Southern District of New York

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), and Margaret Garnett, Commissioner of the New York City Department of Investigation (“DOI”), announced today the unsealing of a superseding indictment charging MARQUIS YOHANIS, a/k/a “DG,” with murder in aid of racketeering, conspiracy to commit murder in aid of racketeering, and a firearms offense in connection with the murder of Nelson Ramos on January 6, 2019, in the Bronx.  Robert Wilson, a/k/a “Ro,” Kevin Crosby, a/k/a “Sama,” and Yefrel Brito, a/k/a “Mini,” were previously arrested on charges related to the murder of Nelson Ramos and are already in federal custody.

YOHANIS was arrested yesterday morning and will be presented today in the South Paris District Court in Maine.  The case is assigned to U.S. District Judge Jesse M. Furman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged in the indictment, Marquis Yohanis, along with his co-defendants, are responsible for the cold-blooded murder of Nelson Ramos earlier this year.  We commend the extraordinary efforts of our law enforcement partners to bring these defendants to justice.”           

HSI Special Agent-in Charge Peter C. Fitzhugh said:  “Mr. Yohanis and his co-defendants would stop at nothing to expand their violent criminal enterprise, including murder, as alleged in court documents.  Working hand in hand with our law enforcement partners at the NYPD and DOI along with the United States Attorney’s Office in the Southern District of New York made today’s arrest possible.  We will always be more determined than criminals are to evade us in bringing them to justice.  Hopefully the arrest of Mr. Yohanis’s will begin a path to healing for all those impacted by his crimes.” 

DOI Commissioner Margaret Garnett said:  “This arrest is another important step in holding accountable those individuals who endanger our City’s neighborhoods and the people who live there.  This investigation reflects the strong impact that law enforcement partnership has on protecting all New Yorkers and rooting out violent crime.”

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

Wilson and Crosby are members or associates of a racketeering enterprise known as the Stevenson Commons Crew.  In order to fund the enterprise, protect and expand its interests, and promote its standing, members and associates of the Stevenson Commons Crew committed, conspired, attempted, and threatened to commit acts of violence against rival gangs, including murder and robbery; conspired to distribute and possess with intent to distribute narcotics; and obtained, possessed and used firearms, including by brandishing and discharging them. 

Brito and YOHANIS are members or associates of a racketeering enterprise known as Sex Money Murder, a criminal organization whose members and associates engaged in, among other things, murder, attempted murder, and narcotics trafficking. 

On January 6, 2019, Wilson, Crosby, Brito, and Yohanis murdered Nelson Ramos in the vicinity of 800 Soundview Avenue in the Bronx, New York.                

*                *                *

YOHANIS, 19, from the Bronx, New York, is charged with one count of murder and assault with a deadly weapon in aid of racketeering, which carries a maximum sentence of death or life in prison, and a mandatory minimum sentence of life in prison; one count of conspiracy to commit murder in aid of racketeering, which carries a maximum sentence of 10 years in prison; and one count of murder through use of a firearm, which carries a maximum sentence of death or life in prison, and a mandatory minimum sentence of five years in prison. 

Mr. Berman praised the investigative work of HSI, the NYPD, and DOI.

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

 

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

 

---

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, James O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), today announced the unsealing of an Indictment charging 13 members and associates of the Mac Baller Brims gang that operated in and around the Mount Hope section of the Bronx with racketeering, narcotics, and firearms offenses, including five attempted murders between September 2018 and July 2019. 

Of the 13 defendants, eight – DERRICK CASADO, a/k/a “Big Bank,” a/k/a “Papa D,” JUSTIN COLON, a/k/a “Lindo,” MICHAEL ROWE, a/k/a “MJ,” CARLOS RIVERA, a/k/a “Nug,” JAHUAN POLLARD, a/k/a “Flip,” CARLOS ROSARIO, a/k/a “Baby Bottle,” a/k/a “Carlito,” a/k/a “Barlito,” a/k/a “Barlos,” JUAN TEJADA, a/k/a “Gotti,” and CHRISTIAN LIVERMAN – were taken into federal custody in New York earlier today.  They were presented before Magistrate Judge Debra Freeman today.  Defendant DAVON MCCULLOUGH, a/k/a “Yung,” a/k/a “Dayday,” was also taken into federal custody in Virginia earlier today, and he was to be presented before Magistrate Judge Lawrence R. Leonard today.  Two other defendants – DARRELL LAWRENCE, a/k/a “Capo,” and GIBRIL DARBOE, a/k/a “Mouse,” a/k/a “G Money” – are currently in state custody in Maine on related charges and will be presented in the District of Maine on a later date.  The case has been assigned to U.S. District Judge J. Paul Oetken.    

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants wreaked havoc on the Mount Hope section of the Bronx, through acts of violence and narcotics trafficking as members of the Mac Baller Brims.  Thanks to the outstanding work of our law enforcement partners at the NYPD, HSI, and DEA, the defendants now face federal charges for these very serious crimes.”

Police Commissioner James O’Neill said:  “This case highlights the NYPD’s relentless pursuit of those few individuals who drive the worst kinds of violence and disorder.  Our success reflects how New Yorkers share in our responsibility to keep families and neighborhoods safe to aid us in reducing crime beyond our record-lows.  I want to commend our partners in the U.S. Attorney’s Office for the Southern District, and the members of Homeland Security Investigations, and the DEA, for working together to dismantle a group allegedly responsible for shootings, robberies, drug-dealing, and more.” 

HSI Special Agent-in-Charge Peter C. Fitzhugh said:  “This investigation exemplifies law enforcement partnerships prevailing over a criminal enterprise only looking to benefit from chaos.  HSI will not back down and will not stop our fight to secure our communities and our nation from violence and narcotics distribution.  Criminal organizations like the Mac Baller Brims should take note that combined law enforcement efforts like this investigation with HSI, the NYPD and DEA along with the United States Attorney’s Office in the Southern District of New York only thrive our resolve to end their existence and eliminate any financial gains they hope to profit.”

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

The Mac Baller Brims were a criminal enterprise, and their members and associates committed numerous acts of violence, including shootings, in and around the Bronx.  They engaged in such acts to preserve and protect their power, territory, and profits, and to promote and enhance the gang and its criminal activities.  Members of the gang also enriched themselves by committing robberies and by selling drugs, such as crack cocaine, heroin, fentanyl, cocaine, oxycodone, and marijuana, including in New York and in Maine.  While conducting their drug business, members and associates of the gang used, carried, and possessed firearms, and members of the gang brandished and fired those guns on multiple occasions since 2017.           

