Southern District of New York

Damian Williams, the United States Attorney for the Southern District of New York, announced today that EDDY ALEXANDRE was sentenced by U.S. District Judge John P. Cronan to nine years in prison for engaging in commodities fraud.  ALEXANDRE was the leader of a purported cryptocurrency and foreign exchange (“forex”) trading platform called EminiFX, and he defrauded over 25,000 investors in the EminiFX trading platform of more than $248 million.

U.S. Attorney Damian Williams said: “Eddy Alexandre defrauded tens of thousands of ordinary investors of almost a quarter-billion dollars in his cryptocurrency investment scam.  Alexandre’s fraud was brazen and included fabricating weekly investment returns of at least 5% out of thin air and falsely claiming to use artificial intelligence trading technology that did not even exist.  Most egregiously, Alexandre recruited many of his investors by exploiting his position of trust within his church and the Haitian community, even going so far as to enlist members of the church to help recruit EminiFX investors.  As today’s sentence demonstrates, cryptocurrency executives who lie and cheat their customers will be held to account for their crimes.”

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

From in or about September 2021, up to and including in or about May 2022, ALEXANDRE operated EminiFX, Inc. (“EminiFX”), a purported investment platform that ALEXANDRE founded, and for which he solicited more than $248 million in investments from over 25,000 individual investors.  ALEXANDRE marketed EminiFX as an investment platform through which investors would earn passive income through automated investments in cryptocurrency and forex trading.  ALEXANDRE offered his investors “guaranteed” high investment returns using new technology that he claimed was secret.  Specifically, ALEXANDRE falsely represented to investors that they would double their money within five months of investing by earning at least 5% weekly returns on their investment using a “Robo-Advisor Assisted account” to conduct trading.  ALEXANDRE referred to this technology as his “trade secret” and refused to tell investors what the technology was.  Each week, EminiFX’s website falsely represented to investors that they had earned at least 5% on their investment, which they could withdraw or re-invest.

In truth and in fact, and as ALEXANDRE well knew, EminiFX did not earn 5% weekly returns for its investors.  ALEXANDRE did not even invest a substantial portion of the investor funds entrusted to him, and ALEXANDRE sustained millions of dollars in losses on the limited portion of funds that he did invest, which he did not disclose to his investors.  Instead of using investors’ funds as he had promised, ALEXANDRE also misdirected at least approximately $14,700,000 to his personal bank account.  For example, ALEXANDRE used $155,000 in investor funds to purchase a BMW car for himself and spent an additional $13,000 of investor funds on car payments, including to Mercedes Benz.

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In addition to his prison term, ALEXANDRE, 51, of Valley Stream, New York, was sentenced to three years of supervised release and ordered to pay forfeiture in the amount of $248,829,276.73 and restitution in the amount of $213,639,133.53. 

Mr. Williams praised the investigative work of the Federal Bureau of Investigation and also thanked the Commodity Futures Trading Commission, which brought a separate civil action.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Nicholas Folly and Jared Lenow are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced his Office’s intention to seek the appointment of a receiver to address the ongoing risk of harm to both incarcerated individuals and Department of Correction (“DOC”) Staff.

U.S. Attorney Damian Williams said: “Rikers Island has been in crisis for years.  This is a collective failure with deep roots, spanning multiple mayoral administrations and DOC commissioners.  But after eight years of trying every tool in the toolkit, we cannot wait any longer for substantial progress to materialize.  That is why my Office will seek a court-appointed receiver to address the conditions on Rikers Island.”

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In 2015, the United States entered into a consent decree with the City of New York and the DOC to address violations of the constitutional rights of incarcerated individuals at Rikers Island (the “Consent Decree”).  The Consent Decree required DOC to develop and implement a wide range of reforms to reduce the level of violence in the jails and ensure the safety and well-being of people in custody as well as corrections officers.  Over the past eight years, this Office has worked diligently with the Monitor appointed pursuant to the Consent Decree and all parties to address the ongoing unsafe conditions on Rikers Island.  After multiple remedial orders and an Action Plan that has been in place for over a year, on July 10, 2023, the Monitor found that despite some progress in certain areas, DOC has not made “substantial and demonstrable progress in implementing the reforms, initiatives, plans, systems, and practices as outlined in the Action Plan” and “there has not been a substantial reduction in the risk of harm currently facing incarcerated individuals and Department staff.”  In light of these findings, this Office has decided to pursue contempt proceedings and seek additional relief from the Court, including the appointment of a receiver, to address the ongoing risk of harm to both incarcerated individuals and DOC staff.  If appointed, the receiver would report to the Court and have independent authority to take necessary steps to comply with core provisions of the Consent Decree and other Court-ordered relief. 

“Last night, my Office, the Southern District of New York, authorized the arrest of Sophia Marks in connection with her distribution of fake oxycodone pills that contained fentanyl.  At least one of Marks’s counterfeit pills was purchased and taken by a teenager who subsequently died of a suspected overdose.  The arrest was critical because, as we allege, Marks knew the pills could kill, and she continued selling them anyway.  The investigation is ongoing.

Fentanyl is now the number one killer of Americans between the ages of 18 and 49.  More than cancer, car accidents, or gun violence.  It is a law enforcement crisis and a public health crisis.  And we are doing everything we can to stop it.” 

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SOPHIA MARKS, 20, of New York, New York, is charged with one count of distributing and possessing with intent to distribute fentanyl and alprazolam, which carries a maximum sentence of 20 years in prison, and two counts of distributing and possessing with intent to distribute fentanyl, each of which also carry 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.

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

U.S. v. Marks Complaint

Damian Williams, the United States Attorney for the Southern District of New York, and Thomas Fattorusso, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced the indictment of FRANK BUTSELAAR for participating in a conspiracy to engage in tax fraud over the course of over seven years.  BUTSELAAR was an advisor to high-net-worth DJs and fashion industry clients who earned income all over the world (the “Clients”).  The Clients earned millions of dollars every year.  In certain years, these Clients became U.S. tax residents, meaning they had a legal obligation to pay U.S. taxes on their worldwide income.  BUTSELAAR, working with other professionals, devised a strategy to unlawfully conceal from the U.S. Government millions of dollars of income the Clients were earning outside the United States during years they were U.S. tax residents.  After having been arrested earlier this year following a request from the United States to Italy for provisional arrest for purposes of extradition, BUTSELAAR was taken back into custody earlier this week in Italy following a favorable ruling on the U.S. extradition request. 

U.S. Attorney Damian Williams said: “As alleged, this defendant and his co-conspirators devised strategies to file false and fraudulent returns with the IRS for U.S. taxpayers of incredible means.  Butselaar, as a tax advisor to many wealthy clients, knew intimately the responsibility his clients had to pay U.S. taxes on their income but ignored this obligation, opting instead to deceptively hide this income from the IRS.  Our Office will continue to pursue those who use their expertise to unlawfully conceal income.”  

IRS-CI Special Agent in Charge Thomas Fattorusso said: “Butselaar thought he was above the law.  It’s alleged he operated this international fraud scheme to conceal millions of dollars in income earned by his high-profile clients around the world.  This wasn’t just a get rich quick scheme, but rather Butselaar sought to play the long game and used a variety of sophisticated techniques to perpetuate this tax fraud over the course of several years.  IRS-CI has a global reach, and we thank our J5 collaborators for their valuable partnership on this case.  For Butselaar, it’s time to pay the tab.”

As alleged in the Indictment unsealed in White Plains federal court:[1]

FRANK BUTSELAAR conspired to defraud the United States and to conceal from the IRS through fraudulent, deceitful, and dishonest means the existence of millions of dollars of worldwide income generated by various clients, including Client-1 and Client-2, who are internationally renowned DJs (the “DJ Clients”).  The DJ Clients, in particular, utilized offshore entities that at all relevant times BUTSELAAR and his co-conspirators knew the DJ Clients beneficially owned and effectively controlled.  These entities were, in turn, held by trusts that the DJ Clients established on the advice of BUTSELAAR and others (the “Offshore Structures”).  As part of their efforts to conceal the DJ Clients’ worldwide income, BUTSELAAR and his co-conspirators created and implemented a fraudulent scheme to use straw beneficiaries to conceal the income held within the DJ Clients’ Offshore Structures from the IRS. 

In addition, FRANK BUTSELAAR and his co-conspirators devised and implemented similar fraudulent schemes for certain fashion industry clients (the “Fashion Industry Clients”) that involved fraudulent transfers of the Fashion Industry Clients’ overseas companies to family members, knowing that the Fashion Industry Clients would maintain beneficial ownership of the overseas companies and the income therefrom. 

The tax evasion schemes, created and implemented by FRANK BUTSELAAR and his co-conspirators, caused to be filed Forms 1040 for the DJ Clients and the Fashion Industry Clients (during the time those Clients were U.S. tax residents) that fraudulently omitted over $100 million in worldwide income earned by those Clients.  

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BUTSELAAR, 63, of Naarden, Netherlands, was charged with one count of conspiracy to defraud the United States, which carries a maximum penalty of five years in prison, and five counts of aiding and abetting the filing of false tax returns, each of which carries a maximum penalty of three 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 a judge.

Mr. Williams praised the outstanding investigative work of the IRS-CI and the Joint Chiefs of Global Tax Enforcement (“J5”).  Mr. Williams also thanked the Justice Department’s Office of International Affairs and Italy’s Ministero della Giustizia, Arma dei Carabinieri, and Guardia di Finanza for their assistance.

The J5 works together to gather information, share intelligence, and conduct coordinated operations against transnational financial crimes.  The J5 includes the Australian Taxation Office, the Canadian Revenue Agency, the Dutch Fiscal Intelligence and Investigation Service, His Majesty’s Revenue and Customs from the United Kingdom, and the IRS-CI from the U.S.

This case is being handled by the Office’s White Plains Division and Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Shiva H. Logarajah and Nicholas S. Bradley 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.

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[1] As the introductory phrase signifies, 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.

U.S. v. Butselaar Indictment

Damian Williams, the United States Attorney for the Southern District of New York, Edward Caban, the First Deputy Commissioner of the New York City Police Department (“NYPD”), and John DeVito, the Special Agent in Charge of the New York Field Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), announced charges against AUSTIN MORRISHOW and CURTIS WHITE for possessing ammunition after conviction of a felony.  MORRISHOW and WHITE were congregated outside on a busy sidewalk in the Bronx the Friday before the July Fourth holiday weekend when they fired multiple shots at three cars in the Bronx, New York, hitting and seriously injuring a five-year-old child sitting in the backseat of one of the cars.  WHITE was arrested this morning in Hazleton, Pennsylvania, pursuant to a criminal Complaint and was presented earlier today in the Southern District of New York before U.S. Magistrate Judge Ona T. Wang.  MORRISHOW remains at large.   

U.S. Attorney Damian Williams said: “As alleged, the defendants fired two guns — with ammunition that they were not allowed to possess — multiple times at three fleeing cars with innocent passengers inside, including a five-year-old girl, who was shot in the back.  These senseless acts of violence occurred in front of a memorial of someone shot and killed in the area just the day before.  Let this be a message to those who plague our streets with gun violence: We will work tirelessly, swiftly, and unceasingly in coordination with our law enforcement partners to find you, wherever you are and whenever it may be, and we will bring you to justice.”

NYPD First Deputy Commissioner Edward Caban said: “We promised this little girl and her family that we would not rest until the criminals involved in her shooting were identified, located, and held accountable.  True to our word, we vow that the actions of any repeat violent offender who uses an illegal gun on our streets will never be tolerated – there will always be consequences.”

ATF Special Agent in Charge John DeVito said: “Today’s arrest sends a clear message that violent criminals will be met with swift justice for their blatant criminal acts.  Any shootings carried out on the streets of NYC are reprehensible let alone one that caused harm to innocent bystanders and a child.  This callous disregard for life has no place in our communities, and ATF will work hand in hand with all our partners to ensure those responsible are held accountable.” 

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

On June 30, 2023, the victim — a five-year-old girl — was sitting in the backseat of her father’s tan sedan, which was double-parked in front of a residential building in the Bronx near a group of individuals who were gathered outside at a makeshift memorial for an individual who had been shot and killed just the day prior.  The victim’s father, who was sitting in the driver’s seat of the car, was waiting for two friends to arrive to attend a car show in Queens.  The two friends arrived at approximately 7:00 p.m. — one driving a silver sedan and the other driving a red minivan.  A still image from surveillance footage is below with the three cars circled in red and the gathering circled in yellow:

As the driver of the silver sedan pulled next to the victim’s father, the driver of the silver sedan revved his engine.  The victim’s father cautioned his friend not to accelerate the car to avoid the vehicle backfiring and the sound being mistaken for gunshots.  But it was too late.  The silver sedan backfired, causing the group of individuals — including MORRISHOW and WHITE — to scatter. 

MORRISHOW took cover behind a parked vehicle and fired a .40 caliber pistol multiple times at the three cars, which began fleeing from the gunfire.  A still image from surveillance video footage is below with MORRISHOW circled in red:

WHITE ran down the street after the fleeing cars, firing a .380 caliber pistol.  A still image from surveillance video footage is below with WHITE circled in red:

After the victim’s father drove his daughter to safety a couple blocks away, he got out of his car to check on his daughter.  Realizing that she had been shot in his back, he held her in his arms and yelled for somebody to call an ambulance.  The driver of the silver car called 911.  Minutes later, NYPD officers arrived and transported the victim to the hospital.

In the wake of the shooting, the NYPD recovered a .380 caliber firearm from an apartment unit that WHITE entered immediately after the shooting before exiting shortly thereafter.  A photograph of the .380 caliber firearm recovered by the NYPD is below:

The NYPD also recovered seven .40 caliber shell casings from the vicinity of the parked car near where MORRISHOW fired his gun, as well as two .380 caliber shell casings from the street near where WHITE fired his gun.  MORRISHOW was not permitted to possess a firearm or ammunition because of his prior federal conviction for using and carrying a firearm during and in relation to a narcotics conspiracy, and WHITE was not permitted to possess a firearm or ammunition because of his prior state conviction for attempted first-degree assault with intent to cause serious injury with a weapon.

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MORRISHOW, 25, and WHITE, 26, both of the Bronx, New York, are each charged with one count of possession of ammunition after a felony conviction, which carries a maximum sentence of 15 years in prison.      

The maximum potential sentence in this case is prescribed by Congress and is 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 NYPD and the ATF and thanked the U.S. Marshals Service and the Bronx County District Attorney’s Office for their assistance.

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Jerry J. Fang is in charge of the prosecution.

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

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[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.

U.S. v. Morrishow and White Complaint

Alexander Mashinsky, Founder and Former Chief Executive Officer of Celsius, Charged with Defrauding Celsius Customers, and Mashinsky and Roni Cohen-Pavon, Former Celsius Chief Revenue Officer, Charged with Manipulating the Market for Celsius Crypto Token

Celsius Network LLC Accepts Responsibility and Pledges to Continue Cooperating

Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting 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 ALEXANDER MASHINSKY, the founder and former Chief Executive Officer of Celsius Network LLC and their affiliated entities (collectively, “Celsius”), with securities fraud, commodities fraud, and wire fraud for defrauding customers and misleading them about core aspects of the company he founded, including Celsius’s success, profitability, and the nature of the investments Celsius made using customer funds.  MASHINSKY and RONI COHEN-PAVON, Celsius’s former Chief Revenue Officer, are further charged with conspiracy, securities fraud, market manipulation, and wire fraud for illicitly manipulating the price of CEL, Celsius’s proprietary crypto token, all while secretly selling their own CEL tokens at artificially inflated prices.

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.  MASHINSKY was arrested earlier today and will be presented this afternoon before U.S. Magistrate Judge Ona T. Wang.  COHEN-PAVON, an Israeli citizen and resident, is currently abroad.  The case has been assigned to U.S. District Judge John G. Koeltl.

U.S. Attorney Williams also announced today that the United States has entered into a non-prosecution agreement (the “Agreement”) with Celsius pursuant to which Celsius has agreed to accept responsibility for its role in the fraudulent schemes.  In entering into the Agreement, the Office considered the fact that Celsius is in Chapter 11 bankruptcy proceedings and is making efforts to maximize recovery for victims in connection with the bankruptcy, as well as the fact that Celsius dramatically improved its cooperation after the Government brought certain production failures to the attention of the Special Committee of Celsius’s Board of Directors.

U.S. Attorney Damian Williams said: “Exactly one year ago today, Celsius Network, a crypto platform that, at its height, managed approximately $25 billion in customer assets, filed for bankruptcy protection in the Southern District of New York.  Over the course of the past year, we have worked quickly to get to the bottom of what led to Celsius’s collapse and to understand how a platform that advertised itself as the ‘safest place for your crypto’ could have left investors holding billions of dollars in losses.  Today we have the answer.  Today I am announcing the unsealing of an indictment charging Celsius’s founder and CEO, Alex Mashinsky, with orchestrating a scheme to defraud customers of Celsius through a series of false claims about the fundamental safety and security of the Celsius platform, and for participating in a scheme with Celsius’s Chief Revenue Officer, Roni Cohen-Pavon, to inflate the price of Celsius’s proprietary token, CEL.  This case, like the others my Office has recently announced alleging fraud in the crypto economy, may appear complicated.  But the message we send today is quite simple: if you rip off ordinary investors to line your own pockets, we will hold you accountable.  Whether it’s old-school fraud or some new-school crypto scheme, it doesn’t matter one bit.  It’s all fraud to us.  And we’ll be here to catch it.”

FBI Acting Assistant Director in Charge Christie M. Curtis said: “As alleged in the indictment, Mashinsky and Cohen-Pavon knowingly engaged in complex financial schemes – deliberately misrepresenting the company’s business model and criminally manipulating the value of Celsius’s proprietary crypto token CEL – while serving in leadership roles at Celsius.  The FBI will continue to ensure that anyone committing fraud and deceiving the public through the misrepresentations of a business’s financial standing or practice is held accountable.

According to the allegations in the Indictment unsealed today in Manhattan federal court and the stipulated facts in the Agreement:[1]

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 United States 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, COHEN-PAVON, 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, COHEN-PAVON, and their 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 COHEN-PAVON 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, COHEN-PAVON, and other Celsius executives to sell their own CEL holdings for a substantial profit.  MASHINSKY personally reaped approximately $42 million in proceeds from his sales of CEL, and COHEN-PAVON personally reaped at least $3.6 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.

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A chart containing the names, ages, residences, charges, and maximum penalties for the individual defendants is below.  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 outstanding work of the FBI.  Mr. Williams further thanked the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, each of which today filed parallel civil actions against MASHINSKY.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Adam Hobson, Allison Nichols, and Noah Solowiejczyk 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.

Defendant

Age

Residence

Charges

Maximum Potential Sentences

MASHINSKY

57

New York, New York

Securities fraud

(Count One)

Commodities fraud

(Count Two)

Wire fraud

(Count Three)

Conspiracy to commit securities fraud, market manipulation, and wire fraud

(Count Four)

Securities fraud

(Count Five)

Market manipulation

(Count Six)

Wire fraud

(Count Seven)

20 years

 

10 years

 

20 years

 

Five years

 

 

20 years

 

20 years

 

20 years

COHEN-PAVON

36

Israel

Conspiracy to commit securities fraud, market manipulation, and wire fraud

(Count Four)

Securities fraud

(Count Five)

Market manipulation

(Count Six)

Wire fraud

(Count Seven)

Five years

 

 

20 years

 

20 years

 

20 years

 

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[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.

Statement of Facts U.S. Mashinsky and Cohen-Pavon Indictment Celsius Non-Prosecution Agreement

Damian Williams, the United States Attorney for the Southern District of New York, announced today that NAYEEM AHMED CHOWDHURY and DAVID MENDEZ were sentenced by U.S. District Judge John P. Cronan to six years and 27 months in prison, respectively, in connection with using glass bottles with ignitable liquid and lit wicks, commonly known as “Molotov cocktails,” in an attempt to set a car and an apartment building on fire in the Bronx, New York.  CHOWDHURY previously pled guilty to possession of unregistered Molotov cocktails and was sentenced on June 15, 2023.  MENDEZ previously pled guilty to conspiracy to possess unregistered Molotov cocktails and was sentenced today.

According to the allegations contained in the Complaint and court filings:

Just after 2:00 a.m. on June 8, 2022, after circling the block for at least an hour, CHOWDHURY and MENDEZ approached a vehicle that was parked in the front yard of an apartment building in the defendants’ neighborhood in the Bronx, New York.  CHOWDHURY lit a Molotov cocktail and placed it underneath the vehicle as MENDEZ looked on.  The defendants drove off to let the fire burn.  Approximately 30 minutes later, CHOWDHURY and MENDEZ returned to the vehicle.  MENDEZ lit a second Molotov cocktail and placed it under the vehicle as CHOWDHURY looked on.  Approximately 30 minutes after the defendants drove away from the vehicle the second time, the owner of the vehicle observed the fire and, together with other individuals from the neighborhood, threw buckets of water on and around the vehicle to put out the flames.  Photographs of the June 2022 incident are below, with the defendants circled in green and the victims’ buckets of water circled in red:       

Around 7:00 a.m. on July 24, 2022, CHOWDHURY approached another residence in his neighborhood, lit a third Molotov cocktail, and hurled it at the residence.  The Molotov cocktail hit a window and fell onto the front porch, where it burst into flames.  The family that was sleeping inside the residence, including a husband, his pregnant wife, and their toddler, woke up from the loud crash against the window and immediately poured buckets of water onto the Molotov cocktail to put out the flames.  Photographs of CHOWDHURY throwing the third Molotov cocktail at the residence in July 2022 are below:  

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In addition to their prison terms, CHOWDHURY, 36, and MENDEZ, 40, both of the Bronx, New York, were sentenced to three years of supervised release.

Mr. Williams praised the outstanding investigative work of the New York City Fire Department, the New York City Police Department, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives.

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

Damian Williams, the United States Attorney for the Southern District of New York, Frank A. Tarentino III, the Special Agent in Charge of the New York Division of the Drug Enforcement Administration (“DEA”), and Tom Walsh, the Rockland County District Attorney, announced today an Indictment charging JUSTIN TURNICK with distributing fentanyl that resulted in death or serious bodily injury to five victims between February 2020 and April 2022 in Rockland County, New York.  TURNICK was arrested on these charges this morning and will be presented before U.S. Magistrate Judge Victoria Reznik this afternoon.

U.S. Attorney Damian Williams said: “Fentanyl is one of the foremost crises the United States faces today, as the leading cause of death for Americans ages 18 to 49.  The fentanyl epidemic is lethally perpetuated by, among others, dealers like Justin Turnick who allegedly knowingly sell a drug that can be fatal to their customers.  As alleged, Justin Turnick was well aware of the dangers of the poison he peddled as he had witnessed three of his victims overdose before his own eyes, but he continued to distribute the drug anyway.  Turnick’s arrest re-emphasizes our efforts to prosecute and dismantle the entirety of the fentanyl supply chain and to take this poison off the streets of our communities.”    

DEA Special Agent in Charge Frank A. Tarentino III said: “The DEA renamed overdoses to poisonings for one simple reason – drug traffickers are intentionally lacing all drugs with fentanyl, making today’s street drugs more lethal than ever.  Fentanyl is responsible for killing more and more Americans at unprecedented rates.  These six poisonings, including two deaths, allegedly linked to Turnick, underscore the devastation fentanyl traffickers have brought into our homes and exemplify law enforcement’s pursuit to bring those responsible to justice.  I applaud the tireless work by our law enforcement partners, the U.S. Attorney’s Office for the Southern District of New York, and the DEA Westchester Resident Office Task Force.” 

Rockland County District Attorney Tom Walsh said: “Today's indictment is an example of local and federal agencies working together to stem the tide of fatal fentanyl overdose deaths.  My office, working with the New York Field Office of the DEA, is investigating and arresting the fentanyl dealers who are devasting our community.  Fentanyl is killing people from all walks of life, every demographic and every ethnicity.  In 2021, Rockland County reported 70 overdose deaths.  That number is completely unacceptable.  I commend the hard work of the Rockland County District Attorney's Drug Task Force, the DEA, and the prosecutors of the United States Attorney’s Office for the Southern District of New York.”

According to the allegations in the Indictment:[1]

At all times relevant to the Indictment, TURNICK engaged in the regular distribution of narcotics to members of his community in Rockland County, New York, including his friends, partners, and acquaintances.  In particular, TURNICK knowingly distributed, among other narcotics, fentanyl — a deadly and highly potent opioid — in various forms, including fentanyl that had been packaged into pills, pure fentanyl, and fentanyl-laced powder.

TURNICK repeatedly distributed fentanyl despite knowing how dangerous the drug is.  Between approximately February 2020 and April 2022, TURNICK’s fentanyl distribution was responsible for at least six overdoses, four of which TURNICK personally observed.  The victims were between the ages of 19 and 24 at the time of their overdoses.  Two victims died as a result of consuming fentanyl provided by TURNICK. 

*                *                *

JUSTIN TURNICK, 25, of Congers, New York, is charged with two counts of narcotics distribution resulting in the deaths of Victim-1 and Victim-2, and four counts of narcotics distribution resulting in serious bodily injury to Victim-3, Victim-4 (who overdosed twice), and Victim-5.  Each of these counts carries a mandatory minimum sentence of 20 years in prison and a maximum sentence of life 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 defendant will be determined by a judge.

Mr. Williams praised the outstanding work of the DEA’s Westchester Resident Office, the Clarkstown Police Department, and the Rockland County District Attorney’s Office.  He also thanked the Ramapo Police Department, the Westchester County Police Department, the Yonkers Police Department, the Putnam County Sherriff’s Department, the Rockland County Sherriff’s Office, and the Orangetown Police Department for their support and assistance in this matter.  Mr. Williams noted that the investigation is ongoing.

The case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys Ryan W. Allison and Kathryn Wheelock 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.

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[1] As the introductory phrase signifies, 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.

U.S. v. Turnick Indictment

Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a two-count Indictment charging SANDY CARAZAS-PINEZ with enticing a minor victim to engage in illegal sexual activity and production of child pornography.  As alleged in the Indictment, CARAZAS-PINEZ, a former high school teacher in Yonkers, New York, enticed one of her students, who was only 16 years old at the time, to engage in sexual activity with CARAZAS-PINEZ and further induced the same student to participate in live-streamed sexually explicit conduct while on video calls with CARAZAS-PINEZ.  CARAZAS-PINEZ was arrested this morning and will be presented in Manhattan federal court later today before U.S. Magistrate Judge Robert W. Lehrburger.  The case has been assigned to U.S. District Judge John P. Cronan.

