Southern District of New York

Damian Williams, the United States Attorney for the Southern District of New York; Michael Alfonso, Acting Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”); John B. DeVito, Special Agent in Charge of the New York Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”); and Keechant Sewell, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing today of a nine-count superseding indictment charging four members of the “Mac Ballers” subset of the national Bloods gang in the Bronx, New York.  GLEN CARWELL, a/k/a “Tink,” a/k/a “Tinky,” SHAWNDALE LEWIS, a/k/a “Nore,” COREY BATCHELOR, a/k/a “Corey Balla,” and JORDAN TOWNSEND were charged with racketeering conspiracy, violent crimes in aid of racketeering, and firearms offenses.  CARWELL and LEWIS were also charged with narcotics conspiracy.  The case is assigned to U.S. District Judge Lewis J. Liman.

CARWELL was already in custody in connection with robbery and firearms charges contained in a previous indictment related to this prosecution.  LEWIS was arrested this morning and presented in Manhattan federal court before U.S. Magistrate Judge Robert W. Lehrburger.  BATCHELOR was also arrested this morning in North Carolina and presented before a Magistrate Judge in the Western District of North Carolina.   TOWNSEND remains at large.

U.S. Attorney Damian Williams said: “We allege that for years, the Mac Baller set of the Bloods has terrorized the New York area, and especially the Bronx, by pouring addictive drugs into our community, committing robberies, and engaging in shootings.  These charges reflect our commitment to keeping our community safe by targeting gang members who engage in violence, as we allege these defendants did.”

HSI New York Acting Special Agent in Charge Michael Alfonso said:  “Today, we announce the arrests of multiple members of the ‘Mac Ballers’ street gang who, as alleged, have participated in escalating acts of violence, to include attempted homicide, in their efforts to protect and control their territory.  HSI is committed to working with our federal, state, and local partners to disrupt and dismantle these dangerous street gangs who terrorize our neighborhoods in an effort to further their criminal enterprises.”

ATF Special Agent in Charge John B. DeVito said:  “New York residents deserve to live, work, and thrive free of fear and trauma.  This is yet another example of law enforcement’s commitment to ensure just that for our citizens.  Thanks to the leadership of HSI and NYPD for their hard work to reduce violent crime.  ATF is proud to support and work alongside our partners in the collective cause of public safety.  Our neighborhoods deserve to flourish without fear or intimidation caused by violent criminal gangs.”

NYPD Commissioner Keechant L. Sewell said:  “Gang violence threatens the safety of New Yorkers and puts communities in the crosshairs of drug trafficking and drug-related crimes.  This case highlights the NYPD’s relentless pursuit of those few individuals who drive the violence and disorder in our city, and today’s indictment reflects our continued focus on removing them from our streets.  I commend all of our partners in the U.S. Attorney’s Office for the Southern District, the New York Field Office of Homeland Security Investigations, and the New York Field Division of the ATF for their diligence on this important case.”

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

From at least in or about late 2014 through 2022, the Mac Ballers was a criminal enterprise centered in the northeastern United States, including in the Bronx, New York, and in the jails and prisons of New York City and the State of New York.  In order to make money for the gang, protect the gang’s territory, and promote the gang’s standing, members of the Mac Ballers engaged in, among other things, narcotics trafficking, fraud and identity theft, and acts of violence, including robberies and attempted murders.  To that end, Mac Baller members sold heroin, cocaine, crack cocaine and marijuana, promoted their gang affiliation on social media, possessed firearms, and engaged in shootings as part of their gang membership and narcotics trafficking.  As part of their membership in the gang, from 2017 to 2022, all four defendants participated in a conspiracy to commit murder in aid of racketeering, resulting in the attempted murder and assault with a dangerous weapon of a victim on October 19, 2021.

*                *                *

A chart containing the charges and minimum and maximum penalties each defendant faces is attached.  The statutory minimum and maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by a judge.

Mr. Williams praised the outstanding investigative work of HSI, ATF, the NYPD, and the Special Agents of the United States Attorney’s Office.

The charges are the result of an ongoing Organized Crime Drug Enforcement Task Forces (“OCDETF”) operation led by the United States Attorney’s Office for the Southern District of New York.  OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach.  Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.  

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Jacob R. Fiddelman, Peter J. Davis, Elizabeth A. Espinosa, and Frank J. Balsamello are in charge of the prosecution.

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

Defendant

Age

Charges

Minimum and Maximum Penalties

 

GLEN CARWELL, a/k/a “Tink,” a/k/a “Tinky”

 

37

 

Racketeering Conspiracy; Conspiracy to Commit Murder in Aid of Racketeering; Narcotics Conspiracy; Use and Brandishing of a Firearm in Furtherance of a Controlled Substance Offense; Hobbs Act Robbery; Conspiracy to Commit Hobbs Act Robbery; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Crime of Violence and Controlled Substance Offense

 

 

Maximum of life in prison; mandatory minimum 17 years in prison (to run consecutive to any other sentence)

 

SHAWNDALE LEWIS, a/k/a “Nore”

 

36

 

Racketeering Conspiracy; Conspiracy to Commit Murder in Aid of Racketeering; Attempted Murder and Assault with a  Dangerous Weapon in Aid of Racketeering; Use and Discharge of a Firearm in Furtherance of a Crime of Violence; Narcotics Conspiracy; Use and Brandishing of a Firearm in Furtherance of a Controlled Substance Offense

 

 

Maximum of life in prison; mandatory minimum 17 years in prison (to run consecutive to any other sentence)

 

COREY BATCHELOR, a/k/a “Corey Balla”

 

24

 

Racketeering Conspiracy; Conspiracy to Commit Murder in Aid of Racketeering; Attempted Murder and Assault with a  Dangerous Weapon in Aid of Racketeering; Use and Discharge of a Firearm in Furtherance of a Crime of Violence

 

 

Maximum of life in prison; mandatory minimum 10 years in prison (to run consecutive to any other sentence)

 

JORDAN TOWNSEND

 

26

 

Racketeering Conspiracy; Conspiracy to Commit Murder in Aid of Racketeering; Attempted Murder and Assault with a  Dangerous Weapon in Aid of Racketeering; Use and Discharge of a Firearm in Furtherance of a Crime of Violence

 

 

Maximum of life in prison; mandatory minimum 10 years in prison (to run consecutive to any other sentence)

 

 

---

[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, United States Attorney for the Southern District of New York, and Paul Kiecker, Administrator of the Food Safety and Inspection Service of the U.S. Department of Agriculture (“USDA-FSIS”), announced today that a federal district court has approved an agreement (“Agreement”) resolving violations by defendants CHUNG SHING MEATS, INC., a/k/a “New Chung Hing Meats, Inc,” WING HONG CHEUNG, MIAO HE FENG, YIU KWAN CHEUNG, and TIAN LUN FENG (collectively, the “defendants”) of a previously entered judicial consent decree requiring defendants to comply with food safety laws at their meat distributorship in Chinatown, Manhattan.  Today’s Agreement imposes a $250,000 civil penalty on defendants, which equals the highest civil penalty ever imposed for such violations.

U.S. Attorney Damian Williams said:  “This Office has zero tolerance for defendants who continue in their ways after entering into consent decrees in which they commit to come into compliance.  Such conduct is all the worse where, as here, the consent decree was designed to protect the public health.  The significant financial penalty should serve as notice to all defendants that they must live up to their commitments and comply with the law.”

FSIS Administrator Paul Kiecker said: “FSIS’s authority to enforce the Federal Meat Inspection Act and the Poultry Products Inspection Act is clear.  Our inspection personnel and investigators are on the job daily, verifying that establishments are providing consumers with safe, wholesome, and accurately labeled food.  We remain committed to public health, and this civil penalty shows that we will take swift action to protect American consumers.”

The Federal Meat Inspection Act (“FMIA”) and Poultry Products Inspection Act (“PPIA”) protect public health by ensuring the nation’s commercial supply of meat and poultry is safe, wholesome, and accurately labeled and packaged.  These requirements allow consumers to have confidence in the safety of their meat and poultry products and permit public health officials to trace problems to their source.

In 2019, this Office filed a civil complaint against defendants, alleging that they routinely prepared and sold meat and poultry products at 19 Catherine Street, New York, New York, without meeting the federal inspection requirements of the FMIA and the PPIA, including by misbranding or repackaging meat and poultry products without the marks of federal inspection.  USDA-FSIS had identified FMIA and PPIA violations by the defendants that included selling uninspected or misbranded roast pork, pork chops, roast ducks, beef brisket, chickens, and other beef, poultry, and pork products.  In all, USDA-FSIS’s inspections had uncovered over 400 pounds of meat and poultry products sold or offered for sale in violation of the FMIA and PPIA.

Contemporaneously with the 2019 complaint, defendants agreed to resolve the violations by entering into a consent decree that required them to comply with the FMIA and PPIA.  Among other things, the consent decree included a permanent injunction prohibiting defendants from “selling, transporting, offering for sale or transportation, or receiving for transportation, any meat, meat food products, poultry, or poultry products required to be inspected and passed by USDA-FSIS that have not been inspected and passed by USDA-FSIS federal inspectors,” and requiring defendants to “prepare and maintain, for each product containing meat, meat food products, poultry, or poultry products, ... business records of all transactions ...”  The consent decree included financial penalties that would apply if defendants violated these obligations.  On January 7, 2020, the federal district court approved the consent decree, making it a binding court order.

Defendants, however, have repeatedly violated the consent decree.  As stated in the Agreement approved by the court today:

• “... Defendants [have] admitted to selling a total of 787.62 pounds of non-federally inspected and misbranded meat and poultry between August 3, 2020, and January 26, 2021, in violation of Paragraph 4(a) of the Consent Decree”
• “... Defendants [have] further admitted that New Chung Hing had generally failed to keep requisite purchase invoices post-dating the Consent Decree, in violation of Paragraph 5 of the Consent Decree”

The Agreement requires defendants to pay $250,000 as a civil penalty for these violations of the Consent Decree.  This penalty equals the highest civil penalty ever imposed for violations of a USDA-FSIS consent decree under these food safety statutes, reflecting the gravity of defendants’ violations.

*                *                *

Mr. Williams thanked the USDA-FSIS for its efforts on this matter. 

This case is being handled by the Environmental Protection Unit of the Office’s Civil Division.  Assistant U.S. Attorney Jessica F. Rosenbaum is in charge of the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced that FREEMAN CELVIN, a/k/a “Celvin Freeman,” was sentenced today to 78 months for his participation in a fraud and money laundering conspiracy based in the Republic of Ghana (“Ghana”) involving the theft of millions of dollars.  On March 30, 2022, CELVIN was convicted after a jury trial of all seven counts against him before U.S. District Judge Jed S. Rakoff, who imposed today’s sentence.  CELVIN was previously arrested on February 17, 2021, and has been detained since his arrest.  

U.S. Attorney Damian Williams said:  “Freeman Celvin used an auto business in New Jersey as a front to launder millions of dollars in fraud proceeds to scam artists in Ghana.  The online scams perpetrated by Celvin’s partners in Ghana were lucrative and callous, as they targeted vulnerable, elderly men and women and tricked them into transferring their life savings to the defendant, who then took his laundering fee and sent the money abroad.  Today’s sentence demonstrates that money launderers who assist online scammers abroad will be held accountable and brought to justice for their crimes.”    

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

From in or about 2014 through in or about February 2021, a criminal enterprise based in Ghana (the “Enterprise”) committed a series of business email compromises and romance scams against individuals and businesses located across the United States, including in the Southern District of New York.  The objective of the Enterprise’s business email compromise fraud scheme was to trick and deceive businesses into wiring funds into accounts controlled by the Enterprise through the use of email accounts that “spoofed” or impersonated employees of a victim company or third parties engaged in business with a victim company.  The Enterprise also conducted romance scams by using electronic messages sent via email, text messaging, or online dating websites that deluded victims, many of whom were vulnerable, older men and women who lived alone, into believing the victim was in a romantic relationship with a fake identity assumed by members of the Enterprise.  Once members of the Enterprise had gained the trust of the victims using the fake identity, they used false pretenses to cause the victims to wire money to bank accounts the victims believed were controlled by their romantic interests, when in fact the bank accounts were controlled by members of the Enterprise, like CELVIN. 

CELVIN received fraud proceeds from victims of the Enterprise in personal bank accounts as well as business bank accounts for his company Freeman Autos LLC, a company purportedly involved in, among other things, automobile sales.  The defendant also received fraud proceeds from other U.S.-based members of the Enterprise either by wire transfer or cash deliveries.  Once CELVIN received fraud proceeds, he took out a percentage fee and then withdrew, transported, and laundered those fraud proceeds to other members of the Enterprise abroad in Ghana.  The defendant primarily laundered the fraud proceeds by using the money to purchase automobiles and other goods and shipping those products to Ghana and elsewhere.  The defendant’s transactions had the appearance of legitimate business transactions.  This trade-based money laundering scheme was designed to obscure the origin of the fraud proceeds as well as the identity of the ultimate beneficiaries of these schemes. 

From in or about 2016 through in or about 2021, CELVIN controlled more than eight bank accounts that had deposits that totaled over approximately $5.7 million during that time period.  The vast majority of those deposits consisted of large wire transfers and check or cash deposits from U.S.-based individuals and entities that were victims of the Enterprise’s fraud schemes.   

*                *                *

In addition to his prison term, CELVIN, 48, of East Orange, New Jersey, was sentenced to three years of supervised release and further ordered to forfeit $290,604.15.  CELVIN’s co-conspirators, FRED ASANTE and LORD ANING, were previously sentenced to 108 months and 24 months in prison, respectively, earlier this year.

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

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Sagar K. Ravi, Katherine C. Reilly, and Mitzi Steiner 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 that TAJ EVERLY, a former correction officer at Green Haven Correctional Facility, was charged in White Plains federal court with falsifying records in connection with EVERLY’s May 28, 2020, assault of an inmate at Green Haven.  EVERLY was arrested this morning and presented before Magistrate Judge Judith C. McCarthy.  The case is assigned to U.S. District Judge Nelson S. Román.

U.S. Attorney Damian Williams said: “As alleged, Taj Everly abused his position as a correction officer by assaulting an inmate and then lying about his actions in an incident report.  This Office has no tolerance for correction officers like Everly who, as alleged, commit acts of violence against inmates in their care and custody and then lie to cover their tracks.  Today’s indictment should send a clear message that this Office will continue to investigate and prosecute civil rights abuses wherever we find them.”

FBI Assistant Director-in-Charge Michael J. Driscoll said: “As we allege today, Mr. Everly violated his oath to uphold the law when he willingly filed a false report to conceal his malicious actions.  Individuals in a position of authority in our criminal justice system are not above the law.  The FBI will continue to investigate these types of allegations and ensure those who abuse their power are held accountable.”

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

On May 28, 2020, EVERLY, who was then a correction officer at Green Haven Correctional Facility, located in Stormville, New York, assaulted an inmate (the “Inmate”) in the care and custody of the New York State Department of Corrections and Community Supervision (“DOCCS”).  As the Inmate exited a room at Green Haven, EVERLY approached the Inmate and, without provocation, punched the Inmate, causing both EVERLY and the Inmate to fall to the ground.

After the assault, EVERLY prepared an incident report, in which EVERLY falsely stated that the Inmate had first punched him and that EVERLY responded with force.

*                *                *

EVERLY, 32, of Cortlandt Manor, New York, is charged with falsifying records in connection with a federal investigation, which carries a maximum sentence 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 a judge.

Mr. Williams praised the outstanding investigative work of the FBI and the DOCCS Office of Special Investigations. 

The prosecution of this case is being handled by the Office’s Civil Rights Unit in the Criminal Division.  Assistant United States Attorney Lindsey Keenan 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.

---

[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 ADAM BELARDINO, the chief executive officer of the Maddox Group, pled guilty to two counts of wire fraud and one count of making a false statement to the Internal Revenue Service in connection with separate schemes to defraud clients and to fail to pay contributions made by Maddox Group employees to the Maddox Group 401(k) plan.  BELARDINO pled guilty before the Honorable Judith C. McCarthy in White Plains federal court today.

According to the allegations in the Superseding Information to which BELARDINO pled guilty and other court documents:

Embezzlement from Victim 1

BELARDINO had managed Victim 1’s investments at another firm before he founded Maddox in July 2019.  In August 2019, BELARDINO convinced Victim 1 to liquidate some of her portfolio and to transfer the liquidated funds to Maddox for investment.  Victim 1 then transferred more than $313,000 to Maddox in eight separate transactions between August 2019 and October 2020.  Instead of investing Victim 1’s money as he had promised, BELARDINO used her money to pay the operating expenses of Maddox, including payroll and office rent; to pay down prior debt; to pay credit card charges, which consisted primarily of personal items; and to pay for personal travel. 

In September 2021, Victim 1 directed BELARDINO to transfer her portfolio at Maddox to her brokerage account at another firm.  From September 2021 to February 2022, BERNARDINO indicated to the victim and her family members that he was liquidating the portfolio and would return the funds shortly.  He additionally provided documents suggesting that he had made a wire transfer of Victim 1’s funds to her bank and deposited checks drawn on a checking account held by Maddox into Victim 1’s bank account for what he claimed was the full value of her portfolio.  Nevertheless, Victim 1 never received any funds by wire, and the checks BELARDINO had deposited were returned due to insufficient funds in Maddox’s account.

Scheme to Obtain Fraudulent Life Insurance Commissions - Victim 2

In or about May 2019, BELARDINO served as the agent for Insurance Company 1 in connection with an application by Victim 2 for a life insurance policy with a face amount of $1 million, which amount was eventually increased to $18 million.  As an agent, BELARDINO received commissions from Insurance Company 1 once Victim 2’s application was approved. 

In or about April 2020 and January 2021, respectively, BELARDINO applied for two additional life insurance policies with a face amount of $3 million and $5 million on behalf of Victim 2 without Victim 2’s knowledge or authorization.  While applying for these policies, BELARDINO made materially false statements regarding Victim 2’s income, net worth, and health.  In or about August 2020 and May 2021, respectively, BELARDINO increased the face amount of one insurance policy to $6 million and the other to $12.1 million, again without Victim 2’s knowledge or authorization.  He additionally paid and attempted to pay the policy premiums of $194,280 and $105,000 with Victim 2’s funds, and ultimately received approximately $197,497 in commissions from the two Insurance Companies.

False Statement in Connection with Fraudulent Withholding of Employee 401(k) Contributions

BELARDINO adopted a retirement savings plan (the “Plan”) on behalf of the Maddox Group that became effective on January 1, 2020.  He served as the trustee of the Plan. 

From on or about November 1, 2020, through on or about August 13, 2021, BELARDINO withheld $8,004.67 from the paychecks of the four Maddox employees other than himself who chose to participate in the Plan.  BELARDINO failed to deposit these withheld funds into the Plan’s trust account and instead converted those funds to his and Maddox’s use.

On or about October 14, 2021, BELARDINO authorized the Plan administrator to file with the Internal Revenue Service a Form 5500-SF for the 2020 calendar year in which he falsely answered in the negative when asked “During [2020]:  Was there a failure to transmit to the plan any participant contributions...?”

*                *                *

BELARDINO, 37, of New York, New York, pled guilty to two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison, and one count of making a false statement to the Internal Revenue Service, which carries a maximum sentence of five years in prison. 

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

Mr. Williams praised the outstanding investigative work of Special Agents of the FBI and Criminal Investigators of the Employee Benefits Security Administration of the United States Department of Labor.

The prosecution of this case is being handled by the Office’s White Plains Division.  Assistant United States Attorney James McMahon is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that MARC LARUELLE pled guilty to one count of distributing Oxycodone, among other narcotics, without a legitimate medical purpose while acting outside the usual course of professional practice.  LARUELLE pled guilty before U.S. District Judge Denis L. Cote.

U.S. Attorney Damian Williams said:  “Marc Laruelle abused his medical license and violated the oath of his profession when he prescribed more than 100,000 doses of a highly potent and addictive opioid without a legitimate medical need.  As this case makes clear, we will aggressively prosecute physicians who are contributing to the national opioid crisis.  Laruelle now awaits sentencing for his crime.”

According to the Indictment, LARUELLE’s plea agreement, and statements made in Court:

Between in or about September 2016 up to and including in or about October 2021, MARC LARUELLE, a licensed doctor specializing in psychiatry, prescribed more than 100,000 doses of Oxycodone without a legitimate medical purpose outside of the usual course of professional practice.  Oxycodone is a highly potent and addictive opioid that commands high prices in the black market because of demand by drug abusers.  LARUELLE often prescribed Oxycodone in combination with Xanax (alprazolam) and/or Adderall (amphetamine), controlled substances that are themselves frequently abused and resold illicitly.  LARUELLE failed to perform proper physical examinations or medical tests prior to prescribing Oxycodone to his patients.  LARUELLE also charged patients as much as $800 per prescription and prescribed large amounts of Oxycodone with the understanding that the quantity would be resold in the black market. 

*                *                *

LARUELLE, 65, of Yonkers, New York, pled guilty to one count of distributing Oxycodone, Amphetamines, and Xanax, which carries a maximum sentence of 20 years in prison. 

The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing will be determined by a judge.  LARUELLE is scheduled to be sentenced by Judge Cote on January 26, 2023.

Mr. Williams praised the outstanding work of the Organized Crime Drug Enforcement Task Force (“OCDETF”) New York Strike Force for their support and assistance in this matter.  The OCDETF New York Strike Force is a crime-fighting unit comprising federal, state, and local law enforcement agencies supported by the Organized Crime Drug Enforcement Task Force and the New York/New Jersey High Intensity Drug Trafficking Area.  The Strike Force is affiliated with the DEA’s New York Division and includes agents and officers of the DEA, New York City Police Department, New York State Police, Homeland Security Investigations, U.S. Internal Revenue Service Criminal Investigation Division, Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Customs and Border Protection, U.S. Secret Service, U.S. Marshals Service, New York National Guard, Clarkstown Police Department, U.S. Coast Guard, Port Washington Police Department, and New York State Department of Corrections and Community Supervision.  Mr. Williams also thanked the New York State Department of Health Bureau of Narcotic Enforcement for their assistance in this case.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that the United States has filed a civil healthcare fraud lawsuit against CIGNA CORPORATION and its subsidiary Medicare Advantage Organizations (collectively, “CIGNA”).  The lawsuit seeks damages and penalties under the False Claims Act for CIGNA’s submissions to the Government of false and invalid patient diagnosis codes to artificially inflate the payments CIGNA received for providing insurance coverage to its Medicare Advantage plan members.  The Government is intervening in a lawsuit filed by a whistleblower, which was originally filed in the United States District Court for the Southern District of New York and later transferred to the Middle District of Tennessee.

The Government’s complaint alleges that the reported diagnoses codes were based solely on forms completed by vendors retained and paid by CIGNA to conduct in-home assessments of plan members.  The healthcare providers (typically nurse practitioners) who conducted these home visits did not perform or order the testing or imaging that would have been necessary to reliably diagnose the serious, complex conditions reported and were prohibited by CIGNA from providing any treatment during the home visit for the medical conditions they purportedly found.  The diagnoses at issue were not supported by the information documented on the form completed by the vendor and were not reported to CIGNA by any other healthcare provider who saw the patient during the year in which the home visit occurred.  Nevertheless, CIGNA submitted these diagnoses to the Government to claim increased payments and falsely certified on an annual basis that its diagnosis data submissions were “accurate, complete, and truthful.”

U.S. Attorney Damian Williams said: “As alleged, CIGNA obtained tens of millions of dollars in Medicare funding by submitting to the Government false and invalid diagnoses for its Medicare Advantage plan members.  CIGNA knew that, under the Medicare Advantage reimbursement system, it would be paid more if its plan members appeared to be sicker.  This Office is dedicated to holding insurers accountable if they seek to manipulate the system and boost their profits by submitting false information to the Government.”

