Southern District of New York

Audrey Strauss, United States Attorney for the Southern District of New York, Patrick J. Freaney, Deputy Special Agent in Charge of the New York Field Office of the United States Secret Service (“USSS”), and Jonathan D. Larsen, Special Agent in Charge of the New York Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the unsealing of a complaint charging ABUCHI SHEDRACH FELIX, NADINE JAZMINE WADE, OLUWATOMIWA AKINTOLA, GREGORY OCHIAGHA, HABIBA FAGGE, and OLANREWAYU AJIBOLA with conspiracy to commit money laundering, in connection with their involvement in laundering millions of dollars in proceeds derived from romance fraud schemes. 

FELIX, AKINTOLA, and AJIBOLA were arrested last night at Newark Liberty International Airport in Newark, New Jersey.  OCHIAGHA was arrested earlier today in the Bronx.  WADE and FAGGE are currently fugitives.  FELIX, AKINTOLA, AJIBOLA, and OCHIAGHA will be presented in Manhattan federal court later today before U.S. Magistrate Judge Sarah L. Cave. 

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, the conspirators preyed on the emotions of their numerous online romance fraud victims to fleece the victims out of millions of dollars.  Thanks to the Secret Service and IRS Criminal, the defendants have dates in court to face federal charges.”

USSS Deputy Special Agent-in-Charge Patrick J. Freaney said:  “Cyber enabled romance schemes continue to harm innocent and unsuspecting people, and the U.S. Secret Service remains committed to investigating those who perpetuate these acts.  In this instance, the conspirators allegedly utilized online aliases and created shell companies in furtherance of their scheme to defraud.  Through a collaborative investigative effort by the Secret Service, the Internal Revenue Service, and the New York City Police Department Financial Crimes Task Force, the accused will answer the charges brought against them in the Southern District of New York.  For further information on ways to better avoid romance scams, please visit www.secretservice.gov/romancescams.” 

IRS-CI Special Agent in Charge Jonathan D. Larsen said:  “The arrests of the alleged perpetrators of this $3.5 million scheme deal a death blow to the vast criminal activity in which the defendants were allegedly engaged.  IRS Criminal Investigation will continue to aggressively pursue those who profit from illegal activity and ensure they are brought to justice.”

According to the allegations in the Complaint:[1]

Using online aliases, the defendants’ co-conspirators contacted victims on various dating sites, and convinced those victims, under false pretenses, to transfer funds to the defendants and others.  One online alias used in the schemes frequently employed the names “Diego Francisco,” “Richard Francisco,” or “Tom Francisco” (the “Francisco Alias”).  The conspirators used online photos of a male model when providing victims with photos of the Francisco Alias.  After engaging in conversation with the victims via phone, text, and email, the conspirators, posing as the Francisco Alias, would ask victims for money.  The reason offered for why the Francisco Alias needed money could vary.  In one version of the scheme, the Francisco Alias was supposedly an architect who had traveled to Dubai and needed funds in order to receive several million dollars in payment.  In another version of the scheme, the Francisco Alias supposedly worked on an oil rig and needed funds to repair the rig.  The Francisco Alias would then instruct the victims to transfer funds to bank accounts controlled by the defendants.  The means of transfer varied.  For example, in some cases, the Francisco Alias instructed victims to obtain cashier’s checks or money orders made payable to one of the defendants’ companies and then either mail the check to the conspirators – at addresses that included one in the Bronx – or to deposit the cashier’s check directly into a bank account held in the name of one of the defendants’ companies.  The Francisco Alias would instruct the victims to send him photographs of any cashier’s checks and any mailing labels.

Each of the defendants created a shell company and opened bank accounts in the name of his or her respective shell company (the “Shell Company Accounts”).  The Shell Company Accounts received funds from victims of the romance fraud scheme described above and rapidly depleted those funds through cash withdrawals, cashier’s checks, and the purchase of vehicles, among other means.  The Shell Company Accounts received over $4.5 million between in or about 2018 and 2020, over $3.5 million of which came from victims of the romance fraud scheme.

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ABUCHI SHEDRACH FELIX, 29, of Newark, New Jersey, NADINE JAZMINE WADE, 28, of the Bronx, New York, OLUWATOMIWA AKINTOLA, 27, of Brooklyn, New York, GREGORY OCHIAGHA, 55, of the Bronx, New York, HABIBA FAGGE, 24, of Towson, Maryland, and OLANREWAYU AJIBOLA, 36, of Newark, New Jersey, were each charged with one count of conspiracy to commit money laundering, in violation of  18 U.S.C. § 1956(h), which carries a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants would be determined by a judge.

Ms. Strauss praised the outstanding investigative work of USSS and IRS-CI.

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

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

Audrey Strauss, the United States Attorney for the Southern District of New York, and Michael Speckhardt, the Special Agent in Charge of the U.S. Department of State, Office of Inspector General, announced the arrest today of SINA MOAYEDI, the owner of a construction company, on charges including bribery and fraud.  MOAYEDI was arrested in Castleton, Virginia, and will be presented later today in the Western District of Virginia before U.S. Magistrate Judge Joel C. Hoppe. 

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Sina Moayedi made misrepresentations about his employees’ qualifications and his company’s ownership in order to induce the State Department into awarding approximately $100 million in lucrative construction contracts to Moayedi’s company, Montage, Inc.  Moayedi also allegedly cultivated a State Department insider, and paid the insider lucrative bribes in exchange for confidential State Department bidding information.  Moayedi must now be held accountable for his alleged brazen fraud on the government.”

Special Agent in Charge Michael Speckhardt said:  “As alleged, the defendant’s scheme to undermine the Department’s procurement process for personal gain caught up with him today and he will now be held accountable.  His alleged actions not only hurt other legitimate businesses competing for awards, but also damage the public’s trust in the effective and efficient utilization of taxpayer money.”

According to allegations in the Complaint[1]:

Montage, Inc. (“Montage”) is a U.S.-based business that is primarily involved in worldwide Government construction projects, including embassies, military posts, consulates, and similar overseas properties owned and operated by the United States Government.  Montage has performed over $220 million in contracting work for the U.S. Government, including for the Department of Defense, the Department of Justice/Federal Bureau of Investigation, the State Department, the Department of the Interior, the Department of Agriculture, the National Aeronautics and Space Administration (“NASA”), the Equal Employment Opportunity Commission (“EEOC”), and the Department of Veterans Affairs.  Since 2014, Montage appears to have focused primarily on competing for and obtaining contracts with the State Department.  During that period, the State Department has awarded Montage approximately six overseas U.S. Embassy/Consulate construction project contracts totaling $100 million, in locales such as Ecuador, Spain, Sudan, the Czech Republic, and Bermuda.  The founder of Montage is SINA MOAYEDI.

Montage engaged in at least two fraud schemes.  The first scheme alleges that, from approximately 2014 to September 2020, MOAYEDI and Montage lied that it was a female-owned business in order to secure unmerited advantages in the bidding process.  By way of context, it is advantageous to a company, when bidding for federal government contracts, to be majority-owned by an individual from a socially or economically disadvantaged community.  In fact, certain contracts (or portions of contracts) are “set aside” for – i.e., only available to – such companies.  MOAYEDI and Montage repeatedly represented falsely in submissions to the State Department that Montage was female-owned, or female-owned and minority-owned, in order falsely to induce the State Department to award Montage lucrative construction contracts.  In actuality, MOAYEDI repeatedly lied about Montage being a female-owned business, and indeed, MOAYEDI controls Montage and makes all material decisions on Montage’s behalf.  As MOAYEDI revealed to a bank that inquired about Montage’s ownership status, “I am the sole owner and president of Montage and have always been.”  Montage and MOAYEDI also repeatedly misrepresented, and significantly overstated, the qualifications of Montage employees.  MOAYEDI made these misrepresentations in order to, among other things, meet State Department and contractual requirements for minimum experience in certain key positions.

The second scheme charged in the Complaint is a bribery scheme during at least 2016 and 2017.  Insider-1 is employed in the State Department’s Overseas Building Operations (“OBO”), which, according to OBO’s website, “directs the worldwide overseas building program for the Department of State and the U.S. Government community serving abroad.”  Specifically, Insider-1 works for the State Department’s OBO Project Development and Coordination Division, European division.  In connection with overseas construction projects, the State Department has a Technical Evaluation Panel (TEP) that considers all aspects of an offeror’s plan to execute the project.  The TEP has the power to disqualify an offeror.  Insider-1 oversaw the TEP for the Hamilton, Bermuda, project – a project that was awarded to Montage.  In at least 2016 and 2017, MOAYEDI paid cash bribes to Insider-1 in exchange for confidential State Department bidding information relating to a particular multimillion-dollar contract in Bermuda, for which Montage was then bidding.  In connection with the bidding process for the Bermuda project, Insider-1 informed MOAYEDI, in sum and substance, that:  His bid was low; Montage could raise its bid by $300,000 and would still be the low bidder; and he should kick back 20 percent, or $60,000, to Insider-1 in return for this information.  Shortly thereafter, Montage increased its bid by nearly $1 million.  In a letter accompanying the revised bid, MOAYEDI falsely represented to the State Department that Montage’s revised bid was attributable to “an arithmetic error in our estimate worksheets.”  MOAYEDI then paid Insider-1 $60,000 in cash, in three separate payments, using two men as intermediaries.

*                *                *

MOAYEDI, 66, of Chevy Chase, Maryland, is charged with one count of wire fraud, and one count of conspiracy to commit wire fraud, each of which carries a maximum potential prison sentence of 20 years, and one count of bribery of a public official, which carries a maximum potential prison sentence of 15 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.

Ms. Strauss praised the outstanding investigative work of the State Department, Office of Inspector General, Special Agents from the United States Attorney’s Office for the Southern District of New York, and the Internal Revenue Service.  She also thanked Special Agents from the United States Attorney’s Office for the District of Columbia and the Montgomery County, Maryland, Police Department.

The Office’s Complex Frauds and Cybercrime Unit is handling this criminal case.  Assistant U.S. Attorneys Michael D. Neff and Louis A. Pellegrino are in charge of the prosecution.

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

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that RULESS PIERRE was convicted in Manhattan federal court today of securities fraud, wire fraud, and structuring charges.  PIERRE was convicted after a trial before Judge Sidney Stein. 

U.S. Attorney Audrey Strauss said:  “Today, Ruless Pierre was brought to justice for callously lying to investors.  Pierre told investors their investment returns were excellent, when in fact he failed to invest investor funds as promised, generated losses when he did invest, and diverted much of investor funds to his personal use and to repay investors in a Ponzi-like fashion.  We will continue aggressively to pursue frauds like this one in order to protect investors.”   

According to the allegations contained in the Complaint, Indictment, and the evidence presented at trial:  

Investment Promissory Fraud

From at least November 2016 through October 2019, PIERRE solicited money from investors of Ruless Pierre Consulting Group (“RPCG”) by falsely promising them that he would earn a 20 percent return on their initial investment every 60 days through stock trading (hereinafter, the “Promissory Note Fraud”).  The investments were memorialized in documents known as “Investment Promissory Notes.”  These investment contracts generally promised that the investor would be paid 20 percent interest every 60 days and that the investor could withdraw all funds from the investment with 30 days’ notice.  Based on these documents and the false representations of PIERRE, the investors understood that their principal and interest were guaranteed.  

During the course of the investment fraud scheme, PIERRE fraudulently obtained over $2 million from nearly 100 investors.  After receiving money from investors, PIERRE deposited the money into one of his personal bank accounts or bank accounts of RPCG.  PIERRE then transferred the money to trading accounts, where he engaged in unprofitable day trading.  Despite his trading losses, PIERRE repeatedly and falsely represented to investors, including in investment statements containing fictitious balances, that the trading was profitable and that their investments were growing as promised.  In addition to losing their money, PIERRE also used investors’ funds to pay for personal expenses, including luxury vehicles.  Additionally, PIERRE further concealed the truth from investors by using money obtained from new investors to make redemption payments to previous investors, in Ponzi-like fashion.

The Franchise Investment Fraud

Beginning in or about November 2018, PIERRE began to offer investors, including some individuals who invested in his Promissory Note Fraud, the opportunity to purchase partnership interests in a partnership that would run three fast-food franchise locations (hereinafter, the “Franchise Investment Fraud”).   At the time, PIERRE did not own any of the fast-food franchises, but he was in discussions regarding purchasing them.  Each investment was memorialized in a document entitled “Silent Partnership Agreement.” 

The Silent Partnership Agreements promised the investors a 5 percent monthly return on the investment, in addition to a 40 percent pro rata share of the quarterly gross operating profit.  The minimum investment was $5,000. 

The Silent Partnership Agreements further provided that RULESS PIERRE was the General Partner, and that he was responsible “for the complete management, control, and policies related to the operation and conduct of the business.”

PIERRE received financial statements for the franchise locations, which showed minimal profits.  Nonetheless, PIERRE promised investors an unrealistic 5 percent monthly return on their investment.

In or about April 2019, PIERRE purchased one fast food franchise for approximately $50,000.  PIERRE did not purchase the other franchises.

PIERRE deposited the fast-food franchise investors’ money in various bank accounts, which commingled the funds from the Franchise Investment Fraud with the Promissory Note Fraud.  In Ponzi-like fashion, PIERRE fraudulently misappropriated some of the fast-food franchise investors’ money to pay back investors in the Promissory Note Fraud.

In total, PIERRE raised at least $200,000 by selling the Silent Partnership Agreements to at least 18 investors.  Some of the investors were paid their 5 percent monthly distribution, but the vast majority of the investors were not made whole.  The fast-food franchise went out of business in December 2019.

The Embezzlement Fraud Scheme

In another scheme, PIERRE embezzled money from his former employers.  From approximately 2007 until February 2016, PIERRE was the director of finance for two different hotels, which were owned by the same company (“Company-1”).  One hotel was located in the Palisades, New York (“Hotel-1”), while the other was located in Armonk, New York (“Hotel-2”) (collectively, “the Hotels”).  As the director of finance, PIERRE was the signatory on several bank accounts held in the name of the management companies that managed the Hotels (“Management Companies”). 

After August 2018, PIERRE no longer worked at either Hotel-1 or Hotel-2, but he regularly wrote himself checks payable to cash from the Management Companies’ bank accounts.  Specifically, from September 2018 through March 2019, PIERRE wrote over 70 checks to “cash” or “petty cash” from one of the bank accounts for Hotel-1, for over $300,000.

In addition, from March 2017 through 2019, PIERRE deposited large amounts of cash into his personal bank accounts in amounts that were generally less than $10,000.  The deposits were conducted at various bank locations and typically took place on the same day, consecutive days, or within a short period of time.  For example, in just seven months, from June 2018 through December 2018, PIERRE deposited approximately $225,612, through 138 cash deposits all under $10,000, into a bank account in the name of RPCG.

*                *                *

PIERRE, 51, of Nanuet, New York, was convicted of two counts of securities fraud, each of which carries a maximum sentence of 20 years in prison, one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of structuring, which carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

PIERRE is scheduled to be sentenced on September 9, 2021, at 2:30 p.m.

Ms. Strauss praised the investigative work of Homeland Security Investigations.  Ms. Strauss also thanked the United States Postal Inspection Service, the United States Internal Revenue Service, the New York City Police Department, and the New York City Sherriff’s Office, which assisted in the investigation.  Ms. Strauss also thanked the Securities and Exchange Commission, which has brought and filed a civil enforcement action against the defendant. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Robert L. Boone and Drew Skinner are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Margaret Garnett, Commissioner of the New York City Department of Investigation (“DOI”), announced the unsealing of indictments charging nine current and former employees and officers of the New York City Department of Correction with taking cash bribes in return for smuggling contraband such as scalpels, razor blades, drugs, alcohol, and cellphones to inmates in New York City area jails.  Nine defendants were arrested today and will be presented before United States Magistrate Judges.  Seven defendants were arrested in New York, one defendant in Pennsylvania, and one defendant in Virginia.

U.S. Attorney Audrey Strauss said:  “These defendants were responsible for maintaining a safe and orderly environment in New York City’s jails.  Instead, as alleged, they abused their positions to enrich themselves by smuggling weapons, drugs, and other dangerous contraband in return for thousands of dollars of cash bribes.  This alleged activity violated the defendants’ duties, and endangered the inmates they were charged to supervise and guard.”

FBI Assistant Director William F. Sweeney Jr. said:  “The nine defendants charged today risked the safety and security of their colleagues and others within the New York City Department of Correction when they carelessly decided to smuggle contraband into our jails, as we allege today.  We shouldn’t have to remind public servants that accepting bribes while conducting illegal activity could constitute a federal crime, but when necessary, that’s exactly what we’ll do.”

DOI Commissioner Margaret Garnett said:  “These charged crimes involving contraband smuggling and bribery by City Correction officers and employees reflect the pernicious and damaging impact of corruption. Correction officers and staff should protect the integrity of the jails, not promote lawlessness and violence by accepting bribes in return for trafficking drugs, scalpels, razor blades, cell phones, and other contraband – all highly valued, illegal items that undermine order in the jails and compromise the safety of other correction officers and inmates. DOI thanks the FBI and the U.S. Attorney’s Office for the Southern District of New York for their partnership on these significant investigations.”      

According to the allegations in the Indictments[1] unsealed today:

MIGUEL COMPRES, 35, of New York, New York, abused his position as a correction officer to smuggle scalpels, smokable synthetic cannabinoids, often referred to as “K2” or “Spice,” cellphones, and large quantities of cigarettes into the Manhattan Detention Complex in downtown Manhattan, in return for over $6,000 in bribes, from at least in or about November 2019 up through and including in or about August 2020.  He is charged with one count of conspiracy to commit federal crimes, which carries a maximum sentence of five years in prison, one count of federal program bribery, which carries a maximum sentence of 10 years in prison, and one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison.

TAMEKA LEWIS, 41, of Brooklyn, New York, abused her position as a counselor with the Department of Correction to smuggle K2 and other contraband into the Otis Bantum Correctional Center on Rikers Island, in return for over $40,000 in bribes, from at least in or about June 2019 up through and including in or about September 2020.  She is charged with one count of conspiracy to commit federal crimes, which carries a maximum sentence of five years in prison, one count of federal program bribery, which carries a maximum sentence of 10 years in prison, one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison, and one count of distribution of a controlled substances analogue, which carries a maximum sentence of 20 years in prison.

DARIEL DIAZ, 33, of Reading, Pennsylvania, abused his position as a correction officer to smuggle K2, a cellphone, and large quantities of cigarettes into the George R. Vierno Center on Rikers Island, in return for over $8,000 in bribes, from at least in or about March 2020 up through and including in or about September 2020.  He is charged with one count of conspiracy to commit federal crimes, which carries a maximum sentence of five years in prison, one count of federal program bribery, which carries a maximum sentence of 10 years in prison, and one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison.

JASMINE REED, 34, of Norfolk, Virginia, abused her position as an exterminator with the Department of Correction to smuggle a razor, K2, marijuana, cigarettes, a cellphone, and other contraband into the Manhattan Detention Complex in downtown Manhattan in return for cash bribes, from at least in or about September 2019 up through and including in or about December 2019.  She is charged with one count of conspiracy to commit federal crimes, which carries a maximum sentence of five years in prison, one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison, and one count of distribution of a controlled substance, which carries a maximum sentence of 20 years in prison.

TEMAINE PELZER, 45, of Brooklyn, New York, abused his position as a correction officer to smuggle cigarettes and other contraband into the Manhattan Detention Complex, in return for over $8,000 in bribes, from at least in or about August 2019 up through and including in or about February 2020.  He is charged with one count of conspiracy to commit federal crimes, which carries a maximum sentence of five years in prison, one count of federal program bribery, which carries a maximum sentence of 10 years in prison, and one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison.

BRIAN HARRELL, 60, of Pelham, New York, abused his position as a correction officer to smuggle K2, alcohol, cigarettes, and other contraband into the Manhattan Detention Complex, in return for over $6,500 in bribes, from at least in or about May 2020 up through and including in or about June 2020.  He is charged with one count of conspiracy to commit federal crimes, which carries a maximum sentence of five years in prison, one count of federal program bribery, which carries a maximum sentence of 10 years in prison, one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison, and one count of distribution of a controlled substances analogue, which carries a maximum sentence of 20 years in prison.

RASHAWN ASSANAH, 25, of Queens, New York, abused his position as a correction officer to smuggle a cellphone, a large quantity of cigarettes, and other contraband into the Robert N. Davoren Center on Rikers Island, in return for over $7,500 in bribes, from at least in or about November 2020 up through and including in or about February 2021.  He is charged with one count of conspiracy to commit federal crimes, which carries a maximum sentence of five years in prison, one count of federal program bribery, which carries a maximum sentence of 10 years in prison, and one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison.

ROBERT BALDUCCI, 33, of the Bronx, New York, abused his position as a correction officer to smuggle razor blades, marijuana, and other contraband into the Otis Bantum Correctional Center on Rikers Island, in return for at least $5,000 in bribes, in or about October 2020.  He is charged with one count of conspiracy to commit federal crimes, which carries a maximum sentence of five years in prison, one count of federal program bribery, which carries a maximum sentence of 10 years in prison, and one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison.

JOHNATHAN GARRETT, 32, of Brooklyn, New York, abused his position as a correction officer to smuggle methamphetamine, K2, and other contraband into the Anna M. Kross Center on Rikers Island, in return for at least $5,000 in bribes, from at least in or about September 2020 up through and including in or about October 2020.  He is charged with one count of conspiracy to commit federal crimes, which carries a maximum sentence of five years in prison, one count of federal program bribery, which carries a maximum sentence of 10 years in prison, and one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison.

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

Ms. Strauss praised the outstanding investigative work of the FBI and DOI.

These cases are being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Marguerite Colson, Jarrod L. Schaeffer, and Hagan Scotten are in charge of the prosecutions.

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

Audrey Strauss, the United States Attorney for the Southern District of New York, and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an Indictment today charging MICHAEL KELLEHER with distributing fentanyl that resulted in the death of a victim (the “Victim”) on May 19, 2020, in the Bronx, New York.  KELLEHER and his codefendant MARK GONZALEZ are also charged with participating in a conspiracy to distribute and possess with intent to distribute fentanyl, and using and carrying a firearm in connection with a drug trafficking offense.  KELLEHER was previously charged by a criminal complaint and arrested on March 5, 2021.  GONZALEZ was arrested this morning and will be presented before United States Magistrate Judge Robert W. Lehrburger tomorrow.  The case is assigned to United States District Judge Victor Marrero.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Michael Kelleher and Mark Gonzalez peddled lethal fentanyl, and Kelleher sold the dose that caused the death of a victim.  Working with the NYPD we will continue to combat the epidemic of lethal opioids.”

NYPD Commissioner Dermot Shea said:  “Opioids have a well-known history of causing overdoses, destroying lives, and devastating communities. That’s why the NYPD and its law enforcement partners work tirelessly to rid our city of these and other deadly drugs and work tirelessly to prosecute those who sell them. I want to thank the investigators and prosecutors who worked on this investigation. It is their work that brings some measure of justice to this family who lost their loved one to a senseless overdose.”

According to the allegations in the Indictment, the underlying complaint for KELLEHER, and information in the public record[1]:

On May 19, 2020, the Victim was found dead in his home in the Bronx, New York.  Following an investigation by the NYPD, law enforcement agents identified KELLEHER as the dealer who sold the Victim pure fentanyl, which resulted in his death.  Following the Victim’s death, law enforcement officers acting in an undercover capacity purchased additional quantities of fentanyl from KELLEHER, and his supplier, GONZALEZ, which were packaged exactly like those found in the Victim’s residence on the day of his death.  KELLEHER and GONZALEZ also sold a firearm with a defaced serial number to an undercover law enforcement agent.

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KELLEHER, 35, and GONZALEZ, 43, both of the Bronx, New York, are each charged with conspiracy to distribute and possess with intent to distribute 400 grams and more of mixtures and substances containing a detectable amount of fentanyl, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years, and with use, carrying, and possession of a firearm in connection with a drug trafficking offense, which carries a mandatory minimum consecutive sentence of five years.  KELLEHER is also charged with narcotics distribution resulting in the death of the Victim, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 20 years in prison.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the NYPD.  This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Michael R. Herman 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.

Audrey Strauss, the United States Attorney for the Southern District of New York, Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the United States Postal Inspection Service (“USPIS”), announced the unsealing of an Indictment charging NIAZ KHAN, NOEL SANABRIA, ANDRE GOMES, and PATRICK PATTERSON with conspiracy to distribute and possess with intent to distribute synthetic cannabinoids and to distribute controlled substances using the internet.  The case has been assigned to United States District Judge J. Paul Oetken.

KHAN, SANABRIA, GOMES, and PATTERSON were arrested this morning.  KHAN, SANABRIA, and GOMES will be presented later today in Manhattan federal court before United States Magistrate Judge Robert W. Lehrburger.  PATTERSON will be presented tomorrow in San Francisco federal court before United States Magistrate Judge Thomas S. Hixson.

Manhattan U.S. Attorney Audrey Strauss 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.”

NYPD Commissioner Dermot Shea said:  “Whether synthetic cannabinoids are trafficked on the street or through the internet, the NYPD and our law enforcement partners will work to stop the source of these dangerous substances and hold accountable those responsible for the sales. I thank and commend the detectives of the NYPD’s Intelligence Bureau, members of the U.S. Attorney’s Office for the Southern District, the New York Field Office of Homeland Security Investigations, and the United States Postal Inspection Service whose dedication resulted in these charges and ended this national trafficking operation.”

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “Smokable synthetic cannabinoids (SSCs) are unlawful and their usage has caused serious medical issues to include overdose deaths. As alleged, the defendants blatantly disregarded public safety while hiding behind a website in an effort to make a quick profit. HSI will continue to work with its law enforcement partners to protect the American public, arrest these individuals, seize their assets, and take down websites that advertise the sale of narcotics.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “Synthetic cannabinoids contain psychoactive chemicals that can result in hallucinations and pose other dangers. The accused in this case may have thought their alleged criminal drug enterprise would go undetected by law enforcement. Today’s arrests should send a strong message to drug traffickers that Postal Inspectors and their law enforcement partners will vigorously investigate and bring them to justice.”

According to the allegations in the Indictment[1]:

From February 2019 until May 2021, KHAN, SANABRIA, GOMES, and PATTERSON 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.

KHAN, SANABRIA, GOMES, and PATTERSON 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, KHAN, SANABRIA, GOMES, and PATTERSON 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.

