Southern District of New York

Eric Dreiband, Assistant Attorney General for Civil Rights, Geoffrey S. Berman, the U.S. 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 FBI, announced today that Grafton Thomas has been charged with five counts of obstructing the free exercise of religion in an attempt to kill, a federal hate crime, related to his machete attack during Shabbat and Hanukkah observances at a Rabbi’s home in Monsey, New York, on the night of Dec. 28, 2019. Thomas is expected to be presented in White Plains federal court later today.

”Every American should be free to live and worship in safety,” said Assistant Attorney General Eric Dreiband for the Civil Rights Division. “The department will vigorously prosecute those who commit hate crimes, and we will continue to work with our state and local partners to bring to justice anyone who violates the civil rights of Americans.”

“As alleged, Grafton Thomas targeted his victims in the midst of a religious ceremony, transforming a joyous Hanukkah celebration into a scene of carnage and pain,” said U.S. Attorney Geoffrey S. Berman for the Southern District of New York. “Today is the eighth day of Hanukkah, the festival of lights that commemorates Jews’ struggle to practice their faith more than two millennia ago. And we are about to welcome a new year. Even in the face of tragedy, both milestones are an occasion for renewed hope and resolve: To combat bigotry in all its forms – and to bring to justice the perpetrators of hate-fueled attacks.”

“When an individual’s actions cross the threshold of a federal crime, as we allege Mr. Grafton did here, we will act swiftly,” said FBI Assistant Director William F. Sweeney Jr. “The message from today’s charges should be crystal clear – the FBI won’t tolerate violence against anyone. Working with our partners, we will hold anyone who commits a crime like this accountable for their actions. The federal penalties for this type of attack are severe and justified. In this instance, the local community was engaged, and their actions were essential to saving lives and led directly to Mr. Grafton’s capture. It’s the rest of our community’s joint responsibility to step up and engage as well – don’t give hate a platform to propagate and don’t dismiss this type of behavior as someone else’s problem, address it and immediately report suspicious activity to authorities.”

According to the complaint unsealed today in White Plains federal court:

On Dec. 28, 2019, Thomas entered a Rabbi’s home in Monsey, New York, which is adjacent to the Rabbi’s synagogue, during observances related to the end of Shabbat and the seventh night of Hanukkah. Thomas declared to dozens of assembled congregants, “no one is leaving,” and attacked the group with an 18-inch machete. At least five victims were hospitalized with serious injuries, including slash wounds, deep lacerations, a severed finger, and a skull fracture. 

Following the attack, Thomas traveled in a car to New York City, and he was stopped in Harlem by members of the New York City Police Department. The responding officers observed what appeared to be blood on Thomas’s hands and clothing, and smelled bleach coming from his vehicle. A search of Thomas’s vehicle led to the seizure of, among other things, a machete that appeared to have traces of dried blood on it. Law enforcement subsequently searched Thomas’s residence and cellphone pursuant to warrants. The residence contained handwritten journals with several pages of anti-Semitic references. Thomas’s cellphone contained Internet searches dating back to at least November 2019 for terms such as “Zionist Temples” in Staten Island and New Jersey, as well as a webpage visit on the day of the attack to an article titled, “New York To Increase Police Presence After Anti-Semitic Attacks.”

Thomas, 37, is charged with five counts of obstructing the free exercise of religion in an attempt to kill, in violation of Title 18, United States Code, Section 247. An indictment is merely an accusation, and the defendant is presumed innocent unless and until proven guilty. Each of the five counts carries a maximum prison term of life. 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 a judge.

Assistant Attorney General Dreiband and Mr. Berman praised the outstanding efforts of the FBI, the Rockland County District Attorney’s Office, the Ramapo Police Department, the Rockland County Sherriff’s Office, the New York State Police, the Clarkstown Police Department, and the New York City Police Department.

This case is being handled by the Office’s Terrorism and International Narcotics Unit and its White Plains Division. Assistant U.S. Attorneys Michael K. Krouse and Lindsey Keenan are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Eric Dreiband, Assistant Attorney General for Civil Rights, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that GRAFTON THOMAS has been charged with five counts of obstructing the free exercise of religion in an attempt to kill, a federal hate crime, related to his machete attack during Hanukkah observances at a rabbi’s home in Monsey, New York, on the night of December 28, 2019.  THOMAS is expected to be presented in White Plains federal court later today.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Grafton Thomas targeted his victims in the midst of a religious ceremony, transforming a joyous Hanukkah celebration into a scene of carnage and pain.  Today is the eighth day of Hanukkah, the festival of lights that commemorates Jews’ struggle to practice their faith more than two millennia ago, and we are about to welcome in a new year.  Even in the face of tragedy, both milestones are an occasion for renewed hope and resolve:  To combat bigotry in all its forms – and to bring to justice the perpetrators of hate-fueled attacks.”

Assistant Attorney General Eric Dreiband said:  “Every American should be free to live and worship in safety.  The Department will vigorously prosecute those who commit hate crimes, and we will continue to work with our state and local partners to bring to justice anyone who violates the civil rights of Americans.”

FBI Assistant Director William F. Sweeney Jr. said:  “When an individual’s actions cross the threshold of a federal crime, as we allege Mr. Thomas did here, we will act swiftly.  The message from today’s charges should be crystal clear – the FBI won’t tolerate violence against anyone.  Working with our partners, we will hold anyone who commits a crime like this accountable for their actions.  The federal penalties for this type of attack are severe and justified.  In this instance, the local community was engaged, and their actions were essential to saving lives and led directly to Mr. Thomas’s capture.  It’s the rest of our community’s joint responsibility to step up and engage as well – don’t give hate a platform to propagate and don’t dismiss this type of behavior as someone else’s problem, address it and immediately report suspicious activity to authorities.” 

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

On December 28, 2019, THOMAS entered a Rabbi’s home in Monsey, New York, which is adjacent to the Rabbi’s synagogue, during observances related to the end of Shabbat and the seventh night of Hanukkah.  THOMAS declared to dozens of assembled congregants, “no one is leaving,” and attacked the group with an 18-inch machete.  At least five victims were hospitalized with serious injuries, including slash wounds, deep lacerations, a severed finger, and a skull fracture. 

Following the attack, Thomas traveled in a car to New York City, and he was stopped in Harlem by members of the New York City Police Department.  The responding officers observed what appeared to be blood on THOMAS’s hands and clothing, and smelled bleach coming from his vehicle.  A search of THOMAS’s vehicle led to the seizure of, among other things, a machete that appeared to have traces of dried blood on it.  Law enforcement subsequently searched THOMAS’s residence and cellphone pursuant to warrants.  The residence contained handwritten journals with several pages of anti-Semitic references.  THOMAS’s cellphone contained Internet searches dating back to at least November 2019 for terms such as “Zionist Temples” in Staten Island and New Jersey, as well as a webpage visit on the day of the attack to an article titled, “New York To Increase Police Presence After Anti-Semitic Attacks.”  

*                *                *

THOMAS, 37, is charged with five counts of obstructing the free exercise of religion in an attempt to kill, in violation of Title 18, United States Code, Section 247.  Each of the five counts carries a maximum prison term of life.  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 a judge.

Mr. Berman praised the outstanding efforts of the FBI, the Rockland County District Attorney’s Office, the Ramapo Police Department, the Rockland County Sherriff’s Office, the New York State Police, the Clarkstown Police Department, and the New York City Police Department, as well as the U.S. Department of Justice’s Civil Rights Division.

This case is being handled by the Office’s Terrorism and International Narcotics Unit, its White Plains Division, and the Civil Rights Unit of the Office’s Civil Division.  Assistant U.S. Attorneys Michael K. Krouse, Lindsey Keenan, and Lara Eshkenazi are in charge of the prosecution.

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

 

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[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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Eric Dreiband, Assistant Attorney General for the Department of Justice Civil Rights Division, announced today that Related Companies L.P. (“Related”) and ERY Vessel LLC have agreed to install a one-of-a-kind platform lift mechanism on the upper levels of the Vessel, a new public attraction in Hudson Yards, to increase the Vessel’s accessibility for individuals with disabilities.  Under the agreement, Related has agreed to design, construct, install, and operate a platform lift mechanism that will allow individuals with disabilities to traverse the stairways and platforms at the top levels of the Vessel so as to enjoy 360-degree views, providing access to the most traveled areas of the Vessel that are also currently inaccessible to individuals with disabilities.     

The United States contends that as constructed, the Vessel, a multi-story, open air structure composed of eighty (80) platforms connected by stairways, is inaccessible to individuals with disabilities in violation of the Americans with Disabilities Act of 1990.  Related has described the Vessel as the centerpiece of the new Hudson Yards development in Manhattan, and as a “public landmark” that “will lift the public up, offering a multitude of ways to engage with and experience New York, Hudson Yards and each other.”  But the Vessel’s current design allows individuals with disabilities to access at most only three (3) of the 80 platforms, all on one side of the structure, as the sole elevator reaches three platforms and visitors must otherwise traverse stairs to move among the platforms.  Due to the high demand for the elevator, Related has at times directed that the elevator bypass the platforms at levels 5 and 7, thereby rendering only one platform (at level 8) accessible to individuals with disabilities. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “We are pleased that Related has designed an innovative solution to increase accessibility to the Vessel.  Related has agreed to commit substantial resources to install a platform lift that will allow individuals with disabilities to enjoy 360-degree views from the Vessel’s top level.”

Assistant Attorney General Eric Dreiband said:  “As we approach the ADA’s 30th Anniversary, it is vital that individuals with disabilities have access to major new tourist attractions in our cities.  I am pleased that Related is taking steps to increase accessibility of the Vessel.”

The agreement also requires Related to ensure that the elevator stops at levels 5 and 7 upon request, to operate the elevator on a pre-set, timed schedule, and to modify the Vessel’s ticketing reservation options to allow individuals with disabilities to reserve priority access to the elevator.

This case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorney Ellen Blain is in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced that ALAN SEIDEL and BENJAMIN MEKAWAY were charged this morning with falsifying the books and records of Seidel & Co., LLC (“Seidel & Co.” or the “Firm”), a broker-dealer they controlled, submitting false reports to the United States Securities and  Exchange Commission (“SEC”) regarding Seidel & Co.’s net capital, and making false statements to SEC staff.  As alleged, in late 2016, SEIDEL, Seidel & Co.’s chief executive officer, and MEKAWAY, a Seidel & Co. employee, falsified the financial records of Seidel & Co. to obscure the fact that Seidel & Co.’s net capital fell below the threshold mandated by SEC regulations, submitted reports to the SEC containing false representations regarding Seidel & Co.’s financial condition, and lied to SEC staff members who made inquiries about Seidel & Co.’s net capital.  SEIDEL and MEKAWAY will be presented today before U.S. Magistrate Judge Stewart D. Aaron.

U.S. Attorney Geoffrey S. Berman said:  “In order to protect investors and our markets, the SEC must be able to rely on the accuracy of the books and records and regulatory filings of the firms it oversees.  By allegedly lying to the SEC about Seidel & Co.’s financial condition, and then attempting to cover it up, Alan Seidel and Benjamin Mekaway threatened to undermine the SEC’s vital mission.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “As alleged, these individuals, being fully aware of the financial status of their firm, chose to lie to the SEC by cooking their books to reflect a healthier financial condition.  The investing public relies on the information provided by firms to make sound financial decisions.  Shame on these two for allegedly falsifying their records and then trying to hide it from regulators.  Criminal acts of the sort alleged here will always be uncovered by law enforcement, ensuring that individuals who break the law will be brought to justice.”

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

At all relevant times, SEIDEL was the CEO of Seidel & Co., a Manhattan-based inter-dealer broker registered with the SEC.  MEKAWAY was a Seidel & Co. employee.  As an inter-dealer broker, Seidel & Co. acted primarily as an intermediary between institutional broker-dealers trading bonds of various types. 

SEC regulations required Seidel & Co. to maintain net capital reserves of the greater of $100,000 or six and two-thirds percent of its aggregate indebtedness.  If Seidel & Co.’s net capital fell below the required threshold, the Firm was required to notify the SEC of that fact the same day.  Once a broker-dealer falls out of its net capital requirement, it becomes subject to the suspension or revocation of its registration.

In order to ensure, among other things, that a broker-dealer maintains adequate net capital, SEC regulations require broker-dealers like Seidel & Co. to maintain books and records reflecting each expense incurred relating to their business and any corresponding liability.  Seidel & Co. was also required to file monthly reports with the SEC summarizing information concerning its financial and operational status, including its current net capital position.

Beginning at least in or about late-2016, SEIDEL and MEKAWAY caused Seidel & Co. to maintain inaccurate books and records regarding its net capital position and to submit false reports to the SEC regarding Seidel & Co.’s net capital position.  In particular, in monthly reports filed with the SEC reflecting Seidel & Co.’s financial position for the months of October 2016 and November 2016, SEIDEL and MEKAWAY caused Seidel & Co. to falsely represent that it had the requisite net capital to meet its regulatory requirements for those months.  In fact, as SEIDEL and MEKAWAY well knew, the net capital of Seidel & Co. fell far below the requisite amount in both months.  Specifically, in its filings for month-end October 2016, Seidel & Co. fraudulently represented that its net capital exceeded the minimum amount by: (i) failing to account for a debt of approximately $104,000 that the firm owed to its landlord, and (ii) falsely inflating the balance of a Firm brokerage account, for which MEKAWAY submitted a forged bank statement to the external financial operations entity the Firm engaged to prepare and submit reports to the SEC.  Subsequently, in order to falsely represent that Seidel & Co. met its capital requirements in its filing for November 2016, Seidel & Co. falsely recorded as a capital contribution a $1 million loan that should have been recorded as a liability.

When, in December 2016, the SEC began to examine Seidel & Co.’s true net capital position, SEIDEL made false statements to the SEC’s exam staff regarding the $1 million loan.  SEIDEL initially claimed on multiple occasions that the loan was a capital investment.  When the SEC sought verification of this assertion, SEIDEL acknowledged that the money was in fact a loan but claimed, falsely, that he believed it might be converted to a capital investment. 

Subsequently, in or about August 2018, MEKAWAY sought to obstruct an investigation by the SEC’s Division of Enforcement into the misconduct at Seidel & Co. by failing to produce relevant documents and emails in response to a subpoena for records and falsely denying that he was in possession of Seidel & Co. records.

*                *                *           

ALAN SEIDEL, 73, of Long Beach, New York, and BENJAMIN MEKAWAY, 37, of Hazlet, New Jersey, were charged in the Complaint with one count of conspiracy, one count of falsifying required books and records of a broker-dealer, and one count of falsifying records in a federal investigation.  SEIDEL and MEKWAWY are also each charged with one count of making false statements to the SEC.  The conspiracy charge and the false statements charges each carry a maximum prison term of five years.  The falsification of records charges each carry a maximum prison term of 20 years.

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

Mr. Berman praised the work of the investigative work of USPIS.  Mr. Berman 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. Attorney Scott Hartman is in charge of the prosecution.  

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York,  announced that RICHARD LIRIANO pled guilty today to one count of computer fraud in connection with his scheme to use malicious software programs, including a program known as a “keylogger,” on dozens of his coworkers’ computers at a New York City-area hospital, secretly obtaining user names and passwords to his victims’ personal email and other accounts, and using that unauthorized access to steal private and confidential files.  Using his victims’ stolen credentials, LIRIANO repeatedly compromised their password-protected online accounts, and accessed their sensitive personal photographs, videos, and other private documents.  LIRIANO pled guilty earlier today in Manhattan federal court before United States Magistrate Judge Kevin N. Fox.

U.S. Attorney Geoffrey S. Berman said:  “To feed his voyeuristic curiosity, Richard Liriano, an information technology professional at a New York hospital, installed a “keylogger” on dozens of his coworkers’ computers and used other unauthorized software to spy on and steal personal information from them.  Liriano’s disturbing crimes not only invaded the privacy of his coworkers; he also intruded into computers housing vital healthcare and patient information, costing his former employer hundreds of thousands of dollars to remediate.  He will now be held accountable for his actions.”

According to the allegations in the Information to which LIRIANO pled guilty, a prior Indictment filed against LIRIANO, as well as statements made during the plea and other proceedings in the case: 

From at least in or about 2013, up to and including at least in or about 2018, LIRIANO misused administrative access provided to him as an information technology employee at a New York City-area hospital (“Hospital-1”), to log in to employee accounts, and copy other employees’ personal documents, including tax records and personal photographs, onto his own workspace computer for his own personal use. 

To further his efforts to steal personal information from Hospital-1’s employees, LIRIANO, without authorization, used various malicious programs to steal the user names and passwords of his primarily female co-workers.  One of these programs was known as a keylogger, which recorded and sent victim employees’ keystrokes to LIRIANO, such as the usernames and passwords those employees entered to access their personal web-based email accounts.  Through the course of this conduct, LIRANO stole usernames and passwords for at least approximately 70 email accounts belonging to Hospital-1 employees or persons associated with those employees (the “Compromised Accounts”). 

LIRIANO then used those stolen usernames and passwords to log in to the Compromised Accounts and obtain unauthorized access to other password-protected email, social media, photographs, and online accounts to which the Compromised Accounts were registered.  Among other things, LIRIANO conducted searches for sexually explicit photographs and videos in the Compromised Accounts.  

LIRIANO’s computer intrusions into Hospital-1’s computer networks caused over $350,000 in losses to Hospital-1.

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LIRIANO, 33, of the Bronx, New York, was arrested on November 14, 2019.  LIRIANO pled guilty today to one count of transmitting a program to a protected computer that intentionally caused damage, 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 will be determined by the judge.

LIRIANO is scheduled to be sentenced by U.S. District Judge Lewis A. Kaplan on April 15, 2020, at 3:00 p.m.           

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and thanked the New York City Police Department for its assistance.  

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced that PEDRO ANDRES OSORIO was sentenced by U.S. District Judge William H. Pauley III to 76 months in prison for his role in a scheme to defraud investors of more than $1 million.  OSORIO pled guilty before Judge Pauley on September 4, 2019, to one count of wire fraud.

U.S. Attorney Geoffrey S. Berman said:  “Pedro Andres Osorio defrauded his friends and family of nearly $1 million by convincing them to invest in his sham liquor company.  Osorio’s scheme destroyed his victims’ financial and emotional wellbeing.  Rather than take responsibility for his actions and face his victims, Osorio was caught trying to flee the country before his sentencing.  Now Osorio will spend years in prison for his betrayals of his investors and the Court.”

FBI Assistant Director William F. Sweeney Jr. said:  “Not only did Osorio steal from people within his inner circle to keep up the façade of his fraudulent investment scheme, he attempted to leave the country after being released on bond in an attempt to escape the consequences of his actions.  Today Osorio has learned the hard way that two wrongs certainly don’t make things right.”

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

From December 2015 to November 2017, OSORIO solicited investments in a purported liquor distribution company from approximately nine people whom he knew from his own family and social circles in Florida and New York.  OSORIO promised the investors high rates of return on importing Colombian liquor, and told them that his new company was working in partnership with a more established company.

In truth, OSORIO’s liquor company was a sham.  OSORIO did not import or distribute liquor, and did not have a business relationship with another liquor distribution company.  Instead, OSORIO used the investors’ money for himself, including for air travel, cruises, jewelry, electronics, and furniture.  OSORIO also redistributed some of the investors’ money to other investors as supposed profits in order to induce additional investments.  In total, OSORIO defrauded investors of approximately $1 million.

OSORIO had been released on bond during the pendency of the case, and was required to surrender his Colombian passport and remain in Florida (where he lived) and New York.  However, on October 29, 2019, OSORIO was arrested at Miami International Airport attempting to jump bail and flee the United States to Colombia.  OSORIO’s ticket was purchased the day before and he had obtained a new Colombian passport.  OSORIO has since remained in custody until his sentencing.

*                *                *

In addition to the prison term, OSORIO, 36, of Doral, Florida, was sentenced to three years of supervised release and ordered to make restitution in the amount of $994,106.  Forfeiture will be in an amount to be determined. 

Mr. Berman thanked the FBI for their outstanding work.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Brett M. Kalikow is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that EVALDAS RIMASAUSKAS, a Lithuanian citizen, was sentenced today to 60 months in prison for participating in a fraudulent business email compromise scheme that induced two U.S.-based Internet companies (the “Victim Companies”) to wire a total of over $120 million to bank accounts he controlled.  RIMASAUSKAS previously pled guilty to one count of wire fraud before U.S. District Judge George B. Daniels, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Evaldas Rimasauskas devised an audacious scheme to fleece U.S. companies out of more than $120 million, and then funneled those funds to bank accounts around the globe.  Rimasauskas carried out his high-tech theft from halfway across the globe, but he got sentenced to prison right here in Manhattan federal court.”

According to the allegations in the Indictment to which RIMASAUSKAS pled guilty, court filings, and statements made in public court proceedings:

From at least in or around 2013 through in or about 2015, RIMASAUSKAS orchestrated a fraudulent scheme designed to deceive the Victim Companies, including a multinational technology company and a multinational online social media company, into wiring funds to bank accounts controlled by RIMASAUSKAS.  Specifically, RIMASAUSKAS registered and incorporated a company in Latvia (“Company-2”) that bore the same name as an Asian-based computer hardware manufacturer (“Company-1”), and opened, maintained, and controlled various accounts at banks located in Latvia and Cyprus in the name of Company-2.  Thereafter, fraudulent phishing emails were sent to employees and agents of the Victim Companies, which regularly conducted multimillion-dollar transactions with Company-1, directing that money the Victim Companies owed Company-1 for legitimate goods and services be sent to Company-2’s bank accounts in Latvia and Cyprus, which were controlled by RIMASAUSKAS.  These emails purported to be from employees and agents of Company-1, and were sent from email accounts that were designed to create the false appearance that they were sent by employees and agents of Company-1, but in truth and in fact, were neither sent nor authorized by Company-1.  This scheme succeeded in deceiving the Victim Companies into complying with the fraudulent wiring instructions.

After the Victim Companies wired funds intended for Company-1 to Company-2’s bank accounts in Latvia and Cyprus, RIMASAUSKAS caused the stolen funds to be quickly wired into different bank accounts in various locations throughout the world, including Latvia, Cyprus, Slovakia, Lithuania, Hungary, and Hong Kong.  RIMASAUSKAS also caused forged invoices, contracts, and letters that falsely appeared to have been executed and signed by executives and agents of the Victim Companies, and which bore false corporate stamps embossed with the Victim Companies’ names, to be submitted to banks in support of the large volume of funds that were fraudulently transmitted via wire transfer.

Through these false and deceptive representations over the course of the scheme, RIMASAUSKAS, the defendant, caused the Victim Companies to transfer a total of over $120,000,000 in U.S. currency from the Victim Companies’ bank accounts to Company-2’s bank accounts. 

            RIMASAUSKAS was arrested by Lithuanian authorities in March 2017, pursuant to a provisional arrest warrant, and was extradited to the Southern District of New York in August 2017.

*                *                *

In addition to the prison term, Judge Daniels ordered RIMASAUSKAS to serve two years of supervised release, to forfeit $49,738,559.41, and to pay restitution in the amount of $26,479,079.24.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation, and thanked the Prosecutor General’s Office of the Republic of Lithuania, the Lithuanian Criminal Police Bureau, the Vilnius District Prosecutor’s Office and the Economic Crime Investigation Board of Vilnius County Police Headquarters, the Prosecutor General’s Office of the Republic of Latvia, and the International Assistance Group at the Department of Justice, Canada, for their assistance in the investigation, arrests, and extradition, as well the Department of Justice’s Office of International Affairs.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Eun Young Choi and Olga Zverovich are in charge of the prosecution. 

Geoffrey S. Berman, 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 convicted of the January 2, 2014, murder of Shaquille Malcolm, 20, in the Bronx, New York.  JONES and HOPKINS were convicted yesterday following a two-week trial before U.S. District Judge Lewis A. Kaplan. 

U.S. Attorney Geoffrey S. Berman said:  “Nearly six years ago, 20-year-old Shaquille Malcolm was shot 13 times and killed in a Bronx apartment lobby.  A unanimous jury has now held Jones and Hopkins responsible for this terrible crime.”

As reflected in the Indictment, and according to the evidence introduced at trial:

THERYN JONES was a high-ranking leader of 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, New York.  Because Shaquille Malcolm and others were encroaching on JONES’s drug territory, JONES directed HOPKINS and another person to murder Malcolm. 

On January 2, 2014, HOPKINS and another individual 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. 

*                      *                      *

JONES, 42, of the Bronx, New York, and HOPKINS, 25, of the Bronx, New York, were each convicted of using a firearm to commit murder in furtherance of a drug trafficking crime (Count One), which carries a mandatory minimum sentence of five years in prison and a maximum sentence of life in prison, and murder while engaged in a conspiracy to distribute 280 grams and more of crack cocaine (Count Two), which carries a mandatory minimum sentence of 20 years’ in prison and a maximum sentence of life in prison.  JONES and HOPKINS are scheduled to be sentenced on May 7, 2020.

Mr. Berman praised the outstanding investigative work of the New York City Police Department.

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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GORDON FREEDMAN, a doctor who practiced in New York, New York, pled guilty today to one count of distributing oxycodone and fentanyl to a patient for no legitimate medical purpose, which resulted in the overdose of the patient.  FREEDMAN pled guilty before U.S. District Judge Alison J. Nathan.

Manhattan U.S. Attorney Geoffrey S. Berman said: “Less than two weeks ago, Gordon Freedman was convicted of accepting hundreds of thousands of dollars from a pharmaceutical company to push medically unneeded fentanyl.  Today, in a separate but hardly unrelated case, he admitted to dispensing massive quantities of oxycodone and fentanyl to a patient who died of a fentanyl overdose in 2017.  It seems clear Gordon Freedman was more concerned with his own wealth than his patients’ health.”    