Medicare Advantage, also known as the Medicare Part C program, provides health insurance coverage for tens of millions of Americans who opt out of traditional Medicare.  Under Medicare Part C, Medicare Advantage Organizations (“MAOs”), typically operated by private insurers like CIGNA, provide coverage for Medicare beneficiaries.  In return, MAOs receive capitated payments from the Centers for Medicare and Medicaid Services (“CMS”) based on demographic information and the diagnoses of each plan beneficiary.  MAOs submit diagnosis data, typically passed along from beneficiaries’ healthcare providers, to CMS.  CMS then uses that diagnosis data, in conjunction with demographic factors, to calculate a “risk score” for each beneficiary and, in turn, the amount of the monthly capitated payment that the MAO will receive for covering that beneficiary.  The Medicare Advantage payment model is intended to pay MAOs more to provide healthcare for sicker enrollees (expected to incur higher healthcare costs) and less for healthier enrollees (expected to incur lower costs).

The following allegations are based on the Complaint that was filed in federal court:

CIGNA, through its subsidiaries and affiliates, owns and operates numerous MAOs that administer Medicare Advantage Plans.  CIGNA contracted with several vendors to conduct home visits of Medicare Advantage plan members across the country as part of its broader so-called “360 comprehensive assessment” program.  The home visits were typically conducted by nurse practitioners, and on occasion by other non-physician healthcare providers such as registered nurses and physician assistants (the “Vendor HCPs”).  Based on the visit, the Vendor HCPs completed a CIGNA-created form (“360 form”) that included a check-the-box multi-page list of a wide range of medical conditions.  CIGNA had its coding teams identify diagnosis codes that corresponded to the recorded medical conditions and then submitted those to CMS for risk adjustment payment purposes.

CIGNA structured the 360 home visits for the primary purpose of capturing and recording lucrative diagnosis codes that would significantly increase the monthly capitated payments it received from CMS.  The purpose of the visits was not to treat patients’ medical conditions, and CIGNA explicitly prohibited the Vendor HCPs from providing actual patient treatment or care.  As CIGNA acknowledged in an internal document discussing the program, “[t]the primary goal of a 360 visit is administrative code capture and not chronic care or acute care management.”  But this was not disclosed to CIGNA’s plan members when the home visit was scheduled or during the actual visit.  When identifying plan members to receive home visits, CIGNA targeted individuals who were likely to yield the greatest risk score increases and thus the greatest increased payment.  

The Vendor HCPs spent limited time with the patients and did not conduct a comprehensive physical examination.  When completing the assessments and recording the diagnoses, the Vendor HCPs relied largely on the patient’s own self-assessment and their responses to various basic screening questions.  Vendor HCPs did not have access to the patient’s full medical history and typically did not obtain or review relevant records from the patient’s primary care physician in advance of the visit.

CIGNA’s 360 home visit program regularly generated false and invalid diagnosis codes for certain serious, complex conditions that cannot be reliably diagnosed in a home setting and without extensive diagnostic testing or imaging.  In tens of thousands of instances, CIGNA submitted diagnosis codes that represent serious, complex medical conditions that (a) were based only on the home visits conducted by the Vendor HCPs; (b) required specific testing or imaging to be reliably diagnosed, which was not performed; (c) were not supported by the information documented on the 360 form completed by the Vendor HCPs; and (d) were not reported by any other healthcare provider who saw the plan member during the year in which the home visit occurred (the “Invalid Diagnoses”).  The Invalid Diagnoses included, but are not limited to, diagnoses for complex medical conditions such as chronic kidney disease, congestive heart failure, rheumatoid arthritis, and diabetes with renal complications.  According to CIGNA’s own clinical guidelines, accurately diagnosing these conditions requires specialized testing.

CIGNA exerted pressure on Vendor HCPs to record high-value diagnoses that significantly increased risk adjustment payments.  CIGNA management identified at least twelve classes of generic chronic diagnoses that they thought were “often underdiagnosed” among its Plan members and, through trainings and seminars, encouraged the Vendor HCPs to make these diagnoses during the home visits.  CIGNA also closely tracked the volume and nature of the diagnoses generated by each vendor’s home visits, as well as how the diagnoses affected risk-adjusted payments.  CIGNA provided trainings to vendors to improve their “performance” when they failed to deliver the expected level of high-value diagnosis codes.

Indeed, CIGNA tracked the return on investment of the 360 home visit program by comparing the costs of the in-home visits (i.e., payments to vendors) against the additional Part C payments generated by increased risk scores.  For example, according to an internal report, CIGNA determined that, during the first nine months of 2014, one vendor’s 6,658 in-home visits resulted in more than an additional $14 million in Medicare payments, which dwarfed the approximately $2.13 million that CIGNA paid to the vendor.  When specific providers were found to have captured fewer diagnoses than expected, CIGNA asked the vendor to prepare a “performance improvement plan” for the provider.

The Invalid Diagnoses generated by the 360 home visits also did not conform with the International Classification of Diseases (“ICD”) Office Guidelines for Coding and Reporting (the “ICD Guidelines”), as required by applicable federal regulations.  The Invalid Diagnoses did not affect patient care, treatment, or management during the home visit, as required under the ICD Guidelines, and thus were ineligible for risk adjustment.  In addition, the Invalid Diagnoses were not supported by the minimal information recorded on the 360 forms, in violation of the ICD Guidelines’ medical record documentation requirement.  In fact, in some cases, the 360 forms include clinical exam findings that contradict the supposed diagnosis.  For example, one patient received a congestive heart failure diagnosis from a home visit even though the 360 form explicitly noted that physical exam results found her heart to be “regular” and “normal” and stated, “cardiac reviewed and unremarkable.”

Through its 360 home visit program, CIGNA submitted diagnosis codes for tens of thousands of Invalid Diagnoses to CMS that constituted false claims for payment.  Based on these unlawful false claims, CIGNA improperly received tens of millions of dollars in risk adjustment payments from CMS, in violation of both the False Claims Act and the common law. 

Mr. Williams thanked HHS-OIG and the U.S. Attorney’s Office for the Middle District of Tennessee for their assistance with this case.

This case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorney Peter Aronoff is in charge of this case.

“The Conviction Integrity Committee of the Southern District of New York will strive to ensure justice is done in every case both by evaluating claims of factual innocence in our own cases, as well as providing assistance and access to information from SDNY cases that may bear on claims of factual innocence of defendants convicted in other jurisdictions.  This committee will be the first of its kind in this Office and only the second formal federal conviction integrity body nationally. 

The formation of the committee builds on work the Office has done historically to support credible claims of factual innocence in other jurisdictions, both as a resource for defendants and their counsel and as a liaison to the conviction integrity processes in other prosecutors’ offices. The committee institutionalizes that practice and also aims to bring the same level of rigor to review of our own convictions. Our solemn obligation as prosecutors to protect the community and seek justice for victims of crimes requires that we take every step to ensure that the guilty are held responsible and the innocent are set free. 

Though infrequent, wrongful convictions engender mistrust of law enforcement and erode the public’s faith in the fundamental fairness of the criminal justice system.  If the committee’s comprehensive review yields but one remedy of an unjust conviction or results in the freedom of even one wrongly incarcerated, innocent individual, we will consider it a successful endeavor to further the cause of justice for all.  We also hope to leverage the Committee’s work and leadership to ensure the Office’s practices on investigative techniques and disclosure are designed to prevent wrongful convictions.” 

Conviction Integrity Committee

Damian Williams, the United States Attorney for the Southern District of New York, announced the conviction in federal court of WILLIE DENNIS for cyberstalking three victims, all his former colleagues at a global law firm (the “Law Firm”).  The jury convicted DENNIS today following a one-week trial before U.S. District Judge Jed S. Rakoff.

U.S. Attorney Damian Williams said:  “Willie Dennis, a former law firm partner in Manhattan, has been convicted of waging a relentless cyberstalking campaign against his own former colleagues.  By texts, emails, and other threatening communications — sometimes hundreds per day — Dennis terrified his former colleagues to the point they had serious concerns for their own safety.  Today, a unanimous jury has made sure that Dennis is accountable for his years-long harassment of his former law partners.” 

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

WILLIE DENNIS, a former partner at the Law Firm, engaged in a years-long campaign of harassment, intimidation, and threats against multiple individuals, including the three victims in this case, all partners at the Law Firm.  As part of that campaign, DENNIS sent the victims thousands of harassing, threatening, and intimidating emails and text messages, back-to-back, at all hours of the day and night.  DENNIS targeted the victims, their families, and threatened their physical safety.  He demeaned them, called them racist names, and warned them that they would become “biblical symbols.”  In his threats, he told one victim to “sleep with one eye open.”

*                *                *

DENNIS, 60, of New York, New York, was convicted of three counts of cyberstalking.  Each count 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 would be determined by the judge.

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

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Sarah L. Kushner, Stephanie Simon, and Kimberly Ravener are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that SAAED MOSLEM and his father MEHDI MOSLEM were sentenced today to 96 months in prison and 40 months in prison, respectively, for defrauding their lenders and the Internal Revenue Service (“IRS”).  The defendants were previously found guilty of multiple offenses following a two-and-a-half-week jury trial in June 2021.  U.S. District Judge Cathy Seibel imposed the sentence in White Plains federal court.

U.S. Attorney Damian Williams said: “This father and son duo spent nearly a decade lying about their finances to get millions of dollars in fraudulent loans while hiding their income from the IRS and, in Saaed Moslem’s case, evading his creditors through a fraudulent bankruptcy filing.  Today’s sentences send a strong message that perpetrators of fraud will be held accountable and brought to justice for their actions.”

According to statements in the Indictment, evidence presented at trial and sentencing, other public filings, and statements in court:

From 2009 through 2018, MEHDI MOSLEM and SAAED MOSLEM conspired to defraud the United States by concealing profits relating to their car dealership, Exclusive Motor Sports, and other businesses from the IRS.  To falsely lower their business income, MEHDI MOSLEM and SAAED MOSLEM, among other things, caused their accountant to prepare partnership tax returns that significantly understated Exclusive Motor Sports’ inventory.  The fraudulent business income figures passed through to MEHDI MOSLEM’s and SAAED MOSLEM’s personal tax returns, contributing to a nearly $1 million underpayment in federal and state taxes. 

From 2011 through 2019, MEHDI MOSLEM and SAAED MOSLEM also conspired to commit bank fraud by providing falsely inflated net worth statements and fabricated tax returns in connection with loan applications, including for a $1.5 million mortgage on the Exclusive Motor Sports property in Central Valley.  SAAED MOSLEM then made numerous false statements to conceal his assets from financial institutions and other creditors when he filed for bankruptcy in 2015.  As a result, more than half a million dollars of unsecured debt was fraudulently discharged in the proceedings.  In 2019, SAAED MOSLEM committed aggravated identity theft by using a customer’s personal identifying information in connection with a fraudulent car loan application.

*                *                *

In addition to their prison terms, MEHDI MOSLEM, 73, and SAAED MOSLEM, 39, both of Central Valley, New York, were sentenced to three years of supervised release.  MEHDI MOSLEM was further ordered to pay restitution in the amount of $1,040,685.58 and a $100,000 fine.  SAAED MOSLEM was ordered to pay forfeiture in the amount of $1,927,303.25 and a $200,000 fine.

Mr. Williams praised the investigative work of the FBI and IRS-CI.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Nicholas S. Bradley, Daniel Loss, and James McMahon 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 JUSTIS COLON and ARIEL MARTINEZ with racketeering conspiracy, murder in aid of racketeering, murder with a firearm, attempted murder, assault with a deadly weapon in aid of racketeering, and other firearms offenses relating to COLON and MARTINEZ’s participation in the murder of Joshua Garcia and the non-fatal shooting of two other victims on April 23, 2022, in the Bronx, New York. 

COLON and MARTINEZ were taken into federal custody from state custody and will be presented today before Magistrate Judge Katharine H. Parker.  The case is assigned to U.S. District Judge Victor Marrero.

U.S. Attorney Damian Williams said:  “As alleged, the defendants participated in a gang shooting that killed Joshua Garcia and left two other victims injured.  We continue our daily work with our law enforcement partners to vigorously investigate and prosecute those who bring violence to our streets.”

NYPD Commissioner Keechant L. Sewell said:  “The fusillade of bullets that killed Joshua Garcia in April and wounded two other victims is a level of violence that shocks the conscience and can never be accepted.  Now, thanks to our determined investigation, the two alleged gang members charged in this case will face swift and meaningful punishment – a message to anyone else considering such violence on our city streets.  I commend our NYPD investigators, together with the prosecutors in the U.S. Attorney’s Office for the Southern District of New York, for their work in this important case.”

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

From at least 2014 to 2022, JUSTIS COLON, a/k/a “Jus Blaze,” a/k/a “JB,” a/k/a “Bin Laden,” and ARIEL MARTINEZ, a/k/a “Rel,” were members or associates of a gang based in the Castle Hill neighborhood of the Bronx known as “670.”   

In order to fund the 670 gang, protect and expand its interests, and promote its standing, members and associates of 670 committed, conspired, attempted, and threatened to commit acts of violence against rival gang members, including murder and assault; conspired to distribute and possess with intent to distribute narcotics, including heroin, “crack” cocaine, oxycodone, and marijuana; committed check fraud and unemployment fraud; committed commercial burglaries; and obtained, possessed, and used firearms, including by brandishing and discharging them. 

On April 23, 2022, during a shooting at rival gang members, COLON and MARTINEZ shot and killed Joshua Garcia and wounded two other victims in the vicinity of 1713 Clay Avenue in the Bronx, New York.

*                *                *

COLON, 25, and MARTINEZ, 23, both of the Bronx, New York, are each 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; two counts of attempted murder and assault with a dangerous weapon in aid of racketeering, which carries a statutory maximum of 20 years in prison; and two counts of using and carrying a firearm in furtherance of a crime of violence, during which the firearm was brandished and discharged, which each carry a statutory maximum of life in prison and a mandatory minimum sentence 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 Special Agents of the United States Attorney’s Office for the Southern District of New York and the NYPD.  Mr. Williams also thanked the Office of the Bronx District Attorney for its assistance.

This case is being handled by the Office’s Violent & Organized Crime Unit.  Assistant United States Attorneys Michael R. Herman, Emily A. Johnson, and Jun Xiang are in charge of the prosecution.

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

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Indictment 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 FREDY RENAN NAJERA MONTOYA was sentenced to 30 years in prison for conspiring to import cocaine into the United States and possessing machine guns and destructive devices during the course of that conspiracy.  NAJERA previously pled guilty before U.S. District Judge Paul G. Gardephe, who sentenced Najera today.       

U.S. Attorney Damian Williams said:  “Fredy Najera, a former Honduran congressman, abused his high-powered position by operating a large-scale narcotics trafficking organization that imported tons of cocaine to the United States.  Najera oversaw the construction of airfields in Honduras and the use of militia-style tactics and weaponry to protect the illicit shipments.  Najera has now been sentenced to 30 years in U.S. federal prison for his conduct in connection to importing over 30 tons of cocaine, which continues to contribute to the devastating cycle of addiction and abuse that affects so many Americans.”

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

From approximately 2008 through 2015, NAJERA abused his position as a Honduran congressman to lead large-scale and violent drug-trafficking activities in the same part of Honduras that he represented in his government position.  NAJERA’s crimes involved the distribution of more than 30 tons of cocaine, which was ultimately imported into the United States.  In connection with these activities, NAJERA used, and employed security teams who used military-grade weapons including machine guns and rocket-propelled grenade launchers. 

During that same time period, NAJERA constructed, maintained, and staffed clandestine airstrips in Olancho, Honduras, that were used to receive multi-hundred-kilogram shipments of cocaine sent from Venezuela to Honduras.  NAJERA facilitated the receipt of cocaine-laden planes and helicopters at his airstrips and coordinated the transportation of the cocaine westward in Honduras so that it could be imported into the United States.  Heavily armed security personnel employed by NAJERA participated in the receipt and transportation of these shipments.  NAJERA also cultivated criminal relationships with members of the Honduran National Police and the Honduran military in order to support his drug-trafficking activities by obtaining sensitive law enforcement information used by traffickers to avoid arrests and to plan transportation routes for U.S.-bound cocaine.

In 2012, NAJERA introduced members of the Sinaloa Cartel to Honduran officials who provided nearly unfettered access to a major commercial shipping hub in Puerto Cortés, Honduras.  The Sinaloa Cartel relied on NAJERA’s connections to transport approximately 10 tons of cocaine through Puerto Cortés.

*                *                *

In addition to his prison sentence, NAJERA, 46, of Honduras, was sentenced to five supervised release, ordered to forfeit $39,000,000, and ordered to pay a fine of $10,000,000.

Mr. Williams praised the outstanding efforts of the Bilateral Investigations Unit of the Special Operations Division of the Drug Enforcement Administration (“DEA”), New York Strike Force, and DEA Tegucigalpa Country Office, as well as the Department of Justice’s Office of International Affairs.    

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

This case is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Jacob H. Gutwillig, Michael D. Lockard, Jason A. Richman, and Elinor L. Tarlow are in charge of the prosecution.

A U.K. national was arrested today for conspiracy to violate U.S. sanctions imposed on Russian Oligarch Oleg Vladimirovich Deripaska and wire fraud in connection with funding U.S. properties purchased by Deripaska and efforts to expatriate Deripaska’s artwork in the United States through misrepresentations. The U.S. government will seek his extradition to the United States. Deripaska was previously charged with U.S. sanctions violations in an indictment unsealed on Sept. 29.

In 2014, the President issued Executive Order 13660, which declared a national emergency with respect to the situation in Ukraine. To address this national emergency, the President blocked all property of individuals determined by the U.S. Department of the Treasury to be responsible for or complicit in actions or policies that threatened the security, sovereignty or territorial integrity of Ukraine, or who materially assist, sponsor or provide support for individuals or entities engaging in such activities. Executive Order 13660 and regulations issued pursuant to it prohibit making or receiving any funds, goods or services by, to, from or for the benefit of any person designated by the U.S. Treasury.

On April 6, 2018, the U.S. Treasury’s Office of Foreign Assets Control (OFAC) designated Deripaska as a Specially Designated National (SDN), in connection with its finding that the actions of the Government of the Russian Federation with respect to Ukraine constitute an unusual and extraordinary threat to U.S. national security and foreign policy (the OFAC Sanctions). According to the U.S. Treasury, Deripaska was sanctioned for having acted or purported to act on behalf of, directly or indirectly, a senior official of the Government of the Russian Federation, and for operating in the energy sector of the Russian Federation economy.

According to court documents, Graham Bonham-Carter, 62, of the United Kingdom, worked for entities controlled by Deripaska from July 2003 through the present. Among other things, Bonham-Carter managed Deripaska’s residential properties located in the United Kingdom and Europe, including a house in Belgravia Square, London. Even after OFAC designated Deripaska, Bonham-Carter continued to work for Deripaska and refer to Deripaska as his “boss.” For example, in an email dated on or about June 18, 2018, Bonham-Carter wrote: “Times a bit tough for my boss as sanctions have hit him from the USA so not an ideal time.” In an email dated on or about Oct. 13, 2021, Bonham-Carter wrote: “It[’]s all good apart from banks keep shutting me down because of my affiliation to my boss Oleg Deripaska.... I have even been advised not to go to the USA where Oleg still has personal sanctions as the authorities will undoubtedly pull me to one side and the questioning could be hours or even days!!”

As alleged in the indictment, after Deripaska’s designation, Bonham-Carter engaged in over $1 million of illicit transactions to fund real estate properties in the United States for Deripaska’s benefit. Between in or about 2005 and in or about 2008, Deripaska purchased three residential properties in the United States, two in New York City and one in Washington, D.C. (the U.S. Properties). The properties were managed by a company named Gracetown Inc. After OFAC imposed sanctions on Deripaska on or about April 6, 2018, Gracetown Inc. continued to manage the properties Deripaska’s benefit. Shortly after Deripaska’s designation, Deripaska instructed Bonham-Carter to set up a new company for managing Deripaska’s properties. On or about May 25, 2018, Bonham-Carter wrote in an email that “OVD [i.e., Deripaska] wants me to set up my own company to run the [Belgravia Square] house and to possibly include Japan, Italy, China and more.” Less than two months later, on or about July 17, 2018, Bonham-Carter incorporated GBCM Limited. 

Between in or about March 2021 and in or about December 2021, while in Deripaska’s employ, Bonham-Carter transmitted payments for the upkeep of the U.S. Properties. Bonham-Carter wired payments totaling $1,043,964.30 from a bank account in Russia held in the name of GBCM Limited, to bank accounts held by Gracetown Inc. in New York City. Gracetown Inc. used the funds from GBCM Limited to pay for various expenses associated with the U.S. Properties, including staff salaries, property taxes and other services, and to maintain and keep up the U.S. Properties.

As alleged, Bonham-Carter also attempted to unlawfully transfer artwork purchased by Deripaska from an auction house in New York City to London through misrepresentations concealing Deripaska’s ownership of the artwork. In May 2021, when advised by the auction house that it had reason to believe that the artwork belonged to Deripaska, Bonham-Carter falsely stated that the artwork and a payment of $12,146 that Bonham-Carter had made to ship the Artwork do not belong to Deripaska. In fact, as Bonham-Carter knew, Deripaska had purchased the artwork, it remained his property, and the funds used to pay for shipping would be billed to Deripaska.

Bonham-Carter is charged in a three-count indictment with one count of conspiring to violate and evade U.S. sanctions, in violation of the International Emergency Economic Powers Act (IEEPA), one count of violating IEEPA and one count wire fraud, each of which counts carries a maximum sentence of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Task Force KleptoCapture Director Andrew C. Adams, U.S. Attorney Damian Williams for the Southern District of New York and Assistant Director Alan E. Kohler Jr. of the FBI’s Counterintelligence Division made the announcement.

The FBI New York Field Office and Counterintelligence Division are investigating the case, with valuable assistance provided by the Justice Department’s National Security Division Counterintelligence and Export Control Section and the Justice Department’s Office of International Affairs. The National Crime Agency of the United Kingdom provided substantial assistance.

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

Assistant U.S. Attorneys Anden Chow and Vladislav Vainberg for the Southern District of New York are prosecuting the case.

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

Damian Williams, the United States Attorney for the Southern District of New York and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an Indictment charging GRAHAM BONHAM-CARTER, a citizen of the United Kingdom, with conspiring to violate United States sanctions imposed on Russian oligarch Oleg Vladimirovich Deripaska and wire fraud in connection with BONHAM-CARTER’s funding of U.S. properties purchased by Deripaska and efforts to expatriate Deripaska’s artwork in the U.S. through misrepresentations.  BONHAM-CARTER was arrested today in the United Kingdom, and the United States Government will be seeking his extradition to the United States.  Deripaska was previously charged with U.S. sanctions violations in an Indictment unsealed on September 29, 2022 (the “Deripaska Indictment”).

U.S. Attorney Damian Williams said: “As alleged, Graham Bonham-Carter provided property management and other services to his employer, sanctioned Russian oligarch Oleg Deripaska.  Bonham-Carter obscured the origin of funding for upkeep and management of Deripaska’s lavish U.S. assets, in violation of the international sanctions.  OFAC sanctions preclude supporters of the brutal and unjust Russian war regime from using U.S. dollars in any financial transactions, and we thank our international partners for their continued partnership in enforcing this critical sanctions program.”

