Southern District of New York

Damian Williams, the United States Attorney for the Southern District of New York, announced today that SUNI MUNSHANI, the former Chief Executive Officer of a Connecticut-based technology company (the “Victim Company”), pled guilty today in Manhattan federal court in connection with a scheme to defraud the Victim Company of millions of dollars.  Pursuant to his plea agreement with the Government, MUNSHANI agreed to pay $10,485,043 in restitution to the Victim Company.  District Judge Jed S. Rakoff accepted the defendant’s guilty plea. 

U.S. Attorney Damian Williams said: “Not even a year into his appointment as CEO, Suni Munshani began betraying his employer’s trust and breaking the law, stealing millions of dollars to line his pockets.  Company executives are given significant amounts of power, but today’s plea should send the message that this Office will be ready to act if an executive chooses to abuse that power.”

According to the allegations in the Superseding Information and other 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 nine-year scheme to defraud the Victim Company.  During the scheme, MUNSHANI created an email account associated with a purported third-party contractor controlled by MUNSHANI and 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 to the Victim Company.  He 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.

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MUNSHANI, 61, of Easton, Connecticut, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison. 

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

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. Attorney Timothy V. Capozzi is 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 Office of the Federal Bureau of Investigation (“FBI”), and Patrick Freaney, Special Agent in Charge of the New York Field Office of the United States Secret Service (“USSS”), announced today that JOEL ZUBAID, DAVID GORAN, JULIAN REBIGA, a/k/a “Iulian Rebiga,” and MARTIN MIZRAHI, a/k/a “Marty Mizrahi” (collectively, the “Defendants”), were arrested for participating in a scheme to defraud businesses, banks, and individuals of more than $9.2 million through business email compromise and credit card fraud schemes.  REBIGA was presented yesterday in the United States District Court for the Central District of California, ZUBAID and GORAN will be presented today in the United States District Court for the Central District of California, and MIZRAHI will be presented today in the United States District Court for the District of Nevada.  The case is assigned to U.S. District Judge J. Paul Oetken.

U.S. Attorney Damian Williams said: “Joel Zubaid, David Goran, Julian Rebiga, and Martin Mizrahi worked together on multiple schemes that included fleecing legitimate businesses by using compromised email accounts.  In tricking them into sending millions of dollars to the defendants’ own bank accounts and using stolen identities and credit card information, they were able to fraudulently charge millions of dollars through business that they controlled.  Today, thanks to the efforts of this Office and our law enforcement partners, they now face serious federal charges and justice.”

FBI Assistant Director in Charge Michael J. Driscoll said: “As we allege today, the defendants participated in several schemes designed to defraud multiple businesses of millions of dollars while also deliberately concealing the stolen proceeds of the frauds in a series of transactions.  The FBI is determined to discover and disrupt frauds of this – and any – nature and will ensure that perpetrators are held accountable for their actions.”

USSS Special Agent in Charge Patrick Freaney said: “Cyber fraudsters continue to present a real and credible threat through their attempts at sophisticated business email compromise schemes aimed to defraud victims.  As demonstrated in this case, collaboration and partnership across law enforcement results in successfully identifying those fraudsters and bringing them before our justice system.  The Secret Service is proud to partner with the Federal Bureau of Investigation in having the defendants named in this indictment answer the charges brought against them in the Southern District of New York.”

As alleged in the Indictment unsealed today: [1]

From at least in or about April 2021 through at least in or about June 2021, the Defendants participated in at least three schemes to defraud businesses, banks, credit card companies, and other entities and to launder the fraud proceeds received.  The Defendants participated in at least two business email compromise schemes in which co-conspirators sent email messages to victims that fraudulently asked those victims to send money to bank accounts under the Defendants’ control.  As a result, the victims of the business email compromise schemes sent wire transfers worth more than $5.4 million to the bank accounts identified by the scheme participants, the majority of which went to the Defendants’ bank accounts.  The Defendants, knowing that the money represented fraud proceeds, then transferred those fraud proceeds to other accounts, or converted it into cryptocurrency, in transactions designed to conceal and disguise their source, ownership, and control.  When banks froze or sought to recover some of the fraud proceeds, the Defendants made multiple attempts to retain or recover control over the funds by lying to the banks about the purpose of the transfers.

In addition, during the same time period, the Defendants participated in a scheme to fraudulently submit more than $3.8 million in charges using stolen credit card information, without the authorization or consent of the card holders.  The charges were conducted through point-of-sale credit card machines associated with companies controlled by MIZRAHI and REBIGA.       

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JOEL ZUBAID, 55, of Riverside, California, DAVID GORAN, 56, of Riverside, California, JULIAN REBIGA, a/k/a “Iulian Rebiga,” 55, of Long Beach, California, and MARTIN MIZRAHI, a/k/a “Marty Mizrahi,” 51, of Las Vegas, Nevada, are charged with conspiracy to commit wire fraud and bank fraud, which carries a maximum sentence of 30 years in prison; wire fraud, which carries a maximum sentence of 20 years in prison; bank fraud, which carries a maximum sentence of 30 years in prison; conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison; money laundering, which carries a maximum sentence of 20 years in prison; and aggravated identity theft, which carries a mandatory minimum sentence of two years in prison consecutive to any other prison terms imposed.

The minimum and maximum potential sentences in these cases 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 FBI and the USSS for their outstanding work on the investigation.  The prosecution of this case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Benjamin Klein and Emily Deininger are in charge of the prosecution.

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

 

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict yesterday against JUSTIN HAMPTON on robbery, armed robbery, and firearms counts.  HAMPTON is scheduled to be sentenced on May 1, 2023, by U.S. District Judge John P. Cronan.

U.S. Attorney Damian Williams said: “Justin Hampton terrorized hardworking New Yorkers with his three-week spree of gunpoint robberies, brandishing a loaded firearm and stealing cash, lottery tickets, and cigarettes.  A jury has now found Hampton guilty, and he faces prison time for his crimes.”

According to the superseding Indictment and the evidence at trial:

Between October 18, 2021, and November 10, 2021, HAMPTON and co-conspirators committed 14 robberies of dollar stores, convenience stores, gas stations, and restaurants. HAMPTON operated as the gunman for the robbery crew.  He entered each of the commercial establishments late at night or early in the morning, brandished a firearm at employees, and demanded cash, large volumes of lottery tickets, and cigarettes.  HAMPTON and his co-conspirators typically fled the scene in HAMPTON’s car and, on multiple occasions, cashed stolen lottery tickets to obtain lottery winnings shortly after the robberies.

After HAMPTON and his crew committed 12 robberies, law enforcement seized HAMPTON’s car and later recovered a gun hidden in the car’s ceiling.  Despite the seizure of his car and gun, HAMPTON went on to commit two additional robberies using a motorized scooter and a pellet gun that resembled a real gun. 

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HAMPTON, 34, of New York, was convicted on one count of robbery conspiracy, which carries a maximum sentence of 20 years in prison; two counts of robbery, each of which carries a maximum sentence of 20 years in prison; one count of brandishing a firearm during a robbery, which carries a maximum sentence of life in prison and a mandatory minumum sentence of seven years in prison to be served consecutively to any other sentence; and one count of being a felon in possession of a firearm, which carries a maximum sentence of 10 years in prison.

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

Mr. Williams praised the outstanding investigative work of the Joint Robbery Task Force of the Bureau of Alcohol, Tobacco, and Firearms and the New York City Police Department.

The prosecution is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Madison Reddick Smyser, Brandon C. Thompson, and Thane Rehn are in charge of the prosecution. 

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the arrest of FOSTER COOLEY for charges in connection with a scheme to conduct cyber intrusions targeting a New York-based company that owns and operates hair salons in New York City, New Jersey, Colorado, and elsewhere, which resulted in the theft of over $400,000.  COOLEY was arrested this morning and is expected to be presented today or tomorrow before a U.S. magistrate judge in the District of Arizona.  The case is assigned to U.S. District Judge Paul A. Crotty.

U.S. Attorney Damian Williams said: “Foster Cooley allegedly participated in a scheme to hack into a salon company’s point-of-sale provider and steal over $400,000 of credit card payments from its customers.  And because Cooley was able to steal this money without stepping foot into one of the salons he stole from, his crimes went undetected for weeks.  Hacks like this that compromise the integrity of our electronic payment systems cause great harm to businesses and consumers alike.  Thanks to this Office’s teamwork with the FBI, Cooley is now facing serious criminal charges for his alleged cybercrimes.”      

FBI Assistant Director in Charge Michael J. Driscoll said: "As alleged, the defendant hacked into the victim's business systems and diverted hundreds of thousands of dollars to his own bank accounts.   The FBI's Cyber Task Force along with our law enforcement partners are committed to tracking down malicious hackers who target private businesses and ensuring they face the consequences for their actions.  If your business is the victim of a cyber intrusion, please report it as soon as possible; the faster we are made aware, the sooner we can provide assistance."

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

In or about May 2022, FOSTER COOLEY perpetrated a scheme to conduct cyber intrusions and steal money from a New York-based company that owns and operates hair salons in New York City, New Jersey, Colorado, and elsewhere (“Victim-1”).  COOLEY stole money from Victim-1 by obtaining unauthorized access to Victim-1’s account with Victim-1’s point-of-sale provider (the “Victim-1 POS Account”) and diverting credit card payments from Victim-1’s bank accounts to bank accounts controlled by COOLEY and others.

COOLEY obtained unauthorized access to the Victim-1 POS Account by obtaining usernames and passwords of Victim-1’s employees.  Those credentials were stolen using a type of malicious software or malware that secretly steals, among other things, a victim’s usernames, passwords, and credit card information that have been saved in the victim’s internet browser.  After COOLEY successfully gained unauthorized access to the Victim-1 POS Account, COOLEY changed the bank accounts designated to receive credit card payments from Victim-1’s hair salons to bank accounts controlled by COOLEY and others.  As a result, credit card payments from Victim-1’s hair salons were fraudulently diverted to COOLEY and others.

In or about May 2022, for a period of approximately two weeks until the scheme was discovered by Victim-1, more than $430,000 in customer payments from Victim-1’s hair salons were fraudulently diverted to bank accounts controlled by COOLEY and others.

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COOLEY, 23 of Chandler, Arizona, is charged with one count of computer fraud for causing damage to a protected computer, which carries a maximum sentence of 10 years in prison; one count of computer fraud for unauthorized access to a protected computer to further intended fraud and one count of receipt of stolen money, each of which carries a maximum sentence of five years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison to be served consecutively to any other sentence imposed. 

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

Mr. Williams praised the investigative work of the FBI.  Mr. Williams also thanked the FBI New York Cyber Task Force, the NYPD Cyber Task Force, and the FBI Field Office in Phoenix for their assistance in the investigation of this case.

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

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment constitutes 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 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 an indictment charging RIKESH THAPA with operating a scheme to defraud a start-up technology company (the “Victim Company”) of over $1 million worth of United States currency, cryptocurrency, and utility tokens.  THAPA used proceeds of his crime on personal expenses, including nightclubs, travel, and clothing, and falsified records and deleted evidence to conceal his theft.  RIKESH THAPA was arrested earlier today in the Southern District of California.  The defendant is expected to be presented before U.S. Magistrate Judge Mitchell D. Dembin this afternoon.  The case is assigned to U.S. District Judge John P. Cronan.

U.S. Attorney Damian Williams said: “Rikesh Thapa allegedly betrayed his company’s trust, as he was responsible for the safeguarding of substantial amounts of money.  Thapa went to great lengths to cover up his frauds, but, thanks to the dedicated work of this Office and our law enforcement partners, he will now have to answer for his crimes.” 

FBI Assistant Director in Charge Michael J. Driscoll said: “As we allege today, the defendant repeatedly stole from and defrauded the victim company - which he cofounded - in order to fund a luxurious personal lifestyle.  In an attempt to hide his crimes, he also deleted and falsified records.  The FBI will continue to work to ensure individuals willing to scam and steal from private businesses are held accountable in the criminal justice system."

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

RIKESH THAPA co-founded and was the Chief Technology Officer (“CTO”) of the Victim Company, which during the relevant period was involved in using blockchain and other technology to provide a ticketing platform for live events.  Between December 2017 and September 2019, THAPA used his position to carry out a scheme to defraud the Victim Company.

In 2018, the Victim Company sought to diversify its banking because of its understanding that certain financial institutions were reluctant to maintain relationships with companies, such as the Victim Company, involved in cryptocurrency transactions.  In furtherance of that effort, THAPA agreed to receive and hold $1 million of the Victim Company’s money in his personal bank account (the “THAPA Account”) while the Victim Company explored banking options.  Soon after receiving the $1 million, however, THAPA began using the funds on personal expenses.  Nevertheless, THAPA repeatedly acknowledged what was supposed to be the temporary nature of his possession of the funds, representing to a colleague, in substance and in part, that the money was “a stationary 1mil in my account” that was held “for safe keeping.”  THAPA then falsified records to conceal his theft, providing the Victim Company with a forged bank statement, which falsely represented that THAPA held over $21 million, approximately $1 million of which was held in a particular savings account (the “Purported Account”).  In fact, THAPA did not have the Purported Account and held much less than $21 million at the relevant bank.  In 2019, THAPA refused to return the $1 million, which he spent on, among other things, nightclubs, travel, and clothing.

In addition, between December 2017 and September 2019, THAPA used his control over the Victim Company’s cryptocurrency holdings to embezzle at least 10 Bitcoin from the Victim Company.  For example, in August 2018, THAPA diverted at least one of the Victim Company’s Bitcoin for his own benefit, selling the Bitcoin for approximately $6,500 and depositing the proceeds into the THAPA Account (the “August 2018 Bitcoin Transaction”).  To avoid detection, THAPA falsified trading records and deleted emails.  In July 2019, THAPA sent the Victim Company’s CEO a fraudulent transaction report that misrepresented the August 2018 Bitcoin Transaction.  After the CEO, copying THAPA, thereafter requested and received a transaction report directly from the Victim Company’s cryptocurrency brokerage, THAPA disabled the CEO’s email account at the Victim Company (the “CEO Email Account”), deleted the cryptocurrency brokerage’s email from the CEO Email Account, and then deleted the entire CEO Email Account.

In yet another facet of the scheme, THAPA stole the Victim Company’s utility tokens.  Such tokens are a type of cryptocurrency that can be used to access particular services, products, or features.  In July 2019, unbeknownst to the Victim Company’s CEO, THAPA set up a meeting in Italy between THAPA and individuals who claimed to be interested in purchasing the Victim Company’s utility tokens.  Before the meeting, THAPA provided account information for the THAPA Account so that the purported investors could wire him funds.  During the meeting, however, THAPA agreed to receive cash in exchange for utility tokens.  After the meeting, THAPA transferred, without authorization, approximately 174,285 of the Victim’s utility tokens to the purported investors.  THAPA later determined that the cash he had received from the purported investors was counterfeit.    

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RIKESH THAPA, 28, of San Diego, California, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.

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

Mr. Williams praised the outstanding investigative work of the FBI’s New York Field Office.

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

The charge contained in the Indictment is merely an accusation, and the defendant is presumed innocent unless and until proven guilty.

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment constitutes 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 Michael J. Driscoll, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a 15-Count Indictment charging 14 members of the Double Nine Grim Reapers Bloods Gang (the “Grimz”), including the gang’s top prison and street leaders, with committing various racketeering, narcotics, and firearms offenses.  The case is assigned to U.S. District Judge Philip M. Halpern.  

The Indictment charges several Grimz members and associates, including JEREMY WILLIAMS, a/k/a “Dubs,” and RANDY JONES, a/k/a “Nicklez,” two co-founders of the Grimz, with participating in a racketeering conspiracy.  The Indictment also charges several Grimz members and associates with acts of violence.  This includes JUSTICE JACKSON, a/k/a “Tweak,” TYRELL SIMON, a/k/a “Insane,” THOMAS RODRIGUEZ, a/k/a “Tom Tom,” and MARCUS CARDONA, a/k/a “D,” a/k/a “Honcho,” who are charged with the attempted murder and assault of a rival gang member in connection with a shooting that sent the rival gang member to the hospital with life-threatening injuries.  JUSTICE JACKSON, a/k/a “Tweak,” and MARKELL WILLIAMS, a/k/a “15,” are also charged with an armed robbery of a drug dealer in which shots were fired and an individual was hit.  In addition to serious acts of violence, the gang was also responsible for trafficking large amounts of narcotics across the City of Newburgh, New York, and New York State to enrich members of the gang. 

U.S. Attorney Damian Williams said: “Today’s indictment against 14 members of the Grimz gang includes myriad charges of violence and drug trafficking that typically accompany gang activity and inflict harm in our communities.  The charges brought today include two of the gang’s co-founders and are a significant step in the dismantling of this dangerous criminal organization.”

FBI Assistant Director in Charge Michael J. Driscoll said: “As alleged, the defendants conspired to use violence in order to further their narcotic-trafficking enterprise.  Their cold-hearted actions and disregard for human life bring havoc and fear to the streets of our neighborhoods.  The FBI’s Hudson Valley Safe Streets Task Force and our law enforcement partners work around the clock to keep our communities safe.  Violent criminals who aim to bring mayhem to our communities will be made to face the consequences of their choices in the criminal justice system.”

As alleged in public court filings and the Indictment unsealed today in White Plains federal court:[1]

JEREMY WILLIAMS, a/k/a “Dubs,” RANDY JONES, a/k/a “Nickelz,” JAMES WHITE, a/k/a “Infared,” PAUL AYALA, a/k/a “Mikey,” MESSIAH JACKSON, a/k/a “Two,” JUSTICE JACKSON, a/k/a “Tweak,” OCTAVIOUS GRIFFIN, a/k/a “Tate,” MARKELL WILLIAMS, a/k/a “15,” TYRELL SIMON, a/k/a “Insane,” a/k/a “Rello,” JOSHUA HENDRICKS, a/k/a “Hendrix,” ELIJAH BRIGGS, a/k/a “Eli,” SHAMELL WILLIAMS, a/k/a “Mello Trend,” THOMAS RODRIGUEZ, a/k/a “Tom Tom,” a/k/a “Checks,” and MARCUS CARDONA, a/k/a “D,” a/k/a “Honcho,” are members and associates of a racketeering conspiracy known as the Grimz.

On November 3, 2020, JUSTICE JACKSON, a/k/a “Tweak,” TYRELL SIMON, a/k/a “Insane,” THOMAS RODRIGUEZ, a/k/a “Tom Tom,” and MARCUS CARDONA, a/k/a “D,” a/k/a “Honcho,” for the purpose of maintaining and increasing their positions in the Grimz, attempted to murder and assaulted with a dangerous weapon a rival gang member and discharged a firearm in connection with that offense in the City of Newburgh, New York.

On November 10, 2020, JUSTICE JACKSON, a/k/a “Tweak,” and MARKELL WILLIAMS, a/k/a “15,” committed a gunpoint robbery of a rival drug dealer and discharged a firearm in connection with that offense in the City of Newburgh, New York.

In 2019, OCTAVIOUS GRIFFIN, a/k/a “Tate,” committed a gunpoint robbery of a rival drug dealer and brandished a firearm in connection with that offense in the City of Newburgh, New York.

On January 18, 2020, MESSIAH JACKSON, a/k/a “Two,” committed a gunpoint robbery of a rival drug dealer and brandished a firearm in connection with that offense in the City of Newburgh, New York.

On September 15, 2021, MARKELL WILLIAMS, a/k/a “15,” committed a gunpoint robbery of a rival drug dealer and brandished a firearm in connection with that offense in the City of Newburgh, New York

On October 31, 2021, JUSTICE JACKSON, a/k/a “Tweak,” TYRELL SIMON, a/k/a “Insane,” a/k/a “Rello,” and SHAMELL WILLIAMS, a/k/a “Mello Trend,” committed a gunpoint robbery of a rival drug dealer and brandished a firearm in connection with that offense in the City of Newburgh, New York.   

From at least 2018 to the present, JEREMY WILLIAMS, a/k/a “Dubs,” JAMES WHITE, a/k/a “Infared,” PAUL AYALA, a/k/a “Mikey,” MESSIAH JACKSON, a/k/a “Two,” JUSTICE JACKSON, a/k/a “Tweak,” OCTAVIOUS GRIFFIN, a/k/a “Tate,” MARKELL WILLIAMS, a/k/a “15,” TYRELL SIMON, a/k/a “Insane,” a/k/a “Rello,” JOSHUA HENDRICKS, a/k/a “Hendrix,” ELIJAH BRIGGS, a/k/a “Eli,” SHAMELL WILLIAMS, a/k/a “Mello Trend,” THOMAS RODRIGUEZ, a/k/a “Tom Tom,” a/k/a “Checks,” and MARCUS CARDONA, a/k/a “D,” a/k/a “Honcho,” participated in a conspiracy to distribute a substantial among of narcotics, including crack cocaine, heroin, Oxycodone, marijuana, and synthetic cannabinoids, commonly known as “K2.”  These individuals also possessed numerous firearms in connection with this narcotics conspiracy.