According to the allegations contained in the Indictment against FREEDMAN and filings in related proceedings:

From in or about 2013 through in or about May 2017, FREEDMAN, who worked at and owned a private pain-management office on the Upper East Side of Manhattan and was an Associate Clinical Professor at a large hospital in Manhattan, prescribed numerous controlled substances to a particular patient (“Patient-1”), including enormous quantities of oxycodone and fentanyl.  For example, in 2013 alone, FREEDMAN prescribed Patient-1 approximately 85,427 oxycodone pills – an average of approximately 234 oxycodone pills per day – containing a total of approximately 2,422,435 mg of oxycodone. 

On or about April 13, 2017, FREEDMAN gave Patient-1 prescriptions for approximately 150 doses of a drug containing fentanyl, and for approximately 950 oxycodone pills containing approximately 30 mg of oxycodone per pill.  On or about May 4, 2017, Patient-1 died of a fentanyl overdose after ingesting a quantity of the drug prescribed by FREEDMAN on or about April 13, 2017.

*                *                *

FREEDMAN, 59, of Mount Kisco, New York, pled guilty to one count of distributing oxycodone and fentanyl, which carries a maximum sentence of 20 years in prison. The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentence for the defendant will be determined by the judge.

FREEDMAN is scheduled to be sentenced by Judge Nathan on March 18, 2020.

On December 5, 2019, FREEDMAN was convicted in a separate case, U.S. v. Gordon Freedman et al., 18 Cr. 217 (KMW), of charges of conspiracy to violate the Anti-Kickback Statute, violation of the Anti-Kickback Statute, and conspiracy to commit honest-services wire fraud.  In connection with that case, FREEDMAN is scheduled to appear for sentencing before U.S. District Judge Kimba M. Wood on March 19, 2020.

Mr. Berman praised the Federal Bureau of Investigation and the New York City Police Department for their investigative efforts and ongoing support and assistance with the case.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Noah Solowiejczyk, David Abramowicz, and Katherine Reilly are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Jonathan D. Larsen, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today FRANCIS J. O’REILLY, a Carmel attorney, pled guilty to failure to pay over payroll taxes and tax evasion for the calendar year 2015.  O’REILLY pled guilty before U.S. Magistrate Judge Lisa Margaret Smith. 

U.S. Attorney Geoffrey S. Berman said:  “Francis O’Reilly is an attorney who has been in practice for three decades.  He certainly ought to know his obligations under the law at least as well as any non-lawyer.  And yet, today he admitted that he failed to pay over payroll taxes for years, and failed to report personal income and pay taxes due on that for years as well.  Now O’Reilly awaits sentencing for his crimes.”

IRS-CI Special Agent-in-Charge Jonathan D. Larsen said:  “Francis O’Reilly spent over two decades trying to evade his personal and business tax obligations using a multitude of schemes.  Not only did Mr. O’Reilly evade his own personal tax obligations, but he also stole payroll taxes collected from his own employees.  It is ironic that Mr. O’Reilly specialized in criminal defense, as his actions in this case are wholly criminal.  As we enter the beginning of the tax filing season, it’s important to remember the consequences associated with tax fraud and tax evasion.  Today’s guilty plea demonstrates to Mr. O’Reilly and all other criminals that these types of offenses will not be tolerated.  IRS-CI appreciates the assistance of the United States Attorney for the Southern District of New York in helping to bring Mr. O’Reilly to justice.”

According to the allegations contained in the Information to which O’REILLY pled guilty and statements made in court:       

In or about 1989, O’REILLY was admitted to practice law in New York State.  At all relevant times, O’REILLY was a self-employed attorney who maintained a law practice in Putnam County, New York (the “O’Reilly Law Practice”).  The O’Reilly Law Practice specialized in, among other things, bankruptcy, foreclosure defense, and criminal defense.

O’REILLY operated the O’Reilly Law Practice as a sole proprietorship.  In the calendar year 2015, O’REILLY had between approximately three and eight paid employees.  As the owner and operator of the O’Reilly Law Practice, O’REILLY exercised control over the O’Reilly Law Practice’s financial affairs and was a responsible person under federal law for collecting, truthfully accounting for, and paying over payroll taxes to the Internal Revenue Service (“IRS”). 

During the calendar year 2015, O’REILLY withheld payroll taxes from the salaries of some employees of the O’Reilly Law Practice and filed Forms 941, Employer’s Quarterly Federal Tax Returns, reporting substantial amounts of payroll taxes due and owing to the IRS.  However, O’REILLY failed to pay over the payroll taxes for employees of the O’Reilly Law Practice to the IRS as required by law.  Instead, O’REILLY spent the withheld payroll taxes, which O’REILLY was required to hold in trust for the United States Government, on personal and business expenses.

O’REILLY’s failure to pay over payroll taxes for 2015 was part of a long-running course of conduct.  Between 1997 and 2018, O’REILLY failed to pay over a total of approximately $155,771 in payroll taxes, resulting in a liability of approximately $232,283 after interest and penalties.

In addition to failing to pay over payroll taxes to the IRS, O’REILLY also committed personal tax evasion.  During the calendar year 2015, O’REILLY withdrew approximately $119,427 from his attorney trust account at KeyBank (the “Attorney Trust Account”) for personal use.  O’REILLY did not report the income he realized from the Attorney Trust Account on his 2015 Form 1040, United States Individual Income Tax Return, which O’REILLY prepared and filed with the IRS in or about April 2016.  Instead, O’REILLY’s 2015 Form 1040 declared only approximately $58,223 in business income and a corresponding tax liability in the approximate amount of $14,403, which O’REILLY did not pay. 

O’REILLY’s conduct with respect to his personal income taxes in 2015 was also part of a long-running tax evasion scheme.  During the calendar years 2013 through 2017, O’REILLY withdrew a total of approximately $481,673 from his Attorney Trust Account for personal use.  O’REILLY did not pay taxes on this income and did not report it on his federal individual tax returns.  In addition, O’REILLY failed to pay most of the taxes that O’REILLY reported on his tax returns for the calendar years 2007 through 2015 and 2018.  In total, in the calendar years 2007 through 2018, O’REILLY evaded the payment of approximately $566,027 in personal federal income taxes, including interest and penalties.

In or about late 2016, in an effort to settle his outstanding tax liabilities, including his personal tax liabilities for the calendar years 2002 through 2015 and payroll tax liabilities for the period 2006 through 2015, O’REILLY submitted an offer in compromise to the IRS proposing to settle at least approximately $691,561 in outstanding tax liabilities for merely $12,400.  In the 2016 offer in compromise, which O’REILLY signed under penalty of perjury, O’REILLY made several material misstatements and omissions regarding his income and assets.  Among other things, O’REILLY’s offer in compromise: (a) failed to disclose the existence of O’REILLY’s Attorney Trust Account, from which, as described above, O’REILLY drew substantial income; (b) failed to disclose real property and land that O’REILLY owned in Socorro County, New Mexico; and (c) failed to disclose a 2010 Lincoln vehicle that O’REILLY had recently purchased for approximately $16,000.

*                *                *

O’REILLY, 61, of Danbury, Connecticut, pled guilty to one count of failing to pay over payroll taxes and one count of tax evasion for the calendar year 2015, each of which carries a maximum sentence of five years in prison.  As part of the plea agreement, O’REILLY has agreed to pay restitution to the IRS in the amount of at least $801,969.  Sentencing is scheduled for April 22, 2020, at 2:00 p.m., before U.S. District Judge Kenneth M. Karas.

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

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

This case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorney Olga I. Zverovich is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced that MARKO STASIV was sentenced to seven years in prison today by U.S. District Judge P. Kevin Castel for his participation in a scheme to defraud banks and check-cashing stores by cashing hundreds of thousands of dollars in unfunded payroll checks.  STASIV was convicted, after a seven-day jury trial in May 2019, of wire fraud, conspiracy to commit bank and wire fraud, and aggravated identity theft. 

U.S. Attorney Geoffrey S. Berman said:  “Marko Stasiv was sentenced today for his leading role in a choreographed scheme to defraud.  He led a group of conspirators in bilking banks and check-cashing businesses in state after state, staying one step ahead of the law – until he was caught.  Now he faces seven years in federal prison for his crimes.”

FBI Assistant Director William F. Sweeney Jr. said:  “There was nothing about Marko Stasiv’s payroll scheme that was on the up and up.  As one would imagine, his initial success couldn’t be sustained for long. Today’s sentencing ensures a long, well-deserved stay in prison, and this time the government will make the room arrangements.”

According to a Superseding Indictment filed December 18, 2018, other court documents, and the evidence presented at trial: 

From approximately September 2016 through February 2018, the defendant and his co-conspirators engaged in a coordinated scheme to defraud check-cashing businesses and federally insured banks (the “Check Scam”).  The Check Scam’s primary objective was to generate illicit profit for its participants by deceiving check-cashing businesses and banks into honoring ostensible payroll checks for which insufficient funds were available to cover the face-value of the checks.  The Check Scam involved building trust and confidence with check-cashing businesses and banks through a purportedly legitimate course of dealings before taking advantage of that trust and confidence to stage intentional, coordinated overdrafts.  This included the use of fraudulently obtained identity documents, sham companies, and interstate wires. 

As part of the scheme, the conspirators incorporated multiple sham companies (the “Sham Companies”) in multiple states, and then opened bank accounts in the names of those sham companies (the “Sham Bank Accounts”).  The individuals opening the Sham Bank Accounts often did so by using legitimate state identification cards (“State IDs”), obtained under false pretenses.  Upon opening the Sham Bank Accounts, members of the Scheme would obtain and print payroll checks, issued by a Sham Company and issued to a member of the Scheme (a “Check Casher”), who posed as an employee of the Sham Company.  Over the course of several weeks, the Check Cashers cashed multiple payroll checks, of gradually increasing values, at multiple check-cashing stores in the state of the Sham Company’s incorporation.  Members of the Scheme would then immediately redeposit these funds into the Sham Bank Account, so that the checks would clear.  In doing so, the Check Cashers developed credibility with the check-cashing stores.  In each state, the Check Scam would culminate during a final week (the “Bomb Week”).  During the Bomb Week, the Check Cashers would cash high-value checks at as many check-cashing stores as possible.  However, during the Bomb Week, the conspirators would not redeposit these funds into the Sham Bank Account, and would instead divide the proceeds among themselves.  By the time the checks bounced, the conspirators had moved on to the next state, where they executed the Check Scam again, using a new Sham Company and Sham Bank Account.

The defendant was one of the Check Scam’s leaders.  Among other things, he recruited Check Cashers; helped Check Cashers obtain State IDs and open Sham Bank Accounts under false pretenses; distributed payroll checks to the Check Cashers; drove the Check Cashers to various check-cashing stores; instructed Check Cashers on how to execute the Check Scam; and collected and redistributed the proceeds of the Check Scam.  The defendant and his conspirators executed or planned to execute the Check Scam in various locations throughout the United States, including in and around New York City, Pennsylvania, Florida, Maryland, Georgia, Virginia, Texas, Illinois, and California.

As a way to keep overhead costs lower while executing the Check Scam in various states, the conspirators obtained hotel rooms, unlawfully and without authorization, by using the names and hotel loyalty program accounts of real persons who were neither part of nor aware of the Check Scam (the “Hotel Scam”).  The defendant personally executed the Hotel Scam with the assistance of at least two associates in Ukraine, who helped arrange dozens of days-long hotel stays for the Check Scam’s participants at various locations by unlawfully accessing victims’ hotel rewards points, and using them to book hotel rooms listing the defendant and other conspirators as authorized guests. 

*                *                *

In addition to the prison term, Judge Castel sentenced STASIV to three years of supervised release and ordered him to pay restitution in the amount of $548,178.70, forfeiture in the amount of $122,424.92, and a $100 special assessment. 

Mr. Berman praised the investigative work of the FBI and its Eurasian Organized Crime Squad.  He also thanked the New York City Police Department and United States Customs and Border Protection for their assistance in the matter.

The prosecution of this case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorney Jonathan Rebold is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Peter C. Fitzhugh, the Special Agent in Charge of the New York Office of Homeland Security Investigations (“HSI”), announced charges against HENRY PEREZ, ASHLEY GOMEZ, and MISTY ALIZETTE INFANTE for participating in a multi-year cellphone account takeover fraud conspiracy that impersonated legitimate cellphone accountholders to fraudulently obtain smartphones and electronic devices that were charged to compromised accounts.  The scheme also caused a number of individual victims across the United States to lose cellphone service for a period of time.  PEREZ, GOMEZ, and INFANTE were all arrested today and were presented before Magistrate Judge Kevin N. Fox in Manhattan federal court.  The case has been assigned to U.S. District Judge Richard M. Berman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants participated in a sophisticated fraud that impersonated victims, changed victims’ account information so that victims would not receive fraud alerts, charged purchases to victims’ accounts, and deprived victims of cellphone service.  Thanks to the dedicated work of our partners at HSI, these alleged cellphone fraudsters will now face the call of justice.”

HSI Special Agent in Charge Peter C. Fitzhugh said:  “Regardless of the fraud or the methods employed by criminal elements, HSI and our partner law enforcement agencies will continue to unmask those responsible.  The individuals arrested today allegedly used social engineering techniques to impersonate victim account holders which may have provided them with a false sense of anonymity, however, our special agents will continuously identify and bring those responsible to justice.”

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

From June 2017 through December 2019, PEREZ, GOMEZ, and INFANTE were members of a criminal fraud ring that committed cellphone account takeover fraud and identity theft across the United States, including in the Southern District of New York.  The scheme’s primary objective was to obtain new, valuable technological devices, including iPhones, and charge these purchases to someone else’s account, without the knowledge or consent of that victim accountholder.  Over the course of the conspiracy, the scheme attempted to fraudulently obtain more than $1 million worth of devices and, in fact, fraudulently obtained more than $500,000 worth of devices, by charging purchases to victims’ accounts.

To conduct the scheme, members of the scheme, including HENRY PEREZ, used stolen identity information to impersonate a victim who had a cellphone account with a particular cellphone service provider (“Provider-1”).  Members of the conspiracy then called customer service representatives of Provider-1 and used social engineering techniques to take over accounts by making various misrepresentations, including impersonating accountholders and indicating a purported need to regain access to their accounts.  Through these misrepresentations, the conspiracy was able to gain unauthorized access to, and control of, accounts belonging to victim accountholders.  Once they gained access, members of the conspiracy made various unauthorized changes to victim accounts, so that fraud alerts, and emails notifying an accountholder of account changes, were sent to them, rather than the legitimate accountholders.  Members of the conspiracy then purchased new electronic devices – typically but not exclusively iPhones – which they charged to victim accounts, without the knowledge or consent of victims. 

In many instances, the conspiracy arranged for the fraudulently ordered devices to be shipped to addresses under their control.  In other instances, members of the scheme, including HENRY PEREZ, ASHLEY GOMEZ, and MISTY ALIZETTE INFANTE, personally entered stores operated by Provider-1 in order to pick up fraudulently obtained devices.  In total, members of the conspiracy conducted in-store pickups of fraudulently obtained devices in at least 10 different states.

Once they had successfully exploited a particular victim’s account, members of the conspiracy typically relinquished control of that account, and moved on to exploiting other victim accounts.  During the period in which the conspiracy compromised, and retained control of, a particular victim’s cellphone account, that victim typically lost cellphone service.

*                *                *

The Indictment contains six counts.  A chart containing the names, ages, residences, charges for each defendant, and maximum penalties, is set forth below.  The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised HSI’s El Dorado Task Force for its outstanding work on the investigation.  He added that the investigation is continuing. 

This matter is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Michael D. Neff is in charge of the prosecution.

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

Defendant, Age, Hometown

Charges, Maximum Penalties

HENRY PEREZ, 32

Fort Lee, New Jersey 

Wire fraud: 20 years’ imprisonment

Wire fraud conspiracy: 20 years’ imprisonment

Computer intrusion: 10 years’ imprisonment

Computer intrusion: 5 years’ imprisonment

Aggravated identity theft (2 counts): mandatory minimum term of 2 years’ imprisonment, consecutive to any other term of imprisonment

ASHLEY GOMEZ, 21

Bronx, New York

 Wire fraud: 20 years’ imprisonment

Wire fraud conspiracy: 20 years’ imprisonment

Aggravated identity theft: mandatory minimum term of 2 years’ imprisonment, consecutive to any other term of imprisonment 

MISTY ALIZETTE INFANTE, 23

Bronx, New York    

Wire fraud: 20 years’ imprisonment

Wire fraud conspiracy: 20 years’ imprisonment

Aggravated identity theft: mandatory minimum term of 2 years’ imprisonment, consecutive to any other term of imprisonment 

 

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[1] 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.

Geoffrey S. Berman, the 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 filed a civil healthcare fraud lawsuit against OMNICARE, INC., and its parent company, CVS HEALTH CORPORATION.  The Government’s Complaint seeks damages and civil penalties under the False Claims Act for fraudulently billing federal healthcare programs for hundreds of thousands of non-controlled prescription drugs dispensed based on stale, invalid prescriptions to elderly and disabled individuals.  These individuals lived in assisted living facilities, group homes, independent living communities, and other non-skilled residential long-term care facilities.  The illegally dispensed drugs include antipsychotics, anticonvulsants, and antidepressants.

The lawsuit alleges that OMNICARE failed to obtain new prescriptions from patients’ doctors after the old ones had expired or run out of refills.  Instead, OMNCIARE just assigned a new number to the old prescription and kept on dispensing drugs for months, and sometimes years, after the prescriptions had expired.  OMNICARE internally referred to these as “rollover” prescriptions.  As set forth in the Complaint, OMNICARE submitted, or caused to be submitted, false claims for payment for these illegally dispensed drugs to Medicare, Medicaid, and TRICARE.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Omnicare put at risk the health of tens of thousands of elderly and disabled individuals living in assisted living and other residential long-term care facilities by dispensing drugs for months, and sometimes years, without obtaining current, valid prescriptions from doctors.  A pharmacy’s fundamental obligation is to ensure that drugs are dispensed only under the supervision of treating doctors who monitor patients’ drug therapies.  Omnicare blatantly ignored this obligation in favor of pushing drugs out the door as quickly as possible to make more money.  This Office will continue to hold accountable those who put at risk people’s health and safety just to turn a profit.” 

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Failing to consult doctors as to whether prescriptions should be refilled places patients’ health and medical care at serious risk.  These automatic rollover refills could have significant consequences for vulnerable people in long term-care facilities.  We will continue working with law enforcement partners to protect people depending on these taxpayer-funded government health programs.”     

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

OMNICARE is the country’s largest provider of pharmacy services to long-term care facilities, operating approximately 160 pharmacies in 47 states across the United States.  Every year, OMNICARE dispenses tens of millions of prescription drugs to long-term care facilities, including assisted living and other non-skilled residential facilities that serve elderly and disabled individuals.  CVS acquired Omnicare in May 2015, and shortly thereafter assumed an active role in overseeing OMNICARE’s operations, including pharmacy dispensing practices and systems.

From 2010 until 2018, OMNICARE and CVS allowed OMNICARE pharmacies to dispense non-controlled prescription drugs to tens of thousands of elderly and disabled individuals living in assisted living and other residential long-term care facilities across the country based on prescriptions that had expired, were out of refills, or were otherwise invalid.  OMNICARE repeatedly disregarded prescription refill limitations and expiration dates that would have triggered doctor visits to evaluate whether the drug should be renewed, choosing instead to push drugs out the door as fast as possible based on stale, invalid prescriptions.  OMNICARE managers exerted pressure on overwhelmed pharmacy staff to fill prescriptions quickly so that OMNICARE could submit claims and collect payments.  Many pharmacies had to process and dispense thousands of orders each day.

Instead of requesting new prescriptions when old ones expired, OMNICARE allowed prescriptions to “roll over.”  At OMNICARE, “rolling over” a prescription meant that when a prescription expired, OMNCIARE’s computer systems would assign the old prescription a new number and the pharmacy would continue to dispense the drug indefinitely without the need for a prescription renewal.  Depending on the computer system used, OMNICARE also sometimes assigned a fake number of authorized refills to a prescription – usually 99 allowable refills for Medicare patients – to allow for continuous refilling.  OMNICARE pharmacies “rolled over” prescriptions for elderly and disabled individuals living in more than 3,000 residential long-term care facilities, including assisted living facilities operated by the largest long-term care providers in the country, such as Brookdale Senior Living, Atria Senior Living, Sunrise Senior Living Services, and Five Star Senior Living.

Senior OMNICARE and CVS management knew that pharmacies were routinely dispensing drugs without valid prescriptions, but they failed to begin to address the problem until after they found out about this Office’s investigation.  Indeed, OMNICARE’s Compliance Department succinctly acknowledged the problem in an internal April 2015 email in which one Regional Compliance Officer stated:  “An issue that I am running into more and more in multiple states concerns the ability of our systems to allow prescriptions to continue to roll after a year to a new prescription number without any documentation or pharmacist intervention.”  A compliance officer then forwarded the email to the head of OMNICARE’s Third Party Audit group, who responded that she had a “potential solution (programmed last year) but no one is rolling it out now.”

OMNICARE’s practice of illegally dispensing drugs to elderly and disabled individuals living in residential facilities exposed these vulnerable individuals to a significant risk of harm.  In contrast to traditional skilled nursing homes, where residents have access to 24-hour medical care supervised by doctors, assisted living and other non-skilled residential facilities offer more limited medical care, or none at all.  In particular, these facilities generally do not have doctors on staff to oversee and monitor residents’ drug therapy.

Many of the prescription drugs dispensed by OMNICARE without valid prescriptions treat serious, chronic conditions, such as dementia, depression, and heart disease.  They include antipsychotics, anticonvulsants, cardiovascular medications, anti-depressants, and other drugs that can have dangerous side effects and need to be closely monitored by doctors, particularly when taken in combination with other drugs by elderly patients.  By repeatedly dispensing potent drugs without current and valid prescriptions, OMNICARE jeopardized the health and safety of tens of thousands of individuals who continued to take the same drugs for months, and sometimes years, without consulting their doctors to determine whether the medications were still clinically appropriate.

A large percentage of the long-term care residents served by OMNICARE are beneficiaries of federal healthcare programs.  By dispensing drugs without valid prescriptions, OMNICARE presented, or caused to be presented, hundreds of thousands of false claims to Medicare, Medicaid, and TRICARE.  These claims were ineligible for payment.  In addition, OMNICARE knowingly transmitted false information to these federal healthcare programs that made it appear that drug dispensations were supported by current, valid prescriptions from physicians when in fact they were not.

The Government intervened in two private whistleblower lawsuits before Chief Judge Colleen McMahon that had previously been filed under seal pursuant to the False Claims Act.

Mr. Berman thanked HHS-OIG for its assistance with the case.

The case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Jeffrey K. Powell and Mónica P. Folch are in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, the Inspector-in-Charge of the New York Division of the U.S. Postal Inspection Service (“USPIS”), announced today the unsealing of an indictment charging DONALD LAGUARDIA with securities fraud, wire fraud, and investment adviser fraud in connection with his operation of a now-bankrupt New York-based investment firm, L-R Managers, LLC.  Over several years, LAGUARDIA, the chief executive officer and co-founder of L-R Managers, misappropriated more than $1.5 million from private investment funds managed by the firm and used the stolen money to finance his personal and business expenses.  LAGUARDIA was arrested this morning in Lavallette, New Jersey.  The case is assigned to U.S. District Judge Lewis A. Kaplan.  LAGUARDIA will be presented before Judge Kaplan in Manhattan federal court later today.

U.S. Geoffrey S. Berman said:  “As alleged, Donald Laguardia stole from investors through a series of lies.  He violated his clients’ trust by siphoning their money to bankroll his business and line his own pockets.  Now, Laguardia faces prosecution for his alleged crimes.”

USPIS Inspector-in-Charge Philip R. Bartlett said: “Mr. Laguardia showed a reckless disregard for his clients when he allegedly misappropriated their investment money to fund personal and business expenses.  This is a clear case of greed overshadowing honest business practices.”

According to the allegations contained in the Indictment,[1] unsealed today in Manhattan federal 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 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, 52, of Lavallette, New Jersey, is charged with 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 sentencing of a defendant will be determined by the judge.

Mr. Berman praised the investigative work of the USPIS.  Mr. Berman also thanked the Securities & 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 Margaret Graham and Daniel Loss 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.

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Wendy Woolcock, Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced that AMADO BELTRAN BELTRAN, a/k/a “Don Amado,” OTTO RENE SALGUERO MORALES, a/k/a “Otto Salguero,” RONALD ENRIQUE SALGUERO PORTILLO, a/k/a “Ronald Salguero,” and FERNANDO FELIX RODRIGUEZ, a/k/a “Don Fernando,” were charged in a Superseding Indictment in Manhattan federal court with conspiring to import cocaine into the United States and related weapons offenses involving the use and possession of machineguns and destructive devices.  The case is assigned to U.S. District Judge P. Kevin Castel.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants conspired with the corrupt Honduran officials they bribed to facilitate the importation into the U.S. of large quantities of cocaine for the Sinaloa cartel.  They allegedly provided security personnel – armed with machineguns and RPGs – for the drug shipments.  Thanks to the DEA, the defendants are now facing potential lengthy prison sentences if convicted.”

DEA Special Agent in Charge Wendy Woolcock said:  “Following the recent conviction of former Honduran congressman Tony Hernandez, today’s charges are further proof that even well-connected drug traffickers will be held to account.  These alleged criminals will stop at nothing to protect their shipments of poison, often resorting to bribery, intimidation, and even violence.  The DEA is committed to doing all it can to combat the threat of drug-trafficking and stop these dangerous substances from flooding our communities and harming Americans.”