Over the course of the scheme, KHAN, SANABRIA, GOMES, and PATTERSON 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.

*                      *                      *

KHAN, 34, of Queens, New York, SANABRIA, 57, of the Bronx, New York, GOMES, 38, of Queens, New York, and PATTERSON, 32, of the Bronx, 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.  

Ms. Strauss praised the outstanding investigative work of the NYPD, HSI, and the USPIS.  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 charge contained in the Indictment is merely an accusation, 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.

Audrey Strauss, the United States Attorney for the Southern District of New York, Patrick J. Freaney, Deputy Special Agent in Charge of the New York Field Office of the United States Secret Service (“USSS”), Philip R. Bartlett, Inspector-in-Charge of the United States Postal Inspection Service’s New York Division (“USPIS”), and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced the indictment of DRAMION COOMBS, OLUFEMI NATHANIEL ITIOWE, TANZANIA HOGAN, and DEIBI SANCHEZ for conspiracy to commit bank fraud, bank fraud, and aggravated identity theft, in connection with a scheme to order bank checks in the names of multiple victims and then fraudulently deposit those checks drawn from the victims’ accounts into accounts that the defendants controlled.  All four defendants were arrested pursuant to a complaint and presented before United States Magistrate Judges on April 20, 2021.  ITIOWE and SANCHEZ were arrested in New York, COOMBS was arrested in Pennsylvania, and HOGAN, was arrested in California. 

U.S. Attorney Audrey Strauss said:  “As alleged, Dramion Coombs, Olufemi Nathaniel Itiowe, Tanzania Hogan, and Deibi Sanchez conspired to defraud multiple banks of nearly $1 million by obtaining the identities of other people and cashing fraudulent checks from their bank accounts.  Thanks to the terrific investigative work of our law enforcement partners, these defendants are now facing prosecution for their alleged crimes.” 

Deputy Special Agent in Charge Patrick J. Freaney said:  “The U.S. Secret Service, alongside our valued partners from the New York City Police Department and the U.S. Postal Inspection Service, continue to prioritize financial fraud investigations.  In this instance, the accused allegedly utilized social engineering techniques to gain access to numerous bank accounts to make fraudulent deposits totaling nearly $1 million. This case illustrates the perils of social engineering and highlights the importance of authentication practices and procedures to better secure financial and personal information.”

Police Commissioner Dermot Shea said:  “These defendants allegedly orchestrated a nationwide cyber scheme to stalk victims and steal their money. But the United States Secret Service and the United States Postal Service, together with our NYPD detectives and the prosecutors of the United States Attorney’s Office in the Southern District of New York, meticulously tracked their digital moves to piece together this important case and ensure justice will be served.”

Inspector-In-Charge Bartlett said:  “These individuals engaged in an old school low tech check/bank fraud scam. While their scheme was unsophisticated, they managed to steal hundreds of thousands of dollars from financial institutions. Their crimes would have continued had it not been for the collaborative efforts of law enforcement.”

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

Between at least September 2018 and November 2018, COOMBS, ITIOWE, HOGAN, and SANCHEZ executed schemes to defraud financial institutions of more than $890,000.    They did so by depositing false and fraudulent checks drawn from the accounts of at least three different New York victims into banks located in New York and California.  In addition, between at least December 2019 and July 2020, COOMBS deposited multiple additional false and fraudulent checks into his own bank account and deposited checks into a separate bank account that he opened in the name of another individual.

COOMBS, 37, of East Stroudsburg, Pennsylvania, is charged with one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison, two counts of bank fraud, which each carry a maximum sentence of 30 years in prison, and two counts of aggravated identity theft, which each carry mandatory minimum sentence of 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 sentencing of the defendant will be determined by the judge.

ITIOWE, 47, of Brooklyn, New York, HOGAN, 47, of Canoga Park, California, and SANCHEZ, 48, of Bronx, New York, are charged with one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison, one count of bank fraud, which carries a maximum sentence of 30 years in prison, and one count of aggravated identity theft, which carries a mandatory minimum sentence of 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 sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the United States Secret Service, New York City Police Department, and United States Postal Inspection Service for their outstanding investigative work. 

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

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

[1] As the introductory phrase signifies, the 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.

Audrey Strauss, 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., pled guilty today to 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 by, among other things, lying about his own prior experience and investment track record and about the nature and characteristics of those funds.  MALLEY pled guilty before United States District Judge Edgardo Ramos.

U.S. Attorney Audrey Strauss said:  “As Eric Malley has now admitted, he lied to his victims to induce them to invest approximately $58 million in his investment funds, promising victims they would reap the benefits of owning equity in Manhattan real estate and falsely touting his prior experience.  Those lies continued for years, all while Malley enriched himself.  As today’s plea demonstrates, our Office remains committed to protecting investors from investment professionals’ deceptive and fraudulent conduct.

According to the allegations contained in the Complaint and the Information and based on statements made in Manhattan federal court:

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 would provide investors with the opportunity to own an equity interest in hundreds of luxury income-producing properties across Manhattan, following a debt-free investment strategy 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.  But MALLEY’s representations were false.  His claims about the existence and performance of Funds I and II were largely fabricated; 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; and the Funds held far fewer properties than MALLEY had represented.

Through these and other fraudulent misrepresentations and omissions throughout the life of the Funds, MALLEY induced approximately 335 investors to invest a total of approximately $58 million in the Funds.  The Funds together incurred millions of dollars in losses, yet MALLEY distributed at least $278,000 to himself in his capacity as general partner in connection with Fund III, and did not disclose Fund IV’s losses until approximately two years into Fund IV’s operation.

*                *                *

MALLEY, 50, of New Canaan, Connecticut, pled guilty to one count of securities fraud, which carries a maximum potential sentence of 20 years in prison.  The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  Sentencing has been scheduled for September 16, 2021, at 11:00 a.m. 

Ms. Strauss praised the investigative work of the Federal Bureau of Investigation and thanked the New York Regional Office of the U.S. Securities and Exchange Commission.

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.

Ilan T. Graff, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced today that cardiologist ASIM HAMEEDI was sentenced to 20 months in prison for orchestrating a widespread healthcare fraud scheme from approximately 2003 to 2015.  HAMEEDI owned a Queens, New York, medical clinic, City Medical Associates (“CMA”), through which he perpetrated a fraud scheme involving, among other things, fraudulent reimbursement claims and false representations to insurers regarding medical tests and procedures.  HAMEEDI previously pled guilty to conspiracy to commit health care fraud before U.S. District Judge John G. Koeltl, who imposed today’s sentence.

Mr. Graff said:  “Doctors and medical clinics should be focused on their patients’ wellbeing, not on fraudulently lining their own pockets.  Thanks to the dogged investigative work of our partners at the FBI, HHS, and NYPD, Asim Hameedi is headed to prison for defrauding Medicare, Medicaid, and private health insurance companies.”

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

CMA, a cardiology and neurology clinic based in Bayside, Queens, conducted a multifaceted scheme spanning approximately 12 years and involving millions of dollars in falsified claims.  HAMEEDI, a board-certified interventional cardiologist, was CMA’s president and owner.  As HAMEEDI has acknowledged, he was a leader of this long-running, wide-ranging fraud scheme, which involved various co-conspirators and several codefendants. 

HAMEEDI’s healthcare fraud scheme included, among other things: (1) making false representations to insurance providers about patients’ symptoms in order to obtain preauthorization for medical tests and procedures; (2) backdating bills in order to create the false impression that medical procedures had not been performed until after CMA received “pre”-authorization from an insurer; (3) submitting false claims to insurance providers for parts of tests that were not performed, as well as for drug items not used or provided; (4) evading scrutiny from insurers for the large volume of claims that CMA submitted by falsely representing that several doctors – who did not work at CMA – had purportedly ordered or performed tests or procedures there; and (5) violating HIPAA by accessing, without authorization, electronic health records of patients at a particular hospital on Long Island, New York, in order to identify patients to be recruited to CMA.  Additionally, HAMEEDI tried to obstruct an investigation by hospital officials into misconduct by his nephew, codefendant Fawad Hameedi.

In addition to his prison sentence, HAMEEDI, 50, of New York, New York, was sentenced to two years of supervised release, restitution of $554,331, and a $100,000 fine.

*                *                *

Fawad Hameedi, 35, pled guilty on February 7, 2018, to one count of conspiracy to commit health care fraud.

Arif Hameedi, 59, pled guilty on February 6, 2018, to one count of conspiracy to commit money laundering.

Absar Haaris, 51, pled guilty on November 15, 2016, to conspiracy to commit health care fraud and wire fraud, health care fraud, false statements relating to health care matters, conspiracy to commit fraud in connection with identification information, aggravated identity theft, conspiracy to violate the anti-kickback statute, conspiracy to commit money laundering, and conspiracy to wrongfully obtain and disclose individually identifiable health information.  Haaris was previously sentenced, by the Honorable Jed S. Rakoff, principally to time served, three years of supervised release, and restitution of $544,331.51.

Michelle Landoy, 40, pled guilty on January 29, 2018, to conspiracy to commit health care fraud and wire fraud, health care fraud, wire fraud, false statements relating to health care matters, conspiracy to commit fraud in connection with identification information, and aggravated identity theft.

Desiree Scott, 41, pled guilty on February 6, 2018, to conspiracy to commit health care fraud and wire fraud, health care fraud, wire fraud, false statements relating to health care matters, conspiracy to commit fraud in connection with identification information, and aggravated identity theft.

Mr. Graff praised the outstanding investigative work of the New York Field Office of the Federal Bureau of Investigation, the New York Regional Office of the United States Department of Health and Human Services Office of the Inspector General, and the New York City Police Department.  Mr. Graff also thanked the New York State Department of Financial Services.

The Office’s Complex Frauds and Cybercrime Unit is handling this criminal case.  Assistant U.S. Attorneys Michael D. Neff, David M. Abramowicz, and Kristy J. Greenberg are in charge of the prosecution.

Audrey Strauss, United States Attorney for the Southern District of New York, and Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an Indictment charging EDWARD NAVEDO, a/k/a “Eddy Bolsas,” with distributing fentanyl that resulted in the death of a 41-year-old man (the “Victim”) on or about December 19, 2020, in New York, New York.  NAVEDO was arrested this morning, presented and arraigned before United States Magistrate Judge Robert W. Lehrburger this afternoon, and ordered detained.  The case is assigned to United States District Judge Analisa Torres.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Edward Navedo sold fentanyl, and a dose he sold resulted in a victim’s death.  Today’s arrest is part of our ongoing commitment to confront this serious public health crisis.”   

NYPD Commissioner Dermot Shea said:  “Today’s arrest is another example of the NYPD’s commitment to holding accountable those allegedly responsible for causing overdose deaths and our continued close partnerships with the U.S. Attorney for the Southern District. Anyone who deals in illegal narcotics should understand that the nation’s best investigators will stop at nothing to fight crime and keep safe all the people we serve.

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

On or about December 19, 2020, the Victim died due to a drug overdose and was found to be in possession of, among other things, a packet stamped with a distinctive red marking.  Following an investigation, the NYPD identified NAVEDO as the dealer who sold the Victim the drugs that resulted in his death.  The NYPD subsequently made several undercover purchases of additional narcotics from NAVEDO – including heroin and fentanyl – some of which NAVEDO sold in packets that bore the same distinctive red stamp as that recovered from the Victim.

*                *                *

NAVEDO, 60, of Brooklyn, New York, is charged with distribution and possession with intent to distribute fentanyl, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 20 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.

Ms. Strauss praised the outstanding investigative work of the NYPD.  This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Jarrod L. Schaeffer 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.

Audrey Strauss, United States Attorney for the Southern District of New York, Stuart M. Goldberg, Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division, and James C. Lee, Chief of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the filing of a criminal Information charging Swiss Life Holding AG (“Swiss Life Holding”), Swiss Life (Liechtenstein) AG (“Swiss Life Liechtenstein”), Swiss Life (Singapore) Pte. Ltd. (“Swiss Life Singapore”), and Swiss Life (Luxembourg) S.A. (“Swiss Life Luxembourg”) (collectively, the “Swiss Life Entities”) with conspiring with U.S. taxpayers and others to conceal from the Internal Revenue Service (the “IRS”) more than $1.452 billion in offshore insurance policies, including more than 1,600 insurance wrapper policies, and related policy investment accounts in banks around the world and the income generated in these accounts.

Ms. Strauss, Mr. Goldberg, and Mr. Lee also announced a deferred prosecution agreement with the Swiss Life Entities (“the Agreement”) under which they agreed to accept responsibility for their criminal conduct by stipulating to the accuracy of the Statement of Facts attached to the Agreement.  The Agreement requires the Swiss Life Entities to refrain from all future criminal conduct, enhance remedial measures, and continue to cooperate fully with further investigations into hidden insurance policies and related policy investment accounts.  Further, as part of today’s resolution, the Swiss Life Entities agreed to pay approximately $77.3 million to the U.S. Treasury, which includes restitution, forfeiture of all gross fees, and a penalty component.  If the Swiss Life Entities abide by all of the terms of the Agreement, the Government will defer prosecution on the Information for three years and then seek to dismiss the charge.

Manhattan U.S. Attorney Audrey Strauss said:  “As they admit, Swiss Life and its subsidiaries sought out and offered their services to U.S. taxpayers to help them become U.S. tax evaders.  The Swiss Life Entities offered private placement life insurance policies and related policy investment accounts to U.S. customers, and provided services that concealed the policies and other assets from the IRS.  Indeed, the Swiss Life Entities saw U.S. authorities’ stepped-up offshore tax enforcement as an opportunity to pitch themselves to tax-evading U.S. customers as an alternative to Swiss banks.  Under the terms of today’s agreement, Swiss Life will turn over more than $77 million and be required to continue to cooperate with the United States in identifying U.S. tax evaders.”

Acting Deputy Assistant Attorney General Stuart M. Goldberg said:  “Swiss Life today is held responsible for creating and marketing specially designed insurance products to  U.S. tax evaders seeking a new way to hide their offshore assets, in light of heightened Justice Department and IRS tax enforcement efforts.  Financial enablers here and abroad – and the taxpayers seeking their services – should know that we will continue to identify and unmask such schemes.”

IRS-CI Chief James C. Lee said:  “The successful resolution of this investigation is an important victory for the American taxpayer for two primary reasons.  First, the recovery of more $77 million owed to the U.S. government sends an unequivocal message that offshore evasion is still a high priority of IRS Criminal Investigation.  Secondly, this agreement further requires Swiss Life Entities to continue to cooperate with the government and does not shield them from future civil or criminal sanctions, which should put every entity engaged in offshore evasion on notice.”

According to documents filed today in Manhattan federal court:

Swiss Life Holding is the ultimate parent company of the Swiss Life group of companies (“Swiss Life”), a Switzerland-based provider of comprehensive life insurance and pension products for individuals and corporations, as well as asset management and financial planning services.  From 2005 to 2014, Swiss Life through affiliated insurance carriers in Liechtenstein (Swiss Life Liechtenstein), Luxembourg (Swiss Life Luxembourg), and Singapore (Swiss Life Singapore) (collectively, the “PPLI Carriers”) maintained approximately 1,608 Private Placement Life Insurance (“PPLI”) policies.  The PPLI Carriers’ issuance and administration of those policies (colloquially known as “insurance wrappers”) and the related investment accounts were often done in a manner to assist U.S. taxpayers in evading U.S. taxes and reporting requirements and concealing the ownership of offshore assets.

Moreover, beginning as early as the summer of 2008, the PPLI Carriers were aware that UBS and other Swiss banks were terminating or reevaluating their business relationships with U.S. clients in response to increasing offshore tax enforcement efforts by U.S. authorities.  Certain management and sales personnel within the Swiss Life PPLI Business Unit viewed these developments as a business opportunity to expand the PPLI Business by onboarding U.S. clients who were fleeing UBS and other Swiss banks.  Such clients with undeclared assets were typically referred within Swiss Life as “non-comprehensive advice seeking,” which was frequently abbreviated to “NCAS.”  Because Swiss Life would be identified as the owner of the policy investment accounts, rather than the U.S. policyholder and/or ultimate beneficial owner of the assets, the insurance wrapper policies could be and were used by unscrupulous U.S. taxpayers to hide undeclared assets and income and to evade taxes.  In turn, Swiss Life grew its PPLI business and earned fees on those policies.  Members of management of the PPLI Business Unit knew about and authorized the onboarding of U.S. clients without regard to whether they were declared or undeclared.

Swiss Life engaged in other misconduct with respect to U.S.-related policies:

•           U.S.-related PPLI Policies were funded or terminated through asset transfers from/to an account maintained by a third party associated with the policyholder, such as an offshore law firm or intermediary. 

•           Swiss Life PPLI personnel assisted U.S. taxpayers in establishing and maintaining Swiss Life PPLI policies in the name of a foreign relative with the effect of obscuring the U.S. nexus of the assets used to fund the policy or to repatriate the U.S. taxpayer’s undeclared assets through a sham death payout. 

•           Certain U.S.-related PPLI Policies issued by Swiss Life Liechtenstein involved transfers of physical gold, other precious metals, or precious gemstones into or out of the policy investment account, presumably for the purpose of avoiding detection by U.S. authorities. 

•           The PPLI Carriers allowed policyholders to designate an authorized recipient – typically the policyholder’s asset manager or other foreign representative – to receive policy documents and custodian investment account statements, rather than having those documents sent directly to the policyholder. 

•           Certain Swiss Life Liechtenstein personnel promoted the use of Swiss Life products to turn U.S. taxpayers’ undeclared or so-called “black” money into so-called “white” money by parking the funds in a Swiss Life insurance policy until the clock had run on the perceived statute of limitations for tax offenses.

•           Corporate premium bank accounts were also misused as a transitory account to help conceal the movement of U.S. clients’ funds. 

Under today’s resolution, the Swiss Life Entities are required to continue to cooperate fully with ongoing investigations and affirmatively disclose any information they may later uncover regarding U.S.-related insurance policies and related policy investment accounts.  The Swiss Life Entities are also required to disclose information consistent with the Department of Justice’s Swiss Bank Program relating to accounts closed between Jan. 1, 2008, and Dec. 31, 2019.  The Agreement provides no protection from criminal or civil prosecution for any individuals.   

Swiss Life Holding will pay a total of $77,374,337, which has three parts.  First, Swiss Life Holding has agreed to pay $16,345,454 in restitution to the IRS, which represents the approximate unpaid taxes resulting from the Swiss Life Entities’ participation in the conspiracy.  Second, Swiss Life Holding has agreed to forfeit $35,782,375 to the United States, which represents the approximate gross fees (not profits) that the Swiss Life Entities earned on the penalized insurance policies and related policy investment accounts between 2005 and 2014.  Finally, Swiss Life Holding has agreed to pay a penalty of $25,246,508.

The penalty amount takes into consideration that Swiss Life conducted a robust internal investigation, supplied client-related data, facilitated the acquisition by the Justice Department of information relating to custodian banks, asset managers, and other entities and individuals related to Switzerland, Liechtenstein, and Singapore, and otherwise meaningfully assisted the Department’s cross-border tax enforcement efforts.  In addition, Swiss Life conducted extensive outreach to current and former U.S. clients to confirm historical tax compliance, and to encourage disclosure to the IRS when policyholders’ historical tax compliance issues had not yet been resolved.  Swiss Life further implemented remedial measures to protect against the use of its services for tax evasion in the future.

*                *                *

Ms. Strauss and Mr. Goldberg praised the outstanding work of IRS-CI.  Ms. Strauss also thanked the Department of Justice’s Tax Division for their partnership on this case.

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

Audrey Strauss, the United States Attorney for the Southern District of New York, Jonathan D. Larsen, Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and Amanda Hiller, Acting Commissioner of the New York State Department of Taxation and Finance (“DTF”), announced today the unsealing of a Complaint charging CARLOS DE LA TORRE with wire fraud, mail fraud, and filing false income tax returns in connection with a years-long scheme to steal from the clients of his tax preparation business and defraud the Internal Revenue Service (“IRS”) and New York State Department of Taxation and Finance (“NYSDTF”).  DE LA TORRE was arrested today and will be presented in Manhattan federal court before United States Magistrate Judge Sarah Netburn.

U.S. Attorney Audrey Strauss said:  “As alleged, Carlos De La Torre defrauded the clients of his tax preparation business by converting to his own use money the clients had been told they owed the IRS and New York State.  Further, De La Torre allegedly defrauded the IRS and the State by seeking refunds for overpayments of his taxes that were actually the funds he stole from his clients, and by failing to report those stolen funds as income.  Now Carlos De La Torre is facing multiple federal felony charges.”  

IRS-CI Special Agent in Charge Jonathan D. Larsen said:  “With the tax filing deadline only days away, the arrest of Mr. De La Torre is a timely reminder to taxpayers to do their due diligence when selecting a tax preparer.  Not only is the defendant accused of violating the trust placed in him by his clients, he also allegedly profited nearly half a million dollars in this years-long scam.  IRS-CI special agents are working tirelessly to protect taxpayers from fraud and investigate potential unscrupulous tax return preparers.”

Acting DTF Commissioner Amanda Hiller said:  “Tax preparers are expected to operate with honesty and integrity.  Those who instead defraud their clients – and New York State – for personal gain must be held accountable.  We’ll continue to work with all levels of law enforcement, including the U.S. Attorney’s Office for the Southern District of New York, to bring dishonest tax preparers to justice.”

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

DE LA TORRE is a tax preparer and the sole proprietor of a bookkeeping and tax preparation business in New York, New York.  From at least in or about 2014 through at least in or about 2020, DE LA TORRE represented certain small businesses based in New York City and their owners (the “Victims”) in connection with the preparation and filing of their personal and business federal and state tax returns.  During that time period, DE LA TORRE told the Victims how much they allegedly owed in state and federal personal and business taxes, and the Victims gave DE LA TORRE checks in those amounts.

Instead of submitting the Victims’ checks as payments to be applied toward the Victims’ federal and state tax liabilities, DE LA TORRE fraudulently altered the checks and mailed them to the IRS and the NYSDTF as estimated tax payments to be credited against his own personal tax liabilities.  Those payments greatly exceeded DE LA TORRE’s own tax liabilities each year.  At the end of each tax period, DE LA TORRE fraudulently sought and received refunds from the IRS and the NYSDTF for the total amount of the altered checks he submitted to each agency, less any amount DE LA TORRE actually owed in taxes.  Refunds from the IRS and the NYSDTF were wired by the U.S. Treasury and New York State, respectively, directly into DE LA TORRE’s personal bank account.  In total, DE LA TORRE stole at least approximately $455,000 from the Victims through this scheme.

DE LA TORRE also filed false tax returns with the IRS in connection with this scheme.  He failed to report the money he stole from the Victims on his federal tax returns.  Had DE LA TORRE reported that income, as he was required to do, his total federal tax liability each year would have been much greater than it was, and he would not have been entitled to the refunds that he claimed.  As a result, DE LA TORRE defrauded the IRS of at least approximately $48,000 in tax liabilities (including interest). 

*                *                *

DE LA TORRE, 79, of Little Neck, New York, is charged with one count of mail fraud, in violation of Title 18, United States Code, Section 1341, and one count of wire fraud, in violation of Title 18, United States Code, Section 1343, each of which carries a maximum sentence of 20 years in prison, and five counts of subscribing to false individual tax returns, in violation of Title 26, United States Code, Section 7206(1), each of which carries a maximum sentence of three 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.

Ms. Strauss praised the outstanding investigative work of the IRS-CI and NYSDTF. 

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

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

WASHINGTON – A New York man was sentenced today to 20 years in prison for attempting to provide material support to the Islamic State of Iraq and al-Sham, aka ISIS.

Zachary Clark, aka Umar Kabir, Umar Shishani and Abu Talha, 42, of Brooklyn, pleaded guilty in August 2020 to one count of attempting to provide material support or resources to a designated foreign terrorist organization, namely, ISIS.

“Today’s 20-year sentence recognizes the gravity of Clark’s conduct, including his calls for other ISIS supporters to carry out lone wolf terrorist attacks in New York City,” said Assistant Attorney General John C. Demers for the Justice Department’s National Security Division. “Having pledged allegiance to ISIS, Clark provided others with specific instructions on knifing and bomb-making for use in such attacks. We remain vigilant to the threat of terrorism and committed to identifying and holding accountable those who threaten our communities through their support for foreign terrorist organizations.”

“Zachary Clark pledged allegiance to ISIS and posted calls for attacks on the public and institutions in New York City on encrypted pro-ISIS chatrooms, along with detailed instructions for carrying out those violent acts,” said U.S. Attorney Audrey Strauss for the Southern District of New York. “Thanks to the Joint Terrorism Task Force, Clark’s efforts to incite deadly violence on behalf of ISIS have been silenced. Today’s sentence sends a clear message that those who seek to further ISIS’s campaign of terror and violence, no matter the method, will face serious consequences.”

“The FBI remains steadfast in the fight against terrorism," said Acting Assistant Director Patrick Reddan for the FBI’s Counterterrorism Division. “I would like to thank the men and women of the FBI, along with our partners in law enforcement, for holding accountable individuals, such as Zachary Clark, who pledge allegiance to ISIS and support and spread their violent terrorist agenda. We remain vigilant in our efforts to prevent terrorism and protect the American people, and today’s sentencing underscores that commitment.”

According to court documents, Clark pledged allegiance to ISIS twice: first in July 2019 to ISIS’s then-leader Abu Bakr al-Baghdadi, and then in October 2019 to ISIS’s new leader, Abu Ibrahim al-Sashemi al-Qurayshi, whom ISIS promoted after al-Baghdadi’s death. Beginning in at least March 2019, Clark disseminated ISIS propaganda through, among other avenues, encrypted chatrooms intended for members, associates, supporters and potential recruits of ISIS. Clark’s propaganda included, among other things, calls for ISIS supporters to commit lone wolf attacks in New York City.

For example, on Aug. 3, 2019, Clark posted instructions about how to conduct such an attack, including directions on how to select an attack target, how to conduct preoperational surveillance, how to conduct operational planning and how to avoid attracting law enforcement attention when preparing for and conducting the attack. On another occasion, Clark posted a manual entitled “Knife Attacks,” which stated, among other things, that discomfort at “the thought of plunging a sharp object into another person’s flesh” is “never an excuse for abandoning jihad” and that “[k]nives, though certainly not the only weapon for inflicting harm upon the kuffar [non-believers], are widely available in every land and thus readily accessible.” 

