Southern District of New York

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 Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), and Johnathan Carson, Special Agent-in-Charge of the U.S. Department of Commerce, Office of Export Enforcement, New York Field Office, announced that ROBERT ALCANTARA was charged in a criminal complaint unsealed today with conspiring to traffic firearms and with making false statements.  ALCANTARA was arrested today and presented in the District of Rhode Island.

U.S. Attorney Damian Williams said: “Untraceable ‘ghost guns’ pose a serious threat to public safety.  As alleged, the defendant agreed with others to buy the parts for these firearms, put them together at his home, and then unlawfully sold or attempted to sell over 100 of them.  Thanks to our law enforcement partners, the defendant has been arrested, and his deadly ghost gun business has been shut down.”

John B. DeVito, ATF New York Special Agent-in-Charge said:  “As alleged, Robert Alcantara engaged in trafficking untraceable, Privately Made Firearms (PMF’s), commonly called ghost guns.  Stopping the flow of these firearms is a top priority of ATF, and we will rigorously pursue those who illegally sell these firearms.  I applaud the NYSP who initiated this investigation through superb investigative actions, as well as our partners at the US Department of Commerce, Office of Export Enforcement and the NYPD for their vital and continued contributions to the investigations.”    

US Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement New York Field Office Special Agent in Charge Jonathan Carson said:  “As is alleged to have happened here, the trafficking of Privately Made Firearms poses a danger to our communities. The Office of Export Enforcement will continue to partner with other law enforcement agencies to combat the illegal smuggling of firearms, including ‘ghost guns’ that are difficult to trace.”

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

From September 2019 up to November 2021, ALCANTARA and others entered an agreement in which ALCANTARA purchased the parts for more than 100 “ghost guns,” machined the ghost guns at his house in Providence, Rhode Island, and then illegally sold the working and completed ghost guns.  On November 20, 2021, law enforcement recovered parts for 45 ghost guns from ALCANTARA’s car.  When interviewed by law enforcement, ALCANTARA falsely told them that he had never sold or transferred ownership of a firearm to any other individual, and that he had never transported a firearm to the Dominican Republic.

Below are photographs of the 45 “ghost guns” seized from ALCANTARA’s house, as well as photographs of firearms ALCANTARA intended to sell to buyers:          

ALCANTARA, 34, of Providence, Rhode Island, is charged with: (1) conspiracy to traffic firearms, which carries a maximum sentence of five years in prison, and (2) making false statements, which carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the ATF and the Department of Commerce.  Mr. Williams also thanked the New York City Police Department, the New York State Police Department, the Providence Police Department, and the United States Attorney’s Office for the District of Rhode Island for their assistance in the case.

The case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Kevin Mead 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 descriptions 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, Matthew G. Olsen, the Assistant Attorney General for National Security, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging PIERRE GIRGIS, a dual Egyptian and U.S. citizen, with acting and conspiring to act in the United States as an unregistered agent of the Arab Republic of Egypt. GIRGIS was taken into custody earlier today, and will be presented this afternoon before U.S. Magistrate Judge Robert W. Lehrburger.

U.S. Attorney Damian Williams said:  “As alleged, Pierre Girgis failed to meet his requirements to register as a foreign agent in the United States.  At the behest of Egyptian officials, Girgis’s alleged prohibited conduct included attempting to covertly gather non-public intelligence about the activities of political opponents of Egypt’s president, and attempting to gain access for foreign officials to attend law enforcement-only trainings in Manhattan. This Office will continue to strictly enforce foreign agent registration laws, which remain critically important to ensuring that our government is not secretly influenced by foreign governments.”

Assistant Attorney General Matthew G. Olsen said: “The Department of Justice will not allow agents of foreign governments to operate in the United States to pursue and collect information about critics of those governments. Working at the direction of the Egyptian government, Girgis agreed to target its perceived critics located in the United States. This indictment begins the process of holding him accountable for his actions in contravention of our laws and values.”

FBI Assistant Director-in-Charge Michael J. Driscoll said: “Agents of foreign countries are required to register with our government for a good reason - they often act in their home country's interests and against those of the United States.  We allege Mr. Girgis sent non-public information back to Egypt for the benefit of the Egyptian government. Mr. Girgis broke our laws, and we must hold him accountable.”

According to the allegations contained in the Indictment unsealed today in Manhattan federal court, and statements made during court proceedings[1]:

From at least approximately 2014 to 2019, GIRGIS, a native of Egypt, acted in the United States as an agent of the Egyptian government, without notifying the U.S. Attorney General as required by law. GIRGIS operated at the direction and control of multiple officials of the Egyptian government in an effort to further the interests of the Egyptian government in the United States. Among other things, at the direction of Egyptian government officials, GIRGIS tracked and obtained information regarding political opponents of Egyptian president Abdel Fattah el-Sisi. GIRGIS also leveraged his connections with local U.S. law enforcement officers to collect non-public information at the direction of Egyptian officials, arranged benefits for Egyptian officials who were visiting Manhattan, and coordinated meetings between U.S. and Egyptian law enforcement in the United States, including by attempting to arrange for Egyptian officials to attend police trainings.

On or about May 7, 2018, GIRGIS discussed his status as an agent of the Egyptian government with an Egyptian official (“Egyptian Official-1”) using an encrypted messaging application. During the conversation, Egyptian Official-1 expressed frustration that GIRGIS had communicated with personnel from a different Egyptian government agency, warned GIRGIS that “it is not possible to open with all the agencies,” and stated that Egyptian Official-1 was “letting you [GIRGIS] open with us only.”[2] Later in the encrypted messaging exchange, Egyptian Official-1 advised GIRGIS that other Egyptian government agencies “want sources for themselves, and you [GIRGIS] have become an important source for them to collect information.” GIRGIS responded, “I know and I see and I learn from you,” and then informed Egyptian Official-1, “it will not be repeated again.”

Approximately one year later, on or about March 8, 2019, in the course of GIRGIS’s continuing operations as an Egyptian agent, GIRGIS and Egyptian Official-1 discussed an upcoming trip of certain Egyptian officials to the United States. During that telephone conversation, GIRGIS stated, “Tell me what you want me to do,” and Egyptian Official-1 responded by inquiring about GIRGIS’s relationship with a particular U.S. law enforcement officer. Egyptian Official-1 then instructed GIRGIS “to ask [the U.S. law enforcement officer] for something. We want you to find out if there are any police trainings happening in Manhattan in the coming days, and if so, who are the people in charge of these trainings? We would like to attend.” Later in the conversation, GIRGIS again asked, “What you want me to do?” Egyptian Official-1 directed GIRGIS, “Make follow up, Ok?” and GIRGIS agreed by responding, “Ok.”

*                      *                     *

GIRGIS, 39, is a resident of Manhattan. GIRGIS is charged with one count of conspiring to act as an agent of a foreign government without notifying the Attorney General, which carries a maximum sentence of five years in prison, and one count of acting as an agent of a foreign government without notifying the Attorney General, which carries a maximum sentence of 10 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

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

The case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Elinor L. Tarlow and Kyle A. Wirshba are in charge of the case, with assistance from Trial Attorney Scott Claffee of the Counterintelligence and Export Control Section.

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 Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

[2] The statements described in the Indictment and herein are set forth in substance and in part.

A New York man was arrested today on criminal charges related to his alleged acting and conspiring to act as a foreign agent in the United States.

According to court documents, Pierre Girgis, 39, of Manhattan, acted in the United States as an agent of the Egyptian government, without notifying the U.S. Attorney General as required by law. Girgis operated at the direction and control of multiple officials of the Egyptian government in an effort to further the interests of the Egyptian government in the United States. Among other things, at the direction of Egyptian government officials, Girgis allegedly tracked and obtained information regarding political opponents of Egyptian president Abdel Fattah el-Sisi. As alleged, Girgis also leveraged his connections with local U.S. law enforcement officers to collect non-public information at the direction of Egyptian officials, arranged benefits for Egyptian officials who were visiting Manhattan, and coordinated meetings between U.S. and Egyptian law enforcement in the United States, including by arranging for Egyptian officials to attend police trainings.

“The Department of Justice will not allow agents of foreign governments to operate in the United States to pursue and collect information about critics of those governments,” said Assistant Attorney General for National Security Matthew G. Olsen. “Working at the direction of the Egyptian government, Girgis agreed to target its perceived critics located in the United States. This indictment begins the process of holding him accountable for his actions in contravention of our laws and values.”

“As alleged, Pierre Girgis failed to meet his requirements to register as a foreign agent in the United States,” said U.S. Attorney Damian Williams for the Southern District of New York. “At the behest of Egyptian officials, Girgis’s alleged prohibited conduct included attempting to covertly gather non-public intelligence about the activities of political opponents of Egypt’s president, and attempting to gain access for foreign officials to attend law enforcement-only trainings in Manhattan. This office will continue to strictly enforce foreign agent registration laws, which remain critically important to ensuring that our government is not secretly influenced by foreign governments.”

“Agents of foreign countries are required to register with our government for a good reason – they often act in their home country's interests and against those of the United States,” said Assistant Director in Charge Michael J. Driscoll of the FBI’s New York Field Office. “We allege Mr. Girgis sent non-public information back to Egypt for the benefit of the Egyptian government. Mr. Girgis broke our laws, and we must hold him accountable.”

According to the indictment, on or about May 7, 2018, Girgis discussed his status as an agent of the Egyptian government with an Egyptian official (Egyptian Official-1) using an encrypted messaging application. During the conversation, Egyptian Official-1 expressed frustration that Girgis had met with personnel from a different Egyptian government agency during a recent trip by Girgis to Egypt, warned Girgis that “it is not possible to open with all the agencies,” and stated that Egyptian Official-1 was “letting you [Girgis] open with us only.” Later in the encrypted messaging exchange, Egyptian Official-1 advised Girgis that other Egyptian government agencies “want sources for themselves, and you [Girgis] have become an important source for them to collect information.” Girgis responded, “I know and I see and I learn from you,” and then informed Egyptian Official-1, “it will not be repeated again.”

Approximately one year later, on or about March 8, 2019, in the course of Girgis’s continuing operations as an Egyptian agent, Girgis and Egyptian Official-1 discussed an upcoming trip of certain Egyptian officials to the United States. During that telephone conversation, Girgis stated, “Tell me what you want me to do,” and Egyptian Official-1 responded by inquiring about Girgis’s relationship with a particular U.S. law enforcement officer. Egyptian Official-1 then instructed Girgis “to ask [the U.S. law enforcement officer] for something. We want you to find out if there are any police trainings happening in Manhattan in the coming days, and if so, who are the people in charge of these trainings? We would like to attend.” Later in the conversation, Girgis again asked, “What you want me to do?” Egyptian Official-1 directed Girgis, “Make follow up, Ok?” and Girgis agreed by responding, “Ok.”

Girgis is charged with one count of conspiring to act as an agent of a foreign government without notifying the Attorney General, which carries a maximum sentence of five years in prison, and one count of acting as an agent of a foreign government without notifying the Attorney General, which carries a maximum sentence of 10 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI’s Counterintelligence Division and New York Field Office are investigating the case.

Assistant U.S. Attorneys Elinor L. Tarlow and Kyle A. Wirshba for the Southern District of New York and Trial Attorney Scott Claffee of the National Security Division’s Counterintelligence and Export Control section are prosecuting the case.

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

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an indictment charging FILIPPO BERNARDINI with wire fraud and aggravated identity theft, in connection with a multi-year scheme to impersonate individuals involved in the publishing industry in order to fraudulently obtain hundreds of prepublication manuscripts of novels and other forthcoming books.  BERNARDINI was arrested this afternoon when he arrived at John F. Kennedy International Airport.  He will be presented tomorrow before United States Magistrate Judge Robert W. Lehrburger in Manhattan federal court.  The case is assigned to U.S. District Judge Colleen McMahon.

U.S. Attorney Damian Williams said:  “Filippo Bernardini allegedly impersonated publishing industry individuals in order to have authors, including a Pulitzer prize winner, send him prepublication manuscripts for his own benefit. This real-life storyline now reads as a cautionary tale, with the plot twist of Barnardini facing federal criminal charges for his misdeeds.”  

Assistant Director-in-Charge Driscoll said: “Unpublished manuscripts are works of art to the writers who spend the time and energy creating them. Publishers do all they can to protect those unpublished pieces because of their value. We allege Mr. Bernardini used his insider knowledge of the industry to get authors to send him their unpublished books and texts by posing as agents, publishing houses, and literary scouts. Mr. Bernardini was allegedly trying to steal other people's literary ideas for himself, but in the end he wasn't creative enough to get away with it."

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

Beginning in at least August 2016, BERNARDINI, who was based in London and worked in the publishing industry, began impersonating agents, editors, and other individuals involved in publishing to fraudulently obtain prepublication manuscripts.  These prepublication manuscripts are valuable, and the unauthorized release of a manuscript can dramatically undermine the economics of publishing, and publishing houses generally work to identify and stop the release of pirated, prepublication, manuscripts.  Such pirating can also undermine the secondary markets for published work, such as film and television, and can harm an author’s reputation where an early draft of written material is distributed in a working form that is not in a finished state. 

In carrying out this scheme, BERNARDINI created fake email accounts that were designed to impersonate real people employed in the publishing industry, including literary talent agencies, publishing houses, literary scouts, and others.  BERNARDINI created these accounts by registering more than 160 internet domains that were crafted to be confusingly similar to the real entities that they were impersonating, including only minor typographical errors that would be difficult for the average recipient to identity during a cursory review.  Among other things, BERNARDINI often replaced the lower-case letter <m> with the lower-case letters <r> and <n>, which, when placed together as <rn>, resemble an <m>.   For example, in or about September 2020, BERNARDINI utilized a fraudulent email address impersonating a well-known editor and publisher (“Editor-1”) who worked for an imprint of a U.S. publishing house (“Publisher-1”).  Impersonating Editor-1, BERNARDINI emailed a Pulitzer Prize winning author (“Author-1”) and requested a copy of a word version of Author-1’s forthcoming manuscript, which Author-1 sent to BERARDINI, believing him to be Editor-1.  Over the course of this scheme, BERNARDINI impersonated hundreds of distinct people and engaged in hundreds of unique efforts to fraudulently obtain electronic copies of manuscripts that he was not entitled to.

In addition, BERNARDINI engaged in a phishing scheme to surreptitiously gain access to a database maintained by a New York City-based literary scouting company (“Scouting Company-1”).  BERNARDINI created a webpage that impersonated Scouting Company-1’s website.  Then, in or about July 2020, BERNARDINI impersonated a Scouting Company-1 employee and emailed two individuals, directing them to BERNARDINI’s look-alike webpage and prompting the users to provide their usernames and passwords.  BERNARDINI’s webpage was programmed to automatically forward the input usernames and passwords to an email account controlled by BERNARDINI. 

*                      *                      *

FILIPPO BERNARDINI, 29, of London, United Kingdom is charged with (1) wire fraud, which carries a maximum sentence of 20 years in prison; and (2) aggravated identity theft, which carries a mandatory consecutive sentence of 2 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Williams praised the investigative work of the FBI.  Mr. Williams also thanked the U.S. Customs and Border Protection for its assistance in this investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Daniel G. Nessim 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.

“A unanimous jury has found Ghislaine Maxwell guilty of one of the worst crimes imaginable – facilitating and participating in the sexual abuse of children.  Crimes that she committed with her long-time partner and co-conspirator, Jeffrey Epstein. The road to justice has been far too long.  But, today, justice has been done.  I want to commend the bravery of the girls – now grown women – who stepped out of the shadows and into the courtroom.  Their courage and willingness to face their abuser made this case, and today’s result, possible. I also want to thank the career prosecutors of the Southern District of New York, who embraced the victims’ quest for justice and have worked tirelessly, day in and day out, to ensure that Maxwell was held accountable for her crimes. This Office will always stand with victims, will always follow the facts wherever they lead, and will always fight to ensure that no one, no matter how powerful and well connected, is above the law.”

Damian Williams, the United States Attorney for the Southern District of New York, today announced the appointment of Nicholas V. Biase as the Office’s Chief Public Information Officer, effective January 1, 2022.

Mr. Biase has been with the Office as a senior public affairs officer and director of social media in the Public Information Office.  Prior to his tenure at the U.S. Attorney’s Office, Mr. Biase was an agent, investigator, and director with the Essex County Prosecutor’s Office.

In making the appointment, U.S Attorney Damian Williams said: “Over his 15-plus years of dedicated service, Nick has been a vital liaison for an Office in the media capital of the world, and he has been a trusted counselor and confidante to every U.S. Attorney he has served.  Nick has also developed close working relationships with our law enforcement partners, and he is respected by the press corps for his professionalism, integrity, and candor.  He has been a leader in our press office for years, and it is my pleasure to formally announce his appointment as Chief Public Information Officer.”

Mr. Williams added: “I also want to thank Jim Margolin, the outgoing Chief Public Information Officer, who is retiring after more than eight years of outstanding service to the Office, and nearly 34 years of dedicated public service.  We will miss him dearly, and wish him the best as he embarks on his exciting new chapter.”

Damian Williams, the United States Attorney for the Southern District of New York, Ricky Patel, the Acting Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Philip R. Bartlett, Inspector-in-Charge of the New York Office of the United States Postal Inspection Service (“USPIS”), Frank Russo, Director, Field Operations, New York, U.S. Customs and Border Protection (“CBP”), and Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a Superseding Indictment charging VICTOR ALMONTE and MICHAEL ESPOSITO with conspiracy to distribute and possess with intent to distribute synthetic cannabinoids and to distribute controlled substances using the internet.  The case, in which four other individuals previously were charged and arrested, is assigned to United States District Judge J. Paul Oetken.

ALMONTE and ESPOSITO were arrested this morning and will be presented later today in Manhattan federal court before United States Magistrate Judge Katharine H. Parker.

U.S. Attorney Damian Williams said: “Trafficking of synthetic cannabinoids – sometimes called K2 or Spice – poses a serious threat to public health and safety.  Packaged attractively to appeal to teenagers and young adults, synthetic cannabinoids are in reality toxic concoctions that can be very dangerous to consume.  As alleged, the defendants used websites they operated to distribute massive quantities of synthetic cannabinoids throughout the United States.  Thanks to our law enforcement partners, the defendants have been arrested and their dangerous business has been dismantled.”

HSI Acting Special Agent-in-Charge Ricky Patel said: “As alleged in the indictment, the defendants purported to sell potpourri and herbs but were instead peddling mass amounts of dangerous synthetic cannabinoids to the public. What made these offenses even more egregious were that the defendants allegedly continued to engage in these illegal activities after the arrest of four co-conspirators involved in the scheme, which displayed a blatant disregard for the rule of law – that will not be tolerated.  HSI, in conjunction with its partners, will stand together and bring to justice malicious actors that use the internet to poison the public and put the health and safety of their customers at risk, just to turn a profit.”

USPIS Inspector-in-Charge Philip R. Bartlett said: “Today’s indictment of Almonte and Esposito is an example of the commitment of Postal Inspectors and their law enforcement partners to keep the streets safe from illegal drugs, while preventing criminal misuse of the mail.”

CBP New York Field Operations Director Frank Russo said: “U.S. Customs and Border Protection is proud of the expertise we provide in support of investigations that result in the takedown of criminal enterprises. Today’s arrest is an example of CBP’s interagency partnerships and collaborative efforts to detect, disrupt, and deter transnational criminal organizations.”

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

From February 2019 until May 2021, Niaz Khan, Noel Sanabria, Andre Gomes, Patrick Patterson, VICTOR ALMONTE, and MICHAEL ESPOSITO (the “Defendants”) operated a scheme to distribute massive quantities of smokeable synthetic cannabinoids (“SSC”), colloquially referred to as “K2” or “Spice,” containing controlled substances and/or a controlled substance analogue, throughout the United States.

The Defendants sold SSC through at least four different websites that they operated, namely K2HerbStore.com, HerbalPlug.com, LegalAromaTherapy.com, and LegalHerbalSmack.com (collectively, the “Websites”).  The SSC the defendants sold through the Websites included dried, shredded plant material onto which synthetic cannabinoid chemicals had been sprayed.  The SSC distributed by the scheme was branded with colorful graphics and distinctive names, including “Train Wrecked,” “Scooby Snax Kush,” “Bizarro,” “AK 47,” “Hi5 Triple X,” “Evil Santa,” “Krazy Turkey,” “Sexy Monkey,” “W.T.F.,” and “COVID-19 Coronavirus Limited Edition.” 

In an effort to conceal their criminal activity and advertise their illegal products, the Defendants used names for certain of the Websites that falsely represented that their SSC products were “legal.”  The defendants also sometimes misleadingly described their SSC products publicly as “not for human consumption,” “potpourri,” “herbal incense,” and “legal aroma therapy,” when, in fact, the defendants intended that the SSC would be consumed by drug users and they knew that their conduct was unlawful.

On May 20, 2021, Khan, Sanabria, Gomes, and Patterson were arrested in connection with the charges contained in the Indictment.  Notwithstanding those arrests and the unsealing of the Indictment, ALMONTE and ESPOSITO continued to perpetrate the SSC distribution scheme until in or about December 2021.

Over the course of the scheme, the Defendants shipped thousands of packages of SSC through the United States mail from the Bronx, New York, to customers in all 50 states and the District of Columbia, which contained a total of hundreds of kilograms of SSC.  The defendants earned more than approximately $1 million from their illegal marketing and sale of SSC during the course of the scheme.