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

Beginning in at least approximately 2004, BELTRAN BELTRAN, SALGUERO MORALES, SALGUERO PORTILLO, and FELIX RODRIGUEZ worked together and with others – including, at times, former Honduran congressman Juan Antonio Hernandez Alvarado, a/k/a “Tony Hernandez,” and the leadership of Mexico’s Sinaloa Cartel – to transport large shipments of cocaine.  The defendants and other drug traffickers received the cocaine shipments in Honduras via air and maritime routes, which were typically dispatched from Colombia and Venezuela.  For protection from official interference, and in order to facilitate the safe passage of the cocaine through Honduras, Guatemala, and Mexico so that the drugs could be imported into the United States, the defendants and others facilitated the payment of bribes to public officials, including Hernandez Alvarado and other Honduran politicians.  The defendants and others also provided armed security for the drugs, including individuals carrying machineguns and rocket-propelled grenade launchers.

*                      *                      *

BELTRAN BELTRAN, 57, of Mexico, SALGUERO MORALES, 58, of Guatemala, SALGUERO PORTILLO, 49, of Guatemala, and FELIX RODRIGUEZ, 45, of Mexico, are charged with (1) conspiring to import cocaine into the United States, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; (2) using and carrying machine guns and destructive devices during, and possessing machine guns and destructive devices in furtherance of, the cocaine-importation conspiracy, which carries a mandatory minimum sentence of 30 years in prison and a maximum sentence of life in prison; and (3) conspiring to use and carry machine guns and destructive devices during, and to possess machine guns and destructive devices in furtherance of, the cocaine-importation conspiracy, which carries a maximum sentence of life in prison.

Mr. Berman praised the outstanding investigative work of the DEA’s Special Operations Division Bilateral Investigations Unit, New York Strike Force, and Tegucigalpa Country Office, as well as the Office of International Affairs of the Justice Department’s Criminal Division.

The case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorneys Michael K. Krouse, Stephanie Lake, Daniel G. Nessim, Benjamin W. Schrier, and Kyle A. Wirshba are in charge of the prosecution.

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

 

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that KAREEM DAVIS, a/k/a “Reem,” a member of a violent, Bronx-based street gang known as “Killbrook,” was convicted of the April 2011 murder of Bolivia Beck, as well as participating in a racketeering conspiracy.  DAVIS was convicted following a one-week trial before U.S. District Judge Lorna G. Schofield. 

U.S. Attorney Geoffrey S. Berman said:  “A unanimous jury convicted Kareem Davis of killing Bolivia Beck as she was meeting her boyfriend’s grandparents, more than eight years ago.   We hope today’s verdict brings some solace to the victim’s family, while also taking a violent offender off the street.”

As reflected in the Indictment, documents previously filed in the case, and evidence introduced at trial:

From at least in or about 2007 through in or about October 2017, DAVIS was a member of Killbrook, a violent street gang based in the “Down the Block” section of the Mill Brook Houses.  Killbrook members were responsible for narcotics trafficking, shootings, robberies, and murder.  In or around 2007, a violent rivalry started between Killbrook and “MBG,” another gang based in the “Up the Block” section of the Mill Brook Houses.  This rivalry involved numerous shootings and acts of violence, including a shooting at a baby shower in the Mill Brook community center. 

On April 18, 2011, Bolivia Beck and her boyfriend, a member of MBG, were walking through the Mill Brook Houses.  As Beck and her boyfriend approached her boyfriend’s grandparents, DAVIS and a co-conspirator fired multiple times, aiming for the boyfriend but instead striking Beck in the head with a single bullet.  The shooting occurred in broad daylight.  Beck died two days later from the gunshot wound. 

*                *                *

DAVIS, 30, was found guilty of one count of racketeering conspiracy, which carries a maximum sentence of life in prison; one count of murder in aid of racketeering, which carries a mandatory minimum sentence of life in prison; and one count of murder through the use of a firearm, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of life in prison.  DAVIS is scheduled to be sentenced on April 16, 2020.

Mr. Berman praised the outstanding investigative work of the New York City Police Department.  

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Christopher Clore, Jordan Estes, and Alexandra Rothman are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOEL MARGULIES was sentenced to four years in prison today by U.S. District Judge Jed S. Rakoff for participating in two schemes to defraud more than 50 investors in the Starship Snacks Corporation and the All American Pet Company of more than $2.9 million, by making false and fraudulent representations about, among other things, the status of the companies’ products, guarantees that purportedly backed the investments, and the interest of large multi-national corporations in acquiring the companies.  MARGULIES was convicted after a seven-day jury trial in August 2019 of various fraud counts, aggravated identity theft, and the illegal transfer of a firearm to an out-of-state resident; he then entered a plea of guilty to participating in a narcotics distribution conspiracy.

U.S. Attorney Geoffrey Berman said:  “For years, Joel Margulies took advantage of individuals who thought they were investing in start-up companies, when in fact Margulies and his co-conspirators diverted for their own personal benefit the more than $2.9 million they had raised.  Margulies perpetuated lies about the products that companies were developing, the interest of large public corporations in buying out the companies, and the existence of guarantees to back the investments.  In order to make these lies more convincing, Margulies stole the identities of three individuals, and created fake letters that appeared to be authored by those individuals.  For the financial and emotional devastation his fraud inflicted on more than 50 individuals, Margulies will spend the next four years of his life in prison.”  

According to allegations contained in the Indictment filed against MARGULIES, the evidence presented during trial and statements made in related court filings and proceedings:

The All American Pet Company Fraud Scheme

From October 2013 through May 2017, MARGULIES, co-defendant Lisa Bershan, and a co-conspirator raised more than $575,000 in purported loans for the All American Pet Company (“AAPT”), a penny-stock company that produced, marketed, and sold food bars and other products for dogs, based on the following misrepresentations, among others: (a) that the Internal Revenue Service (“IRS”) had accepted an “offer in compromise” from AAPT that significantly reduced the back taxes AAPT owed to the IRS; (b) that Lisa Bershan had paid to the IRS the amount of this offer in compromise and had thus absolved AAPT of its outstanding tax liability, (c) that Lisa Bershan was the beneficial owner of a bank account containing over $6.9 million, (d) that Lisa Bershan would personally guarantee some of the loans, and (e) that Nestlé USA had proposed various business deals with AAPT.  MARGULIES held himself out as AAPT’s vice president for marketing and advertising, but in reality he played a number of roles at the company, including communicating with investors and creating fake documents, such as forged bank account statements and letters, to support AAPT’s misrepresentations to investors.

Although MARGULIES and his co-conspirators had promised investors that they would use the loans to help improve AAPT’s manufacturing and distribution capacities, the conspirators instead used those funds largely for their personal expenses, including the rental of a luxury villa in the Bel Air neighborhood of Los Angeles where all three of them lived.

In connection with the AAPT fraud scheme, MARGULIES used the stolen identities of three individuals – an IRS employee, a Nestlé Purina employee, and a Manhattan attorney – to create false and fraudulent letters that were sent to AAPT investors to induce them to make loans to AAPT.

The Starship Snack Corporation Fraud Scheme

From approximately August 2015 through August 2017, MARGULIES, Bershan, and  co-defendant Barry Schwartz raised more than $2.3 million from investors in a company originally called the Awake Company and later renamed Starship Snacks Corporation (“Starship”), which purported to be in the business of developing and manufacturing caffeinated snack products, based on the following misrepresentations, among others: (a) that investments in Starship were guaranteed against losses by Bershan; (b) that Starship was going to be acquired by Monster Beverage (“Monster”) in a one-for-one stock exchange; (c) that Starship was engaged in actual product development and had procured samples of chocolate candies infused with caffeine; and (d) that MARGULIES and others at Starship had entered into non-disclosure agreements with Monster that prohibited them from discussing Starship’s purported acquisition by Monster and its purported product development.  MARGULIES’s title at Starship was senior vice president; he served as the primary point of contact for investors, to whom he made the aforementioned misrepresentations, and he also created a number of fake documents that were used in connection with the Starship fraud.

After receiving funds from Starship investors, MARGULIES and his co-conspirators used those funds to maintain their own extravagant lifestyles, spending hundreds of thousands of dollars on things like luxury clothing, plastic surgery, interior decorating, the rental of a high-end apartment in New York City, and the down payment for a multimillion-dollar house in Florida. 

The Illegal Firearm Transfer and Narcotics Distribution  

In addition to the fraud and identity theft conduct set forth above, MARGULIES was sentenced for illegally transferring a firearm and ammunition from Tennessee to Bershan in New York via commercial courier without being a licensed firearms dealer.  Finally, MARGULIES was also sentenced for conspiracy to distribute cocaine, a charge that had been severed from the charges that were the subject of the trial. 

In addition to the prison term, MARGULIES, 75, was sentenced to three years of supervised release.  MARGULIES was also ordered to forfeit $108,983 and to make restitution in the amount of $2,926,702.54.

Lisa Bershan was convicted upon a guilty plea, and sentenced by Judge Rakoff on November 22, 2019, principally to a term of seven years in prison. 

Barry Schwartz was convicted upon a guilty plea, and sentenced by Judge Rakoff on December 12, 2019, principally to a term of four years in prison.

Mr. Berman praised the work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for its assistance.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that SALVATORE ARENA was sentenced on December 13 to 42 months in prison for defrauding clients who trusted him to prepare and pay their taxes.  ARENA misappropriated over $780,000 of client money from approximately 170 victims for his own use.  ARENA pled guilty on August 23, 2019, before United States District Judge Katherine Polk Failla, who imposed Friday’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Salvatore Arena misappropriated money his clients intended would be used to pay their taxes.  He defrauded his clients and the United States, and now he has been sentenced to prison for his crimes.”

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

During the relevant time period, ARENA purported to offer tax services, including the preparation and payment of taxes, to clients of an accounting firm in Manhattan.  Instead of making payments on behalf of those clients, as ARENA represented he would, he diverted client funds for his own use.  ARENA executed this fraudulent scheme in two primary ways – first, by diverting pre-payments of taxes to his own tax account and later claiming illegitimate refunds; and second, by misappropriating tax payments clients had wired into a bank account controlled by ARENA.

ARENA defrauded approximately 170 victims during the period from January 2014 through March 2019, and agreed as part of his guilty plea to forfeit $789,195.35 in United States currency, representing proceeds traceable to the charged offenses, and was ordered by the Court to pay restitution of at least $726,608.42.

*                *                *

ARENA, 46, of Queens, New York, was sentenced to concurrent terms of 42 months in prison for mail fraud, money laundering, and wire fraud.  In addition to the prison term, ARENA was also sentenced to three years of supervised release.

Mr. Berman praised the outstanding investigative work of Special Agents from TIGTA, Criminal Investigators from the NYSDTF, and Special Agents from the U.S. Attorney’s Office for the Southern District of New York. 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Robert L. Langley Jr., the Putnam County Sheriff, announced the arrest of CHARLES HUSTIS for attempted enticement of a minor to engage in sexual activity.  HUSTIS was arrested today and presented before United States Judge Lisa Margaret Smith.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Charles Hustis used his social media account in an attempt to persuade an innocent minor victim to meet with him and perform sexual acts.  Sexualizing and preying on minors is unconscionable.  Our Office will continue to work with our law enforcement partners at all levels of government to keep our children safe and stop those who seek to take advantage of them.”

FBI Assistant Director William F. Sweeney Jr. said:  “Predators who use their access to children for their own sexual gratification are a parent’s worst fear come true, and their actions can cause detrimental impacts on the victims.  I want to thank the agents and detectives who worked this case for the speed with which they acted once they had the information regarding Mr. Hustis’s position in a school.  If anyone in the community believes their child may have been a victim, we ask for them to call us at 1-800-CALL-FBI.”

Sheriff Robert L. Langley Jr. said:  “This is another example of why all law enforcement agencies should continue to work together at the local and federal levels in order to better serve their communities.  The Putnam County Sheriff’s Department looks forward to continuing our already good working relationship with the FBI and other federal agencies.”

According to the allegations in the Complaint[1] filed today:

Between at least on or about December 8, 2019, and December 16, 2019, HUSTIS, a former teacher and public official in Cold Spring, New York, communicated over Facebook Messenger with a 16-year-old victim (“Victim-1”).  During these communications, HUSTIS sent Victim-1 sexual images, including photographs of himself, and attempted to arrange a meeting with Victim-1 with the understanding that HUSTIS and Victim-1 would perform various sexual acts.  HUSTIS was arrested by law enforcement officers on December 16, 2019, after he arrived at a meeting location that he had arranged with Victim-1, expecting to bring Victim-1 back to his apartment for sexual activity.

HUSTIS, 36, of Cold Spring, New York, is charged with one count of attempted enticement of a minor, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence 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 defendant will be determined by the judge.

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

Mr. Berman praised the outstanding investigative work of the FBI, Putnam County Sheriff’s Department, and the Cold Spring Police Department.

Mr. Berman stated that the investigation is ongoing.  Mr. Berman requests that any individuals with relevant information concerning CHARLES HUSTIS should contact the Federal Bureau of Investigation at 1-800-CALL FBI.

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

 

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[1] 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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOHN ULRICH, who previously served as the vice president of the International Brotherhood of Teamsters Local 812 (the “Union”) and as a trustee of the Union’s employee health benefit plan (the “Plan”), pled guilty today to soliciting tens of thousands of dollars in bribe payments from an executive with the Plan’s Third Party Administrator (the “TPA-1”), in exchange for using his influence to ensure the Union’s continued retention of TPA-1 as its Plan administrator.  ULRICH pled guilty before United States District Judge Analisa Torres.

U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, John Ulrich betrayed the trust of the Union members who elected him in order to line his pockets with bribe money.  This Office is committed to prosecuting corrupt union officials who abuse their positions of trust for their own financial benefit.”

According to the allegations in the Indictment, other public filings, and statements made during the plea proceeding:

The Union has more than approximately 3,000 members, and represents workers in the beverage industry throughout the New York metropolitan area.  The Union’s members are covered by the Plan, which provides, among other things, life insurance, health insurance, dental, vision, and disability benefits to Union members and their families.  As the Plan’s third-party administrator, TPA-1 processed health insurance claims for participants in the Plan.  At all times relevant to the Indictment, ULRICH was a member and officer of the Union and a trustee of the Plan.

In or about 2013, ULRICH  solicited bribe payments from an executive with TPA-1 (“Executive-1”) of $5,000 per quarter in exchange for using his influence to maintain TPA-1 as the Plan’s third-party administrator.  Before ULRICH solicited these bribes, the Plan had issued a request for proposals for a new third-party administrator, and TPA-1 was at risk of losing the Plan’s business.  ULRICH told Executive-1 that ULRICH would use his influence with the Union to ensure that the Plan continued to use TPA-1 to administer the Union’s health care plan.  Executive-1 agreed to make $5,000 quarterly payments to ULRICH, and began doing so.  Subsequently, despite receiving multiple bids from other third-party administrators, the Plan then continued to work with TPA-1.   

In or about 2014, ULRICH demanded increased bribe payments from Executive-1.  In part, ULRICH told Executive-1 that these increased bribe payments were needed for another trustee of the Plan, and Executive-1 began making such increased payments.  On or about September 19, 2015, ULRICH again solicited additional bribe payments for this trustee.

After a special board meeting convened by the Plan in February 2016, ULRICH was terminated as vice president and trustee of the Union and Plan, respectively.  In total, ULRICH demanded, and Executive-1 paid, tens of thousands in bribes before ULRICH was removed from office.

*                *                *

ULRICH, 48, of Newburgh, New York, pled guilty to one count of conspiracy to solicit and receive bribe payments to influence the operation of an employee benefit plan, which carries a maximum penalty 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. 

ULRICH is scheduled to be sentenced by Judge Torres on April 23, 2020, at 2:00 p.m.

Mr. Berman praised the Federal Bureau of Investigation, the U.S. Department of Labor Office of Inspector General, the U.S. Department of Labor Employee Benefits Security Administration, and the U.S. Department of Labor Office of Labor-Management Standards for their outstanding investigative work in this case.

This matter is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Eli J. Mark and Louis A. Pellegrino are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Todd J. Brown, Director of the U.S. Department of State’s Diplomatic Security Service (“DSS”), announced today that former Ambassador from the Permanent Mission of the Kingdom of Morocco to the United Nations (the “Moroccan Mission”) ABDESLAM JAIDI (“JAIDI”), his now ex-wife, MARIA LUISA ESTRELLA JAIDI (“ESTRELLA”), and ESTRELLA’s brother, RAMON SINGSON ESTRELLA (“SINGSON”) were charged in White Plains federal court with conspiring to defraud the United States, to make materially false statements, to commit visa fraud, and to induce aliens to illegally enter, come to, and remain in the United States.  The charges stem from a scheme to bring domestic workers into the United States under fraudulently obtained diplomatic visas, only to then be exploited by JAIDI and ESTRELLA once they arrived.  On March 13, 2019, ESTRELLA was arrested on a complaint and presented in White Plains federal court.  Both JAIDI and SINGSON remain at large.  

U.S. Attorney Geoffrey S. Berman stated:  “Today’s charges underscore that no one is above the law.  The conspiracy alleged to have occurred here was intentionally designed to circumvent important protections against exploitation for domestic workers brought to the United States.  We will not tolerate this type of fraud on the United States or the exploitation of domestic workers – no matter the title or position of the alleged offender.”

DSS Director Todd J. Brown said:  “We are committed to working with our law enforcement partners to prevent situations where vulnerable individuals are exploited for personal gain in schemes such as this.  Because of our global presence, DSS is well positioned to work with U.S. and foreign law enforcement to stop those who would criminally manipulate instruments of international travel, such as passports and visas, to abuse the legal immigration system.”

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

From approximately 2006 through 2019, JAIDI, ESTRELLA, and SINGSON conspired to fraudulently procure visas for at least 10 foreign domestic workers (collectively, the “Domestic Workers”), who were from the Philippines and Morocco, among other countries.  At various times relevant to the Indictment, JAIDI was a diplomatic agent accredited to the Moroccan Mission with the rank of ambassador.  From approximately 1980 through approximately 2016, JAIDI and ESTRELLA were married. 

In order to fraudulently obtain visas for the Domestic Workers, JAIDI and ESTRELLA caused the Domestic Workers to submit visa applications containing false statements and to submit fraudulent employment contracts in support of those visa applications.  SINGSON – who resides in the Philippines – helped recruit several of the Domestic Workers in the Philippines to work for JAIDI and ESTRELLA in the United States and instructed the Domestic Workers to make false statements in their visa applications and to State Department officials.  

In particular, JAIDI, ESTRELLA, and SINGSON caused a number of the Domestic Workers to falsely state in their visa applications that they would be employed as administrative staff at the Moroccan Mission or at the Consulate General of the Kingdom of Morocco in Manhattan.  In addition, they caused some of the Domestic Workers to submit fraudulent employment contracts to the State Department in support of their visa applications.  The fraudulent employment contracts overstated the Domestic Workers’ salaries, understated their hours, and, in many cases, falsely guaranteed benefits, including, among others, sick leave, dental insurance, and medical insurance. 

Once the Domestic Workers arrived in the United States, JAIDI and ESTRELLA employed the workers as their personal drivers, domestic helpers, farmhands, and assistants at their residence in Bronxville, New York and their farm in Ancramdale, New York.  JAIDI and ESTRELLA paid the Domestic Workers less than the minimum salary required by law and regularly compelled them to work far in excess of 40 hours per week.  In addition, JAIDI and ESTRELLA generally denied the Domestic Workers the benefits set forth in their employment contracts, compelled the Domestic Workers to work seven days a week, and required the Domestic Workers to surrender their passports. 

*                *                *

JAIDI, 82, of Rabat, Morocco, ESTRELLA, 60, of Scarsdale, New York, and SINGSON, 55, of Manila, Philippines, are each charged with one count of conspiracy to defraud the United States, to make materially false statements, and to commit visa fraud, which carries a maximum sentence of five years, and one count of conspiracy to induce aliens to illegally enter, come to, and remain in the United States, which carries a maximum sentence of 10 years.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the DSS Criminal Fraud Investigations Branch, the DSS Saint Albans Resident Office, the DSS New York Field Office, Homeland Security Investigations, the U.S. Department of Labor’s Wage and Hour Division from the Albany District Office, the Yonkers Police Department, and the New York State Police.  In addition, Mr. Berman thanked the U.S. Attorney’s Office in the Northern District of New York, the Community Development Project at the Urban Justice Center, and the Human Trafficking Program at the Worker Justice Center of New York for their assistance in this investigation.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Sam Adelsberg, Gillian Grossman, and James Ligtenberg 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.

 

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[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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that BARRY SCHWARTZ was sentenced to four years in prison today by U.S. District Judge Jed S. Rakoff for participating in a conspiracy to defraud more than 50 investors in the Starship Snacks Corporation of more than $2.3 million, by making false and fraudulent representations about, among other things, the status of the company’s products, guarantees that purportedly backed the investments, and the interest of large multi-national corporations in acquiring the companies.

U.S. Attorney Geoffrey Berman said:  “Barry Schwartz participated in a conspiracy to defraud investors, telling them their investments were safe and guaranteed when, in fact, he and his co-conspirators had misappropriated investor funds to support their lavish lifestyles.  Schwartz lied about the readiness of his company’s products and about the claim that two large multi-national companies were vying to buy the company.  Schwartz’s house of lies eventually collapsed, bringing financial devastation to many of its victims.  Today Schwartz was held accountable for the criminal conduct that defrauded more than 50 investors of more than $2.3 million.”

According to the allegations contained in the Indictment filed against SCHWARTZ and statements made in related court filings and proceedings, including the trial of co-defendant Joel Margulies:

The Starship Snack Corporation Fraud Scheme

From approximately August 2015 through August 2017, SCHWARTZ, Margulies, and a co-conspirator, Lisa Bershan, raised more than $2.3 million from investors in a company originally called the Awake Company and later renamed Starship Snacks Corporation (“Starship”), which purported to be in the business of developing and manufacturing caffeinated snack products, based on the following misrepresentations, among others: (a) that investments in Starship were guaranteed against losses by Bershan; (b) that Starship was going to be acquired by Monster Beverage (“Monster”) in a one-for-one stock exchange; (c) that Starship was engaged in actual product development and had procured samples of candies infused with caffeine; (d) that SCHWARTZ and others at Starship had entered into non-disclosure agreements with Monster that prohibited them from discussing Starship’s purported acquisition by Monster and its purported product development.  SCHWARTZ held himself out as Starship’s corporate secretary.   

After receiving funds from Starship investors, SCHWARTZ and his co-conspirators used those funds to maintain their own extravagant lifestyles, spending hundreds of thousands of dollars on things like luxury clothing, plastic surgery, interior decorating, the rental of a high-end apartment in New York City, and the down payment for a multimillion-dollar house in Florida. 

In addition to the prison term, SCHWARTZ, 73, was sentenced to two years of supervised release.  SCHWARTZ was also ordered to forfeit $2,163,214.  A restitution order will be entered within 90 days.

Lisa Bershan was convicted upon a guilty plea, and sentenced by Judge Rakoff on November 22, 2019, principally to a term of seven years in prison.  Joel Margulies was convicted following a seven-day jury trial before Judge Rakoff and is scheduled to be sentenced on December 16, 2019. 

Mr. Berman praised the work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for its assistance.

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

Geoffrey S.  Berman, the United States Attorney for the Southern District of New York, announced that physician PAUL J. MATHIEU was sentenced yesterday evening by U.S. District Judge Lorna G. Schofield to 48 months in prison for his participation in a $30 million scheme to defraud Medicare and the New York State Medicaid Program.  Between 2007 and 2013, MATHIEU falsely posed as the owner of three medical clinics, which were actually owned a by corrupt businessman, and falsely claimed that he had examined and treated thousands of patients whom he had not in fact seen.  In addition, occupational therapist LINA ZHITNIK was sentenced by Judge Schofield on December 3, 2019, to 14 months in prison for her role in the same scheme, which included falsifying medical records in order to claim that she had provided therapy services that she had not in fact provided.  MATHIEU was convicted in May 2019, following a six-week trial, on charges of health care fraud, wire fraud, mail fraud, conspiracy to commit those offenses, and conspiracy to make false statements in connection with a federal health care program.  ZHITNIK pled guilty to health care fraud and conspiracy to commit health care fraud, mail fraud and wire fraud in April 2019, during jury selection for trial.

U.S. Attorney Geoffrey S. Berman said:  “Corrupt doctors and therapists who defraud Medicare and Medicaid betray their medical training, their professions, their patients, and the taxpayers.  These taxpayer-funded programs are designed to provide essential medical services to the elderly and the needy, not to enrich corrupt doctors and other fraudsters.  Paul Mathieu’s sentence sends a clear message that those who cheat Medicare and Medicaid will be held accountable.”

According to the evidence presented at trial and other public documents, including Zhitnik’s guilty plea transcript:

Between 2007 and 2013, Aleksandr Burman – who is currently serving a 10-year prison term for his participation in this scheme – owned and operated six medical clinics in Brooklyn (the “Clinics”) that fraudulently billed Medicare and Medicaid approximately $30 million for medical services and supplies that were not provided, were provided without regard to medical necessity, or were otherwise fraudulently billed.  Under New York State law, professional medical corporations must be owned by a medical professional.  To circumvent this requirement, Burman and MATHIEU agreed to have MATHIEU pose as the true owner of a succession of three different clinics, which Burman owned and operated for more than five years, from 2007 through 2013.  Throughout those years, MATHIEU signed a variety of fraudulent documents that falsely represented to banks, Medicare, Medicaid, and others that MATHIEU was the sole owner of The Medical Office of Paul J. Mathieu, P.C.; Sunlight Medical, P.C.; and Ocean View Medical of Brooklyn, P.C.  Burman also hired two other doctors, Ewald J. Antoine and Mustak Y. Vaid, to pose fraudulently as the owners of three additional, related clinics. 

MATHIEU also came weekly to several of the clinics, where he signed stacks of false and fraudulent medical charts, and issued referrals for expensive additional testing, occupational therapy, and physical therapy.  For the last 3½ years of the scheme, MATHIEU saw no patients at all, simply falsifying enormous stacks of phony medical records falsely stating that he had seen and treated such patients.

