the other assets in the music studio. The music studio sale resulted in net proceeds of over $3 million, which were deposited in the Ocean Studios account.

During 2020, while Shriki was employed by Deripaska and continued to perform services for Deripaska, Shriki requested that an accounting firm transfer the proceeds from the sale of the music studio to a bank account in Russia in the name of a company that funded the music studio’s accounts after the designation date — or, in the alternative, requested that the accounting firm add Shriki as a signatory on the bank account for the music studio so that Shriki could effectuate the transfer of funds on behalf of the owner. The firm declined to effectuate the wire transfer itself.

In or about March 2021, Wells Fargo made the determination to block the Ocean Studios account and the funds on deposit due to Ocean Studios account’s relationship with Deripaska. The blocked funds subject to the complaint amount to approximately $3,435,676 plus accruing interest.

The FBI is investigating the case. The Department of Justice’s Office of International Affairs assisted in the investigation.

Assistant U.S. Attorney Vladislav Vainberg for the Southern District of New York is litigating the case.

On March 2, 2022, the Attorney General announced the launch of Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export restrictions, and economic countermeasures that, beginning in 2014, the U.S. has imposed, along with allies and partners, in response to Russia’s unprovoked military invasion of Ukraine. The Task Force will leverage all the Department’s tools and authorities against efforts to evade or undermine the economic actions taken by the U.S. government in response to Russian military aggression.

Damian Williams, the United States Attorney for the Southern District of New York, Michael Khoo, the Co-Director of Task Force KleptoCapture, and James E. Dennehy, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the filing of a civil forfeiture Complaint against over $3.4 million in proceeds from the sale of a music studio in Burbank California.  The Complaint alleges that the proceeds, which are beneficially owned by Russian oligarch Oleg Deripaska, are the proceeds of sanctions violations.  An Indictment charging Deripaska with sanctions violations had been unsealed on September 29, 2022, and Deripaska remains at large. 

U.S. Attorney Damian Williams said: “Today’s filing of a civil forfeiture complaint against over $3 million in illicit proceeds of Oleg Deripaska exemplifies this Office’s commitment to utilizing all available legal remedies to enforce our critical sanctions program. We remain committed to piercing the opaque financial networks utilized by sanctioned oligarchs attempting to illegally transact business in U.S. dollars.”

Task Force KleptoCapture Co-Director Michael Khoo said: “As the allegations in the complaint once again demonstrate, those who have illicitly accumulated great wealth in support of lawlessness and international chaos invariably turn to the safety and stability of the United States’ rule of law principles in order to preserve their ill-gotten gains.  It is predictable, hypocritical, and illegal.  We are nearly three years into Russia’s unprovoked further invasion of Ukraine, but today’s actions show that Task Force KleptoCapture remains vigilant and fully engaged in its mission to protect the American financial system against the abuses of criminal actors.”

FBI Acting Special Agent in Charge James E. Dennehy said: “As alleged, Oleg Deripaska, an OFAC Specially Designated National, through a series of companies and associates attempted to earn over $3 million in proceeds from the sale of a California-based music studio. Today’s forfeiture filing shows the FBI’s commitment to stopping individuals from obfuscating their activities to violate sanctions.  The FBI will continue to enforce the national security laws of the United States and will ensure any violation of these laws and sanctions is punished accordingly.”

According to the allegations in the Complaint filed in Manhattan federal court today and other court filings:[1]

On April 6, 2018 (the “Designation Date”), the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated Oleg Deripaska as a Specially Designated National (“SDN”) in connection with its finding that the actions of the Government of the Russian Federation in Ukraine constitute an unusual and extraordinary threat to the national security and foreign policy of the U.S.  Deripaska was sanctioned for his support of the Russian government and for his activity in the Russian energy sector. On or about the same date, OFAC also designated Basic Element Limited, EN+ Group and other entities for being owned or controlled by, directly or indirectly, Deripaska. 

On September 29, 2022, an indictment returned by a grand jury sitting in the Southern District of New York was unsealed, charging Deripaska and his associates Olga Shriki and Natalia Mikhaylovna Bardakova with, inter alia, a conspiracy to violate sanctions in violation of 50 U.S.C. § 1705 and the Ukraine-Related Sanctions Regulations (the “Deripaska Indictment”).

As alleged in the Deripaska Indictment, for over four years after Deripaska was sanctioned in 2018, and in violation of those sanctions, Deripaska paid Shriki to provide various services for his benefit in the U.S.  These services included the sale of a music studio in Burbank, California (the “Music Studio”) in 2019, as well as hundreds of thousands of dollars’ worth of other services to aid in Deripaska’s efforts to have two of his children be born in the U.S. in 2020 and 2022, and to purchase goods for Deripaska from the U.S.

Prior to his designation by OFAC, in or about 2008, Deripaska, through a series of shell companies, acquired the Music Studio for over $3 million. The direct owner of the studio was an entity named Ocean Studios California LLC, which held a bank account at Wells Fargo Bank (the “Ocean Studios Account”). 

Between in or about 2013 and in or about 2018, Olga Shriki lived in the U.S. and worked for Deripaska’s entity Basic Element in its Manhattan office.  Before and after the Designation Date, Shriki and Deripaska’s cousin Pavel Ezubov, among others, helped to operate and fund the Music Studio on behalf of Deripaska, and made clear that Deripaska was the ultimate decisionmaker with regard to the Music Studio.

In or about July 2018, approximately three months after OFAC designated Deripaska as an SDN, Shriki created a consulting business named Global Consulting Services LLC (“GCS”).  Through GCS, Shriki coordinated with associates of Deripaska, including Ezubov and Bardakova, to continue providing services to and for the benefit of Deripaska and to continue receiving funds from Deripaska or entities controlled by Deripaska.  GCS opened a bank account (the “GCS Account”) at a bank in Manhattan.  Between August 2018 and September 2019, the GCS Account received wires totaling over $500,000 from two entities associated with Deripaska, one of which entered into a separate agreement with an indicted co-conspirator to manage other Deripaska properties abroad after the Designation Date. 

Beginning in July 2019, the Ocean Studios Account received approximately $69,000 of transfers from Shriki’s GCS Account, which in turn was funded by overseas accounts tied to Deripaska, as noted above. 

In or about June 2019, Shriki effectuated a sale of the contents of the Music Studio in the for more than $500,000. In December 2019, more than a year after the Designation Date, while employed by Deripaska, Shriki assisted with the sale of the Music Studio by Ocean Studios California LLC in various ways, such as preparing the property for sale, coordinating with the accounting firm for the Music Studio, communicating with the real estate broker to approve the sale, facilitating the payment of outstanding taxes and bills for the Music Studio, signing over the property deed, and liquidating the other assets in the Music Studio.  The Music Studio sale resulted in net proceeds of over $3 million, which were deposited in the Ocean Studios Account.

During the year 2020, while Shriki was employed by Deripaska and continued to perform services for Deripaska, Shriki requested that an accounting firm transfer the proceeds from the sale of the Music Studio to a bank account in Russia in the name of a company that funded the Music Studio’s accounts after the Designation Date—or, in the alternative, requested that the accounting firm add Shriki as a signatory on the bank account for the Music Studio so that Shriki could effectuate the transfer of funds on behalf of the owner. The firm declined to effectuate the wire transfer itself. 

In or about March 2021, Wells Fargo Bank made the determination to block the Ocean Studios Account and the funds on deposit due to Ocean Studios Account’s relationship with Deripaska.  The blocked funds subject to the Complaint amount to approximately $3,435,676 plus accruing interest.

*                *                *

Mr. Williams praised the outstanding work of the FBI.  Mr. Williams further thanked the Department of Justice’s Office of International Affairs for its assistance and cooperation in this investigation.

This case is being handled by the Office’s Illicit Finance & Money Laundering Unit.  Assistant U.S. Attorney Vladislav Vainberg is in charge of this action.

This case was coordinated through the Justice Department’s Task Force KleptoCapture, an interagency law enforcement task force dedicated to enforcing the sweeping sanctions, export controls and economic countermeasures that the U.S., along with its foreign allies and partners, has imposed in response to Russia’s unprovoked military invasion of Ukraine. Announced by the Attorney General on March 2, 2022, and under the leadership of the Office of the Deputy Attorney General, the task force will continue to leverage all of the department’s tools and authorities to combat efforts to evade or undermine the collective actions taken by the U.S. government in response to Russian military aggression. 

Damian Williams, the United States Attorney for the Southern District of New York, and Anne Milgram, the Administrator of the U.S. Drug Enforcement Administration (“DEA”), announced the unsealing of an Indictment charging 13 defendants with cocaine importation and related weapons offenses in connection with their participation in a massive cocaine importation conspiracy enabled by corrupt Bahamian government officials, including high-ranking members of the Royal Bahamas Police Force (“RBPF”). ELVIS NATHANIEL CURTIS, an RBPF Chief Superintendent, and DARRIN ALEXANDER ROKER, a Chief Petty Officer in the Royal Bahamas Defence Force (“RBDF”), were arrested on Monday in Florida and had their initial appearances yesterday afternoon in the U.S. District Court for the Southern District of Florida.  LORIELMO STEELE-POMARE, a/k/a “Steele” and WILLIAM SIMEON, a/k/a “Harvey Smith,” a/k/a “William Jacques,” a/k/a “Romeo Russell,” a/k/a “Dario Rolle,” were arrested overseas on Monday.  LUIS FERNANDO OROZCO-TORO was arrested overseas yesterday.  The case has been assigned to U.S. District Judge Gregory H. Woods.

U.S. Attorney Damian Williams said: “As alleged, for years, drug traffickers have smuggled tons of cocaine through The Bahamas with the support and protection of corrupt Bahamian government officials who control airports throughout the country and provide sensitive information about U.S. Coast Guard movements to drug traffickers.  This Indictment is the latest in a series of charges that this Office and the DEA’s Special Operations Division have brought against corrupt government officials around the globe who partner with dangerous cocaine traffickers.  Today’s charges should serve as yet another powerful wake-up call to corrupt officials everywhere—we will not rest until you are held accountable for your role in the drug trade that is poisoning this country and our community.  I commend the career prosecutors of this Office and our partners at the DEA for their tireless efforts to disrupt drug-fueled corruption wherever it takes hold.”

DEA Administrator Anne Milgram said: “The arrests of corrupt officials, including a leader of the Royal Bahamas Police Force and another government official in the Royal Bahamas Defence Force, expose the alarming betrayal of public trust that has enabled tons of cocaine to flow through The Bahamas and into the United States.  In 2024, there was a 5.4% increase in cocaine seizures in the United States.  By abusing their positions to accept bribes, protect traffickers, and facilitate drug shipments via airports and maritime routes, these individuals jeopardized countless lives for personal gain.  Let this be a clear message from the DEA: if you are a government official who uses your power to traffic in drugs and corruption, we will bring you to justice in the United States.”

According to the allegations contained in the Indictment:[1]

Since at least May 2021, drug traffickers have smuggled tons of cocaine through The Bahamas for importation into the U.S. with the help and support of corrupt Bahamian government officials.  The Bahamas has in recent years become an increasingly important transshipment point for U.S.-bound cocaine.  This is a result, in part, of its proximity to the U.S., as the northernmost Bahamian islands are less than 100 nautical miles from the coast of Florida, making The Bahamas an attractive route for cocaine traffickers.

The increased cocaine flow through The Bahamas and into the U.S. has been a direct result of yearslong, drug-fueled corruption by certain officials in key Bahamian government institutions.  Such corruption includes certain high-ranking members of the RBPF and other Bahamian government officials who work with drug traffickers to receive, protect, and provide safe passage for massive cocaine shipments through the airports and ports of The Bahamas.  These corrupt officials support the drug trade into the U.S. at multiple levels. First, cocaine-laden aircraft, including on U.S.-registered planes, are received at remote airstrips and larger airports in The Bahamas under the supervision of corrupt RBPF officials who work with, and accept bribes from, drug traffickers.  Then, once the cocaine arrives in The Bahamas, those corrupt officials also help drug traffickers transport their cocaine from the northernmost points of The Bahamas to the U.S. using go-fast vessels, yachts, and fishing boats.

