Southern District of New York

Damian Williams, the United States Attorney for the Southern District of New York, John Gay, the Inspector General of the Port Authority of New York and New Jersey, Office of Inspector General (“PA-OIG”), 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 Ivan J. Arvelo, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced today the unsealing of a Complaint charging JASMIN GADSON, an employee of the Port Authority of New York and New Jersey, with wire fraud and theft of government funds for submitting fraudulent applications to obtain unemployment insurance benefits from the New York State Department of Labor at the height of the COVID-19 pandemic in 2020 and 2021.  During that period, GADSON also allegedly submitted fraudulent applications for loans under the United States Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”).  GADSON was arrested this morning and will be presented this afternoon before U.S. Magistrate Judge Stewart D. Aaron in Manhattan federal court.  

U.S. Attorney Damian Williams said: “Jasmin Gadson, an employee of the Port Authority of New York and New Jersey, allegedly stole government funds intended to help those who were struggling as a result of a national emergency.  This Office will continue to prosecute those who used the COVID-19 pandemic as an opportunity to line their pockets with fraudulently obtained taxpayer money.”

PA-OIG Inspector General John Gay said: “We are appalled that a toll collector, on her own time, allegedly filed for fraudulent government benefits.”  

DOL-OIG Special Agent in Charge Jonathan Mellone said: “An important part of the mission of the U.S. Department of Labor, Office of Inspector General is to investigate allegations of fraud related to Pandemic unemployment insurance programs.  We will continue to work with our law enforcement partners to investigate these types of allegations.”

HSI Special Agent in Charge Ivan J. Arvelo said: “As alleged, Jasmin Gadson not only fraudulently claimed unemployment benefits while actively employed by the Port Authority of New York and New Jersey, but this defendant also defrauded a program intended to assist hardworking Americans who were financially impacted due to the unprecedented COVID-19 health crisis.  HSI will not abide those who engage in theft of federal funds destined to help the financially vulnerable.  I am extremely grateful to our partners at the Port Authority of NY/NJ, Office of the Inspector General and the U.S. Department of Labor, Office of the Inspector General, as well as HSI New York’s Document & Benefit Fraud Task Force for uncovering and investigating Gadson’s criminal scheme that allegedly defrauded U.S. taxpayers out of $78,000.” 

According to the Complaint unsealed today in Manhattan federal court and publicly available information:[1]

JASMIN GADSON is currently employed by the Port Authority of New York and New Jersey, where she has worked since 2015.  Beginning in the summer of 2020 through the fall of 2021, she submitted fraudulent applications for unemployment insurance benefits to the New York State Department of Labor and fraudulent applications for PPP loans to the SBA.  In support of her fraudulent unemployment insurance applications, GADSON falsely claimed, in an initial application and weekly verifications, that the last date that she worked was during the onset of the COVID-19 pandemic in March 2020.  At all times from March 2020 through the present, GADSON was employed by the Port Authority of New York and New Jersey and received salary or paid sick leave or was on unpaid protected parental leave.  During that period, she received full health benefits and was not eligible for unemployment insurance benefits.  In addition, GADSON falsely claimed five-figure net revenues for a business that did not exist in support of her fraudulent PPP loan applications.  

Between both of these schemes, GADSON stole more than $78,000 from the New York State Department of Labor, the SBA, and financial institutions that issued SBA-guaranteed loans.

*                *                *

JASMIN GADSON, 29, of Queens, New York, is charged with wire fraud, which carries a maximum penalty of 20 years in prison, and theft of government funds, which carries a maximum penalty of 10 years in prison.

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

Mr. Williams praised the outstanding investigative work of the PA-OIG, the DOL-OIG, and HSI.  The investigation was conducted by HSI’s Document and Benefit Fraud Task Force (“DBFTF”), a specialized investigative group comprising personnel from various state, local, and federal agencies with expertise in detecting, deterring, and disrupting organizations and individuals involved in various types of document, identity, and benefit fraud schemes.

The case is being prosecuted by the Office’s General Crimes Unit.  Assistant U.S. Attorney Amanda C. Weingarten 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.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that STEVEN SHORT, the former head of Florida-based E.M. Systems & Services LLC and affiliated companies (collectively, “E.M. Systems”), was sentenced today to 78 months in prison for conspiracy to commit wire fraud and bank fraud in connection with his participation in a fraudulent scheme to obtain credit card processing services for his deceptive Florida-based telemarketing operation through a California-based company called CardReady LLC (“CardReady”).  SHORT previously pled guilty to the conspiracy charge and was sentenced today before United States District Judge Loretta A. Preska. 

U.S. Attorney Damian Williams said: “Over a two-year period, Steven Short and his co-conspirators used shell companies to deceive credit card payment processors into processing more than $19 million obtained from more than 19,000 victims nationwide.  Short preyed on vulnerable people in credit card debt, charging fees up to $1,495 in exchange for guaranteeing to reduce their debt and lower their interest rates, but instead generally sent them cookie-cutter booklets with ordinary budgeting advice.”

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

SHORT controlled E.M. Systems.  From approximately 2012 through 2015, SHORT and E.M. Systems carried out a telemarketing fraud scheme in which they used telemarketers to cold-call consumers, targeting consumers with outstanding credit card debt.  In exchange for fees up to $1,495, the cold-callers offered the customers services, including debt consolidation and interest-rate reduction on their debts, which were prohibited by the applicable guidelines from a bank used by SHORT (“Bank-1”) and associated processing entities (the “Guidelines”), and which — as SHORT knew — would produce chargebacks from dissatisfied customers far in excess of the number and rate of chargebacks permitted under the Guidelines.  SHORT and E.M. Systems generated over $19 million in fraud proceeds from more than 19,000 customers through this scheme, resulting in thousands of complaints by customers of fraud and deceptive tactics and requests for millions of dollars in refunds and chargebacks.

In order to charge for E.M. Systems’ purported services via credit cards, SHORT sought access to the credit card processing market through CardReady, a Los Angeles-based company acting as a sales agent in the credit card processing industry.  As part of its business as a sales agent, CardReady found merchants who wanted credit card processing services, such as SHORT, and submitted merchant applications on behalf of those merchants to a Manhattan-based Independent Sales Organization (the “New York ISO”).  The New York ISO then evaluated the merchant applications and referred acceptable merchant accounts up the chain to a payment processor (“Payment Processor-1”) and Bank-1.  Bank-1 and Payment Processor-1, in turn, processed payments to merchants for purchases by customers who had used credit cards.  Under E.M. Systems’ deal with CardReady, CardReady kept approximately one-third of the credit card sale transactions of SHORT and E.M. Systems in exchange for providing them access to the credit card processing network.  

In securing credit card processing for E.M. Systems to process the fees paid by its customers, SHORT and CardReady concealed that E.M. Systems was the true underlying merchant.  Instead, SHORT and his co-conspirators, over a period of more than 20 months, created approximately 26 sham merchant companies, each headed by a “signer” (the “Sham Merchants” and the “Sham Merchant Accounts”).  The 26 signers for the 26 Sham Merchants typically had no business of their own and knew little or nothing about E.M. Systems’ business.  In return for signing paperwork, the signers were paid a nominal fee by CardReady.  These false merchant applications also concealed the Sham Merchant’s true association with E.M. Systems.

By steering E.M. System’s payment processing through these Sham Merchant Accounts, SHORT and CardReady accomplished a number of fraudulent purposes.  First, the use of these Sham Merchant Accounts made it possible for E.M. Systems to conceal its identity from Payment Processor-1 and Bank-1 and to maintain payment card processing.  This was particularly relevant as Payment Processor-1 repeatedly required CardReady to close individual Sham Merchant Accounts because of excessive chargebacks and reports of sales of prohibited services.  SHORT and CardReady then quickly replaced the closed Sham Merchant Accounts with new Sham Merchant Accounts, precluding Payment Processor-1 from shutting down its processing of high-risk merchants.  Second, the fraudulent processing scheme enabled E.M. Systems to spread out its charges, refunds, and chargebacks across multiple Sham Merchant Accounts.  SHORT and CardReady thus enabled E.M. Systems to evade chargeback monitoring programs operated by Bank-1, Payment Processor-1, and the New York ISO.

*                *                *

SHORT, 46, of Tampa, Florida, pled guilty on August 16, 2022, to one count of conspiracy to commit wire fraud and bank fraud.  In addition to the prison sentence, SHORT was sentenced to three years of supervised release and ordered to pay restitution of $1,912,090.05 and forfeiture of $8,833,889.69.

Also charged in this case is Brandon Becker, 51, of Los Angeles, California, whose trial is scheduled to begin on December 4, 2023, before Judge Preska.  Becker is presumed innocent unless and until proven guilty.

Mr. Williams praised the work of the Federal Bureau of Investigation and thanked the Federal Trade Commission for its assistance.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys David Raymond Lewis, Vladislav Vainberg, and Sarah Y. Lai 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 MICHAEL ROWE, a/k/a “MJ,” was charged with being a felon in possession of ammunition during a shooting that occurred on Saturday afternoon, April 29, 2023, on a crowded sidewalk near 46th Street and Ninth Avenue in Manhattan.  ROWE surrendered last night and was presented today before United States Magistrate Judge Stewart D. Aaron.    

U.S. Attorney Damian Williams said: “As alleged, this past Saturday afternoon, Michael Rowe opened fire on a busy sidewalk in Hell’s Kitchen, endangering the life of his intended victim and the lives of countless bystanders.  Thanks to the swift action of our law enforcement partners, the defendant is now being held accountable for his actions.”

FBI Assistant Director in Charge Michael J. Driscoll said: "Rowe's alleged actions endangered numerous innocent people simply attempting to live their lives safely - something we all should feel free to do.  The charges today should serve as a warning to any individual willing to settle arguments in a similar fashion - the FBI and our partners in law enforcement will hold you accountable in the criminal justice system."

NYPD Commissioner Keechant L. Sewell said: “The NYPD will never relent in our fight against gun violence in our city.  And anyone who threatens our public safety with such reckless behavior must be held accountable to the fullest extent of the law.  This work is critically important, and 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 arrest.”

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

On or about April 29, 2023, MICHAEL ROWE got into a disagreement with another individual on the sidewalk in the vicinity of 650 Ninth Avenue in Manhattan.  Video footage from the scene reveals ROWE appearing to express annoyance and then brandishing a firearm on the crowded sidewalk and shooting at the other individual.  Screenshots of video footage showing the argument and ROWE’s subsequent shooting of the individual are below:

A discharged shell casing was recovered from the ground at the scene of the shooting. ROWE was not permitted to possess ammunition because of prior state and federal felony convictions.

*                *                *

MICHAEL ROWE, 23, of the Bronx, New York, is charged with possessing ammunition after a felony conviction, which carries a mandatory minimum sentence of 15 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 defendant will be determined by the judge.

Mr. Williams praised the outstanding work of the FBI and the NYPD.  Mr. Williams also thanked the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the New York County District Attorney’s Office for their assistance in this case.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Frank Balsamello, Peter Davis, and Jamie Bagliebter are in charge of the prosecution.

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that ANAND SINGH was arrested today and charged with one count of attempted enticement of a minor.  The Complaint charges that SINGH communicated with an individual, who he believed to be a 14-year-old girl, on Hily, a dating application, and via text message and made plans to meet the individual at an apartment building to engage in sexual activity.  SINGH was presented today before U.S. Magistrate Judge Judith C. McCarthy in White Plains federal court and detained pending a bail hearing on Wednesday.

U.S. Attorney Damian Williams said: “33-year-old Anand Singh allegedly attempted to entice an individual, who he believed to be a 14-year-old, to meet for sexual purposes, via dating and text apps.  Today’s arrest is a reminder of the inherent danger the internet could potentially pose to our youth and the critical importance to protect them from online predators.”

As alleged in the criminal Complaint:[1]

In December of 2022, SINGH, then an employee of the Westchester County Board of Legislators, used a mobile dating application called “Hily” and text messages to entice an individual posing as a 14-year-old girl to engage in sexual activity with him.  SINGH used the screen name “Anon” to communicate with the individual on the Hily application.  During these communications, SINGH repeatedly expressed, in graphic and unambiguous terms, his desire to engage in sexual activity with the individual and made a plan to meet her at an apartment building in Newark, New Jersey, for the purposes of engaging in sexual activity.  In the early hours of December 17, 2022, SINGH went to the location where he and the individual posing as a 14-year-old girl planned to meet.

*                *                *

ANAND SINGH, 33, of Tarrytown, New York, is charged with one count of attempted enticement of a minor, which carries a mandatory minimum sentence of 10 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 defendant would be determined by the judge.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation’s (“FBI”) Westchester County Safe Streets Task Force.  He also thanked the Westchester County Police Department and Westchester County District Attorney’s Office for their participation and support in this investigation. 

The investigation is ongoing and there may be other victims of this alleged conduct.  If you have information to report concerning ANAND SINGH, please contact the FBI at 1-800-CALL-FBI.

The prosecution is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney Kathryn Wheelock is in charge of the prosecution.  

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today’s conviction in federal court of PAUL FISHBEIN of multiple counts of fraud and aggravated identity theft.  FISHBEIN stole hundreds of thousands of dollars from rental assistance programs administered by New York City’s Human Resources Administration (“HRA”) and New York City’s Housing Preservation & Development (“HPD,” and with HRA, the “Agencies”) by renting out properties throughout the City that he falsely claimed to own and by collecting made-up broker fees.  FISHBEIN was also convicted of Medicaid fraud.  The jury convicted FISHBEIN today following a nearly two-week trial before U.S. District Judge Paul A. Crotty.

U.S. Attorney Damian Williams said:  “New York City assists millions of low-income and vulnerable New Yorkers through different types of programs, including rental assistance programs and Medicaid.  These programs were designed to help New Yorkers in need.  But, as a jury has now found, for years, Fishbein abused those programs to enrich himself.  To do that, he told lie after lie after lie.  He stole money, including federal funds, from the City’s rental assistance programs by lying about being the landlord of homes he didn’t actually own.  He stole the identity of a real estate broker to get the City to pay him made-up broker fees.  And he stole Medicaid benefits by lying to the City about how much money he made.  Today, a unanimous jury has held Fishbein accountable for his yearslong fraudulent schemes.”

According to the Indictment, documents previously filed in the case, and the evidence introduced at trial:

From in or about 2013 through May 4, 2021, FISHBEIN rented out properties in New York City to low-income New Yorkers through the Agencies’ rental assistance programs, collecting rent payments from the Agencies as the purported owner of the properties.  In fact, FISHBEIN was never the owner of those properties and lied to the Agencies to collect the rent payments.  In addition, FISHBEIN lied to HRA that he used the services of a real estate broker to rent out certain properties in order to collect broker fee payments from HRA, also through its rental assistance program.  FISHBEIN used an actual real estate broker’s license and name without her authority to collect these made-up broker fees from the City.  In-need New Yorkers were placed in these properties, which FISHBEIN, because he was not actually the owner of the properties, failed to maintain.  In one instance, the ceiling completely collapsed while a tenant and her family were living in a property FISHBEIN claimed to own.  Through these two schemes, FISHBEIN fraudulently obtained hundreds of thousands of dollars from HRA and HPD, including more than $90,000 in federal funds. 

FISHBEIN was also convicted of healthcare fraud because, from 2014 through May 4, 2021, he lied to New York City’s Medicaid program about how much money he made in order to collect Medicaid benefits.  Medicaid is meant for low-income New Yorkers.  FISHBEIN, each year, told the City that he made only $150 a week, or $7,200 a year, when in reality, he was raking in hundreds of thousands of dollars each year from his rental assistance and broker fee schemes described above.  By lying about his income and assets, the defendant received at least approximately $49,524.80 in Medicaid benefits to which he was not entitled.

*                *                *

FISHBEIN, 49, of Queens, New York, was convicted of one count of wire fraud, one count of mail fraud, one count of theft of government funds, one count of aggravated identity theft, and one count of healthcare fraud.  The wire fraud and mail fraud charges each carry a maximum sentence of 20 years in prison; the theft of government funds and healthcare fraud charges each carry a maximum sentence of 10 years in prison; and the aggravated identity theft charge carries a mandatory two-year sentence, which must run consecutive to any other prison term imposed.   

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 would be determined by the judge.  FISHBEIN is scheduled to be sentenced by Judge Crotty on July 31, 2023.

Mr. Williams praised the outstanding investigative work of the New York City Department of Investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Sarah L. Kushner, Christy Slavik, and Jared Lenow are in charge of the prosecution and were assisted at trial by Paralegal Specialist Joseph Magliocco.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that TAJ EVERLY pled guilty to a deprivation of constitutional rights under color of law.  On May 28, 2020, EVERLY, then a correction officer at Green Haven Correctional Facility, assaulted an individual incarcerated in the custody of the New York State Department of Corrections and Community Supervision (“DOCCS”), striking and tackling the inmate without provocation, and then attempted to obstruct the investigation of his assault by preparing a false report.  EVERLY’s actions deprived the incarcerated individual of the constitutional right to be free from excessive force amounting to cruel and unusual punishment.  EVERLY pled guilty today before U.S. Magistrate Judge Judith C. McCarthy.

U.S. Attorney Damian Williams said: “As he admitted today, former correction officer Taj Everly violated the constitutional rights of an incarcerated individual by using excessive force amounting to cruel and unusual punishment.  The protections afforded by the U.S. Constitution extend to all Americans, including those who are serving time in prison.  When individuals in power abuse their authority to injure the powerless, we will act aggressively to ensure justice is served.”

According to the Superseding Indictment and other documents in the public record as well as statements made in public court proceedings:

EVERLY previously worked as a correction officer assigned to Green Haven Correctional Facility in Stormville, New York.  On May 28, 2020, while on duty, EVERLY assaulted an incarcerated individual without provocation, striking him with a closed fist and then tackling him to the ground.  After the assault, EVERLY falsified a report about the incident, identifying the inmate as the aggressor, thereby obstructing the investigation into the unjustified use of force.

*                *                *

EVERLY, 32, of Cortlandt Manor, New York, pled guilty to a deprivation of constitutional rights under color of law, which carries a maximum sentence of 10 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 would be determined by the judge.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation and the DOCCS Office of Special Investigations.

The case is being handled by the Civil Rights Unit in the Criminal Division.  Assistant U.S. Attorneys Kaiya Arroyo and Lindsey Keenan are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that COOPER MORGENTHAU, the former chief financial officer (“CFO”) of two special purpose acquisition companies (“SPACs”) — African Gold Acquisition Corp. (“AGAC”) and Strategic Metals Acquisition Corp. (“SMAC”) — was sentenced to 36 months in prison for committing wire fraud when he embezzled more than $5 million from the two SPACs.  U.S. District Judge Paul A. Engelmayer imposed today’s sentence

U.S. Attorney Damian Williams said: “With today’s sentencing of Cooper Morgenthau, SPAC promoters have been sent a message that fraud in the SPAC markets will be punished, and greed on Wall Street will be met with serious consequences.”

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

Between approximately June 2021 and August 2022, MORGENTHAU, who was the CFO of AGAC and SMAC, embezzled more than $5 million from the two SPACs.  AGAC had recently had its initial public offering (“IPO”), while SMAC was raising money from private investors in preparation for its anticipated IPO.  MORGENTHAU used the embezzled funds to trade equities and options of so-called “meme stocks” and cryptocurrencies, losing almost all of the money that he stole.  To conceal and facilitate his embezzlement from AGAC, MORGENTHAU fabricated bank statements, which he provided to AGAC’s accountant and auditor; made and caused to be made material misstatements in AGAC’s public filings with the Securities and Exchange Commission (“SEC”); and transferred some of SMAC’s funds to AGAC to cover up the funds he had misappropriated from AGAC. 

*                *                *

MORGENTHAU, 36, of Fernandina Beach, Florida, previously pled guilty to one count of wire fraud.  In addition to his prison term, MORGENTHAU was also ordered to forfeit $5,111,335 and to pay restitution of $5,111,335. 

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation and thanked the SEC for its assistance and cooperation in this investigation. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force and Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Joshua A. Naftalis and Anden Chow are in charge of the prosecution. 

Damian Williams, the United States Attorney for the Southern District of New York, announced that BRIAN KOLFAGE and ANDREW BADOLATO were sentenced today by United States District Judge Analisa Torres.  KOLFAGE was sentenced to 51 months in prison, and BADOLATO was sentenced to 36 months in prison, for their respective roles in carrying out a scheme to defraud hundreds of thousands of donors in connection with an online crowdfunding campaign known as “We Build The Wall” by soliciting donations using false statements and then stealing the resulting donations.

U.S. Attorney Damian Williams said: “Brian Kolfage and Andrew Badolato abused the trust of donors to We Build the Wall and stole hundreds of thousands of dollars in donations to line their own pockets.  The defendants have now been held accountable for their criminal conduct.”

According to court filings and evidence introduced during court proceedings:

Starting in approximately December 2018, BRIAN KOLFAGE, ANDREW BADOLATO, their co-defendant TIMOTHY SHEA, and others orchestrated a scheme to defraud hundreds of thousands of donors, including donors in the Southern District of New York, in connection with an online crowdfunding campaign ultimately known as “We Build The Wall” that raised more than $25,000,000 to build a wall along the southern border of the United States.  In particular, to induce donors to donate to the campaign, KOLFAGE repeatedly and falsely assured the public that he would “not take a penny in salary or compensation” and that “100% of the funds raised…will be used in the execution of our mission and purpose.”

Those representations were lies.  In truth, KOLFAGE, BADOLATO, SHEA, and others received hundreds of thousands of dollars in donor funds from We Build the Wall, which they each used in a manner inconsistent with the organization’s public representations.  For example, KOLFAGE covertly took for his personal use more than $350,000 in funds that donors had given to We Build the Wall.  To conceal the payments to KOLFAGE from We Build the Wall, KOLFAGE, BADOLATO, SHEA, and others devised a scheme to route those payments through entities and bank accounts that they controlled.  They took various steps to obscure or conceal these payments, including by using fake invoices and sham contracts — conduct for which SHEA was convicted at trial of obstruction of justice.

In imposing today’s sentences on KOLFAGE and BADOLATO, Judge Torres noted that “this was no ordinary financial fraud,” because when victims donated to We Build the Wall, “they were expressing their views about a political issue that was important to them.”  Noting that the offense cast doubt on the efficacy of political involvement and that the scheme would “undoubtedly have a chilling effect” on political donations, Judge Torres remarked that “the fraud perpetrated by Mr. Kolfage and Mr. Badolato went well beyond defrauding individual donors. They hurt us all.”

*                *                *

KOLFAGE, 41, of Miramar Beach, Florida, and BADOLATO, 58, of Cocoa, Florida, each pled guilty to one count of conspiracy to commit wire fraud.  KOLFAGE also pled guilty to tax and wire fraud charges originally filed by the United States Attorney’s Office for the Northern District of Florida. 

SHEA, 52, of Castle Rock, Colorado, was convicted after trial of conspiracy to commit wire fraud, conspiracy to commit money laundering, and obstruction of justice, and is scheduled to be sentenced by Judge Torres on June 13, 2023.

In addition to the prison terms, KOLFAGE was sentenced to three years of supervised release and ordered to forfeit $17,872,106 and pay restitution in the amount of $2,877,414.  BADOLATO was sentenced to three years of supervised release and ordered to forfeit $1,414,368 and pay restitution in the amount of $1,414,368.  Judge Torres also separately ordered forfeiture of $1,376,597.39 of funds held by We Build the Wall and real property located in Sunland Park, New Mexico, on which We Build the Wall had constructed a portion of a wall.

Mr. Williams praised the outstanding investigative work of the United States Postal Inspection Service and the Special Agents of the United States Attorney’s Office for the Southern District of New York.

The case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Mollie E. Bracewell, Alison G. Moe, Nicolas Roos, Robert B. Sobelman, and Derek Wikstrom are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that EDWIN CORTORREAL, a/k/a “Crazy Ed,” was found guilty of all three counts at trial, including conspiracy to commit racketeering and two counts for robbing and murdering Kelly Diaz in 2006 in Washington Heights.  The verdict followed a five-day trial before U.S. District Judge Valerie E. Caproni.

U.S. Attorney Damian Williams said: “In 2006, Edwin Cortorreal conducted a terrifying, gunpoint home invasion robbery in Washington Heights, during which he shot Kelly Diaz in the head, killing him in front of his wife.  Kelly Diaz was only 24 years old at the time.  We hope today’s verdict will bring some solace to the victim’s family and sends the message that we will not rest until justice is done.”

According to the evidence presented in court during the trial:

From at least 2006 to in or about 2013, a violent robbery crew known as the “Hot Boys” committed countless burglaries and robberies and sold narcotics in the Washington Heights area.  EDWIN CORTORREAL was a trusted associate of the Hot Boys.  In 2006, CORTORREAL and four other members and associates of the Hot Boys broke into Kelly Diaz’s apartment in the middle of the night.  During the course of the robbery, CORTORREAL and his co-conspirators duct-taped Diaz to a chair and threw his wife to the ground.  As they were leaving, CORTORREAL came back and shot Diaz point-blank in the head, killing him instantly as his wife looked on.  Less than a year later, CORTORREAL planned to commit another armed robbery, during which he plotted to kill the victims to avoid leaving behind any witnesses. 