*                      *                      *

ALMONTE, 42, and ESPOSITO, 29, both of Queens, New York, are each charged with conspiracy to distribute and possess with intent to distribute controlled substances and a controlled substance analogue, and to distribute controlled substances using the internet, which carries a maximum sentence of 20 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 defendants will be determined by the judge.  

Mr. Williams praised the outstanding investigative work of the NYPD, HSI, USPIS, and the New York Office of U.S. Customs and Border Protection.  The long-term investigation of this case was partially funded by the New York/New Jersey High Intensity Drug Trafficking Area (“HIDTA”), a federal grant program that invests in law enforcement partnerships to build safe and healthy communities.

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Rebecca T. Dell and Robert B. Sobelman are in charge of the prosecution. 

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

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the Superseding Indictment, and the description of the Indictment and 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 that STEVEN BROWN, a/k/a “BI,” was sentenced to 260 months in prison today for participating in the August 2, 2009, murder of Derrick Moore in the Bronx.  BROWN previously pled guilty before U.S. District Judge Katherine Polk Failla, who imposed today’s sentence.  Today’s sentence was imposed in addition to a 115-month sentence that BROWN previously served for related narcotics conduct in the Middle District of Pennsylvania.

U.S. Attorney Damian Williams said: “More than a dozen years ago, Steven Brown, the leader of a violent drug crew, ordered the killing of rival street crew member Derrick Moore.  This prosecution and today’s sentence show that our Office is committed to curbing gang violence and making our neighborhoods safer for the law-abiding residents who make their homes there.”

According to the allegations contained in the Indictment and statements made in court, including at BROWN’s plea proceeding and sentencing:

The Taylor Avenue Crew was a criminal enterprise that operated principally in and around the Bronx from at least 2007 up to and including 2015.  The Taylor Avenue Crew sold cocaine base, commonly known as “crack cocaine,” primarily in and around Taylor Avenue in the Bronx.  The Taylor Avenue Crew controlled crack cocaine sales within this area by prohibiting and preventing non-members, outsiders, and rival narcotics dealers from distributing crack cocaine in the area controlled by the Crew.  The Taylor Avenue Crew also committed acts of violence in the area against rival gangs, including assaults, attempted murder, and murder.

Members and associates of the Taylor Avenue Crew also allied themselves with crews from nearby areas of the Bronx.  One such crew included the Creston Avenue Crew, a criminal enterprise that operated principally in and around the Bronx, New York, from at least 2003 up to and including 2011 and whose members sold cocaine and marijuana primarily in and around Creston Avenue in the Bronx.  Members of the Taylor and Creston Avenue Crews associated with each other and assisted each other by, among other things, carrying out acts of violence on each other’s behalf upon request by the leaders of the respective crews.  One such act of violence was the murder of 22-year-old Derrick Moore.  In August 2009, after escalating violence between the Taylor Avenue Crew and a rival crew, BROWN, who was the head of the Taylor Avenue Crew, ordered the murder of Moore.  To carry out the murder, BROWN requested the assistance of the Creston Avenue Crew, whose members then shot and killed Moore.

*                *                *

In addition to the prison term, BROWN, 42, of the Bronx, New York, was sentenced to five years of supervised release and $6,445 in restitution.

Mr. Williams praised the outstanding investigative work of the New York City Police Department, the Drug Enforcement Administration, Homeland Security Investigations, and the Federal Bureau of Investigation.  Mr. Williams also thanked the United States Attorney’s Office for the Middle District of Pennsylvania for its assistance.

Assistant U.S. Attorneys Maurene Comey, Jason Swergold, and Peter Davis are in charge of the prosecution.  The case is being handled by the Office’s Violent and Organized Crime Unit.

Damian Williams, United States Attorney for the Southern District of New York, announced that MARCUS CHAMBERS, 30, a/k/a “Chino,” a/k/a “Chi D,” a/k/a “SP,” pled guilty today to participating in the murder of Jonathan Johnson, 21, on March 18, 2011, in White Plains, New York.  

U.S. Attorney Damian Williams said: “In March 2011, Jonathan Johnson was shot dead, the victim of senseless drug-related violence.  Marcus Chambers has now admitted to participating in the murder while robbing Johnson of marijuana.  Thanks to the dedication and hard work of our law enforcement partners, Chambers now faces significant prison time for this terrible crime.”

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

On or about March 18, 2011, CHAMBERS and his codefendant Darnell Kidd murdered Jonathan Johnson by shooting him during the course of an armed robbery for marijuana in White Plains, New York. CHAMBERS arranged by phone to purchase the marijuana from Johnson.  CHAMBERS and Kidd met with Johnson to rob him of marijuana, and during the robbery, Johnson was shot and killed.

*                      *                     *

CHAMBERS pled guilty to one count of Hobbs Act robbery, in violation of 18 U.S.C. § 1951 and 18 U.S.C. § 2, which carries a maximum penalty of 20 years in prison.  In connection with his guilty plea, CHAMBERS admitted his role in the murder.  CHAMBERS also pled guilty to one count of conspiracy to commit Hobbs Act robbery, in violation of 18 U.S.C. § 371, which carries a maximum penalty of five years in prison. 

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

CHAMBERS will be sentenced on March 22 or 23, 2022, by U.S. District Judge Nelson S. Román, to whom the case is assigned. 

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

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Olga Zverovich and Christopher Brumwell are in charge of the prosecution.

The Indictment against Darnell Kidd is merely an accusation, and he is presumed innocent unless and until proven guilty.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that ROBERT LEMKE, a California man who threatened members of Congress and journalists in connection with the outcome of the 2020 presidential election, was sentenced to 36 months in prison after previously having pled guilty to making threatening interstate communications.  U.S. District Judge Alvin K. Hellerstein imposed today’s sentence.

U.S. Attorney Damian Williams said: “Robert Lemke, refusing to accept the result of the 2020 presidential election, sent messages threatening dozens of victims, including journalists, elected officials, and their families, for the perceived offense of stating the facts.  Rather than attempting to effect change through the lawful forms of expression that all of us Americans still enjoy, Lemke sought to quell freedom of expression, to intimidate and instill fear in others by threats of violence.  Today, Robert Lemke was rightly sentenced to prison for his conduct.”

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

From November 2020 through early January 2021, LEMKE sent threatening electronic and audio messages to approximately 50 victims, including journalists and politicians, targeting those individuals because of their statements expressing that then-President Trump had lost the 2020 presidential election.  On January 6, 2021, the same day that individuals purporting to protest the 2020 presidential election gathered in Washington, D.C., and stormed the Capitol Building, LEMKE sent a series of these threatening text messages to journalists, members of Congress, other politicians, and their families.

As the attack on the Capitol Building was ongoing, LEMKE sent threatening text messages to a New York City-based family member of a journalist (the “Journalist”), stating: “[The Journalist’s] words are putting you and your family at risk.  We are nearby, armed and ready.  Thousands of us are active/retired law enforcement, military, etc.  That’s how we do it.”

At approximately the same time that LEMKE was sending threats directed at the Journalist, LEMKE also sent threats to the brother of a New York City-based U.S. Congressman (the “Congressman”), citing the Congressman’s statements about the result of the 2020 presidential election.  LEMKE’s text messages, which included a picture of a home in the same neighborhood as the home of the Congressman’s brother, stated:

Your brother is putting your entire family at risk with his lies and other words.  We are armed and nearby your house.  You had better have a word with him.  We are not far from his either.  Already spoke to [the Congressman’s son] and know where his kids are.

. . . your words have consequences.  Stop telling lies; Biden did not win, he will not be president.  We are not[] white supremacists.  Most of us are active/retired law enforcement or military.  You are putting your family at risk.  We have armed members near your home. . . .  Don’t risk their safety with your words and lies.

LEMKE acquired and used at least three different phone numbers and various electronic accounts to mask his identity when sending threats to his victims.  LEMKE was not in fact affiliated with law enforcement or the U.S. military as he claimed in some of his threats.  On or about November 7, 2020, LEMKE posted to Facebook: “Folks.  Be ready for war.  Trump has refused to cede.  Evidence shows fraud occurred and the Supreme Court cases will be successful.  We blockchained and watermarked ballots in 16 states.  Trump will prevail.[] Spread this message. . . . FAITH my fellow Republicans.  Do not give up.”

*                      *                      *

In addition to the prison sentence, LEMKE, 36, was sentenced to three years of supervised release.

Mr. Williams praised the outstanding investigative work of the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the Federal Bureau of Investigation (“FBI”), the New York City Police Department, and over 50 other federal, state, and local agencies.  Mr. Williams also thanked the U.S. Attorney’s Office for the Northern District of California and the FBI’s San Francisco Field Office for their assistance.

The case is being handled by the Office’s National Security and International Narcotics Unit.  Assistant United States Attorneys Kimberly J. Ravener and Kyle A. Wirshba are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that defendants JORGE NAVARRO received a sentence of sixty months’ imprisonment today for his leading role in the felony drug misbranding and adulteration charges arising from this Office’s investigation of the abuse of animals through the use of performance enhancing drugs and as charged in United States v. Navarro et al., 20 Cr. 160 (MKV).  NAVARRO was sentenced by U.S. District Judge Mary Kay Vyskocil, who furthered ordered that NAVARRO pay $26,860,514 in restitution for the fraud perpetrated through his doping program. 

U.S. Attorney Damian Williams said:  “Jorge Navarro’s case reflects failings, greed, and corruption at virtually every level of the world of professional horse racing. For money and fame, corrupt trainers went to increasing extremes to dope horses under their care. Unscrupulous owners, who stood to profit directly, encouraged and pressured trainers to win at any cost. Veterinarians sworn to the care and protection of their patients routinely violated their oaths in service of corrupt trainers and to line their own pockets. Assistants and grooms all witnessed animal abuse in the service of greed, but did little to stop such conduct, and engaged in myriad ways to support notoriously corrupt trainers. Structures designed for the protection of the horses abused in this case failed repeatedly; fixtures of the industry – owners, veterinarians, and trainers – flouted rules and disregarded their animals’ health while hypocritically incanting a love for the horses under their control and ostensible protection. Standing as the keystone for this structure of abuse, corruption, and duplicity was Jorge Navarro, a trainer who treated his animals as expendable commodities in the service of his ‘sport.’ Today’s sentence appropriately condemns the danger inherent in Navarro’s crime and reflects the seriousness with which this Office takes the kind of abuse that Navarro practiced.”

According to the allegations contained in the Superseding Indictment, prior charging instruments and other filings in this case[1], and statements during court proceedings:

The charges in the Navarro case arise 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 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, like NAVARRO, 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. Veterinarians, including those whom NAVARRO directed in the corrupt administration of illegal substances, profited from the sale and administration of these medically unnecessary, misbranded, and adulterated substances.

NAVARRO operated his doping scheme covertly, importing misbranded “clenbuterol” that he both used and distributed to others, avoiding explicit discussion of PEDs during telephone calls, and working with others to coordinate the administration of PEDs at times that racing officials would not detect such cheating. Among the horses that NAVARRO trained and doped was XY Jet, a thoroughbred horse that won the 2019 Golden Shaheen race in Dubai.  Among NAVARRO’s preferred PEDs were various “blood building” drugs, which, when administered before intense physical exertion, can lead to cardiac issues or death.

NAVARRO’s crime was far from a single lapse in judgment. Rather, NAVARRO engaged in repeated and persistent efforts to cheat over the course of years, cycling through various sources of supply, and pursuing aggressively new means to illegally dope horses. Throughout, NAVARRO maintained a flippant attitude towards his dangerous and illegal conduct. NAVARRO, notoriously known in the horse racing world as the “Juice Man” due to his routine doping, kept a pair of customized shoes in his barn with the words “#JUICE MAN” emblazoned across the front:

* * *

In addition to the prison sentence, NAVARRO was ordered to payment of restitution in the amount of $26,860,514, reflecting winnings obtained through his fraudulent doping scheme.

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

[1] As to Navarro co-defendants, 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, announced that LUIS MERCED pled guilty today in Manhattan federal court before U.S. District Judge Edgardo Ramos to charges relating to his involvement in the murder of Efren Cardenas on February 10, 1989, in Brooklyn, New York.  William Skinner and Dorian Brooks, a/k/a “Kool-Aid,” also pled guilty, on December 8, 2021, to charges relating to their involvement in the murder of Efren Cardenas.           

U.S. Attorney Damian Williams said: “Luis Merced, William Skinner, and Dorian Brooks were responsible for the murder of Efren Cardenas in the Bedford-Stuyvesant neighborhood of Brooklyn in February 1989.  Today’s guilty plea shows that we will never lose resolve in our pursuit of justice.  I commend the extraordinary efforts of our law enforcement partners and the Special Agents of the U.S. Attorney’s Office, who worked tirelessly to investigate Efren Cardenas’s murder.”

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

On February 10, 1989, MERCED, Skinner, and Brooks participated in a plot to shoot and kill Efren Cardenas, 30, in the vicinity of 280 Herkimer Street in the Bedford-Stuyvesant neighborhood of Brooklyn.  MERCED arranged for Cardenas to deliver multiple kilograms of cocaine to an apartment building in Brooklyn, where he had recruited Skinner and Brooks to gun down Cardenas and steal the cocaine.  When Cardenas arrived at the scene, Skinner and Brooks shot him over 20 times.  MERCED, Skinner, and Brooks committed the murder in furtherance of a conspiracy to distribute more than five kilograms of cocaine.           

*                *                *

MERCED, 50, pled guilty to one count of conspiring to distribute cocaine and crack cocaine, which carries a maximum prison term of 20 years.  During his guilty plea, MERCED admitted to his role in the murder of Efren Cardenas.  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.  

MERCED is scheduled to be sentenced by Judge Ramos on March 24, 2022.

Mr. Williams praised the outstanding investigative work of the Special Agents of the U.S. Attorney’s Office for the Southern District of New York and the New York City Police Department’s Cold Case Homicide Squad.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Andrew K. Chan, Adam S. Hobson, and Frank J. Balsamello are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Dermot Shea, Police Commissioner of the City of New York (“NYPD”), and Kevin P. Bruen, Superintendent of the New York State Police (“NYSP”), announced today the guilty plea of DAVID KAUFMAN, a/k/a “David Khalifa,” a/k/a “John Morray,” a/k/a “Big Man,” to stalking multiple victims between October 2019 and August 2020.  KAUFMAN pled guilty today before U.S. District Judge Nelson S. Román, to whom the case is assigned.

U.S. Attorney Damian Williams said: “As he admitted in court, David Kaufman is an adherent of the ‘Incels’ who stalked and terrorized two victims, not only harassing them by impersonating them online, but also graphically threatening to murder them.  Thanks to the FBI, the NYPD, the State Police, and other law enforcement partners, Kaufman is in custody and awaiting sentencing for his admitted crime.”

FBI Assistant Director Michael J. Driscoll said: “Kaufman’s overt hatred of women and sickening threats to harm potential victims caught the eye of the FBI’s Joint Terrorism Task Force in New York.  We know acts of violence among those in the Incel community have increased in recent years.  As Kaufman’s guilty plea brings this topic closer to the forefront, we want the public to know the law enforcement community is aware of the threat and working together to confront it.”

NYSP Superintendent Kevin P. Bruen said: “I applaud the hard, difficult work done by law enforcement in this case, which has led to this plea and ensures the defendant will be held accountable for his crimes. We have zero tolerance for anyone who creates fear online, terrorizing victims because of their gender. Together, we will continue to seek justice for those who have been victimized and protect those vulnerable to these types of crimes.”

NYPD Commissioner Dermot Shea said: “The abhorrent acts carried out by David Kaufman are not just isolated offenses but representative of a larger pattern of criminality that tears at the very fabric of our society. I commend our NYPD detectives, our law enforcement partners, those in the FBI’s New York Joint Terrorism Task Force, and the prosecutors in the United States Attorney’s Office in the Southern District of New York for their hard work in ensuring a measure of justice was achieved today."

According to the allegations in the Complaint and the Indictment, as well as statements made in White Plains federal court: 

Background on “Incels”

KAUFMAN self-identifies as a member of the “Incels,” or the “Involuntary Celibate,” which refers to a group of individuals, typically heterosexual, white males, who adhere to a violent and misogynist ideology of male supremacy.  Incels believe they are entitled to sex with women and to women’s bodies, and they blame women for refusing to have sex with them.  Incels have an active online community and over the last seven years, Incels also have committed acts of violence against women across the world, including in the United States.  For example, in 2014, a self-proclaimed Incel named Elliot Rodger declared a “War on Women” and killed six people and injured 14 others near a college campus in California.  Prior to these attacks, Rodger posted a video manifesto online, in which he explained that he planned his attack to punish women for rejecting him and for depriving him of sex, and to punish sexually active men because he envied them.

KAUFMAN Harasses and Threatens Victim-1 and Victim-2

Beginning in or about October 2019, KAUFMAN sent two victims (“Victim-1” and “Victim-2”), among others, violent and threatening messages using various social media accounts.  In these messages, KAUFMAN self-identified as an Incel and expressed his hatred of women.  For example:

• On or about June 24, 2020, KAUFMAN sent the following message to Victim-1:  “Hey wanna hear a joke?  What’s worse than 10 Stacy’s nailed to one tree?  One Stacy nailed to ten trees [laughing crying face emoji].”  “Stacy” is an Incel term that refers to an attractive female who rejects or refuses to have sex with an Incel, is hated by Incels, and is targeted by Incels for harassment, vitriol, humiliation, and violence.

• On or about June 29, 2020, KAUFMAN sent a series of messages to Victim-2.  These messages included an image of one of Elliot Rodger’s victims, a deceased female who had been stabbed to death, accompanied by the following message:  “This is what happened when a woman said ‘no’ to Elliot Rodger . . . . Hopefully [Victim-1] never said no to someone just like Elliot Rodger.” 

• In or about July 2020, KAUFMAN posted the following messages:  “Don’t piss off BIG MAN” and “When [Victim-1] and I are dead, we’ll be in heaven together forever.”

• On or about July 11, 2020, KAUFMAN sent the following message to Victim-1:  “Women have done nothing but spit in my face.  Soon I’ll be getting a gun.”

• On or about July 12, 2020, KAUFMAN posted the following messages:  “A beautiful environment is the darkest hell, if you have to experience it all alone . . . –Elliot Rodger” and “I don’t think [Victim-1] will be laughing too much later on.”

KAUFMAN also created social media accounts using the first and last names of Victim-1 and Victim-2, respectively, and impersonated Victim-1 and Victim-2 online.

In the summer of 2020, law enforcement officers approached KAUFMAN and told him to stop harassing Victim-1 and Victim-2.  On or about July 14, 2020, an order of protection was issued in Westchester County ordering KAUFMAN to, among other things, refrain from communication or any other contact with Victim-1 or Victim-2. 

Notwithstanding the order of protection and warnings by law enforcement, KAUFMAN continued to send harassing and threatening messages to Victim-1 and Victim-2 through in or about August 2020.  On or about August 16, 2020, KAUFMAN posted a picture of himself licking a photograph of Victim-1.  KAUFMAN also conducted online surveillance of Victim-1’s residence and researched how to illegally purchase a gun and assemble a semi-automatic rifle.

*                *                *

KAUFMAN, 27, of Peekskill, New York, pled guilty to one count of stalking, in violation of 18 U.S.C. §§ 2261A(2)(a) and 2261(b)(6), which carries a mandatory minimum sentence of one year in prison and a maximum sentence of five years in prison.  The statutory minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  KAUFMAN is scheduled to be sentenced before Judge Román on March 16, 2022, at 2:00 p.m.

Mr. Williams praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD, as well as the NYSP.  Mr. Williams also thanked the U.S. Postal Inspection Service, the Cortlandt County Police Department, the Stamford Police Department, the Peekskill Police Department, the Mt. Pleasant Police Department, and the Westchester County District Attorney’s Office for their assistance and cooperation.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorney Jane Kim is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that PUNEET DIKSHIT, a former partner in a global management consulting firm (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 an investment bank (the “Investment Bank”) – which DIKSHIT and the Consulting Firm were advising – would be acquiring GreenSky, Inc. (“GreenSky”).  The defendant pled guilty before U.S. District Judge Colleen McMahon.

U.S. Attorney Damian Williams said: “Barely a month after he was charged, Puneet Dikshit admitted in court today that he used his access to material nonpublic information about a pending acquisition of GreenSky, Inc., to trade in GreenSky call options.  This conduct, which netted the defendant nearly half a million dollars in tainted profits, broke the law and violated the defendant’s duties to his firm and its client.  Now Puneet Dikshit awaits sentencing for his admitted crime.”

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

GreenSky was a publicly traded financial technology company that provided technology to banks and merchants to make loans to consumers for home improvement, solar, healthcare, and other purposes.  GreenSky’s common stock traded under the symbol “GSKY” on the NASDAQ.

Between on or about November 2019 and on or about July 2020, and again between on or about April 2021 and on or about September 2021, the Investment Bank engaged the Consulting Firm to provide various consulting services related to its consideration of an acquisition of GreenSky and the post-acquisition integration of GreenSky.  DIKSHIT was one of the Consulting Firm partners leading these engagements.  In that role, he had access to material nonpublic information, which he misappropriated and, in violation of the duties that he owed to the Investment Bank and the Consulting Firm, used to trade GreenSky call options. 