In addition to his role in the clinics, MATHIEU also wrote unneeded prescriptions for adult diapers and other incontinence products, which prescriptions were filled at Universal Supply Depot, a medical supply company also owned by Aleksandr Burman.  MATHIEU was so prolific in this regard that, throughout the period of the fraud, he was the No. 1 top prescriber of adult diapers in the State of New York.  The only year MATHIEU ranked second, he ranked behind another member of the same criminal scheme.  MATHIEU continued to write such prescriptions, even after the medical clinics closed after Medicare stopped paying any of the clinics’ claims.

ZHITNIK participated in the scheme for more than a year, from mid-2011 through mid-2012.  ZHITNIK was paid to come to one of the clinics for a portion of each day.  While there, ZHITNIK signed large numbers of medical records to be used in fraudulent billing, falsely claiming to have provided occupational therapy services that she did not in fact provide.  Indeed, ZHITNIK signed such fraudulent paperwork, backdated, even for weeks when she was on family vacations in New Orleans and Miami, as well as when she was on shorter trips or out of town taking private flying lessons.

MATHIEU is the tenth defendant, and the third physician, who has been sentenced in this case and a related case.  The other defendants, each of whom pled guilty, include:  Aleksandr Burman, who was sentenced in a related case on May 8, 2017, to 10 years in prison; Marina Burman, the former wife of Aleksandr Burman and the owner of a related medical supply company, sentenced on May 17, 2018, to three years in prison; Mustak Y. Vaid, a physician sentenced on August 1, 2018, to 18 months in prison; Ewald J. Antoine, a physician sentenced on August 21, 2018, to a year and a day in prison; Asher Oleg Kataev, a Burman business partner, sentenced on May 31, 2018, to three years in prison; Alla Tsirlin, a Clinic office manager, sentenced on June 5, 2018, to a year and a day in prison; and Edward Miselevich and Ivan Voychak, Burman partners who jointly ran a related ambulette company, sentenced on June 12 and July 19, 2018, to three years in prison each.

One additional defendant awaits sentencing, physical therapist Hatem Behiry, who was convicted at trial with MATHIEU.

In addition to the prison term, MATHIEU, 54, of Morristown, New Jersey, was sentenced to three years of supervised release.  Judge Schofield also ordered MATHIEU to pay restitution and forfeiture.  ZHITNIK, 52, of Brooklyn, New York, was also sentenced to three years of supervised release, ordered to pay restitution of $1,369,554, and to forfeit $89,682.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation, the Office of the Inspector General of the U.S. Department of Health and Human Services, and the New York State Office of the Medicaid Inspector General (“OMIG”).

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys David Raymond Lewis, Stephen J. Ritchin, and Timothy V. Capozzi are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Dermot Shea, the Commissioner of the Police Department for the City of New York (“NYPD”), announced the unsealing of an Indictment charging 12 individuals with operating a crack cocaine distribution ring in the vicinity of 125th Street and Lexington Avenue in Manhattan.  Six of the 12 defendants charged in the Indictment were arrested yesterday, and are scheduled to appear before U.S. Magistrate Sarah L. Cave in federal court later today.  One of the defendants is already in state custody and will be presented at a later date.  Five defendants remain at large.  The case has been assigned to U.S. District Court Judge Andrew L. Carter, Jr.       

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants were members of a Harlem crack distribution crew that peddled its wares in and around the AK Houses, the Metro-North station at 125th Street, and P.S. 30.  Several members are also alleged to have used guns in the plying of their illegal trade.  Our thanks to the NYPD for their continued efforts to rid our neighborhoods of illegal drugs and guns.”

NYPD Police Commissioner Dermot Shea said:  “This case highlights our success in stopping those offenders who sow violence in our city’s neighborhoods. Working together, our mission to eradicate narcotics and illegal guns is clear and I want to commend our NYPD investigators and partners for targeting violent crime and dismantling it with precise effectiveness.”

According to the allegations in the Indictment[1]:

The defendants are members and associates of a drug trafficking organization (the “AK Houses Crew” or “Crew”) that sold crack cocaine in and around the AK Houses apartment complex, located at East 128th Street in the Harlem neighborhood of Manhattan.   During the period 2017 to the present, the AK Houses Crew sold hundreds of grams of crack to customers on the streets of Harlem, and crew members carried and displayed firearms in furtherance of the drug trade.  These crew members routinely sold crack in the vicinity of, among other locations, the area of the AK Houses, the Metro-North commuter rail station at East 125th Street, and Public School 30 at East 128th Street.

The leaders of the AK Houses Crew included defendants VAN WHITMORE, a/k/a “V-High,” RONALD NIXON, a/k/a “Jeter,” and BARRY WILLIAMS, a/k/a “Bistro.”  WHITMORE, NIXON, and WILLIAMS were responsible for, among other things, obtaining supplies of powder cocaine, converting the cocaine into crack, and pushing that crack to customers on the street through the Crew’s network of street-level dealers.  These leaders also maintained order and discipline within the Crew, including by using threats of violence.  Other members of the AK Houses Crew, including defendants RODNEY ROBINSON, a/k/a “Stretch,” KAPRIE LAMBERT, a/k/a “Pri,” SHAROD BELL, a/k/a “Rodo,” and IAN HAYLOCK, a/k/a “E,” served the Crew by, among other things, managing and enforcing order within the Crew’s network of street-level crack dealers, and collecting proceeds from their crack sales to finance the Crew’s operations.

The Crew’s street-level crack dealers included defendants MALIK HAWKINS, a/k/a “Leeky,” ABDOUL HANNE, a/k/a “Buylot,” MALIK BREEDLOVE, a/k/a “LB,” TYRELL MURPHY, a/k/a “Fat Cat,” and ANTHONY MCDADE, a/k/a “Pap,” each of whom obtained crack from other members of the Crew and sold the crack to customers on the street.  In addition, certain members of the AK Houses Crew, including WHITMORE, ROBINSON, HAYLOCK, BELL, and HAWKINS, used and facilitated the use of firearms in furtherance of the Crew’s crack dealing, including for the purposes of enforcing the collection of payment for drugs and to protect members of the Crew.  In the course of the narcotics conspiracy, HAYLOCK and BELL also sold firearms to undercover law enforcement officers in Harlem.

During the execution of a search warrant at NIXON’s house yesterday, law enforcement recovered a firearm, more than 80 grams of heroin belonging to NIXON, and paraphernalia for packaging narcotics for distribution.  During the execution of a search warrant at an apartment where BREEDLOVE was arrested yesterday, law enforcement recovered approximately 50 grams of crack cocaine.

The Indictment charges 12 defendants and contains two counts.  A chart containing the names, ages, residences, and charges for the defendants is set forth below.  The maximum term of imprisonment for both counts is life imprisonment.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

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

This case is being handled by the Office’s Narcotics Unit.   Assistant United States Attorneys Juliana Murray and Louis Pellegrino are in charge of the prosecution.

*                *                *

Defendant

Age

Hometown

Charges

 

VAN WHITMORE,

a/k/a “V High” 

49

Harlem, New York

 

 

Narcotics Conspiracy; Firearms Offense

 

 

 

RONALD NIXON,

a/k/a “Jeter”

 

42

New Rochelle, New York

 

 

Narcotics Conspiracy

 

 

BARRY WILLIAMS,

a/k/a “Bistro”

 

42

Bronx, New York

 

 

Narcotics Conspiracy

 

 

RODNEY ROBINSON,

a/k/a “Stretch”     

 

44

Harlem, New York

Narcotics Conspiracy; Firearms Offense

 

KAPRIE LAMBERT,

a/k/a “Pri”

22

Harlem, New York

 

 

Narcotics Conspiracy

 

 

IAN HAYLOCK,

a/k/a “E”

24

Harlem, New York

 

 

Narcotics Conspiracy; Firearms Offense

 

SHAROD BELL,

a/k/a “Rodo”

23

Harlem, New York

 

 

Narcotics Conspiracy; Firearms Offense

 

MALIK HAWKINS,

a/k/a “Leeky”

26

Harlem, New York

 

 

Narcotics Conspiracy; Firearms Offense

 

 

ABDOUL

HANNE

a/k/a “Buylot”

  

27

Harlem, New York

 

 

Narcotics Conspiracy

 

 

MALIK BREEDLOVE,

a/k/a “LB”

 

23

Harlem, New York

 

Narcotics Conspiracy

 

 

TYRELL MURPHY,

a/k/a “Fat Cat”

 

21

Harlem, New York

 

 

Narcotics Conspiracy

 

 

 

ANTHONY MCDADE,

a/k/a “Pap”

 

 

28

Bronx, New York

 

 

Narco

###

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that LATIQUE JOHNSON, a/k/a “La Brim,” a/k/a “Straight 2 Business,” a/k/a “Breezy,” a/k/a “Boss Dog,” 39, of the Bronx, New York, was sentenced today to 30 years in prison in connection with his leadership of the Blood Hound Brims, a violent street and prison gang that operated in New York City and elsewhere, and his participation in narcotics trafficking and acts of violence, including two shootings in 2012.  JOHNSON was convicted on March 27, 2019, following a five-week jury trial before Judge Gardephe, who also imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “Latique Johnson founded a notoriously violent and lawless gang from within the New York State prison system that grew to terrorize communities across New York City and New York State.  As the founder and leader of the Blood Hound Brims, Johnson recruited members based on their violent reputations and willingness to follow his orders.  Together with other members of the Blood Hound Brims, Johnson is responsible for several heinous acts of violence.  Today’s lengthy sentence sends an important message to gang members who commit violent crimes that they will be apprehended and prosecuted to the fullest extent of the law.” 

According to court documents, the evidence at trial, and statements made in court proceedings:

The Blood Hound Brims (“BHB”) were a criminal enterprise that operated principally in the greater New York area, from at least 2005 up to and including 2016.  The BHB was a faction of the Bloods street gang, which operates nationwide, and is under the New York Blood Brim Army (“NYBBA”).  The BHB operated within and around various locations in New York, including New York City, Westchester County, Elmira, and in Pennsylvania, as well as within and outside federal and state penal systems. 

The BHB used a hierarchical structure that was organized, in part, by New York City borough, and that was maintained, in part, through the payment of dues.  The founder and leader of the gang was LATIQUE JOHNSON, and other members and associates of the BHB referred to JOHNSON as the “Godfather.”  The gang was divided into several “pedigrees,” each of which had its own leadership structure that was approved by JOHNSON.  Leadership positions within the pedigrees included, among others, treasurers who collected dues from members of a particular pedigree, and individuals who performed security and disciplinary functions for the pedigree. 

Members of the BHB had regular meetings, sometimes called “pow wows” or “9-11s,” at which members were required to pay dues.  Some of the meetings were among members of a particular pedigree, and other meetings were for all members of the enterprise.  Word of the meetings was disseminated via text message, word-of-mouth, and flyers.  The BHB’s business, including rivalries with other gangs, shootings, the arrest of gang members, guns, and drugs, was regularly discussed at these meetings.  “Kitty dues” – money that paid for commissary funds, lawyers, guns, and drugs, and that served as tribute to JOHNSON – were collected at these meetings.  The BHB maintained its own rules and constitution that new members were required to learn.  Members of the BHB also used code words and secret phrases to communicate with each other both while in prison and on the street in order to avoid detection by law enforcement.   

One of the BHB’s principal objectives was to sell cocaine base – commonly known as “crack cocaine” – powder cocaine, and heroin, which members and associates of the BHB sold throughout the greater New York area and in Pennsylvania. 

Members and associates of the BHB engaged in multiple acts of violence against rival gangs.  These acts of violence included assaults and attempted murders, and were committed to protect the BHB’s drug territory, to retaliate against members of rival gangs who had encroached on the territory controlled by the BHB, and to otherwise promote the standing and reputation of the gang vis-à-vis rival gangs.  These acts of violence also included assaults and attempted murders against members and associates of the BHB itself, as part of internal power struggles within the gang.

For example, on or about January 28, 2012, in the Bronx, New York, JOHNSON, aided and abetted by his co-defendant Donnell Murray, used an AK-47 assault rifle to fire into a fried chicken restaurant where rival gang members were gathered, injuring two individuals who survived the shooting.  The violence continued in fall of 2012 when JOHNSON ordered the shooting of two other members of a rival gang, who survived.

                                    *                      *                     *                      

Donnell Murray, 39, of the Bronx, New York, was convicted following a jury trial of racketeering conspiracy, assault in aid of racketeering, narcotics conspiracy, and firearms offenses.  Murray was sentenced in November 2019 to 20 years in prison.

Brandon Green, 36, of the Bronx, New York, was convicted following a jury trial of racketeering conspiracy, narcotics conspiracy, and firearms offenses.  Green is facing a mandatory minimum of 20 years in prison and will be sentenced in 2020. 

David Cherry, 39, of the Bronx, New York, was convicted following a guilty plea to a firearms offense.  Cherry faces a mandatory minimum of seven years in prison and will be sentenced in 2020.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation, the New York City Police Department, and the Special Agents of the United States Attorney’s Office for the Southern District of New York.

The prosecution is being handled by the Violent and Organized Crime Unit of the U.S. Attorney’s Office for the Southern District of New York.  Assistant U.S. Attorneys  Jessica Feinstein, Allison Nichols, Andrew Chan, and Abigail Kurland are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Dermot Shea, the Commissioner of the New York City Police Department (“NYPD”), announced today the arrests of LAGARIA SLAUGHTER and TANNER HOWELL, both of whom are service members stationed at a base in New York State, and the unsealing of a Complaint charging SLAUGHTER and HOWELL with distributing Molly on September 1, 2018, to a young woman attending the Electric Zoo music festival in New York, who subsequently died of a drug overdose.  The Complaint also charges SLAUGHTER with conspiring to distribute Molly and LSD between May 2018 and March 2019.  SLAUGHTER and HOWELL were arrested this morning and will be presented later today in federal court in Manhattan before U.S. Magistrate Judge Sarah L. Cave.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Lagaria Slaughter and Tanner Howell supplied the dangerous drug Molly to a young concert-goer, who overdosed and died after using Molly and other drugs.  Tragically, this is not the first time my Office has charged people in connection with the overdose death of a concert-goer at the Electric Zoo festival.  Today’s arrests should serve as a dual-purpose reminder:  To those who peddle dangerous and potentially lethal drugs, this Office and the NYPD are committed to apprehending and prosecuting you.  To prospective users of these drugs, there is nothing ‘recreational’ about drugs that can kill you.”

NYPD Commissioner Dermot Shea said:  “The NYPD is committed to bringing those who commit these acts to justice. I commend the members of the Detective Borough Bronx Overdose Squad, the U.S. Attorney’s Office for the Southern District, and the FBI, who dedicated themselves to help move this case forward.”

According to the allegations in the Complaint[1]:

On September 1, 2018, a young woman (“Victim-1”) began experiencing the effects of a drug overdose after using drugs while attending the Electric Zoo music festival (the “Festival”) on Randall’s Island in Manhattan.  Victim-1 died on September 3, 2018, after being treated for the overdose at a hospital in Manhattan.  Following an investigation by the NYPD, law enforcement identified SLAUGHTER and HOWELL, both members of the U.S. military stationed at a base located in New York State (the “Base”), as individuals who distributed Molly (3,4-methyl​enedioxy​methamphetamine) to Victim-1 on September 1, 2018, while she was attending the Festival and shortly before she fatally overdosed.  Medical records show that Victim-1’s death was caused by acute intoxication from the combined effects of multiple drugs, including Molly.

Days earlier, SLAUGHTER had organized a trip to New York City with other service members to attend the Festival.  At that time, SLAUGHTER was involved in trafficking both Molly and LSD (lysergic acid diethylamide).  From May 2018 to March 2019, SLAUGHTER worked with others to sell Molly and LSD to customers on and off the Base.  While in New York City for the Festival, SLAUGHTER and another individual met HOWELL at a nightclub.  HOWELL told SLAUGHTER that he was going to the Festival the following day with a large group of friends and they wanted to buy Molly to take while at the Festival.  SLAUGHTER agreed to supply the Molly for distribution to the group.  The following day, September 1, 2018, HOWELL arranged to purchase 57 capsules of Molly from SLAUGHTER, at a total price of $560.  SLAUGHTER and another individual traveled to the Festival to sell the Molly.  HOWELL had two female members of his group – Victim-1 and her friend – meet SLAUGHTER and the other individual outside the concert entrance to retrieve the Molly to be used by the group.  HOWELL paid for the Molly via electronic payment, and SLAUGHTER provided the 57 capsules of Molly to Victim-1 and her friend.  Upon completion of the transaction, Victim-1 and her friend entered the Festival with the Molly.  Victim-1 overdosed later that day and died two days later. 

On April 24, 2019, law enforcement searched SLAUGHTER’s barracks at the Base.  Law enforcement recovered, among other things, approximately 10 capsules of Molly, 55 doses of LSD, and drug packaging materials.  Text messages recovered from SLAUGHTER’s cellphone show SLAUGHTER offering to sell hundreds of capsules of Molly to other service members on the Base. 

*                *                *

SLAUGHTER, 25, of Jefferson County, New York, is charged with one count of conspiring to distribute Molly and LSD, and one count of distributing and possessing with intent to distribute Molly.  Both counts carry a maximum sentence of 20 years in prison. 

HOWELL, 22, of Jefferson County, New York, is charged with one count of distributing and possessing with intent to distribute Molly, 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 would be determined by the judge.

Mr. Berman praised the outstanding investigative work of the NYPD.

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Dominic A. Gentile and Peter J. Davis are 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.

 

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[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.

 

Geoffrey S. Berman, United States Attorney for the Southern District of New York, Dermot Shea, the Commissioner of the Police Department for the City of New York (“NYPD”), Philip R. Bartlett, the Inspector-in-Charge of the New York Division of the U.S. Postal Inspection Service (“USPIS”), Patrick Freaney, the Assistant Special Agent-in-Charge of the New York Field Office of the United States Secret Service (“USSS”), and Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced the unsealing today of a criminal Complaint charging 15 defendants with conspiracy to commit wire fraud and bank fraud.  Four defendants were arrested today in the District of Maryland, the District of Columbia, and the Eastern District of Virginia, and were to be presented today in those districts’ federal courts.  One defendant is in state custody and will be presented at a later date.  Ten defendants remain at large.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants conspired to steal millions of dollars by stealing identities, opening fictitious bank accounts, and depositing stolen checks – or conning victims to wire funds – into those accounts.  All told, as alleged, the scheme netted more than $18 million and victimized numerous individuals and businesses.  Thanks to the combined efforts of our law enforcement partners, the game is up.”

NYPD Commissioner Dermot Shea said:  “This case shows that as criminals move into the areas of cyber-related frauds, law enforcement is following.  I want to thank the members of the NYPD’s Financial Crimes Task Force, working alongside our federal partners and prosecutors in the U.S. Attorney’s office, in the Southern District, for their success today in this important investigation.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “This Case is an excellent example of interagency cooperation and collaboration.  Those who choose to break the law will be swiftly brought to justice to answer for their crimes.”

USSS Assistant Special Agent-in-Charge Patrick Freaney said:  “The success of this investigation illustrates the commitment of the U.S. Secret Service in working with our law enforcement partners to confront the continued threat of cyber enabled financial crimes.  The Secret Service remains dedicated in actively pursuing those whose actions threaten the financial security of individuals, businesses, and the financial infrastructure of the United States.”

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “As alleged in the criminal complaint, these 15 defendants used an elaborate bank and wire fraud scheme to steal over $18 million from victim.  HSI New York will continue to work tirelessly to investigate criminals who target our citizens.  Through our law enforcement partnerships, to include the NYPD, USPIS and USSS as well as the prosecutors at the U.S. Attorney’s Office, Southern District of New York, HSI will work to help maintain the integrity of our financial systems.”

As alleged in the criminal Complaint:[1] 

OLADAYO OLADOKUN, FAROUK KUKOYI, BALDWIN OSUJI, HENRY OGBUOKIRI, JOSHUA HICKS, ANTHONY LEE NELSON, DERRICK BANKS, IBRAHIIMA DOUKOURE, JAMAR SKEETE, PAUL YAW OSEI JR., KOWAN POOLE, DARREL WILLIAMS, DARYL BARTLEY, GARNET STEVEN MURRAY-SESAY, a/k/a “Steven Garnet Murray-Sesay,” and ANDREW HEAVEN participated in an $18 million fraud scheme consisting of three key phases.  First, members of the conspiracy opened more than 60 business bank accounts using the real personal identifying information, including names and social security numbers, of identity theft victims.  Second, members of the conspiracy deposited money into these bank accounts that they obtained by defrauding victims.  Third, members of the conspiracy accessed the fraud proceeds by transferring the proceeds into other bank accounts or by withdrawing cash. 

Members of the conspiracy typically defrauded their victims in one of two ways.  In some instances, members of the conspiracy deposited stolen or forged checks.  For example, members of the conspiracy obtained three checks that had been mailed by a national sports league from New York, New York, and deposited those stolen checks into bank accounts that were opened in the names of the intended recipients.  In other instances, members of the conspiracy deceived victims into making electronic transfers.  For example, a member of the conspiracy posing as a victim’s financial adviser caused the victim to wire money from a bank branch in New York, New York, to a bank account controlled by members of the conspiracy. 

To date, law enforcement has identified more than 100 fraudulent transactions in furtherance of the scheme, totaling more than $18 million. 

*                *                *

All defendants – OLADOKUN, 46, KUKOYI, 33, OSUJI, 31, OGBUOKIRI, 32, HICKS, 24, NELSON, 28, BANKS, 27, DOUKOURE, 61, SKEETE, 36, OSEI, 32, POOLE, 29, WILLIAMS, 62, BARTLEY, 58, MURRAY-SESAY, 35, and HEAVEN, 49 – are charged with conspiracy to commit bank fraud and wire fraud, which carries a maximum sentence of 30 years in prison.  Seven defendants – OGBUOKIRI, HICKS, BANKS, POOLE, WILLIAMS, BARTLEY, and MURRAY-SESAY – are also charged with aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Berman praised the outstanding work of the Financial Crimes Task Force of the NYPD and the USSS, the Mail Theft Team of the USPIS, and the Dark Web and Crypto Currency Group of HSI.  Mr. Berman also thanked the Washington Field Office of the USSS for its assistance in the apprehension of the defendants. 

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Jonathan D. Larsen, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that MARC A. SEEDORF pled guilty today to tax evasion before U.S. District Judge Cathy Seibel in White Plains federal court. 

U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, for years Marc Seedorf flouted his obligations under the law to file tax returns and to pay taxes.  This was conduct that would be shameful for anyone, and all the more so from an attorney and a member of the judiciary.  Now Seedorf awaits sentencing for his crime.”

IRS-CI Special Agent in Charge Jonathan D. Larsen said:  “As a Lewisboro Town Justice, Mr. Seedorf knows the consequences when laws are broken.  To maintain faith in our nation’s tax system, honest taxpayers need to be reassured that everyone is paying their fair share.  IRS-CI, together with the Department of Justice, will investigate and prosecute those who break this country’s tax laws.”

According to the allegations contained in the Information:

During the relevant time period of 2009 through October 2019, SEEDORF was a Town Justice for the Town of Lewisboro, New York.  SEEDORF also received income from the private practice of law. 

SEEDORF did not file U.S. Individual Income Tax Returns for the tax years 2005 through 2015, despite being required to do so.  As a result of the income SEEDORF earned from 2005 through 2008, he incurred a federal income tax liability of approximately $323,000, including interest and penalties (“SEEDORF’s 2005 Through 2008 Tax Liability”).  As a result of the income SEEDORF earned from 2009 through 2013, he incurred a federal income tax liability of approximately $164,000, including interest and penalties (“SEEDORF’s 2009 Through 2013 Tax Liability”). 

In early August 2012, SEEDORF received $1,524,116 in connection with the settlement of a civil lawsuit.  At SEEDORF’s request, the law firm that represented SEEDORF in the lawsuit (“Law Firm-1”) deposited the settlement proceeds into its attorney trust account, to be disbursed to SEEDORF at an unspecified later date.  In the following years, SEEDORF instructed Law Firm-1 to disburse portions of the settlement proceeds to accounts other than his personal bank account, including his law firm’s operating account, his law firm’s attorney trust account, and his brother-in-law’s personal account, in order to disguise the source of funds he used to make payments to the IRS and other creditors, and the existence of the remainder of the settlement proceeds.

From January 2010 through June 2013, the IRS attempted to collect SEEDORF’s 2005 Through 2008 Tax Liability, including by mailing letters to SEEDORF and requesting documents and records from SEEDORF.  SEEDORF failed to provide any records to the IRS or make any payment toward SEEDORF’s 2005 Through 2008 Tax Liability. 

In June 2013, after the IRS initiated a process to place a levy upon an investment account held by SEEDORF, he instructed Law Firm-1 to wire $400,000 of the settlement proceeds to his own law firm’s attorney trust account, from which he then paid his outstanding 2005 Through 2008 Tax Liability.  During a conversation with an IRS Revenue Officer concerning the source of these funds, SEEDORF falsely stated that he had borrowed the funds from his own law firm’s trust account.

During a December 2014 IRS interview, an IRS Revenue Agent asked SEEDORF whether he had received any non-taxable income during the period from 2009 through 2013.  During the interview, SEEDORF never disclosed the 2012 law suit settlement or the existence of the more than $540,000 of settlement proceeds that remained in Law Firm-1’s attorney trust account at that time.

SEEDORF pled guilty to one count of tax evasion, 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.

SEEDORF is scheduled to be sentenced by Judge Seibel on March 24, 2020, at 2:30 p.m.

Mr. Berman praised the investigative work of the IRS-CI.

This case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorney Jeffrey C. Coffman is in charge of the prosecution.   