The DEA has historically coordinated drug enforcement operations with the RBPF through a counternarcotics program called Operation Bahamas, Turks and Caicos, or “OPBAT.”  Although OPBAT has had its share of successes in combatting the drug trade in the Caribbean, certain corrupt RBPF and Bahamian officials abuse the OPBAT program and their relationship with the DEA to disrupt U.S.-led law enforcement attempts to combat drug trafficking in The Bahamas.  Corrupt RBPF officials have, among other things, denied the DEA access to seized cocaine and evidence, provided information to the DEA that was contradicted by aerial surveillance, and even informed a DEA agent that certain drug trafficking targets were “off limits.”

As alleged, CURTIS is an RBPF Chief Superintendent who supervises airport locations throughout The Bahamas, including the Lynden Pindling International Airport in Nassau (the “Nassau Airport”), which is the largest airport in The Bahamas.  In exchange for bribes made by drug traffickers, CURTIS has abused his official position to, among other things, provide safe passage for cocaine shipments through airports in The Bahamas, with the assistance of other corrupt officials such as RBPF Sergeant PRINCE ALBERT SYMONETTE.  For instance, on or about October 18, 2023, CURTIS and SYMONETTE each accepted approximately $10,000 in bribe payments as a down payment for their assistance in what they understood to be an upcoming 600-kilogram cocaine shipment to The Bahamas through the Nassau Airport, for eventual distribution to the U.S.  Additionally, in or about September 2024, CURTIS explained that, in exchange for a $2 million bribe, a high-ranking Bahamian politician that CURTIS named would authorize the assistance and involvement of armed RBPF officials to facilitate incoming cocaine shipments.  CURTIS and ROKER also discussed abusing their official positions to transport drug proceeds from cocaine sales in the U.S. back to The Bahamas, including with Bahamian government and military aircraft.

Other corrupt Bahamian officials, such as ROKER, a Chief Petty Officer in the RBDF, have facilitated maritime drug trafficking activities through The Bahamas and into the U.S. by providing sensitive information about U.S. Coast Guard and DEA-led OPBAT operations to alert drug traffickers, in exchange for bribes. RICCARDO ADOLPHUS DAVIS also purports to be an official in the Bahamian government who used his influence with corrupt Bahamian government officials to authorize drug trafficking facilitated by RBPF officials.

Drug traffickers who work with the RBPF and other Bahamian officials coordinate closely with pilots to fly their U.S.-bound cocaine shipments from Central and South America into The Bahamas.  These pilots also work for various Bahamian private charter companies that provide flight services to Bahamian citizens and foreign tourists who are visiting The Bahamas.

*                *                *

CURTIS, 51, of The Bahamas; SYMONETTE, 52, of The Bahamas; ROKER, 56, of The Bahamas; DAVIS, 59, of The Bahamas; SIMEON, 52, of The Bahamas; THEODORE NATHANIEL ADDERLEY, a/k/a “Blue,” 53, of The Bahamas; JOSHUA MCDONALD SCAVELLA, a/k/a “Cow,” 46, of The Bahamas; STEELE-POMARE, 59, of Colombia; OROZCO-TORO, 58, of Colombia; DAVON REVION KHAIM ROLLE, 34, of The Bahamas; DARREN ARTHUR FERGUSON, a/k/a “Hubba,” 54, of The Bahamas; DOMONICK DELANCY, 36, of The Bahamas; and DONALD FREDERICK FERGUSON II, a/k/a “DJ,” a/k/a “Billy,” 26, of The Bahamas, are charged with cocaine importation conspiracy, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; using and carrying firearms during, and possessing firearms in furtherance of, the cocaine-importation conspiracy, which carries a mandatory minimum consecutive sentence of five years in prison and a maximum sentence of life in prison; and conspiring to use and carry firearms during, and possessing firearms in furtherance of, the cocaine-importation conspiracy, which carries a maximum sentence of 20 years in prison.

The statutory minimum and maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Williams praised the outstanding investigative work of the DEA’s Special Operations Division’s Bilateral Investigations Unit, Nassau Country Office, Bogota Country Office, and Panama City Country Office, as well as the assistance of the Office of International Affairs of the Justice Department’s Criminal Division.

The case is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Jonathan L. Bodansky, Nicholas S. Bradley, and Juliana N. Murray are in charge of the prosecution.

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

If you or someone you know has information about the conduct in this case, please contact the DEA’s tip line at BahamasNarcoTips@dea.gov
 

[1] As the introductory phrase signifies, the Indictment and the description of the Indictment set forth herein constitutes only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced that DWIGHT REID, a/k/a “Dick Wolf,” and CHRISTOPHER ERSKINE, a/k/a “Beagle,” were both sentenced to 35 years in prison, respectively, for their years-long leadership of the Untouchable Gorilla Stone Nation Bloods Gang (“Gorilla Stone”), a brutally violent street and prison gang that operates across the country.  REID, the gang’s highest-ranking member, is the gang’s founder and prison leader, and was sentenced on May 21, 2024.  ERSKINE, the gang’s street leader, also known as the “Sun,” is the gang’s second highest-ranking member, and was sentenced today.  The sentencings were imposed by the Honorable Philip M. Halpern following a nearly three-week trial last year, in which REID and ERSKINE were convicted of racketeering and narcotics offenses.

U.S. Attorney Damian Williams said: “Dwight Reid and Christopher Erskine are the two highest-ranking members of Gorilla Stone, a ruthless gang, and are responsible for terrible violent acts and trafficking dangerous narcotics across the country and state, including throughout the New York State prison system.  Reid and Erskine’s convictions and lengthy sentences, as well as our successful prosecution of many of the gang’s most senior and violent members, send an important message to gang leaders that they will be convicted and sentenced to significant terms in prison.”      

According to the Indictment, public court filings, and statements made in court:

REID founded Gorilla Stone over 20 years ago.  Gorilla Stone has many members across New York State, including throughout New York City, Westchester, Upstate New York, and the New York State Prison System, and all over the country — such as in Florida.  Gorilla Stone is comprised of various sets (or “Caves,” as they are called by gang members).  Gorilla Stone is a highly organized and efficient street gang with an organizational commitment to violence that strictly enforces its internal laws.

Among Gorilla Stone’s acts of violence are:

• a September 2020 broad daylight murder of a teenager on a busy Poughkeepsie street;
• an October 24, 2020 gang-related shooting outside of a Miami, Florida strip club, in which two rival gang members were shot and seriously wounded, requiring one to be airlifted from the scene;
• multiple shootings and attempted murders, including an August 8, 2018 shooting in Brooklyn, New York, July 5, 2020 gang shootings at a house party in Miami, Florida, and a July 20, 2020 drive-by shooting in New Rochelle, New York;
• a June 12, 2020 gunpoint drug-related robbery in Peekskill, New York; and
• a vicious January 12, 2018 face slashing of a rival gang member on 125th Street in Manhattan outside a subway station.

As for the gang’s sources of revenue, in addition to some more traditional sources such as the proceeds of nationwide narcotics trafficking both inside and outside of prisons, Gorilla Stone is deeply involved in several fraud schemes that are well organized and sophisticated, and net a significant amount of money for the gang, including a fraudulent unemployment benefits scheme during the COVID-19 pandemic.

*                *                *

REID, 52, of the Bronx, New York, and ERSKINE, 41, of Brooklyn, New York, were convicted after trial of racketeering and narcotics offenses.

All 21 defendants in the Gorilla Stone case before Judge Halpern have been convicted. Eighteen defendants have been sentenced and three defendants have been convicted and are awaiting sentencing.  The 18 defendants, including numerous Godfathers and Godmothers, who have been sentenced by Judge Halpern to date are:

• REID, who was sentenced to 35 years in prison;
• BRANDON SOTO, a/k/a “Stacks,” who was sentenced to 35 years in prison;
• ERSKINE, who was sentenced to 35 years in prison;
• AHMED WALKER, a/k/a “Ammo,” who was sentenced to 235 months in prison;
• Godmother NAYA AUSTIN, a/k/a “Baby,” who was sentenced to 234 months in prison;
• Godfather DONAVAN GILLARD, a/k/a “Donnie Love,” who was resentenced to 19 years in prison;
• Godmother BRINAE THORNTON, a/k/a “Luxury,” who was sentenced to 210 months in prison;
• JARRETT CRISLER, Jr., a/k/a “Jayecee,” who was sentenced to 207 months in prison;
• CASWELL SENIOR, a/k/a “Casanova,” who was sentenced to 188 months in prison;
• ROBERT WOODS, a/k/a “Blakk Rob,” who was sentenced to 188 months in prison;
• Godfather BRANDON NIEVES, a/k/a “Untouchable Dot,” who was sentenced to 110 months in prison;
• JAMAL TRENT, a/k/a “Trap Smoke,” who was sentenced to nine years in prison;
• DEZON WASHINGTON, a/k/a “Blakk,” who was sentenced to 97 months in prison;
• ROBERTA SLIGH, a/k/a “Trouble,” who was sentenced to eight years in prison; 
• JORDAN INGRAM, a/k/a “Flow,” who was sentenced to eight years in prison;
• STEPHEN HUGH, a/k/a “Chino,” who was sentenced to seven years in prison;
• ISAIAH SANTOS, a/k/a “Zay,” who was sentenced to seven years in prison; and
• SHANAY OUTLAW, a/k/a “Easy,” who was sentenced to three years in prison.

Three additional defendants have pled guilty and are awaiting sentencing: Godfather DESHAWN THOMAS, a/k/a “Don,” Godfather WALTER LUSTER, a/k/a “Shells,” and NEIKO CRUDUP, a/k/a “JhitRilla.”

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation (“FBI”) Westchester County Safe Streets Task Force, which is comprised of special agents and task force officers from the FBI, U.S. Probation, New York State Police, New York State Department of Corrections and Community Supervision, New York City Police Department, Westchester County Police Department, Westchester County District Attorney’s Office, Putnam County Sheriff’s Office, Rockland District Attorney’s Office and the Yonkers, New Rochelle, Mount Vernon, Greenburgh, White Plains, Peekskill, Ramapo, and Clarkstown Police Departments.

This prosecution is part of an Organized Crime Drug Enforcement Task Forces (“OCDETF”) operation. OCDETF identifies, disrupts, and dismantles criminal organizations using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF. 

This case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys Shiva H. Logarajah, David R. Felton, Kathryn P. Wheelock, and Courtney L. Heavey, with the assistance of Paralegal Specialists Shannon Becker and Liam Ronan, are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, who has served as the chief federal law enforcement officer in the district, announced today his intention to resign his position as United States Attorney, effective 11:59 p.m. on December 13, 2024.  Edward Y. Kim, who currently serves as Deputy United States Attorney, will become the Acting United States Attorney upon his departure.

U.S. Attorney Damian Williams said: “Today is a bittersweet day for me, as I announce my resignation as United States Attorney for the Southern District of New York. It is bitter in the sense that I am leaving my dream job, leading an institution I love that is filled with the finest public servants in the world.  It is sweet in that I am confident I am leaving at a time when the Office is functioning at an incredibly high level – upholding and exceeding its already high standard of excellence, integrity, and independence.  That success is due to the career attorneys, staff members, and law enforcement agents of this Office.  Working with them during my tenure has been a privilege of a lifetime.  They are worthy custodians of this Office’s tradition of doing the right thing, the right way, for the right reasons.  They are patriots.  They are my family.  And I will miss them dearly.