Count One of the Indictment charges DARRELL LAWRENCE, DAVON MCCULLOUGH, GIBRIL DARBOE, DERRICK CASADO, JUSTIN COLON, MICHAEL ROWE, CARLOS RIVERA, JAHUAN POLLARD, CARLOS ROSARIO, DAVONTE GARCIA, and JOSE NOUEL with conspiring to conduct and participate in the conduct and affairs of the Mac Ballers enterprise through a pattern of racketeering activity, including through acts involving murder, robbery, and narcotics distribution.

Counts Two and Three charge ROWE with assault and attempted murder in aid of racketeering in connection with a September 14, 2018, shooting, and a related firearms offense.

Counts Four and Five charge COLON with assault and attempted murder in aid of racketeering in connection with a March 9, 2019, shooting, and a related firearms offense.

Counts Six and Seven charge CASADO with assault and attempted murder in aid of racketeering in connection with a May 17, 2019, shooting, and a related firearms offense.

Counts Eight and Nine charge ROSARIO with assault and attempted murder in aid of racketeering in connection with a July 18, 2019, attempted shooting, and a related firearms offense.

Counts Ten and Eleven charge ROSARIO with assault and attempted murder in aid of racketeering in connection with a July 20, 2019, shooting, and a related firearms offense.

Count Twelve charges LAWRENCE, MCCULLOUGH, DARBOE, CASADO, COLON, ROWE, RIVERA, POLLARD, ROSARIO, GARCIA, and NOUEL, as well as JUAN TEJADA and CHRISTIAN LIVERMAN, with conspiring to distribute and possess with intent to distribute crack cocaine, heroin, fentanyl, cocaine, oxycodone, and marijuana.

Count Thirteen charges LAWRENCE, MCCULLOUGH, DARBOE, CASADO, COLON, ROWE, RIVERA, POLLARD, ROSARIO, GARCIA, NOUEL, TEJADA and LIVERMAN with using, carrying, possessing, brandishing, and discharging firearms during and in relation to a narcotics conspiracy.

*                      *                     *

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

Mr. Berman praised the outstanding work of the NYPD and HSI on this investigation, and thanked the Drug Enforcement Administration for its assistance.

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

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

---

[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.

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Racketeering conspiracy

 

18 U.S.C. § 1962(d)

DARRELL LAWRENCE

DAVON MCCULLOUGH

GIBRIL DARBOE

DERRICK CASADO

JUSTIN COLON

MICHAEL ROWE

CARLOS RIVERA

JAHUAN POLLARD

CARLOS ROSARIO

DAVONTE GARCIA

JOSE NOUEL

Life in prison

2

Assault and attempted murder in aid of racketeering

 

18 U.S.C. §§ 1959 and 2

MICHAEL ROWE

20 years in prison

3

Using, carrying, possessing, brandishing, and discharging a firearm

 

18 U.S.C.
§§ 924(c)(1)(A)(i), (ii), (iii), and 2

MICHAEL ROWE

Life in prison

 

Mandatory minimum of 10 years in prison

4

Assault and attempted murder in aid of racketeering

 

18 U.S.C. §§ 1959 and 2

JUSTIN COLON

 

20 years in prison

5

Using, carrying, possessing, brandishing, and discharging a firearm

 

18 U.S.C.
§§ 924(c)(1)(A)(i), (ii), (iii), and 2

JUSTIN COLON

Life in prison

 

Mandatory minimum of 10 years in prison

6

Assault and attempted murder in aid of racketeering

 

18 U.S.C. §§ 1959 and 2

DERRICK CASADO

 

20 years in prison

7

Using, carrying, possessing, brandishing, and discharging a firearm

 

18 U.S.C.
§§ 924(c)(1)(A)(i), (ii), (iii), and 2

DERRICK CASADO

 

Life in prison

 

Mandatory minimum of 10 years in prison

8

Assault and attempted murder in aid of racketeering

 

18 U.S.C. §§ 1959 and 2

CARLOS ROSARIO

20 years in prison

9

Using, carrying, possessing, and brandishing a firearm

 

18 U.S.C.
§§ 924(c)(1)(A)(i), (ii), and 2

CARLOS ROSARIO

Life in prison

 

Mandatory minimum of 7 years in prison

10

Assault and attempted murder in aid of racketeering

 

18 U.S.C. §§ 1959 and 2

CARLOS ROSARIO

20 years in prison

11

Using, carrying, possessing, brandishing, and discharging a firearm

 

18 U.S.C.
§§ 924(c)(1)(A)(i), (ii), (iii), and 2

CARLOS ROSARIO

Life in prison

 

Mandatory minimum of 10 years in prison

12

Narcotics conspiracy

 

21 U.S.C. § 846

DARRELL LAWRENCE

DAVON MCCULLOUGH

GIBRIL DARBOE

DERRICK CASADO

JUSTIN COLON

MICHAEL ROWE

CARLOS RIVERA

JAHUAN POLLARD

CARLOS ROSARIO

DAVONTE GARCIA

JOSE NOUEL

JUAN TEJADA

CHRISTIAN LIVERMAN

Life in prison

 

Mandatory minimum of 10 years in prison

13

Using, carrying, possessing, brandishing, and discharging firearms

 

18 U.S.C.
§§ 924(c)(1)(A)(i), (ii), (iii), and 2

DARRELL LAWRENCE

DAVON MCCULLOUGH

GIBRIL DARBOE

DERRICK CASADO

JUSTIN COLON

MICHAEL ROWE

CARLOS RIVERA

JAHUAN POLLARD

CARLOS ROSARIO

DAVONTE GARCIA

JOSE NOUEL

JUAN TEJADA

CHRISTIAN LIVERMAN

Life in prison

 

Mandatory minimum of 10 years in prison

 

 

DEFENDANT

AGE

RESIDENCE

DARRELL LAWRENCE, a/k/a “Capo”

29

Bronx, New York

DAVON MCCULLOUGH, a/k/a “Yung,” a/k/a “Dayday”

32

Newport News, Virginia

GIBRIL DARBOE, a/k/a “Mouse,” a/k/a “G Money”

22

Bronx, New York

DERRICK CASADO, a/k/a “Big Bank,” a/k/a “Papa D”

19

Bronx, New York

JUSTIN COLON, a/k/a “Lindo”

20

Bronx, New York

MICHAEL ROWE, a/k/a “MJ”

19

Bronx, New York

CARLOS RIVERA, a/k/a “Nug”