Telefonaktiebolaget LM Ericsson (Ericsson or the Company), a multinational telecommunications company headquartered in Stockholm, Sweden, has agreed to pay total penalties of more than $1 billion to resolve the government’s investigation into violations of the Foreign Corrupt Practices Act (FCPA) arising out of the Company’s scheme to make and improperly record tens of millions of dollars in improper payments around the world.  This includes a criminal penalty of over $520 million and approximately $540 million to be paid to the U.S. Securities and Exchange Commission (SEC) in a related matter.  An Ericsson subsidiary pleaded guilty today for its role in the scheme. 

Ericsson entered into a deferred prosecution agreement with the department in connection with a criminal information filed today in the Southern District of New York charging the Company with conspiracies to violate the anti-bribery, books and records, and internal controls provisions of the FCPA.  The Ericsson subsidiary, Ericsson Egypt Ltd, pleaded guilty today in the Southern District of New York to a one-count criminal information charging it with conspiracy to violate the anti-bribery provisions of the FCPA.  The case is assigned to U.S. District Judge Alison J. Nathan of the Southern District of New York.  Pursuant to its agreement with the department, Ericsson has committed to pay a total criminal penalty of $520,650,432 within 10 business days of the sentencing hearing, and has agreed to the imposition of an independent compliance monitor. 

“Ericsson’s corrupt conduct involved high-level executives and spanned 17 years and at least five countries, all in a misguided effort to increase profits,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  “Such wrongdoing called for a strong response from law enforcement, and through a tenacious effort with our partners in the Southern District of New York, the SEC, and the IRS, today’s action not only holds Ericsson accountable for these schemes, but should deter other companies from engaging in similar criminal conduct.”

“Today, Swedish telecom giant Ericsson has admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business,” said U.S. Attorney Geoffrey S. Berman of the Southern District of New York.  “Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks.’  Today’s guilty plea and surrender of over a billion dollars in combined penalties should communicate clearly to all corporate actors that doing business this way will not be tolerated.”

“Implementing strong compliance systems and internal controls are basic principles that international companies must follow to steer clear of illegal activity,” said Don Fort, Chief, IRS Criminal Investigation.  “Ericsson’s shortcomings in these areas made it easier for its executives and employees to pay bribes and falsify its books and records.  We will continue to pursue cases such as these in order to preserve a global commerce system free of corruption.”

According to admissions by Ericsson, beginning in 2000 and continuing until 2016, the Company conspired with others to violate the FCPA by engaging in a longstanding scheme to pay bribes, to falsify books and records and to fail to implement reasonable internal accounting controls.  Ericsson used third party agents and consultants to make bribe payments to government officials and/or to manage off-the-books slush funds.  These agents were often engaged through sham contracts and paid pursuant to false invoices, and the payments to them were improperly accounted for in Ericsson’s books and records.  The resolutions cover the Company’s criminal conduct in Djibouti, China, Vietnam, Indonesia and Kuwait. 

Between 2010 and 2014, Ericsson, via a subsidiary, made approximately $2.1 million in bribe payments to high-ranking government officials in Djibouti in order to obtain a contract with the state-owned telecommunications company valued at approximately €20.3 million to modernize the mobile networks system in Djibouti.  In order to effectuate the scheme, an Ericsson subsidiary entered into a sham contract with a consulting company and approved fake invoices to conceal the bribe payments.  Ericsson employees also completed a draft due diligence report that failed to disclose the spousal relationship between the owner of the consulting company and one of the high-ranking government officials.

In China, between 2000 and 2016, Ericsson subsidiaries caused tens of millions of dollars to be paid to various agents, consultants and service providers, a portion of which was used to fund a travel expense account in China that covered gifts, travel and entertainment for foreign officials, including customers from state-owned telecommunications companies.  Ericsson used the travel expense account to win business with Chinese state-owned customers.  In addition, between 2013 and 2016, Ericsson subsidiaries made payments of approximately $31.5 million to third party service providers pursuant to sham contracts for services that were never performed.  The purpose of these payments was to allow Ericsson’s subsidiaries in China to continue to use and pay third party agents in China in contravention of Ericsson’s policies and procedures.  Ericsson knowingly mischaracterized these payments and improperly recorded them in its books and records.

In Vietnam, between 2012 and 2015, Ericsson subsidiaries made approximately $4.8 million in payments to a consulting company in order to create off-the-books slush funds, associated with Ericsson’s customers in Vietnam, that were used to make payments to third parties who would not be able to pass Ericsson’s due diligence processes.  Ericsson knowingly mischaracterized these payments and improperly recorded them in Ericsson’s books and records.  Similarly, in Indonesia, between 2012 and 2015, an Ericsson subsidiary made approximately $45 million in payments to a consulting company in order to create off-the-books slush funds, and concealed the payments on Ericsson’s books and records.

In Kuwait, between 2011 and 2013, an Ericsson subsidiary promised a payment of approximately $450,000 to a consulting company at the request of a sales agent, and then entered into a sham contract with the consulting company and approved a fake invoice for services that were never performed in order to conceal the payment.  The sales agent provided an Ericsson employee with inside information about a tender for the modernization of a state-owned telecommunications company’s radio access network in Kuwait.  An Ericsson subsidiary was awarded the contract valued at approximately $182 million; Ericsson subsequently made the $450,000 payment to the consulting company and improperly recorded it in its books.

As part of the deferred prosecution agreement, Ericsson has agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct, including of individuals; to enhance its compliance program; and to retain an independent compliance monitor for three years.

The department reached this resolution with Ericsson based on a number of factors, including the Company’s failure to voluntarily disclose the conduct to the department and the nature and seriousness of the offense, which included FCPA violations in five countries and the involvement of high-level executives at the Company.  Ericsson received partial credit for its cooperation with the department’s investigation, which included conducting a thorough internal investigation, making regular factual presentations to the department, voluntarily making foreign-based employees available for interviews in the United States, producing extensive documentation and disclosing some conduct of which the department was previously unaware. 

Ericsson did not receive full credit for cooperation and remediation because it did not disclose allegations of corruption with respect to two relevant matters; it produced certain materials in an untimely manner; and it did not fully remediate, including by failing to take adequate disciplinary measures with respect to certain employees involved in the misconduct.  The Company has been enhancing and committed to further enhance its compliance program and internal accounting controls.  Accordingly, the total criminal penalty reflects a 15 percent reduction off the bottom of the applicable United States Sentencing Guidelines fine range.

In the related matter, Ericsson agreed to pay to the SEC disgorgement and prejudgment interest totaling approximately $540 million.

The case is being investigated by IRS-CI.  Acting Assistant Chief Andrew Gentin and Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Abramowicz of the Southern District of New York are prosecuting the case.  The Criminal Division’s Office of International Affairs provided assistance.

The department appreciates the significant cooperation provided by the SEC and law enforcement authorities in Sweden in this case.

The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York (“SDNY”), Brian A. Benczkowski, the Assistant Attorney General for the Criminal Division of the Department of Justice (“DOJ”), and Don Fort, Chief of the Criminal Investigation Division, Internal Revenue Service (“IRS-CI”), announced today the filing of criminal charges against TELEFONAKTIEBOLAGET LM ERICSSON (“ERICSSON”), a multinational telecommunications company headquartered in Sweden, and its subsidiary ERICSSON EGYPT LTD. (“ERICSSON EGYPT”) for conspiring to violate the Foreign Corrupt Practices Act (“FCPA”) by bribing government officials, falsifying books and records, and failing to implement reasonable internal accounting controls.  The resolutions cover criminal conduct in Djibouti, China, Vietnam, Indonesia, and Kuwait. 

Mr. Berman also announced that in connection with the filed charges, ERICSSON EGYPT pled guilty today before United States District Judge Alison J. Nathan, and SDNY and DOJ entered into a deferred prosecution agreement (“DPA”) with ERICSSON.  Pursuant to the DPA, ERICSSON admitted to participating in the charged conspiracy.  ERICSSON will pay a total criminal penalty of $520,650,432 to the United States, which includes a $9,520,000 criminal fine that ERICSSON agreed to pay on behalf of ERICSSON EGYPT.  ERICSSON also agreed to implement rigorous internal controls, retain an independent compliance monitor for a term of three years, and cooperate fully with the Government in any ongoing investigations.

In related proceedings, ERICSSON reached a settlement with the U.S. Securities and Exchange Commission (“SEC”).  Under the terms of its civil resolution with the SEC, ERICSSON agreed to pay $539,920,000 in disgorgement of profits and prejudgment interest, which, together with the criminal penalty paid to the United States, yields total criminal and regulatory penalties to be paid by ERICSSON of $1,060,570,432.

U.S. Attorney Geoffrey S. Berman said:  “Today Swedish telecom giant Ericsson has admitted to a years-long campaign of corruption in five countries to solidify its grip on telecommunications business.  Through slush funds, bribes, gifts, and graft, Ericsson conducted telecom business with the guiding principle that ‘money talks.’  Today’s guilty plea and surrender of over a billion dollars in combined penalties should communicate clearly to all corporate actors that doing business this way will not be tolerated.”

Assistant Attorney General Brian A. Benczkowski said:  “Ericsson’s corrupt conduct involved high-level executives and spanned 17 years and at least five countries, all in a misguided effort to increase profits.  Such wrongdoing called for a strong response from law enforcement, and through a tenacious effort with our partners in the Southern District of New York, the SEC, and the IRS, today’s action not only holds Ericsson accountable for these schemes, but should deter other companies from engaging in similar criminal conduct.”

IRS Criminal Investigation Chief Don Fort said:  “Implementing strong compliance systems and internal controls are basic principles that international companies must follow to steer clear of illegal activity.  Ericsson’s shortcomings in these areas made it easier for its executives and employees to pay bribes and falsify its books and records.  We will continue to pursue cases such as these in order to preserve a global commerce system free of corruption.”

According to the allegations contained in the criminal Informations, which were filed today in Manhattan federal court, the statement of facts set forth in the DPA, and other publicly available information:

From approximately 2000 to 2016, ERICSSON and ERICSSON EGYPT, through various executives, employees, and affiliated entities, used third-party agents and consultants to bribe foreign government officials and/or manage off-the-books slush funds in countries where it pursued contracts to conduct telecommunications business.  The agents were often engaged through sham contracts and paid pursuant to false invoices, with those payments accounted for improperly in ERICSSON’s books and records.

In Djibouti, from approximately 2010 to 2014, ERICSSON, via subsidiaries, paid approximately $2.1 million in bribes to high-ranking government officials in order to obtain a contract valued at approximately €20.3 million.  To conceal the bribe payments, an ERICSSON subsidiary entered into a sham contract with a consulting company and approved fake invoices to conceal the bribe payments, and ERICSSON employees completed a draft due diligence report that failed to disclose that the owner of the consulting company was married to a high-ranking official in Djibouti’s government.

In China, from approximately 2000 to 2016, ERICSSON, via subsidiaries, paid various agents, consultants, and service providers tens of millions of dollars, a portion of which was used to fund an expense account that covered gifts, travel, and entertainment for foreign officials.  ERICSSON used the expense account to win business with Chinese state-owned customers.  In addition, from approximately 2013 to 2016, ERICSSON subsidiaries paid third-party service providers approximately $31.5 million pursuant to sham contracts for services that were never performed.  The payments were intended to allow ERICSSON’s subsidiaries to continue to use and pay third-party agents in China in contravention of ERICSSON’s policies and procedures.  ERICSSON knowingly mischaracterized the payments and improperly recorded them in its books and records.

In Vietnam, from approximately 2012 to 2015, ERICSSON, via subsidiaries, paid a consulting company approximately $4.8 million in order to create off-the-books slush funds.  The slush funds were then used to make payments to third parties who would not be able to pass ERICSSON’s due diligence processes.  ERICSSON knowingly mischaracterized these payments, which were made pursuant to sham contracts for services that were never performed, and improperly recorded them in ERICSSON’s books and records. 

In Indonesia, from approximately 2012 to 2015, ERICSON, via a subsidiary, paid a consulting company approximately $45 million in order to create off-the-books slush funds.  ERICSSON took active steps to conceal the payments, which were made pursuant to sham contracts for services that were never performed.

In Kuwait, from approximately 2011 to 2013, ERICSSON, via a subsidiary, paid a consulting company approximately $450,000 at the request of a sales agent who had given ERICSSON inside information about the bidding process for a lucrative contract with a state-owned telecommunications company.  ERICSSON made the payment after one of its subsidiaries was awarded the contract, which was valued at approximately $182 million.  The payment was made pursuant to a sham contract for services that were never performed.

*                *                *

ERICSSON EGYPT was charged with, and pled guilty to, one count of conspiring to violate the anti-bribery provisions of the FCPA.  ERICSSON was charged in a two-count Information with one count of conspiracy to violate the anti-bribery provisions of the FCPA and one count of conspiracy to violate the internal-controls and books-and-records provisions of the FCPA.

Mr. Berman thanked the Fraud Section of the DOJ’s Criminal Division for its collaboration, and praised the investigative efforts of IRS-CI and law enforcement authorities in Sweden.  He also thanked the SEC’s Division of Enforcement for its significant assistance and cooperation in the investigation.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the FCPA Unit of the Fraud Section of DOJ’s Criminal Division.  Assistant U.S. Attorneys David Abramowicz and Won S. Shin, and Acting Assistant Chief Andrew Gentin and Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section, are in charge of the prosecution.

The Department of Justice announced today that Sajmir Alimehmeti, aka “Abdul Qawii,” 26, was sentenced to 22 years in prison based on convictions for attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS), and attempting to fraudulently procure a U.S. passport to facilitate an act of international terrorism.  Alimehmeti pleaded guilty on Feb. 21, 2018, before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

“Alimehmeti was determined to support ISIS.  He attempted to travel overseas to support the terrorist group, he assisted another person he believed to be a fellow ISIS supporter to prepare to purportedly travel to join ISIS, he lied on his passport application so he could get a clean passport to ease his efforts to travel overseas to join ISIS, and while in pretrial detention, he conspired with another terrorist to spread ISIS propaganda.  With today’s sentence, he is being held accountable for his crimes,” said Assistant Attorney General for National Security John C. Demers.  “The National Security Division will continue to work with our partners to identify, disrupt and hold accountable those who seek to provide material support to designated foreign terrorist organizations.  I want to thank the agents, analysts, and prosecutors who are responsible for this case.”

“Bronx resident Sajmir Alimehmeti took the position of an adversary to the United States and its values.  Alimehmeti’s contempt for the U.S. led him to travel overseas to support ISIS’s terror campaign, eventually purchasing military-type weapons and assisting another to get travel documents, equipment, and encryption technology to fight with ISIS in Syria,” said U.S. Attorney Geoffrey S. Berman for the Southern District of New York.  “Even after his incarceration, Alimemehti continued his supportive conduct for ISIS by working with convicted Chelsea bomber Ahmad Khan Rahimi, to distribute ISIS propaganda in prison.  I sincerely commend our law enforcement partners for their commitment to detecting and apprehending those who support the disruption of American life through brazen acts of terrorism.” 

“Sajmir Alimehmeti was so committed to supporting and furthering the ISIS agenda, that when his multiple attempts to travel overseas raised enough red flags to deny him entry, he turned to assisting someone he thought shared his same objective. Unbeknownst to him, however, that someone was an undercover employee,” said FBI Assistant Director-in-Charge William F. Sweeney Jr. “Today’s sentencing is a welcome end to this case, and another successful outcome for the many agents, detectives, and analysts on FBI’s JTTF in New York. Their work and our extensive partnerships are essential to keeping New York City and the nation safe.”

“Sajmir Alimehmeti betrayed the country he called home by trying to travel overseas to join ISIS, a brutal terrorist group at war with the United States,” said NYPD Police Commissioner Dermot F. Shea. “When that failed, Alimehmeti deliberately assisted another individual he believed was traveling to join ISIS. At the same time, the investigation revealed he was acquiring tactical knives, handcuffs and equipment indicative of efforts to prepare for an attack here in New York City. This case is another example of the relentless efforts of the Joint Terrorism Task Force and the NYPD’s Intelligence Bureau to prevent terrorism before it occurs.”

As reflected in the criminal Complaint, Superseding Indictment, court filings, and statements during court proceedings:

In October 2014, Alimehmeti attempted to enter the United Kingdom but was denied entry after U.K. authorities found camouflage clothing and nunchucks in his luggage.  About two months later, in December 2014, Alimehmeti was again denied entry into the United Kingdom, this time after U.K. authorities found that his cellphone contained images of ISIS flags.  Further forensic examination of the contents of the cellphone and Alimehmeti’s laptop computer showed numerous indicia of Alimehmeti’s support for ISIS, including a photograph of Alimehmeti with an ISIS flag in the background, images of ISIS fighters in the Middle East, a photograph of Alimehmeti making a gesture of support for ISIS, various files relating to jihad and martyrdom, and an online messaging exchange in which Alimehmeti attempted to assist another ISIS supporter to travel to Syria to join ISIS, by providing contact information for an ISIS affiliate who could facilitate the travel.

After returning to the United States, Alimehmeti continued to support ISIS.  Among other things, Alimehmeti displayed an ISIS flag in his apartment in the Bronx and, in the course of recorded meetings with undercover law enforcement employees, Alimehmeti played multiple pro-ISIS propaganda videos on his computer and his cellphone, including videos of ISIS fighters decapitating prisoners, and Alimehmeti also indicated that he was interested in radicalizing other individuals in the Bronx area.  Alimehmeti also made repeated purchases of combat knives and other military-type equipment, including masks, handcuffs, a pocket chainsaw, a wire pocket saw, and a rucksack designed for tactical combat.  Alimehmeti stockpiled such equipment at his apartment in the Bronx.

In October 2015, Alimehmeti applied for a U.S. passport, falsely claiming in the application that his previous passport had been lost.  Alimehmeti later told an undercover law enforcement employee that his prior passport had not been lost and, instead, that he was applying for a new passport because he believed the rejection stamps in his existing passport resulting from his attempted entries into the United Kingdom would make it difficult to travel to ISIS territory. 

In May 2016, Alimehmeti attempted to assist an individual who was purportedly traveling from New York to Syria to train and fight with ISIS but who was actually an undercover law enforcement employee (the “UC”).  On May 17, 2016, Alimehmeti met with the UC in Manhattan.  Alimehmeti helped the UC locate stores so the UC could purchase supplies to use while traveling to, and fighting with, ISIS, including a cellphone, boots, a compass, a bag, and a flashlight, among other items.  Alimehmeti then brought the UC to a hotel in Queens so the UC could purportedly meet with an individual who was preparing travel documents that the UC would use to travel to Syria to join ISIS.  Alimehmeti gave the UC a piece of paper with his name and contact information, and asked the UC to provide that information to the purported document facilitator.  Alimeheti explained that he wanted to travel to Syria and join ISIS, stating “I’m ready to . . . go with you man . . . you know I would.  I’m done with this place.”  After leaving the hotel in Queens, Alimeheti brought the UC to JFK Airport, via public transportation, so the UC could begin the purported journey to ISIS.

Following Alimehmeti’s arrest on the charges in this case in May 2016, the FBI executed a search of Alimehmeti’s Bronx apartment pursuant to a judicially authorized search warrant.  The FBI found in the apartment, among other things, an ISIS flag that was displayed on a wall in the apartment.

In 2017, while Alimehmeti was incarcerated and awaiting trial, law enforcement learned that Alimehmeti had worked with Ahmad Khan Rahimi inside the prison to aggregate and distribute terrorist propaganda that was part of the evidence in their respective cases and produced to them during discovery.  Rahimi was sentenced to life in prison, in February 2018, for planting a series of bombs in New York and New Jersey in September 2016.  Law enforcement also intercepted a letter that Alimhemeti sent to Rahimi, after their propaganda-distribution scheme inside the jail was thwarted, in which Alimehmeti referred to himself as the “ISIS balla,” indicated that he had destroyed evidence of their propaganda distribution efforts, and expressed hope that both convicted terrorists would ultimately achieve so-called martyrdom through another act of terrorism.

In addition to the prison term, Alimehmeti was also sentenced to five years supervised release.

Assistant Attorney General Demers and Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department, the NYPD’s Intelligence Division, the Department of Justice’s Office of International Affairs, the Albania State Police, and the Metropolitan Police Service’s Counter Terrorism Command of London, United Kingdom. 

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Emil J. Bove III and George D. Turner are in charge of the case, with assistance from Trial Attorney Joseph Attias of the National Security Division’s Counterterrorism Section.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, Assistant Attorney General for National Security, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Dermot F. Shea, Commissioner of the New York City Police Department (“NYPD”), announced today that SAJMIR ALIMEHMETI, a/k/a “Abdul Qawii,” was sentenced to 22 years in prison based on convictions for attempting to provide material support to the Islamic State of Iraq and al-Sham (“ISIS”), and for attempting to fraudulently procure a U.S. passport to facilitate an act of international terrorism.  ALIMEHMETI pled guilty on February 21, 2018, before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Bronx resident Sajmir Alimehmeti took the position of an adversary to the United States and its values.  Alimehmeti’s contempt for the U.S. led him to travel overseas to support ISIS’s terror campaign, eventually purchasing military-type weapons and assisting another to get travel documents, equipment, and encryption technology to fight with ISIS in Syria.  Even after his incarceration, Alimemehti continued his supportive conduct for ISIS by working with convicted Chelsea bomber Ahmad Khan Rahimi, to distribute ISIS propaganda in prison.  I sincerely commend our law enforcement partners for their commitment to detecting and apprehending those who support the disruption of American life through brazen acts of terrorism.” 

Assistant Attorney General John C. Demers said:  “Alimehmeti was determined to support ISIS.  He attempted to travel overseas to support the terrorist group, he assisted another person he believed to be a fellow ISIS supporter to prepare to purportedly travel to join ISIS, he lied on his passport application so he could get a clean passport to ease his efforts to travel overseas to join ISIS, and while in pretrial detention, he conspired with another terrorist to spread ISIS propaganda.  With today’s sentence, he is being held accountable for his crimes.  The National Security Division will continue to work with our partners to identify, disrupt and hold accountable those who seek to provide material support to designated foreign terrorist organizations.  I want to thank the agents, analysts, and prosecutors who are responsible for this case.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Sajmir Alimehmeti was so committed to supporting and furthering the ISIS agenda, that when his multiple attempts to travel overseas raised enough red flags to deny him entry, he turned to assisting someone he thought shared his same objective.  Unbeknownst to him, however, that someone was an undercover employee.  Today’s sentencing is a welcome end to this case, and another successful outcome for the many agents, detectives, and analysts on FBI’s JTTF in New York.  Their work and our extensive partnerships are essential to keeping New York City and the nation safe.”

NYPD Commissioner Dermot F. Shea said:  “Sajmir Alimehmeti betrayed the country he called home by trying to travel overseas to join ISIS, a brutal terrorist group at war with the United States.  When that failed, Alimehmeti deliberately assisted another individual he believed was traveling to join ISIS.  At the same time, the investigation revealed he was acquiring tactical knives, handcuffs and equipment indicative of efforts to prepare for an attack here in New York City.  This case is another example of the relentless efforts of the Joint Terrorism Task Force and the NYPD’s Intelligence Bureau to prevent terrorism before it occurs.”

As reflected in the criminal Complaint, Superseding Indictment, court filings, and statements during court proceedings:

In October 2014, ALIMEHMETI attempted to enter the United Kingdom but was denied entry after U.K. authorities found camouflage clothing and nunchucks in his luggage.  Approximately two months later, in December 2014, ALIMEHMETI was again denied entry into the United Kingdom, this time after U.K. authorities found that his cellphone contained images of ISIS flags.  Further forensic examination of the contents of the cellphone and ALIMEHMETI’s laptop computer showed numerous indicia of ALIMEHMETI’s support for ISIS, including a photograph of ALIMEHMETI with an ISIS flag in the background, images of ISIS fighters in the Middle East, a photograph of ALIMEHMETI making a gesture of support for ISIS, various files relating to jihad and martyrdom, and an online messaging exchange in which ALIMEHMETI attempted to assist another ISIS supporter to travel to Syria to join ISIS by providing contact information for an ISIS affiliate who could facilitate the travel.

After returning to the United States, ALIMEHMETI continued to support ISIS.  Among other things, ALIMEHMETI displayed an ISIS flag in his apartment in the Bronx and, in the course of recorded meetings with undercover law enforcement employees, ALIMEHMETI played multiple pro-ISIS propaganda videos on his computer and his cellphone, including videos of ISIS fighters decapitating prisoners, and ALIMEHMETI also indicated that he was interested in radicalizing other individuals in the Bronx area.  ALIMEHMETI also made repeated purchases of combat knives and other military-type equipment, including masks, handcuffs, a pocket chainsaw, a wire pocket saw, and a rucksack designed for tactical combat.  ALIMEHMETI stockpiled such equipment at his apartment in the Bronx.

In October 2015, ALIMEHMETI applied for a U.S. passport, falsely claiming in the application that his previous passport had been lost.  ALIMEHMETI later told an undercover law enforcement employee that his prior passport had not been lost and, instead, that he was applying for a new passport because he believed the rejection stamps in his existing passport resulting from his attempted entries into the United Kingdom would make it difficult to travel to ISIS territory. 

In May 2016, ALIMEHMETI attempted to assist an individual who was purportedly traveling from New York to Syria to train and fight with ISIS but who was actually an undercover law enforcement employee (the “UC”).  On May 17, 2016, ALIMEHMETI met with the UC in Manhattan.  ALIMEHMETI helped the UC locate stores so the UC could purchase supplies to use while traveling to, and fighting with, ISIS, including a cellphone, boots, a compass, a bag, and a flashlight, among other items.  ALIMEHMETI then brought the UC to a hotel in Queens so the UC could purportedly meet with an individual who was preparing travel documents that the UC would use to travel to Syria to join ISIS.  ALIMEHMETI gave the UC a piece of paper with his name and contact information, and asked the UC to provide that information to the purported document facilitator.  ALIMEHETI explained that he wanted to travel to Syria and join ISIS, stating “I’m ready to . . . go with you man . . . you know I would.  I’m done with this place.”  After leaving the hotel in Queens, ALIMEHETI brought the UC to JFK Airport, via public transportation, so the UC could begin the purported journey to ISIS.