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JEREMY WILLIAMS, 33, JONES, 34, AYALA, 30, SHAMELL WILLIAMS, 29, and RODRIGUEZ, 31, were all arrested yesterday and today and will be presented today before United States Magistrate Judge Paul E. Davison.  WHITE, 43, MESSIAH JACKSON, 22, JUSTICE JACKSON, 20, GRIFFIN, 35, MARKELL WILLIAMS 21, SIMON, 21, and HENDRICKS, 22, are already in custody on other charges.  BRIGGS, 25, and CARDONA, 24, have not been arrested at this time.

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 FBI’s Hudson Valley Safe Streets Task Force, New York State Police, Town of New Windsor Police Department, Orange County Sheriff’s Office, City of Newburgh Police Department, Town of Newburgh Police Department, and Nassau County Sheriff’s Office. Mr. Williams also thanked the FBI’s Westchester County Safe Streets Task Force, the New York City Department of Correction, Correction Intelligence Bureau, Department of Labor – Office of Inspector General, the Poughkeepsie Police Department, and the New York City Police Department for their assistance in the investigation.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Jennifer N. Ong, Nicholas S. Bradley, and Ryan W. Allison 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.

COUNT

DEFENDANT(S)

MIN. AND MAX. TERM OF IMPRISONMENT

Count One: Conspiracy to Commit Racketeering

JEREMY WILLIAMS

RANDY JONES

JAMES WHITE

PAUL AYALA

MESSIAH JACKSON

JUSTICE JACKSON

OCTAVIOUS GRIFFIN

MARKELL WILLIAMS

TYRELL SIMON

JOSHUA HENDRICKS

ELIJAH BRIGGS

SHAMEL WILLIAMS

THOMAS RODRIGUEZ

MARCUS CARDONA

20 years in prison

 

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

 

JUSTICE JACKSON

TYRELL SIMON

THOMAS RODRIGUEZ

MARCUS CARDONA

20 years in prison

Count Three:  Possession and Discharge of a Firearm in Furtherance of a Crime of Violence

 

JUSTICE JACKSON

TYRELL SIMON

THOMAS RODRIGUEZ

MARCUS CARDONA

Life in prison; Mandatory minimum of 10 years in prison to run consecutive to any other sentence imposed

 

Count Four: Hobbs Act Robbery

JUSTICE JACKSON MARKELL WILLIAMS

20 years in prison

Count Five: Possession and Brandish of a Firearm in Furtherance of a Crime of Violence

JUSTICE JACKSON MARKELL WILLIAMS

Life in prison; Mandatory minimum of seven years in prison to run consecutive to any other sentence imposed

 

Count Six: Hobbs Act Robbery

OCTAVIOUS GRIFFIN

20 years in prison

Count Seven: Possession and Brandish of a Firearm in Furtherance of a Crime of Violence

 

 

OCTAVIOUS GRIFFIN

Life in prison; Mandatory minimum of seven years in prison to run consecutive to any other sentence imposed

 

Count Eight: Hobbs Act Robbery

MESSIAH JACKSON

20 years in prison

 

Count Nine: Possession and Brandish of a Firearm in Furtherance of a Crime of Violence

MESSIAH JACKSON

Life in prison; Mandatory minimum of seven years in prison to run consecutive to any other sentence imposed

Count Ten: Hobbs Act Robbery

MARKELL WILLIAMS

20 years in prison

Count Eleven: Possession and Brandish of a Firearm in Furtherance of a Crime of Violence

MARKELL WILLIAMS

Life in prison; Mandatory minimum of seven years in prison to run consecutive to any other sentence imposed

Count Twelve: Hobbs Act Robbery

JUSTICE JACKSON TYRELL SIMON SHAMELL WILLIAMS

20 years in prison

Count Thirteen: Possession and Brandish of a Firearm in Furtherance of a Crime of Violence

JUSTICE JACKSON TYRELL SIMON SHAMELL WILLIAMS

Life in prison; Mandatory minimum of seven years in prison to run consecutive to any other sentence imposed

Count Fourteen: Conspiracy to Distribute Controlled Substances

 

JEREMY WILLIAMS

JAMES WHITE

PAUL AYALA

MESSIAH JACKSON

JUSTICE JACKSON

OCTAVIOUS GRIFFIN

MARKELL WILLIAMS

TYRELL SIMON

JOSHUA HENDRICKS

ELIJAH BRIGGS

SHAMEL WILLIAMS

THOMAS RODRIGUEZ

MARCUS CARDONA

Life in prison; Mandatory minimum of 10 years in prison

Count Fifteen: Possession of a Firearm in Furtherance of a Drug Trafficking Crime

 

 

JEREMY WILLIAMS

JAMES WHITE

PAUL AYALA

MESSIAH JACKSON

JUSTICE JACKSON

OCTAVIOUS GRIFFIN

MARKELL WILLIAMS

TYRELL SIMON

JOSHUA HENDRICKS

ELIJAH BRIGGS

SHAMEL WILLIAMS

THOMAS RODRIGUEZ

MARCUS CARDONA

Life in prison; Mandatory minimum of five years in prison to run consecutive to any other sentence imposed

 

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that FRANK OKUNAK, the former chief financial officer of one of the world’s leading global public relations firms, was sentenced today to 52 months in prison by U.S. District Judge P. Kevin Castel.  OKUNAK pled guilty on July 27, 2022, to one count of wire fraud and one count of falsification of the books and records of a public corporation, in connection with a decade-long scheme to embezzle over $16 million from his employer.

U.S. Attorney Damian Williams stated: “Frank Okunak conducted a nearly decade-long conspiracy to embezzle millions of dollars from his employer and the public shareholders of his employer.  Today’s sentence should serve as a warning to executives that if they use their company’s money as if it were their own, they will face lengthy prison time.”  

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

For nearly a decade, FRANK OKUNAK, who was the chief financial officer and later chief operating officer of a leading global public relations firm (the “PR Firm”), embezzled over $16 million from the PR Firm and, ultimately, the shareholders of the PR Firm’s publicly traded parent corporation.  OKUNAK used the embezzled funds to finance his personal lifestyle and his own private business ventures.  OKUNAK concealed and facilitated his theft by preparing and causing others to prepare materially false accounting books and records, including invoices and payment records that falsely described expenditures as having been undertaken for the benefit of the PR Firm, when funds were actually used for OKUNAK’s personal benefit or for the benefit of his personal business associates.

Specifically, from 2011 through 2020, OKUNAK used his authority as an officer of the PR Firm to cause the PR Firm to make unauthorized payments for OKUNAK’s personal and business ventures unrelated to the activities of the PR Firm or its corporate parents.  OKUNAK used the PR Firm’s assets to provide the start-up capital for his personal, independent business ventures, to purchase tickets and luxury boxes at sporting events, and even to cover donations to his alma mater.  To hide the illicit nature of these expenditures, OKUNAK frequently prepared or caused others to prepare false or misleading invoices and other documentation to suggest, falsely, that the funds were used for legitimate corporate purposes.

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In addition to his prison sentence, OKUNAK, 56, of Lyndhurst, New Jersey, was sentenced to three years of supervised release.  As part of his guilty plea, OKUNAK also agreed to forfeit $10,823,575.57 and to pay restitution of $16,043,603.71.

Mr. Williams praised the outstanding work of the FBI.  Mr. Williams further thanked the U.S. Securities and Exchange Commission and the victim PR Firm and its corporate parent for their cooperation and assistance in this investigation.

The prosecution of this case is being overseen by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Scott Hartman and Matthew Podolsky are in charge of the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced that FRANK GLASSNER, a principal of an executive compensation consulting firm based in Novato, California (the “Consulting Firm”), was sentenced to one year and one day in prison by U.S. District Judge Lewis J. Liman.  Glassner pled guilty on August 19, 2022, to one count of securities fraud in connection with his scheme to commit insider trading based on material, nonpublic information regarding the upcoming public announcement that Kadmon Holdings, Inc. (“Kadmon”) – which GLASSNER and the Consulting Firm were advising – would be acquired by Sanofi, S.A. (“Sanofi”).  

U.S. Attorney Damian Williams said: “With today’s sentence, Frank Glassner must face the consequences of trading on inside information.  This conviction and sentence demonstrates once again that we will continue to vigorously protect the integrity of our markets and hold accountable those who cheat by trading on inside information.”

According to the allegations in the Information, the complaint that was filed in this case, and statements made during court proceedings and filings:

Between July 2021 and September 2021, Kadmon, which, prior to its acquisition by Sanofi, was a publicly-traded biopharmaceutical company traded under the ticker symbol “KDMN” on the NASDAQ, engaged GLASSNER and the Consulting Firm to provide executive compensation consulting services related to a potential acquisition.  In connection with this engagement, GLASSNER had access to material, non-public information, which he misappropriated and, in violation of the duties that he owed to Kadmon, used to trade Kadmon stock and call options between on or about August 3, 2021, and on or about August 23, 2021.  On September 8, 2021, Kadmon publicly announced that it had agreed to be acquired by Sanofi for a per-share price significantly above the share price at which Kadmon was trading.  That day, Kadmon’s share price increased by approximately 71%, and GLASSNER ultimately profited $368,000 on the Kadmon stock and call options he had previously purchased. 

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In addition to his prison sentence, GLASSNER, 68, of Novato, California, was ordered to pay forfeiture in the amount of $368,000.

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation.  Mr. Williams further thanked the U.S. Securities and Exchange Commission, which brought a related civil action against GLASSNER. 

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

Damian Williams, the United States Attorney for the Southern District of New York, William Grady, the District Attorney for Dutchess County, and Michael J. Driscoll, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the filing of a superseding Indictment charging ELIJAH BERMUDEZ, a/k/a “Quiet,” with murder in aid of racketeering, the use of a firearm resulting in death, racketeering conspiracy, and illegal possession of ammunition, for the June 20, 2020, murder of a minor victim in the vicinity of Charles Street in Poughkeepsie, New York, in furtherance of BERMUDEZ’s participation in the Bully Hard Hunna Blood (“Bully Hard”) racketeering conspiracy.

U.S. Attorney Damian Williams said:  Gangs like Bully Hard reward violence with promotions within the group, which often leads to tragic deaths, including the minor victim in this case.  We hope this investigation and prosecution brings some measure of closure to the family of Bermudez’s alleged victim.”

Dutchess County Chief Assistant District Attorney Matthew Weishaupt said: “Our office has worked for many years with our partners in the United States Attorney’s Office for the Southern District of New York when the federal system brings an advantage in evidentiary matters, resources, or sentencing options.  We will continue to work collaboratively to eradicate the scourge of ongoing violence within our communities.  We remain focused on making our communities a safer place for everyone through our continued joint efforts.

We extend thanks to all the law enforcement agencies who diligently pursued this investigation and brought it to a successful outcome. We also thank the Assistant United States Attorneys who were assigned to this case for their diligent work and effort through the investigative process.”

FBI Assistant Director in Charge Michael J. Driscoll said: "As alleged, the defendant callously took the life of a minor as a member of a violent street gang.  The FBI's Westchester County Safe Streets Task Force and our law enforcement partners are committed to ensuring the safety of our communities.  Violent actors will be held accountable for their wanton behavior in our criminal justice system."

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

BERMUDEZ was a member or associate of a racketeering enterprise known as Bully Hard, a criminal organization whose members and associates engaged in, among other things, murder, robberies, narcotics trafficking, and fraud. 

On June 20, 2020, BERMUDEZ murdered a minor victim in the vicinity of Charles Street in Poughkeepsie, New York, in furtherance of his membership in the Bully Hard racketeering enterprise. 

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BERMUDEZ, 29, of New York, New York, is charged with one count of murder in aid of racketeering, which carries a maximum sentence of death or life in prison and a mandatory minimum sentence of life in prison; one count of racketeering conspiracy, which carries a maximum sentence of life in prison; one count of murder through the use of a firearm, which carries a maximum sentence of death or life in prison and a mandatory minimum sentence of five years in prison; and one count of being a felon in possession of ammunition, which carries a maximum sentence of 10 years in prison.    

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

Mr. Williams praised the outstanding investigative work of the FBI Westchester County Safe Streets Task Force, which is comprised of special agents and task force officers from the FBI, US Probation, New York State Police, New York State Department of Corrections and Community Supervision, Westchester County DAs Office, Putnam County Sheriff's Office, Rockland DAs Office and the New York City, Westchester County, Yonkers, New Rochelle, Mount Vernon, Greenburgh, White Plains, Peekskill, Ramapo, and Clarkstown Police Departments.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Courtney L. Heavey, David R. Felton, Kevin T. Sullivan, and Shiva H. Logarajah 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         

 

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that CHANETTE LEWIS pled guilty today to two counts of conspiracy to commit wire fraud.  LEWIS participated in a scheme to commit COVID-19 pandemic fraud by, among other things, defrauding New York City’s COVID-19 Hotel Room Isolation Program.  LEWIS also committed a fraud in which she submitted fabricated documents to the New York City Housing Authority (“NYCHA”) — such as purported Orders of Protection bearing Judges’ names, purported letters from a District Attorney, and purported letters from healthcare professionals attesting to alleged medical issues — in order to secure public housing benefits for herself and her customers.  LEWIS pled guilty before United States Magistrate Judge Stewart D. Aaron.  LEWIS’s case is assigned to United States District Judge Lewis A. Kaplan.

U.S. Attorney Damian Williams said: “Chanette Lewis took advantage of multiple lifelines offered to New York City residents in need during the COVID-19 pandemic.  Each of her schemes misappropriated identifying information of hardworking individuals, including medical professionals whose services were vital during the pandemic.  For her brazen crimes, Lewis now faces possible prison time.”

According to the allegations contained in the Superseding Information, court filings, and statements made during plea proceedings:

LEWIS’s COVID-19 Pandemic Fraud Scheme

From April 2020 through September 2021, LEWIS conspired to commit COVID-19 pandemic fraud by, among other things, defrauding the COVID-19 Hotel Room Isolation Program (the “Program”).  In response to the COVID-19 pandemic, New York City created the Program.  Funded by New York City and the Federal Emergency Management Agency, the Program provided free hotel rooms for qualifying individuals throughout New York City.  The Program was open to (a) healthcare workers who needed to isolate because of exposure to COVID-19; (b) patients who had tested positive for COVID-19; (c) individuals who believed, based on their symptoms, that they were infected with COVID-19; and (d) individuals who lived with someone who contracted COVID-19.  As stated on the City’s website describing the Program, such individuals “may qualify to self-isolate in a hotel, free of charge, for up to 14 days if you do not have a safe place to self-isolate.”  Those who wished to book a hotel room through the Program could either call a phone number or use an online hotel booking platform. 

LEWIS defrauded the Program in several respects.  First, she secured free Program hotel rooms for herself by falsely claiming to be a healthcare worker.  Second, she sold at least approximately 1,936 nights’ worth of fraudulently obtained hotel rooms to customers who were ineligible for the Program.  Third, LEWIS abused her employment, which was supposed to be in service of the Program.  Specifically, LEWIS worked at a call center that handled phone calls and certain reservations for the Program for several months in 2020.  LEWIS was hired specifically for the Program, and as a result of her employment, she had access to legitimate healthcare workers’ identifying information.  LEWIS abused her position, including by misappropriating healthcare workers’ identifying information, revealing the Program’s inner workings to co-conspirators, and making unauthorized sales of Program hotel rooms to ineligible individuals.  For instance, LEWIS sold a co-defendant, for $800, personal identifying information of at least five healthcare professionals, as well as certain “codes” to use when booking hotel reservations through the Program, such as an employee ID number and license number.  LEWIS admitted, in Facebook messages, that she had stolen doctors’ identifying information in furtherance of the scheme, writing: “I work for 311 oem [i.e., the Office of Emergency Management] that how I got doctors licenses and stuff . . . I work in the part that I collect they information and I do and approval the booking . . . I take doctors and stuff certificate numbers and stuff.”  LEWIS also advertised to potential customers that, when hotels asked for a healthcare worker’s identification, LEWIS would supply a purported paystub and a letter falsely asserting that the individual was a healthcare worker.

LEWIS’s Fraud against NYCHA

From in or around July 2020 until October 2021, LEWIS participated in a conspiracy to defraud NYCHA.  LEWIS submitted fabricated documents to NYCHA — such as purported Orders of Protection bearing Judges’ names, purported letters from a District Attorney, and purported letters from doctors attesting to alleged medical issues — in order to secure public housing benefits for both herself and others, such as transfers to larger NYCHA apartments.  In total, LEWIS submitted fraudulent applications to NYCHA on behalf of approximately 35 individuals, a number of whom in fact received the public housing benefit they requested based on fraudulent documentation.

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LEWIS, 31, of Brooklyn, New York, pled guilty to two counts of conspiracy to commit wire fraud, each of which carries a maximum sentence of five years in prison.  Under the terms of her plea agreement, LEWIS has agreed to forfeit $289,536 and to pay restitution of $360,916. 

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.  LEWIS is scheduled to be sentenced by Judge Kaplan on May 18, 2023, at 3:00 p.m.

One of LEWIS’s co-defendants, Tatiana Daniel, previously pled guilty to conspiracy to commit wire fraud and is scheduled to be sentenced by Judge Kaplan on March 29, 2023, at 2:30 p.m.  LEWIS’s two other co-defendants are currently scheduled to proceed to trial before Judge Kaplan on January 17, 2023. 

Mr. Williams praised the outstanding efforts of agents, investigators, and analysts from the New York City Department of Investigation (“DOI”), DOI – NYCHA Office of the Inspector General, the New York Regional Office of the U.S. Department of Labor – Office of Inspector General (“DOL-OIG”), and the U.S. Attorney’s Office for the Southern District of New York.  Mr. Williams also thanked the New York/New Jersey High Intensity Drug Trafficking Area Intelligence Analysts for their support and assistance in this investigation.  He also expressed gratitude to the New York City Police Department, the New York State Department of Labor, and the DOL-OIG Atlanta Regional Office for their assistance.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that CARY YAN, a/k/a “Hong Hui Yan,” a/k/a “Chen Hong,” and GINA ZHOU, a/k/a “Chaoting Zhou,” a/k/a “Angel Zhou,” pled guilty to conspiring to violate the Foreign Corrupt Practices Act (“FCPA”) in connection with a multi-year scheme to bribe government officials in the Republic of the Marshall Islands (the “RMI”) to pass legislation that would benefit the business interests of YAN, ZHOU, and their associates.  In November 2020, Thai authorities arrested YAN and ZHOU in Thailand at the request of the United States pursuant to the U.S.-Thailand extradition treaty, and following court proceedings, the Thai government extradited YAN and ZHOU to the United States on September 2, 2022.  Both defendants pled guilty today before District Judge Naomi Reice Buchwald.

U.S. Attorney Damian Williams said: “As they have now admitted, the defendants sought to undermine the democratic processes of the Republic of the Marshall Islands through bribery in order to advance their own financial interests.  I commend the career prosecutors of this Office and our law enforcement partners for bringing this corruption to light and ensuring that justice is done.”

According to the Indictment filed in the case and publicly available information:

Beginning at least in 2016, YAN and ZHOU began communicating and meeting with RMI officials in both New York City and the RMI concerning the development of a semi-autonomous region within a part of the RMI known as the Rongelap Atoll.  The creation of the proposed semi-autonomous region was intended by YAN, ZHOU, and those associated with them to obtain business by, among other things, allowing YAN and ZHOU to attract investors to participate in economic and social development projects that YAN, ZHOU, and others promised would occur in the semi-autonomous region.

As proposed by YAN and ZHOU, the so-called Rongelap Atoll Special Administrative Region (the “RASAR”) would be created by legislation (the “RASAR Bill”) that, if enacted by the RMI legislature, would significantly change the laws on the Rongelap Atoll to attract foreign businesses and investors, such as by lowering or eliminating taxation and relaxing immigration regulations.  In or about mid-August 2018, certain RMI legislators officially introduced the RASAR Bill.  Starting before that date, and continuing until at least on or about November 1, 2018, YAN and ZHOU offered and provided a series of cash bribes and other incentives to obtain the support of RMI legislators for the RASAR Bill.

On or about November 18, 2019, the RMI held elections for the legislature.  As a result of these elections, on or about January 13, 2020, the then-President of the RMI left office.  Shortly thereafter, YAN and ZHOU began emailing and meeting with certain RMI officials to continue their plan to create the RASAR.  In or about late February 2020, the RMI legislature began considering a resolution that would endorse the concept of the RASAR (the “RASAR Resolution”), a preliminary step that would allow the RMI legislature to enact the more detailed RASAR Bill at a later date. 

On or about March 7, 2020, YAN and ZHOU met with a close relative of a member of the RMI legislature in the RMI.  During the meeting, YAN and ZHOU gave the relative $7,000 in cash to pass on to the official, specifying that this money would be used to induce and influence other RMI legislators to support the RASAR Resolution.  YAN and ZHOU further stated, in sum, that they knew that the official needed more than $7,000 for this purpose and that YAN and ZHOU would soon obtain additional cash for the official.  YAN and ZHOU also discussed having previously brought larger sums of cash into the RMI through the United States and that they planned to do so again in the future.  On or about March 20, 2020, the RMI legislature passed the RASAR Resolution with the support of legislators to whom ZHOU and YAN had provided bribes and other incentives.

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YAN, 51, and ZHOU, 35, both of whom have traveled on passports issued by the RMI, pled guilty to one count of conspiring to violate the FCPA, which carries a maximum sentence of five years in prison.    

