Southern District of New York

Audrey Strauss, the Acting 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 that JAMES JEREMY BARBERA, the former founder and chief executive officer of a nanotechnology company based in New York, New York, was arrested this morning in New York on securities fraud and wire fraud charges stemming from a scheme to defraud investors in the company.  Among other illicit activity, BARBERA fraudulently induced dozens of investors to invest at least approximately $12.2 million based on false and misleading statements, by failing to use investors’ funds as promised, and by converting investors’ money to his own use.  BARBERA will be presented this afternoon in Manhattan federal court before U.S. Magistrate Judge Sarah Netburn.

Acting U.S. Attorney Audrey Strauss said:  “As alleged, James Barbera defrauded investors out of millions of dollars by offering the opportunity to invest in a seemingly plausible but wholly fictitious technology, purportedly developed in coordination with NASA.  Barbera allegedly further misled investors with false statements about institutional investors, licensing agreements, an imminent IPO, and other lies, and misappropriated investor money for his own use.  Now he is in custody and facing prosecution for his alleged crimes.”

FBI Assistant William F. Sweeney Jr. said:  “As we allege today, Barbera, in his position as founder and CEO of a privately-held nanotechnology company, fraudulently collected more than $12 million from investors and used approximately half the money to pay for personal expenses including private school and college tuition for his children and mortgage payments on his Central Park West apartment.  Among other misrepresentations he made, Barbera claimed his company had an exclusive relationship with NASA and even used NASA’s logo to solicit investors.  As we demonstrated today, Barbera’s non-existent ‘exclusive’ landed him nothing more than a trip through the federal criminal justice system.”

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

Between in or about 2009 and in or about 2019, BARBERA was the founder and CEO of a privately held nanotechnology company that represented to investors that the company had developed a breathalyzer sensor technology that could detect cancer and narcotics in human breath, based on technology developed by the National Aeronautics and Space Administration (“NASA”), and that it was also partnered with a major U.S. research university. 

From at least in or about 2013 through in or about 2020, BARBERA and others perpetrated a scheme to defraud dozens of investors out of at least approximately $12.2 million (i) by soliciting investments in the company’s equity and notes through false and misleading statements, (ii) by failing to use investors’ funds as promised, and (iii) by converting investors’ money to his own use.  BARBERA and others made false and misleading representations to actual and potential investors, including as set forth below:

BARBERA falsely represented that the company had developed a breathalyzer sensor, based on technology developed by NASA, that could detect narcotics and cancer from a person’s breath.  In truth and in fact, and as BARBERA well knew, the company and NASA never developed such a technology.  Indeed, NASA conducted no research for the company related to this technology after in or about late 2017, and NASA did not permit research related to narcotics testing at NASA facilities.

BARBERA falsely represented that the company had an exclusive license with NASA for certain patents related to a breathalyzer sensor technology for the life of the patents, and used NASA’s name and logo to solicit investors in the company.  In truth and in fact, and as BARBERA well knew, the company did not have an exclusive license with NASA.

BARBERA falsely represented to potential and actual investors that institutional investors, including a large, publicly traded chemical company, had made substantial investments in the company.  In truth and in fact, and as BARBERA well knew, that institutional investor never invested in the company.

BARBERA falsely represented that the company would soon have an initial public offering (“IPO”), which would result in large profits to investors.  In truth and in fact, and as BARBERA well knew, the company was not close to an IPO. 

BARBERA converted to his own use approximately 50 percent of the approximately $12.2 million in investor funds in the form of cash withdrawals and to pay personal expenses, including private school and college tuition for his children, mortgage payments on his Central Park West apartment, and for his other personal items, such as credit card bills, jewelry, automobiles, and daily living expenses.

Previously, BARBERA was the CEO of a publicly traded company.  On or about July 29, 2014, the U.S. Securities and Exchange Commission (“SEC”) announced the settlement of federal securities fraud charges against BARBERA and that company for making materially false and misleading statements about the true business operations and finances of that company.  As part of that settlement, BARBERA was permanently enjoined from future violations of the antifraud provisions of the federal securities laws, and agreed to pay a $100,000 penalty and to be permanently barred from acting as an officer or director of a public company.

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BARBERA, 64, was arrested this morning at his home in New York, New York.  BARBERA was charged with one count of securities fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.  He was also charged with one count of conspiracy to commit securities fraud and wire fraud, which carries a maximum sentence of five years in prison.  The charges carry a maximum fine of $5 million, or twice the gross gain or loss from the offenses.  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 work of the FBI and NASA’s Office of Inspector General, and also thanked the SEC for its assistance and cooperation in this investigation. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorney Joshua A. Naftalis 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 texts of the Complaint and the descriptions of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced that RICHARD DIVER was sentenced on December 7 to 36 months in prison in connection with his embezzlement from the asset management company where he served as chief operating officer.  DIVER previously pled guilty to investment adviser fraud in connection with his fraudulently overbilling the company’s clients by hundreds of thousands of dollars and rerouting those funds into his personal account, and wire fraud for diverting millions of dollars in the company’s payroll to which he was not entitled to his personal account over a period of several years.  U.S. District Judge Loretta A. Preska, who accepted DIVER’s guilty plea, imposed the sentence in Manhattan federal court.

Manhattan U.S. Attorney Audrey Strauss said:  “Richard Diver stole five million dollars, first by defrauding his employer over several years, and then – as if those millions were not enough – turning to the firm’s clients and lining his pockets with excess billings.  This sentence should serve as a reminder that this kind of fraud and abuse will not be tolerated.”

According to statements in the Indictment and Complaint in this case, and statements made in public court proceedings:

DIVER was the chief operating officer (“COO”) of a Manhattan-based asset management company (“Company-1”) that offers its customers investment planning and wealth management services.  As COO, DIVER’s responsibilities included overseeing the company’s payroll and billing functions, and he had unfettered access to the payroll controls. 

Beginning in 2011 and continuing into December 2018, DIVER fraudulently caused Company-1’s third-party payroll vendor to pay him salary significantly beyond his authorized salary and bonus.  Over that period, DIVER caused over $4.5 million to be routed to his personal checking account above and beyond his approved compensation.

In 2017, DIVER began to also defraud Company-1’s clients.  Typically, Company-1 billed its clients quarterly, in most cases having been authorized by the clients to deduct its investment advisory fees directly from their custodial accounts.  DIVER began to cause an employee to run the billing process, which was based on a fixed percentage of the assets the clients had under the company’s management, at off-cycle intervals as to certain clients in addition to the regular quarterly intervals at which it billed legitimately.  These billings were not accompanied by any notice.  The clients affected by this practice therefore had their accounts debited twice, but were only notified of the single legitimate billing in periodic reports and correspondence from the company.  DIVER routed the excess funds to his own personal bank accounts through the company’s payroll system.  Through this mechanism, DIVER defrauded the clients of over $700,000.

In December 2018, certain clients noticed the overbilling and complained to Company-1’s president, who confronted him.  DIVER admitted to both fraudulent practices, stating that the funds he had stolen were consumed by his own “wild” spending.  Prior to his arrest, law enforcement agents recorded a conversation in which DIVER acknowledged having defrauded the company of $4.5 million through the payroll fraud and certain clients of over $700,000 through the billing fraud.

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DIVER, 64, of New York New York, was also sentenced to a three-year term of supervised release.  He was further ordered to forfeit $5,248,197 and pay an additional $5,248,197 in restitution to his former employer. 

Ms. Strauss praised the investigative work of the U.S. Postal Inspection Service and thanked the New York Regional Office of the U.S. Securities and Exchange Commission, which separately filed civil charges against DIVER. 

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

Audrey Strauss, the Acting 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 Kelly R. Jackson, Special Agent in Charge of the Washington, D.C., Field Office of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced today the unsealing of an Indictment in Manhattan federal court charging AMIR BRUNO ELMAANI, a/k/a “Bruno Block,” the founder of the cryptocurrency “Oyster Pearl,” with tax evasion.  As alleged, ELMAANI made millions of dollars from the sale of a new cryptocurrency but evaded reporting that income to the IRS, including by filing a false tax return, operating his business and owning assets through pseudonyms and shell companies, obtaining income through nominees, and dealing in gold and cash.  ELMAANI was arrested this morning in Martinsburg, West Virginia, and will be presented later today before United States Magistrate Judge Robert W. Trumble in the Northern District of West Virginia.   The case is assigned to Chief United States District Judge Colleen McMahon in the Southern District of New York.  

In a separate civil action, the Securities and Exchange Commission is filing civil charges against ELMAANI today. 

Acting Manhattan U.S. Attorney Audrey Strauss said:  “As alleged, Amir Bruno Elmaani purported to establish a high-tech method of financing a high-tech business, but the underlying scheme was old-fashioned fraud and tax evasion.  Elmaani allegedly generated millions by soliciting investor money through his own cryptocurrency, adding to the purportedly fixed number of tokens and converting them to other cryptocurrencies, and failing to report or pay tax on any of the proceeds.  Thanks to the FBI and IRS-CI, Elmaani is now in custody and facing federal prosecution.” 

FBI Assistant Director William F. Sweeney Jr. said:  “Taking advantage of the ever-so-popular cryptocurrency market, Elmaani allegedly capitalized on the investments of those who purchased virtual currency through Oyster Pearl, which he founded.  As it turns out, Elmaani was funneling the proceeds of his alleged cryptocurrency scheme through a shell company that hid the true nature of his financial interests, ultimately never paying taxes on his earnings.  With minimal reported income in 2018, he still managed to spend over $10 million for the purchase of yachts, but after today’s arrest, he won’t be sailing anywhere anytime soon.”

IRS Special Agent-in-Charge Kelly R. Jackson said:  “Ensuring the integrity of our tax system is a priority of IRS-CI.  Evading taxes only aims to deteriorate the confidence in this system and those who fail to pay their fair share will be investigated.  Using cryptocurrency as a means to defraud and evade taxes will not stop our agents from doing what we do best – following the money.”

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

In September and October 2017, ELMAANI began promoting online his new cryptocurrency known as Pearl tokens.  Using a variation of his online pseudonym “Bruno Block,” ELMAANI stated that he planned to develop an online data-storage platform, known as Oyster Protocol, which would allow users to purchase online data storage with Pearl tokens.  Instead of using his real name, ELMAANI operated almost exclusively online under the pseudonym “Bruno Block.”  ELMAANI concealed his true identity from his prospective employees and business associates and never met them in person.

In the fall of 2017 and thereafter, ELMAANI sold Pearl tokens to the investing public through an “initial coin offering” and on cryptocurrency market platforms.  ELMAANI announced that he intended to take a “founder’s share” of Pearl tokens for his own personal use.  ELMAANI owned and controlled the subsequently established company Oyster Protocol Inc. through a shell company not associated with his true name. 

In a statement issued under ELMAANI’s online pseudonym on June 7, 2018, ELMAANI stated that he was retaining millions of Pearl tokens as his “ownership stake” in Oyster Protocol, but that he had to move the tokens to a different cryptocurrency wallet “in order to avoid being double-taxed.”  In truth, ELMAANI did not report or pay tax on any of his cryptocurrency proceeds.  At various points, ELMAANI used friends and family as nominees to receive cryptocurrency proceeds and transfer them or U.S. currency to his own accounts. 

ELMAANI dealt substantially in precious metals, kept gold bars in a safe on a yacht he owned, and used large amounts of cash to pay personal expenses. 

In late October 2018, although the number of Pearl tokens was purportedly fixed, ELMAANI used his access to the blockchain technology used to create Pearl tokens to mint new tokens, which he took for his own personal use (the “Exit Scheme”).  ELMAANI thereby increased the total volume of Pearl tokens.  Shortly after creating the new tokens, ELMAANI converted the Pearl tokens he had obtained to other types of cryptocurrency on an online marketplace or exchange.  As a result of ELMAANI’s conduct, trading in Pearl tokens halted on that exchange and the price of Pearl tokens held by investors dropped substantially.  Pearl tokens were subsequently de-listed from the primary exchange where they were traded.  Subsequent to the Exit Scheme, ELMAANI used his friends and family to receive cryptocurrency and to transfer funds to a bank account in his name. 

While ELMAANI initially attempted to hide even “Bruno Block’s” involvement in the Exit Scheme, he later effectively admitted to the conduct online under his “Bruno Block” pseudonym.  In a recorded call with the then-chief executive officer (“CEO”) of Oyster Protocol Inc., after the Exit Scheme, the CEO asked ELMAANI why he had to take the additional new Pearl tokens if he had already cashed out millions of dollars’ worth of Pearl tokens in the past.  ELMAANI responded, in part, that “taxes are pretty nasty.”  ELMAANI carried out the Exit Scheme only days before the exchange he had used to cash out his Pearl tokens was set to require “know your customer” personal identifying information from its users. 

ELMAANI filed a false 2017 tax return stating that he had only approximately $15,000 of income from a “patent design” business, and he filed no return and reported no income to the IRS in 2018.  Nevertheless, ELMAANI spent, in 2018, over $10 million for the purchase of multiple yachts, $1.6 million at a carbon fiber composite company, hundreds of thousands of dollars at a home improvement store, and over $700,000 for the purchase of two homes, one of which was titled in the name of a shell company and the other in the name of two of his associates.  

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ELMAANI, 28, is charged with two counts of tax evasion, each of which carries a maximum sentence of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Ms. Strauss praised the investigative work of the FBI and IRS-CI and also thanked the Securities and Exchange Commission and the Commodity Futures Trading Commission for their assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Margaret Graham and Drew Skinner 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 Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Peter C. Fitzhugh, Special Agent in Charge of Homeland Security Investigations (“HSI”) in New York, announced the unsealing of an Indictment charging eight defendants with a variety of racketeering and fraud offenses.  Of the eight defendants, NAREK MARUTYAN, ALBERT MARUTYAN, MIKAYEL YEGHOYAN, DAVIT YEGHOYAN, and VAHE HOVHANNISYAN are associated with a coast-to-coast racketeering enterprise referred to as “Pure Armenian Blood” or “P.A.B.” and are charged in United States v. Narek Marutyan, et al. (the “Indictment”), which has been assigned to U.S. District Judge Victor Marrero.  Of those defendants, MIKAYEL YEGHOYAN and DAVIT YEGHOYAN were taken into federal custody and presented before U.S. Magistrate Judge Sarah Netburn today.  Two defendants, ALBERT MURATYAN and VAHE HOVHANNISYAN, were presented in the Central District of California.

Three additional defendants, LUSINE GHAZARYAN, SARO MOURADIAN, a/k/a “Paul Mouradian,” and ZAVEN YERKARYAN, are charged in the Indictment with fraud-related offenses.  Of those defendants, GHAZARYAN was taken into federal custody today and were presented before U.S. Magistrate Judge Sarah Netburn; YERKARYAN was presented in the Central District of California before U.S. Magistrate Judge Charles F. Eick .  MOURADIAN will be presented in the Southern District of Florida before U.S. Magistrate Judge Lurana Snow.

Acting Manhattan U.S. Attorney Audrey Strauss said: “As alleged, Pure Armenian Blood members enriched themselves and their criminal associates through a raft of fraudulent schemes that included years’ long efforts to steal others’ identities, falsify documents, and spend other people’s money as though there were no consequences.  Thanks to the remarkable efforts of our agency partners, spearheaded by the FBI, members of this nationwide network of crime will now face serious consequences in the form of federal charges.”

FBI Assistant William F. Sweeney Jr. said: "The members of this enterprise acted as if they were in another time, much like fiefdoms operated in the Dark Ages in which tributes were paid to protect fellow criminals and settle disputes between members under the benevolence of the vor.  However the actions we allege they've taken, like using electronic devices to steal people's identities, using fake credit cards and setting up fake lines of credit at U.S. banks, are all modern day crimes. As a consequence, they now face modern justice."

HSI Special Agent in Charge Peter C. Fitzhugh said:  “The only thing pure about this alleged crime syndicate is their thirst for stealing from our communities and endangering the security of our homeland from coast to coast.  HSI New York is relentless in our pursuit of dismantling transnational criminal organizations, and we are grateful to have this opportunity working with our federal partners to ensure those involved will now face justice.”

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

Pure Armenian Blood was an organized criminal group operating under the direction and protection of an unindicted co-conspirator (“CC-1”), a “vor v zakone” or “vor,” which are Russian phrases translated roughly as “Thief-in-Law” or “Thief,” and which refer to an order of elite criminals from the former Soviet Union who receive tribute from other criminals, offer protection, and use their recognized status as vor to adjudicate disputes among lower-level criminals.  Members and associates of Pure Armenian Blood operated under the direction and protection of CC-1, a vor of Armenian descent previously based in Los Angeles before being deported in or about 2018.  Pure Armenian Blood operated through groups of individuals, often with overlapping members or associates, dedicated to particular criminal tasks, particularly identity theft, access device fraud and credit card fraud, among others.  While Pure Armenian Blood exploited victims and the financial system in New York City, it had operations in various locations throughout the United States and abroad, including through the use of purportedly legitimate business entities operating under the control and in conjunction with members of P.A.B. at various points throughout the conspiracy.

NAREK MARUTYAN, ALBERT MARUTYAN, a/k/a “Abo,” MIKAYEL YEGHOYAN, a/k/a “Misho,” DAVIT YEGHOYAN and VAHE HOVHANNISYAN are charged in Count One of the Indictment with racketeering conspiracy.  P.A.B.’s illicit activities included:

• The use of counterfeit credit cards and stolen personal identifying information;
• Selling goods purchased with counterfeit credit cards for profit;
• Fraudulently opening and exhausting lines of credit, and then falsifying documents to “clean” the credit of account holders in whose names the lines of credit were opened (the “Account Holders”), who were often relatives or acquaintances of members and associates of Pure Armenian Blood;
• Selling access device fraud devices to other criminals to install in order to steal personal identifying information; and
• Making purchases at collusive businesses with counterfeit credit cards or credit cards that were fraudulently opened.

Along with Pure Armenian Blood members NAREK MARUTYAN, ALBERT MARUTYAN, a/k/a “Abo,” MIKAYEL YEGHOYAN, a/k/a “Misho,” DAVIT YEGHOYAN and VAHE HOVHANNISYAN, two additional defendants, LUSO GHAZARYAN and SARO MOURADIAN, a/k/a “Paul Mouradian,” are charged in Counts Two and Three with conspiracy to commit fraud relating to means of identification and conspiracy to commit access device fraud. Each of these seven defendants, as well as ZAVEN YERKARYAN, are charged in Count Four with conspiracy to commit mail and wire fraud.

Defendants MIKAYEL YEGHOYAN and DAVIT YEGHOYAN are each charged with one count of Aggravated Identity Theft, in Counts Five and Six, respectively.

*          *          *

Ms. Strauss praised the outstanding work of FBI New York’s Eurasian Organized Crime Squad, as well as the FBI’s New Jersey, Los Angeles, and Miami offices, Homeland Security Investigations, the New York City Police Department, the United States Postal Inspection Service, and United States Customs and Border Protection for their investigative efforts and ongoing support and assistance with the case.  This case is part of an Organized Crime Drug Enforcement Task Force (“OCDETF”) operation.  OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach.

The prosecution of this case is being overseen by the Office’s Money Laundering and Transitional Criminal Enterprise Unit.  Assistant U.S. Attorneys Benet J. Kearney and Abigail S. Kurland are in charge of the case.

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, the Acting 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, Commissioner of the New York City Police Department (“NYPD”), announced charges against STEVE ROSADO, a registered sex offender, for attempted enticement of two minor girls in New York, New York.  ROSADO was arrested yesterday evening and presented in Manhattan federal court today, before U.S. Magistrate Judge Sarah Netburn.

Acting U.S. Attorney Audrey Strauss stated:  “Steve Rosado allegedly attempted to harm society’s most vulnerable – trying to engage in sexual activity with two young children, whom he believed to be 12 and 9 years old – even after he had been convicted of sex offenses in the past and required to register as a sex offender.  I thank the FBI and the NYPD for their work in investigating and arresting Rosado before he could harm any more victims.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Mr. Rosado knew exactly what he was doing when he arranged to have sex with two children, one of whom he believed was only 9 years old.  As a convicted sex offender, he knew the risk and allegedly took it anyway.  He is now in federal custody and facing prosecution.  It’s not easy to investigate sexual predators.  The agents, detectives, and analysts who constitute the FBI/NYPD Child Exploitation and Human Trafficking Task Force do this work each and every day hoping to stop the next offender from harming another child.”           

NYPD Commissioner Dermot Shea said:  “These charges, by the United States Attorney’s Office for the Southern District of New York reflect our continuing commitment to keep those would who prey on children from stalking our streets.  I praise our detectives and federal partners for their work in fighting on behalf of society’s most vulnerable individuals.”

According to the allegations in the Complaint charging ROSADO:[1]

On or about November 29, 2020, an undercover FBI agent (“UC-1”), posing as the mother of a 12-year-old girl and a 9-year-old girl, initiated a series of conversations on an instant messaging platform with an individual identified to be ROSADO.  Thereafter, UC-1 and ROSADO had numerous communications via the instant messaging platform, text message, and telephone call.

In these conversations, ROSADO repeatedly expressed, in graphic and unambiguous terms, his desire to engage in sexual activity with both children – including both oral and vaginal sex.  To help alleviate any concerns UC-1 might have regarding ROSADO having sexual relations with her young children, ROSADO provided UC-1 with his recent test results for COVID-19 and HIV, and he discussed what he and UC-1 could do if he were to impregnate one of the children.

  UC-1 and ROSADO arranged to meet at a bar in Manhattan on the evening of December 7, 2020, with the understanding that they would return to UC-1’s apartment afterward and ROSADO would then engage in sexual activity with the children.  On the evening in question, ROSADO met UC-1 at the agreed-upon location.  After the two of them left the bar and began walking toward UC-1’s purported apartment, law enforcement arrested ROSADO.  ROSADO was in possession of a backpack containing, among other things, a toothbrush, a change of clothes, and lubricant.

*                *                *

ROSADO is charged with one count of attempted enticement of a minor to engage in illegal sexual activity, in violation of Title 18, United States Code, Sections 2422(b) and 2, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; and one count of committing the aforementioned offense while being required to register as a sex offender, in violation of Title 18, United States Code, Section 2260A, which carries a mandatory sentence of an additional 10 years in prison.

Ms. Strauss praised the outstanding investigative work of the FBI-NYPD Child Exploitation and Human Trafficking Task Force. 

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Jonathan L. Bodansky is in charge of the prosecution.

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

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

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that COLIN AKPARANTA, formerly a correctional officer at the Metropolitan Correctional Center (“MCC”), which houses federal inmates in Manhattan, was sentenced in Manhattan federal court to 40 months in prison for engaging in abusive sexual contact with an inmate.  AKPARANTA previously pled guilty before United States Magistrate Judge Kevin Nathaniel Fox to one count of abusive sexual contact of an inmate, in violation of Title 18, United States Code, Section 2244(a)(4), and one count of deprivation of the constitutional rights of that inmate, in violation of Title 18, United States Code, Section 242.  In connection with the plea, AKPARANTA also admitted that he engaged in abusive sexual contact with six additional victims, and engaged in sexual acts with all seven of the victims.  U.S. District Judge Lorna G. Schofield, who accepted AKPARANTA’s guilty plea, imposed today’s sentence.