DIKSHIT engaged in this trading between on or about July 26, 2021, and on or about September 15, 2021 – at the same time he was leading the Consulting Firm team that was advising the Investment Bank about its potential acquisition of GreenSky.  At various times between on or about July 26, 2021, and on or about September 13, 2021, DIKSHIT purchased and sold relatively small numbers of GreenSky call options, which had expiration dates weeks or months from the time of purchase.  However, in the two days before the September 15, 2021, public announcement that the Investment Bank would be acquiring GreenSky, DIKSHIT sold all of these longer-dated GreenSky call options and purchased approximately 2,500 out-of-the-money GreenSky call options that were due to expire just a few days later, on September 17, 2021.  After the deal to purchase GreenSky was announced, DIKSHIT sold these options and realized profits of approximately $450,000.

*                *                *

DIKSHIT, 40, of New York, New York, pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison.  The statutory maximum sentence is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  DIKSHIT is scheduled to be sentenced by Judge McMahon on March 30, 2022, at 2:00 p.m.

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

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that SERGEI POLEVIKOV, a former analyst employed by an asset management firm, pled guilty to one count of securities fraud in connection with his multi-year scheme to commit insider trading by misappropriating confidential information about pending trades by his former employer.  POLEVIKOV was arrested in September of this year, and pled guilty today in Manhattan federal court before U.S. District Judge Lewis J. Liman. 

U.S. Attorney Damian Williams said: “As he admitted in court today, Sergei Polevikov broke the law when he exploited material, nonpublic information to make personal trades ahead of his employer’s large institutional trades.  Polevikov now awaits sentencing for his crime, and he must also forfeit more than $8 million in illicit profit.”

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

From at least in or about 2014 through in or about October 2019, POLEVIKOV was employed as a quantitative analyst at an asset management firm with headquarters in New York, New York (the “Employer Firm”).  In his role at the Employer Firm, POLEVIKOV had regular access to information regarding contemplated securities trades on behalf of the Employer Firm’s clients, which included investment companies.  During the period charged in the Complaint, POLEVIKOV engaged in a front-running scheme to misappropriate confidential, material, nonpublic information about the securities trade orders of the Employer Firm on behalf of its clients in order to engage in short-term personal securities trading in a brokerage account opened in his wife’s name.  POLEVIKOV’s trading scheme was designed to take advantage of relatively small price movements in a company’s stock that followed from large securities orders executed by the Employer Firm on behalf of its clients.  In total, POLEVIKOV’s scheme yielded more than $8.5 million in illicit profits.     

As part of his plea agreement, POLEVIKOV has agreed to forfeit $8,564,977 on or before April 1, 2022. 

POLEVIKOV is scheduled to be sentenced by Judge Liman on April 12, 2022.

Mr. Williams praised the investigative work of the Federal Bureau of Investigation.  Mr. Williams also thanked the Securities & Exchange Commission, which brought a related civil action against POLEVIKOV.

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

Damian Williams, the United States Attorney for the Southern District of New York, Jonathan Mellone, Special Agent in Charge of the New York Regional Office of the U.S. Department of Labor Office of Inspector General (“DOL-OIG”), Ricky Patel, Acting Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Damon Wood, Inspector in Charge, Philadelphia Division of the United States Postal Inspection Service  (“USPIS”),  announced today the unsealing of a complaint charging MARILUZ FERMIN, BELLANILDA FERMIN, and JUAN NOLASCO with conspiracy to commit wire fraud, theft of government benefits, and aggravated identity theft in connection with a COVID-19 unemployment benefit scheme that attempted to steal more than $1.3 million from the New York Department of Labor (“NY DOL”).  MARILUZ FERMIN, BELLANILDA FERMIN, and NOLASCO were arrested this morning in Yonkers, New York, and will be presented this afternoon before United States Magistrate Judge Gabriel W. Gorenstein.

U.S. Attorney Damian Williams said: “As alleged, the defendants, working in concert, fraudulently filed claims for COVID-19 unemployment benefits under the names and social security numbers of at least 75 other people, making off with nearly $700,000 and attempting to steal more than $1.3 million.  Now all three are in custody and facing serious federal charges.”    

DOL-OIG Special Agent in Charge Jonathan Mellone said: “The Unemployment Insurance Program exists to provide needed assistance to qualified individuals who are unemployed due to no fault of their own.  Fraud against the Unemployment Insurance Program distracts state workforce agencies from ensuring that benefits go to individuals who are eligible to receive them. The Office of Inspector General will continue to work closely with our law enforcement partners, to investigate those who allegedly exploit the Unemployment Insurance Program.”  

HSI Acting Special Agent in Charge Ricky Patel said: “As alleged in the Complaint, these individuals attempted to manipulate a program designed to help Americans and U.S. businesses pay their bills, retain employees, and keep afloat on the heels of a global pandemic that took the lives of millions throughout the world.  Each defendant allegedly used the personal information of more than 70 people in this attempt, and succeeded in stealing at least $687,000 in COVID unemployment benefits – stealing not just from the government, but from everyday Americans who need it most.  HSI and our partners will use all of our resources to seek out and bring to justice those that attempt to steal benefits meant to help those struggling to get back on their feet from COVID-19.”

USPIS Inspector in Charge Damon Wood said: “These individuals allegedly took advantage of the pandemic and those truly in need of assistance when they developed a scheme to lie and steal from the government and the American public.  Today, they have been brought to justice for their alleged crimes by Postal Inspectors and their law enforcement partners whose mission is to keep the public safe from criminal activity.”

As alleged in the Complaint[1]:

From May 2020 through October 2020, MARILUZ FERMIN, BELLANILDA FERMIN, and JUAN NOLASCO engaged in a scheme to obtain COVID-19 unemployment benefits by fraudulently filing and verifying applications using the names and social security numbers of at least 75 other people.  The NY DOL was alerted to the suspicious activity based on metadata associated with the applications (the “Fraudulent Applications”), which indicated that the Fraudulent Applications were submitted from the same internet protocol (“IP”) address.  During that same time, the IP Address was used to log into unemployment benefits claims – including the Fraudulent Applications – at least approximately 900 times.  Further, MARILUZ FERMIN, BELLANILDA FERMIN, and JUAN NOLASCO exchanged text messages that included, among other things, personal identifying information – such as names, email accounts, and dates of birth – used in the Fraudulent Applications.  In addition, between in or about June 2020 and in or about August 2020, NOLASCO visited several ATM machines in the Bronx, New York, for the purpose of withdrawing funds issued as a result of the Fraudulent Applications.  The scheme filed claims for more than $1.3 million and succeeded in stealing at least $687,000 in COVID-19 unemployment benefits before the fraud was detected. 

*                *                *

MARILUZ FERMIN, 46, BELLANILDA FERMIN, 41, and JUAN NOLASCO, 37, are each charged with (1) conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, (2) theft of government benefits, which carries a maximum sentence of 10 years in prison, and (3) aggravated identity theft, which carries a mandatory two-year consecutive sentence.  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 would be determined by a judge.

Mr. Williams praised the outstanding investigative work of the DOL-OIG, the Internal Revenue Service - Criminal Investigation, HSI, USPIS, the Social Security Administration - Office of the Inspector General, and the NY DOL.

The case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Mitzi S. Steiner is in charge of the prosecution.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced today that GRANT GRANDISON was sentenced to 24 months in prison for making false statements to federal agents, which led to the shooting of two Deputy U.S. Marshals on December 4, 2020.  GRANDISON pled guilty on June 28, 2021, before U.S. Magistrate Judge Debra A. Freeman.  U.S. District Court Judge Kimba M. Wood imposed today’s sentence.

U.S. Attorney Damian Williams said:  “Grant Grandison lied when a team of Deputy U.S. Marshals, NYPD officers, and Massachusetts state troopers came to his apartment early on the morning of December 4, 2020 to arrest Andre Sterling, who was a fugitive from law enforcement.  After Grandison lied to them, two federal agents were shot and injured that fateful morning, and several other agents were placed in serious danger.  Grandison will now serve a meaningful sentence in prison to account for his crimes.  This Office stands firmly behind all of our law enforcement partners, and especially the U.S. Marshals Service, as they work to enforce the laws and keep all New Yorkers safe.”

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

On or about November 20, 2020, Andre Sterling allegedly shot a Massachusetts State Trooper during a traffic stop in Hyannis, Massachusetts. Sterling fled from Massachusetts and was deemed a fugitive.  On or about November 24, 2020, a federal warrant was issued for Sterling’s arrest.

On the morning of December 4, 2020, several Deputy United States Marshals (the “Marshals”), along with officers from the New York City Police Department (“NYPD”) and state troopers from the Massachusetts State Police, traveled to GRANDISON’s apartment in the Bronx (the “Apartment”), where they believed that Sterling was located, in order to arrest Sterling.  The Marshals announced themselves as “U.S. Marshals” and encountered GRANDISON at the door.  The Marshals asked GRANDISON, in sum and substance, if anyone else was in the Apartment, and GRANDISON replied, in sum and substance, that no one else was in the Apartment.  At the time of GRANDISON’s statements to the Marshals, GRANDISON knew that Sterling was a fugitive, and that Sterling was hiding in a bedroom in the Apartment. 

The Marshals proceeded into the Apartment, at which point Sterling came out from a bedroom in the Apartment and began firing at the Marshals, striking and injuring two Marshals.  The Marshals returned fire, and Sterling was killed in the exchange.  Law enforcement agents recovered a firearm from near Sterling.

*              *             *

In addition to his prison sentence, GRANDISON was sentenced to three years of supervised release, and ordered to pay $80,775 in restitution.    

Mr. Williams praised the outstanding investigative work of the Special Agents of the United States Attorney’s Office for the Southern District of New York, the United States Marshals Service, the New York/New Jersey Regional Fugitive Task Force, the New York City Police Department’s 47 Precinct Detective Squad, and the Massachusetts State Police.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorney Alexandra N. Rothman is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that JOSE MARTINEZ-DIAZ, a/k/a “Tony Zinc,” who supplied over 5,000 kilograms of cocaine to the Puerto-Rico-based drug alliance, La Organización de Narcotraficantes Unidos (“La ONU”), was sentenced by U.S. District Judge Jesse M. Furman to 20 years in prison.  MARTINEZ-DIAZ previously pled guilty to participating in a racketeering conspiracy.  

U.S. Attorney Damian Williams said: “Jose Martinez-Diaz supplied a staggering quantity of cocaine, a dangerous and addictive drug, to a violent drug trafficking organization.  Some of the cocaine he supplied came to New York, where it was distributed out of, among other places, a daycare center in the Bronx.  To ensure his drug business flourished, Martinez-Diaz brokered violence and even used corrupt law enforcement officials.  Today Jose Martinez-Diaz was rightly sentenced to a lengthy prison term for his horrific crimes.”

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

MARTINEZ-DIAZ was a high-volume cocaine trafficker who supplied over 5,000 kilograms of cocaine to La ONU, a criminal enterprise involved in shipping thousands of kilograms of cocaine from Puerto Rico to New York.  Cocaine from La ONU was then 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.  In particular, members of the enterprise were ordered to shoot and kill suspected rival drug trafficking members.

MARTINEZ-DIAZ, or those working on his behalf, smuggled cocaine from the Dominican Republic to Puerto Rico, usually by boat.  The shipments often occurred as frequently as once per week, with such shipments containing 130 to 160 kilograms of cocaine.  MARTINEZ-DIAZ would then parcel out the shipments to La ONU members.

MARTINEZ-DIAZ used the machinery of La ONU to protect his narcotics trade.  For example, MARTINEZ-DIAZ arranged for corrupt members of the Puerto Rico Police Department (“PRPD”) to locate rival drug dealers and effect unwarranted traffic stops to control their movements or to isolate them until others from La ONU could attack them. 

In or about 2007, MARTINEZ-DIAZ ordered a shooting on Avenue Monserrate in Carolina, Puerto Rico.  The target was shot, but survived.

On another occasion, MARTINEZ-DIAZ paid a police officer $5,000 in connection with the attempted murder of a rival drug dealer known as “Taliban.”  The intended victim was shot, but survived.

MARTINEZ-DIAZ funded and assisted La ONU in its fight against its rival, La Rompe ONU.  For example, MARTINEZ-DIAZ provided money to La ONU members to purchase firearms.  In addition, MARTINEZ-DIAZ and others created a fake PRPD patrol car.  Members of La ONU used the fake patrol car to harass and intimidate members of La Rompe ONU, and to conduct shootings. 

MARTINEZ-DIAZ also worked with a corrupt Drug Enforcement Administration (“DEA”) agent, who helped MARTINEZ-DIAZ and others in the narcotics conspiracy evade detection by law enforcement. 

*                *                *

In addition to the prison term, Judge Furman sentenced MARTINEZ-DIAZ, 48, of Puerto Rico, to three years of supervised release, and ordered him to forfeit $6.875 million.

Mr. Williams praised the investigative work of the U.S. Postal Inspection Service, the DEA, 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 for 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 Lara Pomerantz, Justin Rodriguez, and Andrew Thomas are in charge of the prosecution.

Damian Williams, United States Attorney for the Southern District of New York, announced today the conviction of SYLVIA ASH, a justice of the New York State Supreme Court, and former chair of the Board of Directors of Municipal Credit Union (“MCU”), for conspiracy to obstruct justice, obstruction of justice, and making a false statement to a federal agent.  These charges arose from a scheme to impede the federal criminal investigation into fraud and corruption at MCU, a non-profit, multibillion-dollar financial institution, including misconduct committed by Kam Wong, the former chief executive officer (“CEO”), and Joseph Guagliardo, a former New York City Police Department Officer and member of MCU’s Supervisory Committee.  Wong and Guagliardo were charged separately and previously pled guilty to embezzlement from MCU.  ASH was convicted after a two-week jury trial before U.S. District Judge Lewis A. Kaplan and is scheduled to be sentenced on April 20, 2022 by Judge Kaplan. 

U.S. Attorney Damian Williams said: “Today’s conviction demonstrates our resolve in uncovering criminal conduct at the highest levels of MCU and ensuring that those who attempt to thwart a federal investigation face consequences for that corrosive conduct.  As the jury unanimously found, Sylvia Ash took repeated steps, over multiple months, to seek to obstruct the federal criminal investigation into financial misconduct at MCU that took place during Ash’s tenure as chair of the Board of Directors.  Obstruction of justice, particularly by a sitting state court judge, is a serious crime, and Ash now faces punishment for her obstruction scheme.”

According to the Complaint, Indictment, Superseding Indictment, publicly-available information, court filings, and evidence presented during the trial in Manhattan federal court:

Municipal Credit Union

MCU is a non-profit financial institution headquartered in New York, New York, which is federally insured by the National Credit Union Administration (“NCUA”).  MCU is the oldest credit union in New York State and one of the oldest and largest in the country, providing banking services to more than 500,000 members, and with more than $4 billion in member accounts, each of which is insured for at least $250,000 by the National Credit Union Share Insurance Fund, which is administered by the NCUA.  Membership in MCU is generally available to employees of New York City and its agencies, employees of the federal and New York state governments who work in New York City, and employees of hospitals, nursing homes, and similar facilities located within New York State.     

At all relevant times, MCU was overseen by a Board of Directors (the “Board”) and a Supervisory Committee (the “Supervisory Committee”), each of which was composed of members of MCU, who were not supposed to be compensated.  As a result of severe deficiencies in the Board’s and the Supervisory Committee’s oversight of the credit union, which came to light in connection with the federal investigation, the New York Department of Financial Services (“DFS”) removed the members of the Supervisory Committee in May 2018 and the Board in June 2018. Subsequently, DFS appointed NCUA as the conservator for the credit union.

ASH

ASH is a sitting New York State Supreme Court Justice in Kings County.  ASH has served as a judge in the New York State court system since approximately 2006, first as a Kings County Civil Court Judge, and then, starting in 2011, as a Kings County Supreme Court Justice.  In or about January 2016, ASH was appointed as the presiding judge in the Kings County Supreme Court’s Commercial Division.  After the charges in this case were unsealed, ASH was suspended from her position.

ASH served on MCU’s Board from in or about May 2008 until on or about August 15, 2016, when she resigned.  From in or about May 2015 until her resignation, ASH served as the chair of the Board.  ASH resigned after a complaint was filed against her by the New York State Commission on Judicial Conduct arising from a conflict of interest between her position as a state judge and her membership on MCU’s Board.  More than a year before her resignation, ASH had been instructed to resign from MCU’s Board by the Advisory Committee on Judicial Ethics, which instruction she disregarded.

From at least in or about 2012 through 2016, while serving as an MCU Board member and while Wong was CEO, ASH received annually tens of thousands of dollars in reimbursements and other benefits from MCU, including airfare, hotels, food and entertainment expenses for her and a guest to attend conferences both domestically and abroad, annual birthday parties at a minor league baseball stadium, payment for phone and cable bills, and electronic devices.  Even after her resignation from the Board, Wong continued to provide or cause MCU to provide ASH with benefits, such as Apple devices and sports tickets.  As a sitting state judge, ASH was required to report both her board service and gifts and benefits she received from any outside sources on an annual state disclosure form.  But between at least 2012 and 2018, ASH never reported her board service nor any gifts or benefits from MCU.

ASH’s Obstruction of Justice

In January 2018, after Wong, MCU’s then-CEO, had been approached by federal law enforcement agents investigating apparent financial misconduct by Wong, in an attempt to protect Wong, ASH agreed to and did sign a false and misleading memorandum purporting to explain and justify millions of dollars Wong had received from MCU.  Wong subsequently provided that false and misleading memorandum to federal agents in an attempt to demonstrate that the millions of dollars had purportedly been orally approved for him to receive by ASH in June 2015, when she was chair of the Board.  However, in truth, neither ASH nor the Board had approved the payment of those funds.

On March 1, 2018, shortly after Wong was placed on administrative leave by MCU, ASH was interviewed about the memorandum she signed for Wong.  During that interview, ASH admitted that the memorandum was not accurate, but attempted to justify the money that Wong received by stating that MCU’s then-current general counsel had told her that Wong’s employment contract gave him the option of receiving such money.  That statement was false.

On March 13, 2018, ASH was served with a federal grand jury subpoena (the “First Subpoena”), which required the production of documents related to various matters, including Wong’s compensation, and any communications with Wong through the date of the First Subpoena.  On April 6, 2018, during a telephonic interview with a federal agent, ASH falsely stated that she did not have any materials responsive to the First Subpoena.

On June 8, 2018—after Wong was charged with embezzlement from MCU and the Government executed a judicially-authorized search of the residence of Guagliardo—ASH was interviewed by telephone for a second time about the First Subpoena.  During that interview, ASH again falsely stated that she did not have any materials responsive to the First Subpoena. 

On June 18, 2018, ASH was served with a second federal grand jury subpoena (the “Second Subpoena”), which required the production of, among other things, all correspondence with Wong and Guagliardo; all documents regarding any criminal investigation, internal investigation, or audit related to Wong; and all documents regarding items of value ASH received from MCU, Wong, or Guagliardo.  Shortly afterward, ASH went to an Apple store and wiped an iPhone X that Wong had provided her in January 2018.  In addition, ASH deleted emails from her Gmail account, including all of her emails with Guagliardo, none of which she produced in response to either of the two federal grand jury subpoenas directed to her.  ASH also later wiped two MCU-issued iPads she had received.

On July 6, 2018, on ASH’s behalf, her then-counsel produced materials to the Government in response to the Second Subpoena.  This production was materially incomplete, and did not contain text messages, emails, and other documents ASH possessed or had under her custody or control that were responsive to the Second Subpoena.

On July 9, 2018, ASH attended a voluntary interview with the U.S. Attorney’s Office.  During this interview, while accompanied by her then-counsel, ASH made multiple false statements, including repeating false statements regarding her purported conversations with MCU’s former general counsel about Wong’s receipt of cash payments and falsely claiming that she and her aunt took a trip to Las Vegas paid for by MCU, including airfare, lodging, and entertainment expenses, after she resigned because all of her travel arrangements were paid for by MCU before she resigned, when in truth all of the expenses were paid for after she resigned.  

On or about October 11, 2019, ASH was arrested and her cellphone was seized.  After obtaining a judicially-authorized search warrant, ASH’s phone was searched, which revealed, among other things, numerous text messages, including with Wong and Guagliardo, that were concealed in response to the First and Second Subpoenas.

*                *                *

ASH, 64, of Brooklyn, New York, was convicted of one count of conspiracy to obstruct justice, which carries a maximum penalty of five years in prison; one count of obstruction of justice, which carries a maximum penalty of 20 years in prison; and one count of making false statements, which carries a maximum penalty of five years in prison.  The maximum potential penalties are prescribed by Congress and are provided here for informational purposes only, as sentencing of the defendant will be determined by Judge Kaplan. 

On June 4, 2019, Wong was sentenced to 66 months in prison for embezzlement from MCU and was ordered to forfeit $9,890,375 and to pay restitution in the same amount to MCU.

On July 23, 2020, Guagliardo was sentenced to 27 months in prison for embezzlement from MCU and was ordered to forfeit $425,514 and to pay $468,189 in restitution to MCU. 

U.S. Attorney Williams praised the outstanding work of the Special Agents of the United States Attorney’s Office.  Mr. Williams also thanked the New York County District Attorney’s Office and DFS for their assistance.

The case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Eli J. Mark, Daniel C. Richenthal, and Jonathan Rebold are in charge of the prosecution, with the assistance of Special Assistant U.S. Attorney Alona S. Katz from the New York County District Attorney’s Office.

Damian Williams, the United States Attorney for the Southern District of New York, and David P. Berry, Inspector General of the National Labor Relations Board, announced today the unsealing of a Complaint charging ANETT RODRIGUES with honest services fraud and bribery.  The charges stem from a scheme in which RODRIGUES, an employee of the National Labor Relations Board (“NLRB”), provided nonpublic NLRB documents to a co-conspirator in exchange for the regular payment of cash bribes.  RODRIGUES will be presented before United States Magistrate Judge Paul E. Davison in White Plains federal court later today.