*                *                *

CORTORREAL, 36, of the Dominican Republic, was found guilty of one count of conspiracy to commit racketeering, which carries a maximum term of life in person; one count of murder in aid of racketeering, which carries a mandatory sentence of life in prison; and one count of the use of a firearm resulting in death, which carries a maximum sentence of life in prison.

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

CORTORREAL is scheduled to be sentenced on September 20, 2023.

Mr. Williams thanked the New York Healthcare Fraud Unit of the Federal Bureau of Investigation, the New York City Police Department (“NYPD”), and NYPD Task Force Officers assigned to the United States Attorney’s Office for their work on the investigation.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Mathew Andrews, David Denton, Courtney Heavey, Adam Hobson, Emily Johnson, Ni Qian, Justin Rodriguez, and Hagan Scotten are in charge of the prosecution, with the assistance of paralegal specialist Mia Vuckovich.

Damian Williams, the United States Attorney for the Southern District of New York, announced that ESTEBAN CABRERA DA CORTE, a/k/a “Esteban Cabrera,” a/k/a “Esteban Da Corte,” a/k/a “Steban,” pled guilty today to participating in a scheme to steal millions of dollars’ worth of cryptocurrency and trick U.S. banks into refunding the millions used to purchase that cryptocurrency, in part by using personal identifying information stolen from other people. 

U.S. Attorney Damian Williams said: “Esteban Cabrera Da Corte orchestrated a scheme to steal millions of dollars by buying cryptocurrency using false and stolen identities and then deceiving U.S. banks regarding those transactions.  As a result of his guilty plea, Cabrera Da Corte is now being held to account.  Our Office will continue to work vigorously with our law enforcement partners to protect the integrity of U.S. banks and financial markets to the full extent of the law from those who seek to enrich themselves through fraud and deceit, including those who attempt to shroud themselves in the anonymity of digital transactions.”

According to the Indictment and statements made in court:

From at least in or about 2020 through at least in or about March 2020, CABRERA DA CORTE and his co-conspirators engaged in a scheme to deceive U.S. banks and a leading cryptocurrency exchange platform (the “Cryptocurrency Exchange”) by purchasing more than $4 million in cryptocurrency and then falsely claiming that the cryptocurrency purchase transactions were unauthorized, deceiving the U.S. banks and the Cryptocurrency Exchange into reversing those transactions and redepositing the money into the bank accounts that the Defendants controlled.  The Defendants then withdrew the money from the bank accounts.

To carry out this scheme, the Defendants opened accounts with the Cryptocurrency Exchange, frequently using photos of fake U.S. passports, fake drivers’ licenses, and stolen personal identifying information.  The Cryptocurrency Exchange accounts were linked to bank accounts that the Defendants controlled.  The Defendants used money that had been deposited into the linked bank accounts, frequently through a series of cash deposits made using ATMs, to purchase cryptocurrency.  That cryptocurrency was then quickly transferred to other cryptocurrency wallets outside of the Cryptocurrency Exchange that were controlled by the Defendants and their co-conspirators.  After the cryptocurrency was transferred, the Defendants made telephone calls to the U.S. banks during which they falsely represented that the cryptocurrency purchases were unauthorized, leading the banks to reverse the transactions. 

The operation of this scheme by the Defendants resulted in U.S. banks processing more than $4 million in fraudulent reversals and the Cryptocurrency Exchange losing more than $3.5 million worth of cryptocurrency. 

*                *                *

ESTEBAN CABRERA DA CORTE, 26, of Miami, Florida, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum term of 20 years in prison, and agreed to pay restitution of $3,578,786.69 and forfeiture of $1,200,000. 

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 work of Homeland Security Investigations’ El Dorado Task Force. 

The matter is being handled by the Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Emily Deininger and Josiah Pertz are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced today the arrest of CAMERON MCEWEN, a 21-year-old convicted sexual offender, in Middletown, New York.  The Complaint charges that MCEWEN persuaded a 16-year-old girl living in Alaska (“Victim-1”) to engage in sexually explicit activity, take photos and videos of herself doing so, and transmit the photos and videos, via Snapchat, to MCEWEN.  MCEWEN threatened to hack into Victim-1’s cell phone and Snapchat account if she did not comply with his demands.  MCEWEN was presented yesterday before U.S. Magistrate Judge Paul E. Davison in White Plains federal court and detained without bail. 

U.S. Attorney Damian Williams said: “Cameron McEwen was on probation following a previous conviction for rape when he allegedly continued to commit sexually abusive and vile crimes, including with a minor victim.  This case underlines the urgent need for law enforcement to continue its efforts to protect children from those who prey on them, and this Office is committed to safeguarding children from these predators.”  

According to the criminal Complaint filed yesterday in White Plains Federal Court:[1]

In April 2023, MCEWEN knowingly used a social media platform to communicate with and entice Victim-1, as well as send extortionate interstate threats to Victim-1. 

MCEWEN, using Snapchat display names “X,” “Cam,” and “fendii.kashout,” and posing as multiple different people, initially connected on Snapchat with an 18-year-old individual, who he offered to pay for sexually explicit images and videos.  When that individual sent MCEWEN the requested content, he threatened to leak the images and videos to the individual’s family and friends and harm her if she did not find another person to send MCEWEN sexually explicit material. 

The individual sought out Victim-1, who connected with MCEWEN on Snapchat.  MCEWEN then began sending Victim-1 messages threatening to hack Victim-1’s Snapchat account and cell phone if she did not send him sexually explicit photos and videos.

CAMERON MCEWEN, a/k/a “X,” a/k/a “Cam,” a/k/a “dzys.world,” a/k/a “itsbeendrippy,” a/k/a “fendii,” a/k/a “fendii.kashout,” was convicted in Orange County Court on January 13, 2022, of rape in the second degree and was on New York State probation when he committed the alleged offenses charged herein.

*                *                *

CAMERON MCEWEN, 21, of Middletown, New York, is charged with one count of sexual exploitation of a minor, which carries a maximum sentence of 50 years in prison, and one count of making extortionate interstate communications, which carries a maximum sentence of two 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 would be determined by the judge.

Mr. Williams praised the outstanding investigative work of Federal Bureau of Investigation (“FBI”) agents in both Alaska and New York, the New York State Police Troop F, and the Middletown Police Department.  He also thanked the Ketchikan Police Department for its participation and support in this ongoing investigation. 

Mr. Williams stated that the investigation is ongoing and requests that any individuals with information concerning CAMERON MCEWEN and any individuals who may have encountered someone using the Snapchat user names “X,” “Cam,” “dzys.wlrd,” “itzbeendrippy,” “fendii,” and “fendii_kashout,” please contact the FBI at 1-800-CALL-FBI and reference this case. 

The prosecution is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Kathryn Wheelock and Marcia S. Cohen and are in charge of the prosecution.  

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that attorneys GEORGE CONSTANTINE and MARC ELEFANT and orthopedic surgeon ANDREW DOWD were sentenced yesterday and today for their participation in a massive trip-and-fall fraud scheme between 2013 and 2018.  CONSTANTINE and DOWD, who were convicted at trial in December 2022 of mail fraud, wire fraud, and conspiracy to commit mail and wire fraud, were each sentenced to 102 months in prison.  ELEFANT, who pled guilty to one count of conspiracy to commit wire fraud, was sentenced to 24 months in prison.  U.S. District Judge Sidney H. Stein imposed all three sentences.    

U.S. Attorney Damian Williams said: “George Constantine, Andrew Dowd, and Marc Elefant abused their professional licenses and degrees and exploited some of the most vulnerable members of society – many of whom were poor, drug addicts, or homeless – in order to enrich themselves through this egregious trip-and-fall fraud scheme.  As officers of the court, Constantine and Elefant had a duty to honestly represent their clients and uphold the rule of law.  Instead, they filed hundreds of fraudulent lawsuits that were filled with lies and stole millions of dollars from small businesses and insurance companies.  Likewise, Dowd, as a medical doctor, took an oath to do no harm.  But motivated by pure greed, Dowd performed hundreds of medically unnecessary surgeries, earning thousands of dollars per surgery.  These sentences send a clear message to all who chose to engage in fraud – no matter their professional title or degree – that they will be held accountable.”

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

Between 2013 and 2018, CONSTANTINE, ELEFANT, and DOWD, among others, engaged in an extensive fraud scheme (the “Fraud Scheme” or “Scheme”), through which Scheme participants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits arising from those staged trip-and-fall accidents.  CONSTANTINE and ELEFANT were personal injury lawyers involved in the Scheme, while DOWD was an orthopedic surgeon.

Fraud Scheme participants recruited individuals (the “Patients”) to stage or falsely claim to have suffered trip-and-fall accidents at particular locations throughout the New York City area (the “Accident Sites”).  In the course of the Fraud Scheme, Scheme participants recruited more than 400 Patients.  Members of the Fraud Scheme often recruited Patients who were extremely poor.  For example, it was common for Patients to ask for food when they would appear for their intake meetings with the lawyers.  Many of the Patients did not have sufficient clothing to keep them warm during the winter and had poor quality shoes.  Members of the Fraud Scheme also recruited Patients who were drug addicts, and it was common for Scheme participants to recruit Patients from homeless shelters in New York City.

In the beginning, Scheme participants would instruct Patients to claim they had tripped and fallen at a particular location, when in fact, the Patients had suffered no such accidents.  Eventually, at the direction of the lawyers who filed fraudulent lawsuits on behalf of the Patients, Scheme participants began to instruct Patients to stage trip-and-fall accidents, i.e., to go to a location and deliberately fall.  Common Accident Sites used during the Fraud Scheme included cellar doors, cracks in concrete sidewalks, and purported “potholes.”

After the staged trip-and-fall accidents, Patients were referred to specific attorneys, including CONSTANTINE and ELEFANT, who would file personal injury lawsuits (the “Fraudulent Lawsuits”) against the owners of the Accident Sites and/or insurance companies of the owners of the accident sites (the “Victims”).  The Fraudulent Lawsuits did not disclose that the Patients had deliberately fallen at the Accident Sites or, in some cases, had not fallen at all.  During the course of the Fraud Scheme, the defendants, together with others, attempted to defraud the Victims of more than $31,000,000.  CONSTANTINE personally filed nearly 200 Fraudulent Lawsuits and earned more than $5 million dollars in settlement fees from these fraudulent cases.  ELEFANT likewise filed nearly 200 Fraudulent Lawsuits and earned millions of dollars in settlement fees.

The Patients were also instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors, including DOWD.  The Fraud Scheme participants advised the Patients that if they intended to continue with their lawsuits, they were required to undergo surgery, which was critical to boosting the value of any potential settlement.  Patients generally were told to undergo two surgeries.  Fraud Scheme participants looked for doctors, like DOWD, who were willing to perform surgeries, even when others would not.  During the course of the Scheme, DOWD performed nearly 300 medically unnecessary surgeries and earned more than $3.2 million dollars.  DOWD received approximately $10,000 per surgery.  

*                *                *

In addition to their prison terms, CONSTANTINE, 60, of Plainview, New York, DOWD, 67, of Miller Place, New York, and ELEFANT, 50, of Woodmere, New York, were each sentenced to three years of supervised release.  CONSTANTINE was further ordered to pay $4,774,709 in forfeiture.  DOWD was further ordered to pay $2,900,905 in forfeiture.  ELEFANT was further ordered to pay $955,281.54 in forfeiture.  Restitution will be decided by the Court within 90 days of today’s sentencings.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Williams also thanked the National Insurance Crime Bureau for their assistance in the investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Nicholas Chiuchiolo, Nicholas Folly, Danielle Kudla, and Alexandra Rothman are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, Andrew C. Adams, the Director of Task Force KleptoCapture, Ivan J. Arvelo, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Jeffrey B. Veltri, Special Agent in Charge of the Miami Field Office of the Federal Bureau of Investigation (“FBI”), announced today that ROBERT WISE, a New York attorney, pled guilty to participating in a scheme to make approximately $3.8 million in U.S. dollar payments to maintain six real properties in the United States that were owned by Viktor Vekselberg, a sanctioned oligarch.  WISE pled guilty before U.S. District Court Judge Mary Kay Vyskocil. 

U.S. Attorney Damian Williams said “With today’s guilty plea, Robert Wise has admitted that he misused his position of trust as a lawyer, laundering money to promote sanctions violations by Viktor Vekselberg’s longtime associate, Vladimir Voronchenko.  This Office is proud to continue its work to enforce the sanctions imposed in response to Russia’s illegal war in Ukraine.”

Director of Task Force KleptoCapture Andrew C. Adams said: “From its inception, the Task Force has targeted those enablers of money laundering and sanctions evasion who aim to hide crime behind a veneer of professionalism.  Admission to the bar carries with it a public trust that attorneys will act with honesty and integrity – a trust that Robert Wise chose to betray in exchange for an easy, illicit paycheck.  The Task Force will continue to pursue those who have made the same poor decision.”

HSI Special Agent in Charge Ivan J. Arvelo said: “The ill-gotten proceeds of Russia’s oligarchs do not move and hide themselves.  Instead, the funds derived from Russia’s crony capitalism are secreted around the world in luxury assets by a professional class of enablers who specialize in secretive methods to shield the true owners and beneficiaries of the assets from detection, investigation, and enforcement.  Today, working with our partners at the Department of Justice, HSI continues to fulfill our promise to hold all individuals accountable for their actions, especially those that betray their ethical codes.” 

According to the allegations in the Information filed in Manhattan federal court today and other public filings:

On April 6, 2018, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated Vekselberg as a Specially Designated National (“SDN”) in connection with its finding that the actions of the Government of the Russian Federation in Ukraine constituted an unusual and extraordinary threat to the national security and foreign policy of the United States.  On or about March 11, 2022, OFAC redesignated Vekselberg as an SDN and blocked Vekselberg’s yacht and private airplane.

Prior to his designation by OFAC, between approximately 2008 and 2017, Vekselberg, through a series of shell companies, acquired six real properties in the United States, specifically, (i) two apartments on Park Avenue in New York, New York, (ii) an estate in Southampton, New York, (iii) two apartments on Fisher Island, Florida, and (iv) a penthouse apartment also on Fisher Island, Florida (collectively, “the Properties”).  As of the date of this Information, the Properties were worth approximately $75 million. 

Voronchenko, Vekselberg’s longtime associate, retained WISE, an attorney who practiced in New York, New York, to assist in the acquisition of the Properties.  WISE also managed the finances of the Properties, including by paying common charges, property taxes, insurance premiums, and other fees associated with the Properties in U.S. dollar transactions from WISE’s interest on lawyer’s trust account (“IOLTA account”).

In particular, prior to Vekselberg’s designation as an SDN, between approximately February 2009 and March 2018, shell companies owned by Vekselberg sent approximately 90 wire transfers totaling approximately $18.5 million to the IOLTA account.  At the direction of Voronchenko and his family member who lived in Russia, WISE used these funds to make various U.S. dollar payments to maintain and service the Properties. 

Immediately after Vekselberg’s designation as an SDN, the source of the funds used to maintain and service the Properties changed.  The IOLTA Account began to receive wires from a bank account in the Bahamas held in the name of a shell company controlled by Voronchenko, Smile Holding Ltd., and from a Russian bank account held in the name of a Russian national who was related to Voronchenko.  Between approximately June 2018 and March 2022, approximately 25 wire transfers totaling approximately $3.8 million were sent to WISE’s IOLTA account.  Although the source of the payments changed, the management of the payments remained the same as before: WISE used these funds to make various U.S. dollar payments to maintain and service the Properties, and he did so knowing that he was promoting sanctions violations.  Additionally, after Vekselberg was sanctioned in 2018, Voronchenko, WISE, and others tried to sell both the Park Avenue apartment and the Southampton estate.  No licenses from OFAC were applied for or issued for these payments or attempted transfers.  

*                *                *

WISE, of Pelham, New York, pled guilty to one count of conspiring to commit international money laundering, which carries a maximum sentence of five years in prison.  WISE also agreed to entry of a forfeiture order in the amount of $3,771,727.67, to be satisfied by a payment of $210,441.

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.

An Indictment charging co-conspirator Vladimir Voronchenko, a/k/a “Vladimir Vorontchenko,” who is a fugitive, was unsealed on February 7, 2023.  A civil forfeiture complaint was filed against the Properties on February 24, 2023.

Mr. Williams praised the outstanding work of HSI and FBI.  Mr. Williams further thanked the Department of Justice’s National Security Division and Office of International Affairs and OFAC for their assistance and cooperation in this investigation.

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

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Jessica Greenwood, Joshua A. Naftalis, and Sheb Swett are in charge of the prosecution. 

Damian Williams, the United States Attorney for the Southern District of New York, announced today that ANGELA CATHERINE HAMBLIN, a citizen of the United Kingdom, was extradited today from Germany to the United States to serve a prison sentence for selling fake works of art through a commercial auction website and in private transactions.  After pleading guilty in 2009, HAMBLIN was sentenced to one year and one day in prison.  However, HAMBLIN failed to report to U.S. prison authorities as ordered and instead fled the United States to the United Kingdom.  She was re-arrested on May 31, 2022, while changing planes at an airport in Frankfurt, Germany.

U.S. Attorney Damian Williams said: “Hamblin went to great lengths to avoid accountability for her crimes, but this Office and the FBI have long memories and benefit greatly from our cooperation with international partners.  Despite some 13 years on the run, Hamblin was apprehended last year as she changed flights in Germany and today returns to face justice and serve her time in prison.”

As alleged in the Indictment and other documents and statements made in Court:

For about five months in 2007, HAMBLIN engaged in a fraudulent scheme to sell at least four paintings that she represented to be works of such artists as Joseph Mallord William Turner (a British watercolorist and printmaker), Milton Avery (an American abstract expressionist painter), Franz Kline (an American abstract painter), and Juan Gris (a Spanish Cubist painter and sculptor), when she knew that the paintings were not authentic works of art by these famed artists.  HAMBLIN made various claims about where she acquired the paintings, including that she or her husband had inherited the paintings from relatives and that they purchased one of the paintings from a then-deceased seller.  With respect to one of the paintings, HAMBLIN claimed that the artist had given it to George Balanchine, the choreographer, who had in turn sold it to her great-grandfather.

HAMBLIN was re-arrested on May 31, 2022, when she changed planes in Frankfurt, Germany, on a flight from Vienna, Austria, to the United Kingdom.  Following an order of extradition by German authorities, HAMBLIN was flown today from Frankfurt to New York City and transported to the custody of the U.S. Bureau of Prisons to serve her prison sentence.

*                *                *

HAMBLIN, 74, of St. Boswells, Scotland, pled guilty on February 16, 2009, to two counts of mail fraud and one count of wire fraud.  She was sentenced on July 14, 2009, by United States District Judge Loretta A. Preska to one year and one day in prison. 

Mr. Williams praised the Federal Bureau of Investigation’s Art Crime Team/New York Major Theft Task Force for their outstanding investigative work on HAMBLIN’s scheme to sell counterfeit art.  Mr. Williams also thanked the Justice Department’s Office of International Affairs, the U.S. Marshals Service, and German authorities for their assistance in the extradition.

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

Damian Williams, the United States Attorney for the Southern District of New York, Ivan J. Arvelo, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing today of an Indictment charging BRUCE SILVA, a/k/a “Brucie,” BRUCE MELVIN, a/k/a “BG,” JORDAN BENNETT a/k/a “Billy Bandz,” a/k/a “J Bills,” ELIJAH POUGH, a/k/a “Eli,” SHADELL MCBRIDE, a/k/a “Deli,” JUSTIN BALLESTER, a/k/a “J-Gunz,” ALZUBAIR SALEH, a/k/a “Sammy,” GIOVANNI RODRIGUEZ, a/k/a “Karrot,” GABRIEL VALDEZ, a/k/a “Wolf,” and EMMANUEL PEREZ, a/k/a “Manny,” a/k/a “Haven,” with racketeering conspiracy, narcotics conspiracy, firearms charges, and other crimes related to their membership in “Dub City,” a street gang based in the Bronx, New York.  SILVA, MELVIN, POUGH, and MCBRIDE are also charged with attempted murder and assault with a deadly weapon in aid of racketeering in connection with their participation in multiple shootings in the Bronx.  The case is assigned to United States District Judge Lorna G. Schofield.

SILVA and MCBRIDE are currently in federal custody in connection with related federal charges.  VALDEZ is in state custody.  MELVIN, BENNETT, POUGH, SALEH, RODRIGUEZ, and PEREZ were arrested this morning in the Bronx and are expected to be presented later today before Magistrate Judge Jennifer E. Willis.  BALLESTER is currently at large.

U.S. Attorney Damian Williams said: “As alleged, over a span of several years, the members of the Dub City Gang enriched themselves through repeated frauds, poured drugs into the Bronx, carried firearms, and terrorized Bronx neighborhoods by repeatedly shooting at other people.  Through these charges, we will hold Dub City members responsible for their gun violence and other criminal activity that makes our communities less safe for innocent residents.”

HSI Special Agent in Charge Ivan J. Arvelo said: “As laid out in this indictment, these ten individuals engaged in a variety of violent crimes that terrorized the community in furtherance of their Dub City gang enterprise.  Their alleged crimes include robberies, narcotics distribution, racketeering, attempted murder, assault with a dangerous weapon, and eight shootings, one of which radically changed an innocent bystander’s life by permanently paralyzing the individual.  This is yet another example of HSI’s commitment to a continued collaboration with the New York City Police Department to ensure a safer community.”

NYPD Commissioner Keechant L. Sewell said: “Today’s charges highlight the commitment of the NYPD and our law enforcement partners to identify, arrest, and prosecute anyone who takes part in illegal gang activities.  This indictment is another step toward making New York City safer for all the people we serve by ridding our streets of violence and fear.  I thank and commend our NYPD detectives, the HSI investigators, and everyone from the office of the U.S. Attorney for the Southern District for their tireless efforts on this important case.”

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

The “Dub City” gang is a criminal organization based in the Mt. Hope and Morris Heights sections of the Bronx, New York.  A map of Dub City’s territory is below:

Since at least 2019, gang members sold drugs, committed robberies, committed financial frauds, used guns, and committed numerous acts of violence in furtherance of the Dub City Gang, including shootings against members of rival gangs and against other Dub City gang members.  The violence committed by the defendants included shootings where innocent bystanders were hit, in one case causing permanent paralysis.  

The following chart contains the dates of the charged shootings and the defendants charged in connection with those shootings:

Date of Shooting

Defendant(s)

August 13, 2019

BRUCE SILVA, a/k/a “Brucie”

March 16, 2021

ELIJAH POUGH, a/k/a “Eli”

June 2, 2021

BRUCE MELVIN, a/k/a “BG”

May 9, 2021

BRUCE SILVA, a/k/a “Brucie,” and BRUCE MELVIN, a/k/a “BG”

August 12, 2021

ELIJAH POUGH, a/k/a “Eli”

October 13, 2021

BRUCE SILVA, a/k/a “Brucie,” and JORDAN BENNETT a/k/a “Billy Bandz,” a/k/a “J Bills”[2]

May 9, 2022

BRUCE MELVIN, a/k/a “BG”

June 20, 2022

SHADELL MCBRIDE, a/k/a “Deli”

The following photographs depict Dub City members SILVA, MELVIN, and POUGH firing their weapons at rival gang members on Bronx streets:

*                *                *

A chart containing the names of the defendants who are charged today, the charges, and minimum and maximum penalties they face is below.  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 and HSI and thanked the Bronx County District Attorney’s Office for its assistance. 