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

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Williams additionally thanked the Royal Thai Government, the U.S. Department of State's Diplomatic Security Service, the Embassy of the United States in Bangkok, and the Justice Department's Office of International Affairs for their assistance in securing the arrest and extradition of the defendants.  

The case is being prosecuted by the Office’s Public Corruption Unit and the Criminal Division’s Fraud Section.  Assistant U.S. Attorneys Hagan Scotten, Lara Pomerantz, and Derek Wikstrom are in charge of the prosecution.  Trial Attorneys Gerald Moody and Anthony Scarpelli were also assigned to the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced the unsealing of an Indictment charging JAMES ROBINSON and DAVID KENNEDY, both citizens of the United Kingdom, with wire fraud and conspiracy to commit wire fraud for engaging in a scheme to defraud victims by making material misrepresentations about the management and operations of a company called Bar Works Inc. and related entities (“Bar Works”).  On November 30, 2022, ROBINSON and KENNEDY were arrested in Spain, and the United States Government will be seeking their extradition to the United States. 

According to the Indictment unsealed today in Manhattan federal court and other court documents related to the prosecution of co-conspirators Renwick Haddow and James Moore:[1]

ROBINSON, KENNEDY, and co-conspirators Renwick Haddow and James Moore are citizens of the United Kingdom (the “UK”).  At all times relevant to the Indictment, United Property Group and related entities (collectively, “UPG”) was a company based in Spain that was controlled in part by ROBINSON and KENNEDY.  UPG sold real estate and other investing opportunities to potential investors.  Bar Works was a private co-working space company controlled by Haddow, which operated locations in New York City and elsewhere between in or about 2015 through 2017 and accepted millions of dollars in investments from investors recruited through UPG, among others.  Prior to launching Bar Works, Haddow had been disqualified as a director of any UK company for eight years and was later sued by the Financial Conduct Authority, a British regulator, for operating investment schemes through misrepresentations that lost investors substantially all of their money.  These sanctions and the lawsuit were publicized online.  

In exchange for millions of dollars in commissions, ROBINSON, KENNEDY, and Moore partnered with Haddow in soliciting investments into workspace leases in Bar Works through material misrepresentations concerning, among other things, the identity of Bar Works’ management and the operations of Bar Works.  Specifically, as ROBINSON and KENNEDY knew, notwithstanding Haddow’s control over Bar Works, Haddow caused the Bar Works offering materials to omit his name entirely, list a fictitious individual named “Jonathan Black” as the Chief Executive Officer of Bar Works, and claim that “Black” had an extensive background in finance and past success with start-up companies.

Through UPG, ROBINSON and KENNEDY recruited agents to sell workspace leases in Bar Works and provided them with fraudulent offering documents and other information.  An account controlled in whole or in part by JAMES ROBINSON and DAVID KENNEDY received over $2 million in commissions from Bar Works in exchange for soliciting victims to invest at least approximately $7.5 million in this scheme.  Separately, Moore received another approximately $1.6 million from Bar Works.  Overall, prior to its collapse in or about June 2017, Bar Works obtained over $57 million from over 800 investors worldwide.

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ROBINSON, 46, and KENNEDY, 47, both of the UK, are each charged with one count of wire fraud and one count of wire fraud conspiracy.  Each charge 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 the judge.

Renwick Haddow, 54, pled guilty pursuant to a cooperation agreement on May 23, 2019, to one count each of wire fraud and wire fraud conspiracy relating to the Bar Works scheme and one count each of wire fraud and wire fraud conspiracy relating to a separate Bitcoin-related investment scheme.  Haddow’s sentencing is currently scheduled for April 28, 2023, before United States District Judge Laura Taylor Swain.

James Moore, 62, was found guilty on June 7, 2019, of wire fraud and conspiracy to commit wire fraud following a week-long jury trial before United States District Judge Richard M. Berman.  On February 1, 2022, Moore was sentenced to 140 months in prison by Judge Berman.

Savraj Gata-Aura, 36, pled guilty on November 18, 2019, to one count of wire fraud conspiracy for his participation in the scheme and was sentenced to 48 months in prison on July 27, 2020, by United States District Judge Jed. S. Rakoff.

Mr. Williams praised the investigative work of the Federal Bureau of Investigation.  He further thanked the Spanish National Police for their assistance.  Finally, Mr. Williams thanked the Securities and Exchange Commission.

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

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment 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 TARAS ILYICH BEVZ, a citizen of Russia, was sentenced to 46 months in prison for laundering over a million dollars of proceeds of various internet frauds targeting dozens of U.S. citizens and companies.  BEVZ was sentenced today by U.S. District Judge Naomi Reice Buchwald.

U.S. Attorney Damian Williams said: “Bevz, a Russian citizen, traveled to the United States on a tourist visa to engage in a crime spree that left over 40 people and entities with over a million dollars in losses.  From the day he set foot on American soil, he ran companies and bank accounts that laundered proceeds of various sophisticated internet fraud schemes.  Bevz’s illegal journey to America to commit crimes comes to an end with a significant prison sentence.”

 According to Count Two of the Indictment, to which BEVZ pled guilty, and other statements and submissions made in Court:         

On or about November 12, 2019, BEVZ entered the United States from Russia on a B2 tourist visa, which prohibited him from working in the United States.  He immediately set to work preparing for the corrupt scheme to launder proceeds of various internet frauds.  On the day of his arrival, BEVZ registered a corporation in New York that would be used to launder proceeds and subsequently registered a second corporation.  From December 2019 to March 2021, BEVZ opened bank accounts for one or both of these companies at nine different banks, including in Manhattan bank branches.

From November 2019 through at least April 2021, BEVZ laundered the proceeds of at least two internet fraud schemes operated by co-conspirators: a hacking scheme and a vehicle fraud scheme.  The hacking scheme compromised multiple companies’ bank accounts and sent proceeds to BEVZ’s accounts, among others.  The fraud scheme targeted victims through internet ads for the sale of cars, RVs, motorcycles, and boats.  The victims were directed to send money to BEVZ’s accounts, among others; their money was then withdrawn by BEVZ as cash or transferred to Turkey, among other destinations.  The purported cars, motorcycles, and boats were never delivered to the victims.  BEVZ supervised at least one other individual who similarly opened bank accounts and transacted with proceeds from the vehicle fraud scheme.  BEVZ persisted in this scheme even after at least one bank prevented him from transferring money and shut down his account.

At least 42 victims lost money as part of BEVZ and his co-conspirators’ schemes.  They include vulnerable victims whose business and personal savings accounts were drained as a result of the fraud and couples who have had to delay retirement.  The victims represent a cross-section of society, including first generation Americans, teachers, and small business owners.  They include a family who spent $26,500 to purchase an RV to transport an ailing parent cross-country over the holidays that was never delivered. 

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In addition to his prison term, BEVZ, 33, was ordered pay $1,044,924 in restitution and forfeit $1,044,924.

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

The criminal case is being prosecuted by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorney Vladislav Vainberg is 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 Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a 10-Count Indictment charging 14 members of the Young Gunnaz Gang (“YG”), including the gang’s high-ranking street leaders, with committing various racketeering, narcotics, and firearms offenses.  The case is assigned to U.S. District Judge Kenneth M. Karas.

The Indictment charges several YG members and associates with acts of violence.  This includes KASHAD SAMPSON, a/k/a “Shoca,” a YG leader who is charged with participating in multiple assaults with a dangerous weapon in Poughkeepsie and Newburgh, New York.  In addition to serious acts of violence, the gang was also responsible for trafficking large amounts of narcotics across the City of Newburgh and New York State and perpetrating fraud schemes to enrich members of the gang. 

U.S. Attorney Damian Williams said: “When I was sworn in as U.S. Attorney, I promised that this Office would be relentless in rooting out violent crime, in every corner of this District.  That’s a promise I am determined to keep.  Today, we’re announcing a sweeping RICO indictment charging 14 members and associates of a violent gang that we allege was up to no good:  Running open air drug markets, engaging in shootouts in the broad daylight, and doing whatever it took to control the streets and do their dirt.  Well, not anymore.  Let today’s massive takedown be a warning to all gang members.  The feds are watching.  And you better believe we don’t quit.”

FBI Assistant Director in Charge Michael J. Driscoll said: "Many communities are seeing a dramatic increase in violent crime, putting people on edge.  The FBI, and our law enforcement partners, are doing all we can to search out and stop these gangs from terrorizing towns in the Hudson Valley.  This investigation should be viewed as a warning to others - we will hold you accountable."

As alleged in public court filings and the Indictment unsealed today in White Plains federal court:[1]

KASHAD SAMPSON, a/k/a “Shoca,” GEORGE DELGADO, a/k/a “Groc,” GABRIEL ROMAN, a/k/a “Gabe,” DALLAS ARCHER, a/k/a “Muggas,” JASIAH WOOTEN, a/k/a “Hov,” BRUCE ALLEN, a/k/a “Bam,” SYNCERE TATUM, a/k/a “Syn,” JOHN LALANNE, a/k/a “JJ,” RAEKWON JACKSON, a/k/a Tree,” BASHIR MALLORY, a/k/a “BG,” a/k/a “Bear,” MEKHI MCDONALD, a/k/a “Khi,” CHRISTOPHER TATE, a/k/a “Bag,” KRISTOPHER BURGESS CUNNINGHAM, a/k/a “KG,” and DEJON SCOTT, a/k/a “Red Dot,” are members and associates of a racketeering conspiracy known as YG.

On August 15, 2020, KASHAD SAMPSON, DALLAS ARCHER, JOHN LALANNE, and RAEKWON JACKSON, for the purpose of maintaining and increasing their positions in the YG enterprise, participated in and facilitated the attempted murder of rival gang members in Poughkeepsie, New York.

On April 27, 2021, SYNCERE TATUM, GABRIEL ROMAN, and CHRISTOPHER TATE, for the purpose of maintaining and increasing their positions in the YG enterprise, attempted to rob and shot at a rival drug dealer in Newburgh, New York.

On November 17, 2021, KASHAD SAMPSON, GEORGE DELGADO, JASIAH WOOTEN, and BRUCE ALLEN, for the purpose of maintaining and increasing their positions in the YG enterprise, shot at four rival gang members in Newburgh, New York.

On November 10, 2020, JOHN LALANNE robbed a narcotics dealer at gunpoint and discharged his firearm in Newburgh, New York.

From at least 2019 to the present, KASHAD SAMPSON, GEORGE DELGADO, GABRIEL ROMAN, JASIAH WOOTEN, BRUCE ALLEN, SYNCERE TATUM, JOHN LALANNE, RAEKWON JACKSON, BASHIR MALLORY, MEKHI MCDONALD, CHRISTOPHER TATE, KRISTOPHER BURGESS CUNNINGHAM, and DEJON SCOTT participated in a conspiracy to distribute a substantial amount of narcotics, including crack cocaine, heroin, Oxycodone, marijuana, and Promethazine HCL mixed with Codeine, commonly known as “lean.”  These individuals also possessed numerous firearms in connection with this narcotics conspiracy.

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SAMPSON, 23, DELGADO, 23, ROMAN, 23, ARCHER, 25, ALLEN, 24, TATUM, 22, LALANNE, 23, MALLORY, 19, MCDONALD, 19, TATE, 19, and CUNNINGHAM, 28, were all arrested yesterday, and presented today before United States Magistrate Judges Judith C. McCarthy and Andrew E. Krause.  WOOTEN, 24, JACKSON, 22, and SCOTT, 27, have not been arrested at this time.

Charts containing the names, charges, and minimum and maximum penalties for the defendants are 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 FBI’s Hudson Valley Safe Streets Task Force, New York State Police, Town of New Windsor Police Department, Orange County Sheriff’s Office, City of Newburgh Police Department, Town of Newburgh Police Department, and Nassau County Sheriff’s Office. Mr. Williams also thanked the FBI’s Westchester County Safe Streets Task Force, the New York City Department of Correction, Correction Intelligence Bureau, Department of Labor – Office of Inspector General, the Poughkeepsie Police Department, and the New York City Police Department for their assistance in the investigation.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Jennifer N. Ong, Nicholas S. Bradley, and Ryan W. Allison 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.

 

COUNT

DEFENDANT(S)

MAX. AND MIN. POTENTIAL PENALTIES

Count One: Conspiracy to Commit Racketeering

KASHAD SAMPSON

DALLAS ARCHER

GABRIEL ROMAN

GEORGE DELGADO

JASIAH WOOTEN

BRUCE ALLEN

BASHIR MALLORY

CHRISTOPHER TATE

JOHN LALANNE

RAEKWON JACKSON

SYNCERE TATUM

MEKHI MCDONALD

KRISTOPHER BURGESS CUNNINGHAM

DEJON SCOTT

20 years in prison

 

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

 

KASHAD SAMPSON

DALLAS ARCHER

JOHN LALANNE

RAEKWON JACKSON

20 years in prison

Count Three:  Possession and Discharge of a Firearm in Furtherance of a Crime of Violence

 

KASHAD SAMPSON

DALLAS ARCHER

JOHN LALANNE

RAEKWON JACKSON

Life in prison; Mandatory minimum of 10 years in prison to run consecutive to any other sentence imposed

 

Count Four: Assault with a Dangerous Weapon in Aid of Racketeering

 

SYNCERE TATUM

GABRIEL ROMAN

CHRISTOPHER TATE

20 years in prison

Count Five: Possession and Discharge of a Firearm in Furtherance of a Crime of Violence

 

 

SYNCERE TATUM

GABRIEL ROMAN

CHRISTOPHER TATE

Life in prison; Mandatory minimum of 10 years in prison to run consecutive to any other sentence imposed

 

Count Six: Assault with a Dangerous Weapon in Aid of Racketeering

 

KASHAD SAMPSON

GEORGE DELGADO

JASIAH WOOTEN

BRUCE ALLEN

20 years in prison

Count Seven: Hobbs Act Robbery

JOHN LALANNE

20 years in prison

Count Eight: Possession and Discharge of a Firearm in Furtherance of a Crime of Violence

 

 

JOHN LALANNE

Life in prison; Mandatory minimum of 10 years in prison to run consecutive to any other sentence imposed

 

Count Nine: Conspiracy to Distribute Controlled Substances

 

KASHAD SAMPSON

GABRIEL ROMAN

GEORGE DELGADO

JASIAH WOOTEN

BRUCE ALLEN

BASHIR MALLORY

CHRISTOPHER TATE

JOHN LALANNE

RAEKWON JACKSON

SYNCERE TATUM

MEKHI MCDONALD

KRISTOPHER BURGESS CUNNINGHAM

DEJON SCOTT

Life in prison; Mandatory minimum of 10 years in prison

Count Ten: Possession of a Firearm in Furtherance of a Drug Trafficking Crime

 

 

KASHAD SAMPSON

GABRIEL ROMAN

GEORGE DELGADO

JASIAH WOOTEN

BRUCE ALLEN

BASHIR MALLORY

CHRISTOPHER TATE

JOHN LALANNE

RAEKWON JACKSON

SYNCERE TATUM

MEKHI MCDONALD

KRISTOPHER BURGESS CUNNINGHAM

DEJON SCOTT

Life in prison; Mandatory minimum of five years in prison to run consecutive to any other sentence imposed

 

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

Two Marshallese nationals pleaded guilty today to conspiring to pay bribes to elected officials of the Republic of the Marshall Islands (RMI) in exchange for passing certain legislation.

According to court documents, beginning in or around 2016 and continuing until at least August 2020, Cary Yan, 50, and Gina Zhou, 34, the heads of a New York-based non-governmental organization (NGO), conspired with others in connection with a multi-year bribery scheme. Yan and Zhou offered and paid tens of thousands of dollars in bribes to elected RMI officials – including, among others, members of the RMI legislature – in exchange for supporting legislation creating a semi-autonomous region within the RMI called the Rongelap Atoll Special Administrative Region (RASAR) that would benefit the business interests of Yan, Zhou, and their associates. Yan and Zhou carried out the bribery and money laundering scheme using the New York NGO, including the physical use of its headquarters in Manhattan, to meet with and communicate with RMI officials. 

In November 2020, Thai authorities arrested Yan and Zhou in Thailand at the request of the United States pursuant to the U.S.-Thailand extradition treaty, and following court proceedings, the Thai government extradited Yan and Zhou to the United States on Sept. 2.

Yan and Zhou each pleaded guilty to one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). They each face a maximum penalty of five years in prison. A sentencing date has not yet been set. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney Damian Williams for the Southern District of New York, and Assistant Director-in-Charge Michael J. Driscoll of the FBI New York Field Office made the announcement.

The FBI investigated the case. The Royal Thai Government, the U.S Department of State’s Diplomatic Security Service, the Embassy of the United States in Bangkok, and the Justice Department’s Office of International Affairs provided substantial assistance in securing the arrest and extradition of the defendants.

Assistant Chief Gerald M. Moody Jr. and Trial Attorney Anthony Scarpelli of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Hagan Scotten, Lara Pomerantz, and Derek Wikstrom for the Southern District of New York are prosecuting the case.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that NICHOLAS TRUGLIA was sentenced today to 18 months in prison for his participation in the theft of over $20 million worth of cryptocurrency during a SIM swap attack of a victim (the “Victim”) and was further ordered to pay $20,379,007 in restitution to the Victim within 60 days.  TRUGLIA was sentenced today by U.S. District Judge Alvin K. Hellerstein.

U.S. Attorney Damian Williams said: “Nicholas Truglia and his associates stole a staggering amount of cryptocurrency from the victim through a complex SIM swap scheme.  Nevertheless, today’s sentencing goes to show that no matter how sophisticated the crime is, this Office will continue to successfully prosecute those who choose to defraud others.”

According to Count One of the Indictment, to which TRUGLIA pled guilty, and other statements and submissions made in Court:   

In or around January 2018, TRUGLIA participated in a scheme to conduct a cyber intrusion of online accounts of the Victim in order to steal cryptocurrency.  During the course of the scheme, participants in the scheme (the “Scheme Participants”) gained unauthorized access to online accounts of the Victim through a cyber intrusion technique referred to as “SIM swapping.”  During a SIM swap attack, cyber threat actors gain control of a victim’s mobile phone number by linking that number to a subscriber identity module (“SIM”) card controlled by the threat actors, resulting in the victim’s calls and messages being routed to a device controlled by the threat actors.  The threat actors then use control of the victim’s mobile phone number to obtain unauthorized access to accounts held by the victim that are registered to the mobile phone number.

The Scheme Participants successfully gained unauthorized access to online accounts of the Victim via a SIM swap of the Victim’s mobile phone number (the “SIM Swap”).  The Scheme Participants then used those online accounts to gain access to a cryptocurrency wallet of the Victim containing over $20 million worth of the Victim’s cryptocurrency.  One of the Scheme Participants contacted TRUGLIA and added him to an online call with other Scheme Participants, during which TRUGLIA learned of the SIM Swap and agreed to receive cryptocurrency fraudulently diverted from the Victim’s cryptocurrency wallet into an online account held by TRUGLIA (the “Truglia Account”).  Over the next few hours, TRUGLIA made the Truglia Account available to other Scheme Participants to receive the Victim’s stolen cryptocurrency, where it was converted into Bitcoin.  Scheme Participants transferred much of this Bitcoin to other accounts controlled by them and left a portion of the criminal proceeds for TRUGLIA.  In total, during the SIM Swap, Scheme Participants stole over $20 million worth of the Victim’s cryptocurrency, with the defendant keeping at least approximately $673,000 worth of the stolen funds. 

*                *                *

In addition to his prison term, TRUGLIA, 25, of Ocoee, Florida, was sentenced to three years of supervised release.  In addition to his restitution obligation of $20,379,007, TRUGLIA was further ordered to forfeit $983,010.72.

Mr. Williams praised the outstanding investigative work of Special Agents of the United States Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation’s Las Vegas Field Office.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Timothy V. Capozzi is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, Thomas M. Fattorusso, Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and Amaleka McCall-Brathwaite, Eastern Region Special Agent in Charge of the U.S. Small Business Administration, Office of Inspector General (“SBA-OIG”), announced today the unsealing of a Complaint charging RODNEY SMITH, DENISE GANT, EBONY SIMON, PHYA SCOTT, PRISCILLA JACKSON, SHARON CHARLES, YOLANDA LAWRENCE, YOLANDA RATCLIFF, and ZHANE RATCLIFF with conspiring to commit wire fraud by submitting fraudulent SBA loan applications, as well as Complaints charging BRANDON BOYLE, DELILAH CUMMINGS, VASHAWN FOREMAN, TREVOR GORDON, DIONE HALL, TONI MCCULLOUGH, JAROD OTTLEY, RONETTE SHORT, EDWIN SKEPPLE, and WALTER SUSSWELL individually with wire fraud for submitting fraudulent loans under the SBA’s Economic Injury Disaster Loan (“EIDL”) program and/or its Paycheck Protection Program (“PPP”).  Most of the defendants were arrested this morning. BOYLE, CUMMINGS, FOREMAN, GORDON, HALL, MCCULLOUGH, OTTLEY, SHORT, SKEPPLE, and SUSSWELL will be presented this afternoon before Magistrate Judge Stewart D. Aaron in Manhattan federal court.  SMITH, GANT, CHARLES, LAWRENCE, YOLANDA RATCLIFF, and ZHANE RATCLIFF will be presented this afternoon before Magistrate Judge Sarah Netburn in Manhattan federal court.  SIMON, SCOTT, and JACKSON are not in custody.