Clark urged the participants in encrypted chatrooms to attack specific targets, posting maps and images of the New York City subway system and encouraging ISIS supporters to attack those locations.  Clark’s guidance also included posting a manual entitled “Make a bomb in the kitchen of your Mom,” which was issued by al-Qaeda in the Arabian Peninsula and included detailed instructions about constructing bombs using readily available materials. 

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

Assistant U.S. Attorneys Gillian Grossman, Matthew Hellman and Sidhardha Kamaraju of the Southern District of New York prosecuted the case with assistance from Trial Attorneys Jason Denney and Chad Davis of the National Security Division’s Counterterrorism Section.

Audrey Strauss, the United States Attorney for the Southern District of New York, Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), and Patrick J. Freaney, Deputy Special Agent-in-Charge of the New York Field Office of the United States Secret Service (“USSS”), announced today the unsealing of a criminal indictment charging SABITRI LAFOREST, GARRY LAFOREST, TATIANA LAFOREST a/k/a “Tatiana Mays,” and SANJAY LAFOREST with wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering in connection with their scheme to defraud SABITRI LAFOREST’s employer, a Manhattan-based electrical contracting company, of at least approximately $17 million.

The defendants were arrested this morning: SABITRI LAFOREST and GARRY LAFOREST in Parkland, Florida, TATIANA LAFOREST in Queens, New York, and SANJAY LAFOREST in New York, New York.  Later today, TATIANA LAFOREST and SANJAY LAFOREST will be presented in federal court in Manhattan before U.S. Magistrate Judge Sarah Netburn; SABITRI LAFOREST and GARRY LAFOREST will be presented in federal court in Ft. Lauderdale, Florida, before U.S. Magistrate Judge Alicia O. Valle. 

Manhattan U.S. Attorney Audrey Strauss said: “The defendants lived a life of luxury: international travel, fancy apartments and homes, a 2020 Ford Shelby GT500, and a 2019 Chevrolet Corvette ZR-1, as well as ownership in successful restaurants.  But, as alleged, this was all paid for with $17 million that the defendants stole from the company that employed Sabitri Laforest for over 30 years.  Thanks to our partners at the NYPD and U.S. Secret Service, the defendants’ alleged greed has led to their facing federal charges of embezzlement and money laundering.”

NYPD Commissioner Dermot Shea said:  “As alleged in this federal indictment, these defendants exploited a position of trust to engage in a vast scheme of criminal plunder. These arrests and the work of our NYPD detectives, the United States Secret Service and the prosecutors of the United States Attorney’s Office in the Southern District of New York will ensure they face justice.”

USSS Deputy Special Agent-in-Charge Patrick J. Freaney said:  “Bringing those to justice who commit financial fraud remains a key focus of the U.S. Secret Service.  In this instance, the accused allegedly used her professional position as controller to embezzle approximately $17 million which was then allegedly laundered with the aid of family members.  Not only are these alleged actions a violation of trust, but also a violation of law. The Secret Service looks forward to our continued partnership with the New York City Police Department in our joint pursuit of those who seek to commit financial crimes.  Special thanks to the New York/New Jersey High Intensity Drug Trafficking Area (HIDTA) Intelligence Analysts and the Miami Field Office of the Secret Service for their considerable support in the success of this investigation.”

According to the allegations in the Indictment:[1]

Between at least 2013 and 2020, SABITRI LAFOREST, GARRY LAFOREST, TATIANA LAFOREST, and SANJAY LAFOREST used SABITRI LAFOREST’s position as the controller of an electrical contracting company (“Victim-1”) to embezzle over $17 million from Victim-1.  The defendants used SABITRI LAFOREST’s access to Victim-1’s bank account to make payments to a charge card account that TATIANA LAFOREST opened.  The defendants regularly charged hundreds of thousands of dollars to the account, all paid for each month using Victim-1’s money. 

The defendants used the charge card account to pay for, among other things, over $639,000 in air travel, over $242,000 in tickets for a New York City professional basketball team, over $250,000 in rent for two luxury apartments in Manhattan leased by TATIANA LAFOREST and SANJAY LAFOREST, over $100,000 in home improvements for a Florida home purchased by SABITRI LAFOREST and GARRY LAFOREST, and a 2020 Ford Shelby GT500 and a 2019 Chevrolet Corvette ZR-1.

The defendants also laundered millions of dollars of the proceeds of their embezzlement scheme by transferring the money to other financial accounts controlled by themselves and their family members, and by making payments to a restaurant in Elmont, New York, owned by SABITRI LAFOREST and GARRY LAFOREST, and a group of hospitality companies, including two Manhattan restaurants, owned by SANJAY LAFOREST.

*                *                *

SABITRI LAFOREST, 59, and GARRY LAFOREST, 64, of Parkland, Florida, TATIANA LAFOREST a/k/a “Tatiana Mays,” 36, of Queens, New York, and SANJAY LAFOREST, 38, of New York, New York, are each charged with one count of conspiracy to commit wire fraud, in violation of  18 U.S.C. § 1349, which carries a maximum sentence of 20 years in prison, one count of wire fraud, in violation of 18 U.S.C. § 1343, which carries a maximum sentence of 20 years in prison, and one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956, which carries a maximum sentence of 20 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by a judge.

Ms. Strauss praised the outstanding investigative work of the NYPD’s Financial Crimes Task Force and the USSS.  Ms. Strauss also thanked the New York/New Jersey High Intensity Drug Trafficking Area (HIDTA) Intelligence Analysts for their support and assistance in this matter.

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

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

Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that ELLIOT SMERLING was indicted this morning on charges of wire fraud, bank fraud, and aggravated identity theft for seeking and obtaining an approximately $95 million subscription-backed line of credit for his $500 million private equity fund on the basis of a forged audit letter, falsified subscription agreements, and falsified bank account statements.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Elliot Smerling went to elaborate measures to create a blatantly false picture of the financial underpinnings of a private equity fund in order to obtain a $95 million line of credit.  Through a forged audit letter and falsified subscription agreements and bank statements, Smerling allegedly induced a California bank to make a loan commitment it never would have made had it known the truth.  Now, the truth has landed Elliot Smerling in federal court.”

FBI Assistant Director William F. Sweeney Jr. said:  “Falsifying information in order to secure a loan, regardless of the amount, is a crime.  When the loan secured is nearly $100 million, the stakes are even higher.  As alleged, Smerling engaged in illegal practices in order to benefit his interests.  Today he’s learned the consequences of his alleged actions.”

According to the Indictment filed today in Manhattan federal court, and the Complaint[1] unsealed February 26, 2021, in the Southern District of Florida:

From at least in or about December 2020 through at least in or about February 2021, ELLIOT SMERLING, the defendant, solicited and obtained on behalf of the general partner (“General Partnership-1”) of a private equity fund (“Private Equity Fund-1”), a loan of approximately $95 million from a commercial bank headquartered in California (“Victim Bank-1”), which was secured by purported capital commitments made by the limited partnership of investors in Private Equity Fund-1 (“Limited Partnership-1”).  SMERLING obtained the approximately $95 million loan on the basis of falsified documents and material misrepresentations, including:  (1) a forged audit letter, purportedly prepared by an international network of accounting, audit, tax, and professional services firms (“Audit Firm-1”), attesting to the audited financial statements of Limited Partnership-1; (2) forged subscription agreements that falsely represented that the investment fund of a private university based in New York, New York (“University Endowment Fund-1”), and the chief investment officer of that fund (“Chief Investment Officer-1”) had committed $45 million to fund Limited Partnership-1, and that the investment management division of a banking and financial services firm headquartered in New York, New York (“Investment Manager-1”), and the chief executive officer of Investment Manager-1 had committed $40 million to fund Limited Partnership-1; and (3) falsified bank records purporting to attest to a $4.5 million wire transfer from University Endowment Fund-1 to Limited Partnership-1. 

On or around December 1, 2020, SMERLING contacted an employee of Victim Bank-1 concerning SMERLING’s interest in acquiring an approximately $95 million loan for SMERLING’s $500 million private equity fund, Limited Partnership-1.  The loan sought by SMERLING would substitute for an existing line of credit SMERLING had secured from a multinational financial services company (“Commercial Bank-1”), where Limited Partnership-1 purported to have an existing line of credit with an outstanding loan balance equal to the amount sought by SMERLING from Victim Bank-1.  The employee of Victim Bank-1 referred SMERLING to a director in the Global Fund Banking Group at Victim Bank-1 (“Witness-1”).

Thereafter, in or around December 2020, Witness-1 requested from SMERLING materials concerning Limited Partnership-1 and General Partnership-1 in order to evaluate SMERLING’s loan request.  In response, SMERLING sent Victim Bank-1 materially false materials, the veracity of which Victim Bank-1 relied upon in ultimately deciding to make the loan sought by SMERLING, including:     

i.          An audit letter (the “Audit Letter”), purportedly prepared by Audit Firm-1, attesting to the sound finances of Limited Partnership-1.

ii.         Subscription agreements purportedly signed by investors in the fund, including an agreement reflecting a purported commitment of $45 million by University Endowment Fund-1 and the purported signature of Chief Investment Officer-1 (“Subscription Agreement-1”), and an agreement reflecting a purported commitment of $40 million by Investment Manager-1 and the purported signature of the chief executive officer of Investment Manager-1 (“Subscription Agreement-2”).  

iii.        A table (the “Capital Commitment Table”) listing $500 million in paid and unpaid capital commitments purportedly made to Limited Partnership-1 as of December 13, 2019, including a purported $45 million commitment by University Endowment Fund-1, consisting of a “call amount” of $4.5 million and an “unpaid commitment” of $40.5 million as of that date, as well as a purported $40 million commitment by Investment Manager-1, consisting of a “call amount” of $4 million and an “unpaid commitment” of $36 million as of that date. 

Following receipt of the materials, employees of Victim Bank-1, including at least one employee based in Victim Bank-1’s office in New York, New York, reviewed the materials as part of Victim Bank-1’s diligence process.

On or around January 7, 2021, Witness-1 wrote an email to the chief financial officer of Private Equity Fund-1, with a copy to SMERLING, in which Witness-1, in substance and in part, advised that Victim Bank-1 was in the process of finalizing its approvals for the loan.  Witness-1 requested bank statements “evidencing receipt of the most recent capital call.”  On the same date, SMERLING replied with an email to which he attached a December 2019 bank statement (the “Bank Statement”) for an account purportedly held in the name of Limited Partnership-1 at Commercial Bank-1’s Americas headquarters in New York, New York.  The statement reflected wires into the account with a combined value of $50 million, including a purported wire of $4.5 million from University Endowment Fund-1 and a purported wire of $4 million from Investment Manager-1.

The materials that SMERLING submitted to Victim-Bank-1 were materially false.  For example, the Audit Letter was not prepared by Audit Firm-1.  Chief Investment Officer-1 of the University Endowment Fund-1 has no knowledge of ELLIOT SMERLING, Limited Partnership-1, or General Partnership-1, and the signature appearing on the Subscription Agreement-1 is not that of Chief Investment Officer-1.  University Endowment Fund-1 has found no indication that it made the $4.5 million wire transfer reflected in the Bank Statement or made any other investment or capital commitment to ELLIOT SMERLING, the defendant, Limited Partnership-1, or General Partnership-1.

Similarly, Investment Manager-1 has found no indication that Investment Manager-1 in fact made the $4 million wire transfer reflected in the Bank Statement or made any other investment or capital commitment to ELLIOT SMERLING, the defendant, Limited Partnership-1, or General Partnership-1.

SMERLING was arrested and presented in the Southern District of Florida on February 26, 2021, before United States Magistrate Judge William Matthewman.

*                      *                      *

SMERLING, 52, of Lake Worth, Florida, is charged in three counts, with wire fraud, bank fraud, and aggravated identity theft.  Wire fraud affecting a financial institution carries a maximum sentence of 30 years in prison, and a maximum fine of $1 million or twice the gross gain or loss from the offense.  Bank fraud carries a maximum sentence of 30 years in prison, and a maximum fine of $1 million or twice the gross gain or loss from the offense.  Aggravated identity theft carries a mandatory sentence of two years in prison consecutive to any other sentence imposed and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  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.

Ms. Strauss praised the work of the Federal Bureau of Investigation. 

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Jilan J. Kamal and Timothy V. Capozzi 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 texts of the Indictment and the Complaint, and the descriptions of the Indictment and the Complaint set forth in this release, constitute only allegations, and every fact described should be treated as an allegation.

Audrey Strauss, the United States Attorney for the Southern District of New York, John C. Demers, Assistant Attorney General for National Security, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, the Commissioner of the Police Department for the City of New York (“NYPD”), announced that ZACHARY CLARK, a/k/a “Umar Kabir,” a/k/a “Umar Shishani,” a/k/a “Abu Talha,” was sentenced today to 20 years in prison, for attempting to provide material support to the Islamic State of Iraq and al-Sham (“ISIS”).  CLARK pled guilty on August 10, 2020, in Manhattan federal court before U.S. District Judge Naomi Reice Buchwald, who sentenced Clark today.

U.S. Attorney Audrey Strauss said:  “Zachary Clark pledged allegiance to ISIS and posted calls for attacks on the public and institutions in New York City on encrypted pro-ISIS chatrooms, along with detailed instructions for carrying out those violent acts.  Thanks to the Joint Terrorism Task Force, Clark’s efforts to incite deadly violence on behalf of ISIS have been silenced.  Today’s sentence sends a clear message that those who seek to further ISIS’s campaign of terror and violence, no matter the method, will face serious consequences.”

Assistant Attorney General John C. Demers said:  “Today’s 20-year sentence recognizes the gravity of Clark’s conduct, including his calls for other ISIS supporters to carry out lone wolf terrorist attacks in New York City. Having pledged allegiance to ISIS, Clark provided others with specific instructions on knifing and bomb-making for use in such attacks. We remain vigilant to the threat of terrorism and committed to identifying and holding accountable those who threaten our communities through their support for foreign terrorist organizations.”

FBI Assistant Director William F. Sweeney Jr. said:  “Zachary Clark will no longer spend his time in chat rooms supporting terrorist ideals, but behind bars in federal prison for the next 20 years. The successful ending in this case is a result of the dedication of the FBI’s JTTF here in New York and our partners around the world. We will continue to work together to protect the people of New York from anyone who wishes to do us harm.”

NYPD Commissioner Dermot Shea said:  “Zachary Clark, using encrypted social media platforms became the facilitator for the voice of ISIS in America. He controlled a private channel, communicating with ISIS followers, posting terrorist attack manuals and bomb making instructions and making statements in support of suicide attacks. He also affirmed his own ambitions of becoming a martyr for ISIS on US soil. His arrest comes out of the tight-knit partnership of the Joint Terrorism Task force agents and detectives as well as the NYPD’s Intelligence Bureau. It is another example---among many---of protecting New York City from terrorist violence through intelligence sharing, joint investigation, and prosecution, which results in prevention.”

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

CLARK pledged allegiance to ISIS twice, first in July 2019, to ISIS’s then-leader Abu Bakr al-Baghdadi, and then in October 2019, to ISIS’s new leader, Abu Ibrahim al-Sashemi al-Qurayshi, whom ISIS promoted after al-Baghdadi’s death.  Beginning in at least March 2019, CLARK disseminated ISIS propaganda through, among other avenues, encrypted chatrooms intended for members, associates, supporters, and potential recruits of ISIS.  CLARK’s propaganda included, among other things, calls for ISIS supporters to commit lone wolf attacks in New York City.  For example, on August 3, 2019, CLARK posted instructions about how to conduct such an attack, including directions on how to select an attack target, how to conduct preoperational surveillance, how to conduct operational planning, and how to avoid attracting law enforcement attention when preparing for and conducting the attack.  On another occasion, CLARK posted a manual entitled “Knife Attacks,” which stated, among other things, that discomfort at “the thought of plunging a sharp object into another person’s flesh” is “never an excuse for abandoning jihad” and that “[k]nives, though certainly not the only weapon for inflicting harm upon the kuffar [non-believers], are widely available in every land and thus readily accessible.”  CLARK urged the participants in encrypted chatrooms to attack specific targets, posting maps and images of the New York City subway system and encouraging ISIS supporters to attack those locations.  CLARK’s guidance also included posting a manual entitled “Make a bomb in the kitchen of your Mom,” which was issued by al-Qaeda in the Arabian Peninsula and included detailed instructions about constructing bombs using readily available materials.    

*                *                *

In addition to his prison sentence, CLARK, 42, of Brooklyn, New York, was sentenced to lifetime supervised release.  

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

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Gillian Grossman, Matthew Hellman, and Sidhardha Kamaraju are in charge of the prosecution, with assistance from Trial Attorneys Jason Denney, Justin Sher, and Chad Davis of the National Security Division’s Counterterrorism Section.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that LUDWIG CRISS ZELAYA ROMERO, a former member of the Honduran National Police (“HNP”), was sentenced today to 12 years in prison for conspiring to import cocaine into the United States and conspiring to use machineguns and destructive devices in furtherance of drug trafficking.  ZELAYA ROMERO previously pled guilty before U.S. District Judge Lorna G. Schofield, who imposed today’s sentence. 

Manhattan U.S. Attorney Audrey Strauss said:  “Ludwig Criss Zelaya Romero was a lawless law enforcement officer, a purported crime-fighter working for a murderous criminal enterprise.  For the personal role he played in cocaine trafficking and multiple murders, Zelaya Romero has been sentenced to a lengthy prison term.”

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

Between at least approximately 2004 and 2014, ZELAYA ROMERO worked with members of a drug trafficking organization known as the Cachiros, which was a prolific and violent criminal syndicate that relied on connections to politicians, military personnel, and law enforcement to transport cocaine to, within, and from Honduras.  During that time, and while ZELAYA ROMERO was purportedly enforcing the law as member of the HNP, he participated in the Cachiros’ criminal enterprise by engaging in cocaine trafficking and violence.  Among other things, ZELAYA ROMERO participated in Cachiros drug shipments, recruited other members of the HNP to join the Cachiros, located teams of hitmen in Honduras to carry out murders for the Cachiros, and himself committed and attempted to commit murders to protect and strengthen the Cachiros’ criminal enterprise. 

Beginning in about 2004, ZELAYA ROMERO personally helped escort large drug shipments belonging to the Cachiros as they were transported through Honduras over land toward the Guatemalan border, so that the drugs could be brought by others to the United States via Mexico and Guatemala.  ZELAYA ROMERO helped transport cocaine from the Atlantic coast of Honduras, where many maritime shipments arrived on their way to the United States, and also coordinated with other members of the HNP along the planned drug routes to ensure that tons of cocaine would transit Honduras unimpeded.  With the help of ZELAYA ROMERO and other members of the HNP, the Cachiros were able to distribute over 130 tons of cocaine to the United States.    

In addition, ZELAYA ROMERO participated in violence and murder for the Cachiros.  ZELAYA ROMERO participated in a 2011 massacre at the airport in San Pedro Sula, Honduras, that left six dead, and recruited a hitman who murdered Honduran journalist Anibal Barrow in 2013.  ZELAYA ROMERO also himself shot and killed a victim at the Cachiros’ request, murdering an individual who had participated in the robbery of a truck containing a large quantity of concealed currency.

This prosecution resulted in the drug trafficking convictions of Fabio Porfirio Lobo, the son of former Honduran president Porfirio Lobo Sosa, and seven former members of the HNP: Zelaya Romero, Mario Guillermo Mejia Vargas, Juan Manuel Avila Meza, Carlos Jose Zavala Velasquez, Victor Oswaldo Lopez Flores, Jorge Alfredo Cruz Chavez, and Carlos Alberto Valladares Garcia.  On September 5, 2017, Judge Schofield sentenced Lobo to 24 years in prison.  On February 6, 2018, Judge Schofield sentenced Lopez Flores to five years in prison.  On June 27, 2018, Judge Schofield sentenced Zavala Velasquez to 12 years in prison.  On September 27, 2018, Judge Schofield sentenced Valladares Garcia to 14 years in prison.  On March 29, 2021, Judge Schofield sentenced Avila Meza to 12 years in prison.

*                *                *

In addition to the prison term, ZELAYA ROMERO, 44, was sentenced to four years of supervised release and forfeiture of $120,000.    

Ms. Strauss praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit, New York Strike Force, and Tegucigalpa Country Office, as well as the U.S. Department of Justice’s Office of International Affairs.

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

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that DANIEL KAMENSKY, the founder and former manager of New York-based hedge fund Marble Ridge Capital (“Marble Ridge”), was sentenced today in Manhattan federal court to six months in prison for engaging in fraud and extortion to pressure a rival bidder to abandon its higher bid for assets in connection with Neiman Marcus’s bankruptcy proceedings so that Marble Ridge could obtain those assets for a lower price.  KAMENSKY pled guilty on February 3, 2021, before United States District Judge Denise L. Cote, who imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “Daniel Kamensky committed bankruptcy fraud – undermining the integrity of bankruptcy proceedings and violating his fiduciary responsibility – in an effort to take extra profits for himself and his hedge fund.  As he himself predicted, this fraud has now landed Daniel Kamensky in prison.”

As alleged in the Complaint, the Information, and statements made in court:           

DANIEL KAMENSKY was the principal of Marble Ridge, a hedge fund with assets under management of more than $1 billion that invested in securities in distressed situations, including bankruptcies.  Prior to opening Marble Ridge, KAMENSKY worked for many years as a bankruptcy attorney at a well-known international law firm, and as a distressed debt investor at prominent financial institutions.

The Neiman Marcus Bankruptcy

Neiman Marcus, an American chain of luxury department stores with stores located across the United States, filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) in May 2020.  At the outset of the bankruptcy, Marble Ridge, through KAMENSKY, applied to be on the Official Committee of Unsecured Creditors (the “Committee”) and was thereafter appointed to be a member of the Committee.  As a member of the Committee, KAMENSKY had a fiduciary duty to represent the interests of all unsecured creditors as a group.

During the bankruptcy process, the Committee had negotiated with the owners of Neiman Marcus to obtain certain securities, known as MyTheresa Series B Shares (the “MYT Securities”), and ultimately, the Committee was successful in coming to a settlement to obtain 140 million shares of MYT Securities for the benefit of certain unsecured creditors of the bankruptcy estate.  In July 2020, KAMENSKY was negotiating with the Committee for Marble Ridge to offer 20 cents per share to purchase MYT Securities from any unsecured creditor who preferred to receive cash, rather than MYT Securities, as part of that settlement.

Kamensky’s Fraudulent Scheme 

On July 31, 2020, KAMENSKY learned that a diversified financial services company headquartered in New York, New York (the “Investment Bank”), had informed the Committee that it was interested in bidding a price between 30 and 40 cents per share – substantially higher than KAMENSKY’s bid – to purchase the MYT Securities from any unsecured creditor who was interested in receiving cash.

That afternoon, KAMENSKY sent messages to a senior trader at the Investment Bank (“IB Employee-1”) telling him not to place a bid, and followed those messages up with a phone call with IB Employee-1 and a senior analyst of the Investment Bank (“IB Employee-2,” and collectively the “Employees”).  During that call, KAMENSKY asserted that Marble Ridge should have the exclusive right to purchase MYT Securities, and he threatened to use his official role as co-chair of the Committee to prevent the Investment Bank from acquiring the MYT Securities.  KAMENSKY also stated that Marble Ridge had been a client of the Investment Bank in the past but that if the Investment Bank moved forward with its bid, then Marble Ridge would cease doing business with the Investment Bank.

The Investment Bank thereafter decided not to make a bid to purchase MYT Securities and informed the legal adviser to the Committee of its decision.  The Investment Bank further told the legal adviser it made that decision because KAMENSKY – a client of the Investment Bank – had asked them not to.

Advisers to the Committee informed counsel for Marble Ridge of their call with the Employees, and after speaking with KAMENSKY, counsel for Marble Ridge falsely informed the advisers that KAMENSKY had not asked the Employees not to bid, but instead had told them to place a bid only if they were serious.  Later that evening, KAMENSKY contacted IB Employee-1 and attempted to influence what IB Employee-1 would tell others, including the Committee and law enforcement, about KAMENSKY’s attempt to block the Investment Bank’s bid for the MYT Securities.  KAMENSKY said at the outset of the call, in substance, “this conversation never happened.”  During the call, KAMENSKY asked IB Employee-1 to say falsely that IB Employee-1 had been mistaken and KAMENSKY had actually suggested that the Investment Bank bid only if it were serious, and made comments including the following:  “Do you understand . . . I can go to jail?”  “I pray you tell them that it was a huge misunderstanding, okay, and I’m going to invite you to bid and be part of the process.”  “But I’m telling you . . . this is going to the U.S. Attorney’s Office.  This is going to go to the court.”  “[I]f you’re going to continue to tell them what you just told me, I’m going to jail, okay?  Because they’re going to say that I abused my position as a fiduciary, which I probably did, right?  Maybe I should go to jail.  But I'm asking you not to put me in jail.”

During a subsequent interview with the Office of the United States Trustee, which was conducted under oath and in the presence of counsel, KAMENSKY stated that his calls to IB Employee-1 were a “terrible mistake” and “profound errors in lapses of judgment.”

After this series of events, Marble Ridge resigned from the Committee and advised its investors that it intended to begin winding down operations and returning investor capital.

*                      *                      *

In addition to his prison term, KAMENSKY, 48, of Roslyn, New York, was sentenced to six months of supervised release on home confinement and ordered to pay a fine of $55,000.

Ms. Strauss praised the work of the FBI.  Ms. Strauss further thanked the Office of United States Trustee and the Securities and Exchange Commission for their cooperation and assistance in this investigation. 

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

Audrey Strauss, the United States Attorney for the Southern District of New York, Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), Raymond P. Donovan, Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), and Kevin P. Bruen, Acting Superintendent of the New York State Police (“NYSP”), announced today the unsealing of an eleven-count Indictment charging JAYQUAN SMITH, a/k/a “Six,” RASHIEN JACKSON, a/k/a “Pop,” JAMES BELL, a/k/a “Dex,” DAQUAN MURPHY, a/k/a “Fritz,” JONATHAN ODENTHAL, a/k/a “White Boy,” HASSAN SIMMONS, a/k/a “Hart,” and DERICK MURPHY, a/k/a “Yogi,” with racketeering and firearms offenses, as well as violent crimes in aid of racketeering, in connection with their membership and association with the 800 YGz gang (the “800 YGz”).  DAQUAN MURPHY was taken into custody yesterday.  DERICK MURPHY and SMITH were already in federal custody on separate charges.  BELL and JACKSON were in state custody on separate charges. The defendants will be presented this afternoon before U.S. Magistrate Judge Katharine H. Parker in Manhattan federal court.  SIMMONS and ODENTHAL remain at large.  The case has been assigned to U.S. District Judge Alison J. Nathan.