Acting U.S. Attorney Audrey Strauss said:  “Colin Akparanta repeatedly abused his position of authority as a correctional officer at the MCC by sexually abusing inmates whose safety and security he was duty-bound to protect.  Today’s sentence should send a strong message that correctional officers who abuse their authority and commit crimes will be held to account.  This Office will remain vigilant to ensure that all inmates are afforded the dignity and security they deserve.”

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

AKPARANTA was employed as a correctional officer at the MCC starting in 2004.  Between in or about late 2012 and in or about April 2018, AKPARANTA used his official position to engage in sexual acts and contact with at least seven female inmates at the MCC while they were under AKPARANTA’s custodial, supervisory, and disciplinary authority.  AKPARANTA digitally penetrated the victims’ vaginas and touched their breasts, buttocks, and/or genitalia.  AKPARANTA also had some of the victims touch his penis over his pants.  In addition, AKPARANTA smuggled contraband, including, but not limited to, personal hygiene items, makeup, and food into the MCC for some of the victims, and, with respect to at least one of the victims, explicitly conditioned his provision of contraband on the inmate’s continued performance of sexual acts with him.  AKPARANTA also asked the victims for their contact information in order to reach them after their release.           

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In addition to the prison term, Judge Schofield sentenced AKPARANTA, 44, of Irvington, New Jersey, to two years of supervised release.

Ms. Strauss praised the investigative work of the Department of Justice Office of the Inspector General and the Special Agents of the United States Attorney’s Office.  

The prosecution is being handled by the Office’s Public Corruption, Violent and Organized Crime, and Civil Rights Units.  Assistant U.S. Attorneys Lara Pomerantz, Sarah Krissoff, and Rachael Doud are in charge of the prosecution.

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, Ralph Sozio, the United States Marshal for the Southern District of New York, and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced today the filing of a Complaint in Manhattan federal court charging GRANT GRANDISON with making false statements to federal agents and harboring or concealing a person from arrest.  As alleged, GRANDISON allowed Andre K. Sterling, a fugitive wanted for the November 20, 2020, shooting of a state trooper in Massachusetts, to reside in his Bronx apartment.  GRANDISON further allegedly lied to the Marshals who were seeking to arrest Sterling by telling the Marshals that no one was in the apartment, before Sterling fired multiple rounds at the Marshals, striking and injuring two Marshals.  GRANDISON was arrested on December 4, 2020, and will be presented this afternoon before United States Magistrate Judge Sarah Netburn.

Acting U.S. Attorney Audrey Strauss said:  “As alleged, Grant Grandison’s conduct led to the horrific shooting of two Deputy United States Marshals who were just doing their jobs in attempting to arrest Andre K. Sterling, a man wanted for a violent felony.  We are lucky that more law enforcement officers were not injured during the shooting, and it appears that both injured Marshals will recover.  Grandison is now charged in federal court for his serious crimes.  Our Office remains committed to defending our brave law enforcement partners, who risk their lives every day to keep New Yorkers safe.”

United States Marshal Ralph Sozio said:  “Unfortunately, and as alleged, the actions of Grandison dictated the events that led to the shooting of two Deputy United States Marshals on that morning in the Bronx.  The heroic actions of the Deputy United States Marshals and Task Force Members that day are a true testament to the dangers of entering an unknown location in search of a violent fugitive.  On behalf of the United States Marshals Service I want to extend my gratitude to the United States Attorney’s Office and the New York City Police Department for their tireless investigation and their pursuit of Federal charges.  Our thoughts and prayers are with our Deputies as they recover from their injuries.  The United States Marshals Service and the law enforcement community remain united in our continued pursuit of justice.”

NYPD Commissioner Dermot Shea said:  “By misleading federal agents, as alleged, the defendant led them into a violent attack.  The ensuing shooting not only injured two Deputy U.S. Marshals but is an assault on society.  I commend the U.S. Attorney’s Office for the Southern District of New York for answering it with these federal charges.”

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

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

On the morning of December 4, 2020, several Deputy United States Marshals (the “Marshals”), along with officers from the NYPD and state troopers from the Massachusetts State Police, traveled to an apartment in the Bronx (the “Apartment”), where they believed Sterling was located, in order to arrest Sterling.  The Marshals announced themselves as “U.S. Marshals” and encountered GRANDISON at the door.  The Marshals asked GRANDISON, in sum and substance, if anyone else was in the Apartment, and GRANDISON replied, in sum and substance, that no one else was in the Apartment.  At the time of GRANDISON’s statements to the Marshals, he knew that Sterling was a fugitive.  The Marshals proceeded into the Apartment, at which point Sterling began firing at the Marshals, striking and injuring two Marshals.  The Marshals returned fire, and Sterling was killed in the exchange.  Law enforcement agents recovered a firearm from near Sterling.

Law enforcement agents later interviewed GRANDISON, who admitted, in sum and substance and among other things, that he had allowed Sterling to live with him.  GRANDISON further admitted that Sterling had told him, in sum and substance and among other things, that if anyone was looking for him, GRANDISON should tell them Sterling was not there. 

*              *             *

GRANDISON, 35, of the Bronx, New York, is charged with one count of making false statements to a federal agents and one count of harboring or concealing a person from arrest, each of which carries a maximum sentence of five years in prison.

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

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

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

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

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

Audrey Strauss, Acting 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 Carolyn Pokorny, Inspector General of the Metropolitan Transportation Authority (“MTA OIG”), announced today the unsealing of complaints charging THOMAS CAPUTO, JOSEPH RUZZO, JOHN NUGENT, and JOSEPH BALESTRA, four current and former longtime employees of the Long Island Rail Road (“LIRR”), and MICHAEL GUNDERSEN, a longtime employee of the New York City Transit Authority (“NYC Transit”), with federal program fraud for submitting time reports falsely claiming to have worked hundreds of hours of overtime that they did not in fact work.  CAPUTO, RUZZO, NUGENT, and BALESTRA were charged in a criminal complaint unsealed today (the “LIRR Complaint”), and GUNDERSEN was charged in a separate criminal complaint unsealed today (the “NYC Transit Complaint”).  CAPUTO, RUZZO, NUGENT, BALESTRA, and GUNDERSEN are expected to be presented this afternoon before U.S. Magistrate Judge Katharine H. Parker.

Acting U.S. Attorney Audrey Strauss said:  “These defendants, senior LIRR and New York City Transit employees, allegedly made themselves some of the highest-paid employees at the entire MTA by claiming extraordinary, almost physically impossible, amounts of overtime.  As alleged, those almost impossible claims were fueled by brazen, repeated fraud, including falsely claiming to be working overtime hours while the defendants were at their homes or, in some instances, bowling.  All New Yorkers ultimately bear the burden of fraud targeting our mass transit systems, and we will continue to work tirelessly to expose and prosecute those who engage in it.  Our investigation remains ongoing.”

FBI Assistant Director William F. Sweeney Jr. said:  “Today we’ve arrested five individuals, all senior MTA employees, for their role in an incredibly blatant overtime fraud scheme.  In the case of at least one defendant, the excessive compensation he received from the MTA was equivalent to purportedly working 10 additional hours a day, every day, for 365 days.  The others weren’t far behind, collectively earning more than $1 million in overtime pay.  This type of double-dealing directly contributes to rising MTA fares for the average, hardworking commuter.  Today these individuals learned the end of this line is the federal courthouse here in Lower Manhattan.  If you or someone you know has additional information regarding this case, we want to hear from you.  You may reach us by calling 1-800-CALL-FBI.”

MTA Inspector General Carolyn Pokorny said: “These employees allegedly worked very hard – to steal MTA time and money, ignoring their duty to keep the tracks and rails safe for their fellow workers and riders.  For MTA employees who earn hundreds of thousands of dollars a year, it takes some nerve to steal overtime by only working a fraction of your shift – if at all. The situation underscores what our Office has been saying, again and again – the lack of management systems and controls at the MTA creates an environment where fraud could easily occur undetected – and it did, as alleged in these criminal complaints.  When employees are on the clock, management needs to know that they are actually working, and not – say, enjoying concerts in Atlantic City, vacationing at resorts, or competing in a bowling league.  In grateful cooperation with our law enforcement partners at the Office of the U.S. Attorney for the Southern District of New York and the FBI, MTA OIG continues to probe how these defendants allegedly succeeded in stealing so much overtime.”

According to the allegations in the LIRR Complaint and the NYC Transit Complaint (the “Complaints”):[1]

CAPUTO, RUZZO, NUGENT, BALESTRA, and GUNDERSEN each schemed to fraudulently receive thousands of dollars in compensation from the MTA by falsely claiming to have worked hundreds of voluntary overtime hours (and in the case of GUNDERSEN some regular time hours as well) that in fact they did not work.  The overtime pay the defendants claimed led to significant increases in their salary and led to them being among the highest-paid MTA employees, and in the case of CAPUTO, the highest-paid MTA employee in 2018.  The defendants frequently volunteered for overtime and then claimed to have been working lucrative overtime shifts at times when they were in fact at home or at other non-work locations, such as, in the case of CAPUTO, a bowling alley, or in the case of GUNDERSEN, family vacations.

The Defendants’ Employment at the MTA

The MTA runs North America’s largest transportation network, providing bus, subway and rail service to a population of more than 15 million people in New York City and the surrounding areas.  The MTA’s operating agencies include the LIRR, a commuter railroad providing service between Manhattan and locations on Long Island, and NYC Transit, which operates New York City subways and buses. 

CAPUTO, RUZZO, NUGENT, and BALESTRA are current or former LIRR employees.  CAPUTO was an LIRR employee responsible for track inspection until he retired on or about April 1, 2019.  RUZZO, who retired on or about October 1, 2019, and NUGENT and BALESTRA, who are still employed by LIRR, were all LIRR foremen during the relevant period. 

In addition to their regular duties, CAPUTO, RUZZO, NUGENT, and BALESTRA each volunteered to work and were assigned a number of lucrative overtime shifts during which they were required to, among other things, support third-party contractors working on construction projects on or around LIRR properties.  These voluntary overtime shifts were offered to LIRR employees in order of their seniority under the applicable union collective bargaining agreements, enabling CAPUTO, RUZZO, NUGENT, and BALESTRA to be assigned large numbers of voluntary overtime shifts due to their seniority.

GUNDERSEN is a current NYC Transit employee.  Since in or about 2015, GUNDERSEN has been a Maintenance Supervisor Level II, which requires him to, among other things, provide managerial-level oversight and support of Third Rail Contract Compliance and Circuit Breakers.

At all relevant times, CAPUTO, RUZZO, NUGENT, BALESTRA, and GUNDERSEN received hourly rates for their regular schedule, and were then entitled to be paid higher “overtime” rates – typically one and a half or two times the regular hourly rate, depending on the circumstances –  for additional hours worked.  At all relevant times, CAPUTO, RUZZO, NUGENT, BALESTRA, and GUNDERSEN were required to self-report their time.

The Defendants’ Excessive Overtime Claims

In 2018, CAPUTO was paid approximately $461,000 by the MTA.  Of that amount, approximately $117,000 comprised his base salary and other forms of compensation apart from overtime, while the additional approximately $344,000 was paid for overtime that CAPUTO ostensibly worked.  In total, this made CAPUTO the highest paid employee at the MTA during 2018 – higher than, for example, the Chairman of the MTA.

In 2018, CAPUTO claimed to have worked approximately 3,864 overtime hours, on top of 1,682 regular hours.  That is, if CAPUTO had worked every single calendar day in 2018 including weekends and holidays (although he did not), that would average out to approximately 10 hours of overtime every day for an entire year in addition to his regular, 40-hour work week.   

Similarly, RUZZO, NUGENT, BALESTRA, and GUNDERSEN also claimed to have worked and were paid for an excessive number of overtime hours in 2018.  Each of them was paid over $240,000 in overtime alone, putting each of them within the top 12 highest paid employees at the MTA during 2018.  These payments were based on reported amounts of overtime hours ranging from 2,918 to 3,914, which if the defendants had worked every calendar day in 2018 would average out to approximately 8 to 10 hours for every single day, in addition to the employee’s regular 40-hour work weeks. 

The Defendants’ Frequent Absences from Work

Staffers from the Office of the MTA Inspector General (“MTA OIG”) have worked with criminal investigators to perform a detailed review of the hours claimed to have been worked by the defendants in or around calendar year 2018.  This investigation, among other things, compared the time records for CAPUTO, RUZZO, NUGENT, BALESTRA, and GUNDERSEN with various records that established their true whereabouts, such as location information for their cellular phones, bank records, MTA building access card data, work and personal emails and social media records, and records from third parties such as a bowling alley where CAPUTO participated in bowling league games despite claiming to work an average of 10 hours of overtime every single day of 2018.

In sum, the MTA OIG’s investigation reflects that CAPUTO, RUZZO, NUGENT, BALESTRA, and GUNDERSEN were each absent from work for hundreds of hours, for which they falsely claimed to have been present and worked in time reports submitted to the MTA.  As a result, each received at least thousands of dollars in unjustified and fraudulently obtained compensation. 

For example, CAPUTO claimed to have worked, and was paid for, a regular shift from 7:30 a.m. to 3:30 p.m. on October 11, 2018, followed by an overtime shift at the West Side Yard in Manhattan (the site of a construction project in the vicinity of West 34th Street near the Hudson River) from 4:00 p.m. until 7:00 a.m. on October 12.  However, CAPUTO’s phone records revealed that CAPUTO made several calls while in the vicinity of his residence in Suffolk County during his overtime shift on October 11, and records maintained by a bowling alley in Suffolk County revealed that he participated in a bowling league game beginning at 7:30 p.m. that night – i.e., hours into his shift.

Similarly, GUNDERSEN claimed to have worked, and was paid for, back-to-back overtime shifts from 4:00 a.m. on September 29, 2018 to 12:00 a.m. on September 30, 2018, and was paid for 20 hours of overtime during that period.  GUNDERSEN did not use any vacation time for this period, instead claiming in his time reports to be at work.  However, several weeks later, GUNDERSEN sent himself an email attaching three photographs with metadata showing the images were taken at 3:05, 3:28, and 3:30 p.m. on September 29, 2018 – i.e., in the middle of the shifts described above.  These photographs (one of which was posted to GUNDERSEN’s wife’s Facebook account) show GUNDERSEN and his family at a farm in Manalapan, New Jersey.  GUNDERSEN’s telephone records reflect that he engaged in two phone calls from the vicinity of Manalapan at 1:09 p.m. and 4:07 p.m. on September 29, 2018, also in the middle of the overtime shifts he claimed to have worked.

*                *                *

THOMAS CAPUTO, 56, of Holbrook, New York, JOSEPH RUZZO, 56, of Levittown, New York, JOHN NUGENT, 50, of Rocky Point, New York, JOSEPH BALESTRA, 51, of Blue Point, New York, and MICHAEL GUNDERSEN, 42, of Manalapan, New Jersey, are each charged with one count of federal program fraud, which carries a maximum sentence of 10 years in prison.

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

Ms. Strauss praised the outstanding investigative work of the FBI and MTA OIG, and encouraged anyone with any information regarding overtime fraud or abuse at the MTA to contact the MTA OIG at 800-MTA-IG4U (800-682-4448), online at mtaig.state.ny.us/ComplaintForm.aspx, or via email at Complaints@mtaig.org.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Paul M. Monteleoni, Aline R. Flodr, and Thomas A. McKay are in charge of the prosecution.

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

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, Peter C. Fitzhugh, Special Agent in Charge of Homeland Security Investigations (“HSI”) in New York, and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an indictment charging KENNETH SPEARMAN, a/k/a “Big Man,” a/k/a “Big Fella,” a/k/a “Friend,” SHELDON CLARK, a/k/a “Sal,” ERIC GRANT, a/k/a “E,” SIRRON STAFFORD, a/k/a “Sherm,” CAMERON FRANCIS, a/k/a “Cam,” ISAIAH LEDGISTER, a/k/a “Pooch,” TRISTAN OLIVER, a/k/a “Jay,” JOSEPH CAMPBELL, a/k/a “JoJo,” ERIC GASTON, HARVEY FOSTER, a/k/a “Fresh,” MAURICE WOMACK, a/k/a “Moe,” REGINALD CLAXTON, a/k/a “Dread,” a/k/a “Reggie,” LAVELLE MAITLAND, a/k/a “Vee,” and RAY BOYD, a/k/a “Mustafa,” with participating in a conspiracy to distribute crack cocaine in the vicinity of Adam Clayton Powell Jr. Boulevard (also known as 7th Avenue) between approximately 120th Street and 123rd Street, in Harlem.  The case is assigned to U.S. District Judge Alvin K. Hellerstein.

Acting Manhattan U.S. Attorney Audrey Strauss said:  “As alleged in the Indictment, the defendants were responsible for selling large amounts of crack cocaine in Manhattan.  Thanks to the extraordinary work of our partners at NYPD and HSI, the defendants now face federal charges for their crimes.”

HSI Special Agent in Charge Peter C. Fitzhugh said:  “HSI and NYPD dismantled a criminal organization that allegedly trafficked and distributed heroin and cocaine while terrorizing our streets with violence and no regard for the welfare of our community.  Eradicating this ruthless syndicate will provide some relief to our neighborhoods, and is a step forward in an effort to safeguard our homeland.”

NYPD Commissioner Dermot Shea said:  “The NYPD is relentless in combating the kind of violent crimes alleged in this federal indictment, which tear at the fabric of life in New York.  I commend the United States Attorney’s Office for the Southern District of New York, and all of our partners, for their sustained focus in this important case.”

As alleged in the Indictment unsealed today in Manhattan federal court and in other court papers and proceedings[1]:

From at least in or about November 2019 up to and including in or about November 2020, KENNETH SPEARMAN, a/k/a “Big Man,” a/k/a “Big Fella,” a/k/a “Friend,” SHELDON CLARK, a/k/a “Sal,” ERIC GRANT, a/k/a “E,” SIRRON STAFFORD, a/k/a “Sherm,” CAMERON FRANCIS, a/k/a “Cam,” ISAIAH LEDGISTER, a/k/a “Pooch,” TRISTIAN OLIVER, a/k/a “Jay,” JOSEPH CAMPBELL, a/k/a “JoJo,” ERIC GASTON, HARVEY FOSTER, a/k/a “Fresh,” MAURICE WOMACK, a/k/a “Moe,” REGINALD CLAXTON, a/k/a “Dread,” a/k/a “Reggie,” LAVELLE MAITLAND, a/k/a “Vee,” and RAY BOYD, a/k/a “Mustafa,” participated in a conspiracy to distribute 280 grams and more of crack cocaine in and around Adam Clayton Powell Jr. Boulevard (also known as 7th Avenue) between approximately 120th Street and 123rd Street, in Harlem. 

On or about November 3, 2020, in the same area, FRANCIS and two others robbed at gunpoint someone attempting to purchase narcotics and a firearm from FRANCIS.

*                *                *

KENNETH SPEARMAN, a/k/a “Big Man,” a/k/a “Big Fella,” a/k/a “Friend,” 45, SHELDON CLARK, a/k/a “Sal,” 55, ERIC GRANT, a/k/a “E,” 45, TRISTIAN OLIVER, a/k/a “Jay,” 43, ERIC GASTON, 36, REGINALD CLAXTON, a/k/a “Dread,” a/k/a “Reggie,” 57, LAVELLE MAITLAND, a/k/a “Vee,” 25, and RAY BOYD, a/k/a “Mustafa,” 57, were arrested yesterday and presented before United States Magistrate Judge Katharine H. Parker.  JOSEPH CAMPBELL, a/k/a “JoJo,” 27, was arrested yesterday and will be presented before Judge Parker today.  SIRRON STAFFORD, a/k/a “Sherm,” 43, CAMERON FRANCIS, a/k/a “Cam,” 20, ISAIAH LEDGISTER, a/k/a “Pooch,” 30, HARVEY FOSTER, a/k/a “Fresh,” 36, and MAURICE WOMACK, a/k/a “Moe,” 51, remain at large. 

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

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

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Ryan B. Finkel, Alexander Li, and Andrew A. Rohrbach are in charge of the prosecution.

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

Count

Defendants

Max. Penalty

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

KENNETH SPEARMAN, a/k/a “Big Man,” a/k/a “Big Fella,” a/k/a “Friend”

SHELDON CLARK, a/k/a “Sal”

ERIC GRANT, a/k/a “E”

SIRRON STAFFORD, a/k/a “Sherm”

CAMERON FRANCIS, a/k/a “Cam”

ISAIAH LEDGISTER, a/k/a “Pooch”

TRISTAN OLIVER, a/k/a “Jay”

JOSEPH CAMPBELL, a/k/a “JoJo”

ERIC GASTON

HARVEY FOSTER, a/k/a “Fresh”

MAURICE WOMACK, a/k/a “Moe”

REGINALD CLAXTON, a/k/a “Dread,” a/k/a “Reggie”

LAVELLE MAITLAND, a/k/a “Vee”

RAY BOYD, a/k/a “Mustafa”

Life imprisonment; Mandatory minimum sentence of 10 years

Count Two: Conspiracy to Commit Hobbs Act Robbery (18 U.S.C. §§ 1951 and 2)

CAMERON FRANCIS, a/k/a “Cam”

20 years’ imprisonment

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

CAMERON FRANCIS, a/k/a “Cam”

20 years’ imprisonment

Count Four: Possession of a Firearm in Furtherance of a Crime of Violence, which Firearm was Brandished (18 U.S.C. §§ 924(c) and 2)

CAMERON FRANCIS, a/k/a “Cam”

Life imprisonment; Mandatory minimum sentence of 7 years

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

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, and Carl W. Hoecker, the Inspector General of the Office of Inspector General of the U.S. Securities and Exchange Commission (“SEC-OIG”), announced today the unsealing of an Indictment in Manhattan federal court charging RICHARD RUBIN and THOMAS CRAFT with securities fraud.  The Indictment alleges that RUBIN, a disbarred attorney, and CRAFT, an attorney licensed in Florida, engaged in a fraudulent scheme in which CRAFT falsely represented that he had undertaken certain legal work in connection with three types of attorney opinion letters, all of which enabled the relevant securities to be sold to the investing public.  In truth and in fact, RUBIN, despite his disbarment, had undertaken all of the legal work attested to in the letters; CRAFT merely served as a “rubber stamp” on the letters in exchange for tens of thousands of dollars in monetary compensation.  RUBIN was taken into custody today in New York, New York, and will be presented today before Magistrate Judge Katharine H. Parker in Manhattan federal court.  CRAFT was taken into custody today in West Palm Beach, Florida, and will be presented today in federal court in Florida.  The case has been assigned to United States District Judge Paul A. Engelmayer.

Acting U.S. Attorney Audrey Strauss said:  “As alleged, rather than act as gatekeepers against fraud, the defendants used their positions as attorneys – albeit one of them disbarred – to actively carry out a fraud, working to generate dozens of attorney opinion letters containing false representations that brought false comfort to the investing public that certain legal work had been performed and certain information had been confirmed as accurate. 

SEC Inspector General Carl W. Hoecker said:  “Today’s criminal indictment demonstrates our commitment to holding bad actors accountable for undermining the integrity of the securities registration system.”

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

Securities Registration Requirements and SEC Rule 144 

Under the Securities Act of 1933 (the “Securities Act”), anyone seeking to sell a security must first register the offering of that security unless an exemption applies. See 15 U.S.C. § 77e.  This registration requirement protects investors by promoting disclosure of information pertinent to informed investment decisions. 