U.S. Attorney Damian Williams said: “Scheming to steal Government funds intended to help small businesses weather a national emergency is offensive.  And, as public employees, these folks should have known better.  This Office will continue to prosecute those who use fraud to line their pockets with taxpayer money.”

IRS-CI Special Agent in Charge Thomas M. Fattorusso said: “Of those arrested today are civil servants, NYPD employees, and a Captain for the Department of Corrections.  These are individuals who held positions of trust and had strong, stable jobs while so many people struggled during the pandemic.  The message that these arrests are sending should be a clear one. Nobody is above the law and while the pandemic has receded from the headlines, IRS-CI’s commitment to bringing those who defrauded these programs to justice remains unwavering.”

SBA-OIG Special Agent in Charge Amaleka McCall-Brathwaite said: “It is especially egregious when individuals that hold positions of public trust engage in criminal activity.  OIG is committed to rooting out bad actors and protecting the integrity of SBA programs.  I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”

According to the 11 Complaints unsealed today in Manhattan federal court and publicly available information:[1]

RODNEY SMITH, DENISE GANT, EBONY SIMON, PHYA SCOTT, PRISCILLA JACKSON, SHARON CHARLES, YOLANDA LAWRENCE, YOLANDA RATCLIFF, and ZHANE RATCLIFF, together with others known and unknown, conspired together to obtain fraudulent SBA loans.  GANT, SIMON, SCOTT, YOLANDA RATCLIFF, and ZHANE RATCLIFF were each employees of the New York City Police Department (the “NYPD”); LAWRENCE was an employee of the New York City Human Resources Administration; JACKSON was an employee of the Metropolitan Transit Authority; and CHARLES was an employee of a non-profit organization in New York City.  During the summer of 2020, they each conspired with SMITH and others to submit fraudulent applications for loans to the SBA’s EIDL program.  The fraudulent loan applications submitted in the names of the defendants made similar false claims about gross revenues and number of employees, and many of the applications claimed that the defendants operated hair and nail salons.  Many of the defendants paid kickbacks to SMITH and/or other members of the conspiracy after their fraudulent loans were funded.

BRANDON BOYLE, DELILAH CUMMINGS, VASHAWN FOREMAN, TREVOR GORDON, DIONE HALL, TONI MCCULLOUGH, JAROD OTTLEY, RONETTE SHORT, EDWIN SKEPPLE, and WALTER SUSSWELL each submitted one or more fraudulent applications for loans under the SBA’s PPP and/or EIDL program.  BOYLE and SUSSWELL worked for the NYPD; CUMMINGS, MCCULLOGH, and FOREMAN worked for the New York City Department of Education; SKEPPLE worked for the New York City Department of Corrections; GORDON had recently retired from the New York City Department of Corrections; OTTLEY worked for the New York City Department of Transportation; and SHORT worked for the New York City Administration for Children’s Services.  Frequently, the applications for these defendants, which were submitted at various times in 2020, were on behalf of purported sole proprietorships in the defendants’ own names.  In support of their fraudulent loan applications, the defendants claimed six-figure gross revenues for businesses that actually earned far less, if they existed at all.  Many defendants claimed employees that they did not actually have, and many spent the proceeds of their loans on personal expenses, including in-person gambling at casinos, online gambling, personal stock investments, home furniture and electronics, and luxury clothing items.

Across all of these schemes, the defendants collectively stole more than $1.5 million from the SBA and financial institutions that issued SBA-guaranteed loans and intended or attempted to steal hundreds of thousands of dollars more.

*                *                *

RODNEY SMITH, 54, DENISE GANT, 52, EBONY SIMON, 45, PHYA SCOTT, 51, PRISCILLA JACKSON, 41, YOLANDA LAWRENCE, 48, and ZHANE RATCLIFF, 27, all of Brooklyn, New York, SHARON CHARLES, 56, of Queens, New York, and YOLANDA RATCLIFF, 48, of Inwood, New York, are each charged with conspiracy to commit wire fraud and wire fraud.  Each of those charges carries a maximum penalty of 20 years in prison.  SMITH is also charged with a single count of aggravated identity theft, which carries a mandatory two-year consecutive sentence.  VASHAWN FOREMAN, 40, DIONE HALL, 55, and WALTER SUSSWELL, 28, all of Queens, New York, DELILAH CUMMINGS, 37, TREVOR GORDON, 66, TONI MCCULLOUGH, 39, and RONETTE SHORT, 40, all of Brooklyn, New York, BRANDON BOYLE, 31, of New York, New York, JAROD OTTLEY, 57, of Valley Stream, New York, and EDWIN SKEPPLE, 40, of West Nyack, New York, are each charged with wire fraud, which carries a maximum penalty 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 the judge.

Mr. Williams praised the outstanding work of the Special Agents of the U.S. Attorney’s Office and agents from the IRS-CI and the SBA-OIG.  Mr. Williams also thanked the NYPD’s Internal Affairs Bureau and the New York City Department of Investigation for their assistance in the investigation of these cases.

The cases are being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Kedar S. Bhatia, Rebecca T. Dell, and Derek Wikstrom are in charge of the prosecutions.

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

 

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[1] As the introductory phrase signifies, the Complaints and the descriptions of the Complaints 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 SPYROS PANOS was sentenced to 111 months in prison for health care fraud, wire fraud, and aggravated identity theft.  PANOS pled guilty to the charges on October 30, 2020.  United States District Judge Kenneth M. Karas imposed the sentence today in White Plains federal court.

U.S. Attorney Damian Williams said: “Spyros Panos, a former surgeon who surrendered his license to practice medicine after a prior conviction for health care fraud in this District, abused our healthcare system for his own personal profit again, and he is now facing a return to prison.  The sentence he received appropriately reflects the seriousness of his crime and of recidivism in the eyes of the law.”

According to the Indictment, to which PANOS pled guilty, and other statements and submissions made in Court:

PANOS surrendered his New York State license to practice medicine in 2013 in anticipation of pleading guilty to an indictment charging him with health care fraud.  Thereafter, while out on release in that case, and after surrendering his license, he began perpetrating a scheme to defraud six medical peer review companies by impersonating a licensed orthopedic surgeon practicing in Westchester County (“Doctor-1”).  Among other things, PANOS submitted Doctor-1’s credentials to peer review companies and conducted peer reviews using Doctor-1’s name and credentials.  He stopped engaging in the scheme while he served his prison sentence.  After he was released, he resumed perpetrating the scheme.  During the course of the scheme, PANOS defrauded the peer review companies of $876,389.97. 

According to court documents, in advance of his November 2, 2020, trial, PANOS submitted proposed defense exhibits that included fraudulent emails and records.  While on release pending sentencing, PANOS submitted false and fraudulent documents in support of requests for adjournments of sentencing based on false claims that he tested positive for COVID-19 and then suffered from COVID related pneumonia.  In July 2022, after the Court revoked his bail conditions and ordered him remanded, PANOS was arrested and placed in custody.  

*                *                *

In addition to the prison term, PANOS, 54, of Hopewell Junction, New York, was sentenced to three years of supervised release.

Mr. Williams praised the outstanding investigative work of the U.S. Postal Inspection Service, the Office of the Inspector General of the U.S. Department of Health and Human Services, and the New York Inspector General. 

The prosecution of this case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Margery Feinzig and Lindsey Keenan are charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that CHET STOJANOVICH, a/k/a “Chester J. Stojanovich,” pled guilty today to wire fraud for defrauding more than a dozen victims of more than $2 million through fraudulent misrepresentations that he would provide the victims with specialized cryptocurrency-mining computers (“Miners”) and Miner hosting services that would provide the victims with a lucrative stream of “hash power” convertible into cryptocurrency.  Instead, STOJANOVICH misappropriated his victims’ money and failed to provide them with the Miners and Miner hosting services they had purchased from him.  STOJANOVICH is scheduled to be sentenced on March 2, 2023, before United States District Judge Denise Cote, who presided over today’s guilty plea hearing.

U.S. Attorney Damian Williams said: “Cryptocurrency mining has generated much media attention and public excitement in the past few years, but new forms of money and investment can also generate fresh opportunities for old-fashioned fraud.  Chet Stojanovich has pled guilty to using those time-worn fraud techniques on this new financial frontier as he stole millions of dollars from victims who thought they were investing in cryptocurrency mining.”

According to publicly filed documents in this case:

From at least 2019 until his arrest in April 2022, STOJANOVICH controlled various companies, including Chet Mining Co. LLC (“Chet Mining”).  Starting in or about March 2019, STOJANOVICH engaged in a scheme to defraud people who were seeking to purchase Miners and Miner hosting services through which they expected to obtain “hash power” convertible into cryptocurrency and money.  STOJANOVICH defrauded these victims by falsely telling them that he would purchase, and had purchased, Miners on their behalf and that he would provide them with Miner hosting services and had already obtained such Miner hosting services for them.  

In total, STOJANOVICH fraudulently induced more than a dozen customer-victims to pay a total of more than $2 million to STOJANOVICH and his companies, ostensibly in return for Miners and Miner hosting services.  Despite fraudulent representations to the contrary, STOJANOVICH: (1) failed to provide many of the Miners that he told customers he had acquired; (2) failed to provide the Miner hosting services and cryptocurrency hash power that he represented he would provide; (3) employed deceptive practices to create the illusion that such Miners had been acquired and were being used to provide hash power to those customers; and (4) misappropriated his customers’ funds and spent the funds on unrelated and personal expenditures, including chartered air flights, hotel rooms, limousines, and private parties.

Defrauding at Least 10 Victims in 2019

In the spring and early summer of 2019, STOJANOVICH fraudulently induced at least 10 customers to pay a total of more than $2 million to STOJANOVICH and Chet Mining in return for Miners and Miner hosting services.  Based on these and other misrepresentations, STOJANOVICH issued at least 15 invoices to these 10 victims with instructions to make payment to STOJANOVICH or one of his companies.  As directed by STOJANOVICH, these customers paid STOJANOVICH more than $2 million in bank wires and cryptocurrency transfers.  However, STOJANOVICH failed to provide the Miners and Miner hosting services that he had agreed to provide and for which he had been paid.

Defrauding Three More Victims in 2021

In or about August and September 2021, STOJANOVICH induced at least three additional customer-victims to pay him a total of approximately $179,880 as payment for a total of 127 Miners.  Ultimately, STOJANOVICH provided those customers with only three of the 127 Miners they had paid for and repaid those customers only approximately $61,000 of the $179,880 they had paid, mostly from funds misappropriated from another customer.

The March 2022 Deposition

Several of the victims of the scheme described in the Indictment brought lawsuits against STOJANOVICH in federal court in Manhattan.  In one such lawsuit, Holmes et al. v. Chet Mining, Chet Stojanovich, et ano., Case No. 20 Civ. 4448 (LJL) (S.D.N.Y.), STOJANOVICH was ordered by the court to appear for a deposition on March 4, 2022.  During that deposition, STOJANOVICH testified falsely on a number of subjects.  For example, in response to several questions, STOJANOVICH testified that he did not know the answers without looking in his personal cellphone and falsely testified that his phone was downstairs in his rental car or in storage.  The deposition was thereupon adjourned for a half-hour, and STOJANOVICH was instructed to retrieve his cellphone and return to the deposition.  Instead, STOJANOVICH left the deposition and loitered in the vicinity of his car until after everyone else participating in the deposition had left.  Shortly thereafter, he returned to Canada, where he resided until he was arrested on April 11, 2022, following his attempt to re-enter the United States.

*                *                *

STOJANOVICH, 38, previously of New York, New York, but residing in California since his release on bail in this case, pled guilty to one count of wire fraud, which carries a maximum penalty of 20 years in prison. 

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

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation in the investigation of this case

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, announced earlier today that a federal jury found NEIL COLE, the former Chief Executive Officer of Iconix Brand Group, Inc. (“Iconix”), guilty of participating in a scheme to fraudulently inflate Iconix’s revenue and earnings per share, making false filings with the U.S. Securities and Exchange Commission (“SEC”), and misleading the conduct of audits.  The defendant was found guilty following a four-week retrial before U.S. District Judge Edgardo Ramos.  Sentencing has not yet been scheduled.

U.S. Attorney Damian Williams said: “As a unanimous jury has now found, Neil Cole deceived his company’s investors and auditors in order to make his company appear to be performing better than it was.  Cole tried to hide his conduct behind tricks and lies, but the truth is now clear: Cole cooked the books.  This verdict sends a message that this Office is committed to holding corporate executives accountable when they resort to fraud, no matter how long it takes.  Wall Street should know that we will not be deterred from seeking justice in tough cases.”

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

Iconix, whose shares traded on the NASDAQ, was in the business of acquiring various brands, including clothing and fashion brands, and then licensing those brands to retailers, wholesalers, and suppliers who, in turn, produced and sold clothing and other products bearing the brand names. 

Iconix utilized joint ventures (“JVs”) to profit from its brands in foreign markets.  With respect to these JVs, Iconix transferred ownership of a trademark or brand to the JV while maintaining a 50 percent ownership interest in the JV itself.  The other party involved in the JV purchased a 50 percent interest in the JV from Iconix.  As part of the JV agreements, each JV partner was generally entitled to 50 percent of the JV’s licensing revenue.  When it entered into a JV, Iconix recognized as revenue the buy-in purchase price paid by the JV partner, less Iconix’s cost basis in the trademarks.

Among the most critical financial metrics disclosed in Iconix’s public filings with the SEC were Iconix’s quarterly and annual revenue and non-GAAP diluted earnings per share (“EPS”).  Iconix executives, including COLE, publicly identified revenue and EPS as the principal metrics demonstrating Iconix’s growth.  They also touted Iconix’s consistent record of revenue and earnings growth and of meeting or exceeding Wall Street analyst consensus with respect to these metrics. 

The Accounting Fraud Scheme

COLE engaged in a scheme to falsely inflate Iconix’s reported revenue and EPS by orchestrating a series of “round trip” transactions in which COLE and a senior Iconix executive induced a JV partner, a Hong Kong-based international apparel licensing company (“Company-1”), to pay artificially inflated buy-in purchase prices for JV interests, with the understanding that Iconix would then reimburse Company-1 for the overpayments.  COLE executed the scheme for the purpose of enabling Iconix to report fraudulently inflated revenue and EPS figures based on the inflated buy-in purchase prices it obtained from Company-1. 

COLE arranged for Iconix to enter into at least two JVs with Company-1 that included inflated buy-in purchase prices from Company-1: (1) an amendment to a preexisting Southeast Asia joint venture, which closed on or about June 30, 2014 (“SEA-2”), and (2) a second amendment to the Southeast Asia joint venture, which closed on or about September 17, 2014 (“SEA-3”) (collectively, the “SEA JVs”).  SEA-2 and SEA-3 involved a fraudulent “round trip” transaction, lacking in economic substance, in which Company-1 paid an artificially inflated buy-in purchase price for its interest in the JV, in exchange for COLE’s agreement that Iconix would give back the inflated portion of the purchase price to Company-1.  COLE and a senior Iconix executive hid from Iconix’s lawyers and outside auditors that COLE had reached an understanding with Company-1 to artificially increase the consideration Company-1 paid Iconix in exchange for COLE’s agreement to round-trip the overpayment back to Company-1.

Through the scheme, COLE caused Iconix to report fraudulently inflated revenue and EPS figures to the investing public.  COLE did so, in part, to ensure that the reported figures met analyst consensus and to fraudulently convey the impression to the investing public that Iconix was growing quarter after quarter, as COLE had touted to the investing public. 

*                *                * 

COLE, 65, of New York, New York, was convicted of one count of securities fraud, six counts of making false filings with the SEC, and one count of improperly influencing the conduct of audits.  Each count carries a maximum prison term of 20 years.   

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

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation and the SEC Office of the Inspector General.  Mr. Williams also thanked the SEC Division of Enforcement, which previously brought a separate civil action.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Jared Lenow, Justin V. Rodriguez, and Andrew Thomas 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 III of the Americans with Disabilities Act (“ADA”) with New York University (“NYU” or the “University”) to increase the accessibility of NYU’s student housing facilities for individuals with disabilities.  The agreement covers all of NYU’s student housing facilities in the New York metropolitan area.

Title III of the ADA requires that privately owned places of public accommodation, including colleges and universities, remove physical barriers to access to existing facilities where it is readily achievable to do so, comply with accessibility standards for new construction and alterations, and modify policies and practices where necessary to ensure full and equal enjoyment of services and facilities.

The out-of-court agreement resolves a compliance review during which the U.S. Attorney’s Office identified various aspects of NYU’s student housing facilities that were not in compliance with Title III of the ADA and the ADA Standards for Accessible Design, including violations of the new construction provisions of the ADA and barriers to access to existing facilities. 

NYU’s New York-area campuses include student housing facilities in Manhattan, in Brooklyn, and on Long Island for the University’s undergraduate, graduate, and professional schools.  The agreement covers a total of more than 4,000 student housing units, which are located within 22 NYU-owned student housing facilities and 10 facilities leased in full or in part by the University.

NYU has agreed to prepare a plan under which it will survey and make alterations to its student housing facilities within five years, update its student housing emergency preparedness plans, and improve the accessibility information related to student housing on its website.

U.S. Attorney Damian Williams said: “The ADA requires colleges and universities to ensure that no individual is discriminated against on the basis of disability in the full and equal enjoyment of their services and facilities.  We are pleased that NYU has committed to improving accessibility within the University’s student housing facilities and hope that other colleges and universities will follow suit and increase access to their facilities for individuals with disabilities.”

Under the agreement, NYU will:

• Conduct architectural surveys and seek public comment from the University community and then submit an accessibility plan for review to this Office, outlining how the University will comply with the agreement.
• Ensure that an appropriate number of accessible student housing units (and bathrooms serving those units) are available to students with disabilities and are dispersed throughout the University’s student housing facilities which serve NYU’s (i) general student population, (ii) graduate student population, (iii) Grossman School of Medicine, (iv) Long Island School of Medicine, (v) law school, and (vi) Brooklyn campus.
• Ensure that each student housing facility in which accessible housing units required by the agreement are located has accessible features, including accessible entrances, approaches, bathrooms, and signage; and that an appropriate number of additional housing facilities have an accessible entrance, first floor common area, and bathroom.
• Update its student housing emergency evacuation, sheltering, and shelter-in-place plans for individuals with disabilities after seeking public comment from the University community.
• Update its website to identify accessible entrances, routes, and transportation options for its student housing facilities; identify newly added or renovated accessible features of the student housing facilities; and provide information to assist students and prospective students with disabilities in securing and utilizing accessible housing and housing accommodations at NYU.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that TATIANA DANIEL pled guilty today to conspiracy to commit wire fraud.  DANIEL participated in a scheme to commit COVID-19 pandemic fraud by (1) defrauding New York City’s COVID-19 Hotel Room Isolation Program; (2) selling fabricated COVID-19 test results, both positive and negative; (3) committing unemployment benefits fraud; and (4) obtaining fraudulent COVID-19 loans from both the United States Small Business Administration’s Paycheck Protection Program (“PPP”) and Economic Injury Disaster Loan (“EIDL”) program.  DANIEL pled guilty before United States Magistrate Judge Ona T. Wang.  DANIEL’s case is assigned to United States District Judge Lewis A. Kaplan.

U.S. Attorney Damian Williams said: “As she admitted today, Tatiana Daniel repeatedly took advantage of resources offered to aid people and businesses in crisis.  Daniel’s misconduct included selling fabricated COVID-19 test results, which likely put members of the public at risk of contracting the deadly virus from one of Daniel’s customers.  Daniel now faces possible prison time for her illegal and dangerous actions.”

According to the allegations contained in the Superseding Information, court filings, and statements made during plea proceedings:

From March 2020 through September 2021, DANIEL conspired to commit COVID-19 pandemic fraud through a variety of different means.

First, DANIEL defrauded the COVID-19 Hotel Room Isolation Program (the “Program”).  In response to the COVID-19 pandemic, New York City created the Program.  Funded by New York City and the Federal Emergency Management Agency, the Program provided free hotel rooms for qualifying individuals throughout New York City.  The Program was open to (a) healthcare workers who needed to isolate because of exposure to COVID-19; (b) patients who had tested positive for COVID-19; (c) individuals who believed, based on their symptoms, that they were infected with COVID-19; and (d) individuals who lived with someone who had COVID-19.  As stated on the City’s website describing the Program, such individuals “may qualify to self-isolate in a hotel, free of charge, for up to 14 days if you do not have a safe place to self-isolate.”  Those who wished to book a hotel room through the Program could either call a phone number or use an online hotel booking platform. 

DANIEL defrauded the Program in at least two respects.  First, she secured free Program hotel rooms for herself by falsely claiming to be a healthcare worker — specifically, a respiratory therapist.  Second, she sold at least approximately 144 nights’ worth of fraudulently obtained hotel rooms to customers who were ineligible for the Program.  In connection with this scheme, DANIEL used Facebook to advertise the sale of Program hotel rooms, to communicate directly with potential purchasers of Program hotel rooms, and to communicate with a co-defendant who worked at a call center that handled phone calls and certain reservations for the Program for several months in 2020.  For instance, at one point, DANIEL wrote to her co-defendant, “We gotta relocate that bitch they keep asking for employee ID.”

