Southern District of New York

Damian Williams, the United States Attorney for the Southern District of New York, announced that ARIEL JIMENEZ, a/k/a “Melo,” was sentenced to 12 years in prison in connection with his leading role in a broad tax fraud and identity theft conspiracy and his actions to launder the proceeds of his crimes.  United States District Judge Sidney H. Stein imposed today’s sentence.

U.S. Attorney Damian Williams said: “Ariel Jimenez was the leader of a long-running fraudulent tax business that cheated the Government of tax refunds by stealing the identities of vulnerable children and using those identities to falsely claim tax credits on behalf of his clients.  Today’s sentence holds Jimenez accountable for brazenly selling the identities of children to his customers for his own profit.” 

According to the Indictment, evidence presented during trial, court documents, and statements in open court:

Beginning in or about 2007, JIMENEZ founded a tax business (the “Business”) in the Bronx, New York.  From the outset, JIMENEZ obtained stolen identities of hundreds of minors and, working with his co-conspirators, sold those identities to his customers for between $1,000 and $1,500 in cash so that customers could claim those minors as fraudulent dependents on their tax returns.  JIMENEZ personally received $1,000 in cash for every identity sold.  JIMENEZ and his co-conspirators callously referred to these stolen identities as “pollitos,” meaning “little chickens.”  In some years, JIMENEZ sold more than a thousand identities, resulting in personal profits to him of more than $1 million per year.  In addition, JIMENEZ made hundreds of thousands of dollars every year in the tax fees that the Business charged to prepare fraudulent tax returns.  In return for their participation in this scheme, the customers received thousands of dollars in inflated tax refunds.

JIMENEZ’s use of stolen identities harmed the actual caretakers of the children who were fraudulently claimed as dependents.  In some cases, the people actually taking care of these children had much-needed tax refunds delayed and were required to prove their actual connection to their own dependent children.

JIMENEZ used the profits from his tax preparation business to acquire millions of dollars of real estate in addition to funding his lavish lifestyle.  By his own admission, JIMENEZ spent more than $5.5 million of the Business’s proceeds on properties in the United States and abroad, jewelry, cars, and gambling.  In or about March 2016, JIMENEZ transferred several properties purchased with fraud proceeds to his parents for little to no value in order to conceal the criminal source of the funds used to purchase the properties. 

JIMENEZ was first arrested in November 2018 along with eight of his co-conspirators, including his sisters Evelin Jimenez and Ana Yessenia Jimenez, as well as additional co-conspirators Ireline Nunez, Leyvi Castillo, Cinthia Federo, Guillermo Arias Moncion, Marcos De Jesus Pantaleon, and Jose Castillo.  The remaining eight defendants pled guilty to fraud and other offenses.

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ARIEL JIMENEZ, 38, of the Bronx, New York was previously convicted at trial of conspiracy to defraud the United States with respect to tax returns, conspiracy to commit wire fraud, aggravated identity theft, and money laundering.  In addition to his prison sentence, JIMENEZ was ordered to pay forfeiture in the amount of $14,580,000 and to forfeit three residential properties located in the Bronx.  JIMENEZ was also ordered to pay restitution in the amount of $44,769,906.

Evelin Jimenez was sentenced on August 12, 2022, to 52 months in prison; Ana Yessenia Jimenez was sentenced on August 9, 2022, to 24 months in prison; Leyvi Castillo was sentenced on October 27, 2021, to 20 months in prison; Cinthia Federo was sentenced on December 20, 2021, to time served; Guillermo Arias Moncion was sentenced on December 18, 2019, to 24 months in prison; Marcos De Jesus Pantaleon was sentenced on January 15, 2020, to 20 months in prison; and Jose Castillo was sentenced on February 20, 2020, to 24 months in prison.  Ireline Nunez has not yet been sentenced.

Mr. Williams praised the outstanding work of the IRS-Criminal Investigation. 

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Daniel G. Nessim and Ni Qian are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that WILLIAM SADLEIR was sentenced today by U.S. District Judge Paul A. Engelmayer to six years in prison for his participation in two fraudulent schemes relating to investments made by a New York-based investment fund (the “Fund”) in Aviron Pictures, LLC and its affiliated entities (collectively, “Aviron”).  Sadleir previously pled guilty to two counts of wire fraud, one relating to each of the schemes.

U.S. Attorney Damian Williams said:  “William Sadleir portrayed himself as a successful Hollywood mogul, but behind the scenes he engaged in brazen and calculated schemes to defraud a New York investment fund out of over $30 million using a fake company, fake documents, and even a fake identity.  Sadleir went so far as to masquerade as a female advertising executive on maternity leave as part of an effort to cover up his crimes.  Today’s sentence holds Sadleir accountable for his crimes, and sends a message that there will be no happy ending for executives who defraud their investors.”

According to the Complaint, Indictment, and other court filings:

The Fund is a publicly traded, closed-end investment fund.  Shares in the Fund trade on the New York Stock Exchange.  As of in or about December 2019, the Fund had approximately $649.1 million in assets.

WILLIAM SADLEIR was the chairman and chief executive officer of Aviron, and oversaw its operations from in or about 2015 until in or about December 2019.  Aviron participated in the distribution of a number of films in the United States, including My All American (2015), Kidnap (2017), The Strangers: Prey at Night (2018), A Private War (2018), Destination Wedding (2018), Serenity (2019), and After (2019).

SADLEIR engaged in two fraudulent schemes relating to an approximately $75 million investment made by the Fund in Aviron.

In one of the schemes (the “Advertising Scheme”), SADLEIR misappropriated millions of dollars that the Fund had invested in Aviron.  SADLEIR represented to the Fund that Aviron had invested this money in pre-paid media credits with the advertising placement company MediaCom Worldwide (“MediaCom”), which is a subsidiary of the advertising and media agency GroupM Worldwide.  Instead, using the bank account for a sham entity he had created, SADLEIR illicitly transferred over $25 million of those funds out of Aviron.  Specifically, SADLEIR created a sham New York-based company called GroupM Media Services, LLC (the “Sham GroupM LLC”) designed to appear to be the legitimate entity, GroupM Worldwide, and a corresponding bank account in the name of that sham entity.  SADLEIR then used a significant portion of those illicitly transferred funds for his personal benefit, including to purchase a private residence in Beverly Hills for approximately $14 million.  SADLEIR then falsely represented to the Fund that Aviron had purchased an approximately $27 million balance in pre-paid media credits with MediaCom that were available to promote future Aviron films, and pledged a portion of those credits to the Fund as collateral for additional loans.  But the claimed credits did not exist.  As part of his false representations, SADLEIR also created a fake identity of a purported New York-based female employee of the Sham GroupM LLC named “Amanda Stevens,” who corresponded with a representative of the Fund, assuring the Fund that Aviron had an approximately $27 million balance in pre-paid media credits with the Sham GroupM LLC.  But SADLEIR himself posed as Amanda Stevens when engaging in email exchanges with a representative from the Fund, and in that role sought to evade questions about his fraudulent conduct by claiming, among other things, that “Amanda Stevens” (Sadleir) was on maternity leave.

In the other scheme (the “UCC Scheme”), SADLEIR engineered the illicit and fraudulent sale and refinancing of assets worth over $3 million that secured the Fund’s loans to Aviron.  The Fund had secured its investment in Aviron by, among other means, obtaining UCC liens in 2017 and 2018 on certain intellectual property and other assets relating to Aviron’s films.  In 2019, SADLEIR used the forged signature of one of the Fund’s portfolio managers on releases to remove the Fund’s UCC liens on certain of these secured assets.  SADLEIR did so in order to sell or refinance the assets without the Fund’s consent, thus depriving the Fund of its collateral on outstanding loans.  Aviron ultimately defaulted on those loans.

Prior to serving as chairman and chief executive officer of Aviron, SADLEIR held senior leadership positions at a variety of businesses, and early in his career served as a special assistant and director of presidential appointments and scheduling to a sitting U.S. president.

*                *                *

SADLEIR, 68, of Beverly Hills, California, pled guilty to two counts of wire fraud before Judge Engelmayer on January 20, 2022.

In addition to the prison term, Judge Engelmayer sentenced SADLEIR to three years of supervised release, and ordered SADLEIR to pay $31,597,000 in forfeiture and restitution.

Mr. Williams praised the work of the Federal Bureau of Investigation.  He also thanked the Securities and Exchange Commission for its cooperation and assistance in this investigation. 

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict yesterday against PURIFICACION CRISTOBAL for her participation in a conspiracy to distribute oxycodone without a legitimate medical purpose acting outside the usual course of professional practice.  CRISTOBAL was also convicted of two counts of oxycodone distribution pertaining to specific prescriptions.  She was found not guilty of other counts of oxycodone distribution pertaining to other prescriptions.  CRISTOBAL will be sentenced by U.S. District Judge Katherine Polk Failla, who presided over the approximately two-week trial.

U.S. Attorney Damian Williams said: “Purificacion Cristobal prescribed powerful medications to patients, some of whom had no medical need for them and were likely selling them, thereby contributing to the flow of highly potent drugs into the black markets of New York.  We trust medical professionals to responsibly handle potentially harmful drugs, and this Office will not turn a blind eye to those professionals who break that trust.”

As proven at trial, PURIFICACION CRISTOBAL, a licensed nurse practitioner purporting to specialize in psychiatry, operated a clinic on Westchester Avenue in the Bronx. Between approximately June 2019 and June 2020, CRISTOBAL prescribed tens of thousands of 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.  CRISTOBAL often prescribed oxycodone in combination with Xanax (alprazolam) and/or Adderall (amphetamine), controlled substances that are themselves frequently abused and resold illicitly. 

CRISTOBAL never performed physical examinations or medical tests, often asked patients to take their pick among different narcotics, and was repeatedly warned by others that her patients were reselling or abusing the drugs she prescribed.  She encouraged existing patients to recruit others, regularly accepted cash, and charged different cash “fees” depending on how many prescriptions she wrote for a particular patient.  CRISTOBAL also coordinated with a nearby pharmacist, to whom she referred many of her patients, to shield her unlawful prescribing practices from law enforcement scrutiny.

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CRISTOBAL, 75, of Lyndhurst, New Jersey, was convicted of one count of conspiring to distribute oxycodone and two counts of distributing oxycodone without a legitimate medical purpose acting outside the usual course of professional practice.  Those counts carry, in the aggregate, a maximum potential sentence of 60 years in prison. 

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

Mr. Williams praised the outstanding investigative work of the Drug Enforcement Administration’s Tactical Diversion Squad in the New York Field Office, which is comprised of agents and officers from the DEA, the New York City Police Department, the New York City Department of Investigation, Health & Hospitals Office of the Inspector General, the New York State Department of Health Bureau of Narcotic Enforcement, the U.S. Department of Health and Human Services, and the New York National Guard.

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Jun Xiang, Kyle A. Wirshba, and Derek Wikstrom are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, Patrick Freaney, Special Agent-in-Charge of the New York Field Office of the United States Secret Service (“USSS”), and Keechant L. Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced today the arrest of LAKENYA HOPKINS on charges of securities fraud and wire fraud for her role in a scheme to defraud over 110 investors in Money Magnet Platinum Membership Initiative LLC (“MMPMI”) of hundreds of thousands of dollars by promising unrealistically high rates of return on investments to induce them to invest and lying about how their money would be invested. Rather than invest the money as promised, HOPKINS used investors’ money for her own personal gain, including to rent a luxury apartment in Manhattan and to purchase high-end luxury goods. HOPKINS was arrested this morning in Manhattan and will be presented before a magistrate judge in the Southern District of New York. 

U.S. Attorney Damian Williams said: “As alleged, Lakenya Hopkins preyed on investors, promising them that investing with her would create generational wealth for their families. She lied to induce their investments and continued to lie when they questioned her about the status of their investments. Instead of investing the money as promised, she allegedly enriched herself with a luxury apartment and high-end purchases. We will continue to work with our law enforcement partners to protect the public from investment frauds.”

Special Agent-in-Charge Freaney said: “Fraudsters will continue their attempts to manipulate and threaten the larger financial landscape in which the American public conducts their business and transactions, but the highly skilled investigators of the U.S. Secret Service and New York City Police Department will ensure they do not succeed in evading our judicial system. The allegations contained within this indictment describe predatory and fraudulent behavior that specifically exploited individuals seeking to invest for their future. I am immensely proud of the men and women of the Secret Service for their efforts in this investigation and would like to thank the United States Attorney’s Office for their continued partnership.”

Police Commissioner Sewell said: “Ms. Hopkins turned her investors into victims, betraying their trust to carry out her own despicable embezzlement scheme. The NYPD and our many partners in law enforcement will continue to aggressively pursue anyone who seeks to defraud others, holding them fully accountable for their actions. I want to thank and commend the U.S. Secret Service and the U.S. Attorney for the Southern District for their tireless dedication and focused commitment to seeing justice served in this case.”

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

From in or about August 2020 through in or about April 2021, HOPKINS operated MMPMI as a fraudulent “investment club.” HOPKINS specifically marketed MMPMI to people of color as a way for them to build generational wealth for their families. During her scheme, HOPKINS solicited money from investors by falsely promising them, among other things, that she would provide them with an $8,000 monthly return for every $1,000 investment they made in MMPMI. HOPKINS also falsely told investors that she could guarantee this return because she would pool investor money and invest it into a hedge fund that guaranteed a three to five percent daily return.

The investments were memorialized in documents known as “MMPMI Membership Promissory Notes.” The terms of those investment contracts generally provided that, for every $1,000 an investor invested in MMPMI, the investor would receive an $8,000 monthly return, $5,000 of which would be paid directly to each investor. These documents and HOPKINS’ false representations deceived investors into believing that their principal and return were guaranteed.

Despite her representations to investors, however, HOPKINS never invested any of the investors’ money in a hedge fund or made any other investments for the benefit of investors. Instead, HOPKINS stole the investors’ money and used it for her own personal gain. Between in or about November 2020 and in or about April 2021, Hopkins used most of the investors’ money to (i) make large cash withdrawals, (ii) purchase high-end luxury goods, (iii) rent a luxury apartment, (iv) pay for food, travel, and other goods, and (v) purchase cryptocurrency for her own benefit.

In or about January 2021, after she had failed to make the first guaranteed monthly payments to investors, HOPKINS told investors she was pausing MMPMI and giving out refunds. When investors questioned her about the status of their investments, HOPKINS continued to lie. For example, on a videoconference with investors in or about January 2021, HOPKINS told investors that their money was still in the hedge fund, that they would “not take a loss,” and that she was “not keeping any money.” Despite these representations, HOPKINS gave only approximately five investors a refund payment. To date, HOPKINS has not paid any investors the promised returns.

As a result of this investment scheme, HOPKINS fraudulently obtained over $290,000 from over 110 investors.

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HOPKINS, 44, of New York, New York, is charged with one count of securities fraud, which carries a maximum potential sentence of 20 years in prison, and one count of wire fraud, which carries a maximum potential sentence of 20 years in prison.

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

Mr. Williams praised the investigative work of the USSS and NYPD and thanked the New York Regional Office of the U.S. Securities and Exchange Commission, which has separately filed a civil action against HOPKINS and MMPMI.

This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Matthew J. King and Elizabeth Daniels are in charge of the prosecution.

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that defendant LISA GIANNELLI, received a sentence of 42 months in prison today for her role in an approximately 20-year scheme to sell and distribute to racehorse trainers and others in the racehorse industry “untestable” performance enhancing drugs (“PEDs”) for use in professional horseracing. GIANNELLI was one of over 30 defendants charged in four separate cases in March 2020, each arising from this Office’s multi-year investigation of the abuse of racehorses through the use of performance enhancing drugs.

U.S. Attorney Damian Williams said: “For years, Giannelli catered to corrupt racehorse trainers by selling illegal performance-enhancing drugs designed to deceive the very people who could put a stop to these crimes. Today’s sentence sends a message that those who engage in fraud and animal abuse will be held to account.”

According to the allegations contained in the Superseding Indictment, prior charging instruments, other filings in this case, and as established by the evidence at trial:[1]

GIANNELLI was charged in United States v. Navarro, 20 Cr. 160 (MKV), a case arising from an investigation of widespread schemes by racehorse trainers, veterinarians, PED distributors, and others to manufacture, distribute, and receive adulterated and misbranded PEDs and to secretly administer those PEDs to racehorses competing at all levels of professional horseracing. By evading PED prohibitions and deceiving drug regulators and horse racing officials, participants in these schemes sought to improve race performance and obtain prize money from racetracks throughout the United States and other countries, including in New York, New Jersey, Florida, Ohio, Kentucky, and the United Arab Emirates (“UAE”), all to the detriment and risk of the health and well-being of the racehorses. Trainers who participated in the schemes stood to profit from the success of racehorses under their control by earning a share of their horses’ winnings and by improving their horses’ racing records, thereby yielding higher trainer fees and increasing the number of racehorses under their control. Indicted veterinarians profited from the sale and administration of these medically unnecessary, misbranded, and adulterated substances. GIANNELLI, a seller of customized PEDs designed specifically to evade anti-doping controls, personally earned hundreds of thousands of dollars in sales commissions from her sale and distribution of PEDs to trainers around the United States.

GIANNELLI marketed these drugs as “untestable” under typical anti-doping drug screens and extolled the virtues of these illegal drugs by describing their potency and untestability.  In the course of over fifteen years during which GIANNELLI operated under the auspices of the company, Equestology, GIANNELLI deliberately lied to state investigators to cover up her crimes and sold vials with no or incomplete labels, with no hint as to the provenance of those unsafe and prohibited drugs.

The drugs GIANNELLI sold included intravenous and intramuscular injectables that she sold to laypeople for injection into the horses under their purported “care,” many of which were seized at premises throughout the country at the time of the original indictments in this case, including barns located in New York. Those included “blood building” drugs (for example, “BB3” and other Epogen-mimetic substances), vasodilators (for example, “VO2Max”), and bags filled with scores of “bleeder pills,” each designed to covertly increase performance in affected horses.

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GIANNELLI, 55, of Felton, Delaware, was previously convicted of one count of conspiracy to commit misbranding and drug adulteration in connection with her work for Equestology. In addition to her prison sentence, GIANNELLI was ordered to pay forfeiture in the amount of $900,000, reflecting the value of the adulterated and misbranded drugs GIANNELLI and her co-conspirators sold as part of his fraudulent doping schemes.

Mr. Williams praised the outstanding investigative work of the FBI New York Office’s Eurasian Organized Crime Task Force and its support of the Bureau’s Integrity in Sports and Gaming Initiative. Mr. Williams also thanked the Food and Drug Administration and Customs and Border Protection for their assistance and expertise. This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Sarah Mortazavi and Benjamin A. Gianforti are in charge of the prosecution.

[1] As to GIANELLI’s co-defendants, these facts, including the entirety of the texts of the Indictments and the descriptions 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, Keechant Sewell, Commissioner of the New York City Police Department (“NYPD”), and Ricky J. Patel, the Acting Special Agent-in-Charge of Homeland Security Investigations (“HSI”) in New York, today announced charges against ten alleged members of a street gang known as “ABG” in the Bronx, New York.  HENRY JONES, a/k/a “Dew Man,” DAIVON MORGAN, a/k/a “Leeky,”  ROBERTO ESPINOSA, a/k/a “Taco,” AMIER WILSON, a/k/a “Smula,” DAVION TRUSTY, a/k/a “Saint,” ELIJAH PERKINS, a/k/a “Eli,” JAMIE WILKINS,  a/k/a “OJ,” XAVIER ARAU, a/k/a “X,” JUAN REYES, a/k/a “Gunplay,” and CASSIUS MILLER, a/k/a “Cash,” all of whom are members of ABG, were charged in a Superseding Indictment with racketeering conspiracy, drug trafficking, and firearms offenses.  JONES, MORGAN, WILSON, TRUSTY, PERKINS, WILKINS, ARAU, and REYES were also charged with engaging in violent crimes in aid of racketeering.  JONES and MORGAN are additionally charged with aiding and abetting the February 8, 2019, murder of Darren Scruggs in the Bronx.  The case is assigned to U.S. District Judge Mary Kay Vyskocil.

JONES, PERKINS, WILKINS, ARAU, and MILLER were already in custody in connection with charges contained in a previous indictment related to this prosecution.  AMIER WILSON and REYES are in federal custody in connection with charges filed in other prosecutions.  TRUSTY and ESPINOSA are in state custody and will be transferred into federal custody.  MORGAN was arrested this morning in the Bronx.

U.S. Attorney Damian Williams said:  “As alleged in the Superseding Indictment, ABG was an extremely violent street gang that brutalized the Bronx by shooting and slashing their victims.  Among ABG’s many victims was Darren Scruggs, who we allege was gunned down at the age of 19 by Roberto Espinosa with the assistance of Daivon Morgan and Henry Jones.  With this Superseding Indictment, ABG’s members will face justice for these serious alleged acts of violence.”

NYPD Commissioner Keechant L. Sewell said:  “Targeting and dismantling gangs and crews, and preventing the violence so often associated with their illegal activities, continues to be among the highest priorities for the NYPD and our law enforcement colleagues.  I thank and commend the NYPD and HSI investigators, along with the prosecutors from the Office of the U.S. Attorney for the Southern District of New York, for their hard work on this important case.  We vow to remain relentless in our efforts to identify and arrest anyone who involves themselves in such behavior.”

Ricky J. Patel, the Acting Special Agent-in-Charge of HSI, said: “Today’s charges are yet another step towards making our city a safer place for everyone.  The individuals charged today are alleged to have committed numerous acts of senseless violence in the name of loyalty to their gang.  This superseding indictment demonstrates HSI’s continued commitment to working together with our partners to dismantle the violent gangs that are terrorizing our communities.” 

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

From at least in or about 2017 to in or about the present, ABG was a criminal enterprise centered in the Bronx, New York.  ABG primarily operated in the vicinity of the Mitchel Houses in the vicinity of 135th and 138th Streets and Lincoln and Willis Avenues.  In addition to their local affiliation, many of ABG’s members also affiliated with the national Crips gang.  In order to make money for the gang, protect the gang’s territory, and promote the gang’s standing, members of ABG engaged in, among other things, narcotics trafficking and violence, including murder.  To that end, ABG members sold 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. 

For years, ABG engaged in disputes with rival crews in the Bronx, which resulted in numerous acts of violence.  Among the many shootings that resulted from those rivalries was the murder of Darren Scruggs on February 18, 2019.  On that date, HENRY JONES and DAIVON MORGAN assisted ROBERTO ESPINOSA when he shot and killed Scruggs.  In addition, ELIJAH PERKINS shot at rival gang members on October 30, 2018, and committed another shooting on August 21, 2021, with assistance from AMIER WILSON.  Separately, WILSON carried out a shooting on March 25, 2022, during which he struck a victim.  JAMIE WILKINS also carried out a different shooting on October 28, 2021, and JONES committed a shooting on November 7, 2021, with assistance from JUAN REYES.

ABG’s rivalries also resulted in multiple slashings.  For example, on May 8, 2020, REYES, PERKINS, and XAVIER ARAU beat and slashed a victim.  Then on February 20, 2021, MORGAN slashed a victim across the face at the direction of TRUSTY.

ABG members also participated in a conspiracy to distribute narcotics in New York.  All defendants named in the Superseding Indictment participated in a conspiracy with other individuals to distribute more than 280 grams of crack cocaine from at least in or about 2017 up to and including the present.

Between in or about 2017 and the present, the defendants also possessed, used, brandished, and discharged firearms in furtherance of the narcotics conspiracy in which they all participated.  JONES, MORGAN, WILSON, PERKINS, WILKINS, and REYES are further charged with engaging in violent crimes in aid of racketeering, and using, brandishing, and discharging firearms in furtherance of these crimes of violence based on the shootings described above.

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

The statutory 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 work of the NYPD, HSI, and the New York City Department of Corrections.

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Jamie Bagliebter, Christopher Brumwell, Courtney Heavey, and Alexandra Rothman are in charge of the prosecution.