Following ALIMEHMETI’s arrest on the charges in this case in May 2016, the FBI executed a search of ALIMEHMETI’s Bronx apartment pursuant to a judicially authorized search warrant.  The FBI found in the apartment, among other things, an ISIS flag that was displayed on a wall in the apartment.

In 2017, while ALIMEHMETI was incarcerated and awaiting trial, law enforcement learned that ALIMEHMETI had worked with Ahmad Khan Rahimi inside the prison to aggregate and distribute terrorist propaganda that was part of the evidence in their respective cases and produced to them during discovery.  Rahimi was sentenced to life in prison, in February 2018, for planting a series of bombs in New York and New Jersey in September 2016.  Law enforcement also intercepted a letter that ALIMHEMETI sent to Rahimi, after their propaganda-distribution scheme inside the jail was thwarted, in which ALIMEHMETI referred to himself as the “ISIS balla,” indicated that he had destroyed evidence of their propaganda distribution efforts, and expressed hope that both convicted terrorists would ultimately achieve so-called martyrdom through another act of terrorism.

*                      *                      *

In addition to the prison term, ALIMEHMETI, 26, of the Bronx, was also sentenced to five years of supervised release. 

Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state and local agencies; the NYPD’s Intelligence Division; the Department of Justice’s Office of International Affairs; the Albania State Police; and the Metropolitan Police Service’s Counter Terrorism Command of London, United Kingdom.  Mr. Berman also thanked the Counterterrorism Section of the Department of Justice’s National Security Division.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Emil J. Bove III and George D. Turner are in charge of the case, with assistance from Trial Attorney Joseph Attias of the National Security Division’s Counterterrorism Section.     

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the arrest of PATRICK EDWIN GORYCHKA for distributing child pornography.  GORYCHKA was arrested yesterday and presented before U.S. Magistrate Judge Judith McCarthy in White Plains federal court and released on bail.

 According to the Complaint[1] filed yesterday in White Plains federal court:           

In October 2019, the Federal Bureau of Investigation (“FBI”) received information from an FBI Online Undercover Employee (“UC-1”) concerning UC-1’s communications with an individual using the Kik user name “epg84” (“User-1”) in a Kik chat room known to be frequented by individuals with a sexual interest in children.  UC-1 identified himself as a 48-year-old uncle who had engaged in sex acts with his niece.  User-1, who identified himself as “Eric G.,” asked UC-1 for photos of UC-1’s niece.  UC-1 told User-1 that UC-1 had met a “pedo mom” (“UC-2”) in New York.  UC-1 told User-1 that “she keeps kids of illegals while they work for a couple weeks” and “makes some $ on the side.”  User-1 stated, “Omg that’s hot” and asked UC-1 to connect him to UC-2.   

Thereafter, UC-2, going by the name “Jane,” and User-1 engaged in numerous communications from in or about October 31, 2019, through in or about November 16, 2019.  During these communications, User-1 said he was interested in “preteens” and told UC-2, “I heard that you could potentially facilitate certain things.”  User-1 said that he was interested in a “similar setup” as UC-1 and told UC-2, “I have money.” 

On November 2, 2019, User-1 transmitted two links to Mega, a New Zealand-based cloud storage platform that permits users to store and share ESI, including images and videos. [2]  Both links contained numerous images and videos of children engaging in sexually explicit activity.

*                *                *

GORYCHKA, 37, of New Windsor, New York, is charged with one count of distribution and receipt of child pornography, which carries a minimum sentence of five years in prison and a maximum sentence of 20 years in prison.  The statutory minimum and maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the efforts of the FBI, West Point’s Criminal Investigation Division, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Town of New Windsor Police Department, in connection with this investigation.  He added that the investigation is ongoing.                     

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

 

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

[2] With respect to Mega, a user can send a link to a Mega cloud account to another person.  Once the link to the Mega cloud account is transmitted, the person who clicks on the link to the cloud account can access, view, and download the files contained in that Mega cloud account.

 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the conviction in Manhattan federal court of GORDON FREEDMAN for participating in a scheme to receive bribes and kickbacks in the form of fees for sham educational programs (“Speaker Programs”) from Insys Therapeutics, Inc. (“Insys”) in exchange for prescribing millions of dollars’ worth of Subsys, a potent fentanyl-based spray manufactured by Insys, among other offenses.  The jury convicted FREEDMAN today on three counts, following a three-week trial before the U.S. District Judge Kimba M. Wood.

U.S. Attorney Geoffrey S. Berman stated:  “Today’s conviction, in addition to the prior guilty pleas in this case of four other prominent Manhattan doctors, underscores that this Office will hold any physician accountable when that physician’s medical judgment is compromised by the corrupting influence of money.  As a jury of his peers has now found, Dr. Gordon Freedman sold out his patients by prescribing a powerful and dangerous fentanyl opioid in exchange for bribes from the pharmaceutical company that manufactured that drug.”

As reflected in the Indictment, documents previously filed in the case, and evidence introduced at trial:

Insys manufactured Subsys, a powerful painkiller approximately 50 to 100 times more potent than morphine.  The FDA approved Subsys only for the management of breakthrough pain in cancer patients.  Prescriptions of Subsys typically cost thousands of dollars each month, and Medicare and Medicaid, as well as commercial insurers, reimbursed prescriptions written by FREEDMAN.

In or about August 2012, Insys launched a “Speakers Bureau,” purportedly aimed at educating practitioners about Subsys.  In reality, however, Insys used its Speakers Bureau to induce doctors to prescribe large volumes of Subsys by paying them Speaker Program fees.  At each Speaker Program, speakers were supposed to conduct a slide presentation for other health care practitioners regarding Subsys.  However, many of the Speaker Programs led by the speakers paid by Insys were predominantly social affairs where no educational presentation about Subsys occurred.  Attendance sign-in sheets for the Speaker Programs were frequently forged by adding the names and signatures of health care practitioners who had not actually been present.

FREEDMAN was a doctor certified in pain management and anesthesiology who owned a private pain management office on Manhattan’s Upper East Side.  FREEDMAN, who was also an Associate Clinical Professor at a large hospital in Manhattan (“Hospital-1”), received approximately $308,600 in Speaker Program fees from Insys in exchange for prescribing large volumes of Subsys. 

In March 2013, a Regional Sales Manager for Insys sent an email to FREEDMAN informing him that he would receive more Speaker Programs in the coming months because Insys wanted prescriptions of Subsys to increase, and urging FREEDMAN to put more patients on Subsys.  FREEDMAN responded, in part, “Got it,” and significantly increased his Subsys prescriptions in the following months, during which he received approximately $33,600 in Speaker Program fees. 

In 2014, FREEDMAN’s prescriptions of Subsys rose even further, and he was the fourth-highest prescriber of Subsys nationally in the final quarter of 2014, accounting for approximately $1,132,287 in overall net sales of Subsys in that quarter alone.  During 2014, FREEDMAN was the highest-paid Insys Speaker in the nation, receiving approximately $143,000. 

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FREEDMAN, 59, who resides in Mount Kisco, New York, was found guilty of one count of conspiracy to violate the Anti-Kickback Statute, which carries a maximum term of five years in prison, one count of violating the Anti-Kickback Statute, which carries a maximum term of 10 years in prison, and one count of conspiracy to commit honest services wire fraud, which carries a maximum term of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  FREEDMAN is scheduled to appear for sentencing before Judge Wood on March 19, 2020.

Mr. Berman praised the investigative work of the FBI, and thanked HHS OIG and the New York City Police Department for their participation in the investigation. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Noah Solowiejczyk, David Abramowicz, and Katherine Reilly are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Dermot F. Shea, the Commissioner of the New York City Police Department (“NYPD”), John B. Devito, Special Agent-in-Charge of the New York Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), and Geraldine Hart, the Commissioner of the Suffolk County Police Department (“SCPD”), announced the unsealing of an Indictment charging 17 defendants with committing various racketeering, narcotics, and firearms offenses in Manhattan and the Bronx.  Ten of the defendants were arrested today and presented before U.S. Magistrate Judge Barbara Moses in Manhattan federal court.  Three of the defendants are already in state custody and will be presented at a later date.  Four defendants remain at large.  The case has been assigned to U.S. District Judge Valerie E. Caproni.

U.S. Attorney Geoffrey S. Berman said:   “As alleged in the indictment, the defendants in this case include high-ranking members of a violent set of the Latin Kings gang.  They are alleged to have engaged in acts of violence, robberies, narcotics trafficking, and the use of firearms.  Thanks to the efforts of our partners at the FBI, NYPD, ATF, and SCPD, the defendants now face federal charges for these very serious crimes.”

FBI Assistant Director William F. Sweeney Jr. said:  “Rounding up these alleged gang members is more than just removing violent criminals from the streets they believe they control.  They’re pushing and selling drugs that are killing thousands of people each year in our country, adding to the epidemic tearing apart families and communities.  Our work today, and the work we will continue to do tomorrow on our FBI Metro Safe Streets Gang Task Force, is vital to combating the spread of these drugs, and crucial to saving people’s lives.”

ATF Special Agent in Charge John B. Devito said:  “The defendants are alleged to have conspired on, threatened and committed numerous acts of violence to influence and control their members and enforce the territorial boundaries of their illegal narcotics operations.  Thankfully through the diligent efforts of our law enforcement partners this operation has been disrupted and dismantled.  We will stand with all of our local, state and federal partners to see that these violent gangs are eradicated from our communities.  I would like to thank the United States Attorney’s Office for prosecuting this case.”

SCPD Commissioner Geraldine Hart said:  “More than a dozen alleged violent gang members are now off the streets thanks to the collaborative efforts with our law enforcement partners.  As alleged, these criminals have zero consideration for the well-being of anyone, inside or outside their gang, distributing narcotics and possessing firearms in an attempt to instill fear in our communities.  We will continue to work together with our partner agencies to rid our communities of violent street gangs.”

NYPD Commissioner Dermot F. Shea said: "Targeting and dismantling gangs and crews, and preventing the violence so often associated with their illegal activities, continues to be among the highest priorities for the NYPD. We continue to relentlessly with our law enforcement partners to identify, arrest, and build the strongest possible cases to hold to account anyone who involves themselves in such behavior."

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

CARMELO VELEZ, a/k/a “Jugg,” CHRISTOPHER RODRIGUEZ, a/k/a “Taz,” LUIS SEPULVEDA, a/k/a “Red,” ANGEL LOPEZ, a/k/a “SB,” CHRISTOPHER LUM, a/k/a “Un,” EMMANUEL BONAFE, a/k/a “Eazy,” CHRISTOPHER NELSON, a/k/a “Hype,” JOSIAH VELAZQUEZ, a/k/a “Siah,” ALBERTO BORGES, a/k/a “AB,” JUAN HERNANDEZ, a/k/a “Goldo,” HEINNER SOLIS, a/k/a “Juelz,” EZEQUIEL OSPINA, a/k/a “Izzy,” RAIMUNDO NIEVES, a/k/a “Dobule-R,” DEESHUNTEE STEVENS, a/k/a “Kay,” HECTOR BONAPARTE, a/k/a “June,” and MICHAEL GONZALEZ, a/k/a “Wisdom,” are members and associates of a racketeering enterprise known as the “Black Mob,” which operates in the Bronx, Manhattan, Queens, Brooklyn, and Long Island.  The Black Mob is a set, or “tribe,” of the nationwide Latin Kings gang.  In order to enrich the enterprise, protect and expand its criminal operations, enforce discipline among its members, and retaliate against members of rival gangs, members and associates of the Black Mob committed, conspired, attempted, and threatened to commit acts of violence; distributed and possessed with intent to distribute narcotics, including heroin, fentanyl, and crack; committed robberies; and obtained, possessed, and used firearms.

VELEZ, 30, RODRIGUEZ, 34, SEPULVEDA, 27, LOPEZ, 34, LUM, 28, BONAFE, 27, NELSON, 28. VELAZQUEZ, 22, BORGES, 29, JUAN HERNANDEZ, 31, JESUS HERNANDEZ, 26, SOLIS, 25, and OSPINA, 23, are each charged with one count of racketeering conspiracy, which carries a statutory maximum sentence of life in prison. 

Those 13 defendants, as well as NIEVES, 46, STEVENS, 46, BONAPARTE, 37, and GONZALEZ, 33, are each charged with one count of conspiracy to distribute and possess with intent to distribute: (i) one kilogram and more of mixtures and substances containing a detectable amount of heroin, (ii) 400 grams and more of mixtures and substances containing a detectable amount of fentanyl, (iii) 280 grams and more of mixtures and substances containing a detectable amount of crack cocaine, (iv) five kilograms and more of mixtures and substances containing a detectable amount of cocaine, (v) oxycodone, (vi) alprazolam, and (vii) marijuana, which carries a statutory maximum sentence of life in prison, and a mandatory minimum sentence of 10 years in prison. 

All of the defendants except GONZALEZ are also each charged with possessing, carrying, and using firearms in relation to, and in furtherance of, the narcotics conspiracy, which carries a statutory maximum sentence of life in prison, and a mandatory minimum sentence of five years in prison.

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

Mr. Berman praised the outstanding investigative work of the FBI, NYPD, ATF, and SCPD.  Mr. Berman also thanked the New York State Department of Corrections and Community Supervision for its assistance in the case.

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

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and 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 NEIL COLE, the former chief executive officer of Iconix Brand Group, Inc. (“Iconix”), a publicly traded brand management company, with engaging in a scheme to fraudulently inflate Iconix’s revenue and earnings per share and obstruct justice.  The case is assigned to U.S. District Judge Edgardo Ramos.

Mr. Berman also announced today the unsealing of charges against Seth Horowitz, the former chief operating officer of Iconix, who pled guilty on December 2, 2019, and is cooperating with the Government.

COLE is expected to be presented and arraigned later today before U.S. Magistrate Judge Barbara C. Moses in Manhattan federal court.

United States Attorney Geoffrey S. Berman said:  “As alleged, Neil Cole entered into illegal secret agreements with joint venture partners to artificially inflate the value to his company.  Further, as alleged, Cole lied to outside auditors and to the SEC, and took steps to destroy evidence.  Now Neil Cole is in custody and facing serious criminal charges for his alleged conduct.  This is the third accounting fraud case brought by our Office in the last four months, which illustrates both the pervasiveness of this crime and my Office’s commitment to policing it.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Cole and Horowitz falsely represented the financial standing of Iconix’s revenue at the expense of its shareholders and the investing public.  To aggravate matters further, they allegedly destroyed and concealed evidence from the SEC during their inquiry into the company’s joint ventures.  This is not a crime to be taken lightly, and as our charges today prove, this type of alleged dishonorable behavior will not go unpunished.”   

SEC Inspector General Carl W. Hoecker said:  “We are committed to tracking down and bringing to justice those who are alleged to have deliberately undermined the integrity of the SEC’s mission.  The charges announced by the U.S. Attorney’s Office are a result of the superb collaborative efforts of our law enforcement partners.”

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

Iconix, whose shares traded on the NASDAQ, was in the business of acquiring various brands, including clothing and fashion brands, and then licensing those brands to retailers, wholesalers, and suppliers, who, in turn, produced and sold clothing and other products bearing the brand names.            

Iconix utilized joint ventures (“JVs”) to profit from its brands in foreign markets.  With respect to these JVs, Iconix transferred ownership of a trademark or brand to the JV while maintaining a 50 percent ownership interest in the JV itself.  The other party involved in the JV purchased a 50 percent interest in the JV from Iconix.  As part of the JV agreements, each JV partner was generally entitled to 50 percent of the JV’s licensing revenue.  When it entered into a JV, Iconix recognized as revenue the buy-in purchase price paid by the JV partner, less Iconix’s cost basis in the trademarks.

Among the most critical financial metrics disclosed in Iconix’s public filings with the SEC were Iconix’s quarterly and annual revenue and non-GAAP diluted earnings per share (“EPS”).  Iconix executives, including COLE, publicly identified revenue and EPS as the principal metrics demonstrating Iconix’s growth.  They also touted Iconix’s consistent record of revenue and earnings growth and of meeting or exceeding Wall Street analyst consensus with respect to these metrics. 

The Accounting Fraud Scheme

COLE and Horowitz engaged in a scheme to falsely inflate Iconix’s reported revenue and EPS by orchestrating a series of “round trip” transactions in which COLE and Horowitz induced a JV partner, a Hong Kong-based international apparel licensing company (“Company-1”), to pay artificially inflated buy-in purchase prices for JV interests, with the understanding that Iconix would then reimburse Company-1 for the overpayments.  COLE and Horowitz executed the scheme for the purpose of enabling Iconix to report fraudulently inflated revenue and EPS figures based on the inflated buy-in purchase prices it obtained from Company-1. 

COLE arranged for Iconix to enter into three JVs with Company-1 that included inflated buy-in purchase prices from Company-1: (1) the Southeast Asia JV, which closed on or about October 1, 2013 (“SEA-1”), (2) the Southeast Asia first amendment, which closed on or about June 30, 2014 (“SEA-2”), and (3) the Southeast Asia second amendment, which closed on or about September 17, 2014 (“SEA-3”), (collectively, the “SEA JVs”).  Each of the SEA JVs involved a fraudulent “round trip” transaction, lacking in economic substance, in which Company-1 paid an artificially inflated buy-in purchase price for its interest in the JV, in exchange for COLE’s agreement that Iconix would give back the inflated portion of the purchase price to Company-1.  COLE and Horowitz hid from Iconix’s lawyers and outside auditors that COLE had reached an understanding with Company-1 to artificially increase the consideration Company-1 paid Iconix in exchange for COLE’s agreement to round-trip the overpayment back to Company-1.

Through the scheme, COLE and Horowitz caused Iconix to report fraudulently inflated revenue and EPS figures to the investing public.  COLE and Horowitz did so, in part, to ensure that the reported figures met analyst consensus and to fraudulently convey the impression to the investing public that Iconix was growing quarter after quarter, as COLE had touted to the investing public.  Absent the false inflation of revenue from SEA-2 and SEA-3, Iconix would have missed its quarterly revenue consensus in the second and third quarters of 2014 and its annual revenue consensus for the full year 2014.  Absent the false inflation of EPS from SEA-2 and SEA-3, Iconix would have missed its annual non-GAAP diluted EPS consensus for the full year 2014.

Obstruction of Justice

In late 2014 and early 2015, the SEC Division of Corporate Finance (“Corp Fin”) conducted an inquiry into Iconix’s accounting treatment for the formation of certain Iconix international JVs, including the SEA JVs.  Although the SEC directed Iconix to disclose to the SEC the “business purpose” and material terms of the SEA JVs, COLE intentionally and falsely omitted from an Iconix response letter to the SEC that Company-1 had agreed to inflate the purchase prices for SEA-2 and SEA-3 by $5 million and $6 million, respectively, in exchange for COLE’s secret agreement that Iconix would reimburse Company-1 for these overpayments.  COLE also took steps during the Corp Fin inquiry to destroy and conceal relevant evidence, including by deleting emails related to the SEA JVs and directing Horowitz to do the same, in order to prevent the scheme from being detected. 

*                *                *           

COLE, 62, of New York, New York, was charged in the Indictment with one count of conspiracy to commit securities fraud, make false filings with the SEC, and improperly influence the conduct of audits; one count of securities fraud; six counts of making false filings with the SEC; one count of improperly influencing the conduct of audits; and one count of conspiracy to destroy, alter, and falsify records in federal investigations.  The conspiracy charges carry a maximum prison term of five years.  The charges of securities fraud, making false filings with the SEC, and improperly influencing the conduct of audits each carry a maximum prison term of 20 years.   

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

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

Mr. Berman praised the investigative work of the FBI and the SEC Office of the Inspector General.  Mr. Berman also thanked the SEC Division of Enforcement, 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 Jared Lenow are in charge of the prosecution. 

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that FRANK GIOVINCO was convicted yesterday of conspiring to commit extortion and racketeering offenses with members and associates of the Genovese Crime Family of La Cosa Nostra following a six-day jury trial before U.S. District Judge Jed S. Rakoff.  The jury found the defendant responsible for acts involving extortion, honest services fraud, and unlawful kickback payments related to the Genovese Crime Family’s control of two local chapters of a labor union.

U.S. Attorney Geoffrey S. Berman said:  “For years, Frank Giovinco, as a member of the Genovese Crime Family, instilled fear in victims and propagated kickback schemes to tighten the Family’s stranglehold over two labor unions.  Now, a jury has held Giovinco accountable for his crimes.”

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

La Cosa Nostra, also known as the “Mob” or the “Mafia,” operates through entities known as “Families.”  The largest of the families operating in the New York City area is the Genovese Crime Family.  In the early 1990s, GIOVINCO was inserted by the Genovese Crime Family into a scheme to control the waste carting industry in New York City, and as far back as the late-1990s, GIOVINCO was a member of the Genovese Crime Family. 

In more recent years, and continuing until 2017, GIOVINCO conspired with other members and associates of the Genovese Crime Family to commit a wide range of crimes to enrich themselves and the Genovese Crime Family, including multiple acts of extortion, honest services fraud, and bribery.  GIOVINCO’s activity for the Genovese Crime Family was centered on two local chapters (the “Unions”) of a labor union.  GIOVINCO participated in a host of schemes designed to manipulate and siphon money from the Unions for the benefit of the Genovese Crime Family.  Among other things, GIOVINCO extorted a financial adviser (the “Adviser”) and a labor union official (“Official-1”) for a cut of commissions made from union investments.  Audio recordings captured GIOVINCO planning to “rattle the cage” of a victim, and to have another victim’s “feet held to the fire.”  When Official-1 failed to pay the commissions demanded by GIOVINCO and other members of the Genovese Crime Family, Official-1’s life was threatened by GIOVINCO and his co-conspirators.  GIOVINCO further plotted to profit from union investments by paying kickbacks to Official-1 and others, in exchange for a cut of future commissions.  GIOVINCO also participated in the long-running extortion of a union president (“Official-2”) for annual tribute payments of more than $10,000, and sought a job at the union for the purpose of exerting control over Official-1 on the Genovese Crime Family’s behalf, and threatening to replace Official-1. 

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GIOVINCO, 52, of Syosset, New York, was convicted of one count of racketeering conspiracy, which carries a maximum potential sentence of 20 years in prison, and one count of conspiracy to commit extortion, which also carries a maximum potential sentence of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the sentencing of the defendant will be determined by the judge.  Sentencing before Judge Rakoff is scheduled for March 11, 2020.

Mr. Berman praised the outstanding investigative work of the FBI, the U.S. Department of Labor’s Office of Inspector General and Office of Labor-Management Standards, the New York City Police Department, 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 U.S. Attorneys Kimberly J. Ravener, Jason A. Richman, and Justin V. Rodriguez are in charge of the prosecution, assisted by Paralegal Specialist Hannah Harney. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that SEAN STEWART, a former senior investment banker at two different New York-based investment banks, was sentenced yesterday to 24 months in prison by U.S. District Judge Jed S. Rakoff for illegally tipping his father and co-defendant Robert Stewart with inside information about five health care company acquisitions before they were publicly announced.  SEAN STEWART was convicted by a jury after a retrial that ended on September 23, 2019. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As two separate juries have now found, Sean Stewart abused his positions at two investment banks, betrayed his employers by stealing his clients’ valuable secrets, and gave his father inside information to illegally profit in the stock market.  To cover his tracks, Sean Stewart committed numerous acts of deception, including lying to bank compliance officials about his father’s trading activities in response to an inquiry from a financial regulator.  Yesterday’s sentence, which requires Sean Stewart to return to prison for his insider trading crimes, is a reminder that no one is above the law and that serious breaches of trust and confidence like Sean Stewart’s will be met with serious punishment.”

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

In early 2011, SEAN STEWART, who at the time held the position of vice president in the Healthcare Investment Banking Group of a global bank headquartered in Manhattan (“Investment Bank A”), began tipping his father, Robert Stewart, with nonpublic information about upcoming mergers and acquisitions.  The first of these tips related to the acquisition of Kendle International Inc. by INC Research, LLC, which was announced publicly on May 4, 2011.  SEAN STEWART represented Kendle in the confidential negotiations that led to the deal announcement.  Based on inside information from SEAN STEWART, Robert Stewart purchased Kendle stock and passed the information to another individual to trade on his behalf, and earned several thousand dollars in profits after the acquisition of Kendle was publicly announced. 

The second deal about which SEAN STEWART tipped Robert Stewart was the acquisition of Kinetic Concepts, Inc. (“KCI”), by Apax Partners, announced on July 13, 2011.  Robert Stewart passed the inside information to another co-conspirator, Richard Cunniffe, to trade on Robert’s behalf.  Robert Stewart and Cunniffe earned more than $100,000 in profits after the acquisition was publicly announced. 

In the summer of 2011, SEAN STEWART learned that the Financial Industry Regulatory Authority (“FINRA”) was conducting an inquiry into suspicious trading in Kendle securities, including trading by Robert Stewart.  SEAN STEWART at first falsely claimed to compliance officials at Investment Bank A that he did not recognize his father’s name on a list of individuals who traded prior to the public announcement of Kendle’s acquisition.  After FINRA and compliance officials at Investment Bank A recognized the connection between SEAN STEWART and his father, SEAN STEWART told a series of lies to those compliance officials, to make it seem as if Robert Stewart had decided on his own initiative to invest in Kendle without the benefit of inside information. 

In October 2011, SEAN STEWART joined an investment banking advisory firm headquartered in Manhattan (“Investment Bank B”) and was later promoted to managing director.  During his tenure with Investment Bank B, SEAN STEWART provided his father with tips concerning nonpublic acquisition negotiations involving three more public companies:  (1) the acquisition of Gen-Probe Inc. by Hologic, Inc., announced on April 30, 2012; (2) the acquisition, by tender offer, of Lincare Holdings Inc. by Linde AG, announced on July 1, 2012; and (3) the acquisition of CareFusion Corp. by Becton, Dickinson & Co. (“Becton”), announced October 4, 2014.  Investment Bank B represented Hologic in connection with its acquisition of Gen-Probe, Linde in connection with its acquisition of Lincare, and CareFusion in connection with its acquisition by Becton.  As before, Robert Stewart passed the information to Cunniffe in order to place trades for the two of them. 