A company registering the offer of securities must complete a registration statement such as SEC Form S-1 before the securities can be listed on a national exchange and publicly traded.   SEC Form S-1 contains information pertinent to informed investment decisions, including, among other things, information on the company’s business operations, the company’s financial condition, and a description of the company’s management.  In connection with SEC Form S-1, the company is required to file an opinion letter (the “Form S-1 Opinion Letter”) from a licensed attorney regarding the legality of the securities being offered or sold pursuant to the registration statement.  A company’s SEC Form S-1 and the Form S-1 Opinion Letter are available to the public on the SEC’s Electronic Data Gathering, Analysis, and Retrieval System (“EDGAR”).

“Restricted securities” refers to securities acquired in unregistered, private sales from the issuing company or from an affiliate of the issuer, with “affiliate” meaning a person that directly or indirectly controls, or is controlled by, or is under common control with, an issuer.  Affiliates can also include an executive officer or a director or large shareholder who is in a relationship of control with respect to the issuing company.  Restricted securities bear a legend indicating that the securities may not be resold in the marketplace unless they are registered with the SEC or are exempt from such registration requirements.

Securities Act Rule 144 (“Rule 144”), codified at 17 C.F.R. § 230.144, provides a registration exemption for the resale of restricted securities.  Specifically, it permits the public resale of restricted securities if a number of conditions are met, including conditions relating to how long the securities are held, the way in which they are sold, the public information available to investors about the securities, and the amount that can be sold at any one time.  However, even if these conditions are met, the sale of restricted securities to the public is still not permitted until a transfer agent removes the “restricted” legend from the security. 

The term “transfer agent” refers to a company that keeps track of individuals and entities that own the stocks and bonds of a given company that has publicly traded securities.  Among other things, transfer agents issue and cancel certificates to reflect changes in ownership, serve as the company’s intermediary for payouts, exchanges, or mailings, and handle lost, destroyed or stolen certificates.  Transfer agents also, when appropriate, remove the “restricted” legend from securities. 

A Rule 144 Seller’s Representation Letter, or “Seller’s Representation Letter,” is a letter to a transfer agent to establish certain facts underlying a legal opinion that the securities at issue can be sold publicly pursuant to Rule 144.  The transfer agent relies on the Seller’s Representation Letter in determining whether to remove the restricted legend from a security.

Over-the-Counter Securities and OTC Markets Group 

Over-the-counter (“OTC”) securities are securities that are traded between two counterparties outside of a formal securities exchange.  OTC Markets Group (“OTC Markets”) is a company headquartered in New York, New York that provides price and liquidity information for OTC securities.

OTC Markets requires issuers seeking to be quoted on certain tiers of OTC Markets to hire a licensed attorney to review company records and submit a letter to OTC Markets (an “OTC Markets Attorney Letter”) regarding whether information publicly disclosed by the issuer is in compliance with the condition in SEC Rule 144 governing the public information available to investors about the issuer.  OTC Markets relies on the OTC Markets Attorney Letter to determine whether an issuer’s security may be quoted on OTC Markets.  OTC Markets Attorney Letters are available to the public on the OTC Markets website. 

The Scheme to Defraud 

From at least in or about 2011 through at least in or about September 2018, RUBIN and CRAFT, the defendants, participated in a fraudulent scheme in which CRAFT falsely represented that he had undertaken certain legal work in connection with Seller’s Representation Letters, OTC Markets Attorney Letters, and S-1 Opinion Letters, all of which enabled the relevant securities to be sold to the investing public.  In addition, in connection with the securities of certain issuers, RUBIN, the defendant, falsely represented that he was an attorney in Seller’s Representation Letters and OTC Markets Attorney Letters, all of which enabled the relevant securities to be sold to the investing public.  The false representations were in letters pertaining to over a dozen companies.

RUBIN, 78, of Brooklyn, New York, and CRAFT, 55, of Tequesta, Florida, are each charged with one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison, one count of securities fraud in violation of 18 U.S.C. §§ 1348 and 2, which carries a maximum sentence of 25 years in prison, and one count of securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5, and 18 U.S.C. § 2, which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

*                      *                      *           

Ms. Strauss praised the investigative work of the SEC OIG.  Ms. Strauss also thanked the U.S. Postal Inspection Service, Office of the Inspector General, which assisted in the investigation.  Ms. Strauss also thanked the SEC Division of Enforcement, which brought a separate civil enforcement action against the defendants. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Martin Bell and Jordan Estes 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.

The Justice Department today announced that it filed a lawsuit against the Village of Airmont, New York, alleging that it violated the Religious Land Use and Institutionalized Persons Act (RLUIPA) by targeting the Orthodox Jewish community through zoning ordinances restricting religious schools and home synagogues, and by enforcing its zoning code in a discriminatory manner to prevent Orthodox Jews from using their property consistent with their faith. 

“In this country, states, towns, and villages cannot make or enforce any law that abridges the privileges or immunities of American citizens, nor can they deny to any person within their jurisdiction the equal protection of the laws,” said Eric Dreiband, Assistant Attorney General for the Civil Rights Division. “The Fourteenth Amendment to the U.S. Constitution enshrined these principles in our law, and the Congress extended them when it enacted the Religious Land Use and Institutionalized Persons Act. Zoning ordinances that seek to exclude people and organizations because of their religion violate the law. Furthermore, targeting Orthodox Jewish individuals for the purpose of excluding them from a community is both illegal and a direct assault on this Nation’s fundamental values. This unlawful anti-Semitic conduct is wholly unacceptable in the United States of America, and the U.S. Department of Justice will not tolerate it. The Department of Justice will continue to use the full force of its authority to stop this despicable conduct and prevent its recurrence.”

“As a jury found over two decades ago, the Village of Airmont was born out of a spirit of animus against a religious minority,”  said Acting U.S. Attorney for the Southern District of New York Audrey Strauss. “Sadly, rather than working to overcome that shameful legacy, Airmont has flagrantly ignored the terms of a court judgment and implemented land use practices that by design and operation are again meant to infringe unlawfully on the rights of a minority religious community. Religious discrimination will not be tolerated. We will remain vigilant to ensure that the right to worship freely and without undue interference is protected for all.”  

The complaint, filed in the Southern District of New York, alleges that the Village adopted a zoning code that, in violation of the terms of a prior federal court judgment, eliminated residential places of worship as by-right uses and applied its code in a manner that made it impossible for members of the Orthodox Jewish community to obtain approval for religious schools and home synagogues. The complaint also alleges that the Village implemented an 18-month moratorium used to prevent the Orthodox Jewish community from advancing religious zoning applications, and interpreted and enforced its zoning code to prevent Orthodox Jews from using their property to construct Sukkahs, ritual huts required under Orthodox Jewish beliefs, and Mikvahs, ritual baths necessary for religious observance.    

RLUIPA is a federal law that protects religious institutions from unduly burdensome or discriminatory land use regulations. In June 2018, the Justice Department announced its Place to Worship Initiative, which focuses on RLUIPA’s provisions that protect the rights of houses of worship and other religious institutions to worship on their land. More information is available at www.justice.gov/crt/placetoworship.

In July 2018, the Department of Justice announced the formation of the Religious Liberty Task Force. The Task Force brings together department components to coordinate their work on religious liberty litigation and policy, and to implement the Attorney General’s 2017 Religious Liberty Guidance.

Individuals who believe they have been subjected to discrimination in land use or zoning decisions may contact the Civil Rights Division Housing and Civil Enforcement Section at (800) 896-7743, or through the complaint portal on the Place to Worship Initiative website. More information about RLUIPA, including questions and answers about the law and other documents, may be found at http://www.justice.gov/crt/about/hce/rluipaexplain.php.

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced the filing today of a lawsuit in federal district court against the Village of Airmont in Rockland County (“AIRMONT” or the “VILLAGE”) to rectify AIRMONT’S renewed efforts to discriminate against its Orthodox Jewish community.  As alleged in the Complaint, AIRMONT has violated the Religious Land Use and Institutionalized Persons Act (“RLUIPA”) by imposing land use and zoning provisions that, among other things, restrict Orthodox Jewish residents’ ability to worship in private homes and prevent operation of a private religious school.  The lawsuit marks the third time that the United States has sued AIRMONT since its 1991 incorporation for discriminatory treatment of Orthodox Jewish residents under both RLUIPA and the Fair Housing Act.  The first two lawsuits resulted in the entry of court judgments against the VILLAGE – a judgment following a jury trial in 1996 and judgment pursuant to a court-entered consent decree in 2011.     

Acting U.S. Attorney Audrey Strauss said:  “As a jury found over two decades ago, the Village of Airmont was born out of a spirit of animus against a religious minority.  Sadly, rather than working to overcome that shameful legacy, Airmont has flagrantly ignored the terms of a court judgment and implemented land use practices that by design and operation are again meant to infringe unlawfully on the rights of a minority religious community.  Religious discrimination will not be tolerated.  We will remain vigilant to ensure that the right to worship freely and without undue interference is protected for all.”  

According to the Complaint filed in White Plains federal court:

Following the expiration of the last court-entered consent decree against AIRMONT in 2015, and beginning with an administration elected in 2017 on an openly anti-Hasidic platform, the VILLAGE has actively sought to prevent its Orthodox Jewish residents from operating home synagogues and a private school in conformity with their faith.  AIRMONT has pursued its discriminatory agenda by, among other actions:  

• Imposing a nearly two-year land use moratorium in 2017 that was motivated by a desire to prevent the growing Orthodox Jewish community from developing property rather than any legitimate governmental purpose.
   
• Amending the Village Zoning Code in 2018 to strike “residential place of worship” as a recognized land use category, in direct violation of the terms of the final judgment entered by the court in 1996.
   
• Imposing new Zoning Code requirements that place an unlawful and arbitrary limit on the gross floor area of private residences that can be used for worship, ban the use of private home mikvahs, or ritual baths, and restrict the co-congregants whom homeowners are allowed to host.
   
• Implementing a new, arbitrary land use application process controlled by the Village designed to impose unreasonable and unnecessary zoning requirements on Orthodox Jewish residents, drive up their costs, and ensure their applications, including minor alterations to private homes, are never approved despite years of good faith efforts to comply.
   
• Targeting Orthodox Jewish residents with the threat and imposition of unfounded fines for supposed zoning infractions in order to thwart and intimidate land use applicants. 

RLUIPA authorizes the Department of Justice to commence an action against any local government that implements a land use regulation that places a substantial burden on religious exercise, discriminates on the basis of religion, or unreasonably limits religious assemblies, institutions, and structures.  The Complaint seeks declaratory and injunctive relief against AIRMONT.

The case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorney Stephen Cha-Kim is in charge of the case.

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, John B. DeVito, Special Agent in Charge of the New York Field Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), and Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), announced charges against SHAWN GARCIA, a/k/a “Ralph Porter,” OSCAR RIOS, a/k/a “Oski,” and SUTHA TAYLOR, a/k/a “Sutha Colon,” (collectively, the “defendants”), in connection with their participation in an August 29, 2020 armed home invasion robbery in the Bronx, New York.  GARCIA and TAYLOR were arrested earlier this morning and will be presented in Manhattan federal court later today before U.S. Magistrate Judge Katharine H. Parker.  RIOS remains at large.

Acting U.S. Attorney Audrey Strauss stated:  “Oscar Rios and his co-defendants allegedly planned and executed a violent robbery, during which one victim was shot and another had her head covered with a garment while the alleged perpetrators coerced her to divulge the location of the other victim’s cash.  The three ultimately absconded with a safe containing cash, a cell phone, and marijuana. I thank the ATF and NYPD for their assistance in bringing these alleged brazen and reckless actors to justice."           

According to the allegations in the Complaint charging GARCIA, RIOS, and TAYLOR, unsealed today in Manhattan federal court:[1]

On or about August 29, 2020, the defendants participated in an armed home invasion robbery of an apartment in the Bronx, New York.  Shortly before the robbery took place, defendant OSCAR RIOS, a/k/a “Oski,” coordinated with certain other co-conspirators (referred to in the Complaint as “CC-1” and “CC-2”) to cause a resident of the Apartment (“Victim-1”) to leave the Apartment, under the guise that CC-1 wanted to buy liquor from Victim-1.  Once RIOS learned from CC-2 that Victim-1 was about to exit the Apartment, RIOS informed defendants SHAWN GARCIA, a/k/a “Ralph Porter,” and SUTHA TAYLOR, a/k/a “Sutha Colon,” via text message.

When Victim-1 opened the door to the Apartment, GARCIA, TAYLOR, and a third co-conspirator (“CC-3”) ran into the Apartment and physically assaulted Victim-1, including by striking Victim-1 in the head several times with at least one firearm.  While the assault on Victim-1 was in progress, another resident of the Apartment (“Victim-2”) was thrown into the bathroom and ordered to remain there.  Victim-1 was then shot one time.  After the shooting, one of the robbers placed a dark garment over Victim-2’s head and demanded to know where Victim-1 kept his safe, which contained proceeds from Victim-1’s marijuana sales.  Meanwhile, RIOS, who had gone to a nearby building, texted GARCIA and TAYLOR to inform them that area was clear for them to flee.  GARCIA, TAYLOR, and CC-3 then fled the Apartment, stealing the safe with cash proceeds from Victim-1’s marijuana sales, as well as other items found in the Apartment, including cash proceeds from Victim-1’s liquor sales, Victim-1’s cellphone, and marijuana belonging to Victim-1.

As a result of the assault and shooting, Victim-1 was hospitalized for several days.  

*                *                *

GARCIA, RIOS, and TAYLOR are each charged with one count of conspiracy to commit Hobbs Act robbery, in violation of Title 18, United States Code, Section 1951, which carries a maximum sentence of 20 years in prison; and one count of substantive Hobbs Act robbery, in violation of Title 18, United States Code, Section 1951, which carries a maximum sentence of 20 years in prison.  GARCIA and TAYLOR are also each charged with one count of carrying and discharging a firearm during and in relation to a crime of violence, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison.

Ms. Strauss praised the outstanding investigative work of the ATF and NYPD, in particular, the Strategic Patterned Armed Robbery Technical Apprehension (“SPARTA”) Task Force, which comprises agents and officers of the ATF and the NYPD.  

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney David J. Robles is in charge of the prosecution.

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

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

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced that KINTEA MCKENZIE, a/k/a “Kooda B,” was sentenced to 54 months in prison in connection with a shooting outside a hotel in Times Square on June 2, 2018, in furtherance of the Nine Trey Gangsta Bloods (“Nine Trey”) criminal enterprise.  MCKENZIE pled guilty on June 3, 2019, before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

Acting U.S. Attorney Audrey Strauss said:  “Kintea McKenzie helped to orchestrate a brazen shooting in Times Square.  Now, thanks to the outstanding work of our partners at the NYPD, HSI, and ATF, McKenzie will spend 54 months in federal prison.”

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

Nine Trey was a criminal enterprise involved in committing numerous acts of violence, including shootings, robberies, and assaults in and around Manhattan and Brooklyn.  Members and associates of Nine Trey engaged in violence to retaliate against rival gangs, to promote the standing and reputation of Nine Trey, and to protect the gang’s narcotics business.  On or about June 2, 2018, MCKENZIE agreed to accept money from Daniel Hernandez, a/k/a “Tekashi 6ix 9ine,” to shoot at a rival gang member and rapper who was staying at a hotel in Times Square.   MCKENZIE helped to organize the shooting in order to scare that rival gang member. 

*                      *                      *

In addition to the prison term, MCKENZIE, 22, of Brooklyn, New York, was sentenced to three years of supervised release. 

Ms. Strauss praised the outstanding investigative work of the New York City Police Department, Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.  Ms. Strauss also praised the New York City Department of Correction, Correction Intelligence Bureau, and the New York County District Attorney’s Office for their assistance in the investigation.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Michael Longyear, Jacob Warren, Jonathan Rebold, and Sebastian Swett are in charge of the prosecution.

Audrey Strauss, Acting 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”), Don Halmy, Chief of the Peekskill Police Department (“PPD”), and Thomas Gleason, Commissioner of the Westchester County Department of Public Safety (“WCDPS”), announced the unsealing of a one-count Indictment charging JORDAN CAMPBELL, a/k/a “Jayoh,” DERRICK DICKEY, a/k/a “D,” TERRANCE PATTERSON, a/k/a “Cupid,” a/k/a “Q,” and JOHNNIE THOMAS, a/k/a “Country,” with crack cocaine distribution in the Peekskill-area.  All four defendants were taken into custody today.  The case is assigned to U.S. District Judge Kenneth M. Karas.

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

JORDAN CAMPBELL, a/k/a “Jayoh,” DERRICK DICKEY, a/k/a “D,” TERRANCE PATTERSON, a/k/a “Cupid,” a/k/a “Q,” and JOHNNIE THOMAS, a/k/a “Country,” conspired to distribute at least 280 grams or more of crack cocaine between March 2020 and August 2020. 

*                      *                     *

Each defendant faces a maximum term of life in prison and a mandatory minimum term 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 defendants will be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force – which comprises agents and detectives from the FBI, Yonkers Police Department, Westchester County District Attorney’s Office, WCDPS, PPD, Putnam County Sheriff, Mount Vernon Police Department, NYPD, Greenburgh Police Department, New Rochelle Police Department, Ramapo Police Department, and U.S. Probation. 

This case is being handled by the Office’s White Plains Division and Violent and Organized Crime Unit.  Assistant United States Attorneys Shiva H. Logarajah, Jacob Warren, and David R. Felton 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, the Acting United States Attorney for the Southern District of New York, William V. Grady, Dutchess County District Attorney, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Thomas Pape, Chief of the City of Poughkeepsie Police Department (“CPPD”), Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), Don Halmy, Chief of the Peekskill Police Department (“PPD”), Thomas Gleason, Commissioner of the Westchester County Department of Public Safety (“WCDPS”), and Anthony J. Annuci, Acting Commissioner of the New York State Department of Corrections and Community Supervision (“DOCCS”), announced the unsealing of a 16-Count Indictment charging 18 members of the Untouchable Gorilla Stone Nation Gang (“Gorilla Stone”) with committing various racketeering, murder, narcotics, firearms, and fraud offenses.  BRANDON SOTO, a/k/a “Stacks,” is charged in connection with the September 21, 2020, murder of a minor in Poughkeepsie.  The case is assigned to U.S. District Judge Philip M. Halpern.

Acting U.S. Attorney Audrey Strauss said:  “As alleged in the Indictment, members of Gorilla Stone committed terrible acts of violence, trafficked in narcotics, and even engaged in brazen fraud by exploiting benefits programs meant to provide assistance in response to the COVID-19 pandemic.  Because of that, communities across the Southern District – from Poughkeepsie to Peekskill to New York City – suffered.  Most shocking, as alleged in the indictment, a minor was murdered in furtherance of the gang’s activities.  Because of the extraordinary work of our law enforcement partners, the defendants now face federal charges for their crimes.”

FBI Assistant Director William F. Sweeney Jr. said:  “As the indictment alleges, the violence and drug activity committed by these gang members threatened the safety of our communities and placed innocent lives at risk.  Their unabashed criminal behavior, as alleged, included the murder of a 15 year-old and even extended to defrauding programs meant for people suffering economic hardship due to the pandemic.  But thanks to the partnership and hard work of all law enforcement agencies involved in this investigation, we were able to stop this violent criminal organization – and show that Gorilla Stone is actually not ‘untouchable.’”

NYPD Commissioner Dermot Shea said:  “These arrests demonstrate the NYPD’s relentless pursuit of the few individuals who drive violence and disorder in New York City.  I commend the NYPD investigators and the many law enforcement agencies involved in this investigation whose hard work resulted in these arrests.  Murder, robberies, narcotics trafficking, and other associated gang behavior will never be tolerated by the people we serve.”

Peekskill Police Chief Don Halmy said:  “While it’s clear that the alleged actions of these individuals had a negative impact on the quality of life in Peekskill, it’s also obvious that the extent of their alleged criminal enterprise was much further reaching.  Through this joint operation, utilizing Federal, County and local law enforcement agencies, communities both large and small will benefit from the arrest of those allegedly responsible for the distribution of illegal narcotics as well as the commission of violent felonies.  We thank all those involved in bringing this to such a successful conclusion."

Westchester County Department of Public Safety Commissioner Thomas Gleason said:  “Today’s arrests put a halt to an alleged criminal enterprise involved in drug trafficking, gang-related violence and other crimes in Westchester and the Hudson Valley.  Our streets are indeed safer thanks to the great work of the Westchester Safe Streets Task Force and all of the partner agencies that contributed to the success of this complex investigation.”

DOCCS Acting Commissioner Anthony J. Annuci said:  “DOCCS has zero tolerance for any criminal activity involving incarcerated individuals in its custody and within our facilities. These arrests highlight the successful investigation that the Department fully assisted with in the pursuit of justice.”

Dutchess County Chief Assistant District Attorney Matthew A. Weishaupt said:  “Gorilla Stone Nation, as alleged below, was involved in widespread crimes of violence which erodes the infrastructure and quality of life in our community.  Our office will continue to collaborate with our Federal, State, County and Local partners to eradicate the crime drivers that fuel gang violence.  This effort will enhance the safety and quality of life in our community.  We extend our thanks to the outstanding job of all the law enforcement agencies involved and special thanks to the City of Poughkeepsie Police Department, Hudson Valley Safe Streets Task Force, and Bureau Chief Sara Thompson of our office.”

City of Poughkeepsie Chief of Police Thomas Pape said:  “I would like to thank our partners at the Federal, State and Local levels of law enforcement for the unwavering assistance and dedication to their sworn duties.  These partnerships are proof that collaborations with agencies at all levels of law enforcement work to bring those responsible for the heinous murder of a 15-year-old on our City streets to justice.”

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

DWIGHT REID, a/k/a “Dick Wolf,” CHRISTOPHER ERSKINE, a/k/a “Beagle,” WALTER LUSTER, a/k/a “Shells,” DESHAWN THOMAS, a/k/a “Don,” NAYA AUSTIN, a/k/a “Baby,” BRANDON NIEVES, a/k/a “Untouchable Dot,” AHMED WALKER, a/k/a “Ammo,” CASWELL SENIOR, a/k/a “Casanova,” BRANDON SOTO, a/k/a “Stacks,” DEZON WASHINGTON, a/k/a “Blakk,” ROBERT WOODS, a/k/a “Blakk Rob,” STEPHEN HUGH, a/k/a “Chino,” JORDAN INGRAM, a/k/a “Flow,” SHANAY OUTLAW, a/k/a “Easy,” ISAIAH SANTOS, a/k/a “Zay,” ROBERTA SLIGH, a/k/a “Trouble,” and BRINAE THORNTON, a/k/a “Luxury,” are members of a racketeering conspiracy known as Gorilla Stone. 

On September 21, 2020, BRANDON SOTO, to further the Gorilla Stone enterprise, participated in and facilitated the murder of a minor victim, and aided and abetted the same, in Poughkeepsie, New York.

On July 20, 2020, STEPHEN HUGH shot at rival gang members in New Rochelle.  HUGH shot at rival gang members to maintain and increase his position in the Gorilla Stone racketeering enterprise operating in the Southern District of New York.