Second, DANIEL operated a fraudulent document mill, through which DANIEL sold, among other things, fabricated COVID-19 test results, both positive and negative, in July and August 2021.  These fabricated test results included the names of purported medical personnel, and contained misspellings (e.g., “postive”).

Third, between May 2021 and September 2021, DANIEL submitted fraudulent applications for COVID-19 loans, through both the PPP and EIDL programs, resulting in the disbursement of thousands of dollars in pandemic loan funding to DANIEL and a co-conspirator.

Fourth, between March 2020 and September 2021, DANIEL conspired to fraudulently obtain more than approximately $97,000 in unemployment benefits in New York State for both herself and others.  She did so by making misrepresentations about herself, and by stealing the identities of more than 10 individuals and collecting unemployment benefits issued for the benefit of those individuals.  In addition, DANIEL filed unsuccessful unemployment benefits applications in other states.

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DANIEL, 28, of Brooklyn, New York, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison.  Under the terms of her plea agreement, DANIEL has agreed to forfeit $109,655 and to pay restitution of $401,206. 

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  DANIEL is scheduled to be sentenced by Judge Kaplan on March 29, 2023, at 2:30 p.m.

DANIEL’s three co-defendants are currently scheduled to proceed to trial before Judge Kaplan on January 17, 2023.

Mr. Williams praised the outstanding efforts of agents, investigators, and analysts from the New York City Department of Investigation, the New York Regional Office of the U.S. Department of Labor – Office of Inspector General (“DOL-OIG”), and the U.S. Attorney’s Office for the Southern District of New York.  Mr. Williams also thanked the New York/New Jersey High Intensity Drug Trafficking Area Intelligence Analysts for their support and assistance in this investigation.  He also expressed gratitude to the New York City Police Department, the New York State Department of Labor, and the DOL-OIG Atlanta Regional Office for their assistance.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that SAADAH MASOUD pled guilty today to one count of participating in a conspiracy to commit hate crime acts in connection with MASOUD’s repeated physical attacks of Jewish victims in New York City between 2021 and 2022.  MASOUD was first arrested in this case on June 14, 2022.  MASOUD pled guilty before U.S. District Judge Denise L. Cote.

U.S. Attorney Damian Williams said: “Saadah Masoud deliberately targeted three victims because of their religion and nation of origin.  There is no place in this country for this offensive and hateful conduct.  This Office is dedicated to seeking justice for victims of hate crimes and will aggressively prosecute those who spread hate by criminal means.”

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

From at least in or about May 2021 through at least in or about April 2022, MASOUD and others conspired to commit hate crime acts in the Southern District of New York and elsewhere.  In furtherance of the conspiracy, MASOUD assaulted at least three victims based upon the victims’ actual and perceived religion and national origin.  Specifically, as part of his guilty plea, the defendant admitted to committing the following acts of violence that were motivated by the victims’ Jewish or Israeli identity or perceived identity:

• On or about April 20, 2022, in Manhattan, MASOUD assaulted a victim who was wearing an Israeli flag.
• On or about June 2, 2021, in Brooklyn, MASOUD and a co-conspirator assaulted a victim who was wearing clothing traditionally associated with the Jewish religion, including a yarmulke, while the victim was sitting outside the victim’s own home.
• On or about May 20, 2021, in Manhattan, MASOUD assaulted a victim who was wearing a Star of David necklace.

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MASOUD, 29, of Staten Island, New York, pled guilty to one count of participating in a conspiracy to commit hate crime acts, which carries a maximum sentence of five years in prison.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  MASOUD is scheduled to be sentenced on March 3, 2023, by U.S. District Judge Denise Cote.

Mr. Williams praised the outstanding investigative work of the New York City Police Department’s Hate Crime Task Force and the Special Agents of the United States Attorney’s Office for the Southern District of New York. 

The prosecution of this case is being handled by the Office’s Civil Rights Unit in the Criminal Division.  Assistant U.S. Attorneys Lindsey Keenan and Mitzi Steiner are 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, pled guilty to securities fraud.  VELISSARIS made false and misleading statements to investors and others concerning Infinity Q’s process for valuing certain over-the-counter (“OTC”) derivative positions that made up a substantial portion of the holdings of the mutual and hedge funds and also fraudulently mismarked those securities in ways that did not reflect their fair value.  VELISSARIS committed the mismarking scheme in order to inflate the value of the investment funds as reported to investors, to attract and retain capital, and to increase his own compensation.  In order to avoid detection of the scheme, VELISSARIS provided both Infinity Q’s auditor and the Securities and Exchange Commission (“SEC”) with falsified or altered documents, including providing the auditor with altered term sheets that served to provide fabricated support for the fraudulently inflated values.  Today’s plea was taken by U.S. District Court Judge Denise Cote.

U.S. Attorney Damian Williams said: “Today’s guilty plea demonstrates this Office’s resolve to pursue even the most sophisticated of financial crimes.  James Velissaris thought he could get away with mismarking some of the most esoteric derivative products on Wall Street by manipulating sophisticated financial models and computer code.  This case has exposed that fraud and shown that Velissaris lied to his investors in order to line his own pockets with inflated fees.  Velissaris will now be held accountable for his actions.”

According to the allegations contained in the Indictment, other publicly available information, 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’ 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’ 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’ 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’ 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’ valuations in BVAL.

Furthermore, beginning in May 2020, the 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.

*                *                *

VELISSARIS, 38, of Atlanta, Georgia, pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison. 

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only.  Sentencing has been scheduled for March 3, 2023, in front of Judge Cote.

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. Attorneys Margaret Graham, Daniel Loss, and Daniel Tracer are in charge of the prosecution.   

Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict yesterday against DARNELL KIDD a/k/a “Black,” a/k/a “Donney,” a/k/a “Donney Black,” on one count of an indictment charging him with the 2011 murder of Jonathan Johnson, 21, in White Plains, New York.  U.S. District Judge Nelson S. Román presided over the eight-day trial.

U.S. Attorney Damian Williams said: “Darnell Kidd shot and killed Jonathan Johnson during a robbery.  He now stands guilty of that murder.  We will continue to work with our law enforcement partners to vigorously investigate gun violence and pursue justice for the victims of violent crimes.”

According to the allegations in the Indictment and the evidence at trial:

On or about March 18, 2011, DARNELL KIDD murdered Jonathan Johnson by shooting him during the course of an armed robbery for marijuana in White Plains, New York.  KIDD’s co-defendant MARCUS CHAMBERS arranged by phone to purchase the marijuana from Johnson.  CHAMBERS and KIDD met with Johnson to rob him of marijuana, and during the robbery, KIDD shot and kill Johnson.

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KIDD, 31, of Yonkers, New York, was convicted of one count of murder through the use of a firearm, which carries a mandatory minimum prison term of five years and a maximum prison term of life.  

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.

CHAMBERS previously pled guilty for his role in the murder.  CHAMBERS was sentenced to 20 years in prison.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation’s Westchester County 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, Rockland County District Attorney’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 White Plains Police Department and the Westchester County District Attorney’s Office for their 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, Steven J. Kochevar, and Hagan Scotten and Paralegal Specialist Shannon Becker are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that defendants LOUIS GRASSO, RICHARD BANCA, and RENE ALLARD were sentenced to 50 months in prison, 30 months in prison, and 27 months in prison, respectively, for their roles in distributing adulterated and misbranded drugs in service of a racehorse doping scheme.  Each defendant previously pled guilty to felony drug misbranding and adulteration charges.  U.S. District Judge P. Kevin Castel imposed the sentences in Manhattan federal court.

U.S. Attorney Damian Williams said: “Illegally doping racehorses is animal abuse in the service of greed.  Such corruption threatens the health of racehorses and undermines the integrity of the sport.  Today, three defendants have been sentenced for their roles in perpetuating, and profiting from, the mistreatment of animals.  The sentences each defendant received appropriately reflects the seriousness of these offenses in the eyes of the law.”

According to the statements in the Superseding Indictment, charging instruments, other filings in this case, and statements during court proceedings:

The charges in the Grasso case arise from an investigation of widespread schemes by racehorse trainers, veterinarians, distributors of performance enhancing drugs (PEDs), and others to manufacture, distribute, and receive adulterated and misbranded PEDs and to secretly administer those PEDs to racehorses competing at all levels of professional horseracing.  By evading PED prohibitions and deceiving regulators and horse racing officials, participants in these schemes sought to improve race performance and obtain prize money from racetracks throughout the United States, all to the detriment and risk of the health and well-being of the racehorses.  GRASSO, a veterinarian, not only accepted payment in exchange for prescriptions for powerful and medically unnecessary PEDs, but he also created, distributed, and administered custom-made PEDs that were all misbranded and adulterated substances designed solely to improve racehorse performance.  Through this fraudulent scheme, GRASSO helped corrupt trainers collect over $47 million in ill-gotten purse winnings.  As standardbred racehorse trainers, BANCA and ALLARD purchased and administered adulterated and misbranded drugs to racehorses under their control, and as a result of their crimes, their horses earned approximately $16 million and $25 million in purse winnings, respectively.  BANCA and ALLARD stood to profit from the success of racehorses under their control by earning a share of their horses’ winnings and by improving their horses’ racing records, thereby yielding higher trainer fees and increasing the number of racehorses under their control.

*                *                *

In addition to their prison terms, LOUIS GRASSO, 65, of Pine Bush, New York, was sentenced to two years’ supervised release.  RICHARD BANCA, 47, of Middletown, New York, and RENE ALLARD, 35, of Canada, were each sentenced to one year of supervised release. LOUIS GRASSO was further ordered to pay restitution in the amount of $47,656,576.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation New York Office’s Eurasian Organized Crime Task Force and its support of the Bureau’s Integrity in Sports and Gaming Initiative.  Mr. Williams also thanked the Food and Drug Administration for their assistance.

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Sarah Mortazavi and Anden Chow are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Keechant L. Sewell, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging LAMAR WILLIAMS with racketeering conspiracy, murder in aid of racketeering, and murder with a firearm.  The charges relate to WILLIAMS’ murder of Rasheed Barton on August 11, 2013, in the Bronx, New York. 

WILLIAMS was arrested today and presented before Magistrate Judge Jennifer E. Willis.  The case is assigned to U.S. District Judge Naomi Reice Buchwald.

U.S. Attorney Damian Williams said: “As alleged, the defendant shot and murdered Rasheed Barton as part of the defendant’s gang membership and crack cocaine dealing.  We will continue to work with our law enforcement partners to investigate and prosecute those who commit these horrific acts of violence.”

NYPD Commissioner Keechant L. Sewell said: “Today’s charges highlight what the NYPD and our partners in the U.S. Attorney’s Office for the Southern District can accomplish when we focus on the relatively few people responsible for much of the crime and violence in New York City.  Together, we remain committed to identifying, arresting, and prosecuting those who partake in any form of gang activity, from drug distribution to murder.  Make no mistake: Severe consequences await anyone who dares to jeopardize the safety of our neighborhoods.”

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

From at least 2013 to 2022, LAMAR WILLIAMS, a/k/a “Black,” a/k/a “Little Black,” a/k/a “Chase Money Marz,” was a member of the Mac Ballers, which is a set of the national Bloods gang.  The Mac Ballers operated primarily in the northeast United States, including in the Bronx, and in jails and prisons of New York City and the State of New York.

Members of the Mac Ballers committed acts of violence, including murder, to protect and expand the gang’s territory, to retaliate against rival gang members, to keep victims and potential victims in fear of the gang, and to otherwise promote the gang’s reputation.  They also distributed controlled substances in order to enrich themselves.  Mac Ballers members promoted and celebrated the gang’s criminal conduct — including acts of violence, drug distribution, and firearm usage — on social media.

On August 11, 2013, WILLIAMS shot and killed Rasheed Barton in the vicinity of East 174th Street and Bronx River Avenue in the Bronx, New York.  WILLIAMS murdered Barton in connection with WILLIAMS’ membership in the Mac Ballers gang and his conspiring to sell crack cocaine. 

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WILLIAMS, 31, of the Bronx, New York, is charged with one count of racketeering conspiracy, which carries a statutory maximum sentence of life in prison; one count of murder in aid of racketeering, which carries a statutory maximum sentence of death or life in prison and mandatory minimum sentence of life in prison; and one count of murder through use of a firearm, which carries a statutory maximum sentence of death or life in prison and a mandatory minimum sentence of five years in prison.

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

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

This case is being handled by the Office’s Violent & Organized Crime Unit.  Assistant U.S. Attorneys Mathew Andrews and Jim Ligtenberg are in charge of the prosecution.

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment constitutes 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, Michael J. Driscoll, Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Frank A. Tarentino III, the Special Agent-in-Charge of the New York Field Office of the Drug Enforcement Administration (“DEA”), Glenn Scott, Commissioner of the Mount Vernon Police Department (“MVPD”), and Terrance Raynor, Acting Commissioner of the Westchester County Department of Public Safety (“WCDPS”), announced today the unsealing of a Superseding Indictment and a Complaint charging 10 defendants with narcotics distribution and firearm offenses in and around Westchester County, New York.  The defendants, ESTEBAN MORALES, TRAVIS SWAIN, BOBBY BROWN, ISHMAEL MORALES, JONATHAN LONG, SR., DAYSHAWN RIVERS, SHANNA LEWIS, DWAYNE HUDSON, SHONTEEA WALKER, and MICHAEL VEGA will be presented in federal court today before United States Magistrate Judge Paul E. Davison.

U.S. Attorney Damian Williams said: “As alleged, these defendants trafficked crack cocaine, an addicting and potentially deadly product that devastates communities throughout the Southern District of New York, and used firearms to protect their operation.  Thanks to the FBI, the DEA, the Mount Vernon Police Department, and the Westchester County Department of Public Safety, the defendants are in custody and facing federal criminal charges.”

FBI Assistant Director Michael J. Driscoll said: "These small groups of drug dealers are contributing to the spike in violent crime across our communities.  The work being done by the FBI Westchester County Safe Streets Task Force and our law enforcement partners is vital to stopping the vicious cycle of shootings, robberies, and illicit drug sales.  We are determined to bring these criminals to justice and make Mount Vernon a safer place." 

DEA Special Agent-in Charge Frank A Tarentino III said: “This investigation has shut down a violent drug trafficking organization based in Mount Vernon, New York.  Drugs and guns cause irreparable damage in our communities, and law enforcement is committed to keeping the public safe and healthy.”   

MVPD Commissioner Glenn Scott said: “The Mount Vernon Police Department is dedicated to solving violent crime and removing guns and drugs from our city streets.  This operation is an example of what we can accomplish when we utilize all of our law enforcement partners.  We thank our partner agencies in this operation, FBI Westchester Safe Streets Task Force, the U.S. Drug Enforcement Agency, U.S. Probation, and the Westchester County Police Department, and we look forward to continuing to work together to make Mount Vernon safer.”

WCDPS Acting Commissioner Terrance Raynor said: “Joint investigations with federal and local partners are one of the most effective tools we can use to take illegal weapons and narcotics off our streets.  I applaud the officers and agents involved in this case for the difficult and dangerous work that led to these indictments and arrests.  By sharing resources and working collaboratively, we can make Mount Vernon and Westchester safer for all.”

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

From at least January 2022 until November 2022, ESTEBAN MORALES, TRAVIS SWAIN, BOBBY BROWN, ISHMAEL MORALES, JONATHAN LONG, SR., DAYSHAWN RIVERS, SHANNA LEWIS, DWAYNE HUDSON, and SHONTEEA WALKER conspired to distribute over 280 grams of crack cocaine.  In or about November 2022, MICHAEL VEGA possessed with intent to distribute over 1,500 grams of crack cocaine.  In addition, on occasions between March 2022 and June 2022, ESTEBAN MORALES, BOBBY BROWN, ISHMAEL MORALES, and DAYSHAWN RIVERS each possessed a firearm in furtherance of the narcotics conspiracy. 

*                *                *

A chart containing the names and ages of the defendants who were charged today, the charges, and the minimum and maximum penalties they face is attached.

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

Mr. Williams praised the outstanding investigative work of the FBI Westchester County Safe Streets Task Force, the MVPD, the DEA, and the WCDPS.  The Westchester County Safe Streets Task Force comprises Special Agents and Task Force Officers from the FBI, U.S. Probation, New York State Police, New York State Department of Corrections and Community Supervision, Westchester County DPS, Westchester County DAs Office, Putnam County Sheriff’s Office, Rockland County DA’s Office, New York City PD, Yonkers PD, Mount Vernon PD, Peekskill PD, Greenburgh PD, New Rochelle PD, White Plains PD, Clarkstown PD, and Ramapo PD. 

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Kaiya Arroyo, Qais Ghafary, and Stephanie Simon are in charge of the prosecution.

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

 

Defendant

Age

Charges

Minimum and Maximum Penalties

 

ESTEBAN MORALES

 

22

 

Conspiracy to Distribute and Possess with Intent to Distribute 280 Grams or More of Cocaine Base and Possession of a Firearm in Furtherance of a Controlled Substance Offense

 

Life in prison; mandatory minimum term of five years in prison (to run consecutively to any other prison term imposed); five years supervised release; $250,000 or twice the gross pecuniary gain derived from the offense, or twice the gross pecuniary loss; $100 special assessment

 

 

ISHMAEL MORALES

 

22

 

Conspiracy to Distribute and Possess with Intent to Distribute 280 Grams or More of Cocaine Base; Unlawful Possession of a Firearm; and Possession of a Firearm in Furtherance of a Controlled Substance Offense

 

Life in prison; mandatory minimum term of five years in prison (to run consecutively to any other prison term imposed); five years supervised release; $250,000 or twice the gross pecuniary gain derived from the offense, or twice the gross pecuniary loss; $100 special assessment

 

 

TRAVIS SWAIN

 

29

 

Conspiracy to Distribute and Possess with Intent to Distribute 280 Grams or More of Cocaine Base

 

Life in prison; mandatory minimum term of 10 years in prison; five years supervised release; $10,000,000 fine; $100 special assessment

 

 

BOBBY BROWN

 

45

 

Conspiracy to Distribute and Possess with Intent to Distribute 280 Grams or More of Cocaine Base and Possession of a Firearm in Furtherance of a Controlled Substance Offense

 

Life in prison; mandatory minimum term of five years in prison (to run consecutively to any other prison term imposed); five years supervised release; $250,000 or twice the gross pecuniary gain derived from the offense, or twice the gross pecuniary loss; $100 special assessment

 

 

JONATHAN LONG, SR.

 

53

 

Conspiracy to Distribute and Possess with Intent to Distribute 280 Grams or More of Cocaine Base

 

Life in prison; mandatory minimum term of 10 years in prison; five years supervised release; $10,000,000 fine; $100 special assessment

 

 

DAYSHAWN RVERS

 

32

 

Conspiracy to Distribute and Possess with Intent to Distribute 280 Grams or More of Cocaine Base and Possession of a Firearm in Furtherance of a Controlled Substance Offense

 

Life in prison; mandatory minimum term of five years in prison (to run consecutively to any other prison term imposed); five years supervised release; $250,000 or twice the gross pecuniary gain derived from the offense, or twice the gross pecuniary loss; $100 special assessment

 

 

SHANNA LEWIS

 

31

 

Conspiracy to Distribute and Possess with Intent to Distribute 280 Grams or More of Cocaine Base

 

Life in prison; mandatory minimum term of 10 years in prison; five years supervised release; $10,000,000 fine; $100 special assessment

 

 

DWAYNE HUDSON

 

38

 

Conspiracy to Distribute and Possess with Intent to Distribute 280 Grams or More of Cocaine Base and Possession of a Firearm in Furtherance of a Controlled Substance Offense

 

Life in prison; mandatory minimum term of five years in prison (to run consecutively to any other prison term imposed); five years supervised release; $250,000 or twice the gross pecuniary gain derived from the offense, or twice the gross pecuniary loss; $100 special assessment

 

 

SHONTEEA WALKER

 

22

 

Conspiracy to Distribute and Possess with Intent to Distribute 280 Grams or More of Cocaine Base

 

 

Life in prison; mandatory minimum term of 10 years in prison; five years supervised release; $10,000,000 fine; $100 special assessment

 

MICHAEL VEGA

 

36

 

Conspiracy to Distribute and Possess with Intent to Distribute 280 Grams or More of Cocaine Base

 

Life in prison; mandatory minimum term of 10 years in prison; five years supervised release; $10,000,000 fine; $100 special assessment

 

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment and Complaint constitutes 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, announced today that JONATHAN WEISS, a/k/a “Ian_Jameson,” was sentenced to 25 years in prison by United States District Judge Philip M. Halpern for his enticement of seven minors to engage in sexual activity.  The sentencing today followed WEISS’s guilty plea on December 9, 2021.

U.S. Attorney Damian Williams said: “Weiss’s crimes are the nightmare of every parent.  Weiss created a false online identity, portraying himself as a young teen, and used this false identity to exploit minors for his own sexual gratification.  As today’s sentencing underscores, we will continue to use every tool available to law enforcement to prosecute and punish those who seek to hide behind the wall of the Internet to sexually exploit children.”