18

Bronx, New York

JAHUAN POLLARD, a/k/a “Flip”

18

Bronx, New York

CARLOS ROSARIO, a/k/a “Baby Bottle,” a/k/a “Carlito,” a/k/a “Barlito,” a/k/a “Barlos”

18

Bronx, New York

DAVONTE GARCIA, a/k/a “VT”

22

Bronx, New York

JOSE NOUEL, a/k/a “Tutu”

22

Bronx, New York

JUAN TEJADA, a/k/a “Gotti”

19

Bronx, New York

CHRISTIAN LIVERMAN

27

Bronx, New York

 

Audrey Strauss, Attorney for the United States acting under authority conferred by 28 U.S.C. § 515, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of four indictments and the arrests of three members of a wide-ranging international insider trading ring.  BRYAN COHEN, an investment banker based in New York, and TELEMAQUE LAVIDAS, the son of a member of the board of directors of Ariad Pharmaceuticals, Inc. (“Ariad”), which, until 2017, was a Boston-based publicly traded company, were both arrested on Friday in Manhattan.  JOSEPH EL-KHOURI, a securities trader, was arrested yesterday in the United Kingdom, and the United States Government will be seeking his extradition to the United States.  BENJAMIN TAYLOR and DARINA WINDSOR, former investment bankers who worked in London, as well as GEORGIOS NIKAS, a securities trader who also owns various business interests in Europe and the United States, including a chain of Greek restaurants in New York, remain at large.

Deputy U.S. Attorney Audrey Strauss said:  “The insider trading charges announced today lay bare a long-running international scheme stretching over the course of years, whose participants earned tens of millions of dollars in illicit profits from illegally trading on stolen inside information.  Our Office, along with our law enforcement partners, will vigorously prosecute those who steal such information and the traders who profit off of it.”   

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, the indictments announced today detail very deliberate activity by both current and former investment bankers, securities traders, and even the son of a corporate board member to illegally profit from receiving or providing advanced knowledge of nonpublic information about publicly traded companies.  When one has access to material, nonpublic information, they’re afforded significant knowledge that could give them a competitive edge in stock and options trading.  Exploiting this knowledge is illegal, and the FBI will continue to investigate and prosecute those who cheat the system in this way.” 

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

The defendants charged were members of a global insider trading ring.  As part of the ring’s illicit conduct, insiders at multiple investment banks obtained material, nonpublic information (“MNPI”) about publicly traded companies and provided that information, sometimes through middlemen, to securities traders who paid for that information in order to place timely, profitable securities trades based on that MNPI.  Members of this ring took steps to evade detection by law enforcement, including by using unregistered “burner” cellphones and encrypted applications to communicate.  In total, the stolen MNPI was used by securities traders to earn tens of millions of dollars in illegal profits.  The charges announced today include charges against investment banking insiders, a close relative of a corporate insider, as well as securities traders who traded on the MNPI.

Investment Bankers Benjamin Taylor and Darina Windsor

Between 2012 and 2016, BENJAMIN TAYLOR and DARINA WINDSOR were investment bankers working in the London offices of two global investment banking advisory firms (“Investment Bank A” and “Investment Bank B,” respectively).  By virtue of their employment at those firms, they had access to MNPI relating to corporate transactions involving clients of Investment Bank A and Investment Bank B, and were able to access computer files relating both to transactions to which they were assigned, and those to which they were not assigned.  Both TAYLOR and WINDSOR were required to keep that MNPI strictly confidential, and they regularly attested that they were complying with their employers’ policies prohibiting insider trading.

Notwithstanding those attestations, TAYLOR and WINDSOR violated their duties of trust and confidence by stealing MNPI from their investment bank employers relating to numerous corporate transactions.  Specifically, TAYLOR stole information from Investment Bank A and sold it to middlemen, and WINDSOR stole information from Investment Bank B and provided it to TAYLOR, who sold it to the same middlemen.  TAYLOR and WINDSOR knew that the MNPI they had stolen would be sold to securities traders, who would be able to execute profitable securities transactions in advance of the MNPI becoming public.  TAYLOR and WINDSOR received from the middlemen over $1 million of benefits, including cash, expensive trips, and luxury watches, for the MNPI they provided. 

In total, TAYLOR and WINDSOR provided the middlemen with information about approximately 16 different corporate transactions, all relating to companies whose securities were listed on United States exchanges.  The MNPI that TAYLOR and WINDSOR stole, and then sold, yielded tens of millions of dollars of illicit profits, including by securities traders residing in Switzerland and the United Kingdom.

TAYLOR, who passed the MNPI to the middlemen, used encrypted messaging applications and unregistered “burner” cellphones to communicate with other members of the scheme and arrange in-person meetings to discuss their scheme.  One of the securities traders who received the MNPI that TAYLOR and WINDSOR stole occasionally purchased the relevant securities and then provided the MNPI to journalists for the purpose of causing them to write news stories relating to the MNPI that could influence a company’s stock price.

The indictment charging TAYLOR and WINDSOR has been assigned to United States District Judge Vernon S. Broderick.

Investment Banker Bryan Cohen

COHEN is an investment banker working in the investment banking division of a global investment banking advisory firm (“Investment Bank C”).  By virtue of his employment at Investment Bank C, COHEN had access to MNPI relating to corporate transactions, and was under duties and obligations to keep that MNPI strictly confidential.  COHEN previously worked in the London office of Investment Bank C, and later transferred to its New York office.   

Notwithstanding his duties to keep the MNPI confidential, between 2015 and 2017, COHEN stole MNPI from Investment Bank C and passed it to a European securities trader in order to trade based on the MNPI.  COHEN informed the securities trader both about corporate acquisitions as well as updates about how the deals were progressing over time.  Some of the inside information that COHEN provided related to companies whose securities were listed on United States exchanges.  The information that COHEN provided ultimately resulted in substantial profits for the traders who received it and traded based on it.  In exchange for providing MNPI he stole from Investment Bank C, COHEN received benefits, including cash, from the securities trader.

COHEN took steps to conceal his scheme, including communicating through “burner” cellphones and receiving cash in person and through intermediaries.

The indictment charging COHEN has been assigned to United States District Judge William H. Pauley III.

Securities Trader Joseph El-Khouri

EL-KHOURI is a securities trader who resides in London, England.  Between February and October 2015, he provided cash, gifts, and other benefits, including travel and expensive hotel stays, to a middleman, in exchange for obtaining MNPI about corporate transactions that had been stolen by TAYLOR and WINDSOR and provided to the middleman in exchange for cash and gifts, part of which were used to compensate TAYLOR and WINDSOR for providing that information.  In total, EL-KHOURI placed trades in the stocks of at least six companies based on the MNPI and prior to the companies announcing their acquisitions to the public, and generated nearly $2 million in illicit profits from those trades.