This case is being handled by the Office’s Violent & Organized Crime Unit.  Assistant U.S. Attorneys Michael R. Herman, Matthew J. King, Jacob R. Fiddelman, and Mathew Andrews 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

BRUCE SILVA, a/k/a “Brucie,”

28

Racketeering Conspiracy

Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering

Narcotics conspiracy

Use, brandishing, and discharge of a firearm in connection with a violent crime and a drug trafficking crime

Use and possession of a firearm in connection with a drug trafficking crime

Maximum: Life in prison

Minimum: 35 years in prison, which must be consecutive to any other term imposed

BRUCE MELVIN, a/k/a “BG,”

25

Racketeering Conspiracy

Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering

Narcotics conspiracy

Use, brandishing, and discharge of a firearm in connection with a violent crime and a drug trafficking crime

Use and possession of a firearm in connection with a drug trafficking crime

Maximum: Life in prison

Minimum: 35 years in prison, which must be consecutive to any other term imposed

JORDAN BENNETT a/k/a “Billy Bandz,” a/k/a “J Bills,”

30

Racketeering Conspiracy

Accessory After the Fact to Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering

Narcotics conspiracy

Use and possession of a firearm in connection with a drug trafficking crime

Maximum: Life in prison

Minimum: Five years in prison, which must be consecutive to any other term imposed

ELIJAH POUGH, a/k/a “Eli,”

28

Racketeering Conspiracy

Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering

Narcotics conspiracy

Use, brandishing, and discharge of a firearm in connection with a violent crime and a drug trafficking crime

Use and possession of a firearm in connection with a drug trafficking crime

Maximum: Life in prison

Minimum: 25 years in prison, which must be consecutive to any other term imposed

SHADELL MCBRIDE, a/k/a “Deli,”

29

Racketeering Conspiracy

Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering

Narcotics conspiracy

Use, brandishing, and discharge of a firearm in connection with a violent crime and a drug trafficking crime

Use and possession of a firearm in connection with a drug trafficking crime

Maximum: Life in prison

Minimum: 15 years in prison, which must be consecutive to any other term imposed

JUSTIN BALLESTER, a/k/a “J-Gunz,”

29

Racketeering Conspiracy

Narcotics conspiracy

Use and possession of a firearm in connection with a drug trafficking crime

Maximum: Life in prison

Minimum: Five years in prison, which must be consecutive to any other term imposed

ALZUBAIR SALEH, a/k/a “Sammy,”

33

Racketeering Conspiracy

Narcotics conspiracy

Use and possession of a firearm in connection with a drug trafficking crime

Maximum: Life in prison

Minimum: Five years in prison, which must be consecutive to any other term imposed

GIOVANNI RODRIGUEZ, a/k/a “Karrot,”

25

Racketeering Conspiracy

Narcotics conspiracy

Use and possession of a firearm in connection with a drug trafficking crime

Maximum: Life in prison

Minimum: Five years in prison, which must be consecutive to any other term imposed

GABRIEL VALDEZ, a/k/a “Wolf,”

25

Racketeering Conspiracy

Narcotics conspiracy

Use and possession of a firearm in connection with a drug trafficking crime

Maximum: Life in prison

Minimum: Five years in prison, which must be consecutive to any other term imposed

EMMANUEL PEREZ, a/k/a “Manny,” a/k/a “Haven,”

24

Racketeering Conspiracy

Narcotics conspiracy

Use and possession of a firearm in connection with a drug trafficking crime

Maximum: Life in prison

Minimum: Five years in prison, which must be consecutive to any other term imposed

[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] BENNETT is charged with being an accessory after the fact to this shooting.

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 Ivan J. Arvelo, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced the arrest today of GERALD SHAW, a convicted felon and disbarred attorney, in connection with his involvement in a multi-million-dollar fraud scheme.  SHAW is accused of serving as the purported “Chief Compliance Officer” for a purported financial institution, Dominion Bank and Trust Company Limited (“Dominion Bank”), which claimed to be able to extend financing for small businesses but, in fact, operated an advance fee fraud scheme.  SHAW was arrested this morning in Claremont, California, and will be presented later today in the United States District Court for the Central District of California.

U.S. Attorney Damian Williams said: “As alleged, Gerald Shaw served as the supposed ‘Chief Compliance Officer’ for Dominion Bank, which held itself out as a legitimate financial institution that could extend or facilitate millions of dollars in financing for small businesses.  But in fact, Dominion Bank was also a fraud.  In his role, Shaw, a disbarred attorney and convicted felon, drafted financial instruments that were worthless.  Shaw knew that Dominion Bank was a fraud, but he continued to draft these financial instruments anyway.  Shaw now faces serious charges for his alleged crimes.” 

FBI Assistant Director in Charge Michael J. Driscoll said: “The defendant is alleged to have participated in a scheme which defrauded clients of millions of dollars through the promise of financing in exchange for an advance fee.  Complex financial frauds of this nature damage faith in our financial systems and institutions, and they can cause untold harm to the victims of the fraud.   The FBI is dedicated to investigating individuals who operate unscrupulous businesses and ensuring that their crimes are answered for in the criminal justice system.”

HSI Special Agent in Charge Ivan J. Arvelo said: “As Dominion Bank and Trust’s purported Chief Compliance Officer, Gerald Shaw is alleged to have participated in a conspiracy that defrauded investors of millions of dollars through the issuance of fraudulent financial instruments.  These types of crimes have devastating effects on the victims and can erode trust in the financial system.  HSI will aggressively pursue individuals and organizations that perpetrate these fraudulent schemes to bring justice to the victims and restore faith in our financial institutions.  I am especially grateful for the dedication and investigative acumen of HSI New York’s El Dorado Task Force and HSI Los Angeles for their support in this investigation.”

According to the allegations in the Complaint:[1]

From its formation in or about late 2015 until in or about July 2020, Dominion Bank (along with its affiliates) was a purported financial institution that claimed to be able to extend and facilitate financing for small businesses in exchange for an advanced fee or deposit.  In fact, Dominion Bank operated an advance fee fraud scheme (the “Scheme”).  As part of the fraud, Scheme members instructed victims to wire tens or hundreds of thousands of dollars to Dominion Bank as a deposit or servicing fee for future financing or credit based on representations that Dominion Bank could provide such services.  Those representations were false.  In fact, no financing existed; the victims did not receive the promised credit; and the victims were generally unable to get their money back, as Dominion Bank typically did not return funds to victims but, instead, kept victims’ money and, in some instances, even responded to refund requests by sending invoices for additional amounts.  Dominion Bank defrauded at least approximately 60 victims in total (individual and corporate) out of more than approximately $4 million. 

One way that Dominion Bank defrauded victims was by issuing them worthless financial instruments — such as a standby letter of credit (“SBLC”) — in exchange for large upfront payments.  An SBLC is a legal document between a bank and its client, in which the bank vouches for the client’s creditworthiness and also becomes the guarantor, i.e., the bank promises that, if its client cannot meet its obligations, the bank will do so.  Among other things, Dominion Bank lacked the assets necessary to issue such financial instruments.  According to several victims of the Scheme, other financial institutions have described SBLCs issued by Dominion Bank as being worthless.  As one victim explained, a potential counterparty described Dominion Bank’s SBLC as a “worthless piece of paper.”  Another individual explained that a potential counterparty described Dominion Bank’s $4 million SBLC as not “worth the paper it’s printed on.”

From at least in or about October 2016 through in or about April 2020, Dominion Bank’s Chief Compliance Officer was SHAW.  In that role, SHAW’s responsibilities included drafting various documents, including SBLCs, that were sent to victims in exchange for payments from the victims.  In June 2018, SHAW sent an email to two Dominion Bank officers in which SHAW acknowledged that Dominion Bank lacked funds.  SHAW wrote that Dominion Bank was “20 weeks behind” in paying SHAW’s “$500 a week salary,” and SHAW added that, “On several occasions, I have indicated to you that I know Dominion does not have the money to pay my $500 a week [salary].”  Nonetheless, SHAW continued his involvement in the Scheme thereafter, despite his awareness that Dominion Bank was selling worthless financial instruments because it lacked the assets and ability to back up its representations.  For instance, in December 2018, SHAW was involved in Dominion Bank’s issuance or sale of an approximately $50 million financial instrument and an approximately $25 million financial instrument.  In each instance, Dominion Bank represented, as guarantor, that it had assets sufficient to cover each financial instrument when it did not.

*                *                *

SHAW, 75, of Claremont, California, is charged with one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carry a maximum potential prison sentence of 20 years. 

The maximum potential 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 investigative work of the FBI and HSI.  He also thanked FBI Los Angeles, HSI Los Angeles, and the U.S. Attorney’s Office for the Central District of California for their assistance.

Mr. Williams also noted that the investigation is ongoing.  If you believe you have information about the defendant, this case, or if you believe you are a victim of any crimes related to Dominion Bank, please email: USANYS.DominionBankCase@usdoj.gov.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit and Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Michael D. Neff and Sheb Swett are in charge of the prosecution.

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

[1] As the introductory phrase signifies, the entirety of the 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.

Damian Williams, the United States Attorney for the Southern District of New York, announced that MATTHEW TAYLOR WITKOWSKI was sentenced today to 60 months in prison for conspiracy to commit health care fraud by fraudulently trafficking in orders for durable medical equipment such as back, knee, and elbow braces.  WITKOWSKI previously pled guilty to the conspiracy charge and was sentenced today before United States District Judge Denise L. Cote.

U.S. Attorney Damian Williams said: “Today, Matthew Taylor Witkowski faced justice for illegally selling orders for durable medical equipment and thus bilking Medicare out of more than $8 million.  This sort of fraud substantially harms the Medicare program — and will not be tolerated.”

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

From at least August 2019 through the date of his arrest in July 2022, WITKOWSKI and his co-defendant, Christopher Margait, engaged in a scheme to defraud Medicare by illegally obtaining and selling fraudulent written orders for goods and services paid for by Medicare, particularly including for durable medical equipment (“DME”).  Using a business that he jointly owned and operated with Margait, and a call center that WITKOWSKI owned and operated in the Dominican Republic, WITKOWSKI illegally generated and purchased fraudulent written orders for DME and then sold those fraudulent orders to pharmacies and DME suppliers, including suppliers in New York City.  Those pharmacies and DME suppliers then used those fraudulent orders as the basis for more than $8 million in fraudulent claims to Medicare.  Many of these fraudulent orders used names and personal health information of actual Medicare beneficiaries, without the beneficiaries’ authorization or prior knowledge.  Many of these fraudulent orders also contained professional information of doctors and other healthcare providers enrolled in the Medicare program, as well as the purported electronic signatures of these providers, which were falsified and created without the authorization or knowledge of these providers.

During the course of the scheme, WITKOWSKI and Margait received more than $4 million in illegal kickbacks from DME suppliers, who made these payments to True Prospects Marketing, Inc., a company controlled by WITKOWSKI and Margait, and to Sales Drive Marketing LLC, a company owned and controlled by WITKOWSKI.

*                *                *

WITKOWSKI, 38, a U.S. citizen who resided in the Dominican Republic, pled guilty on January 19, 2023, to a single count of conspiracy to commit health care fraud.  In addition to the prison sentence, WITKOWSKI was sentenced to three years of supervised release and ordered to pay forfeiture of $4,065,995 and restitution of $8,131,990 to the Medicare program.

Mr. Williams praised the outstanding investigative work of the Office of the Inspector General of the U.S. Department of Health and Human Services.

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

Damian Williams, the United States Attorney for the Southern District of New York, Ivan J. Arvelo, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced the filing of a five-count indictment today charging three individuals — WANDER RIVERA, a/k/a “Ciru,” EDWARD PEREZ, a/k/a “Perico,” and RAMON RODRIGUEZ, a/k/a “Pollo” — with certain federal crimes, including racketeering conspiracy, murder, attempted murder, and firearms offenses.  The defendants are charged for their roles in the “Shooting Boys” gang and associated acts of violence, including the June 21, 2021, murder of Milton Grant and attempted murder of another victim in Manhattan during a robbery.  In a coordinated operation, PEREZ and RIVERA were arrested last night and this morning.  Both defendants will be presented later this afternoon before U.S. Magistrate Judge Jennifer E. Willis in Manhattan federal court.  RODRIGUEZ remains at large.  The case is assigned to United States District Judge Naomi Reice Buchwald.    

U.S. Attorney Damian Williams said: “As alleged, these defendants committed crimes with a street gang that has engaged in robbery, murder, drug trafficking, and other acts of violence.  The indictment unsealed today alleges that Milton Grant was murdered as a result of this gang’s wave of violence.  Gang violence is a threat to the safety and security of our neighborhoods, and we will continue to work to end it.  These defendants now face substantial time in federal prison for their crimes.”  

HSI Special Agent in Charge Ivan J. Arvelo said: “As alleged, Shooting Boys gang members Wander Rivera, Edward Perez, and Ramon Rodriguez utilized extreme violence and intimidation in furtherance of their criminal activities, acting without remorse or regard for human life.  Gang members prey upon the communities they live in, committing the most heinous acts against their victims.  The New York City metropolitan area is much safer when criminal gang members are arrested and held to account for their crimes.  We appreciate the critically important work of our partners at the New York City Police Department and remain dedicated to working collaboratively to help rid our communities of these unrepentant criminals.”

NYPD Commissioner Keechant L. Sewell said: “Dismantling gangs to prevent the senseless violence so often associated with their illegal activities is among the highest priorities for the NYPD and our law enforcement partners.  We will continue to target the relatively small percentage of people responsible for a disproportionate amount of the crime and disorder committed in New York City.  I commend and thank everyone in the office of the U.S. Attorney for the Southern District of New York and all of the NYPD and HSI investigators involved in this case for their work in leveling these charges today.”

As alleged in the Indictment and other documents filed in federal court and based on statements made in public court proceedings:[1]

The “Shooting Boys” gang is a criminal organization based in the University Heights section of the Bronx.  Since at least 2017, gang members sold drugs, used guns, and committed numerous acts of violence against members of rival gangs.  Originally associated with the “Trinitarios” gang, the Shooting Boys broke off from the “Sunset” chapter of the Trinitarios in about 2018. 

The Shooting Boys sold crack, cocaine, heroin, and marijuana in select areas of the Bronx.  Gang members also specialized in armed robberies, often targeting individuals wearing designer jewelry.  During one early morning robbery, on June 21, 2021, Milton Grant was shot and killed as he sat in his car after exiting a Manhattan nightclub.  After Grant was shot, RODRIGUEZ stole Grant’s Audemars Piguet watch, pictured below: 

Another victim ("Victim-1"), who was with Grant at the time, was also shot during the robbery as he attempted to flee from the robbers.  Victim-1 survived his injuries.   

*                *                *

A chart containing the names, charges, and minimum and maximum penalties for the defendants is set forth below.  The minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the NYPD and HSI and thanked the New York County District Attorney’s Office for its assistance.    

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Dominic A. Gentile, James Ligtenberg, Adam S. Hobson, and Jamie Bagliebter 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.

Charge

Defendants

Minimum and Maximum Penalties

Count One

Racketeering Conspiracy

WANDER RIVERA

EDWARD PEREZ

RAMON RODRIGUEZ

Maximum: Life in prison

Count Two

Murder in Aid of Racketeering

WANDER RIVERA

EDWARD PEREZ

Mandatory life in prison or death

Count Three

Murder through Use of a Firearm

WANDER RIVERA

EDWARD PEREZ

Maximum: Life in prison or death

Minimum: Five years in prison, which much be consecutive to any other term imposed

Count Four

Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering

WANDER RIVERA

Maximum: 20 years in prison

Count Five

Firearms Offense

WANDER RIVERA

Maximum: Life in prison

Minimum: 10 years in prison, which much be consecutive to any other term imposed

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that JOHN MUESER was sentenced to 25 years in prison by United States District Judge Vincent Briccetti for his enticement of a seven-year-old minor to engage in sexual activity and his possession of child pornography.  The sentencing today followed MUESER’s guilty plea on January 10, 2023.

U.S. Attorney Damian Williams said: “To the world, John Mueser presented himself as a dedicated teacher.  But in reality, Mueser exploited the trust placed in him as an educator in order to gain access to the victim’s home and to carry out his sickening abuse.  As today’s sentencing underscores, we will continue to use every tool available to law enforcement to prosecute and punish those who exploit children.”

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

On May 1, 2019, JOHN MUESER, a private school teacher and a private tutor at the time, induced a 7-year-old minor (“Victim-1”), whom he was tutoring, to engage in sexually explicit conduct and used his iPhone to record the activity.   

MUESER’s iPhone was found to contain hundreds of images, many of which were sexually explicit, of Victim-1. 

In addition to the numerous images of Victim-1 found on MUESER’s phone, MUESER’s phone was also found to contain numerous sexually explicit images and videos of other prepubescent children.

Years before his abuse of Victim-1, MUESER sexually abused two other children.  With respect to both of those victims, the abuse continued for years. 

In imposing the sentence, Judge Briccetti underscored that the defendant’s criminal conduct was “truly reprehensible,” asking “Is there anything more evil than sexually abusing small children for your own sexual gratification?”  Judge Briccetti recognized that the defendant’s “abuse of these children spanned decades.”  He said that the sentence he imposed “might amount to a life sentence,” and “that does not trouble me at all.”

*                *                *

In addition to the prison sentence, MUESER, 72, of Tuckahoe, New York, was sentenced to a lifetime of supervised release.            

Mr. Williams praised the efforts of the Federal Bureau of Investigation and the Greenwich Police Department in connection with this investigation.                 

The prosecution is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney Marcia S. Cohen is in charge of the prosecution.  

Damian Williams, the United States Attorney for the Southern District of New York, announced that SINA MOAYEDI, the owner of a construction company, Montage, Inc., pled guilty today to a 25-year fraud on the United States Government.  MOAYEDI pled guilty to three counts: conspiracy to commit wire and bank fraud, conspiracy to commit bribery of a public official, and aggravated identity theft.  Under the terms of his plea agreement, MOAYEDI also admitted to obstructing justice by, among other things, deleting electronic evidence of his fraud shortly after his release on bail in this case, which resulted in his pretrial detention.  MOAYEDI pled guilty before United States District Judge Jed S. Rakoff, to whom MOAYEDI’s case is assigned.

U.S. Attorney Damian Williams said: “From 1995 until 2021, Sina Moayedi defrauded the U.S. Government and various of its agencies by lying in various respects.  Moayedi lied that his construction company was woman-owned; he lied about his employees’ qualifications; he lied about his company’s construction experience; and he lied about his company’s financial condition.  He also repeatedly paid bribes to a State Department employee to illegally obtain inside information to help Moayedi’s company win government contracts.  His frauds netted his company at least 27 lucrative government construction contracts, including contracts to build sensitive U.S. embassies and consulates.  And following his arrest in this case, Moayedi obstructed justice by destroying electronic evidence of his frauds less than one month after his release on bail.  Moayedi now faces the consequences of his quarter-century fraud on the federal government, which harmed the government, taxpayers, and his competitors.”

According to the filings and statements made in Manhattan federal court:

In the 1980s, MOAYEDI founded Montage, Inc. (“Montage”), a U.S.-based business that is primarily involved in worldwide Government construction projects, including embassies, military posts, consulates, and similar overseas properties owned and operated by the United States Government.  In total, the U.S. Government has paid Montage more than $200 million on government contracts.  Since 2014, Montage appears to have focused primarily on competing for and obtaining contracts with the State Department.  During that period, the State Department awarded Montage approximately six overseas U.S. Embassy/Consulate construction project contracts totaling $100 million.

MOAYEDI defrauded the U.S. Government — including the State Department, Treasury Department, Department of Defense, and General Services Administration — by lying in various respects.  In submissions to the Government (i.e., bids for contracting work), MOAYEDI mispresented his company’s ownership, his employees’ qualifications, his company’s construction experience, and his company’s financial condition. 

As to ownership, MOAYEDI falsely represented, repeatedly, that Montage was a female-owned business (or a female- and minority-owned business) in order to secure unmerited advantages in the bidding process.  In fact, MOAYEDI founded, owned, ran, and controlled Montage, and he made all material decisions on Montage’s behalf.  As MOAYEDI revealed to a bank that inquired about Montage’s ownership status in 2016, “I am the sole owner and president of Montage and have always been.” 

As to employees’ qualifications, MOAYEDI significantly overstated the qualifications of various Montage employees in order to, among other things, meet State Department and contractual requirements for minimum experience in certain key positions.  For instance, MOAYEDI claimed, falsely, that certain Montage employees possessed engineering degrees, and he claimed, falsely, that certain individuals worked for Montage when, in fact, they did not.

As to Montage’s construction experience, MOAYEDI submitted bids to the Government in which he repeatedly falsified Montage’s purported construction experience in order to burnish its alleged credentials.  To ensure that the U.S. Government did not uncover these lies, MOAYEDI “backstopped” these fabricated prior projects by creating fraudulent email accounts and personas, so that someone else appeared to be “vouching” that Montage had performed this prior work.  This required creating online web domains (the “Fabricated Domains”), so that Montage’s purported references appeared legitimate.  These Fabricated Domains were extremely similar to, but one character or word different from, the legitimate web domain associated with the actual entity.  MOAYEDI purchased the necessary online infrastructure to create these Fabricated Domains.

As to financial condition, MOAYEDI paid a Certified Public Accountant to prepare at least four different sets of books and records, each of which was provided to a different recipient (e.g., one fraudulent set for the U.S. Government, another fraudulent set for the bank, another fraudulent set for a company that sold construction bonds, etc.).

In furtherance of his fraud on the U.S. Government, MOAYEDI also used the identities of at least 10 individuals, including some of his relatives.

In addition, between 2014 and 2020, MOAYEDI repeatedly paid cash bribes and kickbacks to an engineer in the State Department’s Overseas Building Operations division, May Salehi, in exchange for confidential inside information relating to several State Department construction projects, including projects in Ecuador, Spain, and Bermuda.  For instance, in late 2016 and early 2017, MOAYEDI paid approximately $60,000 in cash to Salehi after Salehi provided confidential inside bidding information to MOAYEDI about the relationship between Montage’s original bid and his competitors’ bids — information that allowed Montage to raise its bid by nearly $1 million yet remain the lowest bidder on a construction project that was ultimately awarded to Montage.

MOAYEDI also defrauded his primary bank (“Bank-1”) through various misrepresentations.  MOAYEDI and Montage had a multi-million-dollar line of credit at Bank-1, which they maintained through misrepresentations about Montage’s ownership and the value, progress, status, and existence of construction projects that Montage was performing for the United States Government.  For instance, in or about both 2014 and 2019, MOAYEDI made material misrepresentations to Bank-1 in support of an annual extension of Montage’s line of credit, including misrepresentations about purportedly lucrative “classified” government construction projects which, in fact, did not exist.

MOAYEDI also obstructed justice in multiple respects.  These include: (i) in September 2021, shortly after his release on bail in this case, MOAYEDI destroyed electronic evidence of his fraud on the U.S. Government by deleting at least seven Fabricated Domains, which (as noted) he had used to help inflate Montage’s purported construction experience in bids for U.S. Government construction projects; (ii) shortly after the execution of search warrants at Montage’s offices in September 2020, MOAYEDI attempted to witness tamper by, among other things, pressuring a co-conspirator to lie in order to impede the Government’s ongoing criminal investigation; and (iii) during a civil lawsuit between the State Department and Montage, MOAYEDI lied during a sworn deposition in 2019 by claiming to be the Vice President of Montage and by falsely claiming that a Hispanic woman had been the President of Montage “ever since” 2002.

*                *                *

MOAYEDI, 67, of Chevy Chase, Maryland, pled guilty to three counts: one count of conspiracy to commit wire and bank fraud, which carries a maximum sentence of five years in prison; one count of conspiracy to commit bribery of a public official, which carries a maximum sentence of five years in prison; and one count of aggravated identity theft, which carries a mandatory prison term of two years, which must run consecutively to any other prison term.  

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as MOAYEDI’s sentence will be determined by Judge Rakoff. 

MOAYEDI is scheduled to be sentenced by Judge Rakoff on August 10, 2023, at 4:00 p.m.  Under the terms of his plea agreement, MOAYEDI also agreed to pay restitution of $6,588,679.63 and forfeiture of $17,795,098.50.

May Salehi was previously sentenced to one year in prison, three years of supervised release, a fine of $500,000, and forfeiture of $60,000.

Mr. Williams praised the exceptional investigative work of the State Department, Office of Inspector General; Special Agents from the United States Attorney’s Office for the Southern District of New York; and the Internal Revenue Service. 

The Office’s Complex Frauds and Cybercrime Unit is handling this criminal case.  Assistant U.S. Attorneys Michael D. Neff and Louis A. Pellegrino 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 Robert Gazzola, the Commissioner of the New Rochelle Police Department (“NRPD”), announced that JAYLEEN MOTA was arrested on April 16, 2023, and charged via a criminal Complaint filed in White Plains federal court with making threatening interstate communications, in which MOTA threatened to shoot up a popular nationwide chain restaurant and sports bar located on LeCount Place in New Rochelle on Saturday night.  MOTA will be presented in White Plains federal court later today before United States Magistrate Judge Andrew E. Krause.

U.S. Attorney Damian Williams said: “Actual or threatened gun violence cannot be tolerated.  Simply put, those who place the public in fear by engaging in or threatening the use of violence will be held accountable.  This Office commends the swift action of the New Rochelle Police Department and the FBI in quickly tracking down this threat.”

FBI Assistant Director in Charge Michael J. Driscoll said: “As alleged, Ms. Mota sent a series of text messages in which she threatened to commit a mass shooting at a crowded New Rochelle restaurant.  Communicating threats like those we allege she made can waste valuable law enforcement resources and cause unnecessary alarm in our communities.  Today’s charges should serve as a reminder for all that the FBI takes these types of threats seriously, and there will be consequences for those who make them.”

NRPD Commissioner Robert Gazzola said: “I want to commend the New Rochelle Police detectives, members of the Westchester County Department of Public Safety's Real Time Crime Center, the FBI, and the U.S. Attorney's Office.  They worked quickly and diligently to identify and arrest the individual who allegedly made threats of mass violence directed at a local New Rochelle restaurant.  It is a testament to the professional cooperation that exists in law enforcement today.  The New Rochelle Police Department does not tolerate such acts and will make every effort to identify and arrest anyone making such threats.”