U.S. Attorney Damian Williams said: “As alleged, Sandy Carazas-Pinez exploited the trust placed in her as a teacher to sexually abuse a teenage student in her care.  Today’s indictment makes clear that my Office will continue to tirelessly pursue sexual predators of all forms – especially those who are entrusted to care for children – and hold them accountable to the fullest extent under the law.”

FBI Acting Assistant Director in Charge Christie M. Curtis said: “As alleged, Ms. Carazas-Pinez, a former high school teacher, enticed one of her students to engage in sexual activity and live-stream sexually explicit conduct.  Teachers are entrusted to protect children under their supervision, not bring them harm.  As today’s action demonstrates, the FBI remains steadfast in our commitment to bring justice to those who prey upon our youth.”  

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

CARAZAS-PINEZ was a high school teacher at a school for kindergarten through 12th grade students located in Yonkers, New York (“School-1”).  From in or about November 2022 through in or about February 2023, CARAZAS-PINEZ abused her position as a teacher at School-1 by inducing and attempting to induce a student (“Minor Victim-1”) at School-1 into a sexual relationship with CARAZAS-PINEZ.  Minor Victm-1 was 16 years old at the time of the abuse.

CARAZAS-PINEZ singled out Minor Victim-1 for personal attention at School-1.  In addition, CARAZAS-PINEZ induced Minor Victim-1 to engage in sexual activity with her by leading Minor Victim-1 to believe that they were in a romantic relationship. 

CARAZAS-PINEZ used her personal cellphone to call, text, and video call Minor Victim-1 to arrange sexual encounters and to repeatedly induce Minor Victim-1 to engage in live-streamed sexually explicit conduct while on video calls with CARAZAS-PINEZ.  In text messages with Minor Victim-1, CARAZAS-PINEZ referred to her sexual encounters with Minor Victim-1 and the live depictions of sexually explicit conduct she induced Minor Victim-1 to create as “gifts.”

CARAZAS-PINEZ also used her personal cellphone to send Minor Victim-1 sexually suggestive photographs of herself along with sexually explicit text messages.  After sending the photographs and messages, CARAZAS-PINEZ instructed Minor Victim-1 to delete them and inquired repeatedly as to whether Minor Victim-1 had done so.

To facilitate their sexual encounters outside the premises of School-1, CARAZAS-PINEZ directed Minor Vicitim-1 in text messages to obtain day passes from School-1 to be permitted to leave campus.  CARAZAS-PINEZ then met Minor Victim-1 at a location near School-1’s campus and drove Minor Victim-1 to another location.  On multiple occasions, while parked in CARAZAS-PINEZ’s car at various locations, including in or around the Bronx, Yonkers, and Staten Island, New York, CARAZAS-PINEZ engaged in sexual intercourse and other sexual acts, and attempted to do so, with Minor Victim-1. 

*                *                *

CARAZAS-PINEZ, 34, of Bethel, Connecticut, is charged with one count of enticing a minor victim to engage in illegal sexual activity, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison, and one count of production of child pornography, which carries a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison. 

The minimum and 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 a judge.

Mr. Williams praised the efforts of the FBI and the New York City Police Department (“NYPD”) for their outstanding work on this matter, particularly the FBI-NYPD New York Child Exploitation and Human Trafficking Task Force.  Mr. Williams also thanked the Richmond County District Attorney’s Office for their significant assistance and the Westchester County District Attorney’s Office, the Bronx County District Attorney’s Office, and the Yonkers Police Department for their assistance.  He added that the investigation is ongoing.   

Any individuals who believe they have information that may be relevant to this investigation should contact the FBI at 1-800-CALL-FBI or tips.fbi.gov.

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

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[1] As the introductory phrase signifies, 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.

U.S. v. Carazas-Pinez Indictment

Damian Williams, the United States Attorney for the Southern District of New York, and Ivan J. Arvelo, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced today the arrest of EUGENE WILLIAM AUSTIN, JR., a/k/a “Hugh Austin,” for charges in connection with a scheme to steal money from investors and other victims by offering a variety of fraudulent cryptocurrency-related investment services, including sales of multimillion-dollar batches of cryptocurrency, marketing and advertising services, and short-term investments and loans.  EUGENE AUSTIN was arrested on July 5, 2023, and was presented that same day before U.S. Magistrate Judge Jennifer E. Willis.  Mr. Williams also announced the guilty plea of EUGENE AUSTIN’s son, BRANDON P. AUSTIN, who pled guilty on April 13, 2023, before U.S. District Judge P. Kevin Castel to participating in a money laundering conspiracy with his father, EUGENE AUSTIN, relating to his involvement in conducting financial transactions with the intent to conceal proceeds of fraud. 

U.S. Attorney Damian Williams said: “This is the third case we are announcing this week to shed light on fraud in the cryptocurrency and digital asset ecosystem.  As alleged, the father-son duo of Hugh and Brandon Austin engaged in a cryptocurrency fraud and money laundering scheme that victimized both sophisticated and novice cryptocurrency investors alike out of millions of dollars.  They used the money from victims to fund a lavish lifestyle of travel, luxury hotels, and fancy restaurants.  Thanks to the tenacity of HSI and the career prosecutors of this Office, Hugh Austin is now facing serious criminal charges for his alleged crimes, and Brandon Austin has already pled guilty.”

HSI Special Agent in Charge Ivan J. Arvelo said: “The charging of Hugh and Brandon Austin reflects our ongoing commitment to thwarting individuals involved in all types of financial crimes, especially those that affect the digital environment and subsequently impact the security of our economy.  As alleged, these sophisticated scammers exploited the novelty of digital currency to defraud unsuspecting investors out of millions of dollars, while utilizing it as a cover to engage in illicit activity.  HSI commends the prosecutorial team at the Southern District of New York’s Complex Frauds and Cybercrime Unit for their unwavering support.”

According to the allegations in the Complaint, which was unsealed today in Manhattan federal court, as well as publicly filed court documents and statements made at public court proceedings:[1]

EUGENE WILLIAM AUSTIN, JR. participated in a scheme with his son BRANDON P. AUSTIN and others to steal money from investors and other victims by fraudulently offering to, among other things: (i) serve as a broker for sales of large quantities of cryptocurrency at below-market exchange rates; (ii) provide short-term investments in cryptocurrency for purportedly high returns; and (iii) provide marketing and advertising services to small businesses, while knowing that, in fact, EUGENE AUSTIN and BRANDON AUSTIN would not provide the promised cryptocurrency, returns, or services.  EUGENE AUSTIN also frequently sought personal loans from friends and acquaintances in connection with his purported cryptocurrency and investment businesses, falsely promising to pay lenders back with interest.  In each instance, investors and lenders lost their money, and EUGENE AUSTIN and BRANDON AUSTIN frequently spent investors’ funds on personal expenses, including airline travel, luxury hotels, restaurants, and shopping, as well as nominal payments to victims to prolong the scheme.  In total, EUGENE AUSTIN and BRANDON AUSTIN have caused more than $10 million in losses to over 20 victims.  Below are several examples of victims defrauded by AUSTIN and BRANDON:

• In or about February 2018, EUGENE AUSTIN and BRANDON AUSTIN fraudulently induced a Japanese cryptocurrency company to conduct an interstate cryptocurrency transaction for approximately $600,000 worth of cryptocurrency, for the purported purchase of fundraising and marketing services, which were never provided to the victim.

• In or about August 2018, EUGENE AUSTIN and BRANDON AUSTIN fraudulently induced a partner at a California-based investment firm to send an interstate wire transfer of approximately $5 million to a Manhattan-based attorney, for the purported purchase of cryptocurrency, which was never provided to the victim.

• In or about September 2018, EUGENE AUSTIN and BRANDON AUSTIN fraudulently induced a cryptocurrency start-up company to send an interstate wire transfer of approximately $100,000 for a purported cryptocurrency investment opportunity with high returns; instead of using the funds as promised, EUGENE AUSTIN and BRANDON AUSTIN spent the money on gas, restaurants, hotels, flights, and cash withdrawals.

• In or about January 2019, EUGENE AUSTIN and BRANDON AUSTIN fraudulently induced the founder and chairman of a New Jersey- and Hong Kong-based cryptocurrency investment firm to send an interstate wire transfer of approximately $4 million to a Georgia-based attorney for the purported purchase of cryptocurrency, which was never provided to the victim.

• In or about June 2020, EUGENE AUSTIN and BRANDON AUSTIN embezzled approximately $776,000 that had been sent via an interstate wire transfer to the trust account of a New York-based real estate attorney for the purported purchase of cryptocurrency.

• In or about October 2021, EUGENE AUSTIN and BRANDON AUSTIN embezzled approximately $574,000 that had been sent via an interstate wire transfer to the bank account of a Manhattan-based investment firm for the purported purchase of cryptocurrency.

In connection with BRANDON AUSTIN’s guilty plea, he forfeited his rights and interest in a 2022 E-Pace P250 Jaguar, depicted below:

*                *                *

EUGENE WILLIAM AUSTIN, JR., 60, of Port Jefferson, New York, is charged with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit money laundering, which carries a maximum sentence of 10 years in prison; and one count of conspiracy to commit interstate transportation of stolen property, which carries a maximum sentence of five years in prison.

BRANDON P. AUSTIN, 27, of Coram, New York, pled guilty to one count of conspiracy to commit money laundering, which carries a maximum penalty of 20 years in prison.  In connection with the guilty plea, BRANDON AUSTIN also agreed to forfeit $3,406,450 and to make restitution to victims in the amount of $3,406,450.  BRANDON AUSTIN is scheduled to be sentenced on September 6, 2023, at 12:00 p.m., by Judge Castel. 

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

Mr. Williams praised the investigative work of HSI.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Andrew K. Chan, Sarah Lai, and Olga I. Zverovich are in charge of the prosecution.

The charges contained in the Complaint are merely accusations and the defendant, EUGENE WILLIAM AUSTIN, JR., a/k/a “Hugh Austin,” is presumed innocent unless and until proven guilty.

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[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 herein should be treated as an allegation.

U.S. v. Eugene Austin Complaint U.S. v. Brandon Austin Information

Damian Williams, the United States Attorney for the Southern District of New York, announced that yesterday a federal jury found MENDEL ZILBERBERG guilty of five counts — conspiracy to commit bank fraud, bank fraud, conspiracy to make false statements to a bank, making false statements to a bank, and misapplication of bank funds — in connection with a scheme to obtain a fraudulent loan from Park Avenue Bank.  The defendant was found guilty following a one-week trial before U.S. District Judge George B. Daniels.  Sentencing is scheduled for November 29, 2023, before Judge Daniels.

U.S. Attorney Damian Williams said: “Mendel Zilberberg, while working as a practicing lawyer and serving as a director of Park Avenue Bank, ignored his duties and took advantage of the bank, viewing it as the object of his fraud scheme.  Far from helping the bank through a tenuous moment in its existence, Zilberberg was focused on squeezing money out of it for himself, on the basis of lies.  The bank collapsed just months after Zilberberg defrauded it.” 

According to the allegations contained in the Indictment, the evidence offered at trial, and matters included in public filings:

In or about 2009, ZILBERBERG conspired with Aron Fried and others to obtain a fraudulent loan from Park Avenue Bank (the “Bank”).  Knowing that the conspirators would not be able to obtain the loan directly, the conspirators recruited a straw borrower (the “Straw Borrower”) to make the loan application.  The Straw Borrower applied for a $1.4 million loan from the Bank on the basis of numerous lies directed by ZILBERBERG and his coconspirators. 

ZILBERBERG used his privileged position at the bank to ensure that the loan was processed promptly.  Based on the false representations made to the Bank and ZILBERBERG’s involvement in the loan approval process, the Bank issued a $1.4 million loan to the Straw Borrower, which was quickly disbursed to the defendants through multiple bank accounts and transfers.  In total, ZILBERBERG received more than approximately $500,000 of the loan proceeds.  The remainder of the loan was split between Fried and another conspirator.  The Straw Borrower received nothing from the loan.  The loan ultimately defaulted, resulting in a loss of over $1 million.

On November 15, 2022, Fried pled guilty to conspiracy to commit bank fraud.  On April 10, 2023, Judge Daniels sentenced Fried to one year and one day in prison.

*                *                *

ZILBERBERG, 65 of Monsey, New York, was convicted of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison; bank fraud, which carries a maximum sentence of 30 years in prison; conspiracy to make false statements to a bank, which carries a maximum sentence of five years in prison; making false statement to a bank, which carries a maximum sentence of 30 years in prison; and misapplying bank funds, which carries a maximum sentence of 30 years in prison.  The maximum sentence ZILBERBERG faces on all of these charges is 125 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 Federal Bureau of Investigation and the Federal Deposit Insurance Corporation, Office of the Inspector General.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Dina McLeod, Daniel G. Nessim, and Kimberly Ravener, with the assistance of Paralegal Specialist Joseph Carbone, are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that Allianz Global Investors U.S. LLC (“AGI”) was sentenced today by U.S. District Judge Colleen McMahon for a multi-year securities fraud involving a series of private investment funds managed by AGI.  Those funds ultimately collapsed, leading to billions of dollars of investor losses.  AGI previously pled guilty to one count of securities fraud. 

U.S. Attorney Damian Williams said: “Telling the truth to investors is the core duty of an investment adviser.  AGI violated that central tenet and deceived investors by materially understating the risk to which their assets were exposed.  This Office and our law enforcement partners will be relentless in protecting investors, and this sentence should send a message to the industry: companies will be held responsible when they fail to implement safeguards and ensure that they uphold their duties to investors.”

According to court filings and statements made in court proceedings:

From at least in or about 2014 up through and including at least in or about March 2020, AGI, an investment adviser registered with the Securities and Exchange Commission (“SEC”), headquartered in New York City, and an indirect, wholly owned subsidiary of Allianz SE – one of the world’s largest financial services companies and one of the world’s largest insurance companies – engaged in a scheme to defraud investors in multiple private funds within AGI’s “Structured Alpha Funds.”  The Structured Alpha Funds (the “Funds”) were among the most profitable groups of funds AGI managed and, at their height, held over $11 billion in assets under management.  The Funds employed a complex options trading strategy that sought to provide investors with guaranteed returns, while managing risk.  AGI deceived the Funds and their investors by understating the risk to which investors’ assets were exposed, and therefore how the returns they touted were actually generated.

In particular, in order to generate the Funds’ positive returns and attract and retain capital, AGI fraudulently misled investors regarding the risk taken on by the funds.  Among other things, AGI misrepresented the hedging and other risk-mitigation strategies that were undertaken to protect investor funds.  Investors also received documents altered to hide the riskiness of the Funds’ investments.  Instead of managing the Funds as promised to investors, AGI deployed an investment strategy that prioritized returns over risk management in ways that were fundamentally inconsistent with representations made to investors.  As a result of this scheme to defraud, investors’ funds were exposed to higher risk than promised, and investors were deprived of information about the true risks to which their investments were exposed. 

After the market dislocations following the onset of the COVID-19 pandemic (the “COVID Crash”) in March 2020, the Funds lost in excess of $8 billion in market value and $3 billion in principal, faced margin calls and redemption requests, and ultimately were shut down.  More than 100 investors were victims of this scheme, including, among others, pension funds for teachers, religious organizations, bus drivers, engineers, and other individuals, universities, and charitable organizations.

*                *                *

AGI was sentenced to financial penalties comprised of over $463 million in forfeiture, over $3.23 billion in restitution, and over $2.33 billion in fines.  These amounts include restitution to the victims, the forfeiture of proceeds traceable to the fraud, and the forfeiture by AGI’s corporate parent of the dividends that were paid from AGI to its corporate parent that are traceable to the fraud.  AGI has paid these financial penalties in full and has compensated victims of the conduct through settlements in civil litigation filed against AGI in an aggregate amount of over $5 billion.

Mr. Williams praised the outstanding work of the U.S. Postal Inspection Service.  Mr. Williams further thanked the SEC, which is pursuing parallel civil actions.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Nicholas Folly, Margaret Graham, and Allison Nichols are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that ROGER THOMAS CLARK, a/k/a “Plural of Mongoose,” a/k/a “Variety Jones,” a/k/a “VJ,” a/k/a “cimon,” was sentenced to 20 years in prison today for conspiring to distribute massive quantities of narcotics, arising out of his role as the top adviser to Ross Ulbricht, a/k/a “Dread Pirate Roberts,” the owner and operator of the “Silk Road” online illicit black market.  During its operation from 2011 until 2013, Silk Road was used by thousands of drug dealers and other unlawful vendors to distribute illegal drugs and other illicit goods and services to more than 100,000 buyers and to launder hundreds of millions of dollars derived from those unlawful transactions.  CLARK advised Ulbricht on all aspects of the enterprise, including urging and facilitating an attempted murder-for-hire.  CLARK’s sentence was imposed by U.S. District Judge Sidney H. Stein.  CLARK previously pled guilty before the late U.S. District Judge William H. Pauley III on January 30, 2020.

U.S. Attorney Damian Williams said: “Silk Road was a secret online marketplace for illegal drugs, computer hacking services, and a host of other criminal activity.  Roger Thomas Clark was a central figure in helping to lead Silk Road and in advocating violence, even murder, to protect this digital drug empire.  Today’s sentence is another reminder that criminal marketplaces, like Silk Road, are a road to prison.”

According to the allegations in the Superseding Indictment, court filings, statements made in court, and evidence presented during the 2015 trial of Ross Ulbricht, Silk Road’s founder:

Ulbricht created Silk Road in approximately January 2011 and owned and operated the underground website until it was shut down by law enforcement in October 2013.  Silk Road emerged as the most sophisticated and extensive criminal marketplace on the Internet at the time and one of the first online marketplaces to exclusively use cryptocurrency to facilitate illegal transactions.  Silk Road was massive in scope; there were more than 1.5 million transactions on the site, involving more than 115,000 buyer accounts and 3,000 seller accounts.  These transactions had a total value of approximately $213 million, including more than $183 million in drug sales.  The drugs sold on Silk Road included more than 82 kilograms of cocaine and 26 kilograms of heroin.  Silk Road was also used to launder hundreds of millions of dollars deriving from these unlawful transactions.  Silk Road was specifically designed to allow its users to buy and sell drugs and other illegal goods and services anonymously and outside the reach of law enforcement through the use of the Tor network and a Bitcoin-based payment system.

In his journal, Ulbricht described CLARK as a “real mentor” who advised Ulbricht about, among other things, security vulnerabilities in the Silk Road site, technical infrastructure, the rules that governed Silk Road users and vendors, and the promotion of sales on Silk Road, including the sales of narcotics.  CLARK also provided advice to Ulbricht on developing a “cover story” to make it appear as though Ulbricht had sold Silk Road.  In addition, CLARK assisted Ulbricht with hiring a programmer to help improve and maintain the infrastructure of Silk Road.  CLARK also was responsible for gathering information to counter law enforcement’s efforts to investigate Silk Road.  CLARK advised Ulbricht on how to protect the Silk Road criminal empire.  For instance, when a Silk Road staff member was suspected of stealing approximately $350,000 in Bitcoin from the site, CLARK suggested to Ulbricht that Ulbricht commission a murder-for-hire.  Ulbricht took that suggestion.  Although the attempted murder-for-hire did not result in any harm to the intended target, Ulbricht paid the purported hitman $80,000 for the job.

*                *                *

In addition to his prison sentence, CLARK, 61, a citizen of Canada, was sentenced to three years of supervised release and ordered to forfeit $1,606,150.

Mr. Williams praised the outstanding joint efforts of the Federal Bureau of Investigation, the Internal Revenue Service - Criminal Investigation’s New York Field Office, Homeland Security Investigations (“HSI”) Chicago-O’Hare, the Drug Enforcement Administration’s New York Field Division, and the New York City Police Department.  Mr. Williams also thanked the HSI Attaché Bangkok, the Royal Thai Police, and the U.S. Department of Justice’s Office of International Affairs for their support and assistance.

This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Michael D. Neff and Vladislav Vainberg are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, Chad Plantz, the Special Agent in Charge of the San Diego Field Office of Homeland Security Investigations (“HSI”), and Tyler Hatcher, the Special Agent in Charge of the Los Angeles Field Office of the Internal Revenue Service - Criminal Investigation (“IRS-CI”), announced the unsealing of an Indictment charging SHAKEEB AHMED with wire fraud and money laundering in connection with his attack on a decentralized cryptocurrency exchange (the “Crypto Exchange”).  AHMED was arrested this morning in New York, New York, and will be presented this afternoon before U.S. Magistrate Judge Robert W. Lehrburger. 

U.S. Attorney Damian Williams said: “This is the second case we are announcing this week to shed light on fraud in the cryptocurrency and digital asset ecosystem.  As alleged in the indictment, Shakeeb Ahmed, who was a senior security engineer at an international technology company, used his expertise to defraud the exchange and its users and steal approximately $9 million in cryptocurrency.  We also allege that he then laundered the stolen funds through a series of complex transfers on the blockchain where he swapped cryptocurrencies, hopped across different crypto blockchains, and used overseas crypto exchanges.  But none of those actions covered the defendant’s tracks or fooled law enforcement, and they certainly didn’t stop my Office or our law enforcement partners from following the money.” 

HSI Special Agent in Charge Chad Plantz said: “Financial crime strikes at the core of our national and economic banking security.  With an attack of this magnitude, it’s crucial we ensure continued consumer confidence in our financial system.  Ruthless and reckless attempts aimed to sabotage legitimate commerce for greed must be stopped.  It’s cases like these that demonstrate HSI’s commitment and ability to work with a coalition of the willing to dismantle these complicated and technical fraud schemes and identify those responsible regardless of where they operate.”

IRS-CI Special Agent in Charge Tyler Hatcher said: “As alleged, Mr. Ahmed used his skills as a computer security engineer to steal millions of dollars.  He then allegedly tried to hide the stolen funds, but his skills were no match for IRS Criminal Investigation's Cyber Crimes Unit.  We, along with our partners at HSI and the Department of Justice, are at the forefront of cyber investigations and will track these fraudsters anywhere they try to hide and hold them accountable.”

As alleged in the Indictment:[1]

The Crypto Exchange was incorporated overseas and operates on the Solana blockchain.  At all relevant times, the Crypto Exchange allowed users to exchange different kinds of cryptocurrencies and paid fees to users who deposited cryptocurrency to provide liquidity on the Crypto Exchange. 

In July 2022, AHMED carried out an attack on the Crypto Exchange by exploiting a vulnerability in one of the Crypto Exchange’s smart contracts and inserting fake pricing data to fraudulently cause that smart contract to generate approximately $9 million dollars’ worth of inflated fees that AHMED did not legitimately earn, which fees AHMED was able to withdraw from the Crypto Exchange in the form of cryptocurrency.  This conduct defrauded the Crypto Exchange and its users, whose cryptocurrency AHMED had fraudulently obtained.  Additional details regarding the attack, including AHMED’s use of cryptocurrency “flash loans” to further defraud the Crypto Exchange, are described in the Indictment publicly filed today.  

After he stole the fees he never legitimately earned, AHMED had communications with the Crypto Exchange in which he decided to return all of the stolen funds except for $1.5 million if the Crypto Exchange agreed not to refer the attack to law enforcement.  

At the time of the attack, AHMED was a senior security engineer for an international technology company whose resume reflected skills in, among other things, reverse engineering smart contracts and blockchain audits, which are some of the specialized skills AHMED used to execute the attack.  

AHMED laundered the millions in fees that he stole from the Crypto Exchange to conceal their source and ownership, including through (i) conducting token-swap transactions, (ii) “bridging” fraud proceeds from the Solana blockchain over to the Ethereum blockchain, (iii) exchanging fraud proceeds into Monero, an anonymized and particularly difficult cryptocurrency to trace, and (iv) using overseas cryptocurrency exchanges.

After the attack, AHMED searched online for information about the attack, his own criminal liability, criminal defense attorneys with expertise in similar cases, law enforcement’s ability to successfully investigate the attack, and fleeing the United States to avoid criminal charges.  For example, approximately two days after the attack, AHMED conducted an internet search for the term “defi hack,” read several news articles about the hack of the Crypto Exchange, and visited several pages on the Crypto Exchange’s website.  As another example, AHMED conducted internet searches or visited websites related to the charges in the indictment, including by searching for the term “wire fraud” and for the term “evidence laundering.”  Finally, AHMED also conducted internet searches or visited websites related to his ability to flee the United States, avoid extradition, and keep his stolen cryptocurrency: he searched for the terms “can I cross border with crypto,” “how to stop federal government from seizing assets,” and “buying citizenship”; and he visited a website titled “16 Countries Where Your Investments Can Buy Citizenship . . .”

*                *                *

AHMED, 34, of New York, New York, is charged with wire fraud and money laundering, each of which carry 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 a judge.

Mr. Williams praised the outstanding work of HSI and IRS-CI.  Mr. Williams also thanked the U.S. Attorney’s Office for the Southern District of California for their assistance in the investigation.

The case is being prosecuted by the Office’s Money Laundering and Transnational Criminal Enterprises Unit and Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys David R. Felton and Kevin Mead 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 herein constitute only allegations, and every fact described therein should be treated as an allegation.

U.S. v. Ahmed Indictment

Damian Williams, the United States Attorney for the Southern District of New York, Matthew G. Olsen, the Assistant Attorney General for National Security, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an eight-count Indictment charging GAL LUFT with offenses related to willfully failing to register under the Foreign Agents Registration Act (“FARA”), arms trafficking, Iranian sanctions violations, and making false statements to federal agents.  LUFT, a dual U.S.-Israeli citizen, was indicted on November 1, 2022, and arrested on February 17, 2023, in the Republic of Cyprus based on the charges in the Indictment.  LUFT subsequently fled after being released on bail while extradition proceedings were pending and remains a fugitive.

U.S. Attorney Damian Williams said: “As alleged, Gal Luft, a dual U.S.-Israeli citizen and co-head of a Maryland think tank, engaged in multiple, serious criminal schemes.  He subverted foreign agent registration laws in the United States to seek to promote Chinese policies by acting through a former high-ranking U.S. Government official; he acted as a broker in deals for dangerous weapons and Iranian oil; and he told multiple lies about his crimes to law enforcement.  As the charges unsealed today reflect, our Office will continue to work vigorously with our law enforcement partners to detect and hold accountable those who surreptitiously attempt to perpetrate malign foreign influence campaigns here in the United States.”