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

In September 2019, WEISS communicated online via Snapchat with a 13-year-old minor (“Victim-1”) and directed Victim-1 to take and send sexually explicit photographs of Victim-1 to WEISS.  WEISS utilized the Snapchat screen name “Ian_Jameson” and posed as a minor.  WEISS told Victim-1 that if she did not send more nude pictures to WEISS, he would send the pictures she had already sent to others.  In response to the threats to send her pictures to others, Victim-1 “blocked” “Ian_Jameson” on Snapchat.  Shortly thereafter, people began telling her that they had received her nude images.

 WEISS engaged in the same type of activity with six other minors: a 13-year-old minor (“Victim-2”) in August 2019, a 13-year-old minor (“Victim-3”) in May 2020, a 14-year-old minor (“Victim-4”) in June 2018, a 16-year-old minor (“Victim-5”) in February 2020, a 13-year-old minor in February 2019 (“Victim-6”), and a 14-year-old minor (“Victim-7”) in June 2019. 

At the sentencing today, Judge Halpern underscored that there was “no excuse” for the defendant’s “despicable conduct.”

*                *                *

In addition to the prison term, Judge Halpern sentenced WEISS, 32, of Middletown, New York, to 25 years of supervised release.

Mr. Williams praised the efforts of Homeland Security Investigations, the Putnam County Sheriff’s Office, the Clay County Sheriff’s Office in Orange Park, Florida, the Orange County Child Advocacy Center, and the Longview Texas Police Department in Longview, Texas, 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, and Frank A. Tarentino III, the Special Agent-in-Charge of the New York Field Office of the Drug Enforcement Administration (“DEA”), announced that JUSTO VARGAS was charged for possessing nearly 20 kilograms of fentanyl with the intent to distribute it, in concert with others.  VARGAS was arrested on Sunday and presented yesterday before Magistrate Judge Paul E. Davison. 

U.S. Attorney Damian Williams said: “As alleged, the defendant conspired to distribute fentanyl, one of the deadliest drugs on Earth.  Thanks to our law enforcement partners, nearly 20 kilograms of this poison have been taken off the street.”

As alleged in the Complaint:[1]

On or about November 13, 2022, VARGAS met with a confidential source to sell that confidential source approximately 19 kilograms of fentanyl.  VARGAS arrived at the Cross County Center parking lot in Yonkers, New York, and parked adjacent to the confidential source’s vehicle.  The parties exited their respective vehicles and stood next to the open trunk of VARGAS’s vehicle, which contained what appeared to the confidential source to be 19 kilograms of fentanyl.  Agents and officers then intervened and arrested VARGAS and seized the fentanyl, which is pictured below:

 

*                *                *

VARGAS, 31, of New York, New York, is charged with one count of possession with intent to distribute 400 grams and more of fentanyl and one count of conspiring to do the same.  Those offenses carry mandatory minimum sentences of 10 years in prison and maximum potential sentences of life in prison.  

The mandatory 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 work of the DEA’s New York Drug Enforcement Task Force comprising agents and officers of the DEA,  New York City Police Department, and New York State Police.  Mr. Williams also thanked the Office of the Special Narcotics Prosecutor at the Manhattan District Attorney’s Office and the Yonkers Police Department for their assistance in this case.

The case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorney Ben Arad is in charge of the prosecution.

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth herein, constitutes 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, Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the indictment of MICHAEL BROWN and ANDREW LLOYD for wire fraud charges in connection with a nationwide online marketing scheme to post fake advertisements for rental properties across the United States on a classified advertisements website.  The purpose of the scheme was to fraudulently induce potential customers to enter their credit card information on credit monitoring websites owned by BROWN and obtain a credit report under false pretenses in order to automatically enroll the customers in a monthly membership for credit monitoring services.  BROWN was arrested at Newark Liberty International Airport in New Jersey on October 27, 2022, after he arrived on a flight from Mexico and was detained pending trial.  LLOYD was arrested earlier today in Pennsylvania and will be presented in the United States District Court for the Western District of Pennsylvania later today.  The case is assigned to United States District Judge Katherine Polk Failla.

U.S. Attorney Damian Williams said: “Online scams have spiraled out of control, to the point where nearly every online interaction must be approached with weariness of its validity.  Nevertheless, as alleged, Michael Brown and Andrew Lloyd gave their victims no opportunity to suspect a scam as they enrolled thousands of victims to a nearly $30 a month fee using seemingly reputable websites and deceptive practices.  I commend the efforts of this Office and our law enforcement partners in prosecuting these scams that have become a near-daily frustration, and today’s arrests show that we will continue to zealously investigate consumer fraud.”

FBI Assistant Director-in-Charge Michael J. Driscoll said: “As alleged, the defendants operated a complex scheme, using phony advertisements to trick victims into unknowingly enrolling in a monthly credit monitoring service.  The FBI remains steadfast in our efforts to investigate and eliminate online scams and hold the fraudsters accountable in the criminal justice system.”

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

MICHAEL BROWN owned and operated Credit Bureau Center, LLC, formerly known as MyScore LLC (“MyScore”), a Delaware limited liability company which provided credit reports and credit monitoring services via the websites eFreeScore.com, FreeCreditNation.com, and CreditUpdates.com, among other sites (collectively, the “MyScore Websites”).  ANDREW LLOYD was an affiliate that worked with a co-conspirator (“CC-1”), the owner of an affiliate marketing company, to drive potential customers to the MyScore Websites.  In affiliate marketing, a seller of goods or services such as MyScore uses other firms or individuals known as “affiliates” to market the seller’s goods or services by attracting customers to the seller’s websites.  BROWN contracted with CC-1 in order to increase customer traffic to the MyScore Websites.

From at least in or about 2014 through at least on or about January 10, 2017, BROWN, LLOYD, and CC-1 engaged in a nationwide online marketing scheme to post fake advertisements for rental properties across the United States on a classified advertisements website (the “Advertising Website”).  The purpose of the scheme was to fraudulently induce prospective renters to enter their credit card information on the MyScore Websites and obtain a credit report under false pretenses in order to automatically enroll them in a monthly membership for credit monitoring services.

The advertisements used in the scheme typically contained photos of the rental properties and showcased properties in desirable locations for below-market prices in order to attract interest.  The advertisements were posted for rental properties in metropolitan areas across the United States, including, among other locations, New York City, Miami, Atlanta, Houston, Los Angeles, and San Diego.  In actuality, the rental properties did not exist as advertised or were not actually available for rent through the posts on the Advertising Website.  The advertisements also did not disclose the specific address of the rental properties but instead contained a contact email address inviting prospective renters to contact the property owner if they were interested in the rental property.

When prospective renters inquired about the rental properties posted on the Advertising Website by responding to the advertisements, they received a form email purporting to be from the property owner requiring the prospective renter to obtain a copy of their credit report, and referring the prospective renter to one of the MyScore Websites to obtain a credit report, before scheduling a tour of the property.  The form email typically described purported features of the advertised property and falsely informed the prospective renter, in substance and in part, that he or she was the second person to respond to the advertisement, that the first responder no longer needed the property, and that the property owner was ready to lease the property to the prospective renter with flexible terms and had just completed all new renovations.

Once a prospective renter clicked on the hyperlink in the form email from the purported property owner to obtain a copy of their credit report, the prospective renter was directed to the “landing page” of one of the MyScore Websites.  The landing page of the MyScore Websites typically featured a large banner that stated, in substance and in part, “Get Your Free Credit Score and Report” with significantly smaller text referencing an unspecified “7-day trial” and a “Monthly membership of $29.94 automatically charged after trial.”  In order to get the credit report, prospective renters were required to enter identifying information and credit card information through a series of webpages.  Once the prospective renter entered credit card information, the prospective renter was charged $1.00 and was automatically enrolled in a monthly membership for credit monitoring services with recurring charges of typically $29.94 per month until the membership was cancelled.

When prospective renters responded to the purported property owner asking to schedule a tour of the advertised property now that they had a copy of their credit report, there was typically no response, as the property was not actually available for rent as advertised and the scheme had succeeded in fraudulently generating a monthly membership subscription for MyScore.  Many prospective renters who obtained a credit report from the MyScore Websites as a result of the scheme did not realize that they had been automatically enrolled in MyScore’s membership until they discovered the monthly charges on their credit card statements.  Some prospective renters also had difficulties canceling the membership when they contacted MyScore’s customer service department.

BROWN, LLOYD, and CC-1 continued to execute the scheme through at least on or about January 10, 2017, despite numerous complaints during the course of the scheme from customers and consumer organizations about the fraudulent nature of the rental advertisements on the Advertising Website, the automatic enrollment of customers in MyScore’s monthly membership with recurring charges without their knowledge, and the difficulties in cancelling the monthly membership. 

In total, the scheme caused over approximately 2.7 million unique visits to the MyScore Websites and generated approximately $6.8 million in revenue from approximately 169,000 customers who were automatically enrolled in MyScore’s monthly membership for credit monitoring services through the scheme.

*                *                *

BROWN, 37, who was residing in Mexico, and LLOYD, 30, of Beaver, Pennsylvania, were each charged with one count of conspiracy to commit wire fraud and one count of wire fraud, which each carry a maximum sentence of 20 years in prison.

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

Mr. Williams praised the outstanding investigative work of the FBI.  Mr. Williams also thanked the Federal Trade Commission for their assistance with the case.

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

 

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that ROBERT WILSON, a/k/a “RO,” a/k/a “Sin,” a member of a racketeering enterprise known as the Stevenson Commons Crew, was sentenced today by U.S. District Judge Jesse M. Furman to 37 years in prison.  WILSON previously pled guilty to participating in a racketeering conspiracy, narcotics conspiracy, and a firearms offense.  Co-defendant KEVIN CROSBY, a/ka/ “Sama,” was previously sentenced to 25 years in prison, and co-defendant MARQUIS YOHANIS, a/k/a “DG,” was previously sentenced to over 24 years in prison.  Co-defendant YEFREL BRITO, a/k/a “Mini,” is scheduled to be sentenced on December 7, 2022.

U.S. Attorney Damian Williams said: “For years, Robert Wilson filled the Soundview neighborhood of the Bronx with drugs and violence.  He then helped plan and execute the cold-blooded murder of Nelson Ramos in January 2019.  Today, Wilson was rightly sentenced to 37 years in prison for these horrific crimes.  We thank our law enforcement partners at the New York City Police Department, Homeland Security Investigations, and the New York City Department of Investigation for their outstanding work pursuing justice for Mr. Ramos and his family.”

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

WILSON is a member of a racketeering enterprise known as the Stevenson Commons Crew.  In order to fund the enterprise, protect and expand its interests, and promote its standing, members and associates of the Stevenson Commons Crew committed, conspired, attempted, and threatened to commit acts of violence against rival gangs, including murder and robbery; conspired to distribute and possess with intent to distribute narcotics; and obtained, possessed, and used firearms, including by brandishing and discharging them. 

On September 13, 2018, WILSON and others carried out a robbery, during which WILSON and others repeatedly punched, kicked, and stomped on the victim, causing serious physical injuries to the victim.

On January 6, 2019, WILSON and others helped plan and carry out a shooting, which resulted in the death of Nelson Ramos in the vicinity of 800 Soundview Avenue in the Bronx, New York.

*                *                *

In addition to the prison term, Judge Furman sentenced WILSON, 31, of the Bronx, New York, to five years of supervised release.

Mr. Williams praised the outstanding investigative work of the New York City Police Department, Homeland Security Investigations, and the New York City Department of Investigation.

The prosecution is being handled by the Office’s Violent and Organized Crime Unit.   Assistant U.S. Attorneys Andrew K. Chan, Justin V. Rodriguez, Emily A. Johnson, and Jun Xiang are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that earlier today LUIS RIVAS pled guilty to conspiring to commit bank bribery in connection with a business email compromise scheme that defrauded businesses of millions of dollars.  RIVAS was the seventh person charged in this international scheme. 

U.S. Attorney Damian Williams said: “Bank employee Luis Rivas used his inside knowledge and access to open bank accounts for fake businesses so that his co-conspirators could receive and launder millions of dollars from victims who had been deceived.  Now, Rivas is rightly being held accountable for his crime.  Today’s guilty plea reflects this Office’s commitment to investigating and prosecuting individuals who abuse positions of trust at financial institutions to engage in corrupt criminal conduct.”

According to the Indictment and other public filings and proceedings in the case: 

From at least in or about 2018 through at least in or about May 2020, LUIS RIVAS, who at the time of the offense was a financial sales advisor at a Houston branch of a national bank, agreed to accept payments in exchange for helping others open business bank accounts for phony companies.  Those bank accounts were then used to receive more than $2.2 million in fraud proceeds.  The money came from a business email compromise scheme in which businesses were defrauded by co-conspirators who impersonated, via email, individuals and businesses in the course of otherwise ordinary financial transactions, thereby fraudulently inducing the victims to transfer funds to bank accounts that the perpetrators controlled.  The names of the phony companies used for the bank accounts that RIVAS helped open were purposefully chosen to mirror the names of the true counterparties in those business transactions.

RIVAS also helped the perpetrators access and launder the fraud proceeds.  In particular, RIVAS assisted with unfreezing, transferring, and withdrawing money in transactions designed to conceal and disguise the funds’ source, ownership, and control. 

RIVAS was generally paid between $500 to $1,500 for each account that he helped open and each transaction where he provided assistance.  He received, in total, approximately $45,000 for his corrupt insider services.

*                *                *

RIVAS, 36, of Houston, Texas, pled guilty to one count of conspiracy to commit bank bribery, which carries a maximum sentence of five years in prison.  As part of his guilty plea, RIVAS agreed to forfeit $45,000 to the United States.   

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as RIVAS’s sentence will be determined by the judge.  RIVAS is scheduled to be sentenced by U.S. District Judge P. Kevin Castel on March 21, 2023.

Mr. Williams praised the work of Homeland Security Investigations for their investigative efforts and ongoing support and assistance with the case. 

The prosecution of this case is being handled by the Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorney Emily Deininger is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Keechant L. Sewell, Police Commissioner for the City of New York (“NYPD”), announced the unsealing of a three-count Complaint today charging two members of an armed robbery crew operating in the Bronx, New York, with robbery, conspiracy to commit robbery, and brandishing a firearm during and in relation to a crime of violence.  Specifically, PABLO ARMANDO VALENZUELA and AARON MILLER stole more than $800,000 worth of jewelry while armed with a firearm, bear spray, and hammers.  MILLER was arrested yesterday, and VALENZUELA was arrested today and will be presented before Magistrate Judge Sarah L. Cave.

U.S. Attorney Damian Williams said: “As alleged, the defendants and their co-conspirators committed a violent robbery using any weapons they could get their hands on that left employees of a Bronx jewelry store injured and their store destroyed.  This Office will continue to aggressively prosecute robberies, especially those that are accompanied with violence.”

FBI Assistant Director in Charge Michael J. Driscoll said: “We allege Valenzuela and Miller carried out a robbery at a jewelry store, stole more than $800,000 in merchandise, violently trashed the business, and injured employees by using bear spray.  Smash and grab robberies have become more brazen, and the criminals responsible must be held responsible.  This investigation should serve as a warning to anyone contemplating a similar crime - you will face justice in the federal system for breaking the law.”

NYPD Police Commissioner Keechant L. Sewell said: “This violence will never be tolerated in our city.  And actions must have consequences.  Today’s charges reflect our commitment to safeguarding the people and businesses of New York City, and our relentless pursuit of anyone who would seek to do them harm.  I want to thank the U.S. Attorney’s Office for the Southern District of New York, the New York Office of the FBI, and every investigator who worked on this important case.”

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

On August 10, 2022, VALENZUELA and MILLER, along with at least four other co-conspirators, committed an armed robbery of a jewelry store in the Bronx, New York, using a firearm, bear spray, and hammers.  On the evening of August 10, VALENZUELA entered the jewelry store wearing a ski mask and sprayed a can of bear spray into the eyes of jewelry store employees, temporarily blinding them.  Five other masked robbers entered the jewelry store, including MILLER, and used hammers to destroy glass display cases.  At least one robber brandished a firearm.  VALENZUELA, MILLER, and the other robbers then stole over $800,000 worth of jewelry before fleeing on mopeds, in cars, and by foot.  

Photographs of VALENZUELA (Photographs 1 and 2) and MILLER (Photograph 3) are below:

 

 

*                *                *

VALENZUELA, 32, and MILLER, 23, both of the Bronx, New York, are charged with one count of Hobbs Act robbery and one count of conspiracy to commit Hobbs Act robbery, both of which carry a maximum sentence of 20 years in prison, and one count of brandishing a firearm during and in relation to a crime of violence, which carries a maximum sentence of life in prison and a mandatory minimum term of seven years in prison, which must be served consecutively to any other prison term imposed. 

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

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation, particularly the Albany FBI – Binghamton Resident Agency, the U.S. Marshals Service New York/New Jersey Regional Task Force, and the New York City Police Department.

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

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

 

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

Damian Williams, the United States Attorney for the Southern District of New York, and Tyler Hatcher, the Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, Los Angeles Field Office (“IRS-CI”), announced today that JAMES ZHONG pled guilty to committing wire fraud in September 2012 when he unlawfully obtained over 50,000 Bitcoin from the Silk Road dark web internet marketplace.  ZHONG pled guilty on Friday, November 4, 2022, before United States District Judge Paul G. Gardephe. 

On November 9, 2021, pursuant to a judicially authorized premises search warrant of ZHONG’s Gainesville, Georgia, house, law enforcement seized approximately 50,676.17851897 Bitcoin, then valued at over $3.36 billion.  This seizure was then the largest cryptocurrency seizure in the history of the U.S. Department of Justice and today remains the Department’s second largest financial seizure ever.  The Government is seeking to forfeit, collectively: approximately 51,680.32473733 Bitcoin; ZHONG’s 80% interest in RE&D Investments, LLC, a Memphis-based company with substantial real estate holdings; $661,900 in cash seized from ZHONG’s home; and various metals also seized from ZHONG’s home.

U.S. Attorney Damian Williams said: “James Zhong committed wire fraud over a decade ago when he stole approximately 50,000 Bitcoin from Silk Road.  For almost ten years, the whereabouts of this massive chunk of missing Bitcoin had ballooned into an over $3.3 billion mystery.  Thanks to state-of-the-art cryptocurrency tracing and good old-fashioned police work, law enforcement located and recovered this impressive cache of crime proceeds.  This case shows that we won’t stop following the money, no matter how expertly hidden, even to a circuit board in the bottom of a popcorn tin.”

IRS-CI Special Agent in Charge Tyler Hatcher said: “Mr. Zhong executed a sophisticated scheme designed to steal bitcoin from the notorious Silk Road Marketplace.  Once he was successful in his heist, he attempted to hide his spoils through a series of complex transactions which he hoped would be enhanced as he hid behind the mystery of the ‘darknet.’  IRS-CI Special Agents are the best in the world at following the money through cyberspace or wherever our financial investigations lead us.  We will continue to work with our partners at the US Attorney’s Office to track down these criminals and bring them to justice.”

According to the allegations contained in filings in Manhattan federal court and statements made during 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. 

In September 2012, ZHONG executed a scheme to defraud Silk Road of its money and property by (a) creating a string of approximately nine Silk Road accounts (the “Fraud Accounts”) in a manner designed to conceal his identity; (b) 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 (c) 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 Forfeitable Property

On November 9, 2021, pursuant to a judicially authorized premises search warrant (the “Search”), IRS-CI agents recovered approximately 50,491.06251844 Bitcoin of the Crime Proceeds from ZHONG’s Gainesville, Georgia, house.  Specifically, law enforcement located 50,491.06251844 Bitcoin of the approximately 53,500 Bitcoin Crime Proceeds (a) in an underground floor safe; and (b) 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, and four one-ounce silver-colored bars, three one-ounce gold-colored bars, four 10-ounce silver-colored bars, and one gold-colored coin. 

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.

Forfeiture Actions

In connection with ZHONG’s guilty plea, on November 4, 2022, Judge Gardephe entered a Consent Preliminary Order of Forfeiture as to Specific Property and Substitute Assets/Money Judgment forfeiting ZHONG’s interest in the following property:

• 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.

Today, in United States v. Ross Ulbricht, S1 14 Cr. 68 (LGS), the Government filed a motion for entry of an Amended Preliminary Order of Forfeiture, seeking to forfeit approximately 51,351.89785803 Bitcoin traceable to Silk Road, valued at approximately $3,388,817,011.90 at the time of seizure, as follows:

• 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.

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ZHONG, 32, of Gainesville, Georgia, and Athens, Georgia, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  ZHONG is scheduled to be sentenced by Judge Gardephe on February 22, 2023, at 3:00 p.m. 

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, Ivan J. Arvelo, Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Keechant L. Sewell, Commissioner of the New York City Police Department (“NYPD”), announced today the arrests of ELVIS GUERRERO, a/k/a “E,” JEMYNI TRUE, a/k/a “Jemy,” and TRENTON MICHAEL JUDKINS, for trafficking firearms from New York City to the Dominican Republic.  As alleged in the Complaint filed last Friday, the defendants obtained firearms from straw purchasers and then shipped six handguns and an AR-15 style rifle from New York City to the Dominican Republic inside a cargo shipping container.  TRUE and JUDKINS also conspired to delete evidence regarding their scheme after JUDKINS was contacted by law enforcement.  GUERRERO and TRUE were arrested after flying into JFK Airport from the Dominican Republic last Thursday and were presented before Magistrate Judge Barbara C. Moses in Manhattan federal court.  GUERRERO was ordered detained and TRUE was detained pending release on conditions.  JUDKINS was arrested last Friday in Maine.