As alleged in the Complaint filed today:[1]

On April 15, 2023, the NRPD received a call from an individual (“Caller-1”) who had received an initial text message from an unknown person, later identified as MOTA, threatening to “shoot[] up” a popular nationwide chain restaurant and sports bar located on LeCount Place in New Rochelle (the “Victim Restaurant”).  The text message further stated that there would be a “massacre” and “lots of people are going down.”  A subsequent text message stated that “[t]odays a busy night because of the game DON’T TAKE ME AS A JOKE lots of people will die DON’T CALL THE STORE AND RUIN MY PLANS I’m gonna make the news.”

That same day, the NRPD received a call from a second individual (“Caller-2”) who had received an identical text message from an unknown person threatening to “shooting[] up” the Victim Restaurant and commit a “massacre,” stating, “lots of people are going down.”

The NRPD took the phone number from which the text-message threats were sent and traced the number back to MOTA.  On the evening of April 15, 2023, pursuant to a search warrant, the FBI and New Rochelle Police searched MOTA’s apartment and found both MOTA and the cellphone from which MOTA sent the threats.  After informing MOTA of her Miranda rights, she consented to being interviewed and admitted that she had sent text messages threatening to shoot up the Victim Restaurant to five individuals.

*                *                *

MOTA, 21, of the Bronx, New York, is charged with making threatening interstate communications, which carries a maximum sentence of five years in prison.  

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

Mr. Williams praised the outstanding investigative efforts of the NRPD and the FBI’s Westchester Safe Streets Task Force, which consists of investigators and analysts from the FBI and other New York state and local agencies.

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney Timothy Ly 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.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that DARNELL KIDD, a/k/a “Black,” a/k/a “Donney,” a/k/a “Donney Black,” was sentenced today to 35 years in prison for the murder of Jonathan Johnson, 21, on March 18, 2011, in White Plains, New York.  On November 16, 2022, KIDD was convicted of one count of murder through the use of a firearm, following a jury trial before U.S. District Judge Nelson S. Román, who imposed today’s sentence.

U.S. Attorney Damian Williams said: “This lengthy investigation is yet another example of this Office’s commitment to prosecuting those who perpetuate gun violence and rob residents of New York of their peace and safety.  We will continue our all-hands-on-deck approach with our law enforcement partners to identify and punish those who commit violent and brutal gun offenses.”

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

On March 18, 2011, DARNELL KIDD and his co-defendant MARCUS CHAMBERS murdered Jonathan Johnson by shooting him during an armed robbery for marijuana in White Plains.  In advance of the robbery, CHAMBERS arranged by phone to purchase three ounces of marijuana from Johnson.  Intending to instead rob Johnson, CHAMBERS and KIDD met with Johnson in or near Johnson’s car, which was parked on a suburban street in White Plains.  During the course of the robbery, KIDD drew a loaded gun and fired it, killing Johnson.  KIDD and CHAMBERS then fled from the scene of the murder.   

*                *                *

In addition to his prison term, KIDD, 31, of Yonkers, New York, was sentenced to five years of supervised release.

Mr. Williams praised the outstanding investigative work of the White Plains Police Department and the Federal Bureau of Investigation (“FBI”) Westchester Safe Streets Task Force, which comprises Special Agents and Task Force Officers from the FBI, United States Probation Office, New York State Police, New York State Department of Corrections and Community Supervision, Westchester County Department of Public Safety, Westchester County District Attorney’s Office, Putnam County Sheriff’s Office, New York City Police Department, Yonkers Police Department, Mount Vernon Police Department, Peekskill Police Department, Greenburgh Police Department, New Rochelle Police Department, White Plains Police Department, Clarkstown Police Department, and Ramapo Police Department.  Mr. Williams also thanked the Westchester County District Attorney’s Office for its assistance in this matter.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Olga I. Zverovich, Christopher Brumwell, and Steven J. Kochevar, with the assistance of Paralegal Specialist Shannon Becker, are 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 fentanyl trafficking, weapons, and money laundering charges contained in three Indictments charging 28 defendants, including 23 based in Mexico, four based in China, and one based in Guatemala.

Since at least in or about 2014, the Sinaloa Cartel has run a global fentanyl manufacturing and distribution operation, sending massive quantities of fentanyl — a drug that has killed unprecedented numbers of Americans — into the United States.  Cartel leadership includes three sons of the Sinaloa Cartel’s former leader, Joaquín Archivaldo Guzmán Loera, a/k/a “El Chapo,” known as the “Chapitos”: IVAN ARCHIVALDO GUZMAN SALAZAR, JESUS ALFREDO GUZMAN SALAZAR, a/k/a “Alfredo,” and OVIDIO GUZMAN LOPEZ, a/k/a “Raton.”  Together with their co-conspirators, the Chapitos allegedly controlled extensive, multi-faceted, and international operations covering the fentanyl trade, which was designed to pump staggering quantities of fentanyl into the United States — in IVAN ARCHIVALDO GUZMAN SALAZAR’s words, to flood the United States with fentanyl in order to supply “streets of junkies.”  The Indictments returned today charge not only the Chapitos but also top lieutenants and leadership of the Sinaloa Cartel; alleged manufacturers and distributors of the Sinaloa Cartel’s fentanyl; the managers of the violent armed security apparatus that protects the Sinaloa Cartel’s drug trafficking operations; the sophisticated money launderers who repatriate the Sinaloa Cartel’s drug proceeds back to Mexico; and multiple chemical precursor suppliers in China that fuel the Sinaloa Cartel’s fentanyl distribution operation.  Through these efforts, the Chapitos and the Sinaloa Cartel allegedly reaped hundreds of millions of dollars in profits by flooding the United States with fentanyl.  Seven defendants are in custody pending extradition proceedings: OVIDIO GUZMAN LOPEZ was arrested in Mexico; CARLOS OMAR FELIEX GUTIERREZ and SILVANO FRANCISCO MARIANO, a/k/a “Rayo,” were arrested in Colombia; SERGIO DUARTE FRIAS, ANA GABRIELA RUBIO ZEA, and HUMBERTO BELTRAN CUEN, a/k/a “Don Chino,” were arrested in Guatemala; and ANASTACIO SOTO VEGA, a/k/a “Tachin,” was arrested in Greece.  Additionally, JULIO MARIN GONZALEZ was previously arrested in the United States and will be arraigned before U.S. District Judge Katherine Polk Failla.

U.S. Attorney Damian Williams said: “For over a decade, the illicit fentanyl trade has created a plague of addiction, death, and misery for Americans and New Yorkers of all walks of life.  As alleged, the sons of the infamous Sinaloa Cartel leader ‘El Chapo,’ Ivan Archivaldo Guzman Salazar, Jesus Alfredo Guzman Salazar, and Ovidio Guzman Lopez, commanded the Sinaloa Cartel’s fentanyl manufacturing and trafficking operation.  Today’s charges target not only Sinaloa Cartel leadership but the Cartel’s entire fentanyl infrastructure, including the armed enforcers who use abhorrent violence to protect the Cartel, the lab operators who produce untold quantities of fentanyl, the drug traffickers who move their deadly fentanyl into and throughout the United States, the money launderers who funnel proceeds back to the Cartel, and the China-based chemical suppliers who service the Cartel.  I commend the career prosecutors of the Southern District of New York and our partners at the Drug Enforcement Administration for their tireless efforts to disrupt the Sinaloa Cartel’s fentanyl trafficking at all levels.  We hope that today’s charges are a major step toward accountability for those who have for so long pushed this poison into our communities.”

Attorney General Merrick B. Garland said: “Today, the Justice Department is announcing significant enforcement actions against the largest, most violent, and most prolific fentanyl trafficking operation in the world – run by the Sinaloa Cartel, and fueled by Chinese precursor chemical and pharmaceutical companies.  Families and communities across our country are being devastated by the fentanyl epidemic.  Today’s actions demonstrate the comprehensive approach the Justice Department is taking to disrupt fentanyl trafficking and save American lives.”

Deputy Attorney General Lisa O. Monaco said: “The fentanyl crisis in America – fueled in large part by the Sinaloa cartel – threatens our public health, our public safety, and our national security.  Today’s indictments target every element of the Sinaloa Cartel's trafficking network and reflect the Justice Department's commitment to attacking every aspect of this threat: from the chemical companies in China that spawn fentanyl precursors, to the illicit labs that produce the poison, to the networks and money launderers and murderers that facilitate its distribution.  Just as we have gone on offense against terrorists and cyber criminals around the globe, the Department is now waging a relentless campaign to disrupt the production and trafficking of fentanyl – before it can reach its victims.”

DEA Administrator Anne Milgram said: “Today’s indictments send a clear message to the Chapitos, the Sinaloa Cartel, and criminal drug networks around the world that the DEA will stop at nothing to protect the national security of the United States and the safety and health of the American people.  The Chapitos pioneered the manufacture and trafficking of fentanyl – the deadliest drug threat our country has ever faced – flooded it into the United States for the past eight years and killed hundreds of thousands of Americans.  Over the last year and a half, the DEA proactively infiltrated the Sinaloa Cartel and the Chapitos network, obtained unprecedented access to the organization’s highest levels, and followed them across the world.  I am grateful to the men and women of the DEA for their exceptional work on this case, which is the beginning of our work as ‘One DEA’ to dismantle every part of the criminal cartels that are killing Americans at record rates.”

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

The Sinaloa Cartel (the “Cartel”) is one of the most powerful drug cartels in Mexico and is largely responsible for the manufacturing and importing of fentanyl for distribution in the United States.  Fentanyl is a dangerous synthetic opioid that is more than 50 times more potent than heroin.  Fentanyl is now the leading cause of death for Americans ages 18 to 49, and it has fueled the opioid epidemic that has been ravaging families and communities across the United States for the past approximately eight years.  Between 2019 and 2021, fatal overdoses increased by approximately 94%, with an estimated 196 Americans dying each day from fentanyl.

The Cartel is led, in part, by IVAN ARCHIVALDO GUZMAN SALAZAR, JESUS ALFREDO GUZMAN SALAZAR, and OVIDIO GUZMAN LOPEZ, who are sons of the Cartel’s notorious former leader, Joaquín Archivaldo Guzmán Loera, a/k/a “El Chapo,” and are known collectively as the “Chapitos.”

Since in or about 2014, the Chapitos’ alleged fentanyl trafficking operation for the Cartel has grown exponentially in volume, scale, and sophistication.  Under the Chapitos’ leadership, the Cartel operates a vast fentanyl trafficking operation that integrates each step in the fentanyl trade, from manufacture to distribution.  Members and affiliates of the Cartel purchase and import fentanyl precursor chemicals from China directly or through third countries, manufacture fentanyl in laboratories in the mountains of Sinaloa, move that fentanyl across the border into the United States, distribute that fentanyl through various networks operating across the United States, and launder the proceeds back to Mexico.

As a critical part of the fentanyl trafficking enterprise, the Cartel relies on and directs hundreds of violent, heavily armed soldiers (known as sicarios) to protect the Cartel’s fentanyl operations at every step and intimidate others who might attempt to cheat, interfere with, or compete against the Cartel through kidnapping, torture, and murder using machineguns and other weaponry.  As alleged, the Chapitos’ sicarios operated under the direction of the Chapitos and OSCAR NOE MEDINA GONZALEZ, a/k/a “Panu,” NESTOR ISIDRO PEREZ SALAS, a/k/a “Nini,” and JORGE HUMBERTO FIGUEROA BENITEZ, a/k/a “27,” to kidnap, torture, and kill anyone who opposed the Chapitos.

To manufacture fentanyl, the Cartel uses precursor chemicals procured principally from China.  As alleged, the Cartel relies on brokers such as ANA GABRIELA RUBIO ZEA, a/k/a “Gaby,” who procure fentanyl precursor chemicals for the Cartel through Chinese chemical companies and the owners and operators of the Chinese chemical companies, including KUN JIANG, YONGHAO WU, a/k/a “Tim,” YAQIN WU, a/k/a “Lily,” and HUATAO YAO, a/k/a “Yao.”

The Cartel also employs skilled chemists — or “cooks” — who have expertise in synthesizing fentanyl from the China-sourced precursor chemicals.  In one day alone, a Cartel cook can manufacture over 100,000 pills using pill press machines.  In some instances, Cartel traffickers under the Chapitos have tested the purity of their fentanyl by testing it on others.  For example, in or about 2022, PEREZ SALAZ and FIGUEROA BENITEZ experimented on a woman by injecting her repeatedly with doses of fentanyl until she died.

Led by the Chapitos, the trafficking of finished fentanyl powder and pills is a main goal of the Cartel and one of its most lucrative endeavors.  Most often, the Cartel’s fentanyl crosses into the United States at ports of entry, including concealed in secret compartments of cars, disguised among goods in tractor-trailers, hidden in luggage on planes, obscured through fake paperwork in shipping containers, or secreted on or in the bodies of drug mules.

Once the Cartel’s fentanyl is transported into the United States, Cartel traffickers maintain designated stash locations where the fentanyl is stored, and the Cartel’s U.S.-based distribution network then sells the fentanyl wholesale for retail distribution throughout the United States, including in New York City.  In 2022, alone, the DEA seized over 57 million fentanyl-laced pills and over 13,000 pounds of fentanyl powder — the equivalent of approximately 410 million potentially deadly doses of fentanyl.  

Finally, as alleged, the Cartel relies on increasingly sophisticated ways of laundering fentanyl proceeds from the United States back into Mexico to enrich the Chapitos.  For example, over the course of approximately two years, a single Cartel trafficker in the United States assisted in the laundering of more than $24 million in narcotics proceeds belonging to OVIDIO GUZMAN LOPEZ by providing to Cartel money launderers in the United States approximately $15 million and by sending approximately $9 million in bulk cash to Mexico hidden in secret compartments in cars.  Other alleged Cartel money launderers, including MARIO ALBERTO JIMENEZ CASTRO, a/k/a “Kastor,” and SERGIO DUARTE FRIAS, have used cryptocurrency wallets to launder hundreds of thousands of dollars in fentanyl proceeds for the Cartel.

*                *                *

A chart containing the charges and minimum and maximum penalties each defendant faces is attached.  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 a judge.

Mr. Williams praised the outstanding investigative work of the DEA’s Special Operations Division, Bilateral Investigations Unit; Atlanta Division Office; Aviation Division; Boston Division Office; Denver Division Office; Imperial County District Office; Indianapolis District Office; Los Angeles Division Office; Nashville District Office; Newark Division Office; New York Division Office; Omaha Division Office; Orlando District Office; Philadelphia Division Office; Phoenix Division Office; Riverside District Office; Salt Lake City District Office; San Diego Division Office; San Ysidro District Office; Madrid Country Office; Athens Country Office; Bogota Country Office; Canberra Country Office; Guatemala City Country Office; Vienna Country Office; and multiple DEA offices throughout Mexico, as well as the assistance of the Office of International Affairs of the Justice Department’s Criminal Division; the U.S. Department of the Treasury, Office of Foreign Assets Control; and the U.S. Department of State, Rewards for Justice Program.

This case is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Kyle A. Wirshba, Nicholas S. Bradley, Sarah L. Kushner, David J. Robles, and Alexander Li are in charge of the prosecution.

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

United States v. Ovidio Guzman Lopez, 23 Cr. 42

Defendant

Age

Charges

Minimum and Maximum Penalties

OVIDIO GUZMAN LOPEZ, a/k/a “Raton”

33

Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Mandatory life in prison

United States v. Ivan Archivaldo Guzman Salazar, et al., 23 Cr. 180

Defendant

Age

Charges

Minimum and Maximum Penalties

IVAN ARCHIVALDO GUZMAN SALAZAR

39

Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Mandatory life in prison

JESUS ALFREDO GUZMAN SALAZAR, a/k/a “Alfredo”

36

Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Mandatory life in prison

OSCAR NOE MEDINA GONZALEZ, a/k/a “Panu”

39

Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Mandatory life in prison

NESTOR ISIDRO PEREZ SALAS, a/k/a “Nini”

31

Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Mandatory life in prison

JORGE HUMBERTO FIGUEROA BENITEZ, a/k/a “27”

31

Continuing criminal enterprise; fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Mandatory life in prison

LIBORIO NUNEZ AGUIRRE, a/k/a “Karateca”

65

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

NOEL PEREZ LOPEZ, a/k/a “Tio”

42

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

SAMUEL LEON ALVARADO

34

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

LUIS JAVIER BENITEZ ESPINOZA, a/k/a “El Fourteen”

22

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

ALAN GABRIEL NUNEZ HERRERA

29

Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering

Life in prison; mandatory minimum of 10 years in prison

JUAN PABLO LOZANO, a/k/a “Camaron”

30

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

CARLOS LIMON

19

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

JESUS TIRADO ANDRADE

26

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

CARLOS OMAR FELIX GUTIERREZ

22

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

SILVANO FRANCISCO MARIANO, a/k/a “Rayo”

41

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

JULIO MARIN GONZALEZ

32

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

MARIO ALBERTO JIMENEZ CASTRO, a/k/a “Kastor”

34

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

SERGIO DUARTE FRIAS

26

Fentanyl importation conspiracy; fentanyl distribution conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices; conspiracy to commit money laundering

Life in prison; mandatory minimum of 40 years in prison

ANA GABRIELA RUBIO ZEA, a/k/a “Gaby”

32

Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering

Life in prison; mandatory minimum of 10 years in prison

KUN JIANG

Unknown

Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering

Life in prison; mandatory minimum of 10 years in prison

YONGHAO WU, a/k/a “Tim”

31

Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering

Life in prison; mandatory minimum of 10 years in prison

YAQIN WU, a/k/a “Lily”

30

Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering

Life in prison; mandatory minimum of 10 years in prison

HUATAO YAO, a/k/a “Yao”

32

Fentanyl importation conspiracy; fentanyl distribution conspiracy; conspiracy to commit money laundering

Life in prison; mandatory minimum of 10 years in prison

United States v. Leobardo Garcia Corrales, et al., S2 23 Cr. 136

Defendant

Age

Charges

Minimum and Maximum Penalties

LEOBARDO GARCIA CORRALES, a/k/a “Leo”

53

Fentanyl importation conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices

Life in prison; mandatory minimum of 40 years in prison

MARTIN GARCIA CORRALES, a/k/a “Tano,” a/k/a “Cachuchas”

43

Fentanyl importation conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices

Life in prison; mandatory minimum of 40 years in prison

HUMBERTO BELTRAN CUEN, a/k/a “Don Chino”

69

Fentanyl importation conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices

Life in prison; mandatory minimum of 40 years in prison

ANASTACIO SOTO VEGA, a/k/a “Tachin”

45

Fentanyl importation conspiracy; possession of machineguns and destructive devices; conspiracy to possess machineguns and destructive devices

Life in prison; mandatory minimum of 40 years in prison

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that JEROME WEAH was sentenced today in Manhattan federal court to 46 months in prison for engaging in a scheme to defraud a program of the New York City Human Resources Administration (“HRA”), which provides cash assistance to homeless veterans of the United States armed services (“Veterans”) seeking permanent housing.  Another defendant, RUDEAN WEIR, was sentenced to 30 months in prison on March 30, 2023, for his participation in the scheme.  The sentences were imposed by United States District Judge Denise L. Cote.

U.S. Attorney Damian Williams said: “Rudean Weir and Jerome Weah stole approximately $5.4 million from a New York City program intended to benefit U.S. veterans seeking permanent housing.  These sentences should send a message that individuals who abuse Government programs to enrich themselves at the expense of taxpayers will face serious consequences.”

As alleged in the Complaint, Informations, and other documents in the public record, as well as statements made in public court proceedings:

From at least October 2020 through at least May 2022, RUDEAN WEIR and JEROME WEAH submitted more than 340 fraudulent applications seeking cash assistance pursuant to the Enhanced One Shot Deal (“EOSD”) program administered by the HRA.  The EOSD is an emergency assistance program pursuant to which HRA makes a one-time cash assistance payment to qualifying individuals.  EOSD payments are often used to help individuals move out of homeless shelters and/or other temporary housing into permanent housing.  EOSD payments may be used to cover certain costs associated with the move to permanent housing, including rent, moving expenses, security deposits, broker’s fees, and payments for furniture and other household items.  The HRA also offers and administers services and programs for Veterans, sometimes referred to as “Veteran’s Initiatives.”  In connection with these services, the HRA has a designated group responsible for receiving and reviewing EOSD requests made on behalf of homeless Veterans seeking permanent housing.

Between October 2020 and May 2022, the HRA received at least 340 EOSD applications which claimed that the applicants were homeless Veterans who had entered into a lease agreement with a particular landlord (“Landlord-1”).  Each of these applications (the “Landlord-1 EOSD Applications”) claimed that a particular company provided broker’s services in connection with the lease agreement (“Broker Company-1”).  HRA paid approximately $5.4 million in EOSD payments and broker’s fees pursuant to the Landlord-1 EOSD Applications.

The Landlord-1 EOSD Applications were fraudulent.  Landlord-1 and the Veterans did not, in fact, enter into the lease agreements submitted to HRA in connection with the Landlord-1 EOSD Applications, and Broker Company-1 did not provide real estate brokerage services to either Landlord-1 and/or the Veterans.  The Veterans identified in the Landlord-1 EOSD Applications were not homeless and typically did not live in New York City.  The Landlord-1 EOSD Applications, therefore, contained fake documentation and information and fraudulently induced HRA into making EOSD payments.

*                *                *

In addition to the prison terms, both WEIR, 38, of Atlanta, Georgia, and WEAH, 47, of Trenton, New Jersey, were sentenced to three years of supervised release and ordered to pay restitution in the amount of $5,388,769.60.  WEIR was ordered to forfeit $3,779,489.00, including his interest in two bank accounts and six real estate properties.  WEAH was ordered to forfeit $2,179,922.60, including his interest in two bank accounts and one real estate property.

Mr. Williams praised the outstanding investigative work of the New York City Department of Investigation.  Mr. Williams also thanked the New York City Department of Social Services and the U.S. Department of Veterans Affairs, Office of Inspector General for their assistance.

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, announced that JAMES ZHONG was sentenced today to one year and one day in prison for committing wire fraud in September 2012 when he unlawfully obtained approximaely 50,000 Bitcoin from the Silk Road dark web internet marketplace.  United States District Judge Paul G. Gardephe imposed today’s sentence. 

As part of the ZHONG investigation, the Government has obtained final orders of forfeiture for, among other items, 51,680.32473733 Bitcoin, valued at over $3.4 billion at the time of seizure and over $1.57 billion today.  

U.S. Attorney Damian Williams said: “Back in 2012, James Zhong committed wire fraud by stealing 50,000 Bitcoin from Silk Road, and for the next 10 years, he managed to conceal what he had done and how he obtained his fortune.  Zhong used a decentralized Bitcoin mixer, an overseas cryptocurrency exchange, and an impressive array of technological tools to frustrate tracing efforts.  But thanks to the relentless and skillful efforts of law enforcement in following the money, the federal government uncovered Zhong’s scheme and obtained final orders of forfeiture for over 51,680 Bitcoin.  Cyber-criminals should heed this message: we will follow the money and hold you accountable, no matter how sophisticated your scheme and no matter how long it takes.” 

According to court filings and statements made in court proceedings:

ZHONG’s Scheme to Defraud

Silk Road was an online “darknet” black market.  In operation from approximately 2011 until 2013, Silk Road was used by numerous drug dealers and other unlawful vendors to distribute massive quantities of illegal drugs and other illicit goods and services to many buyers and to launder all funds passing through it.  In 2015, following a groundbreaking prosecution by this Office, Silk Road’s founder Ross Ulbricht was convicted by a unanimous jury and sentenced to life in prison.  United States v. Ulbricht, 14-cr-68 (S.D.N.Y.). 

In September 2012, ZHONG executed a scheme to defraud Silk Road of its money and property by (i) creating a string of approximately nine Silk Road accounts (the “Fraud Accounts”) in a manner designed to conceal his identity; (ii) triggering over 140 transactions in rapid succession in order to trick Silk Road’s withdrawal-processing system into releasing approximately 50,000 Bitcoin from its Bitcoin-based payment system into ZHONG’s accounts; and (iii) transferring this Bitcoin into a variety of separate addresses also under ZHONG’s control, all in a manner designed to prevent detection, conceal his identity and ownership, and obfuscate the Bitcoin’s source. 

While executing the September 2012 fraud, ZHONG did not list any item or service for sale on Silk Road, nor did he buy any item or service on Silk Road.  ZHONG registered the accounts by providing the bare minimum of information required by Silk Road to create the account; the Fraud Accounts were merely a conduit for ZHONG to defraud Silk Road of Bitcoin.