EL-KHOURI and the middleman regularly communicated both in person and by phone about their scheme, including by using encrypted messaging applications and “burner” phones that they destroyed and replaced on a regular basis, in order to avoid detection by law enforcement. 

The indictment charging EL-KHOURI has been assigned to United States District Judge John G. Koeltl.

Securities Trader Georgios Nikas and Telemaque Lavidas

NIKAS’s Trading Based on MNPI Stolen from Investment Banks

NIKAS is a securities trader who also owns various business interests in Europe and the United States, including a chain of Greek restaurants in New York.  NIKAS received MNPI concerning acquisitions and potential acquisitions of publicly traded companies from another securities trader in the scheme.  NIKAS knew that the MNPI was obtained from insiders at investment banks who breached their duties in stealing and passing on the information.

NIKAS began trading with the other securities trader based on MNPI that had been collected from investment banking insiders in 2010.  From December 2012 through 2017, they obtained MNPI from TAYLOR, WINDSOR, and COHEN, all of whom had stolen the MNPI from their respective investment banks.  NIKAS then executed securities trades, both in his own name and in a purported hedge fund that he and the other securities trader used to trade based on the stolen MNPI.  NIKAS ultimately placed trades in the securities of at least 12 companies, which were listed on United States exchanges, based on stolen MNPI, and reaped millions of dollars in profits.

NIKAS and others involved in the scheme also took numerous steps to conceal their activity, including using multiple “burner” cellphones to communicate with each other.  COHEN even picked up the “burner” cellphones that he used to communicate with other members of the scheme from a restaurant owned and operated by NIKAS in New York.

NIKAS’s Trading Based on MNPI Obtained from Lavidas and Stolen from Ariad

NIKAS also obtained MNPI concerning Ariad from LAVIDAS, the relative of a corporate insider.  NIKAS and LAVIDAS together engaged in a scheme, beginning in 2013, to steal confidential inside information from Ariad, a biotechnology company headquartered in Boston that was marketing Iclusig, a drug for treatment of leukemia, for their personal use.  NIKAS and LAVIDAS were friends, and NIKAS also had a personal relationship with a member of the board of directors of Ariad (“Director-1”), who was LAVIDAS’s father.  LAVIDAS used his connection to Director-1 to obtain MNPI about Ariad and then provided that information to NIKAS, who reaped millions of dollars in profits by trading based on that MNPI.  NIKAS also provided the MNPI to another securities trader in the scheme, who also reaped substantial profits by trading on the information.  During the course of the conspiracy, NIKAS paid LAVIDAS in exchange for the MNPI.

Specifically, on four separate occasions from 2013 through 2015, Director-1 became aware of MNPI relating to Ariad, and disclosed that information to LAVIDAS, who in turn disclosed it to NIKAS so that NIKAS could trade on it.  Those four occasions included an announcement that the European Commission was expected to approve the marketing of Iclusig in or about early July 2013; concerns raised by the U.S. Food and Drug Administration (“FDA”) regarding clinical trials for Iclusig in or about September and October 2013; the resumption of marketing and distribution of Iclusig in the United States in or about November and December 2013; and a confidential offer to acquire Ariad by another company in or about the summer of 2015.  In each instance, after NIKAS received the MNPI from LAVIDAS, he executed securities trades based on the MNPI, and then profited after the news was publicly announced.

The indictment charging NIKAS and LAVIDAS has been assigned to United States District Judge Denise Cote.

*                      *                      *

A chart listing the age, place of residence, and charges for each of the six charged defendants is attached.  Various of the defendants are charged with conspiracy to commit securities fraud and fraud in connection with a tender offer, which carries a statutory maximum sentence of five years in prison, conspiracy to commit wire fraud and securities fraud, which carries a statutory maximum sentence of 20 years in prison, securities fraud pursuant to Title 15 of the United States Code, which carries a statutory maximum of 20 years in prison, fraud in connection with a tender offer, which carries a statutory maximum of 20 years in prison, wire fraud, which carries a statutory maximum of 20 years in prison, and securities fraud pursuant to Title 18 of the United States Code, which carries a statutory maximum of 25 years in prison.

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

Ms. Strauss praised the work of the FBI.  She further thanked the Securities and Exchange Commission for its cooperation and assistance in this investigation.  She added that the FBI’s investigation was ongoing.  The Justice Department’s Office of International Affairs of the Department’s Criminal Division assisted in the investigation.

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

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

United States v. Benjamin Taylor and Darina Windsor, S7 19 Cr. 184 (VSB)

United States v. Bryan Cohen, 19 Cr. 741 (WHP)

United States v. Joseph El-Khouri, 19 Cr. 652 (JGK)

United States v. Georgios Nikas and Telemaque Lavidas, 19 Cr. 716 (DLC)

Name

Age

Place of residence

Charges

Number of counts

Benjamin Taylor

35

France

18 U.S.C. § 371 (conspiracy to commit securities fraud and fraud in connection with a tender offer)

 

18 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

 

15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5 (securities fraud)

 

15 U.S.C. §§ 78n(e) and 78ff, 17 C.F.R. §§ 240.14e-3(a) and 240.14e-3(d) (fraud in connection with a tender offer)

 

18 U.S.C. § 1343 (wire fraud)

 

18 U.S.C. § 1348 (securities fraud)

 

1

 

1

 

16

 

5

 

16

 

1

Darina Windsor

32

Thailand

18 U.S.C. § 371 (conspiracy to commit securities fraud and fraud in connection with a tender offer)

 

18 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

 

15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5 (securities fraud)

 

15 U.S.C. §§ 78n(e) and 78ff, 17 C.F.R. §§ 240.14e-3(a) and 240.14e-3(d) (fraud in connection with a tender offer)

 

18 U.S.C. § 1343 (wire fraud)

 

18 U.S.C. § 1348 (securities fraud)

 

1

 

1

 

 

13

 

5

 

13

 

1

Bryan Cohen

33

New York, New York

18 U.S.C. § 371 (conspiracy to commit securities fraud)

 

18 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

 

1

 

1

Joseph El-Khouri

52

London, United Kingdom

18 U.S.C. § 371 (conspiracy to commit securities fraud and fraud in connection with a tender offer)

 