Andrew C. Adams, Director of Task Force KleptoCapture said: “The international real estate market, and its infamous opacity, afforded Bonham-Carter no shelter from the diligence and expertise of U.S. law enforcement and our partners.  Others who would attempt to move illicit money through international markets should take notice: neither powerful connections nor sophisticated deceptions succeeded in hiding Bonham-Carter’s efforts to illegally service a sanctioned oligarch.”

FBI Assistant Director-in-Charge Michael J. Driscoll said: "With each new action we take, we shine a light on the vast network of individuals willing to work with Russian oligarchs who brazenly break our laws and abuse our financial systems. Bonham-Carter allegedly hid Deripaska's money and assets from federal authorities, and continued to do so even after Deripaska was sanctioned by the U.S. Our work would not be possible without the ongoing and dedicated partnerships with our international counterparts, all of whom are strategically focused on stopping the Russian oligarchs and their criminal kleptocracy."

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

In 2014, the President issued Executive Order 13660, which declared a national emergency with respect to the situation in Ukraine.  To address this national emergency, the President blocked all property of individuals determined by the U.S. Treasury to be responsible for or complicit in actions or policies that threatened the security, sovereignty, or territorial integrity of Ukraine, or who materially assist, sponsor, or provide support individuals or entities engaging in such activities.  Executive Order 13660 and regulations issued pursuant to it, prohibit making or receiving any funds, goods or services by, to, from, or for the benefit of any person designated by the U.S. Treasury.

On April 6, 2018, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated Deripaska as a Specially Designated National (“SDN”), in connection with its finding that the actions of the Government of the Russian Federation with respect to Ukraine constitute an unusual and extraordinary threat to U.S. national security and foreign policy (the “OFAC Sanctions”).  According to the U.S. Treasury, Deripaska was sanctioned for having acted or purported to act on behalf of, directly or indirectly, a senior official of the Government of the Russian Federation, and for operating in the energy sector of the Russian Federation economy.

From approximately July 2003 through the present, BONHAM-CARTER worked for entities controlled by Deripaska.  Among other things, BONHAM-CARTER manages Deripaska’s residential properties located in the United Kingdom and Europe, including a house in Belgravia Square, London.  Even after OFAC designated Deripaska, BONHAM-CARTER continued to work for Deripaska and refer to Deripaska as his “boss.”  For example, in an email dated on or about June 18, 2018, BONHAM-CARTER wrote: “Times a bit tough for my boss as sanctions have hit him from the USA so not an ideal time.”  In an e-mail dated on or about October 13, 2021, BONHAM-CARTER wrote: “It[’]s all good apart from banks keep shutting me down because of my affiliation to my boss Oleg Deripaska.... I have even been advised not to go to the USA where Oleg still has personal sanctions as the authorities will undoubtedly pull me to one side and the questioning could be hours or even days!!”

As alleged in the Indictment, after Deripaska’s designation, BONHAM-CARTER engaged in over a million dollars of illicit transactions to fund real estate properties in the United States for Deripaska’s benefit.  Between in or about 2005 and in or about 2008, Deripaska purchased three residential properties in the United States, two in New York, New York, and one in Washington, D.C. (the “U.S. Properties”).  The properties were managed by a company named Gracetown, Inc.  After OFAC imposed sanctions on Deripaska on or about April 6, 2018, Gracetown, Inc. continued to manage the properties for Deripaska’s benefit.  Shortly after Deripaska’s designation, Deripaska instructed BONHAM-CARTER to set up a new company for managing Deripaska’s properties.  On or about May 25, 2018, BONHAM-CARTER wrote in an email that “OVD [i.e., Deripaska] wants me to set up my own company to run the [Belgravia Square] house and to possibly include Japan, Italy, China and more.”  Less than two months later, on or about July 17, 2018, BONHAM-CARTER incorporated GBCM Limited. 

Between in or about March 2021 and in or about December 2021, while in Deripaska’s employ, BONHAM-CARTER transmitted payments for the upkeep of the U.S. Properties. BONHAM-CARTER wired payments totaling $1,043,964.30 from a bank account in Russia held in the name of GBCM Limited, to bank accounts held by Gracetown, Inc. in New York, New York.  Gracetown, Inc. used the funds from GBCM Limited to pay for various expenses associated with the U.S. Properties, including staff salaries, property taxes, and other services, and to maintain and keep up the U.S. Properties.

As alleged, BONHAM-CARTER also attempted to unlawfully transfer artwork purchased by Deripaska from an auction house in New York City to London through misrepresentations concealing Deripaska’s ownership of the artwork.  In May 2021, when advised by the auction house that it had reason to believe that the artwork belonged to Deripaska, BONHAM-CARTER falsely stated that the artwork and a payment of $12,146 that BONHAM-CARTER had made to ship the Artwork do not belong to Deripaska.  In fact, as BONHAM-CARTER knew, Deripaska had purchased the artwork, it remained his property, and the funds used to pay for shipping would be billed to Deripaska.  

*                *                *

BONHAM-CARTER, 62, of the United Kingdom, is charged in a three-count Indictment with one count of conspiring to violate and evade U.S. sanctions, in violation of the International Emergency Economic Powers Act (“IEEPA”), one count of violating IEEPA, and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.

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

Mr. Williams praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division.  Mr. Williams further thanked the Department of Justice’s National Security Division, Counterintelligence, and Export Control Section and the Justice Department’s Office of International Affairs of the Department’s Criminal Division for their guidance and support throughout this investigation.  Finally, Mr. Williams praised the outstanding efforts of the authorities in the United Kingdom, in particular the National Crime Agency.

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

The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Anden Chow and Vladislav Vainberg are in charge of the case.

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

 

---

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

Damian Williams, the United States Attorney for the Southern District of New York, and Carlos F. Matus, Director of the U.S. Department of State’s Diplomatic Security Service (“DSS”), announced today that BARRAK ABDULMOHSEN ALHUNAIF, a former diplomatic attaché assigned to the Permanent Mission of the State of Kuwait to the United Nations, and his wife KHALEDAH SAAD ALDHUBAIBI were charged in Manhattan federal court with forced labor, visa fraud, fraud in foreign labor contracting, and conspiracy to commit visa fraud and fraud in foreign labor contracting, in connection with their hiring and subsequent abuse of three domestic workers from India and the Philippines.  Both ALHUNAIF and ALDHUBAIBI remain at large.

U.S. Attorney Damian Williams said: “Today’s indictment makes clear that no one is above the law.  Barrak Abdulmohsen Alhunaif and his wife Khaledah Saad Aldhubaibi are alleged to have lied to obtain visas to bring three domestic workers to the United States and then exploited and abused those workers upon their arrival.  This Office is committed to investigating and prosecuting those individuals who commit this type of fraud and abuse of particularly vulnerable foreign workers – no matter the title of the alleged offender.”

DSS Director Carlos F. Matus said:  “As the lead agency in this investigation, the Diplomatic Security Service demonstrated its commitment to maintaining the integrity of U.S. travel documents and the rights of visitors to the United States.  Our strong relationship with our law enforcement partners and the U.S. Attorney’s Office for the Southern District of New York continues to be essential in the pursuit of justice.”

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

From in or about 2017, up to and including in or about 2020, ALHUNAIF, a Kuwaiti national and diplomatic attaché assigned to the Permanent Mission of the State of Kuwait to the United Nations, and ALDHUBAIBI, ALHUNAIF’s wife, conspired to fraudulently procure visas for three foreign domestic workers, who were from India and the Philippines, to provide household help to their family in Manhattan.  ALHUNAIF and ALDHUBAIBI obtained the visas through the submission of fraudulent employment contracts, which, among other things, vastly overstated the domestic workers’ salaries, understated their hours, and falsely guaranteed other benefits, such as paid holidays and private living accommodations. 

Once the domestic workers arrived in the United States, ALHUNAIF and ALDHUBAIBI paid the domestic workers far less than what was specified in their contracts and what was the minimum salary required by law.  In order to conceal this scheme, ALHUNAIF provided payments to the domestic workers for the amounts set forth in their employment contracts but required the domestic workers to withdraw a portion of their paycheck in cash and to return the cash to either ALHUNAIF or ALDHUBAIBI.  As a result, ALHUNAIF and ALDHUBAIBI paid at least two of the domestic workers as little as $700 per month.  ALHUNAIF and ALDHUBAIBI also regularly compelled each of the domestic workers to work far in excess of 40 hours per week and without a regular day off.

Further, ALHUNAIF and ALDHUBAIBI subjected the domestic workers to other abusive conditions, including requiring two of them to surrender their passports upon arrival in the United States, restricting their ability to leave their employment, and controlling the domestic workers’ movements by prohibiting them from leaving their residence without their express permission. ALHUNAIF and ALDHUBAIBI also denied two of the domestic workers timely medical care for medical conditions caused by or contracted during their employment.      

In addition, ALDHUBAIBI verbally abused each of the domestic workers and physically abused one of the workers.  ALHUNAIF and ALDHUBAIBI also threatened at least one domestic worker on several occasions.  These threats included, among other things, that ALHUNAIF and ALDHUBAIBI would falsely report the domestic worker to law enforcement for stealing from them or mistreating their children. 

*                *                *

ALHUNAIF, 36, and ALDHUBAIBI, 34, both of Kuwait City, Kuwait, are charged with conspiracy to commit visa fraud, which carries a maximum sentence of five years in prison; conspiracy to commit fraud in foreign labor contracting, which carries a maximum sentence of five years in prison; and forced labor, which carries a maximum sentence of 20 years in prison. 

In addition, ALHUNAIF is charged with three counts of visa fraud, which each carry a maximum sentence of 10 years in prison, and three counts of fraud in foreign labor contracting, which each carry a maximum sentence of five years in prison.

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

Mr. Williams praised the outstanding investigative work of the Diplomatic Security Service. 

The prosecution of this case is being handled by the Office’s Civil Rights Unit in the Criminal Division.  Assistant United States Attorneys Jamie Bagliebter and Mitzi S. Steiner are in charge of the prosecution.

 

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

 

---

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that JUSTIN RIVERA, a/k/a “Denzel Rivera,” a/k/a “Bangout,” a/k/a “Jackie Chan,” was sentenced to 21 years in prison for conspiring to sex traffic two victims.  RIVERA was convicted following an eight-day jury trial in June 2021 before United States District Judge Paul A. Engelmayer, who imposed today’s sentence.

U.S. Attorney Damian Williams said: “Justin Rivera was responsible for terrorizing young women and coercing them into engaging in commercial sex acts.  After Rivera was convicted and in jail, he hatched a plan to subvert the judicial process by attempting to coerce one of his victims—who courageously testified at trial—into recanting her testimony.  Today’s sentence holds Rivera accountable for his horrific crimes.”

According to court documents, the evidence presented trial, and the evidence presented at sentencing:

In 2015, RIVERA and his co-conspirators squatted at an abandoned house in Bohemia, New York, where they worked in concert to coerce the young women to engage in commercial sex acts, using false promises of romance, narcotics, violence, threats of violence, and psychological abuse.  RIVERA physically assaulted one victim (“Victim-1”) on multiple occasions, pointed a gun at her head, and manipulated her heroin addiction by controlling her access to the drug.  RIVERA also played the role of the conspiracy’s enforcer, including on one occasion threatening the mother of a victim (“Victim-2”) who came to the house in Bohemia in an attempt to rescue her daughter.

Both Victim-1 and Victim-2 testified at trial.  Following RIVERA’s conviction, RIVERA engaged in witness tampering by conspiring to offer bribes and threaten Victim-1 to induce her to recant her testimony and falsely state that the Government coerced Victim-1 into falsely testifying at trial.    

*                *                *

In addition to today’s prison sentence, RIVERA, 32, of Amityville, New York, was sentenced to five years of supervised release.

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation, New York City Police Department, Suffolk County Police Department, and the Special Agents from the United States Attorney’s Office for the Southern District of New York for their assistance on this case.

The case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Daniel H. Wolf and Thomas S. Burnett are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that VANIA MAY BELL, the former comptroller of Executive Compensation Planners, Inc. (“ECP”), a registered investment adviser and financial planning firm located in New City, New York, was sentenced to 80 months in prison for participating in a conspiracy with her father, HECTOR MAY, the former president of ECP, to defraud certain investment advisory clients (the “Victims”) out of more than $11 million.  BELL was sentenced today by U.S. District Judge Nelson S. Roman.

U.S. Attorney Damian Williams said: “Over two decades, Bell and her father Hector May ruthlessly orchestrated a multimillion-dollar Ponzi scheme.  They pilfered the retirement savings of over 15 victims, including vulnerable aging couples, close friends, relatives, and an employment pension plan of a construction company.  Bell now joins her father in prison to be held accountable for this devastating crime” 

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

Beginning in 1982, HECTOR MAY was the president of ECP and provided financial advisory services to numerous clients.  In 1993, BELL joined ECP, where she held various titles including comptroller and chief compliance officer.  ECP worked with a broker dealer (“Broker Dealer-1”), of which MAY became a registered representative in 1994. 

In order to obtain money from the Victims’ securities accounts with Broker Dealer-1, MAY advised the Victims, among other things, that they should use money from those accounts to have ECP, rather than Broker Dealer-1, purchase bonds on their behalf.  With BELL’s assistance, MAY guided the Victims, first, to withdraw their money from their Broker Dealer-1 accounts, and second, to send that money to the ECP Custodial Account by wire transfer or check.  At times, when ECP was running out of cash and desperately needed to make supposed bond interest payments to avoid exposing the Ponzi scheme, BELL reached out to Victims directly.  After the Victims sent their money to the ECP Custodial Account, MAY and BELL did not use the money to purchase bonds.  Instead, BELL and MAY transferred the money to ECP’s “operating” account and spent it on business expenses, personal expenses, and to make payments to certain Victims in order to perpetuate the scheme and conceal the fraud.  In this way, from the late 1990’s through March 9, 2018, BELL and MAY induced Victims to forward them more than $11,400,000.

To help perpetuate the fraud, BELL and MAY created phony “consolidated” account statements that they issued through ECP and sent to the Victims.  These “consolidated” account statements purported to reflect the Victims’ total portfolio balances and included the names of bonds MAY falsely represented that he purchased for the Victims and the amounts of interest the Victims were supposedly earning on the bonds.  In order to create the phony consolidated account statements, MAY provided BELL with bond names and false interest earnings, and BELL created ECP computerized account statements and had them distributed to the Victims.  As part of the scheme, MAY personally drove to the home of a stroke victim he and BELL had been defrauding of millions of dollars in order to retrieve the legitimate statements being sent by Broker Dealer-1 and later replace them with BELL’s fake consolidated statements purporting to show the victim’s investments had been growing.

BELL was instrumental to the scheme in multiple ways.  BELL processed and spent client money from ECP’s custodial and operating accounts, watching the money dwindling and helping her father achieve more thefts at many months’ ends; BELL faked account statements that made people believe that they held millions, even when she knew that their money was gone; and BELL wielded her role as Chief Compliance Officer and Comptroller to help conceal the fraud from Broker Dealer-1.

In an audio recording made in 2016, after more than sixteen years in the scheme, BELL said the following about MAY:  “I am his daughter, I am his confidante, I am the backbone that saves his butt in every promise he makes out of there. . . . The virtue of my knowledge is just by the presence of time here.  There is nothing in this office that I don’t know, haven’t touched, haven’t seen, haven’t done, haven’t taught.  Everyone is always intimidated by the time I come in or the things I get to do personally that I’ve earned over time based on my life circumstances. It’s what we call the perk of being the boss’s daughter.”  At the end of that year, MAY thanked BELL in a handwritten note: “My Dearest Vania: you have always been there for me.  You always watch my back.  I couldn’t do it without you[.] Love, Daddy”.

*                *                *

In addition to her prison term, BELL, 57, of Montvale, New Jersey, was ordered to serve three years of supervised release, pay $8,041,233 in restitution, and forfeit $589,942.

MAY, who pled guilty in a separate case in December 2018 to charges of conspiracy to commit wire fraud and investment advisor fraud, was sentenced on July 31, 2019, to 13 years in prison by Judge Vincent Briccetti.  He was also ordered to serve three years of supervised release, pay $8,041,233 in restitution and forfeit $11,452,185. 

Mr. Williams praised the outstanding investigative work of the U.S. Postal Inspection Service, Special Agents of the United States Attorney’s Office, and the Federal Bureau of Investigation.

The criminal case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys Vladislav Vainberg, Margery Feinzig, and Derek Wikstrom are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Edward J. Grace, Assistant Director for the U.S. Fish and Wildlife Service Office of Law Enforcement, announced today that TEO BOON CHING, a/k/a “Zhang,” a/k/a “Dato Sri,” a/k/a “Godfather,” was charged for participating in a conspiracy to traffic in more than 70 kilograms of rhinoceros horns valued at more than $725,000 that involved the illegal poaching of numerous rhinoceros, an endangered wildlife species.  In addition, CHING was charged with laundering the proceeds of his illegal rhinoceros horn sales.  CHING, a citizen of Malaysia, was arrested in Thailand on June 29, 2022, at the request of the United States pursuant to our bilateral extradition treaty. CHING was extradited to the United States earlier today and will appear before Magistrate Judge Gabriel W. Gorenstein this afternoon.  The case has been assigned to U.S. District Judge Paul A. Crotty.

Earlier today, CHING and his associated entities were sanctioned by the U.S. Treasury Department Office of Foreign Assets Control (OFAC) pursuant to E.O. 13581, as amended.

U.S. Attorney Damian Williams said:  “Teo Boon Ching is alleged to be the leader of a transnational criminal enterprise trafficking in rhinoceros horns, enriching poachers responsible for the senseless illegal slaughter of numerous endangered rhinoceros, and furthering the market for these illicit products.  The protection of endangered wildlife and the preservation of our natural resources is an important priority for this Office.  Thanks to the tireless efforts of the U.S. Fish and Wildlife Service, this defendant has been caught and brought to the United States to answer for his alleged crimes.”

U.S. Fish and Wildlife Service Office of Law Enforcement Assistant Director Edward J. Grace said:  “This extradition is a major success for wildlife and people.  Thanks to our federal and international partners, this wildlife trafficker now will have his day in court.  Wildlife traffickers run complex international criminal enterprises that require a multinational law enforcement effort to investigate, arrest and prosecute them for their crimes.  I laud the efforts of our special agents, the U.S. Department of Justice, U.S. Department of State Office of Foreign Assets Control, and especially the Royal Thai Police for their commitment in addressing this global problem that is pushing many species to extinction.”

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

CHING was the leader of a transnational criminal enterprise (the “Enterprise”) based in Asia with significant operations in Malaysia and Thailand which engaged in the large-scale international trafficking and smuggling of rhinoceros horns resulting from the poaching of numerous endangered rhinoceros.  Trade involving endangered or threatened species violates several U.S. laws as well as international treaties implemented by certain U.S. laws.  CHING served as a specialized smuggler, transporting rhinoceros horns from rhinoceros poaching operations primarily in Africa to the eventual customers primarily in Asia.  CHING also claimed to be able to ship rhinoceros horns to the United States.

From at least in or about July 2019 through at least in or about August 2019, CHING conspired to transport, distribute, sell, and smuggle at least approximately 73 kilograms of rhinoceros horns resulting from the poaching of numerous rhinoceros and having an estimated value of at least approximately $725,472. 

On a number of occasions, CHING met with a confidential source to negotiate the sale of rhinoceros horns.  For example, on July 17 and 18, 2019, the confidential source met with CHING in Malaysia.  During those meetings, CHING stated that he served as a “middleman”—one who acquires rhinoceros horns poached by co-conspirators in Africa and ships them to customers around the world for a per-kilogram fee.  During their communications, CHING sent the confidential source numerous photographs of rhinoceros horns that CHING had available for sale and shipment, including the following:

 

In August 2019, the confidential source, at the direction of law enforcement, purchased 12 rhinoceros horns from CHING with money that CHING believed were the proceeds of other illegal wildlife trafficking and was in bank accounts in New York.  At CHING’s direction, law enforcement deposited the purported proceeds into numerous Chinese bank accounts at an underground banking facility in Thailand to disguise the origins, source, and purposes of the monetary transactions.

On August 23, 2019, CHING then arranged for his co-conspirators to deliver twelve rhinoceros horn pieces to undercover law enforcement personnel in Bangkok, Thailand.  A photograph of the rhinoceros horns delivered by CHING is below:

A United States Fish and Wildlife Service forensics laboratory examined these rhinoceros horns and concluded that two horn pieces were black rhinoceros horns and the other 10 pieces were white rhinoceros horns, both endangered species.

*                *                *

CHING, 57, of Malaysia, is charged with one count of conspiracy to commit wildlife trafficking, which carries a maximum sentence of five years in prison, and two counts of money laundering, which carries a maximum sentence of 20 years in prison.

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

Mr. Williams praised the outstanding work of the United States Fish and Wildlife Service.  In addition, Mr. Williams thanked the Royal Thai Government for its assistance in the extradition of CHING to the United States and commended law enforcement authorities and conservation partners in Thailand, including the Royal Thai Police and the Office of the Attorney General.  Mr. Williams also thanked the Embassy of the United States in Bangkok and the U.S. Department of Justice’s Office of International Affairs for providing substantial assistance in securing the arrest and extradition of the defendant and noted that the investigation is ongoing.

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

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

 

---

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

Damian Williams, the United States Attorney for the Southern District of New York, John B. DeVito, Special Agent in Charge of the New York Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), and Laura Kavanagh, Acting Fire Commissioner for the New York City Fire Department (“FDNY”), announced the unsealing yesterday of a one-count Indictment charging MARIO LUCAS with arson.  LUCAS was initially charged by Complaint and arrested on August 8, 2022.  LUCAS’s case has been assigned to the Honorable Edgardo Ramos. 

U.S. Attorney Damian Williams said: “As alleged, Mario Lucas committed a horrific arson of a Manhattan business with a victim trapped inside.  Luckily, the victim survived.  As reflected by the charge today, this Office is committed to holding individuals who would commit violence in this City accountable for their crimes.”

John B. DeVito, ATF Special Agent in Charge said:  “This alleged heinous act of arson is unacceptable.  Thankfully, the victim has survived.  ATF remains steadfast in our commitment to bring our expertise and resources to investigate and apprehend those who commit violent crimes.  We will continue to work alongside our local partners to build safer communities.”

NYPD Commissioner Keechant L. Sewell said:  “As alleged, the arson Mario Lucas sparked in June was not just a crime against a single victim in one business, but a violent assault that endangered an entire community and all the first responders who rushed in to help.  I commend our NYPD officers for their prompt response in arresting Mr. Lucas and thank them for their outstanding work in this case along with our partners in the U.S. Attorney’s Office for the Southern District of New York, the ATF’s New York Field Division, and the FDNY.”

Acting Fire Commissioner Laura Kavanagh said:  “Intentionally setting a fire is a heinous crime, and doing so while knowing there is a person trapped inside is reprehensible.  We are grateful to our Fire Marshals and all law enforcement for quickly apprehending this man and keeping him off our city’s streets.” 

According to the allegations in the Indictment unsealed today in Manhattan federal court, the Complaint, and statements made in open Court:[1] 

At approximately 4:46 p.m. on June 19, 2022, LUCAS entered a spa located in Chinatown (the “Spa”), in Manhattan, New York.  LUCAS then appeared to engage in a conversation with an individual working in the Spa (the “Victim”).  At approximately 4:55 p.m., the Victim exited the lobby into the back room of the Spa, and LUCAS remained in the lobby.  At approximately 4:56 p.m., LUCAS opened his backpack and pulled out a white plastic bag that appeared to contain a plastic container full of liquid.  LUCAS then poured that liquid around the lobby of the Spa.  After pouring the liquid, LUCAS took a lighter out of his pocket and lit the liquid on fire.  The room then went up in flames. 