U.S. Attorney Damian Williams said: “As alleged, Anett Rodrigues, a trusted employee of a federal agency with access to sensitive nonpublic information, monetized her position to divulge some of that information in exchange for bribes.  Rodrigues’s alleged selling of the information provided a competitive advantage to the alleged bribe payer’s company, but it also leaves Rodrigues facing multiple felony counts.”

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

The NLRB is a federal agency that enforces United States labor law relating to unfair labor practices and collective bargaining.  Among other functions, the NLRB serves fact-finding and dispute-resolution functions, in which it investigates and resolves disputes between and among labor unions, company management, and company employees throughout the United States, and supervises the formation and elections of labor unions. Employees seeking to engage the NLRB to investigate and resolve a dispute may do so by filing a “charge sheet” outlining their allegations with their local NLRB regional office, and employees seeking the NLRB’s assistance in forming or joining a union can do so by filing a “petition” with their local NLRB regional office.  These charge sheets and petitions are not immediately publicly available, though they are provided to the companies involved, typically within a matter of days, and may be available in redacted form via Freedom of Information Act requests, typically within a matter of weeks.

ANETT RODRIGUES used her employment with the NLRB to provide a competitive advantage to a co-conspirator (“CC-1”) who operated a Westchester County-based company that offered consulting services to clients – principally law firms – appearing before the NLRB. Between approximately 2017 and approximately 2021, RODRIGUES regularly provided cellphone photographs of NLRB charge sheets and petitions to CC-1, before they were otherwise available to CC-1 or to the public.  CC-1 in turn sold the documents to clients for a per-document fee.  In exchange this assistance, CC-1 regularly met with RODRIGUES to provide her with cash bribe payments.

*                *                *

RODRIGUES, 53, of Nutley, New Jersey, is charged with one count of conspiracy to commit honest services wire fraud and one count of honest services wire fraud, each of which carries a maximum sentence of 30 years in prison, and one count of bribery, which carries a maximum sentence of 15 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 NLRB Office of the Inspector General’s investigator and the Special Agents of the U.S. Attorney’s Office.

The case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Jeffrey C. Coffman and Derek Wikstrom 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 today the guilty plea of YE HEIN ZAW, a citizen of Myanmar, for his role in a conspiracy to assault and make a violent attack upon Myanmar’s Permanent Representative to the United Nations.  ZAW pled guilty today in White Plains federal court before U.S. District Judge Philip M. Halpern.

U.S. Attorney Damian Williams said: “As he admitted in court today, Ye Hein Zaw participated in a plot to injure or kill Myanmar’s ambassador to the United Nations in a planned attack that was to take place on American soil.  Zaw now awaits sentencing for his crime.  I commend the tireless efforts of our law enforcement partners at all levels of government to ensure the safety of foreign diplomats and officials in the United States and bring the perpetrators of this plot to justice.”

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

Between at least in or about July 2021 through at least on or about August 5, 2021, ZAW, a citizen of Myanmar residing in New York, conspired with others to injure or kill Myanmar’s Permanent Representative to the United Nations (the “Ambassador”).  During the conspiracy, a co-conspirator communicated with an arms dealer in Thailand (the “Arms Dealer”) who sells weapons to the Burmese military, which overthrew Myanmar’s civilian government in or about February 2021.  In the course of those conversations, the co-conspirator and the Arms Dealer agreed on a plan in which the co-conspirator would hire attackers to hurt the Ambassador in an attempt to force the Ambassador to step down from his post.  If the Ambassador did not step down, then the Arms Dealer proposed that the attackers hired by the co-conspirator would kill the Ambassador.

Shortly after agreeing on the plan, ZAW contacted the co-conspirator by cellphone and, using a money transfer app, transferred approximately $4,000 to the co-conspirator as an advance payment on the plot to attack the Ambassador.  Later, during a recorded phone conversation, ZAW and the co-conspirator discussed how the planned attackers would require an additional $1,000 to conduct the attack on the Ambassador in Westchester County, and, for an additional payment, the attackers could, in substance, kill the Ambassador.  In response, ZAW agreed, in substance, to pay the additional $1,000 and to try to obtain the additional money.

ZAW pled guilty to one count of conspiracy to assault and make a violent attack upon a foreign official, which carries a maximum sentence of five years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

ZAW is scheduled to be sentenced by Judge Halpern on May 10, 2022.

Mr. Williams praised the outstanding investigative work of the FBI’s Westchester Safe Streets Task Force, which comprises special agents and task force officers from the FBI, NYPD, United States Probation Office, New York State Police, New York State Department of Corrections and Community Supervision, Westchester County Department of Public Safety, Westchester County District Attorney’s Office, Putnam County Sheriff’s Office, and the police departments of Yonkers, Mount Vernon, New Rochelle, Greenburgh, White Plains, Peekskill, Ramapo, and Clarkstown.  Mr. Williams also thanked the Pelham Manor Police Department and the U.S. Department of State’s Diplomatic Security Service for their assistance in the investigation.

Mr. Williams said that the investigation is ongoing, and asked any individuals with relevant information to contact the FBI at (800)-CALL-FBI.

The prosecution is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Nicholas S. Bradley and Benjamin D. Klein are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, announced that TODD CAPSER was sentenced yesterday by U.S. District Judge J. Paul Oetken to 18 months in prison in connection with a $43 million fraud scheme.  CAPSER pled guilty before Judge Oetken on July 2, 2019.

According to the Indictment and other publicly filed documents, from January 2016 through April 2019, CAPSER perpetrated a scheme to defraud a financial institution based in Toronto, Canada (“Financial Institution-1”), by inducing it, through false and misleading representations and omissions, to loan approximately $43.3 million to CAPSER for the purchase of two chemical and oil tankers (the “Tankers”).

After obtaining the loan from Financial Institution-1 and purchasing the Tankers, CAPSER attempted to induce at least nine other Financial Institutions to loan between $46 million and $52 million each to refinance the original loan.

CAPSER fraudulently induced Financial Institution-1 to make the $43 million loan, and attempted to induce the other Financial Institutions to make the $46 million to $52 million refinancing loans, through, among other things: (a) fraudulently obtaining documents from a company that provides wealth management services to private clients (“Trust Company‑1”); (b) altering the Trust Company-1 documents, and forging additional Trust Company-1 documents, to make it appear as though his father held an investment portfolio at Trust Company-1 composed of securities worth tens of millions of dollars, which could serve as collateral for the loans; (c) sending the altered and forged Trust Company-1 documents to certain of the Financial Institutions; (d) creating fake email accounts for employees of Trust Company-1, and sending emails from those accounts to certain of the Financial Institutions to make it appear as though his father held an investment portfolio at Trust Company-1 composed of securities worth tens of millions of dollars; and (e) making false and misleading representations and omissions about the financial assets of CAPSER, his father, and their family to certain of the Financial Institutions, including falsely claiming to own a cattle company and ranch.

In addition, in an effort to engender sympathy, deflect questions, and explain suspicious behavior, CAPSER falsely represented to certain of the Financial Institutions that his daughter was terminally ill with cancer.

After being charged and arrested in connection with the foregoing fraud scheme in May 2019, and pleading guilty in July 2019, CAPSER attempted to commit a distinct fraud while awaiting sentencing.

*                *                *

In addition to yesterday’s prison sentence, CAPSER, 50, of Billings, Montana, was sentenced to three years of supervised release.

Mr. Williams praised the outstanding investigative work of the FBI.  He also thanked the FBI’s Billings Resident Agency for its assistance with the investigation.

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys David J. Robles and Benjamin Woodside Schrier are in charge of the prosecution

Damian Williams, the United States Attorney for the Southern District of New York, announced that WILLIAM SKINNER and DORIAN BROOKS, a/k/a “Kool-Aid,” pled guilty today in Manhattan federal court to charges relating to their involvement in the murder of Efren Cardenas on February 10, 1989, in Brooklyn, New York.  SKINNER is scheduled to be sentenced on March 10, 2022, and BROOKS is scheduled to be sentenced on April 6, 2022, by U.S. District Judge Edgardo Ramos, who accepted today’s pleas.           

U.S. Attorney Damian Williams said: “Today, William Skinner and Dorian Brooks admitted their participation in murdering Efren Cardenas over three decades ago, in February 1989.  Today’s guilty pleas demonstrate that law enforcement will never give up on murder victims and their loved ones, no matter how long it takes to achieve justice.”

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

On February 10, 1989, SKINNER and BROOKS killed Efren Cardenas, 30, in the vicinity of 280 Herkimer Street in the Bedford-Stuyvesant neighborhood of Brooklyn.  During the murder, SKINNER and BROOKS shot Cardenas over 20 times.  SKINNER and BROOKS committed the murder in furtherance of a conspiracy to distribute more than five kilograms of cocaine.           

*                *                *

SKINNER, 51, and BROOKS, 51, each pled guilty to one count of conspiring to distribute cocaine and crack cocaine, which carries a maximum prison term of 20 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 defendants will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the New York City Police Department’s Cold Case Homicide Squad and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Andrew K. Chan, Adam S. Hobson, and Frank J. Balsamello are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Keith A. Bonanno, Special Agent in Charge of the Department of Justice Office of the Inspector General (“DOJ OIG”) Cyber Investigations Office, announced today that an Indictment was filed in Manhattan federal court charging ADEDAYO ILORI and CHRIS RECAMIER for a fraudulent scheme to obtain more than $7 million in Government-guaranteed loans designed to provide relief to small businesses during the COVID-19 pandemic.  In connection with loan applications for relief available from the Paycheck Protection Program (“PPP”) and the Economic Injury Disaster Loan (“EIDL”) Program, ILORI and RECAMIER falsely represented to the Small Business Administration (“SBA”) and private lenders that they operated a number of companies, used stolen identities, and submitted falsified tax documents.  This case has been assigned to U.S. District Court Judge Mary Kay Vyskocil. RECAMIER and ILORI are both in custody. 

U.S. Attorney Damian Williams said: “As alleged, Adedayo Ilori has made quite a habit of committing loan fraud.  While previously facing similar charges in a separate case involving loan and identity fraud – to which Ilori pled guilty in April of this year – he is once again alleged to have committed similar conduct to defraud the SBA and private lenders in an attempt to steal much-needed COVID-19 financial relief.  Ilori and his co-defendant, Chris Recaimer, now face criminal charges for attempting to steal over $7 million in funds specifically designated to assist small businesses struggling with financial hardships from the worldwide COVID pandemic.”

DOJ OIG Special Agent in Charge Keith A. Bonanno said: “Ilori and Recamier allegedly stole the identities of individuals and companies and fraudulently obtained over a million dollars intended to help those suffering from hardship due to the COVID-19 pandemic. The Pandemic Response Accountability Committee COVID-19 Task Force is dedicated to rooting out these kinds of schemes and bringing the fraudsters to justice.”

According to the Indictment unsealed today in Manhattan federal court, the Complaint filed against RECAMIER on October 8, 2021, and filings made on public court dockets:[1]

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of hundreds of billions of dollars in forgivable loans to small businesses for job retention and certain other expenses through the SBA’s PPP.  Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and its average payroll costs.  Businesses applying for a PPP loan must provide documentation to confirm that they have previously paid employees the compensation represented in the loan application.  The CARES Act also expanded the separate EIDL Program, which provides small businesses with low-interest loans of up to $2 million that can provide vital economic support to help overcome the temporary loss of revenue they are experiencing due to COVID-19.  To qualify for an EIDL loan under the CARES Act, the applicant must have suffered “substantial economic injury” from COVID-19.

From at least in or about August 2020 through at least in or about October 2021, ILORI and RECAMIER, prepared to apply, and applied for numerous PPP and EIDL loans.  In applying for these loans, ILORI and RECAMIER claimed stolen identities of third parties.  In the role of these assumed identities, ILORI and RECAMIER claimed full control of a number of companies, which they purported, cumulatively, employed more than 200 people and paid more than $3.2 million in monthly wages.  In reality, they did not operate these companies.  In submitting these applications ILORI and RECAMIER, among other things, submitted falsified tax documents that were never actually filed with the Internal Revenue Service.

ILORI and RECAMIER attempted to obtain over approximately $7.5 million in PPP and EIDL program funds, and successfully obtained more than $1 million as a result of their scheme.  ILORI and RECAMIER transferred the majority of these funds toward (1) cryptocurrency investments, (2) the purchase of stocks, (3) cash withdrawals, and (4) personal expenses.  The investment accounts were also opened by ILORI and RECAMIER in the stolen identities of third parties.

ILORI committed these offenses while facing charges in a separate case filed in the Southern District of New York involving fraud, identity theft, and money laundering in United States v. Ilori, 20 Cr 378 (LJL).  As part of that case, ILORI pled guilty on April 8, 2021, to conspiracy to commit mail and wire fraud and conspiracy to commit money laundering, and is currently awaiting sentencing.    

*                      *                      *

ADEDAYO ILORI, 42, of Queens, New York, and CHRIS RECAMIER, 58, of New York, New York, are charged with (1) major fraud against the United States, which carries a maximum sentence of 10 years in prison; (2) conspiracy to commit wire and bank fraud, which carries a maximum sentence of 30 years in prison; (3) wire fraud, which carries a maximum sentence of 30 years in prison; (4) bank fraud, which carries a maximum sentence of 30 years in prison; (5) aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison; and (6) conspiracy to commit money laundering, which carries a maximum sentence of 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 defendants will be determined by the judge.           

Mr. Williams praised the investigative work of the DOJ OIG, which conducted the investigation on behalf of the Pandemic Response Accountability Committee (PRAC) COVID-19 Task Force.[2]  Mr. Williams also thanked the U.S. Secret Service, the Drug Enforcement Administration, the New York City Police Department, the Federal Bureau of Investigation, and the Federal Aviation Administration for their assistance in this investigation.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Daniel G. Nessim 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.

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

[2] Created by the CARES Act, the PRAC serves the American public by promoting transparency and facilitating coordinated oversight of the federal government’s COVID-19 pandemic response. The PRAC’s 22 member Inspectors General identify major risks that cross program and agency boundaries to detect fraud, waste, abuse, and mismanagement in the more than $5 trillion in COVID-19 spending.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that MICHAEL MAZUR was sentenced by U.S. District Court Judge Jed S. Rakoff to 216 months in prison for his role in the October 31, 2011, murder of Joshua Rubin in Brooklyn, New York.

U.S. Attorney Damian Williams said: “Michael Mazur participated in the robbery that led to the murder of Joshua Rubin, and then he and his codefendants put Rubin’s body in the trunk of a car, drove it to Pennsylvania, dumped it in a garbage can, and set it afire to cover up the crime.  Thanks to our law enforcement partners and the Special Agents of my Office, Mazur will now serve a lengthy prison sentence for his callous crime.” 

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

On or about October 31, 2011, MICHAEL MAZUR, Kevin Taylor, and Gary Robles agreed to rob Joshua Rubin of a pound of marijuana.  Robles agreed to bring a firearm to the robbery.  Taylor lured Rubin to a Brooklyn apartment where, under the guise of purchasing the marijuana, the trio planned to rob Rubin of the drugs.  On the night of the robbery, Taylor and Robles waited inside the apartment while MAZUR was positioned outside to serve as a lookout.  After Rubin entered the apartment, Taylor and Robles demanded that Rubin surrender the marijuana.  When Rubin refused, Robles shot and killed Rubin.

After the murder, MAZUR, Taylor, and Robles placed Rubin’s body into the trunk of a car and drove to rural Pennsylvania.  There, MAZUR, Taylor, and Robles put Rubin’s body in a garbage can, doused it with an accelerant, and set the body on fire.  MAZUR, Taylor, and Robles then drove back to New York in the early morning hours of November 1, 2011.  Over 230 pounds of marijuana and approximately $200,000 were found in MAZUR’S residence at the time of his arrest.

*                *                *

MAZUR, 27, pled guilty to one count of Hobbs Act robbery, in violation of 18 U.S.C. § 1951, and in connection with his guilty plea admitted to his role in the murder.  In addition to his prison sentence, MAZUR, was sentenced to three years of supervised release.

Mr. Williams praised the outstanding work of the Federal Bureau of Investigation, the New York City Police Department, and the Special Agents of the United States Attorney’s Office for the Southern District of New York.  He also thanked the Lehigh County District Attorney’s Office, the Pennsylvania State Police, and the South Whitehall Township Police Department for their assistance in the investigation.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Alexandra N. Rothman, Mollie Bracewell, and Dominic A. Gentile are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York (SDNY), along with Kristen Clarke, Assistant Attorney General for the Justice Department’s Civil Rights Division, announced today that the Justice Department has opened a pattern or practice investigation into the Mount Vernon Police Department (MVPD).  The investigation will assess whether MVPD engages in a pattern or practice of discriminatory policing.  The investigation will also assess MVPD’s use of force, strip and body cavity searches, and how it handles evidence.  As part of the investigation, SDNY and the Civil Rights Division will conduct a comprehensive review of MVPD’s systems of accountability, including complaint intake, investigation, review, disposition, and discipline.  SDNY and the Civil Rights Division will also reach out to community groups and members of the public to learn about their experiences with the MVPD.

U.S. Attorney Damian Williams said: “Police officers have tough jobs, and so many do their work honorably, lawfully, and with distinction, respecting the rights of the citizens they have sworn to protect.  But when officers break the law, they violate their oath and undermine a community’s trust.  We ask anyone who has information relevant to the investigation into the Mount Vernon Police Department to contact the Department of Justice via email at community.mvpd@usdoj.gov or to call (866) 985-1378.”

Assistant Attorney General for the Civil Rights Division Kristen Clarke said: “An effective and accountable police department is a hallmark of a healthy and well-functioning democracy.  The Civil Rights Division is committed to ensuring that law enforcement agencies across our country use their authority in a manner that is constitutional, transparent, and free from discrimination.”

This morning, SDNY and Civil Rights Division officials informed Mount Vernon Mayor Shawyn Patterson-Howard, MVPD Chief Marcel Olifiers, City Council President Marcus A. Griffith, Commissioner of Public Safety Glenn Scott, and Corporation Counsel Brian Johnson of the investigation.

The investigation is being conducted pursuant to the Violent Crime Control and Law Enforcement Act of 1994, which prohibits state and local governments from engaging in a pattern or practice of conduct by law enforcement officers that deprives individuals of rights protected by the Constitution or federal law.  The Act allows the Department of Justice to remedy such misconduct through civil litigation.  SDNY and the Civil Rights Division will be assessing law enforcement practices under the Fourth and Fourteenth Amendments to the U.S. Constitution, as well as under the Safe Streets Act of 1968 and Title VI of the Civil Rights Act of 1964.

The Civil Rights Unit in the Civil Division of the U.S. Attorney’s Office for the Southern District of New York and the Special Litigation Section of the Civil Rights Division, in Washington, D.C., are jointly conducting this investigation.  Individuals with relevant information are encouraged to contact the Department of Justice via email at community.mvpd@usdoj.gov or by phone at (866) 985-1378.  Individuals can also report civil rights violations regarding this or other matters using the Civil Rights Division’s reporting portal, available at civilrights.justice.gov.

Additional information about the U.S. Attorney’s Office for the Southern District of New York is available on its website at https://www.justice.gov/usao-sdny.  Additional information about the Civil Rights Division and the Division’s Police Reform Work is available on its website at www.justice.gov/crt and at /media/872116/dl?inline. 

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a Complaint in Manhattan federal court charging BRIAN O’NEILL, the managing partner of O’Neill & Partners LLC (“O’Neill & Partners”) with wire fraud, perjury, and making false statements.  As alleged, O’NEILL defrauded two victim companies of over $8 million that he had promised to hold in escrow.  O’NEILL was arrested this morning in Chevy Chase, Maryland, and will be presented later today before United States Magistrate Judge Timothy J. Sullivan in the District of Maryland.

U.S. Attorney Damian Williams said: “As alleged, Brian O’Neill violated the canons of his profession to put self-interest above the interests of his clients; to be blunt, he stole their money.  Further, as alleged, when ordered by the federal court in this District to deposit escrow funds he had failed to return to one client, O’Neill misappropriated escrow funds from a second client to make partial satisfaction of the court’s order pertaining to the first client.  In addition, as alleged, O’Neill lied to the FBI about his robbing Peter to pay Paul.  Now he faces serious criminal charges for his alleged misdeeds.” 

FBI Assistant Director Michael J. Driscoll said: “As alleged, Brian O'Neill didn’t just hold his clients’ money in escrow, he held it hostage, and eventually lied to the FBI about his unlawful deeds. His alleged actions weren’t only unethical, they’re punishable by federal law. Today’s charges reflect our ongoing commitment to weeding out criminals who use other people’s money for their own personal gain.”

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

Beginning at least as early as August 2020, O’NEILL engaged in two related fraudulent schemes.

First, O’NEILL engaged in a scheme to defraud a medical equipment company headquartered in Pennsylvania (“Victim-1”) by falsely promising to hold over $5 million of the company’s funds in escrow.  Specifically, in August 2020, Victim-1 entered into an agreement with a Florida-based medical wholesale company (“Seller-1”) for the purchase of Personal Protective Equipment (“PPE”).  Victim-1 sought to purchase PPE from Seller-1 in order to donate the PPE to the Federal Emergency Management Agency (“FEMA”) to help fight the COVID-19 pandemic.  Contemporaneously with the execution of the Purchase Order, Victim-1 and Seller-1 entered into an escrow agreement (“Escrow Agreement-1”) with O’Neill & Partners.  Pursuant to Escrow Agreement-1, O’Neill & Partners was to act as escrow agent for the transaction and hold $5.1 million deposited by Victim-1 in escrow.  Instead of holding the deposited $5.1 million in escrow, however, O’NEILL secretly used the funds to execute personal deals for the purchase of PPE; O’NEILL dissipated the $5.1 million by approximately November 2020. 