18 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

 

15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5 (securities fraud)

 

15 U.S.C. §§ 78n(e) and 78ff, 17 C.F.R. §§ 240.14e-3(a) and 240.14e-3(d) (fraud in connection with a tender offer)

 

18 U.S.C. § 1343 (wire fraud)

 

18 U.S.C. § 1348 (securities fraud)

 

1

 

1

 

6

 

 

2

 

6

 

1

Georgios Nikas,

  a/k/a “George Nikas”

54

New York, New York

Greece

18 U.S.C. § 371 (conspiracy to commit securities fraud)

 

18 U.S.C. § 371 (conspiracy to commit securities fraud and fraud in connection with a tender offer)

 

18 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

 

15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5 (securities fraud)

 

15 U.S.C. §§ 78n(e) and 78ff, 17 C.F.R. §§ 240.14e-3(a) and 240.14e-3(d) (fraud in connection with a tender offer)

 

18 U.S.C. § 1343 (wire fraud)

 

18 U.S.C. § 1348 (securities fraud)

 

 

1

 

1

 

2

 

 

11

 

3

 

11

 

2

Telemaque Lavidas

38

New York, New York

Greece

18 U.S.C. § 371 (conspiracy to commit securities fraud)

 

8 U.S.C. § 1349 (conspiracy to commit wire fraud and securities fraud)

 

15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. § 240.10b-5 (securities fraud)

 

18 U.S.C. § 1343 (wire fraud)

 

18 U.S.C. § 1348 (securities fraud)

 

1

 

1

 

3

 

3

 

1

 

 

 

---

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JAMES T. BOOTH pled guilty to securities fraud in connection with his years-long scheme to defraud customers of his financial services firm, Booth Financial Associates (“Booth Financial”), of nearly $5 million through a variety of lies and misrepresentations.  BOOTH pled guilty before U.S. District Judge John G. Koeltl.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Booth bilked some 40 clients of nearly $5 million by convincing them that he would deliver solid and secure returns on their investments.  Instead, Booth delivered lies and deceit.  Today, Booth has admitted to his scheme and now faces a prison term for his lies.” 

According to the allegations contained in the Indictment:

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

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

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

 

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

 

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

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

*                      *                      *

BOOTH, 74, of Norwalk, Connecticut, pled guilty to one count of securities fraud, 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 the judge.

BOOTH is scheduled to be sentenced by Judge Koeltl on February 21, 2020.           

Mr. Berman praised the outstanding work of Homeland Security Investigations and also thanked the New York City Police Department, which assisted in the investigation. 

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

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”), Michael Greco, the United States Marshal for the Southern District of New York (“USMS”), and John Mueller, Commissioner of the Yonkers Police Department (“YPD”), announced charges today against MICHAEL CABON for attempting to murder a federal law enforcement officer.  The defendant was presented in White Plains federal court this afternoon before United States Magistrate Judge Lisa Margaret Smith.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendant brazenly used deadly force against law enforcement seeking to effectuate a routine warrant.  This incident is a solemn reminder of the dangers our law enforcement partners face each and every day.  We will work tirelessly to ensure that those who put them in harm’s way face justice.”

FBI Assistant Director William F. Sweeney Jr. said:  “People in this country break the law every day, and as law enforcement we are charged with investigating those crimes and holding those criminal accountable.  We assume the physical risks when carrying out court ordered actions, but no one should lose their lives while those actions take place.  I’m relieved this situation did not turn deadly which is a credit to the professionalism of the arresting officers and agents who were on scene.”

United States Marshal Michael Greco said:  “This incident involving members of the U.S. Marshals NY/NJ Regional Fugitive Task Force, highlights the inherent dangers often facing our deputies and task force officers in the performance of their duties.  Nevertheless, these courageous and dedicated law enforcement officers continue to uphold their sworn duty in the pursuit of justice without hesitation.”

Yonkers Police Commissioner John Mueller said:  “Every officer knows the risks and dangers inherent to law enforcement work but still goes out every day into the world to do the complex and difficult job of keeping us safe. When an officer is assaulted, it is an attack upon our community, our residents, our society, and will be met with swift justice. I am grateful and relieved that the victim will recover and extremely proud of him and the officers at scene; despite being faced with deadly force, they took the defendant into custody and delivered him into the criminal justice system where he must now answer for his acts.”

As alleged in the Complaint[1]:

On October 18, 2019, a joint operation between the U.S. Marshals New York/New Jersey Regional Fugitive Task Force and local law enforcement sought to arrest CABON on a bench warrant issued by a Yonkers City Court Judge.  In the course of that arrest, CABON wielded knives in both hands and attempted to stab arresting officers, including a Special Deputy United States Marshal (“Victim-1”).  CABON successfully stabbed Victim-1 before being restrained and arrested by other officers.  Victim-1 was immediately rushed to a nearby hospital and treated for his injuries. 

*                *                *

CABON, 29, of Yonkers, New York, is charged with one count of attempting to murder a federal officer and one count of using a deadly weapon to interfere with the performance of a federal officer’s official duties.  Each count carries a maximum sentence of 20 years in prison.

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

Mr. Berman praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force, which comprises Special Agents and Task Force Officers from the FBI, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, U.S. Probation, New York State Police, New York City Police Department, Westchester County Police Department, Westchester County District Attorney’s Office, Yonkers Police Department, Mount Vernon Police Department, Peekskill Police Department, Greenburgh Police Department and New Rochelle Police Department.  He also thanked the Westchester County District Attorney’s Office for their assistance.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorney Shiva H. Logarajah is in charge of the prosecution.

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

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the descriptions of the Complaint 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 NKANGA NKANGA, a Staten Island physician, pled guilty to illegally distributing oxycodone and other controlled substances.  NKANGA pled guilty before United States Magistrate Judge Debra Freeman to narcotics conspiracy and distribution charges.  NKANGA will be sentenced by United States District Judge Jesse M. Furman, to whom the case is assigned.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Nkanga Nkanga violated the law and the oath of his profession by knowingly selling prescriptions for dangerous opioids to people who did not need them.  Indeed, he sold prescriptions to people he had reason to believe were addicted to these potentially lethal drugs.  Now he awaits sentencing for his role as a drug dealer masquerading as a doctor.”