LUCAS tried to open the front door, but the door would not open.  The Victim appears to have still been in the back room at this time.

Video from outside the Spa shows, at approximately 4:59 p.m., smoke and fire within the Spa.  A crowd gathered around the Spa on the street, and a man used a bar stool to force open the door.  At approximately 5:00 p.m., LUCAS escaped from the Spa and ran down Eldridge Street.  Approximately one minute later, the Victim exited the Spa.

Law enforcement was able to track LUCAS’s movements through security camera footage collected from various locations in the vicinity of the Spa.  This footage showed that LUCAS removed his hooded sweatshirt and shirt and left them on the street.  He also dropped his black backpack.  LUCAS appeared to be suffering from severe burns and appeared to be trying to remove his clothing as a result.

At a location approximately two blocks from the Spa, members of the NYPD intercepted LUCAS and placed him in an ambulance.  LUCAS provided NYPD with a Guatemalan identification card bearing the name “Mario Lucas.” 

*                *                *

LUCAS, 46, of Guatemala, is charged with arson resulting in injury to another person, which carries a mandatory minimum sentence of seven years in prison and a maximum sentence of 40 years in prison. 

The maximum and minimum 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 ATF, NYPD, and FDNY. Mr. Williams also thanked the United States Marshals Service for their assistance in this case.

The prosecution is being handled by the Office’s Violent & Organized Crime Unit.  Assistant United States Attorney Elizabeth A. Espinosa, Adam S. Hobson, and Dominic Gentile are in charge of the prosecution. 

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

 

---

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that EDIBERTO SANTANA, a/k/a “Flaco Veneno,” pled guilty to one count of racketeering conspiracy involving murder, arising out of SANTANA’s long-time leadership of the Sunset Trinitarios gang.  SANTANA pled guilty before U.S. District Judge Paul A. Crotty.

U.S. Attorney Damian Williams said:  “Today’s guilty plea should serve as a reminder that we are committed to seeking justice for victims no matter the passage of time and to holding gang leaders responsible for the violence that they instigate.”

According to the Indictment, SANTANA’s plea agreement, and statements made in Court:

SANTANA is the long-time leader of the Sunset Trinitarios (“Sunset”), a violent set of the national Trinitarios street gang that controlled territory in Manhattan, the Bronx, and Brooklyn, among other places.  Under SANTANA’s leadership and at SANTANA’s direction, Sunset perpetrated a near-constant string of violent crime for nearly a decade, including murders, shootings, assaults, and robberies.  Among other acts of violence, SANTANA ordered the March 13, 2011, murder of Dennis Marquez, age 16, who was stabbed to death in the Bronx; the October 23, 2013, murder of Michael Beltre, age 17, who was shot and killed in the Bronx; and the November 17, 2013, murder of Rafael Alam, age 23, who was shot and killed in the Bronx. 

*                *                *

SANTANA, 33, of Brooklyn, New York, pled guilty to one count of racketeering conspiracy with murder as a special sentencing factor, which carries a maximum sentence of life in prison. 

The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing will be determined by a judge.  SANTANA is scheduled to be sentenced by Judge Crotty on February 8, 2023.

Mr. Williams praised the outstanding work of the Drug Enforcement Administration, Homeland Security Investigations, the New York City Police Department, the New York State Police, and the New York City Department of Investigation.

Assistant U.S. Attorneys Celia V. Cohen, Jacqueline C. Kelly, Lindsey Keenan, and Jacob R. Fiddelman are in charge of the prosecution.  The case is being handled by the Office’s Violent and Organized Crime Unit.

Damian Williams, the United States Attorney for the Southern District of New York, announced that JONATHAN SKOLNICK was sentenced today to 15 years in prison for enticing minor children to send him nude and sexually explicit photographs and videos of themselves over the Internet.  On April 5, 2022, SKOLNICK pled guilty before U.S. Judge Colleen McMahon, who imposed his sentence.

U.S. Attorney Damian Williams said: “For approximately seven years, Jonathan Skolnick abused his position of trust as an associate principal and teacher in New York City schools by posing as a teenage girl online and successfully enticing minor victims, including his own students, to send him child pornography.  This lengthy prison sentence holds Skolnick accountable for his horrific crimes and the extraordinary harm and trauma he caused to many minor victims and their families.” 

According to the Indictment, court documents, and based on statements made in open court:

Between in or around August 2012 and in or around June 2018, JONATHAN SKOLNICK worked as a high school teacher at a school in Brooklyn, New York.  In or around July 2018, SKOLNICK became an associate principal at a middle school in the Bronx, New York, where he worked until his arrest in September 2019.  While in those roles, SKOLNICK posed as a teenage girl online, contacted minor victims by email, social media message, and text message, engaged in sexually explicit conversations with the minor victims, and enticed the minor victims to send him nude and sexually explicit photographs and videos.  Many of the minor victims were students at the schools where SKOLNICK worked. 

During the time period of his crimes, SKOLNICK used at least 21 different email and social media accounts to contact nearly 100 different individuals and solicit nude and sexually explicit images and videos.  When certain minor victims stopped communicating with SKOLNICK, he threatened to release the photographs and images that the minor victims had sent.

*                *                *

In addition to his prison term, SKOLNICK, 40, of the Bronx, New York, was sentenced to five years of supervised release.

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

The prosecution is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Elizabeth A. Espinosa and Rebecca T. Dell are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that defendant EDWARD SHIN, a/k/a “Eungsoo Shin,” was sentenced to 14 months in prison for his role in defrauding a Pennsylvania-based bank (the “Bank”) while serving as its CEO.  SHIN was convicted after a three-week trial before U.S. District Judge John P. Cronan on all counts, which charged SHIN with taking bribes in connection with the Bank’s issuance of loans that were guaranteed by the United States Small Business Administration (“SBA”) and with causing the Bank to issue SBA-guaranteed and commercial loans to companies in which SHIN had a secret financial interest.

U.S. Attorney Damian Williams said: “As CEO, Edward Shin was entrusted with stewardship of a Pennyslvania-based bank.  Instead of promoting and protecting the bank’s interests, Shin used the bank as his own piggy bank, stealing from it to line his pockets and the pockets of his corrupt friends.  For violating the trust placed in him, Shin will rightly serve prison time.”

According to the allegations contained in the Criminal Complaint, Indictment, and evidence adduced during trial:

The SBA helps Americans start, build, and grow businesses by guaranteeing certain loans made by banks to help those businesses succeed.  Between 2009 and 2013, the Bank offered a range of financial products, including SBA-guaranteed loans to small businesses in the New York-New Jersey area, which the Bank could extend only on the condition that all aspects of those loans complied with SBA regulations and SBA’s standard operating procedures.  In particular, SBA regulations and procedures prohibited bank officers, including SHIN, from receiving any payments in connection with SBA-backed loans and prohibited banks from extending such loans to any institution in which a bank officer held an interest.

Notwithstanding these regulations, SHIN, then the CEO of the Bank, secretly solicited and received bribe payments in connection with SBA-guaranteed loans issued by the Bank and caused the Bank to extend SBA-guaranteed and commercial loans to companies in which SHIN had secret ownership interests.  Specifically, when the Bank issued business loans that did not involve the use of any actual broker, SHIN nonetheless arranged to have his longtime friend, a real estate and loan broker (the “Broker”), inserted unnecessarily into the transaction solely to generate a broker fee that could be shared with SHIN; in fact, the Broker did no actual work to earn a commission on those transactions but split the “broker’s fee” with SHIN as an illegal kickback.

SHIN also arranged for the Bank to issue SBA-guaranteed loans to several businesses in which he secretly retained an ownership interest, in violation of SBA regulations and procedures.  For example, in or about June 2010, the Bank issued an SBA-guaranteed loan for approximately $950,000 to a business in New York, New York.  Although documents submitted to the Bank for purposes of securing the loan did not mention SHIN’s financial interest, the business was secretly operated as a partnership between SHIN, the Broker, and another individual.  The loan ultimately went into default status, resulting in a loss to the Bank of approximately $591,278.60.  On another occasion, in or about 2013, the Bank issued an SBA-guaranteed loan for approximately $1,050,000 to a business in New York, New York.  Again, even though the business was secretly operated as a partnership between SHIN and another family member of SHIN’s, the documents submitted to the Bank for purposes of securing the loan did not mention SHIN’s financial interest nor the family member’s relationship to SHIN.

*                *                *

SHIN, 59, of Ambler, Pennsylvania, was convicted at trial of one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution, one count of conspiracy to commit bank bribery, one count of conspiracy to commit loan fraud, another count of conspiracy to commit bank fraud, and one count each of bank bribery and embezzlement of funds by a bank officer.  In addition to the prison terms, Judge Cronan sentenced SHIN to three years of supervised release and ordered SHIN to pay forfeiture in the amount of $5,506,050 and a $600 special assessment fee.

Mr. Williams praised the outstanding investigative work of the Federal Deposit Insurance Corporation – Office of Inspector General, Homeland Security Investigations, the SBA Office of the Inspector General, and the Office of the Special Inspector General for the Troubled Asset Relief Program.   

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Tara La Morte, Anden Chow, and Jessica Greenwood are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that XAVIER SIMMS and BRYCE MARTIN pled guilty to trafficking firearms from Georgia to New York and conspiring to do the same.  SIMMS pled guilty before U.S. District Judge Philip M. Halpern, and MARTIN pled guilty before U.S. District Judge Vincent L. Briccetti.

U.S. Attorney Damian Williams said:  “Today, Xavier Simms and Bryce Martin admitted to trafficking guns from Georgia to New York.  Their actions contributed to the flow of illegal guns into New York, which too often results in gun violence in our communities.  Today’s pleas reflect the commitment of this Office and our law enforcement partners to rid our streets of illegal guns and to prosecute gun traffickers to the fullest extent of the law.”

According to the Complaint, Information against each defendant, and other documents filed in federal court, as well as statements made in public court proceedings:

On April 20, 2022, members of the FBI Westchester Safe Streets Task Force and the City of Yonkers Police Department were investigating illegal firearms activity in the vicinity of Elm and Linden streets in Yonkers, New York.  During the course of their investigation, they attempted to interdict members of the conspiracy, including XAVIER SIMMS, BRYCE MARTIN, and a third co-conspirator (“CC-1”).  When law enforcement officers approached SIMMS, MARTIN, and CC-1 at a Yonkers deli, CC-1 shot and critically wounded an FBI Task Force Officer at close range.  After that, an FBI Special Agent fired his gun at CC-1 and fatally wounded CC-1.

Law enforcement officers recovered four firearms in total from SIMMS, MARTIN, and CC-1 at the Yonkers deli, including a “Ghost Gun” — a type of firearm that is designed to evade law enforcement detection.

SIMMS and MARTIN had previously traveled together with CC-1 from Georgia to New York, arriving in Yonkers on or about April 19, 2022, with multiple firearms to sell.  Evidence recovered from their cellphones showed that SIMMS and MARTIN both had access to specialized firearms, including machinegun-style weapons.  Once in Yonkers, SIMMS, MARTIN, and CC-1 met with another individual (“Individual-1”) who received from them at least five firearms to sell on consignment.

*                *                *

SIMMS, 22, of Covington, Georgia, and MARTIN, 23, of Hampton, Georgia, each pled guilty to one count of conspiring to traffic firearms, in violation of 18 U.S.C. § 371, which carries a maximum sentence of five years in prison, and one count of firearms trafficking, in violation of 18 U.S.C. §§ 922(a)(1)(A) and 924(a)(1), which carries a maximum sentence of five years in prison.

SIMMS is scheduled to be sentenced on April 20, 2023.  MARTIN is scheduled to be sentenced on January 11, 2023.

The statutory maximum 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 Federal Bureau of Investigation and the City of Yonkers Police Department.  He also thanked the Westchester County District Attorney’s Office for its assistance in the investigation.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Shiva H. Logarajah and Kevin T. Sullivan are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that MARCUS CHAMBERS, a/k/a “Chino,” a/k/a “Chi D,” a/k/a “SP,” was sentenced yesterday to 20 years in prison for the 2011 murder of Jonathan Johnson, 21, on March 18, 2011, in White Plains, New York.  On December 20, 2021, CHAMBERS pled guilty before U.S. District Judge Nelson S. Román, who imposed his sentence.

According to the allegations in the Indictment to which the defendant pled guilty and statements made in public court proceedings:[1]

On or about March 18, 2011, CHAMBERS and his co-defendant DARNELL KIDD murdered Jonathan Johnson by shooting him during the course of an armed robbery for marijuana in White Plains, New York. 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, Johnson was shot and killed.

*                *                *

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

Mr. Williams praised the outstanding investigative work of the White Plains Police Department and the FBI Westchester County Safe Streets Task Force, which comprises agents and task force officers from the FBI, Bureau of Alcohol, Tobacco, Firearms and Explosives, United States Probation Office, New York State Police, New York City Police Department, Mount Vernon Police Department, Putnam County Sheriff’s Office, Town of Ramapo Police Department, Yonkers Police Department, Greenburgh Police Department, Peekskill Police Department, Westchester County Police Department, and Westchester County District Attorney’s Office.  Mr. Williams also thanked the Westchester County District Attorney’s Office for its assistance in this matter.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Olga I. Zverovich, Christopher Brumwell, and Steven J. Kochevar and Paralegal Specialist Shannon Becker are in charge of the prosecution.

The allegations contained in the Indictment against DARNELL KIDD are merely accusations, and he is presumed innocent unless and until proven guilty.

 

---

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

Damian Williams, United States Attorney for the Southern District of New York, Daniel B. Brubaker, Inspector-in-Charge, New York Division of the United States Postal Inspection Service (“USPIS”), Matthew Modafferi, Special Agent-in-Charge of the Northeast Area Field Office of the United States Postal Service, Office of Inspector General (“USPS-OIG”), Michael J. Driscoll, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced the arrest of ELHORIN YISREAL on Hobbs Act robbery and firearm charges in connection with the gunpoint robbery of a post office in the Bronx, New York, on September 6, 2022.  YISREAL was arrested yesterday and will be presented today before the Honorable James L. Cott.

U.S. Attorney Damian Williams said:  “As alleged, Elhorin Yisreal brazenly robbed a Bronx post office in broad daylight, endangering the lives of a post office employee and her husband in the process.  Yisreal’s alleged actions show his disregard for the rule of law, and I commend our law enforcement partners for working with this Office to swiftly identify and apprehend Yisreal.”

USPIS Inspector-in-Charge Daniel B. Brubaker said:  “This has been a true team effort between multiple federal, state, and local agencies.  We hope this arrest sends a crystal-clear message to any and all criminal elements: if you target a U.S. Post Office and accost our employees with a gun, you will go to jail.  Period.  We will tirelessly pursue you and bring you to justice.”

FBI Assistant Director Michael J. Driscoll said:  “This was not a random robbery. We allege Yisreal sat waiting for the victims to arrive, forced his way in using a gun, and then stole a significant sum of money.  He also stole a device used to print money orders.  Whatever Yisreal's intent for that device may have been, he will get no use out of it in federal prison.  I want to commend our law enforcement partners at the United States Postal Inspection Service, and other agencies, who all worked diligently to solve this case so quickly.”

NYPD Commissioner Keechant L. Sewell said:  “Today’s charges affirm the NYPD’s unwavering commitment to work in close collaboration with all of our law enforcement partners to identify and arrest anyone who commits a violent crime in New York City – especially a brazen gunpoint robbery of two people inside a post office.  I commend and thank everyone at the Office of the U.S. Attorney for the Southern District of New York and all of the investigators at the NYPD, the FBI’s New York Field Office, the U.S. Postal Inspection Service, and the U.S. Postal Service’s Office of Inspector General for their work on this important case.”

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

On September 6, 2022, YISREAL committed a gunpoint robbery of a post office in the Bronx, New York.  On the morning of September 6, YISREAL was waiting outside the post office in a parked vehicle when a post office employee and her husband arrived.  After the post office employee and her husband unlocked the front entrance to the post office, YISREAL emerged from the vehicle wearing a black mask and carrying a firearm.  YISREAL ordered the post office employee and her husband inside the post office at gunpoint.  He then ordered the post office employee to open a safe and give him two remittance bags containing approximately $100,000 in United States currency, as well as blank money orders, and a machine used to print money orders.  Following the robbery, YISREAL fled in the vehicle parked outside.

*                *                *

YISREAL, 44, is charged with one count of Hobbs Act robbery, which carries a maximum sentence of 20 years in prison; and one count of brandishing a firearm, which carries a maximum sentence of life in prison and a mandatory minimum sentence of seven years in prison. 

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

Mr. Williams praised the outstanding investigative work of the USPIS, USPS-OIG, the FBI, and the NYPD.

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

 

---

[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.

The Justice Department announced today the unsealing of an indictment charging a U.S. citizen and three citizens of the Russian Federation with violating new U.S. sanctions imposed earlier this year in response to Russia’s unprovoked military invasion of Ukraine.

According to court documents, Oleg Vladimirovich Deripaska, aka Oleg Mukhamedshin, 52; and Natalia Mikhaylovna Bardakova, aka Natalya Mikhaylovna Bardakova, 45, both citizens of the Russian Federation (Russia), and Olga Shriki, 42, a New Jersey resident and naturalized U.S. citizen, are charged with conspiring to violate U.S. sanctions imposed on Deripaska and one of Deripaska’s corporate entities, Basic Element Limited (Basic Element). Shriki is further charged with obstruction of justice based on her alleged deletion of electronic records relating to her participation in Deripaska’s sanctions evasion scheme following receipt of a grand jury subpoena requiring the production of those records. Bardakova is charged with one count with making false statements to agents of the FBI. Additionally, Ekaterina Olegovna Voronina, aka Ekaterina Lobanova, 33, is charged with making false statements to agents of the U.S. Department of Homeland Security at the time of Voronina’s attempted entry into the United States for the purpose of giving birth to Deripaska’s child. Shriki was arrested this morning.

“In the wake of Russia’s unjust and unprovoked invasion of Ukraine, I promised the American people that the Justice Department would work to hold accountable those who break our laws and threaten our national security. Today’s charges demonstrate we are keeping that promise,” said Attorney General Merrick B. Garland. “The Justice Department will not stop working to identify, find, and bring to justice those who evade U.S. sanctions in order to enable the Russian regime.”

“As today’s charges reveal, while serving the Russian state and energy sector, Oleg Deripaska sought to circumvent U.S. sanctions through lies and deceit to cash in on and benefit from the American way of life,” said Deputy Attorney General Lisa O. Monaco. “But shell companies and webs of lies will not shield Deripaska and his cronies from American law enforcement, nor will they protect others who support the Putin regime. The Department of Justice remains dedicated to the global fight against those who aid and abet the Russian war machine.”

According to court documents, Deripaska, the owner and controller of Basic Element, a private investment and management company for Deripaska’s various business interests, was subjected to economic sanctions on April 6, 2018. On that day, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Deripaska as a Specially Designated National (SDN), in connection with its finding that the actions of the Government of the Russian Federation with respect to Ukraine constitute an unusual and extraordinary threat to the national security and foreign policy of the United States (the OFAC Sanctions). In designating Deripaska, OFAC explained that Deripaska was sanctioned for having acted or purported to act for or on behalf of, directly or indirectly, a senior official of the Government of the Russian Federation, as well as for operating in the energy sector of the Russian Federation economy.

“Today’s indictment reflects the FBI’s commitment to use all of the tools at our disposal to aggressively pursue those who attempt to evade the United States’ economic countermeasures against the Russian government,” said FBI Director Christopher Wray. “We will continue to aggressively prosecute those who violate measures imposed to protect the national security and foreign policy of the United States, especially in this time of Russia’s unprovoked aggression toward Ukraine.”

“The indictment unsealed today signals the United States’ ongoing support for the people of Ukraine in the face of continued Russian belligerence,” said U.S. Attorney Damian Williams for the Southern District of New York. “The enforcement of sanctions is a vital tool wielded by this Office and our law enforcement partners as we seek to deter Russian aggression, and today’s indictment should be taken as a warning that, try as they might, individuals violating these sanctions will be held accountable.” 

Following his designation by OFAC, Deripaska conspired with others to evade and to violate those sanctions in various ways and over the course of several years. Deripaska, through the corporate entity Gracetown Inc., illegally utilized the U.S. financial system to maintain and retain three luxury properties in the United States (the U.S. Properties), and further employed Olga Shriki and Natalia Mikhaylovna Bardakova to utilize U.S. financial institutions to provide hundreds of thousands of dollars’ worth of services for his benefit in the United States. For example, in or about 2019, Shriki facilitated for Deripaska’s benefit the sale of a music studio in California for over $3 million. Deripaska had owned the studio through a series of corporate shell companies that obscured his actual ownership. Following the sale of the studio, Shriki attempted to expatriate over $3 million in proceeds through one such shell company, Ocean Studios California LLC, to a Russia-based account belonging to another Deripaska company.

Bardakova – largely based in Russia – directed Shriki to engage in particular illegal transactions on Deripaska’s behalf. These instructions included directing Shriki to obtain U.S. goods and technology for Deripaska. Moreover, between in or about May 2018 and in or about 2020, Bardakova instructed Shriki to purchase and send flower and gift deliveries on behalf of Deripaska to Deripaska’s social contacts in the United States and Canada. The deliveries included, among others, Easter gift deliveries to a U.S. television host, two flower deliveries to a then-former Canadian Parliament member, and two flower deliveries in 2020 to Voronina while she was in the United States in 2020 to give birth to Deripaska’s child.      

Then, in or about 2020, Shriki and Bardakova helped Deripaska’s girlfriend, Voronina, travel from Russia to the United States, so she could give birth to Deripaska’s and Voronina’s child in the United States. Despite Deripaska’s ongoing support for the Russian regime, he funded hundreds of thousands of dollars of transactions so that his child would take advantage of the U.S. health care system and U.S. birthright citizenship. Despite Deripaska’s ongoing support for the Russian regime, Deripaska distrusted the safety of the Russian hospital system. As alleged, Shriki orchestrated the payment of approximately $300,000 worth of U.S. medical care, housing, childcare, and other logistics to support Voronina to give birth in the United States, which resulted in the child receiving U.S. citizenship. As part of this scheme, Deripaska counseled Voronina on obtaining a U.S. visa, including by telling her to be “careful” ahead of an interview by U.S. immigration authorities. Voronina thereafter applied for and obtained a U.S. visa for a purported 10-day tourism visit without disclosing her intent to travel and stay in the United States for approximately six months to give birth to Deripaska’s child. Following the birth, Shriki, Bardakova, and Voronina conspired to conceal the name of the child’s true father, Deripaska, going so far as to change, slightly, the spelling of the child’s last name.

Later, in or about 2022, Shriki and Bardakova attempted to facilitate Voronina’s return to the United States to give birth to Deripaska’s and Voronina’s second child. This second attempt included Bardakova and Voronina’s attempt to use false statements to conceal Deripaska’s funding and secure Voronina’s entry into the United States – an attempt that was thwarted, and Voronina was denied entry and returned immediately to Istanbul, through which she had flown from Russia to the United States.

Deripaska, Bardakova and Shriki, are charged with one count of conspiring to violate and evade U.S. sanctions, in violation of the International Emergency Economic Powers Act, which carries a maximum sentence of 20 years in prison. Shriki is further charged in one count of destruction of records, which carries a maximum sentence of 20 years in prison. Bardakova and Voronina are each further charged with one count of making false statements to federal agents, which carries a maximum sentence of five years in prison. The indictment also provides notice of the United States’ intention to forfeit from Deripaska the proceeds of his offense, including the U.S. Properties and the proceeds from the sale of the music studio. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI New York Field Office and Counterintelligence Division are investigating the case, with valuable assistance provided by the Department of Homeland Security and the Justice Department’s National Security Division, Counterintelligence and Export Control Section.