I thank President Biden for nominating me as United States Attorney, and Attorney General Garland for leading the Department and supporting the Southern District of New York during my tenure.  It has been an honor to serve the American people.”

Damian Williams, the United States Attorney for the Southern District of New York, and James E. Dennehy, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging S. KENNETH LEECH II, the former Chief Investment Officer of Western Asset Management Company (“WAMCO”), with securities fraud, investment adviser fraud, commodity trading adviser fraud, commodities fraud, and making false statements.  WAMCO is a global fixed-income investment adviser that manages hundreds of billions of dollars on behalf of its clients.  Between 2021 and 2023, LEECH defrauded WAMCO’s clients by engaging in a criminal cherry-picking scheme to favor certain clients at the expense of others, assigning over $600 million of gains to favored clients and over $600 million of losses to disfavored clients.  LEECH has been summoned to make his initial appearance in the Southern District of New York in connection with the charges by December 6, 2024.  The case has been assigned to U.S. District Judge Gregory H. Woods.

U.S. Attorney Damian Williams said: “We allege today that S. Kenneth Leech II—the Chief Investment Officer of a significant manager of pension funds and other long-term investments—used his position to cherry pick trades and prop up his favored but failing accounts at the expense of others.  These charges should be a reminder that this Office continues to police all corners of the financial markets and will swiftly hold those accountable who believe that they can cheat and abuse the trust of clients for their own purposes.”

FBI Assistant Director in Charge James E. Dennehy said: “Kenneth Leech, the former CIO of Western Asset Management Company, allegedly violated his fiduciary duty by crafting a preferential treatment scheme to allot more than $600 million in profits and losses to particular clients.  Instead of allocating trades appropriately, Leech allegedly allowed favoritism to benefit preferred accounts for their benefit.  The FBI will continue to investigate any individual who exploits their trusted position to favorably treat certain clients at the expense of others."

According to the allegations in the Indictment unsealed today in Manhattan federal court:[1]

Between 2021 and October 2023, LEECH committed fraud and abused the trust placed in him by clients of the investment-management company WAMCO.  LEECH engaged in a criminal scheme commonly known as “cherry picking” to compensate for losses in his marquee investment strategy by assigning trades that performed well during their first day into client accounts associated with that investment strategy, and assigning trades that performed poorly over their first day into the accounts of other clients, who were not aware that LEECH was causing them losses to favor others.  LEECH’s victims included institutional and retail investors who trusted LEECH to manage their savings and pension plans.  Over the course of his criminal scheme, LEECH allocated trades with net first-day gains of at least approximately $600 million to his favored strategy and clients, and allocated trades with net first-day losses of at least approximately $600 million to clients to whom he owed an equal fiduciary duty.

LEECH was able to carry out this scheme because, as Chief Investment Officer of WAMCO, LEECH was responsible for making trades on behalf of different portfolios and assigning those trades to the portfolio for which he had traded—a process generally referred to as “allocation.”  One set of portfolios for which LEECH traded followed what WAMCO called the “Macro Opportunities” strategy (“Macro Opps”).  Another set of portfolios followed what WAMCO called the “Core” and “Core Plus” strategies (together, the “Core Strategies”).  LEECH owed a fiduciary duty to any client who invested in portfolios that followed either of these strategies.

Despite that duty, and in violation of it, LEECH engaged in a fraudulent scheme to bolster Macro Opps, which necessarily came at the expense of the Core Strategies, by allocating trades based on their performance between the time he placed the trades and the time he made his allocations.  He carried out this scheme by placing trades, waiting to see how those trades performed throughout the day, and then using the first-day performance of his trades to determine where to allocate them—assigning better-performing trades to Macro Opps and worse-performing trades to the Core Strategies.  This was contrary to WAMCO’s compliance trainings, which emphasized that LEECH should allocate trades promptly, and against WAMCO’s policies, which prohibited allocating trades on the basis of first-day performance to make up for losses.

Neither LEECH nor WAMCO disclosed to investors that LEECH used first-day performance to decide how to allocate trades, or that LEECH was favoring Macro Opps in his allocations.  To the contrary, WAMCO represented to investors that LEECH and others knew where they planned to allocate a trade before making the trade and finalized the allocation promptly after the trade was completed, and LEECH later testified before the U.S. Securities and Exchange Commission (“SEC”) that he knew where he planned to allocate a trade when he placed it. This testimony was false and the reality was far different.  LEECH routinely waited hours after making his trades—often until late in the day—to make his allocations, allowing him to observe how his trades had performed before deciding where to allocate them.  Between 2021 and October 2023, LEECH used that ability to see how the market moved to support Macro Opps by awarding it better performing trading and hiding worse performing trades in the Core Strategies.

By allocating trades based on first-day performance, LEECH bolstered the overall performance of Macro Opps at the expense of the larger Core Strategies.  Each time LEECH assigned a trade with a first-day gain to Macro Opps, or assigned a trade with a first-day loss to the Core Strategies, LEECH improved or protected the daily performance of Macro Opps.  When done consistently over time, those daily boosts added up to significantly enhance the performance of Macro Opps.  From January 2021 through October 2023, the Treasury futures and options trades that LEECH allocated specifically to Macro Opps had net first day gains of over $600 million.  By contrast, during this period, the Treasury futures and options trades that LEECH allocated specifically to the Core Strategies had net first day losses of over $600 million.

LEECH’s bias in favor of Macro Opps was more pronounced the larger the first-day gain or first-day loss.  For example, between 2021 and October 2023, there were over 500 Treasury futures or options trades that LEECH chose to allocate specifically to either Macro Opps or the Core Strategies and that had first-day gains over $500,000.  LEECH allocated over 90% of those winning trades to Macro Opps and fewer than 10% to the Core Strategies.  Conversely, over that same time period, there were over 500 Treasury futures or options trades that LEECH chose to allocate specifically to either Macro Opps or the Core Strategies and that had first-day losses over $500,000.  LEECH allocated less than 10% of those losing trades to Macro Opps, while allocating over 90% of them to the Core Strategies.

Similarly, between 2021 and October 2023, there were over 150 Treasury futures or options trades that LEECH chose to allocate specifically to either Macro Opps or the Core Strategies and that had first-day gains over $1,000,000.  LEECH allocated over 90% of those winning trades to Macro Opps and less than 10% to the Core Strategies.  Over that same time period, there were over 200 Treasury futures or options trades that LEECH chose to allocate specifically to either Macro Opps or the Core Strategies and that had first-day losses over $1,000,000.  LEECH allocated less than 5% of those losing trades to Macro Opps, while allocating over 95% to the Core Strategies.

LEECH’s pattern of biased allocation was steady over the period relevant to this Indictment.  In each of the 34 months between the beginning of 2021 and October 2023, the U.S. Treasury futures and options trades allocated specifically to Macro Opps had a net first-day gain.  By contrast, over that same period, the U.S. Treasury futures and options trades that LEECH allocated specifically to the Core Strategies had net first-day losses in all months except two.

The bias in favor of Macro Opps was not caused by LEECH pursuing a unique trading strategy for Macro Opps.  Notably, when LEECH did not exercise discretion to allocate trades between Macro Opps and the Core Strategies, the trades that went to Macro Opps were not characterized by disproportionate first-day gains.

For example, between 2021 and October 2023, LEECH had a standing instruction that trades he made through a certain broker (“Broker-1”) should, by default, be allocated to Macro Opps.  As a result, LEECH generally did not exercise discretion to allocate trades through Broker-1 at the end of the day because his trading assistant automatically allocated them to Macro Opps.  When Treasury futures and options trades were allocated to Macro Opps without LEECH first observing performance in the market, the bias in favor of Macro Opps disappeared.  Over the relevant time period, approximately 55% of the trades LEECH placed through Broker-1 trades had first-day gains, while approximately 45% had first-day losses. These trades produced modest first-day losses, generating an average first-day loss of over $5,000. This is dramatically lower than the average first-day gain of approximately $225,000 that LEECH generated on those trades that he specifically allocated to Macro Opps when he had an opportunity to see market movements before making an allocation decision.

After October 2023, WAMCO removed LEECH from the Core Strategies, so he no longer had the authority to allocate trades to those strategies.  As with the Broker-1 trades, when LEECH no longer had discretion to allocate trades to the Core Strategies, the trades LEECH allocated to Macro Opps stopped having a consistent, pronounced bias toward first-day gain.

In all, between 2021 and October 2023, the U.S. Treasury futures and options trades LEECH allocated specifically to Macro Opps had net first-day gains of over $600 million.  By contrast, the U.S. Treasury futures and options trades LEECH allocated specifically to the Core Strategies had net first-day losses of over $600 million.

*               *                *

LEECH, 70, of Pasadena, California, is charged with one count of investment adviser fraud and one count of securities fraud, each of which carries a maximum sentence of 20 years in prison; one count of commodity trading adviser fraud and one count commodities fraud, each of which carries a maximum sentence of 10 years in prison; and one count of making false statements, which carries a maximum sentence of five years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Williams praised the outstanding work of the FBI.  Mr. Williams further thanked the SEC, which today filed a parallel civil action against LEECH.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Thomas S. Burnett and Peter J. Davis are in charge of the prosecution. 

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty. 
 

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth in this release constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced that WILLIAM WASHINGTON was sentenced today to five years in prison for his participation in a scheme to defraud the National Basketball Association (“NBA”) Players’ Health and Welfare Benefit Plan (the “Plan”).  WASHINGTON was convicted on June 28, 2024, following a one-week jury trial and was sentenced today by U.S. District Judge Valerie E. Caproni.

U.S. Attorney Damian Williams said: “William Washington, a licensed medical doctor, had a solemn responsibility not to abuse his position of trust.  Instead, Washington used his license and his clinics to generate fraudulent invoices for medical services he never performed.  Over just one year, Washington pocketed nearly a half-million dollars for himself and his co-conspirators.  Today’s sentence sends a clear message that those who engage in health care fraud schemes, particularly medical providers, will face stringent penalties.”

According to the Indictment and the evidence at trial:

From approximately in or about 2019 through July 2020, WASHINGTON, a licensed medical doctor who operated medical clinics located in the Seattle, Washington-area, participated in a scheme with retired NBA players to defraud the Plan.  In furtherance of the scheme, WASHINGTON generated fraudulent invoices purporting to document nearly $500,000 worth of medical services that he never provided – such as $10,000 office visits and $25,000 shoulder injections – and repeatedly lied to the Plan by claiming that he had performed those services.    WASHINGTON also swiped Plan-issued debit cards to collect money on these fake invoices. As a result of these debit card swipes, WASHINGTON received over $450,000 from the Plan, which he cashed out and distributed to his co-conspirators.   

*                *                *

In addition to the prison sentence, WASHINGTON, 47, of Seattle, Washington, was sentenced to three years of supervised release and ordered to pay a $20,000 fine, forfeit $475,042, and pay restitution in the amount of $475,042.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.   Assistant U.S. Attorneys Rushmi Bhaskaran, Qais Ghafary, and Rebecca Delfiner represented the Government at trial.  Assistant U.S. Attorneys Ryan Finkel and Daniel G. Nessim participated in the investigation and prosecution of this case. 

Damian Williams, the United States Attorney for the Southern District of New York; Jocelyn E. Strauber, the Commissioner of the New York City Department of Investigation (“DOI”); William S. Walker, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”); Vicky Vazquez, the Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General (“HUD OIG”); and Jonathan Mellone, the Special Agent in Charge of the Northeast Region of the U.S. Department of Labor’s Office of Inspector General (“DOL-OIG”), announced that HECTOR COLON, a former New York City Housing Authority (“NYCHA”) superintendent, was convicted today of bribery and extortion under color of official right for taking thousands of dollars from contractors in exchange for awarding those contractors no-bid contracts or approving payment on previously awarded contracts at NYCHA developments for approximately three years.  The verdict followed a four-day trial before U.S. District Judge Lewis J. Liman.