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

Defendant

Age

Charges

Maximum Penalties

HENRY JONES, a/k/a “Dew Man” 

25

Racketeering Conspiracy; Narcotics Conspiracy; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Narcotics Conspiracy; Murder in Aid of Racketeering; Use of a Firearm Resulting in Death; Assault with a Deadly Weapon and Attempted Murder in Aid of Racketeering; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Crime of Violence

Mandatory life in prison

DAIVON MORGAN, a/k/a “Leeky”

23

Racketeering Conspiracy; Narcotics Conspiracy; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Narcotics Conspiracy; Murder in Aid of Racketeering; Use of a Firearm Resulting in Death; Assault with a Deadly Weapon in Aid of Racketeering; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Crime of Violence

Mandatory life in prison

ROBERTO ESPINOSA, a/k/a “Taco”

21

Racketeering Conspiracy; Narcotics Conspiracy; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Narcotics Conspiracy

Maximum of life in prison; mandatory minimum 20 years in prison (10 years to run consecutive to any other sentence)

AMIER WILSON, a/k/a “Smula”

23

Racketeering Conspiracy; Narcotics Conspiracy; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Narcotics Conspiracy; Assault with a Deadly Weapon and Attempted Murder in Aid of Racketeering; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Crime of Violence

Maximum of life in prison; mandatory minimum 40 years in prison (30 years to run consecutive to any other sentence)

DAVION TRUSTY, a/k/a “Saint”

23

Racketeering Conspiracy; Narcotics Conspiracy; Assault with a Deadly Weapon in Aid of Racketeering; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Narcotics Conspiracy

Maximum of life in prison; mandatory minimum 20 years in prison (10 years to run consecutive to any other sentence)

ELIJAH PERKINS, a/k/a “Eli”

22

Racketeering Conspiracy; Narcotics Conspiracy; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Narcotics Conspiracy; Assault with a Deadly Weapon and Attempted Murder in Aid of Racketeering; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Crime of Violence

Maximum of life in prison; mandatory minimum 40 years in prison (30 years to run consecutive to any other sentence)

JAMIE WILKINS,  a/k/a “OJ”

23

Racketeering Conspiracy; Narcotics Conspiracy; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Narcotics Conspiracy; Assault with a Deadly Weapon and Attempted Murder in Aid of Racketeering; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Crime of Violence

Maximum of life in prison; mandatory minimum 30 years in prison (20 years to run consecutive to any other sentence)

XAVIER ARAU, a/k/a “X”

21

Racketeering Conspiracy; Narcotics Conspiracy; Assault with a Deadly Weapon in Aid of Racketeering; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Narcotics Conspiracy

Maximum of life in prison; mandatory minimum 20 years in prison (10 years to run consecutive to any other sentence)

JUAN REYES, a/k/a “Gunplay” 

24

Racketeering Conspiracy; Narcotics Conspiracy; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Narcotics Conspiracy; Assault with a Deadly Weapon and Attempted Murder in Aid of Racketeering; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Crime of Violence

Maximum of life in prison; mandatory minimum 30 years in prison (20 years to run consecutive to any other sentence)

CASSIUS MILLER, a/k/a “Cash”

22

Racketeering Conspiracy; Narcotics Conspiracy; Use, Brandishing, and Discharge of a Firearm in Furtherance of a Narcotics Conspiracy

Maximum of life in prison; mandatory minimum 20 years in prison (10 years to run consecutive to any other sentence)

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that NATALIA KORZHA and VLADISLAV NECEAEV were sentenced today in Manhattan federal court to conspiracy to commit bank fraud in connection with a scheme to launder money derived from an online vehicle sale scam that generated at least $5.3 million from dozens of defrauded consumers.  KORZHA was sentenced to 48 months in prison and NECEAEV was sentenced to 18 months in prison by U.S. District Judge Analisa Torres, before whom they previously pled guilty.

U.S. Attorney Damian Williams said:  “Natalia Korzha and Vladislav Neceaev opened or caused others to open fraudulent bank accounts that were used to launder millions of dollars in criminal proceeds from an online vehicle sale scam.  Without those fraudulent accounts, online fraudsters would not be able to profit from their illegal schemes.  Korzha and Neceaev now face terms of imprisonment and will be required to forfeit their ill-gotten gains.”

In imposing today’s sentences, Judge Torres said that KORZHA and NECEAEV caused “real harm to [the victims’] financial well-being” and noted that victims reported having been hurt “mentally, emotionally and physically.”

As alleged in the Complaint and the Indictments, and based on statements made in court:    

From at least March 2019 through approximately March 2021, KORZHA managed a money laundering operation based in Brooklyn that included co-defendant VLADISLAV NECEAEV and others.  With KORZHA as coordinator, NECEAEV and other co-conspirators opened numerous bank accounts in the name of shell companies for the purpose of laundering money stolen from consumers who were trying to buy vehicles online.  In exchange, the defendants received a cut of the victims’ money. 

Other members of the conspiracy, pretending to represent car dealerships, advertised vehicles that they did not own and were not authorized to sell on fake websites with domain names that sounded like legitimate car dealerships or through online marketplaces like Craigslist and eBay.  Victims who responded to those advertisements and negotiated a purchase price were instructed by the purported sellers to wire payment to accounts that NECEAEV and other co-conspirators opened.  Once the payments cleared, the defendants quickly withdrew the funds before the victims realized they had been defrauded.  The victims never received the vehicles or any refunds from the fake sellers.  In total, dozens of victims were defrauded of a total of at least $5.3 million. 

*                *                *

In addition to her prison term, KORZHA, 50, of Brooklyn, New York, was sentenced to three years of supervised release and ordered to forfeit $5,386,538 and pay restitution in the amount of $5,370,180. 

In addition to his term of imprisonment, NECEAEV, 28, of Brooklyn, New York, was sentenced to three years’ supervised release and ordered to forfeit $458,300 and pay restitution in the amount of $458,300. 

Mr. Williams praised the outstanding investigative work of Homeland Security Investigations and the New York Police Department.  He also thanked the U.S. Department of Justice’s Office of International Affairs of the Department’s Criminal Division, the United States Marshals Service, the Prosecutor General’s Office of the Republic of Lithuania, and the Lithuanian Criminal Police Bureau for their assistance in this investigation.

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

Damian Williams, the United States Attorney for the Southern District of New York, Kenneth A. Polite, Jr., Assistant Attorney General for the Criminal Division of the U.S. Department of Justice, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging CARY YAN, a/k/a “Hong Hui Yan,” a/k/a “Chen Hong,” and GINA ZHOU, a/k/a “Chaoting Zhou,” a/k/a “Angel Zhou,” with engaging in a multi-year scheme to bribe government officials in the Republic of the Marshall Islands (the “RMI”) to pass certain legislation that would benefit the business interests of YAN, ZHOU, and their associates.  YAN and ZHOU are charged with violations of the Foreign Corrupt Practices Act (“FCPA”), money laundering, and conspiracy to commit both.  YAN and ZHOU were arrested in Thailand on November 16, 2020, were extradited from Thailand, and arrived in this District today.  YAN and ZHOU are expected to be presented on Tuesday.  The case is assigned to District Judge Naomi Reice Buchwald.

U.S. Attorney Damian Williams said:  “As alleged, Cary Yan and Gina Zhou’s bribery scheme was designed to influence and manipulate the legislative process of the Republic of the Marshall Islands in order to benefit themselves and their associates financially.  Yan and Zhou’s bribes blatantly flouted the sovereignty of the Republic of the Marshall Islands and its legislature, and the dedicated investigative work carried out by this Office and our partners signals that the Southern District of New York will not tolerate those who violate the integrity of democratic processes.”

Assistant Attorney General Kenneth A. Polite, Jr. said:  “Yan and Zhou allegedly engaged in a multi-year scheme to bribe elected officials in the Marshall Islands and to corrupt the legislative process.  The department is committed to prosecuting individuals who participate in international corruption and undermine the integrity of democratic institutions and the free marketplace.”

FBI Assistant Director Michael J. Driscoll said:  “As alleged, the defendants conducted multiple illegal activities to benefit their personal interests at the expense of the people of the Marshall Islands.  The FBI, along with our global law enforcement partners, is committed to bringing to justice those who seek to use corruption and fraud as a means of doing business - regardless of where in the world they are located.”

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

CARY YAN and GINA ZHOU, acting as officers, directors, employees, and agents of a New York City-based non-governmental organization (the “NGO”) and while in New York City and other locations in the territory of the United States, participated in a scheme to offer and pay bribes to government officials in the RMI to pass legislation that would benefit the business interests of YAN, ZHOU, and their associates.  From at least in or about 2016 through at least in or about 2019, YAN was and held himself out to be the President and Chairman of the NGO, and ZHOU was and held herself out to be the assistant to the President and Chairman of the NGO. 

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

In or about April 2018, YAN and ZHOU caused the NGO to host a conference in Hong Kong that was attended by, among others, RMI officials.  The purpose of the conference was to publicly launch an initiative to establish the so-called Rongelap Atoll Special Administrative Region (the “RASAR”), also known as the Rongelap Special Economic Zone or Rongelap Atoll Digital Special Economic Zone, among other names.  As proposed by YAN and ZHOU, the RASAR would be created by legislation (the “RASAR Bill”) that, if enacted by the RMI legislature, would significantly change the laws on the Rongelap Atoll to attract foreign businesses and investors, such as by lowering or eliminating taxation and relaxing immigration regulations.  YAN planned to use the RASAR to, among other things, attract investors and customers to businesses that he would operate in the RASAR, in whole or in part through the NGO.  A number of RMI officials attended the April 2018 conference, including certain members of the RMI legislature with the ability to vote on the RASAR Bill if and when it was introduced.  The NGO paid for the travel of those officials to Hong Kong and for their accommodations and entertainment while there. 

In or about mid-August 2018, certain RMI legislators officially introduced the RASAR Bill.  Starting before that date, and continuing until at least on or about November 1, 2018, YAN and ZHOU offered and provided a series of cash bribes and other incentives to obtain the support of RMI legislators for the RASAR Bill.

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

On or about March 7, 2020, YAN and ZHOU met with a close relative (the “Relative”) of a member of the RMI legislature in the RMI (“Official-3”).  During the meeting, YAN and ZHOU gave the Relative $7,000 in cash to pass on to Official-3, specifying that this money would be used to induce and influence other RMI legislators to support the RASAR Resolution.  YAN and ZHOU further stated, in sum, that they knew that Official-3 needed more than $7,000 for this purpose and that YAN and ZHOU would soon obtain additional cash for Official-3.  YAN and ZHOU also discussed having previously brought larger sums of cash into the RMI through the United States and that they planned to do so again in the future.

On or about March 20, 2020, the RMI legislature passed the RASAR Resolution with the support of legislators to whom ZHOU and YAN had provided bribes and other incentives.

*                *                *

YAN, 50, and ZHOU, 34, both of whom have traveled on passports issued by the RMI, are charged with conspiring to violate the FCPA, violating the FCPA, conspiring to commit money laundering, and committing money laundering.  The maximum penalties for these charges are as follows: five years in prison for conspiring to violate the FCPA; five years in prison for each violation of the FCPA; 20 years in prison for conspiring to commit money laundering; and 20 years in prison for committing money laundering. 

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

Mr. Williams praised the outstanding work of the FBI.  Mr. Williams also thanked the Department of Justice, Criminal Division’s Office of International Affairs for their assistance in the extradition of YAN and ZHOU, as well as the U.S. Embassy in Bangkok, the Royal Thai Police, and the Office of the Attorney General of Thailand.

The case is being prosecuted by the Office’s Public Corruption Unit and the Criminal Division’s Fraud Section.  Assistant U.S. Attorneys Hagan Scotten, Lara Pomerantz, and Derek Wikstrom, and Trial Attorney Gerald Moody 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 Indictment and the descriptions of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict against DJONIBEK RAHMANKULOV on counts of money laundering conspiracy, bank fraud, and conspiracy to operate an unlicensed money transmitting business.  RAHMANKULOV is scheduled to be sentenced on January 5, 2023, by U.S. District Judge Ronnie Abrams.

U.S. Attorney Damian Williams said:  “Djonibek Rahmankulov exploited the United States financial system to launder millions of dollars of proceeds of fraud.  He lied repeatedly to banks in furtherance of his illegal money laundering enterprise.  Yesterday, a jury found Rahmankulov guilty of his crimes, and he faces the possibility of a lengthy prison sentence.”

According to the superseding indictment and the evidence at trial:

Between 2017 and September 2020, RAHMANKULOV operated a network of shell companies that were used to launder millions of dollars of criminal proceeds from multiple types of criminal activity.  RAHMANKULOV worked with computer hackers who fraudulently gained control of the bank accounts of victims located throughout the United States and executed millions of dollars in fraudulent wire transfers into bank accounts opened by RAHMANKULOV and his co-conspirators.  RAHMANKULOV received wire transfers into bank accounts he created and bank accounts he instructed others to create and laundered these proceeds through multiple additional bank accounts to prevent the victims and the banks from recovering the stolen funds.

In addition, RAHMANKULOV worked with a network of pharmacies engaged in Medicare and Medicaid fraud.  These pharmacies submitted millions of dollars of fraudulent billing for HIV medications that they did not dispense or obtained illegally, including by repurchasing medications from HIV patients who were Medicaid recipients.  RAHMANKULOV created companies to receive these criminal proceeds from the pharmacies and laundered them through a variety of means, including by using them to fund an unlicensed money transmitting business that illegally moved money to and from multiple countries, including Iran.

In 2020, when the COVID-19 pandemic began, RAHMANKULOV filed fraudulent applications for COVID relief loans from the Small Business Administration for multiple companies he controlled. He laundered the proceeds of loans and grants through these companies.  RAHMANKULOV also made a number of materially false statements to financial institutions in connection with his money laundering schemes, both when opening bank accounts and when executing financial transactions with those bank accounts.

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RAHMANKULOV, 34, of Queens, New York, was convicted on one count of money laundering conspiracy, which carries a maximum prison sentence of 20 years; one count of bank fraud, which carries a maximum prison sentence of 30 years; and one count of conspiracy to operate an unlicensed money transmitting business, which carries a maximum prison sentence of five years.

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

The prosecution is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Cecilia Vogel, Thane Rehn, and Samuel Raymond are in charge of the prosecution. 

Two Marshall Island nationals, Cary Yan, 50, and Gina Zhou, 34, arrived in the United States today after being extradited from Thailand. Yan and Zhou are charged with allegedly violating the Foreign Corrupt Practices Act (FCPA), money laundering, and conspiracy to commit those offenses in connection with a scheme to bribe elected officials of the Republic of the Marshall Islands (RMI) in exchange for passing certain legislation. They are expected to make their initial court appearance on Sept. 6 before U.S. Magistrate Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York.

“Yan and Zhou allegedly engaged in a multi-year scheme to bribe elected officials in the Marshall Islands and to corrupt the legislative process,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “The department is committed to prosecuting individuals who participate in international corruption and undermine the integrity of democratic institutions and the free marketplace.”

On Aug. 10, 2020, Yan and Zhou were charged in a five-count indictment with one count of conspiring to violate the FCPA, two counts of violating the FCPA, one count of conspiring to commit international money laundering, and one count of committing international money laundering. The indictment alleges, beginning in or around 2016 and continuing until at least August 2020, Yan and Zhou, as the president and assistant to the president, respectively, of a New York-based non-governmental organization (NGO), conspired with others in connection with a multi-year bribery and money laundering scheme. Yan and Zhou allegedly offered and paid tens of thousands of dollars in bribes to elected RMI officials – including, among others, members of the RMI legislature – in exchange for supporting legislation creating a semi-autonomous region within the RMI called the Rongelap Atoll Special Administrative Region (RASAR) that would benefit the business interests of the defendants and their associates. The indictment alleges that the defendants carried out the bribery and money laundering scheme using the New York NGO, including the physical use of its headquarters in Manhattan, to meet with and communicate with RMI officials. 

“As alleged, Cary Yan and Gina Zhou's bribery scheme was designed to influence and manipulate the legislative process of the Republic of the Marshall Islands in order to benefit themselves and their associates financially,” said U.S. Attorney Damian Williams for the Southern District of New York. “Yan and Zhou's bribes blatantly flouted the sovereignty of the Republic of the Marshall Islands and its legislature, and the dedicated investigative work carried out by this Office and our partners signals that the Southern District of New York will not tolerate those who openly violate the integrity of democratic processes.”

“As alleged, the defendants conducted multiple illegal activities to benefit their personal interests at the expense of the people of the Marshall Islands,” said Assistant Director-in-Charge Michael J. Driscoll of the FBI New York Field Office. “The FBI, along with our global law enforcement partners, is committed to bringing to justice those who seek to use corruption and fraud as a means of doing business - regardless of where in the world they are located.”

On Nov. 17, 2020, Yan and Zhou were arrested in Thailand at the request of the United States pursuant to a bilateral extradition treaty. After extradition proceedings concluded in Thai courts, the Royal Thai Government ordered the defendants’ extradition, which resulted in their arrival in the United States on Sept. 2.

If convicted, Yan and Zhou each face a maximum penalty of 20 years in prison for each count of money laundering and conspiracy to commit money laundering and up to five years in prison for each count of violating the FCPA and conspiring to violate the FCPA. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Polite and U.S. Attorney Williams commended and thanked the Royal Thai Government for its assistance in the extradition of Yan and Zhou to the United States. The Embassy of the United States in Bangkok and the Justice Department’s Office of International Affairs provided substantial assistance in securing the arrest and extradition of the defendants.

The FBI’s New York Field Office investigated the case. The U.S. Marshals Service transported Yan and Zhou from Thailand to the United States.

Assistant Chief Gerald M. Moody, Jr. of the Justice Department’s Fraud Section and Deputy Chief of the Southern District of New York’s Criminal Division Daniel C. Richenthal, Assistant U.S. Attorneys Hagan Scotten, Lara Pomerantz and Derek Wikstrom for the Southern District of New York are prosecuting the case.

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

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

Damian Williams, the United States Attorney for the Southern District of New York, and Scott Lampert, the Special Agent in Charge of the New York Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), announced that the United States has settled civil fraud claims against Maranatha Human Services, Inc. (“MARANATHA”) for falsely claiming that millions of dollars expended to benefit for-profit ventures owned and controlled by MARANATHA and its founder HENRY ALFONSO COLEY (“COLEY”), as well as payments to cover COLEY’s personal expenses and excessive payments to COLEY’s family members, were reasonable and necessary costs in connection with MARANATHA’s provision of Medicaid-funded services to individuals with developmental disabilities.  MARANATHA is a non-profit organization based in Poughkeepsie, New York; COLEY founded MARANATHA in 1988 and served as its chief executive officer until last year. 

Specifically, the Government’s complaint, which was filed in November 2021, alleges that MARANATHA, with its board’s approval, funded for-profit companies operated by COLEY; paid excessive salaries and consulting fees to COLEY’s family members, often in exchange for little to no work; and paid for tens of thousands of dollars of COLEY’s personal expenses.  The Government further alleges that, from 2010 to 2019, COLEY and MARANATHA submitted to the State of New York cost reports that falsely claimed millions of dollars of these expenses as “allowable” costs, which fraudulently inflated MARANATHA’s Medicaid reimbursement rates and resulted in MARANATHA receiving millions of dollars in Medicaid funds to which it was not entitled.

U.S. Attorney Damian Williams said:  “For a decade, Henry Alfonso Coley and Maranatha defrauded Medicaid by submitting reports that fraudulently claimed as allowable expenses millions of dollars spent on for-profit companies owned by them, excessive salaries and fees for Coley’s family members, and Coley’s personal expenses.  These expenses were not related to providing care or assistance to the individuals with developmental disabilities who Maranatha was meant to serve.  Now Coley and Maranatha have each agreed to pay damages, Coley has been barred from working for any entity that bills federal healthcare programs, and Maranatha will close its doors.”

HHS-OIG Special Agent in Charge Scott Lampert said:  “It is incumbent upon the recipient of Medicaid funds to ensure that costs reported for reimbursement are accurate and in accordance with the program’s regulations; this is a steadfast requirement of participating in the Medicaid program.  The use of federal dollars for unallowable expenses diverts much-needed resources meant to support health care services for vulnerable individuals.  Putting a stop to such activity, through collaboration with our law enforcement partners, is a prime objective of HHS-OIG.”

Under the settlement approved yesterday by U.S. District Judge Kenneth M. Karas, MARANATHA agrees to cease operations after transitioning the operation of its programs to other providers under the supervision of the governing state regulatory agency.  MARANATHA will also pay $340,000 to the United States and has admitted and accepted responsibility for conduct alleged by the Government in its complaint as further described below.  In addition, MARANATHA has agreed to pay $510,000 to the State of New York to resolve the State’s claims, for a total recovery of $850,000.  The settlement amount is based on the Office’s assessment of MARANATHA’s ability to pay based on the financial information it provided and its commitment to cease operations.  The United States previously resolved the claims against COLEY through a settlement approved by Judge Karas on November 17, 2021.  In addition to paying damages to the United States and the State of New York, COLEY was barred from working for any entity that bills federal healthcare programs; he also entered into a Voluntary Exclusion Agreement with HHS-OIG, which prohibits him from, among other things, billing Medicaid and other federal healthcare programs for 15 years.

According to the Government’s complaint, from 2010 through 2019:

MARANATHA was required to submit cost reports, called Consolidated Financial Reports (“CFRs”), to the State of New York each year, specifying the reasonable and necessary costs MARANATHA incurred in providing services for its Medicaid-funded programs.  These costs were to be reported as “allowable” costs.  MARANATHA was required separately to report its other, “non-allowable” costs; “non-allowable” costs include costs unrelated to its Medicaid-funded programs, as well as any unreasonable or unnecessary costs. 

With its board’s approval, MARANATHA funded for-profit companies operated by COLEY and owned by COLEY or MARANATHA, as well as various unincorporated pet projects started by COLEY.  One of the chief purposes of these ventures was to serve as vehicles to funnel money to COLEY’s daughter, as well as others associated with COLEY, whom MARANATHA paid for work they purportedly did to support these ventures and projects.  Over the course of a decade, not one of these ventures ever launched a product or service or earned a single dollar in revenue.  COLEY and MARANATHA hired COLEY’s family members as employees and consultants, some in connection with these for-profit ventures, and others in connection with MARANATHA’s Medicaid-funded services.  COLEY and MARANATHA paid excessive salaries and consulting fees to COLEY’s family members, often in return for little to no work.  MARANATHA also paid for tens of thousands of dollars of COLEY’s personal expenses, including more than $34,000 for personal training sessions at a gym.

COLEY and MARANATHA knowingly submitted CFRs annually to the State of New York fraudulently reporting these expenses—totaling millions of dollars—as “allowable” costs.  On each CFR, COLEY falsely certified to the completeness and accuracy of the report.  COLEY and MARANATHA knew that the State of New York relied on providers’ CFRs when setting provider-specific reimbursement rates for certain Medicaid-funded programs, including MARANATHA’s largest Medicaid-funded program.  As a result of COLEY’s and MARANATHA’s falsely inflated cost reports, the State of New York awarded MARANATHA a higher reimbursement rate and MARANATHA received millions of dollars in Medicaid funds to which it was not entitled.

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

• COLEY made a presentation to MARANATHA’s board of directors acknowledging that “[i]t was always the plan for Maranatha to use government funds as a launching pad to create private enterprise that would enable it to not be dependent on [the] government while at the same time fulfilling its function” consistent with its mission.
• MARANATHA knew of the requirement to distinguish “allowable costs” from “non-allowable costs” in its CFRs.
• MARANATHA knew that the allowable costs reported in its CFRs are used by the New York State Department of Health, in part, to determine MARANTHA’s reimbursement rates for the provision of Medicaid services.
• In each CFR that MARANATHA submitted from 2010 to 2019 (the “Covered Period”), MARANATHA’s CEO, COLEY, certified that (i) the “information furnished in this report . . . is in accordance with the instructions and is true and correct to the best of my knowledge”; and (ii) the statement attached to the CFR “fully and accurately represents all reportable income and expenditures made for services performed in accordance with the provision of the Mental Hygiene Law and approved budgets.”
• Throughout the Covered Period, MARANATHA submitted CFRs every year that reported as “allowable costs” amounts expended not for MARANTHA’s provision of Medicaid-funded services but instead to pursue certain for-profit business ventures.
• In particular, MARANATHA submitted CFRs reporting as “allowable costs” costs expended to benefit certain entities owned and/or operated by COLEY or MARANATHA that did not provide Medicaid-funded services (the “Non-Medicaid Ventures”).  
• MARANATHA’s board, which approved MARANATHA funding these Non-Medicaid Ventures, was briefed on them by COLEY.
• MARANATHA paid COLEY’s family members to perform work related to the Non-Medicaid Ventures.  For example, since 2010, MARANATHA paid COLEY’s daughter more than $300,000.  Though much of her time was spent on work related to the Non-Medicaid Ventures, MARANATHA reported her full compensation as an “allowable cost” in the CFRs.
• Since 2010, MARANATHA paid COLEY more than $2 million in salary and benefits, and MARANTHA claimed the full amount of that compensation as “allowable costs” on its CFRs. However, COLEY devoted much of his time to working on the Non-Medicaid Ventures.
• MARANATHA also paid for certain of COLEY’s personal expenses, including more than $34,000 spent on personal training sessions, as well as holiday gifts and jewelry.  MARANATHA reported these expenses as “allowable costs” in its CFRs.