In November 2020, Victim-1 served a cancellation notice on O’Neill & Partners and Seller-1 cancelling the transaction (the “Cancellation Notice”).  In light of the Cancellation Notice, counsel for Victim-1 sent a letter to O’Neill & Partners requesting that the $5.1 million in escrowed funds be returned to Victim-1 within 48 hours, pursuant to the terms of Escrow Agreement-1.  When O’Neill & Partners refused to return Victim-1’s deposited funds, Victim-1 filed a civil action in U.S. District Court for the Southern District of New York (the “Civil Action”).  In connection with the Civil Action, the Court ordered O’Neill & Partners to deposit the $5.1 million of escrowed funds with the Clerk of the Court.  On September 22, 2021, O’NEILL deposited $3.3 million with the Clerk.  Because O’NEILL’s deposit was $1.8 million short of the full $5.1 million he had been ordered to deposit, the Court held O’Neill & Partners and O’NEILL in civil contempt and ordered O’NEILL’s arrest.     

Relatedly, O’NEILL engaged in a second scheme that defrauded a Hong Kong-based investor (“Victim-2”) out of over $3 million.  Specifically, on April 19, 2021, a Delaware-based company involved in the PPE market (“Buyer-2”) entered into a sale and purchase agreement to purchase certain PPE from an Australia-based medical supply company (“Seller-2”).  Funding for the deal was to be provided by Victim-2.  At the same time that Buyer-2 and Seller-2 entered into the Sale and Purchase Agreement, they, along with Victim-2, entered into an escrow agreement (“Escrow Agreement-2”) with O’Neill & Partners.  Pursuant to Escrow Agreement-2, O’Neill & Partners was to hold certain funds associated with the transaction in escrow.  Instead of holding the funds deposited by Victim-2 in escrow, however, O’NEILL used $3.3 million of the funds to attempt to satisfy the Court’s order in the Civil Action by Victim-1 directing him to deposit $5.1 million with the Clerk of the Court.     

In an effort to conceal his wrongful conduct, O’NEILL made false statements to the FBI and submitted a false declaration, sworn to under penalty of perjury, to the U.S. District Court for the Southern District of New York in connection with the Civil Action.  In particular, on or about September 10, 2021, O’NEILL stated to FBI agents that the $5.1 million placed in escrow pursuant to Escrow Agreement-1 remained in an escrow account.  Similarly, on or about October 1, 2021, O’NEILL submitted a declaration in the Civil Action stating, under penalty of perjury, that he “still [had] control of the $1.8 million of the subject escrow funds . . . remaining to be deposited pursuant to the interpleader ordered by [the] Court.”  Neither of those statements was true.    

*                      *                      *           

O’NEILL, 48, of Chevy Chase, Maryland, is charged with two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison, and one count each of false statements and perjury, each of which carries a maximum sentence of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Williams praised the investigative work of the FBI. 

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Maggie Lynaugh 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 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 ERIC MALLEY, the founder and former chief executive officer of real estate private equity investment firm MG Capital Management L.P., was sentenced today by United States District Judge Edgardo Ramos to 60 months in prison in connection with a securities fraud scheme in which he fraudulently induced hundreds of individuals to invest a total of approximately $58 million in two real estate investment funds.  MALLEY pled guilty before Judge Ramos on May 20, 2021.

U.S. Attorney Damian Williams said: “For years, Eric Malley swindled investors through false promises about himself, his credentials, his track record, and the state of his real estate investment funds.  Today’s sentence sends an important message that there are grave consequences to such deception.”

According to the allegations contained in the Complaint, the Information to which Malley pled guilty, other court documents, and statements made in public court proceedings:

MALLEY founded MG Capital Management L.P. (“MG Capital”) in approximately January 2013, and served as its chief executive officer and chief investment officer from that time until approximately December 2019.  During that time, MALLEY formed two real estate investment funds (collectively, “the Funds”) – MG Capital Management Residential Fund III (“Fund III”), in approximately February 2014, and MG Capital Management Residential Fund IV (“Fund IV”), in approximately September 2017.

MALLEY promised, when soliciting investors and throughout the life of the Funds, that the Funds represented an opportunity to own an equity interest in hundreds of luxury income-producing properties across Manhattan, following a debt-free investment strategy purportedly informed by sophisticated proprietary analytics that MALLEY had developed over the course of his career in real estate.  MALLEY touted two purportedly extremely successful prior funds he had formed, Fund I and Fund II; assured investors that the Funds would be and were debt-free; and represented that the properties held by the Funds would be and were leased primarily to corporate tenants, including, among others, well known technology companies and a prominent university based in New York City with which Malley had pre-existing agreements.  But MALLEY’s representations were false.  Funds I and II did not exist.  The Funds were not debt-free, but instead held mortgaged properties. The properties that made up the Funds were almost entirely leased to individual, not corporate, tenants.  Malley did not have the corporate relationships or pre-existing agreements he touted.  The Funds held far fewer properties than MALLEY had represented.  And although Malley promised the investments were fully protected from loss, they were not.

MALLEY induced approximately 335 investors to invest a total of approximately $58 million in the Funds through these and other fraudulent misrepresentations.  The Funds together incurred millions of dollars in losses and are currently being liquidated.

*                *                *

In addition to the prison term, MALLEY, 51, of New Canaan, Connecticut, was sentenced to three years of supervised release and ordered to make restitution in the amount of $33,249,822.12 and forfeiture in the amount of $5,625,747.45.

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

Damian Williams, the United States Attorney for the Southern District of New York, announced that EDWARD HERNANDEZ was sentenced today in Manhattan federal court to 10 years in prison for his role in kidnapping and torturing a Government informant.  WALKIN FRANCISCO ARIAS VILLAR and JOSIEL GUSTAVO MARTINEZ GUZMAN were each sentenced, on September 16, 2021, and September 22, 2021, respectively, to 10 years in prison for their roles in the offense.  HERNANDEZ and ARIAS VILLAR pled guilty on April 6, 2021, and MARTINEZ GUZMAN pled guilty on March 23, 2021, before U.S. District Judge Paul A. Crotty, who also imposed the sentences.  

U.S. Attorney Damian Williams said: “Edward Hernandez now joins his codefendants in being sentenced to spend a decade in federal prison for his admitted role in the brutal and violent kidnapping, torture, and extortion of their victim.  This case illustrates yet again how violence goes hand in hand with the illegal drug trade.”

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

ARIAS VILLAR and MARTINEZ GUZMAN forced a Government informant (the “Victim”) into their car after the Victim – who was acting at the direction of law enforcement – arrived at a meeting in the Bronx, purportedly to retrieve $178,000 in narcotics proceeds to be laundered.  HERNANDEZ, who was driving, sped away after the Victim was forced into the car. 

MARTINEZ GUZMAN and ARIAS VILLAR physically assaulted the Victim in an effort to extort the Victim into transferring money to their co-conspirators.  MARTINEZ GUZMAN burned the Victim with cigarettes, beat him with a handgun, and threatened the Victim’s life.  ARIAS VILLAR pointed the handgun at the Victim repeatedly, threatened the Victim’s life, and demanded that the Victim pay them.  ARIAS VILLAR broke the Victim’s nose when he threw a laptop computer at his face.  HERNANDEZ, ARIAS VILLAR, and MARTINEZ GUZMAN apparently did not know that the Victim was a Government informant, but sought repayment for narcotics proceeds lost to law enforcement seizures.  The Victim, fearing for his life, transferred approximately $16,000 of his own money to accounts his abductors supplied. 

Drug Enforcement Administration (“DEA”) agents located the car in Fairfield, Connecticut, approximately three hours after the Victim was abducted.  MARTINEZ GUZMAN, ARIAS VILLAR, and HERNANDEZ were arrested and the Victim was brought to a hospital for treatment.

*                *                *

HERNANDEZ, 42, ARIAS VILLAR, 31, and MARTINEZ GUZMAN, 29, were each convicted of one count of conspiracy to commit extortion.  In addition to their prison terms, HERNANDEZ, ARIAS VILLAR, and MARTINZ GUZMAN were each sentenced to three years of supervised release.  Charges remain pending against Dacheng Zhen.

Mr. Williams praised and thanked the DEA for its outstanding work locating and safely recovering the Victim.

The case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Aline Flodr, Stephanie Lake, and Sheb Swett are in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Office of the Federal Bureau of  Investigation (“FBI”), announced the arrest today of NICKOLAS SHARP for secretly stealing gigabytes of confidential files from a New York-based technology company where he was employed (“Company‑1”), and then, while purportedly working to remediate the security breach, extorting the company for nearly $2 million for the return of the files and the identification of a remaining purported vulnerability.  SHARP subsequently re-victimized his employer by causing the publication of misleading news articles about the company’s handling of the breach that he perpetrated, which were followed by a significant drop in the company’s share price associated with the loss of billions of dollars in its market capitalization.

SHARP was arrested earlier today in the District of Oregon and will be presented this afternoon before U.S. Magistrate Judge John V. Acosta.  The case was assigned to U.S. District Judge Katherine Polk Failla.

U.S. Attorney Damian Williams said: “As alleged, Nickolas Sharp exploited his access as a trusted insider to steal gigabytes of confidential data from his employer, then, posing as an anonymous hacker, sent the company a nearly $2 million ransom demand.  As further alleged, after the FBI searched his home in connection with the theft, Sharp, now posing as an anonymous company whistle-blower, planted damaging news stories falsely claiming the theft had been by a hacker enabled by a vulnerability in the company’s computer systems.  Now the alleged theft and lies have been exposed, and Sharp is facing serious federal charges.”

FBI Assistant Director Michael J. Driscoll said: “We allege Mr. Sharp created a twisted plot to extort the company he worked for by using its technology and data against it. Not only did he allegedly break several federal laws, he orchestrated releasing information to media when his ransom demands weren't met. When confronted, he then lied to FBI agents. Mr. Sharp may have believed he was smart enough to pull off his plan, but a simple technical glitch ended his dreams of striking it rich.”

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

At all times relevant to the Indictment, Company-1 was a technology company headquartered in New York that manufactured and sold wireless communications products, and whose shares were traded on the New York Stock Exchange.  NICKOLAS SHARP, the defendant, was employed by Company-1 from in or about August 2018 up to and including on or about April 1, 2021.  SHARP was a senior developer who had access to credentials for Company-1’s Amazon Web Services (“AWS”) and GitHub Inc. (“GitHub”) servers.

In about December 2020, SHARP repeatedly misused his administrative access to download gigabytes of confidential data from his employer.  For the majority of this cybersecurity incident (the “Incident”), SHARP used a virtual private network service that he subscribed to from a company named Surfshark to mask his Internet Protocol (“IP”) address when he accessed Company-1’s AWS and GitHub infrastructure without authorization.  At one point during the exfiltration of Company-1 data, SHARP’s home IP address became unmasked following a temporary internet outage at SHARP’s home.

During the course of the Incident, SHARP caused damage to Company-1’s computer systems by altering log retention policies and other files, to conceal his unauthorized activity on the network.  In or about January 2021, while working on a team remediating the effects of the Incident, SHARP sent a ransom note to Company-1, posing as an anonymous attacker who claimed to have obtained unauthorized access to Company-1’s computer networks.  The ransom note sought 50 Bitcoin, a cryptocurrency – which was the equivalent of approximately $1.9 million, based on the prevailing exchange rate at the time – in exchange for the return of the stolen data and the identification of a purported “backdoor,” or vulnerability, to Company-1’s computer systems.  After Company-1 refused the demand, SHARP published a portion of the stolen files on a publicly accessible online platform.

On or about March 24, 2021, FBI agents executed a search warrant at SHARP’s residence in Portland, Oregon, and seized certain electronic devices belonging to SHARP.  During the execution of that search, SHARP made numerous false statements to FBI agents, including, among other things, in substance, that he was not the perpetrator of the Incident and that he had not used Surfshark VPN prior to the discovery of the Incident.  When confronted with records demonstrating that SHARP purchased the Surfshark VPN service in July 2020, approximately six months prior to the Incident, SHARP falsely stated, in part and substance, that someone else must have used his PayPal account to make the purchase.

Several days after the FBI executed the search warrant at SHARP’s residence, SHARP caused false news stories to be published about the Incident and Company-1’s response to the Incident and related disclosures.  In those stories, SHARP identified himself as an anonymous whistleblower within Company-1 who had worked on remediating the Incident.  In particular, SHARP falsely claimed that Company-1 had been hacked by an unidentified perpetrator who maliciously acquired root administrator access to Company-1’s AWS accounts.  In fact, as SHARP well knew, SHARP had taken Company-1’s data using credentials to which he had access in his role as Company‑1’s AWS cloud administrator, and SHARP had used that data in a failed attempt to extort Company-1 for millions of dollars.

Following the publication of these articles, between March 30, 2021, and March 31, 2021, Company-1’s stock price fell approximately 20%, losing over $4 billion in market capitalization.

SHARP, 36, of Portland, Oregon, is charged in four counts.  The first count charges him with transmitting a program to a protected computer that intentionally caused damage, which carries a maximum sentence of 10 years in prison.  The second count charges transmission of an interstate threat, which carries a maximum sentence of two years in prison.  The third count charges wire fraud, which carries a maximum sentence of 20 years in prison.  The fourth count charges the making of false statements to the FBI, which carries a maximum sentence of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the extraordinary work of the FBI.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Vladislav Vainberg 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 that BRYANT BROWN, a/k/a “Trigga,” was sentenced by U.S. District Judge Paul A. Engelmayer yesterday to 24 years in prison for the December 2015 murder of Albendris Nunez and a 2017 armed robbery.  

U.S. Attorney Damian Williams said: “On a Sunday morning in 2015, Bryant Brown shot and killed Albendris Nunez in Devoe Park in the Bronx over $600 of marijuana.  For this senseless killing, Brown will serve a substantial sentence in federal prison.”

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

On or about December 20, 2015, BROWN attempted to rob Nunez of approximately $600 worth of marijuana in Devoe Park in the Bronx, New York.  BROWN set up the purported drug deal with Nunez over Facebook and instructed Nunez to meet him in Devoe Park.  BROWN brought a gun and planned to rob Nunez during this meeting and, during the planned robbery, shot Nunez in the back, killing him.   

On or about November 18, 2017, BROWN and a co-conspirator robbed a victim of liquid promethazine with codeine, also known as “wock” or “lean,” inside a residential apartment building in the Bronx, New York.  BROWN brought a gun to this robbery and struck the victim in the face with it.   

*                      *                     *

In addition to his prison sentence, BROWN, 26, was sentenced to three years of supervised release. 

Mr. Williams praised the outstanding investigative work of the New York City Police Department in this case. 

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

Damian Williams, the United State Attorney for the Southern District of New York, announced today the guilty plea of JEREMY SPENCE, a/k/a “Coin Signals,” a cryptocurrency trader who solicited over $5 million from more than 170 individual investors for various cryptocurrency funds that he operated, after making false representations in connection with these funds. SPENCE pled guilty today before U.S. Magistrate Judge Debra Freeman. The case is assigned to U.S. District Judge Lewis A. Kaplan.

U.S. Attorney Damian Williams said: “Jeremy Spence, a/k/a, ‘Coin Signals,’ admitted today to luring investors to his cryptocurrency investment scam by touting fictitious historical returns of up to 148%.  In reality, Spence’s investments consistently lost money, and his scam left investors with a $5 million loss. The bourgeoning cryptocurrency market can be attractive to investors; however, investors should be aware of the inherent risks, including the risk of fraud.”

According to the Indictment and the Complaint filed in this case, and statements made in open court:       

From November 2017 through April 2019, SPENCE solicited investors in various cryptocurrency investment pools that SPENCE had created and managed (the “Funds”). SPENCE solicited investments for several Funds, the largest and most active of which were the Coin Signals Bitmex Fund, a/k/a the “CS Mex Fund,” the Coin Signals Alternative Fund, a/k/a the “CS Alt Fund,” and the Coin Signals Long Term Fund. Investors who wanted to participate in a Fund would transfer cryptocurrency, such as Bitcoin and Ethereum, to SPENCE in order for SPENCE to invest it. 

SPENCE solicited these investments through false representations, including that SPENCE’s crypto trading had been extremely profitable when, in fact, SPENCE’s trading had been consistently unprofitable.  For example, on January 28, 2018, SPENCE posted a message in an online chat group falsely claiming that his trading of investor funds over the past month had generated a return of more than 148%. As a result of this misrepresentation, investors transferred additional funds to SPENCE. In fact, over that same period of approximately one month, SPENCE’s trading resulted in net losses in the accounts in which he traded investor funds.

To forestall redemptions by investors, and to continue to raise money from investors to fund his scheme, SPENCE generated fictitious account balances, which he made available to investors online. Instead of accurately reporting the trading losses SPENCE was incurring, the account balances falsely indicated to investors that they were making money by investing with SPENCE. To hide his trading losses, SPENCE used new investor funds to pay back other investors in a Ponzi-like fashion. In total, SPENCE distributed cryptocurrency worth approximately $2 million to investors substantially from funds previously deposited by other investors. 

*                      *                      *

SPENCE, 25, pled guilty to commodities fraud, which carries a maximum sentence of ten years in prison.  The maximum potential sentence is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

SPENCE is scheduled to be sentenced at a later date by Judge Kaplan.

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

The case is being handled by the Office’s Securities and Commodities Fraud Unit. Assistant U.S. Attorney Christine I. Magdo is in charge of the prosecution.

Damian Williams, the United States Attorney for the Southern District of New York, and Ricky J. Patel, the Acting Special Agent-in-Charge of the New York Field Office of the Department of Homeland Security (“HSI”), announced today the unsealing of an Indictment charging NORMAN GRAY with wire fraud, in connection with a scheme to induce an individual (“Victim-1”) into wiring him funds through false promises that those funds would be put towards an equity stake in his purported global biomedical company (“Biomedical Company”) and certain purported  investment deals involving the sale of personal protective equipment (“PPE”).  GRAY was arrested this morning and will be presented before U.S. Magistrate Judge Debra Freeman later today.  The case is assigned to United States District Judge Lorna G. Schofield. 

U.S. Attorney Damian Williams said:  “Norman Gray, CEO of a purported global biomedical company, allegedly induced his victim investor to entrust Gray with over $1.2 million by claiming the risk involved in their PPE investment deals was ‘virtually zero.’ But in reality, the deals are alleged to be fictitious, and any chance of actually earning a profit with Gray’s investments was virtually zero. We thank the HSI for their assistance in this investigation and charge.”

Acting HSI Special Agent-in-Charge Ricky J. Patel said:  "As alleged in the indictment, Norman Gray made fake promises and created a fictitious persona to dupe an investor for over a million dollars in real cash, but in the end, Gray’s dishonest imagination led him right into the hands of law enforcement. HSI Special Agents, in conjunction with our partners, will work tirelessly to prevent shameless activities perpetrated by fraudsters like Gray, who sell dreams of making big profits with little risk to unwitting investors.  What made these acts even more deplorable was that he allegedly created this scheme by falsely purporting that the investments were going to legitimate companies providing vital PPE to the public.”

As alleged in the Indictment:[1]

GRAY is the CEO of the Biomedical Company, which is headquartered and incorporated in Hamden, Connecticut.  In or about August 2020, GRAY induced Victim-1 to give him $250,000, supposedly as an equity investment in the Biomedical Company.  In reality, nearly all of the $250,000 was paid out to a company with no apparent affiliation with the Biomedical Company, and Victim-1 received no equity in the Biomedical Company. In the ensuing months, GRAY further solicited a total of approximately $1,200,000 from Victim-1, representing that he would invest those funds in deals involving the procurement of PPE for two major universities in the tristate area.  GRAY represented that the necessary contracts for those deals were in place and that the risk involved with those deals was “virtually zero.”  In reality, the necessary contracts did not exist, and GRAY caused substantially all of Victim-1’s funds to be spent on the Biomedical Company’s general operating expenses, as well as products and services having nothing to do with the Biomedical Company or the procurement of personal protective equipment, including, for example, the cash purchase of an approximately $50,000 luxury SUV. 

As part of his scheme to fraudulently solicit funds from Victim-1, and as a means of dispelling Victim-1’s concern that an investment with GRAY would require Victim-1 to forego the purchase of a home, GRAY offered Victim-1 a mortgage from the “Tranctus Group.” GRAY claimed that “Tranctus Group” was a boutique mortgage company of which he was the sole investor. GRAY directed Victim-1 to his supposed mortgage broker “Benjamin Mabry.”  In fact, “Benjamin Mabry” was a false persona invented by GRAY, and GRAY registered the internet domain associated with the “Tranctus Group” on the very same day that Victim-1 received a purported mortgage commitment letter from “Mabry.”  Ultimately, Victim-1 received no return on Victim-1’s investments, GRAY refused to return Victim-1’s money to Victim-1, and the purported “Tranctus Group” mortgage failed to materialize.    

*                *                *

GRAY, 66, of the Hamden, Connecticut area, is charged with one count of wire fraud, which carries a maximum potential prison sentence of 20 years. The maximum potential penalties are prescribed by Congress and are provided here for informational purposes only; any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of Special Agents of the United States Department of Homeland Security, Homeland Security Investigations, New York City Police Department, New York City Sheriff's Office, Bronx District Attorney, Greenburgh Police Department, and HSI New Haven. 