ZHONG funded the Fraud Accounts with an initial deposit of between 200 and 2,000 Bitcoin.  After the initial deposit, ZHONG then quickly executed a series of withdrawals.  Through his scheme to defraud, ZHONG was able to withdraw many times more Bitcoin out of Silk Road than he had deposited in the first instance.  As an example, on September 19, 2012, ZHONG deposited 500 Bitcoin into a Silk Road wallet.  Less than five seconds after making the initial deposit, ZHONG executed five withdrawals of 500 Bitcoin in rapid succession — i.e., within the same second — resulting in a net gain of 2,000 Bitcoin.  As another example, a different Fraud Account made a single deposit and over 50 Bitcoin withdrawals before the account ceased its activity.  ZHONG moved this Bitcoin out of Silk Road and, in a matter of days, consolidated them into two high-value amounts.

Nearly five years after ZHONG’s fraud, in August 2017, solely by virtue of ZHONG’s possession of the 50,000 Bitcoin that he unlawfully obtained from Silk Road, ZHONG received a matching amount of a related cryptocurrency — 50,000 Bitcoin Cash (“BCH Crime Proceeds”) — on top of the 50,000 Bitcoin.  In August 2017, in a hard fork coin split, Bitcoin split into two cryptocurrencies, traditional Bitcoin and Bitcoin Cash (“BCH”).  When this split occurred, any Bitcoin address that had a Bitcoin balance (as ZHONG’s addresses did) now had the exact same balance on both the Bitcoin blockchain and on the Bitcoin Cash blockchain.  As of August 2017, ZHONG thus possessed 50,000 BCH in addition to the 50,000 Bitcoin that ZHONG unlawfully obtained from Silk Road.  ZHONG thereafter exchanged through an overseas cryptocurrency exchange all of the BCH Crime Proceeds for additional Bitcoin, amounting to approximately 3,500 Bitcoin of additional crime proceeds.  Collectively, by the last quarter of 2017, ZHONG thus possessed approximately 53,500 Bitcoin of total crime proceeds (the “Crime Proceeds”).

The Government’s Seizure of Over 50,000 Bitcoin

On November 9, 2021, pursuant to a judicially authorized premises search warrant, law enforcement agents recovered approximately 50,491.06251844 Bitcoin of crime proceeds from ZHONG’s Gainesville, Georgia, house.  Law enforcement located these crime proceeds in an underground floor safe and on a single-board computer that was submerged under blankets in a popcorn tin stored in a bathroom closet.  In addition, law enforcement recovered $661,900 in cash, 25 Casascius coins (physical bitcoin) with an approximate value of 174 Bitcoin, 11.1160005300044 additional Bitcoin, four one-ounce silver-colored bars, three one-ounce gold-colored bars, four 10-ounce silver-colored bars, and one gold-colored coin.  Photographs of the popcorn tin, single-board computer, underground floor safe, and some of the seized items are included below:

Beginning in or around March 2022, ZHONG began voluntarily surrendering to the Government additional Bitcoin that ZHONG had access to and had not dissipated.  In total, ZHONG voluntarily surrendered 1,004.14621836 additional Bitcoin.

Using a conservative estimate of the lowest spot price of Bitcoin on the seizure dates, the total value of all Bitcoin seized for which the Government has obtained final orders of forfeiture is approximately $3.4 billion. 

Forfeiture Actions

On February 7, 2023, in United States v. Ross Ulbricht, S1 14 Cr. 68 (S.D.N.Y.), District Judge Lorna G. Schofield entered a final order of forfeiture as to the below property seized from ZHONG, vesting all right, title, and interest in the below property in the United States:

• 50,491.06251844 Bitcoin seized from ZHONG’s home on November 9, 2021;
• 825.38833159 Bitcoin provided by ZHONG on March 25, 2022; and
• 35.4470080 Bitcoin provided by ZHONG on May 25, 2022.

On March 14, 2023, District Judge Gardephe entered a final order of forfeiture as to the below property, vesting all right, title, and interest in the below property in the United States:

• ZHONG’s 80% interest in RE&D Investments, LLC, a Memphis-based company with substantial real estate holdings;
• $661,900 in United States currency seized from ZHONG’s home on November 9, 2021;
• Metal items, consisting of four one-ounce silver-colored bars, three one-ounce gold-colored bars, four 10-ounce silver-colored bars, and one gold-colored coin, all seized from ZHONG’s home on November 9, 2021;
• 11.1160005300044 Bitcoin seized from ZHONG’s home on November 9, 2021;
• 25 Casascius coins (physical Bitcoin) with an approximate value of 174 Bitcoin, collectively, seized from ZHONG’s home on November 9, 2021;
• 23.7112850 Bitcoin provided by ZHONG on April 27, 2022;
• 115.02532155 Bitcoin provided by ZHONG on April 28, 2022; and
• 4.57427222 Bitcoin provided by ZHONG on June 8, 2022.

*                *                *

ZHONG, 32, of Gainesville, Georgia, and Athens, Georgia, previously pled guilty to one count of wire fraud before Judge Gardephe.

Mr. Williams praised the outstanding work of the Internal Revenue Service, Criminal Investigation’s Western Cyber Crimes Unit of the Los Angeles Field Office.  Mr. Williams also thanked the Athens-Clarke County Police Department in Athens, Georgia, for its support and assistance with the case.  

The prosecution of this case is being overseen by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorney David R. Felton is in charge of the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced that PEACHES STERGO pled guilty today before United States District Judge Edgardo Ramos in connection with her years-long scheme to defraud an 87-year-old Holocaust survivor of his life savings.

U.S. Attorney Damian Williams said: “Peaches Stergo stole the life savings from an 87-year-old Holocaust survivor who was just looking for companionship.  This conduct is sick – and sad.  Using the millions in fraud proceeds, Stergo lived a life of luxury, purchasing a home in a gated community and a Corvette, taking vacations at hotels like the Ritz Carlton, and buying thousands in designer clothing, while at the same time causing her elderly victim to lose his apartment.  Thanks to the hard work of the FBI and this Office, Stergo is being held accountable for her fraud.”

As alleged in the Indictment:

From at least in or about May 2017, up to and including at least October 2021, STERGO engaged in a scheme to defraud an 87-year-old Holocaust survivor (the “Victim”) of over $2.8 million, which was his life savings. 

STERGO met the Victim on a dating website approximately six or seven years ago.  In or about early 2017, STERGO asked the Victim to borrow money to pay her lawyer, who she claimed was refusing to release funds from an injury settlement.  After the Victim gave her the money, STERGO said the settlement funds had been deposited into her TD Bank account.  In reality, bank records show STERGO never received any money from an injury settlement.

Over the next four and a half years, STERGO continued her lies.  She repeatedly demanded that the Victim deposit money into her bank accounts.  She claimed that if he did not, her accounts would be frozen and he would never be paid back.  In total, the Victim wrote 62 checks — totaling over $2.8 million — that were deposited into one of two of STERGO’s bank accounts.   

In furtherance of the fraud, STERGO created a fake email account, intended to appear as if it belonged to a TD Bank employee.  She also created fake letters from a TD Bank employee and fake invoices.

While the Victim lost his life savings and was forced to give up his apartment, STERGO lived a life of luxury with the millions she received from the fraud: she bought a home in a gated community, a condominium, a boat, and numerous cars, including a Corvette and a Suburban.  During the course of the fraud, STERGO also took expensive trips, staying at places like the Ritz Carlton, and spent many tens of thousands of dollars on expensive meals, gold coins and bars, jewelry, Rolex watches, and designer clothing from stores like Tiffany, Ralph Lauren, Neiman Marcus, Louis Vuitton, and Hermes.

*                *                *

STERGO, 36, of Champions Gate, Florida, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  In connection with the guilty plea, STERGO agreed to pay $2,830,775 in restitution and to forfeit the same amount, along with over 100 luxury items she purchased with fraud proceeds, including Rolex watches, designer purses and clothing, and large amounts of gold and jewelry.

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.  Sentencing has been scheduled for July 27, 2023, at 11:00 a.m.

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 Adam Sowlati is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that ADRIAN ALEXANDER, a New York litigation funder, was sentenced today to 36 months in prison for his participation in a scheme to obtain large insurance settlements and lawsuit recoveries from fraudulent trip-and-fall accidents.  ALEXANDER is the 11th defendant to plead guilty or be convicted at trial for his participation in this fraud scheme and the fifth defendant to be sentenced.  Defendants Ryan Rainford, Bryan Duncan and Robert Locust, who recruited patients into the scheme and were convicted at trial in May 2019, were previously sentenced on January 7, 2020, July 27, 2020, and July 9, 2021, respectively.  Defendant Sady Ribeiro, a surgeon who participated in the scheme, was previously sentenced on March 23, 2023.  U.S. District Judge Sidney H. Stein imposed all sentences. 

U.S. Attorney Damian Williams said: “Adrian Alexander knowingly exploited some of the most vulnerable members of society – many of whom were poor, drug addicts, or homeless – in order to enrich himself and his investors.  Today’s sentence should serve as a warning to unscrupulous litigation funders that, together with our law enforcement partners, we will hold accountable those who engage in unlawful practices and prey on litigants without the means to avail themselves of the judicial process.”

According to the Indictment, the Superseding Information, evidence presented in court, and statements made in court:

ALEXANDER, among others, was involved in an extensive fraud scheme through which fraud scheme participants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits arising from those staged trip-and-fall accidents.

The fraud scheme participants recruited individuals (the “Patients”) to stage or falsely claim to have suffered trip-and-fall accidents at particular locations throughout the New York City area (the “Accident Sites”).  In the course of the fraud scheme, scheme participants recruited more than 400 Patients.  Members of the fraud scheme often recruited Patients who were extremely poor.  For example, it was common for Patients to ask for food when they would appear for their intake meetings with the lawyers.  Many of the Patients did not have sufficient clothing to keep them warm during the winter and had poor-quality shoes.  Members of the fraud scheme also recruited Patients who were drug addicts, and it was common for scheme participants to recruit Patients from homeless shelters in New York City.

In the beginning, scheme participants would instruct Patients to claim they had tripped and fallen at a particular location, when in fact, the Patients had suffered no such accidents.  Eventually, at the direction of the lawyers who filed fraudulent lawsuits on behalf of the Patients, scheme participants began to instruct Patients to stage trip-and-fall accidents, i.e., to go to a location and deliberately fall.  Common Accident Sites used during the fraud scheme included cellar doors, cracks in concrete sidewalks, and purported “potholes.”

After the staged trip-and-fall accidents, Patients were referred to specific attorneys who would file personal injury lawsuits (the “Fraudulent Lawsuits”) against the owners of the Accident Sites and/or insurance companies of the owners of the accident sites (the “Victims”).  The Fraudulent Lawsuits did not disclose that the Patients had deliberately fallen at the Accident Sites or, in some cases, had not fallen at all.  During the course of the fraud scheme, the defendants, together with others known and unknown, attempted to defraud the Victims of more than $31,000,000.

The Patients were also instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors, including Ribeiro.  The fraud scheme participants advised the Patients that if they intended to continue with their lawsuits, they were required to undergo surgery, which was critical to boosting the value of any potential settlement.  Fraud scheme participants, including ALEXANDER, looked for doctors who were willing to perform surgeries, even when others would not.  For example, in a May 2015 email, after one doctor informed ALEXANDER that a particular patient was “not . . . a surgical candidate,” ALEXANDER directed a Patient recruiter and case manager to “[t]ake him to [another doctor]—Nothing is done until its done.” 

As an incentive to getting surgery, the recruited Patients were offered a payment, in the form of loans, typically between $1,000 and $1,500 after they completed surgery (“Post-Surgery Loans”).  Patients generally were told to undergo two surgeries. 

The Patients’ legal and medical fees were usually paid for by litigation funding companies (the “Funding Companies”), including a funding company owned by ALEXANDER, even if the Patient maintained medical coverage through an insurance company or a government-subsidized program.  The Funding Companies also paid the fraud scheme organizers and participants referral fees, typically $1,000 to $2,500, for each Patient who signed a funding agreement.  In an April 2015 email about a particular Patient’s staged accident, Alexander wrote to two of the recruiters and case managers, “I am sure you realize I want to do these deals; I am just trying to see how we can, without getting in trouble.”

In exchange for funding Patients’ medical and legal costs, the Funding Companies charged the Patients high interest rates, sometimes up to 50% on medical loans and up to 100% on personal loans.  The interest rates were so high that oftentimes the majority of the proceeds that were awarded in the Fraudulent Lawsuits were paid to the Funding Companies, lawyers, doctors, and others, with the Patients receiving a much smaller percentage of the remaining recovery. 

In addition to the high-interest rates charged by the Funding Companies, ALEXANDER also profited from the Fraud Scheme through an MRI facility that he owned and operated (“MRI Facility-1”).  ALEXANDER pushed the case managers to send Patients to MRI Facility-1, which routinely prepared MRI reports that were “positive” for medical conditions justifying surgery, even though the Patients had not sustained any injuries.  ALEXANDER received $1,000 per MRI that MRI Facility-1 prepared as part of the scheme. 

*                *                *

In addition to the prison term, ALEXANDER, 76, of New York, New York, was sentenced to three years of supervised release.  ALEXANDER was further ordered to pay $659,011 in forfeiture.  Restitution will be determined by the Court within 90 days. 

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Williams also thanked the National Insurance Crime Bureau for their assistance in the investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Nicholas Chiuchiolo, Nicholas Folly, Danielle Kudla, and Alexandra Rothman are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced a voluntary compliance agreement under Title II of the Americans with Disabilities Act (“ADA”) with the City University of New York (“CUNY”) pursuant to which CUNY will provide individual relief to a student with visual impairments who was excluded from full participation in their academic courses and implement systemwide policies to ensure future compliance with the ADA across CUNY’s 25 colleges in the five boroughs of New York City, which collectively serve 243,000 students.

U.S. Attorney Damian Williams said: “It is simply unacceptable that any student should be denied equal access to an education because of a disability.  We are pleased that CUNY has agreed to provide relief to the student whose education was compromised and that CUNY is committed to improving the accessibility of its courses, including online and digital content, for all future students.”  

Title II of the ADA prohibits public entities from discriminating against any individual on the basis of disability by excluding the individual from participation in services, programs, and activities.  The ADA requires public entities to make reasonable modifications to avoid such discrimination and to administer their services, programs, and activities in the most integrated setting appropriate to the needs of qualified individuals with disabilities, including by furnishing appropriate auxiliary aids and services to ensure effective communication. 

The out-of-court agreement resolves an investigation during which the U.S. Attorney’s Office determined that CUNY failed to provide reasonable accommodations required under the ADA for a student with visual impairments at CUNY’s John Jay School of Criminal Justice and identified shortcomings in CUNY’s accessibility and reasonable accommodation policies and procedures.  Specifically, the investigation found, among other things, that CUNY failed to make qualified learning assistants available to ensure an integrated learning setting for the student in numerous science and mathematics courses.  Additionally, John Jay instructors required students to use WebAssign, a third-party online learning product, to complete assignments, but that digital platform was not fully capable of reading out mathematical and scientific symbols and equations.  Furthermore, John Jay repeatedly failed to make usable versions of required textbooks and other course materials available to the student by the start of courses.  The student made a number of attempts to bring the deficiencies to the attention of staff at John Jay and CUNY, but neither John Jay nor CUNY had adequate policies and procedures to ensure that reasonable accommodation requests and related complaints are addressed in a timely and appropriate manner.  As a result, the student received unduly poor grades and was forced to forgo taking other desired and required advanced courses for a number of academic years.        

CUNY has agreed to prepare and implement systemwide policies to ensure improved accessibility of educational content to visually impaired students, including digital learning content, proper training of staff and faculty, and effective reasonable accommodation and complaint procedures.   

Under the agreement, CUNY will permanently purge all of the affected student’s grades in the relevant courses in which reasonable modifications were not provided and pay the student $10,000 in compensatory damages.  CUNY will also adopt systemwide policies and procedures to ensure:

• The prompt availability of qualified learning assistants, including by initiating an appropriate and timely search process, involving the relevant affected students in that process, and setting a reasonable level of compensation likely to attract qualified candidates;   
• The prompt availability of accessible course materials by the start of the relevant course or as soon as practicable based upon early consultations with affected students;
• Reasonable accommodation and complaint mechanisms based on clear, short deadlines by which accommodation requests and complaints must be addressed and remaining concerns are promptly escalated to higher-level administrators as necessary;
• Information Technology accessibility consistent with the latest Web Content Accessibility Guidelines, including via verification of the accessibility of third-party learning products and of instructors’ awareness of accessibility requirements for instructor-created content; and
• Training of faculty and accessibility-services staff on ADA requirements.  

*                *                *

This case is being handled by the Office’s Civil Rights Unit in the Civil Division.  Assistant U.S. Attorney Stephen Cha-Kim is in charge of the case.

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 Thomas Fattorusso, the Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced the unsealing of a four-count Indictment charging LARS WINKELBAUER, ABILASH KURIEN, CARLTON LLEWELLYN, ROBERT SCHIRMER, SKYE XU, BENJAMIN WEI, a/k/a/ “Ben Wei,” ALVARO LOPEZ, FABIOLA CINO, ORLANDO WONG, and PATRICK LAU, a/k/a “Pat Lau,” in connection with a massive scheme to defraud Polar Air Cargo Worldwide, Inc. (“Polar”), a leading cargo airline, of tens of millions of dollars in revenue and the honest services of its employees.  Nine defendants were arrested today.  KURIEN, LLEWELLYN, SCHIRMER, and LAU will be presented in federal court in Manhattan this afternoon.  WEI and WONG will be presented later today in federal court in the Central District of California.  LOPEZ and CINO will be presented later today in federal court in the Southern District of Florida.  WINKELBAUER was arrested today in Thailand and is pending extradition to the United States.  SKYE XU remains at large.

U.S. Attorney Damian Williams said: “As alleged, the 10 defendants charged today conducted a widespread scheme that tainted nearly every aspect of Polar Air Cargo Worldwide’s operations and that cost the company an estimated $52 million in losses.  The defendants, all of whom were either employed in high-level positions by Polar or were vendors reliant on business arrangements with Polar, allegedly showed a blatant disregard for the integrity of their companies in favor of lining their own pockets.  Their pervasive fraud ends today, and each defendant now faces substantial prison time for their alleged crimes.” 

FBI Assistant Director Michael J. Driscoll said: “For more than a decade, the defendants allegedly utilized a complex set of schemes at the expense of Polar Air to line their own pockets.  The indictments today serve as a reminder to any unscrupulous actors attempting complex frauds – the FBI will hold you accountable in the criminal justice system.”   

IRS-CI Special Agent in Charge Thomas Fattorusso said: “Today’s charges are the opening salvo against a decade-long scam by a small group of Polar’s executives and others that allegedly tainted every aspect of its business operations.  These arrests and charges today will hopefully begin the process of righting the alleged wrongs of those charged and put the company on a path to integrity, which its hardworking employees and legitimate customers deserve.”

As alleged in the Indictment:[1]

From at least in or about 2009 through in or about July 2021, LARS WINKELBAUER, ABILASH KURIEN, CARLTON LLEWELLYN, ROBERT SCHIRMER, SKYE XU, BENJAMIN WEI, ALVARO LOPEZ, FABIOLA CINO, ORLANDO WONG, and PATRICK LAU participated in a massive scheme to defraud Polar.  At all relevant times, WINKELBAUER, KURIEN, LLEWELLYN, and SCHIRMER (collectively, the “Executive Defendants”) were senior executives of Polar.  XU, WEI, LOPEZ, CINO, WONG, and LAU (collectively, the “Vendor Defendants”) owned and operated various Polar vendors and customers.  The Executive Defendants agreed to accept millions of dollars in kickbacks from the Vendor Defendants and also reaped substantial financial benefits as a result of their secret ownership interests in certain Polar vendors, in exchange for ensuring that those vendors received favorable business arrangements with Polar.  The fraud they perpetrated — which involved a substantial portion of Polar’s senior management and at least 10 customers and vendors of Polar — led to pervasive corruption of Polar’s business, touching nearly every aspect of the company’s operations, for over a decade. 

Polar’s business involved numerous outside vendors and customers.  Polar relied heavily on third-party, general sales agents (“GSAs”) in the United States to sell cargo space on its planes.  In turn, the GSAs hired by Polar often sold available cargo space to freight forwarding vendors, which had been hired by downstream customers to coordinate transportation logistics for large quantities of goods.  Polar also contracted with ground handling vendors to load and unload cargo and with trucking vendors to transport cargo from domestic locations to the appropriate airports.  In addition, Polar contracted with other partners for a variety of business reasons, including to secure cargo space on airline routes not serviced by Polar flights.  The scheme to defraud Polar touched on each aspect of these operations.

Together, the Executive Defendants and the Vendor Defendants defrauded Polar by corrupting Polar’s relationships with GSAs, freight forwarders, and other vendors, including those providing ground handling and trucking services.  Unbeknownst to Polar, the Executive Defendants utilized their positions within Polar to secure, among other things, favorable contracts, valuable cargo space, favorable shipping rates, and enrollment in various incentive programs for the Vendor Defendants and their entities.  In return, the Vendor Defendants paid the Executive Defendants kickbacks in various forms, including, for example, in payments calculated per kilo of cargo shipped with Polar or as a percentage of the revenue earned as a result of a vendor’s relationship with Polar.  In addition, the Executive Defendants, in various combinations, held concealed ownership positions in certain companies which contracted with Polar and that were, in at least one case, associated with the Vendor Defendants.  As a result, the Executive Defendants received ownership distributions based, in large part, on revenue derived from contracts with Polar — contracts that had been secured and, often times, renewed due to, in large part, the recommendation of the Executive Defendants with conflicts of interest.

To conceal the kickbacks and conflicted ownership interests from Polar, and thereby to continue the fraud scheme, WINKELBAUER, KURIEN, LLEWELLYN, and SCHIRMER often directed the kickbacks and ownership distributions be paid to limited liability companies with non-descript names that they, in fact, controlled.  Additionally, the Executive Defendants communicated amongst themselves and with the Vendor Defendants about the scheme primarily using personal email accounts, while the Vendor Defendants conducted official Polar business with the Executive Defendants primarily using their professional email accounts. 

As a result of the scheme, the Executive Defendants, along with two co-conspirators who also worked as senior executives at Polar, received unlawful payments, either directly or through various limited liability companies they controlled, in excess of approximately $23 million in kickback payments or disbursements received as a result of their ownership of conflicted companies.  Additionally, a financial analysis conducted at Polar’s direction estimates that, as a result of the fraudulent scheme, Polar suffered at least approximately $52 million in losses between in or about 2009 and in or about July 2021.

In the Summer of 2021, Polar discovered documentary evidence of the conflicted ownership arrangements and kickback agreements.  Shortly thereafter, Polar terminated the employment of WINKELBAUER, KURIEN, LLEWELLYN, and SCHIRMER, and reported the conduct to law enforcement authorities.  Polar has continued to cooperate with law enforcement authorities through the investigation.

*                *                *

WINKELBAUER, 47, of Bangkok, Thailand, KURIEN, 45, of Wilton, Connecticut, LLEWELLYN, 55, of Highland Mills, New York, SCHIRMER, 58, of Port Jefferson Station, New York, XU, 40, of West Covina, California, WEI, 58, of San Marino, California, LOPEZ, 50, of Aventura, Florida, CINO, 45, of Aventura, Florida, WONG, 60, of Manhattan Beach, California, and LAU, 43, of Flushing, New York, are each charged with one count of conspiracy to commit wire fraud and honest services wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.  WINKELBAUER, KURIEN, LLEWELLYN, and SCHIRMER are also charged with one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison.   

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

Mr. Williams praised the outstanding work of the FBI and IRS-CI.  Mr. Williams also thanked the United States Attorney’s Offices for the Central District of California and the Southern District of Florida as well as the Justice Department’s Office of International Affairs and Thai authorities for their assistance in the investigation. 

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Katherine Reilly and Danielle Kudla 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.

[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.

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 the unsealing today of a four-count Indictment charging DARIUS A. PADUCH, a New York–area urologist, with inducement of a person to travel to engage in unlawful sexual activity and inducement of a minor to engage in unlawful sexual activity for his yearslong sexual abuse of two victims who were his patients and who were minors during part of the period of abuse.  PADUCH was arrested this morning and will be presented before U.S. Magistrate Judge Sarah L. Cave this afternoon.  The case has been assigned to U.S. District Judge Ronnie Abrams.

U.S. Attorney Damian Williams said: “As alleged, for years, Darius Paduch abused the trust of patients, including minors, who saw him for sensitive medical problems.  Paduch took advantage of his victims for his own deviant satisfaction.  Thanks to this morning’s arrest, Paduch’s abuse of his patients ends today.” 

FBI Assistant Director in Charge Michael J. Driscoll said: “The indictment unsealed today against Paduch, a New York-area doctor, details alleged systemic abuse of a number of patients, to include minors, over the course of several years.  Sexual abuse of anyone at any age for any reason is a horrific crime that carries strict penalties.  If you have been victimized by Darius Paduch in any way or have any additional information about his alleged illegal behavior, please call us at 1-800-CALL-FBI, or reach out to us at tips.fbi.gov.”