During the course of the scheme, SEAN STEWART became aware that his father was having financial problems.  Rather than loan his father money, SEAN STEWART gave his father stock tips so that his father could profit from the information that STEWART stole from Investment Bank A and Investment Bank B and their clients.  In total, with respect to all five deals, Robert Stewart and Cunniffe earned profits of more than $1.1 million.

     *                      *                      *

In addition to his prison sentence, SEAN STEWART, 38, of North Merrick, New York, was sentenced to three years of supervised release.  SEAN STEWART was ordered to report to prison on January 14, 2020. 

Robert Stewart pled guilty on August 12, 2015, to one count of conspiracy to commit securities fraud and tender offer fraud and was sentenced to four years’ probation, with the first year to be served in home detention, and $150,000 in forfeiture.

Richard Cunniffe pled guilty on May 12, 2015, to one count of conspiracy to commit securities fraud and tender offer fraud, one count of conspiracy to commit wire fraud, three counts of substantive securities fraud, and one count of substantive tender offer fraud, and was sentenced to one year of probation, and $900,000 in forfeiture.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and also thanked the SEC, which has brought a civil action against SEAN STEWART.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorneys Richard Cooper and Samson Enzer are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that YMER SHAHINI was sentenced to 18 months in prison by United States District Judge P. Kevin Castel in connection with his role in a scheme to defraud shareholders of a publicly traded company and the investing public.  SHAHINI pled guilty to one count of conspiracy to commit securities fraud on September 10, 2019. 

U.S. Attorney Geoffrey S. Berman said:  “Ymer Shahini played a strategic role in a multimillion-dollar fraud.  He wittingly and willingly served as a straw man to conceal beneficial ownership of stock, which facilitated a fraudulent scheme that reaped tens of millions in illegal profits.  Now Shahini has been sentenced to prison for his role in this massive fraud.”           

According to the allegations contained in the Indictment:

From 2009 to 2011, YMER SHAHINI, along with co-defendants Jason Galanis, John Galanis, Derek Galanis, Gary Hirst, and Gavin Hamels, engaged in a scheme to defraud the shareholders of a publicly traded company called Gerova Financial Group, Ltd. (“Gerova”), and the investing public, by obtaining secret control over millions of shares of Gerova stock and then manipulating the market for the stock as the defendants caused their secretly held shares to be sold.  As part of the scheme, the defendants fraudulently generated demand for Gerova stock by bribing investment advisers to purchase for client accounts the Gerova stock that was sold by the defendants, thereby enabling the defendants to cash out from the scheme and make millions in illegal profits.   

As a part of the scheme to defraud, Jason Galanis obtained such control over Gerova so as to be able to cause Gerova to enter into transactions of his design, and for his benefit, including the issuance of Gerova stock.  Jason Galanis obtained this control without identifying himself as an officer or director of Gerova to avoid the SEC-imposed bar that prohibited him from holding such positions at publicly traded companies.  Among other means and methods, Jason Galanis, with the assistance of Gary Hirst, caused more than 5,000,000 shares of Gerova stock, which represented nearly half the company’s public float and which were intended for Jason Galanis’s ultimate benefit, to be issued to and held in the name of YMER SHAHINI, who knowingly served as a foreign nominee for Jason Galanis.  SHAHINI, Jason Galanis, John Galanis, Derek Galanis, and Hirst understood that the purpose of the stock grant to SHAHINI was to disguise Jason Galanis’s ownership interest in the stock, and to evade the SEC’s regulations for issuing unregistered shares of stock. 

At the same time, and as a further part of the scheme to defraud, John Galanis and Derek Galanis, among others, with the knowledge and approval of YMER SHAHINI and Jason Galanis, opened and managed brokerage accounts in the name of SHAHINI (the “SHAHINI Accounts”), effected the sale of Gerova stock from the SHAHINI Accounts, and received and concealed the proceeds, knowing that this activity was designed to conceal from the investing public Jason Galanis’s ownership of and control over the Gerova stock.

Jason Galanis also fraudulently induced investment advisers, including Gavin Hamels and others, to purchase shares of Gerova stock in the investment advisers’ client accounts by offering compensation and/or other benefits to the respective investment adviser.  By causing the purchase of Gerova stock at the time, quantity, and/or price of their choosing, Jason Galanis was able to, among other things, effectuate the sale of large quantities of Gerova stock from the SHAHINI Accounts that Jason Galanis controlled, while artificially maintaining the price of Gerova stock through coordinated match trading.  Such coordinated trading served to manipulate the market for Gerova stock and deceive the investing public.  As a result, Jason Galanis and his co-conspirators reaped nearly $20 million in profits.

*                *                *

SHAHINI, 49, a citizen of Kosovo, was the first defendant extradited to the United States pursuant to the extradition treaty between the United States and the Republic of Kosovo, which went into effect on June 13, 2019.  In addition to his term of imprisonment, SHAHINI was sentenced to two years of supervised release, and was ordered to forfeit $310,000.

Mr. Berman praised the work of the United States Postal Inspection Service and the Federal Bureau of Investigation, and thanked the U.S. Securities and Exchange Commission for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Brian Blais and Rebecca Mermelstein are in charge of the prosecution.

The Department of Justice today announced that Ali Kourani, 35, was sentenced to 40 years in prison based on terrorism, sanctions, and immigration convictions arising from Kourani’s illicit work as an operative for the Islamic Jihad Organization, Hizballah’s external attack-planning component.

“While living in the United States, Kourani served as an operative of Hizballah in order to help the foreign terrorist organization prepare for potential future attacks against the United States.  With today’s sentence, he is being held accountable for his crimes,” said Assistant Attorney General for National Security John C. Demers.  “The evidence at trial showed that Kourani searched for suppliers who could provide weapons for such attacks, identified people who could be recruited or targeted for violence, and gathered information about and conducted surveillance of potential targets within our country.  Such covert activities conducted on U.S. soil are a clear threat to our national security and I applaud the agents, analysts, and prosecutors who are responsible for this investigation and prosecution.”

“Ali Kourani was recruited, trained, and deployed by Hizballah’s Islamic Jihad Organization to plan and execute acts of terrorism around New York City.  After spending years conducting surveillance on the City’s critical infrastructure, federal buildings, international airports, and even daycare centers, he is now the first Islamic Jihad Organization operative to be convicted and sentenced for his crimes against the United States,” said U.S. Attorney Geoffrey S. Berman for the Southern District of New York. “The lengthy prison term imposed today on Kourani sends an important message to Hizballah and the Islamic Jihad Organization:  If you are caught planning harm against this City and its residents, you will face justice and be held accountable.”

 “Ali Kourani’s arrest was a reminder to us all that New York City and its surrounding areas remain primary targets for those looking to conduct a violent attack against our way of life,” said FBI Assistant Director William F. Sweeney Jr.  “His sentencing today, however, is also a reminder of the many successes of our FBI JTTFs nationwide, and their never-ending determination to disrupt the plans of those working to harm us.”  

“This sentencing is an another example of the dedicated work of the New York Joint Terrorism Task Force and the close partnership with the U.S. Attorney’s Office, Southern District, to combat terror and hold accountable those who seek to support and promote terrorist groups,” said Police Commissioner Dermot F. Shea.  “I thank the NYPD investigators and our law enforcement partners whose hard work brought Mr. Kourani to justice.”

As reflected in the criminal Complaint, Indictment, court filings, and evidence presented at trial:

Hizballah is a Lebanon-based Shia Islamic organization with political, social, and terrorist components that was founded in the 1980s with support from Iran.  Since Hizballah’s formation, the organization has been responsible for numerous terrorist attacks that have killed hundreds, including United States citizens and military personnel.  In 1997, the U.S. Department of State designated Hizballah a Foreign Terrorist Organization, pursuant to Section 219 of the Immigration and Nationality Act, and it remains so designated today.  In 2010, State Department officials described Hizballah as the most technically capable terrorist group in the world, and a continued security threat to the United States.

The Islamic Jihad Organization (IJO), which is also known as the External Security Organization and “910,” is a highly compartmentalized component of Hizballah responsible for the planning, preparation, and execution of intelligence, counterintelligence, and terrorist activities on behalf of Hizballah outside of Lebanon.  In July 2012, an IJO operative detonated explosives on a bus transporting Israeli tourists in the vicinity of an airport in Burgas, Bulgaria, killing six people and injuring 32 others.  Law enforcement authorities have disrupted several other IJO attack-planning operations around the world, including the arrest of an IJO operative surveilling Israeli targets in Cyprus in 2012, the seizure of bomb-making precursor chemicals in Thailand in 2012, including chemicals manufactured by a medical devices company based in Guangzhou, China (Guangzhou Company-1), and a similar seizure of chemicals manufactured by Guangzhou Company-1 in Cyprus in May 2015 in connection with the arrest of another IJO operative. 

Kourani, who was born in Lebanon, attended Hizballah-sponsored weapons training in Lebanon in 2000 when he was approximately 16 years old.  After lawfully entering the United States in 2003, Kourani obtained a Bachelor of Science in biomedical engineering in 2009, and a Master of Business Administration in 2013.

Kourani and certain of his relatives were in Lebanon during the summer 2006 conflict between Israel and Hizballah, when a residence belonging to his family was destroyed.  At some point by 2008, IJO recruited Kourani to its ranks.  In August 2008, Kourani submitted an application for naturalization in the United States in which he falsely claimed, among other things, that he was not affiliated with a terrorist organization.  In April 2009, Kourani became a naturalized citizen and was issued a United States passport.  Despite claiming in his passport application that he had no travel plans, Kourani traveled to Guangzhou, China – the location of Guangzhou Company-1 – on May 3, 2009.  The purpose of the trip was to develop relationships that the IJO could rely on to obtain ammonium nitrate to be used as an explosive precursor chemical. 

IJO assigned Kourani an IJO handler, or mentor, responsible for providing him with taskings, debriefings, and arranging training.  Kourani sometimes communicated with his handler using coded email communications, including messages sent by the handler that informed Kourani of the need to return to Lebanon.  In order to establish contact with his handler when Kourani returned to Lebanon, Kourani called a telephone number associated with a pager (the IJO Pager) and provided a code that he understood was specific to him.  After contacting the IJO Pager, the handler would contact Kourani to set up an in-person meeting by calling a phone belonging to one of Kourani’s relatives.  The IJO also provided Kourani with additional training in tradecraft, weapons, and tactics.  In 2011, for example, Kourani attended a weapons training camp in the vicinity of Birkat Jabrur, Lebanon, where he used a rocket-propelled grenade launcher, an AK-47 assault rifle, an MP5 submachine gun, a PKS machine gun (a Russian-made belt-fed weapon) and a Glock pistol.

Based on other taskings from IJO personnel, which IJO personnel conveyed during periodic in-person meetings when Kourani returned to Lebanon, Kourani conducted operations, which he understood to be aimed at preparing for potential future Hizballah attacks.   These covert activities included searching for weapons suppliers in the United States who could provide firearms to support IJO operations; identifying individuals affiliated with the Israeli Defense Force whom the IJO could either recruit or target for violence; gathering information regarding operations and security at airports in the United States and elsewhere, including JFK International Airport in New York; and surveilling U.S. military and law enforcement facilities in New York City, including the federal building at 26 Federal Plaza in Manhattan.  Kourani transmitted some of the products of his surveillance and intelligence-gathering efforts back to IJO personnel in Lebanon using digital storage media.

In addition to the prison term, Kourani was also sentenced to five years supervised release. 

Assistant Attorney General Demers and Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department.   

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Amanda L. Houle and Emil J. Bove III are in charge of the case, with assistance from Trial Attorney Bridget Behling of the Counterterrorism Section.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, Assistant Attorney General for National Security, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Dermot F. Shea, Commissioner of the New York City Police Department (“NYPD”), announced today that ALI KOURANI was sentenced to 40 years in prison based on terrorism, sanctions, and immigration convictions arising from KOURANI’s illicit work as an operative for the Islamic Jihad Organization, Hizballah’s external attack-planning component.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Ali Kourani was recruited, trained, and deployed by Hizballah’s Islamic Jihad Organization to plan and execute acts of terrorism around New York City.  After spending years conducting surveillance on the City’s critical infrastructure, federal buildings, international airports, and even daycare centers, he is now the first Islamic Jihad Organization operative to be convicted and sentenced for his crimes against the United States.  The lengthy prison term imposed today on Kourani sends an important message to Hizballah and the Islamic Jihad Organization:  If you are caught planning harm against this City and its residents, you will face justice and be held accountable.”

Assistant Attorney General John C. Demers said:  “While living in the United States, Kourani served as an operative of Hizballah in order to help the foreign terrorist organization prepare for potential future attacks against the United States.  With today’s sentence, he is being held accountable for his crimes.  The evidence at trial showed that Kourani searched for suppliers who could provide weapons for such attacks, identified people who could be recruited or targeted for violence, and gathered information about and conducted surveillance of potential targets within our country.  Such covert activities conducted on U.S. soil are a clear threat to our national security and I applaud the agents, analysts, and prosecutors who are responsible for this investigation and prosecution.”

FBI Assistant Director William F. Sweeney Jr. said:  “Ali Kourani’s arrest was a reminder to us all that New York City and its surrounding areas remain primary targets for those looking to conduct a violent attack against our way of life.  His sentencing today, however, is also a reminder of the many successes of our FBI JTTFs nationwide, and their never-ending determination to disrupt the plans of those working to harm us.”  

Police Commissioner Dermot F. Shea said:  “This sentencing is an another example of the dedicated work of the New York Joint Terrorism Task Force and the close partnership with the U.S. Attorney’s Office, Southern District, to combat terror and hold accountable those who seek to support and promote terrorist groups.  I thank the NYPD investigators and our law enforcement partners whose hard work brought Mr. Kourani to justice.”

As reflected in the criminal Complaint, Indictment, court filings, and evidence presented at trial: 

Hizballah is a Lebanon-based Shia Islamic organization with political, social, and terrorist components that was founded in the 1980s with support from Iran.  Since Hizballah’s formation, the organization has been responsible for numerous terrorist attacks that have killed hundreds, including United States citizens and military personnel.  In 1997, the U.S. Department of State designated Hizballah a Foreign Terrorist Organization, pursuant to Section 219 of the Immigration and Nationality Act, and it remains so designated today.  In 2010, State Department officials described Hizballah as the most technically capable terrorist group in the world, and a continued security threat to the United States.

The Islamic Jihad Organization (IJO), which is also known as the External Security Organization and “910,” is a highly compartmentalized component of Hizballah responsible for the planning, preparation, and execution of intelligence, counterintelligence, and terrorist activities on behalf of Hizballah outside of Lebanon.  In July 2012, an IJO operative detonated explosives on a bus transporting Israeli tourists in the vicinity of an airport in Burgas, Bulgaria, killing six people and injuring 32 others.  Law enforcement authorities have disrupted several other IJO attack-planning operations around the world, including the arrest of an IJO operative surveilling Israeli targets in Cyprus in 2012, the seizure of bomb-making precursor chemicals in Thailand in 2012, including chemicals manufactured by a medical devices company based in Guangzhou, China (Guangzhou Company-1), and a similar seizure of chemicals manufactured by Guangzhou Company-1 in Cyprus in May 2015 in connection with the arrest of another IJO operative. 

KOURANI, who was born in Lebanon, attended Hizballah-sponsored weapons training in Lebanon in 2000 when he was approximately 16 years old.  After lawfully entering the United States in 2003, KOURANI obtained a Bachelor of Science in biomedical engineering in 2009, and a Master of Business Administration in 2013.

KOURANI and certain of his relatives were in Lebanon during the summer 2006 conflict between Israel and Hizballah, when a residence belonging to his family was destroyed.  At some point by 2008, IJO recruited KOURANI to its ranks.  In August 2008, KOURANI submitted an application for naturalization in the United States in which he falsely claimed, among other things, that he was not affiliated with a terrorist organization.  In April 2009, KOURANI became a naturalized citizen and was issued a United States passport.  Despite claiming in his passport application that he had no travel plans, KOURANI traveled to Guangzhou, China – the location of Guangzhou Company-1 – on May 3, 2009.  The purpose of the trip was to develop relationships that the IJO could rely on to obtain ammonium nitrate to be used as an explosive precursor chemical. 

IJO assigned KOURANI an IJO handler, or mentor, responsible for providing him with taskings, debriefings, and arranging training.  KOURANI sometimes communicated with his handler using coded email communications, including messages sent by the handler that informed KOURANI of the need to return to Lebanon.  In order to establish contact with his handler when KOURANI returned to Lebanon, KOURANI called a telephone number associated with a pager (the IJO Pager) and provided a code that he understood was specific to him.  After contacting the IJO Pager, the handler would contact KOURANI to set up an in-person meeting by calling a phone belonging to one of KOURANI’s relatives.  The IJO also provided KOURANI with additional training in tradecraft, weapons, and tactics.  In 2011, for example, KOURANI attended a weapons training camp in the vicinity of Birkat Jabrur, Lebanon, where he used a rocket-propelled grenade launcher, an AK-47 assault rifle, an MP5 submachine gun, a PKS machine gun (a Russian-made belt-fed weapon) and a Glock pistol.

Based on other taskings from IJO personnel, which IJO personnel conveyed during periodic in-person meetings when KOURANI returned to Lebanon, KOURANI conducted operations, which he understood to be aimed at preparing for potential future Hizballah attacks.   These covert activities included searching for weapons suppliers in the United States who could provide firearms to support IJO operations; identifying individuals affiliated with the Israeli Defense Force whom the IJO could either recruit or target for violence; gathering information regarding operations and security at airports in the United States and elsewhere, including JFK International Airport in New York; and surveilling U.S. military and law enforcement facilities in New York City, including the federal building at 26 Federal Plaza in Manhattan.  KOURANI transmitted some of the products of his surveillance and intelligence-gathering efforts back to IJO personnel in Lebanon using digital storage media.

*                      *                      *

In addition to the prison term, KOURANI, 35, was also sentenced to five years of supervised release. 

Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department.  Mr. Berman also thanked the Counterterrorism Section of the Department of Justice’s National Security Division.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Amanda L. Houle and Emil J. Bove III are in charge of the case, with assistance from Trial Attorney Bridget Behling of the Counterterrorism Section.

The Department of Justice announced the unsealing of a criminal complaint charging Virgil Griffith, a United States citizen, with violating the International Emergency Economic Powers Act (IEEPA) by traveling to the Democratic People’s Republic of Korea (“DPRK” or “North Korea”) in order deliver a presentation and technical advice on using cryptocurrency and blockchain technology to evade sanctions. Griffith was arrested at Los Angeles International Airport Thursday, Nov. 28, 2019 and will be presented in federal court today.

“Despite receiving warnings not to go, Griffith allegedly traveled to one of the United States’ foremost adversaries, North Korea, where he taught his audience how to use blockchain technology to evade sanctions,” said Assistant Attorney General for National Security John C. Demers.  “By this complaint, we begin the process of seeking justice for such conduct.”

 “As alleged, Virgil Griffith provided highly technical information to North Korea, knowing that this information could be used to help North Korea launder money and evade sanctions, said U.S. Attorney Geoffrey S. Berman for the Southern District of New York.  “In allegedly doing so, Griffith jeopardized the sanctions that both Congress and the president have enacted to place maximum pressure on North Korea’s dangerous regime.”

“There are deliberate reasons sanctions have been levied on North Korea.  The country and its leader pose a literal threat to our national security and that of our allies,” said FBI Assistant Director-in-Charge William F. Sweeney Jr.  “Mr. Griffith allegedly traveled to North Korea without permission from the federal government, and with knowledge what he was doing was against the law.  We cannot allow anyone to evade sanctions, because the consequences of North Korea obtaining funding, technology, and information to further its desire to build nuclear weapons put the world at risk.  It’s even more egregious that a U.S. citizen allegedly chose to aid our adversary.”

According to the complaint unsealed in Manhattan federal court:

Pursuant to the IEEPA and Executive Order 13466, United States Persons are prohibited from exporting any goods, services, or technology to the DPRK without a license from Department of the Treasury, Office of Foreign Assets Control (OFAC).

In or about April 2019, Griffith traveled to the DPRK to attend and present at the “Pyongyang Blockchain and Cryptocurrency Conference” (the “DPRK Cryptocurrency Conference”).  Despite that the U.S. Department of State had denied Griffith permission to travel to the DPRK, Griffith presented at the DPRK Cryptocurrency Conference, knowing that doing so violated sanctions against the DPRK.  At no time did Griffith obtain permission from OFAC to provide goods, services, or technology to the DPRK.

At the DPRK Cryptocurrency Conference, Griffith and other attendees discussed how the DPRK could use blockchain and cryptocurrency technology to launder money and evade sanctions.  Griffith’s presentation at the DPRK Cryptocurrency Conference had been approved by DPRK officials and focused on, among other things, how blockchain technology, including a “smart contract,” could be used to benefit the DPRK.  Griffith identified several DPRK Cryptocurrency Conference attendees who appeared to work for the North Korean government, and who, during his presentation, asked Griffith specific questions about blockchain and cryptocurrency and prompted discussions on technical aspects of those technologies.

After the DPRK Cryptocurrency Conference, Griffith began formulating plans to facilitate the exchange of cryptocurrency between the DPRK and South Korea, despite knowing that assisting with such an exchange would violate sanctions against the DPRK.  Griffith also encouraged other U.S. citizens to travel to North Korea, including to attend the same DPRK Cryptocurrency Conference the following year.  Finally, Griffith announced his intention to renounce his U.S. citizenship and began researching how to purchase citizenship from other countries.

Virgil Griffith, 36, is a resident of Singapore and citizen of the United States.  Griffith is charged with conspiring to violate the IEEPA, which carries a maximum term of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Assistant Attorney General Demers and Mr. Berman praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division.

The case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Kimberly Ravener, Michael K. Krouse, and Kyle A. Wirshba are in charge of the case, with assistance from Trial Attorneys Christian Ford and Matthew J. McKenzie of the Counterintelligence and Export Control Section.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, the Assistant Attorney General for National Security, John Brown, Assistant Director of the Federal Bureau of Investigation (“FBI”) Counterintelligence Division, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the FBI, announced today the unsealing of a criminal complaint charging VIRGIL GRIFFITH, a United States citizen, with violating the International Emergency Economic Powers Act (“IEEPA”) by traveling to the Democratic People’s Republic of Korea (“DPRK” or “North Korea”) in order deliver a presentation and technical advice on using cryptocurrency and blockchain technology to evade sanctions.  GRIFFITH was arrested at Los Angeles International Airport yesterday and will be presented in federal court in Los Angeles on Monday, December 2.

U.S. Attorney Geoffrey S. Berman stated:  “As alleged, Virgil Griffith provided highly technical information to North Korea, knowing that this information could be used to help North Korea launder money and evade sanctions.  In allegedly doing so, Griffith jeopardized the sanctions that both Congress and the president have enacted to place maximum pressure on North Korea’s dangerous regime.”

Assistant Attorney General John Demers said:  “Despite receiving warnings not to go, Griffith allegedly traveled to one of the United States’ foremost adversaries, North Korea, where he taught his audience how to use blockchain technology to evade sanctions.  By this complaint, we begin the process of seeking justice for such conduct.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “There are deliberate reasons sanctions have been levied on North Korea.  The country and its leader pose a literal threat to our national security and that of our allies.  Mr. Griffith allegedly traveled to North Korea without permission from the federal government, and with knowledge what he was doing was against the law.  We cannot allow anyone to evade sanctions, because the consequences of North Korea obtaining funding, technology, and information to further its desire to build nuclear weapons put the world at risk.  It’s even more egregious that a U.S. citizen allegedly chose to aid our adversary.”

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

Pursuant to the IEEPA and Executive Order 13466, United States Persons are prohibited from exporting any goods, services, or technology to the DPRK without a license from Department of the Treasury, Office of Foreign Assets Control (“OFAC”).

In or about April 2019, GRIFFITH traveled to the DPRK to attend and present at the “Pyongyang Blockchain and Cryptocurrency Conference” (the “DPRK Cryptocurrency Conference”).  Despite that the U.S. Department of State had denied GRIFFITH permission to travel to the DPRK, GRIFFITH presented at the DPRK Cryptocurrency Conference, knowing that doing so violated sanctions against the DPRK.  At no time did GRIFFITH obtain permission from OFAC to provide goods, services, or technology to the DPRK.

At the DPRK Cryptocurrency Conference, GRIFFITH and other attendees discussed how the DPRK could use blockchain and cryptocurrency technology to launder money and evade sanctions.  GRIFFITH’s presentation at the DPRK Cryptocurrency Conference had been approved by DPRK officials and focused on, among other things, how blockchain technology, including a “smart contract,” could be used to benefit the DPRK.  GRIFFITH identified several DPRK Cryptocurrency Conference attendees who appeared to work for the North Korean government, and who, during his presentation, asked GRIFFITH specific questions about blockchain and cryptocurrency and prompted discussions on technical aspects of those technologies.

After the DPRK Cryptocurrency Conference, GRIFFITH began formulating plans to facilitate the exchange of cryptocurrency between the DPRK and South Korea, despite knowing that assisting with such an exchange would violate sanctions against the DPRK.  GRIFFITH also encouraged other U.S. citizens to travel to North Korea, including to attend the same DPRK Cryptocurrency Conference the following year.  Finally, GRIFFITH announced his intention to renounce his U.S. citizenship and began researching how to purchase citizenship from other countries.