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit. Assistant United States Attorneys Benjamin A. Gianforti and Tara La Morte 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 Information and the description of the Information 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 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 today that the United States has filed a civil fraud lawsuit against Maranatha Human Services, Inc. (“MARANATHA”) and HENRY ALFONSO COLEY (“COLEY”) for falsely claiming that millions of dollars expended to benefit for-profit ventures owned and controlled by COLEY and MARANATHA, as well as payments to cover COLEY’s personal costs 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 earlier this year. 

Specifically, the Government’s complaint alleges that, with its board’s approval, MARANATHA 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 in 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.

Simultaneous with the filing of the lawsuit, the United States has resolved its claims against COLEY through a settlement approved by U.S. District Judge Kenneth M. Karas.  Pursuant to the settlement, COLEY will pay $88,000 to the United States and has admitted and accepted responsibility for conduct alleged by the Government in its complaint as further described below.  COLEY has also agreed to pay $132,000 to the State of New York to resolve the State’s claims, for a total recovery of $220,000.  The settlement amount is based on the Office’s assessment of COLEY’s ability to pay based on the financial information he provided.  COLEY also agreed never to work for or accept payments from any entity that receives funds from a federal healthcare program.  In addition, COLEY entered into a Voluntary Exclusion Agreement with HHS-OIG, which prohibits him from participating in Medicaid and other federal healthcare programs for 15 years.

 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, on excessive salaries and fees for Coley’s family members, and on Coley’s personal expenses.  These expenses were not related to providing care or assistance to the individuals with developmental disabilities Maranatha was meant to serve.  This Office will continue to hold entities and their executives accountable when they abuse our federal healthcare programs.”

HHS-OIG Special Agent in Charge Scott Lampert said: “Any threat to the financial health of Medicaid is a threat to the vulnerable people who depend upon it for critical services.  We will continue to hold those who steal from federal health care programs accountable for their actions.”

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.

COLEY has settled the claims against him in the Government’s complaint.  As part of the settlement, COLEY 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 government while at the same time fulfilling its function” consistent with its mission.
• COLEY was familiar with the requirement that MARANATHA distinguish “allowable costs” from “non-allowable costs” in its CFRs.
• COLEY knew that the CFRs are used by the New York State Department of Health to determine MARANTHA’s reimbursement rates for the provision of Medicaid services.
• In each CFR that MARANATHA submitted since 2010, COLEY certified that the (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.”
• COLEY signed the certifications set out above in CFRs that reported as “allowable costs” amounts expended not for MARANTHA’s provision of Medicaid 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 and/or MARANATHA that did not provide Medicaid-funded services (the “Non-Medicaid Ventures”).   
• MARANATHA paid certain employees and contractors, including 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, COLEY and MARANATHA reported her full compensation as an “allowable cost” in the CFRs.
• Since 2010, COLEY received more than $2 million from MARANATHA in salary and benefits, and MARANTHA claimed the full amount of his compensation as “allowable costs” on its CFRs. However, COLEY devoted much of his to time to working on the Non-Medicaid Ventures.

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

Mr. Williams praised the outstanding investigative work of the 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, Thomas Fattorusso, Special Agent in Charge of the Internal Revenue Service - Criminal Investigation (“IRS-CI”) New York Field Office, and Keith Kruskall, Acting Special Agent in Charge of the New York Office of the Drug Enforcement Administration (“DEA”), today announced that defendant JORDAN SUDBERG pled guilty to tax evasion for the calendar years 2015 through 2017, in connection with false deductions from a scheme involving his issuance of hundreds of business checks falsely purporting to be payments for business services, which he provided in exchange for cash to a black market money exchange network.  As part of his plea SUDBERG agreed to pay $551,660 in restitution to the Internal Revenue Service (“IRS”), and forfeit an additional $243,257.  SUDGERG pled guilty today before U.S. District Judge Paul A. Crotty. 

U.S. Attorney Damian Williams said: “As he admitted in court today, Jordan Sudberg engaged in a years-long pattern of fabricating false business expenses to conceal from the IRS large portions of his substantial income earned from his medical practices.  He fraudulently claimed more than $1 million in deductions that should have been reported to the IRS as taxable income, and allowed other individuals to create purportedly legitimate origin for their illicit cash in the process.  Now Sudberg awaits sentencing for his crime.”

IRS-CI Special Agent in Charge Thomas Fattorusso said: “Medical professionals should be in the business of caring for people, not evading taxes.  IRS-CI agents are specially trained to detect tax fraud – even elaborate schemes like the one Sudberg allegedly devised.”

DEA Acting Special Agent in Charge Keith Kruskall said: “This defendant allegedly engaged in a scheme where he purposefully claimed a significantly lower income to evade U.S. tax law.  Thanks to the dedication of our law enforcement partners, the defendant will finally be paying his fair share.”

According to the allegations contained in the Information to which SUDBERG pled guilty, a Civil Forfeiture Complaint filed against funds seized from SUDBERG, a Criminal Complaint and Information filed against SUDBERG’s co-conspirator Hua Fen Bi, and statements made in court:

From at least 2015 through 2017, SUDBERG devised and perpetrated a scheme to evade a substantial portion of his personal income taxes.  During that period, SUDBERG owned two S-corporations through which he operated a medical practice, specializing in pain management, at locations located in Manhattan, Long Island, and Queens, New York.  SUDBERG issued hundreds of checks made payable to various companies and falsely purporting to be payments for business services.  In fact, those companies had not performed any business services for SUDBERG’s corporations.  In exchange for the checks, SUDBERG received sums of cash that were equal to the value of the checks minus a small fee.  SUDBERG falsely reported to the IRS that the checks were for legitimate business expenses and claimed deductions in the amount of the checks, thereby substantially understating his taxable income. 

SUDBERG’s tax evasion helped support an unlicensed money services network operated by a number of co-conspirators, including Hua Fen Bi, who was sentenced by U.S. District Judge Colleen McMahon on May 24, 2021, for his role in conspiring to operate an unlicensed money transmitting business.  This network permitted individuals to exchange cash for business checks like those provided by SUDBERG, thereby generating a false and nominally legitimate source of funds, including for the laundering of narcotics proceeds.  

SUDBERG pled guilty to one count of tax evasion, which carries a maximum penalty of five years in prison.  The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

SUDBERG is scheduled to be sentenced on February 23, 2022.

*                *                *

Mr. Williams praised the outstanding work of the Internal Revenue Service and the Drug Enforcement Administration on this case.  He also thanked the Office of the Inspector General of the United States Department of Health and Human Services and the New York Drug Enforcement Task Force for their support and assistance. 

The prosecution of this case is being overseen by the Office’s Money Laundering and Transnational Criminal Enterprise Unit.  Assistant U.S. Attorneys Emily Deininger and Alexandra Rothman are in charge of the case.

Damian Williams, the United States Attorney for the Southern District of New York, announced that HUMBERTO RODRIGUEZ, a/k/a “El Bori,” pled guilty today in Manhattan federal court to the April 18, 2020, murder of Jorge Miguel Cabrera.  U.S. District Judge P. Kevin Castel accepted the defendant’s guilty plea.

U.S. Attorney Damian Williams said: “In the early morning of April 18, 2020, Humberto Rodriguez shot and ultimately killed Miguel Cabrera in connection with a failed drug transaction.  This case is yet another tragic reminder of the violence that often accompanies narcotics trafficking. We continue our daily work with our law enforcement partners to keep our communities safe by vigorously investigating and prosecuting acts of violence and drug trafficking.”

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

On or about April 18, 2020, RODRIGUEZ and other members of a Bronx-based narcotics trafficking organization attempted to purchase one kilogram of cocaine on East 175th Street in the Bronx.  After obtaining the buyers’ money, the sellers attempted to flee the scene.  At that point, RODRIGUEZ fired a gun at the sellers’ vehicles, striking Cabrera in the spine.  Cabrera ultimately died from the gunshot wound. 

*                *                *

RODRIGUEZ, 27, pled guilty to one count of murder through the use of a firearm, in violation of Title 18, United States Code, Sections 924(j) and 2, which carries a maximum term of life in prison and a mandatory minimum term of five years in prison.  The maximum and minimum 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.

RODRIGUEZ is scheduled to be sentenced by Judge Castel on March 9, 2022.

On July 27, 2021, Rodriguez’s codefendant Alex Melendez pled guilty to narcotics and firearms offenses.  On November 11, 2021, Rodriguez’s codefendant Sharone Lewis pled guilty to a narcotics offense. 

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 Peter J. Davis and Nicholas W. Chiuchiolo are in charge of the prosecution. 

Damian Williams, United States Attorney for the Southern District of New York, announced that DOV MALNIK, an Israeli securities trader and finance professional, was sentenced to 30 months in prison for his role in an international insider trading scheme.  MALNIK was extradited from Switzerland and pled guilty on June 25, 2021, to insider trading for his role in trading based on confidential inside information stolen by an insider at a global investment bank and shared with MALNIK in exchange for profits.  The sentence was imposed on November 19, 2021, by United States District Judge Victor Marrero.

U.S. Attorney Damian Williams said: “This prosecution shows that we will vigorously protect the integrity of our nation’s capital markets by holding insider traders accountable for their use of inside information, regardless of where in the world the inside information is stolen and where tips are illegally passed.”

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

DOV MALNIK and his business partner and codefendant Tomer Feingold, both Israeli citizens, were securities traders who traded in their own names and managed various companies and investment funds.  From at least 2013 through 2017, MALNIK participated in a large-scale, international insider trading ring.  Through the scheme, MALNIK received material, nonpublic information (“MNPI”) concerning acquisitions and potential acquisitions of publicly traded companies from a securities trader who resided in Switzerland (“CC-1”).  MALNIK knew that this MNPI was obtained by CC-1 directly and indirectly from individuals who were insiders at publicly traded companies and investment banks.  These insiders breached their fiduciary duties and shared MNPI with others, including CC-1, in exchange for compensation, who in turn shared that information with MALNIK.  MALNIK used that information to place timely, profitable securities trades resulting in millions of dollars of profits.

Throughout the conspiracy, MALNIK, Feingold, the investment bank insiders, CC-1, and others involved in this scheme, took numerous steps to conceal their unlawful enterprise, including through the use of encrypted messaging applications and multiple unregistered “burner” cellphones to communicate with each other.  MALNIK also attempted to avoid detection by engaging in securities trading through numerous offshore corporate entities.  For example, in 2011, MALNIK incorporated a British Virgin Islands entity based in Geneva, Switzerland, and subsequently opened trading and/or bank accounts in that shell company’s name.  During the insider trading scheme, MALNIK’s offshore companies traded in the stocks of companies about which MALNIK had received MNPI – often with multiple of those companies trading in the same stock and on the same days.

MALNIK also used these entities to transfer a portion of the profits of his and Feingold’s illegal insider trading to CC-1, as per MALNIK’s agreement with CC-1.  At first, MALNIK instructed his bank to send the funds to an account at a financial institution in Switzerland that agreed to hold the funds for the benefit of CC-1.  After a short time, however, MALNIK’s bank questioned the purpose of the transactions and requested justification for the transfer of funds.  Accordingly, in order to deceive the banks, MALNIK, Feingold, and CC-1 agreed that CC-1 would issue fake invoices for consulting services to MALNIK and Feingold’s various offshore entities.  The offshore entities would then send the funds to CC-1’s account pursuant to the fake invoices.

To date, this investigation has also resulted in the conviction of other individuals who were involved in this global insider trading scheme, including investment banker Bryan Cohen, who pled guilty on January 7, 2020, to illegally passing MNPI related to his bank’s corporate clients, and entrepreneur and pharmaceutical company executive Telemaque Lavidas, who was convicted on January 15, 2020, of illegally passing MNPI related to Ariad Pharmaceuticals, Inc.

*                *                *

In addition to the prison term, MALNIK, 43, was ordered to pay a fine of $50,000 and forfeiture of $1,594,779.

Mr. Williams praised the work of the Federal Bureau of Investigation and also thanked the Securities and Exchange Commission. The Justice Department’s Office of International Affairs and the Swiss Federal Office of Justice provided substantial assistance in securing Malnik’s arrest and extradition.

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

Damian Williams, 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 Daniel G. Cort, Acting Commissioner of the New York City Department of Investigation (“DOI”), announced the unsealing of an Indictment charging GERALD MIGDOL with conspiracy to commit wire fraud, wire fraud, and aggravated identity theft in connection with a scheme to misrepresent and conceal the sources of political campaign contributions.  MIGDOL was arrested this morning and will be presented before United States Magistrate Judge Ona T. Wang later today.  The case is assigned to United States District Judge J. Paul Oetken.

U.S. Attorney Damian Williams said: “Free and fair elections are the foundation of our democracy, and campaign finance regulations are one way communities seek to ensure everyone plays by the same rules.  As alleged, Gerald Migdol and others tried to divert taxpayer dollars from New York City’s matching funds program to a particular candidate based on fraudulent campaign contributions.  My Office remains vigilant against such attempts to defraud the public.”

FBI Assistant Director Michael J. Driscoll said: “Public programs, such as the one Migdol allegedly defrauded, exist to provide support for New Yorkers who want to represent their city in elections, but find themselves without the means to do so. Illegally subverting the requirements to be eligible for these funds is detrimental to our ability to hold a free and fair election and is a federal offense.”

Acting DOI Commissioner Daniel G. Cort said: “Obtaining fraudulent donations for a political candidate that will ultimately be used to secure matching funds undermines the fair and honest public financing of elections. DOI thanks its partners on this matter, the office of the United States Attorney for the Southern District of New York and the Federal Bureau of Investigation.”

According to the allegations in the Indictment and information in the public record[1]:

From at least in or about October 2019, through at least in or about January 2021, GERALD MIGDOL orchestrated and participated in a scheme to misrepresent and conceal sources of contributions made during the 2021 election cycle to the campaign of a candidate for New York City Comptroller (“Candidate-1”), fraudulently attempting to procure public funds for Candidate-1 from the campaign finance program overseen by the New York City Campaign Finance Board (“CFB”).  That campaign finance program included, among other things, a “matching funds program” that provided eligible candidates with public funds based on the number and amount of certain donor contributions.  According to the CFB, “[b]y matching their contributions with public funds, the [p]rogram empowers New Yorkers in every neighborhood to make their voices heard in city elections” and “[b]y encouraging candidates to raise small-dollar contributions from average New Yorkers, the program increases engagement between voters and those who seek to represent them.”[2]

Candidates running for the office of New York City Comptroller were eligible to participate in the matching funds program if they met certain criteria, and eligible candidates could receive up to approximately $3.4 million in public matching funds based on qualifying contributions.  Candidate-1 filed a certification with the CFB in or about September 2019, becoming a candidate for the office of the New York City Comptroller and opting in to the CFB’s matching funds program.  Thereafter, MIGDOL and others conspired to obtain fraudulent contributions for Candidate-1 that would be used, among other things, to seek public matching funds from the CFB.  A number of those contributions were “nominee contributions,” in which money was given to Candidate-1’s campaign under one contributor’s name, but in reality the money for the contribution came from, or was reimbursed by, another person.  Other contributions obtained at MIGDOL’s direction were fraudulently made in the names of individuals who, in fact, had never authorized those contributions.

Through these and other efforts, MIGDOL and others involved in the scheme procured nominee and other fraudulent contributions for Candidate-1’s campaign, which in turn were submitted to the CFB by Candidate-1’s campaign in connection with requests for at least tens of thousands of dollars in additional public matching funds.

*                *                *

MIGDOL, 71, of New York, New York, is charged with one count of conspiracy to commit wire fraud and one count 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 two years in prison.  The statutory maximum penalties are prescribed by Congress, and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Williams praised the outstanding investigative work of the FBI and DOI.  This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Jarrod L. Schaeffer, David Abramowitz, Tara La Morte, and Alison Moe 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.

[2] https://www.nyccfb.info/program/benefits.

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 an Indictment charging WILLIE DENNIS with cyberstalking partners of DENNIS’s former law firm.  DENNIS, a U.S. citizen, was arrested this week in the Dominican Republic and will be presented today in Manhattan federal court before United States Magistrate Judge Ona T. Wang.  The case is assigned to U.S. District Court Judge Lorna G. Schofield.

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

From at least in or about 2018, up to and including in or about November 2020, WILLIE DENNIS, a former partner at a prominent national law firm (the “Firm”), engaged in a campaign of harassment, intimidation, and threats against multiple individuals, including other partners, who worked at the Firm.  As part of that campaign, DENNIS sent the victims thousands of harassing, threatening, and intimidating emails and text messages. 

*                *                *

DENNIS, 59, of New York, New York, is charged with four counts of cyberstalking, in violation of Title 18, United States Code, Section 2261A(2)(b).  Each count carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

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

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Sarah L. Kushner 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 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 Bryan Vorndran, the Assistant Director of the Federal Bureau of Investigation’s Cyber Division (“FBI”), and Matthew G. Olsen, Assistant Attorney General for National Security, announced today the unsealing of an indictment charging Iranian citizens and residents Seyyed Mohammad Hosein and MUSA KAZEMI (سید محمد حسین موسی کاظمی), a/k/a “Mohammad Hosein Musa Kazem,” a/k/a “Hosein Zamani,” and SAJJAD KASHIAN (سجاد کاشیان), a/k/a “Kiarash Nabavi,”for their involvement in a cyber-enabled campaign to intimidate and influence American voters, and otherwise undermine voter confidence and sow discord, in connection with the 2020 U.S. Presidential election.  As part of this campaign, the conspirators obtained confidential United States voter information from at least one state election website, sent threatening email messages to intimidate voters, created and disseminated a video containing disinformation pertaining to purported but non-existent voting vulnerabilities, attempted to access, without authorization, several states’ voting-related websites, and successfully gained unauthorized access to a U.S. media company’s computer network that, if not for successful FBI and victim company efforts to mitigate, would have provided the conspirators another vehicle for further disseminating false claims after the election.  The case has been assigned to U.S. District Judge Victor Marrero.

U.S. Attorney Damian Williams said:  “As alleged, Kazemi and Kashian were part of a coordinated conspiracy in which Iranian hackers sought to undermine faith and confidence in the U.S. Presidential elections.  Working with others, Kazemi and Kashian accessed voter information from at least one state’s voter database, threatened U.S. voters via email, and even disseminated a fictitious video that purported to depict actors fabricating overseas ballots.  The United States will never tolerate any foreign actors’ attempts to undermine our free and democratic elections.  As a result of the charges unsealed today, and the concurrent efforts of our U.S. government partners, Kazemi and Kashian will forever look over their shoulders as we strive to bring them to justice.”

Assistant Director of the FBI’s Cyber Division Bryan Vorndran.said:  “The FBI remains committed to countering malicious cyber activity targeting our democratic process. Working rapidly with our private sector and U.S. government partners and ahead of the election, we were able to disrupt and mitigate this malicious activity – and then to enable today’s joint, sequenced operations against the adversary. Today’s announcement shows what we can accomplish as a community and a country when we work together, and the FBI will continue to do its part to keep our democracy safe.”

Assistant Attorney General for National Security Matthew G. Olsen said:  “The Department is committed to using all tools at its disposal, including criminal charges, to expose and disrupt malign foreign influence efforts and bring the responsible actors to justice. The indictment reveals that Iranian actors sought to sow discord by targeting Republicans with messages claiming voter fraud, and Democrats with ‘false flag’ threats from the Proud Boys.  Its detailed allegations provide unadulterated facts that will help further inoculate the U.S. public, regardless of political affiliation, from future tailored and targeted disinformation campaigns.”

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

The 2020 Election Interference Campaign

Starting in approximately August 2020, and proceeding until November 2020, KAZEMI, KASHIAN, and other co-conspirators began a coordinated, four-stage campaign to undermine faith and confidence in the 2020 Presidential Election (the “Election Interference Campaign”) and otherwise sow discord within U.S. society.  The campaign had four components:

1. In September and October 2020, members of the conspiracy conducted reconnaissance on, and attempted to compromise, approximately eleven state voter websites, including state voter registration websites and state voter information websites.  Those efforts resulted in the successful exploitation of a misconfigured computer system of a particular U.S. state (“State-1”), and the resulting unauthorized downloading of more than 100,000 State-1 voters’ information.
2. In October 2020, members of the conspiracy, claiming to be a “group of Proud Boys volunteers,” sent Facebook messages and emails (the “False Election Messages”) to Republican Senators, Republican members of Congress, individuals associated with the Presidential campaign of Donald J. Trump, White House advisors, and members of the media.  The False Election Messages claimed that the Democratic Party was planning to exploit “serious security vulnerabilities” in state voter registration websites to “edit mail-in ballots or even register non-existent voters.”  The False Election Messages were accompanied by a video (the “False Election Video”) which purported, via simulated intrusions and the use of State-1 voter data, to depict an individual affiliated with the Proud Boys hacking into state voter websites and using stolen voter information to create fraudulent absentee ballots through the Federal Voting Assistance Program (“FVAP”) for military and overseas voters.[2] 
3. Also in October 2020, the conspirators engaged in an online voter intimidation campaign involving the dissemination of a threatening message (the “Voter Threat Emails”), purporting to be from the Proud Boys, to tens of thousands of registered voters, including some voters whose information the conspiracy had obtained from State-1’s website.  The emails were sent to registered Democrats, and threatened the recipients with physical injury if they did not change their party affiliation and vote for President Trump.
4. On November 4, 2020, the day after the 2020 U.S. Presidential election, the conspirators sought to leverage earlier September and October 2020 intrusions into an American media company’s (“Media Company-1”) computer networks.  Specifically, on that day, the conspirators attempted to use stolen credentials to again access Media Company-1’s network, which would have provided them another vehicle for further disseminating false claims concerning the election through conspirator-modified or created content.  However, because of an earlier FBI victim notification, Media Company-1 had by that time mitigated the conspirators’ unauthorized access and these log-in attempts failed.