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

Over the course of several years, PADUCH sexually abused multiple male patients, including minor male patients, while conducting purported urological examinations in his capacity as a medical doctor employed by a prestigious medical institution in New York, New York (“Medical Institution-1”).

From at least in or about 2015 through at least in or about 2019, PADUCH, while working as a urologist, enticed and induced multiple victims to travel to his medical offices at Medical Institution-1, so PADUCH could, among other things, sexually abuse the victims.  In or about 2019, PADUCH began practicing at a different hospital located in Long Island, New York (“Medical Institution-2”), where he continued to sexually abuse patients.  PADUCH used his position as a urologist at prominent medical institutions in New York to make or attempt to make the victims believe that the sexual abuse he inflicted on them was medically necessary and appropriate, when, in fact, it was not.  PADUCH often directed the victims to schedule follow-up visits, and he instructed victims to return to see him again.  As a result, some of the victims attended many appointments with PADUCH over the course of multiple years, at which PADUCH repeatedly abused them.

After appointments, PADUCH sent certain victims — including minor victims — text messages from his personal cellphone.  In those messages, he made inappropriate and sexual comments and jokes, and he directed the victims to schedule follow-up appointments or to visit his office after regular business hours. 

As alleged, PADUCH induced two victims to travel to New York, New York, from or through another state to engage in unlawful sexual activity — in other words, his abuse of the victims.  PADUCH also used a telephone and other means of interstate commerce to induce two minor victims to engage in the unlawful sexual activity.

*                *                *

PADUCH, 55, of North Bergen, New Jersey, is charged with inducement of a victim (“Minor Victim-1”) to travel to engage in unlawful sexual activity, which carries a maximum sentence of 20 years in prison;  inducement of a victim (“Minor Victim-2”) to travel to engage in unlawful sexual activity, which carries a maximum sentence of 20 years in prison; inducement of Minor Victim-1 to engage in unlawful sexual activity, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; and inducement of Minor Victim-2 to engage in unlawful sexual activity, which carries a mandatory minimum sentence of 10 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 the judge.

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

The prosecution is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Marguerite B. Colson, Elizabeth A. Espinosa, and Jun Xiang 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 descriptions of the Indictment set forth below constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that restaurateur BESIM KUKAJ was sentenced to 57 months in prison for orchestrating a sprawling loan fraud scheme, including while he was on pretrial release, whereby he fraudulently sought at least $6.14 million and received $1.5 million in Government-guaranteed loans designed to provide relief to small businesses during the COVID-19 pandemic.  KUKAJ was also sentenced for attempting to intimidate a creditor as part of an interstate threats scheme with his already sentenced co-defendant Abduraman Iseni, a/k/a “Diamond.”  U.S. District Judge Andrew L. Carter imposed today’s sentence.

U.S. Attorney Damian Williams said: “Manhattan restaurateur Besim Kukaj took advantage of the hardships created by the COVID-19 pandemic and the federal government’s efforts to help those in need by lining his own pockets with seven figures of illegally obtained funds.  He did this out of pure greed, sending some of this money to a Florida real estate developer and using it to buy luxury items from Cartier and Hugo Boss.  He even continued to commit the same crimes while he was on bail.  And he didn’t stop there.  He directed his co-conspirator to physically threaten a victim to whom he owed money.  For his brazen crimes, Kukaj will serve meaningful time in prison.”

According to court filings and statements made in court proceedings:

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of hundreds of billions of dollars in forgivable loans to small businesses for job retention and certain other expenses through the Small Business Administration’s Paycheck Protection Program (“PPP”) and additional billions for the separate Economic Injury Disaster Loan program (“EIDL”).  Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined in significant part by the number of employees employed by the business and their average payroll costs.  The amount of a loan under the EIDL program is determined in part by a formula based on the date the borrower began operating and the borrower’s gross revenue and cost of goods sold during a period before the pandemic.  The loans can be used only for working capital and other normal operating expenses.  Businesses applying for loans under the PPP and EIDL program must confirm the accuracy of their loan statements. 

From at least in or about April 2020 through at least in or about July 2020, KUKAJ, working with others, submitted applications for loans under the EIDL program and the PPP to multiple banks on behalf of various restaurants KUKAJ or a relative of his owned.  He did so on behalf of restaurants that were no longer operating or that had far less revenue and far fewer employees than were listed on the loan applications.  KUKAJ and his co-conspirators applied for dozens of loans, totaling at least $6.14 million, from numerous financial institutions, using many different corporate entities, and they successfully received at least $1.5 million in loans. 

KUKAJ was arrested in October 2020 and charged with bank fraud conspiracy and later indicted for the same charges in December 2020.  He was released on pretrial release under a court order that notified him of the potential effect of committing a crime while on pretrial release.  KUKAJ violated the terms of his bail for continuing to file false loan applications while on pretrial release for the same conduct.  Specifically, in 2021, while on pretrial release, KUKAJ filed additional false loan applications that inflated the businesses’ number of employees and payrolls and falsely claimed that he was not under indictment. 

Separately, on November 6, 2019, at the urging of KUKAJ, co-defendant Abduraman Iseni placed a telephone call to a victim, in which Iseni threatened physical violence against the victim.  KUKAJ instructed Iseni to place this call because KUKAJ owed money to the victim.

*                *                *

In addition to the prison sentence, KUKAJ, 43, of Fort Lee, New Jersey, was ordered to pay forfeiture of $1,500,000 and restitution in the amount of $1,500,000 to the U.S. Small Business Administration.

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation New York’s Balkans and Middle East Organized Crime Squad, as well as the Small Business Administration Office of the Inspector General, the Social Security Administration Office of the Inspector General, and the New York State Liquor Authority for their investigative efforts and ongoing support and assistance with the case.  

The prosecution of this case is being overseen by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys David R. Felton and Samuel L. Raymond are in charge of the case.

A California woman was sentenced on April 7 to four years in prison followed by three years of supervised release for conspiring to violate the International Emergency Economic Powers Act (IEEPA) by providing services, including financial services, to Iran and the Government of Iran, in violation of U.S. sanctions against Iran, and for structuring.

According to court documents, Niloufar Bahadorifar, aka Nellie Bahadorifar, 48, of Irvine, pleaded guilty on Dec. 15, 2022, before U.S. District Judge Ronnie Abrams, who imposed the sentence.

“The Government of Iran has shown that it will take extreme measures to silence dissidents and critics around the world exercising their lawful rights, including through the use of violence on U.S. soil,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “We hold accountable an individual who violated U.S. sanctions by providing financial assistance that ultimately supported a failed kidnapping plot directed by the Iranian government, underscoring the Department’s commitment to bringing to justice those who criminally aid the Iranian regime.”

“Niloufar Bahadorifar provided financial support to a brazen plot intended to kidnap an Iranian human rights activist living in the United States whom the Iranian Government has sought to silence for years,” said U.S. Attorney Damian Williams for the Southern District of New York. “Efforts by malign foreign governments to stifle free speech and peaceful protest by means of intimidation or repression cannot be tolerated. The right to free speech is a core fundamental principle of American ideals, and this office is proud to protect that right with every means at our disposal.”

“Simply put, the defendant provided assistance to individuals who tried to help kidnap a journalist living in New York, who has criticized the regime in Teheran,” said Assistant Director Alan E. Kohler Jr. of the FBI’s Counterintelligence Division. “This case demonstrates that the government of Iran will continue to target dissidents and reach beyond their borders, violating U.S sanctions and national security, but more importantly threaten the personal safety of individuals living in our country. The FBI will continue to shield those who are targeted and aggressively pursue anyone who attempts to circumvent our laws and will leverage all our authorities to protect the right to free speech.”

According to the indictment and other documents in the public record, as well as statements made in public court proceedings:

For years, the Government of Iran has targeted a prominent Iranian dissident living in New York City (the Victim). The Victim is a journalist, author and human rights activist who has publicized the Government of Iran’s human rights abuses and suppression of political expression. Beginning in at least 2020, Iranian intelligence officials and assets, including co-defendant Mahmoud Khazein, plotted to kidnap the Victim from within the United States for rendition to Iran in an effort to silence the Victim’s criticism of the regime. As part of that plot, on multiple occasions in 2020 and 2021, agents of the Government of Iran procured the services of private investigators to surveil, photograph, and video record the Victim and the Victim’s household members. These agents of the Government of Iran, including Khazein, procured the surveillance by misrepresenting their identities and the purpose of the surveillance to the investigators and laundered money into the United States from Iran in order to pay for the surveillance, photos and video recordings of the Victim.

Beginning in approximately 2015, Bahadorifar, a U.S. citizen residing in California and originally from Iran, provided financial and other services, including access to the U.S. financial system and U.S. financial institutions, to Iranian residents and entities, including to Khazein. Bahadorifar, who is not charged with participating in the kidnapping conspiracy, provided financial services that ultimately supported the plot. Among other things, Bahadorifar caused a payment to be made to a private investigator for surveillance of the Victim on behalf of Khazein. Bahadorifar’s payment obscured the origin of those who had hired the private investigator, who surveilled the Victim without knowing it was on behalf of Iranian intelligence services. At no time did Bahadorifar obtain permission from OFAC to provide services to Iran.

Beginning in approximately 2019, Bahadorifar also structured cash deposits totaling hundreds of thousands of dollars. In total, Bahadorifar structured at least approximately $476,100 in more than 120 individual deposits. All but two of the deposits were less than $10,000.

The FBI New York Field Office Counterintelligence-Cyber Division and the New York FBI Iran Threat Task Force investigated the case, with valuable assistance provided by the New York City Police Department (NYPD) and the NYPD Intelligence Bureau, the FBI Los Angeles Field Office and the Justice Department’s National Security Division.

Assistant U.S. Attorneys Michael D. Lockard, Jacob H. Gutwillig and Matthew J.C. Hellman for the Southern District of New York and Trial Attorney Christopher M. Rigali of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced that SUNI MUNSHANI, the former Chief Executive Officer of a Connecticut-based technology company (the “Victim Company”), was sentenced to 42 months in prison for his participation in a scheme to defraud the Victim Company of millions of dollars.  The sentence was imposed by U.S. District Judge Jed S. Rakoff.

U.S. Attorney Damian Williams said: “Suni Munshani believed that he could ransack a company that had put its trust in him.  He lied for years — even impersonating his deceased uncle — to steal from an organization he was supposed to lead.  His sentence shows once again that crime doesn’t pay, and that this Office will bring to justice those who flout the law, even if they have the top job.”

According to public court filings and statements made in Court:     

Between 2011 and 2019, SUNI MUNSHANI was the CEO of the Victim Company, which provided data security services to its clients.  Within six months of his appointment as CEO, MUNSHANI and others began an approximately eight-year scheme to defraud the Victim Company.  During the scheme, MUNSHANI, among other things, created an email account in the name of his deceased uncle but controlled by MUNSHANI.  MUNSHANI, posing as the uncle, used that email account to correspond with the Victim Company and to obtain payments from the Victim Company totaling at least approximately $3 million dollars for services that were never provided.  These purported services were falsely represented to have been rendered by the uncle as well as others, including a marketing executive who had met MUNSHANI in social settings but had never worked for MUNSHANI or the Victim Company and had no idea his identity was being used by MUNSHANI.  MUNSHANI also caused the Victim Company to issue a $3.5 million check for a purported tax liability, which check MUNSHANI then deposited into an unauthorized bank account created by MUNSHANI in the name of the Victim Company.  

In addition, MUNSHANI defrauded the Victim Company through fraudulent licensing and reseller agreements between the Victim Company and two other companies (the “Licensing Company” and the “Reseller Company,” respectively).  Among other things, MUNSHANI instructed another individual to set up the Reseller Company “in the same way as [the Licensing Company],” and then helped create and submit fraudulent invoices from the Reseller Company to the Victim Company.

*                *                *

In addition to his prison term, MUNSHANI, 61, of Easton, Connecticut, was sentenced to three years of supervised release.  The Court reserved decision on the amount of restitution.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation’s New York Office.  

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Timothy V. Capozzi and Steven J. Kochevar are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that JAMES VELISSARIS, the founder and former chief investment officer of Infinity Q Capital Management (“Infinity Q”), a New York-based investment adviser that ran a mutual fund and a hedge fund that purported to have approximately $3 billion in assets under management, was sentenced to 15 years in prison for his participation in a scheme to defraud Infinity Q’s investors.  The sentence was imposed by U.S. District Judge Denise L. Cote.

U.S. Attorney Damian Williams said: “Velissaris wove a complex scheme to defraud investors in Infinity Q’s investment funds, and he continuously lied to investors, auditors, and even the SEC in order to hide his crimes.  Velissaris’s massive scheme was calculated and deceptive, and he now justly faces 15 years in federal prison.  We hope this lengthy sentence resonates in the financial sector and deters anyone who may be tempted to lie to investors.”

According to public court filings and statements made in Court:     

Background

VELISSARIS was the founder and chief investment officer of Infinity Q, an investment adviser that ran both a mutual fund (the “Mutual Fund”), started in about 2014, and a hedge fund (the “Hedge Fund,” and collectively the “Investment Funds”), started in about 2017.  As of 2021, the two funds purported to have approximately $3 billion in assets under management.  Infinity Q was headquartered in New York, New York, and employed a small staff, including a chief compliance and chief risk officer (“Employee-1”). 

A major component of both the Mutual Fund and the Hedge Fund’s holdings were over-the-counter (“OTC”) derivative positions that involved customized contracts that allowed the counterparties to take positions on the volatility, or price movement, of underlying assets or indices.  VELISSARIS, through Infinity Q, represented to its investors that it valued these OTC derivative positions based on fair value, and that in order to do so, it utilized the services of an independent third-party provider.  In particular, Infinity Q represented to investors and other stakeholders that it used Bloomberg Valuations Service (“BVAL”) to independently calculate the fair value of these positions, in accordance with the terms of the underlying derivative contracts.  These OTC derivative positions comprised hundreds of millions of dollars of the Investment Funds’ portfolios.  

VELISSARIS’s Scheme to Lie to Investors and Inflate Derivative Swap Positions

In fact, however, VELISSARIS defrauded Infinity Q’s investors by taking an active role in the valuation of Infinity Q’s positions and by modeling the positions in ways that were not based on the actual terms of the underlying contracts and were inconsistent with fair value.  VELISSARIS’s input into the BVAL valuation process was inconsistent with Infinity Q’s representations about the independence of the process and allowed VELISSARIS to fraudulently mismark positions in BVAL.  VELISSARIS engaged in the mismarking of positions in BVAL by making false entries in BVAL’s system, including by secretly altering the computer code employed by BVAL that caused BVAL to alter and disregard certain critical terms.  Altering and disregarding terms in this fashion caused BVAL to report values that were artificially inflated and, often, much higher than fair value. 

By manipulating OTC derivative positions in BVAL in this way, VELISSARIS caused numerous positions in the Investment Funds to have anomalous and, at times, impossible valuations.  For example, at times, VELISSARIS made manipulations in either the Mutual Fund and/or the Hedge Fund that caused certain identical positions that were held by both the Mutual Fund and the Hedge Fund (namely, a position where all the material terms are the same) to have substantially divergent values.  In other cases, some of VELISSARIS’s manipulations caused certain positions held by the Investment Funds to have impossible values, such as where, under the true terms of the swap, the value adopted by VELISSARIS could only be true if volatility were negative – a condition which is mathematically impossible.

Ultimately, after VELISSARIS’s mismarking scheme was uncovered in or about February 2021, Infinity Q liquidated the Investment Funds and sold its OTC derivative positions.  These positions were sold for hundreds of millions of dollars less than their purported market values in BVAL, thereby resulting in substantial losses to the investors in the Investment Funds.

VELISSARIS Lies to Auditors and Obstructs the SEC’s Investigation

In order to hide this scheme and prevent its detection, VELISSARIS lied to numerous outside stakeholders and regulators.  First, in order to prevent Infinity Q’s outside auditor (the “Auditor”) from discovering the fraud, VELISSARIS provided the Auditor with falsified term sheets from counterparties that he had altered to change the true terms of certain OTC derivative positions.  In particular, in connection with a number of audits, the Auditor selected certain OTC positions that it would independently value in order to confirm the reasonableness of Infinity Q’s values from BVAL.  In order to ensure that the Auditor would not arrive at materially different results when independently valuing positions that VELISSARIS had manipulated in BVAL, VELISSARIS altered the terms of certain deal documents and provided them to the Auditor.  After receiving these falsified documents and relying on them in its independent evaluation, the Auditor confirmed the reasonableness of VELISSARIS’s valuations in BVAL.

Furthermore, beginning in May 2020, the Securities and Exchange Commission (“SEC”) opened an inquiry and later an investigation into Infinity Q’s valuation practices.  In connection with that investigation, VELISSARIS provided false and misleading information to the SEC.  For example, when the SEC asked for original documents that had been provided to investors, VELISSARIS altered the documents before providing them to the SEC, including certain alterations that would help hide his mismarking scheme.  For example, Infinity Q’s original investor materials stated that “[o]nce a price is established for a portfolio security, it shall be used for all Funds that hold the security.”  As explained above, this was untrue, and on numerous occasions, manipulations in BVAL made by VELISSARIS caused the same positions in the Mutual Fund and the Hedge Fund to have substantially different values.  To conceal the falsity of Infinity Q’s disclosures, VELISSARIS, along with Employee-1, removed this line from investor documents that were provided to the SEC.

In June 2020, the SEC requested that Infinity Q provide additional materials, including documents regarding Infinity Q’s valuation committee and all of its meeting minutes.  Infinity Q’s investor materials had represented that Infinity Q had a valuation committee, including VELISSARIS; that the committee would meet monthly or more often; and that VELISSARIS would be responsible for preparing minutes of such meetings.  In fact, however, VELISSARIS had not kept notes of any such meetings.  Accordingly, days before responding to the SEC, VELISSARIS made up notes purporting to be from valuation committee meetings in 2019 and 2020 and submitted them to the SEC.

*                *                *

In addition to his prison term, VELISSARIS, 38, of Atlanta, Georgia, was sentenced to three years of supervised release and agreed to pay approximately $22 million in forfeiture.  The Court reserved decision on the amount of restitution.

Mr. Williams praised the work of the Federal Bureau of Investigation.  He further thanked the SEC and the Commodity Futures Trading Commission for their cooperation and assistance in this investigation.   

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that the United States has settled a federal Fair Housing Act (“FHA”) lawsuit against ARTIMUS CONSTRUCTION, INC. (“ARTIMUS”).  Under the settlement, ARTIMUS has agreed to make retrofits at rental buildings in Harlem and Chelsea, named Susan’s Court and Chelsea Park, respectively.  ARTIMUS also agreed to provide $75,000 to compensate aggrieved persons and pay a $5,000 civil penalty.  Additionally, ARTIMUS agreed to establish procedures to survey four additional properties, two in Manhattan and two in Queens, to improve accessibility and agreed to ensure that its future residential development projects will comply with the accessibility requirements of the FHA.  The settlement was approved today by U.S. District Judge Paul A. Engelmayer. 

U.S. Attorney Damian Williams said: “This Office has brought multiple suits to address the failure of real estate developers to comply with the Fair Housing Act, and we will continue to ensure that New York City’s residential housing market is open to everyone, including people with disabilities.  We appreciate Artimus’s cooperation in remedying the inaccessible conditions in their buildings.”

According to the allegations in the complaint and the settlement approved today:

The FHA’s accessible design and construction provisions require multifamily housing complexes constructed after January 1991 to have basic features accessible to persons with disabilities.  The inaccessible conditions at ARTIMUS’s rental buildings included excessively high thresholds at building entrances and entrances to common use areas, common use bathrooms that lack grab bars and pipe insulation, excessively high thresholds at entrances to individual apartments and within the apartments, and bathrooms in individual apartments that lack sufficient clear floor space for people who use wheelchairs.  These features in the common use areas of ARTIMUS’s buildings, as well as in the buildings’ apartment interiors, did not meet the specifications set forth in the Fair Housing Accessibility Guidelines, Design Guidelines for Accessible/Adaptable Dwellings.

Under the settlement, ARTIMUS agreed to make retrofits to the public and common use areas as well as the individual units at the Chelsea Park and Susan’s Court buildings to improve accessibility.  The settlement also requires ARTIMUS to establish procedures to ensure FHA compliance at its future development projects, including to retain an FHA compliance consultant to assess the design documents and conduct site visits to identify non-compliant conditions.  In addition, ARTIMUS agreed to institute policies and training to ensure that its employees and agents will comply with the FHA’s accessibility requirements.

Finally, the settlement requires ARTIMUS to provide $75,000 to compensate aggrieved persons.  Aggrieved persons may be entitled to monetary compensation from the fund created through today’s settlement.  Aggrieved individuals may include those who:

• Were discouraged from living at ARTIMUS’s rental buildings because of the lack of accessible features;
• Have been hurt in any way by the lack of accessible features at ARTIMUS’s rental buildings;
• Paid to have an apartment at one of ARTIMUS’s rental buildings made more accessible to persons with disabilities; or
• Otherwise were discriminated against on the basis of disability at one of ARTIMUS’s rental buildings as a result of inaccessible design and construction.

*                *                *

The settlement with ARTIMUS is the 18th settlement reached by this Office with developers and architects to remedy inaccessible housing in this District, including suits against The Durst Organization, Glenwood Management, Silverstein Properties, Related Companies, and Atlantic Development.

Any individual who may be entitled to compensation can file a claim by using the Civil Rights Complaint Form available on the United States Attorney’s Office’s website https://www.justice.gov/usao-sdny/civil-rights or by sending a written claim to:

U.S. Attorney’s Office, Southern District of New York      

86 Chambers Street, 3rd Floor                      

New York, New York 10007      

Attention: Chief, Civil Rights Unit

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that NILOUFAR BAHADORIFAR, a/k/a “Nellie Bahadorifar,” was sentenced to four years in prison for conspiring to violate the International Emergency Economic Powers Act (“IEEPA”) by providing services, including financial services, to Iran and the Government of Iran, in violation of U.S. sanctions against Iran, and for structuring.  BAHADORIFAR pled guilty on December 15, 2022, before U.S. District Judge Ronnie Abrams, who imposed today’s sentence.

U.S. Attorney Damian Williams said: “Niloufar Bahadorifar willfully violated sanctions and knowingly provided financial support to Iranian intelligence assets, who in turn were engaged in a plot to kidnap an Iranian human rights activist living in the United States whom the Iranian Government has sought to silence for years.  Assisting malign foreign governments by violating sanctions can have devastating consequences, including for those targeted by hostile regimes for retribution.  This Office will continue to prosecute efforts to subvert sanctions and is proud to protect victims from repressive regimes.”

According to the Indictment and other documents in the public record, as well as statements made in public court proceedings:

The IEEPA confers upon the President authority to deal with unusual and extraordinary threats to the national security and foreign policy of the United States.  Since 1979, the President has found that the situation in Iran constitutes an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States.  Among the Government of Iran’s malign practices, it has targeted and sought to repress, including through harassment, intimidation, and violence, those who defend human rights and criticize the regime.  Pursuant to the IEEPA, and applicable Executive Orders and regulations, U.S. persons are prohibited from exporting any services, including financial and banking services, to Iran or the Government of Iran without a license from the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”).

For years, the Government of Iran has targeted a prominent Iranian dissident living in New York City (“the Victim”).  The Victim is a journalist, author, and human rights activist who has publicized the Government of Iran’s human rights abuses and suppression of political expression.  Beginning in at least 2020, Iranian intelligence officials and assets, including co-defendant Mahmoud Khazein, plotted to kidnap the Victim from within the United States for rendition to Iran in an effort to silence the Victim’s criticism of the regime.  As part of that plot, on multiple occasions in 2020 and 2021, agents of the Government of Iran procured the services of private investigators to surveil, photograph, and video record the Victim and the Victim’s household members.  These agents of the Government of Iran, including Khazein, procured the surveillance by misrepresenting their identities and the purpose of the surveillance to the investigators and laundered money into the United States from Iran in order to pay for the surveillance, photos, and video recordings of the Victim. 

Beginning in approximately 2015, BAHADORIFAR, a U.S. citizen residing in California and originally from Iran, provided financial and other services, including access to the U.S. financial system and U.S. financial institutions, to Iranian residents and entities, including to Khazein.  BAHADORIFAR, who is not charged with participating in the kidnapping conspiracy, provided financial services that ultimately supported the plot.  Among other things, BAHADORIFAR caused a payment to be made to a private investigator for surveillance of the Victim on behalf of Khazein.  BAHADORIFAR’s payment obscured the origin of those who had hired the private investigator, who surveilled the Victim without knowing it was on behalf of Iranian intelligence services.  At no time did BAHADORIFAR obtain permission from OFAC to provide services to Iran. 

Beginning in approximately 2019, BAHADORIFAR also structured cash deposits totaling hundreds of thousands of dollars.  In total, BAHADORIFAR structured at least approximately $476,100 in more than 120 individual deposits.  All but two of the deposits were less than $10,000. 

*                *                *

In addition to the prison term, BAHADORIFAR, 48, of Irvine, California, was sentenced to three years of supervised release.