FBI Acting Assistant Director in Charge Christie M. Curtis said: “As alleged, the defendant engaged in multiple schemes to evade sanctions and laws intended to protect our national security.   The FBI is determined to defend our nation by enforcing laws designed to promote transparency of foreign influence within the United States.”

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

For years, LUFT, a dual U.S.-Israeli citizen who serves as the co-director of a Maryland-based think tank, engaged, along with others, in multiple international criminal schemes. 

First, LUFT conspired with others in an effort to act within the United States to advance the interests of the People’s Republic of China (“China”) as agents of China-based principals, without registering as foreign agents as required under U.S. law.  As part of this scheme, while serving as the co-director of a Maryland-based non-profit think tank, LUFT agreed to covertly recruit and pay, on behalf of principals based in China, a former high-ranking U.S. Government official (“Individual-1”), including in 2016 while the former official was an adviser to the then-President-elect, to publicly support certain policies with respect to China without LUFT or Individual-1 filing a registration statement as an agent of a foreign principal with the Attorney General of the United States, in violation of FARA.  Among other things, in the weeks before the 2016 U.S. presidential election, LUFT and a co-conspirator (“CC-1”), who is a Chinese national and worked for a Chinese nongovernmental organization affiliated with a Chinese energy company, created a written “dialogue” between CC-1 and Individual-1, in which LUFT wrote Individual-1’s responses and included information that was favorable to China.  The dialogue was then published in a Chinese newspaper online and sent to, among others, individuals in the United States, including a journalist and professors at multiple U.S. universities.  When LUFT was writing the dialogue, CC-1 told LUFT that “[i]n these articles, we do not want to spill all the beans yet, just enough to let ‘people’ know he [i.e., Individual-1] is in the corridor of power to be.  Just broad stroke policy consideration that leaves plenty of room for interpretation and imagination to be filled in later.”  After the purported “conversations” were published, LUFT told CC-1 that certain information, favorable to China, had been “tucked between the lines.”  Shortly after the 2016 election, LUFT and CC-1 also discussed possible roles Individual-1 might have in the incoming U.S. administration and discussed Individual-1 taking a “silent trip” to China.  LUFT responded that “[w]e are debating about his role in the new admin.  There are all kinds of considerations . . .We should talk ftf [i.e., face-to-face] as there can be a supremely unique opportunity for china.”

Second, LUFT conspired with others and attempted to broker illicit arms transactions with, among others, certain Chinese individuals and entities.  In his role as a broker or middleman, LUFT worked to find both buyers and sellers of certain weapons and other materials, without a license to do so as required under U.S. law, in violation of the Arms Export Control Act.  Among other things, LUFT worked to broker a deal for Chinese companies to sell certain weapons to Libya, including anti-tank launchers, grenade launchers, and mortar rounds (which LUFT and his associates referred to in coded language as “toys”).  LUFT also worked to broker deals for certain weapons to be sold to the United Arab Emirates, including aerial bombs and rockets.  LUFT further worked to broker deals for certain weapons to be sold by a Chinese company to Kenya, including unmanned aerial vehicles (“UAVs”) – and specifically “strike” UAVs, which LUFT acknowledged “[t]he US doesn’t want to sell[, . . .] hence the opportunity.”  LUFT also discussed brokering a deal for weapons to Qatar and told CC-1 that Israel was “not a good fit” as the middleman for the deal because it had the “[s]ame problem the [] Q [i.e., Qataris] have w uncle [i.e., the United States].  Need a third party.  . . .  I will activate.”  In his role as a broker for illicit arms deals, LUFT worked on a commission basis and traveled to meetings and received and passed on documentation needed to secure the deals.  During a voluntary interview with U.S. law enforcement in which he was asked questions about his involvement in arms trafficking, LUFT made multiple false statements, including that he had not sought to engage in or profit from arms deals.

Third, LUFT conspired with others and attempted to broker deals for Iranian oil – which he directed an associate to refer to as “Brazilian” oil in an effort to conceal the activity and evade sanctions – in violation of U.S. sanctions against Iran and the International Emergency Economic Powers Act.  In his role as a broker or middleman, LUFT solicited buyers and passed on pricing and other information.  One offer letter for Iranian oil that LUFT received noted that the “origin” of the oil was “Iranian / It can be presented as UAE origin without Iranian papers.”  He also assisted in setting up meetings between Iranian representatives and a Chinese energy company for the purpose of discussing oil deals.  During a voluntary interview with U.S. law enforcement in which he was asked about his role brokering deals in Iranian oil, LUFT made multiple false statements, including that he had tried to prevent oil deals with Iran and had not been present during meetings with the Chinese energy company and Iranians. 

*                *                *

LUFT, 57, a dual U.S.-Israeli citizen who formerly resided in both Maryland and Israel and is now a fugitive, has been charged with the following offenses, which carry the maximum prison terms listed below.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.

Count

Charge

Maximum Prison Term

One

Conspiracy to violate the Foreign Agents Registration Act

Five years

Two

Conspiracy to violate the Arms Export Control Act

Five years

Three

Violation of the Arms Export Control Act (relating to Libya)

20 years

Four

Violation of the Arms Export Control Act (relating to the United Arab Emirates)

20 years

Five

Violation of the Arms Export Control Act (relating to Kenya)

20 years

Six

Making false statements

Five years

Seven

Conspiracy to violate the International Emergency Economic Powers Act

20 years

Eight

Making false statements

Five years

Mr. Williams praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division.  Mr. Williams also thanked the Internal Revenue Service – Criminal Investigation, the Department of Justice’s National Security Division, and the Department of Justice’s Office of International Affairs for their assistance.

If you have any information about LUFT’s whereabouts, please contact your local FBI office or the nearest American Embassy or Consulate.  Tips can be reported anonymously and can also be reported online at tips.fbi.gov.

This matter is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Daniel C. Richenthal and Catherine Ghosh are in charge of the prosecution, with assistance from Trial Attorney Scott Claffee of the National Security Division’s Counterintelligence and Export Control Section.

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

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

U.S. v. Luft Indictment_As Filed

Damian Williams, the United States Attorney for the Southern District of New York, and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a four-count Indictment charging SOUFIANE OULAHYANE, a/k/a “Soufiane Oulahya,” for a scheme to impersonate the OpenSea marketplace in order to obtain unauthorized access to cryptocurrency and non-fungible tokens (“NFTs”).  In September 2021, OULAHYANE stole approximately $450,000 worth of cryptocurrency and NFTs from a victim in Manhattan.  OULAHYANE is currently in custody in Morocco for domestic Moroccan charges. 

U.S. Attorney Damian Williams said: “As alleged, Soufiane Oulahyane used a common cybercrime technique to steal victim cryptocurrency and NFTs.  ‘Spoofing’ is one of the oldest tricks in the criminal playbook.  Oulahyane adapted this old tool for use in a new and developing arena – the crypto space.  The charges unsealed today should serve as a reminder that digital assets, such as cryptocurrency and NFTs, are not immune from cyber fraudsters and that my Office is committed to prosecuting these fraudsters both here and abroad.” 

FBI Acting Assistant Director in Charge Christie M. Curtis said: “Oulahyane is alleged to have operated a spoof website to gain unauthorized access to victims’ cryptocurrency wallets to steal their cryptocurrency and NFTs.  The FBI is committed to holding all individuals who conduct malicious cyberattacks against U.S. interests accountable in the United States criminal justice system - no matter where in the world they are located.”

As alleged in the Indictment unsealed today in Manhattan federal court:[1]

In or about September 2021, SOUFIANE OULAHYANE, a/k/a “Soufiane Oulahya,” engaged in a scheme to “spoof” the login page to the OpenSea marketplace, the first and largest NFT marketplace.  Through paid advertisements on a popular search engine, OULAHYANE caused his spoofed version of OpenSea to appear first in search results for “opensea.”  The spoofed website was purposefully designed to look like the legitimate OpenSea login page in order to trick unsuspecting victims into thinking they were interfacing with the real OpenSea marketplace.  However, when victims entered their login credentials or other private information on the spoofed site, their credentials were automatically sent to an email account controlled by OULAHYANE.

On or about September 26, 2021, a Manhattan-based victim (“Victim-1”) used a popular search engine to search for “opensea.”  That search yielded a link that, unbeknownst to Victim-1, connected to OULAHYANE’s spoofed version of the OpenSea login page.  Believing that the spoofed website was the legitimate OpenSea website, Victim-1 entered the seed phrase to their cryptocurrency wallet.  By doing this, Victim-1 unwittingly transferred their seed phrase to OULAHYANE, giving access to Victim-1’s cryptocurrency wallet.

Almost immediately, OULAHYANE used Victim-1’s seed phrase to obtain unauthorized access to Victim-1’s cryptocurrency wallet.  OULAHYANE then transferred the cryptocurrency from Victim-1’s wallet to another cryptocurrency wallet outside of Victim-1’s control.  In addition, OULAHYANE sold approximately 39 of Victim-1’s NFTs on the OpenSea marketplace and transferred the fraudulent cryptocurrency proceeds to a wallet outside of Victim-1’s control.  For example:

OULAHYANE sold an NFT from the “Bored Ape Yacht Club” series, depicted below, which Victim-1 had purchased for approximately 49 ETH.

OULAHYANE sold an NFT from the “Meebit” series, depicted below, which Victim-1 had purchased for approximately 9.88 ETH.

OULAHYANE sold an NFT from the “Bored Ape Kennel Club” series, depicted below, which Victim-1 had purchased for six ETH.

OULAHYANE sold an NFT from the “CryptoDad” series, depicted below, which Victim-1 had purchased for 1.789 ETH.

In total, OULAHYANE stole cryptocurrency and NFTs from Victim-1 that Victim-1 had paid approximately $448,923 to obtain.

*                *                *

OULAHYANE, 25, of Morocco, is charged with wire fraud, which carries a maximum sentence of 20 years in prison; the use of an unauthorized access device, which carries a maximum sentence of 10 years in prison; affecting transactions with an access device to receive something of value that is equal to or greater than $1,000, which carries a maximum sentence of 15 years in prison; and aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison. 

The maximum and mandatory 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 FBI.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Nicholas W. Chiuchiolo 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.       

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[1] As the introductory phrase signifies, 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.

U.S. v. Oulahyane Indictment

A dual U.S.-Israeli citizen who serves as the co-director of a Maryland-based think tank was indicted today for allegedly engaging in multiple international criminal schemes.

According to court documents, Gal Luft, 57, is charged in an eight-count indictment with offenses related to willfully failing to register under the Foreign Agents Registration Act (FARA), arms trafficking, Iranian sanctions violations and making false statements to federal agents. Luft was arrested on Feb. 17 in the Republic of Cyprus based on the charges in the indictment. Luft subsequently fled after being released on bail while extradition proceedings were pending and remains a fugitive.

According to the allegations contained in the indictment, for years, Luft conspired with others in an effort to act within the United States to advance the interests of the People’s Republic of China (China) as agents of China-based principals, without registering as foreign agents as required under U.S. law. As part of this scheme, while serving as the co-director of a Maryland-based nonprofit think tank, Luft agreed to covertly recruit and pay, on behalf of principals based in China, a former high-ranking U.S. government official (Individual-1), including in 2016 while the former official was an adviser to the then-President-elect, to publicly support certain policies with respect to China without Luft or Individual-1 filing a registration statement as an agent of a foreign principal with the Attorney General of the United States, in violation of FARA.

Among other things, in the weeks before the 2016 U.S. presidential election, Luft and a co-conspirator (CC-1), who is a Chinese national and worked for a Chinese nongovernmental organization affiliated with a Chinese energy company, created a written “dialogue” between CC-1 and Individual-1, in which Luft wrote Individual-1’s responses and included information that was favorable to China. The dialogue was then published in a Chinese newspaper online and sent to, among others, individuals in the United States, including a journalist and professors at multiple U.S. universities. When Luft was writing the dialogue, CC-1 told Luft that “[i]n these articles, we do not want to spill all the beans yet, just enough to let ‘people’ know he [i.e., Individual-1] is in the corridor of power to be. Just broad stroke policy consideration that leaves plenty of room for interpretation and imagination to be filled in later.” After the purported “conversations” were published, Luft told CC-1 that certain information, favorable to China, had been “tucked between the lines.” Shortly after the 2016 election, Luft and CC-1 also discussed possible roles Individual-1 might have in the incoming U.S. administration, and discussed Individual-1 taking a “silent trip” to China. Luft responded that “[w]e are debating about his role in the new admin. There are all kinds of considerations . . .We should talk ftf [i.e., face-to-face] as there can be a supremely unique opportunity for china.”

Second, Luft conspired with others and attempted to broker illicit arms transactions with, among others, certain Chinese individuals and entities. In his role as a broker or middleman, Luft worked to find both buyers and sellers of certain weapons and other materials, without a license to do so as required under U.S. law, in violation of the Arms Export Control Act. Among other things, Luft worked to broker a deal for Chinese companies to sell certain weapons to Libya, including anti-tank launchers, grenade launchers and mortar rounds (which Luft and his associates referred to in coded language as “toys”). Luft also worked to broker deals for certain weapons to be sold to the United Arab Emirates, including arial bombs and rockets. Luft further worked to broker deals for certain weapons to be sold by a Chinese company to Kenya, including unmanned aerial vehicles (UAVs) – and specifically “strike” UAVs, which Luft acknowledged “[t]he US doesn’t want to sell[, . . .] hence the opportunity.” Luft also discussed brokering a deal for weapons to Qatar, and told CC-1 that Israel was “not a good fit” as the middleman for the deal because it had the “[s]ame problem the [] Q [i.e., Qataris] have w uncle [i.e., the United States]. Need a third party. . . . I will activate.” In his role as a broker for illicit arms deals, Luft worked on a commission basis, and traveled to meetings and received and passed on documentation needed to secure the deals. During a voluntary interview with U.S. law enforcement in which he was asked questions about his involvement in arms trafficking, Luft made multiple false statements, including that he had just been checking prices for a friend and had not sought to engage in or profit from arms deals.

Third, Luft conspired with others and attempted to broker deals for Iranian oil – which he directed an associate to refer to as “Brazilian” oil in an effort to conceal the activity and evade sanctions – in violation of U.S. sanctions against Iran and the International Emergency Economic Powers Act (IEEPA). In his role as a broker or middleman, Luft solicited buyers and passed on pricing and other information. One offer letter for Iranian oil that Luft received noted that the “origin” of the oil was “Iranian / It can be presented as UAE origin without Iranian papers.” He also assisted in setting up meetings between Iranian representatives and a Chinese energy company for the purpose of discussing oil deals. During a voluntary interview with U.S. law enforcement in which he was asked about his role brokering deals in Iranian oil, Luft made multiple false statements, including that he had tried to prevent oil deals with Iran and had not been present during meetings with the Chinese energy company and Iranians.

Luft is charged with the following offenses, which carry the maximum prison terms listed below. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Count 

Charge

Maximum Prison Term

One

Conspiracy to violate the Foreign Agents Registration Act

Five years

Two

Conspiracy to violate the Arms Export Control Act

Five years

Three

Violation of the Arms Export Control Act (relating to Libya)

20 years

Four

Violation of the Arms Export Control Act (relating to the United Arab Emirates) 

20 years

Five

Violation of the Arms Export Control Act (relating to Kenya)

20 years

Six

Making false statements

Five years

Seven

Conspiracy to violate the International Emergency Economic Powers Act

20 years

Eight

Making false statements

Five years

The FBI New York Field Office and FBI’s Counterintelligence Division are investigating the case, with valuable assistance provided by the IRS-Criminal Investigation (IRS-CI) and the Justice Department’s Office of International Affairs.

Assistant U.S. Attorneys Daniel C. Richenthal and Catherine Ghosh for the Southern District of New York and Trial Attorney Scott Claffee of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

If you have any information about Luft’s whereabouts, please contact your local FBI office or the nearest American Embassy or Consulate. Tips can be reported anonymously and can also be reported online at tips.fbi.gov.

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 and Christie M. Curtis, the Acting Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”) announced the unsealing of a two-count Indictment charging JOSHUA HENNER with wire fraud and aggravated identity theft.  As alleged in the Indictment, HENNER, through false statements and representations, convinced victims to loan him at least $1.6 million for the purpose of investing in a start-up, while, in reality, misappropriating those funds for his own purposes.  HENNER was arrested this morning and will be presented in Manhattan federal court later today before U.S. Magistrate Judge Jennifer E. Willis.

U.S. Attorney Damian Williams said: “As alleged, Joshua Henner defrauded his victims of over $1.6 million and used those funds to line his own pockets.  Investment fraud schemes are all too common.  Thanks to our partnership with the Federal Bureau of Investigation, Henner will now be held accountable for his conduct.”

FBI Acting Assistant Director in Charge Christie M. Curtis said: “The defendant is alleged to have to conducted an investment fraud scheme, based on misrepresentations and falsehoods, in order to misappropriate more than $1.6 million in investor funds. Investment fraud schemes cause harm to victims directly involved, but also weaken the public's faith in the financial marketplace. Investigating and holding the individuals responsible for complex financial schemes accountable remains a top focus for the FBI.”

As alleged in the Indictment[1]:

From at least in or about May 2022 through at least in or about December 2022, HENNER ran a scheme that defrauded victims out of at least $1.6 million.  HENNER solicited and obtained funds from victims based on representations that he had been an angel investor in a start-up (the “Company”) and that he needed funds to purchase additional shares in the Company to maintain his investment position.

To induce victims to give him funds, HENNER routinely made materially false oral and written statements, including lies about his previous investment in the Company and his ownership interest in the Company.  Without their knowledge or authorization, HENNER misappropriated his victims’ funds by, among other things, transferring the funds to himself and other individuals.  

During and in relation to the scheme, HENNER used, without authorization, the name and email address of a lawyer purportedly involved in the investments to communicate via email with his victims and foster the illusion that he was using the funds that his victims lent him for their intended purposes.

*                 *                *

HENNER, 35, of New York, New York, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory two-year consecutive sentence.  The minimum and maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.

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

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Brandon C. Thompson 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.

U.S. v. Henner Indictment

 

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

 

Pfizer Employee and Associate Charged with Insider Trading Based on Non-Public Drug Trial Results for COVID-19 Treatment

Investment Firm Executive Director Charged with Insider Trading Based on Information Stolen from a Major Investment Bank

SPAC Investors Charged with Insider Trading by Exploiting Their Privileged Access to Information to Engage in Illegal Open Market Trades

Network of Individuals, Including Police Chief, Charged with Insider Trading Based on Inside Information About an Impending Merger

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced charges in four separate insider trading cases, collectively charging 10 defendants with securities fraud and other related charges.  These cases involve trading based on confidential information misappropriated from entities and individuals in a variety of industries and reflect the U.S. Attorney’s Office for the Southern District of New York’s broad investigative reach and continued resolve to root out corruption in our financial markets.  The defendants in these cases collectively generated more than $30 million dollars from illegal securities trading based on material, non-public information (“MNPI”) that was stolen from numerous sources.

U.S. Attorney Damian Williams said:  “Insider trading is not a quick buck.  It’s not easy money.  It’s not a sure thing.  It’s cheating.  It’s a bad bet.  It’s a ticket to prison.  Because my Office, the Southern District of New York, is watching.  And we’re working quickly to investigate and prosecute anyone who corrupts our financial markets.  And we’ll keep at it as long as it takes.  You can bet on that.”

FBI Assistant Director in Charge Michael J. Driscoll said: “The charges announced today center on the defendants’ alleged participation in illegal securities trading based on material, non-public information.  Insider trading schemes not only yield ill-gotten gains for those directly involved but also damage the public’s faith in the fairness of our financial markets.  Today’s announcement serves as a reminder to anyone attempting to tilt the balance in their direction using insider trading, investigating this illegal behavior is a top priority of the FBI.”

According to the allegations contained in the Indictments filed in federal court and other publicly available information:[1]

United States v. Amit Dagar and Atul Bhiwapurkar

In or about November 2021, AMIT DAGAR and ATUL BHIWAPURKAR participated in an insider trading scheme to reap illicit profits from options trading based on inside information about the results of clinical trials of Paxlovid, a medicine used to treat COVID-19.  DAGAR was an employee of Pfizer Inc. (“Pfizer”) and assisted in managing the data analysis in certain clinical drug trials. 

On or about November 4, 2021, DAGAR learned that a Pfizer trial of the drug Paxlovid, a medicine designed to treat mild to severe COVID‑19 infection, had produced positive results.  The results were confidential and meant to remain so until Pfizer publicized them on or about November 5, 2021.

Later that same day, and while those results remained confidential, DAGAR purchased short-dated, out-of-the-money call options in Pfizer stock.  DAGAR also tipped his close friend, ATUL BHIWAPURKAR, about the coming drug results and BHIWAPURKAR also purchased short-dated, out-of-the-money Pfizer call options that expired approximately two weeks later.  BHIWAPURKAR also tipped another friend (“Individual-1”), who similarly purchased short-dated, out-of-the-money Pfizer call options that expired approximately three weeks later.

The next day, on or about November 5, 2021, and before the market opened, Pfizer publicly released results of its Paxlovid study.  That same day, following the publication of the positive results, Pfizer’s stock price increased substantially, opening — and eventually closing — more than 10% higher than the prior day’s closing price.  In the coming weeks, DAGAR, BHIWAPURKAR, and Individual-1 sold their Pfizer call options at significant profits, totaling approximately more than $350,000.  

DAGAR, 44, of Hillsborough, New Jersey, who was arrested this morning, has been charged with four counts of securities fraud, each of which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison.

BHIWAPURKAR, 45, of Milpitas, California, who was arrested this morning, has been charged with two counts of securities fraud, each of which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison.

United States v. Jordan Meadow

From at least in or about March 2021 through in or about May 2022, JORDAN MEADOW, a registered broker at a brokerage firm based in New York, New York, used inside information stolen from a major investment bank in New York City (“the Investment Bank”) to make millions of dollars in illegal profits trading stock on behalf of himself and his clients.  In or about late 2020, MEADOW offered and agreed to provide items of value, such as Rolex watches, to a friend, Steven Teixeira, in exchange MNPI that Teixeira obtained by secretly accessing confidential work documents on a personal laptop computer (the “Laptop”) belonging to Teixeira’s then-girlfriend, an executive assistant at the Investment Bank.  The documents on the Laptop contained MNPI about planned corporate acquisitions in which the Investment Bank served as an advisor.

In or around late July 2021, Teixeira secretly accessed confidential work information on the Laptop and learned that in less than a week, Penn National Gaming, Inc. (“Penn National”), was going to acquire Score Media and Gaming Inc. (“Score”), a Canadian digital media company, for approximately $2.2 billion.  Teixeira shared this MNPI with a friend, who in turn shared it with MEADOW.  MEADOW then purchased more than 769 call option contracts in Score between August 2, 2021, and August 3, 2021, based on the MNPI and also advised a colleague at the brokerage firm where he worked, their clients, and a friend to purchase Score securities.  After Penn National’s acquisition of Score was announced publicly on August 5, 2021, MEADOW, his colleague, their clients at the brokerage firm, and MEADOW’s friend sold their holdings in Score for a combined profit exceeding $5 million. 

Later, in or around early March 2022, Teixeira secretly accessed confidential work information on his then-girlfriend’s laptop and learned about a planned corporate acquisition of VMWare, an enterprise software company, for approximately $65 billion.  Teixeira shared this MNPI with his friend, who in turn shared it with MEADOW.  MEADOW purchased over 5,000 shares of VMWare stock, as well as call options contracts in VMWare, between May 9, 2022, and May 18, 2022, and advised his colleague at the brokerage firm to purchase VMWare securities.  After there was public reporting that Broadcom was in talks to acquire VMWare, the VMWare holdings of MEADOW and his colleague increased significantly, and they began to sell their VMWare holdings for a combined profit exceeding $100,000. 

MEADOW, 34, of Warren, New Jersey, who was arrested this morning, has been charged with six counts of securities fraud under Title 15, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy, which carries a maximum sentence of five years in prison.

Also unsealed today were charges against Steven Teixeira, who has pled guilty pursuant to a cooperation agreement.

United States v. Michael Shvartsman, Gerald Shvartsman, and Bruce Garelick

In October 2021, MICHAEL SHVARTSMAN, GERALD SHVARTSMAN, and BRUCE GARELICK together made more than $22 million dollars in illegal profits by trading in securities of Digital World Acquisition Corporation (“DWAC”) based on MNPI about DWAC’s planned but not yet public business combination with a media company founded by former President Donald J. Trump.

As sophisticated investors, MICHAEL SHVARTSMAN, GERALD SHVARTSMAN, and BRUCE GARELICK were invited to invest in DWAC and another special purpose acquisition company (“SPAC”), and after signing non-disclosure agreements, they were provided confidential information about the SPACs, including that a potential target of the SPACs was Trump Media & Technology Group (“Trump Media”).  As a condition of receiving this information, the defendants were prohibited by the non-disclosure agreements from disclosing the confidential information they learned or using it to buy and sell securities on the open market.  After making initial investments into DWAC through the initial public offering process, GARELICK was given a seat on DWAC’s board of directors, which gave him access to valuable MNPI about DWAC’s plans to merge with Trump Media.  After learning MNPI through his role on DWAC’s board, GARELICK provided updates to his alleged co-conspirators — which he called “intelligence” — about the status of the merger negotiations and the timing of a public merger announcement.

In violation of the non-disclosure agreements that they had signed, and in contravention of GARELICK’s duties and responsibilities as a board member, the defendants bought millions of dollars of DWAC securities on the open market before the news of the Trump Media business combination was public.  In addition to their own purchases, the defendants also passed DWAC’s confidential information to their friends on a trip to Las Vegas, to MICHAEL SHVARTSMAN’s neighbors, and to GERALD SHVARTSMAN’s employees at a furniture supply store.  After DWAC’s merger with Trump Media was announced publicly, the stock and warrant holdings of MICHAEL SHVARTSMAN, GERALD SHVARTSMAN, and BRUCE GARELICK, and those they tipped, significantly increased in value.  The defendants and the individuals they tipped then sold their DWAC securities for a significant profit.

MICHAEL SHVARTSMAN, 52, of Sunny Isles Beach, Florida, who was arrested this morning, has been charged with five counts of securities fraud under Title 15, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy, which carries a maximum sentence of five years in prison.

GERALD SHVARTSMAN, 45, of Aventura, Florida, who was arrested this morning, has been charged with three counts of securities fraud under Title 15, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy, which carries a maximum sentence of five years in prison.