On June 12, 2020, NAYA AUSTIN, DEZON WASHINGTON, and JORDAN INGRAM committed a gunpoint robbery of a rival drug dealer in Peekskill, New York.  AUSTIN, WASHINGTON, and INGRAM committed the robbery in order to maintain or increase their position in the Gorilla Stone racketeering enterprise operating in the Southern District of New York.

On August 28, 2018, BRINAE THORNTON shot at a rival gang member in Brooklyn, New York, and aided and abetted the same.  THORNTON shot at the rival gang member to maintain and increase her position in the Gorilla Stone racketeering enterprise operating in the Southern District of New York.

On January 12, 2018, ROBERT WOODS maimed and assaulted an individual with a dangerous weapon, and aided and abetted the same, by slashing the individual in the face.  WOODS slashed the individual in part to maintain and increase his position in the Gorilla Stone racketeering enterprise operating in the Southern District of New York.

In August 2020, NAYA AUSTIN and SHANAY OUTLAW, without lawful authority, knowingly used the identification of others to file fraudulent applications for COVID-19-related unemployment benefits, and aided and abetted the same.   

*                      *                     *

Seventeen of the 18 defendants are in custody.

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.

Ms. Strauss praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force – which comprises agents and detectives from the FBI, Yonkers Police Department, Westchester County District Attorney’s Office, WCDPS, PPD, Putnam County Sheriff, Mount Vernon Police Department, NYPD, Greenburgh Police Department, New Rochelle Police Department, Ramapo Police Department, and U.S. Probation – as well as the outstanding investigative work of the CPPD and DOCCS, Office of Special Investigations.  Ms. Strauss also thanked the FBI’s Hudson Valley Safe Streets Task Force, the FBI’s Newark, Albany, and Tampa Divisions, the New York City Department of Correction, Correction Intelligence Bureau, and the New York State Department of Labor for their assistance in the investigation.

This case is being handled by the Office’s White Plains Division and Violent and Organized Crime Unit.  Assistant United States Attorneys Shiva H. Logarajah, Jacob Warren, and David R. Felton are in charge of the prosecution.           

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

COUNT

DEFENDANT(S)

MAX. TERM OF IMPRISONMENT

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

DWIGHT REID

CHRISTOPHER ERSKINE

WALTER LUSTER

DESHAWN THOMAS

NAYA AUSTIN

BRANDON NIEVES

AHMED WALKER

CASWELL SENIOR

BRANDON SOTO

DEZON WASHINGTON

ROBERT WOODS

STEPHEN HUGH

JORDAN INGRAM

SHANAY OUTLAW

ISAIAH SANTOS

ROBERTA SLIGH

BRINAE THORNTON

Life in prison as to all defendants except OUTLAW, for whom the maximum term is 20 years in prison

Count Two:  Travel Act Murder

(18 U.S.C. §§ 1952 and 2)

BRANDON SOTO

Life in prison

Count Three: Attempted Murder and Attempted Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(5), (a)(6), and 2)

STEPHEN HUGH

10 years in prison

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

STEPHEN HUGH

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

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

NAYA AUSTIN

DEZON WASHINGTON

JORDAN INGRAM

20 years in prison

Count Six: Possession and Brandish of a Firearm in Furtherance of a Crime of Violence (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), and 2)

NAYA AUSTIN

DEZON WASHINGTON

JORDAN INGRAM

Life in prison; Mandatory minimum of 7 years in prison to run consecutively to any other sentence imposed

Count Seven: Attempted Murder and Attempted Assault with a Dangerous Weapon in Aid of Racketeering (18 U.S.C. §§ 1959(a)(5), (a)(6), and 2)

BRINAE THORNTON

10 years in prison

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

BRINAE THORNTON

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

Count Nine: Maiming and Assault in Aid of Racketeering (18 U.S.C. §§ 1959(a)(2), (a)(3), and 2)

ROBERT WOODS

30 years in prison

Count Ten: Possession with Intent to Distribute Crack Cocaine (21 U.S.C. §§ 841(a)(1), (b)(1)(B) and 18 U.S.C. § 2)

NAYA AUSTIN

40 years in prison; Mandatory minimum of 5 years in prison

Count Eleven: Possession with Intent to Distribute Crack Cocaine (21 U.S.C. §§ 841(a)(1), (b)(1)(B) and 18 U.S.C. § 2)

CHRISTOPHER ERSKINE

NAYA AUSTIN

JORDAN INGRAM

40 years in prison; Mandatory minimum of 5 years in prison

Count Twelve: Possession with Intent to Distribute Crack Cocaine (21 U.S.C. §§ 841(a)(1), (b)(1)(B) and 18 U.S.C. § 2)

BRANDON SOTO

40 years in prison; Mandatory minimum of 5 years in prison

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

DWIGHT REID

CHRISTOPHER ERSKINE

WALTER LUSTER

DESHAWN THOMAS

NAYA AUSTIN

BRANDON NIEVES

AHMED WALKER

CASWELL SENIOR

BRANDON SOTO

DEZON WASHINGTON

ROBERT WOODS

STEPHEN HUGH

JORDAN INGRAM

ISAIAH SANTOS

ROBERTA SLIGH

BRINAE THORNTON

JAMAL TRENT

Life in prison; Mandatory minimum of 10 years in prison

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

DWIGHT REID

CHRISTOPHER ERSKINE

WALTER LUSTER

DESHAWN THOMAS

NAYA AUSTIN

BRANDON NIEVES

AHMED WALKER

CASWELL SENIOR

BRANDON SOTO

DEZON WASHINGTON

ROBERT WOODS

STEPHEN HUGH

JORDAN INGRAM

ROBERTA SLIGH

BRINAE THORNTON

Life in prison; Mandatory minimum of 5 years in prison to run consecutively to any other sentence imposed

Count Fifteen: Possession and Brandish of a Firearm in Furtherance of a Drug Trafficking Crime (18 U.S.C. §§ 924(c)(1)(A)(i), (ii), and 2)

ISAIAH SANTOS

Life in prison; Mandatory minimum of 7 years in prison to run consecutively to any other sentence imposed

Count Sixteen: Aggravated Identity Theft (18 U.S.C. §§ 1028A(a)(1), 1028(b) and 2)

NAYA AUSTIN

SHANAY OUTLAW

20 years in prison;

Mandatory minimum of two years in prison 

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

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that ADEL KELLEL, owner of Raffles Bistro, formerly a restaurant located in New York City, was sentenced in Manhattan federal court to two years in prison for perpetrating a tax evasion scheme.  KELLEL previously pled guilty before U.S. Magistrate Judge Gabriel W. Gorenstein to one count of tax evasion for the calendar years 2011 through 2015.  U.S. District Judge Paul G. Gardephe, who accepted KELLEL’s guilty plea, imposed today’s sentence.

Acting U.S. Attorney Audrey Strauss said:  “Adel Kellel cooked his books to conceal income from the IRS and his own accountants.  He spent the ill-gotten gains on personal luxuries like a Mercedes, a Porsche, and a Maserati.  Now he will spend two years in federal prison.”

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

In 2011, KELLEL was the President and a 45 percent owner of K&H Restaurant, Inc. (“K&H”), which operated Raffles Bistro (“Raffles”), a restaurant then located in a hotel (the “Hotel”) in Manhattan.  From 2012 through 2015, KELLEL was the 100 percent owner of K&H.  The gross receipts of K&H consisted primarily of: (a) credit card payments by Raffles’ customers; (b) cash payments by Raffles’ customers; and (c) check payments by the Hotel for various services that Raffles provided to hotel guests and patrons, including room service, banquets, and catering.

KELLEL perpetrated a scheme to evade income taxes by diverting and failing to report to the Internal Revenue Service (“IRS”) a substantial portion of K&H’s gross receipts for the calendar years 2011 through 2015.  As part of his tax evasion scheme, KELLEL diverted over 150 Hotel checks, totaling over $2.1 million in gross receipts, which he hid from his accountants and the IRS.  KELLEL concealed these receipts – representing approximately 43 percent of this particular revenue stream for the restaurant – by depositing them into more than a dozen bank accounts that KELLEL did not disclose to his accountants.  KELLEL also diverted cash income received from Raffles’ customers, a portion of which he deposited into personal bank accounts or spent directly on personal expenses, without disclosing it to his accountants or paying taxes on it. 

KELLEL used the diverted income for various personal expenses, including overseas transfers; condominium fees; rent for a high-end Manhattan apartment; college tuition payments from his children; shopping at luxury retailers, such as Hugo Boss and Saks Fifth Avenue; payments for luxury cars manufactured by Mercedes, Porsche, and Maserati; and payments for domestic and international travel.

By fraudulently concealing from his accountants a substantial portion of K&H’s gross receipts, KELLEL caused K&H’s corporate income tax returns and KELLEL’s own individual income tax returns for the calendar years 2011 through 2015 to be materially false.  As a result of his conduct, KELLEL admitted to causing a combined tax loss of at least $771,195 to the IRS and the New York State Department of Taxation and Finance (“NYSDTF”).

*                *                *

In addition to the prison term, Judge Gardephe ordered KELLEL, 63, of New Hyde Park, New York, to pay restitution to the IRS in the amount of $613,478, and to pay restitution to NYSDTF in the amount of $157,717.  KELLEL 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.  Ms. Strauss also thanked the U.S. Department of Justice’s Tax Division for its significant assistance in the investigation.

This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Olga I. Zverovich and Special Assistant U.S. Attorney Jorge Almonte of the Department of Justice’s Tax Division are in charge of the prosecution.

Audrey Strauss, Acting United States Attorney for the Southern District of New York,  and Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced that GUTEMBERG DOS SANTOS, a citizen of Brazil and the United States, was extradited from Panama on November 25.  DOS SANTOS is charged by indictment with co-defendants Pablo Renato Rodriguez, Scott Hughes, Cecilia Millan, Karina Chairez, and Jackie Aguilar for their roles in an internationally coordinated fraud and money laundering ring involved in defrauding individuals through investments in AirBit Club, a purported cryptocurrency mining and trading company.  DOS SANTOS was arrested on August 18, 2020, in Panama City, Panama, and will be presented later today before U.S. Magistrate Judge Katharine H. Parker.  Rodriguez, Hughes, Millan, and Aguilar were arrested in the United States on August 18, 2020, and Chairez was arrested in the United States on October 20, 2020.  The case has been assigned to U.S. District Judge George B. Daniels. 

Acting United States Attorney Audrey Strauss said:  “As alleged, Gutemberg Dos Santos played a key role in an international investment scam that promised extraordinary rates of return on phantom investments in cryptocurrencies, defrauding victims of tens of millions of dollars.  Thanks to HSI, Dos Santos is now in U.S. custody.”

HSI Special Agent in Charge Peter C. Fitzhugh said:  “The extradition of Dos Santos reflects the determination of agents from HSI New York’s El Dorado Financial Crimes Task Force to dismantle global criminal organizations, wherever the investigation takes us.  Utilizing our broad authorities and network of law enforcement partners, HSI will continue to hunt those who allegedly prey upon innocent citizens for financial gain.”

According to the allegations in the Superseding Indictments: [1]   

Rodriguez, DOS SANTOS, Hughes, Millan, Chairez, and Aguilar participated in a coordinated scheme in which victim-investors (the “Victims”) were induced to invest in AirBit Club based on the promise of guaranteed profits in exchange for cash investments in club “memberships” (the “AirBit Club Scheme” or the “Scheme”).  Beginning in late 2015, AirBit Club, through its founders, Rodriguez and DOS SANTOS, as well as its promoters (the “Promoters”), including Millan, Chairez, and Aguilar, marketed AirBit Club as a multilevel marketing club in the cryptocurrency industry.  Promoters falsely promised Victims that AirBit Club earned returns on cryptocurrency mining and trading and that Victims would earn passive, guaranteed daily returns on any membership purchased.

Rodriguez, DOS SANTOS, Hughes, Millan, Chairez, and Aguilar traveled throughout the United States, and around the world to places in Latin America, Asia, and Eastern Europe, where they hosted lavish expos and small community presentations aimed at convincing Victims to purchase AirBit Club memberships.  In furtherance of the AirBit Club Scheme, the Victims were induced to buy memberships in cash, including in the Southern District of New York.  Following a Victim’s investment, a Promoter provided the Victim with access to an online AirBit Club portal to view the purported returns on memberships (the “Online Portal”).  While Victims saw “profits” accumulate on their Online Portal, those representations were false:  No Bitcoin mining or trading on behalf of Victims in fact took place.  Instead, Rodriguez, DOS SANTOS, Millan, Chairez, and Aguilar enriched themselves, and spent Victim money on cars, jewelry, and luxury homes, and financed more extravagant expos to recruit more Victims. 

Hughes, an attorney licensed to practice law in California, had previously represented Rodriguez and DOS SANTOS in a Securities and Exchange Commission (“SEC”) investigation related to another investment scheme known as Vizinova before aiding Rodriguez and DOS SANTOS in perpetrating the AirBit Club Scheme by, among other things, helping to remove negative information about AirBit Club and Vizinova from the internet. 

In many instances, as early as 2016, Victims who attempted to withdraw money from the AirBit Club Online Portal and complained to a Promoter were met with excuses, delays, and hidden fees amounting to more than 50% of the Victim’s requested withdrawal, if they were able to make any withdrawal at all.  In one instance, Aguilar told one Victim of the AirBit Club Scheme who was complaining about her inability to withdraw AirBit Club returns that she should “bring new blood” into the AirBit Club Scheme in order to receive her returns.

In April 2020, another victim received a notice on the AirBit Club Online Portal that his account was closed – and principal investment lost – due to “execution of financial sustainability Reserve, policy #34 of the Airbit Club Terms and Conditions, due to the economic and financial crisis caused by (Covid-19).”

Rodriguez, DOS SANTOS, Hughes, Chairez, and Millan sought to conceal the AirBit Club Scheme, as well as their respective control of the proceeds of that Scheme, by requesting that Victims purchase memberships in cash, using third-party cryptocurrency brokers, and by laundering the Scheme’s proceeds through several domestic and foreign bank accounts, including an attorney trust account managed by Hughes (the “Hughes Trust Account”).  The Hughes Trust Account was ostensibly intended to maintain custody of Hughes’s law practice’s client funds.  Instead, the Hughes Trust Account was used by Rodriguez, DOS SANTOS, Hughes, and Millan to conceal the nature and origin of the AirBit Club Scheme’s illicit proceeds.  Through that account, Hughes directed Victim funds to the personal expenses of Rodriguez, DOS SANTOS, Millan, and himself, and funded promotional events and sponsorships designed to further promote the AirBit Club Scheme.  In total, the defendants laundered at least $20 million in proceeds of the Scheme through these various methods.

*                      *                     *

DOS SANTOS, 45, of Panama City, Panama, is charged with one count of conspiracy to commit wire fraud, one count of conspiracy to commit bank fraud, and one count of conspiracy to commit money laundering. The wire fraud conspiracy and money laundering conspiracy charges each carry a maximum term of 20 years in prison, and the bank fraud conspiracy charge carries a maximum term of 30 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 would be determined by the judge. 

Ms. Strauss praised the outstanding investigative work of Special Agents from Homeland Security Investigations’ El Dorado Task Force, HSI Panama, the HSI Panama City Transnational Criminal Investigative Unit, and HSI New Orleans.  Ms. Strauss further thanked the attorneys and investigators at the SEC whose expertise and diligence were integral to the development of this investigation.

The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Kiersten A. Fletcher, Cecilia E. Vogel, and Elizabeth A. Espinosa 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 Superseding Indictments and the description of the Superseding Indictments set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, and Scott J. Lampert, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of the Inspector General (“HHS-OIG”), announced today that the United States has settled a civil healthcare fraud lawsuit against RAMESH TADUVAI (“TADUVAI”), the former part-owner and Pharmacist-in-Charge of Manav II, Inc., d/b/a Good Health Pharmacy (“Good Health Pharmacy”) in Manhattan.  The settlement resolves claims that, from February 2013 through February 2014, TADUVAI submitted false claims for payment to Medicare and Medicaid for prescriptions that Good Health Pharmacy never dispensed to patients, and received reimbursements to which the pharmacy was not entitled, in violation of the False Claims Act.  Under the settlement approved yesterday by U.S. District Judge P. Kevin Castel, TADUVAI will pay $600,000 to the United States to resolve the fraudulent billing claims.  TADUVAI also made admissions regarding his conduct as further described below.

Acting U.S. Attorney Audrey Strauss said:  “For more than a year, pharmacist Ramesh Taduvai knowingly billed the Medicare and Medicaid programs for prescriptions that his pharmacy never dispensed to patients.  This Office will continue to hold accountable those who engage in fraudulent billing schemes to personally profit at the expense of federally funded healthcare programs.”

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Health care professionals must be held to a high standard of ethical behavior.  HHS-OIG will continue to ensure that those individuals and entities that bill federal health care programs do so in an honest manner.”

According to the Complaint filed in Manhattan federal court: 

TADUVAI has been a licensed pharmacist since 1999 and was a 50% owner of Good Health Pharmacy, a retail pharmacy in New York, New York, from late 2005 until October 2014.  From February 2013 through February 2014, TADUVAI, on behalf of Good Health Pharmacy, knowingly billed Medicare and Medicaid for prescription drugs that were never actually dispensed to patients.  After Pharmacy Benefit Manager CVS/Caremark (“CVS”) determined that Good Health Pharmacy had submitted claims for medications that were not supported by records showing that it had purchased the medications, TADUVAI presented checks that he had issued, purportedly to independent pharmaceutical wholesalers, and falsely claimed they were proof of the purchases.  However, Good Health Pharmacy had in fact not purchased these drugs and the checks were instead deposited into bank accounts controlled by TADUVAI.  In March 2017, TADUVAI, Good Health Pharmacy, and others were indicted by the Manhattan District Attorney’s Office for crimes related to underreporting income, some of which related to the issuance of these checks.  In November 2018, TADUVAI pled guilty to three counts of criminal tax fraud in the second degree.

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

• At all times during the relevant time period, TADUVAI was Good Health Pharmacy’s Pharmacist-in-Charge and was responsible for the pharmacy’s operations and the management of its staff.
• Good Health Pharmacy, under the management of TADUVAI, as Pharmacist-in-Charge, submitted false claims for payment to Medicare and Medicaid for prescriptions that were never dispensed to patients and received reimbursements on these prescriptions to which it was not entitled.
• TADUVAI issued checks, purportedly to independent pharmaceutical wholesalers, and claimed that these checks were proof that Good Health Pharmacy had ordered and paid for drugs for which the pharmacy billed CVS and federal healthcare programs, but the medications were not actually purchased and the checks were instead deposited into bank accounts controlled by TADUVAI and others.

Ms. Strauss thanked HHS-OIG for its assistance with the case.

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

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced the unsealing of an Indictment charging VICTOR RIVERA, 29, and MICHOLS PENA, 38, with conspiracy to commit robbery, robbery, and firearms offenses.  RIVERA and PENA were arrested on this morning.  PENA was arrested in Queens and will be presented early next week before United States Magistrate Judge Gabriel W. Gorenstein. RIVERA was arrested in Miami and will be presented early next week before United States Magistrate Judge Edwin Torres in the Southern District of Florida. This case is assigned to United States District Judge Alvin Hellerstein.

Acting U.S. Attorney Audrey Strauss said:  “As alleged in the Indictment, the defendants are charged in connection with a violent robbery conspiracy.  In one of the robberies a victim was shot.  Thanks to the outstanding work of the Special Agents of our office and cooperation across multiple law enforcement agencies, the defendants now face federal charges for their crimes.  We especially want to thank the Bergen County Prosecutor’s Office for its assistance in this matter.”

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

From at least in or about June 2020 up to and including November 2020, VICTOR RIVERA, MICHOLS PENA, and others known and unknown, agreed to commit robberies in which the objects of the robberies were Richard Mille watches worth hundreds of thousands of dollars, and the watches were owned by businesses transacting in interstate commerce.  RIVERA participated in an armed robbery on June 11, 2020, in which the victim was shot.  RIVERA also participated in an armed robbery on August 2, 2020.

    *          *          *

RIVERA and PENA are charged with conspiring to commit Hobbs Act robbery; this count carries a statutory maximum sentence of twenty years in prison. RIVERA is further charged with two counts of Hobbs Act robbery, each of which carries a statutory maximum sentence of twenty years in prison; aiding and abetting the use, carrying, and possession of a firearm, which firearm was brandished and discharged in furtherance of a crime of violence, which carries a statutory maximum sentence of life in prison, and a mandatory minimum sentence of ten years in prison, which must run consecutively to any other sentence imposed; and using, carrying, and possessing a firearm in furtherance of a crime of violence, which firearm was brandished, which carries a statutory maximum sentence of life in prison and a mandatory minimum sentence of seven years in prison, which must run consecutively to any other sentence imposed.

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 Special Agents of the U.S. Attorney’s Office for the Southern District of New York, the New York City Police Department, the Bergen County Prosecutor’s Office, the Englewood Cliffs Police Department, the Weehawken Police Department, and the Nassau County Police Department.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorney Mathew Andrews 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, the description of the Indictment, and the statements made in related court filings and proceedings set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Audrey Strauss, the Acting 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 today the arrest of JOHN MUESER.  MUESER, 69, is charged with sexual exploitation of a 7-year-old minor and with transporting child pornography from Fairfield County, Connecticut to Westchester County, New York.  MUESER was arrested this morning and is expected to be presented today before U.S. Magistrate Judge Judith C. McCarthy in White Plains federal court.

Acting U.S. Attorney Audrey Strauss said:  “John Meuser allegedly used his position of trust as a tutor to engage in unspeakable acts with a 7-year-old child.  Alleged conduct such as Meuser’s can inflict long-lasting negative effects on victims which no child should ever endure. Meuser now faces federal charges and substantial prison time for his craven conduct, as alleged. I thank the FBI for their assistance in this case and urge anyone with knowledge of child sexual abuse to call 1-800-CALL-FBI.”

FBI Assistant Director William F. Sweeney Jr. said: “Announcements of charges like those we bring today should make anyone’s stomach turn.  Mueser allegedly induced his seven-year-old tutoring student to engage in sexually-explicit conduct and recorded it on his phone.  Mueser's conduct should shock the community into action to help others. The FBI will never waver in its commitment to protect our society's most vulnerable citizens, but we are all better working together as we try to protect our children.  We believe there may be more victims in this case, and we need your help.  We implore parents or family members of potential victims to contact us at 1-800-CALL-FBI.”

According to the Complaint[1] filed on November 17, 2020, and unsealed today in White Plains federal court:

On May 1, 2019, JOHN MUESER induced a 7-year-old minor, whom he was tutoring, to engage in sexually explicit conduct, used his iPhone to record the activity and then transported the images from Fairfield County, Connecticut to Westchester County, New York. 

On October 1, 2019, JOHN MUESER transported child pornography maintained on his iPhone from Westchester County, New York to Fairfield County, Connecticut.  

On or about March 19, 2020, JOHN MUESER was charged in Connecticut with Possession of Child Pornography, Risk of Injury to a Minor, Sexual Assault 4th, and Voyerism.

There may be more victims of this alleged conduct.  If you have information to report, contact the Federal Bureau of Investigation at 1-800-CALL-FBI.   

 *          *          *

MUESER, 69, of Tuckahoe, New York, is charged with one count of sexual exploitation, which carries a mandatory minimum sentence of 15 years in prison and a maximum sentence of       30 years in prison, and one count of transportation of child pornography, which carries a mandatory minimum sentence of 5 years in prison and a maximum sentence of 20 years in prison.  The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the efforts of the Federal Bureau of Investigation in connection with this investigation.  She added that the investigation is ongoing.