U.S. Attorney Damian Williams said: “International gun traffickers endanger our community by putting dangerous weapons in the hands of those who often use them for violence.  As demonstrated by these arrests, our Office will continue to investigate and prosecute gun traffickers who seek to profit from the illegal gun trade, which endangers the lives of law-abiding citizens everywhere.”

HSI New York Special Agent in Charge Ivan J. Arvelo said: “These three defendants are alleged to have conspired to obtain and traffic firearms to the Dominican Republic, and then attempted to cover their tracks to evade detection.  HSI New York will continue to leverage the full breadth of its investigative authorities and maximize our investigative partnerships to combat the exportation of illegal firearms across our borders.  Those who wish to engage in the illicit purchasing, trafficking, or shipping of illegal firearms will be held accountable to the fullest extent of the law.” 

NYPD Commissioner Keechant L. Sewell said: “Illegal guns pose a grave public-safety threat to every community, here in New York City and across the globe.  With these charges, the NYPD and our law-enforcement partners are sending a clear and definitive message: If you traffic in these deadly weapons, you will be arrested and prosecuted to the fullest extent of the law.  I want to thank the U.S. Attorney’s Office for the Southern District of New York, HSI’s New York Field Office, and all of the investigators who worked on this important case.”

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

TRUE and GUERRERO obtained firearms from multiple straw purchasers located in the United States, including JUDKINS.  GUERRERO and JUDKINS discussed that GUERRERO would pay JUDKINS for a firearm with narcotics. 

On or about October 6, 2022, a shipping container that had been transported by cargo ship from New York City to the Dominican Republic was inspected in the Dominican Republic.  Inside a box that was reported to contain food and other items, inspectors found six handguns and an AR-15 style rifle.  A photograph of the firearms is below:

 

Law enforcement in the Dominican Republic searched a location where the firearms were intended to be received and found a paper containing a phone number associated with TRUE. 

On November 3, 2022, law enforcement agents approached JUDKINS, who admitted to selling the AR-15 style rifle recovered in the Dominican Republic to GUERRERO and that TRUE had recently asked him to provide a second firearm.  After speaking with law enforcement agents, JUDKINS communicated with TRUE, advising her that he had spoken with federal law enforcement agents and to “be careful.”  In response, TRUE asked him to “delete all our chats on Facebook and here please / And text / And your s*** w [GUERRERO].”  JUDKINS agreed to do so. 

On November 3, 2022, law enforcement agents seized cellphones possessed by GUERRERO and TRUE after they flew into JFK Airport from the Dominican Republic.  Substantially all of the data on TRUE’s cellphone had been deleted. 

On GUERRERO’s phones, law enforcement found multiple photographs of firearms, including the following photograph of GUERRERO posing with a rifle:

 

Law enforcement agents also found communications between GUERRERO and TRUE regarding firearms and notes GUERRERO kept regarding quantities of narcotics. 

*                *                *

GUERRERO, 21, of Lowell, Massachusetts; TRUE, 20, of Corinth, Maine; and JUDKINS, 18, of Garland, Maine, are each charged with one count of conspiring to commit an offense against the United States, namely, gun trafficking, which carries a maximum sentence of five years in prison and one count of gun trafficking, which carries a maximum sentence of five years in prison.  TRUE and JUDKINS are additionally charged with one count of obstruction of justice, 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 sentence will be determined by a judge.

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

This case is being handled by the Office’s Violent & Organized Crime Unit.  Assistant U.S. Attorney Jun Xiang is in charge of the prosecution.

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Complaint constitutes 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, announced earlier today that a federal jury found HOWARD ADELGLASS guilty for his participation in a conspiracy to illegally prescribe oxycodone.  The defendant was found guilty following a two-week trial before U.S. District Judge Jed S. Rakoff.  Sentencing is scheduled for March 8, 2023, before Judge Rakoff.

U.S. Attorney Damian Williams said: “Doctor Howard Adelglass was a drug dealer, but instead of peddling drugs on the street corner, he distributed drugs with a prescription pad from his Central Park South ‘pain-management clinic.’  For years, the defendant prescribed enormous quantities of highly addictive and deadly opioids to people he knew were suffering from substance abuse disorders or were dealers.  By distributing mammoth quantities of oxycodone pills to people without a legitimate medical purpose, the defendant destroyed lives and families.  Along with our law enforcement partners, we will continue to hold accountable those responsible for fueling the opioid crisis that is ravaging our community and nation.”

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

HOWARD ADELGLASS was a licensed physician.  Together with Marcello Sansone, the defendant operated a pain-management clinic located in Midtown Manhattan (the “Clinic”).  The Clinic serviced purported patients seeking oxycodone and other pain-relief medications commonly diverted for illicit purposes.  In exchange for cash payments, and in some instances for cocaine, ADELGLASS wrote thousands of prescriptions for large quantities of oxycodone, and many he wrote to individuals whom ADELGLASS knew did not need the pills for a legitimate medical purpose.  When they occurred, ADELGLASS’s examinations were perfunctory.  The defendant’s purported patients included individuals addicted to opioids and, in some cases, who sold oxycodone on the street.  Even when faced with clear evidence of his purported patients’ drug abuse and diversion, ADELGLASS continued to prescribe large quantities of oxycodone to them.

Initially, ADELGLASS staffed the Clinic with inexperienced young women, some of whom he addicted to oxycodone.  In approximately October 2018, after serving as a primary source of patient referrals, Sansone took over as the Clinic’s office manager.  In that role, Sansone helped to control access to ADELGLASS and the lucrative prescriptions he wrote for medically unnecessary oxycodone.  With particularly vulnerable patients, the defendants solicited and, in some instances, received sex acts in exchange for oxycodone prescriptions.

Between in or about November 2017 and in or about September 2020, ADELGLASS prescribed more than 1.3 million oxycodone pills. 

On October 13, 2022, Sansone pled guilty to conspiracy to illegally distribute oxycodone.  Sansone is scheduled to be sentenced on February 13, 2023, before Judge Rakoff.

*                *                *

ADELGLASS, 67, of New York, New York, was convicted of conspiracy to illegally distribute oxycodone, which carries a maximum sentence of 20 years in prison. 

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

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation, the New York City Police Department, and the Department of Health and Human Services, Office of the Inspector General.

This case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Nicholas W. Chiuchiolo, Marguerite B. Colson, and Daniel G. Nessim are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Keechant L. Sewell, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging JALEEL SHAKOOR with racketeering conspiracy, murder in aid of racketeering, murder with a firearm, and illegal possession of ammunition.  The charges relate to SHAKOOR’s murder of Gerry Mazzella on June 3, 2021, in the Bronx, New York.  As alleged in the Indictment, SHAKOOR shot Mazzella in the back of the neck from point-blank range.

SHAKOOR, who was already in federal custody, will be presented today before Magistrate Judge Barbara C. Moses.  The case is assigned to U.S. District Judge Colleen McMahon.

U.S. Attorney Damian Williams said: “As alleged, the defendant committed a murder as part of his gang membership: he shot Gerry Mazzella from point-blank range, killing him.  With these charges, we continue our daily work of investigating and prosecuting those who perpetrate these senseless acts.  We hope this prosecution brings some measure of comfort to the victim’s loved ones.”

NYPD Commissioner Keechant L. Sewell said: “This case is an outstanding example of what the NYPD and our law enforcement partners can accomplish when we strike back at the relatively few people responsible for spreading violence and fear in New York City.  Together, we remain committed to thwarting gang activity in all its forms, and to reinforcing the severe consequences that await anyone who dares to jeopardize safety in our neighborhoods.”

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

From at least 2020 to 2022, JALEEL SHAKOOR, a/k/a “Midnight,” was a member of the Untouchable Gorilla Stone Nation (“Gorilla Stone”), which is a set of the national Bloods gang.  Gorilla Stone operated primarily in the northeast United States, including in the Bronx, and in the jails and prisons of New York City and the State of New York.

Members of Gorilla Stone committed robberies and distributed controlled substances in order to enrich themselves.  They also murdered and assaulted members of rival gangs and members of Gorilla Stone in order to resolve disputes within the gang.  Gorilla Stone members promoted and celebrated the gang’s criminal conduct — including drug distribution, acts of violence, and firearms usage — on social media.

On June 3, 2021, in the vicinity of West 165th Street and Woodycrest Avenue in the Bronx, SHAKOOR shot Mazzella in the back of the neck, causing Mazzella’s death.  SHAKOOR committed this murder to maintain and increase his position in Gorilla Stone.

*                *                *

SHAKOOR, 27, of the Bronx, New York, is charged with one count of racketeering conspiracy, which carries a statutory maximum sentence of life in prison; one count of murder in aid of racketeering, which carries a statutory maximum sentence of death or life in prison and a mandatory minimum sentence of life in prison; one count of murder through use of a firearm, which carries a statutory maximum sentence of death or life in prison and a mandatory minimum sentence of five years in prison; and one count of possessing ammunition after a felony conviction, which carries a statutory maximum of 10 years in prison.

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

Mr. Williams praised the outstanding investigative work of the NYPD.  He also thanked the Bronx District Attorney’s Office for its assistance.

This case is being handled by the Office’s Violent & Organized Crime Unit.  Assistant United States Attorneys Christopher D. Brumwell, Emily A. Johnson, and Patrick R. Moroney are in charge of the prosecution.

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

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

United States Attorneys Damian Williams and Breon Peace announced today that Assistant United States Attorneys (AUSAs) will lead the efforts of their Offices in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 8, 2022, general election.  AUSA David J. Kennedy has been appointed to serve as the District Election Officer (DEO) for the Southern District of New York, and AUSA Erik Paulsen has been appointed to serve as the DEO for the Eastern District of New York. In their capacity as DEOs, these AUSAs are responsible for overseeing the Districts’ handling of election day complaints of voting rights concerns, threats of violence to election officials or staff, and election fraud, in consultation with Justice Department Headquarters in Washington.

United States Attorney Williams said: “Free and fair elections are principal to democracy, and every vote counts. It is the solemn privilege of this Office to work together with our law enforcement partners to ensure that New Yorkers are able to exercise their inherent right to select their representatives unencumbered by unlawful intimidation or interference.  We encourage anyone who finds their civic voting protections subject to hindrance to please contact the numbers below.”

United States Attorney Peace said: “The right of all citizens in the district to cast their votes and have their votes counted fairly and without interference, discrimination or threat of violence, is a cornerstone of our democracy and this Office will vigorously defend that right with the full force of federal law.”

The Department of Justice plays an important role in deterring and combatting discrimination and intimidation at the polls, threats of violence directed at election officials and poll workers, and election fraud.  The Department will address these violations wherever they occur.  The Department’s longstanding Election Day Program furthers these goals and also seeks to ensure public confidence in the electoral process by providing local points of contact within the Department for the public to report possible federal election law violations.

Federal law protects against such crimes as threatening violence against election officials or staff, intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.  It also contains special protections for the rights of voters, and provides that they can vote free from interference, including intimidation, and other acts designed to prevent or discourage people from voting or voting for the candidate of their choice.  The Voting Rights Act protects the right of voters to mark their own ballot or to be assisted by a person of their choice (where voters need assistance because of disability or inability to read or write in English).  

United States Attorneys Williams and Peace stated that: “The franchise is the cornerstone of American democracy.  We all must ensure that those who are entitled to the franchise can exercise it if they choose, and that those who seek to corrupt it are brought to justice.  In order to respond to complaints of voting rights concerns and election fraud during the upcoming election, and to ensure that such complaints are directed to the appropriate authorities, AUSAs will be on duty in this District while the polls are open.”

In order to respond to complaints of election fraud or voting rights concerns during the voting period that ends on November 8, 2022, and to ensure that such complaints are directed to the appropriate authorities, the United States Attorneys said that their Offices will be available to receive complaints at the following numbers through Tuesday, November 8, 2022:

(646) 369-4739                       (for Manhattan, Bronx, Dutchess, Orange, Putnam, Rockland, Sullivan, and                                                          Westchester counties) and

(718) 254-7000                       (for Brooklyn, Queens, Staten Island, Nassau, and Suffolk counties)

In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day.  The local FBI field office can be reached by the public at (212) 384-1000.

Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division in Washington, DC by phone at 800-253-3931 or by complaint form at https://civilrights.justice.gov/.

Please note, however, in the case of a crime of violence or intimidation, please call 911 immediately and before contacting federal authorities.  State and local police have primary jurisdiction over polling places, and almost always have faster reaction capacity in an emergency.

The United States Attorneys also noted that the following additional telephone numbers are available on Election Day for citizens to call for routine inquiries, such as where to vote or how late the polls are open, or to register complaints that may concern violations of New York State election laws:

IN NEW YORK CITY

City Board of Elections

Main Office                           (866) 868-3692

                                                 TTY #: 212-487-5496

IN COUNTIES OUTSIDE NEW YORK CITY

County Boards of Elections

Dutchess                                       (845) 486-2473

Nassau                                          (516) 571-8683

Orange                                          (845) 360-6500

Orange (Spanish language)      (855) 331-2444

Putnam                                         (845) 808-1300

Rockland                                      (845) 638-5172

Suffolk                                          (631) 852-4500

Sullivan                                        (845) 807-0400

Westchester                                 (914) 995-5700

Damian Williams, the United States Attorney for the Southern District of New York, announced that LEROY GIBBS and JULIO FIGUEROA each pled guilty to accepting bribes for awarding no-bid contracts at the New York City Housing Authority (“NYCHA”) facilities at which they served as superintendents.  GIBBS pled guilty before United States Magistrate Judge Gabriel W. Gorenstein on October 7, 2022, and will be sentenced by United States District Judge Colleen McMahon on January 25, 2023.  FIGUEROA pled guilty today before United States District Judge Denise L. Cote and will be sentenced by Judge Cote on February 9, 2023. 

U.S. Attorney Damian Williams said: “Leroy Gibbs and Julio Figueroa betrayed the trust placed in them by the New York City Housing Authority by accepting bribes in exchange for awarding no-bid contracts.  Gibbs and Figueroa now stand convicted of federal felonies and will face sentencing for their crimes.”

According to the Complaints, Informations, and statements made in court:

In February 2020, GIBBS, who was then employed as the Resident Buildings Superintendent at Douglass Houses in New York, New York, solicited and accepted approximately $2,000 in bribes from a confidential informant (the “CI”) in exchange for awarding no-bid contracts to the CI worth a total of approximately $9,950 from NYCHA for work at that NYCHA facility.

Between July 2021 and August 2022, FIGUEROA, who was then employed as the Assistant Resident Buildings Superintendent at the Ft. Independence St.-Heath Ave. Houses in the Bronx, New York, solicited and accepted approximately $6,000 in bribes from the CI in exchange for awarding no-bid contracts to the CI worth a total of approximately $46,622 from NYCHA for work at that NYCHA facility.

*                *                *

GIBBS, 58, of Bay Shore, New York, and FIGUEROA, 45, of East Stroudsburg, Pennsylvania, each pled guilty to one count of solicitation and receipt of a bribe, which carries a maximum sentence of 10 years in prison.  Under the terms of their plea agreements, GIBBS agreed to forfeit $2,000 and make restitution in the amount of $2,000, and FIGUEROA agreed to forfeit $6,000 and make restitution in the amount of $6,000.

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

Mr. Williams praised the outstanding investigative work of the New York City Department of Investigation, the United States Department of Housing and Urban Development’s Office of Inspector General, and the Special Agents of the United States Attorney’s Office for the Southern District of New York. 

The prosecution of this case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Catherine Ghosh and Robert B. Sobelman are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that ADAM ROGAS, the co-founder and former CEO, CFO, and member of the board of directors of a Las Vegas-based cyberfraud prevention company NS8, Inc. (“NS8”), was sentenced today in Manhattan federal court to five years in prison for engaging in securities fraud by creating and using fraudulent financial data to obtain over $123 million in financing for NS8, of which he personally obtained approximately $17.5 million.  ROGAS pled guilty on March 16, 2022, before United States District Judge John P. Cronan, who imposed today’s sentence.

U.S. Attorney Damian Williams said: “Adam Rogas took the ‘fake-it-till-you-make-it’ saying to a criminal extreme.  While claiming to be in the fraud prevention business, Rogas himself faked nearly all of his company’s customers, revenue, and assets.  In doing so, he defrauded investors out of over $100 million.  Now Rogas will report to prison to be held accountable for his fraudulent scheme.”

In handing down ROGAS’s sentence, Judge Cronan characterized the defendant’s fraud as “brazen, calculated, and long-running.”

According to the Complaint, Indictment, other publicly filed documents, and statements made in court:

ADAM ROGAS was a co-founder of NS8 and served as its CEO, CFO, and as a member of its board of directors.  ROGAS was also primarily responsible for the company’s fundraising activities.  NS8, which was based in Las Vegas, Nevada, was a cyberfraud prevention company that developed and sold electronic tools to help online vendors assess the fraud risks of customer transactions.  In the fall of 2019 and the spring of 2020, NS8 engaged in fundraising rounds through which it issued Series A Preferred Shares and obtained approximately $123 million in investor funds.  ROGAS used the materially misleading financial statements to raise those funds.

Specifically, ROGAS maintained control over a bank account into which NS8 received revenue from its customers and periodically provided monthly statements from that account to NS8’s finance department so that NS8’s financial statements could be created.  ROGAS also maintained control over spreadsheets that purportedly tracked customer revenue, which were also used to generate NS8’s financial statements.

During the fundraising process in the fall of 2019 and spring of 2020, ROGAS altered the bank statements before providing them to NS8’s finance department to show tens of millions of dollars in both customer revenue and bank balances that did not exist.  In the period from January 2019 through February 2020, between at least approximately 40% and 95% of the purported total assets on NS8’s balance sheet were fictitious.  In that same period, the bank statements that ROGAS altered reflected over $40 million in fictitious revenue.  ROGAS also falsified nearly all of NS8’s purported customers on internal tracking spreadsheets.

Additionally, ROGAS provided the falsified bank records he had created to auditors who were conducting due diligence on behalf of potential investors.  After these fundraising rounds concluded, NS8 conducted a tender offer with the funds raised from investors, and ROGAS received $17.5 million in proceeds from that tender offer, personally and through a company he controlled.  After ROGAS’s fraud was uncovered, NS8 ultimately entered bankruptcy proceedings.  ROGAS used his fraudulent proceeds to purchase, among other things, luxury goods and a residence in the Dominican Republic.

*                *                *

In addition to his prison term, ROGAS, 45, of Las Vegas, Nevada, was sentenced to three years’ supervised release and ordered to forfeit $17,542,259.

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that RASHAWN ASSANAH was sentenced today to 27 months in prison and more than $18,000 in financial penalties for taking bribes from inmates to smuggle contraband into a Rikers Island facility.  ASSANAH previously was arrested on May 26, 2021, and later pled guilty to bribery and conspiracy charges.  United States District Judge Colleen McMahon imposed today’s sentence. 

U.S. Attorney Damian Williams said: “Rashawn Assanah violated his oath to protect inmates in his care when he accepted cash bribes to smuggle dangerous contraband into Rikers Island.  That conduct was outrageous and unacceptable.  His prison sentence should send a clear message to any correction officer who may be tempted to smuggle contraband to inmates: this is a serious crime that leads to serious jail time.”

As reflected in the Indictment, public filings, and statements made in public proceedings:

RASHAWN ASSANAH abused his position as a correction officer to smuggle contraband, including cigarettes, K2, and a weapon, into the Robert N. Davoren Center on Rikers Island in return for over $7,500 in bribes from at least in or about November 2020 up through and including in or about February 2021.

Following ASSANAH’s guilty plea and before sentencing, and in order to adjourn his sentencing, ASSANAH lied to the court by claiming to have cancer and be undergoing chemotherapy — even submitting a forged note from a doctor who does not exist to substantiate his bogus claims. 

*                *                *

ASSANAH, 26, of Queens, New York, pled guilty on October 22, 2021, to one count of conspiracy to commit federal crimes and one count of federal program bribery.  In addition to his prison term, ASSANAH was sentenced to three years of supervised release, ordered to forfeit $7,500.00, and directed to pay $10,935.60 in restitution to the New York City Department of Correction. 

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

This case is being handled by the Office’s Public Corruption Unit, and Assistant United States Attorneys Marguerite Colson and Jarrod L. Schaeffer are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that restaurateur BESIM KUKAJ pled guilty today to bank fraud conspiracy and making interstate threats.  KUKAJ pled guilty before U.S. District Judge Andrew L. Carter.

U.S. Attorney Damian Williams said: “As he admitted in court today, Besim Kukaj conspired with others to try to secure more than $3.5 million dollars in government-backed loans intended for businesses devastated by the COVID-19 pandemic.  Kukaj told banks that his restaurants operated with dozens of employees, when in fact he employed far fewer people. These brazen lies tricked banks into sending him approximately $1.5 million in loans.  Even after his arrest, Kukaj continued to submit false loan applications.  Kukaj now faces the possibility of a significant term of incarceration for these serious crimes.”