BRUCE GARELICK, 53, of Fort Lauderdale, Florida, who was arrested this morning, has been charged with five counts of securities fraud under Title 15, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy, which carries a maximum sentence of five years in prison.

United States v. Joseph Dupont, Shawn Cronin, Slava Kaplan, and Paul Feldman

In 2020, JOSEPH DUPONT, SHAWN CRONIN, SLAVA KAPLAN, a/k/a “Stanley Kaplan,” and PAUL FELDMAN engaged in an insider trading scheme surrounding the announcement of one pharmaceutical company’s acquisition of another.  CRONIN, KAPLAN, and FELDMAN collectively made more than $2.2 million dollars in illegal profits by trading in stocks and options based on MNPI that DUPONT misappropriated from his employer.

DUPONT was a vice president at Alexion Pharmaceuticals, Inc. (“Alexion”) and, on January 31, 2020, was informed of Alexion’s upcoming acquisition of Portola Pharmaceuticals, Inc. (“Portola”).  Before that acquisition was publicly announced, in April 2020, DUPONT provided MNPI about the acquisition to his childhood friend, CRONIN.  Not only were CRONIN and DUPONT childhood friends, but also CRONIN — who, at the time, was a sergeant in the police department of Dighton, Massachusetts, and later served as the chief of police — supervised DUPONT in DUPONT’s capacity as a reserve officer in that police department.  Based on the MNPI that DUPONT provided CRONIN, CRONIN purchased shares of Portola stock as well as out-of-the-money call options for Portola stock.

In turn, CRONIN shared MNPI about Portola’s pending acquisition with Jarett Mendoza, another childhood friend of both CRONIN’s and DUPONT’s.  CRONIN also assisted Mendoza in purchasing Portola stock in the days before the acquisition was publicly announced.

CRONIN shared MNPI about Portola’s pending acquisition not only with Mendoza, but also with KAPLAN, a friend of CRONIN’s, who was also known to DUPONT.  CRONIN shared the MNPI with KAPLAN both so that KAPLAN could trade in advance of the acquisition and so that KAPLAN would assist CRONIN in formulating trading strategies to maximize CRONIN’s own insider trading profits.  Based on the MNPI that CRONIN gave to KAPLAN, KAPLAN bought Portola shares and options.

KAPLAN, in turn, shared MNPI about the upcoming acquisition with, among others, FELDMAN, a friend and colleague of KAPLAN’s.  Based on the MNPI that KAPLAN gave FELDMAN, FELDMAN aggressively bought Portola call options.

FELDMAN, for his part, shared MNPI about the Portola acquisition with others, including a work colleague.

Alexion’s acquisition of Portola was publicly announced on the morning of May 5, 2020.  Portola’s stock increased significantly in value.  CRONIN, KAPLAN, FELDMAN, and their tippees sold their shares of Portola and call options for Portola stock, reaping millions of dollars of illegally obtained trading profits.

DUPONT, 44, of Rehoboth, Massachusetts, who surrendered to authorities today, has been charged with one count of Title 15 securities fraud and one count of tender offer fraud, each of which carries a maximum sentence of 20 years in prison, and one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison.

CRONIN, 43, of Dighton, Massachusetts, who surrendered to authorities today, has been charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison;.

KAPLAN, 45, of Hopewell Junction, New York, who was arrested today, has been charged with three counts of securities fraud under Title 15 and three counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison.

FELDMAN, 48, of Poughquag, New York, who was arrested today, has been charged with six counts of securities fraud under Title 15 and six counts of tender offer fraud, each of which carries a maximum sentence of 20 years in prison; one count of securities fraud under Title 18, which carries a maximum sentence of 25 years in prison; and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison.

Also unsealed today were charges against Jarett Mendoza, who has pled guilty pursuant to a cooperation agreement.

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

Mr. Williams praised the outstanding investigative work of the FBI’s New York and Philadelphia Field Offices.  He also thanked the Miami Field Office of the U.S. Department of Homeland Security, Homeland Security Investigations, for its assistance in the investigation in United States v. Michael Shvartsman, Gerald Shvartsman, and Bruce Garelick.  He further thanked the Securities and Exchange Commission for its cooperation and assistance across these investigations.   

These cases are being handled by the Office’s Securities and Commodities Fraud Task Force.  United States v. Dagar and Bhiwapurkar is in the charge of Assistant U.S. Attorney Alex Rossmiller.  United States v. Meadow is in the charge of Assistant U.S. Attorney Nicholas Folly.  United States v. Michael Shvartsman, Gerald Shvartsman, and Bruce Garelick is in the charge of Assistant U.S. Attorneys Elizabeth Hanft, Nicolas Roos, and Matthew Shahabian.  United States v. Dupont, Cronin, Kaplan, and Feldman is in the charge of Assistant U.S. Attorneys Samuel P. Rothschild, Sarah Mortazavi, and Margaret Graham.    

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

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

U.S. v. Dagar and Bhiwapurkar Indictment U.S. v. Meadow Indictment U.S. v. Shvartsman et al Indictment U.S. v. Dupont et al Indictment

Damian Williams, the United States Attorney for the Southern District of New York, announced that JONATHAN GHERTLER pled guilty today before U.S. District Judge Edgardo Ramos in connection with his scheme to impersonate senior leaders of two Manhattan-based investment firms, resulting in over $1 million in losses to their portfolio companies, and to impersonating a partner of a global law firm on telephone calls with federal law enforcement agents who were investigating the scheme. 

U.S. Attorney Damian Williams said: “Jonathan Ghertler defrauded companies of over $1 million by impersonating some of the most prominent figures in finance.  But law enforcement got wind of his scheme.  Again.  And when Ghertler saw the writing on the wall, he brazenly impersonated a partner of a global law firm and tried to convince federal agents and an Assistant United States Attorney to drop their investigation.  His efforts failed and his fraud was unraveled, as have all of Ghertler’s past frauds, thanks to the persistent work of the prosecutors of this Office and our law enforcement partners.”

According to the allegations in the Indictment and Complaint:

From at least in or about December 2021, up to and including at least June 2022, GHERTLER impersonated the General Counsel of a global private equity firm (the “Private Equity Firm”).  In doing so, GHERTLER fraudulently caused the Private Equity Firm’s portfolio companies to pay at least $200,000 to fund a non-existent internal investigation into alleged links between senior employees of the Private Equity Firm and Jeffrey Epstein, the deceased financier who, before he died on or about August 10, 2019, had been charged in the Southern District of New York with sex trafficking of minors and conspiring to commit sex trafficking of minors. 

In addition, from at least May 2021, up to and including February 2023, GHERTLER impersonated the founder of an investment firm (the “Investment Firm”), directing the Chief Executive Officer (the “CEO”) of one of the Investment Firm’s portfolio companies (the “IF Portfolio Company”) to make at least $865,000 in payments to fund a non-existent internal investigation related to the founder’s alleged relationship with Epstein.  In recent weeks, GHERTLER, posing as the founder of the Investment Firm, had discussed with the CEO the possibility of making a large investment into a restaurant chain owned by another investment firm.

On or about February 7, 2023, after learning from the CEO that federal investigators were investigating a potentially fraudulent payment made by the Investment Firm, GHERTLER, posing as a partner (the “Partner”) at a global law firm, spoke on the phone with Special Agents with the Federal Bureau of Investigation (“FBI”).  GHERTLER told the federal agents that the IF Portfolio Company had chosen not to report the fraud because it had been “made whole” by the fraudster. 

On or about February 10, 2023, GHERTLER, impersonating the Partner, spoke again with federal agents.  GHERTLER said, after “consult[ing]” with “associates and lower-level partners” at the Global Law Firm who “used to work” at the United States Attorney’s Office for the Southern District of New York, “our position is that, uh, the law states that, umm, you know, if the money was paid back prior to, uh, the crime being, uh, discovered, uh, it’s not a crime.”  GHERTLER added that his “client [i.e., the founder of the Investment Firm] has a lot of other issues he is dealing with right now, so this is one he really doesn’t need to deal with.”

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GHERTLER, 60, of Orlando, Florida, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 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.  Sentencing has been scheduled for August 9, 2023, at 11 a.m.

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

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Adam Sowlati is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that CHIBUNDU JOSEPH ANUEBUNWA, a citizen of Nigeria who was previously extradited from the United Kingdom, pled guilty today before U.S. District Judge Paul A. Crotty to wire fraud conspiracy in connection with his participation in fraudulent business email compromise scams that targeted thousands of victims around the world, including in the United States.  In connection with the same conspiracy as ANUEBUNWA, co-defendant DAVID CHUKWUNEKE ADINDU was previously sentenced to 41 months in prison, and co-defendant ONYEKACHI EMMANUEL OPARA was previously extradited from South Africa and sentenced to 60 months in prison.

U.S. Attorney Damian Williams said: “As he has now admitted, Chibundu Joseph Anuebunwa participated in a conspiracy to trick thousands of business employees located all around the world into wiring millions of dollars to overseas bank accounts by sending bogus emails that appeared to be legitimate.  This case should serve as a reminder to cyber criminals located around the globe that we will track them down and hold them responsible.”

According to publicly filed court documents and statements made at public court proceedings:

Between 2014 and 2016, ANUEBUNWA, OPARA, and ADINDU participated in business email compromise scams (“BEC scams”) targeting thousands of victims around the world, including in the United States.  As part of the BEC scams, emails were sent to employees of various companies directing that funds be transferred to specified bank accounts.  The emails purported to be from supervisors at those companies or third-party vendors that did business with those companies.  The emails, however, were not legitimate.  Rather, they were either from email accounts with a domain name that was very similar to a legitimate domain name, or the metadata in the emails had been modified so that the emails appeared as if they were from legitimate email addresses.  After victims complied with the fraudulent wiring instructions, the transferred funds were quickly withdrawn or moved into different bank accounts.  In total, the BEC scams attempted to defraud the victims of millions of dollars.

ANUEBUNWA and others carried out BEC scams by exchanging information regarding: (i) bank accounts used for receiving funds from victims; (ii) email accounts used for communicating with victims; (iii) scripts for requesting wire transfers from victims; and (iv) lists of names and email addresses for contacting and impersonating potential victims.

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ANUEBUNWA, 40, a citizen of Nigeria, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison.  ANUEBUNWA is scheduled to be sentenced by Judge Crotty on October 2, 2023, at 3:30 p.m.

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.

Mr. Williams praised the investigative work of the Federal Bureau of Investigation.  Mr. Williams also thanked United Kingdom authorities and the Yahoo E-Crime Investigations Team for their assistance in the investigation.  The U.S. Department of Justice’s Office of International Affairs provided significant assistance in securing the defendant’s extradition from the United Kingdom.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Andrew K. Chan is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, Carlos F. Matus, the Director of the U.S. Department of State’s Diplomatic Security Service (“DSS”), and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced that a Complaint was unsealed today alleging that RECEP AKBIYIK used a metal bar to shatter the glass of 10 windows and two doors of the building housing the Turkish Consulate General in New York, New York (the “Turkish Consulate”).  When two of the Turkish Consulate’s security officers emerged from the building to investigate, AKBIYIK allegedly charged at the security officers with the metal bar and, as the security officers retreated into the building, repeatedly struck the building’s doors with the metal bar.  AKBIYIK was arrested this morning and will be presented today before U.S. Magistrate Judge Sarah L. Cave. 

U.S. Attorney Damian Williams said: “As alleged, Recep Akbiyik brazenly attacked the Turkish Consulate building, causing serious damage to its windows and doors.  Even worse, Akbiyik allegedly endangered two of the Turkish Consulate’s security officers, nearly beating them with a metal bar.  As these charges make clear, people who attack diplomatic facilities or their employees within the United States will be held accountable for their actions.”   

DSS Director Carlos F. Matus said: “The Diplomatic Security Service is firmly committed to working with the U.S. Attorney’s Office and our other law enforcement partners to investigate allegations of crime related to diplomatic facilities and personnel within the United States, and to bring those who commit these crimes to justice.  This was a great success by all of the agencies involved.”

According to the allegations in the Complaint:[1]

On May 22, 2023, at 3:15 a.m., AKBIYIK used a blue metal bar to shatter approximately 10 of the Turkish Consulate’s windows.  Below are photographs reflecting the damage done to the windows:

As AKBIYIK shattered the Turkish Consulate’s windows, two security officers who had been in the Turkish Consulate’s lobby stepped outside of the building.  AKBIYIK sprinted toward the security officers with the blue metal bar raised as if to strike them.  Below are stills from surveillance video showing AKBIYIK running toward the security officers:

    

As the Security Officers retreated into the Turkish Consulate, pulling its doors closed, AKBIYIK repeatedly struck the Turkish Consulate’s doors with the blue metal bar, breaking the doors’ glass panes.  Below is a photograph reflecting the damage done to the Turkish Consulate’s doors:

AKBIYIK fled, leaving behind a blue bag containing eight bricks and the blue metal bar, photographs of which are below:

    

In a post-arrest interview with NYPD officers, AKBIYIK admitted to the attack on the Turkish Consulate and stated that he had been planning the attack for weeks.

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AKBIYIK, 29, of Brooklyn, New York, is charged with damaging property occupied by a foreign government, which carries a maximum sentence of five 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 a judge. 

Mr. Williams praised the outstanding investigative work of DSS and the NYPD and thanked the U.S. Marshals Service and the New York County District Attorney’s Office for their assistance.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Benjamin M. Burkett is 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.

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

U.S. v. Akbiyik Complaint

Damian Williams, the United States Attorney for the Southern District of New York, announced that recording artist CASWELL SENIOR, a/k/a “Casanova,” was sentenced today by U.S. District Judge Philip M. Halpern to 188 months in prison for racketeering and narcotics offenses arising out of his leadership role in the Untouchable Gorilla Stone Nation Bloods Gang (“Gorilla Stone”).  As part of the racketeering conspiracy, SENIOR participated in a shooting in Florida on July 5, 2020, and a robbery in New York City on August 5, 2018, and conspired to traffic over 100 kilograms of marijuana.

U.S. Attorney Damian Williams said: “Caswell Senior is not just a notorious recording artist, but he is also a high-profile leader of a vicious street gang and a magnet for gang violence.  At a crowded Miami house party, Senior personally fired a gun that seriously injured and could have killed a victim, inciting a shootout.  Further, Senior’s stature in the community was central to Gorilla Stone’s successful recruitment and nationwide expansion.  Today’s sentencing — along with the other significant sentences that have been imposed in this case — shows once again that gang life is not worth it and will lead to many years in prison.”      

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

Since at least 2004, Gorilla Stone has been a brutally violent street gang with a national presence that was founded by SENIOR’s co-defendant Dwight Reid, a/k/a “Dick Wolf.”  Gorilla Stone has many members across New York State, including throughout New York City, Westchester, and the New York State Prison System, and all over the country — such as in Florida, where SENIOR engaged in substantial criminal conduct.  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.

SENIOR’s Gorilla Stone co-defendants were charged with a host of crimes committed in furtherance of their joint enterprise.  Some of the charges against Gorilla Stone members include racketeering conspiracy, various frauds, a large-scale narcotics conspiracy that SENIOR actively participated in, myriad firearms offenses, and numerous acts of violence, including a daytime murder of a juvenile in the middle of a Poughkeepsie street; multiple attempted murders and shootings, including two in Florida in which SENIOR was involved; a gunpoint drug-related robbery; and a brutal slashing. 

For over a decade, SENIOR participated in and was associated with the Gorilla Stone racketeering conspiracy.  SENIOR was a powerful, respected, high-profile member of the gang.  SENIOR admitted that he was an organizer or leader of a criminal activity that involved five or more participants.  SENIOR joined the gang while incarcerated over a decade ago and has remained an active member ever since, including upon his release from custody from a prior case in 2013.    

As part of the racketeering activity, on or about July 5, 2020, while in Florida for a gang member’s birthday, SENIOR shot a gun at a gang member with whom he was having a gambling dispute, hitting one gang member in the leg/calf area and a second, different gang member in the foot when the bullet ricocheted.  A victim suffered serious bodily injury because of the shooting and was treated at a Miami-area hospital for a gunshot wound to the foot.  Thereafter, other party attendees, including a member of Gorilla Stone, discharged multiple firearms. 

Additionally, as part of an August 5, 2018, robbery at a Manhattan diner that SENIOR participated in, a victim was restrained and suffered serious bodily injury.  The robbery started when SENIOR appeared to believe that a female victim took a photo of him from the booth where the victim was sitting.  SENIOR then proceeded to forcefully take the victim’s cellphone.  SENIOR’s gang member associate then came up behind the victim and put her in a headlock until she fell to the floor unconscious from lack of oxygen.   

SENIOR further agreed to traffic at least 100 kilograms of marijuana.  During an approximately nine-month period, SENIOR was responsible for distributing between 100 kilograms and 400 kilograms of his personally branded “2x” marijuana.

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SENIOR, 36, of Montville, New Jersey, previously pled guilty on May 11, 2022, before Judge Halpern to one count of conspiring to conduct and participate in the conduct of the affairs of a criminal enterprise through a pattern of racketeering activity and one count of conspiring to distribute over 100 kilograms of marijuana.  In addition to the prison term, SENIOR was sentenced to four years of supervised release and ordered to forfeit $50,000.

SENIOR is the 12th defendant in the Gorilla Stone case to have been sentenced.  The 11 other defendants who have been sentenced by Judge Halpern are:

• DONAVAN GILLARD, a/k/a “Donnie Love,” who was sentenced to 248 months in prison;
• NAYA AUSTIN, a/k/a “Baby,” who was sentenced to 234 months in prison;
• JARRETT CRISLER, Jr., a/k/a “Jayecee,” who was sentenced to 207 months in prison;
• 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.

Five additional defendants have pled guilty and are awaiting sentencing: DESHAWN THOMAS, a/k/a “Don,” AHMED WALKER, a/k/a “Ammo,” BRANDON SOTO, a/k/a “Stacks,” ROBERT WOODS, a/k/a “Blakk Rob,” and BRINAE THORNTON, a/k/a “Luxury.”

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 case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys Shiva H. Logarajah, David R. Felton, and Courtney L. Heavey are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that MICHAEL BARRETO was sentenced today by U.S. District Judge Katherine Polk Failla to 20 years in prison for repeatedly enticing minors to meet him for illegal sexual activity over the course of more than a decade and receipt of child pornography.  BARRETO previously pled guilty to three counts of enticement and three counts of receipt of child pornography. 

U.S. Attorney Damian Williams said: “Over the course of more than a decade, Michael Barreto repeatedly victimized minors in his community in the Bronx.  Barreto tried and succeeded in luring minors to meet him for illegal sexual activity, often by lying to the victims about his own age.  Today’s sentence shows that this abhorrent conduct will not be tolerated and will lead to a lengthy prison sentence.  This Office is committed to prosecuting those who prey on children.”

According to court filings and statements made in court proceedings:

In 2008, BARRETO, age 19 or 20, had sex with one victim, age 14, and then told the victim to run away from home and lie about their relationship.  In 2017, BARRETO, age 29, met a second victim, age 13, at a store in the Bronx, New York.  BARRETO lied about his age and began an illegal sexual relationship with him.  Two years after meeting, BARRETO surreptitiously recorded illegal sexual activity between himself and the victim.  In 2018, BARRETO, age 30, exchanged sexual Facebook messages with a third victim, age 14, lied about his own age, and encouraged the victim to travel to BARRETO’s apartment in the Bronx.  This victim in fact traveled to BARRETO’s apartment, where BARRETO engaged in illegal sexual activity with him.  In 2018 and 2019, BARRETO exchanged sexual messages with three other victims, each age 14 or 15, lied about his age to each, and eventually received nude photographs constituting child pornography from the victims.

Apart from these victims, from approximately 2017 through 2019, BARRETO attempted to entice more than a dozen other minors using social media chat platforms.  In these chats, BARRETO frequently lied about his own age, sent flirtatious and sexual messages, and expressed an interest in meeting with the minor victims in person to engage in sexual activity.

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In addition to the prison term, BARRETO, 34, of the Bronx, New York, was sentenced to 10 years of supervised release, ordered to pay $9,000 in restitution, and ordered to pay a $300 assessment pursuant to the Amy, Vicky, and Andy Child Pornography Victim Assistance Act.

Mr. Williams praised the outstanding work of New York City Police Department.  He also thanked the U.S. Department of Homeland Security, Homeland Security Investigations, for its assistance.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Kedar S. Bhatia and Brandon D. Harper are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that KONRAD BICHER pled guilty today to wire fraud in connection with his fraudulent operation of real estate companies, including by entering lease agreements for residential apartment units in Manhattan on false and fraudulent pretenses and by making false statements to obtain loans guaranteed by the United States government.  BICHER pled guilty before U.S. Magistrate Judge Sarah L. Cave.

U.S. Attorney Damian Williams said: “Bicher proudly referred to himself as the ‘Wolf of Airbnb.’  But, as he admitted in court today, his businesses were premised on fraud.  Bicher entered into lease agreements on false pretenses and made false statements to obtain loans guaranteed by the United States government.  Bicher lined his own pockets by abusing government programs and tenant protections intended to benefit those in crisis during the COVID-19 pandemic.  Thanks to the hard work of the FBI and this Office, he is being held accountable for his conduct.”

According to the allegations in the Complaint, Indictment, other court documents, and statements made in Court:

Beginning in at least February 2019, BICHER, and/or individuals working in concert with BICHER, began renting apartment units (the “Units”) in Manhattan.  The Units were leased pursuant to lease agreements which required that the lessee make monthly rental payments and also included clauses that prohibited the lessee from renting the Units to third parties on a short-term basis and/or included clauses that prohibited the lessee from subletting the Units to third parties without written consent of the owner.  Despite the requirement to make monthly rental payments, BICHER failed to make payments as required by the lease agreements.  For many of the Units, BICHER also refused to vacate the Units after the expiration of the lease agreements.  During the period of time that BICHER failed to make required rental payments, including the period of time after a lease agreement expired and the premises had not been vacated, BICHER derived income by renting the Units on a short-term basis, including by posting the Units for rent on various online marketplaces, such as Airbnb, Inc. (“Airbnb”). 

Between in or about July 2019 and in or about April 2022, BICHER and his associates failed to make more than $1,000,000 in payments pursuant to the Lease Agreements or, for the period of time after the expiration of the Lease Agreements, based on the estimated fair market value for the Units.  During this period, BICHER caused the Units to be listed for short-term rent on Airbnb and at least one other online marketplace for short-term rentals, resulting in at least $1,170,000 in rental income to BICHER and his associates.

Throughout the course of this scheme, the lessors of the Units made numerous efforts to recover rental payments from BICHER and/or to stop BICHER from continuing to rent the Units on a short-term basis, including by initiating civil litigation against BICHER.  BICHER relied on legal protections intended to benefit tenants, including tenant protections adopted in connection with the COVID-19 pandemic, in order to oppose the lawsuits.  Despite relying on tenant protections for New Yorkers in need, BICHER continued to generate revenue by renting certain Units on a short-term basis. 

In addition, between at least in or about April 2021 until in or about July 2021, BICHER obtained government-guaranteed loans through a loan program of the United States Small Business Administration designed to provide relief to small businesses during the COVID-19 pandemic, namely the Paycheck Protection Program (“PPP”).  In furtherance of this scheme, BICHER submitted at least four applications for PPP loans on behalf of at least three entities and obtained over $565,000 in loan proceeds.  These PPP applications contained fraudulent documents and false information.  For example, in connection with the PPP applications, BICHER submitted tax documents which were purportedly filed with the Internal Revenue Service (“IRS”).  These documents were falsified in that the entities seeking PPP loans had not actually filed the purported tax returns with the IRS, and BICHER has not otherwise reported the purported income to the IRS.

During the course of the scheme, BICHER referred to himself as the “Wolf of Airbnb” and explained to media outlets that this nickname referred to the fact that he was “hungry and ruthless enough to get on top of the financial ladder” and had the “ferocity…of a wolf, because wolves are territorial, vicious, and show no mercy when provoked.”

*                *                *

BICHER, 31, of Hialeah, Florida, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  BICHER also agreed to forfeit $1,740,407.12 and to make restitution to victims in the amount of $1,985,251.

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 a judge. 

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

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Matthew Weinberg is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, Merrick B. Garland, the Attorney General of the United States, Lisa O. Monaco, the Deputy Attorney General of the United States, and Anne Milgram, the Administrator of the U.S. Drug Enforcement Administration (“DEA”), announced today the unsealing of an Indictment charging the Chinese chemical company HUBEI AMARVEL BIOTECH CO., LTD., a/k/a “AmarvelBio,” (“AMARVEL BIOTECH”) as well as its executives and employees QINGZHOU WANG, a/k/a “Bruce” (“WANG”), YIYI CHEN, a/k/a “Chiron” (“CHEN”), and FNU LNU, a/k/a “Er Yang,” a/k/a “Anita” (“YANG”), with fentanyl trafficking, precursor chemical importation, and money laundering offenses.  WANG and CHEN, both nationals of China, were expelled from Fiji on June 8, 2023, arrested by the DEA, and presented before U.S. Magistrate Judge Wes Reber Porter in Honolulu federal court on June 9, 2023.  WANG and CHEN were ordered detained in Honolulu and will appear in Manhattan federal court following their arrival in the Southern District of New York.  YANG, also a national of China, is at large.  The case has been assigned to U.S. District Judge Paul G. Gardephe.

U.S. Attorney Damian Williams said: “The indictment unsealed today in the Southern District of New York is the next step in our fight against fentanyl.  Today, we target the very beginning of the fentanyl supply chain: the Chinese manufacturers of the raw chemicals used to make fentanyl and its analogues.  We’ve charged a Chinese precursor chemical company.  And that’s not all.  We’ve charged and arrested some of the individuals who work at the company.  That includes a corporate executive and a marketing manager.  They’re in American handcuffs.  And they’re going to face justice in an American courtroom.”

Attorney General Merrick B. Garland said: “When I announced in April that the Justice Department had taken significant enforcement actions against the Sinaloa Cartel, I promised that the Justice Department would never forget the victims of the fentanyl epidemic.  I also promised that we would never stop working to hold accountable those who bear responsibility for it.  That includes not only going after the leaders of the Cartels, their drug and gun traffickers, their money launderers, security forces, and clandestine lab operators.  It also includes stopping the Chinese chemical companies that are supplying the cartels with the building blocks they need to manufacture deadly fentanyl.”