U.S. Attorney Audrey Strauss said:  “As alleged in today’s indictment, members and associates of a violent street gang wreaked havoc in the Bronx for many years, committing numerous acts of violence against rival gang members.  Thanks to the hard work of our law enforcement partners, the defendants now face federal charges for these serious crimes.”

DEA Special Agent in Charge Raymond P. Donovan said:  “These defendants are charged with participating in the activities of the 800 YGz gang and committing numerous acts of violence.  Their alleged criminal conduct has been a scourge on communities in the Bronx for years. I applaud the New York Drug Enforcement Task Force and U.S. Attorney’s Office Southern District of New York on their teamwork and diligence throughout this impactful investigation.”

NYPD Commissioner Dermot Shea said:  “The kind of street violence these defendants were allegedly willing to carry out threatens the fabric of life for everyone in our city. This federal prosecution puts an end to it, strengthened by the joint work of our NYPD officers, federal partners and prosecutors from the United States Attorney’s Office in the Southern District of New York.”

New York State Police Acting Superintendent Kevin P. Bruen said:  “This case involves members of a gang that engaged in numerous alleged acts of violence, with absolutely no regard for the consequences of their actions. I want to commend our partners for their cooperation and hard work to hold these subjects accountable and remove this threat from our neighborhoods.”

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

JAYQUAN SMITH, a/k/a “Six,” RASHIEN JACKSON, a/k/a “Pop,” JAMES BELL, a/k/a “Dex,” DAQUAN MURPHY, a/k/a “Fritz,” JONATHAN ODENTHAL, a/k/a “White Boy,” HASSAN SIMMONS, a/k/a “Hart,” and DERICK MURPHY, a/k/a “Yogi,” are members and associates of the 800 YGz, a racketeering enterprise that operates principally in the New York City metropolitan area.  In order to enrich the enterprise, preserve and protect the power of the enterprise, and enhance its criminal operations, 800 YGz members and associates committed, conspired, attempted, and threatened to commit acts of violence; distributed and possessed with intent to distribute narcotics, including crack cocaine and marijuana; engaged in wire fraud; and obtained, possessed, and used firearms. 

On or about July 8, 2019, BELL shot at rival gang members, injuring two individuals, in the Bronx, New York.

On or about March 27, 2020, JACKSON shot at rival gang members in the Bronx, New York.

On or about September 16, 2020, JACKSON slashed a rival gang member in the Bronx, New York.

On or about November 21, 2020, SMITH shot at rival gang members in the Bronx, New York.

On or about December 21, 2020, SMITH shot at rival gang members in the Bronx, New York.

On or about August 28, 2020, JACKSON possessed a firearm during and in relation to a drug trafficking offense.

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

Ms. Strauss praised the outstanding work of the New York Drug Enforcement Task Force, comprising agents and officers of the DEA, NYPD, and NYSP.  Ms. Strauss also thanked the NYPD’s 48th Precinct for its assistance with the investigation.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Jim Ligtenberg and Alexandra Rothman 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

MAX. PENALTY

Count One

 Racketeering Conspiracy

 18 U.S.C. § 1962(d)

All defendants

Life imprisonment

Count Two

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

18 U.S.C. §§ 1959 and 2

JAMES BELL

Twenty years’ imprisonment

Count Three

Firearms Offense

18 U.S.C. §§ 924(c) and 2

JAMES BELL

Life imprisonment

Mandatory minimum of ten years’ imprisonment

Count Four

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

18 U.S.C. §§ 1959 and 2

RASHIEN JACKSON

Twenty years’ imprisonment

Count Five

Firearms Offense

18 U.S.C. §§ 924(c) and 2

RASHIEN JACKSON

Life imprisonment

Mandatory minimum of ten years’ imprisonment

Count Six

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

18 U.S.C. §§ 1959 and 2

RASHIEN JACKSON

Twenty years’ imprisonment

Count Seven

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

18 U.S.C. §§ 1959 and 2

JAYQUAN SMITH

Twenty years’ imprisonment

Count Eight

Firearms Offense

18 U.S.C. §§ 924(c) and 2

JAYQUAN SMITH

Life imprisonment

Mandatory minimum of ten years’ imprisonment

Count Nine

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

18 U.S.C. §§ 1959 and 2

JAYQUAN SMITH

Twenty years’ imprisonment

Count Ten

Firearms Offense

18 U.S.C. §§ 924(c) and 2

JAYQUAN SMITH

Life imprisonment

Mandatory minimum of ten years’ imprisonment

Count Eleven

Firearms Offense

18 U.S.C. §§ 924(c) and 2

RASHIEN

JACKSON

Life imprisonment

Mandatory minimum of five years’ imprisonment

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

Audrey Strauss, the United States Attorney for the Southern District of New York, and Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an indictment charging SHAREEF LANDSMARK, a/k/a “Reef, a/k/a “Wreef,” with murdering Michael Perez in the Bronx, New York, on September 17, 2012.  LANDSMARK was arrested yesterday and will be presented later today before U.S. Magistrate Judge Katharine H. Parker.  The case is assigned to U.S. District Judge Lorna G. Schofield.

U.S. Attorney Audrey Strauss said:  “As alleged in the Indictment, almost nine years ago, Shareef Landsmark executed Michael Perez in the streets of the Bronx.  Thanks to the perseverance of the NYPD, Landsmark now stands charged in federal court.”

NYPD Commissioner Dermot Shea said:  “Today’s charges prove that the best investigators in the world will never cease to secure justice that is owed to victims and their families.  I would like to thank the NYPD Detectives, our law enforcement partners, and the prosecutors of the U.S. Attorney’s Office for the Southern District of New York for their dedication to this investigation.”

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

On September 17, 2012, LANDSMARK was hired by a co-conspirator to kill Michael Perez in furtherance of a conspiracy to distribute crack cocaine.  Later that night, LANDSMARK shot and killed Perez, who was standing in the street near the intersection of East 213th Street and Willett Avenue in the Bronx.

*                *                *

LANDSMARK, 35, from the Bronx, New York, is charged with one count of murder through use of a firearm, which carries a maximum penalty of death or life in prison and a mandatory minimum sentence of five years in prison; one count of murder in connection with a drug trafficking crime, which carries a maximum penalty of death or life in prison and a mandatory minimum sentence of 20 years in prison; and one count of murder-for-hire, which carries a maximum penalty of death or life in prison and a mandatory minimum sentence of life in prison.

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

 Ms. Strauss praised the outstanding work of the NYPD.  She also thanked the Special Agents of the United States Attorney’s Office for the Southern District of New York 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 Rothman and Adam Hobson 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.

Audrey Strauss, United States Attorney for the Southern District of New York, announced that GABRIEL LETIZIA Jr., the owner and executive director of AMA Laboratories, Inc. (“AMA”), a consumer products testing company in New City, pled guilty today to defrauding customers by reporting laboratory test results for panelist testing that was not fully performed.  LETIZIA pled guilty before United States Magistrate Judge Paul E. Davison.  Former AMA employees David Winne, Mayya Tatsene, Patrycja Wojtowicz, and Kaitlyn Gold previously pled guilty in connection with their respective roles in the scheme.

U.S. Attorney Audrey Strauss said:  “As he has now admitted, Gabriel Letizia schemed for decades to defraud customers of his laboratory, and caused sunscreens and other consumer products to be sold and marketed to consumers on the basis of false laboratory testing reports.  Letizia’s guilty plea underscores that my Office will continue to work with our law enforcement partners to investigate and prosecute fraud and endangerment in the consumer products testing industry.”              

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

LETIZIA is the owner and executive director of AMA, a consumer products testing company in Rockland County, New York.  David Winne served as AMA’s technical director, Mayya Tatsene served as AMA’s clinical laboratory director, Patrycja Wojtowicz served as AMA’s associate director of clinical studies, and Kaitlyn Gold served as AMA’s supervising laboratory technician.  AMA tested the safety and efficacy of cosmetics, sunscreens and other products on specified numbers of volunteer panelists for consumer products companies. 

From 1987 through April 2017, LETIZIA and his co-conspirators defrauded AMA’s customers of more than $46 million by testing products on materially lower numbers of panelists than the numbers specified and paid for by AMA’s customers.  LETIZIA, and AMA employees acting under his direction, sent the customers fraudulent reports, which falsely represented that AMA had tested the products on the number of panelists specified by the customers, causing the introduction of misbranded products into interstate commerce.

*                *                *

LETIZIA, 71, of New City, New York, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum penalty of five years in prison; and two counts of causing a misbranded drug to be introduced into interstate commerce, each of which carries a maximum penalty of one year in prison.

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the sentence of LETIZIA will be determined by the Court.

LETIZIA will be sentenced by U.S. District Judge Kenneth M. Karas on September 14, 2021, at 2:00 p.m.

Ms. Strauss praised the outstanding work of the Federal Bureau of Investigation, the U.S. Food and Drug Administration, Office of Criminal Investigations, and the Rockland County District Attorney’s Office. 

This case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys Jeffrey C. Coffman, James McMahon, and Olga I. Zverovich are in charge of the prosecution             

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that MICHAEL HILD, the founder and former chief executive officer of Live Well Financial, Inc. (“Live Well”), was convicted today of securities fraud, wire fraud, and bank fraud charges in connection with a scheme to fraudulently inflate the value of a portfolio of bonds owned by Live Well in order to induce various securities dealers and at least one financial institution into loaning more money to Live Well – through repurchase (“repo”) agreements and collateralized loans – than they otherwise would have had they known the actual value of Live Well’s bond portfolio.  The scheme allowed Live Well to grow its bond portfolio exponentially, from approximately 20 bonds with a stated value of approximately $50 million in 2014 to approximately 50 bonds with a stated value of over $500 million by the end of 2016.  In May 2019, in conjunction with an effort to wind down the company, Live Well wrote down the value of its portfolio by over $200 million. 

Manhattan U.S. Attorney Audrey Strauss said:  “As a unanimous jury found, Michael Hild obtained millions of dollars in secured loans for Live Well Financial by grossly inflating the value of bonds used as collateral.  Hild deceived a third-party pricing service by providing it with inflated marks, resulting in the pricing service publishing valuations for the bonds far in excess of market value.  Lenders were hoodwinked into lending far more than they otherwise would have.  The house of cards came crashing down with the unwinding of Live Well and the revelation to lenders that the bond portfolio had been overvalued by $200 million.  Now, Michael Hild awaits sentencing for his crimes.”

According to the evidence presented during the trial:

Live Well’s Bond Portfolio and Repurchase Agreements 

Live Well was a Richmond, Virginia-based company that originated, serviced, and securitized government-guaranteed reverse mortgages known as Home Equity Conversion Mortgages (“HECMs”).   In or about 2014, Live Well acquired a portfolio of approximately 15 bonds, each entitling the holder to receive a portion of the interest payments, but not the principal payments, from a particular pool of reverse mortgages (“HECM IO bonds.”).  Live Well purchased the HECM IO bond portfolio for approximately $50 million.  At the same time that Live Well purchased the HECM IO bond portfolio, HILD established within Live Well a New York City-based trading desk to manage and grow Live Well’s bond portfolio. 

Live Well financed the acquisition and growth of its bond portfolio through a series of loans in which Live Well used its bond portfolio as collateral.  The majority of Live Well’s lenders were securities dealers whose lending arrangements with Live Well were structured as bond repurchase agreements, also known as “repo agreements.”  A repo agreement is a short-term loan in which both parties agree to the sale and future repurchase of an asset within a specified contract period.  The seller sells the asset to the lender with a promise to buy it back at a specific date and at a price that includes an interest payment.  Functionally, a repo agreement is a collateralized loan in which title of the collateral is transferred to the lender.  When the loan is repaid by the borrower, the collateral is returned to the borrower through a repurchase.  Additionally, at least one of Live Well’s lenders was an FDIC-insured bank, and its lending arrangement with Live Well was structured as a secured loan, with certain bonds held as collateral by a third-party custodian.

The Scheme to Mismark the Bond Portfolio 

Live Well’s financing agreements with all but one of the lenders required that any bond that Live Well sought to borrow against be priced by a third-party pricing source in order to determine the market value of the bond as of the measurement date.  The lenders then used the value of the bond, coupled with the application of a haircut of generally 10% to 20%, to determine the amount of money to lend Live Well.

The lenders generally relied on a particular widely utilized subscription service (the “Pricing Service”) to price various securities.  In or about September 2014, HILD and his co-conspirators embarked on a scheme to cause the Pricing Service to publish valuations for the bonds that far exceeded actual market prices.  By doing so, the conspirators induced the lenders to extend credit to Live Well far in excess of the prices for which the bonds could be sold in the market.  The inflated prices were based on a set of market assumptions that the conspirators called “Scenario 14.” 

HILD was aware that if the lenders had known that the Pricing Service was publishing bond prices that did not reflect fair value, meaning the price at which a lender could sell the bond in the market if necessary to recoup its capital, they would have refused to use those prices in determining how much money to loan to Live Well.  To prevent the Pricing Service and the lenders from learning that the prices did not reflect market value, HILD directed his co-conspirators at Live Well to take steps to conceal their provision of inflated marks to the Pricing Service.  Ultimately, due to the asset overvaluation and the purchase of additional bonds using the capital generated by the scheme, Live Well grew the purported value of its bond portfolio to over $500 million by December 2016.

In addition to using the liquidity generated by the scheme to expand Live Well’s bond portfolio, in or about September 2016, HILD used $18 million generated from the repo lenders to buy out the preferred stockholders in Live Well.  The elimination of the preferred stockholders gave HILD control of the company and allowed him to substantially increase his personal compensation.  Accordingly, HILD’s compensation jumped from approximately $1.4 million in 2015, to approximately $5 million in 2016, approximately $9.7 million in 2017, and over $8 million in 2018.

In or about late 2018, the chief financial officer of Live Well resigned after HILD refused to reduce the compensation he was receiving from the company.  In or about May 2019, the company’s interim chief financial officer informed HILD that he would not sign the company’s interim financial statements because he believed that the company’s carrying value for the HECM IO bond portfolio was significantly overstated.  In or about May 2019, Live Well announced that it would cease operations and unwind.  After the announcement of Live Well’s closing, Live Well’s interim chief financial officer provided a balance sheet to Live Well’s lenders showing that Live Well had reduced the value of its bond portfolio by over $200 million. 

*                *                *         

HILD, 46, of Richmond, Virginia, was convicted of five counts:  one count of conspiracy to commit securities fraud; one count of conspiracy to commit wire and bank fraud; one count of securities fraud; one count of wire fraud; and one count of bank fraud.  Count One carries a maximum sentence of five years in prison, Counts Two, Four, and Five each carry a maximum sentence of 30 years in prison, and Count Three carries a maximum sentence of 20 years in prison.  The charges also contain a maximum fine of $5 million, or twice the gross gain or loss from the offense.

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.

HILD is scheduled to be sentenced at 10:00 a.m. on August 20, 2021, by U.S. District Judge Ronnie Abrams, who presided over the trial.

Ms. Strauss praised the investigative work of the FBI and also thanked the Securities and Exchange Commission.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Jordan Estes and Scott Hartman are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Amaleka McCall-Brathwaite, Special Agent-in-Charge of the Eastern Region Office of the Inspector General of the U.S. Small Business Administration (“SBA-OIG”), and Jonathan D. Larsen, Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and Patricia Tarasca, Special Agent in Charge of the New York Region Office of the Inspector General of the Federal Deposit Insurance Corporation (“FDIC-OIG”), announced today the unsealing of a criminal complaint charging MARCUS FRAZIER with major fraud against the United States, bank fraud, wire fraud, making false statements, and money laundering, for carrying out a fraudulent scheme to obtain $5.8 million in government-guaranteed loans designed to provide relief to small businesses during the novel coronavirus/COVID-19 pandemic.  FRAZIER was arrested this morning and presented before United States Magistrate Judge Gabriel W. Gorenstein this afternoon.

U.S. Attorney Audrey Strauss said:  “As alleged, Marcus Frazier sought millions of dollars in unsecured SBA-guaranteed loans for which his businesses did not qualify.  Frazier allegedly did this by lying about the number of people employed by his businesses, the salaries they were paid, even that these employees existed.  Further, Frazier allegedly used the loan proceeds he did obtain not to pay allowable expenses, but rather, to fund his lavish lifestyle.  Now Marcus Frazier stands to learn the true cost of his alleged conduct.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Frazier fraudulently sought approximately $5.8 million in PPP loans through a government program designed to help small businesses continue to pay their employees during the pandemic.  Rather than use the proceeds he ultimately secured for this purpose, he used the funds for personal expenses that included luxury hotels and travel.  With today’s action, the only place he’ll travel is the courthouse in Lower Manhattan to face justice and the possibility of a lengthy stay in federal prison.”

SBA-OIG Special Agent-in-Charge Amaleka McCall-Brathwaite said:  “Lying to gain access to economic stimulus funds will be met with justice.  Greed has no place in SBA’s programs that are intended to provide assistance to the nation’s small businesses struggling with the pandemic challenges.  I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”

IRS-CI Special Agent-in-Charge Jonathan D. Larsen said:  “Instead of using these vital CARES Act funds to keep his purported businesses afloat, the defendant allegedly drowned himself in luxuries. I applaud the speed with which the federal law enforcement community uncovered these alleged abuses. The arrest today should be an unequivocal message about the consequences that await those engaged in related alleged criminal activities.”  

FDIC-OIG Special Agent-in-Charge Patricia Tarasca said:  “These charges represent blatant falsehoods, fraud, and other criminal conduct that sought to take advantage of tax dollars meant to help the nation recover from the ongoing pandemic.  We appreciate the work of our law enforcement partners on this important case.”

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

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other business expenses through the Paycheck Protection Program (the “PPP”).  The PPP allows qualifying small businesses and other organizations to receive unsecured SBA-guaranteed loans.  PPP loan proceeds must be used by businesses on payroll costs, mortgage interest, rent, and/or utilities, among other specified expenses.  Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and their average payroll costs.  Businesses applying for a PPP loan must provide documentation to confirm that they have in the past paid employees the compensation represented in the loan application. 

Between in or about May 2020 and in or about April 2021, FRAZIER submitted at least seven applications for PPP loans for various businesses he controlled (collectively, the “Frazier Companies”).  These applications relied upon fraudulent statements regarding the number of employees of each business and the amount of payroll involved in each business and were submitted, in many cases, alongside fake bank statements, designed to support FRAZIER’s false statements.  These fake bake statements included, among other things, fraudulent account statements for a checking account that showed balances far greater than the account actually held, and depicted payroll withdrawals that never occurred.  FRAZIER also submitted lists of employees on the purported payrolls of the Frazier Companies, which included names and Social Security numbers that do not match the records of the Social Security Administration, suggesting that FRAZIER fabricated the employee records.  On at least one occasion, FRAZIER also provided documents purporting to show that one of the Frazier Companies had been in existence for approximately 10 years.  In truth and in fact, however, the corporate entity had not been registered until on or about July 2020, months after the onset of the COVID-19 pandemic.

FRAZIER sought more than approximately $5.8 million in PPP loans and was awarded at least approximately $2.17 million.  A substantial portion of the funds awarded were spent not on payroll for the Frazier Companies but, rather, on FRAZIER’s personal expenses.  During the period between on or about June 18, 2020, shortly after his first PPP loan was funded, and on or about April 7, 2021, FRAZIER utilized PPP funds to spend approximately $124,982 on hotels, including more than approximately $88,791 at a luxury hotel located in Miami, Florida.  During the same period, FRAZIER spent approximately $63,000 on restaurants and food service, approximately $17,000 on transportation with Uber, approximately $16,519 on airline travel, and approximately $11,000 on clothing.  During this same period, FRAZIER collected approximately $21,000 in unemployment benefits.    

*                *                *

FRAZIER, 47, of New York, New York York, is charged in the Complaint with (1) major fraud against the United States, in violation of 18 U.S.C. § 1031, which carries a maximum sentence of 10 years in prison; (2) bank fraud, in violation of 18 U.S.C. § 1349, which carries a maximum sentence of 30 years in prison ; (3) wire fraud, in violation of 18 U.S.C. § 1343, which carries a maximum sentence of 30 years in prison; (4) making false statements to a bank, in violation of 18 U.S.C. § 1014, which carries a maximum sentence of 30 years in prison; (5) making false statements, in violation of 18 U.S.C. § 1001, which carries a maximum sentence of five years in prison; (6) making false statements to the SBA, in violation of 18 U.S.C. § 645, which carries a maximum sentence of two years in prison and (7) money laundering, in violation of 18 U.S.C. § 1957, which carries a maximum sentence of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the FBI, SBA-OIG, IRS-CI, and FDIC-OIG in this case.

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

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that SALVATORE TAGLIAFERRO, the president of Local 926 chapter of the United Brotherhood of Carpenters and Joiners of America (the “Union”), was found guilty today in Manhattan federal court of honest services wire fraud, conversion of union assets, and conspiracy, in connection with his involvement in a scheme to solicit cash bribes from hundreds of prospective members in exchange for union membership.  The jury convicted TAGLIAFERRO today following a one-week trial before U.S. District Judge Paul A. Crotty.  TAGLIAFERRO is scheduled to appear for sentencing before Judge Crotty on July 27, 2021.

U.S. Attorney Audrey Strauss said: “As a unanimous jury has now found, Salvatore Tagliaferro is guilty of old-fashioned corruption – betraying his duty to the union and the trust of its hard-working members by taking cash bribes to line his own pockets.”

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

From at least in or about 2017 up through and including in or about June 2019, TAGLIAFERRO, as the President of the Local 926 chapter of the Union in Brooklyn, abused his position as an officer and employee of the Union by soliciting and accepting cash bribes from prospective Union members in exchange for securing the bribe payors’ admission to the Local 926.  Working with other co-conspirators, including John DeFalco, the former Vice President of the Local 157 chapter of the Union in Manhattan, TAGLIAFERRO identified prospective members and solicited cash payments in amounts ranging from $600 to $2,000.  Once prospective members had paid bribes, TAGLIAFERRO then used his authority to ensure they were admitted into the Local 926 and received Union membership cards.  Over the course of the scheme, the Local 926 ballooned by over 800 new members, but for two years more than half of the new members never worked a single Union job.  TAGLIAFERRO and DeFalco split the cash bribes obtained from the bribe payors’ during clandestine early morning meetings outside a construction site in lower Manhattan, and each received at least $70,000 as a result of the scheme. 

*                *                *

TAGLIAFERRO was found guilty of one count of conspiracy, which carries a maximum sentence of five years in prison; one count of conversion of union assets, which carries a maximum sentence of five years in prison; and one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison. 

Ms. Strauss praised the investigative work of the Department of Labor, Office of the Inspector General, the Department of Labor, Office of Labor-Management Standards, and the New York City Department of Investigation.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Thomas McKay and Jarrod Schaeffer and are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”) and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a fifteen-count Superseding Indictment charging 18 defendants with committing various racketeering, narcotics, and firearms offenses, as well as violent crimes in aid of racketeering.  Eleven of the defendants were previously indicted in December 2019 by a grand jury in the Southern District of New York with racketeering conspiracy, narcotics conspiracy, and possessing firearms in furtherance of a narcotics conspiracy.  Five of the seven newly-indicted defendants were arrested today and will be presented before U.S. Magistrate Judge Gabriel W. Gorenstein in Manhattan federal court.  Defendant MARK WOODS, a/k/a “Smokey,” is currently in state custody and will be presented at a later date.  Defendant WILLIAM GONZALEZ, a/k/a “Bori,” remains at large.  The case has been assigned to U.S. District Judge Valerie E. Caproni.

The defendants arrested today include the most senior members—known as the “Dons”—of a Latin Kings set currently operating in New York. 

U.S. Attorney Audrey Strauss said:  “As alleged in the Superseding Indictment, the defendants in this case include the leaders of a violent set of the Latin Kings gang.  They are alleged to have engaged in acts of violence, robberies, narcotics trafficking, and the use of firearms.  Thanks to the efforts of our partners at the FBI and NYPD, the defendants now face federal charges for these very serious crimes.”

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

CARMELO VELEZ, a/k/a “Jugg,” CHRISTOPHER RODRIGUEZ, a/k/a “Taz,” LUIS SEPULVEDA, a/k/a “Red,” EMMANUEL BONAFE, a/k/a “Eazy,” ALBERTO BORGES, a/k/a “AB,” JUAN HERNANDEZ, a/k/a “Guerra,” JESUS HERNANDEZ, a/k/a “Goldo,” EZEQUIEL OSPINA, a/k/a “Izzy,” RAIMUNDO NIEVES, a/k/a “Double-R,” DEESHUNTEE STEVENS, a/k/a “Kay,” HECTOR BONAPARTE, a/k/a “June,” DIEGO MATEO, a/k/a “Casa,” JUPANKY PIMENTEL, a/k/a “Panky,” WILLIAM GONZALEZ, a/k/a “Bori,” MARK WOODS, a/k/a “Smokey,” RICARDO RICUARTE, a/k/a “Nino,” RAUL CUELLO, a/k/a “2B,” and PAUL CUELLO, a/k/a “Flip,” are members and associates of a racketeering enterprise known as the Latin Kings, and specifically, the set, or “tribe” of the Latin Kings known as the Black Mob, which operates in the Bronx, Manhattan, Queens, Brooklyn, and Long Island.  In order to enrich the enterprise, protect and expand its criminal operations, enforce discipline among its members, and retaliate against members of rival gangs, members and associates of the Black Mob committed, conspired, attempted, and threatened to commit acts of violence; distributed and possessed with intent to distribute narcotics, including heroin, fentanyl, and crack; committed robberies; and obtained, possessed, and used firearms.  Some of the defendants are also charged with committing assaults in aid of racketeering, including assaults in connection with gunpoint robberies of drug dealers and gambling parlors. 

The Black Mob has a recognized leadership hierarchy and a code of conduct that members must follow.  The leadership structure resembles the traditional leadership structure of other Latin King tribes.  Leaders in the Black Mob are referred to as “Crowns,” with the respective Crowns ranked as “First Crown,” “Second Crown,” etc.  The gang’s leadership structure also includes “Coppos,” which are the Black Mob members in charge of members in a certain geographic borough.  Even higher than the Crowns and Coppos are the “Dons.”  The Dons are either founding members of the Black Mob or longtime members who have earned a higher level of respect.   As alleged, three of the Dons—MATEO, PIMENTEL, and GONZALEZ—and four Crowns or Coppos—RICUARTE, WOODS, and the CUELLO brothers—have been charged in the Superseding Indictment.