Assistant U.S. Attorneys Anden Chow and Vladislav Vainberg are prosecuting the case.

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

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

Damian Williams, the United States Attorney for the Southern District of New York and Michael J. Driscoll, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging OLEG VLADIMIROVICH DERIPASKA, a/k/a “Oleg Mukhamedshin,” and NATALIA MIKHAYLOVNA BARDAKOVA, a/k/a “Natalya Mikhaylovna Bardakova,” citizens of the Russian Federation (“Russia”), and OLGA SHRIKI, a New Jersey resident and naturalized U.S. Citizen, with conspiring to violate United States sanctions imposed on DERIPASKA and one of DERIPASKA’s corporate entities, “Basic Element.”  SHRIKI is further charged with obstruction of justice based on her deletion of electronic records relating to her participation in DERIPASKA’s sanctions evasion scheme following receipt of a Grand Jury subpoena requiring the production of those records.  BARDAKOVA and is charged in one count with making false statements to agents of the Federal Bureau of Investigation.  Additionally, EKATERINA OLEGOVNA VORONINA, a/k/a “Ekaterina Lobanova,” is also charged with making false statements to agents of the Department of Homeland Security at the time of VORONINA’s attempted entry into the United States for the purpose of giving birth to DERIPASKA’s child.  SHRIKI was arrested this morning.

U.S. Attorney Damian Williams said: “The indictment unsealed today signals the United States’ ongoing support for the people of Ukraine in the face of continued Russian belligerence.  The enforcement of sanctions is a vital tool wielded by this Office and our law enforcement partners as we seek to deter Russian aggression, and today’s indictment should be taken as a warning that, try as they might, individuals violating these sanctions will be held accountable.” 

Andrew C. Adams, Director of Task Force KleptoCapture said: “Despite his cozy ties with the Kremlin and his vast wealth acquired through ties to a corrupt regime, Deripaska did all he could to lead a life in a stable, free, democratic society – even if that meant lying and evading U.S. sanctions.  The hypocrisy in seeking comfort and citizenship in the United States, while enjoying the fruits of a ruthless, anti-democratic regime, is striking.  That Deripaska practiced that hypocrisy through lies and criminal sanctions evasion has made him a fugitive from the country he so desperately wished to exploit.”

FBI Assistant Director Michael J. Driscoll said: “Russian oligarch, Oleg Deripaska, was sanctioned in April 2018 as part of the U.S. response to the Russian Government’s engagement in worldwide malign activity and its annexation of Crimea, Ukraine.  Since that time, Deripaska has continued to circumvent those sanctions through an international network of enablers and facilitators.  We will not idly standby while Russian oligarchs brazenly subvert our laws and simultaneously seek benefit from U.S. goods and services for themselves and their families. Today’s actions demonstrate the FBI’s commitment to protecting U.S. national interests through the identification and disruption of Kremlin-linked oligarchs’ criminal networks.”

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

DERIPASKA, the owner and controller of Basic Element Limited (“Basic Element”), a private investment and management company for DERIPASKA’s various business interests, was subjected to economic sanctions on April 6, 2018.  On that day, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated DERIPASKA as a Specially Designated National (“SDN”) in connection with its finding that the actions of the Government of the Russian Federation with respect to Ukraine constitute an unusual and extraordinary threat to the national security and foreign policy of the United States (the “OFAC Sanctions”).  In so designating DERIPASKA, OFAC explained that DERIPASKA was sanctioned for having acted or purported to act for or on behalf of, directly or indirectly, a senior official of the Government of the Russian Federation, as well as for operating in the energy sector of the Russian Federation economy.

Following his designation by OFAC, DERIPASKA conspired with others to evade and to violate those sanctions in various ways and over the course of several years.  DERIPASKA, through the corporate entity “Gracetown Inc.,” illegally utilized the U.S. financial system to maintain and retain three luxury properties in the United States (the “U.S. Properties”) and further employed OLGA SHRIKI and NATALIA MIKHAYLOVNA BARDAKOVA to utilize U.S. financial institutions to provide hundreds of thousands of dollars’ worth of services for his benefit in the United States.  For example, in or about 2019, SHRIKI facilitated for DERIPASKA’s benefit the sale of a music studio in California for over $3 million. DERIPASKA had owned the studio through a series of corporate shell companies that obscured his actual ownership.  Following the sale of the studio, SHRIKI attempted to expatriate over $3 million in proceeds through one such shell company, “Ocean Studios California LLC,” to a Russia-based account belonging to another DERIPASKA company.

BARDAKOVA – largely based in Russia – directed SHRIKI to engage in particular illegal transactions on DERIPASKA’s behalf.  These instructions included directing SHRIKI to obtain U.S. goods and technology for DERIPASKA.  Moreover, between in or about May 2018 and in or about 2020, BARDAKOVA instructed SHRIKI to purchase and send flower and gift deliveries on behalf of DERIPASKA to DERIPASKA’s social contacts in the United States and Canada.  The deliveries included, among others, Easter gift deliveries to a U.S. television host, two flower deliveries to a then-former Canadian Parliament member, and two flower deliveries in 2020 to VORONINA while she was in the United States in 2020 to give birth to DERIPASKA’s child.           

Then, in or about 2020, SHRIKI and BARDAKOVA helped DERIPASKA’s girlfriend, VORONINA, travel from Russia to the United States so she could give birth to DERIPASKA’s and VORONINA’s child in the United States.  Despite DERIPASKA’s ongoing support for the Russian regime, he funded hundreds of thousands of dollars of transactions so that his child could take advantage of the U.S. healthcare system and U.S. birthright.  SHRIKI orchestrated the payment of approximately $300,000 worth of U.S. medical care, housing, childcare, and other logistics to aid VORONINA and DERIPASKA’s efforts to help VORONINA give birth in the United States, which resulted in the child receiving U.S. citizenship.  DERIPASKA counseled VORONINA on obtaining a visa to travel to the United States, including by telling her to be “careful” ahead of an interview by U.S. immigration authorities.  VORONINA thereafter applied for and obtained a U.S. visa for a purported ten-day tourism visit without disclosing her intent to travel and stay in the United States for approximately six months to give birth to DERIPASKA’s child.  Following the birth, SHRIKI, BARDAKOVA, and VORONINA conspired to conceal the name of the child’s true father, DERIPASKA, going so far as to change, slightly, the spelling of the child’s last name.

Later, in or about 2022, at DERIPASKA’s further behest and for his further benefit, SHRIKI and BARDAKOVA attempted to facilitate VORONINA’s return to the United States to give birth to DERIPASKA’s and VORONINA’s second child.  This second attempt included BARDAKOVA and VORONINA’s attempt to use false statements to conceal DERIPASKA’s funding and secure VORONINA’s entry into the United States – an attempt that was thwarted, and VORONINA was denied entry and returned immediately to Istanbul, through which she had flown from Russia to the United States.  

*                *                *

DERIPASKA, 52, and BARDAKOVA, 45, of Russia, and SHRIKI, 42, of New Jersey, are charged with one count of conspiring to violate and evade U.S. sanctions, in violation of the International Emergency Economic Powers Act, which carries a maximum sentence of 20 years in prison. SHRIKI is further charged in one count of destruction of records, which carries a maximum sentence of 20 years in prison.  BARDAKOVA and VORONINA, 33, of Russia, are each further charged in one count of making false statements to federal agents, which carries a maximum sentence of five years in prison.  The Indictment also provides notice of the United States’ intention to forfeit from DERIPASKA the proceeds of his offense, including the U.S. Properties and the proceeds from the sale of the music studio.  

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

Mr. Williams praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division and thanked the Department of Homeland Security and the Department of Justice’s National Security Division, Counterintelligence and Export Control Section for their assistance.

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

The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Anden Chow and Vladislav Vainberg are in charge of the case.

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

 

---

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that SADY RIBEIRO, a New York-licensed pain management doctor and surgeon, pled guilty today to one count of conspiracy to commit mail fraud and one count of conspiracy to commit wire fraud in connection with a scheme to obtain fraudulent insurance reimbursements and other compensation from fraudulent trip-and-fall accidents.  RIBEIRO is the second defendant to plead guilty in the case.  ADRIAN ALEXANDER, the owner of a litigation funding company who was also involved in the trip-and-fall fraud scheme, previously pled guilty to one count of conspiracy to commit wire fraud on August 30, 2022.  ALEXANDER and RIBEIRO both pled guilty before U.S. District Judge Sidney H. Stein.

U.S. Attorney Damian Williams said: “As alleged, Sady Ribeiro abused his professional license and position of trust by performing medically unnecessary surgeries to increase the value of fraudulent trip-and-fall lawsuits.  In carrying out the scheme, Adrian Alexander, who funded many of the fraudulent lawsuits, Sady Ribeiro, and their co-conspirators preyed upon the most vulnerable members of society in order to enrich themselves.  Ribeiro and Alexander now await sentencing for their reprehensible crimes.”

According to the Indictment, the Superseding Informations filed against RIBEIRO and ALEXANDER, other documents filed in this case, and statements made in court:

SADY RIBEIRO and ADRIAN ALEXANDER, among others, were 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 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, including RIBEIRO, were expected to, and in fact did, conduct these surgeries regardless of the legitimate medical needs of the Patients.  For example, RIBEIRO wrote an August 2015 email to ALEXANDER—the owner and operator of a litigation funding company that financed numerous Fraudulent Lawsuits—in which RIBEIRO described the services that he performed, stating, “I will play very honest ‘game’ with you . . . I see the patient and I generate a very good dictation that justifies the treatment-there is a cost for that and I hope a profit.”  RIBEIRO performed back surgeries, among other medical procedures, on nearly 200 Patients.  To maximize his patient base, RIBEIRO paid participants cash kickbacks in exchange for patient referrals.

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 one Funding Company that, as noted above, was owned and operated 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, doctors, and others, with the Patients receiving a much smaller percentage of the remaining recovery.

*                *                *    

RIBEIRO, 72, of New York, New York, pled guilty to one count of conspiracy to commit mail fraud, which carries a maximum sentence of five years in prison; and one count of conspiracy to commit wire fraud, which carries a maximum sentence of five years in prison.  As part of his plea agreement, RIBEIRO agreed to forfeit $513,005 to the United States and to make restitution in the amount of $3,928,133.

ALEXANDER, 77, of New York, New York, previously 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, ALEXANDER agreed to forfeit $659,001 to the United States and to make restitution in the amount of $3,928,133.

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

RIBEIRO is scheduled to be sentenced on January 5, 2023.  ALEXANDER is scheduled to be sentenced on November 30, 2022.  Both defendants will be sentenced 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.

Damian Williams, United States Attorney for the Southern District of New York, Daniel B. Brubaker, Inspector-in-Charge, New York Division of the United States Postal Inspection Service (“USPIS”), and Matthew Modafferi, Special Agent-in-Charge of the Northeast Area Field Office of the United States Postal Service, Office of Inspector General (“USPS-OIG”), announced today the unsealing of an indictment charging JOHNNY DAMUS, a/k/a “Ace,” RASHAAN RICHARDS, a/k/a “Jay Dee,” a/k/a “JD,” a/k/a “Payso,” DEVON RICHARDS, a/k/a “Dev,” CONRAD HERON, a/k/a “Conny Cash,” LOUIS JEUNE VERLY, a/k/a “Luis Jesus Virola,” KAREEM SHEPHERD, a/k/a “Reem,” a/k/a “Marcus Ford,” a/k/a “Frank James,” FABIOLA MOMPOINT, a/k/a “Lady Fab,” NATHANAEL FOUCAULT, and JOHNATHAN PERSAUD, a/k/a “Junzie-J,”  in connection with their theft and unauthorized use of credit cards to defraud several national financial institutions, credit card companies, and major retailers, resulting in more than $1.3 million in intended losses as well as the theft of hundreds of identities.  As alleged, the defendants conspired to steal credit cards from the mail; use those stolen credit cards at a variety of stores, including high-end retailers; and sell some of the merchandise purchased with the stolen cards on the website LuxurySnob.com (“LuxurySnob”).

NATHANAEL FOUCAULT and JOHNATHAN PERSAUD, U.S. Postal Employees, were arrested today in the Eastern District of New York and will be presented before Judge James L. Cott.

FABIOLA MOMPOINT, a U.S. Postal Employee, was arrested today in the District of New Jersey and will be presented before Judge James L. Cott.

DEVON RICHARDS was arrested today in the Eastern District of New York and will be presented before Judge James L. Cott.

The remaining defendants are at large.

U.S. Attorney Damian Williams said:  “As alleged, the defendants engaged in a years-long scheme to manipulate credit card companies and major retailers across New York and New Jersey by stealing credit cards and using those cards to purchase, and subsequently sell, luxury goods.  The defendants took advantage of the public trust we place in U.S. Postal Service employees for their own financial gain.  Thanks to the diligence of USPIS, the NYPD, and USPS-OIG, the defendants will now be held accountable for their brazen criminal conduct.”

USPIS Inspector-in-Charge Daniel B. Brubaker said:  “These nine defendants, three of which are postal employees, sought to enrich themselves by stealing mail directly from hundreds of postal customers.  They further compounded their crimes by committing identity theft against those customers to facilitate their elaborate scheme to defraud several national financial institutions.  Make no mistake, the Postal Inspection Service will not allow thieves, no matter who they are, to use the U.S. Mail to harm postal customers or the financial institutions that serve them.  We are pleased the members of this criminal syndicate have been apprehended and their crime spree brought to an abrupt end.”

USPS-OIG Special Agent-in-Charge Matthew Modafferi said:  “The Special Agents of the U.S. Postal Service Office of Inspector General will continue to maintain the integrity of the U.S. Postal Service and its personnel. The conduct alleged is disgraceful, and our office will continue to vigorously investigate postal service employees and their co-conspirators who violate the public’s trust. The USPS OIG is thankful for the relationships with our law enforcement partners and the Department of Justice for their dedication and efforts in this investigation.”

According to the allegations in the Indictment:[1]

Between in or around December 2018, up to and including the present, members of the conspiracy worked with U.S. Postal Service mail carriers, including, among others, FABIOLA MOMPOINT, NATHANAEL FOUCAULT, and JOHNATHAN PERSAUD to steal credit cards from the mail stream before those cards were delivered to the assigned credit card customers.  After obtaining the stolen credit cards, members of the conspiracy activated the cards using stolen personally identifiable information (“PII”) of the intended recipients.  Members of the conspiracy, including RASHAAN RICHARDS, DEVON RICHARDS, CONRAD HERON, LOUIS JEUNE VERLY, and KAREEM SHEPHERD (collectively, “the Shoppers”), and others known and unknown, then used the stolen cards to purchase luxury goods—including items manufactured by, among others, Chanel, Fendi, Hermes, and Dior—from high-end retailers, including major department stores in, among other places, Manhattan, Brooklyn, and New Jersey.  Often, JOHNNY DAMUS, instructed the Shoppers to purchase particular luxury items in specific quantities.  Working together with a close associate (“CC-1”), DAMUS functionally operated LuxurySnob.com, on which many of these fraudulently obtained luxury items were sold.  LuxurySnob purports to be an “online consignment and personal shopping company” specializing in “pre-owned luxury items,” but, in fact, many of the items it sells were purchased using stolen credit cards.

*                *                *

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

Mr. Williams praised the outstanding investigative work of the USPIS, USPS-OIG, and the NYPD.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Ashley C. Nicolas and Madison Reddick Smyser 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

DEFENDANTS

MAX. TERM OF IMPRISONMENT

Count One: Conspiracy to Commit Access Device Fraud

(18 U.S.C. § 1029(b)(2))

JOHNNY DAMUS

RASHAAN RICHARDS

DEVON RICHARDS

CONRAD HERON

LOUIS JEUNE VERLY

KAREEM SHEPHERD

FABIOLA MOMPOINT

NATHANAEL FOUCAULT

JOHNATHAN PERSAUD

Seven and a half years in prison

Count Two: Access Device Fraud

(18 U.S.C. § 1029(a)(5), (c)(1)(a)(ii) and 2)

JOHNNY DAMUS

RASHAAN RICHARDS

DEVON RICHARDS

CONRAD HERON

LOUIS JEUNE VERLY

KAREEM SHEPHERD

FABIOLA MOMPOINT

NATHANAEL FOUCAULT

JOHNATHAN PERSAUD

15 years in prison

Count Three: Conspiracy to Commit Bank Fraud

(18 U.S.C. § 1349)

JOHNNY DAMUS

RASHAAN RICHARDS

DEVON RICHARDS

CONRAD HERON

LOUIS JEUNE VERLY

KAREEM SHEPHERD

30 years in prison

Count Four: Aggravated Identity Theft

(18 U.S.C. § 1028A)

JOHNNY DAMUS

RASHAAN RICHARDS

DEVON RICHARDS

CONRAD HERON

LOUIS JEUNE VERLY

KAREEM SHEPHERD

FABIOLA MOMPOINT

NATHANAEL FOUCAULT

JOHNATHAN PERSAUD

Mandatory minimum sentence of two years in prison

Count Five: Conspiracy to Steal Mail by U.S. Postal Employees

 

(18 U.S.C. § 1709)

RASHAAN RICHARDS

DEVON RICHARDS

KAREEM SHEPHERD

FABIOLA MOMPOINT

NATHANAEL FOUCAULT

JOHNATHAN PERSAUD

Five years in prison

 

---

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

 

Damian Williams, the United States Attorney for the Southern District of New York, Attorney General Merrick Garland, and Assistant Attorney General Kenneth A. Polite of the Justice Department’s Criminal Division, announced today that the Madoff Victim Fund established by the Department of Justice began its eighth distribution to victims of funds forfeited to the United States Government in connection with the Bernard L. Madoff Investment Securities LLC (“BLMIS”) fraud scheme.  The distribution will include approximately $372 million in additional funds, bringing the total distributed to date to over $4 billion.  The funds will be sent to 40,000 victims worldwide, the eighth payment to victims that will bring their total recovery from all sources of compensation to 88.35% of their losses.  The Madoff Victim Fund will ultimately return to victims more than $4 billion in assets that have been recovered as compensation for losses suffered by the collapse of BLMIS, following the largest fraud in history, announced by this Office in 2013.  Another $5 billion in assets recovered by the U.S. Attorney’s Office are being separately paid to Madoff victims through the BLMIS Customer Fund administered by the Securities Investor Protection Act Trustee.

U.S. Attorney Damian Williams said:  “This Office continues its historic work seeking justice for the victims of Madoff’s heinous crimes.  Today’s additional payments of $372 million by this Office and the U.S. Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section represents the eighth in a series of distributions that will leave victims with compensation for more than 88 percent of their losses—a truly remarkable result.  But our work is not fully complete, and this Office’s tireless commitment to compensating the victims who suffered as a result of Madoff’s crimes continues.”

Assistant Attorney General Kenneth A. Polite said:  “The Criminal Division is proud to continue providing compensation to victims through the largest remission process the Department has overseen.  The billions distributed worldwide is a testament to the Department’s sustained efforts to ensure justice for the victims of Bernard Madoff’s massive fraud.” 

Since the early 1970s, BERNARD L. MADOFF (“MADOFF”) used his position as Chairman of BLMIS, the investment advisory business he founded, to steal billions from his clients.  On March 12, 2009, MADOFF pled guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family, and select members of his inner circle.  On June 29, 2009, United States District Judge Denny Chin sentenced MADOFF to 150 years in prison for running the largest fraudulent scheme in history.  Judge Chin ordered MADOFF to forfeit $170,799,000,000 as part of MADOFF’s sentence.   

The Madoff Victim Fund is funded through recoveries by the U.S. Attorney’s Office in various criminal and civil forfeiture actions and is overseen by Richard Breeden, the former Chairman of the United States Securities and Exchange Commission, in his capacity as Special Master appointed by the Department of Justice to assist in connection with the victim remission proceedings.

Of the approximately $4.05 billion that will be made available to victims through the Madoff Victim Fund, approximately $2.2 billion was collected as part of the civil forfeiture recovery from the estate of deceased MADOFF investor Jeffry Picower.  An additional $1.7 billion was collected as part of a Deferred Prosecution Agreement with JPMorgan Chase Bank N.A. for MADOFF-related Bank Secrecy Act violations.  Additional funds were collected through criminal and civil forfeiture actions against MADOFF and his co-conspirators, and certain MADOFF investors.

Mr. Williams praised the work of the FBI and the Madoff Victim Fund and thanked the Money Laundering and Asset Recovery Section of the Department of Justice’s Criminal Division for their assistance.

For more information about the Madoff Victim Fund, compensation to victims of BLMIS, eligibility criteria, and payment information, please visit www.madoffvictimfund.com.

The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorney Louis A. Pellegrino is in charge of the case.  The remission of these forfeited funds is being handled by the Office and the U.S. Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that DIANTE FERNANDES and MARK FRANCIS, both of the Bronx, were arrested in connection with a series of recent carjackings in the Bronx and Yonkers, New York.  FERNANDES and FRANCIS had their initial appearance today before United States Magistrate Judge Judith C. McCarthy and were ordered detained.  

According to the allegations in the Complaint, and statements made in court:[1]

Between September 26 and 27, 2022, DIANTE FERNANDES and MARK FRANCIS, the defendants, carjacked, robbed, and kidnapped multiple victims, in the Bronx and Yonkers, New York.  Once on September 26 and again on September 27, the defendants lured victims to a location in Yonkers using an ad for a used car posted on Facebook Marketplace.  When the victims arrived, hoping to buy the car, FERNANDES and FRANCIS forced the victims, at gunpoint, into the car they were considering buying.  FERNANDES and FRANCIS then drove around the New York City area, forcing the victims to withdraw money from bank accounts and threatening to kill them if they did not comply.  FERNANDES and FRANCIS stole the victims’ money, wallets, and phones.  On at least one occasion, FERNANDES and FRANCIS held a victim captive in the car for several hours.  FERNANDES and FRANCIS then left the victims on the street and stole the cars the victims had driven to the meeting place.

*                *                *

FERNANDES, 19, and FRANCIS, 18, both of the Bronx, New York, are charged with carjacking, Hobbs Act robbery, kidnapping, and conspiracy to commit these offenses, as well as possessing a firearm during the offenses.  If convicted of these offenses, the defendants face a maximum sentence of life in prison.

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

Mr. Williams praised the investigative work of the Federal Bureau of Investigation’s Westchester County Safe Streets Task Force and also thanked the Yonkers Police Department, Westchester County Police Department, Westchester County Real Time Crime Center, and the New York City Police Department.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Kingdar Prussien and Josiah Pertz are in charge of the prosecution.

 

---

[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.

The Department of Justice announced today that the Madoff Victim Fund (MVF) began its eighth distribution of approximately $372 million in funds forfeited to the U.S. government in connection with the Bernard L. Madoff Investment Securities LLC (BLMIS) fraud scheme. 

In this distribution, payments will be sent to 27,219 victims across the globe, bringing their total recovery to 88.35%. The total amount distributed now exceeds $4 billion to more than 40,000 victims as compensation for losses they suffered from the collapse of BLMIS. 

According to court documents and information presented in related proceedings, for decades, Bernard L. Madoff used his position as chairman of BLMIS, the investment advisory business he founded in 1960, to steal billions from his clients. On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family, and select members of his inner circle.

“The Criminal Division is proud to continue providing compensation to victims through the largest remission process the Department has overseen,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “The billions distributed worldwide is a testament to the department’s sustained efforts to ensure justice for the victims of Bernard Madoff’s massive fraud.” 