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

[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 Acting United States Attorney for the Southern District of New York, announced today the guilty plea of DAMIR PEJCINOVIC, a/k/a “Damian,” a/k/a “CoCo,” to participating in a criminal organization that committed a series of burglaries and engaged in the interstate transportation of stolen goods between 2006 and 2017.  PEJCINOVIC pled guilty today before U.S. Magistrate Judge Kevin Nathaniel Fox.  Gzimi Bojkovic, a/k/a “Jimmy,” pled guilty on October 7, 2019, before U.S. Magistrate Judge Ona T. Wang.  Adrian Fiseku pled guilty on March 13, 2020, before U.S. Magistrate Judge Ona T. Wang.  Elvis Cirikovic, a/k/a “Gorilla,” pled guilty on August 26, 2019, before U.S. Magistrate Judge Katharine H. Parker.

Acting U.S. Attorney Audrey Strauss said:  “As they have now admitted, the defendants were part of a sophisticated criminal enterprise that carried out burglaries on both sides of the Atlantic, to the tune of over $10 million.  We continue our daily work with our law enforcement partners to vigorously investigate criminal organizations that commit crimes in New York City and elsewhere.  We especially want to thank the FBI and the NYPD for their outstanding work on this case.”

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

Between 2006 and April 2017, DAMIR PEJCINOVIC, a/k/a “Damian,” a/k/a “CoCo,” Gzimi Bojkovic, a/k/a “Jimmy,” Adrian Fiseku, and Elvis Cirikovic, a/k/a “Gorilla,” participated in a criminal organization whose members and associates engaged in, among other things, the commission of burglaries and interstate transportation and sale of stolen goods.  The criminal organization operated principally in New York City, California, New Jersey, Pennsylvania, Florida, Massachusetts, Maine, and Europe.  Members and associates of the organization committed, conspired to commit, and attempted to commit numerous burglaries of jewelry stores and banks, as well as the interstate transportation and sale of stolen property from the burglaries.  PEJCINOVIC, Bojkovic, Fiseku, Cirikovic, and other members and associates of the criminal organization committed the following burglaries and attempted burglaries:

On March 29, 2008, PEJCINOVIC, Bojkovic, and Cirikovic participated in a burglary of a jewelry store in Manhattan, which resulted in the theft of jewelry valued at over $2.5 million.

On October 11, 2008, PEJCINOVIC and Cirikovic participated in an attempted burglary of a jewelry store in Germany, attempting to steal gold valued at more than €10 million.

On July 26, 2009, PEJCINOVIC and Bojkovic participated in a burglary of a jewelry store in Manhattan, which resulted in the theft of jewelry valued at over $850,000.

On August 25, 2010, PEJCINOVIC participated in an attempted burglary of a jewelry store in Manhattan.

On August 28, 2010, PEJCINOVIC and Bojkovic participated in a burglary of a jewelry store in Beverly Hills, which resulted in the theft of jewelry valued at over $70,000.

On September 5, 2010, PEJCINOVIC participated in a burglary of a jewelry store in Kansas City, which resulted in the theft, interstate transportation, and sale of jewelry valued at over $1 million.

On February 19, 2011, PEJCINOVIC, Cirikovic, and Fiseku participated in a jewelry store in Los Angeles, which resulted in the theft, interstate transportation, and sale of jewelry valued at over $3 million.

In the summer of 2011, PEJCINOVIC participated in an attempted burglary of a jewelry store in Brooklyn.

On September 16, 2011, PEJCINOVIC and Cirikovic participated in a burglary of a jewelry store in Los Angeles, which resulted in the theft of jewelry valued at over $150,000.

In the fall of 2012, PEJCINOVIC and Bojkovic participated in an attempted burglary of a bank in Philadelphia.

On June 30, 2012, PEJCINOVIC and Cirikovic participated in an attempted burglary of a bank in Scarsdale.

On July 22, 2012, PEJCINOVIC participated in an attempted burglary of a jewelry store in Manhattan.

In the fall of 2013, PEJCINOVIC, Bojkovic, and Cirikovic participated in the burglary of a jewelry store in New Jersey.

On December 31, 2016, PEJCINOVIC, Bojkovic, and Fiseku participated in the burglary of a jewelry store in Manhattan, which resulted in the theft, interstate transportation, and sale of jewelry valued at over $3 million.

On March 20, 2017, PEJCINOVIC, Bojkovic, and Fiseku participated in the burglary of a jewelry store in Los Angeles, which resulted in the theft of jewelry valued at over $2 million.                

*                *                *

PEJCINOVIC, Bojkovic, Fiseku, and Cirikovic each pled guilty to racketeering conspiracy, 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 sentencings of the defendants will be determined by the judge.

PEJCINOVIC is scheduled to be sentenced on March 9, 2021. 

Bojkovic was sentenced by U.S. District Judge Victor Marrero on November 17, 2020, to 36 months in prison. 

Fiseku is scheduled to be sentenced on January 22, 2021. 

Cirikovic was sentenced by Judge Marrero on January 13, 2020, to 27 months in prison.

Ms. Strauss praised the outstanding investigative work of the FBI and the NYPD.  Ms. Strauss also thanked the Los Angeles Police Department, Beverly Hills Police Department, Kansas City Police Department, Portland Police Department, German Federal Police, Interpol, Europol, the Office of International Affairs, and the Manhattan District Attorney’s Office for their assistance in this investigation.

This case is being handled by the Office’s Violent & Organized Crime Unit.  Assistant United States Attorneys Andrew K. Chan, Margaret Graham, and Jamie Bagliebter 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.

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that, following a four-week trial, PARKER H. “PETE” PETIT, the former chief executive officer of MiMedx Group, Inc. (“MiMedx”), a publicly traded biopharmaceutical company, was convicted of securities fraud, and WILLIAM TAYLOR, the former chief operating officer of MiMedx, was convicted of conspiracy to commit securities fraud, to make false statements in SEC filings, and to mislead the conduct of audits.  The convictions stem from their participation in a scheme to fraudulently inflate MiMedx’s revenue. 

Acting U.S. Attorney Audrey Strauss said:  “As the jury found, Parker Petit and William Taylor employed secret agreements and corrupt financial inducements with four distributors to materially misstate the quarterly and annual sales revenue of MiMedx.  In the process, they deceived the SEC, auditors, and the investing public, repeatedly misrepresenting the financial condition of their publicly traded company.  Now they await sentencing for their crimes.”

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

MiMedx was headquartered in Marietta, Georgia, and its securities traded under the symbol “MDXG” on the NASDAQ.  MiMedx sold regenerative biologic products, such as skin grafts and amniotic fluid, both directly to end users, such as public and private hospitals, and to various stocking distributors, which, in turn, resold the product to end users. 

One of the most critical financial metrics disclosed in MiMedx’s public filings with the Securities and Exchange Commission (“SEC”), and touted in MiMedx’s accompanying press releases, was MiMedx’s quarterly and annual sales revenue.  Under Generally Accepted Accounting Principles (GAAP) and SEC guidance, a company like MiMedx that engages in the sale of products through a distributor may recognize revenue upon transfer of the product to a distributor if certain requirements are satisfied, including that delivery has occurred or services have been rendered, the seller’s price to the buyer is fixed or determinable, and collectability of payment is reasonably assured.  PETIT and TAYLOR repeatedly demonstrated and touted their understanding of these rules governing revenue recognition.  They also publicly identified revenue as the principal metric reflecting MiMedx’s growth, and touted MiMedx’s consistent record of quarter-over-quarter revenue growth and meeting or exceeding revenue guidance in 17 consecutive quarters, from 2011 through year-end 2015.  By 2015, however, it became increasingly difficult for MiMedx to reach its revenue guidance due to decreased demand from certain distributors and the increasingly aggressive revenue targets that MiMedx had publicly announced. 

Confronted with the difficulties faced by MiMedx in meeting its quarterly and annual revenue guidance by legitimate means, PETIT and TAYLOR engaged in a fraudulent scheme to falsely recognize revenue upon the shipment of MiMedx product to four stocking distributors, CPM, SLR, Stability Biologics (“Stability”), and First Medical, in the second through fourth quarters of 2015.  PETIT and TAYLOR caused MiMedx to report fraudulently inflated revenue figures to the investing public in order to ensure that the reported figures fell within MiMedx’s publicly announced revenue guidance, and to fraudulently convey to the investing public that MiMedx was accomplishing consistent growth quarter after quarter, as PETIT and TAYLOR had falsely touted to the investing public.  The fraudulent scheme involved the following central features:

• As to CPM, in the second quarter of 2015, PETIT and TAYLOR caused MiMedx fraudulently to recognize $1.4 million in revenue by (1) making a $200,000 sham “consulting” payment to CPM’s owner to bribe CPM to buy MiMedx product and (2) secretly agreeing to send CPM approximately $1.1 million of product it did not want and did not intend to sell, while promising that CPM could return the product to MiMedx and swap it for different product in a subsequent quarter.  PETIT and TAYLOR entered into the sham “consulting” agreement to conceal that the payment was a bribe to purchase product, and CPM’s owner performed no consulting work for the payment.  Neither PETIT nor TAYLOR disclosed to MiMedx’s outside auditors the “consulting” payment or product swap.  

• As to SLR, in the third quarter of 2015, PETIT and TAYLOR caused MiMedx fraudulently to recognize $4.6 million in revenue by booking the revenue despite understanding that SLR would not make a timely payment for the product, and certainly would not do so within contractual terms.  To hide from MiMedx’s auditors that the collectability of payment from SLR was questionable, during the fourth quarter 2015, PETIT arranged for his adult children to use a shell company to loan money to SLR (money that came from a trust fund established by PETIT for their benefit), with the understanding that the loan proceeds would be used in substantial part to pay down SLR’s debt to MiMedx.  PETIT did not disclose the loan to MiMedx’s outside auditors and made false and misleading statements to the auditors about SLR’s ability to pay MiMedx.

• As to Stability, in the third and fourth quarters of 2015, PETIT and TAYLOR caused MiMedx improperly to recognize $2.6 million of revenue, where they (1) failed to agree with Stability on the essential terms of the deal, including when payment was due; (2) reached a secret understanding that Stability could swap or return unwanted product in subsequent quarters; and (3) understood that Stability could not pay for the product in a timely fashion.  In fact, PETIT granted the right of return to Stability in a back-dated letter he hid from MiMedx’s internal accountants and outside auditors.

• As to First Medical, in the fourth quarter of 2015, TAYLOR caused MiMedx improperly to recognize $2.2 million in revenue by making an undisclosed promise to First Medical that it could return any product that it could not sell and that MiMedx would not leave First Medical with any losses.  To carry out the scheme, TAYLOR sent two emails four seconds apart to First Medical.  The first was a “cover story” that purported to require payment within a fixed period, as required by MiMedx’s accountants.  TAYLOR forwarded the first email to MiMedx’s accounting department.  The second email, sent only four seconds after the first, memorialized the true terms of the deal, which involved an agreement to defer payment and take back product if it could not be sold.  TAYLOR hid the second email from MiMedx’s internal accountants and outside auditors.  TAYLOR also arranged for a false audit “confirmation,” which falsely represented that First Medical was required to pay within a fixed period and omitted the true terms of the deal, to be provided to MiMedx’s outside auditors.

PETIT’s and TAYLOR’s fraudulent manipulation of MiMedx’s revenue caused MiMedx to report materially inflated revenue in the second, third, and fourth quarters of 2015, and for the full year 2015.  In its 2015 10-K, MiMedx reported annual revenue that was fraudulently inflated by approximately $8.2 million.  Absent this fraudulent inflation of revenue, MiMedx would have missed both (1) its quarterly revenue guidance in the third and fourth quarters of 2015 and annual revenue guidance for 2015 and (2) analyst revenue consensus for the second through fourth quarters of 2015 and the full year 2015.

*                *                *           

PARKER H. “PETE” PETIT, 81, was convicted of one count of securities fraud, and WILLIAM TAYLOR, 52, was convicted of one count of conspiracy to commit securities fraud, make false filings with the SEC, and mislead the conduct of audits.  The securities fraud count carries a maximum sentence of 20 years in prison, and the conspiracy count carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the Court.

PETIT is scheduled to be sentenced before Judge Rakoff on February 23, 2021, and TAYLOR is scheduled to be sentenced before Judge Rakoff on February 24, 2021.

Ms. Strauss praised the outstanding investigative work of the United States Postal Inspection Service.  Ms. Strauss also thanked the SEC, which brought a separate civil action.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Edward A. Imperatore, Scott A. Hartman, and Daniel M. Tracer are in charge of the prosecution.  

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Dermot Shea, Commissioner of the New York City Police Department (“NYPD”), and Scott J. Lampert, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), announced today the unsealing of an Indictment in Manhattan federal court charging HOWARD ADELGLASS, a licensed physician, and MARCELLO SANSONE, an employee at ADELGLASS’s clinic, with conspiracy to distribute oxycodone illegally.  The defendants were arrested yesterday afternoon, and will be presented before United States Magistrate Judge Kevin Nathaniel Fox in Manhattan federal court today.  The case is assigned to U.S. District Judge Kimba M. Wood.

Acting U.S. Attorney Audrey Strauss said:  “As alleged, Howard Adelglass betrayed his profession by writing thousands of medically unnecessary opioid prescriptions for more than a million oxycodone pills in less than three years.  Marcello Sansone allegedly got promoted from trusted gatekeeper patient to office manager, helping Adelglass run his grotesquely lucrative pill mill.  Now both are in custody and facing federal felony charges.”

FBI Assistant Director William F. Sweeney Jr. said:  “The alleged behavior of Adlelglass, a licensed physician, who held a position of trust in our society, causes lasting harm to our communities.  To intentionally peddle these substances into our communities, especially to those who have struggled to overcome the addiction of powerful painkillers, is an offense against all of society.  The type of conspiracy alleged here has led to devastating consequences for addicted patients and their families, and has placed an immense burden on communities who will be left to pick up the pieces of shattered lives.  This particular alleged operation has been shut down, but our message to others engaging in the same type of illegal activity should be clear – put the prescription pad away.  Your medical degree won’t provide you immunity from federal charges or the consequences that will follow.”       

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “The defendants allegedly operated a greed-fueled scheme that callously put lives at risk and worsened the opioid epidemic that plagues our country.  Working with our law enforcement partners, we will continue to hold accountable medical professionals who act like drug dealers at the expense of some of the most vulnerable people in our society.”  

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

HOWARD ADELGLASS is a licensed physician who, with MARCELLO SANSONE, operated a pain-management clinic located in Midtown Manhattan (the “Clinic”).  The Clinic serviced purported patients seeking oxycodone and other pain-relief medications commonly diverted for illicit purposes.  In exchange for cash payments, ADELGLASS wrote thousands of prescriptions for large quantities of oxycodone to individuals who ADELGLASS knew did not need the pills for any legitimate medical purpose.  Many of the purported patients were addicted to opioids and, in some cases, sold oxycodone pills on the street to drug users.  Most patients were referred to the Clinic by existing, trusted “gatekeeper” patients, of which SANSONE was one.  The Clinic primarily operated on a cash-only basis, and generally operated only for a few hours per day, opening sometime between approximately 2:00 p.m. and 5:00 p.m.  After serving as a gatekeeper patient, SANSONE’s role at the Clinic expanded beginning in or about October 2018, when he joined ADELGLASS in managing the Clinic’s operations.  SANSONE helped to control access to ADELGLASS and the lucrative prescriptions he wrote for medically unnecessary oxycodone.

Between in or about November 2017 and in or about September 2020, ADELGLASS prescribed more than 1.3 million oxycodone pills.  ADELGLASS generally dispensed these pills after conducting limited or no examination of the purported patient.  The purported patients who obtained oxycodone through ADELGLASS and SANSONE at the Clinic were often drug-addicted individuals who failed drug tests administered by the Clinic.  ADELGLASS nevertheless continued to prescribe large quantities of oxycodone to these patients, many of whom traveled long distances to obtain the illicit oxycodone from the Clinic. 

*                      *                      *

HOWARD ADELGLASS, 65, of New York, New York, and MARCELLO SANSONE, 35, of Old Bridge, New Jersey, are charged each with one count of conspiracy to distribute oxycodone illegally, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the FBI, NYPD, and HHS-OIG.  She also thanked for its assistance the Drug Enforcement Administration (“DEA”) Tactical Diversion Squad - New York City, which comprises agents and officers from the DEA, the NYPD, the New York State Police, New York State Department of Financial Services, New York National Guard, New York City Department of Investigation, and New York State Department of Health Bureau of Narcotics Enforcement.

This case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Nicholas W. Chiuchiolo and Daniel G. Nessim 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, the Acting United States Attorney for the Southern District of New York, and Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced today that JAMES EARLY was sentenced by U.S. District Judge Kenneth M. Karas to 25 years in prison for enticing two different minors to engage in illegal sexual activity.  The sentencing today followed EARLY’s guilty plea on November 13, 2019.

Acting U.S. Attorney Audrey Strauss said:  “This case underlines the urgent need for law enforcement to continue its efforts to protect children from those who prey on them.  As today’s sentencing underscores, we will continue to use every tool available to law enforcement to prosecute and punish those who sexually exploit children.”

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “The sexual exploitation of children is a despicable crime and today’s sentencing sends a strong message that those who victimize the most vulnerable amongst us will be held accountable for their actions. The identification and rescue of child victims of sexual exploitation is one of Homeland Security Investigations top priorities. HSI and our law enforcement partners will continue to vigorously investigate those who prey on children.”           

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

From in or about July 2015 to March 2017, EARLY engaged in sexually explicit communications by text with a female minor (“Victim-1”) in Sullivan County, New York.  In connection with these sexually explicit communications, EARLY persuaded Victim-1 to engage in sexually explicit activity, photograph and video it, and transmit it to him via text.  Victim-1 was 15 when they began their online communications.  Victim-1 sent EARLY numerous sexually explicit photos in direct response to directions she received from EARLY, instructing her exactly what he wanted to see her do.  In addition, on numerous occasions, EARLY sent images of his erect penis to Victim-1 and also images of him masturbating.

From in or about the fall of 2014 to the spring of 2017, EARLY persuaded, induced, and enticed a female minor (“Victim-2”) to engage in illegal sexual activity in the Middle District of Pennsylvania.  EARLY’s sexual abuse of Victim-2 began when Victim-2 was entering 8th grade and was 14 years old. 

In October 2017, a search warrant of EARLY’s residence was executed in connection with the investigation.  Sexually explicit images and videos of Victim-2 were recovered during the search, as well as hundreds of other images of child pornography.

In addition to the prison term, EARLY, 40, of Selinsgrove, Pennyslvania, was sentenced to a lifetime term of supervised release.

Ms. Strauss praised the efforts of Homeland Security Investigations and the New York State Police in this investigation.

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

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that JAMES T. BOOTH was sentenced in Manhattan federal court today to 42 months in prison in connection with his years-long scheme to defraud customers of his financial services firm, Booth Financial Associates (“Booth Financial”), of nearly $5 million through a variety of lies and misrepresentations.  BOOTH pled guilty to one count of securities fraud on October 22, 2019, before U.S. District Judge John G. Koeltl, who also imposed today’s sentence.

Acting Manhattan U.S. Attorney Audrey Strauss said:  “Today, James T. Booth was sentenced for brazenly bilking some 40 clients of nearly $5 million by fraudulently convincing them that he would deliver solid and secure returns on their investments.  Instead, Booth delivered lies and deceit.  We will continue to aggressively pursue frauds like this one to preserve investor confidence in our capital markets.” 

According to the allegations contained in the Indictment:

From 2013 through 2019, BOOTH solicited money from clients of Booth Financial and falsely promised to invest their money in securities offered outside of their ordinary advisory and brokerage accounts.  Specifically, BOOTH directed certain of his clients to write checks or wire money to an entity named “Insurance Trends, Inc.”  Instead of investing his clients’ funds, BOOTH, who controlled the bank account of Insurance Trends, Inc., subsequently misappropriated his clients’ funds to pay his personal and business expenses.

In total, BOOTH raised more than $4.9 million from approximately 40 investors.  BOOTH lured many of his victims with false promises of safe investments with high returns.  For example:           

•           BOOTH convinced a recently widowed elderly investor (“Investor-1”) to move money she had received from her late husband’s pension into Insurance Trends, Inc.  BOOTH falsely promised Investor-1 that she would have $1 million by the time she was 100 years old.  As a result of BOOTH’s false assurances, Investor-1 invested more than $600,000 with BOOTH.

•           BOOTH similarly convinced another investor (“Investor-2”) to move his money into an investment product that, according to BOOTH, would never lose its principal and would grow with the market.  Based on this false representation, Investor-2 moved money he had set aside for his child’s college expenses, at least approximately $60,000, to BOOTH.  BOOTH subsequently failed to provide Investor-2 with documentation of his investment or to allow Investor-2 to redeem his investment.

•           BOOTH convinced another elderly investor (“Investor-3”) to withdraw money from an annuity established for the care of his disabled sibling – approximately $18,000 – and invest that money with BOOTH.  Investor-3 gave the money to BOOTH with the understanding that BOOTH would invest that money for the benefit of Investor-3’s sibling’s continued care.

To prevent investors from seeking a return of their money, and to induce additional investments, BOOTH provided investors with fabricated account statements that falsely indicated that BOOTH had purchased certain securities on their behalf and that those investments had generated a profit.  BOOTH further concealed the truth from investors by using money obtained from new investors to make redemption payments to previous investors, in a Ponzi-like fashion.

*                      *                      *

In addition to the prison term, BOOTH, 75, of Norwalk, Connecticut, was sentenced to three years of supervised release, and was ordered to pay $4,969,689.00 in forfeiture.  BOOTH will pay restitution in an amount to be determined by the Court.

Ms. Strauss praised the outstanding work of Homeland Security Investigations and also thanked the Securities and Exchange Commission for its assistance in the investigation. 

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

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced that DONALD LAGUARDIA was convicted yesterday following a five-day jury trial before the Honorable Lewis A. Kaplan.  As the jury found, between 2013 and 2016, LAGUARDIA, the chief executive officer and co-founder of a New York-based investment firm, L-R Managers, LLC, lied to investors and misappropriated money from investment funds managed by LAGUARDIA through L-R Managers.  The jury convicted LAGUARDIA of three counts: securities fraud, investment adviser fraud, and wire fraud.

Acting U.S. Attorney Audrey Strauss said:  “As a jury unanimously determined, Donald LaGuardia lied to investors about how their invested money would be utilized, failing to disclose that much of it would be spent on business and personal expenses.  Further, LaGuardia continued to lie in soliciting additional investors even after he was well aware his company was in financial distress.  Now he awaits sentencing for his crimes.”

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

From in or about 2013 through in or about 2017, LAGUARDIA solicited millions of dollars from investors for the LR Global Frontier Master Fund and two related feeder funds (collectively, the “Frontier Funds”), which had a stated focus on investments in “frontier” markets in Latin America, Central and Eastern Europe, the Middle East, Africa, and Asia.  Contrary to LAGUARDIA’s representations, and in breach of his duties to investors in the Frontier Funds, LAGUARDIA misappropriated more than $1.2 million in investors’ money to finance L-R Managers’ payroll, rent for its office space on Park Avenue in Manhattan, and hundreds of thousands of dollars in charges on the firm’s credit card, among other unauthorized expenses.  At least $191,000 of the misappropriated money went directly to, or for the benefit of, LAGUARDIA personally.