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

Ms. Strauss praised the outstanding investigative work of the FBI and NYPD. 

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Adam Hobson, Elinor Tarlow, and David Robles are in charge of the prosecution.

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

COUNT

DEFENDANT(S)

MAX. TERM OF IMPRISONMENT

Count One:  Conspiracy to Commit Racketeering (18 U.S.C. §§ 1962(d), 1963)

All defendants except STEVENS and BONAPARTE

Life imprisonment

Count Two: Narcotics Conspiracy (21 U.S.C. §§ 846, 841(b)(1)(A))

All defendants

Life imprisonment; Mandatory minimum sentence of ten years

Count Three: Brandishing and Discharging Firearms in Furtherance of a Drug Trafficking Offense  (18 U.S.C. §§ 924(c)(1)(A) and 2)

All defendants except STEVENS and BONAPARTE

Life imprisonment; Mandatory minimum sentence of ten years, which must run consecutively to any other sentence

Count Four: Possessing a firearm in furtherance of a drug trafficking offense (18 U.S.C. §§ 924(c)(1)(A) and 2)

STEVENS and BONAPARTE

Life imprisonment; Mandatory minimum sentence of five years, which must run consecutively to any other sentence

Count Five: Assault with a dangerous weapon in aid of racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

WOODS

Twenty years’ imprisonment

Count Six: Brandishing a firearm in furtherance of a crime of violence (18 U.S.C. §§ 924(c)(1)(A) and 2)

WOODS

Life imprisonment; Mandatory minimum sentence of seven years, which must run consecutively to any other sentence

Count Seven: Assault with a dangerous weapon in aid of racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

VELEZ, RODRIGUEZ, SEPULVEDA, BONAFE, JESUS HERNANDEZ, PIMENTEL, and WOODS

Twenty years’ imprisonment

Count Eight: Assault with a dangerous weapon in aid of racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

WOODS

Twenty years’ imprisonment

Count Nine: Brandishing a firearm in furtherance of a crime of violence (18 U.S.C. §§ 924(c)(1)(A) and 2)

WOODS

Life imprisonment; Mandatory minimum sentence of seven years, , which must run consecutively to any other sentence

Count Ten: Assault with a dangerous weapon in aid of racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

WOODS

Twenty years’ imprisonment

Count Eleven: Brandishing a firearm in furtherance of a crime of violence (18 U.S.C. §§ 924(c)(1)(A) and 2)

WOODS

Life imprisonment; Mandatory minimum sentence of seven years, which must run consecutively to any other sentence

Count Twelve: Assault with a dangerous weapon in aid of racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

VELEZ, SEPULVEDA, WOODS

Twenty years’ imprisonment

Count Thirteen: Brandishing a firearm in furtherance of a crime of violence (18 U.S.C. §§ 924(c)(1)(A) and 2)

VELEZ, SEPULVEDA, WOODS

Life imprisonment; Mandatory minimum sentence of seven years, which must run consecutively to any other sentence

Count Fourteen: Assault with a dangerous weapon in aid of racketeering (18 U.S.C. §§ 1959(a)(3) and 2)

WOODS, OSPINA

Twenty years’ imprisonment

Count Fifteen: Brandishing and Discharging a firearm in furtherance of a crime of violence (18 U.S.C. §§ 924(c)(1)(A) and 2)

WOODS, OSPINA

Life imprisonment; Mandatory minimum sentence of ten years, which must run consecutively to any other sentence

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

Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a complaint charging SETH ANDREW with wire fraud, money laundering, and making false statements to a financial institution, in connection with a scheme in which ANDREW stole $218,005 from a charter school network that he founded.  ANDREW was arrested this morning in New York, New York, and will be presented today before U.S. Magistrate Judge Gabriel W. Gorenstein.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Seth Andrew abused his position as a founder of a charter school network to steal from the very same schools he helped create.  Andrew is not only alleged to have stolen the schools’ money but also to have used the stolen funds to obtain a savings on a mortgage for a multimillion-dollar Manhattan apartment.  Thanks to the FBI’s diligent work, Andrew now faces federal charges for his alleged scheme.”     

FBI Assistant Director William F. Sweeney Jr. said:  “Locking into the lowest interest rate when applying for a loan is certainly the objective of every home buyer, but when you don’t have the necessary funds to put down, and you steal the money from your former employer to make up the difference, saving money in interest is likely to be the least of your concerns. We allege today that Andrew did just that, and since the employer he stole from was a charter school organization, the money he took belonged to an institution serving school-aged children. Today Andrew himself is learning one of life’s most basic lessons – what doesn’t belong to you is not yours for the taking.”

As alleged in the Complaint unsealed today[1]:

In 2005, SETH ANDREW helped create “School Network-1,” a series of public charter schools then based in New York City.  In the Spring of 2013, ANDREW left School Network-1 and accepted a job in the United States Department of Education and, thereafter, as a senior adviser in the Office of Educational Technology at the White House.  While employed at the Department of Education, and at the White House, ANDREW was paid by School Network-1.  In November 2016, ANDREW left his role in the White House and, shortly thereafter, in January 2017, ANDREW officially severed his relationship with School Network-1.

School Network-1 comprises several charter schools throughout United States including several in New York City.  Pursuant to an agreement with the New York State Board of Regents, School Network-1’s New York-based charter schools must maintain an “escrow account” that may be accessed only if the school dissolves.  Three such escrow accounts, for three New York City-based School Network-1 schools, were opened by ANDREW and other School Network-1 employees at  “Bank-1” in 2009, 2011, and 2013.  As to each of those three accounts – Escrow Account-1, Escrow Account-2, and Escrow Account-3 – ANDREW was a signatory and had access to the funds in them.  However, pursuant to the charter agreement, the funds in the Escrow Accounts were reserved in case the school dissolved, and the funds could not be moved by ANDREW, or anyone, without proper authorization.

After he severed his relationship with School Network-1, on March 28, 2019, ANDREW entered a Bank-1 branch in New York City and closed both Escrow Account-1 and Escrow Account-2.  Bank-1 provided ANDREW a bank check in the amount of $71,881.23 made payable to “[School Network-1] Charter School” (“Check-1”) and a second bank check in the amount of $70,642.98 to “[School Network-1] Harlem Charter” (“Check-2”).  Check-1 and Check-2 represented the funds that were in Escrow Account-1 and Escrow Account-2, respectively.

The same day that ANDREW closed Escrow Account-1 and Escrow Account-2, ANDREW entered a Manhattan branch of a different FDIC-insured bank (“Bank-2”) and opened a business bank account in the name of “[School Network-1] Charter School” (“Fraud Account‑1”).  To open that account, ANDREW represented to a Bank-2 employee that he was a “Key Executive with Control of” School Network-1 Charter School, which was a lie.  ANDREW then deposited Check-1 into the account but, that day, ANDREW did not deposit Check-2.

Five days later, on April 2, 2019, ANDREW used an ATM machine in Baltimore, Maryland, to deposit Check-2 into Fraud Account-1.  It appears ANDREW waited to deposit Check-2 because it was made payable to “School Network-1 Harlem Charter” and not “School Network-1 Charter School.”  Had he tried to deposit Check-2 when he opened Fraud Account-1 it would not have been honored by Bank-2.

At the time ANDREW deposited Check-1 and Check-2 into a Bank-2 bank account, ANDREW was contemplating obtaining a mortgage from Bank-2 to purchase a residential property.  At that time, Bank-2 offered certain customers, as a promotion, more favorable mortgage interest rates if those customers maintained a certain amount of funds in Bank-2 accounts.  Specifically, for every $250,000 on deposit, up to a total of $1 million, Bank-2 would lower that qualifying customer’s mortgage interest rate by 0.125%.  Thus, in total, if a qualifying customer maintained $1 million or more of his/her funds in Bank-2 accounts that customer would receive a 0.5% interest rate deduction on a Bank-2 mortgage.  But to take advantage of the interest rate deduction promotion, Bank-2 required that the funds a customer deposited be funds owned by the customer or, in some instances, a business the customer owned, controlled or was lawfully associated with.  Bank-2 did not permit a customer to utilize money owned by someone else to gain the benefit of the interest rate deduction promotion.

By April 2019, because of the $142,524 ANDREW deposited in Bank-2, using the money he stole from two charter schools, ANDREW deposited a total of approximately $1,007,716 with Bank-2, and therefore became eligible to receive a 0.5% interest rate deduction – the largest deduction a customer could receive from Bank-2’s promotion.  Without the $142,524 deposited stolen funds, ANDREW would have been eligible for only a 0.375% interest rate deduction.  On August 21, 2019, ANDREW purchased a residential property located in New York, New York, for approximately $2,368,000.  To effectuate that purchase, ANDREW, and his spouse, obtained a mortgage from Bank-2 in the amount of $1,776,000 with an interest rate of 2.5% –  taking full advantage of the promotion Bank-2 offered. 

On October 17, 2019, ANDREW closed out Escrow Account-3 and received a check (“Check-3”) made payable to “[School Network-1] Endurance” in the amount of $75,481.10.

On October 21, 2019, ANDREW deposited Check-3 into an account that he opened at a third bank (“Fraud Account-2”).  Approximately one month later, ANDREW obtained a check from Bank-2 for $144,473.29, which constituted the funds stolen from Escrow Account-1 and Escrow Account-2, and ANDREW ultimately deposited those funds into Fraud Account-2.  Five days later, ANDREW rolled the funds in Fraud Account-2 into a certificate of deposit.  That certificate of deposit matured on May 20, 2020, which earned ANDREW $2,083.52 in interest.  ANDREW then transferred the funds from the certificate of deposit – including the funds stolen from the Escrow Accounts – into a bank account held in the name of a particular civic organization that ANDREW currently controls, thereby concealing the money’s association with School Network-1, and depositing the stolen money into an account under ANDREW’s complete control.

*                *                *           

ANDREW, 42, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, one count of money laundering, which carries a maximum sentence of 20 years in prison, and one count of making a false statement to a bank, which carries a maximum sentence of 30 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the FBI.

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

The charges in the Complaint are merely allegations, 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.

Audrey Strauss, the United States Attorney for the Southern District of New York, Raymond P. Donovan, Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), and Marty Raybon, the Acting Director of the New York Office of Customs & Border Protection (“CBP”) announced that Clyde Hall, a/k/a “Peter,” was arrested on April 24, 2021, in New York, New York.  A criminal Complaint was subsequently filed in Manhattan federal court charging HALL with possessing with intent to distribute over five kilograms of suspected cocaine.  HALL, a former professional football player with the New York Giants, was previously sentenced in 2010 to 20 years in prison following his conviction for various financial fraud crimes.  HALL was serving his prison sentence and was recently released to home confinement by the Bureau of Prisons (“BOP”) under the Coronavirus Aid, Relief, and Economic Security Act (“CARES ACT”), which expanded the authority of the Director of the BOP to place federal prisoners on home confinement earlier than otherwise permissible.  HALL was arrested on the instant narcotics charge while on home confinement and will be presented today before United States Magistrate Judge Gabriel W. Gorenstein. 

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

On April 24, 2021, HALL was found in possession of approximately seven kilograms of suspected cocaine, which he attempted to sell to a confidential source.  In addition, HALL claimed that another five kilograms was on its way.

*          *          *

HALL, 82, of New York, NY, is charged with narcotics distribution, which carries a mandatory minimum sentence of 10 years and a maximum sentence of life imprisonment.  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.

Ms. Strauss praised the outstanding investigative work of the DEA, HSI, NYPD, and CBP.

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

The charge 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.

Note: A full copy of the complaint can be viewed 

WASHINGTON – A Singaporean national was charged today in New York with crimes related to his alleged leadership role in a scheme to use an oil tanker to violate U.S. and U.N. sanctions imposed against North Korea for facilitation of proliferation of weapons of mass destruction.

The oil tanker, the M/T Courageous was seized last month by Cambodian authorities and held pursuant to the court approval of today’s U.S. seizure warrant.

According to court documents, Kwek Kee Seng, 61, of Singapore, and his co-conspirators engaged in an extensive scheme to evade U.S. and U.N. sanctions by using vessels under their control to covertly transport fuel to North Korea, providing a critical resource for the North Korean government and for DPRK-based companies. One of those vessels was M/T Courageous — formerly known as the Sea Prima — which was purchased by Seng through front companies to further the scheme to evade sanctions and launder money.

“The seizure of the Courageous is another step in sinking North Korea’s efforts to circumvent sanctions on the high seas,” said Assistant Attorney General John C. Demers for the Justice Department's National Security Division. “The United States will continue to enforce sanctions on North Korea through civil forfeiture actions and criminal prosecutions to ensure that the North Korean government —and the private entities that enable this regime by prioritizing personal profit over global security — are held accountable.”

“The FBI investigates violations of U.S. law wherever they may occur, even in the middle of an ocean,” said Assistant Direct Alan E. Kohler Jr. of the FBI’s Counterintelligence Division. “Those individuals who decide to violate sanctions imposed on North Korea should expect to encounter the full force of U.S. law enforcement.”

“As alleged, Kwek Kee Seng conspired to violate international sanctions by arranging illicit deliveries of petroleum products to North Korea, and used front companies and false documentation to send money through the U.S. financial system in furtherance of his support for that pariah state,” said U.S. Attorney Audrey Strauss for the Southern District of New York. “As a result of his illegal activities, not only does Kwek face criminal charges, but his sanctions-evading ship, the Courageous, has been seized and will no longer enable North Korea’s pattern of evading the global community’s prohibitions on support for that regime. Thanks to the extraordinary cooperation between U.S. and Cambodian law enforcement authorities, the Courageous is out of service. This Office has pioneered the deployment of the full array of criminal and civil enforcement tools to curb North Korea’s deceptive and illicit activities, and today’s actions send a message that anyone who supports the DPRK’s sanctions-busting efforts stands to lose both their liberty and their property.”

Pursuant to the International Emergency Economic Powers Act (IEEPA) and the North Korea Sanctions and Policy Enhancement Act of 2016 (NKSPEA), the DPRK and individuals or entities that the Department of the Treasury's Office of Foreign Assets Control (OFAC) has determined are involved in the facilitation of proliferation of weapons of mass destruction are prohibited from engaging in transactions with U.S. persons or using the U.S. financial system. The United Nations Security Council has similarly imposed economic sanctions on North Korea, prohibiting among other things the conduct of ship-to-ship transfers with DPRK-flagged vessels and the provision of petroleum products to the DPRK.

For a four-month period between August and December 2019, M/T Courageous illicitly stopped transmitting location information, during which time satellite imagery shows that M/T Courageous engaged in a ship-to-ship transfer of more than $1.5 million worth of oil to a North Korean ship, the Saebyol, which had been designated by OFAC and traveled to the North Korean port of Nampo. Seng and his co-conspirators took additional steps to hide the scheme by (1) operating a series of shell companies, (2) lying to international shipping authorities about M/T Courageous’ dealings with North Korea, and (3) falsely identifying M/T Courageous as another ship in order to evade detection.

In furtherance of the scheme, Seng and his co-conspirators arranged for a variety of payments, denominated in U.S. dollars, that were processed through U.S.-based correspondent accounts to purchase oil — including more than $1.5 million to purchase the oil that was transferred to the Saebyol, over $500,000 to buy M/T Courageous, and thousands more dollars to procure necessary services for M/T Courageous and another vessel, including registration fees, ship materials and salary payments for crewmembers. Seng and his co-conspirators overseas sought to conceal these sanctions-evading transactions by, among other things, using front companies to disguise the nature of the transactions; disguising location information for vessels carrying illicit shipments; and conducting ship-to-ship fuel transfers on the open sea in an attempt to hide their counterparties, such as the Saebyol. 

Seng is charged with conspiring to violate the IEEPA and to commit money laundering. If convicted, each count carries a maximum term of imprisonment of 20 years. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Seng remains at large and the United States looks forward to working with our foreign partners to bring him to justice.

Acting U.S. Attorney Strauss praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division. Strauss also thanked the FBI Legal Attaché Office in Phnom Penh, Cambodia; the Justice Department’s National Security Division, Counterintelligence and Export Control Section, Money Laundering and Asset Recovery Section’s Program Operations Unit, Office of International Affairs; the U.S. Coast Guard; the Cambodian Ministry of Justice; and the Cambodian National Police, for their assistance.

Trial Attorney Matthew McKenzie of the National Security Division’s Counterintelligence and Export Control Section and Assistant U.S. Attorneys David W. Denton Jr. and Kimberly J. Ravener are prosecuting the case.

A criminal complaint is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Audrey Strauss, the United States Attorney for the Southern District of New York, John C. Demers, the Assistant Attorney General for National Security, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the filing of a criminal complaint charging KWEK KEE SENG with conspiring to evade economic sanctions on the Democratic People’s Republic of Korea (“DPRK” or “North Korea”) and money laundering conspiracy.  In addition to these criminal charges, a civil forfeiture complaint was filed against M/T Courageous, an oil products tanker purchased and operated by KWEK to make illicit deliveries of petroleum products through ship-to-ship transfers with North Korean vessels and direct shipments to the North Korean port of Nampo. 

The M/T Courageous

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Kwek Kee Seng conspired to violate international sanctions by arranging illicit deliveries of petroleum products to North Korea, and used front companies and false documentation to send money through the U.S. financial system in furtherance of his support for that pariah state.  As a result of his illegal activities, not only does Kwek face criminal charges, but his sanctions-evading ship, the Courageous, has been seized and will no longer enable North Korea’s pattern of evading the global community’s prohibitions on support for that regime.  Thanks to the extraordinary cooperation between U.S. and Cambodian law enforcement authorities, the Courageous is out of service.  This Office has pioneered the deployment of the full array of criminal and civil enforcement tools to curb North Korea’s deceptive and illicit activities, and today’s actions send a message that anyone who supports the DPRK’s sanctions-busting efforts stands to lose both their liberty and their property.”

Assistant Attorney General John C. Demers said:  “The seizure of the Courageous is another step in sinking North Korea’s efforts to circumvent sanctions on the high seas.  The United States will continue to enforce sanctions on North Korea through civil forfeiture actions and criminal prosecutions to ensure that the North Korean government – and the private entities that enable this regime by prioritizing personal profit over global security – are held accountable.”

FBI Assistant Director William F. Sweeney Jr. said:  “In case our message wasn't clear when we seized M/V Wise Honest in May 2019, our seizure of M/T Courageous should serve as another signal of our intentions: the FBI will not allow adversaries to evade sanctions designed to protect our nation. Kwek is now a fugitive on our radar, and his ship is now ours. We are grateful to our international partners who have worked with us to ensure the safety of the citizens we serve."

According to the criminal and civil documents filed today in Manhattan federal court:[1]

Pursuant to the International Emergency Economic Powers Act (IEEPA) and the North Korea Sanctions and Policy Enhancement Act of 2016 (NKSPEA), the DPRK and individuals or entities that the Department of the Treasury, Office of Foreign Assets Control (OFAC) has determined are involved in the facilitation of proliferation of weapons of mass destruction are prohibited from engaging in transactions with U.S. persons or using the U.S. financial system. The United Nations Security Council has similarly imposed economic sanctions on North Korea, prohibiting among other things the conduct of ship-to-ship transfers with DPRK-flagged vessels and the provision of petroleum products to the DPRK.

For a four-month period between August and December 2019, M/T Courageous illicitly stopped transmitting location information, during which time satellite imagery shows that M/T Courageous engaged in a ship-to-ship transfer of more than $1.5 million worth of oil to a North Korean ship, the Saebyol, which had been designated by OFAC, and traveled to the North Korean port of Nampo. Seng and his co-conspirators took additional steps to hide the scheme by (1) operating a series of shell companies, (2) lying to international shipping authorities about M/T Courageous’ dealings with North Korea, and (3) falsely identifying M/T Courageous as another ship in order to evade detection.

In furtherance of the scheme, Seng and his co-conspirators arranged for a variety of payments, denominated in U.S. dollars, that were processed through U.S.-based correspondent accounts to purchase oil – including more than $1.5 million to purchase the oil that was transferred to the Saebyol, over $500,000 to buy M/T Courageous, and thousands more dollars to procure necessary services for M/T Courageous and another vessel, including registration fees, ship materials and salary payments for crewmembers. Seng and his co-conspirators overseas sought to conceal these sanctions-evading transactions by, among other things, using front companies to disguise the nature of the transactions; disguising location information for vessels carrying illicit shipments; and conducting ship-to-ship fuel transfers on the open sea in an attempt to hide their counterparties, such as the Saebyol. 

Cambodian authorities seized M/T Courageous in March of 2020, and have been holding the vessel pursuant to a U.S. seizure warrant, which was issued under seal on April 2, 2020. 

*                      *                      *

KWEK, 61, of Singapore, is charged with conspiring to violate the IEEPA and to commit money laundering.  Each count carries a maximum term of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

KWEK KEE SENG remains at large.  The United States looks forward to working with our foreign partners to bring KWEK to justice.

Ms. Strauss praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division.  Ms. Strauss also thanked the FBI Legal Attaché Office in Phnom Penh, Cambodia; the Department of Justice’s National Security Division, Counterintelligence and Export Control Section, Money Laundering and Asset Recovery Section’s Program Operations Unit, and Office of International Affairs; the United States Coast Guard; the Cambodian Ministry of Justice; and the Cambodian National Police, for their assistance.

The cases are being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys David W. Denton Jr. and Kimberly J. Ravener are in charge of the cases, with assistance from Trial Attorney Matthew McKenzie of the Counterintelligence and Export Control Section.

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

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

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that SCOTT MANGINI pled guilty today to conspiring to unlawfully distribute adulterated and misbranded drugs with the intent to defraud and mislead, in connection with the charges filed in United States v. Robinson et al., 20 Cr. 162 (JPO).  MANGINI pled guilty before U.S. District Judge J. Paul Oetken, and will be sentenced on September 10, 2021, before Judge Oetken.

U.S. Attorney Audrey Strauss said:  “Scott Mangini created and flooded the supply side of a market of greed that continues to endanger racehorses through the sale of performance-enhancing drugs.  Mangini designed and created dozens of products intended for use by those engaged in fraud and animal abuse.  His products were manufactured with no oversight of their composition, in shoddy facilities, despite prior efforts by state and federal regulators to shut down Mangini’s operation and strip his license.  Mangini’s guilty plea underscores that our Office and our partners at the FBI are committed to the prosecution and investigation of corruption, fraud, and endangerment in the horse racing industry.”

According to the prior Indictments, the Superseding Information to which MANGINI pled guilty, and other court documents, as well as statements made in public court proceedings:

From at least in or about 2011 through at least in or about March 2020, MANGINI and his conspirators manufactured, sold, and shipped millions of dollars’ worth of adulterated and misbranded equine drugs, including performance-enhancing drugs (“PEDs”) intended to be administered to racehorses for the purpose of improving those horses’ race performance in order to win races and obtain prize money.  MANGINI, a former pharmacist whose license was suspended in 2016, sold these drugs through several direct-to-consumer websites designed to appeal to racehorse trainers and owners, including, among others, “horseprerace.com” and “racehorsemeds.com.”    

MANGINI contributed to the conspiracy by, among other things, using his training to design and create custom PEDs that were advertised and sold online, using misleading labels, packaging, and return address information, including sales to customers in the Southern District of New York.  Among the drugs advertised and sold during the course of the conspiracy were “blood builders,” which are used by racehorse trainers and others to increase red blood cell counts and/or the oxygenation of muscle tissue of a racehorse in order to stimulate the horse’s endurance, which enhances that horse’s performance in, and recovery from, a race, as well as customized analgesics that are used by racehorse trainers and others to deaden a horse’s nerves and block pain in order to improve a horse’s race performance.  MANGINI and his co-conspirators repeatedly touted illegal drugs sold on these websites as substances that “WILL NOT TEST” in the event of drug screens by racing officials.  For example, MANGINI’s pain-numbing product “Numb It Injection” was advertised as a “proprietary formula and without question the most powerful pain shot in the market today AND WILL NOT TEST,” and customers were expressly directed to administer the drug by “injection as close to the event or extreme exercise as possible.”

The drugs distributed through the defendant’s websites were manufactured in non-Food and Drug Administration (“FDA”) -registered facilities and carried significant risks to the animals affected through the administration of those illicit PEDs.  For example, in 2016, MANGINI and his co-conspirator, Scott Robinson, who was previously convicted and sentenced in this case, received a complaint regarding the effect of his unregulated drugs on a customer’s horse: “starting bout 8 hours after I give the injection and for about 36 hours afterwards both my horses act like they are heavily sedated, can barely walk.  Could I have a bad bottle of medicine, I’m afraid to give it anymore since this has happened three times.”  Commenting on this complaint to MANGINI, Robinson wrote simply, “here is another one.”

MANGINI is among 29 individuals charged to date in a series of Indictments arising from an investigation of a widespread scheme 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,  horse racing officials, and the FDA, among others, participants in these schemes sought to improve race performance and obtain prize money from racetracks, all to the detriment and risk of the health and well-being of the racehorses. 

*                *                *

MANGINI, 55, of Boca Raton, Florida, pled guilty to one count of conspiring to violate the federal drug misbranding and adulteration laws.  This offense carries a maximum sentence of five years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the New York FBI Office’s Eurasian Organized Crime Task Force and its support of the FBI’s Integrity in Sports and Gaming Initiative.  Ms. Strauss also thanked the New Jersey Attorney General’s Office, the New York State Police, and the New York City Police Department for their support of this investigation, and the FDA and the U.S. Drug Enforcement Administration for their assistance and expertise.

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

Audrey Strauss, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced today the arrest yesterday afternoon of ANDREW FRANZONE, the founder and former general partner of FF Fund I L.P. on charges of securities fraud and wire fraud for his role in a scheme to fraudulently induce more than 100 investors to invest approximately $40 million in his fund by, among other things, lying about the fund’s investment strategy, liquidity, and amount of assets under management.  FRANZONE was arrested yesterday afternoon in Fort Lauderdale, Florida, on a criminal complaint (the “Complaint”) and will be presented before a magistrate judge in the Southern District of Florida.