“This Office continues its historic work seeking justice for the victims of Madoff’s heinous crimes,” said U.S. Attorney Damian Williams for the Southern District of New York. “Today’s additional payments of $372 million by this Office and the Criminal Division’s Money Laundering and Asset Recovery Section represents the eighth in a series of distributions that will leave victims with compensation for more than 88 percent of their losses—a truly remarkable result. But our work is not fully complete, and this Office’s tireless commitment to compensating the victims who suffered as a result of Madoff’s crimes continues.”

“The damage perpetrated by Bernard Madoff in history’s largest Ponzi scheme reverberates around the world, devastating thousands of victims,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The funds distributed today are approximately $372 million, alongside the funds distributed previously now totaling over $4 billion, showing our unwavering commitment to bringing justice to the victims of Madoff’s greedy crimes.”

On June 29, 2009, then-U.S. District Judge Denny Chin sentenced Madoff to serve 150 years in prison for running the largest fraudulent scheme in history. Of the over $4 billion that has been made available to victims, approximately $2.2 billion was collected as part of the historic civil forfeiture recovery from the estate of deceased Madoff investor Jeffry Picower. An additional $1.7 billion was collected as part of a deferred prosecution agreement with JPMorgan Chase Bank N.A. and civilly forfeited in a parallel action. The remaining funds were collected through a civil forfeiture action against investor Carl Shapiro and his family, and from civil and criminal forfeiture actions against Bernard L. Madoff, Peter B. Madoff, and their co-conspirators.

The MVF’s payouts would not have been possible without the extraordinary efforts of the Criminal Division’s Money Laundering and Asset Recovery Section, the U.S. Attorney’s Office for the Southern District of New York, and the FBI in the prosecution of Madoff’s crimes and the recovery of assets supporting the forfeiture in this case. 

Former Chairman Richard Breeden of the U.S. Securities and Exchange Commission oversees the MVF in his capacity as Special Master appointed by the Justice Department to assist with the victim remission proceedings. The Department also acknowledges the continued sacrifice of numerous individuals due to the COVID-19 pandemic, who worked in challenging conditions to ensure that this distribution occurred and remained on schedule.  

More information about MVF and its compensation to victims of BLMIS is available on the MVF website at www.madoffvictimfund.com, such as eligibility criteria, process updates, and frequently asked questions. Further questions may be directed to the MVF at 866-624-3670 or info@madoffvictimfund.com.

Damian Williams, the United States Attorney for the Southern District of New York, announced the conviction in Manhattan federal court of STEFAN GILLIER, a/k/a “Stephan Gillier,” a/k/a “Stefan R.R. Gillier,” a/k/a “Roland Gillier,” a/k/a “Roland Van Gorp,” a Belgian citizen, for engaging in a conspiracy to fraudulently obtain over $6 million dollars’ worth of aircraft parts through the use of stopped check payments.  The jury convicted GILLIER today following a one-week trial before U.S. District Judge Paul A. Engelmayer. 

U.S. Attorney Damian Williams said:  “Today’s guilty verdict by a unanimous jury on all counts brings an end to Stefan Gillier’s long con, which began in 2004 and ultimately resulted in his arrest and extradition from Italy in 2019.  Gillier defrauded aerospace manufacturers out of millions of dollars’ worth of aircraft parts through front companies, fake identities, and hundreds of stopped checks.  He will now face sentencing for his crimes.”

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

GILLIER was president and ran the day-to-day business activities of RTF International Inc. (“RTF), a broker of aircraft parts.  RTF began obtaining aircraft parts from Honeywell International, Inc. (“Honeywell”) in June 2004.  Starting in 2005, RTF began increasing the number of parts it ordered from Honeywell, paying for them by check.  RTF paid with checks written in foreign currency and for amounts well above the cost of the parts, which created an apparent credit balance in RTF’s favor in Honeywell’s accounting system.  RTF wrote approximately $17 million worth of checks to Honeywell but stopped payment on approximately $15 million worth of checks.  In total, RTF was able to obtain over $6 million worth of aircraft parts without paying for them.  In June 2006, Honeywell executed a civil attachment order and recovered some of the stolen aircraft parts.

To execute the scheme, GILLIER signed checks to Honeywell on behalf of RTF but repeatedly caused stop payment orders to be placed after Honeywell shipped the parts to RTF.  When questioned by Honeywell’s employees about these stop payment orders, GILLIER, using the alias “Roland Van Gorp,” falsely represented that the stop payment orders were the result of a misunderstanding with the bank and that he would check with RTF’s finance department.  In fact, as GILLIER knew, he had issued the stop payment orders, and RTF did not have a finance department. 

In June 2006, following the execution of the civil attachment order by Honeywell, GILLIER caused various large transfers of fraudulent proceeds into bank accounts controlled by him, his relatives, and a co-conspirator (“CC-1”).  The very next day, on June 15, 2006, GILLIER left the United States for Canada. 

After Honeywell discovered that it was being victimized by RTF, GILLIER and CC-1 continued their fraud scheme through a new corporate entity, “UN Air Services, Inc.” (“UAS”) (which had no relation to the United Nations).  In 2006, UAS began obtaining aircraft parts from Pratt & Whitney Component Solutions, Inc. (“Pratt & Whitney”).  Like RTF, UAS began stopping payment on checks it had written to Pratt & Whitney for the aircraft parts after Pratt & Whitney delivered the aircraft parts.

GILLIER was arrested and extradited from Italy in 2019.     

*                *                *

GILLIER, 49, a citizen of Belgium, was convicted of eight counts: (1) one count of conspiracy to commit mail fraud, wire fraud, interstate transportation of stolen property, and money laundering, which carries a maximum potential penalty of five years in prison; (2) one count of mail fraud, which carries a maximum potential penalty of 20 years in prison; (3) one count of wire fraud, which carries a maximum potential penalty of 20 years in prison; (4) one count of interstate transportation of stolen property, which carries a maximum potential penalty of 10 years in prison; and (5) four counts of money laundering, each of which carries a maximum potential penalty of 10 years in prison. 

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  GILLIER is scheduled to appear for sentencing before Judge Engelmayer on January 26, 2023.

Mr. Williams praised the outstanding investigative work of Homeland Security Investigations and the U.S. Department of Defense, Defense Criminal Investigative Service.  He also thanked the Federal Bureau of Investigation, the U.S. Marshals Service, the U.S. Department of Commerce, law enforcement and prosecutorial authorities in Italy, including the Italian Ministry of Justice and Interpol Rome, Honeywell, and Pratt & Whitney for their assistance in this case.  The U.S. Department of Justice’s Office of International Affairs of the Department’s Criminal Division provided significant assistance in securing the defendant’s extradition from Italy.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Dina McLeod, Micah Fergenson, Michael McGinnis, and Michael Neff 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 Field Office of the Federal Bureau of Investigation (“FBI”), announced today that DAVID STONE pled guilty to one count of securities fraud in connection with an insider trading scheme.  STONE was arrested in May of this year and pled guilty this morning before U.S. District Judge Mary Kay Vyskocil.

U.S. Attorney Damian Williams said: “David Stone admitted in court today that he unlawfully accessed pre-publication stock picks from an investment advice service so that he could beat the markets and generate millions in trading profits for himself.  Today’s plea reflects this Office’s commitment to ensuring the integrity and fairness of our markets.  David Stone now awaits sentencing for his crime and must also forfeit his illicit profits and make restitution.”

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

From 2020 up to at least March 2022, DAVID STONE exploited market-moving stock recommendations made by an investment recommendation service (“Advisor-1”) before those recommendations were released to paying subscribers.  STONE, an I.T. professional, accessed Advisor-1’s computing system using log-in credentials he obtained without authorization and used his improperly obtained access to view information relating to Advisor-1’s recommendations before they were announced to Advisor-1’s paying subscribers.

Advisor-1’s stock recommendations typically, but not always, lead to higher closing prices for the recommended stock as compared to the prior day’s closing price.  By trading on those recommendations before they were announced, STONE was able to obtain significant profits unavailable to other market participants.  In fact, across all the brokerage accounts he traded in, STONE realized gains of at least $3.5 million.

In addition to his own trading, STONE supplied trading tips to at least one other person (“Tipee-1”).  Between in or about January 2021 up to and including in or about March 2022, on approximately 45 different days, STONE sent emails to Tipee-1 providing stock names and/or ticker symbols ahead of Advisor-1 announcements of stock recommendations to its paying subscribers.  A brokerage account associated with Tipee-1 traded ahead of Advisor-1 recommendations on more than a dozen occasions.  As a result of that trading, Tipee-1 profited more than approximately $2.7 million.

Before providing tips to Tipee-1, STONE summarized the terms by which STONE would provide information to Tipee-1, including steps they would take to hide their scheme. Among other things, STONE acknowledged that “what we are doing could be considered insider trading,” and accordingly, he recommended that Tipee-1 “[d]o other trades besides just what I tell you,” explaining, “[i]f all your trades are up 5x and you never make a loosing [sic] trade it may call attention of regulators.”

*                *                *

DAVID STONE, 37, of Nampa, Idaho, 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, as any sentencing of the defendant will be determined by the judge.  STONE is scheduled to be sentenced by Judge Vyskocil on February 14, 2023 at 2:00pm.

Mr. Williams praised the outstanding work of the FBI.  Mr. Williams thanked the U.S. Securities and Exchange Commission, which has filed a parallel civil action.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Samuel P. Rothschild and Andrew Thomas are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that ROBERT NEWLAND, the business partner of art dealer INIGO PHILBRICK, who specialized in post-war and contemporary fine art with galleries in London, United Kingdom, and Miami, Florida, pled guilty today before United States District Judge Sidney H. Stein to one count of conspiracy to commit wire fraud for perpetrating a multi-year scheme to defraud various individuals and entities in order to finance PHILBRICK’s art business.  NEWLAND, a citizen of the United Kingdom, was arrested in the United Kingdom on February 23, 2022, and extradited from the United Kingdom to the United States on September 22, 2022.  PHILBRICK has been sentenced to seven years in prison for the multi-year, $86 million fraud scheme.     

U.S. Attorney Damian Williams said:  “Robert Newland conspired with Inigo Philbrick to take advantage of the lack of transparency in the art market to defraud art collectors, investors, and lenders in order to finance Philbrick’s art business.  Newland has now admitted his guilt and awaits sentencing for his role in perpetrating this extensive fraud.” 

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

From approximately 2016 through 2019, to finance his art business, PHILBRICK engaged in a scheme to defraud multiple individuals and entities in the art market located in the New York metropolitan area and abroad (the “Fraud Scheme”).  NEWLAND was PHILBRICK’s business partner and financial adviser and conspired with PHILBRICK to perpetrate the Fraud Scheme.  NEWLAND and PHILBRICK made material misrepresentations and omissions to art collectors, investors, and lenders to access valuable art and obtain sales proceeds, funding, and loans.  NEWLAND and PHILBRICK knowingly misrepresented the ownership of certain artworks, for example, by selling a total of more than 100%ownership in an artwork to multiple individuals and entities without their knowledge and by selling artworks and/or using artworks as collateral on loans without the knowledge of co-owners and without disclosing the ownership interests of third parties to buyers and lenders.

Over the years, PHILBRICK obtained over $86 million in loans and sale proceeds in connection with the Fraud Scheme.  Artworks about which NEWLAND and PHILBRICK made these fraudulent misrepresentations in furtherance of the Fraud Scheme include, among others, a 1982 painting by the artist Jean-Michel Basquiat titled “Humidity,” a 2010 untitled painting by the artist Christopher Wool, and an untitled 2012 painting by the artist Rudolf Stingel depicting the artist Pablo Picasso.  

In the fall of 2019, NEWLAND and PHILBRICK’s Fraud Scheme collapsed as various investors and lenders learned about the material misrepresentations and omissions PHILBRICK and NEWLAND had made.

*                *                *

NEWLAND, 45, a U.K. citizen residing in the United Kingdom, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum prison term of 20 years. 

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

PHILBRICK, 35, a U.S. citizen formerly residing in the United Kingdom, pled guilty to one count of wire fraud on November 18, 2021.  On May 23, 2022, United States District Judge Sidney L. Stein sentenced PHILBRICK to 84 months in prison and two years of supervised release.  PHILBRICK was further ordered to pay a forfeiture of $86,672,790 and restitution of $82,592,367.

Mr. Williams praised the investigative work of the Federal Bureau of Investigation’s Art Crime Team.  He also thanked the U.S. Department of Justice’s Office of International Affairs and the U.S. Marshals Service for their support and assistance in the defendant’s extradition.

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Jessica K. Feinstein and Cecilia E. Vogel are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that defendants RANDY TORRES, a/k/a “Rico,” was sentenced to 39 and 1/2 years in prison and WALSTON OWEN, a/k/a “Purpose,” was sentenced to 39 and 1/2 years in prison today for their roles as leaders of the violent Rollin’ 30s Crips street gang.  DERRICK RICHARDSON, a/k/a “J-ROCC,” who served under Torres in the Rollin’ 30s Crips, received a sentence of 24 and 1/2 years in prison today for shooting and killing Nestor Suazo, 25, on September 19, 2015, in the Bronx, New York.  Richardson’s sentence was imposed to run concurrently with a previously imposed sentence of 11 years in prison for related Crips offenses.  United States District Judge Victor Marrero imposed today’s sentences.

U.S. Attorney Damian Williams said: “Randy Torres and Walston Owen were leaders of a violent gang that terrorized the law-abiding citizens of the Bronx neighborhoods where the gang operated.  Under their leadership, two individuals were killed, and others were caught in the crossfire of the gang’s shootings.  One of those individuals, Nestor Suazo, was killed at Torres’s direction by Derrick Richardson.  Nothing can undo the trauma experienced by his family and the many others affected by the defendants’ crimes, but justice requires that those responsible be held accountable.  Today, Torres, Owen, and Richardson were rightly sentenced to decades in prison for their horrific crimes.”

According to the allegations contained in the Superseding Indictments, other documents in the public record, and the evidence at trial:

From at least in or about 2009 up to and including in or about 2017, in the Southern District of New York and elsewhere, RANDY TORRES, WALSTON OWEN, DERRICK RICHARDSON, and others were members or associates of a racketeering enterprise known as the “Rollin’ 30s,” also known as the “Harlem Mafia Crips” or “Dirt Gang.”  In order to fund the enterprise, protect and expand its interests, and promote its standing, members and associates of the Rollin’ 30s committed, conspired, attempted, and threatened to commit acts of violence, including murder, attempted murder, and robbery; and they conspired to distribute and possess with intent to distribute narcotics.

TORRES, a “Big Homie,” described himself as “four levels from the top” of the Crips national leadership and oversaw the management of multiple Crips sets and hundreds of Crips members in New York City and elsewhere.  TORRES was employed as a maintenance worker in a Bronx elementary school during part of the offense and used the school and its gym to hold gang meetings where he handled gang business.  The evidence at trial showed that TORRES committed and ordered multiple acts of violence, including ordering a shooting in September 2015 that killed Nester Suazo, a/k/a “Smacc.”  The shooting was carried out by RICHARDSON, a soldier in the Rollin’ 30s who served under Torres.  RICHARDSON was captured on surveillance footage fleeing the scene of the murder and discarding the gun he used in the shooting.

OWEN was the leader of the “Stratford Avenue Rollin’ 30s,” a subset of the gang in the Bronx.  As the head of that set, Owen stored guns for the gang, collected money, issued directives to younger or less powerful members, and participated in numerous acts of gang violence, including committing a shooting in May 2015 that injured two innocent bystanders and ordering a shooting that resulted in the March 2015 Bronx murder of another innocent bystander, Victor Chafla.

*                *                *

TORRES and OWEN were convicted after trial before United States District Judge Victor Marrero in February 2022 of racketeering conspiracy offenses.  OWEN was also convicted of attempted murder in aid of racketeering, assault resulting in serious bodily injury in aid of racketeering, and related firearms offenses.  Those charges were brought in the case United States v. Torres, et al., 16 Cr. 809 (VM).  As part of that same case, RICHARDSON previously pled guilty in January 2019 before Judge Marrero to narcotics conspiracy and racketeering conspiracy.   In October 2021, RICHARDSON pled guilty in a related case to narcotics offenses in connection with Suazo’s homicide.  Those charges were brought in the case Unites States v. Richardson, 20 Cr. 299 (VM).

In addition to the prison terms, Judge Marrero sentenced Torres, 41, of New York, to three years of supervised release, Owen, 38, of New York, to five years of supervised release, and Richardson, 29, of the Bronx, New York, to three years of supervised release.

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

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Anden Chow and Jacqueline C. Kelly are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, David A. Hubbert, Deputy Assistant Attorney General for the Justice Department’s Tax Division, and Charles P. Rettig, Commissioner of the Internal Revenue Service (“IRS”), announced that U.S. District Judge Paul G. Gardephe entered an order on September 22, 2022, authorizing the IRS to issue a so-called John Doe summons requiring M.Y. Safra Bank to produce information about U.S. taxpayers who may have failed to report to the IRS, and pay taxes on, cryptocurrency transactions.  Specifically, the IRS summons seeks information about customers of SFOX, a cryptocurrency prime broker, who used banking services that M.Y. Safra Bank offered to SFOX customers engaged in cryptocurrency transactions.  As described further in the IRS’s petition in support of the summons, though taxpayers who transact in cryptocurrencies are required to report any associated profits and losses on their tax returns, the IRS’s experience has demonstrated significant tax compliance deficiencies relating to cryptocurrencies and other digital assets.

U.S. Attorney Damian Williams said:  “Taxpayers are required to truthfully report their tax liabilities on their returns, and liabilities that arise from cryptocurrency transactions are not exempt.  The government is committed to using all of the tools at its disposal, including John Doe summonses, to identify taxpayers who have understated their tax liabilities by not reporting cryptocurrency transactions, and to make sure that everyone pays their fair share.”

Deputy Assistant Attorney General David A. Hubbert said:  “Taxpayers who transact with cryptocurrency should understand that income and gains from cryptocurrency transactions are taxable.  The information sought by the summons approved today will help to ensure that cryptocurrency owners are following the tax laws.

IRS Commissioner Charles P. Rettig said:  “The government’s ability to obtain third-party information on those failing to report their gains from digital assets remains a critical tool in catching tax cheats.  The court’s granting of the John Doe summons reinforces our ongoing, significant efforts to ensure that everyone pays their fair share. Taxpayers earning income from digital asset transactions need to come into compliance with their filing and reporting responsibilities.”

According to the allegations in the documents filed in support of the petition to authorize the John Doe summons, and other information in the public record:

SFOX is a cryptocurrency prime dealer and trading platform that connects digital currency exchanges, over-the-counter virtual currency brokers, and liquidity providers globally.  SFOX has over 175,000 registered users who have collectively undertaken more than $12 billion in transactions since 2015.  Based on its recent experiences with cryptocurrencies, the IRS has strong reason to believe that many virtual currency transactions are not being properly reported on tax returns.  Among other reasons, there is no third-party reporting to the IRS in connection with such transactions, and summonses served on other cryptocurrency dealers have revealed significant underreporting of such transactions.  Further, IRS investigations have identified at least ten U.S. taxpayers who used SFOX’s services for cryptocurrency transactions but failed to report those transactions to the IRS as required by law.

SFOX has partnered with M.Y. Safra to offer SFOX users access to cash-deposit bank accounts.  SFOX users were able to use their funds at M.Y. Safra to buy and sell positions in virtual currency from SFOX.  Based on M.Y. Safra’s arrangement with SFOX, the IRS expects that in response to the John Doe summons, M.Y. Safra will be able to provide information about the identities and cryptocurrency transactions of SFOX users who also used M.Y. Safra’s services—which the IRS will then be able to use in conjunction with other information to examine whether these users complied with the internal revenue laws. 

In this action, the district court granted the IRS permission to serve what is known as a John Doe summons on M.Y. Safra.  There is no allegation in this action that M.Y. Safra engaged in any wrongdoing.  Rather, the IRS utilizes John Doe summonses to obtain information about possible violations of the internal revenue laws by individuals whose identities are unknown.  The John Doe summons directs M.Y. Safra to produce records that will enable the IRS to identify U.S. taxpayers who were customers of SFOX and who engaged in cryptocurrency transactions that may not have been properly reported on tax returns.  In parallel, the IRS was authorized on August 15 by the U.S. District Court for the Central District of California to serve a John Doe summons on SFOX itself.

*                *                *

This case is being handled by the Office’s Tax and Bankruptcy Unit.  Assistant U.S. Attorney Jean-David Barnea is in charge of the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced that DEEJAY WHITE was sentenced today to 21 years in prison for his participation in a May 29, 2019, gunpoint robbery in the Bronx targeting more than 150 kilograms of cocaine; his participation in a conspiracy to smuggle contraband, including narcotics and a firearm, into a federal detention facility; and his possession of that firearm while incarcerated.  On July 23, 2021, WHITE pled guilty before U.S. District Judge P. Kevin Castel, who imposed this sentence. 

U.S. Attorney Damian Williams said:  “Deejay White was responsible for a dangerous gunpoint robbery of more than 150 kilograms of cocaine that left several victims injured.  Even more troubling, after he was arrested and in jail, White continued to commit crimes.  White devised a perilous scheme to bring a gun and drugs into a federal prison.  White placed inmates, prison staff, and court personnel in grave danger.  Today’s lengthy sentence sends a clear message that those who endanger others will be brought to justice.”

According to the Information, court documents, and statements made in open court:

In or about late May 2019, DEEJAY WHITE learned that a Bronx-based member of a Puerto Rico-based drug trafficking organization (“DTO”) was expecting a delivery of furniture, which concealed approximately 176 kilograms of cocaine.  WHITE and others planned a violent, gunpoint robbery of the DTO’s cocaine.  On May 29, 2019, WHITE drove to the Bronx apartment where the DTO’s cocaine was stored and parked outside with his wife and young child in the car.  Minutes later, four coconspirators forced entry into the apartment and held up the 10 victims, including four children, at gunpoint.  Two victims were pistol-whipped during the robbery, and a third sustained serious injuries after jumping out of the apartment’s third-floor window in an attempt to flee to safety.  One of the robbers threw a duffel bag containing dozens of kilograms of cocaine into WHITE’s car, which then drove off.

WHITE was arrested on November 25, 2019, on charges relating to the gunpoint robbery and conspiracy to distribute the stolen cocaine, ordered detained, and housed at the Metropolitan Correctional Center (“MCC”) in Manhattan.  Days after entering the MCC, WHITE began using contraband cellphones to conspire with others, including his wife, to commit additional crimes.  Among other things, WHITE directed his wife to smuggle drugs into in the MCC, including cocaine and oxycodone, which his wife did on multiple occasions.

In or about January 2020, WHITE conspired with his wife and others to have a loaded firearm smuggled inside the MCC, which they did successfully.  When Bureau of Prisons (“BOP”) officials discovered a contraband cellphone in WHITE’s cell on or about February 26, 2020, WHITE reported to an MCC investigator that there was a gun inside the MCC.  WHITE lied to the MCC investigator about his own role in smuggling the firearm into the MCC.  Once alerted that there may be a firearm inside the MCC, the BOP imposed a lockdown, which lasted several days, while officials searched for the gun.  Following a search of the MCC, on or about March 5, 2020, WHITE’s loaded firearm was located inside a wall of WHITE’s MCC jail cell.

*                *                *

In addition to his prison term, WHITE, 45, of Chappaqua, New York, was sentenced to five years of supervised release. 

Mr. Williams praised the outstanding investigative work of the New York City Police Department the Bureau of Alcohol, Tobacco, Firearms and Explosives , the New York Field Division of the Drug Enforcement Administration , the New York Office of the United States Postal Inspection Service, the New York State Police, the New York Office of the Federal Bureau of Investigation, Special Agents from the U.S. Attorney’s Office for the Southern District of New York, the U.S. Customs and Border Protection in New York, and the Department of Justice Office of the Inspector General New York Field Office.