This lawsuit originated as a whistleblower lawsuit filed under seal pursuant to the False Claims Act.

Mr. Williams praised the outstanding investigative work of HHS-OIG, and he thanked the Medicaid Fraud Control Unit at the New York State Attorney General’s Office for its extensive collaboration in the investigation.

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

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a three-count Indictment charging defendant SAKOYA BLACKWOOD with interstate communications with the intent to extort, cyberstalking, and extortion.  The defendant was arrested yesterday and presented before U.S. Magistrate Judge Jennifer Willis in federal court in Manhattan.  The case has been assigned to U.S. District Judge Jesse M. Furman.

U.S. Attorney Damian Williams said:  “No one should have to fear public humiliation and financial loss from the release of personal, private information.  As alleged, Sakoya Blackwood created that very fear and sought to capitalize on it for her own personal gain.  I commend the victim for reporting this alleged criminal activity and encourage anyone else who believes they may have been a victim of this scheme to contact the FBI.”    

FBI Assistant Director Michael J. Driscoll said:  "Most people hope for a personal human connection in life, and scam artists twist that desire into illicit schemes to steal more than hearts. We believe Blackwood used tactics we allege in this indictment to blackmail and extort money from other victims.  We are asking those people to contact us so we can help them but also to ensure no one else ever falls victim to Blackwood's alleged deception."

As alleged in the Indictment unsealed yesterday in Manhattan federal court and statements made in court:[1]

The defendant used multiple online identities to target wealthy and high-profile men in a catfishing and extortion scheme.  In particular, as alleged in Count One, BLACKWOOD made threats against the Chief Executive Officer of a publicly traded company, identified in the Indictment as “Victim-1,” and threatened to release sexually explicit photographs and communications involving Victim-1 with the intent to extort.  BLACKWOOD engaged in a campaign of harassment against Victim-1, sending numerous intimidating and threatening text messages.  BLACKWOOD also used threats of economic and reputational harm from the release of the sexually explicit communications and photographs in an attempt to obtain payments from Victim-1.  As indicated in the Indictment, BLACKWOOD targeted multiple other victims as part of this catfishing and extortion scheme.

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BLACKWOOD, 34, of the Bronx, New York, is charged with one count of making interstate communications with intent to extort, which carries a maximum sentence of two years in prison; one count of cyberstalking, which carries a maximum sentence of five years in prison; and one count of extortion, which carries a maximum sentence of 20 years.

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

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

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Mollie Bracewell and Justin Rodriguez are in charge of the prosecution.

If you believe you are a victim of this offense, please contact the FBI at 1-800-CALL FBI, and reference this case.

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 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 DILLON JORDAN, a/k/a “Daniel Jordan,” a/k/a “Daniel Maurice Hatton,” a/k/a “Daniel Bohler,” pled guilty to conspiracy to violate the Mann Act for his operation of an interstate prostitution business.  JORDAN pled guilty before U.S. District Judge John P. Cronan. Sentencing is scheduled for December 12, 2022.

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

From in or about 2010 through at least in or about May 2017, JORDAN operated a prostitution business throughout the United States and abroad.  JORDAN maintained a roster of women who resided around the United States and who, in exchange for payment, performed sexual acts for JORDAN’s clients at locations throughout the United States, including the Southern District of New York, and abroad.  JORDAN communicated with the clients of his prostitution business by email to coordinate the prostitution services, which included sending to clients photos of women who were available for hire for prostitution services, discussing the price of prostitution services, and overseeing travel logistics for women to travel to engage in prostitution.  At times, JORDAN himself arranged the interstate travel for the women to engage in prostitution, and at other times, clients, at JORDAN’s direction, arranged the interstate travel for the women whom JORDAN directed to those clients.  To facilitate his prostitution business, JORDAN also coordinated with a United Kingdom-based madam by sharing and referring customers and prostitutes.

JORDAN primarily managed the finances of the prostitution business through two front companies – a purported party and event planning company and a movie production company – incorporated in California.  JORDAN opened multiple bank accounts for these companies, which he used to accept cash, wire, and check payments for prostitution services from clients and to pay for the expenses of the prostitution business, including paying the women for their prostitution services by cash and check.  By using the two front companies to receive deposits from the prostitution business, JORDAN ensured that transactions involving those proceeds from the prostitution business would disguise the nature, source, and origin of those proceeds.    

*                *                *

JORDAN, 50, of Arrowhead Lake, California, pled guilty to one count of conspiracy to violate the Mann Act, which carries a maximum sentence of five years in prison. As part of his guilty plea, JORDAN has agreed to forfeit $1,429,717 to the United States.

The sentencing of JORDAN is scheduled for December 12, 2022, before Judge Cronan. 

We urge anyone who feels she may be a victim of, or have information related to, the conduct in this case to please contact the FBI at NK-Victim-Assistance@fbi.gov or (973) 792-3000.

Mr. Williams praised the investigative work of the FBI.  This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorney Cecilia E. Vogel is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an Indictment charging NEIL PHILLIPS, the co-founder and chief investment officer of a hedge fund based in the United Kingdom, with conspiracy to commit commodities fraud, conspiracy to commit wire fraud, commodities fraud, and wire fraud in connection with a scheme to artificially manipulate the United States dollar (“USD”) / South African rand (“ZAR”) exchange rate to fraudulently trigger a $20 million payment under a barrier options contract.  PHILLIPS was arrested in Spain earlier this week at the request of the United States.

U.S. Attorney Damian Williams said:  “As alleged, Neil Phillips – the co-founder and chief investment officer of a prominent U.K. hedge fund – manipulated the FX market in order to unlawfully obtain millions of dollars in payments for his hedge fund under an options contract.  Market manipulation is pernicious in all of its forms and today’s charges are a reminder that the Southern District of New York will steadfastly investigate and prosecute such activity whether it occurs in the equity market, the FX market, or elsewhere in the financial system.”

FBI Assistant Director Michael J. Driscoll said:  “As alleged, Mr. Phillips maliciously manipulated global markets in order to defraud financial institutions for illicit profit.  The FBI is determined to root out these types of frauds so financial markets remain a level playing field.  As shown today, the FBI will find fraudulent actors no matter where in the world they are located and seek to bring them back to the United States to face the consequences of their actions in our federal criminal justice system.”

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

Background on Hedge Fund-1 and the FX Markets

At all relevant times, PHILLIPS was the co-founder and co-Chief Investment Officer of a hedge fund based in the United Kingdom (“Hedge Fund-1”), which was a global “macro” fund that focused on macroeconomic trends and emerging markets, foreign currency exchange (“FX”) markets, and currency and commodity products.  Hedge Fund-1 was at all relevant times a registered commodity pool operator with the Commodity Futures Trading Commission (the “CFTC”) and PHILLIPS was himself registered with the CFTC as well.

The FX market is a global market in which participants trade currencies in pairs.  In a currency pair, each currency is valued relative to the other, and the ratio that expresses the value of one currency against the other is referred to as the “exchange rate” or the “rate.”  FX “spot” trades involve one party agreeing to receive a particular currency in exchange for delivering a different currency, at an agreed-upon price and quantity. 

The $20 Million One Touch Option

In late October 2017, Hedge Fund-1 purchased a “one touch” digital option for the USD/ZAR currency pair that was set to expire on January 2, 2018.  The option had a notional value of $20 million and a barrier rate of 12.50 ZAR to USD (the “$20 Million One Touch Option”).  Under the terms of the $20 Million One Touch Option, if the USD/ZAR exchange rate went below the rate of 12.50 at any point prior to January 2, 2018, Hedge Fund-1 would be entitled to a $20 million payment.  Hedge Fund-1 subsequently allocated a portion of the $20 million notional value to a client (“Client Fund-1”), thereby entitling Client Fund-1 to receive $4,340,000 in the event that the $20 Million One Touch Option was triggered.

Other financial institutions were party to the transaction:  Hedge Fund-1 purchased the $20 Million One Touch Option through a financial services firm (“Intermediary Firm-1”) that facilitates trades on behalf of underlying clients; a subsidiary of a bank headquartered in Manhattan, New York (“Bank-1”) was obligated to pay the $20 million in the event the $20 Million One Touch Option was triggered; and a bank headquartered in Manhattan, New York (“Bank-2”) acted as Hedge Fund-1’s prime broker in connection with the $20 Million One Touch Option.

Hedge Fund-1 and Bank-2 entered into a letter agreement that set forth the terms and conditions of the transaction.  This letter agreement provided that Hedge Fund-1 would be “acting in good faith and in a commercially reasonable manner” as the “Calculation Agent” in connection with the $20 Million One Touch Option and that Hedge Fund-1 would determine whether a barrier event occurred in good faith and in a commercially reasonable manner.

PHILLIPS Intentionally Manipulates the USD/ZAR Rate on Boxing Day 2017

With the $20 Million One Touch Option set to expire in a matter of days without having been triggered, on December 26, 2017 (Boxing Day), PHILLIPS engaged in a scheme to intentionally and artificially manipulate the USD/ZAR rate to drive the rate below 12.50 and trigger payment under the $20 Million One Touch Option.  PHILLIPS caused and sought to cause the USD/ZAR exchange rate to fall below 12.50 by engaging in FX spot trades in which he caused hundreds of millions of USD to be exchanged for ZAR.  PHILLIPS engaged in this USD/ZAR FX spot trading for the express purpose of artificially driving the USD/ZAR rate below 12.50.  On December 26, 2017, in the hours that followed the completion of the USD/ZAR FX spot trading directed by PHILLIPS, the USD/ZAR rate once again increased and returned to levels above the 12.50 barrier and did not go below that rate for the remainder of the day.

In particular, during the span of less than an hour between shortly before midnight London time on December 25, 2017 (Christmas day), and approximately 12:45 a.m. London time on December 26, 2017 (Boxing Day), PHILLIPS personally directed a Singapore-based employee (“CC-1”) of a bank (“Bank-3”) to sell, on behalf of Hedge Fund-1, a total of approximately $725 million USD in exchange for approximately 9,070,902,750 ZAR.  During the course of that approximately one-hour period, PHILLIPS, through his trading, caused the USD/ZAR rate to fall substantially until the rate went just below 12.50.  As soon as PHILLIPS had achieved his objective and the USD/ZAR rate fell below 12.50 due to PHILLIPS’ manipulative spot trading activity, PHILLIPS immediately directed that CC-1 cease trading.  PHILLIPS provided trading instructions to CC-1 through Bloomberg chat messages while PHILLIPS was located in South Africa and while CC-1 was located in Singapore.  In these Bloomberg chat messages, PHILLIPS explicitly directed CC-1 to continue selling until the USD/ZAR rate fell below 12.50 and PHILLIPS expressly stated that PHILLIPS’ purpose in directing these trades was to drive the USD/ZAR rate below 12.50 stating, among other things, “my aim is to trade thru 50,” “[n]eed it to trade thru 50. 4990 is fine,” and “[g]et it thru.”  Once PHILLIPS was informed by CC-1 that the USD/ZAR had traded at below 12.50, PHILLIPS immediately instructed CC-1 to “stop” trading and asked for proof “of the print.”

PHILLIPS Causes the Fraudulent Triggering of the $20 Million One Touch Option

Minutes after PHILLIPS artificially caused the USD/ZAR exchange rate to fall below 12.50 through his manipulative trading, PHILLIPS instructed another employee of Hedge Fund-1 (“CC-2”) to notify Intermediary Firm-1 that the $20 Million One Touch Option had been triggered.  Consistent with PHILLIPS’ directive, CC-2 contacted an employee of Intermediary Firm-1 to confirm that the $20 Million One Touch Option had been triggered and, in so doing, omitted the fact that the triggering event – the USD/ZAR rate falling below 12.50 – had occurred as a result of the manipulation of the USD/ZAR exchange rate by PHILLIPS.  Furthermore, Bank-2, which was serving as Hedge Fund-1’s prime broker in connection with the $20 Million One Touch Option and with whom Hedge Fund-1 had executed the relevant letter agreement governing the transaction, required confirmation from both the executing broker and from Hedge Fund-1 that the $20 Million One Touch Option had, in fact, been triggered.  In this regard, on or about December 27, 2017, an employee of Hedge Fund-1 notified Bank-2, that “[t]he below option level of 12.50 was hit yesterday” and sought to process payment in connection with the triggering of the $20 Million One Touch Option.  This representation by Hedge Fund-1 to Bank-2 that the $20 Million One Touch Option had been triggered likewise omitted the fact that the triggering event – the USD/ZAR exchange rate falling below 12.50 – had occurred as a result of the manipulation of the USD/ZAR exchange rate by PHILLIPS.

As a result of the fraudulent triggering of the $20 Million One Touch Option by PHILLIPS, Hedge Fund-1 ultimately received a wire transfer of $15,660,000 and Client Fund-1 received a wire transfer of $4,340,000. 

*                *                *

PHILLIPS, 52, of the United Kingdom, is charged with one count of conspiracy to commit commodities fraud, which carries a maximum sentence of five years in prison; one count of commodities fraud, in violation of Title 7, United States Code, Sections 9(1) and 13(a)(5), which carries a maximum sentence of 10 years in prison; and one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carry a maximum sentence of 20 years in prison. 

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

Mr. Williams praised the investigative work of the FBI.  He also thanked the Justice Department’s Office of International Affairs, as well as authorities in Spain.  Mr. Williams further thanked the Commodity Futures Trading Commission for their cooperation and assistance in this investigation.

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

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today the unsealing of an Indictment charging VICTOR BYRNE, 56, with transporting two minors to engage in illegal sexual activity in 2006 and 2008.  BYRNE was arrested this morning in Orlando, Florida and presented in Orlando federal court.

U.S. Attorney Damian Williams said:  “Victor Byrne allegedly used his position as a diving coach to sexually exploit young athletes.  This case illustrates that the passage of years will not prevent us from holding accountable those who prey on children.”   

As alleged in the Indictment filed on August 17, 2022, in White Plains federal court and unsealed today and in statements made today at the presentment in Orlando federal court:[1]

In or about July 2006, VICTOR BYRNE, the defendant, knowingly transported a 16-year-old minor (“Victim-1”) from Cape Cod, Massachusetts to Rockland County, New York with the intent to engage in illegal sexual activity with Victim-1. 

In or about February 2008, VICTOR BYRNE knowingly transported a 16-year-old minor (“Victim-2”) from New Jersey to Rockland County, New York with the intent to engage in illegal sexual activity with Victim-2.

From in or about 2001 until at least in or about 2009, BYRNE was a diving coach in Rockland County, New York who coached a team of competitive divers.  Victim-1 and Victim-2 were divers for BYRNE.  Victim-1 and Victim-2 are adults today, and they are law enforcement officers.  Victim-1 is a police officer in New York.  Victim-2 is a Special Agent with Homeland Security Investigations.

The defendant’s criminal conduct occurred repeatedly over a period of years:  The defendant began abusing Victim-1 when she was about 14 years old.  For Victim-2, the abuse began when she was 16.

Mr. Williams stated that the investigation is ongoing.  Mr. Williams requests that any individuals who have information with respect to VICTOR BYRNE contact Homeland Security Investigations Tip Line (866) 347-2423.

*                *                *

BYRNE, 56, of Orlando, Florida, is charged with two counts of transporting a minor to engage in illegal sexual activity.  Count One, which charges an offense that occurred in or about July 2006, carries a mandatory minimum sentence of five years in prison and a maximum sentence of 30 years in prison. Count Two, which charges an offense that occurred in or about February 2008, carries a mandatory minimum of 10 years in prison and a maximum sentence of life.  

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

Following today’s presentment, Judge David Baker ordered that BYRNE be detained pending a hearing in Orland federal court scheduled for September 12, 2022.

Mr. Williams praised the efforts of Homeland Security Investigations, the U.S. Marshal Service, the U.S. Attorney’s Office for the Middle District of Florida, and the New York City Police Department Special Victims Unit assigned to the HSI Human Trafficking Task Force in connection with this investigation.  He added that the investigation is ongoing.

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

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that NYSHIEM SPENCER, a/k/a “Willy,” pled guilty today in Manhattan federal court before U.S. Magistrate Judge Jennifer Willis to charges relating to his involvement in a shooting on October 31, 2017, in the vicinity of the Soundview Houses in the Bronx, New York, which resulted in the murder of Luis Vargas, 16 years old, and injuries to two other individuals, including a 15-year old child.

U.S. Attorney Damian Williams said:  “On October 31, 2017, Nyshiem Spencer opened fire in the courtyard of the Soundview Houses and killed Luis Vargas, who was 16 years old.  Spencer also shot and injured two other people in the courtyard, including a 15-year old child.  Today’s guilty plea shows that we will vigorously investigate and hold accountable those who are responsible for shootings and acts of gang violence in our community.  I commend the extraordinary efforts of our law enforcement partners, who worked tirelessly to investigate Luis Vargas’s murder.”

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

NYSHIEM SPENCER was a member and associate of the Monroe Houses Crew, a racketeering enterprise which operates principally in the James Monroe Houses in the Soundview neighborhood of the Bronx.  In order to enrich the enterprise, preserve and protect the power of the enterprise, and enhance its criminal operations, Monroe Houses Crew members and associates committed, conspired, attempted, and threatened to commit acts of violence, including murder; distributed and possessed with intent to distribute narcotics; committed robberies; engaged in fraud; and obtained, possessed, and used firearms.

On October 31, 2017, SPENCER carried out a shooting targeting rival gang members in the courtyard of the Soundview Houses, which resulted in the murder of Luis Vargas, age 16.  Two other individuals, including a 15-year old child, were injured during the shooting.          

*                *                *

SPENCER, 21, of the Bronx, New York, pled guilty to one count of using and carrying a firearm during and in furtherance of a murder and assault with a dangerous weapon in aid of racketeering, which was brandished and discharged, which carries a maximum prison term of life and a mandatory minimum prison term of 10 years.  

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.  

SPENCER is scheduled to be sentenced by Judge Analisa Torres on March 7, 2023.

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

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Andrew K. Chan, Justin V. Rodriguez, and Emily A. Johnson are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that TERRENCE WILLIAMS pled guilty to conspiracy to commit health care and wire fraud, and aggravated identity theft, in connection with a scheme to defraud the National Basketball Association (“NBA”) Players’ Health and Welfare Benefit Plan (the “Plan”). WILLIAMS pled guilty before U.S. District Judge Valerie E. Caproni.  Sentencing is scheduled for January 25, 2023.

U.S. Attorney Damian Williams said: “Williams led a scheme involving more than 18 former NBA players, a dentist, a doctor, and a chiropractor, to defraud the NBA Players’ Health and Welfare Benefit Plan of millions of dollars.  Williams also impersonated others to help him take what was not his—money that belonged to the Plan.  I thank our law enforcement partners in the FBI for their hard work investigating this pervasive scheme.”   

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

The Plan is a health care plan providing benefits to eligible active and former players of the NBA and their family members.  From at least 2017 through at least 2021, WILLIAMS, and more than a dozen others, engaged in a widespread scheme to defraud the Plan by submitting and causing to be submitted fraudulent claims for reimbursement of medical and dental services that were not actually rendered.  Over the course of the scheme, the defendants submitted and caused to be submitted to the Plan false claims totaling at least approximately $5 million.

WILLIAMS orchestrated the scheme to defraud the Plan.  WILLIAMS recruited other Plan participants to defraud the Plan by offering to provide them with false invoices to support their fraudulent claims.  WILLIAMS’s co-defendants, including a dentist in California and a doctor in Washington State, provided WILLIAMS with fraudulent invoices that WILLIAMS sent to other co-conspirators.  WILLIAMS also recruited non-medical professionals to copy invoices made by medical offices, which WILLIAMS provided to co-conspirators and were used to defraud the Plan.  WILLIAMS conspired with others to submit fraudulent claims to the Plan in exchange for kickback payments to WILLIAMS of at least $300,000.

To verify that certain services were medically necessary, the Plan sometimes requires participants to provide, from a medical provider, a letter of medical necessity establishing that necessity of the provided services.  WILLIAMS fraudulently created and transferred letters of medical necessity for three co-conspirators.  Those letters were unusual in several respects: they were not on letterhead, contained unusual formatting, had grammatical errors, and one of the letters misspelled a purported patient’s name.

WILLIAMS also impersonated others in furtherance of the scheme.  WILLIAMS pretended to be employees of the Plan’s administrative manager.  In one instance, WILLIAMS created an email account designed to appear as an email account used by the Plan’s administrative manager.  WILLIAMS used that account to attempt to frighten a co-defendant so that the co-defendant would re-engage with WILLIAMS and would pay kickback to WILLIAMS.

On other occasions, WILLIAMS used another email account he created to threaten another co-defendant—a doctor who created fraudulent invoices for WILLIAMS.  WILLIAMS used this email account to pretend to be employees of the Plan’s administrative manager and demand that this co-defendant pay WILLIAMS a “fine” or the “employees” would tell the authorities about the submission of fraudulent invoices.  Through these threats and deception, WILLIAMS obtained approximately $346,000 from this particular co-defendant.

In or about April 2022, after WILLIAMS was charged and arrested in this case, and while on pretrial release, WILLIAMS texted threats to a witness including that the witness was “talking way to[o] f[---]ing much,” to “shut the f[--]k up,” and “me spitting in your face is exactly what you’ll see.”  Following a motion by the Government on May 6, 2022, as a result of this obstructive conduct, Judge Caproni remanded WILLIAMS.

*                *                *

WILLIAMS, 35, of Seattle, Washington, pled guilty to one count of conspiracy to commit health care and wire fraud, which carries a maximum term of twenty years in prison; and one count of aggravated identity theft, which carries a mandatory minimum sentence of two years in prison.  As part of his guilty plea, WILLIAMS agreed to pay restitution of $2,500,000 to the Plan and to forfeit $653,672.55 to the United States.

The sentencing of WILLIAMS is scheduled for January 25, 2023, before Judge Caproni.

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

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

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Ryan B. Finkel and Daniel G. Nessim are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that DONOVAN GRANT pled guilty today in Manhattan federal court to participating in the armed robbery of Jercar Brooks in the Bronx on January 23, 2014.  As part of his guilty plea, GRANT admitted that during the robbery, he shot and killed Brooks.  GRANT is scheduled to be sentenced before the Honorable Alvin K. Hellerstein on November 28, 2022.

U.S. Attorney Damian Williams said:  “Eight years ago, Jercar Brooks was murdered inside his apartment in the Bronx.  Thanks to the tireless efforts of the New York City Police Department and the Federal Bureau of Investigation, Donovan Grant has now been held accountable for this senseless crime.  Together with our law enforcement partners, this Office will continue to bring justice to the victims of violent crime.”

According to the allegations in the Superseding Indictment and other documents filed in federal court, as well as statements made in public court proceedings:

On January 23, 2014, GRANT planned to rob Brooks at gunpoint during a supposed marijuana deal.  GRANT brought a gun and bag of pretend money to Brooks’ apartment located at 634 East 233rd Street in the Bronx, intending to take the marijuana by force if the plan to deceive Brooks was unsuccessful.   During the course of the armed robbery, GRANT shot Brooks two times and killed him.  GRANT fled the building, taking with him the box of marijuana that he had planned to steal. 

*                *                *

GRANT, 60, of Brooklyn, New York, pled guilty to one count of Hobbs Act robbery, in violation of Title 18, United States Code, Section 1951, which carries a maximum term of twenty years in prison. 

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

Mr. Williams praised the outstanding investigating work of the FBI and the NYPD.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Jason Swergold and Mollie Bracewell 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, announced that AIMEE HARRIS and ROBERT KURLANDER pled guilty to conspiracy to commit interstate transportation of stolen property involving the theft of personal belongings of an immediate family member of a then-former government official who was a candidate for national political office.  HARRIS and KURLANDER pled guilty today before United States Magistrate Judge Sarah L. Cave and will be sentenced by Chief United States District Judge Laura Taylor Swain. 

U.S. Attorney Damian Williams said:  “Harris and Kurlander stole personal property from an immediate family member of a candidate for national political office.  They sold the property to an organization in New York for $40,000 and even returned to take more of the victim’s property when asked to do so.  Harris and Kurlander sought to profit from their theft of another person’s personal property, and they now stand convicted of a federal felony as a result.”  

FBI Assistant Director Michael J. Driscoll said:  “As they've admitted with today’s pleas, the defendants conspired to steal an individual’s personal property, which they subsequently sold to a third party and delivered across state lines.  As a consequence of their actions, they now face punishment in the federal criminal justice system for their crimes.  I’d like to thank the Public Corruption Units at both the FBI’s New York Office and the United States Attorney’s Office for the Southern District of New York for their dedicated effort in this case.”  