Deputy Attorney General Lisa O. Monaco said: “Today’s announcement is a down payment on our pledge to use every tool in the government’s arsenal, in every corner of the globe, to protect American communities.  The Justice Department will not rest or relent in investigating and prosecuting every link of the fentanyl supply chain, including the PRC companies and executives who produce and export vast quantities of the precursor chemicals the drug cartels need to peddle their poison.  There can be no safe haven.”

DEA Administrator Anne Milgram said: “Today’s announcement is a considerable step forward in our unrelenting fight against fentanyl, targeting the threat where it starts.  These companies and individuals are alleged to have knowingly supplied drug traffickers, in the United States and Mexico, with the ingredients and scientific know-how needed to make fentanyl – a drug that continues to devastate families and communities across the United States, killing Americans from all walks of life.  The fentanyl supply chain begins in China, but tragically, it ends here.  Targeting entire criminal drug networks, from the source of supply to the last mile of distribution, is critical to saving American lives.  DEA will not stop until this crisis ends.”

According to the allegations contained in the Indictment and other court filings:[1]

AMARVEL BIOTECH is a chemical manufacturer based in the city of Wuhan in Hubei Province, China, that has exported vast quantities of the precursor chemicals used to manufacture fentanyl and its analogues.  A synthetic opioid that is 50 times more potent than heroin, fentanyl is now 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 devastated communities across the United States and are fueling the ongoing opioid epidemic, which killed at least 105,263 Americans between February 2022 and January 2023 alone. 

AMARVEL BIOTECH has openly advertised online its shipment of fentanyl precursor chemicals to the United States and to Mexico, where drug cartels operate clandestine laboratories, synthesize finished fentanyl at scale, and distribute the deadly fentanyl into and throughout the United States.  Through its website and a host of other storefront sites, AMARVEL BIOTECH has targeted precursor chemical customers in Mexico, including by advertising fentanyl precursors as a “Mexico hot sale”; guaranteeing “100% stealth shipping” abroad; and posting to its websites documentation of AMARVEL BIOTECH shipping chemicals to Culiacan, the home city of the Sinaloa Cartel, one of the dominant drug trafficking organizations in the Western Hemisphere and which is largely responsible for the massive influx of fentanyl into the United States in recent years.

AMARVEL BIOTECH has also endeavored to thwart law enforcement interdiction of its precursor chemical shipments.  AMARVEL BIOTECH has advertised, for example, the company’s ability to use deceptive packaging — such as packaging indicating the contents are dog food, nuts, or motor oil — to ensure “safe” delivery to the United States and Mexico. 

Over the past eight months, during the course of an undercover investigation by the DEA, AMARVEL BIOTECH and its principal executive, WANG, its marketing manager, CHEN, and its sales representative, YANG, shipped more than 200 kilograms from China to the United States of precursor chemicals used to make fentanyl and its analogues.  AMARVEL BIOTECH, WANG, CHEN, and YANG shipped the precursors to the United States intending that the chemicals would be used to produce fentanyl and its analogues in New York, and they agreed to continue supplying multi-ton shipments of fentanyl precursors despite being told that Americans had died after consuming fentanyl made from the chemicals that the defendants had sold. 

For example, on or about November 17, 2022, a DEA confidential source (“CS-1”) wrote to YANG using an encrypted messaging application, “You know I making fentanyl,” and “Is not safe.”  YANG replied, “i know.”  On or about December 1, 2022, YANG wrote to CS-1, promising that CS-1 would be “happy with our product” and noting that CS-1 would “be able to synthesize fentanyl.”  In exchange for payment in cryptocurrency, AMARVEL BIOTECH thereafter shipped from China to New York approximately 999.7 grams of the fentanyl precursor 1-boc-4-AP, approximately 1,002.6 grams of the fentanyl precursor 1-boc-4-piperidone, and approximately 893.6 grams of the methamphetamine precursor methylamine. 

In or about March 2023, WANG and CHEN met in person with an individual whom CS-1 represented was CS-1’s boss but was in fact another DEA confidential source (“CS-2”).  During the meeting, WANG and CHEN discussed AMARVEL BIOTECH’s ability to supply ton-quantities of fentanyl precursors to New York for CS-1 and CS-2’s fentanyl manufacturing operation.  After CS-2 stated that CS-2 wanted a different formula for manufacturing fentanyl and that several of CS-2’s American customers had purportedly died, WANG and CHEN advised they had “a lot of customers in America and Mexico” who could provide technical assistance with fentanyl production. 

After the March 2023 meeting, AMARVEL BIOTECH, WANG, CHEN, and YANG agreed to sell CS-1 and CS-2 approximately 210 kilograms of fentanyl precursors in exchange for payment in cryptocurrency.  During an April 10, 2023, video call with WANG and CHEN, CS-2 stated that the approximately 210 kilograms of fentanyl precursors would be used to manufacture approximately 50 to 55 kilograms of fentanyl — an amount that could contain approximately 25 million deadly doses.    

In or about May 2023, AMARVEL BIOTECH, WANG, CHEN, and YANG sent to the United States the shipment ordered by CS-1 and CS-2.  On or about May 5, 2023, the DEA retrieved the precursor shipment from a warehouse near Los Angeles, California.  Lab testing confirmed the presence of a precursor chemical for a fentanyl analogue.  In an encrypted messaging group chat with CS-1, CS-2, WANG, and CHEN, YANG explained that “New York, the United States, has been strict in checking the precursors of the ‘final product’ some time ago, so for the sake of safety, this time it is sent to California.”

In or about June 2023, WANG and CHEN met again with CS-2.  During the meeting, WANG and CHEN discussed with CS-2 a multi-ton order of fentanyl precursor chemicals.  WANG and CHEN also discussed the need to take additional measures to protect themselves from detection and interdiction of their shipments “because recently American government . . . seized some Mexican group and they followed the routes to China,” where the U.S. Government found “our competitor in China” — an apparent reference to fentanyl-related charges filed in the Southern District of New York and announced in April 2023 against, among others, leadership of the Sinaloa Cartel and certain China-based precursor chemical company executives.[2] 

*                *                *

A table containing the charges and minimum and maximum potential penalties for AMARVEL BIOTECH, a company in China; WANG, 35, of China; CHEN, 31, of China; and YANG, of China, is set forth below.  The minimum and maximum potential 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.

Count

Defendants

Minimum and Maximum Penalties

Count One: Fentanyl Trafficking Conspiracy

AMARVEL BIOTECH, WANG, CHEN, and YANG

Mandatory minimum sentence of 10 years in prison; maximum sentence of life in prison

Fine of the greatest of $50 million for organizations or $10 million for individuals, twice the gross pecuniary gain from the offense, or twice the gross pecuniary loss to others from the offense

Count Two: Conspiracy to Import Fentanyl Precursor Chemical with Intent to Manufacture Fentanyl

AMARVEL BIOTECH, WANG, CHEN, and YANG

Maximum sentence of 20 years in prison

Fine of the greatest of $500,000 for organizations or $250,000 for individuals, twice the gross pecuniary gain from the offense, or twice the gross pecuniary loss to others from the offense

Count Three: Importation of Fentanyl Precursor Chemical with Intent to Manufacture Fentanyl

AMARVEL BIOTECH, WANG, and YANG

Maximum sentence of 20 years in prison

Fine of the greatest of $500,000 for organizations or $250,000 for individuals, twice the gross pecuniary gain from the offense, or twice the gross pecuniary loss to others from the offense

Count Four: Importation of Methamphetamine Precursor Chemical

AMARVEL BIOTECH, WANG, and YANG

Maximum sentence of 10 years in prison

Fine of the greatest of $500,000 for organizations or $250,000 for individuals, twice the gross pecuniary gain from the offense, or twice the gross pecuniary loss to others from the offense

Count Five: Conspiracy to Commit Money Laundering

AMARVEL BIOTECH, WANG, CHEN, and YANG

Maximum sentence of 20 years in prison

Fine of the greatest of $500,000 or twice the value of the monetary instrument or funds involved in the laundering

Mr. Williams praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit.  Mr. Williams also thanked the DEA Bangkok Country Office, DEA Wellington Country Office, DEA Beijing Country Office, DEA Honolulu District Office, DEA New York Organized Crime Drug Enforcement Task Force (“OCDETF”) Strike Force, DEA Riverside District Office, DEA Special Testing Laboratory, the Office of International Affairs of the Department of Justice’s Criminal Division, the Royal Thai Police Narcotics Suppression Bureau, the Fiji Police Force Narcotic Bureau, the Fiji Office of the Director of Public Prosecutions, and the U.S. Attorney’s Office for the District of Hawaii for their assistance.

This case is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Kevin Sullivan and Alexander Li are in charge of the prosecution.

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

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

[2] United States v. Ivan Archivaldo Guzman Salazar, et al., No. 23 Cr. 180 (S.D.N.Y. Apr. 4, 2023). 

U.S. v. Amarvel Biotech et al Indictment

Damian Williams, the United States Attorney for the Southern District of New York, announced that JOSEPH JAMES O’CONNOR, a/k/a “PlugwalkJoe,” a U.K. citizen, was sentenced today to five years in prison for his role in a wide array of cybercrime offenses.  O’CONNOR was extradited from Spain on April 26, 2023, and pled guilty on May 9, 2023, before U.S. District Judge Jed S. Rakoff to two sets of charges: (i) conspiracy to commit computer hacking and other charges pending in the Southern District of New York relating to a fraudulent scheme perpetrated by O’CONNOR and his co-conspirators to use a cyber intrusion technique known as a SIM swap attack to steal cryptocurrency, then valued at approximately $794,000, from a Manhattan-based cryptocurrency company and then to launder the proceeds of the scheme (the “SDNY Case”), and (ii) a set of charges filed in the Northern District of California, and transferred to the SDNY under Federal Rule of Criminal Procedure 20, relating to O’Connor’s role in the July 2020 hack of Twitter, computer intrusions related to takeovers of TikTok and Snapchat user accounts, and cyberstalking two separate victims (the “NDCA Case”).  Judge Rakoff imposed today’s sentence.

According to the publicly filed charging documents against O’CONNOR, court filings, and statements made in court:

The SDNY Case

During a cyber intrusion known as a subscriber identity module (“SIM”) swap attack, cyber threat actors gain control of a victim’s mobile phone number by linking that number to a SIM card controlled by the threat actors, resulting in the victim’s calls and messages being routed to a malicious unauthorized device controlled by the threat actors.  The threat actors then typically use control of the victim’s mobile phone number to obtain unauthorized access to accounts held by the victim that are registered to the mobile phone number.

Between approximately March 2019 and May 2019, O’CONNOR and his co-conspirators perpetrated a scheme to use SIM swaps to conduct cyber intrusions in order to steal a large amount of cryptocurrency from a Manhattan-based cryptocurrency company (“Company-1”), which, at all relevant times, provided wallet infrastructure and related software to cryptocurrency exchanges around the world. 

As part of the scheme, O’CONNOR and his co-conspirators successfully perpetrated SIM swap attacks targeting at least three Company-1 executives.  Following a successful SIM swap attack targeting one of the executives on or about April 30, 2019, O’CONNOR and his co-conspirators successfully gained unauthorized access to multiple Company-1 accounts and computer systems.  On or about May 1, 2019, through their unauthorized access, O’CONNOR and his co-conspirators stole and fraudulently diverted cryptocurrency of various types (the “Stolen Cryptocurrency”) from cryptocurrency wallets maintained by Company-1 on behalf of two of its clients.  The Stolen Cryptocurrency was worth at least approximately $794,000 at the time of the theft and is currently worth more than $1.6 million.

After stealing and fraudulently diverting the Stolen Cryptocurrency, O’CONNOR and his co-conspirators laundered it through dozens of transfers and transactions and exchanged some of it for Bitcoin using cryptocurrency exchange services.  Ultimately, a portion of the Stolen Cryptocurrency was deposited into a cryptocurrency exchange account controlled by O’CONNOR.

The NDCA Case

Between 2019 and 2020, O’CONNOR participated in a variety of crimes associated with exploitation of social media accounts, online extortion, and cyberstalking.

In July 2020, O’CONNOR participated in a conspiracy to gain unauthorized access to social media accounts maintained by Twitter, Inc. (“Twitter”).  In early July 2020, O’CONNOR’s co-conspirators used social engineering techniques to obtain unauthorized access to administrative tools used by Twitter to maintain its operations.  Those co-conspirators were able to use the tools to transfer control of certain Twitter accounts from their rightful owners to various unauthorized users.  In some instances, the co-conspirators took control themselves and used that control to launch a scheme to defraud other Twitter users.  In other instances, the co-conspirators sold access to Twitter accounts to others.  O’CONNOR communicated with others regarding purchasing unauthorized access to a variety of Twitter accounts, including accounts associated with public figures around the world.  A number of Twitter accounts targeted by O’CONNOR were subsequently transferred away from their rightful owners.  O’CONNOR agreed to purchase unauthorized access to one Twitter account for $10,000.

O’CONNOR also accessed without authorization one of the most highly visible TikTok accounts in August 2020, which was associated with a public figure with millions of followers (“Victim-1”).  O’CONNOR and his associates obtained unauthorized access to Victim-1’s account via a SIM swap after discussing a variety of celebrities to target, and O’CONNOR used his unauthorized access to Victim-1’s platform to post self-promotional messages, including a video in which O’CONNOR’s voice is recognizable.  O’CONNOR also stated publicly, via a post to Victim-1’s TikTok account, that he would release sensitive, personal material related to Victim-1 to individuals who joined a specified Discord server.

O’CONNOR targeted another public figure (“Victim-2”) in June 2019.  O’CONNOR and his associates obtained unauthorized access to Victim-2’s account on Snapchat via a SIM swap.  They used that access to obtain sensitive materials, to include private images, that Victim-2 had not made publicly available.  O’CONNOR sent copies of these sensitive materials to his associates.  O’CONNOR and his associates also reached out to Victim-2 and threatened to publicly release the stolen sensitive materials unless Victim-2 agreed to publicly post messages related to O’CONNOR’s online persona, among other things.

Lastly, O’CONNOR stalked and threatened a minor victim (“Victim-3”) in June and July 2020.  In June 2020, O’CONNOR orchestrated a series of swatting attacks on Victim-3.  A “swatting” attack occurs when an individual makes a false emergency call to a public authority in order to cause a law enforcement response that may put the victim or others in danger.  On June 25, 2020, O’CONNOR called a local police department and falsely claimed that Victim-3 was making threats to shoot people.  O’CONNOR provided an address that he believed was Victim-3’s address, which would have the result of causing a law enforcement response.  That same day, O’CONNOR placed another call to the same police department and stated that he was planning to kill multiple people at the same address.  In response to that call, the police department dispatched every on-duty officer to that address in reference to an armed and dangerous individual.  O’CONNOR sent other swatting messages that same day to a high school, a restaurant, and a sheriff’s department in the same area.  In those messages, O’CONNOR represented himself as either Victim-3 or as a resident at the address he believed was Victim-3’s.  The following month, O’CONNOR called multiple family members of Victim-3 and threatened to kill them.

The NDCA Case was transferred to the Southern District of New York pursuant to Federal Rule of Criminal Procedure 20 and consolidated with the SDNY Case before Judge Rakoff.

*                *                *

O’CONNOR, 24, of the United Kingdom, pled guilty before Judge Rakoff to the following charges: (i) as part of the SDNY Case — conspiracy to commit computer intrusions, conspiracy to commit wire fraud, and conspiracy to commit money laundering; and (ii) as part of the NDCA Case — conspiracy to commit computer intrusion, two counts of committing computer intrusions, making extortive communications, two counts of stalking, and making threatening communications.  In addition to the prison term, O’CONNOR was sentenced to THREE years of supervised release.  O’CONNOR was further ordered to pay $794,012.64 in forfeiture.

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation.  He also thanked the Department of Justice’s Office of International Affairs for its assistance in the extradition.

The SDNY Case is being handled by the Complex Frauds and Cybercrime Unit of the United States Attorney’s Office for the Southern District of New York.  Assistant U.S. Attorney Olga I. Zverovich is in charge of the prosecution of the SDNY Case.  The NDCA Case is being handled by the U.S. Attorney’s Office for the Northern District of California and the Computer Crime and Intellectual Property Section (“CCIPS”) of the Department of Justice.  Assistant U.S. Attorney Andrew F. Dawson and CCIPS Assistant Deputy Chief Adrienne L. Rose are in charge of the prosecution of the NDCA Case.

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, 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 WILSON BASTON, a/k/a “Chanon Gordon,” a/k/a “William Baston,” a/k/a “Jackie Wilson,” with wire fraud, securities fraud, and aggravated identity theft in connection with a scheme to defraud investors in a series of purported real estate investments managed by BASTON and the entity Gordon Management Group (“GMG”).  BASTON was arrested this morning in New York and was presented in federal court this afternoon.

U.S. Attorney Damian Williams said: “As alleged, Wilson Baston used a fake name to conceal his prior convictions and to solicit more than $10 million as part of a series of brazen real estate scams against innocent New Yorkers.  Today’s arrest demonstrates this Office’s commitment to stopping recidivist fraudsters like Baston and to seeking justice for victims of financial frauds.”

FBI Assistant Director in Charge Michael J. Driscoll said: “As alleged, the defendant ran a fraudulent scheme which used funds intended for real estate investment to repay other investors or use on lavish personal expenses.  This fraud, like many Ponzi schemes, guaranteed large returns on investment, but proved too good to be true.  The FBI will continue to ensure that fraudsters are held responsible for their scams in the criminal justice system.”

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

Between 2018 and 2023, WILSON BASTON engaged in a scheme to defraud investors in a series of purported real estate investments managed by GMG.  In order to defraud his investors, BASTON falsely represented that he would use investor money to fund real estate transactions in the New York City area.  However, in truth and in fact, BASTON operated GMG as a Ponzi scheme.  Rather than use investment contributions to fund real estate transactions as he promised, BASTON instead used funds from new and existing investors to repay money that was owed to other investors.  BASTON also misappropriated investor funds by spending them on personal expenses such as payments to a luxury carmaker.

BASTON typically made false promises of guaranteed short-term, high rates of return on investments in real estate deals, with additional guarantees on the principal investment.  On many occasions, BASTON initially repaid both the principal and interest as promised to garner trust with his investors and entice them to continue investing in GMG — and in many cases, to invest additional, larger sums of money.  BASTON then ceased paying the victims the promised interest and did not return the principal on the deals they had invested in.

Eventually, when victims began to complain to BASTON about not getting their money as promised, BASTON provided increasingly outlandish excuses and avoided responding to their inquiries.  At times, BASTON also gave false excuses and explanations as to why the investors had not been paid. 

In some instances, BASTON paid investors with the funds he received from existing investors, or the funds of new investors, rather than from any purported investments, in a Ponzi-like fashion.  BASTON also used certain investment funds for personal expenditures.  Further, in order to avoid detection and falsely instill confidence in his investors, BASTON, who was previously convicted in federal court of 17 counts of mail and wire fraud for operating a similar fraudulent investment scheme, hid his true identity and the fact of his prior conviction from his investors by falsely representing that his name was “Chanon Gordon.”

*                *                *

WILSON BASTON, 62, of Brooklyn, New York, is charged with one count of wire fraud and one count of securities fraud, each of which carries a maximum sentence of 20 years in prison, and one count of aggravated identity theft, which carries a two-year mandatory sentence in addition to any sentence imposed.

The statutory maximum and mandatory 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.

Mr. Williams praised the outstanding work of the FBI on the investigation.  Mr. Williams further thanked the U.S. Securities and Exchange Commission for its assistance and cooperation in this investigation.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Alex Rossmiller and Nicholas Folly are in charge of the prosecution.

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

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[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.

U.S. v. Baston Indictment

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 that the United States has settled a federal civil rights lawsuit alleging that the TOWN/VILLAGE OF HARRISON (“HARRISON”) and its Fire Department (the “HARRISON FIRE DEPARTMENT”) discriminated against a female firefighter on the basis of her sex and retaliated against her in violation of Title VII of the Civil Rights Act of 1964.  The Consent Decree was approved yesterday by U.S. District Judge Cathy Seibel.

U.S. Attorney Damian Williams said: “As part of the settlement, the Town of Harrison has admitted that it never took any disciplinary action against a male firefighter who ultimately pled guilty to harassing a female firefighter.  That type of response to illegal workplace harassment is abhorrent and undermines citizens’ faith in their local government.  Pursuant to the Consent Decree, the Town of Harrison is required to implement comprehensive policy changes.  I want to commend the bravery of Angela Bommarito, who fought back against discrimination and made this Consent Decree possible.  This Office will always stand with victims of violations of our nation’s civil rights laws.”

Assistant Attorney General Kristen Clarke said: “All employees deserve a workplace free from sexual harassment and must be able to report harassment without fear of retaliation by employers.  The Justice Department will continue to vigorously pursue all cases to ensure that all workers are guaranteed the rights and protections promised by our Nation’s laws.”

As part of the Consent Decree, HARRISON and the HARRISON FIRE DEPARTMENT made factual admissions, including the following:

• In May 2015, the HARRISON FIRE DEPARTMENT had no active female firefighters.  In June 2015, Angela Bommarito joined the HARRISON FIRE DEPARTMENT, together with one other female volunteer firefighter.

• HARRISON and the HARRISON FIRE DEPARTMENT ultimately became aware that after Bommarito ended a relationship with Henry Mohr, a senior firefighter, Mohr repeatedly called her, followed her (including while driving a Fire Department official vehicle), and repeatedly drove by her house.  In addition, Bommarito complained to certain members of the HARRISON FIRE DEPARTMENT leadership about Mohr’s harassment.

• In January 2016, Bommarito went to the HARRISON Police Department and filed a report against Mohr.  HARRISON’S then-Police Chief met with Mohr and told him that he wanted “to make sure this whole thing dies” and get Mohr “out of this whole situation.”  The Police Chief said to Mohr that Bommarito’s presence at the firehouse was a “temptation,” which was “hard to resist sometimes.”

• The then-Police Chief also met with Bommarito.  During their meeting, the Police Chief suggested that he could arrest Bommarito for her presentation of what the Police Chief claimed was incomplete and false information to the Police Department regarding her relationship with Mohr.  The Police Chief prepared a resignation letter for Bommarito, which stated that she would resign from the Fire Department.  Bommarito signed the resignation letter.

• HARRISON and the HARRISON FIRE DEPARTMENT never took any disciplinary action against Mohr.  In May 2016, Mohr was arrested for his harassment of Bommarito.  Later that year, Mohr pled guilty to harassment in the second degree, in violation of New York Penal Law 240.26.03.

Under the Consent Decree approved by the Court, HARRISON and the HARRISON FIRE DEPARTMENT must maintain an anti-discrimination policy that includes prohibitions on discrimination, sexual harassment, and retaliation, as well as provisions that require objective fact-finding investigations into complaints of policy violations.  HARRISON and its FIRE DEPARTMENT must also provide training to relevant personnel on prohibited employment practices and corresponding investigation procedures.  The Consent Decree further requires HARRISON and the HARRISON FIRE DEPARTMENT to provide information to the United States regarding complaints and investigations relating to charges of discrimination while the Consent Decree remains in effect.  The Consent Decree also requires that HARRISON maintain recent improvements to the HARRISON FIRE DEPARTMENT firehouse, which have provided additional facilities and features for female firefighters.  Finally, the Consent Decree requires the HARRISON FIRE DEPARTMENT and HARRISON Police Department to maintain policies relating to use of HARRISON FIRE DEPARTMENT vehicles and limitations on the disclosure of non-public sensitive information obtained by HARRISON Police Department employees in connection with criminal investigations.  

As part of the resolution, the Defendants have also agreed to pay a total of $425,000, which will consist of an up-front cash payment to Bommarito and a sum to fund the purchase of an annuity contract to make future periodic payments to Bommarito as well as payments to her attorney for reasonable attorneys’ fees.  This is one of the largest payments by a local government in an employment discrimination case brought by the United States on behalf of a single individual.

*                *                *

Mr. Williams thanked the Equal Employment Opportunity Commission (“EEOC”) for its initial investigation of Bommarito’s charge filed with the EEOC.

This case is being handled by the Office’s Civil Rights Unit in the Civil Division.  Assistant U.S. Attorney Charles S. Jacob is in charge of the case.

Harrison Consent Decree

Damian Williams, the United States Attorney for the Southern District of New York, and Ivan J. Arvelo, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced today that the United States had filed and settled a civil forfeiture action against $12 million derived from the sale of stolen Southeast Asian antiquities by indicted antiquities dealer Douglas Latchford.  The Settlement with the daughter of the late Douglas Latchford, who died in 2020, resolves claims that Latchford transferred the proceeds from the sale of stolen antiquities to bank accounts in the Bailiwick of Jersey.  As part of the Settlement, Latchford’s daughter has also agreed to the forfeiture of a 7th Century bronze statue depicting the four-armed goddess Durga, which is alleged to have been stolen from Vietnam in 2008 and which Latchford allegedly purchased using tainted funds.  The proposed settlement is subject to review by a district judge in the Southern District of New York.

U.S. Attorney Damian Williams said: “For years, Douglas Latchford made millions from selling looted antiquities in the U.S. art market, stashing his ill-gotten gains offshore.  This historic forfeiture action and settlement shows that we will be relentless in following the money wherever it leads to fight the illicit trade in cultural patrimony.”

HSI Special Agent in Charge Ivan J. Arvelo said: “The late Douglas Latchford was a prolific dealer of stolen antiquities.  His complicity in numerous illicit transactions over several decades garnered him millions of dollars in payments from buyers and dealers in the United States, of which as part of this agreement, $12 million will be rightfully forfeited by his estate.  HSI New York celebrates the pending repatriation of any outstanding artifacts from Latchford’s illegally obtained collection to their rightful owners and reaffirms our commitment to disrupting the illicit trafficking of cultural property, art, and antiquities.”

According to the allegations in the Complaint and the Stipulation filed in Manhattan federal court on June 22, 2023:[1]

In 2019, Latchford was indicted in the Southern District of New York with wire fraud conspiracy and other crimes related to a multi-year scheme to sell looted Cambodian antiquities on the international art market, primarily by creating false provenance documents and falsifying invoices and shipping documents, including misrepresenting the country of origin of artworks.  See United States v. Latchford, 19 Cr. 748 (AT) (the “Indictment”).  In September 2020, the Indictment was dismissed due to the death of Latchford.