Background on Kazemi and Kashian

SEYYED MOHAMMAD HOSEIN MUSA KAZEMI and SAJJAD KASHIAN are experienced Iran-based computer hackers that worked as contractors for an Iran-based company called Eeleyanet Gostar, now known as Emennet Pasargad.  Eeleyanet Gostar purported to provide cybersecurity services within Iran.  Among other things, Eeleyanet Gostar is known to have provided services to the Iranian Government, including to the Guardian Council.

As part of his role in the Election Interference Campaign, KAZEMI compromised computer servers that were used to send the Voter Threat Emails, prepared such emails, and compromised the systems of Media Company-1.  KASHIAN’s role was to manage the conspirators’ computer infrastructure used to carry out the Voter Threat Email campaign, and to purchase social media accounts in furtherance of the Election Interference Campaign.

*                *                *

KAZEMI, 24, and KASHIAN, 27, are both charged with one count of conspiracy, which carries a maximum sentence of five years in prison; one count of voter intimidation, which carries a maximum sentence of one year in prison; and one count of transmission of interstate threats, which carries a maximum sentence of five years in prison.  KAZEMI is additionally charged with one count of unauthorized computer intrusion, which carries a maximum sentence of five years in prison; and one count of computer fraud: knowingly damaging a protected computer, which carries a maximum sentence of ten 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 defendants will be determined by the assigned judge.

Concurrent with the unsealing of the indictment, the Department of the Treasury Office of Foreign Assets Control (“OFAC”) designated Emennet Pasargad, KAZEMI, KASHIAN, and four other Iranian nationals comprising Emennet Pasargad leadership pursuant to Executive Order (E.O.) 13848, “Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election.”  Additionally, the Department of State’s Rewards for Justice Program, is offering a reward of up to $10 million for information on or about the KAZEMI and KASHIAN’s activities.

Mr. Williams praised the outstanding investigative work of the FBI, including the work of the Cleveland FBI Field Office and the FBI Cyber Division.    

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Dina McLeod and Louis A. Pellegrino are in charge of the prosecution, with assistance from Trial Attorney Adam Small of the National Security Division’s Counterintelligence and Export Control Section.

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

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

[2]  In actuality, the computer intrusions depicted in the False Election Video were simulated intrusions created by members of the conspiracy using their own server and data obtained during the State-1 exploitation.  Further, the FVAP could not actually be leveraged in the manner implied by the False Election Video.

An indictment was unsealed in New York today charging two Iranian nationals for their involvement in a cyber-enabled campaign to intimidate and influence American voters, and otherwise undermine voter confidence and sow discord, in connection with the 2020 U.S. presidential election.

According to court documents, Seyyed Mohammad Hosein Musa Kazemi (سید محمد حسین موسی کاظمی), aka Mohammad Hosein Musa Kazem, aka Hosein Zamani, 24, and Sajjad Kashian (سجاد کاشیان), aka Kiarash Nabavi, 27, both of Iran, obtained confidential U.S. voter information from at least one state election website; sent threatening email messages to intimidate and interfere with voters; created and disseminated a video containing disinformation about purported election infrastructure vulnerabilities; attempted to access, without authorization, several states’ voting-related websites; and successfully gained unauthorized access to a U.S. media company’s computer network that, if not for successful FBI and victim company efforts to mitigate, would have provided the conspirators another vehicle to disseminate false claims after the election.

“This indictment details how two Iran-based actors waged a targeted, coordinated campaign to erode confidence in the integrity of the U.S. electoral system and to sow discord among Americans,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The allegations illustrate how foreign disinformation campaigns operate and seek to influence the American public. The Department is committed to exposing and disrupting malign foreign influence efforts using all available tools, including criminal charges.”

“As alleged, Kazemi and Kashian were part of a coordinated conspiracy in which Iranian hackers sought to undermine faith and confidence in the U.S. presidential election,” said U.S. Attorney Damian Williams for the Southern District of New York. “Working with others, Kazemi and Kashian accessed voter information from at least one state’s voter database, threatened U.S. voters via email, and even disseminated a fictitious video that purported to depict actors fabricating overseas ballots. The United States will never tolerate any foreign actors’ attempts to undermine our free and democratic elections. As a result of the charges unsealed today, and the concurrent efforts of our U.S. government partners, Kazemi and Kashian will forever look over their shoulders as we strive to bring them to justice.”

“The FBI remains committed to countering malicious cyber activity targeting our democratic process,” said Assistant Director Bryan Vorndran of the FBI’s Cyber Division. “Working rapidly with our private sector and U.S. government partners and ahead of the election, we were able to disrupt and mitigate this malicious activity – and then to enable today’s joint, sequenced operations against the adversary. Today’s announcement shows what we can accomplish as a community and a country when we work together, and the FBI will continue to do its part to keep our democracy safe.”

According to the allegations contained in the indictment unsealed today:

The Voter Intimidation and Influence Campaign

Starting in approximately August 2020, and proceeding until November 2020, Kazemi, Kashian, and other co-conspirators began a coordinated, campaign to undermine faith and confidence in the 2020 presidential election (the “Voter Intimidation and Influence Campaign”) and otherwise sow discord within U.S. society. The Campaign had four components:

• In September and October 2020, members of the conspiracy conducted reconnaissance on, and attempted to compromise, approximately 11 state voter websites, including state voter registration websites and state voter information websites. Those efforts resulted in the successful exploitation of a misconfigured computer system of a particular U.S. state (“State-1”), and the resulting unauthorized downloading of information concerning more than 100,000 of State-1’s voters.
• In October 2020, members of the conspiracy, claiming to be a “group of Proud Boys volunteers,” sent Facebook messages and emails (the “False Election Messages”) to Republican Senators, Republican members of Congress, individuals associated with the presidential campaign of Donald J. Trump, White House advisors, and members of the media. The False Election Messages claimed that the Democratic Party was planning to exploit “serious security vulnerabilities” in state voter registration websites to “edit mail-in ballots or even register non-existent voters.” The False Election Messages were accompanied by a video (the “False Election Video”) carrying the Proud Boys logo, which purported, via simulated intrusions and the use of State-1 voter data, to depict an individual hacking into state voter websites and using stolen voter information to create fraudulent absentee ballots through the Federal Voting Assistance Program (FVAP) for military and overseas voters.[1]
• Also in October 2020, the conspirators engaged in an online voter intimidation campaign involving the dissemination of a threatening message (the “Voter Threat Emails”), purporting to be from the Proud Boys, to tens of thousands of registered voters, including some voters whose information the conspiracy had obtained from State-1’s website. The emails were sent to registered Democrats and threatened the recipients with physical injury if they did not change their party affiliation and vote for President Trump.
• On Nov. 4, 2020, the day after the 2020 U.S. presidential election, the conspirators sought to leverage earlier September and October 2020 intrusions into an American media company’s (Media Company-1) computer networks. Specifically, on that day, the conspirators attempted to use stolen credentials to again access Media Company-1’s network, which would have provided them another vehicle for further disseminating false claims concerning the election through conspirator-modified or created content. However, because of an earlier FBI victim notification, Media Company-1 had by that time mitigated the conspirators’ unauthorized access and these log-in attempts failed.

Background on Kazemi and Kashian

Kazemi and Kashian are experienced Iran-based computer hackers who worked as contractors for an Iran-based company formerly known as Eeleyanet Gostar, and now known as Emennet Pasargad. Eeleyanet Gostar purported to provide cybersecurity services within Iran. Among other things, Eeleyanet Gostar is known to have provided services to the Iranian government, including to the Guardian Council.

As part of his role in the Voter Intimidation and Influence Campaign, Kazemi compromised computer servers that were used to send the Voter Threat Emails, drafted those emails, and compromised the systems of Media Company-1. Kashian managed the conspirators’ computer infrastructure used to carry out the Voter Threat Emails campaign and he purchased social media accounts in furtherance of the Voter Intimidation and Influence Campaign.

Kazemi and Kashian are both charged with one count of conspiracy to commit computer fraud and abuse, intimidate voters, and transmit interstate threats, which carries a maximum sentence of five years in prison; one count of voter intimidation, which carries a maximum sentence of one year in prison; and one count of transmission of interstate threats, which carries a maximum sentence of five years in prison. Kazemi is additionally charged with one count of unauthorized computer intrusion, which carries a maximum sentence of five years in prison; and one count of computer fraud, namely, knowingly damaging a protected computer, which carries a maximum sentence of 10 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Concurrent with the unsealing of the indictment, the Department of the Treasury Office of Foreign Assets Control (OFAC) designated Emennet Pasargad, Kazemi, Kashian, and four other Iranian nationals comprising Emennet Pasargad leadership pursuant to Executive Order 13848, “Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election.” Additionally, the Department of State’s Rewards for Justice Program, is offering a reward of up to $10 million for information on or about the Kazemi and Kashian’s activities.

The FBI’s Cyber Division and Cleveland Field Office are investigating the case.

Assistant U.S. Attorneys Dina McLeod and Louis A. Pellegrino and Trial Attorney Adam Small of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

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

[1]  In actuality, the computer intrusions depicted in the False Election Video were simulated intrusions created by members of the conspiracy using their own server and data obtained during the State-1 exploitation. Further, the FVAP could not actually be leveraged in the manner implied by the False Election Video.

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 Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced that GERARDO MANUEL CHECO NUNEZ has been charged with making a hoax bomb threat yesterday, November 17, 2021, to FBI personnel at the Jacob K. Javits Federal Office Building (the “Javits Building”), located at 26 Federal Plaza in Manhattan, which houses the headquarters of the New York Field Office of the FBI and other federal agencies.  CHECO NUNEZ was arrested yesterday after making the alleged bomb threat and was presented before United States Magistrate Judge Ona T. Wang in Manhattan federal court this afternoon.

U.S. Attorney Damian Williams said: “As alleged, the defendant’s bomb threat caused an immediate mobilization by the FBI and the NYPD appropriate for a real explosive device.  Hoax or not, a bomb threat requires the diversion of valuable law enforcement and public safety resources, and causes genuine fear in the public.  The defendant now faces a serious federal charge for his alleged conduct.”

FBI Assistant Director‑in‑Charge Michael J. Driscoll said: “While Nunez’s alleged threat to our federal building was deemed a hoax, his actions called for the resources of law enforcement, which were expended in response to one man’s personal gripe. Aside from the fact that these types of hoax threats divert resources and cost taxpayer dollars, they put law enforcement in harm’s way regardless of their intended purpose. Make no mistake about it, this case will be taken as seriously as any other.”

NYPD Commissioner Dermot Shea said: “In a city that has experienced more than 50 terrorist plots and four attacks, making a claim that you have a bomb at a government building is no joke. Mr. Checo Nunez faces serious charges which should serve as an example to others who believe making threats is an effective way to get attention.”

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

On November 17, 2021, CHECO NUNEZ entered the Javits Building and approached a security booth staffed by members of the uniformed security police of the FBI (the “FBI Police”).  The security booth is protected by a transparent security screen.  CHECO NUNEZ slammed against the security screen a copy of a written complaint he had previously filed through the FBI’s website alleging that a foreign government had hacked his accounts and was trying to extort him.[2]  CHECO NUNEZ then stated to the FBI Police that he had an improvised explosive device (“IED”) in his vehicle (“Vehicle‑1”), and that he wanted to turn himself in.  The FBI Police asked CHECO NUNEZ to confirm that there was an IED in Vehicle‑1, and CHECO NUNEZ responded affirmatively.  FBI Police took CHECO NUNEZ into custody, and alerted members of the FBI’s New York Joint Terrorism Task Force (the “JTTF”).

Members of the JTTF asked CHECO NUNEZ if there was an IED in Vehicle‑1.  CHECO NUNEZ responded that there was not an IED in Vehicle‑1, and that he had told the FBI Police that there was an IED in Vehicle‑1 because the FBI had ignored his hacking complaints, and he wanted the FBI to pay attention to those complaints.  CHECO NUNEZ provided a description of Vehicle‑1 and its approximate location outside the Javits Building.

Members of the JTTF located Vehicle‑1, which is a full‑size cargo van.  Vehicle‑1 was parked on Worth Street near the intersection of Worth Street and Lafayette Street, which is approximately across the street from the Javits Building.  Vehicle­‑1 was parked in the immediate vicinity of a closed coffee shop and an apartment building in which numerous individuals reside.  Law enforcement evacuated the area around Vehicle‑1, including the apartment building, and closed the area to pedestrian and vehicle traffic.  At least one law enforcement helicopter began surveilling the scene.

FBI bomb technicians searched Vehicle‑1 and determined that it did not contain an IED or any other type of explosive device or materials.  During subsequent searches of Vehicle‑1, members of the JTTF found at least approximately several rounds of .223 caliber ammunition, as well as written materials regarding weapons of mass destruction and the detection of IEDs.  From approximately 2006 to 2013, CHECO NUNEZ was enlisted in the United States Marine Corps, including as an Engineer Equipment Operator.

*                      *                      *

CHECO NUNEZ, 33, of Queens, New York, is charged with one count of conveying false information and hoaxes in connection with the alleged bomb threat, in violation of Title 18, United States Code, Section 1038, which carries a maximum sentence of five years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.

Mr. Williams praised the outstanding efforts of the FBI’s New York JTTF, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies.

This case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorney Benjamin Woodside Schrier is in charge of the prosecution.

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

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

[2] Communications and statements discussed herein are described in substance and in part.

Damian Williams, the United States Attorney for the Southern District of New York, announced today the guilty plea of GEORGE BRIDI, a citizen of the United Kingdom, for his role in the Sparks Group, an international piracy group that illegally distributed movies and television shows on the Internet.  BRIDI pled guilty today before U.S. District Judge Richard M. Berman.

U.S. Attorney Damian Williams said: “As he admitted in court today, George Bridi participated in an international video piracy ring that illegally distributed worldwide on the Internet nearly every movie released by major production studios, as well as television shows.  Bridi circumvented copyright protections on DVDs and Blu-Ray discs to illegally share movies online, but he and his crew could not evade law enforcement scrutiny, and Bridi now awaits sentencing for his crime.”

As alleged in the Indictment and statements made in open court:

Between 2011 and the present, GEORGE BRIDI and others known and unknown were members of the Sparks Group, a criminal organization that disseminated on the Internet movies and television shows prior to their retail release date, including nearly every movie released by major production studios, after compromising the content’s copyright protections.

In furtherance of its scheme, the Sparks Group fraudulently obtained copyrighted DVDs and Blu-Ray discs from wholesale distributors in advance of their retail release date by, among other things, making various misrepresentations to the wholesale distributors concerning the reasons that they were obtaining the discs prior to the retail release date.  

Sparks Group members then used computers with specialized software to compromise the copyright protections on the discs, a process referred to as “cracking” or “ripping,” and to reproduce and encode the content in a format that could be easily copied and disseminated over the Internet.  Sparks Group members then uploaded copies of the copyrighted content onto servers controlled by the Sparks Group, where other members further reproduced and disseminated the content on streaming websites, peer-to-peer networks, torrent networks, and other servers accessible to public.  The Sparks Group identified its reproductions by encoding the filenames of reproduced copyrighted content with distinctive tags, and also uploaded photographs of the discs in their original packaging to demonstrate that the reproduced content originated from authentic DVDs and Blu-Ray discs.

BRIDI arranged for discs to be picked up, mailed, or delivered from distributors located in Manhattan, Brooklyn, and New Jersey to other members of the Sparks Group prior to their official release date.  BRIDI then reproduced, and aided and abetted the reproduction of, these discs by using computer software that circumvented copyright protections on the discs and reproducing the copyrighted content for further distribution on the Internet. 

The Sparks Group has caused tens of millions of dollars in losses to film production studios.                

*                *                *

BRIDI, 52, pled guilty to conspiracy to commit copyright infringement, which carries a maximum sentence of five years in prison.  The maximum potential sentence is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

BRIDI is scheduled to be sentenced on January 20, 2022, at 12:00 p.m.

Mr. Williams praised the outstanding investigative work of Homeland Security Investigations and the U.S. Postal Inspection Service.  Mr. Williams also thanked Europol and Eurojust as well as law enforcement authorities in the following countries for their assistance in the investigation: Canada, Cyprus, Czech Republic, Denmark, France, Germany, Italy, Republic of Korea, Latvia, Netherlands, Norway, Poland, Portugal, Romania, Spain, Sweden, Switzerland, and the United Kingdom.

This case is being handled by the Office’s Violent & Organized Crime Unit.  Assistant United States Attorneys Andrew K. Chan, Mollie Bracewell, and Christy Slavik are in charge of the prosecution.  The Justice Department’s Office of International Affairs (OIA) provided significant and ongoing assistance with facilitating the execution of dozens of mutual legal assistance requests in 18 different countries necessary for taking down servers and gathering evidence.  OIA also provided critical support in working with Eurojust and Europol in planning the coordinated operation in August 2020.

Damian Williams, United States Attorney for the Southern District of New York, and Ricky J. Patel, Acting Special Agent in Charge of the New York Field Office of the Homeland Security Investigations (“HSI”), announced today the arrest of JUAN S. CORDERO, who is charged with leading a fraud ring operating in the United States and the Dominican Republic in which co-conspirators fraudulently purchased iPhones that were billed to compromised accounts of AT&T Wireless (“AT&T”) customers.  CORDERO was apprehended by authorities in the Dominican Republic and transported to the Southern District of New York, where he will be presented later today.  He is the eighth and final defendant arrested on an Indictment that charges CORDERO, DANIEL A. TORRES, ALEKSEY SERYY, RARNIERY MOLINA, a/k/a “Eddy,” ADAEL ARIEL FIGARO, SALAH SAL ALTAWEEL, JOSE F. CORDERO, and JEANCARLOS URENA with conspiracy to commit wire fraud, wire fraud, and aggravated identity theft.  The case is assigned to United States District Judge Alvin K. Hellerstein.

U.S. Attorney Damian Williams said: “As alleged, Juan S. Cordero and his co-conspirators obtained millions of dollars’ worth of iPhones after customers were deceived into providing PIN codes needed to complete the fraudulent transactions.  Now, each defendant has been arrested and charged with serious crimes, and the international scheme has been disconnected.”

HSI Acting Special Agent in Charge Ricky J. Patel said: “This arrest closes the final chapter of an alleged fraud network operating in New York and the Dominican Republic that used modern technology to steal and monetize personal information.  The co-conspirators’ alleged activities left a trail of unsuspecting victims across the United States and caused significant business losses.  HSI prides itself on its ability to couple traditional investigative techniques with cutting edge technical skills to combat cybercrime.”

As alleged in the Indictment[1]:

From at least in or around February 2016 up to and including in or around June 2020, the defendants participated in a criminal fraud ring (the “Fraud Ring”) based in the United States and the Dominican Republic.  Participants in the Fraud Ring sought to obtain iPhones and other electronic devices by billing the devices to the wireless service accounts of victim account holders without the account holders’ knowledge or consent.

To effectuate the scheme, the Fraud Ring obtained personally identifying information (“PII”) belonging to AT&T customers in one of two ways:

First, the Fraud Ring purchased from the dark web account information, such as usernames and passwords, belonging to AT&T customers.  Having purchased the username and password belonging to a particular AT&T customer, a member of the Fraud Ring was able to log into the account of that customer and add a co-conspirator as an authorized user.  In order to complete the addition of an authorized user, a member of the Fraud Ring also had to obtain the resulting confirmatory PIN code sent by AT&T to the true customer.  To do so, a member of the Fraud Ring purporting to be an AT&T representative called the customer.  When placing these calls, the Fraud Ring used Voice Over Internet Protocol (“VOIP”) Technology, which enables a caller to insert a chosen telephone number into the originating caller field.  Often the Fraud Ring input numbers affiliated with, or closely related to, AT&T customer service telephone numbers, leading unsuspecting customers to provide their PIN codes based on their belief that they were communicating with representatives of AT&T.

Alternatively, the Fraud Ring obtained PII of customer accounts through password reset requests.  Using this method, a member of the Fraud Ring, purporting to be an AT&T representative, typically placed a VOIP call to a particular wireless customer and alerted the customer to a forthcoming PIN code.  At that point, while still on the line with the AT&T customer, a member of the Fraud Ring reset the password on that customer’s account and asked the customer to recite the PIN code just sent via text message.  Having obtained the PIN code, the Fraud Ring then changed the password of the customer’s account and added a co-conspirator as an authorized user.

Next, the member of the Fraud Ring whose name had been added to a particular customer account entered either an AT&T retail location or a retailer of iPhones and electronic devices registered to the AT&T network.  Once at the retail location, that member of the Fraud Ring purchased one or more electronic devices, typically iPhones cost at least $1000 each.  The cost of the devices would be charged to the customer account, while the member of the Fraud Ring making the purchase paid only the taxes and processing fees.

Members of the Fraud Ring made in-store purchases of iPhones and other electronic devices from retailers in the Southern District of New York and elsewhere in New York, and in 45 other states.  Once purchased, the iPhones were sold to buyers nationwide.