According to the Information and statements made in court:

In or about September 2020, HARRIS and KURLANDER conspired to steal, transport across state lines, and sell personal property that belonged to an individual (the “Victim”) whom HARRIS and KURLANDER knew was an immediate family member of a then-former government official who was a candidate for national political office.  The Victim had stored the property, including a handwritten journal containing highly personal entries, tax records, a digital storage card containing private family photographs, and a cellphone, among other things, in a private residence in Delray Beach, Florida, at which HARRIS was temporarily residing.  After HARRIS stole the property, she enlisted KURLANDER to help her facilitate its sale.  HARRIS and KURLANDER then made contact with an employee of an organization based in Mamaroneck, New York (the “Organization”), who instructed them to use an encrypted application to communicate with the Organization and requested photographs of the Victim’s property.  After receiving the photographs, the Organization offered to pay for HARRIS and KURLANDER’s transportation of the property from Florida to New York City.  HARRIS and KURLANDER subsequently traveled to New York City with the Victim’s property at the Organization’s expense and met with employees of the Organization.  During that meeting, HARRIS described the circumstances of how she had obtained the Victim’s property, provided the property to the Organization, and disclosed that the Victim had stored additional property in the residence where HARRIS continued to have access.  After the meeting, and at the Organization’s request, HARRIS and KURLANDER returned to Florida to obtain more of the Victim’s property in order to provide it to the Organization.  They later met with an Organization employee in Florida and gave that employee more of the Victim’s stolen property, believing that the Organization would transport or cause the transport of the stolen property from Florida to the Organization’s offices in New York, which the Organization subsequently did.  The Organization subsequently paid HARRIS and KURLANDER each $20,000 for the stolen property.

*                *                *

AIMEE HARRIS, 40, of Palm Beach, Florida, and ROBERT KURLANDER, 58, of Jupiter, Florida, each pled guilty to one count of conspiracy to commit interstate transportation of stolen property, which carries a maximum sentence of 5 years in prison. 

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

Under the terms of their plea agreements, HARRIS and KURLANDER each agreed to forfeit $20,000, and KURLANDER agreed to cooperate with the Government.

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 Public Corruption Unit.  Assistant United States Attorneys Jacqueline C. Kelly, Robert B. Sobelman, and Mitzi S. Steiner are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York,  Thomas 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 charges against GREGORY GUMUCIO, MICHAEL ANDERSON, and HAVEN SOLIMAN for participating in a conspiracy to commit tax fraud for at least seven years.  The three defendants were longtime leaders at a prominent nationwide yoga business, Yoga to the People (“YTTP”), from which they all received a substantial amount of income, yet none of the three defendants filed individual or business tax returns – or paid any income taxes – from at least 2013 through 2020.  GUMUCIO, ANDERSON, and SOLIMAN were arrested today in Washington State.  GUMUCIO and SOLIMAN will be presented before Magistrate Judge David W. Christel in the Western District of Washington (Tacoma Division), and ANDERSON will be presented before Magistrate Judge Mary Alice Theiler in the Western District of Washington (Seattle Division).

U.S. Attorney Damian Williams said:  “As alleged, the defendants operated a lucrative nationwide yoga business, which brought in over $20 million and netted them each substantial sums, permitting them to live lavish lifestyles.  Yet the defendants chose not to file tax returns, or pay income taxes, for at least seven consecutive years.  The defendants perpetrated their scheme in various ways, including paying employees in cash and off the books, refusing to provide employees with tax documentation, not maintaining books and records, paying personal expenses from business accounts, and using nominees to disguise their connection to various entities.  At least two of the defendants even submitted fabricated tax returns to third parties when seeking a loan or an apartment, despite not filing any tax returns with the IRS.  Thanks to dogged investigative work, the defendants now face serious charges for their alleged crimes.”

IRS-CI Special Agent in Charge Fattorusso said:  “The defendants purported to create a donation-based exercise community to make yoga more accessible for their clients, when in reality, they allegedly ran a more than decade-long cash cow that relied on a sophisticated network of tens of millions of dollars in unreported income and free labor to fund the leaders’ lavish lifestyles.  Today’s arrests and charges are the opening salvo against this years-long scam and the first step to holding these defendants accountable for their alleged crimes.”

DOL-OIG Special Agent-in-Charge Jonathan Mellone said:  “An important part of the mission of the Office of Inspector General is ensuring that workers receive the wages that they are entitled to and that appropriate unemployment insurance taxes are withheld from their pay and remitted to the relevant tax authority. We will continue to work with our law enforcement partners to investigate these types of allegations."

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

In or around 2006, GUMUCIO founded YTTP in New York, New York.  YTTP was originally donation-based: YTTP requested, but did not require, payment from its yoga students.  YTTP started with one yoga studio on the Lower East Side of Manhattan, and it became extremely popular.  Over the ensuing years, YTTP opened at least approximately 20 yoga studios or affiliated entities throughout New York City and in various other places, including California, Colorado, Arizona, Florida, and Washington State.  YTTP also had a teacher training program, which earned substantial income from aspiring yoga teachers.  YTTP operated from at least approximately 2006 until 2020.  From 2010 to 2020, YTTP and its affiliates generated gross receipts of more than $20 million.  Yet YTTP never filed a corporate tax return with the IRS. 

YTTP’s leadership included GUMUCIO, ANDERSON, and SOLIMAN.  GUMUCIO was YTTP’s founder, principal owner, and functional chief executive officer, as he directed and made decisions for the YTTP enterprise.  ANDERSON was an owner of YTTP and the functional chief financial officer; he was involved in, among other things, negotiating leases for YTTP entities, obtaining Employer Identification Numbers from the IRS, opening bank accounts, and working with GUMUCIO to expand YTTP.  SOLIMAN was an owner of YTTP, its Chief Communications Officer, the Director of Education for YTTP’s Teacher Training (“TT”) Program, and was actively involved in YTTP’s efforts to expand internationally.

GUMUCIO, ANDERSON, and SOLIMAN each received a large volume of income from YTTP, yet none of the three defendants filed a personal tax return with the IRS for any calendar year from 2013 to 2020, inclusive.  Using conservative figures, for calendar years 2015 to 2020, GUMUCIO had unreported income directly from YTTP exceeding $1.6 million and a tax due and owing to the IRS exceeding an estimated $431,000; ANDERSON had unreported income directly from YTTP exceeding $2.1 million and a tax due and owing to the IRS exceeding an estimated $603,000; and SOLIMAN had unreported income directly from YTTP exceeding $961,000 and a tax due and owing to the IRS exceeding an estimated $196,000.  During the charged period, GUMUCIO, ANDERSON, and SOLIMAN each represented their annual income to be six figures to third parties not associated with the Government (e.g., in loan applications, rental applications, and/or bank documents), yet none of them filed an individual tax return. 

During the charged period, despite not filing any tax returns and not paying any income taxes, GUMUCIO, ANDERSON, and SOLIMAN enjoyed extravagant lifestyles, which included frequent foreign travel; expensive meals and clothing; NFL season tickets; and horse lodging and horseback riding.

YTTP and its leaders, including GUMUCIO, ANDERSON, and SOLIMAN, used various methods to evade taxes, including, among others:

• Accepting yoga students’ payments in cash (e.g., which was collected in tissue boxes that were passed around during yoga classes) and paying yoga teachers in cash and “off the books”;
• Using nominees to disguise the defendants’ connection to various entities which, in fact, were part of the YTTP enterprise and from which GUMUCIO, ANDERSON, and SOLIMAN all received income; to that end, GUMUCIO targeted and groomed typically young women and others to become nominee “owners” of studios, luring them with the title of studio owner when, in fact, he generally controlled business decisions, took a cut of their proceeds, and the nominees generally took on meaningful financial risk;
• Generally forbidding YTTP teachers from counting incoming cash that yoga students paid and requiring yoga studio managers to transport cash proceeds to GUMUCIO’s apartment on St. Marks Place in Manhattan, where those proceeds were “stacked” and counted during so-called “stacking parties”;
• Failing to maintain a corporate headquarters or keep corporate books and records;
• Using YTTP business accounts to pay the defendants’ personal expenses; and
• Maximizing unreported income, as GUMUCIO manipulated subordinates into providing free labor (e.g., teaching unpaid classes, stacking cash, cleaning yoga studios, depositing cash into bank accounts, etc.).

*                *                *

GUMUCIO, 61, of Cathlamet, Washington; ANDERSON, 51, of Bellevue, Washington; and SOLIMAN, 33, of Cathlamet, Washington, are each charged with (i) one count of conspiracy to defraud the IRS, which carries a maximum penalty of five years in prison; and (ii) five counts of tax evasion, each of which carries a maximum penalty of five years in prison. 

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

Mr. Williams praised the outstanding efforts of IRS-CI, DOL-OIG, and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York.  Mr. Williams also thanked the U.S. Attorney’s Office for the Western District of Washington for its assistance. 

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

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.

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

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth 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, and Ricky J. Patel, the Acting Special Agent-in-Charge of Homeland Security Investigations (“HSI”) in New York, announced today that ESTEBAN CABRERA DA CORTE, a/k/a “Esteban Cabrera,” a/k/a “Esteban Da Corte,” a/k/a “Steban,” LUIS HERNANDEZ GONZALEZ, a/k/a “Luis Hernandez,” a/k/a “Luisito,” and ASDRUBAL RAMIREZ MEZA (collectively, the “Defendants”) were arrested this morning for participating in a scheme to steal millions of dollars’ worth of cryptocurrency and trick U.S. banks into refunding them for the millions used to purchase that cryptocurrency, in part by using personal identifying information stolen from other people.  CABRERA, HERNANDEZ, and RAMIREZ will be presented in the United States District Court for the Southern District of Florida.

U.S. Attorney Damian Williams said:  “As alleged, Esteban Cabrera Da Corte, Luis Hernandez Gonzalez, and Asdrubal Ramirez Meza used stolen identities to buy cryptocurrency and then doubled down by disputing the transactions, deceiving U.S. banks into believing that they themselves were the victims of someone else’s fraud.  Thanks to the efforts of HSI’s El Dorado Task Force, their duplicity has been uncovered and they now face serious federal charges.”

HSI Acting Special Agent-in-Charge Ricky J. Patel said:  “Cabrera, Hernandez, and Ramirez coordinated this large-scale operation to launder millions of dollars through cryptocurrency exchanges and U.S. banks, ultimately exploiting both the virtual currency market and the U.S. financial system.  Today’s arrests demonstrate how HSI, along with the U.S. Secret Service and our partners at the Southern District of New York, will continue to work together to leverage the transparency of cryptocurrency transactions to follow the trail of illicit funds and pierce the veil of anonymity.” 

As alleged in the Indictment[1] unsealed today, from at least in or about 2020 through at least in or about March 2020, CABRERA, HERNANDEZ, and RAMIREZ engaged in a scheme to deceive U.S. banks and a leading cryptocurrency exchange platform (the “Cryptocurrency Exchange”) by purchasing more than $4 million in cryptocurrency and then falsely claiming that the cryptocurrency purchase transactions were unauthorized, deceiving the U.S. banks and the Cryptocurrency Exchange into reversing those transactions and redepositing the money into the bank accounts that the Defendants controlled.  The Defendants then withdrew the money from the bank accounts.

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

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

*                *                *

CABRERA, 26, HERNANDEZ, 23, and RAMIREZ, 34, all of Miami, Florida, are charged with (1) conspiracy to commit wire fraud and bank fraud, which carries a maximum sentence of 30 years in prison; (2) wire fraud, which carries a maximum sentence of 20 years in prison; and (3) aggravated identity theft, which carries a mandatory minimum sentence of 2 years in prison, to run consecutive to any other sentence imposed.  CABRERA is also charged with engaging in a monetary transaction in property derived from wire fraud and bank fraud, which carries a maximum sentence of 10 years in prison.

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

Mr. Williams praised the Homeland Security Investigation’s El Dorado Task Force for its outstanding work on the investigation. 

The matter is being handled by the Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorney Emily Deininger is in charge of the prosecution.

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

[1] 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, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a complaint charging RUSSELL DWAYNE LEWIS, a/k/a “Clifford Ari Getz,” a/k/a “Clifford Ari Getz Cohen,” a/k/a “Ari Getz,” a/k/a “Aryeh Getz,” with three counts of wire fraud and one count of aggravated identity theft in connection with multiple schemes to defraud victims out of millions of dollars.  Over several years, LEWIS, who falsely claimed to be a billionaire, defrauded his friend and employee out of more than $3 million, money he falsely claimed was being used in business opportunities; defrauded an individual out of more than $500,000, which he falsely claimed was being directed to a real estate investment; and made a fraudulent offer to purchase a corporate entity for $290 million.  LEWIS was arrested last night in California and is expected to be presented today before a United States Magistrate Judge in the Central District of California.

U.S. Attorney Damian Williams said:  “As alleged, the defendant engaged in a pattern of serial fraud, lying repeatedly and blatantly to friends, associates, and a major corporation about his identity, wealth, and business activities.  He did so out of greed, and he now faces serious criminal charges for his alleged conduct.”

FBI Assistant Director Michael J. Driscoll said:  "As alleged, Mr. Lewis played on his victims' misplaced trust and, through a series of deceptions, cheated them out of valuable resources and money.  His arrest today shows the FBI's continued determination to hold impostors accountable and force them to deal with the repercussions of their illegal activities in court.”

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

Between 2016 and 2020, RUSSELL DWAYNE LEWIS engaged in a series of brazen schemes to misrepresent his identity, his wealth, and his professional and personal background in order to defraud multiple individuals and at least one corporate entity.  For years, LEWIS lived under assumed names, using the birth date of a real individual with the name of one of his aliases, and utilizing the social security number of yet another individual.  As opportunities arose, LEWIS told increasingly outrageous lies to individuals around him, including a close friend of many years, an individual who turned to him for his claimed expertise in astrology, and representatives of a major company he falsely purported to intend to purchase.

In one scheme, LEWIS befriended an individual (“Victim-1”), claiming to Victim-1 that he was a billionaire businessman.  As part of their increasingly close friendship, and believing that LEWIS was a successful businessman, Victim-1 solicited professional and investment advice from LEWIS.  In response, and with greater frequency over time, LEWIS solicited “investments” from Victim-1 in the tens and then hundreds of thousands of dollars.  Eventually, Victim-1 went to work for LEWIS, working to explore opportunities in business and finance to assist LEWIS in identifying investment opportunities.  LEWIS continued to ask Victim-1 for money, which was characterized as investments and/or loans, and which Victim-1 routinely provided.  LEWIS had Victim-1 seek out investment opportunities, only to repeatedly back out of prospective deals at the last moment, claiming difficulties in accessing his vast wealth.  By 2020, Victim-1 had transferred more than $3 million of loan and/or investment funds to LEWIS in less than three years, virtually none of which was ever paid back.

In addition to his purported business activities, LEWIS also separately charged some individuals for astrological readings and analyses.  One such individual was a widow with four children who met LEWIS in or about 2018 (“Victim-2”).  Victim-2 continued to have contact with LEWIS in the coming years, including for astrological readings.  In 2020, over the course of several months, LEWIS defrauded Victim-2 out of approximately $555,000 by pressuring her into paying him money for a purported real estate investment opportunity.  In truth, there was no such investment opportunity, and LEWIS spent Victim-2’s money on personal expenses, including office supplies that facilitated and promoted LEWIS’s other schemes.  Victim-2 received back virtually none of her “investment.”

Finally, in August and September 2020, LEWIS fraudulently attempted to acquire a corporate entity in bankruptcy proceedings (“Corporation-1”).  LEWIS made a purported all‑cash offer to purchase Corporation-1 for $290 million, which resulted in weeks of due diligence processes, legal discussions, and negotiations—including through which Getz and others had access to certain of Corporation-1’s internal business records and materials.  Corporation-1 and its representatives dedicated significant time and resources to the purported offer, based on the false premise that LEWIS intended to, and could, pay hundreds of millions of dollars for Corporation‑1.  In fact, LEWIS had no intention or ability to purchase Corportion-1, and ultimately he backed out of the deal.

*                *                *

LEWIS, 52, of Los Angeles, California, is charged with three counts of wire fraud, each of which carries a maximum sentence of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory consecutive sentence of 24 months in prison.

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

Mr. Williams praised the outstanding work of the FBI, and thanked the Beverly Hills Police Department for its exceptional investigative assistance.

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

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

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

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

U.S. Attorney Damian Williams said:  “As he admitted in court, Frank Glassner misappropriated his client’s material, non-public information about an upcoming acquisition to make personal trades and line his own pockets.  Glassner now awaits sentencing for his crime, and must also forfeit his illicit profits”

According to the Information to which GLASSNER pled guilty, the complaint that was filed in this case, and statements made during court proceedings:

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

As part of his plea agreement, GLASSNER has agreed to forfeit $368,000. 

GLASSNER is scheduled to be sentenced by Judge Liman on December 6, 2022.

*                *                *

GLASSNER, 68, of Novato, California, pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison.

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

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that MOAZU KROMAH, a/k/a “Ayoub,” a/k/a “Ayuba,” a/k/a “Kampala Man,” a citizen of Liberia and resident of Uganda, was sentenced today to 63 months in prison for conspiring to traffic in millions of dollars in rhinoceros horns and elephant ivory, both endangered wildlife species, which involved the illegal poaching of more than approximately 35 rhinoceros and more than 100 elephants.  The sentence was imposed by U.S. District Judge Gregory H. Woods.  KROMAH was previously extradited to the United States from Uganda on June 13, 2019, to face charges in this case, and he has been detained since his arrival in the United States.

U.S. Attorney Damian Williams said:  “The protection of endangered wildlife and natural resources remains a crucial and important priority for my Office.  Today’s sentence demonstrates that those who are responsible for the decimation of global populations of endangered and threatened animals protected by international agreements will face serious consequences. This case also exemplifies our commitment, together with the U.S. Fish and Wildlife Service and the Drug Enforcement Administration, to work with our international partners to arrest and bring to justice in a U.S. courtroom those who commit these serious crimes abroad.”

In imposing today’s sentence, Judge Woods remarked that he agreed with the Government that a significant sentence was necessary to send a “loud and clear message” that such large-scale wildlife trafficking warrants serious consequences.

According to the charging and other documents filed in the case, as well as statements made in court proceedings:

KROMAH and two of his co-conspirators, AMARA CHERIF, a/k/a “Bamba Issiaka,” a citizen of Guinea, and MANSUR MOHAMED SURUR, a/k/a “Mansour,” a Kenyan citizen, were members of a transnational criminal enterprise (the “Enterprise”) based in Uganda and surrounding countries that was engaged in the large-scale trafficking and smuggling of rhinoceros horns and elephant ivory, both protected wildlife species.  Trade involving endangered or threatened species violates several U.S. laws, as well as international treaties implemented by certain U.S. laws.

From at least in or about December 2012 through at least in or about May 2019, KROMAH, CHERIF, and SURUR conspired to transport, distribute, sell, and smuggle at least approximately 190 kilograms of rhinoceros horns and at least approximately 10 tons of elephant ivory from or involving various countries in East Africa, including Uganda, the Democratic Republic of the Congo, Guinea, Kenya, Mozambique, Senegal, and Tanzania, to buyers located in the United States and countries in Southeast Asia.  Such weights of rhinoceros horn and elephant ivory are estimated to have involved the illegal poaching of more than approximately 35 rhinoceros and more than approximately 100 elephants.  In total, the estimated average retail value of the rhinoceros horn involved in the conspiracy was at least approximately $3.4 million, and the estimated average retail value of the elephant ivory involved in the conspiracy was at least approximately $4 million.

Typically, the defendants exported and agreed to export the rhinoceros horns and elephant ivory for delivery to foreign buyers, including a buyer represented to be in Manhattan, in packaging that concealed the rhinoceros horns and elephant ivory in, among other things, pieces of art such as African masks and statues.  The defendants received and deposited payments from foreign customers that were sent in the form of international wire transfers, some of which were sent through U.S. financial institutions, and paid in cash.

On or about March 16, 2018, law enforcement agents intercepted a package containing a black rhinoceros horn sold by the defendants that was intended for a buyer represented to be in Manhattan.  From in or about March 2018 through in or about May 2018, the defendants offered to sell additional rhinoceros horns of varying weights, including horns weighing up to approximately seven kilograms.  On or about July 17, 2018, law enforcement agents intercepted a package containing two rhinoceros horns weighing over five kilograms sold by the defendants that were intended for a buyer represented to be in Manhattan.

*                      *                      *

KROMAH, 49, of Kampala, Uganda, previously pled guilty on March 30, 2022, to one count of conspiracy to commit wildlife trafficking and two counts of wildlife trafficking. 

Mr. Williams praised the outstanding investigative work of the U.S. Fish and Wildlife Service and the U.S. Drug Enforcement Administration, and he thanked law enforcement authorities and conservation partners in Uganda and Kenya, including the Uganda Wildlife Authority, the Uganda Office of the Director of Public Prosecution, the Uganda Police Force, the Kenya Directorate of Criminal Investigations, and the Kenyan Office of the Director of Public Prosecutions, for their assistance in this investigation.  Mr. Williams also thanked the U.S. Department of State and the U.S. Department of Justice’s Office of International Affairs for their assistance.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Sagar K. Ravi and Jarrod L. Schaeffer are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Daniel B. Brubaker, Inspector-in-Charge of the United States Postal Inspection Service (“USPIS”),  announced today that CARMEN MIRANDA, a/k/a “Millie Miranda,” was charged with wire fraud, bank fraud, and aggravated identity theft, in connection with her scheme to embezzle over $4 million from her employer and its clients in Manhattan, New York.  MIRANDA was arrested today and will be presented today before Magistrate Judge Barbara Moses in Manhattan federal court.

U.S. Attorney Damian Williams said:  “For years, Carmen Miranda allegedly pilfered funds from her employer and clients for her own benefit.  She used the stolen funds to live a lifestyle she could not afford, purchasing expensive trips, luxury items, and throwing lavish parties.  Her dishonesty led to serious disruptions in her employer’s and its clients’ businesses.  Miranda’s arrest and prosecution should send a message to anyone engaging in fraudulent conduct that they will be found and prosecuted.”

Inspector-in-Charge Daniel B. Brubaker said:  “Carmen Miranda was placed in a position of trust to help people manage their finances.  She allegedly abused that trust by misappropriating approximately $4 million dollars and in stealing their money, sought only to enrich herself through personal gain.   Miranda used the alleged stolen funds to pay for a lavish lifestyle full of vacations, parties, cosmetic procedures, high-end luxury goods, and even her own wedding. Her greed was her downfall, and in the end, the Postal Inspectors were there to put a stop to her ill-gotten spending spree.”

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

CARMEN MIRANDA, a/k/a “Millie Miranda,” the defendant, was an account manager at a small business management firm that primarily serviced clients in the entertainment industry (the “Company”).  From at least in or about December 2014, up to and including at least January 2022, while serving as an account manager for the Company, MIRANDA embezzled funds from the Company and some of the Company’s clients (the “Clients” or individually “Client”).  She added herself as an authorized user on two credit cards belonging to a Client, used two other credit cards issued to a Client’s employees, and wrote checks and sent electronic funds transfers out of the Clients’ accounts.  MIRANDA used the credit cards, the checks, and electronic funds transfers to make payments to a cosmetic surgeon, her children, and others, and to pay for expenses such as tuition, travel, her wedding, an anniversary party, and luxury items from Jimmy Choo.  To conceal the Client funds that she had stolen and spent, MIRANDA transferred funds between accounts belonging to different Clients.

As a part of this scheme, MIRANDA misappropriated approximately $4 million.  

*                *                *

MIRANDA, 50, of Massapequa, New York, is charged with one count of wire fraud, which carries a maximum penalty of twenty years in prison, and one count of bank fraud, which carries a maximum penalty of thirty years in prison, and one count of aggravated identity theft, which carries a mandatory penalty of two years in prison to be served consecutive to any other term of imprisonment. 

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

Mr. Williams praised the outstanding work of the USPIS in this investigation.

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

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that ROBERT BERNARDI, the founder, and former Chief Executive Officer of the Virginia-based email security company GigaMedia Access Corporation, d/b/a GigaTrust (“GigaTrust”), pled guilty today in Manhattan federal court in connection with a scheme to defraud investors and lenders of millions of dollars through false and misleading misrepresentations, including fabricated bank statements and audit reports, and by impersonating a purported customer, auditor, and GigaTrust lawyer.  U.S. District Judge Paul G. Gardephe accepted the defendant’s guilty plea.

U.S. Attorney Damian Williams said:  “Robert Bernardi, founder and former CEO of Gigatrust, a purported market-leading provider of cloud-based content security solutions, used the prolific reputation of his company to secure upwards of $50 million in loans and investments.  But, as he admitted today, Bernardi’s representations to lenders and investors were just a house of cards built on a series of lies.”   