Manhattan U.S. Attorney Audrey Strauss said:  “Andrew Franzone allegedly promised his clients access to his successful liquid trading strategy and consistent, positive trading returns.  As alleged, those promises were lies.  Franzone lied about his fund’s investments and performance, and he lied in promising clients that they had could readily access their invested capital.  While his investors lost money, Franzone enriched himself.  We will continue to work with our law enforcement partners to protect investors from these types of deceptive practices.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “Mr. Franzone allegedly misled investors to believe his fund was liquid and he could cover their redemption requests, in a scheme to lure them in to investing in his hedge fund. This should be a reminder that greed has no boundaries and does not care about a favorable portfolio. Postal Inspectors remind all investors to thoroughly check offers, and if they sound too good to be true, keep your money in the bank.”

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

FRANZONE co-founded Farrell Franzone Investments LLC in 2010.  FRANZONE described Farrell Franzone as an opportunity for investors to invest, through the purchase of limited partnership (“LP”) interests, in a hedge fund purporting to trade preferred securities and options and to maintain a highly liquid portfolio for its investors.  FRANZONE renamed the fund FF Fund I (“FF Fund”) in 2014, and served as its general partner from that time until approximately September 2019. 

In connection with marketing the FF Fund to investors, FRANZONE touted FF Fund as a “multi-strategy investment program … focus[ed] on three unique asset classes: the preferred stock market, the option market, and the private investment portfolio.”  When discussing FF Fund, FRANZONE assured investors that FF Fund was focused on trading in the preferred securities and options markets, which afforded its investors access to quarterly liquidity, and that FF Fund had a track record of consistent positive trading returns since its inception in August 2010. 

FRANZONE’s representations about FF Fund’s strategy, liquidity, and performance were largely fabricated.  Instead of engaging primarily in preferred securities and options trading that ensured the FF Fund’s liquidity, FRANZONE instead diverted more than 80% of FF Fund’s capital to high-risk, illiquid private investments, many of which were either worthless or significantly impaired.  FRANZONE also misappropriated FF Fund’s assets to fund his own personal business interests, including the purchase of an airplane hangar, and lied to investors about FF Fund’s performance and assets under management.

Through these and other fraudulent misrepresentations and omissions, FRANZONE induced over 100 investors to invest more than $40 million in FF Fund.  Despite showing investors positive trading returns as late as 2019, FF Fund was unable to fulfill redemption requests in early 2019 and is currently in the process of being liquidated.

*                *                *

FRANZONE, 44, of Fort Lauderdale, Florida, is charged with one count of securities fraud, which carries a maximum potential sentence of 20 years in prison, and one count of wire fraud, which carries a maximum potential sentence of 20 years in prison.  The maximum potential penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the investigative work of the USPIS and thanked the U.S. Securities and Exchange Commission, which has separately filed a civil action against FRANZONE and FF Fund Management.

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

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

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

Audrey Strauss, the United States Attorney for the Southern District of New York, and Jonathan D. Larsen, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that CHRISTOPHER WRIGHT, a citizen of the United Kingdom, was extradited today from Spain.  WRIGHT is  charged with wire fraud and money laundering relating to his role in a telemarketing scheme involving the fraudulent sale of purported “carbon credits” to victims in the United Kingdom.   WRIGHT was arrested in Spain on January 27, 2021, and is the second defendant charged in the case.  WRIGHT is expected to be presented on Friday, April 23, 2021, before U.S. Magistrate Judge James L. Cott.  WRIGHT’s case is assigned to U.S. District Judge Jesse M. Furman. 

U.S. Attorney Audrey Strauss said:  “As alleged, Wright and his codefendants deceived retirees in the United Kingdom with false promises of big returns on restricted stock and environmentally friendly ‘carbon credits.’  Many of the victims lost their life savings, while Wright and his criminal associates allegedly hid the proceeds in the United States and overseas.  Thanks to the IRS and international cooperation, Wright is now in U.S. custody and facing charges in this District.”

IRS-CI Special Agent in Charge Jonathan D. Larsen said:  “The charges in this case are particularly troubling because this scam allegedly targeted the elderly and retirees, many of whom as a result have lost their hard-earned nest eggs.  This case is a painful reminder that cold-callers promising substantial investments are almost always looking to prey on the elderly. For those with elderly loved ones, take the time to warn them about these scams.”

According to the allegations in the Indictment:[1]

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

In order to conceal the nature, location, source, ownership, and control of the proceeds of the fraudulent scheme, WRIGHT and his co-conspirators set up overseas bank accounts in Cyprus, Switzerland, and the United Kingdom, in the names of various shell companies, which were used to launder a substantial portion of the fraud proceeds.

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

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

*                      *                      *

WRIGHT, 48, a citizen of the United Kingdom, is charged with conspiracy to commit mail and wire fraud, substantive mail fraud, and substantive wire fraud, with a penalty enhancement for telemarketing, each of which carries a maximum sentence of 30 years; conspiracy to commit money laundering and two counts of money laundering, each of which carries a maximum sentence of 20 years; and one count of engaging in monetary transactions in property derived from specified unlawful activity, which carries a maximum sentence of 10 years.           

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

Ms. Strauss praised the outstanding investigative work of IRS Criminal Investigation in this case.

This case is being prosecuted by the Office’s Money Laundering and Transnational Criminal Enterprises and Complex Frauds and Cybercrime Units. Assistant U.S. Attorneys Jessica Feinstein and Olga I. Zverovich 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.

Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Amaleka McCall-Brathwaite, Eastern Region Special Agent-in-Charge of the Office of the Inspector General of the U.S. Small Business Administration (“SBA”), Jonathan D. Larsen, Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and Stephen Donnelly, Acting Special Agent in Charge of the Office of the Inspector General of the Board of Governors for the Federal Reserve announced that APOCALYPSE BELLA, a/k/a “Dias Yumba,” MACKENZY TOUSSAINT, a/k/a “Mack,” and AMOS MUNDENDI, a/k/a “Mos,” a/k/a “El Ashile Mundi,” were charged with participating in a fraudulent scheme to obtain over $14 million in Government-guaranteed loans designed to provide relief to small businesses during the novel coronavirus/COVID-19 pandemic. TOUSSAINT and MUNDENDI are expected to be presented tomorrow before a U.S. magistrate judge in the Northern District of Texas.  BELLA was arrested on March 18, 2021 in the Eastern District of Virginia.  The case is assigned to U.S. District Judge Alvin K. Hellerstein.

U.S. Attorney Audrey Strauss said:  “Apocalypse Bella and his co-defendants are charged with engaging in a scheme to obtain over $14 million in fraudulent loans from the government. The Coronavirus pandemic has profoundly affected the global economy, and Government-funded Coronavirus loan programs provide much-needed economic relief to individuals, families, and businesses suffering economic hardships.  This Office and our law enforcement partners will continue to ensure the watchful protection of these critical funds from fraud.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged in the indictment, the defendants in this case are charged with fraudulently securing loans intended to help honest small businesses and their employees deal with the pandemic’s economic effects.  Our actions should serve as a reminder of our steadfast commitment to bringing justice to those who would seek to illegally leverage government programs for selfishly personal gains.  These defendants now face a personal reckoning - the result of which may be an extended stay in federal prison for each of them.”

IRS-CI Special Agent-in-Charge Jonathan Larsen said:  “The CARES Act and the Payroll Protection Program have been a life line to help sustain the many small and large businesses who were impacted by the pandemic.  The defendants are accused of fraud against these programs solely to enrich themselves, a flagrant and reprehensible abuse of these programs, which has kept so many American businesses afloat. Today’s charges make it clear that IRS-CI and our partners will continue to aggressively root alleged abusers of these programs.”

Acting Special Agent in Charge, Eastern Region, OIG for the Federal Reserve Board and CFPB Stephen Donnelly said: “We are fully committed to bringing to justice wrongdoers who exploit and defraud financial institutions and the government’s response to the COVID-19 pandemic.” 

SBA OIG’s Eastern Region Special Agent in Charge Amaleka McCall-Brathwaite said: “Law enforcement will identify all conspirators to pull fraud schemes out by the roots. SBA OIG will aggressively pursue evidence of fraud against SBA’s programs aimed at assisting the nation’s small businesses struggling with the pandemic challenges.  I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”     

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

APOCALYPSE BELLA, a/k/a “Dias Yumba,” MACKENZY TOUSSAINT, a/k/a “Mack,” and AMOS MUNDENDI, a/k/a “Mos,” a/k/a “El Ashile Mundi,” were involved in an extensive scheme to prepare and submit fraudulent applications to the Small Business Administration (“SBA”) and to at least one company which processes loan applications under the SBA’s Paycheck Protection Program (“PPP”), in order to obtain at least approximately $14 million in government-guaranteed loans for various companies through the PPP, designed to provide financial relief to qualifying companies during the novel coronavirus/COVID-19 pandemic. 

This scheme resulted in the approval of fraudulently procured loans for two companies (“Company-1” and “Company-2”), both located in the Southern District of New York, totaling approximately $4 million, and the distribution of the proceeds of these fraudulently obtained funds to a series of bank accounts located in the United States and elsewhere, including bank accounts controlled by TOUSSAINT and BELLA. 

The PPP loan applications for Company-1 and Company-2 were false, containing lies designed to maximize proceeds to the fraud scheme.  Specifically, applications for both Company-1 and Company-2 contained material differences from loan applications submitted for both companies for the Economic Injury Disaster Loan (“EIDL”) program just months earlier.  For instance, the PPP loan application for Company-1 represented that Company-1 had over 100 employees.  However, an earlier EIDL loan application for Company-1 dated on or about March 30, 2020, represented that Company-1 had only four employees.

BELLA, TOUSSAINT, and MUNDENDI devised and executed this fraudulent scheme by conspiring with individuals who own, operate or otherwise are affiliated with businesses, such as Company-1 and Company-2.  BELLA, TOUSSAINT, MUNDENDI, and other co-conspirators supervised and coordinated the submission of fraudulent PPP loan applications for those businesses, and in some cases, completed and/or submitted the fraudulent applications themselves.        

*                      *                      *

BELLA, 36, of Clackamas, Oregon, TOUSSAINT, 39, of Irving, Texas, and MUNDENDI, 32, of Dallas, Texas, are charged with one count of conspiracy, which carries a maximum sentence of five years in prison, one count of major fraud against the United States, which carries a maximum sentence of ten years in prison, and one count of wire fraud and wire fraud conspiracy, each of which carry 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.

Ms. Strauss praised the outstanding work of the FBI, SBA-OIG, IRS-CI, and the OIG for the Federal Reserve.

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

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

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

Audrey Strauss, United States Attorney for the Southern District of New York, Jonathan D. Larsen, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and Margaret Garnett, Commissioner of the New York City Department of Investigation (“DOI”), announced that CHAIM DEUTSCH, a New York City Council Member, was charged and pled guilty today in Manhattan federal court to filing a false tax return in connection with outside income he received from his real estate management corporation.  DEUTSCH pled guilty before United States Magistrate Judge James L. Cott.

U.S. Attorney Audrey Strauss said:  “New York City Council Member Chaim Deutsch admitted today that he defrauded the IRS in connection with his real estate business.  As an elected official and community leader, Deutsch had a particular responsibility to follow the law.  Instead, over a multi-year period, Deutsch concealed his true business income to avoid paying his fair share of taxes.  My Office will continue to work tirelessly with our law enforcement partners to hold our elected officials accountable when they break the law for their own financial benefit.”   

IRS-CI Special Agent-in-Charge Jonathan D. Larsen said:  “The defendant’s admissions today are the result of the hard work of a talented and dedicated cadre of IRS CI special agents and federal prosecutors.  This investigation should also make it clear that no one is above paying their fair share of taxes, even those who occupy elected office.”

DOI Commissioner Margaret Garnett said:  “It is dispiriting when a sitting City Councilmember is convicted of a crime.  Rather than set an example of integrity and fidelity to the rule of law, this City Councilman’s actions placed personal advantage over the public interest, and undermined public trust in elected officials.  DOI was pleased to work side-by-side with our partners at the IRS and the U.S. Attorney’s Office for the Southern District of New York on this investigation.”

According to the allegations contained in the Information, other court filings, statements made during court proceedings, and publicly available information:

Since in or about 2014, DEUTSCH has served as the New York City Council Member for the 48th District, which includes portions of Brooklyn.  During at least a portion of that time, DEUTSCH was the sole owner of Chasa Management, Inc., a real estate management business.  In or about March 2016, DEUTSCH filed a personal tax return for calendar year 2015 that included false and fraudulent information concerning his income and business expenses in connection with operating Chasa Management.  In total, during the tax years 2013 through 2015, DEUTSCH’s failure to properly pay taxes on his income from Chasa Management evaded approximately $82,076 in taxes due to the IRS.  Effective on or about January 1, 2017, New York City Council Members were prohibited from earning most outside income.

*                *                *

DEUTSCH, 52, of Brooklyn, New York, pled guilty to a single count of filing a false tax return for the tax year 2015, and agreed to restitution in the amount of at least $82,076 plus interest.  DEUTSCH is scheduled to be sentenced before Judge Cott on July 29, 2021, at 10:00 a.m.

The charge against DEUTSCH carries a maximum sentence of one year in prison, a maximum term of one year of supervised release, a maximum fine of $100,000, and an order of restitution.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the Court.           

Ms. Strauss praised the outstanding work of IRS-CI and the Special Agents of the U.S. Attorney’s Office.  Ms. Strauss also thanked the New York City Department of Investigation for its assistance in the investigation.

The case is being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorney Eli J. Mark is in charge of the prosecution.

A New York man was sentenced today to life in prison for detonating a bomb in a New York City subway station. He admitted that he conducted the terrorist attack on behalf of the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization.

Akayed Ullah, 31, of Brooklyn, New York, and a lawful permanent resident of Bangladesh, was convicted by a federal jury of offenses related to the detonation and attempted detonation of a bomb in a subway station near the New York Port Authority Bus Terminal in New York City on Dec. 11, 2017. According to court documents, on Dec. 11, 2017, at approximately 7:20 a.m., Ullah detonated a pipe bomb strapped to his chest in a subway station near the Port Authority Bus Terminal in midtown Manhattan. Shortly after the blast, first responders located Ullah lying on the ground in the station where he had detonated the improvised explosive device, and he was taken into custody. Surveillance footage captured Ullah walking through the station immediately prior to the explosion and then detonating the bomb.

“Ullah constructed a pipe bomb and detonated it in a mass transit hub in the heart of New York City to harm and terrorize as many people as possible - and he admitted that he did it on behalf of ISIS,"  said Assistant Attorney General John C. Demers for the Justice Department’s National Security Division. “This case reminds us that the threat of ISIS-inspired terrorism remains real. This sentence holds Ullah accountable, as he will spend the rest of his life in federal prison for his crimes. I want to thank all of the agents, analysts, and prosecutors whose outstanding work made this result possible.”

“Akayed Ullah, previously convicted in a New York federal court of carrying out a lone-wolf bombing attack on behalf of ISIS at the Port Authority Bus Terminal, a bustling transit artery in New York City, admittedly intended to murder as many innocent Americans as possible,” said U.S. Attorney Audrey Strauss for the Southern District of New York. “Ullah’s motive was clear and unambiguous: a deeply held ideological hatred for America. Ironically, Ullah’s actions resulted only in reaffirming the greatness of America by displaying the fairness and impartiality for which our justice system stands. Ullah received a speedy, fair, public trial, and was convicted by a jury of his peers. Akayed Ullah’s message of hatred clearly backfired; his just sentence of life in prison only exemplifies that cowardly acts of terrorism will be met with law enforcement’s unwavering resolve to protect our core values of freedom and democracy.”

“The defendant sought to attack innocent Americans who were going about their daily lives," said Acting Assistant Director Patrick Reddan for Counterterrorism at the FBI. “He will now spend the rest of his life in prison, where he will not be in a position to attempt another attack. While the terrorism threat continues to evolve in this country, groups like ISIS remain committed to attacking America, and the FBI will continue to work with our JTTF partners across the country in our commitment to track down and disrupt terrorists who seek to harm our homeland.”

According to court documents and the evidence presented at trial, Ullah began radicalizing in approximately 2014. Ullah disagreed with U.S. foreign policy in the Middle East and began seeking out online materials promoting radical Islamic terrorist ideology. In particular, Ullah was inspired by ISIS propaganda, including a video in which ISIS instructed supporters to carry out attacks in their homelands if they were unable to travel overseas to join ISIS. Ullah began researching how to build a bomb about a year prior to his attack. He built his pipe bomb in the weeks leading up to the attack at his Brooklyn apartment.  

Following the attack on Dec. 11, 2017, law enforcement located remnants of the pipe bomb on Ullah’s person and strewn across the attack site in the subway station. Law enforcement found, among other things: (i) a nine-volt battery inside Ullah’s pants pocket, which he used as the power source for triggering the bomb; (ii) wires connected to the battery and running underneath Ullah’s jacket; (iii) plastic zip ties underneath Ullah’s jacket, which he used to strap the bomb to his body; (iv) several fragments of a metal pipe, which Ullah had filled with an explosive substance that he made using sugar and match heads; (v) fragments of Christmas tree lightbulbs attached to wires, which Ullah used to ignite the explosion; and (vi) numerous metal screws. Ullah filled his pipe bomb with dozens of metal screws to function as shrapnel, for the purpose of causing maximum damage.

On the morning of the attack, shortly before detonating his bomb, Ullah posted a statement on Facebook referring to the then-President of the United States, stating: “Trump you failed to protect your nation.” Ullah also posted an ISIS slogan so that ISIS would know that he had carried out the attack on behalf of the foreign terrorist organization.

After Ullah was taken into custody following the attack, he waived his Miranda rights and spoke to law enforcement. Ullah was inspired by ISIS to carry out the Dec. 11 attack, and stated, among other things, “I did it for the Islamic State.” He also said that he chose a busy weekday morning for the attack in order to “terrorize as many people as possible.” One commuter who was inside the station when Ullah detonated the pipe bomb suffered a shrapnel wound to his leg, and two other victims partly lost their hearing as a result of the blast. Ullah’s attack caused the Port Authority subway station and bus terminal to shut down temporarily, disrupting the lives of commuters across the New York City area.

After the attack, law enforcement searched Ullah’s apartment pursuant to a search warrant. Agents recovered, among other things, Ullah’s passport, which contained the handwritten statement, “O AMERICA, DIE IN YOUR RAGE.” Less than two weeks before carrying out the attack, Ullah had watched and drawn inspiration from a particular ISIS propaganda video that proclaimed, “die in your rage, America,” with an image of the U.S. Capitol in the background.

Later in December 2017, while in custody at the Metropolitan Correctional Center on the charges in this case, Ullah began chanting “more is coming” at a correctional officer, and then told the officer: “You started this war, we will finish it. More is coming, you’ll see.”

Assistant Attorney General Demers and Acting U.S. Attorney Strauss praised the outstanding investigative efforts of the FBI, the New York Police Department (NYPD) and Port Authority Police Department (PAPD). Ullah’s conviction is the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York, the Justice Department’s National Security Division, and the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies.

Assistant U.S. Attorneys Rebekah Donaleski and George D. Turner for the Southern District of New York prosecuted this case with assistance from Trial Attorneys Jason Denney and Felice Viti of the National Security Division’s Counterterrorism Section.

Audrey Strauss, U.S. Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, the Commissioner of the Police Department for the City of New York (“NYPD”), announced that NICHOLAS SKULSTAD was taken into federal custody today based on a criminal Complaint filed in White Plains federal court charging him with destruction of a motor vehicle employed in interstate commerce, in connection with SKULSTAD’s alleged assault on a Metropolitan Transportation Authority (“MTA”) vehicle in Ossining, New York, on April 5, 2021.  SKULSTAD will be presented later today before U.S. Magistrate Judge Paul E. Davison.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Nicholas Skulstad used his vehicle as a weapon, repeatedly ramming it into an occupied MTA vehicle, then shattering the driver’s window.  When police officers responded, Skulstad allegedly charged at and threatened them, and had in his car a notebook page titled “List – To Kill,” with names of public figures.  Thanks to the combined response of law enforcement officers and agents, Skulstad is in custody and facing a serious federal charge.”

FBI Assistant Director William F. Sweeney Jr. said:  “Skulstad’s alleged targeting of an MTA vehicle, and the subsequent actions he took against police officers who arrived on scene, remind us of the threat our public servants face each and every day as they uphold their duty to protect the communities they serve. Thanks to the work of the FBI’s JTTFs and our many partners in this case, Skulstad no longer poses a threat to society or, more specifically, those he included as targets on his list.”

NYPD Commissioner Dermot Shea said:  “Attacks against public servants, as alleged in this federal complaint, endanger not only those who work to maintain public safety, but all of society.  I commend our investigators in the NYPD and our partners in the FBI Joint Terrorism Task Force and the United States Attorney’s Office in the Southern District of New York for working closely to ensure this individual would be brought to justice.”

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

On April 5, 2021, SKULSTAD rammed his vehicle repeatedly into an MTA vehicle driven by an MTA employee in Ossining, New York, damaging the MTA vehicle and forcing it off the road.  SKULSTAD subsequently exited his vehicle, approached the MTA vehicle on foot, and banged on the driver-side window until he shattered it.  

When Ossining Police Department officers arrived at the scene, SKULSTAD yelled at an officer, “I’m Jesus Christ!  You are going to die today!  Are you ready to die?”  SKULSTAD then charged a police vehicle, throwing his body into the driver-side door and yelling threats at an officer inside.  SKULSTAD resisted officers’ attempts to subdue him, before ultimately being taken into custody. 

After taking SKULSTAD into custody, law enforcement found in SKULSTAD’s vehicle, among other things, a shell casing and a notebook with a page entitled, “List – To Kill,” which listed the names of various current and former public officials and other public figures. 

*                *                *

SKULSTAD, 33, of Dobbs Ferry, New York, is charged with destruction of a motor vehicle employed in interstate commerce, which carries a maximum sentence of 20 years in prison.  The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the FBI’s New York-based Joint Terrorism Task Force (“JTTF”), which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies.  Ms. Strauss also thanked the Ossining Police Department, the Irvington Police Department, the Dobbs Ferry Police Department, the Croton-on-Hudson Police Department, the FBI’s Newark-based JTTF, the FBI’s Counterterrorism Division, the U.S. Attorney’s Office for the District of New Jersey, the Westchester County District Attorney’s Office, the Westchester County Real Time Crime Center, and the New York State Intelligence Center for their assistance.

The case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorneys Sam Adelsberg and Elinor L. Tarlow are in charge of the prosecution, with assistance from Trial Attorney Elisabeth Poteat of the Counterterrorism Section of the Department of Justice’s National Security Division.

The charge contained in the Complaint is merely an allegation, 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.

Audrey Strauss, the U.S. Attorney for the Southern District of New York, John C. Demers, the Assistant Attorney General for National Security, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, Commissioner of the Police Department for the City of New York (“NYPD”), announced that AKAYED ULLAH was sentenced today in Manhattan federal court to life in prison for carrying out a terrorist bombing attack on behalf of the Islamic State of Iraq and al-Sham (“ISIS”) in a subway station under the Port Authority Bus Terminal in New York City on December 11, 2017.  In November 2018, a jury convicted ULLAH after a one-week trial of all six counts in the Indictment.  The sentence was imposed by the Honorable Richard J. Sullivan, who also presided over the trial. 

Manhattan U.S. Attorney Audrey Strauss said:  “Akayed Ullah, previously convicted in a New York federal court of carrying out a lone-wolf bombing attack on behalf of ISIS at the Port Authority Bus Terminal, a bustling transit artery in New York City, admittedly intended to murder as many innocent Americans as possible. Ullah’s motive was clear and unambiguous: a deeply held ideological hatred for America. Ironically, Ullah’s actions resulted only in reaffirming the greatness of America by displaying the fairness and impartiality for which our justice system stands. Ullah received a speedy, fair, public trial, and was convicted by a jury of his peers. Akayed Ullah’s message of hatred clearly backfired; his just sentence of life in prison only exemplifies that cowardly acts of terrorism will be met with law enforcement’s unwavering resolve to protect our core values of freedom and democracy.”

Assistant Attorney General John C. Demers said:  “Ullah constructed a pipe bomb and detonated it in a mass transit hub in the heart of New York City to harm and terrorize as many people as possible – and he admitted that he did it on behalf of ISIS. This case reminds us that the threat of ISIS-inspired terrorism remains real. This sentence holds Ullah accountable, as he will spend the rest of his life in federal prison for his crimes. I want to thank all of the agents, analysts, and prosecutors whose outstanding work made this result possible.”

FBI Assistant Director William F. Sweeney Jr. said:  “Bound and determined to incite fear and create a mass casualty incident, Ullah detonated a pipe bomb of his own creation in one of New York City’s major transportation hubs during morning rush hour. The quick thinking of PAPD officers, who responded to the threat undeterred by the potential risk to their safety, in addition to the work of the FBI’s JTTF and the NYPD, is another example for the public of our joint commitment to keep the citizens and visitors of New York City safe. Today’s sentencing is a just ending in this case.”

NYPD Commissioner Dermot Shea said:  “Akayed Ullah accepted the call from ISIS to target and kill New Yorkers. Through planning and research, he built a pipe bomb and detonated it in the heart of the New York City Transit System under the Port Authority Bus Terminal. Fortunately, this cowardly act resulted in no loss of life to New Yorkers.  I commend the FBI agents and NYPD detectives of the JTTF, prosecutors from the United States Attorney for the Southern District of New York, and our other Law Enforcement partners for bringing this individual to Justice.”

As set forth in the Complaint, Indictment, evidence presented at trial, and other court filings and proceedings:

On December 11, 2017, at approximately 7:20 a.m., AKAYED ULLAH detonated a pipe bomb strapped to his chest in a subway station under the Port Authority Bus Terminal in midtown Manhattan.  Shortly after the blast, first responders located ULLAH lying on the ground in the station where he had detonated the improvised explosive device, and he was taken into custody.  Surveillance footage captured ULLAH walking through the station immediately prior to the explosion, and then detonating the bomb.

ULLAH began radicalizing in about 2014.  ULLAH was angry at U.S. foreign policy in the Middle East, and began seeking out online materials promoting radical Islamic terrorist ideology.  In particular, ULLAH was inspired by ISIS propaganda, including a video in which ISIS instructed supporters to carry out attacks in their homelands if they were unable to travel overseas to join ISIS.  ULLAH began researching how to build a bomb about a year prior to his attack.  He built his pipe bomb in the weeks leading up to the attack at his Brooklyn apartment.     