In one example, in 2013, LAGUARDIA solicited an $800,000 investment in the Frontier Funds from an investor (“Investor-1”).  Upon receipt of Investor-1’s money, an L-R Managers employee sent an email to LAGUARDIA and another person asking for approval to forward the $800,000 to the Frontier Funds.  LAGUARDIA responded, “Dont [sic] wire anything yet!”  LAGUARDIA then caused approximately $390,000 of Investor-1’s investment never to be transmitted to the Frontier Funds, but instead to be used to pay himself approximately $52,000 and for various other personal and business expenses.

By September 2015, L-R Managers faced substantial financial difficulties.  On September 1, 2015, an L-R Managers principal sent an email to LAGUARDIA and others at the firm stating that it would be “ethically troubling to accept money into the [Frontier Funds] when [L-R Managers] can no longer support . . . payroll and mission critical services.”  Nevertheless, just a few days later, a new investor solicited by LAGUARDIA (“Investor-2”) made a $2 million investment into the Frontier Funds.  Prior to this investment, LAGUARDIA concealed his firm’s near insolvency from Investor-2 and did not disclose that the Frontier Funds had been paying substantial expenses for L-R Managers, contrary to the representations in the funds’ offering documents.  LAGUARDIA then proceeded, over the course of several months, to use a substantial portion of Investor-2’s investment in the Frontier Funds to continue paying himself and subsidizing his firm’s business expenses.

*                      *                      *

LAGUARDIA, 53, of Lavallette, New Jersey, was convicted at trial of one count of securities fraud, one count of wire fraud, and one count of investment adviser fraud.  LAGUARDIA faces a maximum sentence of 20 years in prison on each of the securities and wire fraud counts and a maximum sentence of five years in prison on the investment adviser fraud count.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence imposed upon LAGUARDIA will be determined by the judge.

Ms. Strauss praised the investigative work of the U.S. Postal Inspection Service.  Ms. Strauss also thanked the Securities and Exchange Commission, which previously brought a related civil action against LAGUARDIA.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Max Nicholas, Elisha Kobre, Margaret Graham, and Daniel Loss are in charge of the prosecution.

Audrey Strauss, the Acting 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 Raymond Donovan, the Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), announced the return of a superseding indictment charging KYLE MULLINGS, a/k/a “Kase,” with murder in aid of racketeering and murder through the use of a firearm in connection with the murder of Daquan Cooper on June 25, 2015, in the Bronx.  MULLINGS was already in federal custody on other charges.  On November 5, 2019, an indictment was unsealed charging co-defendant Jose Rodriguez, a/k/a “Hov,” a/k/a “Hov Goon,” in connection with the murder of Daquan Cooper.

MULLINGS will be presented at a later date.  The case is assigned to U.S. District Judge Alvin K. Hellerstein.

Acting U.S. Attorney Audrey Strauss said:  “As alleged in the indictment, Kyle Mullings and others were responsible for the murder of Daquan Cooper in the Parkchester neighborhood of the Bronx in 2015.  We commend the extraordinary efforts of our law enforcement partners to bring Mullings to justice.”           

HSI Special Agent in Charge Peter C. Fitzhugh said:  “HSI and our partners have demonstrated a tireless commitment to dismantling this gang’s complex criminal enterprise through multi-agency cooperation, resulting in these indictments.  This case highlights that, as alleged, Mullings and other violent perpetrators in our communities are well organized in their criminal pursuits.  However, law enforcement in New York continues to be successful in apprehending these pugnacious offenders allegedly responsible for numerous senseless deaths.”

DEA Special Agent in Charge Raymond Donovan said:  “Great police work and multi-agency cooperation has brought an alleged murderer to justice.  I applaud all of our partners for their steadfast diligence throughout this investigation.”            

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

MULLINGS was a member or associate of a racketeering enterprise known as the Beach Avenue Crew, a criminal organization whose members and associates engaged in, among other things, murder, attempted murder, and narcotics trafficking. 

On June 25, 2015, MULLINGS orchestrated the murder of Daquan Cooper and provided the firearms that others used to shoot and kill Cooper in the vicinity of 1595 Unionport Road in the Parkchester neighborhood of the Bronx.                

*                *                *

MULLINGS, 26, from the Bronx, New York, is charged with one count of murder in aid of racketeering, which carries a maximum sentence of death or life in prison, and a mandatory minimum sentence of life in prison; and one count of murder through the use of a firearm, which carries a maximum sentence of death or life in prison, and a mandatory minimum sentence of five years in prison.  The statutory maximum and mandatory minimum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of a defendant would be determined by the Court.

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

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Maurene Comey, Jacob Warren, and Andrew K. Chan 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 constitutes only allegations, and every fact described herein should be treated as an allegation.

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), today announced a Superseding Indictment in United States v. Scales, et al. 19 Cr. 96 (JSR).  In the initial indictment, unsealed on February 21, 2019, defendant SYDNEY SCALES, a/k/a “Sid,” a/k/a “Moe Black,” was charged with conspiracy to commit murder for hire, as well as narcotics and firearms offenses.  A second defendant on the Indictment, ERNEST HORGE, a/k/a “Ern,” a/k/a “Mac,” was charged with narcotics and firearms offenses.  In the Superseding Indictment, SCALES is charged with causing another person to shoot at rival drug dealers on June 9, 2017, in the vicinity of 1135 East Tremont Avenue in the Bronx, New York, causing the death of Joshua Lopez.  SCALES and HORGE are also charged in the Superseding Indictment with engaging in multiple specific drug sales between November 2018 and February 2019, in addition to the narcotics conspiracy charged in the initial indictment.  The case is proceeding before U.S. District Judge Jed S. Rakoff. 

Acting U.S. Attorney Audrey Strauss said:  “As alleged in the Superseding Indictment, Sydney Scales was responsible for the murder of Joshua Lopez.  Thanks to the outstanding work of our law enforcement partners at HSI and the NYPD, Scales is now charged in federal court for this terrible crime.”

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “The murder of a bystander during a drug-related shooting is a disturbing crime against the people of this City.  Scales and Horge are charged with serious narcotics and firearms offenses that caused great harm the community, and ultimately resulted in the tragic loss of a young man’s life.  HSI and its law enforcement partners remain committed to ridding our streets of armed and violent drug traffickers, and to doing justice for victims of such senseless violence.”

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

Between in or about 2016 and in or about 2019, SCALES and HORGE participated in a conspiracy to distribute crack cocaine, cocaine, heroin, fentanyl, and marijuana in the Bronx and elsewhere.  SCALES and HORGE also used, carried, and possessed firearms, which were brandished and discharged, in connection with the narcotics conspiracy, and aided and abetted such firearms offenses.  In addition, in or about June 2017, SCALES conspired to commit murder for hire, agreeing to compensate another individual in return for locating and killing at least one rival drug dealer.  On the night of June 9, 2017, SCALES caused another person to shoot at rival drug dealers, but the shooter missed the targets and hit Joshua Lopez, causing Lopez’s death. 

SCALES, 41, and HORGE, 50, face maximum sentences of life in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

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

The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Frank Balsamello, Sarah Krissoff, and Mathew Andrews are in charge of the prosecution.

The charges contained 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 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, the Acting United States Attorney for the Southern District of New York, announced today that ANTHONY ELLISON, a/k/a “Harv,” was sentenced to 288 months in prison in connection with his participation in the Nine Trey Gangsta Bloods (“Nine Trey”), the July 22, 2018, kidnapping of Daniel Hernandez, a/k/a “Tekashi 6ix 9ine,” and the October 24, 2018, slashing of a victim in furtherance of the Nine Trey enterprise.  ELLISON was convicted following a three-week jury trial in October 2019 before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

Acting U.S. Attorney Audrey Strauss said:  “Anthony Ellison was a high-ranking member of the Nine Trey Gangsta Bloods, a violent gang that wreaked havoc across New York City, and he was convicted of racketeering, kidnapping, and a violent assault with a dangerous weapon.  Now, thanks to the outstanding work of our partners at the NYPD, HSI, and ATF, he will spend the next 24 years in federal prison.”

According to court documents and the evidence presented at the trial of ELLISON and co-defendant Aljermiah Mack:

Nine Trey was a criminal enterprise involved in committing numerous acts of violence, including shootings, robberies, and assaults in and around Manhattan and Brooklyn.  Members and associates of Nine Trey engaged in violence to retaliate against rival gangs, to promote the standing and reputation of Nine Trey, and to protect the gang’s narcotics business.  Members and associates of Nine Trey enriched themselves by committing robberies and selling drugs, such as heroin, fentanyl, furanyl fentanyl, MDMA, dibutylone, and marijuana.

The leadership structure of Nine Trey is divided into two parts: the Prison Lineup, which consists of incarcerated members, and the Street Lineup, which consists of members who are not incarcerated.  ELLISON was a high-ranking member of the Street Lineup.

ELLISON was found guilty after trial of racketeering conspiracy for his participation in the Nine Trey enterprise, kidnapping in aid of racketeering, and maiming and assault with a dangerous weapon in aid of racketeering.

*                *                *

In addition to the prison term, ELLISON, 33, of Brooklyn, New York, was sentenced to five years of supervised release.              

Ms. Strauss praised the outstanding investigative work of the New York City Police Department, Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.  Ms. Strauss also praised the New York City Department of Correction, Correction Intelligence Bureau, and the Kings County District Attorney’s Office for their assistance in the investigation.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Michael Longyear, Jacob Warren, and Jonathan Rebold are in charge of the prosecution.

Audrey Strauss, the Acting 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, Commissioner of the New York City Police Department (“NYPD”), announced the arrest of AQUILINO TORRES in connection with the kidnapping of his girlfriend and her 7-year-old son.  TORRES was arrested yesterday and will be presented in Manhattan federal court later today before U.S. Magistrate Judge Stewart D. Aaron. 

Acting U.S. Attorney Audrey Strauss said:  “As alleged, Aquilino Torres threatened to kill a 7-year-old child in carrying out a brutal kidnapping of the child and his mother.  Torres then allegedly held his victims captive for several days, during which he physically abused both mother and child, and sexually assaulted the woman.  Thankfully, the victims managed to escape, and thanks to the FBI and NYPD, Torres is in custody and facing federal prosecution for horrific crimes.”

FBI Assistant Director William F. Sweeney Jr. said:  “The conduct we allege in this case is horrific.  Torres allegedly broke a mother’s jaw, tied her hands to a bed frame after physically and sexually assaulting her, and held her and her seven-year-old child against their will for several days.  In spite of all she endured, the victim was able to escape her captor with her son and bring them both to safety.  The resiliency she and her son showed is commendable, and as a result of their heroic actions, Torres will now face justice.  I sincerely hope that provides them some comfort; we will do everything in our power to help them heal.”

NYPD Commissioner Dermot Shea said:  “In kidnaping a mother and her son, as alleged in this case, the defendant harmed innocent victims and that will never be tolerated.  I commend our NYPD investigators and federal partners for their hard work to bring justice in this case.”           

According to the allegations in the Complaint[1]:

On or about October 5, 2020, TORRES approached his girlfriend (“Victim-1”) in the vicinity of Harlem in New York, New York, and threatened to kill Victim-1’s 7-year-old son (“Minor Victim-1”) if she did not come with TORRES.  TORRES brought Victim-1 and Minor Victim-1 to a motel in the Bronx, where he proceeded to lock the door and physically assault Victim-1, including by punching Victim-1 several times in the face and body.  TORRES then had sex with Victim-1 against her will.  The following day, TORRES directed Victim-1 to order an Uber to take TORRES, Victim-1, and Minor Victim-1 to an apartment in Washington Heights (the “Apartment”).  TORRES forced Victim-1 and Minor Victim-1 to stay in the Apartment against their will for multiple days.  On at least one occasion, TORRES tied Victim-1’s hands to a bed frame to prevent her from leaving the Apartment while he was away.  TORRES also physically assaulted Victim-1 and Minor Victim-1 while at the Apartment.  On or about October 10, 2020, Victim-1 and Minor Victim-1 escaped from the Apartment.  Thereafter, Victim-1 was admitted to a hospital, where she was found to have a broken jaw that required surgery.

*                *                *

TORRES is charged with: one count of kidnapping, which carries a maximum term of life in prison, and one count of kidnapping of a minor, which carries a mandatory minimum term of 20 years in prison and a maximum term of life.  The maximum potential sentences and the mandatory minimum sentences 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 and NYPD, in particular, the Violent Crimes Task Force.  The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney David Robles is in charge of the prosecution.

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

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

Audrey Strauss, Acting 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 David Chong, Public Safety Commissioner for the City of White Plains, announced the unsealing of a federal Indictment charging MARCUS CHAMBERS, 29, a/k/a “Chino,” a/k/a “Chi D,” a/k/a “SP,” and DARNELL KIDD, a/k/a “Black,” a/k/a “Donney,” a/k/a “Donney Black,” 29, with the murder of Jonathan Johnson, 21, on March 18, 2011, in White Plains, New York.  CHAMBERS and KIDD are serving prison sentences from prior federal convictions, and will be brought to the federal courthouse in White Plains at a later date to be presented before a magistrate judge. 

Acting U.S. Attorney Audrey Strauss said:  “In March 2011, Jonathan Johnson was shot dead, the victim of senseless drug-related violence.  As alleged in the Indictment, Marcus Chambers and Darnell Kidd are responsible for that murder.  Thanks to the work of our remarkable law enforcement partners, Chambers and Kidd now stand charged in federal court for this terrible crime.”

FBI Assistant Director William F. Sweeney Jr. said:  “At times, it may seem murders are less likely to be solved as more time passes.  However, as the two men charged in this case have learned, the investigators and analysts assigned to our Westchester County Safe Streets Task Force don’t let time get in the way.  Their commendable dedication and determination has now forced these men to answer for their alleged actions.”

White Plains Public Safety Commissioner David Chong said:  “When local and federal law enforcement team together, there is little place for criminals to hide.  This is a perfect example, taking two alleged felons off the streets for a vicious crime.”

According to the allegations in the Indictment[1]:

On or about March 18, 2011, CHAMBERS and KIDD murdered Jonathan Johnson by shooting him during the course of an armed robbery of Johnson for marijuana in White Plains, New York.

CHAMBERS and KIDD are each charged with one count of murdering Johnson through the use of a firearm during and in relation to a crime of violence, and aiding and abetting the same, in violation of Title 18, United States Code, Sections 924(j) and 2.  This charge carries a maximum penalty of life in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

*                      *                     *

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

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

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

Audrey Strauss, Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the arrest of TERRENCE CHALK, a/k/a “TERRENCE CASH,” the Chairman of Greenlight Investment Partners and several related entities operating in Florida, with securities fraud and wire fraud for his role in a scheme to fraudulently induce individuals to invest in his wealth management business under false pretenses, including operating under an alias to hide his criminal past.  CHALK was arrested this morning in Orlando, Florida on a criminal complaint (the “Complaint”) and was presented before a magistrate judge in the Middle District of Florida. 

Acting Manhattan U.S. Attorney Audrey Strauss said: “Terrence Chalk gained the trust of his clients by promising that he would invest it in opportunities he had vetted.  As alleged, he betrayed their trust.  He concealed his criminal past, did not make the investments as promised, and sent most of the money he took from his clients to a pool of money from which he spent lavishly on himself and his friends.  Meanwhile, his clients were left with broken promises.  We will continue to work with our law enforcement partners to root out fraud like this wherever it exists.”

Assistant Director-in-Charge William F. Sweeney Jr. said: “As the chairman of a Florida-based investment group, “Terrence Cash” allegedly convinced his clients to trust him with their money, which, in some cases, amounted to the entirety of their retirement savings. Little did they know his investment pitch wasn’t the only lie he told. His real name was Terrence Chalk, and he was a previously convicted felon whose pseudonym spelled out exactly what he was after: cash, and lots of it. In the end, as charged today, he solicited more than $4 million from his victims for purposes other than what he had promised. The charges announced today demonstrate the FBI’s commitment to protect the investing public.”  

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

CHALK, holding himself out as “Terrence Cash,” was the Chairman of Greenlight Investment Partners and Greenlight Investment Circle, among other similarly named entities (together, “Greenlight”).  The Greenlight companies offered customers “business, money, and wealth coaching” -- advice and training in investment planning and wealth management.  To certain of his coaching clients, CHALK also offered admission into the “Chairman’s Fund” – purportedly, an elite investing arrangement under which clients would purchase equity stakes in Greenlight and CHALK would invest the purchase proceeds into individual ventures he had vetted.  As promised by CHALK, the ventures would generate a guaranteed, fixed return, often in excess of 12 percent annually, to be paid by check on a quarterly basis.

CHALK induced the investors to entrust him with their money – including, in several instances, the entire contents of their retirement accounts and pensions – while concealing from them the fact that, under his real name, he had been convicted for fraud-related offenses in this District in 2010.  Had his clients known his real name and researched him on the Internet, they would have found press releases detailing his conviction and sentencing for an array of fraudulent activity, which included fraudulently applying for loans, including in the name of a deceased relative, and directing the submission of fraudulent documents to a BMW car dealership from jail after his initial arrest in order to secure luxury automobiles for his associates.  This history would have dissuaded clients from investing with CHALK.

Instead, CHALK’s victims each invested tens of thousands of dollars in the Chairman’s Fund, which took in over $4 million overall.  Within months of the clients’ investments, their promised return payments began to arrive erratically or not at all.  In fact, CHALK had not made all of the promised investments.  Despite having solicited more than $4 million in investments, CHALK routed no more than $1.2 million of that money into the promised ventures.  Instead, he had diverted much of the money into other Greenlight accounts, from which he spent lavishly on himself and his associates.  CHALK’s spending included approximately $1.7 million on credit card bills for cards in his name, those of his associates, and business accounts from which clear personal purchases or business purchases wholly separate from investment activity had been made.  CHALK also transferred, out of the same accounts, tens of thousands of dollars to a criminal defense attorney who had handled a personal matter for him; over $70,000 to a luxury car dealer; approximately $30,000 to a retail jewelry retailer; over $20,000 to an incarcerated prison inmate; and approximately $17,000 to an NBA basketball team in what appear to have been season ticket payments.

* * *

CHALK, 58, 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 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.

Ms. Strauss praised the investigative work of the FBI and thanks the New York Regional Office of the U.S. Securities and Exchange Commission, which has separately filed a civil action against CHALK.

This case is being handled by the Office’s Securities and Commodities Task Force.  Assistant United States Attorneys Martin S. Bell and Robert L. Boone are in charge of the prosecution.

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

[1] As the introductory phase 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 Acting United States Attorney for the Southern District of New York, announced that SPYROS PANOS, a former orthopedic surgeon, who was previously convicted of health care fraud, pled guilty yesterday before U.S. District Judge Kenneth M. Karas to charges of wire fraud, health care fraud, and aggravated identity theft, in connection with a scheme in which he assumed the identity of a licensed orthopedic surgeon and obtained over $876,000 in payments for reviewing patient files in connection with healthcare appeals and Workers Compensation cases. 

Acting U.S. Attorney Audrey Strauss said:  “Spyros Panos, a former surgeon who surrendered his medical license after a prior conviction in this District for health care fraud, has admitted to committing health care fraud again, this time by impersonating a licensed doctor.  Now, for a second time, Panos awaits sentencing for his criminal conduct.”

According to the allegations in the Indictment to which PANOS pled guilty, PANOS, an unlicensed physician, perpetrated a scheme to defraud medical peer review companies by impersonating a licensed orthopedic surgeon practicing in Westchester County (“Doctor-1”).  Among other things, PANOS submitted Doctor-1’s credentials to peer review companies and conducted peer reviews using Doctor-1’s name and credentials.  During the course of the scheme, PANOS defrauded the peer review companies of $876,389.97. 

According to court documents, in advance of his November 2, 2020, trial, PANOS submitted proposed defense exhibits that included fraudulent emails and records.

PANOS, 52, of Hopewell Junction, New York, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison, one count of health care fraud, which carries a maximum sentence of 10 years in prison, and one count of aggravated identity theft, which carries a mandatory minimum sentence of two years in prison.  The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

PANOS is scheduled to be sentenced by Judge Karas on March 16, 2021, at 10:00 a.m.

In connection with his plea, PANOS agreed to forfeit $876,389.97, and to pay restitution in the same amount.

Ms. Strauss praised the outstanding investigative work of the U.S. Postal Inspection Service, the Office of the Inspector General of the U.S. Department of Health and Human Services, and the New York Inspector General for their assistance.

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

Audrey Strauss, the Acting 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 JAMEEN WALKER was arrested yesterday in Manhattan, and charged with making a false claim, subscribing to false tax returns, and theft of government funds in connection with WALKER’s repeated filing of false tax returns claiming multimillion-dollar tax refunds based on fictitious income and withholdings.  WALKER will be presented today before United States Magistrate Judge Ona Wang.

Acting U.S. Attorney Audrey Strauss said:  “As alleged, Jameen Walker filed multiple false tax returns, both corporate and individual, ultimately defrauding the IRS out of nearly $7 million.  Now he will have to answer for his alleged crimes.  

IRS-CI Special Agent-in-Charge Larsen said:  “Identifying refund fraud schemes is a priority for IRS-Criminal Investigation.  I want honest taxpayers to know that we are committed to holding those accountable that choose to defraud the government.  Mr. Walker’s allegedly false claims for millions of dollars in fraudulent refunds should be considered an attack on the tax system and the general public who believe in it and follow the rules, and we take these allegations very seriously.”

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

Between 2016 and 2018, WALKER repeatedly filed tax returns with the Internal Revenue Service (the “IRS”) falsely claiming that a corporation he controlled had paid him millions of dollars and withheld millions of dollars in federal taxes.  WALKER then fraudulently sought large federal tax refunds based on those claims.     

In 2016, WALKER filed multiple Forms 1040 (“U.S. Individual Income Tax Return”)   falsely claiming that Stallings Empire Corporation paid him $19.7 million, of which $14.6 million had been withheld.  In fact, Stallings Empire Corporation did not withhold or pay any money in federal taxes on behalf of WALKER or any other employee.  Nevertheless, based on the false claims in his Forms 1040, WALKER sought a federal tax refund of more than $6.8 million. 

Though the IRS did not issue that refund, WALKER continued to file fraudulent returns.  In 2018 and 2019, WALKER filed multiple false Forms 941 (“Employer’s Quarterly Federal Tax Return”) and 941-X (“Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund”) for Stallings Empire Corporation for tax year 2018.  In each, WALKER falsely claimed that Stallings Empire Corporation had paid millions of dollars and withheld commensurately large amounts.  In early 2019, WALKER filed a Form 1040 for tax year 2018, claiming more than $16 million in income, $12.2 million in withholdings, and seeking a multimillion-dollar refund.  Based on this false tax return, the IRS ultimately issued a tax refund check to WALKER for more than $6.9 million.  In August 2019, WALKER deposited that refund check at a bank in the Bronx, New York, and proceeded to withdraw and spend in excess of $85,000 before the bank restricted his account.      