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

From in or about 2016 through at least in or about 2019, GigaTrust was a private company headquartered in Virginia that purported to be a market-leading provider of cloud-based content security solutions.  BERNARDI founded GigaTrust and served as its CEO, while NIHAT CARDAK and SUNIL CHANDRA were GigaTrust’s CFO and Vice President of Business Development, respectively.  The defendants devised a scheme to defraud investors and lenders by (a) fabricating and disseminating false and misleading bank account statements that overstated GigaTrust’s cash deposits; (b) fabricating and disseminating false and misleading audit materials that purported to have been issued by GigaTrust’s auditors and overstated GigaTrust’s performance; (c) forging and disseminating a false and misleading letter purporting to be from GigaTrust’s New York-based counsel; and (d) impersonating or causing others to impersonate a purported customer and auditor of GigaTrust on telephone calls with a prospective lender. 

Specifically, BERNARDI sent fabricated audit materials to a New York-based investment firm, and BERNARDI and CARDAK used fabricated bank statements to obtain multiple rounds of loans and investments for GigaTrust, worth millions of dollars.  After a New York-based bank (“Bank-1”), which had loaned GigaTrust $25 million, declared that GigaTrust had defaulted on the terms of its loan agreement, BERNARDI and CARDAK induced additional investments in GigaTrust through, among other things, forging a letter purporting to be from GigaTrust’s New-York based counsel.  Shortly thereafter, while negotiating another $25 million deal with a lender (“Lender-1”), BERNARDI and CARDAK devised a scheme to impersonate a GigaTrust customer and auditor on requested diligence calls, which induced Lender-1 to make a $25 million loan to GigaTrust.  BERNARDI recruited CHANDRA to pose as one of GigaTrust’s alleged customers on a call with Lender-1.  BERNARDI and CARDAK also fabricated bank statements and sent them to Lender-1 right before closing the $25 million deal. 

GigaTrust filed for Chapter 7 bankruptcy protection in the District of Delaware on or about November 27, 2019.

*                *                *

BERNARDI, 68, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison, one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison, and one count of conspiracy to commit wire fraud affecting a financial institution, which carries a maximum sentence of 30 years in prison. 

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

Mr. Williams praised the outstanding investigative work of the Federal Bureau of Investigation in this case.  Mr. Williams further thanked the Securities and Exchange Commission, which has filed a civil enforcement action against the defendants, for its cooperation and assistance in this investigation. 

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Peter J. Davis and Emily A. Johnson are in charge of the prosecution.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that OSCAR VALDEZ-GARCIA, a/k/a “Pony,” an assassin for La Organización de Narcotraficantes Unidos (“La ONU”), was sentenced by U.S. District Judge Jesse M. Furman to 40 years in prison.  VALDEZ-GARCIA previously pled guilty to participating in a racketeering conspiracy, participating in a narcotics conspiracy, and participating in conspiracies to murder three people in aid of racketeering.  

U.S. Attorney Damian Williams said: “Oscar Valdez-Garcia murdered three people on behalf of a brutal drug cartel.  His killings were depraved and despicable.  In one instance, Valdez-Garcia and another gunman shot their victim, a double-amputee who was sitting in his wheelchair, 24 times in front of the victim’s daughter.  Today Oscar Valdez-Garcia was rightly sentenced to 40 years in prison for his horrific crimes.”

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

VALDEZ-GARCIA was a member and enforcer of La ONU, a criminal enterprise involved in the distribution of thousands of kilograms of cocaine, including cocaine that was sent from Puerto Rico to New York. Cocaine supplied by La ONU was distributed in New York City, including out of a daycare center in the Bronx, New York.  Members and associates of La ONU also engaged in acts of violence, including murder, to protect and expand the enterprise’s criminal operations and in connection with rivalries with other criminal organizations.

As an assassin for La ONU, VALDEZ-GARCIA participated in the murder of at least three people in 2006. Those murders involved heinous and brazen acts of violence.  Specifically:

On June 23, 2006, in San Juan, Puerto Rico, VALDEZ-GARCIA shot and killed Ken Gonzalez-Rodriguez and Jean Adorno-Caballero on the orders of a senior member of La ONU because of the victims’ involvement in a drug robbery. On the day of the murders, VALDEZ-GARCIA asked the victims if they could give him a ride and he climbed into the backseat of their car. VALDEZ-GARCIA then asked to pull the car over and shot the victims four times each. VALDEZ-GARCIA then fled the scene and put the gun in a nearby trash can. The victims tried to flee to safety after being shot in the car, but soon collapsed and were left on the road and sidewalk to die.

On December 28, 2006, in San Juan, Puerto Rico, VALDEZ-GARCIA and another gunman shot and killed Israel Crespo-Cotto on the orders of a senior member of La ONU, because Crespo-Cotto and his wife were suspected of cooperating with federal authorities. Crespo-Cotto, a double amputee who lost both his legs to diabetes, was killed in front of his daughter while sitting in his wheelchair on his balcony. He was shot 24 times.

*                *                *

In addition to the prison term, Judge Furman sentenced VALDEZ-GARCIA, 40, of Puerto Rico, to three years of supervised release.

Mr. Williams praised the investigative work of the U.S. Postal Inspection Service, the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the New York City Police Department.  Mr. Williams also thanked the United States Attorney’s Office in the District of Puerto Rico and the Puerto Rico Police Department for their support in this ongoing investigation.

The prosecution is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Jamie E. Bagliebter, Peter J. Davis, Jordan L. Estes, Jacob R. Fiddelman, Lara Pomerantz, Justin V. Rodriguez, and Andrew Thomas are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that STEVEN SHORT, the former head of Florida-based E.M. Systems & Services, LLC and affiliated companies (collectively, “E.M. Systems”), pled guilty today to one count of conspiracy to commit wire fraud and bank fraud, in connection with his participation in a scheme to fraudulently obtain credit-card-processing services for his deceptive Florida-based telemarketing operation, through a California-based company called CardReady LLC (“CardReady”).  SHORT pled guilty today by videolink, before U.S. District Judge Loretta A. Preska.  His sentencing is scheduled for December 7, 2022. 

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

SHORT and his co-conspirators fraudulently secured access to credit-card-processing services for SHORT’s underlying telemarketing scheme. From about 2012 through 2015, SHORT and E.M. Systems generated over $19 million from thousands of customers who received cold calls promising to reduce their overall debt burdens in exchange for fees of up to $1,495.  The telemarketing operation resulted in hundreds of complaints by customers of fraud and deceptive tactics, and requests for millions of dollars in refunds and chargebacks.  Credit-card-processing companies prohibit the processing of credit-card charges for purported “debt consolidation” and “interest rate reduction” services. SHORT and his co-conspirators fraudulently subverted those prohibitions using CardReady, which functioned as a sales agent engaged in the business of securing credit-card payment-processing services.  To execute this fraud, SHORT and others created dozens of sham merchant accounts and false merchant applications, concealing the true nature of SHORT’s telemarketing operation, and defrauding an associated credit-card-processing company and a federally insured bank into processing more than $19 million in payments for the scheme.

SHORT controlled E.M. Systems.  Beginning in 2012, SHORT sought to use E.M. Systems to carry out a telemarketing scheme targeting people with outstanding debt, and to offer them purported financial services.  In order to charge for such purported services via credit cards, SHORT sought access to the credit-card-processing market through CardReady, a Los-Angeles based company acting as a sales agent in the credit-card-processing industry.  As part of its business as a sales agent, CardReady found merchants who wanted credit-card-processing services, such as SHORT, and submitted merchant applications on behalf of those merchants to a Manhattan-based Independent Sales Organization (the “New York ISO”).  The New York ISO then evaluated the merchant applications, and referred acceptable merchant accounts up the chain to a payment processor (“Payment Processor-1”) and a bank (“Bank-1”).  Bank-1 and Payment Processor-1, in turn, processed payments to merchants for purchases by customers who had used credit cards.  Under E.M. Systems’ deal with CardReady, CardReady kept approximately one-third of the credit card sale transactions of SHORT and E.M. Systems, in exchange for providing them access to the credit card processing network.  

From approximately 2012 through 2015, SHORT and E.M. Systems carried out a telemarketing scheme in which they used telemarketers to cold-call consumers, targeting consumers with outstanding credit card debt.  The cold-callers offered the customers services, including debt consolidation and interest-rate reduction on their debts, which were prohibited by the applicable guidelines from Bank-1 and associated processing entities (the “Guidelines”), and which — as SHORT knew — would produce chargebacks from dissatisfied customers far in excess of the number and rate of chargebacks permitted under the Guidelines.

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

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

*                *                *

SHORT, 45, of Tampa, Florida, pled guilty to Count One of the Superseding Indictment, which carries a maximum sentence of 30 years in prison, and a maximum fine of $1 million or twice the gross gain or loss from the offense.

Also charged in the superseding Indictment is Brandon Becker, 51, of Los Angeles, California, whose trial is scheduled to begin on November 14, 2022 before Judge Preska.  Becker is presumed innocent unless and until proven guilty.

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

Mr. Williams praised the extraordinary work of the FBI and thanked the Federal Trade Commission for its assistance.

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

Damian Williams, the 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 U.S. Postal Service, Office of Inspector General (“USPS-OIG”), 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”), and Sharon MacDermott, Special Agent-in-Charge of the Boston-New York Field Division of the U.S. Social Security Administration Office of Inspector General (“SSA-OIG”), announced today charges against OSCAR ABREU, RAFAEL GRULLON, and ALDO PALOMINO, JR., in connection with their participation in a conspiracy to receive bribes and steal hundreds of pieces of mail linked to a COVID-19 benefits scheme that sought to obtain millions of dollars in fraudulent unemployment benefits from the New York State Department of Labor (“NYS DOL”).  OSCAR ABREU was arrested yesterday morning in White Plains, New York and was presented later that day before United States Magistrate Judge Paul E. Davison.  RAFAEL GRULLON and ALDO PALOMINO, JR. were arrested this morning in Queens, New York, and were presented this afternoon before Magistrate Judge Davison.

U.S. Attorney Damian Williams said:  “As alleged, the defendants accepted bribes and stole hundreds of pieces of mail, abusing the public trust placed in them as employees of the U.S. Postal Service and enabling the perpetration of a multi-million-dollar scheme to obtain fraudulent COVID-19 unemployment benefits.  My Office and our partners in law enforcement will continue to hold accountable the individuals who defraud government benefit programs as well as anyone else who enables them to do so."

USPIS Inspector in Charge Daniel B. Brubaker said:  “It is a sad day when postal employees allegedly aid other conspirators to commit identify theft.  Their actions affected hundreds of innocent victims by enabling their fellow criminals to illegally receive Covid-19 unemployment benefits through the U.S Mail. These Letter Carriers have betrayed the public and showed a total disregard for honesty and the public trust that was placed with them.  Thankfully however, these instances are few and far between, as the hard-working men and women of the U.S. Postal Service continue to deliver mail with pride and integrity on a daily basis to every doorstep in the nation. Customers should know, no matter where crime is found, Postal Inspectors and their law enforcement partners will bring the perpetrators to justice. I would like to thank our law enforcement partners for their dedication and hard work on this case.”

USPS-OIG Special Agent-in-Charge Matthew Modafferi said: “The Special Agents of the USPS OIG will vigorously investigate Postal Service employees who comprise their integrity for personal gain. This case serves as an excellent example of the successful collaboration between the USPS OIG, our law enforcement partners and the U.S. Attorney’s Office to pursue and prosecute Postal Service employees involved in criminal activity. The U.S. Postal Service, Office of Inspector General would like to thank our law enforcement partners and the Department of Justice for their dedication and efforts in this investigation.”

DOL-OIG Special Agent-in-Charge Jonathan Mellone said:  “An important mission of the Office of Inspector General is to investigate allegations relating to Unemployment Insurance Fraud. We will continue to work with our law enforcement partners to investigate these types of allegations.”

SSA-OIG Special Agent-in-Charge Sharon MacDermott said:  “Today’s arrest results from our collective law enforcement efforts to pursue those who have devised schemes to defraud federal benefit programs and taxpayers of much needed resources by misusing identities of innocent people.  I thank the U.S. Postal Inspectors, U.S. Postal Service OIG, Homeland Security Investigations, and the Department of Labor OIG for their major efforts leading to these arrests. I also thank the U.S. Attorney’s Office for their pursuit of justice in this matter.”

As alleged in the Complaints filed yesterday and today in White Plains federal court:[1]

From at least in or about July 2020 to in or about December 2020, OSCAR ABREU, RAFAEL GRULLON, and ALDO PALOMINO, JR., while employed as letter carriers with the U.S. Postal Service and working in Queens, New York, accepted cash bribe payments to intercept and steal mail sent by the NYS DOL to specific addresses along their assigned postal routes.  ABREU was first approached by a co-conspirator (“CC-1”) in or about mid-2020 and agreed to accept $200 for every NYS DOL envelope he intercepted and turned over to CC-1.  The payment later increased to $500 per NYS DOL envelope, and, at CC-1’s request, ABREU eventually recruited two more letter carriers, GRULLON and PALOMINO, JR.  CC-1 agreed to pay $200 per NYS DOL envelope that GRULLON and PALOMINO, JR. intercepted, $100 of which ABREU retained.

The stolen NYS DOL mail was linked to a scheme perpetrated by CC-1 and others to obtain COVID-19 unemployment benefits through the fraudulent filing and verification of benefit claims using the names and social security numbers of hundreds of other individuals.  The scheme required numerous addresses to which CC-1 and her co-conspirators could direct NYS DOL mailings related to the fraudulent claims.  Law enforcement agencies were first alerted to the scheme after CC-1 and another co-conspirator, CC-2, fled a Yonkers hotel in December 2020, leaving behind in their previously occupied room over 700 pieces of NYS DOL mail, containing, among other items, benefit debit cards.  The stash of stolen NYS DOL mail was tied to over 500 unemployment benefit claims seeking in excess of $16 million in benefits, approximately $3 million of which had already been disbursed by December 2020.

*                *                *

OSCAR ABREU, 41, of South Ozone Park, New York, RAFAEL GRULLON, 40, of Manhattan, and ALDO PALOMINO, JR., 30, of Long Island City, New York, are charged with conspiracy to commit theft and receipt of stolen mail, which carries a maximum sentence of five years in prison; theft of mail by Postal officer or employee, which carries a maximum sentence of five years in prison; and conspiracy to receive bribes, which carries a maximum sentence of 15 years in prison.

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

Mr. Williams praised the outstanding work of the USPIS, the USPS-OIG, the DOL-OIG, the SSA-OIG, the NYS DOL, the City of Yonkers Police Department, Homeland Security Investigations, and the New York City Police Department.  Mr. Williams noted that the investigation is ongoing.

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

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that ARIEL TAVAREZ, a/k/a “A,” a/k/a “Mike,” was sentenced to 264 months in prison in connection with his conspiring to distribute heroin, cocaine, fentanyl, and a fentanyl analogue, and to distributing narcotics that caused the 2018 death of Colin Kroll, the co-founder of the video hosting service Vine and the trivia game application HQ Trivia.  United States District Judge Katherine Polk Failla imposed yesterday’s sentence.

U.S. Attorney Damian Williams said:  “Ariel Tavarez was the leader of Mike’s Candyshop, an illegal on-demand drug delivery service that served deadly narcotics directly to customers in New York City. At Tavarez’s direction, a Mike’s Candyshop courier delivered a fatal dose of heroin laced with a fentanyl analogue to Colin Kroll, co-founder of Vine and HQ Trivia. Along with our law enforcement partners, we will continue to treat overdose deaths as crime scenes, and bring those responsible to justice, as in this case. Tavarez’s lengthy sentence of 22 years in federal prison underscores the grave nature of his conduct, and the devastating harm that dealing deadly, unregulated fentanyl can inflict.”

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

TAVAREZ was the leader of a drug trafficking organization (the “DTO”) that engaged in a drug delivery service, which identified itself as “Mike’s Candyshop.”  The DTO delivered heroin and cocaine (sometimes laced with fentanyl and a fentanyl analogue) on demand to customers in New York City, and distributed numerous kilograms of heroin and cocaine throughout the course of the conspiracy.  Mike’s Candyshop generally operated seven days per week, from approximately 6:00 p.m. to 12:00 a.m., with the exception of major holidays such as Thanksgiving, New Year’s Eve, and Labor Day. 

Customers of the DTO placed delivery orders via text message to a centralized phone number (the “Candyshop Number”).  The operator of the Candyshop Number was usually TAVAREZ.  Using the Candyshop Number, TAVAREZ accepted customer orders and subsequently arranged for a courier working for the DTO to deliver the narcotics to the customer, usually within hours of the customer texting his or her order to the Candyshop Number.  Certain of the DTO members, including Christian Baez, Luis Meson, a/k/a “Sito,” Gregoris Martinez, a/k/a “Greg,” Kevin Grullon, a/k/a “Kev,” a/k/a “JB,” and Jeffrey Urena, a/k/a “Jeff,” a/k/a “Jay,” served as couriers for the DTO, and regularly delivered and sold narcotics to the DTO’s customers in hand-to-hand drug transactions coordinated through the Candyshop Number. 

The DTO stored heroin, cocaine, a fentanyl analogue, and cash from drug sales in various stash locations maintained by the DTO, including in Brooklyn, New York.  In an effort to avoid law enforcement detection, the DTO sold only to customers who had been referred by existing customers, periodically changed the Candyshop Number, used coded language to discuss narcotics, and delivered narcotics directly to customers at locations specified by the customer.  As a means of marketing its cocaine, and to ensure that the DTO’s customers knew the cocaine provided by the couriers belonged to the DTO, the DTO sold its cocaine in vials sealed with different colored tops.

TAVAREZ, the leader of the DTO, used threats of violence, including with firearms, against other members of the DTO to maintain order and eliminate competition from within the organization.  

On or about December 16, 2018, Colin Kroll, a customer of the DTO, died of a drug overdose in New York, New York.  The narcotics that caused Kroll’s death – cocaine, heroin, fentanyl, and a fentanyl analogue – were purchased from Mike’s Candyshop on the evening of December 14, 2018. 

*                *                *

TAVAREZ, 41, previously pled guilty to one count of conspiring to distribute heroin, cocaine, fentanyl, and a fentanyl analogue, the use of which resulted in the death of Colin Kroll on or about December 16, 2018. 

Baez, Meson, Martinez, Grullon, and Urena each previously entered a plea of guilty to participating in the Mike’s Candyshop narcotics trafficking conspiracy.  Martinez was sentenced on June 29, 2021, to 72 months in prison; Meson was sentenced on September 7, 2021, to 108 months in prison; Urena was sentenced on October 6, 2021, to 40 months in prison; and Grullon was sentenced on October 13, 2021, to 60 months in prison.  Baez has not yet been sentenced.

Mr. Williams praised the outstanding investigative work of Homeland Security Investigations, the Drug Enforcement Administration, the New York City Police Department, and the Organized Crime Drug Enforcement Task Force.  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.

The prosecution is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Mollie Bracewell, Nicholas W. Chiuchiolo, and Aline R. Flodr are in charge of the prosecution. 

Damian Williams, the United States Attorney for the Southern District of New York, AnnMarie Highsmith, Executive Assistant Commissioner for U.S. Customs and Border Protection’s (“CBP”) Office of Trade, and Francis Russo, Director, CBP Field Operations New York, announced today that the United States has filed and settled a civil lawsuit against Luchiano Visconti Loutie LLC d/b/a Luchiano Visconti (“LUCHIANO VISCONTI”), a New York-based company that imports and sells men’s apparel to retailers, as well as its manager, SASHA HOURIZADEH (“HOURIZADEH”). The settlement resolves claims that LUCHIANO VISCONTI and HOURIZADEH (collectively, “Defendants”) defrauded the United States by falsely underreporting to CBP the value of apparel imported from overseas in order to avoid paying customs duties owed on the goods. 

U.S. Attorney Damian Williams said:  “Luchiano Visconti and Hourizadeh engaged in a fraudulent scheme to cheat the Government of customs duties owed by falsely reporting the value of the apparel brought into this country.  This Office is committed to combatting customs fraud and will continue to hold companies, as well as their executives, accountable when they mispresent the value of imported goods to evade paying legally required duties.”

Executive Assistant Commissioner AnnMarie Highsmith said:  “Trade enforcement is a priority for CBP, and this settlement serves as a great example of collaborative efforts to enforce trade laws.  The dedication of the men and women of the CBP Office of Trade, the Office of Chief Counsel, and the United States Attorney’s Office to protect a fair and competitive trade environment is vital to facilitating lawful trade.”

Under the settlement agreement approved by U.S. District Judge P. Kevin Castel, Defendants will pay $3,641,157 to the United States. As part of the settlement agreement, Defendants also made admissions regarding their conduct. LUCHIANO VISCONTI and HOURIZADEH admitted that LUCHIANO VISCONTI significantly underreported the actual value of imported menswear on entry documents filed with CBP and routinely underpaid customs duties on the menswear.  Specifically, Defendants admitted that they regularly provided their customs brokers with information and documentation, including commercial invoices, that significantly understated the true value of the imported menswear and the price actually paid for the apparel. LUCHIANO VISCONTI and HOURIZADEH also admitted that, in some instances, they made changes to invoices provided by a foreign manufacturer before providing them to a customs broker. In other instances, as acknowledged by Defendants, foreign manufacturers transmitted invoices that LUCHIANO VISCONTI and HOURIZADEH knew or had reason to know did not reflect the actual value and price paid for the menswear.     

As alleged in the Complaint filed in Manhattan federal court:

From December 2013 through August 2019, LUCHIANO VISCONTI and HOURIZADEH defrauded the United States by materially underreporting to CBP the value of imported apparel.  Defendants knowingly submitted, or caused the submission of, customs entry forms and associated invoices to CBP that contained false valuations of the apparel.

In some cases, HOURIZADEH altered commercial invoices issued by a foreign manufacturer so that the invoices reflected lower and false prices. In other instances, a foreign manufacturer transmitted two categories of invoices to LUCHIANO VISCONTI and HOURIZADEH that, together, reflected the actual price paid for the apparel. The first category of invoices identified specific quantities and prices for the imported apparel. These invoices, in sum, reflected a substantially lower price than what LUCHIANO VISCONTI actually paid for the imported goods. The second category of invoices were for services relating to the production of the Menswear, such as “pre-production” services, “patent” services, and “designer” services. In reality, and as reflected in LUCHIANO VISCONTI’s own banking records, these invoices generally reflected an additional amount paid by LUCHIANO VISCONTI for the same shipment of apparel. Defendants, however, routinely failed to provide their customs broker with this second category of invoices, which constituted a substantial portion of LUCHIANO VISCONTI’s payments for the apparel.   

In the settlement agreement, LUCHIANO VISCONTI and HOURIZADEH admitted, acknowledged, and accepted responsibility for the following conduct:

• From December 2013 through August 2019, LUCHIANO VISCONTI imported menswear from manufacturers based outside the United States, including Turkey and China (the “Foreign Manufacturers”).

• HOURIZADEH is the LUCHIANO VISCONTI manager who is responsible for managing the importation of the menswear and all customs entry issues, including the provision of relevant and necessary information and documentation to LUCHIANO VISCONTI’s customs brokers who prepared and submitted the entry summaries to CBP. 

• LUCHIANO VISCONTI’s customs brokers used commercial invoices and other information provided by LUCHIANO VISCONTI and HOURIZADEH to determine the value of the menswear to declare to CBP and to calculate the amount of the customs duties owed. LUCHIANO VISCONTI and HOURIZADEH knew that the customs brokers would rely on the information and invoices when preparing the entry summaries submitted to CBP.

• LUCHIANO VISCONTI and HOURIZADEH regularly provided LUCHIANO VISCONTI’s customs brokers with information and documentation, including commercial invoices, that significantly understated the true value of the imported menswear and the price actually paid by LUCHIANO VISCONTI to the Foreign Manufacturers for the menswear.

• LUCHIANO VISCONTI did not pay over $1.8 million in customs duties that it was obligated to pay on the menswear.

*                *                *

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

Mr. Williams thanked U.S. Department of Homeland Security, Homeland Security Investigations, and CBP for their investigative efforts and ongoing support and assistance with the case. 

This case is being handled by the Office’s Civil Frauds Unit. Assistant United States Attorney Charles S. Jacob is in charge of the case.                                   

Damian Williams, United States Attorney for the Southern District of New York, Frank A. Tarentino III, the Special Agent-in-Charge of the New York Field Office of the Drug Enforcement Administration (“DEA”), and Keechant Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced today that CESAR VASQUEZ, a/k/a “Aguila,” a/k/a “Primo,” and MICKY COLON, were arrested and charged in a nine-count Complaint with trafficking more than 50 firearms, along with methamphetamine and fentanyl, from Ohio to New York. VASQUEZ and COLON will be presented before United States Magistrate Judge Robert W. Lehrburger in Manhattan federal court later today.