Between 2003 and 2020, Latchford maintained bank accounts in New York, the United Kingdom, and the Bailiwick of Jersey (“Jersey”).  During those years, Latchford received more than $12 million in his New York and U.K. accounts as payment for his sale of stolen and smuggled Southeast Asian antiquities to buyers and dealers in the United States.  As part of those sales, Latchford provided false provenance and/or made false statements on shipping records and importation records when those antiquities were imported into the United States.  Latchford then transferred at least $12 million in illegally derived proceeds (the “$12 Million”) to his bank accounts in Jersey.

In 2008 and 2009, Latchford used funds derived from the sale of stolen and smuggled antiquities to purchase a 7th Century bronze statue depicting the four-armed goddess Durga (the “Durga”), pictured below:

 According to bank and email records, including correspondence with his bankers, Latchford traveled to Vietnam in November 2008 to purchase a piece of art and instructed his bankers to send around $2 million to the bank account of a person with a Vietnamese email address.  In January 2009, Latchford emailed a dealer a photograph, below, of the Durga lying on its back, covered in what appears to be dirt and minerals indicative of recent excavation.  Latchford identified My Son, a United Nations Educational, Scientific, and Cultural Organization World Heritage site located in Vietnam, as the location where the Durga was recovered. 

Under the terms of the stipulation and order of settlement, Latchford’s daughter (the “Claimant”) consents to forfeiture of the $12 Million and the Durga.  The United States has agreed not to object to the lifting by Jersey of a freeze order on any remaining funds as defined in the settlement agreement.  The parties recognize that nothing in the Stipulation constitutes an admission of liability, fault, or guilt on the part of the Claimant, who expressly denies fault, liability, or wrongdoing. 

*                *                *

Mr. Williams thanked HSI for its outstanding work on this investigation, which he noted is ongoing, and praised its ongoing efforts to find and repatriate stolen and looted cultural property.  Mr. Williams also thanked the U.S. Department of Justice’s Office of International Affairs, the Law Officers’ Department of the Bailiwick of Jersey, and authorities in the United Kingdom for their cooperation and assistance.

This matter is being handled by the Office’s Money Laundering and International Criminal Enterprises Unit.  Assistant U. S. Attorney Jessica Feinstein is in charge of the case.

The allegations contained in the Complaint are merely accusations.

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[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.

Latchford Complaint Latchford Stipulation and Settlement

 

Damian Williams, the United States Attorney for the Southern District of New York, announced today that BRIJESH GOEL, a former investment banker at Goldman Sachs, was convicted of insider trading and obstruction of justice.  GOEL was convicted after a seven-day trial before U.S. District Judge P. Kevin Castel and is scheduled to be sentenced on October 19, 2023.

U.S. Attorney Damian Williams said: “Brijesh Goel, a senior banker at a leading investment bank, betrayed the trust of his employer and unlawfully shared inside information with his squash partner in an agreement to trade on that information.  A federal jury has now convicted Goel of insider trading, and he faces time in prison for his conduct.  Today’s verdict should remind those in the capital markets that if you engage in insider trading, we will catch you and hold you accountable.”

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

BRIJESH GOEL was an investment banker at Goldman Sachs in New York, New York.  In that position, GOEL received confidential, internal emails directed to Goldman Sachs’s Firmwide Capital Committee and Credit Markets Capital Committee, which contained detailed information and analysis about potential merger-and-acquisition transactions Goldman Sachs was considering financing.  In violation of the duties that he owed to Goldman Sachs, GOEL misappropriated that confidential information and tipped a friend (the “Friend”), who worked at another investment bank in New York, New York, with the names of potential target companies from those internal emails during in-person meetings (such as when the two met at New York Health and Racquet Club).  The Friend then used that confidential information to trade call options, including short-dated, out-of-the-money call options, in brokerage accounts that were in the name of the Friend’s brother.  GOEL and the Friend agreed to split the profits from their trading.  Between approximately 2017 and 2018, GOEL tipped the Friend on at least six deals in which Goldman Sachs was involved, yielding total illegal profits of approximately $280,000. 

Between approximately May and June 2022, GOEL also obstructed investigations by a Grand Jury in the Southern District of New York and the U.S. Securities and Exchange Commission.  Specifically, GOEL deleted and asked the Friend to delete electronic communications regarding the insider trading scheme, including during an in-person meeting that the Friend consensually recorded.

*                *                *

GOEL, 38, of New York, New York, was convicted of four counts of securities fraud and one count of obstruction of justice, each of which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit securities fraud and tender offer fraud, which carries a maximum sentence of five years in prison. 

The statutory maximum penalties 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 Federal Bureau of Investigation.  Mr. Williams further thanked the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority for their assistance and cooperation in this investigation. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Joshua A. Naftalis, Samuel P. Rothschild, and Andrew Thomas are in charge of the prosecution. 

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced today that LENNY REYES was charged with being a felon in possession of ammunition during a shooting that occurred on the afternoon of March 8, 2023, near the intersection of East 167th Street and Sherman Avenue in the Bronx.  REYES was transferred to federal custody this morning and was presented today before U.S. Magistrate Judge Gabriel W. Gorenstein.

U.S. Attorney Damian Williams said: “As alleged, Lenny Reyes fired at a group of individuals outside a bodega in the Bronx, provoking a gunfight and endangering the lives of his intended victims and other bystanders.  Thanks to the swift action of the prosecutors of this Office and our law enforcement partners, the defendant is now being held accountable for his reckless actions.”

FBI Assistant Director in Charge Michael J. Driscoll said: “As alleged, Reyes recklessly endangered the lives of others when he fired a gun in the direction of another individual in the Bronx on March 8, 2023.  As a previously convicted felon, Reyes was not permitted to possess ammunition, and, as today’s action demonstrates, the FBI and our NYPD partners will continue to hold accountable those who put others’ lives at risk and violate our firearms laws.”

NYPD Commissioner Keechant L. Sewell said: “The alleged violent and dangerously reckless actions of this defendant will never be tolerated in New York City.  Illegal guns are a grave threat to our public safety, and the NYPD works tirelessly to ensure that the people who carry and shoot them are held accountable.  I want to thank the U.S. Attorney’s Office for the Southern District of New York, the New York Field Office of the FBI, and everyone else who aided in this investigation and arrest.”

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

On or about March 8, 2023, REYES ran toward a group of people assembled on the sidewalk near 1217 Sherman Avenue in the Bronx.  Video footage from the scene shows REYES running towards the group with a handgun pointed at them.  The group began to flee.  REYES fired the handgun in the direction of an individual located behind a car parked on the side of Sherman Avenue.  A still image of REYES firing the shot is below:

REYES’s gun then appeared to malfunction, and he fled the scene as another individual fired six shots at him. 

A shell casing discharged by REYES’s gun was recovered from the ground at the scene of the shooting.  REYES was not permitted to possess ammunition because of prior felony convictions.

*                *                *

LENNY REYES, 43, of the Bronx, New York, is charged with possessing ammunition after a felony conviction, which carries a maximum sentence of 15 years in prison.

The statutory maximum penalty is prescribed by Congress and is 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 FBI and NYPD.  Mr. Williams also thanked the Bronx County District Attorney’s Office for their assistance in this case.

The case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Henry Ross is 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.

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[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.

U.S. v. Reyes Complaint

Damian Williams, the United States Attorney for the Southern District of New York, and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced charges against ANTHONY GOMEZ alleging that on June 16, 2023, he fired a 9mm bullet at NYPD officers in broad daylight on a busy street in the Bronx while he was on leave from a federal halfway house where he was completing his sentence for armed robbery.  Following the shooting, GOMEZ hid inside of a residential building, and eight hours later, he was arrested by the NYPD.  GOMEZ was presented today before U.S. Magistrate Judge Gabriel W. Gorenstein.

U.S. Attorney Damian Williams said: “As alleged, the defendant fired a loaded firearm aimed at officers of the NYPD.  At that time, he was on leave from the halfway house at which he was completing his federal sentence for other violent felony offenses involving firearms.  Worse still, the defendant allegedly committed this shooting in the bright light of a summer Friday night while numerous New Yorkers, including young children and families, were on the sidewalk and had to duck and run for safe cover.  Anyone who brings gun violence to our community and targets law enforcement officers who work hard every day to keep New Yorkers safe will be prosecuted to the full extent of the law.”

NYPD Commissioner Keechant L. Sewell said: “By allegedly escaping from federal custody and brazenly shooting a gun at uniformed NYPD officers in broad daylight on a busy Bronx street, this repeat criminal has proven that he is a dangerous threat to our community.  I commend the work of our courageous NYPD officers in arresting and removing this violent felon from our streets, and the Office of the U.S. Attorney for the Southern District of New York for its work in prosecuting this case.”

According to the allegations in the Complaint:[1]

NYPD officers witnessed GOMEZ attempting to hide a firearm in the front-right wheel well of a vehicle parked on a residential street in the Bronx.  When he realized he had been caught, GOMEZ grabbed the gun and tried to run from police.  Still images from surveillance footage are below:

While attempting to flee, GOMEZ came upon additional NYPD officers, pointed the firearm at them several times, and fired a shot at them.  Below are stills from surveillance video of the shooting in which the NYPD officers are circled in yellow in the first image, and GOMEZ is circled in red in the second image.

After shooting the firearm at NYPD officers, GOMEZ continued to flee, hid inside a residential building, and was subsequently arrested by NYPD outside of a neighboring building with a rooftop that connects to the residential building in which GOMEZ hid.

Below are photographs of the shell casing of the 9mm luger bullet fired by GOMEZ and the deformed fired bullet lodged in the door frame of a vehicle that was parked on the street during the shooting.

GOMEZ was not permitted to possess ammunition because of his prior federal convictions for conspiracy to commit Hobbs Act robbery and using, carrying, and possessing a firearm during a crime of violence.

GOMEZ committed this shooting while he was away on an approved pass from the halfway house at which he was residing.  GOMEZ failed to return to the halfway house before his designated curfew and is thus considered to have escaped from federal custody.

*                *                *

GOMEZ, 33, of the Bronx, New York, is charged with possession of ammunition after a felony conviction, which carries a maximum sentence of 15 years in prison, and escape from custody, 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 a judge. 

Mr. Williams praised the outstanding investigative work of the NYPD and thanked the United States Marshals Service and the Bronx County District Attorney’s Office for their assistance.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Chelsea L. Scism is 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.

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

U.S. v. Gomez Complaint

Damian Williams, the United States Attorney for the Southern District of New York, announced that JASON KURLAND, a New York lawyer, and CHRISTOPHER CHIERCHIO were sentenced today and yesterday for their participation in schemes to defraud KURLAND’s prominent lottery-winning clients of more than $100 million.  KURLAND, who was convicted at trial in July 2022 of wire fraud, honest services wire fraud, money laundering, and conspiracy to commit wire fraud and money laundering, was sentenced to 13 years in prison.  CHIERCHIO, who pled guilty to one count of conspiracy to commit wire fraud and money laundering, was sentenced to five years in prison.  U.S. District Judge Nicholas G. Garaufis imposed both sentences.

U.S. Attorney Damian Williams said: “The trial of Jason Kurland proved that Kurland violated his solemn duties as a lawyer and as an officer of the Court by stealing and misappropriating more than $100 million from his clients, who were some of the largest lottery winners in U.S. history.  Just before trial, Christopher Chierchio pled guilty to assisting Kurland in this fraud, while personally pocketing more than $25 million of the lottery winners’ money.  Now, the sentences imposed by Judge Garaufis show that for these defendants who made the lottery winners their victims, their luck has run out, and this Office will prosecute anyone who chooses to engage in fraud – no matter their title or degree.”  

According to the Indictment, the evidence presented in court during trial, and other statements made during court proceedings:

Between mid-2018 and mid-2020, KURLAND was a successful partner at a Long Island law firm, earning approximately $500,000 in annual compensation.  Through public advertisements and self-promotion, KURLAND built a niche practice representing lottery jackpot winners across the country.  KURLAND marketed himself widely in the national media as the “Lottery Lawyer,” touting expertise in counseling individuals and families who had won lotteries and consequently achieved sudden wealth.  KURLAND purported to represent dozens of lottery winners throughout the country with total winnings of approximately $3 billion.

Beginning in mid-2018, KURLAND retained three major lottery winners — one won the $1.5 billion Mega Millions lottery, another won the $245 million Powerball jackpot, and the third won the $150 million jackpot (together, the “Lottery Victims”).  The Lottery Victims each paid KURLAND and his law firm hundreds of thousands of dollars so that he could advise them on how to safely invest their money.  Instead, after gaining their trust, KURLAND steered his clients to invest in various risky businesses that he secretly co-owned and controlled with co-defendants Francis Smookler and Frangesco Russo, among others.  In addition to ownership profits from these businesses, KURLAND received undisclosed kickbacks based on a percentage of the Lottery Victims’ investments.  The defendants then used the money from the Lottery Victims’ investments to keep their scheme going and to support their lavish lifestyles, purchasing, among other things, expensive vacations and luxury vehicles, including two yachts and a Porsche.

In text messages and intercepted phone calls, KURLAND and his co-defendants brazenly gloated about defrauding the Lottery Victims.  For example, when KURLAND learned that he had retained the first Lottery Victim, he texted Russo, “Have to figure out how to have this get to us,” referring to KURLAND’s desire to direct the Lottery Victim’s money to their businesses.  KURLAND used the unique attorney-client relationship, which is founded on principles of honesty and loyalty, to his advantage, ensuring that he and his co-defendants secured multimillion-dollar investments.  Following a pre-investment client meeting with one Lottery Victim, KURLAND texted Smookler and Russo, “haven’t talked about the investment yet, but I could not have teed it up better[.]”  Shortly thereafter, that Lottery Victim invested $5 million in one of the defendants’ businesses without knowledge of KURLAND’s ownership in the business.  On a separate occasion, after KURLAND convinced one of the Lottery Victims to unknowingly purchase his and his co-defendants’ entire business for $2 million — a transaction that resulted in a large payout to KURLAND and his co-defendants — KURLAND bragged to Smookler in a text: “Like looking at my bank statement today. Not gonna lie.”  Motivated by greed, KURLAND and the co-defendants haphazardly invested the Lottery Victims’ money in high-risk deals, which turned out to be a Ponzi scheme.  As it became apparent that their high-risk investments were in peril, KURLAND texted Smookler, “let me know if I’m keeping the Panamera [a Porsche model], or have to go back to my Lexus.”  Within a little more than a year, a large portion of the Lottery Victims’ investment capital, totaling more than $40 million, was lost.

In April 2020, in an effort to try to recoup their losses and conceal their fraud from the Lottery Victims, KURLAND, Russo, and Smookler resorted to investing in Personal Protective Equipment (“PPE”) deals.  CHIERCHIO was the middleman for the PPE deals.  CHIERCHIO quickly capitalized on KURLAND’s precarious situation and need for quick returns, egging him on to “go deep with me here” and promising that KURLAND could “make all [his] losses back.”  In turn, KURLAND stole $19.5 million from one of the Lottery Victims’ accounts.  Only a portion of this money was ever used for the purported PPE deals while millions of dollars were skimmed off the top by CHIERCHIO and the other co-defendants.  In total, KURLAND’s misrepresentations, along with the actions of his co-defendants, caused the Lottery Victims losses in excess of $80 million, as well as an additional $19.5 million that was stolen by KURLAND directly from one of the Lottery Victims.  

*                *                *

In addition to their prison terms, KURLAND, 49, of Dix Hills, New York, and CHIERCHIO, 54, of Queens, New York, were sentenced to three years of supervised release.  KURLAND was ordered to pay $64,600,000 in forfeiture, and his restitution will be determined by the Court within 90 days of today’s sentencing.  CHIERCHIO was further ordered to pay $26,550,000 in forfeiture and $30,550,000 in restitution.

Mr. Williams praised the work of the Federal Bureau of Investigation on this case.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Danielle Kudla, Louis A. Pellegrino, and Olga Zverovich from the Southern District of New York, and Assistant U.S. Attorney Brian Morris from the Eastern District of New York are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that JONATHAN GARCIA, a/k/a “Jayo,” was found guilty at trial of the May 2017 murder of Joshua Flores in aid of racketeering.  GARCIA shot and killed Flores in front of a playground on a residential street in Queens, New York, while Flores was running away from GARCIA.  The verdict followed a four-day trial before U.S. District Judge Valerie E. Caproni.

U.S. Attorney Damian Williams said: “Jonathan Garcia gunned down his victim, 23-year-old Joshua Flores, to gain standing within the violent Latin Kings street gang.  Then, Garcia bragged about the murder for years as he advanced in the ranks of the Latin Kings and engaged in additional violence and drug trafficking with his fellow gang members.  Today, a unanimous jury held Garcia accountable for his brutal killing of Joshua Flores and the devastating impact of his crimes on the community.  This Office remains fully committed to working with our law enforcement partners to root out gang violence from the streets of New York City.”

According to court filings and the evidence presented in court during the trial:

GARCIA is a member of a racketeering enterprise known as the Latin Kings and, specifically, the set or “tribe” of the Latin Kings known as the Black Mob, which operates in the Bronx, Manhattan, Queens, Brooklyn, and Long Island.  In order to enrich the enterprise, protect and expand its criminal operations, enforce discipline among its members, and retaliate against members of rival gangs, members and associates of the Black Mob committed, conspired, attempted, and threatened to commit acts of violence; distributed and possessed with intent to distribute narcotics, including heroin, fentanyl, and crack; committed robberies; and obtained, possessed, and used firearms.  In December 2019 and April 2021, several members and associates of the Black Mob, including its senior-most leaders, were charged with racketeering offenses, narcotics conspiracy, and firearms offenses.

GARCIA has been a member of the Latin Kings since at least 2012.  On May 18, 2017, GARCIA brought a firearm to a meeting with other Latin Kings members with whom he had been arguing and who intended to revoke his membership in the Latin Kings.  During the meeting, next to a park in a residential area of Queens, GARCIA began arguing with other gang members.  When the argument escalated, one of GARCIA’s associates fired a warning shot into the air, and gang members immediately began running away.  GARCIA then took the firearm from his associate and shot at the fleeing gang members, hitting Joshua Flores, who was trying to run away.  The bullet went through Flores’s back, into his jaw, and killed him.  The murder elevated GARCIA’s status within the Latin Kings, including the Black Mob, with whom GARCIA committed additional crimes in the years after the murder. 

*                *                *

GARCIA, 29, of Queens, New York, was found guilty of (i) conspiracy to commit racketeering, which carries a maximum term of life in prison; (ii) murder in aid of racketeering, which carries a mandatory term of life in prison or death; (iii) narcotics conspiracy, which carries a maximum term of life in prison and a mandatory minimum term of 10 years in prison; and (iv) use of a firearm in furtherance of a drug trafficking offense, which carries a maximum term of life in prison and a mandatory minimum term of seven years in prison, which must be served consecutively to any other term of in prison. 

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

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation 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 United States 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 Narcotics Unit.  Assistant U.S. Attorneys Adam Hobson, David Robles, and Patrick Moroney, with the assistance of Paralegal Specialist Sam Dobro, are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll,  the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Steven A. Nigrelli, the Acting Superintendent of the New York State Police (“NYSP”), announced today the arrest of NICHOLAS ORSINI and JAMIE ORSINI, who were each charged in a Complaint with one count of carjacking resulting in death and one count of conspiracy, each related to the 2020 murder of JAMIE ORSINI’s ex-husband, Steven Kraft.  The ORSINIs will be presented in federal court later today.

U.S. Attorney Damian Williams said: “A little over three years ago, Nicholas and Jamie Orsini allegedly plotted to and did kill Jamie’s ex-husband, Steven Kraft.  Their alleged scheme was sophisticated — it involved burner phones, stealing and dumping Kraft’s car, and, ultimately, disposing of Kraft’s body.  In doing so, the Orsinis denied Kraft’s family — including Kraft’s children with Jamie — the dignity of having a proper burial.  This complaint shows that no matter how well you cover up your heinous act, law enforcement will not relent until they have uncovered your crimes.”

FBI Assistant Director in Charge Michael J. Driscoll said: “The charges today allege that the defendants planned, practiced, and carried out a heinous series of actions in an attempt to get away with murdering Steven Kraft.  This complaint today demonstrates our continued commitment to the community – the FBI will ensure those involved in such horrendous violence are held responsible in the criminal justice system.”

NYSP Acting Superintendent Steven A. Nigrelli said: “I commend our State Police members and our partners with the FBI and the U.S. Attorney’s Office for their tireless efforts to find justice for the grieving loved ones of Mr. Kraft.  These two murderous individuals allegedly deliberately took the life of another person and will now be held accountable for their actions.  State Police and our partners will continue to work together to keep our communities safe and make sure those who commit senseless, violent acts are placed behind bars.”

According to the allegations made in the Complaint:[1]

In 2020, JAMIE ORSINI and NICHOLAS ORSINI planned to, and did, murder Steven Kraft — who was JAMIE ORSINI’s ex-husband and the father of two children with her — take and get rid of Kraft’s car, and dispose of Kraft’s body, covering their tracks.

During the days leading up to April 28, 2020, the ORSINIs began preparing to murder Steven Kraft at their home in Beacon, New York, and to cover up that murder.  Among other things, they purchased a 10x100 foot paint tarp, duct tape, a Tyvek suit and boots, and a “burner phone,” all paid for in cash.  They also drove from their home in Beacon, New York, to a location in the City of Newburgh, New York, in what would be a “dry run” for how they ultimately got rid of Kraft’s car.  On April 28, 2020, the ORSINIs carjacked and murdered Kraft.  That afternoon, Kraft picked up his children from the ORSINIs’ home in Beacon.  The ORSINIs followed Kraft and activated their burner phone before returning home.  Kraft brought his children back to the ORSINIs’ at approximately 7:00 p.m.; he was never seen again.  After falsely telling a co-worker that he was not coming to work because his wife’s car broke down, NICHOLAS ORSINI drove Kraft’s car along the same circuitous route the pair travelled in their dry run the day before from their home in Beacon to the same location in Newburgh.

After leaving Kraft’s car on the street, NICHOLAS ORSINI walked over a mile to a gas station.  He used the burner phone to call a taxi to take him home and then threw out the burner phone.

In the days after the murder and carjacking, the ORSINIs continued to cover up their crimes.  Among other things, they bought a new burner phone (changing the number on it at least once), drove repeatedly to and from Amsterdam, New York — where NICHOLAS ORSINI had family — which is more than 120 miles north of Beacon, staying for no more than a few hours before returning to Beacon, and purchased equipment that can be used to chop up and burn a body.

In particular, on April 29, 2020, NICHOLAS ORSINI — who, like JAMIE ORSINI, left his own phone at home in Beacon — purchased a new burner phone and then drove approximately two-and-a-half hours to Amsterdam either by himself or with JAMIE ORSINI, stayed for less than three hours, and then drove back to Beacon.  The next day, on April 30, 2020, NICHOLAS ORSINI used his phone to search for “How to view your location history in google maps.”  On May 1, 2020, the ORSINIs again drove to and from Amsterdam, again leaving their personal phones behind but using their burner phone.  Later that day, the ORSINIs changed the phone number of their burner phone in an apparent attempt to hide their tracks.

The next day, NICHOLAS ORSINI used his phone to search for “Orange County News” (the City of Newburgh is in Orange County) and “Montgomery County News” (Amsterdam is in Montgomery County).  At about the same time that he was conducting those searches, NICHOLAS ORSINI texted his mother: “Who did u tell I was coming up.”  He then went to a Home Depot and a Walmart before using Google to search for “is galvanized steel fireproof.”  Not long thereafter, NICHOLAS ORSINI returned to the Home Depot and purchased two 31-gallon galvanized steel round trash cans, a coarse stainless-steel rod, an angle grinder with grinding wheel, five metal disks, three 32-ounce bottles of odorless charcoal grates, an axe, and a flame lighter.  The next morning, he returned to the Home Depot to purchase 16 bundles of firewood.

*                *                *

NICHOLAS ORSINI, 35, and JAIME ORSINI, 36, both of Amsterdam, New York, are each charged with one count of carjacking resulting in death, which carries a maximum potential sentence of life in prison or death, and one count of conspiracy, which carries a maximum potential 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 defendants would be determined by a judge.

Mr. Williams praised the NYSP and the FBI for their outstanding work on the investigation.  Mr. Williams also thanked the Dutchess County District Attorney’s Office.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Kaiya Arroyo and Michael D. Maimin 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.

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

U.S. v. Jamie and Nicholas Orsini Complaint

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a Complaint charging RAWINDER DHILLON and AMNINDER SINGH, the owners of a construction company, with participating in a scheme to submit fraudulent bonds to the New York State Governor’s Office of Storm Recovery (“GOSR”) in order to obtain payments on false pretenses in connection with construction projects funded by the United States Department of Housing and Urban Development (“HUD”).  The defendants were arrested this morning and will be presented in Manhattan federal court later today before U.S. Magistrate Judge Robert W. Lehrburger.

U.S. Attorney Damian Williams said: “New Yorkers rely on the New York State Governor’s Office of Storm Recovery and the construction companies and subcontractors supported by GOSR to rebuild after devastating storms.  As alleged, Rawinder Dhillon and Amninder Singh greedily defrauded GOSR and obtained more than $5 million of construction payments on false pretenses.  Thanks to our partnership with the Federal Bureau of Investigation, Dhillon and Singh will now be brought to justice for their conduct.”

FBI Assistant Director in Charge Michael J. Driscoll said: “The defendants allegedly conspired to obtain over five million dollars from the state of New York based on phony construction surety bonds.  Unfortunately, this is another example of a program intended to help communities recover from disaster being targeted for manipulation and fraud.  The FBI is committed to ensuring that individuals who conspire to commit fraud against the government face the consequences for their schemes.”

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

GOSR was established in 2013 – following Hurricane Irene, Tropical Storm Lee, and Superstorm Sandy – to centralize recovery and rebuilding efforts in impacted areas of New York State.  GOSR utilizes federal funding to provide aid for housing recovery, small businesses, community reconstruction, and infrastructure.  DHILLON and SINGH owned and operated a construction company based in Staten Island, New York (“the Construction Company”).  The Construction Company was awarded contracts by GOSR in connection with certain construction projects (the “Construction Projects”) funded by HUD. 

For each of the Construction Projects, the Construction Company was required to obtain surety performance bonds (meant to ensure satisfactory completion of a construction company’s contractual obligations) and payment bonds (meant to ensure payment by a construction company to subcontractors and/or vendors supplying labor and/or materials).  In or about April 2021, the Construction Company emailed to GOSR documents purporting to be the required performance bonds and payment bonds for the Construction Projects.  Following the submission of the purported bonds, GOSR paid the Construction Company more than approximately $5.4 million in connection with the Construction Projects.