*                *                *

WALKER, 46, of New York, New York, is charged with one count of making a false claim, which carries a maximum penalty of five years in prison, three counts of subscribing to a false tax return, each of which carries a maximum penalty of three years in prison, and one count of theft of government funds, which carries a maximum penalty of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Ms. Strauss praised the outstanding investigative work of IRS-CI and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York in this case.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Katherine Reilly and Dina McLeod 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 phase 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, Acting United States Attorney for the Southern District of New York, announced that GUSTAVO L. VILA, a disbarred lawyer in Westchester County, pled guilty today in White Plains federal court to stealing government funds.  VILA’s plea results from his theft of approximately $1 million that the Department of Justice’s 9/11 Victim Compensation Fund (“VCF”) had awarded to the defendant’s client, a 9/11 first responder. 

VILA was arrested on September 3, 2020, and pled guilty today before U.S. District Judge Vincent L. Briccetti. 

Acting U.S. Attorney Audrey Strauss said:  “As he admitted today, Gustavo Vila stole money awarded by the 9/11 Victim Compensation Fund to his client, an NYPD officer and 9/11 first responder, and falsely told the client for more than three years that the stolen money had yet to be released by the Fund.  Now Gustavo Vila awaits sentencing for his crime.”

According to the Complaint, the Information, and other 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 VCF, despite the fact that in 2015, VILA was disbarred.  

In or about May 2013, VILA submitted a claim to VCF on behalf of Victim-1.  VILA also submitted forms to the VCF authorizing the VCF to deposit Victim-1’s compensation award directly into a bank account controlled by VILA’s law firm (the “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 that the client 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 – over $1 million – into the 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, did not inform Victim-1 about this deposit, and kept 90 percent of the award – $927,559.84 – for himself.  VILA used the money he stole for his own personal benefit, including to pay his own taxes.  From in or about October 2016 to in or about February 2020, VILA falsely represented to Victim-1 that the VCF had not yet released the majority of Victim-1’s VCF 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 one count of theft of government funds, which carries a maximum sentence of 10 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

VILA will be sentenced on February 5, 2021.

Ms. Strauss praised the outstanding investigative work of DOJ-OIG’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, the Acting United States Attorney for the Southern District of New York, and Michael Montanez, the Special Agent-in-Charge of the Newark Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today that BILAL SALAJ, an operator of a construction business, pled guilty to conspiracy to defraud the IRS, tax evasion, and failure to pay over payroll taxes.  SALAJ pled guilty before U.S. Magistrate Judge Ona T. Wang.

Acting U.S. Attorney Audrey Strauss said:  “As he admitted in court today, Bilal Salaj defrauded the IRS by evading both payroll taxes for his business and personal income taxes.  To carry out the scheme, Salaj lied to his own accountant and caused false tax returns to be filed with the IRS.  Now he awaits sentencing for his crimes.”

IRS-CI Special Agent-in-Charge Michael Montanez said:  “When Mr. Salaj made the decision to evade paying taxes for himself and his business, he also made the decision to cheat every honest hardworking taxpayer.  Today’s guilty plea should send a strong deterrent message that IRS-Criminal Investigation will vigorously pursue those individuals who attempt to cheat our nation’s tax system.”

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

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 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.

*                *                *

SALAJ, 55, of Morganville, New Jersey, pled guilty to one count of conspiracy to defraud the IRS, one count of tax evasion, and one count of failure to pay over payroll taxes, each of which carries a maximum sentence of five years in prison.  As part of the plea agreement, SALAJ has agreed to pay restitution to the IRS in the amount of $952,778.  Sentencing is scheduled for March 3, 2021, at 2:00 p.m., before U.S. District Judge P. Kevin Castel.

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 outstanding work of IRS Criminal Investigation in this case.

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

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, John B. DeVito, the Special Agent-in-Charge of the New York Field Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), and Daniel A. Nigro, the Commissioner of the New York City Fire Department (“FDNY”), announced today the arrest of SHAWN JENKINS in connection with his attempted arson of police vehicles in the Bronx, New York.  JENKINS was arrested on October 28, 2020, and will be presented in the Manhattan federal court later today before U.S. Magistrate Ona T. Wang.

Acting U.S. Attorney Audrey Strauss stated:  “Shawn Jenkins allegedly threw a glass bottle containing a lit wick with gas accelerant at an NYPD vehicle in the Bronx.  Jenkins’s alleged actions – causing an adjacent vehicle to be damaged – are as reckless as they are misguided.  There is never an acceptable time or situation to attempt to damage the property of law enforcement professionals who serve to protect the public, and this case is emblematic of our resolve to bring anyone who does so to justice.” 

ATF Special Agent-in-Charge John B. DeVito said:  “As alleged, Jenkins brazenly and deliberately fire-bombed a marked NYPD vehicle without regard for human life or property. The New York Arson and Explosives Task Force will be relentless in bringing to justice those who use fire as a weapon in order to ensure a safer community for all New Yorkers.”

NYPD Commissioner Dermot Shea said:  “Peaceful assembly and speech are protected and valued by the NYPD. But the kind of violence alleged in this case endangers lives and threatens everyone’s constitutional right to peacefully protest and we commend our federal partners for bringing justice for acts society can never tolerate.”

NYFD Commissioner Daniel A. Nigro said:  “Arson is a dangerous, potentially deadly act that needlessly puts lives in danger and destroys property. Any act of arson will be vigorously investigated by our Fire Marshals and their partners in law enforcement.  Thanks to the excellent teamwork by our Bureau of Fire Investigation, the NYPD and the ATF, a suspect has been arrested for this senseless crime.”

According to the allegations in the Complaint[1]:

On June 1, 2020, at approximately 11:30 p.m., JENKINS approached two NYPD vehicles located in front of the NYPD 42nd Precinct in the Bronx, New York.  JENKINS threw a glass bottle containing a wick that was lit with a gas accelerant at the NYPD vehicles.  The incendiary device hit the ground short of its intended target and spread a fire, damaging an adjoining vehicle, which is privately owned by an NYPD officer.

*                *                *

JENKINS, 33, of the Bronx, New York, is charged with one count of attempted arson, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Ms. Strauss praised the outstanding investigative work of the Strategic Explosive and Arson Response Task Force of the ATF, the NYPD, and the FDNY. 

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

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

________________________________

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

[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 Acting United States Attorney for the Southern District of New York, Kathy A. Michalko, Special Agent in Charge of the New York Field Office of the United States Secret Service (“Secret Service”),  Phillip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), and New York Police Department Commissioner Dermot Shea, announced the unsealing today of a criminal Indictment and Complaint charging 19 defendants with conspiracy to steal government funds, conspiracy to commit bank fraud, and aggravated identity theft.  Twelve defendants were arrested yesterday and today in the Southern and Western Districts of New York and Northern District of Georgia, and were to be presented yesterday and today in those districts’ federal courts.  Seven defendants remain at large.

Acting U.S. Attorney Audrey Strauss said: “As alleged, these defendants engaged in schemes to steal millions of dollars by cashing fraudulent checks and stolen postal money orders, falsifying their identities, and taking advantage of multiple national financial institutions.  They must be held accountable for their brazen conduct.” 

USSS Special Agent-in-Charge Kathy A. Michalko said:  “The success of this case is the result of the partnerships between the New York City Police Department, the U.S. Postal Inspection Service and the U.S. Secret Service.   The ability to leverage our combined expertise to detect, identify, and disrupt organized groups is vital to protect the integrity of our financial system.”

USPIS Chief Postal Inspector Phillip R. Bartlett said: “The accused allegedly participated in an unsophisticated, low-tech crime, involving the deposit of stolen checks and postal money orders into bank accounts they controlled. They engaged in this criminal enterprise to allegedly rip-off the government and unsuspecting financial institutions across the country. Gangs like these are opportunists and use any means to lie and steal for profit. Although the alleged crimes occurred months ago, Postal Inspectors and their law enforcement partners have put an end to their thieving evil ways and their day of reckoning has finally arrived.”

NYPD Commissioner Dermot Shea said: “As the kind of crime alleged in this indictment moves into new frontiers of identity theft and financial fraud, the NYPD remains vigilant to stop it. I commend our federal partners and the United States Attorney’s Office for the Southern District of New York for leading us to justice in this case.”

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

From January 2019 up to an including the present, defendants AHMAD AKBAR, a/k/a “Meech,” TYRELL BEECHER, a/k/a “Shae,” CHRISTOPHER BOVAIN, a/k/a “Cleko,” WINNIS BRITO, a/k/a “Flaco,” DARNELL GREEN, a/k/a “Nellz,” DOMINIQUE GREEN, a/k/a “Domo,” MAURICE HARGROW, a/k/a “Moe Tally,” CHARLES HEWITT, a/k/a “Young Cee,” KEVIN LEWIS, a/k/a “Mula,” JAMA MOHAMOUD, a/k/a “JFK Jay,” JAVIAN MOORE, a/k/a “Julio,” JORDAN RUSSELL, a/k/a “J Rozay,” DEVON SMITH, GEORGE THOMPSON, LOUIS WILLIAMS, ISAIAH WISE FORDHAM, a/k/a “ZayBands,” and JAHNICO HARVEY conspired to defraud the United States by cashing postal money orders that had been stolen from post offices in Manhattan, the Bronx, Brooklyn, Queens, Long Island, New Jersey, and Arkansas.  The postal money orders cashed by the members of the conspiracy originated from 18 post offices. In total, more than 15,000 postal money orders have been stolen from those 18 post offices. At a face value of up to $1,000 per postal money order, the theft results in a potential loss to the USPS of up to $15 million.

From at least in or around January 2018, up to and including the present, defendants TYRELL BEECHER, a/k/a “Shae,” CHRISTOPHER BOVAIN, a/k/a “Cleko,” WINNIS BRITO, a/k/a “Flaco,” DONTA DOUGLAS, DOMINIQUE GREEN, a/k/a “Domo,” MAURICE HARGROW, a/k/a “Moe Tally,” CHARLES HEWITT, a/k/a “Young Cee,” KEVIN LEWIS, a/k/a “Mula,” JAMA MOHAMOUD, a/k/a “JFK Jay,” JAVIAN MOORE, a/k/a “Julio,” JORDAN RUSSELL, a/k/a “J Rozay,” JONATHAN SHORTT, LOUIS WILLIAMS, ISAIAH WISE FORDHAM, a/k/a “ZayBands,” and JAHNICO HARVEY defrauded multiple national banks by recruiting collusive accountholders who allowed members of the conspiracy to deposit fraudulent checks into their bank accounts and by withdrawing money from the collusive bank accounts after banks made available funds associated with the fraudulent check deposits to the account, but before the banks discovered that the checks were fraudulent and would not clear.

All of the defendants charged in the bank fraud conspiracy, as well as AKBAR and SMITH, have also been charged with aggravated identity theft.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Emily A. Johnson, Kaylan E. Lasky, and Ashley C. Nicolas are in charge of the prosecution.

The charges contained in the indictment and complaint are merely an 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. 

The Department of Justice announced the unsealing of a federal indictment charging Haji Najibullah, a/k/a “Najibullah Naim,” a/k/a “Abu Tayeb,” a/k/a “Atiqullah”  with six counts related to the 2008 kidnapping of an American journalist and two Afghan nationals.  Najibullah, 44, was arrested and transferred to the United States from Ukraine to face the charges in the indictment.    Najibullah will be presented today before U.S. Magistrate Judge Ona T. Wang.  The case is assigned to U.S. District Judge Katherine Polk Failla.

“Najibullah is charged with taking an American journalist and others hostage in Afghanistan in November 2008.  Journalists risk their lives bringing us news from conflict zones, and no matter how much time may pass, our resolve to find and hold accountable those who target and harm them and other Americans will never wane,” said Assistant Attorney General for National Security John C. Demers.  “The defendant, like many others before and surely others to come, will now face justice in an American courtroom.”

Acting U.S. Attorney Audrey Strauss said:  “Nearly 12 years ago, the defendant arranged to kidnap at gunpoint an American journalist and two other men, and held them hostage for more than seven months,” said Acting U.S. Attorney for the Southern District of New York Audrey Strauss.   “The prosecution of Haji Najibullah shows that law enforcement will never stop in our mission to hold accountable those who commit violent crimes against American citizens.”         

“Whether someone commits a violent act against an American citizen here at home or overseas, we’ll never stop aggressively pursuing charges against them and, when necessary, seeking their transfer to U.S. custody,” said FBI Assistant Director-in-Charge of the New York Office of the FBI William F. Sweeney Jr.  “Najibullah’s reprehensible actions over a decade ago earned him a flight to the U.S. yesterday. Today he arrived in U.S. federal court to face our justice system.”

“The FBI, along with our partners, continue to work tirelessly in the pursuit of justice and to hold accountable those who are responsible for the kidnapping and hostage taking of U.S. citizens abroad,” said Assistant Director Jill Sanborn of the FBI's Counterterrorism Division.  “We remain steadfast in our obligation to see justice served, regardless of the how long it may take or where those individuals are located. This investigation and resulting indictment reflects the FBI’s perseverance and commitment to the victims of these heinous acts – We never forget, and we never give up.”

“Haji Najibullah’s alleged kidnapping of a United States journalist and two Afghan nationals was a crime against America, a crime against the freedom of the press, and against the integral work of shining a light on important international affairs,” said Police Commissioner Shea.  “While today’s federal indictment reflects events that occurred a dozen years ago, it shows once again that the FBI-NYPD Joint Terrorism Task Force and all of our law enforcement partners will wait as long and go as far as it takes to bring justice.”

According to the Indictment:[1]

On or about Nov. 10, 2008, Najibullah and his co-conspirators, armed with machineguns, kidnapped an American journalist (Victim-1) and two Afghan nationals who were assisting Victim-1 (Victim-2 and Victim-3) at gunpoint in Afghanistan.  Approximately five days later, on or about Nov. 15, 2008, Najibullah and his co-conspirators forced the three hostages to hike across the border from Afghanistan to Pakistan, where Najibullah and his co-conspirators detained the hostages.  For the next seven months, Najibullah and his co-conspirators held the hostages captive in Pakistan.

During their captivity, Najibullah and his co-conspirators forced the victims to make numerous calls and videos seeking help.  For example, on or about Nov. 19, 2008, while in Pakistan, Najibullah and a co-conspirator (CC-1) directed Victim-1 to call his wife in New York.  In addition, Najibullah and his co-conspirators made the victims create at least three videos in which they begged for help while surrounded by masked guards armed with machineguns.  In one of the videos, Victim-1 — the American journalist — was forced to beg for his life while a guard pointed a machinegun at Victim-1’s face.         

Najibullah, 44, of Afghanistan is charged with hostage taking, conspiracy to commit hostage taking, kidnapping, conspiracy to commit kidnapping, and two counts of using and possessing a machinegun in furtherance of crimes of violence.  Each of the six counts of the indictment carry a maximum sentence of life in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Ms. Strauss and Mr. Demers praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force.  They also thanked the New York and New Jersey Port Authority Police, the Counterterrorism Section of the Department of Justice’s National Security Division, the Legal Attaché Office/U.S. Embassy Kyiv and the FBI's Counterterrorism Division for its assistance with this investigation, as well as the Ukrainian authorities and the Office of International Affairs of the Justice Department’s Criminal Division for their assistance in the extradition.

This prosecution is being handled by the Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Sam Adelsberg, Sidhardha Kamaraju, and Michael Kim Krouse are in charge of the prosecution, with assistance from Trial Attorney Jennifer Burke of the Counterterrorism Section.

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

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

Audrey Strauss, the Acting 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 Office of the Federal Bureau of Investigation (“FBI”), and Dermot Shea, Police Commissioner of the City of New York (“NYPD”), announced the unsealing of a federal indictment charging HAJI NAJIBULLAH, a/k/a “Najibullah Naim,” a/k/a “Abu Tayeb,” a/k/a “Atiqullah,” with six counts related to the 2008 kidnapping of an American journalist and two Afghan nationals.  NAJIBULLAH was arrested and transferred to the United States from Ukraine to face the charges in the indictment.  NAJIBULLAH will be presented today before U.S. Magistrate Judge Ona T. Wang.  The case is assigned to U.S. District Judge Katherine Polk Failla.

Acting U.S. Attorney Audrey Strauss said:  “As alleged, nearly 12 years ago, the defendant arranged to kidnap at gunpoint an American journalist and two other men, and held them hostage for more than seven months.  The prosecution of Haji Najibullah shows that law enforcement will never stop in our mission to hold accountable those who commit violent crimes against American citizens.”          

Assistant Attorney General for National Security John C. Demers said:  “Najibullah is charged with taking an American journalist and others hostage in Afghanistan in November 2008.  Journalists risk their lives bringing us news from conflict zones, and no matter how much time may pass, our resolve to find and hold accountable those who target and harm them and other Americans will never wane.  The defendant, like many others before and surely others to come, will now face justice in an American courtroom.”

FBI Assistant Director William F. Sweeney Jr. said:  “Whether someone commits a violent act against an American citizen here at home or overseas, we’ll never stop aggressively pursuing charges against them and, when necessary, seeking their transfer to U.S. custody.  Najibullah’s alleged reprehensible actions over a decade ago earned him a flight to the U.S. yesterday.  Today he arrived in U.S. federal court to face our justice system.”

Police Commissioner Dermot Shea said:  “Haji Najibullah’s alleged kidnapping of a United States journalist and two Afghan nationals was a crime against America, a crime against the freedom of the press, and against the integral work of shining a light on important international affairs. While today’s federal indictment reflects events that occurred a dozen years ago, it shows once again that the FBI-NYPD Joint Terrorism Task Force and all of our law enforcement partners will wait as long and go as far as it takes to bring justice.”

According to the Indictment:[1]

On or about November 10, 2008, NAJIBULLAH and his co-conspirators, armed with machineguns, kidnapped an American journalist (“Victim-1”) and two Afghan nationals who were assisting Victim-1 (“Victim-2” and “Victim-3”) at gunpoint in Afghanistan.  Approximately five days later, on or about November 15, 2008, NAJIBULLAH and his co-conspirators forced the three hostages to hike across the border from Afghanistan to Pakistan, where NAJIBULLAH and his co-conspirators detained the hostages.  For the next seven months, NAJIBULLAH and his co-conspirators held the hostages captive in Pakistan.

During their captivity, NAJIBULLAH and his co-conspirators forced the victims to make numerous calls and videos seeking help.  For example, on or about November 19, 2008, while in Pakistan, NAJIBULLAH and a co-conspirator (“CC-1”) directed Victim-1 to call his wife in New York.  In addition, NAJIBULLAH and his co-conspirators made the victims create at least three videos in which they begged for help while surrounded by masked guards armed with machineguns.  In one of the videos, Victim-1 – the American journalist – was forced to beg for his life while a guard pointed a machinegun at Victim-1’s face.         

*                *                *

NAJIBULLAH, 42, of Afghanistan, is charged with hostage taking, conspiracy to commit hostage taking, kidnapping, conspiracy to commit kidnapping, and two counts of using and possessing a machinegun in furtherance of crimes of violence.  Each of the six counts of the Indictment carries a maximum sentence of life in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Ms. Strauss and Mr. Demers praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force.  They also thanked the New York and New Jersey Port Authority Police, the Counterterrorism Section of the Department of Justice’s National Security Division for its assistance with this investigation, as well as the Ukrainian authorities and the Office of International Affairs of the Justice Department’s Criminal Division for their assistance in the arrest and transfer of the defendant.

This prosecution is being handled by the Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Sam Adelsberg, Sidhardha Kamaraju, and Michael Kim Krouse are in charge of the prosecution, with assistance from Trial Attorney Jennifer Burke of the Counterterrorism Section.

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

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

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that SAJID JAVED, an owner and operator of a number of pharmacies in the New York City area, was sentenced to 30 months in prison for using his pharmacies to submit more than $7.1 million in fraudulent claims to Medicare and Medicaid.  JAVED previously pled guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Vernon S. Broderick, who imposed today’s sentence.

Acting U.S. Attorney Audrey Strauss said:  “Sajid Javed fraudulently billed Medicare and Medicaid more than $7 million for drugs that were never actually dispensed, inducing others to forego their prescription medications in return for kickbacks.  Javed contributed to the multibillion-dollar theft of federally funded public health care subsidies.”

According to the Complaint, the Superseding Information to which JAVED pled guilty, court filings, and statements made in public court proceedings:

While owning and operating a number of pharmacies located in Brooklyn and Queens, JAVED conducted a multimillion-dollar scheme to defraud Medicare and Medicaid programs by seeking reimbursement for prescription drugs that were not distributed to customers.  Specifically, from January 2013 through December 2014, JAVED obtained more than $7.1 million in reimbursements from Medicare and Medicaid for prescription drugs that his pharmacies never actually dispensed to customers.  JAVED defrauded Medicare and Medicaid into providing him with these reimbursements by obtaining prescriptions from other individuals, who were willing to forego delivery of the medications in exchange for a share of the reimbursed proceeds, in the form of kickbacks.  JAVED offered to pay, and did actually pay, kickbacks in furtherance of this scheme.

*                *                *

In addition to the prison term, Judge Broderick sentenced JAVED, 49, of Fresh Meadows, Queens, to three years of supervised release and ordered JAVED to make court-ordered restitution in the amount of $6,040,451.32 to Medicare and $1,150,562.16 to Medicaid, and imposed forfeiture in the amount of $7,191,013.48.

Ms. Strauss praised the investigative work of the Federal Bureau of Investigation and the Department of Health and Human Services, Office of the Inspector General.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Christopher J. DiMase is in charge of the prosecution.

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today the settlement of a tax refund lawsuit brought by insurance and financial services company AMERICAN INTERNATIONAL GROUP, INC. (“AIG”) involving seven cross-border financial transactions that the United States asserted were abusive tax shelters designed to generate bogus foreign tax credits that AIG improperly attempted to use to reduce its tax liabilities in the United States.  AIG filed this tax refund lawsuit in 2009, seeking to recover disallowed foreign tax credits and other taxes related to the 1997 tax year.  The United States obtained overwhelming evidence that these transactions lacked any meaningful economic substance, were devoid of any legitimate business purpose, and instead were designed solely to manufacture hundreds of millions of dollars in tax benefits to which AIG was not entitled.  According to the terms of the settlement, approved yesterday by United States District Judge Louis L. Stanton, AIG agreed that all foreign tax credits that AIG claimed for the 1997 tax year and all later tax years for these same transactions, totaling more than $400 million, would be disallowed in their entirety.  AIG further agreed to pay a 10% tax penalty.

Acting U.S. Attorney Audrey Strauss said:  “AIG created an elaborate series of sham transactions that were designed to do nothing – and in fact did nothing – other than generate hundreds of millions of dollars in ill-gotten tax benefits for AIG.  Our system of taxation is built upon the premise that all citizens and corporations must pay the taxes they owe, no more and no less.  People and companies who game that system to avoid paying their fair share of taxes undermine public trust in our tax laws.  We will continue to be vigilant in holding accountable those who use economically empty transactions to avoid paying their taxes.”

As alleged in filings in Manhattan federal court:

During the mid-1990s, AIG Financial Products Corp. (“AIG-FP”), a wholly-owned subsidiary of AIG, designed, marketed, and entered into seven cross-border structured finance transactions with various foreign banks.  These complicated transactions, involving hundreds of agreements, numerous shell companies, and intricate cash flows, had no economic substance but rather exploited differences in U.S. and foreign tax laws to create profits from U.S. tax benefits.  In particular, the transactions generated more than $400 million in foreign tax credits that AIG used to reduce its U.S. tax liabilities.  The U.S. has a worldwide tax system that taxes companies on income earned abroad, but also grants credits for foreign taxes paid.  AIG, was able to turn a profit by obtaining credits from the U.S. Treasury for foreign taxes it did not actually pay in full.  AIG obtained more than $61 million in foreign tax credits during the 1997 tax year alone, the tax year resolved by the settlement. 