Following the attack on December 11, 2017, law enforcement located remnants of the pipe bomb on ULLAH’s person and strewn across the attack site in the subway station.  Law enforcement found, among other things: (i) a nine-volt battery inside ULLAH’s pants pocket, which he used as the power source for triggering the bomb; (ii) wires connected to the battery and running underneath ULLAH’s jacket; (iii) plastic zip ties underneath ULLAH’s jacket, which he used to strap the bomb to his body; (iv) several fragments of a metal pipe, which ULLAH had filled with an explosive substance that he made using sugar and match heads; (v) fragments of Christmas tree lightbulbs attached to wires, which ULLAH used to ignite the explosion; and (vi) numerous metal screws.  ULLAH filled his pipe bomb with dozens of metal screws to function as shrapnel, for the purpose of causing maximum damage.

On the morning of the attack, shortly before detonating his bomb, ULLAH posted a statement on Facebook referring to the then-President of the United States, stating: “Trump you failed to protect your nation.”  ULLAH also posted an ISIS slogan so that ISIS would know that he had carried out the attack on behalf of ISIS.

After ULLAH was taken into custody following the attack, he waived his Miranda rights and spoke to law enforcement.  ULLAH stated, among other things, that he carried out the bombing on behalf of ISIS, and chose a busy weekday morning for the attack in order to “terrorize as many people as possible.”  One commuter who was inside the station when ULLAH detonated the pipe bomb suffered a shrapnel wound to his leg, and two other victims partly lost their hearing as a result of the blast.  ULLAH’s attack caused the Port Authority subway station and bus terminal to shut down temporarily, disrupting the lives of commuters across the New York City area.

After the attack, law enforcement searched ULLAH’s apartment pursuant to a search warrant.  Agents recovered, among other things, ULLAH’s passport, which contained the handwritten statement, “O AMERICA, DIE IN YOUR RAGE.”  Less than two weeks before carrying out the attack, ULLAH had watched and drawn inspiration from a particular ISIS propaganda video that proclaimed, “die in your rage, America,” with an image of the U.S. Congress in the background.

Later in December 2017, while in custody at the Metropolitan Correctional Center on the charges in this case, ULLAH began chanting “more is coming” at a correctional officer, and then told the officer: “You started this war, we will finish it. More is coming, you’ll see.”

*                      *                      *

In addition to the prison term, ULLAH, 31, was sentenced to life of supervised release.   

Ms. Strauss praised the outstanding investigative efforts of the FBI, the NYPD, and the Port Authority of New York and New Jersey Police Department.  ULLAH’s conviction is the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York and the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies. 

The prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Rebekah Donaleski and George D. Turner are in charge of the prosecution, with assistance from Trial Attorneys Jason Denney and Felice Viti of the Counterterrorism Section of the Department of Justice’s National Security Division.

Audrey Strauss, United States Attorney for the Southern District of New York, announced today that SHENG-WEN CHENG, a/k/a “Justin Cheng,” a/k/a “Justin Jung,” pled guilty to major fraud against the United States, bank fraud, securities fraud, and wire fraud in connection with multiple fraud schemes he perpetrated.  Specifically, CHENG engaged in a scheme to fraudulently obtain over $7 million in Government-guaranteed loans designed to provide relief to small businesses during the novel coronavirus/COVID-19 pandemic.  CHENG also solicited and obtained investments in Alchemy Coin Technology Limited and related companies controlled by CHENG through materially false and misleading statements and omissions.  Finally, CHENG fraudulently obtained due diligence fees from various start-up companies as part of an advance fee scheme.  CHENG pled guilty today before U.S. District Judge Alison J. Nathan and is scheduled to be sentenced on August 3, 2021, at 3:00 p.m.

U.S. Attorney Audrey Strauss said:  “As he admitted, Sheng-Wen Cheng fraudulently applied for over $7 million in government-guaranteed loans under programs designed to provide relief for small businesses financially struggling in the COVID pandemic.  Cheng lied to the SBA and several banks about ownership of his companies, the number of people employed, and how any loan proceeds would be applied, using forged and fraudulent documents in the process.  Cheng spent much of the money on personal luxury items.  In addition, Cheng committed securities fraud by lying to investors in his blockchain-based peer-to-peer lending platform, and wire fraud by engaging in an advance fee scheme.  Now Cheng awaits sentencing for his multitude of crimes.”

According to the Complaint, Information, and other documents filed in Manhattan federal court:

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of hundreds of billions of dollars in forgivable loans to small businesses for job retention and certain other expenses through the SBA’s Paycheck Protection Program (“PPP”).  Pursuant to the CARES Act, the amount of PPP funds a business is eligible to receive is determined by the number of employees employed by the business and their average payroll costs.  The CARES Act also expanded the separate Economic Injury Disaster Loan (“EIDL”) Program, which provided small businesses with low-interest loans that can provide vital economic support to help overcome the temporary loss of revenue they are experiencing due to COVID-19.

CHENG, a Taiwanese national who entered the United States on a student visa, is a self-proclaimed “serial entrepreneur” who earned a Bachelor’s Degree from Pennsylvania State University (“Penn State”).  From at least in or about April 2020 through at least on or about August 13, 2020, CHENG used the identity of other individuals to submit online applications to the SBA and at least five financial institutions for a total of over $7 million in government-guaranteed loans through the SBA’s PPP and EIDL Program for several companies controlled by CHENG, namely Alchemy Finance, Inc., Alchemy Guarantor LLC d/b/a “Celer Offer,” Celeri Network, Inc., Celeri Treasury LLC, and Wynston York LLC (collectively, the “Cheng Companies”).  In connection with these loan applications, CHENG represented, among other things, that other individuals were the sole owners of the Cheng Companies and that the Cheng Companies together had over 200 employees and paid a total of approximately $1.5 million in wages to those employees on a monthly basis.  In fact, however, the Cheng Companies appear to have had a total of no more than 14 employees. 

In order to support the false representations in the loan applications about the number of employees at and the wages paid by the Cheng Companies, CHENG submitted fraudulent and doctored tax records that were never actually filed with the IRS and payroll records containing the forged electronic signature of a payroll company employee.  CHENG also submitted a payroll summary for one of his companies that listed the names of more than 90 purported employees, several of whom are current or former athletes, artists, actors, or public figures.  For example, the list of purported employee names included a co-anchor on “Good Morning America,” a former National Football League player, and a prominent former Penn State football coach who is now deceased.

Based on the fraudulent PPP loan applications submitted by CHENG, a total of more than $3.7 million in PPP loans were approved for the Cheng Companies and approximately $2.8 million in PPP loan proceeds were deposited into bank accounts solely controlled by CHENG.  Instead of using the PPP loan proceeds for payroll costs, mortgage interest, rent, and/or utilities for the purported Cheng Companies as required by the PPP, CHENG transferred over $1 million abroad, withdrew approximately $360,000 in cash and/or cashier’s checks, and spent at least approximately $279,000 in PPP loan proceeds on personal expenses.  These personal expenses included the purchase of an 18-carat gold Rolex watch for approximately $40,000, rent and move-in fees for a $17,000 per month luxury condominium used by CHENG, approximately $50,000 of furnishings for the condominium, a portion of the purchase of a 2020 S560X4 Mercedes, and purchases totaling approximately $37,000 at Louis Vuitton, Chanel, Burberry, Gucci, Christian Louboutin, and Yves Saint Laurent.

In addition to the COVID-19 pandemic loan fraud described above, from at least in or about 2017 through at least in or about 2019, CHENG committed securities fraud by soliciting and obtaining investments in Alchemy Coin Technology Limited and related companies (“Alchemy Coin”) controlled by CHENG.  These investments were obtained through materially false and misleading statements and omissions regarding Alchemy Coin’s access to capital, use of investor proceeds, the product readiness of its purported blockchain-based peer-to-peer lending platform, and the registration of its tokens as part of an initial coin offering. 

Finally, from at least in or about 2018 through at least in or about 2019, CHENG committed wire fraud by fraudulently obtaining due diligence fees from various start-up companies as part of an advance fee scheme through materially false and misleading statements regarding the purpose and refundability of the fees and his interest and ability to make investments in the start-up companies.

*                *                *

CHENG, 24 of New York, New York, pled guilty to one count of bank fraud, which carries a maximum sentence of 30 years in prison; one count of securities fraud and one count of wire fraud, which each carry a maximum sentence of 20 years in prison; and one count of major fraud against the United States, 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 the judge.

Ms. Strauss praised the investigative work of the Federal Bureau of Investigation, the Office of the Inspector General of the U.S. Small Business Administration, and the Internal Revenue Service Criminal Investigation.  Ms. Strauss also thanked the United States Securities and Exchange Commission, U.S. Customs and Border Protection, and the New York State Department of Labor for their assistance.

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

Audrey Strauss, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced new charges against NACHMAN HELBRANS, MAYER ROSNER, YAKOV WEINGARTEN, SHMIEL WEINGARTEN, and YOIL WEINGARTEN for conspiring to (1) transport a minor with intent to engage in criminal sexual activity, and (2) travel with intent to engage in illicit sexual conduct, in connection with the kidnapping of a 14-year-old girl (“Minor-1”) from New York to reunite her with her adult “husband” outside the United States for purposes of continuing their sexual relationship.  The defendants, among other members of Lev Tahor, were previously charged with several other crimes related to the kidnapping of Minor-1 and her younger brother.

U.S. Attorney Audrey Strauss stated:  “As alleged, the defendants engaged in a brazen kidnapping of a minor girl in the middle of the night, taking her across the border to Mexico in order to reunite her with her adult ‘husband’ to continue their sexual relationship.  These charges send a clear message that the sexual exploitation of children will not be tolerated.”

FBI Assistant Director William F. Sweeney Jr. stated:  “International borders will not stop the FBI from pursuing justice and enforcing violations of our laws, especially when you target children.  The behavior alleged today is outrageous, and there is no justification for it whatsoever.  We are grateful for the excellent cooperation from our partners in Mexico and Guatemala who helped us hold these leaders of Lev Tahor accountable for their behavior.  Protecting innocent children should be a priority for all of society – it’s certainly one of ours.  If you know of children who are being trafficked, please contact the FBI at 1-800-CALL-FBI or fbi.tips.gov.”

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

NACHMAN HELBRANS, MAYER ROSNER, YAKOV WEINGARTEN, SHMIEL WEINGARTEN, and YOIL WEINGARTEN are U.S. citizens and senior leaders of Lev Tahor, an extremist Jewish sect previously based in New York and Canada, and currently based in Guatemala.  HELBRANS became the leader of Lev Tahor in or about 2017.  After HELBRANS and his leadership team took over, they seized tight control over the group and embraced several extreme practices, including strict, invasive monitoring of members, frequent beatings, and forced marriages of minors to adult members.  Children in Lev Tahor are often subject to physical, sexual, and emotional abuse.

In or about 2017, HELBRANS arranged for his then-12-year-old niece, Minor-1, to be “married” to a then-18-year-old man, defendant JACOB ROSNER.  They were religiously “married” the following year, when Minor-1 was 13 and JACOB ROSNER was 19, and immediately began a sexual relationship with the goal of procreation.  They were never legally married.  Lev Tahor leadership, including the defendants, required young brides to have sex with their husbands, to tell people outside Lev Tahor that they were not married, to pretend to be older, and to deliver babies inside their homes instead of at a hospital, partially to conceal from the public the mothers’ young ages.

In or about October 2018, the mother of Minor-1 (who is also HELBRANS’s sister) determined that it was no longer safe for her children to remain in the Lev Tahor community in Guatemala.  The mother escaped from the group’s compound and arrived in the United States in early November 2018.  Also in November 2018, a Brooklyn family court granted her temporary custody of the children and prohibited the children’s father, a leader within Lev Tahor, from communicating with the children.

After the mother fled and settled in New York with her children, the defendants devised a plan to return Minor-1, then 14 years old, to Guatemala and to her then-20-year-old “husband” so that they could resume their sexual relationship and procreate.  In December 2018, they executed their plan, kidnapping Minor-1 and her brother in the middle of the night from a home in New York and transporting them through various states and, eventually, to Mexico.  During this time, Lev Tahor leadership was seeking asylum for the entire Lev Tahor community in the Islamic Republic of Iran. 

Following a three-week search involving scores of local, federal, and international law enforcement entities, Minor-1 and her brother were recovered in Mexico and returned to New York.  On two additional occasions, in or about March 2019 and March 2021, members of Lev Tahor again tried to kidnap Minor-1 and her brother.

*                *                *

NACHMAN HELBRANS, 39, of Guatemala, MAYER ROSNER, 44, of Guatemala, YAKOV WEINGARTEN, 30, of Guatemala, SHMIEL WEINGARTEN, 25, of Guatemala, and YOIL WEINGARTEN, 32, of Guatemala, are charged with (1) conspiring to transport a minor with intent to engage in criminal sexual activity, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; and (2) conspiring to travel with intent to engage in illicit sexual conduct, which carries a maximum sentence of 30 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

The Superseding Indictment also includes charges that were previously brought against the defendants and other members of Lev Tahor.  Specifically, it charges NACHMAN HELBRANS, MAYER ROSNER, YAKOV WEINGARTEN, SHMIEL WEINGARTEN, YOIL WEINGARTEN, MORDECHAY MALKA, 26, of Guatemala, ARON ROSNER, 47, of Brooklyn, New York, JACOB ROSNER, 21, of Guatemala, and MATITYAU MOSHE MALKA, 29, of Guatemala, with conspiring to kidnap, unlawfully use a means of identification, and enter by false pretenses the secure area of an airport, and charges three additional counts of international parental kidnapping.

Ms. Strauss praised the outstanding work of the FBI, the New York State Police, the Sullivan County District Attorney’s Office, United States Customs and Border Protection, the Village of Spring Valley Police Department, and our law enforcement partners in Mexico and Guatemala.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Sam Adelsberg, Jamie Bagliebter, and Jim Ligtenberg are in charge of the prosecution.

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

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

Audrey Strauss, United States Attorney for the Southern District of New York, announced that GUSTAVO L. VILA, a disbarred lawyer in New York, was sentenced today in White Plains federal court to 51 months in prison for stealing approximately $1 million that the Department of Justice’s 9/11 Victim Compensation Fund (“VCF”) had awarded to VILA’s client, a 9/11 first responder.  VILA pled guilty on October 29, 2020, before U.S. District Judge Vincent L. Briccetti, who also imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “Gustavo Vila stole money awarded by the 9/11 Victim Compensation Fund to his client, an NYPD officer and 9/11 first responder.  Further, Vila lied to his client for more than three years, telling him that the stolen money had yet to be released by the Fund.  Now Gustavo Vila has been sentenced to prison for his betrayal.”

According to the Complaint, the Information, and other court filings and statements made in open court:

In the wake of the September 11 terrorist attacks, Congress created the VCF to provide compensation with federal government funds to any individual who suffered physical harm or was killed as a result of the terrorist attacks, or as a result of the debris removal efforts that took place in the immediate aftermath of those attacks.  The original VCF operated from 2001 to 2004.  President Obama and President Trump reactivated the VCF, authorizing it to operate through October 2016, and December 2020, respectively.  Claimants seeking compensation from the VCF were authorized to work with an attorney and have the attorney, on the claimant’s behalf, submit a claim to, and receive the claimant’s award from, the VCF.  An attorney’s fees were limited to 10% of a VCF award.

From at least in or about 2012 through at least in or about 2019, VILA represented a retired New York City Police Department officer (“Victim-1”) in connection with Victim-1’s claim for compensation from VCF.  Victim-1 was diagnosed with, and suffered from, serious, life-threatening medical conditions, including cancer, as a result of rescue and recovery work he performed at Ground Zero.  Throughout his representation of Victim-1, VILA held himself out as an attorney to Victim-1 and to the VCF, despite the fact that in 2015, VILA was disbarred, after being convicted in Westchester County Supreme Court of grand larceny in the third degree, a felony, for stealing funds from another client.  

Despite his disbarment, VILA continued to hold himself out as an attorney to Victim-1 and to the VCF and to represent Victim-1 in connection with his VCF claim.  Victim-1, on VILA’s advice, authorized the VCF to deposit any money it awarded Victim-1 directly into VILA’s bank account.  On or about September 13, 2016, the VCF authorized an award to Victim-1 of $1,030,622.04 for life-threatening illnesses Victim-1 had sustained from rescue and recovery work he performed as a police officer at Ground Zero.  On or about October 12, 2016, the VCF deposited the full amount of Victim-1’s award – mover $1 million – into VILA’s bank account.  At that point, VILA was required to distribute all of that money, less 10 percent for his purported attorney’s fees, to Victim-1.  VILA, however, represented to Victim-1 that the VCF had only released 10 percent of the award, that is, approximately $103,062, which VILA sent Victim-1 on or about October 26, 2016.  That is the only portion of the award that Victim-1 ever received.  VILA stole the remaining 90 percent of the award – approximately $927,559.84 – and used those funds for his own personal benefit, including to pay his own taxes and personal loans.  Over the next three-plus years, VILA continued to lie to Victim-1, repeatedly telling Victim-1 and his family that the VCF had not yet released the full amount of the award, when in fact, the entire award had been released for Victim-1’s benefit in October 2016. 

*                *                *

VILA, 62, of Yorktown Heights, New York, pled guilty to, and was sentenced on, one count of theft of government funds, in violation of Title 18, United States Code, Section 641.  In addition to the 51-month prison term, VILA was sentenced to three years of supervised release and was ordered to forfeit $922,559.84, and to pay restitution to Victim-1 in the amount of $867,870.76.

Ms. Strauss praised the outstanding investigative work of the U.S. Department of Justice Office of the Inspector General's Fraud Detection Office. 

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.

Audrey Strauss, United States Attorney for the Southern District of New York, announced today that BILAL SALAJ was sentenced in Manhattan federal court to 19 months in prison for perpetrating tax fraud.  SALAJ previously pled guilty before U.S. Magistrate Judge Ona T. Wang to conspiracy to defraud the Internal Revenue Service (“IRS”), tax evasion, and failure to pay over payroll taxes.  U.S. District Judge P. Kevin Castel, who accepted SALAJ’s guilty plea, imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “Bilal Salaj failed to pay his tax obligations to the IRS and maintained a cash payroll for his business while cheating the government out of almost $1 million. Our self-assessment system of tax reporting is not synonymous with ‘forthrightness optional.’ The government — and especially our law enforcement partners — won’t miss, overlook, or ignore those who misreport on their tax returns. In the competitive small business world, being dishonest and underreporting tax obligations might be tempting. But Salaj’s sentence is a reminder that tax fraud is a serious federal crime and not worth the risk.”

According to the allegations contained in the Information to which SALAJ pled guilty, court filings, and statements made in public court proceedings:    

At all relevant times, BILAL SALAJ, a citizen and resident of the United States, operated a construction business in Manhattan.  Initially, SALAJ was the record owner of the business, but in approximately July 2014, SALAJ began operating the business under a new entity that, on paper, was wholly owned by a third party (“Individual-1”), who worked for SALAJ in the construction business.  Despite this purported change in ownership, SALAJ continued to exercise principal control and decision-making authority over the business and its financial affairs.  In particular, SALAJ was a responsible person under federal law for collecting, truthfully accounting for, and paying over payroll taxes for the business to the IRS.

Between at least in or about 2014 and in or about June 2019, SALAJ devised and perpetrated a scheme to evade a substantial portion of both the payroll taxes for the construction business and SALAJ’s personal income taxes for the period 2014 through 2018.  During this period, SALAJ cashed, and caused Individual-1 to cash, approximately $3.2 million in business checks payable to the construction company at check cashing facilities in Manhattan, instead of depositing them into the company’s operating bank account.  SALAJ and Individual-1 used a portion of the proceeds from the cashed checks to pay cash wages to employees of the construction business, and spent most of the rest on personal expenses.  SALAJ did not withhold or pay over to the IRS any payroll taxes on the cash wages paid to the employees, and did not report to the IRS or pay any personal income taxes on the cash income he realized through the cashed checks.  As part of the tax evasion scheme, SALAJ fraudulently withheld from his accountant any records relating to the cashed business checks, and thereby caused false tax returns to be filed with the IRS.  The tax evasion scheme, including relevant conduct, resulted in a tax loss to the IRS of approximately $952,778.

*                *                *

In addition to the prison term, Judge Castel ordered SALAJ, 56, of Morganville, New Jersey, to pay restitution to the IRS in the amount of $952,778.  SALAJ was also ordered to serve three years of supervised release.

Ms. Strauss praised the outstanding work of the Internal Revenue Service, Criminal Investigation, in this case. 

This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Olga I. Zverovich is in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the 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 today the unsealing of a criminal Complaint charging MALIK SANCHEZ, a/k/a “Smooth Sanchez,” with making a hoax threat to detonate a bomb at a restaurant in the Flatiron neighborhood in New York, New York, on or about February 13, 2021.  SANCHEZ was arrested today in Manhattan, and he will be presented this afternoon before United States Magistrate Judge Ona T. Wang.

Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Malik Sanchez perpetrated a hoax bomb threat at a Manhattan restaurant that frightened innocent victims, sowed chaos, and diverted precious law enforcement resources.  Today’s arrest makes clear that such conduct will not be tolerated.”

FBI Assistant Director William F. Sweeney Jr. said:  “Whether real or perceived, a threat of violence is a serious action with real-life consequences. In this case, Sanchez’s alleged behavior carries the potential for a federal prison sentence.  Anyone who intends to carry out a similar hoax should know that the FBI’s JTTF is ready and willing to respond.”

NYPD Commissioner Dermot Shea said:  “Malik Sanchez’s alleged hoax bomb threat, as detailed in today’s federal complaint, disrupted not only the safety and well-being of several innocent restaurant patrons but the fabric of society.  Our NYPD detectives, with our partners in the FBI’s Joint Terrorism Task Force and the United States Attorney’s Office in the Southern District of New York, have zero tolerance for actions like these.”

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

SANCHEZ self-identifies as an “Involuntary Celibate” or “Incel,” which refers to a primarily online group of individuals, mostly men, who believe that society unjustly denies them sexual or romantic attention to which they are entitled.  SANCHEZ has posted multiple videos to social media accounts depicting SANCHEZ harassing, threatening, and in one instance harming individuals whom SANCHEZ encounters in Manhattan, while expressing support for Incel ideology, including for carrying out violence against women in the name of the group.

For example, on or about February 7, 2021, SANCHEZ posted online a video with a caption including “INCEL ARMY RISE UP.”  The video depicts SANCHEZ yelling at two women walking on a street in Manhattan that SANCHEZ has “Incel rage”; that he supports Incel’s unofficial founder, Elliot Rodger, who attacked a sorority house and pedestrians in California in 2014, killing six victims and injuring 14 others; and that Rodger’s victims “deserved to be run over and hit by a truck.  They deserved to be slaughtered.”[2]  On or about March 20, 2021, SANCHEZ posted another video filmed in Manhattan, which depicts SANCHEZ approaching multiple women at an outdoor seating area.  In the video, SANCHEZ again proclaimed his support for Incels and Elliot Rodger, while making hand gestures mimicking pointing a gun.  After multiple individuals attempted to get SANCHEZ to stop, SANCHEZ sprayed pepper spray in the face of one of those individuals.  SANCHEZ was arrested by responding NYPD officers and charged with state offenses, and was thereafter released on bail.  

On or about February 13, 2021, SANCHEZ posted a video that depicts him perpetrating a hoax bomb threat at a restaurant in Manhattan’s Flatiron neighborhood.  The video shows SANCHEZ approaching an outdoor seating area in front of the restaurant and stating:  “Let’s enhance their meal.”  SANCHEZ then positioned himself close to two women seated at one of the tables, and conveyed that he was about to detonate a bomb.  SANCHEZ loudly stated:  “Allahu Akbar.  Allahu Akbar.  Bomb detonation in two, in two minutes.  I take you with me and I kill all you.  I kill all you right now.  And I kill all you for Allah. . . .  I’m gonna do it.  I’m gonna fucking do it for Allah.  I’m gonna do it, for, Allah, Allah, Allahu Akbar, Come on.  I do it, bomb now, bomb now.”  The two women appeared startled, gathered their belongings, and went into the restaurant; approximately four other individuals in the seating area grabbed their belongings and ran away.  SANCHEZ then stated:  “Yo, all of them scattered” and “Holy shit boys.  That was fucking five stars.  That was five stars.”  At least one individual called 911 in connection with the bomb threat, and law enforcement responded to the scene.  By that point, SANCHEZ had left the area.

*                *                *

SANCHEZ, 19, of New York, New York, is charged with one count of conveying false and misleading information and hoaxes, in violation of Title 18, United States Code, Section 1038, which carries a maximum sentence of five years in prison.  The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.

Ms. Strauss praised the outstanding investigative work of the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state, and local agencies.

The case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorney Kaylan E. Lasky is in charge of the prosecution, with assistance from Trial Attorney Elisabeth Poteat of the Counterterrorism Section of the Department of Justice’s National Security Division.

The charge contained in the Complaint is merely an allegation, 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.

[2] Statements discussed and quoted herein are described in substance and in part.

Audrey Strauss, United States Attorney for the Southern District of New York, announced that MARTIN SILVER, a managing partner and the chief operating officer of the New York-based investment advisory firm International Investment Group (“IIG”), pled guilty today before U.S. District Judge Alvin K. Hellerstein to investment adviser fraud, securities fraud, and wire fraud offenses in connection with an over $100 million scheme to defraud IIG’s investment advisory fund clients and investors.  Throughout the course of more than 10 years, SILVER perpetrated the scheme by, among other fraudulent actions, creating fictitious investments and overvaluing investments used to generate funds to pay off earlier investors in a Ponzi-like manner.  In connection with his plea agreement, SILVER has also agreed to cooperate with the Government’s ongoing investigation.

Manhattan U.S. Attorney Audrey Strauss said:  “Today, Martin Silver admitted to participating in a sophisticated, decade-long scheme to defraud IIG funds and investors, abandoning his fiduciary responsibilities to IIG’s clients, and causing millions of dollars of losses.  My Office remains committed to policing investment advisers who seek to take advantage of their clients for personal and professional gain.”

According to the allegations contained in the Information and based on statements made in Manhattan federal court:           

Background of IIG 

SILVER and a co-conspirator (“CC-1”) founded IIG in 1994.  SILVER was a managing partner and the chief operating officer of IIG.  IIG, an SEC-registered investment adviser, provided investment management and advisory services, including for three private funds that it operated: (1) the IIG Trade Opportunities Fund N.V. (“TOF”), (2) the IIG Global Trade Finance Fund, Ltd. (“GTFF”), and (3) the IIG Structured Trade Finance Fund, Ltd. (“STFF”).  IIG also advised the Venezuela Recovery Fund (“VRF”), a fund that managed the remaining assets of a failed Venezuelan bank (VRF, together with TOF, GTFF, and STFF, the “IIG Funds”).  In March 2018, IIG reported to the SEC that it had approximately $373 million in assets under management.