U.S. Attorney Damian Williams said: “Corruption is an insidious crime—difficult to detect, corrosive in its effect on government agencies, and damaging to the public’s trust in government institutions.  As a NYCHA Superintendent, Hector Colon abused his position of public trust by demanding thousands of dollars of bribes from contractors, betraying his duty to NYCHA residents, the City of New York, and taxpayers.  The jury’s unanimous verdict sends a clear message that those who use their public offices for personal gain will be held accountable.”

DOI Commissioner Jocelyn E. Strauber said: “When public servants demand payoffs from vendors providing services to the New York City Housing Authority, they drive up the cost of those services, diverting valuable resources from the residents of public housing.  Today, this suspended NYCHA employee stands convicted by a jury for this criminal conduct, joining 59 convicted colleagues, among the 70 who have been charged.  And to date, NYCHA has implemented 11 of DOI’s 14 recommendations intended to thwart employees who would use positions of trust to enrich themselves at the expense of New Yorkers that NYCHA serves.  I thank the U.S. Attorney’s Office for the Southern District of New York and our federal law enforcement partners for their commitment to protect public resources and to hold accountable those public servants who abuse their authority.”  

HSI Special Agent in Charge William S. Walker “Today’s guilty verdict — the second successful trial following HSI’s sweeping task force investigation into bribery and extortion amongst NYCHA personnel — underscores the importance of collaboration among law enforcement partners in protecting and serving New Yorkers.  The pervasive corruption exemplified by Colon’s conduct continues to be brought to light, and HSI New York’s Document and Benefit Fraud Task Force is proud to have played a role uncovering the exploitation of an underserved community for personal gain.”

HUD OIG Special Agent in Charge Vicky Vazquez said: “Colon took advantage of his position of trust and engaged in a deplorable bribery and kickback scheme to enrich himself.  Moreover, he violated the fair process for awarding government contracts, putting the integrity of HUD programs at risk.  HUD OIG remains steadfast in its commitment to working with our prosecutorial, law enforcement, and oversight partners to aggressively pursue individuals who engage in activities that jeopardize HUD programs.”

DOL-OIG Special Agent in Charge Jonathan Mellone said: “Suspended NYCHA superintendent Hector Colon abused his position to extort contractors in exchange for no-bid construction contracts that violated the requirements of federal law.  Today’s conviction sends a clear message that public corruption will not be tolerated.  We will continue to work with our law enforcement partners to investigate those who corruptly exploit federally funded governmental programs at the expense of American taxpayers.”

According to the evidence presented in court during the trial:

NYCHA is the largest public housing authority in the country, providing housing to New Yorkers across the City and receiving over $1.5 billion in federal funding from the U.S. Department of Housing and Urban Development (“HUD”) every year.  When repairs or construction work at NYCHA housing require the use of outside contractors, services must typically be purchased via a bidding process.  However, when the value of a contract was under a certain threshold, designated staff at NYCHA developments, including superintendents, could hire a contractor of their choosing without soliciting multiple bids.  With either type of contract, a NYCHA employee needed to certify that the work was satisfactorily completed in order for the contractor to receive payment from NYCHA.

COLON, a superintendent at multiple NYCHA developments in Manhattan between 2019 and 2021, including Harlem River Houses, Fort Washington Houses, and Drew Hamilton Houses, demanded and received cash in exchange for NYCHA contracts by either requiring contractors to pay up front in order to be awarded the contracts or requiring payment after the contractor finished the work and needed COLON to sign off on the completed job.  COLON typically demanded approximately 10% of the contract value—between $500 and $1,000 depending on the size of the contract—or a flat bribe of $1,000 for signing off on invoices for completed work.  In total, COLON demanded and received thousands of dollars in bribes in exchange for hundreds of thousands of dollars in NYCHA contracts.

Of the 70 individual NYCHA employees charged with bribery and extortion offenses in February 2024, 58 have pled guilty, and two have been convicted after trial.

If you believe you have information related to bribery, extortion, or any other illegal conduct by NYCHA employees, please contact OIGNYCHA@doi.nyc.gov or (212) 306-3356.  If you were involved in such conduct, please consider self-disclosing through the SDNY Whistleblower Pilot Program at USANYS.WBP@usdoj.gov.

*                *                *

COLON, 46, of the Bronx, New York, was convicted of one count of federal program bribery, which carries a maximum sentence of 10 years in prison, and one count of extortion under color of official right, which carries a maximum sentence of 20 years in prison.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the New York City Department of Investigation, U.S. Department of Homeland Security – Homeland Security Investigations (“HSI”), the HUD Office of Inspector General, and DOL-OIG, which work together collaboratively as part of the HSI Document and Benefit Fraud Task Force, as well as the special agents and task force officers of the U.S. Attorney’s Office for the Southern District of New York.

This prosecution is part of an Organized Crime Drug Enforcement Task Forces (“OCDETF”) operation. OCDETF identifies, disrupts, and dismantles criminal organizations using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.

This case is being handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Jacob R. Fiddelman, Catherine Ghosh, and Jane Kim are in charge of the prosecution, with the assistance of Paralegal Specialists Jayda Foote and Shirel Garzon.

Damian Williams, the United States Attorney for the Southern District of New York; James E. Dennehy, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”); and Rebecca Weiner, the Deputy Commissioner of Intelligence and Counterterrorism for the New York City Police Department (“NYPD”), announced today that ERALD ALIMEHMETI was arrested in connection with a Complaint charging ALIMEHMETI with attempting to provide material support to the Islamic State of Iraq and al-Sham (“ISIS”) and distributing instructional information regarding the making of explosives.  ALIMEHMETI was presented today before U.S. Magistrate Judge Stewart D. Aaron and ordered detained.

U.S. Attorney Damian Williams said: “As alleged, Erald Alimehmeti distributed—on pro-ISIS channels—dozens of instructional materials, including those he personally created, that describe handling firearms and making specific explosives.  Alimehmeti also allegedly discussed planning and training for terrorist attacks on behalf of ISIS, provided instructions on how to spray explosives on innocent people, and went so far as to claim that ‘it’s time for a genocide.’  I commend our law enforcement partners and this Office’s career prosecutors who worked tirelessly to detect and disrupt Alimehmeti’s alleged terrorist activities.”

FBI Assistant Director in Charge James E. Dennehy said: “Erald Alimehmeti not only allegedly attempted to provide material support to ISIS by trying to recruit and train who he believed to be like minded individuals online, but also repeatedly shared multiple instructions on how to make explosives for use in a terrorist attack.  Thankfully, due to the dedication and determination of the New York Joint Terrorism Force, Alimehmeti was stopped before he could further his evil aims.  The FBI New York, the NYPD, and all law enforcement partners on the JTTF continue to be unrelenting in our mission to protect our country from anyone attempting to cause violence and mayhem in the name of terrorism.”

NYPD Deputy Commissioner Rebecca Weiner said: “As we continue to see, allegedly attempting to provide material support to a designated terrorist organization usually has just one outcome: Arrest.  I commend the NYPD and all the members of the FBI’s New York JTTF, for their unwavering focus on keeping New York City and our nation safe.  In today’s borderless world, public safety demands the level of teamwork that defines this and all of our joint investigations.”

As alleged in the Complaint:[1]

ALIMEHMETI is a U.S. and Albanian citizen and former resident of the Bronx, New York, and moved to Albania in 2014.  ALIMEHMETI was arrested by Albanian authorities and imprisoned in late 2015 to 2019 and again from late 2020 to 2022 for weapons and assault offenses.

Between prison terms, ALIMEHMETI created and used numerous online accounts on encrypted messaging applications and social media websites to communicate with others about planning and training for attacks on behalf of ISIS.  For example, in 2019, ALIMEHMETI expressed interest in “DC sniper” style attacks and referenced an “op” for which he sought the participation of confidential sources, writing, among other things, “Do you know sniping akhi? The formulas and ballistics?” and “I will brief you brothers right before the op, not here akhi. Do you both know how to use red dot optics and how to zero them?”  ALIMEHMETI also requested what he described as “tactical” equipment and “gear” for “training” and “operations” in support of ISIS, including particular models of vests capable of holding “ballistic plates,” “magazine pouches,” and “knives,” and described modifications he intended to make to his “AKM,” an apparent reference to an assault rifle.

In addition, in 2019 and 2020, ALIMEHMETI regularly posted pro-ISIS propaganda online, praising specific ISIS leaders and promoting ISIS-issued publications and videos.  For example, ALIMEHMETI’s social media posts included praise of the ISIS propagandist Shaykh ul-Haqq Musa Cerantonio and the Libyan terrorist and high-ranking al Qaeda official Abu Yahya al-Libi; photographs of various jihadist publications, such as “The Islamic Ruling of the Permissibility of Self-Sacrificial Operations: Suicide, or Martyrdom?” and “The Book of Jihad”; and a video depicting the killing of U.S. Special Forces in Niger and an accompanying comment in Albanian, which translates to: “The Islamic State in Africa killing crusaders, American and French special forces. Look at how the US special forces scream before they die!!! Hahaha!”

ALIMEHMETI also described his work compiling resources on mixing dangerous chemicals and making explosives to a confidential source and discussed how to make specific types of incendiaries to spray at innocent bystanders in a terrorist attack.  On an encrypted messaging channel, ALIMEHMETI posted dozens of links and downloadable documents on topics such as explosives-making, firearms-handling, defensive tactics, and outdoor survival, with comments encouraging the use of these resources.  For example, he posted a video and described it as “a video release from the official media of the Khilafa, explaining how YOU O Muwahid can make TATP explosives in your own home ... SO FIGHT THEM O MUWAHID,” an apparent reference to a well-known ISIS video titled, “You Must Fight Them O Muwahhid,” which provides step-by-step instructions for constructing a TATP-based explosive device and attacking a human target with a knife.

*                *                *

ALIMEHMETI, 33, of Tirana, Albania, is charged with one count of attempting to provide material support to ISIS, which carries a maximum sentence of 20 years in prison, and one count of distribution of information pertaining to explosives, destructive devices, and weapons of mass destruction in furtherance of a federal crime of violence, which carries a maximum sentence of 20 years in prison.

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the FBI’s New York Joint Terrorism Task Force, which consists principally of agents and analysts from the FBI and detectives from the NYPD.  Mr. Williams also thanked Homeland Security Investigations, the Counterterrorism Section of the Department of Justice’s National Security Division, the Office of International Affairs of the Department of Justice’s Criminal Division, and law enforcement partners in Albania and Australia, including the Australian Attorney-General’s Department, for their valuable assistance.

The case is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Nicholas S. Bradley and Jane Y. Chong are in charge of the prosecution, with assistance from Trial Attorney Jessica K. Fender of the Counterterrorism Section.

The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
 

[1] As the introductory phrase signifies, the complaint and the description of the complaint set forth herein constitutes only allegations, and every fact described should be treated as an allegation.

A former New York man and dual citizen of the United States and Albania was arrested yesterday in New York on criminal charges related to his alleged involvement in attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS) and distributing instructional information regarding the making of explosives.

According to court documents, Erald Alimehmeti, 33, of Tirana, Albania, is a former resident of the Bronx, New York, and moved to Albania in 2014. Alimehmeti was arrested by Albanian authorities and imprisoned in late 2015 to 2019 and again from late 2020 to 2022 for weapons and assault offenses.

Between prison terms, Alimehmeti created and used numerous online accounts on encrypted messaging applications and social media websites to communicate with others about planning and training for attacks on behalf of ISIS. For example, in 2019, Alimehmeti expressed interest in “DC sniper” style attacks and referenced an “op” for which he sought the participation of confidential sources, writing, among other things, “Do you know sniping akhi? The formulas and ballistics?” and “I will brief you brothers right before the op, not here akhi. Do you both know how to use red dot optics and how to zero them?” Alimehmeti also requested what he described as “tactical” equipment and “gear” for “training” and “operations” in support of ISIS, including particular models of vests capable of holding “ballistic plates,” “magazine pouches,” and “knives,” and described modifications he intended to make to his “AKM,” an apparent reference to an assault rifle.