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

From at least 2013 until late 2018, in exchange for cash payments, NKANGA wrote hundreds of oxycodone and other controlled substances prescriptions for patients he knew had no legitimate medical need for them, some of whom displayed visible signs of drug addiction.  NKANGA wrote prescriptions for these highly addictive substances without conducting any physical examination, or seeing patients in an examination room.  NKANGA wrote prescriptions in the names of patients who did not even visit his medical office.  On one occasion, for instance, NKANGA asked a patient, “[H]ow many people are you representing today,” and then wrote prescriptions in the names of multiple people, even though three were not present.  NKANGA regularly prescribed over 100 oxycodone pills per patient per month until mid-2018, when he reduced all patients’ monthly allotment, telling one patient he was “very worried” about scrutiny from law enforcement.  

*                *                *

NKANGA, 66, of Staten Island, New York, pled guilty to one count of conspiracy to distribute controlled substances and four counts of distribution of controlled substances.  Each count carries a maximum sentence of 20 years in prison.  The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Sentencing before Judge Furman is scheduled for January 30, 2020, at 3:30 p.m.

Mr. Berman praised the outstanding investigative work of the Drug Enforcement Administration’s (“DEA”) New York Tactical Diversion Squad, the U.S. Department of Health and Human Services-Office of the Inspector General, and the New York City Police Department (“NYPD”).  DEA’s Tactical Diversion Squad (Group TDS-NY) comprises agents and officers from the DEA, the NYPD, the New York State Police, New York State Department of Financial Services, and New York City Department of Investigation.

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Nicolas Roos, Jacob R. Fiddelman, and Cecilia E. Vogel are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John C. Demers, Assistant Attorney General for National Security, announced today the entry of a judgment of forfeiture regarding the M/V Wise Honest (the “Wise Honest”), a 17,061-ton, single-hull bulk carrier ship flagged in the Democratic People’s Republic of Korea (“DPRK” or “North Korea”).  The Wise Honest, one of the largest North Korean-flagged vessels, was used to conduct large illicit shipments of coal from North Korea and to import heavy machinery back to the DPRK.  Payments for maintenance, equipment, and improvements of the Wise Honest were made in U.S. dollars through unwitting U.S. banks, in violation of U.S. law and United Nations Security Council resolutions. 

U.S. Attorney Geoffrey S. Berman said:  “Today’s judgment of forfeiture finalizes the U.S. government’s seizure of the Wise Honest and officially takes this North Korean vessel out of commission.  It will no longer be used to further a criminal scheme.  Using the full set of tools at our disposal, we will continue to investigate and prosecute attempts to evade U.S. sanctions, including by the North Korean regime.”

Assistant Attorney General for National Security John C. Demers said:  “This order of forfeiture sinks the Wise Honest’s career as one of North Korea’s largest sanctions-busting vessels.  The Department of Justice will continue to pursue other property used to violate U.S. and international sanctions, around the globe, with the cooperation of our international partners.”

According to documents filed in Manhattan federal court:

Pursuant to the International Emergency Economic Powers Act (“IEEPA”) and the North Korea Sanctions and Policy Enhancement Act of 2016 (“NKSPEA”), the DPRK and individuals or entities that the Department of the Treasury, Office of Foreign Assets Control (“OFAC”) has determined are involved in the facilitation of proliferation of weapons of mass destruction (“WMDs”) are prohibited from engaging in transactions with U.S. persons, involving U.S.-origin goods, or using the U.S. financial system.  The United Nations Security Council has similarly prohibited the provision of goods, technology, and services to North Korea, including the sale, supply, or transfer of coal.

From November 2016 through April 2018, the Wise Honest was used by Korea Songi Shipping Company, an affiliate of Korea Songi General Trading Corporation – which, in 2017, OFAC determined was “subordinate to the [Korean People’s Army] and involved in exporting North Korean coal” – and one of Korea Songi Shipping Company’s representatives, Kwon Chol Nam, to export coal from North Korea to foreign purchasers and import machinery to North Korea (the “Korea Songi Scheme”). 

On March 14, 2018, the Wise Honest was loaded with coal in Nampo, North Korea.  On April 2, 2018, Indonesian maritime authorities intercepted and detained the Wise Honest.  Although maritime regulations require vessels like the Wise Honest engaged in international voyages to operate an automatic identification system (“AIS”) capable of providing information about the vessel to other ships and to coastal authorities, and despite its March 2018 voyage from North Korea, the Wise Honest had not broadcast an AIS signal since August 4, 2017. 

Participants in the Korea Songi Scheme additionally attempted to conceal the Wise Honest’s DPRK affiliation by falsely listing the Wise Honest’s nationality or the origin of the illicit coal on board the vessel in shipping documentation, for example, as from Tanzania or Russia.

In connection with Korea Songi Scheme, Kwon paid for numerous improvements, equipment purchases, and service expenditures for the Wise Honest in U.S. dollars through U.S. financial institutions.  Such transfers constitute a provision of services by U.S. banks to both the sender and recipient of the funds, and U.S. law prohibits banks from providing such services to North Korean parties.  In connection with the March 2018 shipment of coal on board the Wise Honest alone, payments totaling more than $750,000 were transmitted through accounts at a U.S. financial institution.

On May 9, 2019, the U.S. Attorney’s Office filed a civil forfeiture complaint against the Wise Honest, which had previously been seized pursuant to a warrant issued in the Southern District of New York.  Today’s judgment of forfeiture was ordered by U.S. District Judge P. Kevin Castel. 

*                      *                     *

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation and its New York Field Office, Counterintelligence Division, and thanked the Department of Justice’s Money Laundering and Asset Recovery Section’s Program Operations Unit and Office of International Affairs, the U.S. Coast Guard, and the Department of State for their assistance.

Mr. Berman also thanked Fred and Cindy Warmbier, the parents of the late Otto Warmbier, for their willingness to voluntarily withdraw their claim in the action in order to facilitate the forfeiture of the Wise Honest.

The case is being handled by the Office’s Terrorism and International Narcotics Unit and Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys David W. Denton Jr. and Benet J. Kearney are in charge of the case, with assistance from Trial Attorney Christian Ford of the Counterintelligence and Export Control Section. 

 

The Department of Justice today announced the entry of a judgment of forfeiture regarding the M/V Wise Honest (the “Wise Honest”), a 17,061-ton, single-hull bulk carrier ship registered in the Democratic People’s Republic of Korea (“DPRK” or “North Korea”).  The Wise Honest, one of North Korea’s largest bulk carriers, was used to illicitly ship coal from North Korea and to deliver heavy machinery back to the DPRK.  Payments for maintenance, equipment and improvements of the Wise Honest were made in U.S. dollars through unwitting U.S. banks.  This conduct violates longstanding U.S. law and United Nations Security Council resolutions.  