Following the re-sale of the fraudulently obtained iPhones, co-conspirators wired money to other co-conspirators across the country and in the Dominican Republic.

Over the course of the conspiracy, the Fraud Ring billed over 4,800 iPhones and other electronic devices to AT&T customer accounts, resulting in over $4 million in customer losses, which were ultimately absorbed by AT&T.

*                *                *

A chart 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 HSI.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Marguerite B. Colson and Patrick R. Moroney 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

CHARGE

DEFENDANTS
(Age and Residence)

MAX. PENALTIES

1

Conspiracy to Commit Wire Fraud

18 U.S.C. § 1349

JUAN S. CORDERO
(age: 33; Yonkers, NY and Dominican Republic)
 

DANIEL A. TORRES

(age: 25; Yonkers, NY)

ALEKSEY SERYY
(age: 30; Fairfield, NJ)
 

RARNIERY MOLINA,

a/k/a “Eddy,”
(age: 28; Yonkers, NY)
 

ADAEL ARIEL FIGARO

(age: 30; Yonkers, NY)

SALAH SAL ALTAWEEL

(age: 24; Yonkers, NY)

JOSE F. CORDERO

(age: 29; Yonkers, NY)

JEANCARLOS URENA

(age: 32; Yonkers, NY)

20 years in prison

2

Wire Fraud

18 U.S.C. § 1343 and 2

JUAN S. CORDERO,

DANIEL A. TORRES,

ALEKSEY SERYY,

RARNIERY MOLINA,

a/k/a “Eddy,”

ADAEL ARIEL FIGARO,

SALAH SAL ALTAWEEL,

JOSE F. CORDERO, and

JEANCARLOS URENA

20 years in prison

3

Aggravated Identity Theft

18 U.S.C. § 1028A and 2

JUAN S. CORDERO,

DANIEL A. TORRES,

ALEKSEY SERYY,

RARNIERY MOLINA,

a/k/a “Eddy,”

ADAEL ARIEL FIGARO,

SALAH SAL ALTAWEEL,

JOSE F. CORDERO, and

JEANCARLOS URENA

Mandatory consecutive 2 years in prison

[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth 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 INIGO PHILBRICK, an art dealer specializing in post-war and contemporary fine art with galleries in London, United Kingdom, and Miami, Florida, pled guilty today before United States District Judge Sidney H. Stein to one count of wire fraud for perpetrating a multi-year scheme to defraud various individuals and entities in order to finance his art business.  In total, PHILBRICK fraudulently obtained more than $86 million as a result of the scheme.

U.S. Attorney Damian Williams said: “Inigo Philbrick was a serial swindler who took advantage of the lack of transparency in the art market to defraud art collectors, investors, and lenders of more than $86 million to finance his art business and his lifestyle.  Philbrick has now admitted his guilt and awaits sentencing for perpetrating this extensive fraud.” 

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

From approximately 2016 through 2019, to finance his art business, PHILBRICK engaged in a scheme to defraud multiple individuals and entities in the art market located in the New York metropolitan area and abroad. PHILBRICK made material misrepresentations and omissions to art collectors, investors, and lenders to access valuable art and obtain sales proceeds, funding, and loans (the “Fraud Scheme”).  PHILBRICK knowingly misrepresented the ownership of certain artworks, for example, by selling a total of more than 100 percent ownership in an artwork to multiple individuals and entities without their knowledge; and by selling artworks and/or using artworks as collateral on loans without the knowledge of co-owners, and without disclosing the ownership interests of third parties to buyers and lenders. PHILBRICK furnished fraudulent contracts and records to investors to artificially inflate the artworks’ value and conceal his scheme, including a contract that listed a stolen identity as the seller.

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

By in or about the fall of 2019, PHILBRICK’s Fraud Scheme began to come to light as various investors and lenders learned about the fraudulent records PHILBRICK had provided and the material misrepresentations and omissions he had made.  By in or about mid-October, a lender officially notified PHILBRICK that he was in default of approximately a $14 million loan, and by November 2019, various investors had filed civil lawsuits in multiple jurisdictions regarding PHILBRICK’s Fraud Scheme in connection with various artworks.  At around the same time, PHILBRICK’s art galleries in Miami and London closed, and PHILBRICK stopped responding to legal process.  PHILBRICK fled the United States shortly before public reporting began about the lawsuits.  A fugitive, PHILBRICK resided in Vanuatu from approximately October 2019 until he was arrested there on June 11, 2020, in connection with this case.   

*                *                *

PHILBRICK, 34, a U.S. citizen previously residing in London, United Kingdom, pled guilty to one count of wire fraud, which carries a maximum prison term of 20 years.  The statutory maximum sentence is prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.  PHILBRICK is scheduled to be sentenced by Judge Stein on March 18, 2022 at 12:00 p.m.

Mr. Williams praised the investigative work of the Federal Bureau of Investigation’s Art Crime Team.

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

Damian Williams, the United States Attorney for the Southern District of New York,  announced that GREGG BRIE, an investment adviser in White Plains, New York, was sentenced yesterday in White Plains federal court to 63 months in prison for fraud in connection with his embezzlement of more than $640,000 from three clients.  BRIE had previously pled guilty to one count of wire fraud and was sentenced by U.S. District Judge Cathy Seibel.

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

BRIE embezzled funds from three victims, two of whom lived in his White Plains apartment complex.  He advised his first victim, a disabled man on a fixed income and confined to a wheelchair, to buy shares in Alaska Air Group, Inc.  Bank records show that this victim gave BRIE more than $480,000.  BRIE told his victim that he had opened accounts for him at a brokerage firm and that his stock had increased in value to approximately $8 million.  When the victim asked for his money, BRIE told him that his accounts were frozen because the stockbrokers had done something “sketchy” in order to buy the shares at a lower price.  When the victim attempted to contact the brokerage firm, BRIE told him that he would “murder [him]” if the victim attempted to contact the firm again.  BRIE repeated this threat at least two more times, noting that he meant his threats to be taken “literally, not metaphorically.”

According to written loan agreements drafted by BRIE, the second victim made three loans to BRIE in a total amount of approximately $157,000 “for the purpose of producing and distributing a proprietary, composite unimold commode for use within indigent venues of the African nation of Uganda.”  The third victim loaned $2,000 to BRIE on BRIE’s representation that he was illiquid because he had put all of his cash into the unimold commode project.

The Federal Bureau of Investigation’s (“FBI”) analysis of bank accounts controlled by BRIE showed that BRIE spent the money he obtained from his victims primarily on credit cards and a Mercedes Benz lease.  The evidence showed that there was no brokerage account.

In addition to the prison term, Judge Seibel ordered BRIE, 54, of White Plains, New York, to serve three years of supervised release and to pay forfeiture and restitution, each in the amount of $642,333.33.

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

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

Damian Williams, United States Attorney for the Southern District of New York, Scott J. Lampert, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of the Inspector General (“HHS-OIG”), and Ricky J. Patel, Acting Special Agent in Charge of the New York Field Office of the Homeland Security Investigations (“HSI”), announced the unsealing of an Indictment charging PATRICK NDUKWE, DAVID TRAVERS, and MICHELLE MARTIN with participating in a fraudulent scheme in which TRAVERS and MARTIN improperly routed trips for Medicaid-funded transportation to NDUKWE’s company, Quality Service Medical Transportation (“Quality”) and facilitated fraudulent Medicaid claims by Quality.  The case is assigned to U.S. District Judge Denise L. Cote.

U.S. Attorney Damian Williams said: “Every day, thousands of government employees and private contractors around New York are entrusted with handling, disbursing, and guarding public funds.  As alleged, David Travers and Michelle Martin, who were employees at the state manager for Medicaid-funded transportation, abused their roles and the public’s trust when they took payments to steer business to a private company and helped that company submit fraudulent Medicaid claims.  This Office and our law enforcement partners will always investigate and prosecute the illegal abuse of public programs for unjust enrichment.”

HHS-OIG Special Agent in Charge Scott J. Lampert said: “The defendants in this case allegedly engaged in a greed-fueled fraud scheme that undermined the Medicaid program and diverted taxpayer funds from their intended purpose of providing health care benefits to low-income individuals and families.  Together with our law enforcement partners, HHS-OIG will continue to vigorously pursue those who steal from government health programs for personal gain.”

HSI Acting Special Agent in Charge Ricky J. Patel said: “As alleged, these defendants lined their pockets by abusing a program created to provide assistance to the sick and injured in our communities.  Working with our partners, HSI will seek out and bring to justice those that attempt to undermine any federal or state program, explicitly those designed to help millions of our most vulnerable in New York.”

As alleged in the Indictment, which was unsealed today, public filings, and statements in court:[1] 

In New York, individuals who are enrolled in the state’s Medicaid program are eligible to have Medicaid pay for their transportation to and from medical appointments if they are not able to safely take public transportation.  To obtain Medicaid-funded transportation, the enrollee or their health care professional must schedule transportation by contacting the private company that is contracted to manage Medicaid-funded transportation in the New York City area (the “Transportation Manager”).

NDUKWE, 56, was the owner and operator of Quality.  From in or about May 2017 to March 2020, Quality was paid more than $7.3 million for more than 120,000 trips the company purportedly provided for Medicaid-enrolled customers in the New York City area.  However, many of these trip claims were fraudulent and never actually performed.  In some instances, the Medicaid-enrollee who purportedly used Quality to travel to a medical appointment had, in fact, never heard of or used the company for any transportation services.  In other instances, the driver who Quality said performed the trip had never actually worked for the company.  In yet other instances, Quality paid a periodic “kickback” to a Medicaid enrollee to use that enrollee’s personal identifying information to submit a trip claim.

TRAVERS and MARTIN were customer service representatives at the Transportation Manager.  Both were responsible for, among other things, receiving calls from Medicaid enrollees who needed transportation and then randomly assigning those trips among the dozens of eligible transportation companies in the New York City area.  However, both TRAVERS and MARTIN steered a disproportionately high volume of their trips to Quality.  In addition, when certain enrollees requested to be moved from Quality to another transportation company, TRAVERS and MARTIN ensured that the customers were eventually reassigned back to Quality.  TRAVERS and MARTIN also scheduled trips for Quality that they knew would not be performed and would allow Quality to submit fraudulent claims for payment.  For their fraud, both TRAVERS and MARTIN received payments from NDUKWE.

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NDUKWE was arrested this morning in the Bronx and will be presented later today before U.S. Magistrate Judge Ona T. Wang in Manhattan federal court.  TRAVERS was arrested this morning in Syracuse, New York, and Martin was arrested this morning in East Syracuse, New York.  Both TRAVERS and MARTIN will be presented later today before U.S. Magistrate Judge Therese Wiley Dancks.

NDUKWE, TRAVERS, and MARTIN are each charged with one count of theft of government funds, in violation of 18 U.S.C. § 641; one count of health care fraud, in violation of 18 U.S.C. § 1347; one count of conspiracy to commit health care fraud, in violation of 18 U.S.C. § 1349; and one count of violating the Anti-Kickback statute, in violation of 42 U.S.C. § 1320a-7b. In addition, NDUKWE is charged with one count of aggravated identity theft, in violation 18 U.S.C. § 1028A. In February 2020, as part of the same investigation, the Government charged 13 defendants involved in a different transportation company.

The crimes of theft of government funds, health care fraud, conspiracy to commit health care fraud, and violating the Anti-Kickback Statute each carry a maximum sentence of 10 years in prison.  The crime of aggravated identity theft carries a mandatory two years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by a judge.

Mr. Williams praised the outstanding work of DHHS-OIG and HSI.  He also thanked the Office of the New York State Medicaid Inspector General, New York Attorney General’s Medicaid Fraud Control Unit, United States Customs and Border Protection, the Syracuse Police Department, the Onondaga County Sheriff’s Office, the Internal Revenue Service, the New York City Police Department, and the U.S. Probation Office for the Northern District of New York for their assistance in the case.

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

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

Damian Williams, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, the Inspector-in-Charge of the New York Division of the U.S. Postal Inspection Service (“USPIS”), announced today the unsealing of an indictment charging JOSHUA BURRELL with securities fraud, wire fraud, and aggravated identity theft in connection with his operation of a New York-based investment firm, Activated Capital, LLC.  Based on fraudulent representations, BURRELL sought to raise up to $75 million for Opportunity Zone Funds, which are vehicles for making real estate investments in economically distressed areas.  BURRELL touted Activated Capital’s Opportunity Zone Funds for delivering consistent and stable cash flows to investors through targeted eight percent annual distributions.  However, contrary to BURRELL’s claims, Activated Capital’s funds did not generate enough income on their real estate investments to make those payments, and BURRELL used investors’ money to help make up the shortfall.  BURRELL was arrested this morning in Richmond Heights, Missouri, and is expected to be presented tomorrow before United States Magistrate Judge John Bodenhausen in St. Louis federal court.

U.S. Attorney Damian Williams said: “As alleged, Joshua Burrell solicited investors through a series of lies.  While promising investors transparency, he doctored documents and falsely depicted his firm’s finances.  Now, Burrell faces prosecution for his alleged crimes.”

USPIS Inspector-in-Charge Philip R. Bartlett said: “Mr. Burrell’s scheme is unfortunately not an uncommon scam in the investment community. Investors must always check and double check any firm or individual promising guaranteed positive returns to ensure they will not be taken for a ride. It is a good practice for all investors to trust their gut. If it doesn’t seem right, walk away.”

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

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

To attract additional investment capital for the Activated OZ Funds, BURRELL sought to establish a partnership with an investment bank headquartered in Manhattan (“Company-1”).  As part of Company-1’s diligence process, Company-1 asked BURRELL for “[b]acking to show current fund proceeds/acquisitions made.”  In response to these requests, BURRELL fabricated documents to make it appear that the Activated OZ Funds were more successful, owned more properties, and were in better financial condition than was actually the case.  For example, BURRELL sent Company-1 fake bank statements making it appear that, for the period July 2019 through October 2019, one of the Activated OZ Funds had ending monthly account balances of between approximately $2,094,450 and $2,463,100 when the real account statements for that period showed ending monthly balances of between only $116,369 and $154,399.

BURRELL fabricated additional documents to make it appear to Company-1 that an Activated Capital affiliate had purchased nine properties in Detroit, Michigan, when none of the transactions had taken place.  The fabricated documents contained identifying information for two individuals that BURRELL used without lawful authority.

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JOSHUA BURRELL, 38, of New York, New York, faces a maximum sentence of 20 years in prison on each of the securities and wire fraud counts and a mandatory sentence of two years in prison on the aggravated identity theft count, which must run consecutively to any other sentence 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 a defendant would be determined by the judge.

Mr. Williams praised the investigative work of the U.S. Postal Inspection Service.  Mr. Williams also thanked the Securities & Exchange Commission, which brought a separate civil action against BURRELL.

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

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

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment 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 JOSEPH CIMINO, the founder of a tequila brand based in the Hudson Valley, pled guilty today to securities and wire fraud charges before U.S. District Judge Vincent Briccetti.  CIMINO admitted as part of his plea that he fraudulently solicited investments for his company.

U.S. Attorney Damian Williams stated: “As he admitted in court today, Joseph Cimino lied about his tequila business’s finances to lure investors and then diverted investor funds in order to line his own pockets.  Now Cimino awaits sentencing for his fraudulent conduct.”

According to court documents and statements in court, from in or about 2014 to 2018, CIMINO raised approximately $935,000 from at least 25 investors based on fraudulent representations.  To attract investors, CIMINO falsely inflated the amount of capital that he had raised from prior investors, and falsely described as investors several individuals who, in fact, had not contributed any funds.  CIMINO also falsely inflated his company’s sales.  For example, in July 2017, CIMINO claimed in an investor report that year-to-date sales totaled 3,410 cases of tequila, when the actual sales totaled only 350 cases.  Similarly, in October 2017, CIMINO falsely claimed that year-to-date sales totaled 6,035 cases, which was approximately five times the actual total.  CIMINO further claimed in October 2017 that his company would receive reimbursement for 800 cases of tequila supposedly destroyed at a Puerto Rican warehouse as a result of Hurricane Maria.  In reality, no inventory was destroyed in the hurricane, and the company lacked insurance.

CIMINO also misused a substantial portion of investor money that was intended to fund the operations of his tequila business for personal expenses.  For example, from 2014 to 2018, CIMINO transferred approximately $472,000 of investor money to his personal bank account in order to subsidize his food, entertainment, and other living expenses.

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CIMINO, 57, of Warwick, New York, pled guilty to one count of securities fraud and one count of wire fraud, each of 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.  

CIMINO is scheduled to be sentenced by Judge Briccetti on February 18, 2022, at 2:30 p.m.

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

This case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys Benjamin A. Gianforti and Daniel Loss are in charge of the prosecution.

Damian Williams, the United State Attorney for the Southern District of New York, announced today that JEFFREY HASTINGS, the former Chief Executive Officer and Chairman of the Board of Directors of SAExploration Holdings, Inc. (“SAEX” or the “Company”), a publicly traded seismic data company based in Houston, Texas, was sentenced today in Manhattan federal court to three years in prison for his role in a scheme to fraudulently and materially inflate the publicly reported revenue of SAEX by tens of millions of dollars, in 2015 and 2016, and also for misappropriating millions of dollars from the Company. On August 13, 2021 HASTINGS pled guilty before U.S. District Judge Gregory H. Woods, who imposed today’s sentence.

According to the Superseding Information, the Superseding Indictment, and the Complaint filed in this case, and statements made in connection with sentencing:

At all times relevant to the Information until August 2016, HASTINGS was the Executive Chairman of the Board of Directors of SAEX (the “Board”). After August 2016, HASTINGS served as both the Chairman of the Board and the Chief Executive Officer (“CEO”) of SAEX until he separated from the company in August 2019. SAEX was a publicly-traded seismic data acquisition company headquartered in Houston, Texas, that traded under the symbol “SAEX” on the NASDAQ. In May 2020, SAEX was delisted from the NASDAQ and, in December 2020, was taken private. SAEX provided land and marine-based seismic acquisition services including program design, planning and permitting, camp services, survey, drilling, recording and processing.  Seismic data is used by oil and gas companies to identify and analyze drilling prospects and maximize successful drilling.

From February 2015 through May 2019, HASTINGS, together with Brent Whiteley, the then Chief Financial Officer and General Counsel of SAEX; Michael Scott, the then Executive Vice President of Operations at SAEX; and the founder, and at various times the President, CEO, and Chief Operating Officer of SAEX (“CC-1”), devised and carried out a scheme to defraud SAEX’s shareholders, bondholders, and the investing public by artificially and materially inflating SAEX’s reported revenue by making it appear that Alaskan Seismic Ventures, LLC (“ASV”) was an independent and reliable source of tens of millions of dollars of revenue.

In February 2015, HASTINGS and Whiteley discussed finding a way for SAEX to take advantage of certain tax credits offered by the State of Alaska to seismic data library companies, to offset the costs of exploring for oil and gas in Alaska (the “Alaska Tax Credits”). The Board of SAEX was opposed to operating its own data library company because of concerns about the ability to ensure payment to SAEX, including through the monetization of Alaska Tax Credits, among other reasons. To avoid the appearance that SAEX was operating a data library company that licensed data to third parties, HASTINGS and Whiteley set up ASV, to purport to operate as an independent customer purchasing seismic data from SAEX and licensing it to third parties. HASTINGS recruited an acquaintance to serve as the owner and sole employee of ASV. In truth and in fact, and as hidden from investors, ASV was not independent and could not pay SAEX for its seismic data.

After setting up ASV, HASTINGS and Whiteley created and caused to be created a number of shell companies (the “Shell Companies”) for the purpose of secretly transferring funds from SAEX into ASV. One of the Shell Companies, Global Equipment Solutions (“Global Equipment”), was purportedly an equipment rental company from which SAEX rented seismic acquisition equipment. In truth and in fact, and as HASTINGS and his co-conspirators well knew, SAEX did not rent any equipment from Global Equipment and did not owe Global Equipment any money. The co-conspirators took steps to make the payments from SAEX to Global Equipment appear legitimate to others at SAEX; for example, Whiteley drafted a lease agreement between SAEX and Global Equipment, and Scott caused fake purchase orders to be created that purported to show expenses incurred by SAEX as a result of renting equipment from Global Equipment.

By the end of 2015, SAEX had recorded on its books approximately $12 million in payables to Global Equipment. HASTINGS and his co-conspirators ultimately routed approximately $5.8 million of SAEX’s funds through Global Equipment, and the other Shell Companies, to ASV. That money then went from ASV back to SAEX to pay outstanding receivables. The fact that these funds belonged to and originated with SAEX was not disclosed to investors.  HASTINGS and his co-conspirators referred to this portion of the scheme as “round-tripping.”     In addition, HASTINGS and Whiteley then misappropriated more than $5 million of the funds that SAEX transferred to Global Equipment for their own use, including making payments to Scott and CC-1, among others.   

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In addition to his prison term, HASTINGS, 63, of Anchorage, Alaska and British Columbia, Canada, was sentenced to two years of supervised release and ordered to pay a forfeiture money judgment in the amount of $590,807. Judge Woods deferred determination of restitution for 90 days.

Two co-defendants – Brent Whiteley and Michael Scott – have already pled guilty and await sentencing before Judge Woods.

Mr. Williams praised the investigative work of the Federal Bureau of Investigation and thanked the Securities and Exchange Commission, which brought a separate civil action. 

The case is being handled by the Office’s Securities and Commodities Fraud Unit. Assistant U.S. Attorneys Christine I. Magdo and Gina Castellano are in charge of the prosecution.