In or about February 2022, a subcontractor (the “Subcontractor”) that had contracted with the Construction Company to perform roofing work in connection with one of the Construction Projects contacted GOSR to report that the Construction Company had not paid the Subcontractor for its work.  In response, GOSR provided the Subcontractor with a copy of one of the purported bonds so that the Subcontractor could obtain payment from the insurance carrier.  However, when the Subcontractor contacted the insurance broker that allegedly issued the bond, the insurance broker informed the Subcontractor, in substance and in part, that the insurance broker had no record of issuing the bond and that the bond was fraudulent.  Thereafter, the insurance broker informed GOSR, in substance and in part, that each of the purported payment and performance bonds provided by the Construction Company to GOSR were fraudulent.  Accordingly, on or about February 20, 2022, GOSR terminated its contracts with the Construction Company.

*                *                *

DHILLON, 32, of Staten Island, New York, and SINGH, 37, of New Hyde Park, New York, are each charged with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory two-year consecutive sentence. 

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

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

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Alexandra S. Messiter is 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.

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[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 herein should be treated as an allegation.

U.S. v. Dhillon and Singh Complaint

An Ohio man today pleaded guilty to attempting to provide material support to a designated foreign terrorist organization and attempting to murder U.S. military service members based on his efforts to help the Islamic State of Iraq and al-Sham (ISIS) to attack and kill U.S. soldiers in the Middle East.

Cole Bridges, aka Cole Gonzales, 22, of Stow, pleaded guilty before U.S. District Judge Lewis J. Liman. According to court documents, Bridges joined the U.S. Army in approximately September 2019 and was assigned as a cavalry scout in the Third Infantry Division based in Fort Stewart, Georgia. Beginning in at least 2019, Bridges began researching and consuming online propaganda promoting jihadists and their violent ideology. Bridges also expressed his support for ISIS and jihad on social media. In or about October 2020, Bridges began communicating with an FBI online covert employee (the OCE), who was posing as an ISIS supporter in contact with ISIS fighters in the Middle East. During these communications, Bridges expressed his frustration with the U.S. military and his desire to aid ISIS. Bridges then provided training and guidance to purported ISIS fighters who were planning attacks, including advice about potential targets in New York City. Bridges also provided the OCE with portions of a U.S. Army training manual and guidance about military combat tactics, for use by ISIS.

In or about December 2020, Bridges began to supply the OCE with instructions for the purported ISIS fighters on how to attack U.S. forces in the Middle East. Among other things, Bridges diagrammed specific military maneuvers intended to help ISIS fighters maximize the lethality of attacks on U.S. troops. Bridges further provided advice about the best way to fortify an ISIS encampment to repel an attack by U.S. Special Forces, including by wiring certain buildings with explosives to kill the U.S. troops. Then, in January 2021, Bridges provided the OCE with a video of himself in his U.S. Army body armor standing in front of a flag often used by ISIS fighters and making a gesture symbolic of support for ISIS. Approximately a week later, Bridges sent a second video in which Bridges, using a voice manipulator, narrated a propaganda speech in support of the anticipated ambush by ISIS on U.S. troops.

Attempting to provide material support to ISIS carries a maximum sentence of 20 years in prison, and attempting to murder U.S. military service members carries a maximum sentence of 20 years in prison. Bridges is scheduled to be sentenced on Nov. 2.

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 Assistant Director Robert R. Wells of the FBI Counterterrorism Division made the announcement.

The FBI’s New York Joint Terrorism Task Force, which primarily consists of investigators and analysts from the FBI, the New York City Police Department, and over 50 other federal, state and local agencies, is investigating the case. The U.S. Army Counterintelligence, the FBI Washington Field Office, the FBI Atlanta Field Office and its Savannah Resident Agency, the FBI Cleveland Field Office, the FBI’s Counterterrorism Division, the U.S. Attorney’s Office for the Southern District of Georgia, the Air Force Office of Special Investigations, U.S. Army Criminal Investigation Command and the U.S. Army Third Infantry Division provided valuable assistance.

Assistant U.S. Attorneys Sam Adelsberg and Matthew Hellman for the Southern District of New York and Trial Attorney Michael Dittoe of the National Security Division’s Counterterrorism Section are prosecuting the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that COLE BRIDGES, a/k/a “Cole Gonzales,” pled guilty to attempting to provide material support to a designated foreign terrorist organization and attempting to murder U.S. military service members based on BRIDGES’s efforts to assist the Islamic State of Iraq and al-Sham (“ISIS”) to attack and kill U.S. soldiers in the Middle East.  BRIDGES pled guilty today before U.S. District Judge Lewis J. Liman.

U.S. Attorney Damian Williams said: “As he admitted in court today, Cole Bridges attempted to orchestrate a murderous ambush on his fellow soldiers in service of ISIS and its violent ideology.  Bridges’s traitorous conduct was a betrayal of his comrades and his country.  Thanks to the incredible work of the prosecutors of this Office and our partners at the FBI and the U.S. Army, Bridges’s malign intent was revealed, and he now awaits sentencing for his crimes.”    

According to the Complaint, the Indictment to which BRIDGES pled guilty, and other documents in the public record, as well as statements made in public court proceedings:

BRIDGES joined the U.S. Army in approximately September 2019 and was assigned as a cavalry scout in the Third Infantry Division based in Fort Stewart, Georgia.  Beginning in at least 2019, BRIDGES began researching and consuming online propaganda promoting jihadists and their violent ideology.  BRIDGES also expressed his support for ISIS and jihad on social media.  In or about October 2020, BRIDGES began communicating with a Federal Bureau of Investigation (“FBI”) online covert employee (the “OCE”), who was posing as an ISIS supporter in contact with ISIS fighters in the Middle East.  During these communications, BRIDGES expressed his frustration with the U.S. military and his desire to aid ISIS.  BRIDGES then provided training and guidance to purported ISIS fighters who were planning attacks, including advice about potential targets in New York City.  BRIDGES also provided the OCE with portions of a U.S. Army training manual and guidance about military combat tactics, for use by ISIS.

In or about December 2020, BRIDGES began to supply the OCE with instructions for the purported ISIS fighters on how to attack U.S. forces in the Middle East.  Among other things, BRIDGES diagrammed specific military maneuvers intended to help ISIS fighters maximize the lethality of attacks on U.S. troops.  BRIDGES further provided advice about the best way to fortify an ISIS encampment to repel an attack by U.S. Special Forces, including by wiring certain buildings with explosives to kill the U.S. troops.  Then, in January 2021, BRIDGES provided the OCE with a video of himself in his U.S. Army body armor standing in front of a flag often used by ISIS fighters and making a gesture symbolic of support for ISIS.  Approximately a week later, BRIDGES sent a second video in which BRIDGES, using a voice manipulator, narrated a propaganda speech in support of the anticipated ambush by ISIS on U.S. troops.

*                *                *

BRIDGES, 22, of Stow, Ohio, pled guilty to attempting to provide material support to ISIS, which carries a maximum sentence of 20 years in prison, and attempting to murder U.S. military service members, which carries a maximum sentence of 20 years in prison.  BRIDGES is scheduled to be sentenced by Judge Liman on November 2, 2023, at 2:00 p.m.

The statutory maximum penalties 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 FBI’s New York Joint Terrorism Task Force, which primarily consists of investigators and analysts from the FBI, the New York City Police Department, and over 50 other federal, state, and local agencies.  Mr. Williams also thanked U.S. Army Counterintelligence, the FBI Washington Field Office, the FBI Atlanta Field Office and its Savannah Resident Agency, the FBI Cleveland Field Office, the FBI’s Counterterrorism Division, the U.S. Attorney’s Office for the Southern District of Georgia, the Air Force Office of Special Investigations, U.S. Army Criminal Investigation Command, the U.S. Army Third Infantry Division, and the Counterterrorism Section of the Department of Justice’s National Security Division for their assistance.

This prosecution is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Sam Adelsberg and Matthew Hellman are in charge of the prosecution, with assistance from Trial Attorney Michael Dittoe of the Counterterrorism Section.

Damian Williams, the United States Attorney for the Southern District of New York, announced that MIHAI IONUT PAUNESCU, a/k/a “Virus,” was sentenced to three years in prison today in Manhattan federal court for conspiracy to commit computer intrusion in connection with running a “bulletproof hosting” service that enabled cybercriminals to distribute the Gozi Virus, the Zeus Trojan, the SpyEye Trojan, and the BlackEnergy malware, all of which were designed to steal confidential financial information.  PAUNESCU also enabled other cybercrimes, such as initiating and executing distributed denial of service (“DDoS”) attacks and transmitting spam.  PAUNESCU previously pled guilty before U.S. Magistrate Judge Valerie Figueredo on February 24, 2023.  He was sentenced today by U.S. District Judge Lorna G. Schofield.

U.S. Attorney Damian Williams said: “Paunescu ran a ‘bulletproof’ hosting service that enabled cyber criminals throughout the world to spread malware that stole confidential financial information, crashed websites, and caused other harm.  By allowing cybercriminals to acquire online infrastructure for their unlawful activity without revealing their true identities, Paunescu’s bulletproof hosting service shielded his criminal customers from both law enforcement and cybersecurity professionals, while enriching himself.  Paunescu now faces prison time and will be required to forfeit his ill-gotten gains.”

In imposing today’s sentence, Judge Schofield said that PAUNESCU facilitated the distribution of “some of the most serious malware circulating at the time” and “made considerable money from it.”

As alleged in the Complaint, the Indictment, other documents in this case, and statements made in court:

The Gozi Virus is malicious computer code or “malware” that stole personal bank account information, including usernames and passwords, from the users of affected computers.  The Gozi Virus infected over one million victim computers worldwide, among them at least 40,000 computers in the United States, including computers belonging to the National Aeronautics and Space Administration (“NASA”), as well as computers in Germany, Great Britain, Poland, France, Finland, Italy, Turkey, and elsewhere.  The Gozi Virus caused tens of millions of dollars in losses to the individuals, businesses, and government entities whose computers were infected.  Once installed, the Gozi Virus – which was intentionally designed to be undetectable by anti-virus software – collected data from the infected computer in order to capture personal bank account information, including usernames and passwords.  That data was then transmitted to various computer servers controlled by the cyber criminals who used the Gozi Virus.  These cyber criminals then used the personal bank account information to transfer funds out of the victims’ bank accounts and ultimately into their own personal possession.

Similar to the Gozi Virus, the Zeus Trojan and the SpyEye Trojan were designed to steal confidential financial information from victims’ computers.  BlackEnergy was initially designed to launch World Wide Web-based DDoS attacks and later upgraded to include the ability to steal account access credentials.

“Bulletproof hosting” services helped cyber criminals distribute the Gozi Virus with little fear of detection by law enforcement.  Bulletproof hosts provided cyber criminals using the Gozi Virus with the critical online infrastructure they needed, such as Internet Protocol (“IP”) addresses and computer servers, in a manner designed to enable them to preserve their anonymity.

PAUNESCU operated a “bulletproof hosting” service that helped cyber criminals to distribute some of the world’s most harmful malware, including the Gozi Virus, the Zeus Trojan, the SpyEye Trojan, and BlackEnergy, as well to as commit other cybercrimes, such as transmitting spam, which is an often used means of distributing malware.  PAUNESCU rented servers and IP addresses from legitimate Internet service providers and then, in, turn rented those resources to cybercriminals; provided servers that cyber criminals used as command-and-control servers to conduct DDoS attacks; monitored the IP addresses that he controlled to determine if they appeared on a special list of suspicious or untrustworthy IP addresses; and relocated his customers’ data to different networks and IP addresses, including networks and IP addresses in other countries, to avoid being blocked as a result of private security or law enforcement scrutiny. 

*                *                *

In imposing the sentence, Judge Schofield gave PAUNESCU credit for the approximately one year and two months that the defendant was held in Romanian and Colombian custody prior to his extradition to the United States.  In addition to his prison sentence, PAUNESCU, 39, of Bucharest, Romania, was ordered to forfeit $3,510,000 and pay restitution in the amount of $18,945.

Mr. Williams praised the investigative work of the Federal Bureau of Investigation.  Mr. Williams also thanked the NASA Office of Inspector General and the Colombian National Police.  In addition, Mr. Williams thanked the Department of Justice’s Computer Crime and Intellectual Property Section for its partnership in this matter.  The U.S. Department of Justice’s Office of International Affairs of the Department’s Criminal Division, the Narcotic and Dangerous Drug Section Judicial Attachés in Bogota, Colombia, and the U.S. Marshal Service provided significant assistance in securing the defendant’s extradition from Colombia.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Sarah Lai is in charge of the prosecution. 

Damian Williams, the United States Attorney for the Southern District of New York, Kenneth A. Polite, Jr., the Assistant Attorney General for the Department of Justice’s Criminal Division, Ismail J. Ramsey, the United States Attorney for the Northern District of California, James C. Lee, the Chief of the Internal Revenue Service-Criminal Investigation (“IRS-CI”), Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), William Mancino, the Special Agent in Charge of the U.S. Secret Service’s Criminal Investigative Division (“USSS”), and Katrina W. Berger, the Acting Executive Associate Director of Homeland Security Investigations (“HSI”), announced the unsealing of charges against ALEXEY BILYUCHENKO and ALEKSANDR VERNER, both Russian nationals.  BILYUCHENKO and VERNER are charged in the Southern District of New York with conspiring to launder approximately 647,000 bitcoins from the 2011 hack of Mt. Gox (the “SDNY Case”).  BILYUCHENKO is separately charged in the Northern District of California with conspiring with Alexander Vinnik to operate the illicit cryptocurrency exchange BTC-e from 2011 to 2017 (the “NDCA Case”).  The SDNY Case has been assigned to U.S. District Judge P. Kevin Castel.  The NDCA Case has been assigned to U.S. District Judge Chhabria. 

U.S. Attorney Damian Williams said: “As cyber criminals have become more sophisticated in their methods of thievery, our career prosecutors and law enforcement partners, too, have become experts in the latest technologies being abused for malicious purposes.  As alleged, Alexey Bilyuchenko and Aleksandr Verner thought they could outsmart the law by using sophisticated hacks to steal and launder massive amounts of cryptocurrency, a novel technology at the time, but the charges unsealed demonstrate our ability to tenaciously pursue these alleged criminals, no matter how complex their schemes, until they are brought to justice.”

Assistant Attorney General Kenneth A. Polite, Jr. said: “This announcement marks an important milestone in two major cryptocurrency investigations.  As alleged in the indictments, starting in 2011, Bilyuchenko and Verner stole a massive amount of cryptocurrency from Mt. Gox, contributing to the exchange’s ultimate insolvency.  Armed with the ill-gotten gains from Mt. Gox, Bilyuchenko allegedly went on to help set up the notorious BTC-e virtual currency exchange, which laundered funds for cyber criminals worldwide.  These indictments highlight the department’s unwavering commitment to bring to justice bad actors in the cryptocurrency ecosystem and prevent the abuse of the financial system.”

NDCA U.S. Attorney Ismail J. Ramsey said: “For years, Bilyuchenko and his coconspirators operated a digital currency exchange that enabled criminals around the world – including computer hackers, ransomware actors, narcotics rings, and corrupt public officials – to launder billions of dollars.  The Department of Justice will work tirelessly to identify cyber criminals, no matter where they are.  And Bilyuchenko and his coconspirators will learn that the Department of Justice has long arms and an even longer memory for crimes that harm our communities.”

IRS-CI Chief James C. Lee said: “Cryptocurrency offers a new way for criminals to steal and launder money, but greed and deceit are nothing new.  IRS-CI is specially equipped to follow the complex financial trail left by criminals, and we are dedicated to holding those accountable for crimes committed.  IRS-CI is proud to stand with our law enforcement partners to announce these indictments.”

FBI Assistant Director in Charge Michael J. Driscoll said: “As alleged in the indictment, the defendants gained unauthorized access to a server used by Mt. Gox to house cryptocurrency wallets.  Mt. Gox was the world’s largest bitcoin exchange at the time, and the defendants used their unauthorized access to steal the bulk of the bitcoins held by Mt. Gox customers.  The FBI and our partners will continue to work tirelessly to protect the integrity of all of our financial markets.”

USSS Special Agent in Charge William Mancino said: “The Secret Service has a long tradition of pursuing and bringing to justice those who aim to exploit our financial systems and target innocent victims.  Working together with our local, state, and federal law enforcement partners, we will continue to investigate criminal organizations that operate in the ever-evolving cyber domain.”

HSI Acting Executive Associate Director Katrina W. Berger said: “Homeland Security Investigations continues to investigate cyber criminals illicitly operating in virtual spaces, and we are proud to have worked collaboratively with our law enforcement partners to bring these two individuals to justice.  Our special agents continue to investigate transnational criminal organizations operating in emerging technologies, leveraging our broad authorities to identify and dismantle those behind sophisticated crypto scams.”

The SDNY Case

According to the allegations in the Indictment unsealed in the Southern District of New York:[1] 

In or about September 2011, BILYUCHENKO, VERNER, and their co-conspirators gained unauthorized access to the server holding the cryptocurrency wallets for Mt. Gox.  At the time, Mt. Gox was the largest bitcoin exchange in existence, servicing thousands of users worldwide, including users in the Southern District of New York.  Mt. Gox stored the cryptocurrency wallets containing its customers’ bitcoin and the corresponding private keys used to authorize bitcoin transfers from those wallets on a computer server in Japan.

BILYUCHENKO, VERNER, and their co-conspirators used their unauthorized access to Mt. Gox’s server to fraudulently cause bitcoins to be transferred from Mt. Gox’s wallets to bitcoin addresses controlled by BILYUCHENKO, VERNER, and their co-conspirators.  From September 2011 through at least May 2014, BILYUCHENKO, VERNER, and their co-conspirators caused the theft of at least approximately 647,000 bitcoins from Mt. Gox, representing the vast majority of the bitcoins belonging to Mt. Gox’s customers.  BILYUCHENKO, VERNER, and their co-conspirators laundered the bulk of the bitcoins stolen from Mt. Gox principally through bitcoin addresses associated with accounts BILYUCHENKO, VERNER, and their co-conspirators controlled at two other online bitcoin exchanges (“Exchange-1” and “Exchange-2”), as well as a particular user account on Mt. Gox itself.

In furtherance of the money laundering scheme, in or about April 2012, BILYUCHENKO, VERNER, and their co-conspirators negotiated and entered into a fraudulent contract (the “Advertising Contract”) to provide purported advertising services to a bitcoin brokerage service based in the Southern District of New York (the “New York Bitcoin Broker”).  Under the guise of the Advertising Contract, in order to conceal and liquidate the bitcoins stolen from Mt. Gox, BILYUCHENKO and VERNER made regular requests to the owner and operator of the New York Bitcoin Broker to make large wire transfers into various offshore bank accounts, including in the names of shell corporations, controlled by BILYUCHENKO, VERNER, and their co-conspirators.  In accordance with these requests, between in or about March 2012 and in or about April 2013, the New York Bitcoin Broker transferred more than approximately $6.6 million to overseas bank accounts controlled by BILYUCHENKO, VERNER, and their co-conspirators.  In exchange for the wire transfers, the New York Bitcoin Broker received “credit” on Exchange-1, through which BILYUCHENKO, VERNER, and their co-conspirators laundered more than 300,000 of the bitcoins stolen from Mt. Gox.  The fraudulent Advertising Contract with the New York Bitcoin Broker enabled BILYUCHENKO, VERNER, and their co-conspirators to conceal and liquidate bitcoins stolen through the Mt. Gox hack. 

Mt. Gox ceased operations in 2014 after the theft was revealed. 

The NDCA Case

According to the allegations in the Indictment unsealed in the Northern District of California:[2] 

BILYUCHENKO worked with Alexander Vinnik and others to operate the BTC-e exchange from 2011 until it was shut down by law enforcement in July 2017.  During that time period, BTC-e was one of the world’s largest cryptocurrency exchanges and was one of the primary ways by which cyber criminals around the world transferred, laundered, and stored the criminal proceeds of their illegal activities.

BTC-e served over one million users worldwide, moving millions of bitcoin worth of deposits and withdrawals and processing billions of dollars’ worth of transactions.  BTC-e received criminal proceeds of numerous computer intrusions and hacking incidents, ransomware events, identity theft schemes, corrupt public officials, and narcotics distribution rings.

*                *                *

The SDNY Indictment charges BILYUCHENKO, 43, and VERNER, 29, both Russian nationals, with conspiracy to commit money laundering.  If convicted of the charge in the SDNY Indictment, each defendant faces a maximum penalty of 20 years in prison.

The NDCA Indictment charges BILYUCHENKO with conspiracy to commit money laundering and operating an unlicensed money services business.  If convicted of the charges in the NDCA Indictment, BILYUCHENKO faces a maximum penalty of 25 years in prison.

The maximum potential sentences set forth above are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the Court.

Mr. Williams praised IRS-CI and the FBI for their work in investigating the SDNY Case.

The SDNY Case is being handled by the Complex Frauds and Cybercrime Unit of the United States Attorney’s Office for the Southern District of New York.  Assistant U.S. Attorney Olga I. Zverovich is in charge of the prosecution of the SDNY Case. 

The NDCA Case is behind handled by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office for the Northern District of California and the Criminal Division’s Computer Crime and Intellectual Property Section (“CCIPS”).  CCIPS Trial Attorney C. Alden Pelker and NDCA Assistant U.S. Attorney Claudia Quiroz, both members of the National Cryptocurrency Enforcement Team, and NDCA Assistant U.S. Attorney Katherine Lloyd-Lovett are prosecuting the case.  The FBI; IRS-CI Oakland Field Office and Cyber Crime Unit in Washington, D.C.; U.S. Secret Service Criminal Investigative Division; and Homeland Security Investigations are investigating the case.  The Justice Department’s Office of International Affairs provided invaluable assistance.

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

 

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[1]  As the introductory phrase signifies, 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.

[2]  As the introductory phrase signifies, 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.

U.S. v. Bilyuchenko and Verner Indictment

Damian Williams, the United States Attorney for the Southern District of New York, and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing today of an Indictment charging ADONYS CASTILLO, a/k/a “Candela,” GERARD VALENTINE FRIAS, a/k/a “Monkey,” JADEL ARAUJO, a/k/a “Negro,” a/k/a “Negromoneymaker,” HENRY MARCANO, a/k/a “KC,” JOSHUA TORRES, EDWIN RAMIREZ, RANDY BAUTISTA, JARYLIZ ORTEGA, ELVIO TORIBIO, and CLAUDY BRATINI, a/k/a “Cilantro,” with conspiring to kidnap a minor in the Bronx, New York.  The defendants have been charged in the violent abduction of a 16-year-old victim (the “Victim”).  The Indictment is assigned to United States District Judge Laura Taylor Swain.

CASTILLO, FRIAS, MARCANO, TORRES, BAUTISTA, ORTEGA, AND TORIBIO were arrested last night and this morning and are expected to be presented later today before U.S. Magistrate Judge Sarah Netburn.  ARAUJO, who is currently in federal custody in connection with a separate firearms offense, and BRATINI, who was previously in state custody and has been transferred to federal custody, will also be presented later today.  RAMIREZ is a fugitive.   

U.S. Attorney Damian Williams said: “As alleged, a 16-year-old child was beaten and kidnapped over the course of 19 hours before he was dumped on a desolate street under an overpass.  The charges announced today hold the perpetrators responsible for their reprehensible crimes.”

According to the allegations in the Indictment unsealed today and statements previously made on the record in this case and related matters:[1]

In the early morning hours of April 26, 2022, the Victim, along with two others, robbed a location where marijuana was sold.  The defendants immediately gave chase, including EDWIN RAMIREZ and JOSHUA TORRES, who discharged a firearm as they pursued the Victim and his friends who had just stolen bags of marijuana from the drug-selling location.  The defendants were able to capture the Victim.  The defendants then held the Victim against his will for approximately 19 hours.  During this time, the Victim was severely beaten and transported from one building in the Bronx to another before being dropped off under an overpass.  The Victim was found by a bystander the next morning on April 27, 2022, after having been left on the street, hog-tied and drifting in and out of consciousness, the night before.  According to a doctor who treated the 16-year-old Victim, the Victim suffered from lacerations to his brain.

All 10 defendants have been charged with conspiracy to kidnap a minor, and RAMIREZ and TORRES have been charged with the use and discharge of a firearm during and in relation to a drug trafficking crime.

*                *                *

A chart containing the names and ages of the defendants who were charged today, the charges, and the minimum and maximum penalties they face is attached.  All of the defendants are residents of the Bronx, New York. 

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

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

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Ni Qian and Jim Ligtenberg 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.

Defendant

Age

Charges

Minimum and Maximum Penalties

ADONYS CASTILLO

27

Kidnapping conspiracy

Mandatory minimum of 20 years in prison; maximum of life in prison

GERARD VALENTINE FRIAS

28

Kidnapping conspiracy

Mandatory minimum of 20 years in prison; maximum of life in prison

JADEL ARAUJO

23

Kidnapping conspiracy

Mandatory minimum of 20 years in prison; maximum of life in prison

HENRY MARCANO

27

Kidnapping conspiracy

Mandatory minimum of 20 years in prison; maximum of life in prison

JOSHUA TORRES

27

Kidnapping conspiracy; use and discharge of a firearm during and in relation to a drug trafficking crime

Mandatory minimum of 30 years in prison; maximum of life in prison

EDWIN RAMIREZ

28

Kidnapping conspiracy; use and discharge of a firearm during and in relation to a drug trafficking crime

Mandatory minimum of 30 years in prison; maximum of life in prison

RANDY BAUTISTA

21

Kidnapping conspiracy

Mandatory minimum of 20 years in prison; maximum of life in prison

JARYLIZ ORTEGA

28

Kidnapping conspiracy

Mandatory minimum of 20 years in prison; maximum of life in prison

ELVIO TORIBIO

27

Kidnapping conspiracy

Mandatory minimum of 20 years in prison; maximum of life in prison

CLAUDY BRATINI

27

Kidnapping conspiracy

Mandatory minimum of 20 years in prison; maximum of life in prison

 

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[1] As the introductory phrase signifies, 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.