According to the allegations contained in filings in Manhattan federal court:

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”).  Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and their average payroll costs.  Businesses applying for a PPP loan must provide documentation to confirm that they have previously paid employees the compensation represented in the loan application. 

From at least in or about April 2020 through at least in or about July 2020, KUKAJ, working with others, submitted applications for PPP loans 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 fewer employees than were listed on the PPP loans.  In total, KUKAJ and his co-conspirators applied for dozens of PPP loans, totaling approximately $3.9 million, from numerous financial institutions, using many different corporate entities, and they successfully received at least $1.5 million in PPP 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 pursuant to an order that notified him of the potential effect of committing a criminal offense while on pretrial release.

In January 2021, however, KUKAJ filed another false loan application for one of the same restaurants he had previously filed a false application for in July 2020.  The same month, KUKAJ also requested PPP loans for six businesses he owned and submitted false documentation about each of the six businesses.  These January 2021 applications and requests were not funded by the banks to whom he submitted the false paperwork. 

Separately, on November 6, 2019, at the urging of KUKAJ, a co-conspirator of his placed a telephone call, which traveled in interstate commerce, to a victim, during which call the co-conspirator threatened physical violence against the victim.  KUKAJ instructed his co-conspirator to place this call because KUKAJ owed money to the victim.

*                *                *

KUKAJ, 42, of New Jersey, pled guilty to one count of conspiracy to commit bank fraud, which carries a maximum sentence of 40 years in prison, and one count of making interstate threats, which carries a maximum sentence of five years in prison.  Under the terms of his plea agreement, KUKAJ also agreed to pay forfeiture in the amount of $1,500,000.

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.  KUKAJ is scheduled to be sentenced by Judge Carter on March 9, 2023, at 2:00 p.m. 

Mr. Williams praised the outstanding work of FBI 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 United States Attorneys Samuel L. Raymond and David R. Felton are in charge of the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced that earlier today a federal jury found ADEDAYO ILORI guilty of all six counts of an Indictment for his participation in a fraudulent scheme to obtain more than $10 million in government-guaranteed loans designed to provide relief to small businesses during the COVID-19 pandemic.  The defendant was found guilty following a one-week trial before U.S. District Judge Mary Kay Vyskocil.  The jury further found that ILORI committed these crimes while on pretrial release.  Sentencing is currently scheduled for January 31, 2023, before Judge Vyskocil.

U.S. Attorney Damian Williams said: “Adedayo Ilori used the stolen identities of innocent victims to steal Government money that was set aside to help small businesses stay afloat during the COVID-19 pandemic.  Ilori illegally profited from a national emergency.  Making matters worse, he did so while on pretrial release in another serious criminal case brought by this Office.  Thanks to the hard work of the Department of Justice-Office of Inspector General and the career prosecutors in this Office, a unanimous jury has found Ilori guilty of committing another fraud scheme.”

According to the Superseding Indictment and the evidence presented at trial:

From at least in or about August 2020 through at least in or about October 2021, ILORI and his co-defendant, Chris Recamier, engaged in a rampant COVID-19 loan fraud scheme.  Utilizing false identities, sham tax records, and corporate documents, ILORI and Recamier successfully obtained more than $1 million and attempted to obtain more than $10 million through two loan programs of the U.S. Small Business Administration (“SBA”) designed to provide relief to small businesses during the COVID-19 pandemic, namely the Paycheck Protection Program ( “PPP”) and the Economic Injury Disaster Loan (“EIDL”) Program.  In particular, ILORI and Recamier applied for 14 PPP and EIDL loans.  In applying for these loans, ILORI and Recamier claimed stolen identities of third parties and claimed full control of a number of companies, which they purported, cumulatively, employed more than 200 people and paid monthly salaries of more than $3.2 million in wages.  In reality, they did not operate these companies.  In submitting these applications, ILORI and Recamier, among other things, submitted falsified tax documents which were never actually filed with the Internal Revenue Service.

ILORI and Recamier transferred the majority of these stolen government funds toward cryptocurrency investments, the purchase of stocks, cash withdrawals, and personal expenses, including leasing luxury apartments and a Mercedes.  The investment accounts were also opened by ILORI and Recamier in the stolen identities of third parties.

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 SBA’s PPP.  Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and their average payroll costs.  Businesses applying for a PPP loan must provide documentation to confirm that they have previously paid employees the compensation represented in the loan application.  The CARES Act also expanded the separate EIDL Program, which provides small businesses with low-interest loans of up to $2 million that can provide vital economic support to help overcome the temporary loss of revenue they are experiencing due to COVID-19.  To qualify for an EIDL loan under the CARES Act, the applicant must have suffered “substantial economic injury” from COVID-19.

ILORI committed these offenses while facing charges in a separate case filed in the Southern District of New York involving fraud, identity theft, and money laundering in United States v. Ilori, 20 Cr 378 (LJL).  As part of that case, ILORI was sentenced on March 3, 2022, to 63 months in prison by U.S. District Judge Lewis J. Liman in connection with a commercial loan fraud and bank bribery scheme.

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ILORI, 43, of Queens, New York, was convicted of: (1) major fraud against the United States, which carries a maximum sentence of 20 years in prison; (2) conspiracy to commit wire and bank fraud, which carries a maximum sentence of 40 years in prison; (3) wire fraud, which carries a maximum sentence of 40 years in prison; (4) bank fraud, which carries a maximum sentence of 40 years in prison; (5) aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison; and (6) conspiracy to commit money laundering, which carries a maximum sentence of 30 years in prison. 

The maximum potential sentences in this case, which are increased by the jury’s finding that these crimes were committed while ILORI was on pretrial release, are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

ILORI’s co-defendant, Chris Recamier, 59, of New York, New York, previously pled guilty to major fraud against the United States and was sentenced on October 17, 2022, by Judge Vyskocil to nine years in prison.

Mr. Williams praised the investigative work of the DOJ-OIG.  Mr. Williams also thanked the U.S. Secret Service, the Drug Enforcement Administration, the New York City Police Department, the Federal Bureau of Investigation, and the Federal Aviation Administration for their assistance in this investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Juliana Murray, David R. Felton, and Daniel G. Nessim are in charge of the prosecution.

"Timothy Shea and his co-defendants orchestrated a crowdfunding scheme to purportedly raise funds to erect a border wall between Mexico and the United States.  We Build The Wall’s public campaign promised that 100% of the funds raised would be used to build the wall, which induced over 100,000 victims to donate.  Shea and his co-defendants lied.  And they stole over $25 million from their victims.

Months ago, this Office stated our belief in the powerful and compelling evidence that showed Shea’s guilt. Today, a unanimous jury has convicted Shea on all counts in the indictment.  I commend the prosecutors of this Office for their perseverance in ensuring justice was done."     

Damian Williams, the United States Attorney for the Southern District of New York, announced today that JOSHUA HALL pled guilty to a Superseding Information charging him with making threats to kill a member of the United States Congress.  HALL previously pled guilty to wire fraud for impersonating family members of the then-President of the United States on social media to fraudulently raise funds for a fictitious political organization (the “Fraud Scheme”).  At the time HALL made the threats to kill a member of the United States Congress, he was on pretrial release pending sentencing for the Fraud Scheme.  HALL was arrested the same day the threats were made and was subsequently ordered detained pending sentencing.  HALL pled guilty before United States District Judge Gregory H. Woods, before whom sentencing will be held on December 8, 2022.

U.S. Attorney Damian Williams said: “Joshua Hall made terrifying threats to the staff of a United States Congressman whom he disliked rather than attempting to effect change through any of the freedoms of expression that all Americans enjoy.  These threats of violence endanger our public officials and thwart common decency, which is why this Office will continue to prosecute crimes like those committed by Joshua Hall.”

According to the Superseding Information:

On or about August 29, 2022, HALL placed a series of telephone calls from in or around Yonkers, New York, to the California office of a member of the United States Congress (the “Congressman”).  During those telephone calls, HALL conveyed threats to kill the Congressman to at least three different members of the Congressman’s staff (“Staff Member-1,” “Staff Member-2,” and “Staff Member-3”). 

On a telephone call with Staff Member-1 and Staff Member-2, HALL stated, in substance and in part, that he had a lot of AR-15s; that he wanted to shoot the Congressman; that he intended to come to the Congressman’s office with firearms; and that if he saw the Congressman, he would kill him.  He further stated, in substance and in part, that he wanted to “beat the shit out of” the Congressman and that he would find the Congressman wherever he was and hurt him.  On a telephone call with Staff Member-3, HALL stated, in substance and in part, that he intended to come to the Congressman’s office to kill the Congressman with firearms. 

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HALL, 22, of Mechanicsburg, Pennsylvania, pled guilty to one count of making interstate communications with a threat to injure, which carries a maximum sentence of five years in prison.  HALL previously pled guilty to one count of wire 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 United States Capitol Police and the Federal Bureau of Investigation and thanked the City of Yonkers Police Department for their assistance.

The case is being handled by the Office’s Public Corruption Unit and General Crimes Unit.  Assistant United States Attorneys Alexandra S. Messiter and Robert B. Sobelman are in charge of the prosecution.

Damian Williams, United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the indictment of KONRAD BICHER for two counts of wire fraud and one count of aggravated identity theft in connection with a scheme to defraud New York City landlords (the “Rental Property Scheme”) and a scheme to fraudulently obtain over $565,000 in government-guaranteed loans designed to provide relief to small businesses during the COVID-19 pandemic, namely the Paycheck Protection Program (“PPP”).  BICHER was arrested in connection with the Rental Property Scheme in late June 2022.  The case has been assigned to Judge Lorna G. Schofield.

U.S. Attorney Damian Williams said: “We allege that Bicher brazenly rented at least 18 apartments in Manhattan with the intent to ignore his lease obligations, including by operating the apartments as mini-hotels and skipping rent.  When landlords sought to recover rental payments from Bicher, he lied and claimed that he could not make payments during the pendency of the COVID-19 pandemic.  At the same time, Bicher obtained hundreds of thousands of dollars in PPP money based on multiple fraudulent applications.  Bicher abused Government programs and tenant protections intended to benefit New Yorkers in crisis, and he will have to answer for his conduct.”

FBI Assistant Director-in-Charge Michael J. Driscoll said: "As alleged, the defendant proudly executed multiple schemes to defraud both private entities and the United States government for his own personal benefit.  The FBI remains committed to not only exterminating fraud in all its forms, but also to ensuring all those who abused a program designed to aid small businesses during an unprecedented global pandemic are held accountable."

As alleged in the Indictment and previously filed Complaint:[1]

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

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

Throughout the course of this scheme, the lessors of the Units made numerous efforts to recover rental payments from BICHER and/or to stop BICHER from continuing to rent the Units on a short-term basis, including by initiating civil litigation against BICHER.  Despite these efforts, BICHER continued to rent certain Units on a short-term basis.

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

In addition, between at least in or about April 2021 until in or about July 2021, BICHER engaged in a scheme to obtain Government-guaranteed loans through a loan program of the United States Small Business Administration designed to provide relief to small businesses during the COVID-19 pandemic, namely the PPP.  In furtherance of this scheme, BICHER submitted at least four applications for PPP loans on behalf of at least three entities and obtained over $565,000 in loan proceeds.  These PPP applications contained fraudulent documents and false information.  For example, in connection with the PPP applications, BICHER submitted tax documents which were purportedly filed with the Internal Revenue Service (“IRS”).  These documents were falsified, in that the entities seeking PPP loans had not actually filed the purported tax returns with the IRS, and BICHER has not otherwise reported the purported income to the IRS.  In connection with one of the PPP applications, submitted on behalf of NY Approved Rentals, BICHER submitted a copy of a 2019 income tax return which was purportedly filed with the IRS and was signed by a particular accountant (“Accountant-1”) located in the state of Florida.  In truth and fact, NY Approved Rentals did not file a tax return of any kind in 2019, and BICHER only requested that Accountant-1 prepare a tax return for NY Approved Rentals after BICHER was asked to provide a copy of the tax return in connection with the PPP loan.

*                *                *

BICHER, 31, of Hialeah, Florida, is charged with two counts of wire fraud and one count of aggravated identity theft.  The two counts of wire fraud each carry a maximum sentence of 20 years in prison.  The charge for aggravated identity theft carries an additional mandatory consecutive two-year sentence. 

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.

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

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment and Complaint and the description of the Indictment and Complaint set forth 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 KARIM ELKORANY, a former communications specialist with the United Nations (“UN”) in Iraq, was sentenced today in Manhattan federal court by United States District Judge Naomi Reice Buchwald to 15 years in prison for drugging and/or sexually assaulting 20 victims.  ELKORANY previously pled guilty on May 24, 2022, to sexually assaulting an internationally protected person and making false statements to cover up another sexual assault.  In connection with the plea, ELKORANY also admitted that he drugged and/or sexually assaulted 17 additional victims. 

U.S. Attorney Damian Williams said: “Karim Elkorany perpetrated monstrous acts against multiple women over nearly two decades.  At today’s proceeding, Elkorany was held accountable by the Court and also by his victims, a number of whom confronted him with powerful statements about the grievous harm he caused through his horrific conduct.  We express deep gratitude to all of the victims for their bravery in coming forward and remain committed to doing all we can to bring perpetrators like Elkorany to justice.”

According to the Superseding Indictment, public court filings, and statements during court proceedings:

Since at least in or about 2005 up to at least in or about April 2018, ELKORANY worked in international aid, development, and/or foreign relations.  From in or about October 2013 up to in or about April 2016, ELKORANY worked for the UN Children’s Fund (commonly known as UNICEF) in Iraq.  From in or about July 2016 up to in or about April 2018, ELKORANY worked as a Communications Specialist for the UN in Iraq. 

In or about November 2016, ELKORANY drugged and sexually assaulted a woman (“Victim-1”) in Iraq, where he was stationed while working for the UN.  ELKORANY drugged Victim-1 and brought Victim-1 to his apartment.  While at ELKORANY’s apartment, ELKORANY sexually assaulted Victim-1 while she was unconscious.  In or around December 2016, Victim-1 reported the sexual assault to the UN.  The UN initiated an investigation, through which ELKORANY was notified of the substance of Victim-1’s allegations against him.

On or about November 3, 2017, special agents with the New York Field Office of the Federal Bureau of Investigation (“FBI”) conducted a voluntary interview of ELKORANY outside of his residence in New Jersey.  During that interview, ELKORANY expressed familiarity with the nature and substance of the allegations made by Victim-1 to the UN but falsely stated that the drugging and sexual assault by ELKORANY that Victim-1 had reported to the UN did not occur. 

ELKORANY also engaged in a pattern of similar conduct involving many other women.  Between in or around 2014 and in or around 2019, ELKORANY drugged and sexually assaulted a woman (“Victim-2”), who was a contractor for a UN organization at relevant times, in the United States and Iraq, among other locations, on multiple occasions. 

In addition to Victim-1 and Victim‑2, ELKORANY drugged and/or sexually assaulted 18 additional victims between in or around 2002 and in or around 2016. 

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In addition to the prison sentence, ELKORANY, 39, of West Orange, New Jersey, was sentenced to three years of supervised release and ordered to pay restitution in amounts to be determined. 

Mr. Williams praised the outstanding work of the FBI.

The case is being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Lara Pomerantz, Amanda L. Houle, Daniel C. Richenthal, and Robert B. Sobelman are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Michael Alfonso, the Acting Special Agent-in-Charge of the New York Field Office of the Department of Homeland Security (“HSI”), announced that PHILIP DALLMANN, the former executive director of a children’s not-for-profit organization based in New York City, was charged in a complaint with embezzling funds from the organization from 2018 to 2021.  DALLMANN was arrested today in Seattle, Washington, and will be presented this afternoon in Seattle federal court.

U.S. Attorney Damian Williams said:  “As alleged, Philip Dallmann spent years exploiting his position of trust to line his own pockets with donor funds intended to enrich the lives of children.  He also stole for years from his wife’s family, and when he was caught, he claimed he did so in part to help cover the organization’s costs.  Dallmann now faces federal charges for this double deception.”

Acting Special Agent-in-Charge Michael Alfonso said:  “Dallmann’s insatiable greed led him to allegedly embezzle nearly $100,000 from a not-for-profit organization aimed at helping children participate in the arts.  Dallmann betrayed the trust of his employers and took these funds from the hands of children and teachers who deserve them, funding his own lifestyle with the stolen funds.  HSI is a leader in federal financial crime investigations, and we will continue to bring our investigative capabilities to expose financial frauds targeting our most vulnerable.”

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

From at least 2018 through 2021, PHILIP DALLMANN served as the executive director of a children’s not-for-profit organization based in Manhattan.  The organization is dedicated to providing inclusive arts programming for students of all development profiles, including autistic children.

In 2018, DALLMANN began embezzling funds from the organization’s bank account for unauthorized personal expenses.  In or around 2019, the organization began receiving overdraft notices from the bank, which DALLMANN claimed was caused by the bank’s loss of donor checks.  The following year, the organization switched banks, and DALLMANN continued his embezzlement.  A subsequent audit revealed that DALLMANN stole a total of approximately $98,000.

While serving as the executive director, DALLMANN married a teacher at the not-for-profit organization.  In or around the spring of 2020, DALLMANN’s wife learned that DALLMANN had stolen credit cards that belonged to her father and on which she was an authorized user and that DALLMANN had used the credit cards to make unauthorized transactions, later found to total more than $143,000.

DALLMANN claimed that he had used his wife’s credit cards to cover operational expenses for the not-for-profit organization.  DALLMANN then impersonated the organization’s treasurer by email to negotiate repayments by the organization to his wife.  Based on DALLMANN’s representations, the organization then, in fact, entered into a contract to pay DALLMANN’s wife $30,000.

In sum, DALLMANN made hundreds of unauthorized personal transactions using the not-for-profit organization’s bank accounts, such as payments for pet grooming, food delivery, restaurants, groceries, alcohol, clothing, shoes, transportation, ESPN Plus and Netflix subscriptions, Amazon orders, and wedding photography services.  He also withdrew thousands of dollars in cash from the not-for-profit organization’s accounts.

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DALLMANN, 34, of Seattle, Washington, is charged with one count of wire fraud, which carries a maximum potential sentence of 20 years in prison, and one count of access device fraud, which carries a maximum potential sentence of 15 years in prison.  He is also charged with one count of aggravated identity theft, which carries a mandatory minimum sentence of two years in prison, consecutive to any other sentence imposed.

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 investigative work of HSI and thanked local law enforcement partners in Seattle and the U.S. Attorney’s Office for the Western District of Washington for their assistance.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Jane Y. Chong is in charge of the prosecution.

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Complaint constitutes 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, announced that MARC ELEFANT, a New York lawyer, pled guilty today to one count of conspiracy to commit wire fraud in connection with a scheme to obtain millions of dollars in fraudulent insurance reimbursements and other compensation from fraudulent trip-and-fall accidents.  ELEFANT is the third defendant to plead guilty this year.  Two other defendants — ADRIAN ALEXANDER, the owner of a litigation funding company, and SADY RIBEIRO, a New York-licensed pain management doctor and surgeon — pled guilty earlier this year.  ALEXANDER pled guilty to one count of conspiracy to commit wire fraud on August 30, 2022.  RIBEIRO pled guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit mail fraud on September 29, 2022.  All defendants pled guilty before U.S. District Judge Sidney H. Stein.

U.S. Attorney Damian Williams said: “We expect lawyers to follow the rules and act ethically on behalf of their clients, but attorney Marc Elefant acted only for himself, abusing his professional license and position of trust to steal over a million dollars from New York City businesses and their insurance companies through a massive trip-and-fall fraud scheme.  Elefant and his co-conspirators preyed upon the most vulnerable members of society in order to enrich themselves.  Elefant now awaits sentencing for his reprehensible crime.”

According to the Indictment, the Superseding Information filed against ELEFANT, other documents filed in this case, and statements made in court:

MARC ELEFANT, 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.  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 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 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 of 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 were expected to, and in fact did, conduct these surgeries regardless of the legitimate medical needs of the Patients.  

Members of the fraud scheme often recruited individuals who were extremely poor as Patients — individuals desperate enough to submit to surgeries in exchange for the small Post-Surgery Payments.  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.  It was also common for scheme participants to recruit Patients from homeless shelters in New York City.

The Patients’ legal and medical fees were usually paid for by litigation funding companies (the “Funding Companies”), including a company owned by ALEXANDER.  Funding Companies were used 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 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 (if not all) of the proceeds that were awarded in the Fraudulent Lawsuits were paid to the Funding Companies, lawyers, including ELEFANT, doctors, and others, with the Patients receiving a much smaller percentage of the remaining recovery.

*                *                *

ELEFANT, 51, of Long Island, New York, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison.  As part of his plea agreement, ELEFANT agreed to forfeit $955,281 to the United States and to make restitution in the amount of $1,486,000.

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 the judge.  ELEFANT is scheduled to be sentenced on January 25, 2023, by U.S. District Judge Sidney H. Stein.     

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 United States Attorneys Nicholas Chiuchiolo, Nicholas Folly, Danielle Kudla, and Alexandra Rothman are in charge of the prosecution.