In addition, in 2019 and 2020, Alimehmeti regularly posted pro-ISIS propaganda online, praising specific ISIS leaders and promoting ISIS-issued publications and videos. For example, Alimehmeti’s social media posts included praise of the ISIS propagandist Shaykh ul-Haqq Musa Cerantonio and the Libyan terrorist and high-ranking al Qaeda official Abu Yahya al-Libi; photographs of various jihadist publications, such as “The Islamic Ruling of the Permissibility of Self-Sacrificial Operations: Suicide, or Martyrdom?” and “The Book of Jihad”; and a video depicting the killing of U.S. Special Forces in Niger and an accompanying comment in Albanian, which translates to: “The Islamic State in Africa killing crusaders, American and French special forces. Look at how the US special forces scream before they die!!! Hahaha!”

Alimehmeti also described his work compiling resources on mixing dangerous chemicals and making explosives to a confidential source and discussed how to make specific types of incendiaries to spray at innocent bystanders in a terrorist attack. On an encrypted messaging channel, Alimehmeti posted dozens of links and downloadable documents on topics such as explosives-making, firearms-handling, defensive tactics, and outdoor survival, with comments encouraging the use of these resources. For example, he posted a video and described it as “a video release from the official media of the Khilafa, explaining how YOU O Muwahid can make TATP explosives in your own home ... SO FIGHT THEM O MUWAHID,” an apparent reference to a well-known ISIS video titled, “You Must Fight Them O Muwahhid,” which provides step-by-step instructions for constructing a TATP-based explosive device and attacking a human target with a knife.

Alimehmeti is charged with one count of attempting to provide material support to ISIS, which carries a maximum penalty of 20 years in prison, and one count of distribution of information pertaining to explosives, destructive devices, and weapons of mass destruction in furtherance of a federal crime of violence, which carries a maximum penalty of 20 years in prison.

The FBI’s New York Joint Terrorism Task Force, which consists principally of agents and analysts from the FBI and detectives from the New York City Police Department, is investigating the case. The Justice Department’s Office of International Affairs, Department of Homeland Security’s Homeland Security Investigations, and law enforcement partners in Albania and Australia, including the Australian Attorney-General’s Department, provided valuable assistance.

Assistant U.S. Attorneys Nicholas S. Bradley and Jane Y. Chong for the Southern District of New York are prosecuting the case, with assistance from Trial Attorney Jessica K. Fender of the National Security Division’s Counterterrorism Section.

A criminal complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Damian Williams, the United States Attorney for the Southern District of New York, announced that JYSHUN TROWER was sentenced today by U.S. District Judge Denise L. Cote to 14 years in prison for trafficking firearms and selling counterfeit pills laced with fentanyl. TROWER previously pled guilty to illegally transporting and distributing firearms and conspiring to distribute narcotics.

U.S. Attorney Damian Williams said: “Jyshun Trower placed countless New Yorkers’ lives in danger, attempting to flood the City with over 40 illegal firearms, including military-style assault weapons, that destroy human bodies and lives.  Trower also sold thousands of counterfeit pharmaceutical pills containing deadly fentanyl.  He now faces significant time in prison for his crimes.” 

According to the Indictment, and statements made in court proceedings and filings:

From on or about June 5, 2023, through on or about December 14, 2023, TROWER illegally transported and sold firearms in Manhattan and the New York City Area.  In almost a dozen transactions, TROWER illegally sold approximately 43 firearms to an undercover law enforcement agent and others.  The firearms included multiple semiautomatic pistols, semiautomatic rifles, assault style rifles and pistols, ammunition, high-capacity magazines, a ghost gun, and components used to convert a semiautomatic pistol into a fully automatic pistol—that is, a machine gun.  Images of several of the firearms that TROWER sold are below.

Firearms TROWER sold in Manhattan on July 21, 2023.

Firearms TROWER sold in Manhattan on July 31, 2023.

Firearms TROWER sold in Manhattan on August 17, 2023.

Firearms TROWER sold in Manhattan on August 25, 2023.

Firearms TROWER sold in Manhattan on September 29, 2023.

Firearms TROWER sold in Manhattan on December 14, 2023.

In addition, TROWER conspired to sell 10,000 fentanyl pills to an undercover law enforcement agent.  TROWER also had arranged with the undercover agent to include several firearms in the transaction.  On or about December 14, 2023, TROWER arrived at the sale location with the firearms, where law enforcement apprehended TROWER and recovered a bag containing over hundreds of counterfeit pills laced with fentanyl.

*                *                *

In addition to the prison term, TROWER, 27, of Virginia Beach, Virginia, was sentenced to five years of supervised release.

Mr. Williams praised the outstanding investigative work of the New York City Police Department, the Drug Enforcement Administration New York Division, and the U.S. Department of Homeland Security, Homeland Security Investigations New York Field Office.

The case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorney Lisa Daniels is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Steven G. James, the Superintendent of the New York State Police, announced the unsealing of a four-count Complaint charging MICHAEL O’FLAHERTY with obstructing an official proceeding and making false statements to federal investigators. O’FLAHERTY was arrested this morning and presented today before U.S. Magistrate Judge Victoria Reznik.

U.S. Attorney Damian Williams said: “As alleged, Michael O’Flaherty, a New York State Police narcotics investigator, exploited his position of public trust in an effort to help his former confidential informant—who was responsible for distributing tens of thousands of potentially deadly fentanyl pills—evade law enforcement.  O’Flaherty allegedly abused his position as a sworn member of law enforcement by tipping off the fentanyl pill dealer about a covert narcotics investigation and encouraging the dealer to destroy evidence.  The defendant’s alleged conduct betrayed the oath he swore to protect New Yorkers and jeopardized the safety of fellow law enforcement officers.  Today’s charges make clear that this Office will remain vigilant in rooting out and prosecuting all forms of police corruption.”

New York State Police Superintendent Steven G. James said: “Law enforcement officers hold a profound responsibility to serve and protect our communities, which requires the highest standards of accountability and integrity.  Trust is the cornerstone of public safety, and maintaining that trust demands transparency, professionalism, and an unwavering commitment to ethical conduct.  The State Police will continue to work cooperatively with the U.S. Attorney’s Office of the Southern District regarding this criminal case, and I appreciate Governor Hochul’s ongoing support of our longstanding culture of accountable policing.”

As alleged in the Complaint unsealed today:[1]

In 2022, a state law enforcement agency and the U.S. Drug Enforcement Administration conducted an investigation of fentanyl pill distribution linked to multiple overdose deaths in Dutchess County (the “Fentanyl Investigation”).  The Fentanyl Investigation identified a particular narcotics trafficker (“Individual-1”) and Individual-1’s network of runners as a prolific source of fentanyl pills in the county.  The Fentanyl Investigation also learned that Individual-1 had previously served as a confidential informant for the New York State Police (“NYSP”) and had been supervised by O’FLAHERTY, a police officer with the NYSP.  During conversations with members of the Fentanyl Investigation, O’FLAHERTY expressed a willingness to assist the Investigation.  But unbeknownst to the Fentanyl Investigation and O’FLAHERTY’s own supervisors, O’FLAHERTY had maintained a personal relationship with Individual-1 both during and after Individual-1’s tenure as an informant.  O’FLAHERTY purported to assist the Fentanyl Investigation, but in fact O’FLAHERTY promptly told Individual-1 about the Fentanyl Investigation and encouraged Individual-1 to destroy evidence of Individual-1’s narcotics trafficking. O’FLAHERTY also tried to dig for sensitive details about the Investigation, including the identity of the Investigation’s confidential source within Individual-1’s network.  At the same time, O’FLAHERTY attempted to prevent the Fentanyl Investigation from discovering the nature and extent of O’FLAHERTY’s interactions with Individual-1, including telephone calls, text messages, and one-on-one meetings that O’FLAHERTY had concealed from NYSP supervisors and colleagues.  When federal investigators ultimately questioned O’FLAHERTY about the nature of his interactions with Individual-1, including O’FLAHERTY’s disclosure of the Fentanyl Investigation, O’FLAHERTY lied to federal investigators.

*                *                *

O’FLAHERTY, 42, of Poughkeepsie, New York, is charged with two counts of obstructing an official proceeding, each of which carries a maximum sentence of 20 years in prison, and two counts of false statements, each of which carries a maximum sentence of five years in prison.

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding work of the Special Agents of the U.S. Attorney’s Office for the Southern District of New York and the valuable assistance of the New York State Police’s Professional Standards Bureau. 

The case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys Qais Ghafary and Jeffrey C. Coffman are in charge of the prosecution. 

The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
 

[1] As the introductory phrase signifies, the entirety of the Complaint and the descriptions of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, and James E. Dennehy, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the arrest of HENRY YAU for charges in connection with a scheme to commit identity theft, convert government records, and disclose agency records containing individually identifiable information.  YAU was arrested this morning and will be presented today before U.S. Magistrate Judge Stewart D. Aaron.

U.S. Attorney Damian Williams said: “Henry Yau, a supervisory law enforcement officer within U.S. Customs and Immigration Enforcement, allegedly engaged in a years-long scheme to disseminate non-public and sensitive information from law enforcement databases to friends and acquaintances.  Among other things, Yau allegedly tipped off an individual who was being investigated by the FBI; disclosed sensitive and non-public information from immigration and law enforcement databases; and, most egregiously, offered to use his authority as an ICE officer to arrest specific people at the request of, and as favors to, his friends.  As I have said before, public service is a privilege, not a right, and the career prosecutors of this Office and our law enforcement partners will never stop investigating those who seek to abuse that privilege.”

FBI Assistant Director in Charge James E. Dennehy said: “Henry Yau, a supervisory ICE deportation officer, allegedly disclosed confidential law enforcement information of more than two dozen individuals to unauthorized recipients for personal and financial gain.  This alleged abuse of authority to satisfy unwarranted personal favors erodes the public's trust.  The FBI maintains its steadfast commitment to hold accountable all government officials who engage in unscrupulous behavior infringing on the privacy and rights of others.”

According to the allegations in the Complaint unsealed today in Manhattan federal court:[1]

YAU was a Supervisory Deportation Officer with U.S. Immigration and Customs Enforcement (“ICE”), which is a law enforcement agency within the U.S. Department of Homeland Security (“DHS”).  ICE’s stated mission includes protecting the U.S. through criminal investigations and enforcing immigration laws to preserve national security and public safety.  Between in or about 2015 and in or about November 2024, YAU was employed as a Deportation Officer with ICE.  In or around September 2021, YAU was promoted to Supervisory Deportation Officer.  YAU was assigned to the ICE New York Field Office, located in Manhattan.  As an ICE Deportation Officer, YAU was given access to several password-protected law enforcement databases operated by DHS and other law enforcement agencies, including U.S. Customs and Immigration Service (“USCIS”) databases containing the status of immigration-related applications filed by aliens, U.S. Customs and Border Protection (“CBP”) databases containing information about border crossings, criminal history databases containing people’s arrest and conviction records, and ICE databases containing records relating to arrests and removals of aliens from the U.S.

From at least in or about 2017 through at least in or about 2023, YAU participated in schemes to disseminate confidential government information from law enforcement databases, including multiple databases maintained by ICE, CBP, and USCIS. YAU disseminated this confidential government information to friends and acquaintances for his own personal and financial gain.  In total, YAU improperly disseminated confidential government information relating to approximately 28 individuals, at least.  This information came from DHS databases, and YAU disclosed it without any apparent law enforcement purpose to at least approximately 12 non-law enforcement personnel, including, among others: Tommy Lin, a former Director of Constituent Services within the New York City Mayor’s Office[2]; a former candidate for New York City Council and New York State Assembly (“CC-1”); a former target of a fraud investigation being conducted by the FBI in California (“CC-2”); and a former business partner (“CC-3”).