“This order of forfeiture sinks the Wise Honest’s career as one of North Korea’s largest sanctions-busting vessels,” said Assistant Attorney General for National Security John C. Demers.  “The Department of Justice will continue to pursue other property used to violate U.S. and international sanctions, around the globe, with the cooperation of our international partners.”​

​“Today’s judgment of forfeiture finalizes the U.S. government’s seizure of the Wise Honest and officially takes this North Korean vessel out of commission,” said U.S. Attorney Geoffrey S. Berman for the Southern District of New York.  “It will no longer be used to further a criminal scheme.  Using the full set of tools at our disposal, we will continue to investigate and prosecute attempts to evade U.S. sanctions, including by the North Korean regime.”

​According to documents filed in Manhattan federal court:

​Pursuant to the International Emergency Economic Powers Act (IEEPA) and the North Korea Sanctions and Policy Enhancement Act of 2016 (NKSPEA), the DPRK and individuals or entities that the Department of the Treasury, Office of Foreign Assets Control (OFAC) has determined are involved in the facilitation of proliferation of weapons of mass destruction (WMDs) are prohibited from engaging in transactions with U.S. persons, involving U.S.-origin goods, or using the U.S. financial system.  The United Nations Security Council has similarly prohibited the provision of goods, technology, and services to North Korea, and the sale, supply, or transfer of coal from North Korea.

​From at least November 2016 through April 2018, the Wise Honest was used by Korea Songi Shipping Company, an affiliate of Korea Songi General Trading Corporation, to export coal from North Korea to foreign purchasers and import machinery to North Korea (the “Korea Songi Scheme”).  On June 1, 2017, OFAC designated Songi Trading Company pursuant to Executive 13722 for its involvement in the sale, supply, or transfer of coal from North Korea.  OFAC also determined Songi Trading Company was a subordinate of the Korean People’s Army.

​On or about March 14, 2018, the Wise Honest was loaded with coal in Nampo, North Korea.  On or about April 2, 2018, foreign maritime authorities intercepted and detained the Wise Honest.  Maritime regulations require vessels like the Wise Honest engaged in international voyages to operate an automatic identification system (AIS) capable of providing information about the vessel to other ships and coastal authorities.  However, despite its March 2018 voyage from North Korea, the Wise Honest had not broadcast an AIS signal since Aug. 4, 2017.  

​Participants in the Korea Songi Scheme attempted to conceal the Wise Honest’s DPRK affiliation by falsely listing different countries for the Wise Honest’s nationality and the origin of the illicit coal in shipping documentation.

​In connection with Korea Songi Scheme, Kwon Chol Nam, one of Korea Songi Shipping Company’s Representatives, paid for numerous improvements, equipment purchases, and service expenditures for the Wise Honest in U.S. dollars through U.S. financial institutions.  Such transfers constitute a provision of services, and longstanding U.S. law prohibits banks from providing such services to North Korean parties.  Payments totaling more than $750,000 were transmitted through accounts at a U.S. financial institution in connection with the March 2018 shipment of coal on board the Wise Honest.

​On May 9, 2019, the United States Attorney’s Office for the Southern District of New York filed a civil forfeiture complaint against the Wise Honest, which had previously been seized pursuant to a warrant issued in the Southern District of New York.  Today’s judgment of forfeiture, which was ordered by the Honorable P. Kevin Castel of the Southern District of New York, confirms the U.S. Government’s ownership of the Wise Honest.  

Assistant Attorney General Demers and U.S. Attorney Berman praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division, and thanked the Department of Justice’s Money Laundering and Asset Recovery Section and Office of International Affairs; the United States Coast Guard; and the Department of State for their assistance.

Assistant Attorney General Demers and U.S. Attorney Berman also thanked Fred and Cindy Warmbier, the parents of the late Otto Warmbier, for their willingness voluntarily to withdraw their claim in the action in order to facilitate the forfeiture of the Wise Honest.

​The case is being handled by Assistant U.S. Attorneys David W. Denton, Jr. and Benet J. Kearney of the U.S. Attorney’s Office for Southern District of New York, and Trial Attorney Christian Ford of the National Security Division’s Counterintelligence and Export Control Section.    

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Wendy C. Woolcock, the Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that a jury returned a guilty verdict against JUAN ANTONIO HERNÁNDEZ ALVARADO, a/k/a “Tony Hernández” (“HERNÁNDEZ”) on all four counts in the Superseding Indictment, which included cocaine-importation, weapons, and false-statements offenses.  HERNÁNDEZ is scheduled to be sentenced on January 17, 2020.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Former Honduran congressman Tony Hernandez was involved in all stages of the trafficking through Honduras of multi-ton loads of cocaine that were destined for the U.S.  Hernandez bribed law enforcement officials to protect drug shipments, solicited large bribes from major drug traffickers, and arranged machinegun-toting security for cocaine shipments.  Today, Hernandez stands convicted of his crimes and faces the possibility of a lengthy prison sentence.”

DEA Special Agent in Charge Wendy C. Woolcock said:  “This conviction serves as a warning to all those who traffic illegal drugs into our country with complete disregard for human life.  The United States will not tolerate any individual or organization that seeks to gain profit through violence and corruption.  The DEA will continue to stand with its partners to pursue justice regardless of social status.  No one is exempt from being held accountable for predatory criminal activity.”

As reflected in the Superseding Indictment and the evidence presented at trial:

HERNÁNDEZ is a former member of the National Congress of Honduras, the brother of the current President of Honduras, and a large-scale drug trafficker who worked with other drug traffickers in, among other places, Colombia, Honduras, and Mexico, to import cocaine into the United States.  From at least in or about 2004, up to and including in or about 2018, HERNÁNDEZ helped process, receive, transport, and distribute multi-ton loads of cocaine that arrived in Honduras via planes, helicopters, and go-fast vessels.  HERNÁNDEZ controlled cocaine laboratories in Honduras and Colombia, at which some of his cocaine was stamped with the symbol “TH,” i.e., “Tony Hernández.”  HERNÁNDEZ also coordinated and, at times, participated in providing heavily armed security for cocaine shipments transported within Honduras, including by members of the Honduran National Police and drug traffickers armed with machineguns and other weapons.  HERNÁNDEZ also used members of the Honduran National Police to coordinate the drug-related murder of Franklin Arita in 2011, and he used drug-trafficking associates to murder a drug worker known as “Chino” in 2013.  In connection with these activities, HERNÁNDEZ participated in the importation of almost 200,000 kilograms of cocaine into the United States. 