*                      *                     *

VIRGIL GRIFFITH, 36, is a resident of Singapore and citizen of the United States.  GRIFFITH is charged with conspiring to violate the IEEPA, which carries a maximum term of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

The case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Kimberly Ravener, Michael K. Krouse, and Kyle A. Wirshba are in charge of the case, with assistance from Trial Attorneys Christian Ford and Matthew J. McKenzie of the Counterintelligence and Export Control Section.

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

 

---

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

 

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that EDWIN ROMERO was sentenced yesterday to 35 years in prison for his role as the leader of a drug distribution organization centered on Weeks Avenue and East 175th Street in the Mount Hope neighborhood of the Bronx, including the murder of Jose Montalvo on May 13, 2004.  ROMERO was sentenced by U.S. District Judge Loretta A. Preska, after previously pleading guilty to participating in a narcotics distribution conspiracy. 

U.S. Attorney Geoffrey S. Berman said:  “For nearly two decades Edwin Romero was the leader of a major drug organization, responsible for dozens of dealers selling dangerous drugs on the streets of the Bronx, and for numerous acts of violence committed at his direction.  Romero was personally responsible for the cold-blooded murder of Jose Montalvo, whom he shot ten times in May 2004.  The sentence imposed is just punishment for a man who for years held a community in the grip of violence and drugs.  We thank our partners at Homeland Security Investigations and the New York City Police Department for their outstanding work on this case.”

According to the allegations in the superseding Indictment filed against EDWIN ROMERO and statements made in related court filings and proceedings:

Between at least 2000 until March 2017, ROMERO was a member and leader of a long-running narcotics conspiracy centered around East 175th Street and Weeks Avenue in the Bronx, New York.  ROMERO and dozens of members of the conspiracy, including juveniles working at ROMERO’s direction, sold crack cocaine, powder cocaine, heroin, and marijuana every day on the streets and in buildings throughout the neighborhood.  In the course of his participation in the conspiracy, ROMERO committed numerous robberies and acts of gun violence, including the May 13, 2004 murder of Jose Montalvo at the corner of East 175th Street and Monroe Avenue.  He also provided guns to other members of the group, caused subordinates to commit shootings and robberies, and used threats and intimidation to maintain and expand the organization’s territory.

*                      *                      *

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

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Frank Balsamello, Matthew Hellman, and Anden Chow are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that Dr. EMMANUEL LAMBRAKIS, a state licensed doctor, pled guilty to conspiring to unlawfully distribute medically unnecessary oxycodone.  LAMBRAKIS pled guilty on November 26, 2019 before U.S. District Judge William H. Pauley III, and will be sentenced by Judge Pauley on February 7, 2020.  LAMBRAKIS previously pled guilty on March 1, 2018 before U.S. Magistrate Judge Gabriel W. Gorenstein, but later withdrew his plea.  Trial against LAMBRAKIS had been scheduled to start on December 2, 2019. 

According to the Complaint, the Indictment to which LAMBRAKIS pled guilty, and other court documents, as well as statements made in public court proceedings:

Oxycodone is a highly addictive, narcotic opioid that is used to treat severe and chronic pain conditions.  Oxycodone prescriptions are in high demand and have significant cash value to drug dealers.  In fact, oxycodone tablets can be resold on the street for thousands of dollars.  For example, 30-milligram oxycodone tablets have a current street value of approximately $20 to $40 per tablet in New York City, with street prices even higher in other parts of the country.  A single prescription for 120 30-milligram tablets of oxycodone can net an illicit distributor $2,400 in cash or more.

From at least approximately January 2011 until December 2016, LAMBRAKIS operated two medical clinics in Queens, New York, where LAMBRAKIS wrote numerous medically unnecessary prescriptions for large quantities of oxycodone in exchange for cash payments.  LAMBRAKIS typically charged between $250 to $150 in cash for “patient visits,” and these visits often involved numerous “patients” being seen by LAMBRAKIS at the same time in the same examination room.  During these “patient visits,” LAMBRAKIS would perform simple, perfunctory body manipulations (such as rotating the patient’s arm or leg) and engage in little or no conversation with the purported “patient.”  Nonetheless, LAMBRAKIS would then issue to the patient a prescription for a large quantity of oxycodone, most often 120 30-milligram tablets or more.

Between January 2011 and December 2016, LAMBRAKIS wrote thousands of oxycodone prescriptions, resulting in the illicit distribution of more than two million oxycodone tablets, which have a street value in the tens of millions of dollars.  On numerous occasions, LAMBRAKIS wrote 100 or more prescriptions for 30-milligram oxycodone pills in a single day.  As a result of LAMBRAKIS’s actions, LAMBRAKIS collected approximately more than $2 million in fees from his “patients.”

*               *               *

LAMBRAKIS, 72, of Manhattan, New York, pled guilty to one count of conspiring to unlawfully distribute and possess with intent to distribute oxycodone.  This offense carries a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the DEA’s Tactical Diversion Squad, which comprises agents and officers from the DEA, the NYPD, the New York State Police, Town of Orangetown Police Department, Rockland County Drug Task Force, Westchester County Police Department, and New York City Department of Investigation.  He also acknowledged the assistance of the Department of Health & Human Services, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the New York City Human Resources Administration, and the National Insurance Crime Bureau.

The case is being prosecuted by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Kimberly J. Ravener, Jessica K. Fender, Ryan Finkel, Sarah Mortazavi, and Joshua A. Naftalis are in charge of the prosecution. 

The Department of Justice today announced that Zachary Clark, 40, of Brooklyn, New York, was arrested today in Brooklyn.  Clark is charged in a criminal Complaint with attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization, and distributing bomb-making instructions.  Clark is expected to be presented later today before Magistrate Judge Robert W. Lehrburger in Manhattan federal court.

“The defendant allegedly provided instructions for how to plan attacks on U.S. soil, encouraging ISIS supporters to attack in well-populated locations,” said Assistant Attorney General for National Security John C. Demers.  “The National Security Division is committed to identifying and holding accountable those who support foreign terrorist organizations and pose a threat to our communities.”

“As alleged, Zachary Clark twice pledged allegiance to ISIS, and posted on encrypted pro-ISIS chatrooms numerous exhortations and instructions on bomb-making and other terrorist acts to be carried out in New York.  Thanks to the Joint Terrorist Task Force, Clark now faces serious criminal charges for his alleged support of a terrorist organization bent on killing Americans,” said U.S. Attorney Geoffrey S. Berman for the Southern District of New York.

“As alleged, Clark championed his support for ISIS, disseminated hate-filled messages via encrypted chatrooms, and encouraged like-minded individuals to carry out vicious attacks in the name of jihad, said FBI Assistant Director-in-Charge William F. Sweeney Jr.  “While today’s arrest reminds us that there are still people out there who embrace the idea of inflicting harm on others in this way, it also presents evidence of the dedication and resolve of the FBI’s JTTF here in New York who, along with our many partners, successfully confronts threats of this nature head-on, day in and day out.”

“Today’s arrest in Brooklyn is a reminder that New York City remains a top terrorism target in the United States," said NYPD Commissioner James P. O'Neill.  "The NYPD and all of our law-enforcement partners remain vigilant in this ongoing fight against terror and anyone who would plot to do us harm.”

As alleged in the criminal Complaint, filed on Nov. 25, 2019, in Manhattan federal court:

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

Clark is charged with (1) one count of attempting to provide material support to ISIS, which carries a maximum sentence of 20 years in prison, and (2) one count of distributing information relating to explosives, destructive devices, and weapons of mass destruction, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Assistant Attorney General John Demers and Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which consists principally of agents from the FBI and detectives from the NYPD. 

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, Assistant Attorney General for National Security, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), announced that ZACHARY CLARK was arrested today in Brooklyn, New York.  CLARK is charged in a criminal Complaint with attempting to provide material support to the Islamic State of Iraq and al-Sham (“ISIS”), a designated foreign terrorist organization, and distributing bomb-making instructions.  CLARK is expected to be presented later today before Magistrate Judge Robert W. Lehrburger in Manhattan federal court.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Zachary Clark twice pledged allegiance to ISIS, and posted on encrypted pro-ISIS chatrooms numerous exhortations and instructions on bomb-making and other terrorist acts to be carried out in New York.  Thanks to the Joint Terrorist Task Force, Clark now faces serious criminal charges for his alleged support of a terrorist organization bent on killing Americans.”

Assistant Attorney General John C. Demers said:  “The defendant allegedly provided instructions for how to plan attacks on U.S. soil, encouraging ISIS supporters to attack in well-populated locations.  The National Security Division is committed to identifying and holding accountable those who support foreign terrorist organizations and pose a threat to our communities.

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “As alleged, Clark championed his support for ISIS, disseminated hate-filled messages via encrypted chatrooms, and encouraged like-minded individuals to carry out vicious attacks in the name of jihad. While today’s arrest reminds us that there are still people out there who embrace the idea of inflicting harm on others in this way, it also presents evidence of the dedication and resolve of the FBI’s JTTF here in New York who, along with our many partners, successfully confronts threats of this nature head-on, day in and day out.”

NYPD Commissioner James P. O’Neill said:  “Today’s arrest in Brooklyn is a reminder that New York City remains a top terrorism target in the United States. The NYPD and all of our law-enforcement partners remain vigilant in this ongoing fight against terror and anyone who would plot to do us harm.”

As alleged in the criminal Complaint,[1] filed on November 25, 2019, in Manhattan federal court:

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

*                      *                      *

CLARK, 40, of Brooklyn, New York, is charged with (1) one count of attempting to provide material support to ISIS, which carries a maximum sentence of 20 years in prison, and (2) one count of distributing information relating to explosives, destructive devices, and weapons of mass destruction, which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Berman and Assistant Attorney General Demers praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which consists of investigators and analysts from the FBI, the NYPD, and over 50 other federal, state and local agencies.  

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

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Peter C. Fitzhugh, the Special Agent in Charge of the New York Field Office of the Homeland Security Investigations (“HSI”), announced today the unsealing of an indictment charging antiquities dealer DOUGLAS LATCHFORD, a/k/a “Pakpong Kriangsak”— with wire fraud, smuggling, conspiracy and related charges pertaining to his trafficking in stolen and looted Cambodian antiquities.  LATCHFORD remains at large, residing in Thailand.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, LATCHFORD built a career out of the smuggling and illicit sale of priceless Cambodian antiquities, often straight from archeological sites, in the international art market. This prosecution sends a clear message to the art market and to those who profit from the illegal trafficking of cultural treasures: the United States and the Southern District of New York will use every legal tool to stop the plundering of cultural heritage.”

HSI Special Agent in Charge Peter C. Fitzhugh said:  “The theft and trafficking of cultural property and priceless national treasures is a global concern. Historical artifacts are living sources of knowledge, objects of worships, and symbols of hope that must be safe guarded for future generations.  Through the investigative efforts of HSI special agents, three stolen artifacts from Cambodia and another from India, valued at a total of $750,000, were successfully recovered and will be returned to their rightful homeland.  In addition, an alleged major player in a multi-billion dollar cultural property transnational criminal network was identified and revealed.   Working hand in hand with our partners at the United States Attorney’s Office, Southern District of New York, HSI will not waiver in its commitment to stopping the illicit distribution of cultural property, both domestically and abroad.”

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

 

Background on Looting of Cambodian Antiquities

From the mid-1960s until the early 1990s, Cambodia experienced continuous civil unrest and regular outbreaks of civil war.  During these times of extreme unrest, Cambodian archeological sites from the ancient Khmer Empire, such as Angkor Wat and Koh Ker, suffered serious damage and widespread looting. This looting was widely publicized and well-known to participants in the international art market.

Looted artifacts usually entered the international art market through an organized looting network.  Local looters, often working with local military personnel, would remove statues and architectural elements from their original locations, sometimes breaking and damaging the antiquities in the process of excavation and transportation. The antiquities would be transported to the Cambodia-Thailand border and transferred to Thai brokers, who would in turn transport them to dealers of Khmer artifacts located in Thailand, particularly Bangkok. These dealers would sell the artifacts to local or international customers, who would either retain the pieces or sell them on the international art market. Widespread looting of ancient Khmer and Cambodian antiquities continued into the 1990s.

 

The Scheme to Sell Looted Cambodian Antiquities

At all times relevant to this Indictment, DOUGLAS LATCHFORD, a/k/a “Pakpong Kriangsak,” the defendant, was a prominent collector and dealer in Southeast Asian art and antiquities, in particular, ancient Cambodian art. Starting in or about the early 1970s, LATCHFORD supplied major auction houses, art dealers, and museums around the world, including in the United States, with Cambodian antiquities from the ancient Khmer Empire. LATCHFORD, a dual citizen of Thailand and the United Kingdom, maintained residences in Bangkok and London.

From at least in or about 2000, up to and including at least in or about 2012, LATCHFORD engaged in a fraudulent scheme to sell looted Cambodian antiquities on the international art market, including to dealers and buyers in the United States. As part of that scheme, in order to conceal that LATCHFORD’s antiquities were the product of looting, unauthorized excavation, and illicit smuggling, and to encourage sales and increase the value of his merchandise, LATCHFORD created and caused the creation of false provenance for the antiquities he was selling. In the context of art and antiquities, provenance refers to records and other evidence documenting the origin and history of ownership of an object. In particular, LATCHFORD misrepresented the provenance of Cambodian antiquities in letters, emails, invoices, and other communications. As part of the scheme, LATCHFORD also falsified invoices and related shipping documents to facilitate the international shipment of the antiquities to dealers and buyers, and to avoid restrictions on the importation of Khmer antiquities into the United States.

Beginning in or about the early 1970s, LATCHFORD regularly supplied an auction house based in the United Kingdom (“Auction House-1”) with looted Khmer antiquities, including from the archeological site of Koh Ker in Cambodia. LATCHFORD conspired with representatives of Auction House-1 and others to conceal the real provenance of looted Khmer antiquities and to create false export licenses and documentation. Many of the antiquities that LATCHFORD consigned to Auction House-1 were eventually sold to museums and collectors in the United States.  In or about 2011, an auction house in New York (“Auction House-2”) offered for sale one of the Koh Ker statues that LATCHFORD had originally supplied to Auction House-1, a stone guardian figure called the “Duryodhana.” During the course of preparing to sell the Duryodhana in or about 2010, Auction House-2 asked LATCHFORD and a scholar closely associated with LATCHFORD (the “Scholar”) to help trace the provenance of the Duryodhana back to the early 1970s. LATCHFORD falsely stated to Auction House-2 that he had the Duryodhana in London in 1970, and that he had consigned it with Auction House-1 in 1975; whereas in truth and in fact LATCHFORD had exported the Duryodhana from Cambodia in or about 1972. About a month later, LATCHFORD changed his story, telling Auction House-2, in substance and in part, that he had never owned the Duryodhana. Around the same time that LATCHFORD falsely denied owning the Duryodhana, the Scholar warned LATCHFORD in an email, “I think maybe you shouldn’t be known to have been associated with the Koh Ker Guardian figures[.] . . . Let’s fudge a little, and just put the blame squarely on [Auction House-1] .  .  .  .”

Over the course of his lengthy career, LATCHFORD continued to act as a conduit for recently looted Cambodian antiquities. LATCHFORD advertised purportedly newly discovered and excavated pieces for sale to trusted associates, including a Manhattan-based dealer in Southeast Asian art (the “Dealer”). For example, on or about August 12, 2005, LATCHFORD emailed the Dealer photographs of a bronze seated Buddha, visibly covered in earth. Latchford explained that the photographs showed the statue “before cleaning” by a restorer, and “[w]hen it was found they took off most of the mud, or as it was, a sandy soil, it was found near Sra Srang, the lake in front of Banteay Kedi, right in the Angkor [Wat] Complex.”  Similarly, on or about March 13, 2006, LATCHFORD sent the Dealer an email labeled “PRIVATE AND CONFIDENTIAL -------- FOR YOUR EYES ONLY.” The email contained a photograph of a bronze head. LATCHFORD explained that the head “was recently found around the site of the Angkor Borei group in the N E of Cambodia, in the Preah Vihar area. They are looking for the body, no luck so far, all they have found last week were two land mines !! What price would you be interested in buying it at? let me know as I will have to bargain for it.”  On or about April 23, 2007, LATCHFORD sent the Dealer another email, attaching a photograph of a standing Buddha statue that appears to be covered in dirt. LATCHFORD wrote, “Hold on to your hat, just been offered this 56 cm Angkor Borei Buddha, just excavated, which looks fantastic. It’s still across the border, but WOW.”

In order to facilitate the sale and international transportation of the antiquities to buyers and to conceal that the antiquities were looted, LATCHFORD, created false letters of provenance and false invoices, including letters of provenance purporting to have been drafted by a particular art collector (the “False Collector”). For example, in or about 2000, LATCHFORD sold a 12th Century stone Khmer sculpture to a museum in Colorado (the “Colorado Museum”). LATCHFORD informed the Colorado Museum that he had purchased the piece from the False Collector in June 1999, and provided the Colorado Museum with a letter of provenance purportedly from the False Collector as part of the sale.  However, LATCHFORD also supplied the Colorado Museum with records indicating that the statue was transported from LATCHFORD’s residence in Bangkok to London in 1994, long before he claimed to have purchased it from the False Collector.  The False Collector died in or about 2001. Thereafter, LATCHFORD continued to provide numerous provenance letters purportedly provided by the False Collector, while claiming, falsely, that the False Collector was still alive.

On other occasions, LATCHFORD directed third parties to create false provenance documents and false invoices for him.  For example, in or about September 2005, LATCHFORD sold the Dealer a 12th Century Angkor Wat-style standing Buddha statue for $90,000. LATCHFORD told the Dealer that the Buddha “needs to be cleaned, as there is surface corrosion and earth still on it,” indicia of recent excavation. LATCHFORD arranged to ship the Buddha from Bangkok to an “antique consultant/collector” in Singapore (the “Singapore Collector”), and from Singapore to the Dealer’s gallery in Manhattan. LATCHFORD instructed the Singapore Collector to “re-invoice[]” the Buddha on the Collector’s letterhead, “mentioning it has been in your collection for the past 12 years.” The Singapore Collector followed LATCHFORD’s instructions, creating a new, false invoice and letter of provenance stating that the Buddha had been in the Singapore Collector’s private collection in Singapore for the last 12 years, omitting any mention of LATCHFORD, and falsely describing the statue as a “17th C. Bronze Standing Figure from Laos.” The Singapore Collector then shipped the Buddha with the false invoice and false provenance to the Dealer in Manhattan.

As part of the scheme to sell looted Cambodian antiquities in the United States, from at least in or about 2005 up to and including in or about 2011, LATCHFORD supplied false information to the United States Customs and Border Protection (“CBP”) regarding the antiquities he imported into the United States for resale. In particular, LATCHFORD’s false invoices misstated the nature, age, country of origin, and/or value of the Cambodian antiquities. LATCHFORD misrepresented the country of origin and the age of the goods in particular in order to conceal that they were looted antiquities, and to avoid an embargo on the importation into the United States of Khmer antiquities exported from Cambodia after 1999. Frequently, LATCHFORD listed the “country of origin” as “Great Britain” or “Laos,” rather than Cambodia, and often described the objects as “figures” from the 17th or 18th century.

*                      *                      *

LATCHFORD, 88, of Bangkok, Thailand, is charged with conspiracy to commit wire fraud, substantive wire fraud, and smuggling, each of which carries a maximum sentence of 20 years; conspiracy to commit an offense against the United States, which carries a maximum sentence of five years’ imprisonment; entry of goods by false statements, which carries a maximum sentence of two years’ imprisonment; and one count of aggravated identity theft, which carries a mandatory term of two years’ imprisonment.

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

Mr. Berman praised the outstanding investigative work of Homeland Security Investigations in this case.

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

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

Looted Cambodian art for sale by Douglas Latchford

 

 

 

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[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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that YOSEF ZIEGLER was arrested in connection with four bank robberies in the counties of Rockland, Dutchess, and Bergen from January 24, 2019, through October 29, 2019.  The defendant was arrested this morning in Airmont, New York, and presented in White Plains federal court this afternoon before United States Magistrate Judith C. McCarthy. 

U.S. Attorney Geoffrey S. Berman said: “In quick succession, Yosef Ziegler allegedly committed a series of daring broad-daylight bank robberies in New York and New Jersey.  Ziegler’s alleged conduct not only put bank employees, law enforcement, and the public at risk.  Traumatic events such as this can also cause lasting undue emotional distress on victims and bystanders.  Yosef Ziegler now stands accused of bank robbery charges which could potentially earn him 25 years in federal prison.”

According to the allegations in the Complaint[1]:

On January 24, 2019, at approximately 4:20 p.m., ZIEGLER entered a bank in Pomona, New York, announced that he had a bomb, displayed a cylindrical device attached to wires, and demanded that employees empty the bank’s vault.  ZIEGLER collected approximately $76,000 in United States currency and then fled. 

On April 17, 2019, at approximately 12:00 p.m., ZIEGLER entered a bank in Park Ridge, New Jersey, announced that he had a bomb, and demanded that employees empty the bank’s vault.  ZIEGLER collected approximately $30,150 in United States currency and then fled.  

On June 25, 2019, at approximately 11:50 a.m., ZIEGLER entered a bank in Wappingers Falls, New York, announced that he had bomb, with a device in his hand attached to wires that connected to his belt, and demanded that employees empty the vault and teller draws.  ZIEGLER collected approximately $22,500 in United States currency and then fled.

On October 29, 2019, at approximately 12:00 p.m., ZIEGLER entered a bank in Fishkill, New York, wielding what appeared to be a firearm, which he pointed at employees while demanding that they empty the bank’s vault.  ZIEGLER collected approximately $105,000 in United States currency and then fled.  

Altogether, ZIEGLER allegedly stole over $233,000 from the four robberies. 

*              *             *

ZIEGLER, 29, of Airmont, New York, faces a maximum term of 25 years in prison for each of the three counts of bank robbery.  The statutory maximum sentence is prescribed by Congress and is provided here for information purposes only, as any sentencing of the defendant would be determined by the respective judge.

Mr. Berman praised the outstanding investigative work of the FBI Westchester County Safe Streets Task Force, FBI Hudson Valley Safe Streets Task Force, FBI Newark Division, Bergen County Prosecutors Office, the Ramapo Police Department, the Fishkill Police Department, the New York State Police, and the Dutchess County District Attorney’s Office. Mr. Berman also thanked the Rockland County District Attorneys Office for their assistance.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorney Courtney L. Heavey is in charge of the prosecution.

 

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[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 Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced that ANILESH AHUJA, a/k/a “Neil,” the founder, chief executive officer, and chief investment officer of Premium Point Investments L.P. (“PPI”), was sentenced to 50 months in prison in connection with his conviction following a jury trial for engaging in a securities mismarking scheme from 2014 to 2016.  The jury convicted AHUJA and Jeremy Shor, a former trader at PPI, on securities fraud-related offenses relating to their participation in a scheme to inflate the net asset value (“NAV”) reported to investors for hedge funds managed by PPI by more than $100 million.  AHUJA was sentenced by U.S. District Judge Katherine Polk Failla, who presided over the six-week jury trial.  

Ms. Strauss said:  “Anilesh Ahuja, founder of Premium Point Investments, was convicted of participating in a scheme to mismark securities and thereby mislead investors as to the true value of the funds that Premium Point managed.  Ahuja conspired with others in his company and corrupt brokers to fraudulently inflate the value of the assets under their management, which in turn allowed them charge higher fees and avoid redemptions by investors who otherwise would have pulled their money from Premium Point.  The substantial prison term imposed on Ahuja appropriately holds him accountable for his criminal acts.”

According to the Indictment, evidence presented at trial, and court filings:

Premium Point Investments

In or about 2008, AHUJA co-founded PPI, where he was the chief executive officer and chief investment officer.  PPI managed hedge funds focused primarily on structured credit products, including residential mortgage backed securities (“RMBS”).   PPI’s flagship mortgage credit fund (the “Hedge Fund”) was launched in or about October 2009.  A segregated ERISA fund held the same positions as the Mortgage Credit Fund.  In 2013, PPI launched a new fund (the “New Issue Fund”) that purchased and securitized pools of mortgages that were not issued or guaranteed by a government agency.  At various relevant times between 2008 and 2016, PPI managed billions in assets.  Shor was employed by PPI as a trader, where he focused on non-agency RMBS – i.e., RMBS securities that were not issued by a government agency.   

The Scheme to Mismark Securities

From at least in or about 2014 through at least in or about 2016, AHUJA and Shor participated in a scheme to defraud PPI’s investors and potential investors in the Hedge Fund, ERISA Fund, and the New Issue Fund by deceptively mismarking each month the value of certain securities held in these funds, and thus fraudulently inflating the NAV of those funds as reported to investors and potential investors. 

PPI fraudulently obtained inflated quotes, including from corrupt brokers, and manipulated its valuation process to inflate the purported value of securities held by the funds.    The effect of the mismarking scheme was to materially overstate the reported NAV – at times by more than $100 million across the funds managed by PPI.  This benefited PPI in at least two ways.  First, PPI was able to charge its investors higher management and performance fees.  Second, PPI was able to forestall redemptions by investors who would have requested a return of their funds had they known PPI’s true performance and operating health.

The mismarking scheme evolved as a result of demands by AHUJA that PPI maintain its track record of success and keep pace with the performance of peer funds, regardless of market conditions or the actual performance of the funds.  To achieve the goal of posting competitive returns, AHUJA, along with another partner, set an inflated “target” return for the Hedge Fund, ERISA Fund, and New Issue Fund at the end of each month, which was at times based in part on the performance of peer funds.  The traders at PPI were then tasked with “reverse engineering” marks to meet the “targets.”

*                *                *

In addition to the prison term imposed by Judge Failla, AHUJA, 51, of New York, New York and Miami, Florida, was further sentenced to three years of supervised release.

On November 18, 2019, Judge Failla sentenced Shor to 40 months’ imprisonment and three years of supervised release.

Ms. Strauss praised the work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Andrea M. Griswold, Joshua A. Naftalis, and Max Nicholas are in charge of the prosecution.