Mr. Williams praised the outstanding efforts of the Federal Bureau of Investigation’s (“FBI”) New York Field Office Counterintelligence-Cyber Division and the New York FBI Iran Threat Task Force.  Mr. Williams also thanked the New York City Police Department (“NYPD”) and the NYPD Intelligence Bureau, the FBI’s Los Angeles Field Office Orange County Resident Agency, and the Department of Justice’s National Security Division, Counterintelligence and Export Control Section for their assistance.

This prosecution is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Michael D. Lockard, Jacob H. Gutwillig, and Matthew J.C. Hellman are in charge of the prosecution, with assistance from Trial Attorney Christopher Rigali of the Counterintelligence and Export Control Section.

“Martin Luna, Miguel Luna, Urbano Santiago, and Hector Gutierrez were beloved fathers, husbands, brothers, and sons.  In 2016, Nicholas Tartaglione, a former police officer-turned drug dealer, suspected that Martin Luna had stolen money from him.  Tartaglione then devised a scheme to confront Martin at a meeting.  Unaware he was being lured into a deadly trap, Martin tragically brought his two nephews — Miguel and Urbano — and a family friend — Hector — to the meeting.  What occurred next could only be described as pure terror, as Tartaglione tortured Martin, then forced one of his nephews to watch as Tartaglione strangled Martin to death with a zip-tie.  Tartaglione and two of his associates then transported Miguel, Urbano, and Hector — who were simply at the wrong place at the wrong time — to a remote wooded location, forced them to kneel, and executed them with gunshots to the back of the head.  Tartaglione then buried all four victims in a mass grave.  Tartaglione’s heinous acts represent a broader betrayal, as he was a former police officer who once swore to protect the very community he devastated.  Today, a jury has found Tartaglione guilty of these heinous acts, sending a message that no one is above the law.  We commend the career prosecutors and investigators for their relentless pursuit of justice in this case over the past seven years, and for ensuring that Nicholas Tartaglione faces a lifetime in federal prison for his unconscionable murder of four men.  Most of all, we thank the victims’ families for trusting law enforcement to find their loved ones and see that justice was done.”

Damian Williams, the United States Attorney for the Southern District of New York, announced that AMIR BRUNO ELMAANI, a/k/a “Bruno Block,” the founder of the cryptocurrency “Oyster Pearl,” pled guilty yesterday to tax offenses.  In connection with his guilty plea, ELMAANI admitted that he had secretly minted and sold for his own gain Pearl cryptocurrency tokens, which caused the price of Pearl tokens to plummet, and that he did not pay income tax on certain cryptocurrency profits.  ELMAANI agreed that he caused a tax loss of over $5.5 million.  ELMAANI pled guilty before United States District Judge Colleen McMahon.  

U.S. Attorney Damian Williams said: “Amir Elmaani violated the duty he owed to pay taxes on millions of dollars of cryptocurrency profits.  As he admitted, he also violated the trust of investors in the cryptocurrency he founded.  Our Office will continue to bring groundbreaking cases, like this one, to ensure participants in cryptocurrency markets play by the rules.” 

Based on the allegations in the Indictment, in the Superseding Information to which ELMAANI pled guilty, the plea agreement, and other statements made and documents filed in court:

In September and October 2017, ELMAANI began promoting online a new cryptocurrency known as Pearl tokens.  Using a variation of his online pseudonym “Bruno Block,” ELMAANI stated that he planned to develop an online data-storage platform, known as Oyster Protocol, which would allow users to purchase online data storage with Pearl tokens.  Instead of using his real name, ELMAANI operated almost exclusively online under the pseudonym “Bruno Block.”  ELMAANI concealed his true identity from his prospective employees and business associates and never met them in person.

In late October 2018, although the number of Pearl tokens was purportedly fixed, ELMAANI used his access to the blockchain technology used to create Pearl tokens to mint new tokens, which he took for his own personal use (the “Exit Scheme”).  ELMAANI thereby increased the total volume of Pearl tokens.  Shortly after creating the new tokens, ELMAANI converted the Pearl tokens he had obtained to other types of cryptocurrency on an online marketplace or exchange.  As a result of ELMAANI’s conduct, trading in Pearl tokens halted on that exchange and the price of Pearl tokens held by investors dropped substantially.  Pearl tokens were subsequently de-listed from the primary exchange where they were traded.  Subsequent to the Exit Scheme, ELMAANI used his friends and family to receive cryptocurrency and to transfer funds to a bank account in his name. 

While ELMAANI initially attempted to hide even “Bruno Block’s” involvement in the Exit Scheme, he later effectively admitted to the conduct online under his “Bruno Block” pseudonym.  In a recorded call with the then-chief executive officer (“CEO”) of Oyster Protocol Inc., after the Exit Scheme, the CEO asked ELMAANI why he had to take the additional new Pearl tokens if he had already cashed out millions of dollars’ worth of Pearl tokens in the past.  ELMAANI responded, in part, that “taxes are pretty nasty.”  ELMAANI carried out the Exit Scheme only days before the exchange he had used to cash out his Pearl tokens was set to require “know your customer” personal identifying information from its users. 

In connection with his plea, ELMAANI admitted in the plea agreement that:

In or about 2017, using the alias “Bruno Block,” I began an online project called the “Oyster Protocol.”  In support of this project, an initial coin offering (“ICO”) was held in or about October 2017, in which a token named “Pearl” (“PRL”) was issued.  I stated in public forums that after the ICO, the supply of PRL would not increase, and that the smart contract that created PRL would be “locked.”  Contrary to these statements, on or about October 29, 2018, I used the smart contract to mint new PRL, without telling anyone, including others who worked on the Oyster Protocol project.  I then sold these newly minted PRL on a digital trading platform.  I was aware that the counterparties who were buying these newly minted PRL likely were not aware of my reopening of the smart contract, and did not know that I had just substantially increased the total supply of PRL.  After Oyster management learned of my reopening of the smart contract and alerted the public, the price of PRL plummeted.       

ELMAANI filed a false 2017 tax return stating that he had only approximately $15,000 of income from a “patent design” business, and he filed no return and reported no income to the Internal Revenue Service (“IRS”) in 2018.  Nevertheless, ELMAANI spent, in 2018, over $10 million for the purchase of multiple yachts, $1.6 million at a carbon-fiber composite company, hundreds of thousands of dollars at a home improvement store, and over $700,000 for the purchase of two homes, one of which was titled in the name of a shell company and the other in the name of two of his associates.  The tax loss to the United States from ELMAANI’s conduct was approximately $5,523,794.

*                *                *

ELMAANI, 31, of Martinsburg, West Virginia, pled guilty to one count of subscribing to a false tax return for the year 2017, which carries a maximum sentence of three years in prison, and one count of failure to file a tax return for the year 2018, which carries a maximum sentence of one year in prison.  ELMAANI also agreed to pay restitution in the amount of at least $5,523,794. 

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 investigative work of the Federal Bureau of Investigation and the IRS and also thanked the Securities and Exchange Commission and the Commodity Futures Trading Commission for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Margaret Graham, Adam Hobson, and Drew Skinner are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that IRVIN CARTAGENA, a/k/a “Green Eyes,” pled guilty today to conspiring to distribute heroin, fentanyl, and fentanyl analogue.  As part of the conspiracy, CARTAGENA distributed the fentanyl-laced heroin that resulted in the death of Michael K. Williams.  CARTAGENA pled guilty earlier today before U.S. District Judge Ronnie Abrams.

U.S. Attorney Damian Williams said: “Irvin Cartagena sold fentanyl-laced heroin in broad daylight in New York City, feeding addiction and causing tragedy.  In doing so, he dealt the fatal dose that killed Michael K. Williams.  This Office and our law enforcement partners will continue to hold accountable the dealers who push this poison, exploit addiction, and cause senseless death in our community.”

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

Between at least in or about August 2020 and February 2022, a drug trafficking organization (the “DTO”) was operating in the vicinity of 224 South 3rd Street in the Williamsburg neighborhood of Brooklyn, New York.  The DTO sold heroin laced with fentanyl and a fentanyl analogue on the street in front of, and from an apartment inside of, the apartment building located at 224 South 3rd Street, among other places.  On or about September 5, 2021, members of the DTO sold Michael K. Williams heroin, which was laced with fentanyl and a fentanyl analogue, with CARTAGENA executing the hand-to-hand transaction.  Williams died as a result of using that fentanyl-laced heroin.  Despite knowing that Williams died after being sold the DTO’s product, CARTAGENA and his co-conspirators continued to sell fentanyl-laced heroin in broad daylight amidst residential apartment buildings in Brooklyn and Manhattan.           

*                *                *

CARTAGENA, 39, of Brooklyn, New York, pled guilty to one count of conspiracy to distribute and possess with intent to distribute fentanyl analogue, fentanyl, and heroin, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 40 years in prison.  As part of his guilty plea, CARTAGENA stipulated that the substances he conspired to distribute and possess with intent to distribute resulted in the death of Michael K. Williams.

The statutory minimum and 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 New York City Police Department and the New York/New Jersey High Intensity Drug Trafficking Area Intelligence Analysts.  Mr. Williams also thanked the Organized Crime Drug Enforcement Task Forces New York Strike Force, the United States Marshals Service, the New York/New Jersey Regional Fugitive Task Force, and the New York Division of the Drug Enforcement Administration for their assistance in this case. 

This case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Micah Fergenson and David Robles are in charge of the prosecution.

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 in Manhattan federal court charging ANDRIS PUKKE with wire fraud and with engaging in unlawful monetary transactions in connection with his embezzlement of more than $13 million from Sanctuary Belize, a real estate development in Belize that he directed and controlled.  PUKKE was arrested this morning in Los Angeles and will be presented in the Central District of California later today. 

U.S. Attorney Damian Williams said: “Andris Pukke sold residential lots in Belize with a promise to build out an affordable vacation and retirement community in a tropical paradise.  Instead, Pukke’s planned paradise turned out to be just a mirage, as he allegedly stole the very funds the development needed to pay for roads, utilities, and other infrastructure, leaving the lot buyers with nothing but land they cannot access or use.  This Office will continue to aggressively pursue consumer fraud to ensure that businesses deliver on their promises to their customers.”

FBI Assistant Director Michael J. Driscoll said: “The defendant, as alleged, sold his victims dreams of a tropical haven, instead he used their money for his own interests.  Investigating and holding financial fraudsters like Mr. Pukke accountable in the criminal justice system remains a top priority for the FBI.”

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

PUKKE directed and controlled Sanctuary Belize, which was a vacation and retirement community under development in Belize.  PUKKE marketed and sold residential lots in the development to U.S. residents with promises that the development, when finished, would be near an international airport and hospital and would include a marina, a wildlife reserve, a beach club, and an equestrian center, among other amenities.  Lot buyers could construct homes on their lots once the infrastructure, such as roads and electricity, was built out by Sanctuary Belize.

PUKKE and his salespeople falsely represented to lot buyers that Sanctuary Belize was free of debt and that all income from lot sales would go to the development of Sanctuary Belize's infrastructure.  In fact, Sanctuary Belize had more than $12 million in debt, and PUKKE stole more than $13 million of the $124 million that Sanctuary Belize received from sales of residential lots.  PUKKE stole the money by directing Sanctuary Belize employees to transfer the funds to recipients he designated.  These transfers of funds were concealed on the books and records of Sanctuary Belize as business expenses, such as professional fees, legal fees, consulting fees, loans receivable, and online advertising expenses.

PUKKE used the embezzled funds for his personal benefit, including the renovation of his home in Newport Beach, California; investments in various entities unrelated to Sanctuary Belize; investments in unrelated real estate developments; repayment of personal debt; and payments to PUKKE's family members. 

*                *                *

PUKKE, 54, of Newport Bach, California, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of engaging in unlawful monetary transactions, which carries a maximum sentence of 10 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 investigative work of the FBI.  Mr. Williams also thanked the Federal Trade Commission for their assistance with the case.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys James McMahon and Jeffrey C. Coffman 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 below constitute only allegations, and every fact described herein should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, and Patricia Tarasca, the Special Agent in Charge of the New York Regional Office of the Federal Deposit Insurance Corporation’s Office of the Inspector General (“FDIC-OIG”), announced the unsealing of a criminal Complaint charging CHARLIE JAVICE with falsely and dramatically inflating the number of customers of her company, Frank, in order to fraudulently induce J.P. Morgan Chase (“JPMC”) to acquire Frank for $175 million.  JAVICE, who appeared on the Forbes 2019 “30 Under 30” list, stood to gain over $45 million from the fraud.

JAVICE was arrested last night in New Jersey and will be presented later today before U.S. Magistrate Judge Barbara Moses.

U.S. Attorney Damian Williams said: “As alleged, Javice engaged in a brazen scheme to defraud JPMC in the course of a $175 million acquisition deal.  She lied directly to JPMC and fabricated data to support those lies — all in order to make over $45 million from the sale of her company.  This arrest should warn entrepreneurs who lie to advance their businesses that their lies will catch up to them, and this Office will hold them accountable for putting their greed above the law.”

FDIC-OIG Special Agent in Charge Patricia Tarasca said: “The allegations described in today’s criminal Complaint exemplify the many ways banks can be defrauded.  The FDIC-OIG remains committed to holding individuals accountable who threaten the integrity of financial institutions, and we thank our law enforcement partners for their diligence and dedication to investigating such crimes.”

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

In or about 2017, JAVICE founded TAPD, Inc., d/b/a Frank (“Frank”), a for-profit company that offered an online platform designed to simplify the process of filling out the Free Application for Federal Student Aid (“FAFSA”).  FAFSA is a federal government form, available free of charge, that students use to apply for financial aid for college or graduate school.  JAVICE was Frank’s CEO.

In or about 2021, JAVICE began to pursue the sale of Frank to a larger financial institution.  Two major banks, one of which was JPMC, expressed interest and began acquisition processes with Frank.  JAVICE represented repeatedly to those banks that Frank had 4.25 million customers or “users.”  JAVICE explicitly defined “users” — to both banks — as individuals who had signed up for an account with Frank and for whom Frank therefore had at least four identified categories of data (i.e., first name, last name, email address, and phone number).  In fact, Frank had less than 300,000 users.

When JPMC sought to verify the number of Frank’s users and the amount of data collected about them — information that was critical to JPMC’s decision to move forward with the acquisition process — JAVICE fabricated a data set.  To do this, JAVICE and a co-conspirator (“CC-1”) first asked Frank’s director of engineering to create an artificially generated data set (a so-called synthetic data set).  The director of engineering raised concerns about the legality of the request, to which JAVICE responded, in substance and in part, “We don’t want to end up in orange jumpsuits.”  The director of engineering declined the request.

JAVICE then approached an outside data scientist and hired him to create the synthetic data set.  After the data set was created, JAVICE provided that synthetic data set to an agreed-upon third-party vendor in an effort to confirm to JPMC that the data set had over 4.25 million rows.  JAVICE then caused the third-party vendor to convey to JPMC that the data set had over 4.25 million rows, consistent with JAVICE’s misrepresentations that Frank had 4.25 million users.

In reliance on JAVICE’s fraudulent representations about Frank’s users, JPMC agreed to purchase Frank for $175 million.  As part of the deal, JPMC hired JAVICE and other Frank employees.  JAVICE received over $21 million for selling her equity stake in Frank and, per the terms of the deal, was to be paid another $20 million as a retention bonus.

Unbeknownst to JPMC, at or about the same time that JAVICE was creating the fabricated data set, JAVICE and CC-1 sought to purchase, on the open market, real data for over 4.25 million college students to cover up their misrepresentations.  JAVICE and CC-1 succeeded in purchasing a data set of 4.5 million students for $105,000, but it did not contain all the data fields that JAVICE had represented to JPMC were maintained by Frank.  JAVICE then purchased an additional set of data on the open market in order to augment the data set of 4.5 million users.  After JPMC acquired Frank, JPMC employees asked JAVICE and CC-1 to provide data relating to Frank’s users so that JPMC could begin a marketing campaign to those users.  In response, JAVICE provided what was supposedly Frank’s user data.  In fact, JAVICE fraudulently provided the data she and CC-1 had purchased on the open market at a small fraction of the price that JPMC paid to acquire Frank and its purported users.

*                *                *

JAVICE, 31, of Miami Beach, Florida, is charged with one count of conspiracy to commit bank and wire fraud, one count of wire fraud affecting a financial institution, and one count of bank fraud, each of which carry a maximum sentence of 30 years in prison, and one count of securities fraud, which carries a maximum sentence of 20 years in prison. 

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

Mr. Williams praised the outstanding investigative work of the Special Agents from the U.S. Attorney’s Office for the Southern District of New York and from FDIC-OIG.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit, and Assistant U.S. Attorneys Micah F. Fergenson and Dina McLeod are in charge of the prosecution.

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

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

Damian Williams, the United States Attorney for the Southern District of New York, Stuart M. Goldberg, Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division, and James C. Lee, Chief of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that DANIEL WÄLCHLI pled guilty today to conspiring to defraud the United States in connection with a scheme to help wealthy American clients conceal more than $60 million in income and assets held in undeclared offshore bank accounts and evade U.S. income taxes.  WÄLCHLI was a member of the executive board of a Swiss holding company that owned, among other entities, a Zurich-based private bank called Privatbank IHAG Zurich AG (“IHAG”).  WÄLCHLI pled guilty earlier today before U.S. District Judge Gregory H. Woods. 

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

From in or about 2009 to in or about 2014, WÄLCHLI and his co-conspirators defrauded the IRS by concealing income and assets of three wealthy U.S. clients with undeclared bank accounts at IHAG.  In order to assist the U.S. clients, WÄLCHLI and his co-conspirators devised and implemented a scheme dubbed the “Singapore Solution” to fraudulently conceal the bank accounts of the U.S. clients, their assets, and their income from U.S. authorities.  In furtherance of the fraudulent scheme, WÄLCHLI and his co-conspirators agreed to transfer more than $60 million from undeclared IHAG bank accounts of the U.S. clients through a series of nominee bank accounts in Hong Kong and other locations before returning the funds to newly opened accounts at IHAG in the name of a Singapore-based asset-management firm that WÄLCHLI helped establish.  The U.S. clients paid large fees to IHAG and others to help them conceal their assets and evade U.S. income taxes. 

*                *                *

WÄLCHLI, 55, of Switzerland, pled guilty to one count of conspiracy to defraud the United States, 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 WÄLCHLI’s sentence will be determined by the judge.

Mr. Williams praised the outstanding work of IRS-CI.  Mr. Williams thanked the Department of Justice’s Tax Division for their partnership on this case. 

This prosecution is being handled by the Complex Frauds and Cybercrime Unit of the United States Attorney’s Office for the Southern District of New York and the Department of Justice’s Tax Division.  Assistant U.S. Attorney Olga I. Zverovich of the United States Attorney’s Office for the Southern District of New York and Senior Litigation Counsel Nanette Davis and Trial Attorney Christopher Magnani of the Tax Division are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced today the unsealing of charges against DIONISIO FIGUEROA, a/k/a “Dionicio,” an employee of the United States District Court for the Southern District of New York (“the SDNY District Court”), and TELESFORO DEL VALLE, JR., a/k/a “Ted,” a criminal defense attorney practicing in the SDNY District Court and elsewhere, for their participation in a scheme in which FIGUEROA referred criminal defendants to DEL VALLE and encouraged those defendants to retain DEL VALLE as counsel in exchange for cash payments from DEL VALLE to FIGUEROA.  FIGUEROA was arrested, and DEL VALLE surrendered earlier today, and both will be presented before United States Magistrate Judge Andrew E. Krause in the SDNY District courthouse in White Plains, New York.

U.S. Attorney Damian Williams said: “The public, the Court, and the bar all rely on the integrity and honesty of the professionals who work for the Court and the lawyers who appear there.  For years, Figueroa and Del Valle allegedly violated their duties and undermined the fair administration of justice, all for their personal gain.  This Office will do its part to uphold the high standards of conduct expected of all those who play a role in the criminal justice process.”

According to the allegations in the Indictment:[1]

As a clerk in the SDNY Magistrate Clerk’s Office since in or about 2002, FIGUEROA was responsible for performing duties that included, among other things, making data entries regarding official case events in criminal cases; making summary entries of documents and proceedings on case dockets; and performing inquiries and furnishing information, either in person or by correspondence, regarding the status of cases.  FIGUEROA also played a role with respect to the intake of criminal cases, including by preparing appearance bonds, advising defendants and their family members about the conditions of the bonds, and ensuring that appearance bonds were signed by all parties prior to a defendant’s release. 

SDNY District Court personnel policies prohibited FIGUEROA from having outside employment that would pose a conflict of interest; receiving payments, gifts, or other benefits from persons having business before the SDNY District Court; and recommending particular attorneys to members of the public.  FIGUEROA also was subject to the United States Courts’ Code of Conduct for Judicial Employees (the “Code of Conduct”), which cautioned judicial employees that “[a] number of criminal statutes of general applicability govern federal employees’ performance of official duties.  These include: 18 U.S.C. § 201 (bribery of public officials and witnesses) ….”  The Code of Conduct likewise admonished, among other things, that “[a] judicial employee should never influence or attempt to influence the assignment of cases, or perform any discretionary or ministerial function of the court in a manner that improperly favors any litigant or attorney, nor should a judicial employee imply that he or she is in a position to do so.” 

DEL VALLE is a private attorney who has appeared in numerous federal criminal cases pending before the SDNY District Court.

Between at least 2011 and 2022, FIGUEROA and DEL VALLE engaged in a scheme whereby FIGUEROA used his position as an employee of the SDNY District Court to encourage criminal defendants to retain DEL VALLE to represent them in pending criminal cases.  In return, DEL VALLE paid FIGUEROA a portion of the fees clients paid to DEL VALLE.  Over the course of more than a decade, FIGUEROA referred at least 45 SDNY criminal defendants to DEL VALLE, and DEL VALLE paid FIGUEROA tens of thousands of dollars in referral fees.  DEL VALLE paid FIGUEROA directly and through an intermediary, who would pick up envelopes of cash for FIGUEROA from DEL VALLE’s law office. 

Many of the clients who ended up retaining and paying DEL VALLE were assigned free, court-appointed counsel.  Nevertheless, FIGUEROA encouraged those individuals to change counsel, including by vouching for DEL VALLE’s abilities as a lawyer.  For example, in July 2018, FIGUEROA told family members of one defendant (“Defendant-1”), in substance, that FIGUEROA knew a good attorney who was a specialist in similar cases and could get
Defendant-1 out of trouble.  He then provided FIGUEROA’s contact information to
Defendant-1’s relative.  Similarly, in February 2020, FIGUEROA told a family member of another defendant (“Defendant-2”), in substance, that if anyone could help Defendant-2 in Defendant-2’s case, it was DEL VALLE.  At the time, Defendant-2 was represented by court-appointed counsel.

FIGUEROA and DEL VALLE are also charged with making false statements to law enforcement during the investigation.  In November 2022, federal law enforcement agents separately interviewed both FIGUEROA and DEL VALLE.  After advising each that lying to federal law enforcement agents is a federal crime, FIGUEROA and DEL VALLE each made materially false, fictitious, and fraudulent statements and representations in response to the agents’ questions.  In particular, FIGUEROA denied making any referrals to DEL VALLE, except on a small number of occasions concerning close relations or friends, and further denied ever having received payments from DEL VALLE for referrals.  As to DEL VALLE, upon being served with a federal grand jury subpoena requiring the production of records from his law firm, DEL VALLE denied having any records reflecting client referrals from, or payments to, FIGUEROA or anyone else.

*                *                *

FIGUEROA, 66, of New York, New York, and DEL VALLE, 65, of Leonia, New Jersey, are each charged with one count of conspiracy to bribe a federal employee and pay illegal compensation to a judicial employee, which carries a maximum potential sentence of five years in prison; one count of bribery of a federal employee, which carries a maximum potential sentence of 15 years in prison; one count of illegal compensation to a judicial employee, which carries a maximum potential sentence of five years in prison; and one count of false statements, 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 will be determined by a judge.

Mr. Williams praised the outstanding investigative work of the Special Agents from the U.S. Attorney’s Office for the Southern District of New York.

The case is being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Frank Balsamello, Andrew Rohrbach, and Jarrod L. Schaeffer 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.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that JULIO ALVARADO was sentenced to 95 months in prison for leading a sprawling scheme to defraud Medicaid of millions of dollars through the billing of fraudulent transportation claims.  ALVARADO previously pled guilty to one count of healthcare fraud.  U.S. District Judge Kimba M. Wood imposed today’s sentence.

U.S. Attorney Damian Williams said: “Julio Alvarado was the leader of a multi-million-dollar scheme to defraud Medicaid by filing false claims for medical transportation services that were never provided.  He brazenly lined his own pockets with Medicaid funds meant to help the neediest New Yorkers.  Today’s sentence makes clear that this type of criminal conduct will be prosecuted and punished to the full extent of the law.”