U.S. Attorney Damian Williams said:  “Illegal firearms, and especially military-style assault weapons, like many of those allegedly trafficked by these defendants, pose a dire threat to all New Yorkers. These weapons of war are designed to kill, and absent intervention from the dedicated federal, state, and local law enforcement agents who investigated this case, these guns could have been loose on the streets of New York City. That many of these guns were sold alongside narcotics only underscores the connection between drug trafficking and gun violence. We will continue to work with our dedicated partners at the DEA and NYPD to aggressively dismantle those networks that enable gun violence and endanger the lives of New Yorkers.”

DEA Special Agent-in-Charge Frank Tarentino said:  “Fifty guns headed to criminal networks in New York were intercepted, preventing the potential for at least 50 instances of gun-related violence.  These arrests and seizures clearly demonstrate DEA’s resolve to safeguarding our communities from the threats of drugs and guns.  I would like to commend the tireless work and countless hours of collaboration by the New York Strike Force and U.S. Attorney’s Office Southern District of New York.”

NYPD Commissioner Keechant Sewell said:  “The NYPD’s fight against the flow of illegal guns and narcotics into our city is at the forefront of our public-safety mission.  The defendants in this case showed a callous disregard for human life, and we will never waver in our commitment to protect the people we serve – no matter where the threats to them originate.  I want to thank the U.S. Attorney’s Office for the Southern District of New York, the DEA’s New York Division, and every local, state, and federal agency working with the Organized Crime Drug Enforcement Task Force for their efforts in this important investigation.”

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

From at least June 2022 until their arrests today, VASQUEZ and COLON were part of a gun and narcotics trafficking operation that moved dozens of guns, alongside methamphetamine and fentanyl, from the Columbus, Ohio area to the Bronx. On five separate occasions, VASQUEZ, COLON, and their co-conspirators sold, or attempted to sell, firearms to undercover law enforcement agents.  During three of those gun incidents, VASQUEZ, COLON, and their co-conspirators also sold, or attempted to sell, the undercover agents narcotics.

In total, VASQUEZ, COLON, and their co-conspirators sold law enforcement agents approximately 51 firearms, approximately 196 grams of methamphetamine, and a “sample” of fentanyl as a precursor to later fentanyl transactions. Included in the firearms that VASQUEZ, COLON, and their co-conspirators sold were more than a dozen assault rifles; other military-style weapons, including a semiautomatic shotgun and assault-type weapons that fire pistol rounds; and numerous handguns.

VASQUEZ and COLON were arrested early this morning in the Bronx, when they arrived from Ohio, bringing 23 guns and fentanyl into the city. Photos of some the firearms that VASQUEZ, COLON, and his co-conspirators sold are below.

Firearms Sold on June 4, 2022

Firearms Sold on June 17, 2022

Firearms Sold on June 23, 2022

Firearms Sold on July 6, 2022

Firearms Brought to the Bronx on August 11, 2022

VASQUEZ, 19, of Columbus, Ohio, has been charged in Count One with conspiring to traffic firearms, which carries a maximum sentence of 15 years in prison; in Count Two with trafficking firearms, which carries a maximum sentence of 15 years in prison; in Count Three with attempting to traffic firearms, which carries a maximum sentence of 15 years in prison; in Count Four with transferring a firearm for use in a drug trafficking crime, which carries a maximum sentence of 15 years in prison; in Count Five with attempting to transfer a firearm for use in a drug trafficking crime, which carries a maximum sentence of 15 years in prison; in Count Six with illegally dealing firearms, which carries a maximum sentence of five years in prison; in Count Seven with illegally transporting and distributing firearms, which carries a maximum sentence of five years in prison; in Count Eight with conspiring to traffic in methamphetamine and fentanyl, which carries a maximum sentence of 40 years in prison and a statutory minimum sentence of five years in prison; and in Count Nine with using and carrying firearms while engaging in the narcotics trafficking conspiracy, which carries a maximum sentence of life in prison and a statutory minimum sentence of five years in prison.

COLON, 21, of Columbus, Ohio, is charged in Count One, Count Three, and Counts Five through Nine of the Complaint. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of these defendants would be determined by a judge.

Mr. Williams praised the outstanding investigative work of the Organized Crime Drug Enforcement Task Force (“OCDETF”) New York Strike Force.  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 United States Attorney’s Office for the Western District of Pennsylvania for its assistance in the case.

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Andrew Jones and Christy Slavik 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 should be treated as an allegation.

Damian Williams, United States Attorney for the Southern District of New York, announced today that ROBERT LENARD BOOTH, a/k/a “Trevor Nicholas,” was sentenced to ten years in prison for defrauding investors of almost $2 million and laundering the proceeds as part of an international boiler room scheme.  Back in April, a jury convicted BOOTH of conspiracies to commit securities fraud, wire fraud and money laundering.  U.S. District Judge Jed S. Rakoff imposed the sentence in Manhattan federal court.

U.S. Attorney Damian Williams said:  “For years, Robert Lenard Booth and his co-conspirators made fraud their business.  They used elaborate paperwork and strategies for emotional manipulation to defraud individual investors, often repeatedly targeting the same victims and sometimes extracting from them their life savings.  Today’s sentence holds him accountable and sends a message to those who engage in fraud that they will face consequences.”

According to previous filings in this case and the evidence presented at trial:

Previously a resident of Brooklyn, New York, BOOTH relocated overseas and spent years defrauding investors from Thailand and Panama.  From at least June 2019 through August 2021, BOOTH ran, and conspired with others to run, a boiler room operation that sold investors nearly $2 million in securities that they never received.  Targeting their victims repeatedly by phone, BOOTH and others pretended to be licensed brokers at real Manhattan brokerages, then used high-pressure tactics to pitch stocks at alleged discount prices.  They followed up by sending the victims false documents to confirm the alleged stock purchases and trades.

Over time, the fraudsters established personal rapport with the victims and directed the victims to wire money—sometimes hundreds of thousands of dollars—to shell company accounts in New York, Hong Kong, and Singapore.  To make the payments, a number of victims spent down their savings and took out loans and mortgages.  To receive and launder the victims’ payments, BOOTH worked with other money launderers who established sham companies and then lied to banks to open U.S. bank accounts in the names of those companies.

In total, Booth’s boiler room defrauded at least 17 victims of $2,003,993.

*                *                *

On April 27, 2022, BOOTH, 68, was convicted of conspiracies to commit securities fraud, wire fraud and money laundering after a six-day jury trial before Judge Rakoff.  In addition to the prison sentence, BOOTH was sentenced to 3 years of supervised release. Orders have also been entered for $2,003,883 in restitution and $780,981.86 in forfeiture.

Mr. Williams praised the outstanding investigative work of the Special Agents of the United States Attorney’s Office, HSI, IRS-CI, and their partnership with the J5. The J5 works together to gather information, share intelligence and conduct coordinated operations against transnational financial crimes. The J5 includes the Australian Taxation Office, the Canadian Revenue Agency, the Dutch Fiscal Information and Investigation Service, Her Majesty's Revenue and Customs from the U.K. and IRS-CI from the U.S.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Andrew Jones, Jane Y. Chong, and Andrew Thomas are in charge of the prosecution.

Damian Williams, United States Attorney for the Southern District of New York, Frank A. Tarentino III, the Special Agent-in-Charge of the New York Field Office of the Drug Enforcement Administration (“DEA”), Ricky J. Patel, the Acting Special Agent-in-Charge of the New York Field Office of the Department of Homeland Security (“HSI”), and Keechant Sewell, the Commissioner of the New York City Police Department (“NYPD”), announced that BENITO BELLO, a/k/a “Zuriel Ayala Rodriguez” was charged in a criminal complaint today with possession of fentanyl and cocaine with the intent to distribute them.  BELLO was arrested yesterday on an outstanding warrant in Massachusetts and has been charged by complaint in the Southern District of New York.  BELLO will be presented before United States Magistrate Judge Robert W. Lehrburger in Manhattan federal court at a later date.

U.S. Attorney Damian Williams said:  “As alleged, the defendant was trafficking huge quantities of fentanyl from his home in the Bronx—a home he shared with his minor children and a home that was next door to a day care center serving infants as young as six weeks old.   Thanks to our law enforcement partners, approximately 14 kilograms of this deadly drug that is fueling the opioid epidemic in our city will never flood the streets.”

DEA Special Agent-in-Charge Frank Tarentino said:  “Seventy five percent of all overdoses and poisonings involve an opioid like heroin and fentanyl.  This seizure and arrest have saved lives and shut down a multi-million dollar drug mill located next door to a children’s day care.  DEA works with our law enforcement partners every day to make this city and country safer and healthier.  I applaud the collaboration and hard work by our law enforcement partners.”

HSI Acting Special Agent-in-Charge Ricky J. Patel said:  “The dangers of fentanyl are well known.  As drug traffickers become more brazen, displaying complete disregard for human life, the plague of addiction continues to tear apart families and communities not only in New York, but throughout the country.  Yesterday’s enforcement action took approximately fourteen kilograms of this deadly narcotic not only off the street, but removed it from a residence mere steps from a day care center for young children.  HSI, along with our law enforcement partners, will never cease in supporting our local communities in the fight against drug traffickers.”

NYPD Commissioner Keechant Sewell said:  “These charges further affirm the NYPD’s unwavering commitment to ridding our city of illegal drugs. And this investigation – involving several law enforcement agencies across multiple states – is a perfect example of how focused collaboration makes us all safer. The narcotics trade wreaks havoc in our communities, and our job is to ensure that anyone who peddles this poison be brought to justice swiftly and successfully. To that end, I thank and commend the U.S. Attorney for the Southern District, the DEA’s New York Field Office, Homeland Security Investigations New York, and all of our law-enforcement partners for their outstanding work on this case.”

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

On or about January 31, 2013, the Trial Court of Massachusetts, Superior Court, issued a warrant for the arrest of BELLO, a/k/a “Zuriel Ayala Rodriguez,” for failure to appear on charges of drug trafficking, assault and battery, possession of a dangerous weapon, and negligent operation of a motor vehicle.

On or about August 10, 2022, law enforcement agents sought to arrest BELLO on the Massachusetts warrant, after law enforcement surveillance located BELLO at a particular residence in the Bronx.  The Bronx residence is located next to a day care center for children as young as six weeks old.

Law enforcement agents later searched the Bronx residence and recovered approximately 14 kilograms of fentanyl, one kilogram of cocaine, a kilogram press, a pill press, a scale, and other drug paraphernalia. Additionally, law enforcement agents recovered suspected fentanyl from a toilet in the Bronx residence, which was running as if it had been flushed.

BELLO, 44, of Lawrence, Massachusetts, is charged with possession with intent to distribute a controlled substance, which carries a maximum sentence of life imprisonment.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of DEA, HSI, and the NYPD.  Mr. Williams also praised the United States Marshals for the Southern District of New York and the New York/New Jersey Regional Fugitive Task Force. 

The case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Marguerite B. Colson is in charge of the prosecution.

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

[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint set forth 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, 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 L. Sewell, Police Commissioner for the City of New York (NYPD), announced that ABOUDULAYE KEITA, a/k/a “Abdoulaye,” MARQUISE DESHAUN AUSTIN, CEDRIC KEYON CHRISTOPHER, JR., and JAILYN HILLIARD were indicted yesterday with conspiracy to commit firearms offenses and gun trafficking, in connection with their involvement in a scheme to illegally obtain and transport firearms from Arkansas for resale to residents of New York. KEITA was also charged with interstate travel with intent to engage in gun trafficking. The case is assigned to U.S. District Judge Loretta A. Preska.

AUSTIN was arrested on March 11, 2022 in Arkansas and the complaint charging AUSTIN was unsealed yesterday in the Southern District of New York. CHRISTOPHER and HILLIARD were charged by complaint and arrested last month in Arkansas. KEITA is in state custody on unrelated charges and is expected to be transferred into federal custody.

U.S. Attorney Damian Williams said:  “As alleged, the defendants are responsible for trafficking dozens of guns across state lines, including guns that were later used to commit violent acts extending all the way from Arkansas to New York. Let today’s arrests make clear that we will not tolerate gun traffickers and the devastating harm they inflict on our communities.”

ATF Special Agent-in-Charge John DeVito said:  “People who flood illegal guns on our streets are drivers of violent crime and put communities in danger. This case highlights how ATF’s National Integrated Ballistic Information Network is a crucial tool in the investigation and prosecution of gun crimes because it connects individual firearms to the violent criminal offenses in which they are used.  ATF will continue to work with our partners to identify and disrupt the schemes used to put illegal firearms into the hands of violent criminals and on our streets. Thank you to the partnership and hard work of the men and women of Little Rock Police Department’s Gun Crimes Unit and ATF NY’s Crime Gun Intelligence Center.”

NYPD Commissioner Keechant L. Sewell said:  “The interstate flow of illegal guns into New York City is a grave threat to the public safety of everyone we serve.  Each gun seized is another step forward in our tireless pursuit to rid our streets of these deadly weapons – and anyone who traffics them must be held fully accountable. I want to thank the U.S. Attorney’s Office for the Southern District of New York, the ATF’s New York Field Division, and all of our law-enforcement partners who worked on this critical case.”

According to the allegations in the Indictment and the Complaints[1]:

From at least October 2020 through December 2021, the defendants and others conspired to illegally purchase and traffic firearms across state lines. AUSTIN, CHRISTOPHER and HILLIARD each acted as straw purchasers to buy firearms from licensed gun shops in Arkansas—a total of at least 73 firearms—and then sold these firearms illegally to KEITA and others with the understanding the firearms would then be transported to New York. To date, nine of the defendants’ firearms have been recovered in the Bronx and Brooklyn, in addition to six recoveries in California and five in Arkansas.

Through lead information collected and maintained by the National Integrated Ballistic Information Network (NIBIN), casings from the recovered firearms have been connected to a shooting that took place in the Bronx on June 20, 2021 and shootings that took place in Harlem on July 5, 2021 and October 6, 2021. Casings from one firearm recovered in Arkansas were found at the scene of a September 3, 2021 homicide in Little Rock.

*                *                *

KEITA, AUSTIN, CHRISTOPHER, and HILLIARD are charged with one count of conspiracy to commit firearms offenses, which carries a maximum penalty of five years in prison, and one count of gun trafficking, which also carries a maximum penalty of five years in prison. KEITA is also charged with one count of interstate travel with intent to commit gun trafficking, which carries a maximum penalty of ten years in prison.

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

Mr. Williams praised the outstanding investigative work of the ATF and the NYPD. Mr. Williams also thanked local law enforcement partners in Arkansas, the ATF’s Little Rock Field Office, and the U.S. Attorney’s Office in the Eastern District of Arkansas for their assistance.

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

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

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

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Keechant L. Sewell, Police Commissioner for the City of New York (“NYPD”), announced today that JEAN CARMONA was charged with racketeering conspiracy, murder in aid of racketeering, committing violent crimes in aid of racketeering, and firearms offenses. As alleged, CARMONA is a member of a street gang known as “the 200s,” operating in and around upper Manhattan. On January 31, 2019, CARMONA and other 200s members traveled to another neighborhood, murdered Roberto Vasquez and attempted to murder a second individual. Vasquez and the second victim were innocent bystanders mistaken for rival gang members. CARMONA was in custody in Bergen County, New Jersey and was transferred into federal custody today. He will be presented this afternoon in Manhattan federal court.  The case has been assigned to United States District Judge Paul G. Gardephe.

U.S. Attorney Damian Williams said:  “Carmona allegedly participated in a callous, gang-related murder of an innocent bystander whose only offense was wanting to go home. Carmona’s callous actions not only took Roberto Vasquez’ life, but also led to a second innocent bystander being shot as well.  We hope that today’s charges bring some measure of comfort to the families of the victims and make clear that this Office and our law enforcement partners will continue to be relentless in our pursuit of anyone who takes another person’s life.”

FBI Assistant Director Michael J. Driscoll said:  “As alleged, Mr. Carmona is a member of the 200’s street gang who participated in the 2019 murder of Roberto Vasquez, an innocent victim mistaken for a rival gang member, in Upper Manhattan.  Our communities deserve far better than to live in fear of criminal gangs.  As the scourge of gang violence continues to plague the streets of our city, the FBI and our partners with the NYPD will continue to be relentless in our pursuit of the criminals responsible for these violent acts.”

NYPD Commissioner Keechant L. Sewell said:  “Today’s charges demonstrate that as long as people are involved in the violence and other illegal activities so often associated with gang life, the NYPD and our law-enforcement partners will be relentless in holding them fully accountable. I want to commend and thank our colleagues in the FBI and the U.S. Attorney’s Office for the Southern District of New York for their hard work in furthering this cause.”

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

From at least in or about 2017 up to and including June 2022, in the Southern District of New York and elsewhere, JEAN CARMONA was a member of the 200s street gang. In order to fund the gang, protect its territory, and promote its standing, members of the 200 engaged in, among other things, narcotics trafficking and other acts of violence, including murder. 200 members sold marijuana in the gang’s territory and engaged in shootings as part of their gang membership.  In particular, on January 31, 2019, CARMONA participated in the shooting and murder of Roberto Vasquez and the non-fatal shooting of a second individual, who were innocent bystanders mistaken for rival gang members, in the vicinity of 158th Street and Broadway Avenue, in Manhattan, New York.

*                *                *

CARMONA, 31, is charged with one count of racketeering conspiracy, which carries a maximum term of life in prison; one count of murder in aid of racketeering, which carries a mandatory minimum term of life in prison or death; one count of causing death through use of a firearm, which carries a mandatory minimum sentence of five years in prison and a maximum of life in prison or death; one count of committing violent crimes in aid of racketeering, which carries a maximum term of 20 years in prison; and one count of carrying, brandishing, and discharging a firearm in connection with a crime of violence, which caries a mandatory minimum term of 10 years in prison and a maximum sentence of life in prison.

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

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

The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Mathew Andrews, Rushmi Bhaskaran, and Elizabeth Espinosa are in charge of the prosecution.

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that ROGER RALSTON, the CEO of DirectView Holdings, Inc. (“DirectView”), a Florida-based video surveillance and security company, pled guilty today to one count of conspiracy to commit wire fraud for defrauding elderly victims in connection with the fraudulent sale of stock and fake carbon credits as part of an international telemarketing scheme that caused nearly $16 million in losses.  RALSTON pled guilty before U.S. District Judge Jed S. Rakoff.  Co-defendants Christopher Wright and Steven Hooper previously pled guilty and were sentenced to 52 months in prison and 42 months in prison, respectively, for their roles in the fraud.

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

From in or about 2009 up to and including in or about 2015, RALSTON and other co-conspirators engaged in a scheme to defraud victims in the United Kingdom of nearly $16 million through the sale of false, fraudulent, and materially misleading investments, and to launder the proceeds of the fraud through bank accounts in the United States and foreign countries.  RALSTON and his co-conspirators used the services of telemarketing call centers to identify and cold-call potential victims, who were primarily elderly or retired individuals residing in the United Kingdom.  Over a series of telephone calls, the telemarketers persuaded victims to invest money under various false and misleading pretenses, including the promise of short-term, high-yield, no-risk returns, when in fact the investments were high-risk, illiquid, and in some instances, entirely fictitious.  Many victims were persuaded to make additional investments under the false pretense that they would not be permitted to sell their holdings until they purchased more.  In reliance on the false representations and promises, the victims wired funds to various bank accounts in the United States, including in the Southern District of New York, in the names of corporate entities controlled by RALSTON.  RALSTON then mailed and emailed documents related to the fraudulent investments, including purchase contracts and investment certificates, to the victims.  Victims who tried to sell their investments found they were unable to do so.  The victims never received a refund on their principal or any return on their investments.  

In order to conceal the nature, location, source, ownership, and control of the proceeds of the fraudulent scheme, RALSTON regularly transferred a substantial portion of the fraud proceeds from bank accounts in the United States, including in the Southern District of New York, to overseas bank accounts, including accounts in Cyprus, Switzerland, and the United Kingdom, in the names of various shell companies controlled by RALSTON’s co-conspirators.

The nature of the particular fraudulent investment vehicles being marketed to the victims changed over time.  From in or about 2009 until in or about 2011, RALSTON and his co-conspirators sold DirectView stock to the victims based on telemarketers’ false representations and promises that the shares were a no-risk, short-term investment in a debt-free company, and that the shares were likely to increase over 100 percent in value in a short period of time.  In contrast to what RALSTON represented to victims, DirectView’s annual report filed with the United States Securities and Exchange Commission for the year ending December 31, 2010, contained dire warnings about the poor fiscal health of DirectView and the risk attendant in purchasing stock, including that the company “may be forced to cease operations” due to losses and cash flow problems, and purchasers “may find it extremely difficult or impossible to resell our shares.”

From in or about 2011 until in or about 2015, RALSTON and his co-conspirators engaged in the sale of fraudulent “carbon credits.”  The boiler room callers appealed to victims by claiming that the investments would be environmentally friendly and help address the climate crisis.  “Carbon credits,” which are issued as part of governmental and voluntary regulatory regimes, are permits representing the right to emit a certain number of tons of carbon dioxide into the atmosphere. “Carbon offsets,” which are tied to particular carbon-dioxide emissions reducing projects, represent a reduction in carbon dioxide emissions, and can be purchased by individuals and companies to “offset” their or third parties’ “carbon-footprints.”  The victims were falsely promised that the carbon-related investments they purchased could be easily sold, carried no risk, and would yield a significant, short-term return.  In fact, the carbon credits and offsets that were sold to the victims were fake, and did not represent any actual carbon credits or offsets.  Ralston caused fraudulent carbon certificates to be created and sent to the victims.   

*                *                *

RALSTON, 53, of Florida, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 30 years in prison.  As part of his guilty plea, RALSTON also agreed to forfeit $15,713,621.20 and to pay restitution in the same amount to victims of the scheme.  RALSTON is scheduled to be sentenced by Judge Rakoff on December 13, 2022, at 4 p.m.

The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as RALSTON’s sentence will be determined by the judge.

Mr. Williams praised the outstanding investigative work of IRS Criminal Investigation in this case.

This case is being prosecuted by the Office’s Money Laundering and Transnational Criminal Enterprises and Complex Frauds and Cybercrime Units. Assistant U.S. Attorneys Jessica Feinstein, Olga I. Zverovich, and David Felton are in charge of the prosecution.

The United States of America has been authorized to seize an Airbus A319-100 (the Airbus) owned and controlled by sanctioned Russian oligarch Andrei Skoch, pursuant to a seizure warrant from the U.S. District Court for the Southern District of New York, which found that the airplane is subject to seizure and forfeiture based on probable cause of violation of the federal anti-money laundering laws.

According to the seizure warrant and affidavit sworn out today:

Pursuant to the International Emergency Economic Powers Act (IEEPA), the National Emergencies Act (NEA), and Executive Orders Issued by the President of the United States, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Andrei Skoch as a Specially Designated National (SDN) on or about April 6, 2018 “for being an official of the Government of the Russian Federation,” “a deputy of the Russian Federation’s State Duma,” and because of his “longstanding ties to Russian organized criminal groups, including time spent leading one such enterprise.” After Russia invaded Ukraine in 2022, OFAC issued further sanctions against Skoch and his assets. On or about March 24, 2022, OFAC designated Skoch and other members of the Duma for “support[ing] the Kremlin’s efforts to violate Ukraine’s sovereignty and territorial integrity.” On or about June 2, 2022, OFAC identified the Airbus as blocked property in which Skoch had an interest. 

Skoch is the beneficial owner of the Airbus through a series of shell companies and trusts tied to his romantic partner. After OFAC designated Skoch in or about April 2018 and continuing through in or about at least in or about 2021, U.S. dollar transactions were made to pay for the registration of the Airbus in Aruba and for aviation insurance premiums for the Airbus, each of which was a necessary expense to maintain and operate the Airbus. 

The Airbus (pictured below), bearing tail number P4-MGU and serial number 5445, is believed to be worth more than $90 million.

U.S. Attorney Williams praised the outstanding work of the FBI and U.S. Department of Commerce, Bureau of Industry and Security. The Justice Department’s National Security Division and Office of International Affairs and the U.S. Treasury Department’s Office of Foreign Assets Control provided valuable assistance in this investigation. 

Assistant U.S. Attorneys Joshua A. Naftalis and Nicholas S. Bradley for the Southern District of New York are in charge of the investigation. 

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.

Damian Williams, the United States Attorney for the Southern District of New York, Lisa O. Monaco, the Deputy Attorney General of the United States, Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Matthew S. Axelrod, Assistant Secretary of Commerce for Export Enforcement, announced today that the United States of America has been authorized to seize an Airbus A319-100 (the “Airbus”) owned and controlled by sanctioned Russian oligarch Andrei Skoch, pursuant to a seizure warrant from the U.S. District Court for the Southern District of New York, which found that the airplane is subject to seizure and forfeiture based on probable cause of violation of the federal anti-money laundering laws.