Between in or about 2019 and in or about 2020, YAU agreed to and did disclose confidential information from law enforcement databases about an individual (“Victim-1”) that Lin was seeking to have arrested and deported from the U.S. because Victim-1 had conflict with members of a bank fraud conspiracy in which Lin was involved.  YAU shared with Lin a copy of a Field Operations Worksheet containing personal identifying information about Victim-1.  YAU then arrested Victim-1 and sent Lin photographs of Victim-1, handcuffed, following the arrest.  In connection with this scheme, Lin earned approximately $20,000 in cash.

Between in or about 2019 and in or about 2021, YAU agreed to and did disclose confidential information from immigration databases to CC-1 on multiple occasions, including information about the status of USCIS’s investigation of the permanent resident application of a particular individual (“Victim-2”) and the immigration status of another individual (“Victim-3”).

Between in or about 2018 and in or about 2020, YAU agreed to and did disclose confidential information from law enforcement databases to CC-2 on multiple occasions, including information about whether CC-2 would be potentially arrested by law enforcement at the border when entering or leaving the U.S. In or about January 2020, YAU disclosed to CC-2 that CC-2 was being investigated by law enforcement agents in California.

Between in or about 2019 and in or about 2021, YAU agreed to and did disclose confidential information from law enforcement databases to CC-3 on multiple occasions, including information about the immigration status of an individual (“Victim-3”), who YAU offered to arrest for CC-3.  YAU also disclosed to CC-3 non-public information from law enforcement databases regarding the immigration status of another individual (“Victim-4”) and information about the border crossings of another individual (“Victim-5”) into and out of the U.S.

*                *                *

YAU, 41, of New York, New York, is charged with one count of identity theft conspiracy, which carries a maximum sentence of 15 years in prison; four counts of conspiracy to convert government records and property and disclose agency records containing individually identifiable information, each of which carries a maximum sentence of one year in prison; one count of conversion of government records and property, which carries a maximum sentence of one year in prison; and one count of disclosure of agency records containing individually identifiable information, which carries a maximum sentence of one year in prison.

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the investigative work of the FBI. Mr. Williams also thanked the DHS Office of Inspector General and the New York City Department of Investigation for their assistance in the investigation of this case.  

This case is being handled by the Office’s Violent & Organized Crime Unit. Assistant U.S. Attorneys Andrew K. Chan, James Ligtenberg, and Ni Qian are in charge of the prosecution. 

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

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.

[2] As of the date of this Complaint, Lin is charged in United States v. Tommy Lin et al., S7 23 Cr. 572 (CM), with participating in a bank fraud conspiracy, in violation of 18 U.S.C. § 1349, and aggravated identity theft, in violation of 18 U.S.C. §§ 1028A and 2. 

Damian Williams, the United States Attorney for the Southern District of New York, announced that DARIUS A. PADUCH, a former urologist at two prominent medical institutions in the New York-area, was sentenced today to life in prison by Judge Ronnie Abrams for his yearslong sexual abuse of patients, some of whom were minors.  On May 8, 2024, PADUCH was convicted, following a two-week trial, of six counts of inducing a person to travel to engage in unlawful sexual activity and five counts of inducing a minor to engage in unlawful sexual activity. 

U.S. Attorney Damian Williams said: “Darius Paduch was a sexual predator who preyed on patients seeking treatment for sensitive medical issues. He used his position as a renowned urologist at prestigious hospitals to sexually assault vulnerable patients, including children, to gratify his own sexual desires.  Paduch’s abuse was perverse and pervasive, spanning over a decade and victimizing patients both inside and outside of hospital rooms.  He repeatedly violated his oath to ‘Do No Harm.’  Today’s sentence demonstrates that medical providers who exploit their position of trust to commit sexual abuse will be held accountable for their conduct.” 

According to the Superseding Indictment and evidence at trial:

From at least in or about 2007 through at least in or about 2019, PADUCH, while working as a urologist, enticed and induced multiple victims to travel to his medical offices at a prominent hospital in Manhattan (“Medical Institution-1”), so PADUCH could, among other things, sexually abuse the victims.  PADUCH also induced certain victims to travel to New Jersey where he abused and assaulted the victims under the guise of medical care.  In or about 2019, PADUCH began practicing at a different hospital located in Long Island, New York (“Medical Institution-2”), where he continued to sexually abuse patients.  During medical appointments, PADUCH would: masturbate his patients, sometimes without wearing gloves, and sometimes to the point of the patients ejaculating on him; direct his patients to masturbate while he watched; insert his finger inside the rectums of patients, including while masturbating them; and press his own erect penis against patients’ bodies.  PADUCH invited at least one victim to his boat, where PADUCH provided the patient with sedatives and masturbated the patient; PADUCH also exposed his own genitals to this patient.  PADUCH used his position at prominent medical institutions in New York to make or attempt to make the victims believe that the sexual abuse he inflicted on them was medically necessary and appropriate, when, in fact, it was not.  PADUCH often directed the victims to schedule follow-up visits, and he instructed victims to return to see him again.  PADUCH also invited at least two patients, who were minors, to serve as high school interns.  As a result of PADUCH’s actions, some victims attended many appointments with PADUCH over the course of multiple years, at which PADUCH repeatedly abused them. At trial, 11 victims testified about being sexually abused by PADUCH, and dozens more provided impact statements with the Court in connection with sentencing.

*                *                *

In addition to the prison term, PADUCH, 57, of North Bergen, New Jersey, was ordered to pay restitution in an amount to be determined at a later date. 

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.

The prosecution is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Marguerite B. Colson, Elizabeth A. Espinosa, Ni Qian, and Jun Xiang are in charge of the prosecution. 

Damian Williams, the United States Attorney for the Southern District of New York, announced the conviction in Manhattan federal court of WILSON DANIEL FREITA DA COSTA of one count of wire fraud and two counts of aggravated identity theft for his role in a scheme to use forged documents on Angolan Government letterhead to deceive a subdivision of the GE Company and the Angolan Government.  The jury convicted DA COSTA yesterday following a two-week trial before U.S. District Judge P. Kevin Castel.

U.S. Attorney Damian Williams said: “As a unanimous jury of his peers has found, Wilson Da Costa brazenly used forged documents to deceive a subdivision of the GE Company and the Angolan Government, causing hundreds of millions of dollars to be disbursed.  The scheme further committed the Angolan Government to purchase expensive equipment that it had not agreed to purchase – all so that Da Costa could receive millions of dollars for himself on the back end.  Thanks to the hard work of the career prosecutors of this Office and our law enforcement partners at HSI, Da Costa has now been held to account for his fraudulent conduct.”

As reflected in the Superseding Indictment, public filings, and the evidence presented at trial:

In or about October 2017, DA COSTA, the former Chief Executive Officer of GE Angola, disseminated fake documentation on Angolan Government letterhead, purportedly signed by officials from the Angolan Government and purportedly showing the Angolan Government’s commitment to purchase more GE-manufactured turbines than the Angolan Government had actually agreed to purchase.  These forged documents were then used to justify and support payouts from a $1.1 billion loan from a subdivision of the GE Company to the Angolan Government.  Subsequently, when questions arose about the number of turbines the Angolan Government had actually purchased, DA COSTA lied and continued to rely on the same forged documents that he had previously disseminated. For his efforts, DA COSTA received millions of dollars in kickback payments from the founder of a local Angolan company that had contracts to supply the Angolan Government with the GE-manufactured turbines.

*                *                *

DA COSTA, 51, a naturalized U.S. citizen, was convicted by a jury of one count of wire fraud, which carries a maximum sentence of 20 years in prison, and two counts of aggravated identity theft, each of which carries a mandatory minimum sentence of two years in prison to run consecutively to any other prison terms imposed.

The statutory minimum and maximum penalties in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.  DA COSTA is scheduled to be sentenced by Judge Castel on February 26, 2025.

Mr. Williams praised the outstanding investigative work of Homeland Security Investigations.

This case is being handled by the Office’s Illicit Finance & Money Laundering Unit.  Assistant U.S. Attorneys Jennifer N. Ong, Christopher D. Brumwell, and Samuel P. Rothschild are in charge of the prosecution, with assistance from Paralegal Specialists Angelica Cotto and Nerlande Pierre. 

John Chen, 71, of the People’s Republic of China (PRC) and Los Angeles, was sentenced today to 20 months in prison for acting as unregistered agents of the PRC and bribing an IRS agent in connection with a plot to target U.S.-based practitioners of Falun Gong — a spiritual practice banned in the PRC.

According to court documents, from at least approximately January 2023 to May 2023, Chen and co-defendant Lin Feng, 44, a PRC citizen and resident of Los Angeles, California, worked inside the United States at the direction of the PRC government, including an identified PRC government official PRC Official-1, to further the PRC government’s campaign to repress and harass Falun Gong practitioners. The PRC government has designated the Falun Gong as one of the “Five Poisons,” or one of the top five threats to its rule. In China, Falun Gong adherents face a range of repressive and punitive measures from the PRC government, including imprisonment.

As part of the PRC's campaign against the Falun Gong, Chen and Feng engaged in a PRC government-directed scheme to manipulate the IRS’ Whistleblower Program in an effort to strip the tax-exempt status of an entity run and maintained by Falun Gong practitioners, the Shen Yun Performing Arts Center. After Chen filed a defective whistleblower complaint with the IRS (the Chen Whistleblower Complaint), Chen and Feng paid $5,000 in cash bribes and promised to pay substantially more to a purported IRS agent (Agent-1) who was, in fact, an undercover officer, in exchange for Agent-1’s assistance in advancing the complaint. Neither Chen nor Feng notified the Attorney General that they were acting as agents of the PRC in the United States.

In the course of the scheme, Chen, on a recorded call, explicitly noted that the purpose of paying these bribes, which were directed and funded by the PRC, was to carry out the PRC government’s aim of “toppl[ing] . . . the Falun Gong.” During a call intercepted pursuant to a judicially authorized wiretap, Chen and Feng discussed receiving “direction” on the bribery scheme from PRC Official-1, deleting instructions received from PRC Official-1 in order to evade detection, and “alert[ing]” and “sound[ing] the alarm” to PRC Official-1 if Chen and Feng’s meetings to bribe Agent-1 did not go as planned. Chen and Feng also discussed that PRC Official-1 was the PRC government official “in charge” of the bribery scheme targeting the Falun Gong.

As part of this scheme, Chen and Feng met with Agent-1 in Newburgh, New York, on May 14, 2023. During the meeting, Chen gave Agent-1 a $1,000 cash bribe as an initial, partial bribe payment. Chen further offered to pay Agent-1 a total of $50,000 for opening an audit on the Shen Yun Performing Arts Center, as well as 60% of any whistleblower award from the IRS if the Chen Whistleblower Complaint were successful. On May 18, 2023, Feng paid Agent-1 a $4,000 cash bribe at John F. Kennedy International Airport as an additional partial bribe payment in furtherance of the scheme.

Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division, U.S. Attorney Damian Williams for the Southern District of New York, and Executive Assistant Director Robert R. Wells of the FBI’s National Security Branch made the announcement.

In addition to the prison term, Chen was sentenced to three years of supervised release and ordered to forfeit $50,000. Feng was sentenced on Sept. 26, to a time-served sentence of 16 months in prison.

The FBI and Office of the Treasury Inspector General for Tax Administration investigated the case.