IIG advertised itself as specializing in global trade financing, particularly in providing trade finance loans to small and medium-sized businesses.  IIG’s principal investment advisory strategy, including with respect to the IIG Funds, was investing in trade finance loans that it also originated.  Trade finance loans are used by small and medium-sized companies, typically exporters and importers, to facilitate international trade.  IIG’s purported expertise was in trade finance loans to borrowers located in Central or South America, and in a variety of industries, with a stated focus on “soft commodities,” such as coffee, agriculture, fishing, and other food products.  IIG’s trade finance loans were purportedly secured by collateral, such as the underlying traded goods, assets held by the borrowers, or expected payments by third parties.

Investments in TOF, STFF, and GTFF were marketed by IIG to institutional investors, such as pension funds, hedge funds, and insurers.  In offering memoranda and communications with investors, IIG advertised strict risk controls, such as promises to use diligence to carefully select borrowers or issuers with trusted management and marketable assets, and portfolio concentration limits based on borrower, developing country, and industry.

IIG purported to value the trade finance loans in the IIG Funds on a regular basis.  IIG and, in turn, SILVER, received a performance fee with respect to the IIG Funds, as well as a management fee, which was calculated as a percentage of the assets under management held in the Funds.

The Scheme

From approximately 2007 to 2019, SILVER conspired to defraud investors in IIG-managed funds by: (i) overvaluing distressed loans held by the IIG Funds, (ii) falsifying paperwork to create a series of fake loans that were classified, fraudulently, as positively performing loans, and to otherwise hide losses, (iii) selling overvalued and fake loans to a collateralized loan obligation trust and new private funds established and advised by IIG, and (iv) using the proceeds from those fraudulent sales to generate liquidity required to pay off earlier investors in a Ponzi-like manner.

*                *                *           

MARTIN SILVER, 63, of New Jersey, pled guilty to one count of conspiracy to commit investment adviser fraud, securities fraud, and wire fraud, which carries a maximum sentence of five years in prison; one count of securities fraud, which carries a maximum sentence of 20 years in prison, and one count of wire fraud, which carries a maximum sentence of 20 years in prison.  Sentencing before Judge Hellerstein has been scheduled for November 16, 2021, at 11:00 a.m.

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.

Ms. Strauss praised the investigative work of the FBI and also thanked the SEC for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Drew Skinner, Negar Tekeei, and Alex Rossmiller are in charge of the prosecution.

Audrey Strauss, United States Attorney for the Southern District of New York, announced that IFEANYI EKE, a/k/a “Luther Mulbah Doley,” pled guilty today and was sentenced in Manhattan federal court by U.S. District Judge Jesse M. Furman to 40 months in prison for conspiring to commit wire fraud as part of a wide-ranging international business email compromise (“BEC”) syndicate. 

U.S. Attorney Audrey Strauss said:  “As he admitted today, Ifeanyi Eke played a key role in an international conspiracy that deceived and defrauded dozens of victims of nearly $3 million.  Fittingly, Eke has been sentenced to prison and ordered to make restitution to the victims of the conspiracy.”

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

Between in or about 2016 and July 2018, EKE and his co-conspirators, including codefendants Cyril Ashu, Joshua Ikejimba, and Chinedu Ironuah, perpetrated a fraudulent BEC scheme through which they deceived dozens of victims, both foreign and domestic, into wiring millions of dollars to bank accounts controlled by the syndicate.  The fraud was perpetrated by sending victims “spoofed” emails, which purported to be from counterparties whom the victims knew and trusted, and which contained wiring instructions fraudulently directing the victims to send funds to accounts that were in fact controlled by the defendants and others involved in the scheme.    

EKE played a broad role in the fraud.  As part of the scheme, EKE personally received wire transfers of fraud proceeds from several different victims in bank accounts that he opened and controlled.  One of the victims, an intergovernmental organization headquartered in New York, was defrauded into sending $188,815 into EKE’s bank account.  After receiving the fraud proceeds, EKE withdrew and transferred them both for his own use and for dissemination to his co-conspirators.  In addition to receiving and dissipating victim funds directly, EKE managed and supervised other members of the conspiracy, including by arranging for co-conspirators’ accounts to receive fraud proceeds, receiving and communicating wire transfer information contained in victim emails, and coordinating the acquisition and deposit of checks representing fraud proceeds.  In total, EKE is responsible for actual losses to 35 victims totaling approximately $2.7 million.

*                *                *

EKE, 34, of Sandy Springs, Georgia, pled guilty to, and was sentenced on, one count of conspiracy to commit wire fraud, in violation of Title 18, United States Code, Section 1349.  In addition to the prison term, EKE was sentenced to three years of supervised release.  EKE was further ordered to forfeit $365,205, and to pay restitution to his victims in the amount of $2,691,908.30.

Ms. Strauss praised the outstanding investigative work of the FBI.  The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Olga I. Zverovich and Jarrod L. Schaeffer are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced today that JAMES SPINA was sentenced to 108 months in prison for his participation in a widespread health care fraud scheme through the fraudulent operation of Dolson Avenue Medical (“DAM” or the “Practice”), a multi-disciplinary medical clinic located in Middletown, New York.  SPINA previously pled guilty before U.S. District Judge Kenneth M. Karas, who imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “James Spina led a sophisticated, widespread, and callous scheme that put greed and profits ahead of patients and their well-being.  In doing so, he betrayed his professional obligations and bilked insurance companies and Medicare out of millions of dollars.  Thanks to the coordinated efforts of federal and state investigative agencies, Spina will now serve a lengthy sentence in federal prison.”

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

From 2011 through September 2017, DAM was a registered medical service corporation in New York State that purported to provide a variety of pain management and rehabilitation services, including physical medicine and rehabilitation, chiropractic services, physical therapy, diagnostic testing, and acupuncture.  DAM primarily provided treatment services from its clinic located at 201 Dolson Avenue, Middletown, New York.

In addition to DAM, at least eight other corporations, including four other medical corporations, billed Medicare and other health insurance providers (the “Insurance Providers”) from 201 Dolson Avenue (the “Associated Businesses”).  On paper, DAM and the Associated Businesses appeared to be separate entities owned by multiple different qualified individuals.  But in reality, JAMES SPINA, who is a doctor of chiropractic – not a medical doctor – along with his co-defendant, were the true owners and operators of the different medical service corporations.

JAMES SPINA and his co-conspirators made all corporate decisions for DAM and the Associated Businesses.  In particular, JAMES SPINA ran the day-to-day operations of the businesses.  JAMES SPINA and his co-conspirators controlled payroll, the hiring and firing of employees, corporate expenses such as employee compensation and rent, and billing to Insurance Providers.  Further, JAMES SPINA and one of his co-conspirators were the financial beneficiaries of DAM and its Associated Businesses. 

JAMES SPINA also went to great lengths to conceal his control and ownership of DAM and the Associated Businesses.  In particular, JAMES SPINA and one of his co-conspirators recruited medical doctors and other professionals to serve as the nominee owners of DAM and the Associated Businesses.  JAMES SPINA further concealed his ownership of DAM and the Associated Businesses by transferring revenues of these companies into other companies that he and a codefendant owned.  To further disguise these transfers, JAMES SPINA drafted fake lease and marketing agreements between DAM and the Associated Businesses and purported real estate and marketing companies he owned, and referred to the payments as “rent” or “marketing fees.”  JAMES SPINA and his co-conspirators also used phony and non-existent addresses for the corporations so that it would appear that DAM and the Associated Businesses were operating out of separate locations.

In operating the multiple fraudulent businesses, JAMES SPINA and his co-conspirators routinely showed little, if any, regard for which medical services or treatments were medically necessary, or even whether the services were actually provided to patients, and instead operated DAM and billed Insurance Providers to maximize DAM’s reimbursements and, ultimately, their own profits.  In particular, JAMES SPINA and his co-conspirators: (a) submitted and caused to be submitted claims to Insurance Providers for medically unnecessary services and procedures; (b) submitted and caused to be submitted claims to Insurance Providers for medical services that were not rendered; (c) double billed, i.e., submitted and caused to be submitted multiple claims for the same service to two different Insurance Providers; (d) altered and fabricated medical records; and (e) obstructed and impeded audits by Medicare and other Insurance Providers to conceal their fraud.

As part of the fraudulent scheme, one of the doctors who worked at DAM and the Associated Businesses introduced a lucrative procedure called a facet injection.  Because the facet joints to which the injections are applied are near the spinal cord, such procedures are high-risk, with a small margin for error.  The doctor had no formal training in the procedure, and taught himself by shadowing other doctors and watching YouTube videos.  JAMES SPINA was intimately involved with all billing-related aspects of the facet injections, and continued to encourage their use even after several patients suffered serious, adverse events, and one patient died of complications following a facet injection.

As a consequence of the above-described scheme, a substantial number of claims submitted by DAM and the Associated Businesses to Medicare and other Insurance Providers were false and fraudulent. 

In addition to the prison term, JAMES SPINA, 63, of Middletown, New York, was sentenced to three years of supervised release.  The Court also ordered JAMES SPINA to pay $9,760,555.20 in restitution, and to forfeit $9,105,741.61.  On May 2, 2019, JAMES SPINA pled guilty to one count of conspiracy to commit healthcare fraud, in violation of Title 18, United States Code, Section 1349.

Ms. Strauss praised the outstanding investigative work of the FBI, the U.S. Department of Health and Human Services-Office of the Inspector General, the New York State Office of the State Comptroller, and the Orange County Sheriff’s Office. 

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney Nicholas S. Bradley is in charge of the prosecution.  The prosecution was previously led by former Assistant U.S. Attorney Kathryn Martin. 

Audrey Strauss, the United States Attorney for the Southern District of New York, and Michael J. Missal, the Inspector General of the United States Department of Veterans Affairs, Office of the Inspector General (“VA-OIG”), announced that SHAWN PIERRE HOBBS, a soldier for the Connecticut Army National Guard (“Army National Guard”) and a Rikers Island correction officer employed by the New York City Department of Correction (“NYC DOC”), was arrested yesterday in El Paso, Texas, on wire fraud and aggravated identity theft charges.  HOBBS is alleged to have defrauded the Department of Veterans Affairs (“VA”) and NYC DOC in order to receive financial and other benefits to which he was not entitled.  HOBBS is expected to be presented in federal court in El Paso this afternoon. 

U.S. Attorney Audrey Strauss said:  “Shawn Pierre Hobbs, a National Guard soldier and correction officer at Rikers Island, allegedly submitted false certifications to receive veterans benefits for hundreds of hours of work he did not perform. Moreover, Hobbs allegedly forged the signatures of his colleagues to make the fraudulent paperwork appear to be authentic. Hobbs’s alleged conduct certainly does not befit that of a sworn officer of two government agencies, and thanks to the assistance of Veterans Affairs, he is now charged criminally for fraud and identity theft.”

VA-OIG Inspector General Michael J. Missal said:  “The charges unsealed today are the result of the hard work and dedication of the VA Office of Inspector General’s special agents working with our law enforcement partners.  The VA OIG will seek to hold accountable those who perpetrate fraud and steal benefits that are intended for deserving veterans.”

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

From at least in or about April 2015, up to and including at least on or about April 8, 2021, SHAWN PIERRE HOBBS served as a soldier in the Army National Guard.  Army National Guard soldiers hold civilian jobs or attend school while maintaining their military training part-time.  The VA provides certain benefits to United States veterans, including Army National Guard soldiers, who work in approved on-the-job training programs (“VA Benefits”).  From at least in or about January 2019, up to and including at least on or about April 8, 2021, HOBBS was employed by NYC DOC as a correction officer at Rikers Island, a VA-approved on-the-job training program.  NYC DOC employees who are members of the military are entitled to paid leave, with certain limitations, while they are engaged in the performance of ordered military duty.

From at least in or about January 2019, up to and including at least in or about March 2021, HOBBS defrauded the VA and NYC DOC in order to obtain VA Benefits and paid military leave from NYC DOC, among other things.  Specifically, HOBBS submitted eight fraudulent military memoranda purportedly from the Army National Guard to NYC DOC in order to obtain paid leave.  The fraudulent military memoranda each bore the seal of the United States Department of Defense and the letterhead of the Army National Guard, and falsely represented that HOBBS had served military duty on hundreds of days on which he, in fact, had not served.  At the same time, HOBBS transmitted by fax 16 fraudulent employment certifications to the VA that were purportedly from NYC DOC and falsely represented that he had worked for NYC DOC for hundreds of hours, which he had not worked.  To effectuate this scheme, HOBBS used the names, identities, and signatures of an Army National Guard Platoon Leader, an Army National Guard Readiness Noncommissioned Officer, and a NYC DOC employee without their knowledge or authorization on the fraudulent military memoranda and employment certifications.

*                *                *

SHAWN PIERRE HOBBS, 34, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory consecutive term of two years in prison.  The statutory maximum and mandatory penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by a judge.

Ms. Strauss praised the outstanding investigative work of VA-OIG.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorney Jane Kim is in charge of the prosecution.

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

[1] As the introductory phrase signifies, the entirety of the text of the Complaint, and the description of the Complaint as set forth herein, constitute only allegations, and every fact described therein should be treated as an allegation.  The defendant is presumed innocent unless and until proven guilty.

Audrey Strauss, United States Attorney for the Southern District of New York, Acting Under Authority Conferred by 28 U.S.C. § 515, announced that ARMANDO J. PEREZ, the former Chief of Police of the City of Bridgeport, Connecticut (the “City”), was sentenced today to 12 months and one day in prison for participating in a scheme to defraud the City by rigging the 2018 police chief examination in order to ensure he would be selected for the position, and to making false statements to federal agents in the course of the investigation.  PEREZ previously pled guilty in Bridgeport federal court on October 5, 2020, before U.S. District Judge Kari A. Dooley, who also imposed today’s sentence.

U.S. Attorney Audrey Strauss said:  “Former Chief Perez schemed to rig the search for a permanent police chief to ensure the position was awarded to him, and then he repeatedly lied to federal agents in order to conceal his conduct.  Today’s sentence sends a strong message that public officials will be held accountable when they corruptly put their own self-interest above their duties to faithfully serve their citizens.”   

According to the allegations contained in the Complaint, the Information, other court filings, statements made during court proceedings, and publicly available information:

The Scheme to Rig the City of Bridgeport’s Police Chief Exam

In or about 2018, PEREZ participated in a criminal scheme to rig the City’s search for a new Bridgeport Police Department (“BPD”) chief in 2018.  During the course of this scheme, PEREZ – who was serving as the acting BPD chief at the time – conspired with David Dunn, who was at that time the City’s acting personnel director, to deceive the City by secretly rigging the supposedly independent search process for a new BPD chief to ensure that PEREZ was ranked as one of the top three candidates and could therefore be awarded a five-year contract to serve as the BPD chief.

More specifically, in or about February 2018, the City commenced a search to fill the position of permanent Chief of Police.  Under the City’s Charter, the City was required to conduct an “open and competitive examination” to determine the top three scoring candidates for the position, from which the mayor could then choose.  Dunn, in his role as the personnel director, oversaw the police chief examination process, and retained an outside consultant (“Consultant-1”) to assist with developing and carrying out the exam.  PEREZ and Dunn then manipulated that examination process in multiple ways:  Dunn stole confidential examination questions and related information developed by Consultant-1, and provided those materials to PEREZ, including by email; Dunn had Consultant-1 tailor the examination scoring criteria to favor PEREZ; PEREZ enlisted two BPD officers to secretly draft and write PEREZ’s written exam; and Dunn attempted to influence a panelist, tasked with ranking the candidates in the last stage of the exam, to ensure that PEREZ was scored as one of the top three candidates. 

As a result of the scheme, the City was deceived into ranking PEREZ among the top three candidates, which rendered him eligible for the permanent police chief position.  The mayor ultimately offered the position to PEREZ, and the City, under the assurance that PEREZ had been appointed in accordance with the City Charter, entered into a five-year contract with PEREZ, the terms of which included a payout to PEREZ for accrued leave.

PEREZ’s False Statements

PEREZ was voluntarily interviewed in connection with the FBI’s investigation.  In an attempt to conceal his conduct, during those interviews he lied to FBI agents about facts material to the criminal investigation.  PEREZ provided false and misleading information about the assistance Dunn and others had provided him in connection with the examination process, including his requests to a BPD officer to sneak into headquarters to retrieve stolen confidential information provided by Dunn. 

*                *                *

In addition to the prison term, PEREZ, 64, of Trumbull, Connecticut, was sentenced to two years of supervised release, a fine in the amount of $7,500, and restitution of $299,407. 

On October 5, 2020, Dunn pled guilty to his participation in the scheme to rig the City’s police chief search and to making false statements to federal investigators, and is scheduled to be sentenced by Judge Dooley tomorrow.              

Ms. Strauss praised the outstanding work of the FBI and the Special Agents of the U.S. Attorney’s Office. 

The case is being prosecuted by the Office’s Public Corruption Unit and White Plains Division.  Assistant U.S. Attorneys Eli J. Mark and Jeffrey C. Coffman, and Assistant U.S. Attorney Jonathan N. Francis of the U.S. Attorney’s Office for the District of Connecticut, are in charge of the prosecution.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that YUSUF OWOLABI ABDUL, a/k/a “Saheed Sador,” a citizen of Nigeria and a resident of Canada, was extradited today from Germany.  ABDUL was charged with participation in a fraud scheme from at least in or about 2013 until at least April 2019 involving the theft and laundering of victim funds.  ABDUL was arrested in Germany on December 11, 2020, on an Interpol Red Notice, and is the fifth defendant charged in this case.  ABDUL is expected to be presented on Monday, April 12, before U.S. Magistrate Judge Ona T. Wang.  ABDUL’s case is assigned to U.S. District Judge Katherine Polk Failla.

U.S. Attorney Audrey Strauss said:  “As alleged, Yusuf Owolabi Abdul and his codefendants used a widely available telephone ‘spoofing’ service and other deceitful means to steal and conceal millions of dollars in victim funds.  Thanks to the FBI and international cooperation, Abdul is in U.S. custody and facing charges in this District.”

According to the allegations in the Indictment [1]:

From at least 2013 through in or about 2018, ABDUL and various other conspirators, located in countries including the United States, Canada, Italy, the United Kingdom, and the United Arab Emirates (collectively, the “Conspirators”), were involved in a scheme to fraudulently access individuals’ and corporations’ bank accounts and to conduct financial transactions using those bank accounts without the knowledge or authority of the accounts’ legitimate owners (the “Bank Scheme”).  As part of the Bank Scheme, the Conspirators placed thousands of calls to various United States banks, holding themselves out as legitimate accountholders of particular targeted bank accounts and using the stolen personal identifying information belonging to those accountholders.  Using a particular telephone number “spoofing” service, and voice-altering technology, the Conspirators would deceive bank representatives into believing that the Conspirators were actual accountholders.  In so doing, they convinced multiple U.S. banks to, among other things: move money from a victim’s savings account to the victim’s checking account (so that the Conspirators could more easily access the funds and conduct unauthorized transactions); falsely note on the account that the accountholder was traveling abroad (making the bank less likely to void suspicious international transactions made by the Conspirators); have “replacement” credit cards mailed to international addresses controlled by the Conspirators (whereupon the Conspirators could use them to make unauthorized purchases); and authorize foreign purchases made by the Conspirators.

*                *                *

ABDUL, 45­, a citizen of Nigeria and resident of Canada, is charged with one count of conspiracy to commit bank and wire fraud, which carries a maximum sentence of 30 years in prison; one count of conspiracy to commit money laundering, which carries a maximum of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison, to be served consecutively to the other charges. 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.

Other defendants charged in this case include Alade Kazeem Sodiq, a/k/a “Eluku,” a citizen of the United Arab Emirates and Abdulai Kennedy Saaka, a/k/a “Kenny,” of Atlanta, Georgia, who each pled guilty to one count of money laundering conspiracy and were sentenced to 50 months in prison and 32 months in prison, respectively; Habeeb Audu, a/k/a “Dickson” whose case remains pending; and Dominic Francis Labiran, a citizen of the United Kingdom, who remains at large.

Ms. Strauss praised the outstanding investigative work of the Federal Bureau of Investigation.  The U.S. Department of Justice’s Office of International Affairs of the Department’s Criminal Division provided significant assistance in securing the defendant’s extradition from Germany.

The prosecution of this case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Kiersten A. Fletcher, Jonathan E. Rebold, and Andrew A. Rohrbach are in charge of the prosecution.

The charges against ABDUL, Audu, and Labiran contained in the Indictment are merely accusations, and they 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 below constitute only allegations, and every fact described should be treated as an allegation.

Audrey Strauss, the United States Attorney for the Southern District of New York, David M. Hoovler, Orange County District Attorney, and William F. Sweeney Jr., Assistant Director-in-Charge, New York Division, Federal Bureau of Investigation (“FBI”), announced today that TISHAWN C. WOODS has been arrested for his participation in a string of armed home invasion and gas station robberies in and around Newburgh, New York.  WOODS was apprehended yesterday in Orange, New Jersey, and will be presented this afternoon before United States Magistrate Judge Andrew E. Krause in White Plains federal court. 

U.S. Attorney Audrey Strauss said:  “As alleged, Tishawn Woods and an accomplice committed a series of robberies during which they discharged firearms, shooting and seriously wounding one of their victims.  We thank the FBI and the Orange County District Attorney’s Office for their efforts to bring Woods to justice and keep the public safe.”   

Orange County District Attorney David M. Hoovler said:  “It takes the combined cooperative efforts of different law enforcement officials to stop organized violent criminal activity, particularly where it crosses over into different jurisdictions.  I am grateful for the cooperation and work of the City of Newburgh Police Department, the Town of Newburgh Police Department, the Town of New Windsor Police Department, and the FBI’s Safe Streets Task Force in this case.  I am proud of the work of my office’s investigators and assistant district attorneys in this matter, particularly in obtaining some of the video evidence.  Very often digital recordings possessed by private citizens provide crucial evidence in solving violent crimes, which is why in 2016 we created the Video Camera Community Partnership Program.  I thank United States Attorney Audrey Strauss for the professionalism, diligence, and courtesy shown by her staff and look forward to working with the United States Attorney’s Office of the Southern District of New York on this and other matters.”   

FBI Assistant Director William F. Sweeney Jr. said:  “We’ve recently seen an uptick in violent offenses, and today I have a sincere warning for those planning similar violent behavior – think twice.  Respect others’ property and belongings. The FBI and our law enforcement partners will track you down and hold you accountable for violent behavior.  If you break federal law you will face federal penalties.”

According to the allegations in the Complaint:[1]

In the early morning hours of March 17, 2021, WOODS and an accomplice, armed with handguns, burst inside an apartment in Newburgh, New York, where they robbed and shot the apartment’s occupant, inflicting life-threatening injuries. 

In the early morning hours of March 22 and March 28, 2021, WOODS and an accomplice committed armed robberies of gas stations in New Windsor, New York, during which they fired shots near the gas stations’ clerks.

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WOODS, 20, of Newburgh, New York, is charged with three counts of Hobbs Act robbery, each of which carries a maximum sentence of 20 years in prison, and three counts of using, carrying, brandishing, and discharging a firearm during, in relation to, and in furtherance of, a crime of violence, each of which carries a mandatory 10-year consecutive sentence. 

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

Ms. Strauss praised the outstanding work of the FBI, the Orange County District Attorney’s Office, the Orange County Crime Analysis Center, the City of Newburgh Police Department, the Town of Newburgh Police Department, and the Town of New Windsor Police Department.

The case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorney Jeffrey C. Coffman 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, constitutes only allegations, and every fact described therein should be treated as an allegation.

Audrey Strauss, the United States Attorney for the Southern District of New York, announced that ADEDAYO ILORI pled guilty today before United States District Judge Lewis J. Liman to one count of conspiracy to commit wire and mail fraud in connection with his role in a loan fraud scheme.  ILORI also admitted that he conspired to commit money laundering, in violation of Title 18, United States Code, Section 1956(h).  Codefendants Herode Chancy and Michael Albarella, who at the time of offense were employed as a managers at a Manhattan branch of a national bank (“Bank-1”), previously pled guilty before Judge Liman in connection with their respective roles in the scheme.

U.S. Attorney Audrey Strauss said:  “Adedayo Ilori worked with bank insiders to obtain over $1 million in commercial loans for fake businesses.  Ilori used stolen identities to apply for the loans and open bank accounts to receive the loan proceeds.  His co-conspirators used a stolen identity provided by Ilori to launder a portion of the loan proceeds.  Now all three have admitted their guilt and await sentencing for their crimes.”

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

From at least in or about March 2019 up to and including at least in or about March 2020, ILORI and Chancy conspired to fraudulently obtain business loans from a third-party commercial lender with the intent not to repay the loans – i.e., with the intent to “bust out” the loans.  ILORI and Chancy together submitted eight fraudulent business loan applications for a total of $1,020,000 in business loans.  The business loan applications submitted by ILORI and Chancy included doctored bank statements and listed the identities of other persons as the loan applicants, including stolen identities provided by ILORI.  ILORI and Chancy also opened bank accounts using the identities of those other persons in order to receive the loan payments from the third-party commercial lender.  ILORI and Chancy subsequently conspired with Albarella to open a bank account at Bank-1 using a stolen identity provided by ILORI to launder approximately $200,000 of the expected proceeds of the loan scheme.  Albarella opened the bank account at Bank-1 using the stolen identity provided by ILORI and Chancy, and Albarella accepted a $10,000 bribe to open the bank account.       

ILORI and Chancy believed that the underwriter for the third-party commercial lender was participating in the scheme and agreed to pay the underwriter a “commission” for the underwriter’s role in the scheme.  In reality, however, the underwriter was an undercover law enforcement officer. 

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ILORI, 42 of Queens, New York, pled guilty to one count of conspiracy to commit wire and mail fraud, which carries a maximum penalty of 20 years in prison.  The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

ILORI is scheduled to be sentenced by Judge Liman on July 22, 2021, at 2:00 p.m.

Ms. Strauss praised the outstanding investigative work of the New York FBI’s Eurasian Organized Crime Task Force and the El Dorado Task Force of Homeland Security Investigations. 

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