In 2008, the Internal Revenue Service (“IRS”) issued a Notice of Deficiency to AIG that, among other things, disallowed the foreign tax credits AIG had claimed in connection with the seven transactions and asserted a 20% tax penalty.  In 2009, after paying the deficiency, AIG filed a lawsuit against the United States in Manhattan federal court challenging the IRS’s determination and demanding a refund.  In response, the United States asserted that the IRS had correctly disallowed the tax benefits because the transactions had no economic substance, a basic requirement for seeking tax benefits. 

According to the terms of the Settlement, AIG agreed that all foreign tax credits that AIG claimed in connection with the seven cross-border transactions that were the subject of the litigation would be disallowed in full for the 1997 tax year and all subsequent tax years during which the transactions were operating, totaling more than $400 million.  AIG further agreed to pay a 10% penalty.  The settlement allows AIG to retain certain income expense deductions relating to six of the transactions that were structured as borrowings, as well as remove certain amounts related to the transactions from its taxable income.  In addition, the settlement resolves certain of AIG’s tax refund claims unrelated to the cross-border transactions stemming from AIG‘s restatement of its publicly filed financials.

The Acting U.S. Attorney thanked the Tax Division of the Department of Justice, as well as the IRS Office of Chief Counsel, including Jill Frisch, Matthew Avon, Jackie Levinson, Barbara Felker, and Michael Gilman, for all of their assistance throughout the litigation.

The case is being handled by the Office’s Tax and Bankruptcy Unit.  Assistant U.S. Attorneys Pierre Armand, Talia Kraemer, Jennifer Jude, and Charles Jacob, and former Assistant U.S. Attorneys Nicolas Boeving, Arastu Chaudhry, John Clopper, Joseph Cordaro, Caleb Hayes-Deats, and Bertrand Madsen, handled the case.

Acting United States Attorneys Audrey Strauss and Seth DuCharme announced today that Assistant United States Attorneys (AUSAs) will lead the efforts of their Offices in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 3, 2020, general election.  AUSA Erik Paulsen has been appointed to serve as the District Election Officer (DEO) for the Eastern District of New York, and David J. Kennedy has been appointed to serve as the DEO for the Southern District of New York.  In their capacity as DEOs, these AUSAs are responsible for overseeing the Districts’ handling of complaints of election fraud and voting rights concerns in consultation with Justice Department Headquarters in Washington.

Acting United States Attorneys Audrey Strauss and Seth DuCharme said:  “Every citizen must be able to vote without interference or discrimination and to have that vote counted without it being stolen because of fraud.  The Department of Justice will always act appropriately to protect the integrity of the election process.”

The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur.  The Department’s long-standing Election Day Program furthers these goals and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open through Election Day.

Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.  It also contains special protections for the rights of voters, and provides that they can vote free from acts that intimidate or harass them.  For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting, may violate federal voting rights law.  Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice (where voters need assistance because of disability or illiteracy).

The franchise is the cornerstone of American democracy.  We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice. 

In order to respond to complaints of election fraud or voting rights concerns during the voting period that ends on November 3, 2020, and to ensure that such complaints are directed to the appropriate authorities, the Acting United States Attorneys said that their Offices will be available to receive complaints at the following numbers on Tuesday, November 3, 2020:

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

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

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

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

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

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

IN NEW YORK CITY

City Board of Elections

Main Office  (866) 868-3692; TTY #: 212-487-5496

IN COUNTIES OUTSIDE NEW YORK CITY

County Boards of Elections

Dutchess                                 (845) 486-2473

Nassau                                     (516) 571-8683

Orange                                    (845) 360-6500

Putnam                                    (845) 808-1300

Rockland                                 (845) 638-5172

Suffolk                                    (631) 852-4500

Sullivan                                   (845) 807-0400

Westchester                             (914) 995-5700

Acting United States Attorneys Strauss and DuCharme said:  “Ensuring free and fair elections depends in large part on the cooperation of the American electorate.  It is imperative that those who have specific information about discrimination or election fraud make that information available to my Office, the FBI, or the Civil Rights Division.”

Audrey Strauss, Acting United States Attorney for the Southern District of New York, announced that VANCE COLLINS, a/k/a “Big AK,” and RAMON RAMIREZ, a/k/a “Obendy,” were found guilty of hiring gang members to murder an individual believed to be having an affair with RAMIREZ’s wife.  COLLINS was also convicted of possessing a firearm after having been convicted of a felony.  COLLINS and RAMIREZ were convicted yesterday after a five-day trial before U.S. District Judge P. Kevin Castel.

Acting U.S. Attorney Audrey Strauss said:  “Vance Collins and Ramon Ramirez tried to arrange for a murder.  Now, in the first criminal trial in this District since the outbreak of the COVID-19 pandemic, the defendants stand convicted and will face punishment for their crimes.”

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

In around 2017, RAMIREZ learned that his wife was having an affair with another man (the “Victim”).  RAMIREZ enlisted COLLINS, a high-ranking gang leader, to hire someone to kill the Victim.  COLLINS turned to a member of his gang, who in turn enlisted another gang member, and those two gang members took steps to locate and surveil the Victim, intending to shoot or stab the Victim to death.  One night in October 2018, the two hitmen encountered the Victim at the Victim’s home; however, the presence of another person thwarted their plan.  One of the hitmen was arrested shortly thereafter, and the Victim was not killed.  During his arrest, COLLINS was found to be in possession of three firearms, including one that he and one of the hitmen had acquired to use in the plot to kill the Victim.

*                      *                      *

Count One charged the defendants with conspiracy to commit murder for hire in violation of 18 U.S.C. § 1958, and Count Two charged the defendants with murder for hire in violation of 18 U.S.C. §§ 1958 and 2.  Count Three charged defendant COLLINS with possessing a firearm after having been convicted of a felony.  Each charge carries a maximum penalty of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

The defendants are scheduled to be sentenced by Judge Castel on February 10, 2021.

Ms. Strauss praised the outstanding investigative work of the FBI Westchester County Safe Streets Task Force, which comprises agents and task force officers from the FBI, Bureau of Alcohol, Tobacco, Firearms and Explosives, United States Probation Office, New York State Police, New York City Police Department, Mount Vernon Police Department, Yonkers Police Department, Greenburgh Police Department, Peekskill Police Department, Westchester County Police Department, and the Westchester County District Attorney’s Office. 

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Jamie Bagliebter, Adam Hobson, Frank Balsamello, Christopher Brumwell, and Celia Cohen are in charge of the prosecution.

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that CRAIG ZABALA, the chairman, chief executive officer, and president of Concorde Group Holdings Inc. (“Holdings”), pled guilty before U.S. District Judge J. Paul Oetken to conspiracy to commit securities fraud and wire fraud stemming from a scheme to defraud investors in Holdings, a purported merchant banking firm.  Among other illicit activity, ZABALA fraudulently induced at least 17 investors to invest at least approximately $4.38 million based on false and misleading statements, by failing to use investors’ funds as promised, including to build Holdings’ purported business by investing in and buying other financial services companies, and by converting investors’ money to his own use, including to repay other investors in a Ponzi-like fashion. 

Acting U.S. Attorney Audrey Strauss said:  “Craig Zabala admitted in court that he defrauded investors of more than $4 million through a purported financial services firm he controlled.  Zabala lied to investors about how much money had been raised, who had invested, how close the firm was to an IPO, and how he would use investors’ money – most of which he took for his own use or to pay off investors in Ponzi-like fashion.”

According to the allegations in the Complaint, the Information filed today, and other proceedings in this case:           

CRAIG ZABALA was the chairman, CEO, and president of various affiliated and intertwined purported financial services companies:  Holdings, Concorde Group, Inc. (“Group”), Blackhawk Capital Group BDC, Inc. (“Blackhawk”), DBL Holdings, LLC, d/b/a “Drexel Burnham Lambert” (“DBL”), Concorde Investment Managers, LLC (“CIM”), and Concorde Europe, Ltd. (“Concorde Europe”).  In or about August 2019, FINRA barred ZABALA from the broker-dealer industry, including because of his failure to cooperate with a FINRA investigation.

Holdings was a Delaware corporation formed in or about 2015, with an office in Jersey City, New Jersey, and a mailing address in New York, New York.  Holdings purported to provide financial services, including merchant banking, investment banking, asset management, and securities brokerage services, to entrepreneurs, investors, and businesses in the middle market, meaning small to mid-sized companies with revenue and market capitalizations of less than $1 billion, in North America, Europe, and Asia.  Holdings’ purported affiliates included Group, DBL, Blackhawk, CIM, and Concorde Europe.  ZABALA was a majority owner of Holdings.

Group was a Delaware corporation formed in or about 1995, based in New York, New York, that purported to provide the same types of financial services as Holdings.  Group’s purported affiliates included DBL, Blackhawk, CIM, and Concorde Europe.  ZABALA was a majority owner of Group.  Between in or about 2001 and in or about 2014, Group purportedly raised approximately $18 million from investors.

From at least in or about 2015 through in or about 2020, ZABALA and others perpetrated a scheme to defraud at least approximately 17 investors out of at least approximately $4.38 million in Holdings notes, warrants, and equity, almost all of whom invested in a private offering by Holdings of $25 million in senior secured notes with attached warrants paying 13 percent interest (the “Holdings Offering”). 

ZABALA and others falsely represented that the proceeds from the offerings would be used to grow Holdings’ purported business by investing in and buying other financial services companies.  In truth and in fact, and as ZABALA well knew, Holdings did not make any investments in or buy other companies.

ZABALA and others falsely represented to Holdings investors that Holdings had raised nearly $25 million in the Holdings Offering.  In truth and in fact, and as ZABALA well knew, Holdings only raised a few million dollars. 

ZABALA and others falsely represented to Holdings investors that the family office of a wealthy German family had invested millions of dollars in Holdings.  In truth and in fact, and as ZABALA well knew, this family office never invested in, and never committed to invest in, Holdings.

ZABALA and others falsely represented to Holdings Investors that Holdings would soon have an initial public offering (“IPO”), which would result in large profits to Holdings investors.  In truth and in fact, and as ZABALA well knew, Holdings was not close to an IPO.            

ZABALA converted at least approximately 70 percent of the approximately $4.38 million in Holdings investor funds in the form of cash withdrawals and other transfers to himself, payments to his girlfriend, payments of his personal credit card bills, and repayment of Group investors in a Ponzi-like fashion.

*                *                *

ZABALA, 68, pled guilty to one count of conspiracy to commit securities fraud and wire fraud, which carries a maximum sentence of five years in prison.  The charge also carries a maximum fine of $250,000, or twice the gross gain or loss from the offenses.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  ZABALA also agreed to forfeit $4,380,000 and to pay restitution in the amount of $4,380,000.  ZABALA is scheduled to be sentenced by Judge Oetken on February 5, 2021 at 11:00 a.m.

Ms. Strauss praised the outstanding work of the United States Postal Inspection Service’s New York Division, and also thanked the SEC and Financial Industry Regulatory Authority for their assistance and cooperation in this investigation. 

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

Audrey Strauss, Acting United States Attorney for the Southern District of New York, announced that THERYN JONES, a/k/a “Ty,” a/k/a “Old Man Ty,” a/k/a “Tyballa,” and ARIUS HOPKINS, a/k/a “Scrappy,” a/k/a “Scrap,” were sentenced today to life in prison following their conviction for the January 2, 2014 murder of Shaquille Malcolm.  A jury convicted JONES and HOPKINS on December 18, 2019, following a two-week trial before U.S. District Judge Lewis A. Kaplan, who also imposed today’s sentences.   

Acting U.S. Attorney Audrey Strauss said:  “Jones and Hopkins were responsible for the murder of 20-year-old Shaquille Malcolm over six years ago in a Bronx apartment lobby.  Now they have been sentenced to serve the rest of their lives in federal prison for this heinous crime.”

According to the evidence presented during the trial:

THERYN JONES was a high-ranking leader within the Mac Balla gang and the leader of a large-scale drug trafficking organization that distributed crack cocaine out of a residential building in the Allerton section of the Bronx.  Because Malcolm and others were encroaching on JONES’s drug territory, JONES directed HOPKINS and another person to murder Malcolm.  On January 2, 2014, HOPKINS shot Shaquille Malcolm multiple times in the lobby of an apartment building located at 2818 Bronx Park East in the Bronx, New York.  Malcolm died at the scene. 

For their participation in the Malcolm murder, JONES, 43, and HOPKINS, 25, of the Bronx, New York were each convicted at trial of using a firearm to commit murder in furtherance of a drug trafficking crime, and murder while engaged in a conspiracy to distribute 280 grams and more of crack cocaine.

*                      *                      *

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

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Michael K. Krouse, Danielle R. Sassoon, Margaret Graham, and Jessica Fender are in charge of the prosecution.

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that MARC LAWRENCE pled guilty to securities fraud and wire fraud in connection with his role as a senior executive of a number of corporate entities (collectively referred to as “Downing”) that were operated as a Ponzi-like scheme.  LAWRENCE solicited millions of dollars from Downing investors through materially false and misleading statements regarding, among other things, Downing’s use of investor proceeds, sources of funding, financial condition and ability to pay salaries to employee-investors, and portfolio companies.  LAWRENCE pled guilty before U.S. District Judge Alvin K. Hellerstein.  LAWRENCE’s co-defendant, David Wagner, the chief executive officer of Downing, previously pled guilty to securities fraud and wire fraud before Judge Hellerstein on September 21, 2020.

Acting Manhattan U.S. Attorney Audrey Strauss said:  “As he admitted in court, Marc Lawrence and his co-defendant swindled employee-investors of their purported venture capital firm.  They fraudulently induced employee-investors to hand over more than $8 million that was supposed to be invested in profitable business operations.  The firm was a sham, and employee-investor funds were used to pay personal expenses or pay off other investors in Ponzi-like fashion.  Now Lawrence awaits sentencing for his crimes.”

According to the Indictment filed in Manhattan federal court:

From at least in or about December 2013 through at least in or about 2017, Wagner, the chief executive officer of Downing, and LAWRENCE, the president of several Downing entities, solicited investments in Downing, a purported venture capital firm that would invest in healthcare start-ups referred to as “portfolio companies” and provide sales, operations, and management expertise to the portfolio companies in order to bring their products to market and generate returns for Downing investors, who also worked for Downing (the “employee-investors”).  Wagner and LAWRENCE, and others acting at their direction, solicited more than approximately $8 million in investments in Downing from employee-investors located across the United States, including in the Southern District of New York, as a requirement of employment with Downing. 

After making the required investment of between $150,000 and $250,000 in Downing and starting their employment at Downing, employee-investors soon learned, among other things, that contrary to representations made by Wagner and LAWRENCE, and others acting at their direction, Downing did not have access to millions of dollars in funding, often could not make payroll, had virtually no products to sell, and employee investments were the overwhelming source of funding.  Employee-investors also learned that Wagner and LAWRENCE had misrepresented the companies in Downing’s portfolio, their product readiness, and ability to generate revenue.  While the particular formulation of these misrepresentations shifted over time, Wagner and LAWRENCE systematically sought and obtained employee-investor money through materially false and misleading statements.

Beginning in or about May 2016, after several employee-investors had brought lawsuits against Wagner, LAWRENCE, and several Downing entities alleging claims based on, among other things, fraud, Wagner and LAWRENCE continued the scheme by recruiting employee-investors into a new company called Cliniflow Technologies, LLC (“Cliniflow”), through materially false and misleading statements about Cliniflow’s cash reserves, portfolio companies, and exposure to litigation.  In fact, Cliniflow purportedly held majority ownership in the same primary portfolio company as other Downing entities and was simply a new name used by Wagner and LAWRENCE to solicit investments from new employee-investors that was not tainted by the lawsuits filed against Downing entities.  A majority of the over $1.5 million raised by Wagner and LAWRENCE through Cliniflow was transferred to other Downing entities and used to pay for, among other things, Wagner’s personal expenses and the repayment of prior investors.

*                      *                      *

LAWRENCE, 66, of St. Petersburg, Florida, pled guilty to two counts of securities fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  As part of the plea agreement with the Government, LAWRENCE agreed to forfeit $150,000 in United States currency and pay restitution of $4,550,000 to victims of his criminal conduct.  

LAWRENCE will be sentenced by Judge Hellerstein on February 1, 2021, at 2:30 p.m. 

Ms. Strauss praised the outstanding work of the Federal Bureau of Investigation, and thanked the U.S. Securities and Exchange Commission and the Enforcement Section of the Massachusetts Securities Division for their assistance in the investigation. 

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Jilan J. Kamal and Sagar K. Ravi are in charge of the prosecution.  

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, announced today that VLADIMIR ZISKIND was sentenced today in Manhattan federal court to 28 months in prison for participating in a scheme to use false statements to promote and sell worthless stock in various companies.  ZISKIND pled guilty on October 9, 2019, to one count of securities fraud and one count of securities fraud conspiracy before U.S. District Judge Vernon S. Broderick, who also imposed today’s sentence.

Acting Manhattan U.S. Attorney Audrey Strauss said:  “Vladimir Ziskind heartlessly preyed on innocent investors – many of them elderly – who believed they were investing in a promising IPO or other time-sensitive lucrative investment, when in fact they were being fleeced by Ziskind and his co-conspirators.  As this prosecution and today’s sentence reflect, this kind of predatory fraud will not be tolerated.”

According to the allegations contained in the Complaint, the Indictment, and statements made in related court filings and proceedings:[1]

For several years, ZISKIND and his co-defendants operated a fraudulent scheme in which a salesman named “Mike Palmer” would call elderly persons on the phone and offer them what he claimed was a time-sensitive opportunity to buy stock in certain companies.  In fact, there was no “Mike Palmer,” and the salesman was actually ZISKIND or co-defendant Kevin Weinzoff, who were taking turns using the fake alias.  The purported time-sensitive investment opportunity was also fabricated by the defendants, as the companies in which they solicited investments were actually companies under their control.  In one intercepted phone call conversation, ZISKIND described to co-defendant Keith Orlean, the chief executive officer of the company, his strategy for a successful investor sales pitch as: “You ram it down their fucking throat.”  In another intercepted call between ZISKIND and Orlean, upon learning that a particular victim investor died, ZISKIND remarked: “I knew I should have pulled the last $10,000 out of him.”  

The most recent version of the defendants’ phony sales pitch included false representations about an impending initial public offering, or “IPO,” for their company, Digital Donations Technologies, Inc.  For example, in April 2018, ZISKIND assured a victim investor that “our company is doing great,” that the company had an offer for an IPO valued at approximately $300 million, and that Orlean was considering a private sale of the company for more than $1.5 billion.  In truth, however, the defendants knew that the company had little or no actual commercial value and that no such IPO or sale was taking place.  

The FBI estimates that since April 2014, the defendants have convinced more than approximately 50 elderly persons to purchase stock in companies controlled by one or more of  the defendants based on false representations.  During the scheme, the defendants solicited more than $2 million in stock purchases from victims.

In addition to a prison term, ZISKIND, 52, of Brooklyn, New York, was sentenced to 3 years of supervised release, and ordered to pay a forfeiture money judgment in the amount of $732, 018.

Keith Orlean was previously sentenced to a prison term of 32 months.  Kevin Weinzoff, who previously pled guilty, awaits sentencing.

Ms. Strauss praised the outstanding work of the FBI.

The prosecution of this case is being overseen by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Robert L. Boone and Andrew Thomas are in charge of the case.

[1] As for the defendants who have pled not guilty, the description of the charges set forth herein constitute only allegations.

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), and Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced the unsealing of a Superseding Indictment charging three members of the 59 Brims gang with racketeering, narcotics, and firearms offenses. 

Acting U.S. Attorney Audrey Strauss said:  “As alleged, Robert Baley, Augustus Ingram, and Quaveon Ross participated in the activities of a violent gang, conspired to sell significant quantities of heroin, fentanyl, and crack cocaine, and unlawfully possessed firearms.  Now they face significant charges in federal court.  We commend our partners at the NYPD and HSI for their outstanding work on this ongoing investigation.  This Office, working with our law enforcement partners, continues its efforts to prosecute gun violence in New York City.”

NYPD Commissioner Dermot Shea said:  “Gang violence puts all of us in peril – not simply the vicious gang members.  I commend our NYPD detectives and our law enforcement partners for using all of our lawful tools to ensure that the New Yorkers we serve can live free from the threat of it.”

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “HSI and NYPD continue to relentlessly dismantle violent gangs in the New York Metro area.  The gangsters we take off the street are responsible for numerous murders, deadly drug distribution, and senseless violence throughout our communities.  As alleged, we cut the 59 Brims at their roots, arresting the ‘Godfather’ of New York.  This was the culmination of the systematic and successful indictment of the entire 59 Brims’ top leadership across all 5 boroughs.  Our agents and officers have done outstanding work during the course of this investigation and I applaud their tireless commitment to public safety.”

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

ROBERT BALEY, a/k/a “Dead Eye,” AUGUSTUS INGRAM, a/k/a “Elevator,” and QUAVEON ROSS, a/k/a “Bullet,” are members of the 59 Brims gang, a criminal organization whose members engaged in, among other activities, acts involving murder, robbery, fraud, and the distribution of controlled substances. 

The 59 Brims operate in and around Manhattan, the Bronx, Queens, and Brooklyn, New York.  Members of the 59 Brims engaged in a series of violent disputes with rivals of the 59 Brims, including those within the 59 Brims who were deemed disloyal.  During these disputes, members and associates of the 59 Brims committed multiple murders, shootings, robberies, and assaults against their rivals and against fellow members of the 59 Brims.  Members of the 59 Brims sold heroin, fentanyl, crack cocaine, and marijuana, and committed, or attempted to commit, acts of violence to protect and expand their narcotics business.

Today’s Superseding Indictment follows initial charges brought in February 2020 against 18 members and associates of the 59 Brims gang, who were charged with racketeering, narcotics, and firearms offenses, including murder and attempted murder. 

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BALEY, 43, of Brooklyn, New York, was arrested on October 15, 2020, in Scranton, Pennsylvania.  INGRAM, 49, of New York, New York, was arrested on October 14, 2020, in New York, New York.  ROSS, 23, of New York, New York, remains at large.  This case is assigned to United States District Judge George B. Daniels.

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

Ms. Strauss praised the outstanding investigative work of the NYPD and HSI.  Ms. Strauss also praised the New York City Department of Correction, Correction Intelligence Bureau, and the Bronx District Attorney’s Office for their assistance in the investigation.  Ms. Strauss also thanked the Pennsylvania State Police - Bureau of Criminal Investigations - North East and South Central Drug Enforcement Divisions and Blooming Grove Barracks for their assistance in the arrest of Baley.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Michael D. Longyear, Jacob Warren, Adam S. Hobson, and Peter J. Davis 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))

All Defendants

Life imprisonment

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

All Defendants

Life imprisonment; Mandatory Minimum Sentence of 10 years

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

All Defendants

Life Imprisonment; Mandatory Minimum Sentence of 5 years

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