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

The prosecution of DEEJAY WHITE for conspiracy to commit Hobbs Act robbery and brandishing a firearm in furtherance of a drug trafficking crime is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Juliana N. Murray, Ryan B. Finkel, Peter J. Davis, and Kaylan E. Lasky are in charge of the prosecution.

The prosecution of DEEJAY WHITE for conspiring to receive contraband in prison and being a felon in possession of a firearm is being handled by the Office’s Narcotics and Public Corruption Units.  Assistant United States Attorneys Juliana N. Murray, Ryan B. Finkel, Peter J. Davis, Kaylan E. Lasky, Aline R. Flodr, Daniel H. Wolf, and Jonathan E. Rebold are in charge of the prosecution.  

Damian Williams, the United States Attorney for the Southern District of New York, Jonathan Mellone, Special Agent-in-Charge of the New York Region of the United States Department of Labor Office of Inspector General (“DOL-OIG”), and Jocelyn Strauber, the Commissioner of the New York City Department of Investigation (“NYC-DOI”), announced today the arrest of LIAQUAT CHEEMA and ALI CHEEMA on charges of wire fraud conspiracy, aggravated identity theft, and money laundering conspiracy for their role in a scheme to defraud New York City (the “City”) in connection with public contracts to perform general contracting work at City homeless shelters.  Three other participants in the money laundering scheme, IRFAN BAJWA, SHOUKET CHUDHARY, a/k/a “Muhammad Shakoor Chudary,” a/k/a “Mohammad Shakoor Chudary,” and KHIZAR HAYAT were also arrested for their role in using bank accounts to receive proceeds of the fraud scheme and conducting financial transactions to conceal, among other things, the illegal source of the funds.  In addition, LIAQUAT CHEEMA, BAJWA, CHUDHARY, and HAYAT were each charged in a separate scheme to fraudulently obtain tens of thousands of dollars-worth of Medicaid benefits.  The defendants were arrested this morning in East Elmhurst and New Hyde Park, New York, and will be presented today before a magistrate judge in the Southern District of New York.

U.S. Attorney Damian Williams said: “The defendants entered into public contracts so that they could provide vital maintenance to homeless shelters to aid New York City’s most vulnerable residents; however, instead of honoring these contracts, the defendants allegedly concocted multiple schemes to steal public funds.  Today’s arrests signal this Office’s continued commitment to combat any and all fraud and money laundering schemes.”

Special Agent-in-Charge Jonathan Mellone said: “An important mission of the U.S. Department of Labor Office of Inspector General is to investigate allegations of certain illicit and fraudulent employment practices.  We will continue to work with our law enforcement partners to investigate these types of allegations.”

NYC-DOI Commissioner Jocelyn Strauber said: “As alleged, these defendants, contractors who work on New York City homeless shelters, used their contractor status to fraudulently siphon funds from the City.  The charged scheme was vast and involved overbilling for material, false claims to prompt the issuance of paychecks to purported workers and the diversion of those paychecks to defendants, and the submission of false certifications that enabled defendants to wrongfully obtain Medicaid benefits.  DOI thanks the City Department of Social Services for initially referring allegations of fraud to DOI and the United States Attorney's Office for the Southern District of New York and the U.S. Department of Labor Office of the Inspector General for their partnership on this investigation.”

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

LIAQUAT CHEEMA and ALI CHEEMA were the President and, at least as of in or about 2015, the Vice President, respectively, of AFL Construction Co. Inc. (“AFL”), located in Queens, New York.  AFL entered into public contracts with the City worth approximately $12 million to perform general contracting work at homeless shelters located in the City, including in the Southern District of New York.  Pursuant to the contracts, AFL would perform, among other things, general maintenance, landscaping, roofing, and snow removal at shelter sites. 

From at least in or about 2014 through at least in or about 2018, LIAQUAT CHEEMA and ALI CHEEMA used the contracts to fraudulently enrich themselves and steal from the City.  In furtherance of the scheme, LIAQUAT CHEEMA and ALI CHEEMA, among other things, submitted fraudulent invoices and other documentation in support of requests for payment on the contracts, which falsely claimed that certain workers had performed work on certain projects and falsely inflated amounts paid by the defendants for materials purportedly used on such projects.  These fraudulent invoices and supporting documentation contained, without authorization, the identities of other persons, including the names, and in at least one case, the social security number, of purported workers who in fact had not worked on the projects specified in the requests for payment submitted by LIAQUAT CHEEMA and ALI CHEEMA.  To date, AFL has been paid at least $8 million for work purportedly performed pursuant to these contracts.

In addition, during the same period, LIAQUAT CHEEMA and ALI CHEEMA, as well as IRFAN BAJWA, SHOUKET CHUDHARY, and KHIZAR HAYAT used several bank accounts to receive the proceeds of the fraudulent scheme and conducted financial transactions to conceal, among other things, the illegal source of the funds.  Those transactions included transfers of illicit proceeds into the defendants’ personal and business bank accounts via fraudulent checks in order to conceal the scheme.  For example, certain of the defendants caused AFL to issue hundreds of checks to purported workers fraudulently listed in documentation submitted to the City in support of payment on the contracts but never delivered those checks to the purported workers; instead, the defendants deposited the checks into their own personal and business bank accounts. 

LIAQUAT CHEEMA, IRFAN BAJWA, SHOUKET CHUDHARY, and KHIZAR HAYAT also fraudulently obtained tens of thousands of dollars-worth of Medicaid benefits by repeatedly submitting fraudulent certifications, which underreported their actual incomes and accordingly enabled them to obtain Medicaid benefits for which they were not eligible.  In support of requests for Medicaid benefits, LIAQUAT CHEEMA, BAJWA, CHUDHARY, and HAYAT repeatedly submitted nearly identical employment letters, which, among other misrepresentations, contained the name and purported signature of a purported “Project Manager” who, in fact, was deceased.

*                *                *

LIAQUAT CHEEMA, 62, of East Elmhurst, New York, is charged with one count of wire fraud conspiracy, which carries a maximum potential sentence of 20 years in prison; one count of money laundering conspiracy, which carries a maximum potential sentence of 20 years in prison; one count of health care fraud conspiracy, which carries a maximum potential sentence of 10 years in prison; and two counts of aggravated identity theft, each of which carry a mandatory sentence of two years in prison.

ALI CHEEMA, 31, of East Elmhurst, New York, is charged with one count of wire fraud conspiracy, which carries a maximum potential sentence of 20 years in prison; one count of money laundering conspiracy, which carries a maximum potential sentence of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison.

IRFAN BAJWA, 42, of New Hyde Park, New York, SHOUKET CHUDHARY, 64, of East Elmhurst, New York, and KHIZAR HAYAT, 46, of East Elmhurst, New York, are each charged with one count of money laundering conspiracy, which carries a maximum potential sentence of 20 years in prison; one count of health care fraud conspiracy, which carries a maximum potential sentence of 10 years in prison; and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison.

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

Mr. Williams praised the outstanding investigative work of DOL-OIG and NYC-DOI.

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

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Complaint 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 a jury returned a guilty verdict against MUSTAPHA RAJI for his participation in a $1.7 million business email compromise and money-laundering scheme that targeted a Manhattan hedge fund.  RAJI was convicted on four counts of conspiracy to commit wire fraud, wire fraud, receipt of stolen property, and conspiracy to commit money laundering.  RAJI was convicted after a jury trial before U.S. District Judge Jesse M. Furman which lasted approximately one week.  RAJI was previously arrested on December 20, 2019.

U.S. Attorney Damian Williams said:  “Email scams that target businesses in this District will not be tolerated.  Together with our law enforcement partners, we will continue to zealously prosecute online scammers abroad, and the U.S.-based money launderers they work with, to protect American businesses.”

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

RAJI participated in an international fraud ring that conducted phishing and other email fraud campaigns.  One of those campaigns involved the July 2018 compromise of the business email account of a hedge fund founder in New York.  That compromise resulted in the fraudulent diversion of a $1.7 million wire transfer from the hedge fund to a corporate bank account used to facilitate the scheme.  RAJI was a registered officer of the company that received the stolen funds, he fabricated documents to cover up the fraudulent transfer of funds from the hedge fund, and he directed a co-conspirator to launder the stolen funds to other co-conspirators domestically and overseas.  RAJI took a $50,000 cut for his participation in the scheme.

*                *                *

RAJI, 52, of Hollywood, Florida, was convicted of one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of receipt of stolen money, which carries a maximum sentence of 10 years in prison; and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.

RAJI is scheduled to be sentenced before Judge Furman on January 11, 2023, at 3:15 p.m.

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

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

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Catherine Ghosh, Jilan Kamal, Dina McLeod, 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 JOSHUA BURRELL was sentenced today to 48 months in prison for committing securities fraud in connection with the operation of a New York-based investment firm, Activated Capital, LLC (“Activated Capital”).  BURRELL previously pled guilty for raising millions of dollars for Activated Capital’s “Opportunity Zone Funds” using fraudulent misrepresentations.  U.S. District Judge Lewis A. Kaplan imposed the sentence in Manhattan federal court.

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

From in or about 2019 through in or about 2021, BURRELL obtained millions of dollars of investments for the Activated Tax Advantaged Opportunity Fund, LLC and Activated Capital Opportunity Zone Fund II, LLC (collectively, the “Activated OZ Funds” or the “Funds”) based on fraudulent representations.  BURRELL represented, in substance, that the money invested in the Activated OZ Funds would be used to purchase real estate properties in Opportunity Zones and that investors would receive distribution payments out of the Funds’ net real estate investment income.  Contrary to those representations, BURRELL caused the Activated OZ Funds to pay putative distributions in amounts greater than the Funds’ net income.  From the inception of the Funds in 2019 through approximately February 2021, BURRELL used investor money to help pay distributions totaling approximately $470,000 in a manner akin to a Ponzi scheme.  BURRELL also falsely inflated Activate Capital’s assets under management in communications with prospective investors.

To attract additional investment capital for the Activated OZ Funds, BURRELL sought to establish a partnership with an investment bank headquartered in Manhattan (“Company-1”).  As part of Company-1’s diligence process, Company-1 asked BURRELL for “[b]acking to show current fund proceeds/acquisitions made.”  In response to these requests, BURRELL fabricated documents to make it appear that the Activated OZ Funds were more successful, owned more properties, and were in better financial condition than was actually the case.  For example, BURRELL sent Company-1 fake bank statements making it appear that, for the period July 2019 through October 2019, one of the Activated OZ Funds had ending monthly account balances of between approximately $2,094,450 and $2,463,100 when the real account statements for that period showed ending monthly balances of between only $116,369 and $154,399.  BURRELL fabricated additional documents to make it falsely appear to Company-1 that an Activated Capital affiliate owned nine properties in Detroit, Michigan, that it had not, in fact, acquired.

*                *                *

BURRELL, 39, of New York, New York, was also sentenced to a one-year term of supervised release.  He was further ordered to pay restitution to his victims in the amount of $5,763,420 and to pay forfeiture in the amount of $107,688.  

Mr. Williams praised the investigative work of the United States Postal Inspection Service and thanked the U.S. Securities and Exchange Commission for its assistance.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Daniel Loss and Alex Rossmiller are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Jocelyn Strauber, Commissioner of the New York City Department of Investigation (“DOI”), announced that WALTER MELNICK, a retired Inspector of the New York City Police Department and a disaster relief consultant, pled guilty to conspiring to commit federal program fraud in connection with his work for an Illinois-based consulting firm (“Company-1”) that provided Hurricane Sandy-related recovery services to the City of New York.  MELNICK surrendered today and pled guilty before U.S. Magistrate Judge Valerie Figueredo in federal court in Manhattan.  The case has been assigned to U.S. District Judge Victor Marrero.

U.S. Attorney Damian Williams said:  “As New York City worked to recover from the devastation of Hurricane Sandy, Walter Melnick conspired to misuse funds that were allocated to heal the city in the wake of this disaster, instead attempting to use the funds for his own benefit.  I commend the Department of Investigation and this Office for holding to account those who conspire to defraud invaluable federal programs.”

DOI Commissioner Jocelyn Strauber said:  “This defendant was hired to help New York City with Hurricane Sandy relief efforts; instead, he conspired to defraud the City’s Office of Management and Budget of almost three hundred and ninety thousand dollars in federal disaster recovery funds.  Today, he plead guilty to that conduct, and agreed to pay back those funds to the City.  DOI thanks the Office of Management and Budget for its assistance.  We will continue to work with our local and federal law enforcement partners to hold accountable those who would seek to defraud the public and to ensure that public funds are used for their intended purpose.” 

According to the allegations in the Information, court filings, and statements made in court:[1]

Beginning in or about 2013, in the aftermath of Hurricane Sandy, the City of New York received billions of dollars in federal money to fund Hurricane Sandy-related recovery efforts.  The City used certain of these funds to hire Company-1 to assist with Hurricane Sandy relief (the “Sandy Project”).  Company-1 hired MELNICK as an independent contractor to work on the Sandy Project.

Between in or about 2013 and in or about 2019, while working on the Sandy Project for Company-1, MELNICK participated in two schemes to defraud the New York City Office of Management and Budget (“NYC-OMB”).  First, between in or about January 2013 and in or about October 2017, MELNICK conspired with at least one other individual (“CC-1”) and submitted fraudulent documentation to NYC-OMB via Company-1, falsely claiming that he was renting and living in an apartment in New York in order to obtain lodging and travel reimbursements.  Upon learning that this first fraudulent scheme was under investigation, MELNICK told CC-1 to lie to law enforcement.  Second, between in or about 2017 and in or about 2019, while working on the Sandy Project, MELNICK conspired with at least two individuals, including another employee of Company-1 (“CC-2”) and a family member (“CC-3”), to purchase a property that CC-2 used to submit fraudulent reimbursement requests to NYC-OMB via Company-1 for lodging expenses to which CC-2 was not entitled.  CC-2 transferred the proceeds from this fraudulent scheme to CC-3, who used part of the proceeds to pay the mortgage and maintenance for the property and retained the rest.  In or about March 2022, MELNICK made false statements to the Government in connection with this second fraudulent scheme.

*                *                *

WALTER MELNICK, 77, of Treasure Island, Florida, pled guilty to one count of conspiring to commit federal program fraud, which carries a maximum sentence of five years in prison.  Under the terms of his plea agreement, MELNICK agreed to forfeit $387,749 and to pay restitution to NYC-OMB in the amount of $387,749.

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 would be determined by a judge.  MELNICK is scheduled to be sentenced by Judge Marrero on January 20, 2023, at 10 a.m.

Mr. Williams praised the outstanding investigative work of DOI. 

This matter is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Jane Kim and Catherine Ghosh are in charge of the prosecution.

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Information 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 EFRAIN GRANADOS-CORONA, a/k/a “Chavito,” a/k/a “Cepillo,” was sentenced today to 212 months in prison in connection with trafficking three victims.  Five additional defendants in this case were previously sentenced to terms of imprisonment.  JULIO SAINZ-FLORES, a/k/a “Rogelio,” was sentenced on January 10, 2020, to 135 months in prison; PEDRO ROJAS-ROMERO was sentenced on December 2, 2021, to 137 months in prison; ALAN ROMERO-GRANADOS, a/k/a “El Flaco,” was sentenced on February 24, 2022, to 84 months in prison; JUAN ROMERO-GRANADOS, a/k/a “Chegoya,” a/k/a “El Guero,” was sentenced on May 3, 2022, to 108 months in prison; and EMILIO ROJAS-ROMERO was sentenced on June 9, 2022, to 136 months in prison.

U.S. Attorney Damian Williams said:  “These defendants used brute force, threats of violence, and false promises to lure dozens of minors and adult victims in Mexico and the United States, traffic them into commercial sex, and collect millions of dollars in illegal proceeds.  The devastation inflicted on the defendants’ victims is beyond measure.  These sentencings send a clear message: those who prey on women and children to sell them into sexual slavery will be prosecuted and punished to the full extent of the law.”

According to the allegations in the Indictment to which each defendant pleaded guilty, public court filings, and statements made in court: 

EFRAIN GRANADOS-CORONA, JULIO SAINZ-FLORES, JUAN ROMERO-GRANADOS, ALAN ROMERO-GRANADOS, PEDRO ROJAS-ROMERO, and EMILIO ROJAS-ROMERO, the defendants, were members of an international sex trafficking organization (the “STO”).  Many of the members of the STO are related by blood, marriage, and community. 

Between at least in or about 2000 and 2016, members of the STO (the “Traffickers”) used false promises, physical and sexual violence, threats, lies, and coercion to force and coerce adult and minor women (the “Victims”) to work in prostitution in both Mexico and the United States.

In most cases, a Trafficker enticed a Victim – frequently a minor – in Mexico.  The Trafficker then used multiple means to isolate the Victim from her family.  In some cases, the Trafficker used romantic promises to induce the Victim to leave her family and live with the Trafficker.  In other cases, the Trafficker raped the Victim, making it difficult for her to return to her family due to the associated stigma of the rape.  Once a Victim was separated from her family, the Trafficker frequently monitored her communications, kept her locked in an apartment, left her without food, and engaged in physical or sexual violence against the Victim. 

Traffickers often told Victims that the Traffickers owed a significant debt and that the Victim needed to work in commercial sex to assist in repaying the debt.  Traffickers typically began forcing the Victims to work in commercial sex in Mexico.  Victims were often required to see at least 20 to 40 customers per day.  Traffickers monitored the number of clients each Victim saw by surveilling the Victims, communicating with brothel workers, and by counting the number of condoms provided to each Victim.  Traffickers typically required the Victims to turn over all of the commercial sex proceeds to the Traffickers. 

After a Victim worked in commercial sex in Mexico for some time, Traffickers typically arranged for the Victim to be smuggled into the United States.  Members of the STO assisted one another in making smuggling arrangements.  In many cases, multiple Traffickers and multiple Victims were smuggled into the United States together.  In other cases, one Trafficker remained in Mexico while arranging for a Victim to be smuggled together with another Trafficker and other Victims.

Once in the United States, the members of the STO generally maintained their Victims at one of several shared apartments in New York City.  Victims living in the same apartment were frequently forbidden from communicating with one another.  Once in the United States, Traffickers continued to use physical and sexual violence, threats, lies, and coercion to force the Victims to work in commercial sex. 

In most cases, the Trafficker or another member of the STO provided Victims with contact information with which to find work engaging in commercial sex acts.  The Victims typically worked weeklong shifts either in a brothel or in a “delivery service.”  In a delivery service, the Victims were delivered to customers’ homes by “drivers.”  These brothels and delivery services were located both within New York and in surrounding states, including, but not limited to, Connecticut, Maryland, Virginia, New Jersey, and Delaware.

Generally, each customer paid $30 to $35 for 15 minutes of sex with a Victim.  Of that, half of the money typically went to the driver (in the case of a delivery service) or to the brothel.  The other half went to the Victim, who was then typically forced to give all of those proceeds to the Trafficker.  When a Trafficker was unavailable, a Victim would be forced to give the proceeds to another member of the STO.

The Traffickers then frequently sent, or had their Victims send, some of the commercial proceeds to Traffickers’ family members and associates in Mexico by wire transfer.  Such transfers provided financial assistance to the Traffickers’ families and provided financial support to the Traffickers themselves if they returned to Mexico. 

*                *                *

EFRAIN GRANADOS-CORONA, 45, of Mexico, pled guilty to sex trafficking by force, fraud, and coercion, which carries a mandatory minimum sentence of 15 years in prison and a maximum sentence of life in prison.  In addition to the prison terms, EFRAIN GRANADOS-CORONA was ordered to pay $2,004,450 in restitution.

JULIO SAINZ-FLORES, 37, of Mexico, pled guilty to sex trafficking of a minor, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.

JUAN ROMERO-GRANADOS, 33, ALAN ROMERO-GRANADOS, 28, PEDRO ROJAS-ROMERO, 40, and EMILIO ROJAS-ROMERO, 37, all of Mexico, pled guilty to conspiracy to commit sex trafficking by force, fraud, and coercion, which carries a maximum sentence of life in prison.  In addition to the prison terms, JUAN ROMERO-GRANADOS was ordered to pay $147,600 in restitution.

The maximum and minimum 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.

The prosecution is being handled by the Violent and Organized Crime Unit of the U.S. Attorney’s Office for the Southern District of New York.  Assistant U.S. Attorneys Jacqueline C. Kelly and Elinor L. Tarlow are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that ASA SAINT CLAIR, a/k/a “Asa Williams,” a/k/a “Asa Sinclair,” was sentenced today to 42 months in prison for devising a fraudulent investment scheme in which he tricked at least 60 victims into providing loans to his organization, the World Sports Alliance, tied to a purported digital coin offering called IGObit.  SAINT CLAIR falsely represented to investors that the World Sports Alliance was a close affiliate of the United Nations and that they would receive guaranteed returns on their investment, but instead diverted the investors’ funds for his personal expenses and benefit.  SAINT CLAIR was found guilty of wire fraud in March 2022, following a two-week jury trial before U.S. District Court Judge P. Kevin Castel, who imposed today’s sentence. 

U.S. Attorney Damian Williams said:  “Asa Saint Clair deceived everyday investors by taking advantage of their desire to invest in a better world while also getting a guaranteed financial return.  Saint Clair promised his victims all this and more if they invested in IGObit, a digital currency he claimed the World Sports Alliance was developing in support of its work with the UN to promote sports and peace in developing countries.  These promises were false, and Saint Clair’s victims lost the entirety of their hard-earned money.  Today’s sentence holds Saint Clair accountable for brazenly lying to investors while lining his own pockets.”   

According to the evidence presented at trial, SAINT CLAIR solicited investors for the launch of IGObit through promised investment returns, representations that the World Sports Alliance, a purported intergovernmental organization, was a close affiliate and partner with the United Nations, and representations about the World Sport Alliance’s development projects around the world.  World Sports Alliance did not in fact have any relationship with the United Nations and did not, and had not, participated in any international development projects. 

SAINT CLAIR also represented to investors that their money would be used for the development of IGObit, when he in fact diverted those funds to other entities controlled by him and members of his family, as well as to pay his personal expenses, including dinners at Manhattan restaurants, travel, and online shopping.

SAINT CLAIR defrauded more than 60 victims of more than $600,000 dollars.

*                *                *

SAINT CLAIR, 50, of Washington, was convicted of one count of wire fraud.  In addition to the prison term, SAINT CLAIR was sentenced to three years of supervised release and ordered to pay forfeiture of $618,417 and restitution of $613,417.

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

The prosecution of this case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Emily Deininger, Tara LaMorte, and Kiersten Fletcher are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that VICTOR RIVERA was sentenced yesterday to 235 months in prison in connection with his participation in a robbery crew that targeted owners of luxury watches worth up to hundreds of thousands of dollars each between October 2019 and November 2020.  On January 19, 2022, RIVERA pled guilty to participating in a conspiracy to commit Hobbs Act robbery.  U.S. District Judge Alvin K. Hellerstein imposed this sentence.

U.S. Attorney Damian Williams said: “Victor Rivera committed nearly a dozen robberies of unarmed and defenseless victims, stealing hundreds of thousands of dollars of jewelry in the process.  During one of these robberies, he shot the victim in front of the victim’s own home.  This lengthy sentence holds Rivera accountable for these terrifying acts of violence.”

According to the Indictment, court documents, and based on statements made in open court:

From at least in or about October 2019 up to and including November 2020, VICTOR RIVERA and others known and unknown agreed to rob victims of luxury watches worth up to hundreds of thousands of dollars each.  The watches owned by victims targeted in the robberies included Richard Mille, Rolex, Audemars Piguet, and Patek Philippe watches owned by jewelers as part of the jewelers’ businesses, which were based in Manhattan’s Diamond District.  RIVERA used guns to commit several of the robberies, and in one robbery, shot a victim, who survived. 