U.S. v. Castillo et al Indictment

Damian Williams, the United States Attorney for the Southern District of New York, and Patrick J. Freaney, the Special Agent in Charge of the New York Field Office of the United States Secret Service (“USSS”), announced today the unsealing of an Indictment charging TETIANA BERRIORS with conspiring to commit money laundering and bank fraud in connection with laundering the proceeds of a series of business email compromise (“BEC”) scams that sought to deceive victims into sending nearly $10 million to bank accounts that she and others opened using fake and stolen identities.  The defendant was arrested and will be presented tomorrow before U.S. Magistrate Judge Sarah Netburn in the Southern District of New York.  The case is assigned to U.S. District Judge Mary Kay Vyskocil.

U.S. Attorney Damian Williams said: “Tetiana Berriors exploited the United States financial system to launder millions of dollars of fraud proceeds.  In doing so, she helped victimize over 15 different individuals, businesses, government entities, and public institutions.  In furtherance of her illegal money laundering enterprise, she lied repeatedly to banks and stole the identities of at least three other innocent victims.  Thanks to the efforts of this Office and its law enforcement partners, the defendant will be prosecuted to the full extent of the law.”

USSS Special Agent in Charge Patrick J. Freaney said: “Despite the defendant’s alleged efforts to conceal the wide range of criminal activity targeting individuals, businesses, and government alike, such attempts against discovery were no match for this investigation’s expert professional team.  Today, I am privileged to recognize the invaluable partnerships that fuel the New York law enforcement community’s essential work to fight fraud, and the Secret Service’s New York Field Office especially thanks the Financial Crimes Task Force of the New York City Police Department for their critical assistance in this case.”

As alleged in the Indictment:[1]

From at least in or about December 2020 through at least in or about October 2022, TETIANA BERRIORS laundered funds on behalf of individuals engaged in a series of frauds, primarily BECs, that targeted individuals, public institutions, government entities, and businesses located across the United States.  The victims included, among others, a public research university in Pennsylvania, a housing developer in Texas, and a county-level government in California.

To launder those funds, BERRIORS created over a dozen fraudulent bank accounts, used those accounts to receive funds from victims of the frauds, and rapidly depleted those accounts through cash withdrawals, wire transfers, and cashier’s checks.  Typically, the wire transfers and cashier’s checks were made payable to shell companies that BERRIORS or her co-conspirators controlled.  In total, BERRIORS opened at least 13 fraudulent bank accounts in the name of at least five shell companies using four different female aliases.  Three of those aliases were identities stolen from real individuals.

As a result of the frauds, more than 15 victims were directed to transfer nearly $10 million to bank accounts under the control of BERRIORS and her co-conspirators.  Out of those nearly $10 million, BERRIORS and her co-conspirators successfully stole over $3.5 million in victim funds.

*                *                *

BERRIORS, 49, of Smallwood, New York, was charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison.  BERRIORS was also charged with one count of aggravated identity theft, which carries a mandatory two-year consecutive sentence.

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

Mr. Williams praised the outstanding investigative work of the USSS.  Mr. Williams also recognized the assistance of the New York City Police Department.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Matthew J. King 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.

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[1] As the introductory phrase signifies, 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.

U.S. v. Berriors Indictment

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of Indictments charging DAGOBERTO SOTO-RAMIREZ, a/k/a “Pito,” SAUL ARISMENDY DE LA CRUZ, a/k/a “Nene,” a/k/a “Venom,” EDWIN LUCIANO RODRIGUEZ-GENAO, a/k/a “Pantalla,” SANTIAGO XAVIER MALDONADO, a/k/a “Xavier,” and DIEGO MUELAS-GONZALEZ, a/k/a “Menor,” for their participation in a violent theft crew.  DE LA CRUZ, RODRIGUEZ-GENAO, MALDONADO, and MUELAS-GONZALEZ were arrested this morning and arraigned before U.S. Magistrate Judge Judith C. McCarthy.  SOTO-RAMIREZ has not been arrested at this time.

DAGOBERTO SOTO-RAMIREZ: WANTED BY THE FBI

U.S. Attorney Damian Williams said: “As alleged, this crew stole substantial quantities of cash and valuables from dozens of families in New York and across the country, predominantly targeting Asian-American small business owners.  And, as alleged, they bribed an NYPD detective in an attempt to get away with it.  Corruption, violence, and racially targeted crime are intolerable, and this Office stands with our law enforcement partners in the fight against all three.  Dagoberto Soto-Ramirez, the alleged leader of this violent crew, remains at large.  We encourage anyone who may have additional information regarding Dagoberto Soto-Ramirez’s whereabouts to please call the FBI at 1-800-CALL-FBI.”

FBI Assistant Director in Charge Michael J. Driscoll said: “Over an extended period, the defendants allegedly participated in a string of violent armed robberies and additional crimes designed to conceal the thefts.  The crew went so far as to entice a member of law enforcement to help them evade capture.  The FBI will continue to work diligently everyday to remove violent criminals from our communities.”

NYPD Commissioner Keechant L. Sewell said: “Violent criminal acts like the type alleged today are a disgrace.  When such behavior involves a former police officer who shamelessly exploits their position of power for personal gain, it erodes public trust in law enforcement and tarnishes the reputations of the many thousands of women and men who honorably serve New Yorkers each day.  There will always be zero tolerance in the NYPD for corruption of any kind.  And our investigators, in close partnership with all of our local, state, and federal law enforcement partners, will continue to ensure that it is punished to the fullest extent possible.”

As alleged in the Indictment and Superseding Indictments unsealed in White Plains federal court:[1]

Between 2017 and 2022, SOTO-RAMIREZ organized a crew that committed residential burglaries and home invasion robberies, repeatedly targeting small business owners.  The majority of the targeted victims were Asian-American.  Armed with guns and other weapons, members of the crew stole money, jewelry, and other property from scores of homes in states across the country.  RODRIGUEZ-GENAO, MALDONADO, and MUELAS-GONZALEZ took part in the crew’s criminal scheme, which also included the use of false identification, bank fraud, and laundering theft proceeds.  In addition, SOTO-RAMIREZ and other members of the conspiracy bribed DE LA CRUZ, first an officer and later a detective of the NYPD, who helped members of the crew escape arrest.  As part of his activities with the crew, SOTO-RAMIREZ committed two gunpoint home invasion robberies in Queens.

*                *                *

SOTO-RAMIREZ, 41, of the Bronx, New York, DE LA CRUZ, 31, RODRIGUEZ-GENAO, 48, MALDONADO, 43, and MUELAS-GONZALEZ, 26, all of Queens, New York, are each charged with one count of racketeering conspiracy, which carries a maximum sentence of 20 years in prison.  SOTO-RAMIREZ is additionally charged with two counts of assault with a dangerous weapon in aid of racketeering, each of which carry a maximum sentence of 20 years in prison, and two counts of possession of a firearm, which was brandished, in furtherance of a crime of violence, each of which carry a mandatory minimum sentence of seven years in prison and a maximum sentence of life 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 would be determined by the judge.

Mr. Williams praised the investigative work of the FBI, the Westchester County Joint Organized Crime Task Force, the New York Public Corruption Task Force, the Westchester County Department of Public Safety, the NYPD, the Nassau County Police Department, the New York State Police, and the Fort Lee Police Department.  He added that the investigation is ongoing.  

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

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

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

U.S. v. Soto-Ramirez et al Indictment U.S. v. Muelas-Gonzalez Indictment U.S. v. Maldonado Indictment

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging six defendants — SALIF NDAMA-TRAORE, KYLE EMORDI, KEITH EMORDI, AMADOU TIDIANE BA, MOHAMMED NABI ELIKPLIM AKINOTCHO, and IBRAHIM BOCOUM — with conspiring to commit wire fraud and money laundering in connection with a business email compromise (“BEC”) scheme that used spoofing attacks to deceive victims into sending a total of approximately $5.8 million to bank accounts that had been opened using fake and stolen information.  All six defendants were arrested and will be presented today before U.S. Magistrate Judge Peter Bray in the Southern District of Texas.  The case is assigned to U.S. District Judge Richard M. Berman.

U.S. Attorney Damian Williams said: “Sitting behind their computer screens, the defendants and others used email spoofing to insert themselves into legitimate business transactions and deceived victims across the country into sending millions of dollars to fraudulent bank accounts.  Thanks to the efforts of this Office and its law enforcement partners, the defendants now face the long arm of justice.”

FBI Assistant Director in Charge Michael J. Driscoll said: “As alleged, the defendants engaged in a business email compromise scheme in which they induced the victims to make fraudulent payments totaling more than $5 million.  Additionally, in an attempt to conceal their actions, the defendants withdrew their ill-gotten gains in a manner intended to evade federal reporting requirements.  As today’s action demonstrates, the FBI remains committed to bringing those who engage in fraudulent activity to justice.”

NYPD Commissioner Keechant L. Sewell said: “Business email compromise and money laundering schemes, although not violent, are not victimless and can be devastating to the organizations and individuals who fall prey to them.  While the network of online criminals targeting unsuspecting victims is growing every day, today’s charges should send a clear message to scammers committing fraud – wherever they are based – that they will be identified and held fully accountable.  The NYPD will continue to work tirelessly with all of our law enforcement partners to address this pervasive threat head-on.”

As alleged in the Indictment:[1]

From July 2021 through February 2022, the defendants and others engaged in a fraudulent BEC scheme that involved impersonating legitimate business contacts by email to induce five victims — a hospital, a labor union, a law firm, a real estate closing company, and a logistics company — into remitting payments totaling approximately $5.8 million to fraudulent bank accounts.  Each of the fraudulent bank accounts was opened shortly before the diversion of funds, and at least three accounts were opened using a fake driver’s license or stolen social security number.  Internet protocol registration information also shows that the defendants logged into several of the fraudulent accounts online.

The funds were immediately moved from the fraudulent accounts to bank accounts held in the defendants’ own names or in the name of a defendant-owned company.  The funds were then quickly transferred to additional savings or investment vehicles held in the defendants’ names, withdrawn in cash, or sent to co-defendants through ACH transfers or using a P2P payment service.  Withdrawals were usually made in successive increments of less than $10,000 to avoid triggering federal reporting requirements.  Some funds were pulled back after hitting the fraudulent accounts, resulting in the recovery of approximately $3.14 million and a total loss of approximately $2.66 million.

*                *                *

NDAMA-TRAORE, 39, KYLE EMORDI, 26, KEITH EMORDI, 29, and BOCOUM, 32, all of Houston, Texas; AKINOTCHO, 33, of Cypress, Texas; and BA, 35, of Sugar Land, Texas, were each charged with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit money laundering, which also carries a maximum sentence of 20 years in prison.

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

Mr. Williams praised the outstanding investigative work of the FBI and thanked the U.S. Attorney’s Office for the Southern District of Texas; the U.S. Attorney’s Office for the Eastern District of California; the FBI Field Offices in Columbia (Hilton Head Resident Agency), Houston, and Sacramento; and the police departments of New York City, the City of Beaufort, and Houston for their assistance.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Jane Yumi Chong 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.

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[1] As the introductory phrase signifies, 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.

U.S. v. Ndama-Traore et al Indictment

Damian Williams, the United States Attorney for the Southern District of New York, announced that BHASKARRAY BAROT pled guilty today to wire fraud in connection with engaging in a years-long scheme to defraud his former employer out of approximately $4.4 million.  BAROT pled guilty before U.S. Magistrate Judge Sarah Netburn and is scheduled to be sentenced by U.S. District Judge Andrew L. Carter on September 7, 2023. 

U.S. Attorney Damian Williams said: “For years, Barot created fraudulent invoices and processed them for payment at the Manhattan-based company where he used to work as a procurement manager.  Barot designed the invoices to closely resemble the invoices that the company received from real vendors and other entities owed payment from the company.  But the fraudulent invoices differed in a crucial way: they directed payment into Barot’s pocket.  Today’s guilty plea emphasizes that this Office will seek justice for companies that fall victim to corporate theft.”

According to court filings and statements made in court proceedings:

From at least in or about July 2018, up to and including at least August 2022, BAROT engaged in a scheme to defraud his former employer (the “Company”) of approximately $4.4 million through fake invoices designed to resemble those received from legitimate vendors of the Company.  BAROT used his position as a procurement manager at the Company to process the fraudulent invoices for payment.  When doing so, he often affixed the fake invoices to email messages that he, in some cases, sent in the names of employees of the Company’s real vendors so that it would appear as though the real vendors were seeking payment on the fake invoices.   

The fake invoices, however, stated that payment should be made to entities with names that often differed slightly from those of the real vendor companies.  BAROT then incorporated companies and opened bank accounts in the names of some of the entities listed for payment on the fake invoices so that he could collect the payments that the Company made on the fake invoices.

BAROT repeated these fraudulent tactics with more than a dozen fictitious entities and caused payment from the Company on approximately 40 fake invoices, totaling approximately $4.4 million.

*                *                *

BAROT, 32, of Queens, New York, pled guilty to wire fraud, which carries a maximum potential sentence of 20 years in prison.

The maximum potential sentence in this case is prescribed by Congress and is 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 Federal Bureau of Investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Jeffrey W. Coyle is in charge of the prosecution.

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 – Office of Inspector General (“DOL-OIG”), and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that ELIZABETH TORRES pled guilty today to a workers’ compensation fraud scheme.  TORRES duped the DOL into paying her hundreds of thousands of dollars in federal disability benefits by falsely claiming that she had a debilitating knee injury and, therefore, essentially could not work, but in fact, TORRES was employed full-time for several years during her scheme.  TORRES surrendered today and pled guilty before U.S. District Judge Sidney H. Stein, to whom her case is assigned.

U.S. Attorney Damian Williams said: “The federal workers’ compensation program protects qualifying federal employees who suffer legitimate work injuries.  But some individuals take advantage of this disability benefit program.  As she admitted today, Elizabeth Torres was one such individual.  Torres exploited the program for years by lying, in various respects, in order to steal hundreds of thousands of dollars in disability benefits.  For her crime, Torres now faces potential prison time.”

DOL-OIG Special Agent in Charge Jonathan Mellone said: “Elizabeth Torres defrauded the Office of Workers’ Compensation Programs of hundreds of thousands of dollars by exaggerating the extent of any work-related injury.  She compounded this fraud by failing to inform OWCP for many years about her paid employment.  Protecting the integrity of worker compensation programs administered by the Department of Labor is an important part of the mission of the Office of Inspector General, and we will continue to work with our law enforcement partners to investigate these types of allegations.” 

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

Over the course of several years, ELIZABETH TORRES sought and received compensation under the Federal Employees’ Compensation Act (“FECA”).  FECA provides benefits to civilian federal employees who sustain injuries as a result of their employment.  FECA benefits are administered by the DOL’s Office of Workers’ Compensation Programs (“OWCP”).  In order to receive FECA benefits, a claimant must prove that she is disabled by furnishing medical documentation and other evidence with her claim.

Until approximately 2006, TORRES worked as a Corrections Officer for the Bureau of Prisons (“BOP”).  BOP employees are eligible to receive FECA benefits.  For a number of years, TORRES submitted annual forms to OWCP seeking such benefits.  In these forms, TORRES lied in various respects, including by claiming that: (i) she was significantly disabled; (ii) a dependent was living with her for various years; (iii) she was not receiving any pay for various years; and (iv) she was not working or performing volunteer work.  More specifically, TORRES claimed in substance and in part that she had a debilitating knee injury and was essentially incapable of performing any work because she experienced pain and swelling within 30 minutes of sitting or standing.  But in fact, TORRES was employed full-time from approximately 2015 through 2019 at a drug and alcohol addiction treatment center (the “Clinic”) in New York City, where she served as the Program Director for several years.  On one occasion in 2019, TORRES was caught on video dancing in high-heeled boots, with ease, on the sidewalk outside of the Clinic.  Finally, to conceal her Clinic employment from OWCP, TORRES was paid indirectly through an entity, and her salary payments were disguised as “rent.”

On the basis of TORRES’s false representations to OWCP, TORRES received benefit payments of more than $4,000 per month over the course of several years.

*                *                *

TORRES, 56, of Brooklyn, New York, pled guilty to one count of federal workers’ compensation fraud, which carries a maximum sentence of five years in prison. 

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  TORRES is scheduled to be sentenced by Judge Stein on September 7, 2023, at 2:30 p.m.

Mr. Williams praised the outstanding efforts of the DOL-OIG and FBI.

This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Michael D. Neff and Danielle M. Kudla are in charge of the prosecution.

U.S. v. Torres Information

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a Complaint charging GLENROY WALKER, HOWARD LEVY, SHERRIL BAEZ, NORMA GETTEN, DONNAT POWELL, and GARY WHEELER with conspiring to commit wire fraud by submitting fraudulent applications for loans from the Paycheck Protection Program (“PPP”) administered by the U.S. Small Business Administration (“SBA”).  WALKER and LEVY are also charged with aggravated identity theft.  The defendants were arrested this morning and were presented this afternoon before U.S. Magistrate Judge Judith C. McCarthy in White Plains federal court.

U.S. Attorney Damian Williams said: “As alleged, the defendants schemed to steal millions of dollars from a program Congress created to help struggling small businesses weather the COVID-19 pandemic.  As we continue to recover from the COVID-19 pandemic, this Office will pursue and prosecute the fraudsters that took advantage of a global emergency to greedily line their own pockets.”

FBI Assistant Director in Charge Michael J. Driscoll said: “As alleged, the defendants conspired to fraudulently obtain more than $14 million from the Paycheck Protection Program through applications containing sham documents.  This unfortunately is another example of individuals attempting to scam a program that was designed to help Americans during unprecedented upheaval.  Ensuring that fraudsters who abused the Paycheck Protection Program are brought to justice remains a priority for the FBI.”

According to the Complaint unsealed today:[1]

Between at least July 2020 and February 2022, GLENROY WALKER and HOWARD LEVY operated a scheme to submit fraudulent applications for loans from the SBA’s Paycheck Protection Program.  The PPP was created by Congress to provide billions of dollars in forgivable loans to small businesses struggling to fund payroll and certain other qualifying business expenses because of the effects of the COVID-19 pandemic.  The PPP was overseen by the SBA, which guaranteed loans issued, in the first instance, by commercial lenders.  WALKER and LEVY submitted more than 100 fraudulent PPP loan applications to various financial institutions.  Among other fraudulent misrepresentations, the PPP applications WALKER and LEVY submitted frequently contained phony bank statements and tax documents.  SHERRIL BAEZ, NORMA GETTEN, DONNAT POWELL, and GARY WHEELER all participated in this scheme with WALKER and LEVY by, among other things, participating in the submission of fraudulent applications for their own purported businesses and recruiting other prospective fraudulent PPP applicants into the scheme.  WALKER and LEVY received significant kickbacks from the applicants, including BAEZ, GETTEN, POWELL, and WHEELER, and shared portions of their kickbacks with recruiters, including some of the defendants.

The fraudulent applications submitted by the six defendants collectively sought more than $14.7 million in loans and resulted in the disbursement of more than $4.6 million from various financial institutions, all guaranteed by the SBA.

*                *                *

WALKER, 65, of New Rochelle, New York, LEVY, 60, of the Bronx, New York, BAEZ, 50, of Freeport, New York, GETTEN, 62, of the Bronx, New York, POWELL, 48, of Paterson, New Jersey, and WHEELER, 46, of Mount Vernon, New York, are each charged with conspiracy to commit wire fraud affecting a financial institution.  That charge carries a maximum penalty of 30 years in prison.  WALKER and LEVY are also charged with a single count of aggravated identity theft, which carries a mandatory two-year consecutive sentence.

The minimum and maximum potential sentences 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 work of the FBI.

The prosecution is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Jared Hoffman and Derek Wikstrom 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.

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

u.s._v._walker_et_al_complaint.pdf

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of two Complaints charging five defendants with the armed robberies of two Manhattan jewelry stores on the mornings of January 3, 2023, and May 20, 2023, in which approximately $2 million of jewelry was stolen at gunpoint.  The five defendants were arrested this morning in New York and New Jersey.  FRANK DIPIETRO, VINCENT CERCHIO, VINCENT SPAGNUOLO, and MICHAEL SELLICK were charged by Complaint in connection with the January 3, 2023, robbery of a jewelry store on Madison Avenue in Midtown Manhattan.  SAMUEL SORCE was charged by Complaint in connection with the May 20, 2023, robbery of a jewelry store on Elizabeth Street in lower Manhattan.  DIPIETRO, CERCHIO, SPAGNUOLO, SELLICK, and SORCE will be presented in Manhattan federal court later today before U.S. Magistrate Judge Sarah Netburn.

U.S. Attorney Damian Williams said: “These five defendants allegedly carried out brazen and dangerous daylight robberies of jewelry stores in Manhattan, stealing about $2 million in jewelry at gunpoint.  Dressed as construction workers, the defendants allegedly sought to blend into the busy streets around them before pointing guns at the jewelry stores’ employees and carrying out about $2 million in stolen diamonds and other valuable pieces.  Thanks to the career prosecutors from my Office and our partners at the NYPD and the FBI, the defendants’ alleged armed robbery spree has been shut down.”

FBI Assistant Director in Charge Michael J. Driscoll said: “The defendants allegedly brazenly robbed Manhattan jewelry stores of approximately $2 million worth of merchandise at gunpoint.  Violent robberies, especially those with firearms, will not be tolerated by the FBI and our partners in law enforcement.  The arrests today should serve as a warning to anyone willing to engage in armed robberies – you will face the consequences.”

NYPD Commissioner Keechant L. Sewell said: “The swift arrests in this case reaffirm the NYPD’s steadfast commitment, with its law enforcement partners, to hold everyone accused of violent acts accountable.  The charges these defendants face reflect a callous disregard for life, and they will now be held accountable.  I thank and commend the U.S. Attorney for the Southern District, the New York Field Office of the FBI, and everyone who worked to achieve justice in this case.”

According to the allegations in the Complaints and other publicly filed documents:[1]

On the morning of January 3, 2023, DIPIETRO, CERCHIO, SPAGNUOLO, and SELLICK traveled to Midtown Manhattan together in multiple vehicles.  At approximately 10:20 a.m., an employee of a Midtown Manhattan jewelry store was preparing to place pieces of jewelry into the store’s street-level display case when DIPIETRO and SELLICK, dressed in construction vests, entered the building from Madison Avenue.  As shown in the image below, DIPIETRO pointed a gun at the employee and said “give it to me,” before SELLICK said, “turn around and get in the closet.” 

DIPIETRO and SELLICK fled the store with at least three pieces of high-end diamond jewelry, including an approximately 73-carat necklace (first picture below), an approximately six-carat ring (second picture below), and an approximately 17-carat pair of earrings (third picture below).  DIPIETRO, SELLICK, CERCHIO, and SPAGNUOLO then fled Midtown Manhattan.  Surveillance footage from the area of the robbery indicates that the defendants, including DIPIETRO and CERCHIO, had prepared for the robbery by “casing” the scene the day before.

On the morning of May 20, 2023, employees of a jewelry store on Elizabeth Street in Manhattan had just opened for business when DIPIETRO and SELLICK — again masked and wearing construction vests — entered the store’s street-level front door.  As shown in the image below, SELLICK pointed a gun at the store’s employees and ordered them to the ground, while DIPIETRO gathered jewelry.  After DIPIETRO and SELLICK fled the store with the stolen goods, they first got in a getaway car driven by SORCE — who was also dressed like a construction worker — before switching to a second getaway car driven by SPAGNUOLO.

*                *                *

CERCHIO, 69, of Howard Beach, New York, DIPIETRO, 65, of Red Bank, New Jersey, SELLICK, 67, of Franklin Square, New York, SORCE, 25, of Florham Park, New Jersey, and SPAGNUOLO, 65, of Monmouth Beach, New Jersey, are each charged with one count of Hobbs Act robbery and one count of conspiracy to commit Hobbs Act robbery, each of which carry a maximum sentence of 20 years in prison, and one count of brandishing a firearm during and in connection with a crime of violence, which carries a mandatory minimum sentence of seven years in prison to be imposed in addition to any sentence imposed for the underlying Hobbs Act robbery. 

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

Mr. Williams praised the outstanding investigative work of the NYPD.  Mr. Williams also thanked the FBI for its assistance in this matter.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Alexandra S. Messiter and Justin Horton are in charge of the prosecution.

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

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

u.s._v._sorce_complaint.pdf u.s._v._dipietro_et_al_complaint.pdf

Damian Williams, the United States Attorney for the Southern District of New York, announced that JOSHUA RODRIGUEZ, a/k/a “Suave,” was found guilty at trial of the October 23, 2018, murder of Jaquan Millien in connection with a drug trafficking crime.  RODRIGUEZ shot and killed Millien in the Butler Houses in the Bronx, New York.  During the shooting, RODRIGUEZ shot Millien’s five-year-old son, who was with his father at the time.  Thankfully, his son survived.  The verdict followed a five-day trial before U.S. District Judge Jed S. Rakoff.

U.S. Attorney Damian Williams said: “Jaquan Millien was bringing his five-year-old son to an after-school program — something parents do in New York City every day — when he was gunned down in his building’s stairwell.  His son not only was shot, but he had to see his father die before his eyes.  Today, a unanimous jury returned a verdict within hours that found Rodriguez shot and killed Millien.  While the verdict cannot bring Millien back, we hope today’s verdict brings some measure of justice for Millien’s family and his community.  We remain committed to ridding our neighborhoods of gun violence, and today’s verdict, made possible by the career prosecutors of this Office and our FBI and NYPD law enforcement partners, is an important step in that fight.”

According to the evidence presented in court during the trial:

Between in or about 2012 and in or about 2018, JOSHUA RODRIGUEZ conspired with others to sell marijuana in an apartment building located at 1408 Webster Avenue (the “Apartment Building”).  In connection with his narcotics dealing, on or about October 23, 2018, RODRIGUEZ followed Jaquan Millien and his son into the Apartment Building and into a stairwell.  RODRIGUEZ then fired multiple shots, killing Jaquan Millien and hitting Millien’s son in the arm.

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RODRIGUEZ, 31, of the Bronx, New York, was found guilty of one count of conspiracy to distribute marijuana, which carries a maximum sentence of 20 years in prison; one count of possessing marijuana with intent to distribute for remuneration, which carries a maximum sentence of five years in prison; and one count of using a firearm to commit murder during a drug trafficking crime, which carries a mandatory minimum of five years in prison and a maximum sentence of life 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 a defendant will be determined by the judge.  RODRIGUEZ is scheduled to be sentenced on September 19, 2023.

Mr. Williams thanked the Federal Bureau of Investigation and the New York City Police Department for their outstanding work on the investigation.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Mathew Andrews, Courtney Heavey, and Jim Ligtenberg are in charge of the prosecution, with the assistance of Paralegal Specialist William Coleman.