Assistant U.S. Attorneys Qais Ghafary, Michael D. Lockard, and Kathryn Wheelock for the Southern District of New York and Trial Attorney Christina Clark of the National Security Division’s Counterintelligence and Export Control Section prosecuted the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced that JOHN CHEN was sentenced today to 20 months in prison for acting as an unregistered agent of the government of the People’s Republic of China (“PRC”) and bribing an Internal Revenue Service (“IRS”) agent in connection with a plot to target U.S.-based practitioners of Falun Gong — a spiritual practice banned in the PRC.  CHEN pled guilty on July 24, 2024, before U.S. Magistrate Judge Andrew E. Krause and was sentenced today by U.S. District Judge Nelson S. Román. 

U.S. Attorney Damian Williams said: “John Chen aligned himself with the PRC government and its goals to harass and intimidate the Falun Gong, a long-standing target of PRC repression.  In doing so, Chen boldly attempted to bribe an individual he believed to be an IRS agent to corrupt the administration of the U.S. tax code and pervert the IRS whistleblower program.  This Office will not tolerate efforts like this to repress free speech by targeting critics of the PRC in the United States.  Today’s sentence is a reminder that the U.S. justice system will hold accountable those who attempt to engage in malicious transnational repression on American soil.”

According to the Indictment and other court documents:

From at least approximately January 2023 to May 2023, CHEN and his co-defendant, Lin Feng (“FENG”) worked inside the U.S. at the direction of the PRC Government, including an identified PRC Government official (“PRC Official-1”), to further the PRC Government’s campaign to repress and harass Falun Gong practitioners.  The PRC Government has designated the Falun Gong as one of the “Five Poisons,” or one of the top five threats to its rule.  In China, Falun Gong adherents face a range of repressive and punitive measures from the PRC Government, including imprisonment.

As part of the PRC Government’s campaign against the Falun Gong, CHEN and FENG engaged in a PRC Government-directed scheme to manipulate the IRS’s Whistleblower Program in an effort to strip the tax-exempt status of an entity run and maintained by Falun Gong practitioners, the Shen Yun Performing Arts Center.  After CHEN filed a defective whistleblower complaint with the IRS (the “Chen Whistleblower Complaint”), CHEN and FENG paid $5,000 in cash bribes, and promised to pay substantially more, to a purported IRS agent who was, in fact, an undercover officer (“Agent-1”) in exchange for Agent-1’s assistance in advancing the complaint.  Neither CHEN nor FENG notified the Attorney General that they were acting as agents of the PRC Government in the U.S.

In the course of the scheme, CHEN, on a recorded call, explicitly noted that the purpose of paying these bribes, which were directed and funded by the PRC Government, was to carry out the PRC Government’s aim of “toppl[ing] . . . the Falun Gong.” During a call intercepted pursuant to a judicially authorized wiretap, CHEN and FENG discussed receiving “direction” on the bribery scheme from PRC Official-1, deleting instructions received from PRC Official-1 in order to evade detection, and “alert[ing]” and “sound[ing] the alarm” to PRC Official-1 if CHEN and FENG’s meetings to bribe Agent-1 did not go as planned.  CHEN and FENG also discussed that PRC Official-1 was the PRC Government official “in charge” of the bribery scheme targeting the Falun Gong.

As part of this scheme, CHEN and FENG met with Agent-1 in Newburgh, New York, on May 14, 2023. During the meeting, CHEN gave Agent-1 a $1,000 cash bribe as an initial, partial bribe payment.  CHEN further offered to pay Agent-1 a total of $50,000 for opening an audit on the Shen Yun Performing Arts Center, as well as 60% of any whistleblower award from the IRS if the Chen Whistleblower Complaint were successful. On May 18, 2023, FENG paid Agent-1 a $4,000 cash bribe at John F. Kennedy International Airport as an additional partial bribe payment in furtherance of the scheme.

*                *                *

In addition to the prison term, CHEN, 71, of Chino, California, was sentenced to three years of supervised release and ordered to forfeit $50,000.

FENG, 44, a PRC citizen and resident of Los Angeles, California, was sentenced by Judge Román on September 26, 2024, to a time-served sentence of 16 months in prison.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation’s New York and Los Angeles Field Offices and Counterintelligence Division and the Office of the U.S. Treasury Inspector General for Tax Administration.  Mr. Williams also thanked the Department of Justice’s National Security Division, Counterintelligence and Export Control Section for their assistance.

The case is being handled by the Office’s White Plains Division and National Security and International Narcotics Unit.  Assistant U.S. Attorneys Qais Ghafary, Michael D. Lockard, and Kathryn Wheelock are in charge of the case, with assistance from Trial Attorney Christina Clark of the Counterintelligence and Export Control Section. 

Damian Williams, the United States Attorney for the Southern District of New York, and James E. Dennehy, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging JOANNA SMITH-GRIFFIN with securities fraud, wire fraud, and aggravated identity theft in connection with defrauding investors in AllHere Education, Inc., the startup artificial intelligence education technology company she founded, out of millions of dollars.  SMITH-GRIFFIN was arrested earlier today in the Eastern District of North Carolina and will be presented this afternoon before a magistrate judge in that district. The case has been assigned to U.S. District Judge John G. Koeltl.

U.S. Attorney Damian Williams said: “As alleged, Joanna Smith-Griffin orchestrated a deliberate and calculated scheme to deceive investors in AllHere Education, Inc., inflating the company’s financials to secure millions of dollars under false pretenses.  The law does not turn a blind eye to those who allegedly distort financial realities for personal gain.”

FBI Assistant Director in Charge James E. Dennehy said: “Joanna Smith-Griffin allegedly misrepresented the composition of her startup company to defraud investors of millions and masqueraded as a financial consultant to perpetuate the scheme once discrepancies were discovered.  Her alleged actions impacted the potential for improved learning environments across major school districts by selfishly prioritizing personal expenses.  The FBI will ensure that any individual exploiting the promise of educational opportunities for our city’s children will be taught a lesson.”

According to the allegations in the Indictment unsealed today in Manhattan federal court:[1]

From at least in or about November 2020 through at least in or about June 2024, SMITH‑GRIFFIN engaged in a scheme to defraud investors in AllHere Education, Inc. (“AllHere”), an educational technology startup she founded at Harvard that sold artificial intelligence software designed to increase classroom attendance and engagement in K-12 school districts.  Beginning as early as AllHere’s Series A financing round in November 2020 and continuing through the collapse of the company in June 2024, SMITH-GRIFFIN misrepresented AllHere’s revenue, customer base, and cash to her investors.

For example, in the spring of 2021, SMITH-GRIFFIN told potential AllHere investors that AllHere had generated approximately $3.7 million in revenue in 2020, had approximately $2.5 million in cash on hand, and had major school district customers like the New York City Department of Education ("NYC DOE") and Atlanta Public Schools.  In fact, AllHere had generated approximately $11,000 in revenue in 2020, had approximately $494,000 in cash, and did not have contracts with many of the customers it represented, including the NYC DOE and Atlanta Public Schools.

SMITH-GRIFFIN’s misrepresentations continued through AllHere’s collapse, during which time she was able to obtain nearly $10 million from investors and sought an additional $35 million from a private equity investor who ultimately decided not to invest.  She used some of the fraudulently obtained funds to put a down payment on her house in North Carolina and pay for her wedding.  SMITH-GRIFFIN also embezzled corporate funds for her own benefit.  When AllHere’s investors and outside accountant accidentally discovered the discrepancy between AllHere’s actual financials and what SMITH-GRIFFIN was telling investors, SMITH-GRIFFIN tried to cover up her crimes, going so far as to create a fake email account for AllHere’s outside financial consultant, which she used to send additional fraudulent financial documents to her largest investor.

AllHere is now in Chapter 7 bankruptcy, its employees have been laid off, and AllHere is under the control of a court-appointed bankruptcy trustee.

*               *                *

SMITH-GRIFFIN, 33, of Raleigh, North Carolina, is charged with securities fraud, which carries a maximum sentence of 20 years in prison; wire fraud, which carries a maximum sentence of 20 years in prison; and aggravated identity theft, which carries a mandatory sentence of two years in prison.

Mr. Williams praised the outstanding work of the FBI.  

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorney Matthew R. Shahabian is in charge of the prosecution. 

The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty. 

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth in this release constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York; Jonathan Mellone, the Special Agent in Charge of the Northeast Region of the U.S. Department of Labor’s Office of Inspector General (“DOL-OIG”); and Andrew Wroblewski, the Assistant Director of the U.S. Department of State’s Diplomatic Security Service (“DSS”) Domestic Operations, announced the unsealing of a Superseding Indictment charging LE VAN HUNG, a/k/a “Hung Van Le,” a/k/a “Van Hung Le,” with conspiring with the Chief Financial Officer of a multinational media company headquartered in New York City to engage in a transnational scheme to launder at least approximately $67 million of illegally obtained funds to benefit, among others, the media company.  On Friday, HUNG was extradited from South Korea and was presented before U.S. Magistrate Judge Ona T. Wang.  The case has been assigned to U.S. District Judge Marrero. 

U.S. Attorney Damian Williams said: “As alleged, Le Van Hung, while located in a foreign country, conspired with the Chief Financial Officer of a global newspaper and media company, to benefit the media company and its affiliates by laundering tens of millions of dollars in fraudulently obtained unemployment insurance benefits and other crime proceeds.  In furtherance of the scheme, Hung allegedly stole the personal identification of U.S. residents to open and maintain financial accounts in order to launder fraud proceeds.  The charges against and extradition of Hung reflect this Office’s ongoing commitment to enforce the law against those who facilitate money laundering, even if located abroad, together with our foreign partners.”

DOL-OIG Special Agent in Charge Jonathan Mellone said: “An important part of the mission of the Office of Inspector General is to investigate allegations of fraud involving the Department of Labor's unemployment insurance program.  We will continue to work with our law enforcement partners to safeguard benefits intended for unemployed American workers.”

DSS Domestic Operations Assistant Director Andrew Wroblewski said: “Protecting U.S. persons from international fraud schemes and safeguarding U.S. personal information and documentation, including passports, is critical to the Diplomatic Security Service’s mission.  We are firmly committed to partnering with our U.S. and international law enforcement colleagues to stop criminals from conspiring to commit identity fraud and protecting greater U.S. interests.”

According to the allegations contained in the Superseding Indictment:[1]

From at least in or about 2020, through in or about May 2024, HUNG, while working in a foreign office of a multinational media company headquartered in New York, New York (the “Media Company”), conspired with others, including the Chief Financial Officer of the Media Company, to participate in a sprawling, transnational scheme to launder at least approximately $67 million of illegally obtained funds to bank accounts in the names of the Media Company and related entities.  In furtherance of the money laundering conspiracy, HUNG recruited and managed various co-conspirators, including co-conspirators who worked with the Media Company’s “Make Money Online” team.  HUNG also used, possessed, and transferred personal identification information and documents of U.S. residents in order to, among other things, open and maintain financial accounts that were used to launder fraud proceeds. In one particular instance, HUNG directed a co-conspirator to call a bank and falsely claim that the co-conspirator was the account holder of a certain account so that the bank would unlock the account and HUNG could move fraudulent proceeds out of the account.

*               *                *

If you believe you are a victim of identity fraud perpetrated by HUNG, please contact USANYS.LEVANHUNGFRAUD@usdoj.gov, and find more information here: https://www.justice.gov/usao-sdny/united-states-v-le-van-hung. 

HUNG, 29, of Vietnam, is charged with one count of conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison, one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison, one count of aggravated identity theft, which carries a mandatory sentence of two years in prison, and one count of identity theft conspiracy, which carries a maximum sentence of 15 years in prison.

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of DOL-OIG, DSS, and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York.  Mr. Williams also thanked U.S. Customs and Border Protection.  The Justice Department’s Office of International Affairs worked with the International Criminal Division of the Korean Ministry of Justice to secure the arrest and extradition of Hung. 

This prosecution is part of an Organized Crime Drug Enforcement Task Forces (“OCDETF”) operation.  OCDETF identifies, disrupts, and dismantles high-level criminal organizations using a prosecutor-led, intelligence-driven, multi-agency approach.  Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.