The 11 robberies and attempted robberies included the following: 

1. On October 3, 2019, RIVERA and a co-conspirator robbed a jeweler in Long Island City, New York, of, among other things, a Richard Mille watch worth over $250,000.
2. On October 25, 2019, RIVERA and a co-conspirator robbed a jeweler in Jamaica, New York, of, among other things, a Rolex watch worth over $150,000.
3. On December 10, 2019, RIVERA and two co-conspirators robbed a jeweler in Brooklyn, New York, of, among other things, a Patek Philippe watch worth over $160,000 and a diamond necklace worth over $77,000.  During the robbery, a firearm was shown to the victim.
4. On January 14, 2020, RIVERA and a co-conspirator robbed a jeweler in Rego Park, New York, of, among other things, a Richard Mille watch worth over $500,000.
5. On February 16, 2020, RIVERA and a co-conspirator robbed a jeweler in Jamaica Estates, New York, of, among other things, an Audemars Piguet watch worth over $28,000.
6. On February 20, 2020, RIVERA and a co-conspirator robbed an individual in Long Island City, New York, of, among other things, an Audemars Piguet watch worth over $125,000.
7. On June 11, 2020, RIVERA and a co-conspirator robbed a jeweler in Brooklyn, New York, of, among other things, a Richard Mille watch worth over $148,000.  During the robbery, a firearm was shown to the victim, and a victim was shot.
8. On July 6, 2020, RIVERA and a co-conspirator robbed a jeweler in Hoboken, New Jersey, of, among other things, a Richard Mille watch worth over $81,000.  Following the robbery, RIVERA and others transported the stolen watch from New Jersey to New York.
9. On July 20, 2020, RIVERA and a co-conspirator participated in an attempted robbery of a jeweler in Queens, New York, attempting to steal a Richard Mille watch worth over $180,000.
10. On August 2, 2020, RIVERA and a co-conspirator robbed an individual in the vicinity of Englewood Cliffs, New Jersey, of, among other things, a Richard Mille watch worth over $250,000.  During the robbery, a firearm was shown to a victim.  Following the robbery, RIVERA and others transported the stolen watch from New Jersey to New York.
11. On October 27, 2020, RIVERA and a co-conspirator robbed a jeweler in the vicinity of Woodbury, New York, of, among other things, an Audemars Piguet watch worth over $26,000 and assorted jewels and gold links worth over $60,000.  During the robbery, a firearm was shown to a victim.

*                *                *

In addition to his prison term, RIVERA, 31, of Brooklyn, New York, was sentenced to three years of supervised release.  In addition, RIVERA was ordered to pay $1,380,800 in restitution and $1,380,800 in forfeiture.

Mr. Williams praised the outstanding investigative work of the Special Agents of the U.S. Attorney’s Office for the Southern District of New York and the New York City Police Department.  Mr. Williams also thanked the Bergen County Prosecutor’s Office, the Englewood Cliffs Police Department, the Weehawken Police Department, and the Nassau County Police Department for their assistance.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Mathew Andrews and Andrew K. Chan are in charge of the prosecution.

Damian Williams, United States Attorney for the Southern District of New York, and Lisa Flavia Garcia, Regional Administrator for the U.S. Environmental Protection Agency (“EPA”), Region 2, announced today that the United States has filed a civil lawsuit against AMERICAN IRON & METAL CO., INC. (“AIM”), CULP INDUSTRIES, INC. (“Culp”), PARAMOUNT GLOBAL (“Paramount”), and PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE (“PSNH”) (collectively, the “Defendants”), and has simultaneously filed a consent decree settling the lawsuit.  In the complaint, brought pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601-9675 (“CERCLA”) – commonly known as the Superfund statute – the United States alleged that the Defendants arranged for the disposal or treatment of mercury by Port Refinery, Inc. (“Port Refinery”), a mercury refining business in the Village of Rye Brook, New York, which led to releases of mercury into the environment.  The consent decree provides for a combined payment of $437,255 by the Defendants for costs incurred by EPA in conducting clean-up activities at the site.

U.S. Attorney Damian Williams said:  “AIM, Culp, Paramount, and PSNH played a part in causing contamination in a residential community by arranging for the treatment or disposal of nearly 4,000 pounds of toxic mercury or mercury-containing materials, and now each is paying a share of the costs that EPA had to incur to clean up this site.  This Office continues to pursue and hold responsible parties accountable for their share of the costs at the site.”

EPA Regional Administrator Lisa F. Garcia said:  “With an additional $437,255 in cleanup costs that will be recovered by EPA, this settlement is good news and it brings the total amount recovered from responsible parties for this cleanup to more than $2.8 million.  This case demonstrates EPA’s commitment to clean up harmful pollution while holding accountable those entities that are responsible for cleanup costs.”

As alleged in the complaint filed today in White Plains federal District Court, each of the Defendants arranged for Port Refinery’s treatment or disposal of used or scrap mercury and mercury-containing materials at the Site.  Port Refinery’s treatment and processing of mercury sent by the Defendants and other parties led to extensive releases of mercury into the environment, necessitating two separate clean-up actions by EPA.  In connection with the second clean-up, EPA incurred costs at the Site for investigative and removal activities, including, among other things, excavating and disposing of more than 9,300 tons of mercury-contaminated soil from the site.

In the consent decree filed today, the Defendants admit and accept responsibility for the following:

• EPA has determined that from the 1970s through the early 1990s, Port Refinery engaged in, among other things, the business of mercury reclaiming, refining, and processing.
• Port Refinery operated in the Village of Rye Brook out of a two-story garage bordered by private residences on its south, east, and west sides.
• EPA has determined that Port Refinery took virtually no environmental precautions or safety measures during its mercury refinement process.
• EPA has determined that Port Refinery released a significant amount of mercury into the environment, contaminating the Site.
• EPA has determined that mercury from the Defendants’ mercury-containing products was comingled at the Site and contributed to the mercury released into the environment.

Moreover, in the consent decree each Defendant admits and accepts responsibility for directly or indirectly delivering mercury to Port Refinery as follows:

• AIM delivered 1,033 pounds of mercury to Port Refinery during Port Refinery’s period of operations.
• Culp delivered 527 pounds of scrap mercury to Port Refinery during Port Refinery’s period of operations.
• Paramount delivered to Port Refinery, via a third-party broker, ten drums containing at least 600 pounds of mercury residue for refining by Port Refinery during Port Refinery’s period of operations.
• PSNH sold 1,754 pounds of used mercury containing titanium or magnesium to a third-party broker during Port Refinery’s period of operations, and EPA has determined that those surplus mercury and mercury-containing materials came to be located at the Site.

Pursuant to the consent decree, the Defendants will pay a total of $437,255 in costs incurred by EPA.

*                *                *

This lawsuit is the United States’ seventh lawsuit against responsible parties to recover clean-up costs for the second clean-up at the Site.  With this settlement, the United States has recovered a total of $2,819,392 from responsible parties. 

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

This case is being handled by the Office’s Environmental Protection Unit.  Assistant U.S. Attorney Anthony J. Sun is in charge of the case.

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”), Thomas M. Fattorusso, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, New York Field Office (“IRS-CI”), and Jonathan Mellone, Special Agent-in-Charge of the New York Regional Office of the U.S. Department of Labor – Office of Inspector General (“DOL-OIG”), announced that ANTHONY LISI pled guilty to conspiracy to commit wire fraud for his involvement in an embezzlement scheme.  LISI surrendered yesterday and pled guilty before United States District Judge Paul A. Engelmayer, to whom his case is assigned.

U.S. Attorney Damian Williams said:  “As he admitted, Anthony Lisi participated in an embezzlement scheme.  Lisi accepted a job with a technology company and, for over a year, submitted falsified weekly time sheets to his employer. He claimed that he had worked eight hours per day, every day—including various holidays—when he had not.  As a law enforcement officer who worked for the NYPD for over 20 years, including as a Sergeant, Lisi knew right from wrong.”

FBI Assistant Director Michael J. Driscoll said:  “As he admitted, Mr. Lisi intentionally defrauded his victims through an embezzlement scheme as soon as he began his employment.  As a law enforcement officer, he knew better than most that by lying about the services he provided he was committing a crime.  Embezzlement schemes harm both private businesses and the broader economy regardless of their scale.  The FBI and our law enforcement partners will continue to work to hold fraudsters accountable in our justice system.”

IRS-CI Special Agent in Charge Thomas M. Fattorusso said:  “There is simply no excuse for Lisi, whose job as a Sergeant with the NYPD was to understand how laws work and how laws are broken.  His scheme to make fast cash without doing the work has now landed him on the wrong side of the law, and his guilty plea moves him a step closer to realizing the consequences of his actions.”

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

In connection with an IT services contract, a technology company hired ANTHONY LISI.  From January 2018 to February 2019, LISI electronically submitted weekly time sheets in which he represented to the technology company that he had worked eight hours per day, every day, including various holidays.  In fact, he had not.  These false representations induced the technology company to pay LISI. 

*                *                *

LISI, 47, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison.  Under the terms of his plea agreement, LISI has agreed to forfeit $66,100 and to pay restitution of $94,185. 

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.  LISI is scheduled to be sentenced by Judge Engelmayer on December 21, 2022, at 10:30 a.m.

Mr. Williams praised the outstanding efforts of the FBI, IRS-CI, and DOL-OIG.  Mr. Williams also noted that the investigation is ongoing.

This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States 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 NIKHIL WAHI, the brother of a former product manager at Coinbase Global, Inc. (“Coinbase”), pled guilty to one count of conspiracy to commit wire fraud in connection with a scheme to commit insider trading in cryptocurrency assets by using confidential Coinbase information about which crypto assets were scheduled to be listed on Coinbase’s exchanges.  WAHI was arrested in July of this year and pled guilty before U.S. District Judge Loretta A. Preska.

U.S. Attorney Damian Williams said:  “Less than two months after he was charged, Nikhil Wahi admitted in court today that he traded in crypto assets based on Coinbase’s confidential business information to which he was not entitled.  For the first time ever, a defendant has admitted his guilt in an insider trading case involving the cryptocurrency markets.  Today’s guilty plea should serve as a reminder to those who participate in the cryptocurrency markets that the Southern District of New York will continue to steadfastly police frauds of all stripes and will adapt as technology evolves.  Nikhil Wahi now awaits sentencing for his crime and must also forfeit his illicit profits.”

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

At all relevant times, Coinbase was one of the largest cryptocurrency exchanges in the world.  Coinbase users could acquire, exchange, and sell various crypto assets through online user accounts with Coinbase.  Periodically, Coinbase added new crypto assets to those that could be traded through its exchange, and the market value of crypto assets typically significantly increased after Coinbase announced that it would be listing a particular crypto asset.  Accordingly, Coinbase kept such information strictly confidential and prohibited its employees from sharing that information with others, including by providing a “tip” to any person who might trade based on that information.

Beginning in approximately October 2020, ISHAN WAHI worked at Coinbase as a product manager assigned to a Coinbase asset listing team.  In that role, ISHAN WAHI was involved in the highly confidential process of listing crypto assets on Coinbase’s exchanges and had detailed and advanced knowledge of which crypto assets Coinbase was planning to list and the timing of public announcements about those crypto asset listings. 

On multiple occasions between July 2021 and May 2022, after getting tips from ISHAN WAHI as to which crypto assets Coinbase was planning to list on its exchanges, NIKHIL WAHI used anonymous Ethereum blockchain wallets to acquire those crypto assets shortly before Coinbase publicly announced that it was listing these crypto assets on its exchanges.  Following Coinbase’s public listing announcements, on multiple occasions NIKHIL WAHI sold the crypto assets for a profit. 

To conceal his purchases of crypto assets in advance of Coinbase listing announcements, NIKHIL WAHI used accounts at centralized exchanges held in the names of others, and transferred funds, crypto assets, and proceeds of their scheme through multiple anonymous Ethereum blockchain wallets.  NIKHIL WAHI also regularly created and used new Ethereum blockchain wallets without any prior transaction history in order to further conceal his involvement in the scheme.

*                *                *

NIKHIL WAHI, 26, of Seattle, Washington, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison. 

The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.  NIKHIL WAHI is scheduled to be sentenced by Judge Preska on December 13, 2022, at 12:00 p.m.

Mr. Williams praised the investigative work of the Federal Bureau of Investigation.  He also acknowledged the assistance of the Justice Department’s National Cryptocurrency Enforcement Team, as well as that of the Securities and Exchange Commission, which separately initiated civil proceedings against WAHI.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorneys Noah Solowiejczyk and Nicolas Roos are in charge of the prosecution.

Today in the Southern District of New York, Arwa Muthana, 30, of Hoover, Alabama, pleaded guilty to attempting to provide material support to the Islamic State of Iraq and al-Sham, aka ISIS, a designated foreign terrorist organization. On Friday, her husband James Bradley, aka Abdullah, 21, of the Bronx, entered a guilty plea to the same charge.

According to court documents, Bradley and Muthana are ISIS supporters who attempted to travel to the Middle East to join and fight for ISIS. Bradley expressed violent extremist views since at least 2019, including his desire to support ISIS by traveling overseas to join the group or committing a terrorist attack in the United States. In May 2020, Bradley stated to an undercover law enforcement officer (UC-1) that he believed that ISIS may be good for Muslims because ISIS was establishing a caliphate. Bradley further expressed his desire to conduct a terrorist attack in the United States and discussed potentially attacking the U.S. Military Academy in West Point, New York. Bradley explained that if he could not leave the United States, he would do “something” in the United States instead, referring to carrying out an attack.

In June 2020, Bradley reaffirmed his interest to UC-1 in attacking a military base, and that doing so would be his contribution to the cause of jihad. In January 2021, Bradley mentioned to UC-1 another university in New York State where he frequently saw Reserve Officer Training Corps (ROTC) cadets training. Bradley stated that he could use his truck in an attack, and that he along with Muthana could take all of the ROTC cadets “out.”

In late January 2021, Bradley married Muthana in an Islamic marriage ceremony. Beginning before and continuing after their marriage, Bradley and Muthana discussed, planned and ultimately attempted to travel to the Middle East together to join and fight with ISIS. In or about early March 2021, Bradley traveled from New York to Alabama to visit Muthana, and Bradley and Muthana traveled back to New York together, to travel from New York to join ISIS in the Middle East. Thereafter, Bradley raised the possibility of UC-1 helping Bradley and Muthana get on a cargo ship to travel to Asia or Africa for the purpose of ultimately joining and fighting for ISIS. UC-1 subsequently put Bradley in contact with a purported associate who could assist Bradley in making arrangements for Bradley and Muthana to travel to the Middle East via cargo ship. In reality, the purported facilitator was a law enforcement officer acting in an undercover capacity (UC-2).

Later in March 2021, Bradley met with UC-2 and expressed his desire to travel via cargo ship and to “fight among the rank[s] of the Islamic State.” Bradley subsequently provided UC-2 $1,000 in cash as travel costs for Bradley and Muthana to take a cargo ship to Yemen. Bradley told UC-2 that he and Muthana both planned to be “fighting” after arriving in the Middle East. Bradley also told UC-2 that he had a dream that he had given “bay’ah,” an Arabic term meaning the oath of allegiance, to Abu Ibrahim al-hashimi al-Qurashi, the former leader of ISIS.

On March 25, 2021, UC-2 told Bradley that the cargo ship would be leaving on March 31, from a seaport in Newark, New Jersey. Bradley praised Allah and confirmed he and Muthana planned to travel on the ship. On March 31, 2021, Bradley and Muthana met with UC-2 on the way to the seaport. During this meeting, Muthana confirmed to UC-2 that she was traveling to the Middle East to fight for ISIS. Bradley and Muthana were arrested as they walked on a gangplank to board the cargo ship. After Muthana was arrested, she waived her Miranda rights and stated during an interview that she was willing to fight and kill Americans if it was for Allah. Also on March 31, 2021, in connection with a court-authorized search, the FBI seized from a bedroom previously used by Bradley what appears to be a hand-drawn image of a jihadi flag commonly used by ISIS and a hand-drawn map of the Pakistan region.

In the months and years prior to their arrests, Bradley and Muthana also accessed, posted and distributed extremist online content, including materials indicative of their support for ISIS. Such material included Bradley’s postings of images of ISIS fighters, Usama Bin Laden, and terrorist attacks, and his distribution to UC-1 of videos of ISIS fighters, a 2020 stabbing attack against a New York City Police Department officer, and extremists shooting a uniformed soldier. Content on Muthana’s cellphone, which was searched pursuant to a court-authorized search warrant, included images of an ISIS flag with Arabic writing, firearms, ISIS propaganda, and quotations of the deceased extremist preacher and former al Qaeda in the Arabian Peninsula member Anwar al-Awlaki, including, for example, a copy of the cover of a book authored by al-Awlaki and titled “44 Ways to Support Jihad.”

Bradley and Muthana each pleaded guilty to one count of attempting to provide material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Bradley is scheduled to be sentenced by Judge Engelmayer on Feb. 2, 2023, and Muthana is scheduled to be sentenced by Judge Engelmayer on Feb. 3, 2023.

The FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the New York City Police Department, and over 50 other federal, state, and local agencies investigated the case.

Assistant U.S. Attorneys Andrew J. Defilippis, Kaylan E. Lasky, and Jason A. Richman are prosecuting the case, with assistance from Trial Attorney Jennifer Burke of the Counterterrorism Section.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that JAMES BRADLEY, a/k/a “Abdullah,” and ARWA MUTHANA pled guilty to attempting to provide material support to a designated foreign terrorist organization, the Islamic State of Iraq and al-Sham (“ISIS”). BRADLEY pled guilty on September 9, 2022, and MUTHANA pled guilty earlier today, both before United States District Judge Paul A. Engelmayer in Manhattan federal court.

U.S. Attorney Damian Williams said: “Husband and wife James Bradley and Arwa Muthana admitted today to their support of ISIS, a violent extremist terrorist organization.  In planning their support, Bradley and Muthana collected and distributed jihadist propaganda, including videos of Usama Bin Laden, and even chillingly expressed their desire to ‘take out’ American military cadets. Just one day after the anniversary of 9/11, today’s prosecution of Bradley and Muthana exemplifies that the resolve of this Office and our law enforcement partners will never waiver, and we will never forget.”

According to the Complaint, Indictment, and other public documents in the case, as well as statements made during court proceedings:[1]

BRADLEY and MUTHANA are ISIS supporters who attempted to travel to the Middle East to join and fight for ISIS. BRADLEY expressed violent extremist views since at least 2019, including his desire to support ISIS by traveling overseas to join the group or committing a terrorist attack in the United States. In May 2020, BRADLEY stated to an undercover law enforcement officer (“UC-1”) that he believed that ISIS may be good for Muslims because ISIS was establishing a caliphate. BRADLEY further expressed his desire to conduct a terrorist attack in the United States and discussed potentially attacking the United States Military Academy in West Point, New York. BRADLEY explained that if he could not leave the United States, he would do “something” in the United States instead, referring to carrying out an attack.

In June 2020, BRADLEY reaffirmed his interest to UC-1 in attacking a military base, and that doing so would be his contribution to the cause of jihad. In January 2021, BRADLEY mentioned to UC-1 another university in New York State where he frequently saw Reserve Officer Training Corps (“ROTC”) cadets training. BRADLEY stated that he could use his truck in an attack and that he along with MUTHANA could take all of the ROTC cadets “out.”

In late January 2021, BRADLEY married MUTHANA in an Islamic marriage ceremony. Beginning before and continuing after their marriage, BRADLEY and MUTHANA discussed, planned, and ultimately attempted to travel to the Middle East together in order to join and fight with ISIS. In or about early March 2021, BRADLEY traveled from New York to Alabama to visit MUTHANA, and BRADLEY and MUTHANA traveled back to New York together in order to travel from New York to join ISIS in the Middle East. Thereafter, BRADLEY raised the possibility of UC-1 helping BRADLEY and MUTHANA get on a cargo ship to travel to Asia or Africa for the purpose of ultimately joining and fighting for ISIS. UC-1 subsequently put BRADLEY in contact with a purported associate who could assist BRADLEY in making arrangements for BRADLEY and MUTHANA to travel to the Middle East via cargo ship. In reality, the purported facilitator was a law enforcement officer acting in an undercover capacity (“UC-2”).

Later in March 2021, BRADLEY met with UC-2 and expressed his desire to travel via cargo ship and to “fight among the rank[s] of the Islamic State.” BRADLEY subsequently provided UC-2 $1,000 in cash as travel costs for BRADLEY and MUTHANA to take a cargo ship to Yemen. BRADLEY told UC-2 that he and MUTHANA both planned to be “fighting” after arriving in the Middle East. BRADLEY also told UC-2 that he had a dream that he had given “bay’ah,” an Arabic term meaning the oath of allegiance, to Abu Ibrahim al-hashimi al-Qurashi, the former leader of ISIS.

On March 25, 2021, UC-2 told BRADLEY that the cargo ship would be leaving on March 31 from a seaport in Newark, New Jersey. BRADLEY praised Allah and confirmed he and MUTHANA planned to travel on the ship. On March 31, 2021, BRADLEY and MUTHANA met with UC-2 en route to the seaport. During this meeting, MUTHANA confirmed to UC-2 that she was traveling to the Middle East to fight for ISIS. BRADLEY and MUTHANA were arrested as they walked on a gangplank to board the cargo ship. After MUTHANA was arrested, she waived her Miranda rights and stated during an interview that she was willing to fight and kill Americans if it was for Allah. Also on March 31, 2021, in connection with a court-authorized search, the Federal Bureau of Investigation (“FBI”) seized from a bedroom previously used by BRADLEY what appears to be a hand-drawn image of a jihadi flag commonly used by ISIS and a hand-drawn map of the Pakistan region.

In the months and years prior to their arrests, BRADLEY and MUTHANA also accessed, posted, and distributed extremist online content, including materials indicative of their support for ISIS. Such material included BRADLEY’s postings of images of ISIS fighters, Usama Bin Laden, and terrorist attacks, and his distribution to UC-1 of videos of ISIS fighters, a 2020 stabbing attack against a New York City Police Department officer, and extremists shooting a uniformed soldier.  Content on MUTHANA’s cellphone, which was searched pursuant to a court-authorized search warrant, included images of an ISIS flag with Arabic writing, firearms, ISIS propaganda, and quotations of the deceased extremist preacher and former al Qaeda in the Arabian Peninsula member Anwar al-Awlaki, including, for example, a copy of the cover of a book authored by al-Awlaki, titled “44 Ways to Support Jihad.”

*                *                *

BRADLEY, 21, of the Bronx, New York, and MUTHANA, 30, of Hoover, Alabama, each pled guilty to one count of attempting to provide material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison.

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

BRADLEY is scheduled to be sentenced by Judge Engelmayer on February 2, 2023, at 10:30 a.m., and MUTHANA is scheduled to be sentenced by Judge Engelmayer on February 3, 2023, at 2:00 p.m.

Mr. Williams praised the outstanding efforts of the FBI New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the New York City Police Department, and over 50 other federal, state, and local agencies. Mr. Williams also thanked the Counterterrorism Section of the Department of Justice’s National Security Division.

The case is being handled by the Office’s National Security and International Narcotics Unit. Assistant United States Attorneys Andrew J. DeFilippis, Kaylan E. Lasky, and Jason A. Richman are in charge of the prosecution, with assistance from Trial Attorney Jennifer Burke of the Counterterrorism Section.

 

---

[1] Communications, conversations, and statements discussed and quoted herein are described in substance and in part.