U.S. Attorney Damian Williams said:  “Today’s affidavit and warrant authorizing the seizure of Andrei Skoch’s private airplane demonstrate the Southern District’s partnership commitment with the task force to pursuing sanctioned Russian oligarchs and their blocked property.  We will continue to use every legal tool available to enforce our anti-money laundering laws and to pursue those who seek to use the U.S. financial system to violate and evade sanctions.” 

Task Force KleptoCapture Director Andrew C. Adams said:  “Once again U.S. law enforcement has demonstrated that international shell games will not suffice to hide the fruits of corruption and money laundering. Through today’s warrant, the Department of Justice lays out a roadmap for those engaged in the legitimate financial sector to follow when assessing transactions with Skoch’s laundering network, while taking steps to freeze, seize, and forfeit the fruits of his criminal activities.”

FBI Assistant Director-in-Charge Michael J. Driscoll said:  “An oligarchy is defined as a government in which a small group exercises control for their own selfish and corrupt gain.  Members of that group in Russia have long hid and disguised their illegal activities using the U.S. dollar in the process.  The sanctions levied by the U.S government and the work of this task force demonstrate to these offensively wealthy oligarchs who support Russia’s military aggression that they are not untouchable, and we are dramatically impacting their way of life.”

Assistant Secretary of Commerce for Export Enforcement Matthew S. Axelrod said:  “Today’s action demonstrates that the U.S. government will be relentless in our efforts to bring to justice those that are enabling Putin’s heinous war against Ukraine.  Coordination and collaboration between federal law enforcement and international partners is essential to effective enforcement of U.S. law, and I’m proud of our team of dedicated law enforcement professionals.”

According to the seizure warrant and affidavit sworn out today:[1]

Pursuant to the International Emergency Economic Powers Act (“IEEPA”), the National Emergencies Act, and Executive Orders Issued by the President of the United States, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) designated Andrei Skoch as a Specially Designated National (“SDN”) on April 6, 2018 “for being an official of the Government of the Russian Federation,” “a deputy of the Russian Federation’s State Duma,” and because of his “longstanding ties to Russian organized criminal groups, including time spent leading one such enterprise.”  After Russia invaded Ukraine in 2022, OFAC issued further sanctions against Skoch and his assets.  On March 24, 2022, OFAC designated Skoch and other members of the Duma, for “support[ing] the Kremlin’s efforts to violate Ukraine’s sovereignty and territorial integrity.”   On June 2, 2022, OFAC identified the Airbus as blocked property in which Skoch had an interest. 

Skoch is the beneficial owner of the Airbus through a series of shell companies and trusts tied to his romantic partner.  After OFAC designated Skoch in April 2018 and continuing through at least 2021, U.S. dollar transactions were made to pay for the registration of the Airbus in Aruba and for aviation insurance premiums for the Airbus, each of which was a necessary expense to maintain and operate the Airbus. 

The Airbus (pictured below), bearing tail number P4-MGU and serial number 5445, is believed to be worth more than $90 million.

*                *                *

Mr. Williams praised the outstanding work of the FBI and U.S. Department of Commerce, Bureau of Industry and Security.  Mr. Williams further thanked the Justice Department’s National Security Division and Office of International Affairs, and OFAC for their assistance in this investigation. 

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit and National Security and International Narcotics Unit.  Assistant United States Attorneys Joshua A. Naftalis and Nicholas S. Bradley are in charge of the investigation. 

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.

[1] The burden to prove forfeitability in a forfeiture proceeding is upon the government.

Damian Williams, the United States Attorney for the Southern District of New York, and Ricky J. Patel, Acting Special Agent in Charge of Homeland Security Investigations (“HSI”) in New York, announced today the return to the Kingdom of Cambodia of 30 antiquities which were stolen from Cambodia as part of an organized looting network and sold by antiquities dealer Douglas Latchford.  Among the antiquities returned today was a 10th Century sculpture of Skanda on a Peacock and a monumental 10th Century sculpture of Ganesha, both looted from the ancient Khmer capital Koh Ker. Cambodian Ambassador to the United States Keo Chhea received the antiquities today during a ceremony at the U.S. Attorney’s Office.

U.S. Attorney Damian Williams said:  “Today, we celebrate the return of Cambodia’s cultural heritage to the Cambodian people, and reaffirm our commitment to reducing the illicit trafficking of art and antiquities.  It is with great pleasure that we send the Skanda on a Peacock and the rest of these artworks on the final leg of their journey home.”

HSI Acting Special-Agent-in-Charge Ricky J. Patel said:  “These antiquities we return today were ripped from their country. Beyond their extraordinary beauty and craftsmanship, many are sacred artifacts pried from temples and palaces to be smuggled across borders and peddled by those seeking profit, without any regard to the intangible value they have to the people of their homeland.  For over five years, the agents and experts in HSI New York’s specialized dedicated Cultural Property, Arts and Antiquities Unit, alongside our government partners, hunted down leads, examined origin, reviewed financial records, and conducted dozens of interviews to find and recover these pieces we are returning today.  These artifacts belong to the people of Cambodia, and we are proud to participate in their recovery and their return home.”

The 30 antiquities returned to Cambodia today were the subjects of three civil forfeiture actions filed in this District. According to the civil forfeiture complaints filed in 2021 and 2022, and other documents filed in the cases:

The antiquities repatriated to Cambodia are sandstone and bronze sculptures and artifacts, ranging in age from the Bronze Age to the 12th Century, which were either removed illegally from Cambodia by looters, imported into the United States based on false statements to United States Customs and Border Protection (“CBP”), or both.

During the civil conflicts of late 20th century, statues and other artifacts were stolen from Koh Ker and other archeological sites in Cambodia and entered the international art market through an organized looting network.  Local teams of looters would first remove the statues from the original sites. The statues would then be transported to the Cambodia-Thailand border, and transferred to brokers, who would in turn transport them to dealers in Khmer artifacts located in Thailand, particularly Bangkok.  These dealers would sell the artifacts to local or international customers, who would either retain the pieces or sell them on the international art market.

Bangkok-based antiquities dealer Douglas Latchford, a/k/a “Pakpong Kriangsak” sold the antiquities to individuals in the Western art market, including the two private collectors and an American museum which were the prior owners of the pieces returned today. In 2019, Latchford was charged by this Office with wire fraud conspiracy and other crimes related to a many-year scheme to sell looted Cambodian antiquities on the international art market, primarily by creating false provenance documents and falsifying invoices and shipping documents. The indictment was ultimately dismissed due to the death of Latchford.

Once the prior owners were contacted by the United States, they agreed to relinquish possession of the antiquities and to waive all claims of right, title, and interest in them.

*                *                *

Mr. Williams thanked Homeland Security Investigations for its outstanding work on this investigation, and U.S. Customs and Border Protection for its invaluable assistance. Mr. Williams also thanked the Kingdom of Cambodia’s Ministry of Culture and Fine Arts for its assistance with this investigation.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that GREGORY DWYER, a high-ranking employee of purportedly “off-shore” cryptocurrency derivatives exchange the Bitcoin Mercantile Exchange or “BitMEX,” pled guilty today to violating the Bank Secrecy Act (the “BSA”) by willfully failing to establish, implement, and maintain an anti-money laundering (“AML”) program at BitMEX, and aiding and abetting the same.  DWYER pled guilty today before U.S. District Judge John G. Koeltl.

U.S. Attorney Damian Williams said:  “With this plea, this Office has now obtained criminal convictions against all three founders, as well as a high-ranking employee at BitMEX, for willful violations of anti-money laundering laws.  Today’s plea reflects that employees with management authority at cryptocurrency exchanges, no less than the founders of such exchanges, cannot willfully disregard their obligations under the Bank Secrecy Act.”

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

DWYER was one of the first employees of BitMEX, and served as its Head of Business Development.  BitMEX is an online cryptocurrency derivatives exchange that, during the relevant time period, had U.S.-based operations and served thousands of U.S. customers.  From at least September 2015, and continuing at least through the time of the Indictment in September 2020, DWYER, working with BitMEX’s founders Arthur Hayes, Benjamin Delo, and Samuel Reed, willfully caused BitMEX to fail to establish and maintain an AML program, including a program for verifying the identify of BitMEX’s customers (or a “know your customer” or “KYC” program).  As a result of its willful failure to implement AML and KYC programs, BitMEX was in effect a money laundering platform. 

DWYER aided and abetted BitMEX’s failure to institute AML or KYC programs despite closely following U.S. regulatory developments that made clear the legal obligation to do so if BitMEX operated in the United States, which it did.  DWYER knew that BitMEX’s purported withdrawal from the U.S. market after in or about September 2015 was a sham, and that purported “controls” BitMEX put in place to prevent U.S. trading were an ineffective facade that did not, in fact, prevent users from accessing or trading on BitMEX from the United States.  Among his other tasks at BitMEX, DWYER collected and circulated data evidencing that BitMEX users included traders, and that the company earned revenue, from the United States.

*                *                *

DWYER, 39, of Australia and Bermuda, pled guilty to one count of violating the Bank Secrecy Act, which carries a maximum penalty of five years in prison.  Under the terms of his plea agreement, DWYER agreed to separately pay a $150,000 criminal fine representing pecuniary gain derived from the offense.

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.

HAYES, DELO, and REED, previously pled guilty to the same count, and were sentenced by Judge Koeltl.

Mr. Williams praised the outstanding investigative work of the FBI’s New York Money Laundering Investigation Squad, and thanked the attorneys and investigators at the Commodity Futures Trading Commission whose expertise and diligence were integral to the development of this investigation.

The prosecution is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Jessica Greenwood, Samuel Raymond, and Thane Rehn 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 the unsealing today of a Superseding Indictment charging DANZEL MACKINS, a/k/a “Putt,” DARRIN SAMUELS, a/k/a “Klepto,” JAMEL WILLIAMS, a/k/a “Big T,” and BRANDON WILKINS, a/k/a “Banger,” a/k/a “Fishy,” with participating in a conspiracy to distribute crack cocaine.  MACKINS and SAMUELS are also charged with carrying and using firearms in connection with that drug trafficking crime, and with participating in the murder of Felton Durant, who was shot to death on April 25, 2021.

MACKINS and SAMUELS were previously charged with conspiring to distribute crack cocaine, though the charge of murder against each of them was only made public today.  WILLIAMS and WILKINS were both arrested yesterday and are expected to be presented later today before the Honorable Katharine H. Parker, United States Magistrate Judge for the Southern District of New York.  The case is assigned to United States District Judge Lewis A. Kaplan.

U.S. Attorney Damian Williams said:  “On April 25, 2021, Felton Durant was shot to death in broad daylight on a weekend afternoon over a drug trafficking dispute.  As alleged in the Superseding Indictment unsealed today, Danzel Mackins and Darrin Samuels participated in that brutal killing, which took place in the middle of a busy public housing development in South Brooklyn.  Thanks to the hard work of the NYPD, the defendants have been charged with this heinous crime.  I am committed to devoting every resource in my Office to target gun violence in this City.  To be clear, we are not going to give up any neighborhood, anywhere in this City to drug violence, and the charges unsealed today should make that clear to all violent actors who endanger our neighborhoods and our communities.”

NYPD Commissioner Keechant L. Sewell said:  “The wanton depravity outlined in the charges leveled against these individuals today will never be acceptable in any neighborhood of New York City. By dismantling their drug trafficking organization, and by putting a stop to the violence so often associated with this illegal activity, the NYPD and our law enforcement partners have affirmed our promise to the people we serve: Anyone who deals in this type of violent, destructive behavior will be held accountable to the fullest extent of the law.”

As alleged in the Superseding Indictment,[1] DANZEL MACKINS, DARRIN SAMUELS, JAMEL WILLIAMS, and BRANDON WILKINS, all of New York City, are charged with being members of a drug trafficking organization (the “DTO”) that distributed crack cocaine from December 2019 through July 2022.  In addition to the murder of Durant Felton on April 25, 2021, MACKINS and SAMUELS are charged with using and carrying multiple firearms in connection with the charged drug trafficking conspiracy and aiding and abetting the same.

*                      *                     *

A set of charts containing the names, charges, and maximum penalties for the defendants is 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 NYPD and thanked the Kings County District Attorney’s Office for its assistance in this case.

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Thomas John Wright is in charge of the prosecution.

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

COUNT

CHARGE

DEFENDANTS

MAXIMUM PENALTIES

1

Narcotics conspiracy

21 U.S.C. § 846

DANZEL MACKINS, a/k/a “Putt,” DARRIN SAMUELS, a/k/a “Klepto,” JAMEL WILLIAMS, a/k/a “Big T,” and BRANDON WILKINS, a/k/a “Banger,” a/k/a “Fishy"

40 years’ Imprisonment

Mandatory Minimum Sentence of 5 years

2

Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a drug trafficking crime, which firearm was brandished and discharged

18 U.S.C. § 924(c)

DANZEL MACKINS, a/k/a “Putt,” and DARRIN SAMUELS, a/k/a “Klepto”

Life Imprisonment

Mandatory Minimum Sentence of 10 years

3

Murder through use of a firearm

18 U.S.C. § 924(j)

DANZEL MACKINS, a/k/a “Putt,” and DARRIN SAMUELS, a/k/a “Klepto”

Death or Life Imprisonment

Mandatory Minimum Sentence of 5 years

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict today against VICENTE ESTEVES, a/k/a “El Bori,” on one count of conspiracy to traffic cocaine, as charged in a Superseding Indictment.  ESTEVES is scheduled to be sentenced on November 17, 2022, by U.S. District Judge John G. Koeltl, who presided over the eight-day trial. 

U.S. Attorney Damian Williams said:  “Esteves was a ‘boss’ of a drug trafficking crew that conspired to import 150 kilograms of cocaine into the United States.  Today, Esteves’s drug trafficking operation has been disrupted, and he stands convicted of his crime and faces the possibility of a lengthy prison sentence.”  

According to the Superseding Indictment and the evidence at trial:

Between at least in or about September 2020 and in or about December 2020, ESTEVES belonged to a New York/New Jersey-based drug trafficking organization (the “DTO”) that attempted to purchase 150 kilograms of cocaine from purported Colombian suppliers, who were in fact undercover law enforcement agents.  The DTO negotiated for the delivery of the cocaine in Puerto Rico, with the delivery of the purchase money in the Bronx, New York.  On the day of the exchange, December 4, 2020, ESTEVES and his coconspirators arrived in the Bronx to complete the transaction with two suitcases stuffed with more than $1.3 million cash, which was intended as a payment for part of the overall 150-kilogram transaction.  ESTEVES supervised the collection and delivery of the $1.3 million and carried a ledger for the transaction in his wallet.  A third suitcase, containing over $644,000 in additional cash, was later recovered in a stash house that ESTEVES and coconspirators met at in preparation for the transaction.

*               *                *

ESTEVES, 49, was convicted on one count of conspiring to distribute and possess with intent to distribute at least five kilograms of cocaine, which carries a mandatory minimum prison term of ten years and a maximum prison term of life.

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

Mr. Williams praised the outstanding investigative work of the Drug Enforcement Task Force, the Drug Enforcement Administration, the New York City Police Department, the New York State Police, the Office of the Special Narcotics Prosecutor, Homeland Security Investigations, the Middlesex County Prosecutor’s Office, and the Edison Police Department. 

The case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Jun Xiang, Ashley Nicolas, and Frank Balsamello and Paralegal Specialists Christopher Sykes and Alei Rizvi are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Jonathan Mellone, the Special Agent-in-Charge of the New York Region of the Office of the Inspector General, Department of Labor (“DOL-OIG”) announced today that ONEKEY, LLC, a New Jersey construction company, and its principal, FINBAR O’NEILL, were charged by Information with willfully violating Occupational Safety and Health Administration (“OSHA”) regulations, resulting in the death of a construction worker (“Victim-1”) in Poughkeepsie, New York, on or about August 3, 2017.  The Information charges that ONEKEY and O’NEILL built and placed construction loads on a concrete wall without consulting with a qualified person to determine whether the wall could withstand the weight.  The Information also charges that ONEKEY and O’NEILL failed to warn workers about the dangers of the wall.  The wall collapsed, killing Victim-1.  ONEKEY and O’NEILL were arraigned on the charges this afternoon before United States Magistrate Judge Judith C. McCarthy.

U.S. Attorney Damian Williams said: “As alleged, OneKey, a construction company, and its principal, Finbar O’Neill, endangered the safety of their workers by disregarding regulations and taking shortcuts to sidestep their safety obligations. This conduct led to the death of a worker on a construction site. Today’s charges should serve as a reminder to small business that failure to comply with safety regulations can lead to unnecessary and preventable tragedy.”

DOL-OIG Special Agent-in-Charge Jonathan Mellone said:  “An important part of the mission of the Office of Inspector General is to investigate allegations of criminal misconduct related to U.S. Department of Labor (DOL) programs. We will continue to work with our law enforcement partners and DOL’s Occupational Safety and Health Administration to hold accountable those who jeopardize workers’ safety.”

As alleged in the Information[1]:

In 2017, ONEKEY and O’NEILL implemented a soil compaction plan at a construction site at 1 Dutchess Avenue in Poughkeepsie.  The soil compaction plan involved piling large quantities of dirt, called “surcharges,” on top of the sites of three future buildings.  An engineering firm designed a plan for the use of the surcharges.  ONEKEY and O’NEILL did not follow this plan.  Instead, they built a wall to hold back one of the surcharges, so workers could get started on the buildings next to it.  ONEKEY and O’NEILL did not consult with any qualified person to see if the wall could withstand the weight to be placed on it by the surcharge. 

While people were working next to the wall, ONEKEY kept using construction machinery to add dirt to the surcharge pressing up against the wall.  The people working near the wall were not warned about the dangers it created.  ONEKEY and O’NEILL heard from people working at the site that the wall was not safe.  They did not fix the wall.

On August 3, 2017, workers complained that construction machines were driving on top of the surcharge, adding dirt to it.  Later that day, the wall collapsed.  As it fell, Victim-1 ran away from the wall, but he could not get away in time and was killed.

*                *                *

ONEKEY, LLC, a New Jersey corporation, is charged with one count of willful violation of OSHA regulations resulting in death.  The foregoing count carries a maximum fine of $500,000. 

FINBAR O’NEILL, 57, of Paramus, New Jersey, is charged with one of count of willful violation of OSHA regulations resulting in death. The foregoing count carries a maximum sentence of six months in prison and a maximum fine of $250,000.  

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

Mr. Williams praised the outstanding work of OSHA and DOL-OIG.

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

The charges contained in the Information 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 Information, and the description of the Information set forth herein, constitutes only allegations, and every fact described therein should be treated as an allegation.

Damian Williams, the United States Attorney for the Southern District of New York, Frank A. Tarentino III, the Special Agent-in-Charge of the New York Field Office of the Drug Enforcement Administration (“DEA”), Keechant Sewell, the Commissioner of the New York City Police Department (“NYPD”), and Kevin P. Bruen, the Superintendent of the New York State Police (“NYSP”), announced the unsealing of an Indictment charging 16 members and associates of the Own Every Dollar (or “OED”) gang, a subset of the Trinitarios, with committing various racketeering, narcotics, and firearms offenses, including murder and attempted murder. 

JOWENKY NUNEZ, JR., a/k/a “Juju,” JERRIN PENA, a/k/a “Rooga,” a/k/a “Perry,” JUSTIN DEAZA, a/k/a “Booka,” a/k/a “Pepito,” WILSON MENDEZ, a/k/a “Tati,” BRIAN HERNANDEZ, a/k/a “Malikai,” HUGO RODRIGUEZ, a/k/a “Juice,” MAYOVANEX RODRIGUEZ, a/k/a “Menorcito,” JOHANN ZAPATA, a/k/a “Zapata,” ELVIS TREJO, a/k/a “Po Po,” STEVEN JOAQUIN, a/k/a “Baby Gunz,” IYAURY RODRIGUEZ-ROSARIO, a/k/a “Bricha,” JOWENKY NUNEZ, SR., a/k/a “Bala,” ARGENIS TAVAREZ, a/k/a “Nose,” a/k/a “A-Kash,” VICTOR COLON, a/k/a “V,” JOSE GUTIERREZ, a/k/a “G,” and NIJMAH MARTE, a/k/a “N,” a/k/a “Nena,” are members or associates of the OED gang.

The Indictment charges five defendants—JOWENKY NUNEZ, JR., JERRIN PENA, BRIAN HERNANDEZ, MAYOVANEX RODRIGUEZ, and IYAURY RODRIGUEZ-ROSARIO—with committing one or more of a total of five murders in the Bronx and Manhattan.  Eleven of the defendants—JOWENKY NUNEZ, JR., JERRIN PENA, JUSTIN DEAZA, WILSON MENDEZ, BRIAN HERNANDEZ, HUGO RODRIGUEZ, ELVIS TREJO, STEVEN JOAQUIN, IYAURY RODRIGUEZ-ROSARIO, JOWENKY NUNEZ, SR., and ARGENIS TAVAREZ—are charged with committing one or more of a total of 12 attempted murders. 

U.S. Attorney Damian Williams said:  “Our indictment alleges that for the past four years, OED has wreaked havoc in this City – committing multiple murders, numerous armed robberies, shootings, assaults, and also dealing dangerous drugs, including fentanyl.  The defendants charged today include OED’s leadership and some of the gang’s most violent members, who we allege murdered five victims over the past four years, committed 13 shootings, and committed seven robberies or attempted robberies.  The charges we unseal today required the partnership and dedication of our law enforcement partners.  It required us to work together, side by side, across jurisdictions, to protect the people.  I want to thank all of our partners here today for their hard work on these and so many other investigations.”

DEA Special Agent-in-Charge Frank Tarentino said: “These arrests and seizures amplify our commitment and focus to safeguard our communities from the perils of violent crime, and the destruction that follows.  The DEA works in partnership with our law enforcement partners having two goals in mind: saving lives and making our communities healthy and safe.  I applaud the U.S. Attorney’s Office, Southern District of New York and the New York Drug Enforcement Task Force comprising DEA, NYPD, and NYSP for their diligence and commitment to this impactful investigation.”

NYPD Commissioner Keechant Sewell said:  “These individuals lived by a brutal code of street violence – where firearms were recklessly pulled out and indiscriminately fired, where innocent lives were disregarded, where families and neighborhoods were traumatized and torn apart. Now they will no longer be able to terrorize New Yorkers.  And make no mistake: Organized groups like this do terrorize.  They sow fear and disorder, and they show zero respect for the lives of the people who reside and work in the neighborhoods where they wreak havoc.  The vast resources and untiring efforts of the NYPD and our law enforcement partners, across multiple agencies, are concentrated on the nexus of gangs, guns, and drugs that drive much of the crime in New York City.  And all the people we serve are safer today because of our collaboration.”

NYSP Superintendent Kevin P. Bruen said: “The charges brought today against these dangerous individuals are a direct result of the vigilant work conducted by law enforcement partners.  These partnerships were instrumental in shutting down this racketeering operation, took dangerous drugs and weapons off our streets, and interrupted heinous crimes in our neighborhoods.  Let this be a strong message that New York State will not tolerate those who bring drugs and violence into our communities.”

As alleged in the Indictment unsealed today in Manhattan federal court and in statements made in court filings[1]:

OED Acts of Violence

The following murders, attempted murders, shootings, and gunpoint robberies and attempted robberies were perpetrated in part so that the following members and associates of OED could maintain or increase their positions in the OED racketeering enterprise operating in the Southern District of New York:      

• On August 31, 2018, JOWENKY NUNEZ, JR. shot and killed Nicolas Vargas in the vicinity of 232nd Street in the Bronx, and aided and abetted the same. 

• On April 14, 2019, JOWENKY NUNEZ, JR. and JERRIN PENA shot and killed Hector Cruz in the vicinity of West 135th Street in Manhattan, and aided and abetted the same. 

• On January 24, 2020, JOWENKY NUNEZ, JR., BRIAN HERNANDEZ, WILSON MENDEZ, STEVEN JOAQUIN, and ARGENIS TAVAREZ shot at a rival gang member in the vicinity of West 136th Street in Manhattan, and aided and abetted the same. 

• In February 2020, JOWENKY NUNEZ, JR., JERRIN PENA, BRIAN HERNANDEZ, and ARGENIS TAVAREZ shot at rival gang members in the vicinity of West 138th Street in Manhattan, and aided and abetted the same. 