According to court filings and statements made in court proceedings:

From August 2017 to February 2020, KJ Transportation C Services Inc. (“KJ”) was paid more than $20 million for providing transportation services for Medicaid enrollees in the New York City area.  A large volume of those claims were fraudulent.  In some instances, the Medicaid recipient was deceased or out of the country when KJ claimed it was transporting that person to medical appointments.  In other instances, the company used stolen identities, whereby the Medicaid recipient had never heard of KJ and had never taken any rides with the company.  In other instances, the Medicaid recipients had received unlawful kickbacks from defendants in exchange for either providing KJ their Medicaid information or for fraudulently scheduling trips they did not take.

ALVARADO, who supervised more than a dozen other participants in the scheme, was responsible for billing more than $8 million in fraudulent trip claims.

*                *                *

In addition to the prison term, ALVARADO, 63, of Yonkers, New York, was sentenced to three years of supervised release and ordered to pay $8,507,115 in restitution and to forfeit $8,507,115.

Mr. Williams praised the outstanding work of Homeland Security Investigations and the United States Department of Health and Human Services’ Office of Inspector General.  He also thanked the Office of the Medicaid Inspector General 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 today the filing of a civil complaint seeking forfeiture of various World War I-era documents, letters, and photographs relating to Russian military personnel, including the diary of a Russian general, for the purpose of returning the antiquities to the American university from which they were stolen. 

U.S. Attorney Damian Williams said: “Antiquities allow us to see and study pieces of history from, in this case, more than one hundred years ago.  The University’s important historical research was undercut by the alleged theft and illegal smuggling of these antiquities abroad.  Thanks to the hard work and dedication of the FBI’s Art Crime Team, these records have been recovered and will be returned to their rightful owner.”

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

The United States seeks the forfeiture of documentary materials, relating primarily to the 1917 Russian Revolution and World War I Russian military personnel, that were stolen from a university located in New York, New York (the “University”).  The stolen materials included the 1919 diary of General Nikolai Iudenitch, a commander of the Russian Imperial Army during World War I, along with other documents, correspondence, and photographs that had been sent to an auction house located in Paris, France, (the “Auction House”) for inclusion in an April 2018 auction of Russian documents and books.  The Auction House was not provided with any certificate of authenticity or proof as to the provenance of the materials.  After a curator employed by the University recognized the items in a catalog published by the Auction House, the stolen materials were seized by law enforcement.     

*                *                *

Mr. Williams praised the investigative work of the Federal Bureau of Investigation/New York City Police Department Joint Major Theft Task Force/Art Crime Team.  In addition, Mr. Williams thanked authorities in France for their assistance.

This matter is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Emily Deininger and Benet Kearney are in charge of the case.

The allegations contained in the Complaint are merely accusations.   

[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.

Damian Williams, the United States Attorney for the Southern District of New York, announced that FRANKLIN RAY pled guilty today to four counts of wire fraud, including one count of wire fraud while released under conditions of bail, and one count of aggravated identity theft in connection with various fraud schemes relating to his operation of a trucking business known as CSA Business Solutions LLC and another Michigan-based trucking company.  RAY, who was previously convicted of wire fraud and bank fraud in the Eastern District of Michigan and was released from prison in 2010, pled guilty before United States District Judge Analisa Torres.

U.S. Attorney Damian Williams said: “As he admitted in court today, between June 2020 and April 2022, Franklin Ray engaged in four separate fraudulent schemes by lying about the business operations of his purported trucking companies, including two separate PPP frauds and a $40 million Ponzi scheme.  Ray continued his crime spree even after he was arrested by federal authorities in March 2022, brazenly defrauding investors in his fake trucking company of nearly $2 million while he was on bail following his arrest.  Thanks to the hard work of the FBI and this Office, he is being held accountable for his serial fraudulent conduct.”

As alleged in the previously filed Complaint and Indictment and other court documents:

Beginning in at least June 2021, FRANKLIN RAY began to offer investors an opportunity to invest in his trucking and logistics company, CSA Business Solutions LLC (the “Truck Investment Scheme”).  Specifically, RAY and the investors entered into contracts pursuant to which CSA Business Solutions LLC would procure and operate a truck in its trucking business for each $20,000 contributed by the investor.  RAY told investors that the trucks would perform delivery services for a multinational e-commerce company and/or a multinational shipping company and that the investors would be entitled to 77% of the net income of the trucks.  In reality, CSA Business Solutions LLC operated few trucks and had minimal revenues from trucking activities.  Instead, investors in the Truck Investment Scheme received payments from new investments into the scheme or from other sources.  After the investors purchased the rights to trucks from CSA Business Solutions LLC, RAY sent them falsified spreadsheets at regular intervals, purporting to show the performance of their trucks during the relevant period.  RAY ultimately induced approximately 275 investors to invest at least $40 million and fraudulently claimed to have purchased over 2,000 trucks with the investments.

RAY also pled guilty to carrying out fraudulent schemes to obtain over $1.9 million in government-guaranteed loans designed to provide relief to small businesses during the COVID-19 pandemic on behalf of CSA Business Solutions LLC and another Michigan-based trucking company (the “SBA Loan Fraud Schemes”).  In connection with the SBA Loan Fraud Schemes, RAY submitted false information and forged documents to the Small Business Administration and commercial lenders.  RAY claimed that these businesses engaged in significant trucking business, but they had minimal revenues and trucking activity.

Finally, RAY pled guilty to fraudulently inducing a New York City-based real estate company (the “Company”) to pay $175,000 in startup costs for a joint venture (the “Join Venture”) between the Company and CSA Business Solutions LLC.  RAY misrepresented CSA Business Solutions LLC and his own personal business experience to the Company.  Rather than pay for startup costs, RAY spent the funds on personal expenses, including private airplane trips.  The Joint Venture was never formed.

RAY was arrested in early March 2022, and a CSA Business Solutions LLC bank account was seized at that time.  After his arrest, up until his Indictment in April 2022, RAY continued to operate the Truck Investment Scheme.  RAY hid the fact of his arrest and the seizure of the bank account and lied to investors about why he did not make expected payments after his arrest.  During the period after his arrest, RAY opened new bank accounts on behalf of CSA Business Solutions LLC and continued to solicit and accept investor funds for trucks that did not exist.  In the post-arrest period alone, RAY defrauded investors into paying at least $1.9 million into his scheme.

*                *                *

RAY, 51, of Canton, Michigan, pled guilty to four counts of wire fraud, including one count of wire fraud while released under conditions of bail and two counts of wire fraud affecting a financial institution, and one count of aggravated identity theft.  The counts of wire fraud while released under conditions of bail and wire fraud affecting a financial institution each carry a maximum sentence of 30 years in prison.  The remaining count of wire fraud carries a maximum sentence of 20 years in prison.  Aggravated identity theft carries an additional mandatory two-year sentence, which must be imposed consecutively to any other sentence.  RAY also agreed to forfeit $42,128,912, including the funds on deposit at several bank accounts used in connection with the fraudulent schemes, including the primary CSA Business Solutions bank account.  RAY also agreed to pay restitution to the victims.

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.  RAY is scheduled to be sentenced at 11:40 a.m. on July 25, 2023, by U.S. District Judge Analisa Torres.

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.

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

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 the unsealing of an Indictment charging JOHN ROESSER, a former attorney, with abusing the bankruptcy system by making false statements under penalty of perjury and submitting falsified records.  By February 2022, after years as a partner at major law firms, ROESSER owed the Internal Revenue Service (“IRS”) millions of dollars in income taxes and filed for Chapter 11 bankruptcy.  Through multiple false statements, ROESSER lied to the Bankruptcy Court and the IRS about his purported receipt of millions of dollars in order to receive the protections of bankruptcy and keep his assets – including a multi-million-dollar residence and an Aston Martin sports car – while not paying his bills.  ROESSER was arrested this morning in Bronxville, New York, and will be presented today in Manhattan federal court.

U.S. Attorney Damian Williams said: “Bankruptcy is a lifeline for many people who need its protections to keep their lives together.  The defendant allegedly corrupted and degraded a system that helps so many.  As alleged, he manipulated the bankruptcy system by lying and falsifying bank records so that he could use its protections to keep his assets and to avoid paying his bills.  And he should have known better — he used to be a lawyer.  This Office will always bring to justice those who use their status to abuse the public’s trust and to try to put themselves above the law.”

FBI Assistant Director Michael J. Driscoll said: “As alleged, Roesser committed bankruptcy fraud when he lied to both the Bankruptcy Court and the IRS about his receipt of millions of dollars so he could retain his assets – which included a multi-million-dollar residence and a luxury sports car – while avoiding paying his bills.  The FBI will continue to investigate and bring to justice those who attempt to fraudulently exploit our nation’s legitimate financial protections to satisfy their own selfish desires.”

As alleged in the Indictment:[1]

From in or about March 2013 through in or about January 2018, ROESSER was a partner at three multinational law firms.  During his time as a partner at these law firms, ROESSER earned substantial income — and incurred substantial income tax liability.  ROESSER resigned from the New York bar in or about June 2020 after admitting to misappropriating client funds.

By 2022, ROESSER owed the IRS, and others, over three million dollars.  He also owned a house that he estimated was worth millions of dollars and an Aston Martin Rapide, a luxury sports car.  Instead of paying his debts, in February 2022, ROESSER filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of New York.  See In re John Roesser, No. 22 Bk. 22049 (Bankr. S.D.N.Y.) (the “Bankruptcy”).  In a Chapter 11 bankruptcy, a debtor may remain “in possession,” meaning that the debtor keeps possession and control of his assets during the bankruptcy.  But a debtor-in-possession must propose a viable plan of reorganization, which creditors then vote on.  If a debtor fails to comply with the requirements of Chapter 11, a Chapter 11 bankruptcy can be converted to a Chapter 7 bankruptcy or dismissed.  In a Chapter 7 bankruptcy, an appointed trustee usually converts a debtor’s assets into cash for distribution among creditors.  If a bankruptcy is dismissed, the debtor loses the protections of bankruptcy; for example, creditors can take steps to seize a debtor’s assets.

ROESSER told the Bankruptcy Court and the IRS that he would soon receive millions of dollars and be able to pay his debts while keeping his house.  Then, ROESSER filed a false declaration and submitted falsified records in the Bankruptcy indicating that he had received millions of dollars.  This was false.  ROESSER was concealing that he had not received millions of dollars after all, in a fraudulent effort to retain control of his assets while avoiding payment of his debts.

On or about March 3, 2023, after some of the above false statements were withdrawn by ROESSER’s attorney in the Bankruptcy, ROESSER’s Chapter 11 bankruptcy was dismissed.  Without the protections of bankruptcy, creditors can now take steps to seize ROESSER’s assets to pay his debts.

*                *                *

ROESSER, 52, of Bronxville, New York, is charged with one count of falsification of records in bankruptcy, which carries a maximum sentence of 20 years in prison, and one count of false oaths and claims in bankruptcy, 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 FBI.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Steven J. Kochevar is in charge of the prosecution.

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that BAREND OBERHOLZER, a/k/a “Barry Oberholzer,” the Chief Executive Officer of a defense technology start-up (“Start-Up-1”), pled guilty today in Manhattan federal court in connection with a conspiracy to solicit investment in and financing for Start-Up-1 on the basis of fraudulent misrepresentations regarding financial solvency, access to cash, and use of investor funds.  Magistrate Judge Robert W. Lehrburger accepted the defendant’s guilty plea.  The case is assigned to U.S. District Judge Andrew L. Carter, Jr. 

U.S. Attorney Damian Williams said: “Barend Oberholzer attempted to use the reputation of a retired, four-star Army General in order to solicit investments in his start-up company and a device he developed that purportedly could detect concealed weapons.  Instead of attracting investors honestly, Oberholzer lied continuously to make his company more appealing to investors.  Fortunately, law enforcement was able to detect the defendant’s lies, and he is now facing substantial time in prison.”

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

Beginning in or around 2018, OBERHOLZER began soliciting investments in Start-Up-1 and a purported security device it had developed (“Security Device-1”) from at least two venture capital firms on false pretenses.  OBERHOLZER sent multiple emails to the firms, posing as a retired, four-star General in the United States Army (“Retired General-1”), who was employed by a prominent private equity firm based in New York, New York (“Private Equity Firm-1”).  Therein, OBERHOLZER, posing as Retired General-1, endorsed and solicited investment in Start-Up-1 and Security Device-1, a smartphone case that purportedly permitted its users to detect at a distance weapons or other dangerous items concealed on another person.

OBERHOLZER and his co-conspirator, JAROMY PITTARIO, a/k/a “Jaromy Jannard-Pittario,” also solicited investments in and loans to Start-Up-1 and Security Device-1 by falsely representing, among other things, their financial solvency, access to cash, and use of investor funds.  For instance, the pair repeatedly provided falsified financial statements to potential creditors to secure funding. 

*                *                *

OBERHOLZER, 39, of Calabasas, California, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison.  PITTARIO previously pled guilty on January 26, 2023.  The sentencing of PITTARIO is scheduled for May 25, 2023, before Judge Andrew L. Carter, Jr., and the sentencing of OBERHOLZER is scheduled for July 11, 2023.

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 the judge.

Mr. Williams praised the outstanding investigative work of the New York Office of the U.S. Postal Inspection Service.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Jilan J. Kamal and Timothy V. Capozzi are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that SADY RIBEIRO, a New York-licensed pain management doctor, was sentenced today to 36 months in prison for his participation in a scheme to obtain fraudulent insurance reimbursements and other compensation from fraudulent trip-and-fall accidents.  U.S. District Judge Sidney H. Stein imposed today’s sentence. 

U.S. Attorney Damian Williams said: “Sady Ribeiro abused his professional license and broke his vow to do no harm by performing scores of medically unnecessary, invasive surgeries to increase the value of fraudulent trip-and-fall lawsuits.  In carrying out the scheme, Ribeiro and his co-conspirators preyed upon the most vulnerable members of society – many of whom were poor, drug addicts, or homeless – in order to enrich themselves.  Ribeiro now faces serious penalties for his callous crime.”

According to the Indictment, the Superseding Information, evidence presented in court, and statements made in court:

RIBEIRO, among others, was involved in an extensive fraud scheme through which fraud scheme participants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits arising from those staged trip-and-fall accidents.

The fraud scheme participants recruited individuals (the “Patients”) to stage or falsely claim to have suffered trip-and-fall accidents at particular locations throughout the New York City area (the “Accident Sites”).  In the course of the fraud scheme, scheme participants recruited more than 400 Patients.  Members of the fraud scheme often recruited individuals who were extremely poor as Patients.  For example, it was common for Patients to ask for food when they would appear for their intake meetings with the lawyers.  Many of the Patients did not have sufficient clothing to keep them warm during the wintertime and had poor-quality shoes.  Members of the fraud scheme also recruited Patients who were drug addicts, and it was common for scheme participants to recruit Patients from homeless shelters in New York City.

In the beginning, scheme participants would instruct Patients to claim they had tripped and fallen at a particular location, when in fact, the Patients had suffered no such accidents.  Eventually, at the direction of the lawyers who filed fraudulent lawsuits on behalf of the Patients, scheme participants began to instruct Patients to stage trip-and-fall accidents, i.e., to go to a location and deliberately fall.  Common Accident Sites used during the fraud scheme included cellar doors, cracks in concrete sidewalks, and purported “potholes.”

After the staged trip-and-fall accidents, Patients were referred to specific attorneys who would file personal injury lawsuits (the “Fraudulent Lawsuits”) against the owners of the Accident Sites and/or insurance companies of the owners of the accident sites (the “Victims”).  The Fraudulent Lawsuits did not disclose that the Patients had deliberately fallen at the accident sites or, in some cases, had not fallen at all.  During the course of the fraud scheme, the defendants, together with others known and unknown, attempted to defraud the Victims of more than $31,000,000.

The Patients were also instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors, including RIBEIRO.  The fraud scheme participants advised the Patients that if they intended to continue with their lawsuits, they were required to undergo surgery.  As an incentive to getting surgery, the recruited Patients were offered a payment typically between $1,000 and $1,500 after they completed surgery (“Post-Surgery Payments”).  Patients generally were told to undergo two surgeries.

Doctors in the fraud scheme, including RIBEIRO, were expected to, and in fact did, conduct these surgeries, such as discectomies, regardless of the legitimate medical needs of the Patients.  RIBEIRO performed discectomies, among other medical procedures, on more than 200 Patients.  To maximize his patient base, RIBEIRO paid participants cash kickbacks in exchange for patient referrals.

*                *                *

In addition to the prison term, RIBEIRO, 72, of New York, New York, was sentenced to three years of supervised release. 

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Williams also thanked the National Insurance Crime Bureau for their assistance in the investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Nicholas Chiuchiolo, Nicholas Folly, Danielle Kudla, and Alexandra Rothman are in charge of the prosecution.

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 the unsealing of a six-count Indictment charging DARRYL COHEN, BRIAN GILDER, CHARLES BRISCOE, and CALVIN DARDEN, JR. in connection with two schemes to defraud professional basketball players.  COHEN and GILDER were arrested this morning in, respectively, Chatsworth, California, and North Ridge, California, and will be presented later today in the United States District Court for the Central District of California.  BRISCOE was arrested this morning in Katy, Texas, and will be presented later today in the United States District Court for the Southern District of Texas.  DARDEN, JR. was arrested this morning in Atlanta, Georgia, and will be presented later today in the United States District Court for the Northern District of Georgia.

U.S. Attorney Damian Williams said: “As alleged in the indictment, these defendants believed that defrauding their professional athlete clients of millions of dollars would be a layup.  That was a huge mistake, and they now face serious criminal charges for their alleged crimes.” 

FBI Assistant Director Michael J. Driscoll said: “As alleged, the defendants engaged in schemes to defraud four professional basketball players of more than $13 million.  Today’s actions should serve as an example to others who engage in criminal activity to serve their own greedy financial desires at the expense of others – the FBI is committed to bringing you to justice.”

As alleged in the Indictment:[1]

COHEN and GILDER

From at least in or about 2017 through in or about 2020, COHEN, a registered investment adviser, orchestrated a scheme to defraud three different professional basketball player clients (“Athlete-1,” “Athlete-2,” and “Athlete-3,” respectively) of a total of over $5 million by taking advantage of his advisory and fiduciary relationships with those clients.  COHEN conspired with BRIAN GILDER, an independent financial planner whom COHEN encouraged his clients to work with and who assisted in tax preparation for Athletes-1, -2, and -3.

First, COHEN and GILDER fraudulently induced Athletes-1, -2, and -3 to purchase viatical life insurance policies at massive markups.  COHEN and GILDER did not disclose that GILDER had arranged for a purported law firm (“Law Firm-1”) that he controlled to purchase the polices and then to sell them to the athletes at markups of 222%, 310%, and 244%, respectively.  Indeed, Law Firm-1 made approximately $4.5 million in profit from the sale of the policies to COHEN and GILDER’s athlete clients.  COHEN and GILDER used a substantial portion of these illicit proceeds to pay their own personal expenses.  In particular: (i) GILDER used approximately $257,479 of the funds to pay off a mortgage he owed; (ii) COHEN used approximately $178,462 of the funds to renovate his home and to perform work on his pool; (iii) COHEN used approximately $67,500 of the funds to pay off his personal credit card bill; and (iv) COHEN transferred approximately $200,000 of the funds to an individual with whom he was in a romantic relationship.

Second, COHEN directed that $500,000 be transferred from the accounts of Athletes-2 and -3 as purported donations to a non-profit organization.  COHEN then used approximately $238,000 of the funds purportedly donated to the non-profit to build athletic training facilities in the backyard of his home.  Athletes-2 and -3 never, in fact, authorized any transfers of their funds to the non-profit organization.  When Athlete-2 confronted COHEN about the donations, COHEN told Athlete-2 in a text message, in substance and in part, that Athlete-2’s money had “[h]elped a lot of future prospects and a lot of underprivileged kids.”  COHEN did not disclose to Athlete-2 that a substantial portion of Athlete-2’s donations had, in fact, been used to build an athletic training facility in COHEN’s backyard.

Third, COHEN and GILDER used a sports agency and another law firm to channel approximately $328,125 of Athlete-2’s money to repay a former professional baseball player (“Athlete-4”), who was a disgruntled client of COHEN’s.  Athlete-4 had expressed concern to COHEN about investments and loans that COHEN made on Athlete‑4’s behalf and demanded to be repaid.  On or about February 19, 2020, in the midst of making the payments of Athlete-2’s money to Athlete-4, COHEN messaged GILDER, “We gotta send [Athlete-4] more to get rid of him.”  Athlete-2 did not authorize the use of funds from his account to repay debts owed by COHEN to Athlete-4. 

BRISCOE and DARDEN, JR.

BRISCOE and DARDEN, JR. also defrauded professional basketball players.  BRISCOE was an NBA agent, and DARDEN, JR. had previously pled guilty to wire fraud in the Southern District of New York.

BRISCOE served as the sports agent of a professional basketball player (“Athlete-5”).  Athlete-5 began discussing the possibility of purchasing a professional women’s basketball team (“Team-1”), and BRISCOE introduced Athlete-5 to DARDEN, JR.  Because Athlete-5 was not permitted to purchase Team-1 as an active professional basketball league player, BRISCOE, DARDEN, JR., and a relative of DARDEN, JR., who serves or has served on the boards of multiple public companies (“Relative-1”), discussed with Athlete-5 an arrangement in which Athlete-5 would indirectly purchase Team-1 through a company (“Company-1”) purportedly controlled by Relative-1.  BRISCOE provided Athlete-5 with a slide deck outlining a “vision plan” for the purchase of Team-1 by Company-1.  The “vision plan” claimed, among other things, that Company-1 was led by Relative-1 and was advised by a board including several prominent individuals in sports, entertainment, and corporate America.  In truth and in fact, and as BRISCOE and DARDEN, JR. well knew, at least two of those individuals never served as advisors to Company-1.

Between in or about November 2020 and in or about December 2020, Athlete‑5 caused $7 million to be transferred to a bank account controlled by DARDEN, JR.  Athlete-5 understood that these payments were in order for Athlete-5 to purchase and become full owner of Team-1.  In truth and in fact, none of the money Athlete-5 sent went toward the purchase of Team-1, and Athete-5 did not become an owner of Team-1.  Instead, from approximately November 2020 until approximately December 2021, DARDEN, JR. transferred more than $1 million of the funds to BRISCOE.  In addition, DARDEN, JR. retained a substantial portion of the funds for himself and his relatives, sending more than $500,000 to a relative and more than $400,000 to a cryptocurrency exchange for his benefit.  DARDEN, JR. also used some of the funds to pay for luxury goods for himself, including approximately $880,000 to luxury car companies, more than $300,000 to art galleries, and more than $100,000 to purchase a piano, among other things.  DARDEN, JR. also spent in excess of approximately $1 million in connection with purchasing and making improvements to a residence, including, among other things, the addition of a koi pond.

BRISCOE and DARDEN, JR. also worked together to defraud Athlete-2.  BRISCOE, in consultation with COHEN and GILDER, was purportedly building a new sports agency (“Agency-1”) funded by Athlete-2.  BRISCOE convinced Athlete-2 that BRISCOE had signed, through Agency-1, a highly touted athlete preparing for a professional basketball draft (“Athlete-6”).  In fact, Athlete-6 had not signed with BRISCOE or Agency-1.  Rather, BRISCOE forged the signature of Athlete-6 and Athlete-6’s mother on a player-agent contract and sent that forged contract to Athlete-2.  BRISCOE then directed Athlete-2 to transfer $1 million to BRISCOE as a “loan” to Athlete-6 while Athlete-6 prepared for the draft.  In fact, Athlete-6 never had any conversations with BRISCOE or DARDEN, JR. about signing with BRISCOE or about receiving a $1 million loan, and Athlete-6 never received any part of the $1 million loan.  Instead, BRISCOE used approximately $306,642 of the funds transferred by Athlete-2 to pay off a debt that BRISCOE had personally incurred and also transferred approximately $544,000 to a bank account controlled by DARDEN, JR.

*                *                *

COHEN, 49, of Chatsworth, California, and Las Vegas, Nevada, GILDER, 49, of North Ridge, California, BRISCOE, 35, of Katy, Texas, and DARDEN, JR. 49, of Atlanta, Georgia, are each charged with one count of conspiracy to commit wire fraud and one count of wire fraud.  Each count carries a maximum sentence of 20 years in prison.  COHEN is also charged with one count of investment advisor fraud, which carries a maximum sentence of five years in prison, and BRISCOE is also charged with one count of aggravated identity theft, which carries a mandatory prison term of two years.

The 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 a judge.

Mr. Williams praised the outstanding work of the FBI.  Mr. Williams also thanked the United States Attorney’s Offices for the Central District of California, the Northern District of Georgia, and the Southern District of Texas for their assistance in the investigation.  Mr. Williams further thanked the U.S. Securities and Exchange Commission, which today filed a parallel civil action against COHEN, for its assistance and cooperation in this investigation.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Katherine Reilly and Kevin Mead 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.

[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.