The case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Emily Deininger, Rebecca T. Dell, and Jane Kim are in charge of the prosecution.

The charges contained in the Superseding Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

[1] As the introductory phrase signifies, the Superseding Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that MUHAMMAD ASIF HAFEEZ, a/k/a “Sultan,” pled guilty in Manhattan federal court to conspiring to import heroin, methamphetamine, and hashish into the United States.  HAFEEZ was provisionally arrested in London, United Kingdom, on August 25, 2017, and extradited to the U.S. on May 12, 2023. The defendant pled guilty today before U.S. Magistrate Judge Stewart D. Aaron and will be sentenced by U.S. District Judge Victor Marrero.

U.S. Attorney Damian Williams said: “For more than two decades, Muhammad Asif Hafeez played a leading role in a sophisticated international drug trafficking network that was responsible for manufacturing and distributing ton quantities of dangerous narcotics to the U.S. and throughout the world.  Today’s plea ensures that one of the world’s most prolific drug traffickers will be held accountable for his crimes.  I thank our partners at the DEA’s Special Operations Division for their incredible work and dedication to this case, which has taken years to investigate and prosecute, and thank the career prosecutors of this Office who remained dogged in their pursuit of the defendant and his co-conspirators.”

According to the allegations contained in indictments charging HAFEEZ and his co-defendants and other public statements and filings:

From at least in or about 2013 through the date of his provisional arrest in 2017, HAFEEZ conspired with his co-defendants, Baktash Akasha Abdalla, Ibrahim Akasha Abdalla, Gulam Hussein, and Vijaygiri Anandgiri Goswami to import heroin into the U.S.  Baktash Akasha Abdalla was the leader of an organized crime family in Kenya (the “Akasha Organization”), which was responsible for the production and distribution of ton quantities of narcotics within Kenya and throughout Africa and maintained a network used to distribute narcotics for importation into the U.S.  For years, HAFEEZ served as one of the primary suppliers of narcotics to the Akasha Organization, including to Bakash Akasha Abdalla’s father, who helmed the Akasha Organization before he was murdered in the Netherlands in 2000.  During this investigation, in October 2014, Ibrahim Akasha Abdalla delivered a one-kilogram heroin sample, on behalf of HAFEEZ and the Akasha Organization, to confidential sources acting at the direction of the Drug Enforcement Administration (“DEA”) in Nairobi, and, in early November 2014, Ibrahim Akasha Abdalla delivered 98 additional kilograms of heroin to the confidential sources. These samples were just a small portion of the narcotics that HAFEEZ distributed with the Akasha Organization; indeed, during this investigation, Baktash Akasha Abdalla boasted in a recorded meeting that HAFEEZ had distributed “tons” of narcotics with his father and the Akasha Organization.  Baktash Akasha, Ibrahim Akasha, and Goswami were provisionally arrested by Kenyan authorities in November 2014 and extradited to the U.S. in 2017.

Further, from at least in or about 1993 through the date of his provisional arrest in 2017, HAFEEZ also conspired to import hashish and methamphetamine into the U.S.  In connection with this conspiracy, HAFEEZ and co-conspirators transported multi-ton shipments of hashish to Europe and North America.  Between 2013 and 2016, HAFEEZ and certain co-conspirators also sought to establish a methamphetamine-production facility in Mozambique, which was intended to produce methamphetamine for sale in the U.S., Europe, and Australia.  HAFEEZ and his co-conspirators abandoned their plan after law enforcement authorities seized approximately 18 tons of ephedrine from a factory in Solapur, India, including several tons of ephedrine that HAFEEZ and his co-conspirators planned to use as a precursor chemical to manufacture methamphetamine in Mozambique.

*                *                *

HAFEEZ, 66, a Pakistani national residing in, among other places, London, pled guilty to conspiring to manufacture and distribute heroin for importation into the U.S. and conspiring to manufacture and distribute methamphetamine and hashish for importation into the U.S.  Each of these offenses carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison.

The maximum and minimum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Baktash Akasha Abdallah, 47, and Ibrahim Akasha Abdallah, 36, previously pled guilty to conspiring to import and importing heroin and methamphetamine into the U.S., conspiring to use and carry machineguns and destructive devices in connection with their drug-trafficking crimes, and obstructing justice by paying bribes to Kenyan officials in an effort to avoid being extradited to the U.S.  Baktash Akasha Abdallah was sentenced on August 16, 2018, to 25 years in prison, and Ibrahim Akasha Abdallah was sentenced on January 10, 2020, to 23 years in prison.

Mr. Williams praised the outstanding efforts of the Special Operations Division of the DEA, Bilateral Investigations Unit.  Mr. Williams also thanked the United Kingdom authorities, the DEA Dubai Country Office, the DEA Nairobi Country Office, the DEA Pretoria Country Office, the DEA New Delhi Country Office, and the U.S. Department of Justice’s Office of International Affairs and London Attaché. 

This prosecution is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Jane Chong and Michael D. Lockard are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that FRANK BUTSELAAR pled guilty on Thursday, November 14, 2024, to one count of aiding or assisting in the filing of a false or fraudulent tax return.  BUTSELAAR pled guilty before U.S. District Judge Cathy Seibel, to whom his case is assigned.

U.S. Attorney Damian Williams said: “Today’s guilty plea, which comes after a rigorous investigation, demonstrates that this Office will stop at nothing to ensure that tax professionals who decide to cheat and lie are held to account for their misconduct.” 

As alleged by the Government, and based on the testimony and exhibits received at trial, filings in Court, and statements made in Court:

BUTSELAAR advised the creation of offshore structures for multiple ultra-high-net worth individuals who earned money all over the world and did so while a shareholder in the Amsterdam Office of a major U.S.-based international law firm. 

Those clients included world-famous DJs, including Tijs Verwest, p/k/a “DJ Tiesto,” and Nick van de Wall, p/k/a “DJ Afrojack” (the “DJ Clients”).  Other celebrity clients included fashion models Patricia van der Vliet and Daria Strokous (the “Fashion Model Clients,” and collectively with the DJ Clients, the “Clients”).

BUTSELAAR worked with partners at a U.S.-based management firm to file U.S. tax returns for the Clients (“Management Firm-1”). 

When the Clients were becoming or had become U.S. tax residents, the defendant, and his co-conspirators—partners at Management Firm-1—sought to conceal the Clients’ offshore income through the use of nominee owners of their offshore structures.  As part of the scheme, these nominees were installed to make it appear as though the Clients’ earnings now belonged to someone else, generally a family member who lived outside the U.S.

Despite these paper changes in ownership, BUTSELAAR and his co-conspirators at Management Firm-1 never told the Clients anything of substance had changed. The Clients—with the knowledge of BUTSELAAR and his co-conspirators at Management Firm-1—continued to operate their offshore entities as their own and believed they had access to and could direct the money they were accumulating offshore.  

Between 2012 and 2017, when Verwest was a U.S. Resident taxpayer, BUTSELAAR and Management Firm-1 omitted from Verwest’s taxes substantial sums held offshore. Similarly, in 2013, when van de Wall was a U.S. Resident taxpayer, BUTSELAAR and Management Firm-1 omitted from van de Wall’s taxes substantial sums held offshore.  The amount of unreported income for these two taxpayers exceeded $70 million.  During his allocution, BUTSELAAR admitted that partners at Management Firm-1 knowingly omitted overseas income, which should have been reported, from van de Wall’s 2013 U.S. resident return.     

While the scheme was operating, BUTSELAAR was repeatedly warned that the income being collected offshore for his Clients was reportable.  In fact, six different professionals—CPAs and tax lawyers in the U.S.—told BUTSELAAR that the offshore income being accumulated outside the U.S. for the Clients was reportable in the U.S.  In the face of these repeated warnings, BUTSELAAR lied and concealed information from these professionals.  Instead, BUTSELAAR worked with his co-conspirators, partners at Management Firm-1, to conceal otherwise reportable income from U.S. authorities. 

*                *                *

BUTSELAAR, 66, of Naarden, Netherlands, pled guilty to one count of aiding or assisting in the filing a fraudulent tax return for the 2013 Tax Year for taxpayer Nick van de Wall, p/k/a “Afrojack,” which carries a maximum sentence of three years in prison.

The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing will be determined by a judge. BUTSELAAR is scheduled to be sentenced by Judge Seibel on February 13, 2025.

Mr. Williams praised the outstanding investigative work of the Internal Revenue Service-Criminal Investigation (“IRS-CI”) and the Joint Chiefs of Global Tax Enforcement.  Mr. Williams also thanked the Justice Department’s Office of International Affairs and Italy’s Ministero della Giustizia, Arma dei Carabinieri, Guardia di Finanza, and Interpol-Rome for their assistance.

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Benjamin Klein, Shiva H. Logarajah, and David A. Markewitz are in charge of the prosecution. 

Damian Williams, the United States Attorney for the Southern District of New York, announced that BASHIRU GANIYU was sentenced today by U.S. District Judge Lewis A. Kaplan to 13 years in prison for his role in a criminal enterprise that defrauded individuals and businesses across the U.S. of millions of dollars.  In April 2024, GANIYU was convicted following a jury trial of conspiracy to commit mail fraud and wire fraud, conspiracy to commit money laundering, conspiracy to receive stolen money, and receipt of stolen money.

U.S. Attorney Damian Williams said: “The defendant participated in a criminal enterprise that preyed on elderly people and other unsuspecting victims, deceiving them into sending millions of dollars in romance scams and other schemes.  The defendant’s conduct devastated victims around the country, including many who were looking for companionship.  Today’s sentence holds the defendant accountable for his conduct.”     

As reflected in the Indictment, court filings, and the evidence presented at trial:

From in or about 2020 through in or about 2022, a criminal enterprise (the “Enterprise”) based in Ghana committed a series of romance scams and business email compromises against individuals located across the U.S., including in the Southern District of New York.  The Enterprise conducted the romance scams by using electronic messages sent via email, text messaging, or online dating websites that deluded victims, many of whom were vulnerable older men and women who lived alone, into believing the victim was in a romantic relationship with a fake identity assumed by members of the Enterprise.  Once members of the Enterprise had gained the trust of the victims using the fake identity, they used false pretenses to cause the victims to wire money to bank accounts the victims believed were controlled by their romantic interests, when in fact the bank accounts were controlled by members of the Enterprise like GANIYU.  The Enterprise also used business email compromises to trick individuals and businesses to send funds that the victims believed were being sent to legitimate business counterparties but were actually sent to accounts controlled by members of the Enterprise.

GANIYU received money sent by more than 40 victims of the Enterprise under false pretenses into 10 bank accounts held in the name of his purported business located in the Bronx, New York.  After receiving nearly $12 million in stolen funds, GANIYU laundered these criminal proceeds to other members of the Enterprise or abroad at the direction of his co-conspirators. 

*                      *                      *

In addition to the prison term, GANIYU, 39, of the Bronx, New York, was sentenced to three years of supervised release and ordered to forfeit $11,744,115.07 and pay restitution in the amount of $7,675,785.32. 

Mr. Williams praised the outstanding investigative work of the FBI.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Danielle Kudla and Matthew Weinberg are in charge of the prosecution, with assistance from Paralegal Specialist Lucy Gavin.

“As evidence has shown during the trial of Alvin Eusebio, the 174th Street Crew was a large-scale narcotics organization, principally operating in Washington Heights.  Earlier today, Eusebio was convicted in connection to this crew that operated an organized and sophisticated operation, staffing managers to ensure 24/7 coverage, and even disciplining members who missed work or demanding proof of illness (such as a doctor’s note or picture of a positive COVID-19 test).  All to pump narcotics onto our streets, including deadly fentanyl. Eusebio’s federal conviction is indicative of the consequences facing those who peddle massive amounts of illegal narcotics on New York’s streets.”