• On March 30, 2020, JOWENKY NUNEZ, JR. and STEVEN JOAQUIN shot at a rival narcotics trafficker in the vicinity of West 180th Street in Manhattan, and aided and abetted the same.  Photographs of NUNEZ, JR. (on the left) and JOAQUIN (on the right) committing that shooting are below:

• On April 18, 2020, JOWENKY NUNEZ, SR. shot at an individual in the vicinity of Audubon Avenue in Manhattan, and aided and abetted the same.
• On May 13, 2020, JUSTIN DEAZA and WILSON MENDEZ shot at rival narcotics traffickers in the vicinity of West 184th Street in Manhattan, and aided and abetted the same. 

• On May 15, 2020, BRIAN HERNANDEZ shot at a rival narcotics trafficker in the vicinity of West 188th Street in Manhattan, and aided and abetted the same. 

• On June 26, 2020, JOWENKY NUNEZ, JR., STEVEN JOAQUIN, and IYAURY RODRIGUEZ-ROSARIO shot at rival narcotics traffickers during a high-speed chase through Washington Heights in Manhattan, and aided and abetted the same. 

• On July 2, 2020, JOWENKY NUNEZ, JR., BRIAN HERNANDEZ, and IYAURY RODRIGUEZ-ROSARIO shot and killed Richard Dominguez and Israel Cabrera in the vicinity of Sedgewick Avenue in the Bronx, and aided and abetted the same. 

• On July 5, 2020, JOWENKY NUNEZ, JR. and IYAURY RODRIGUEZ-ROSARIO shot at rival gang members in the vicinity of West 136th Street in Manhattan, and aided and abetted the same. 

• On July 18, 2020, JOWENKY NUNEZ, JR. shot at an individual in the vicinity of West 183rd Street in Manhattan, and aided and abetted the same. 

• On October 22, 2020, JOWENKY NUNEZ, JR. and JUSTIN DEAZA shot at individuals in the vicinity of Valentine Avenue in the Bronx, and aided and abetted the same. 

• On December 13, 2020, WILSON MENDEZ robbed an individual at gunpoint, in the vicinity of West 188th Street in Manhattan, and aided and abetted the same. 

• On August 12, 2021, HUGO RODRIGUEZ and JOWENKY NUNEZ, SR. engaged in a shootout with each other in the vicinity of West 183rd Street in Manhattan, and aided and abetted the same.  A photograph of NUNEZ, SR., committing that shooting is below:

• In August 2021, JUSTIN DEAZA robbed an individual at gunpoint, in the vicinity of West 28th Street in Manhattan, and aided and abetted the same. 

• In September 2021, JUSTIN DEAZA attempted to rob an individual at gunpoint, in the vicinity of the FDR Drive in Manhattan, and aided and abetted the same. 

• In September 2021, JUSTIN DEAZA and WILSON MENDEZ robbed an individual at gunpoint, in Queens, and aided and abetted the same. 

• On January 22, 2022, JOWENKY NUNEZ, JR., JERRIN PENA, ELVIS TREJO, and STEVEN JOAQUIN robbed and shot several individuals in the vicinity of West 145th Street in Manhattan, and aided and abetted the same. 

• On February 7, 2022, MAYOVANEX RODRIGUEZ shot and killed Anthony Savarese in the vicinity of Andrews Avenue in the Bronx, and aided and abetted the same. 

• On February 14, 2022, HUGO RODRIGUEZ and ELVIS TREJO robbed several individuals at gunpoint in the vicinity of West 203rd Street in Manhattan, and aided and abetted the same.

• On March 4, 2022, JOWENKY NUNEZ, JR. and ELVIS TREJO shot at a rival gang member in the vicinity of Dyckman Street in Manhattan, and aided and abetted the same.   A photograph of NUNEZ, JR., committing that shooting is below:

Narcotics Trafficking and Firearms Use

Between 2018 and July 2022, JOWENKY NUNEZ, JR., JERRIN PENA, JUSTIN DEAZA, WILSON MENDEZ,  BRIAN HERNANDEZ, HUGO RODRIGUEZ, MAYOVANEX RODRIGUEZ, JOHANN ZAPATA, ELVIS TREJO, STEVEN JOAQUIN, IYAURY RODRIGUEZ-ROSARIO, JOWENKY NUNEZ, SR., ARGENIS TAVAREZ, VICTOR COLON, JOSE GUTIERREZ, and NIJMAH MARTE conspired to distribute and possess with intent to distribute fentanyl, heroin, cocaine, crack cocaine, oxycodone, ecstasy, and marijuana.  In addition, these defendants used, carried, and possessed firearms in furtherance of their narcotics trafficking, and aided and abetted the same.

Firearms Trafficking

Between May 2020 and October 2020, JOWENKY NUNEZ, JR., JERRIN PENA, and IYAURY RODRIGUEZ-ROSARIO unlawfully obtained approximately thirteen firearms in Pennsylvania and transported those firearms to New York for use by members of OED.

*          *          *

H. RODRIGUEZ, 26, M. RODRIGUEZ, 27, ZAPATA, 20, TREJO, 21, JOAQUIN, 20, and NUNEZ, SR., 39, were all arrested yesterday, and will be presented today before United States Magistrate Judge Katharine H. Parker.  Today, RODRIGUEZ-ROSARIO, 41, was arrested and will be presented in the Eastern District of Pennsylvania.  NUNEZ, JR., 20, PENA, 20, DEAZA, 21, MENDEZ, 20, HERNANDEZ, 22, COLON, 24, GUTIERREZ, 20, and MARTE, 22, were charged in a prior indictment and have been presented on those charges.  TAVAREZ, 23, has not been arrested at this time.  This case is assigned to United States District Judge J. Paul Oetken.

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 NYPD and DEA.  Mr. Williams also thanked the Manhattan District Attorney’s Office, the Bronx District Attorney’s Office, the Office of the Special Narcotics Prosecutor, the New York State Police, and the NYPD Task Force Officers assigned to this Office for their assistance in the investigation.

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

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

COUNT

DEFENDANT(S)

MAX. TERM OF IMPRISONMENT

Count One: Conspiracy to Commit Racketeering

(18 U.S.C. § 1962(d))

Jowenky Nunez, Jr.

Jerrin Pena

Justin Deaza

Wilson Mendez

Brian Hernandez

Hugo Rodriguez

Mayovanex Rodriguez

Johann Zapata

Elvis Trejo

Steven Joaquin

Iyaury Rodriguez-Rosario

Jowenky Nunez, Sr.

Argenis Tavarez

Life Imprisonment

Count Two:  Murder in Aid of Racketeering

(18 U.S.C. §§ 1959(a)(1) and 2)

Jowenky Nunez, Jr.

Brian Hernandez

Iyaury Rodriguez-Rosario

Death or a Mandatory Minimum Sentence of Life Imprisonment

Count Three: Use of a Firearm to Commit Murder (18 U.S.C. § 924(j)(1))

Jowenky Nunez, Jr.

Brian Hernandez

Iyaury Rodriguez-Rosario

Death or Life Imprisonment; Mandatory Minimum Sentence of 5 years

Count Four:  Murder in Aid of Racketeering

(18 U.S.C. §§ 1959(a)(1) and 2)

Jowenky Nunez, Jr.

Brian Hernandez

Iyaury Rodriguez-Rosario

Death or a Mandatory Minimum Sentence of Life Imprisonment

Count Five: Use of a Firearm to Commit Murder

(18 U.S.C. §§ 924(j)(1) and 2)

Jowenky Nunez, Jr.

Brian Hernandez

Iyaury Rodriguez-Rosario

Death or Life Imprisonment; Mandatory Minimum Sentence of 5 years

Count Six:  Murder in Aid of Racketeering

(18 U.S.C. §§ 1959(a)(1) and 2)

Mayovanex Rodriguez

Death or a Mandatory Minimum Sentence of Life Imprisonment

Count Seven: Use of a Firearm to Commit Murder (18 U.S.C. §§ 924(j)(1) and 2)

Mayovanex Rodriguez

Death or Life Imprisonment; Mandatory Minimum Sentence of 5 years

Count Eight: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Brian Hernandez

Argenis Tavarez

20 years’ Imprisonment

Count Nine: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Brian Hernandez

Argenis Tavarez

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Ten: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Jerrin Pena

Brian Hernandez

Argenis Tavarez

20 years’ Imprisonment

Count Eleven: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Jerrin Pena

Brian Hernandez

Argenis Tavarez

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Twelve: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Jowenky Nunez, Sr.

20 years’ Imprisonment

Count Thirteen: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Jowenky Nunez, Sr.

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Fourteen: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Justin Deaza

Wilson Mendez

20 years’ Imprisonment

Count Fifteen: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Justin Deaza

Wilson Mendez

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Sixteen: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Brian Hernandez

20 years’ Imprisonment

Count Seventeen: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Brian Hernandez

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Eighteen: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Jowenky Nunez, Jr.

Steven Joaquin

Iyaury Rodriguez-Rosario

20 years’ Imprisonment

Count Nineteen: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Jowenky Nunez, Jr.

Steven Joaquin

Iyaury Rodriguez-Rosario

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Twenty: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Jowenky Nunez, Jr.

Iyaury Rodriguez-Rosario

20 years’ Imprisonment

Count Twenty-One: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii) and 2)

Jowenky Nunez, Jr.

Iyaury Rodriguez-Rosario

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Twenty-Two: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Jowenky Nunez, Jr.

20 years’ Imprisonment

Count Twenty-Three: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Jowenky Nunez, Jr.

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Twenty-Four: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Jowenky Nunez, Jr.

Justin Deaza

20 years’ Imprisonment

Count Twenty-Five: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Jowenky Nunez, Jr.

Justin Deaza

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Twenty-Six: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Hugo Rodriguez

20 years’ Imprisonment

Count Twenty-Seven: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Hugo Rodriguez

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Twenty-Eight: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Jowenky Nunez, Sr.

20 years’ Imprisonment

Count Twenty-Nine: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Jowenky Nunez, Sr.

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Hobbs Act Robbery (18 U.S.C. §§ 1951 and 2)

Jowenky Nunez, Jr.

Jerrin Pena

Elvis Trejo

Steven Joaquin

20 years’ Imprisonment

Count Thirty-One: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Jowenky Nunez, Jr.

Jerrin Pena

Elvis Trejo

Steven Joaquin

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Thirty-Two: Attempted Murder and Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3), (a)(5), and 2)

Jowenky Nunez, Jr.

Elvis Trejo

20 years’ Imprisonment

Count Thirty-Three: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Discharged (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), (iii), and 2)

Jowenky Nunez, Jr.

Elvis Trejo

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Thirty-Four: Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

Wilson Mendez

20 years’ Imprisonment

Count Thirty-Five: Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

Justin Deaza

20 years’ Imprisonment

Count Thirty-Six: Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

Justin Deaza

20 years’ Imprisonment

Count Thirty-Seven: Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

Justin Deaza

20 years’ Imprisonment

Count Thirty-Eight: Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

Justin Deaza

Wilson Mendez

20 years’ Imprisonment

Count Thirty-Nine: Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

Hugo Rodriguez

Elvis Trejo

20 years’ Imprisonment

Count Forty: Conspiracy to Distribute Controlled Substances (21 U.S.C. § 846)

Jowenky Nunez, Jr.,

Jerrin Pena

Justin Deaza

Wilson Mendez

Brian Hernandez

Hugo Rodriguez

Mayovanex Rodriguez

Johann Zapata

Elvis Trejo

Steven Joaquin

Iyaury Rodriguez-Rosario

Jowenky Nunez, Sr.

Argenis Tavarez

Victor Colon

Jose Gutierrez

Nijmah Marte

Life Imprisonment; Mandatory Minimum Sentence of 10 years

Count Forty-One: Possession of a Firearm in Furtherance of a Drug Trafficking Crime (18 U.S.C. §§ 924(c)(1)(A)(i) and 2)

Jowenky Nunez, Jr.,

Jerrin Pena

Justin Deaza

Wilson Mendez

Brian Hernandez

Hugo Rodriguez

Mayovanex Rodriguez

Johann Zapata

Elvis Trejo

Steven Joaquin

Iyaury Rodriguez-Rosario

Jowenky Nunez, Sr.

Argenis Tavarez

Victor Colon

Jose Gutierrez

Nijmah Marte

Life Imprisonment; Mandatory Minimum Sentence of 5 years

Count Forty-Two: Interstate Transportation or Receipt of Firearms (18 U.S.C. §§ 922(a)(3), 924(a)(1), and 2)

Jowenky Nunez, Jr.

Jerrin Pena

Iyaury Rodriguez-Rosario

5 years’ Imprisonment

[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 SETH ANDREW was sentenced to 366 days in prison in connection with his execution of a scheme to defraud Democracy Prep Public Schools (“DPPS”), a charter school network that he founded, of more than $218,000.  United States District Judge John P. Cronan imposed today’s sentence.

U.S. Attorney Damian Williams said: “Seth Andrew was sentenced today for stealing from those who once trusted him.  Andrew committed this crime to attempt to punish non-profit charter schools because they declined his offer to return as their leader.  Thankfully, the victim of Andrew’s crime was resilient, and its important work continues.  Today’s sentence sends a message that those who engage in fraud schemes and steal from others will face appropriate consequences for their conduct.”      

According to previous filings in this case:

In 2005, SETH ANDREW helped to found Democracy Prep Public Schools, a series of public charter schools then based in New York City.  In the Spring of 2013, ANDREW left DPPS and accepted a job in the United States Department of Education and, thereafter, as a senior advisor in the Office of Educational Technology at the White House.  In November 2016, ANDREW left his role at the White House.  Shortly thereafter, in January 2017, ANDREW officially severed his relationship with DPPS.

Under New York state regulations, DPPS’s New York-based charter schools must maintain an “escrow account” that may be accessed only if the school dissolves.  Three such escrow accounts, for three New York City-based-DPPS schools, were opened by ANDREW and other DPPS employees, at  a bank (“Bank-1”) in 2009, 2011 and 2013, respectively (“Escrow Account-1,” “Escrow Account-2,” and “Escrow Account-3”, collectively, the “Escrow Accounts”).  ANDREW was a signatory and had access to the funds in the Escrow Accounts.  However, pursuant to the charter agreement, the funds in the Escrow Accounts were reserved in case the schools dissolved, and the funds could not be moved by ANDREW, or anyone, without proper authorization.

In early 2019, apparently frustrated with decisions made by DPPS, and his inability to exercise control over the organization, ANDREW sought to rejoin DPPS.  On March 10, 2019, ANDREW sent an email to several members of DPPS, including its Chairman, offering to return as “President,” in exchange for “$25k/month as [a] salaried employee and basic frugal expenses,” plus a $250,000 bonus if he met deliverables ANDREW outlined.  ANDREW further stated that “every single day that goes by, this situation becomes exponentially more difficult and the ability to pull out of a nosedive becomes harder. So after 24 hours, my monthly salary expectation will go up every day that we’re not under a signed contract.” 

DPPS declined ANDREW’s offer.  Eighteen days later, on March 28, 2019, ANDREW entered a Bank-1 branch in New York City and closed both Escrow Account-1 and Escrow Account-2.  Bank-1 provided ANDREW a bank check in the amount of $71,881.23 made payable to “Democracy Prep Charter School” (“Check-1”) and a second bank check in the amount of $70,642.98 made payable to “Democracy Prep Harlem Charter” (“Check-2”). 

The same day that ANDREW closed Escrow Account-1 and Escrow Account-2, ANDREW entered a Manhattan branch of a different FDIC-insured bank (“Bank-2”) and opened a business bank account in the name of “Democracy Prep Charter School” (“Fraud Account‑1”).  To open that account, ANDREW misrepresented to a Bank-2 employee that he was a “Key Executive with Control of” DPPS and supported that misrepresentation by sending emails sent to the Bank-2 employee from a DPPS email account.  ANDREW then deposited Check-1 into Fraud Account-1. Five days later, on April 2, 2019, ANDREW used an ATM machine in Baltimore, Maryland to deposit Check-2 into Fraud Account‑1. 

On October 17, 2019, ANDREW closed out Escrow Account-3 and received a check (“Check-3”) made payable to “Democracy Prep Endurance” in the amount of $75,481.10.  On October 21, 2019, ANDREW deposited Check-3 into an account that he opened at a third bank (“Fraud Account-2”). 

Approximately one month later, ANDREW obtained a check from Bank-2 for $144,473.29, which constituted the funds stolen from Escrow Account-1 and Escrow Account-2.  ANDREW ultimately deposited those funds into Fraud Account-2, combing all of the stolen funds, then worth approximately $219,954.  Five days later, ANDREW rolled the stolen funds in Fraud Account-2 into a certificate of deposit.  That certificate of deposit matured on May 20, 2020, which earned ANDREW $2,083.52 in interest.  ANDREW then transferred the funds from the certificate of deposit -- including the funds stolen from the Escrow Accounts -- into a bank account held in the name of Democracy Builders, another nonprofit that ANDREW then-controlled, thereby concealing the money’s association with DPPS, and depositing the stolen money into an account under ANDREW’s complete control.  The next day, ANDREW sent a wire for $225,000, apparently comprised primarily of funds from the Escrow Accounts, for a down payment on a significant purchase of property for Democracy Builders.

In total, DPPS lost $218,005 as a result of Andrew’s actions.

*                      *                     *

ANDREW, 43, previously pled guilty to one count of wire fraud on January 14, 2022, before Judge Cronan.  In addition to this prison sentence, ANDREW was sentenced to 3 years of supervised release.  Prior to today’s sentencing Andrew paid $218,005 in restitution to DPPS, and $22,537 in forfeiture.

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

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Ryan B. Finkel is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that JAESON BIRNBAUM, a disbarred lawyer, was sentenced today to 36 months in prison for defrauding investors in his now bankrupt litigation finance firm, “Cash4Cases.”  BIRNBAUM previously pled guilty to securities fraud for misappropriating investors funds and pledging the same lawsuit recoveries as collateral to multiple parties, contrary to his representations.  U.S. District Paul A. Crotty imposed the sentence in Manhattan federal court.

U.S. Attorney Damian Williams stated: “As a lawyer Birnbaum understood the importance of honest dealings and putting his investors first.  Instead, Birnbaum chose to lie to his investors in order to steal their money and cover up his fraud by doctoring company records.  Through today’s sentence, Birnbaum has been held accountable for this serious fraud.”

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

From at least in or about 2017 through in or about 2019, BIRNBAUM obtained more than $3 million in investments for Cash4Cases based on fraudulent misrepresentations.  These investments were in the form of promissory notes, titled “Investor Security Agreements” (“ISAs”), which purported to provide the relevant investors with a security interest in the recoveries associated with certain specified lawsuits that were ostensibly purchased by Cash4Cases.  In fact, in some instances, the lawsuits that were either never funded by Cash4Cases or BIRNBAUM had previously pledged their recoveries to other parties. 

To help carry out his fraud, BIRNBAUM directed an employee to falsify his company’s books and records to make it appear that the recoveries from lawsuits that had already been paid out were still available to be pledged as collateral to new investors.

BIRNBAUM also misappropriated a substantial portion of investors’ funds for his personal use and to make promised payments to earlier investors in Ponzi-like manner.  As one example, BIRNBAUM obtained a $1 million investment for Cash4Cases in September 2019.  Prior to this investment, BIRNBAUM told the investor that Cash4Cases would use the money exclusively for advances to litigants.  However, contrary to this representation, BIRNBAUM used the money to make a $530,000 down payment on the purchase of a house and to pay for other personal expenses and Ponzi-like payments to earlier investors.

*                *                *

BIRNBAUM, 48, of Boca Raton, Florida, was also sentenced to a three-year term of supervised release.  He was further ordered to pay restitution to his victims in the amount of $2,661,072.24 and to forfeit $2,661,072.24 in fraud proceeds.  

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 Attorney Daniel Loss is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Daniel R. Brubaker, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced today the unsealing of an Indictment charging RAQUEL MOURA BORGES with securities fraud, wire fraud, and investment adviser fraud in connection with her scheme to defraud customers of her investment adviser firm, Global Access Investment Advisor LLC (“GAIA”).  BORGES was arrested yesterday morning and presented before Magistrate Judge Sarah Netburn. The case is assigned to U.S. District Judge Lewis J. Liman. 

U.S. Attorney Damian Williams said: “Borges promised her investment advisory clients that she would invest in securities and other investments but in fact stole her clients’ savings and lined her own pockets.  Now, for this alleged violation of the law and of her fiduciary duty to her clients, Borges faces federal criminal charges”

USPIS Inspector-in-Charge Daniel R. Brubaker said:  “The defendant, a native of Brazil, was welcomed by Postal Inspectors with a pair of handcuffs upon her return to the United States yesterday. For years investors trusted Raquel Moura Borges and her company Global Access Investment Advisors in Manhattan with a combined total of over $19 Million. She allegedly violated at least two of those investors’ trust and broke the law by spending their money on a lavish New York City apartment and to cover other clients’ losses. The arrest of Borges should serve as a warning to criminals: no matter where they are, Postal Inspectors and our law enforcement partners will be waiting at the end of that road to bring you to justice. We will commit every resource available to us in the fight against investment fraud and will track down fraudsters whether they are here or abroad.”

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

From at least in or about 2017 until at least in or about 2018, RAQUEL MOURA BORGES represented to Victim-1 that she was making financial investments, including a private placement investment in a particular Brazilian company, on Victim-1’s behalf.  In or about December 2017, over the course of three transactions, BORGES caused approximately $2.7 million to be transferred from Victim-1’s account to accounts controlled by BORGES. Contrary to the representations made by BORGES to Victim-1 and in violation of the duties she owed Victim-1, none of the $2.7 million was actually invested on Victim-1’s behalf.  Instead, BORGES diverted the money to others and spent approximately $160,000 on interior design fees for an apartment in Manhattan, New York that BORGES owned and used personally.  To conceal her misappropriation of Victim-1’s funds, in or about June 2018, BORGES sent Victim-1 a fake bank statement that falsely reflected a transfer of $2.7 million for the purpose of a “private placement purchase.” 

From at least in or about 2016 until at least in or about 2017, BORGES represented to Victim-2 that she was making financial investments on Victim-2’s behalf.  In or about August 2016, BORGES caused approximately $1.95 million to be transferred from Victim-2’s account to a GAIA account controlled by BORGES (the “GAIA Account”).  The purported reason for the transfer was an investment in real estate in New York.  Contrary to the representations made by BORGES to Victim-2, and in violation of the duties she owed Victim-2, none of the $1.95 million was actually invested on Victim-2’s behalf.  Instead, on or about August 23, 2016, the same date that the $1.95 million wire from Victim-2’s account arrived in the GAIA Account, BORGES signed a check drawn on the GAIA Account in the amount of $1,500,000 payable to herself (the “$1.5M Check”).  The “For” line of the $1.5M Check read “RB’s new house.”  Also on or about August 23, 2016, BORGES caused the $1.5M Check to be deposited into her personal account. 

In or about October 2017, in a meeting with a family member of Victim-2 and in a subsequent e-mail communication, BORGES admitted, in substance and relevant part, that she had misappropriated Victim-2’s money. Among other things, BORGES stated, in sum and substance, that BORGES had used Victim-2’s money to cover other clients’ losses and that BORGES would find a way to pay back Victim-2. 

*                      *                      *

BORGES, 55, of Brazil, is charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison, one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of investment adviser fraud, which carries a maximum sentence of 5 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the investigative work of the USPIS and also thanked the Securities and Exchange Commission, which has filed a civil enforcement action against the defendant, for its assistance in the investigation.

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

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that FRANK OKUNAK, the former chief financial officer of one of the world’s leading global public relations firms, pled guilty in connection with a decade-long scheme to embezzle over $16 million from his employer.

U.S. Attorney Damian Williams stated: “ Frank Okunak, former CFO of one of the world’s leading public relations firms, admitted today to illegally embezzling over $16 million of the firm’s assets to pay for his posh lifestyle. Okunak now awaits sentencing for his decade-long fraud scheme.”

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

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

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

*                *                *

OKUNAK, 56, of Lyndhurst, New Jersey, pled guilty to one count of wire fraud and one count of falsification of corporate books and records. Each count carries a maximum sentence of 20 years in prison. As part of his guilty plea, OKUNAK agreed to forfeit $10,823,575.57 and to pay restitution of $16,043,603.71.

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

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

“Jason Kurland marketed himself to the public as the leading lottery lawyer in the country and was successful in recruiting as clients some of the biggest lottery winners in U.S. history.  But then he used his position as a lawyer—a profession founded on duties of honesty and loyalty—to steer his clients to invest millions of dollars in companies that he secretly owned and took illegal kickbacks based on his clients’ investments without their knowledge. Ultimately, the defendant and his co-conspirators lined their own pockets while his clients suffered massive losses from their crimes.  I want to thank the FBI and the career prosecutors of the Southern District of New York who worked tirelessly to hold the defendant accountable for his crimes.”