HERNÁNDEZ made millions of dollars through his cocaine trafficking, and he funneled millions of dollars of drug proceeds to National Party campaigns to impact Honduran presidential elections in 2009, 2013, and 2017.  Between 2010 and at least 2013, one of HERNÁNDEZ’s principal co-conspirators was former Sinaloa Cartel leader Joaquín Archivaldo Guzmán Loera, a/k/a “Chapo.”  During that period, HERNÁNDEZ helped Guzmán Loera with numerous large cocaine shipments and delivered a $1 million bribe from Guzmán Loera to HERNÁNDEZ’s brother in connection with the 2013 national elections in Honduras.      

*                *                *

HERNÁNDEZ, 42, was convicted on four counts:  (1) conspiring to import cocaine into the United States, which carries a mandatory minimum prison term of 10 years and a maximum prison term of life; (2) using and carrying machine guns during, and possessing machine guns in furtherance of, the cocaine-importation conspiracy, which carries a mandatory consecutive prison term of 30 years; (3) conspiring to use and carry machine guns during, and to possess machine guns in furtherance of, the cocaine-importation conspiracy, which carries a maximum prison term of life; and (4) making false statements to federal agents, which carries a maximum prison term of five years.

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

This case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Amanda L. Houle, Jason A. Richman, Matthew J. Laroche, and Emil J. Bove III are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Peter Lopez, Regional Administrator of the U.S. Environmental Protection Agency (“EPA”), announced today that the United States has filed a civil lawsuit against MARK FORD, MARK FORD STABLES, INC., MARK FORD STAGE ROAD PROPERTY, INC., and FORD EQUINE, LTD. (collectively, “Defendants”), seeking injunctive relief and civil penalties for violations of the Clean Water Act (“CWA”) in connection with Defendants’ construction and operation of a horse racing training facility in Orange County.

U.S. Attorney Geoffrey S. Berman said:  “The defendants violated the laws protecting our Nation’s wetlands and have repeatedly discharged waste from their horse training facility into the waters of the United States.  This lawsuit will hold the defendants accountable for violating our environmental laws and require them to remedy the significant damage they have caused to federal wetlands.”

EPA Regional Administrator Peter Lopez stated:  “EPA is taking this action to enforce the Clean Water Act and protect America’s wetlands.  The defendants in this case showed a disregard for the law, resulting in the destruction of federal wetlands, among other violations.”  

According to the Complaint filed today in White Plains federal court:

Defendants own and operate a 76-acre horse racing training center and stables on two adjacent properties in the Town of Wallkill in Orange County, New York.  From 2007 to 2017, Defendants destroyed existing federal wetlands and rerouted streams in the course of building a horse racing training center at both properties.  In addition, Defendants have operated a concentrated animal feeding operation without a permit, allowing horse washwater and process wastewater to be discharged into waters of the United States.  Defendants also violated the terms of a stormwater construction general permit during construction work at one of the properties from January 2016 to February 2017. 

*                *                *

This case is being handled by the Office’s Environmental Protection Unit.  Assistant United States Attorney Tomoko Onozawa is in charge of the case.

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 Division of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an Indictment charging RAMON SOLLA, a/k/a “Ray,” a/k/a “RB,” with the March 3, 1995, murders of Ricky Santiago and Christopher Torro,  a/k/a “Christopher Rossy,” in New York, New York.  SOLLA was arrested today and will be presented this afternoon before U.S. Magistrate Judge Stewart D. Aaron.  This case is assigned to U.S. District Judge Colleen McMahon.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For more than two decades, the families of Ricky Santiago and Christopher Torro have been waiting for justice.  Thanks to the extraordinary efforts of the FBI and the NYPD, Ramon Solla will now face justice for his alleged role in the brutal murder of two teenage boys.  We hope today’s arrest brings some measure of comfort to the victims’ families.” 

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Decades have gone by since these young boys were murdered, but the detectives and agents working the case never gave up on finding the killer who pulled the trigger.  The fact that we have an alleged suspect in handcuffs today is a testament to their dedication, hard work, and our strong partnerships with the NYPD through the FBI New York Metro Safe Streets Task Force and working with the NYPD Cold Case Squad.  Time doesn’t wear away the guilt of anyone who takes a human life, and it doesn’t erode our determination to find those responsible.”

NYPD Commissioner James P. O’Neill said:  “The ability of investigators to bring justice for these two victims and provide a sense of closure to their loved ones is paramount.  The identification and arrest of the suspect in this case would not have been possible without the collaboration between the NYPD and our law-enforcement partners.  I thank the U.S. Attorney for the Southern District of New York, the FBI, and the hardworking members of the NYPD, who efforts resulted in this arrest.”

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

On March 3, 1995, on the rooftop of 250 East 105th Street in New York, New York, SOLLA shot and killed both Ricky Santiago, 17, and Christopher Torro, 17.  SOLLA committed both murders in furtherance of a conspiracy to distribute more than one kilogram of heroin.

*                *                *

SOLLA, 45, of New York, New York, is charged with two counts of using a firearm to commit murder, each of which carries a maximum sentence of life in prison or death, and a mandatory minimum sentence of five years in prison, and with two counts of murder in furtherance of a drug crime, each of which carries a maximum sentence of life in prison or death, and a mandatory minimum sentence of 20 years in prison.  The maximum and minimum 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 the FBI and the NYPD.

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Maurene Comey and Allison Nichols are in charge of the prosecution.

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

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth 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 JAMEL JONES, a/k/a “Mel Murda,” was sentenced to 135 months in prison in connection with his participation in the Nine Trey Gangsta Bloods (“Nine Trey”) and the distribution of narcotics, including heroin and fentanyl.  JONES pled guilty on April 3, 2019, before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Under Jamel Jones’s leadership, the Nine Trey gang acted with impunity to ensure their narcotics business remained intact, including shootings, assaults, and robberies.  Now, Jones faces more than a decade behind bars for his role and involvement in this violent gang.”

According to court documents and the evidence presented at the trial of JONES’ co-defendants:

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

The leadership structure of Nine Trey is divided into two parts: the Prison Lineup, which consists of incarcerated members, and the Street Lineup, which consists of members who are not incarcerated.  JONES was the Godfather of the Street Lineup.

JONES pled guilty to one count of racketeering conspiracy for his participation in the Nine Trey enterprise and to one count of conspiracy to distribute and possess with intent to distribute ten grams and more of an analogue of fentanyl.

*                *                *

In addition to the prison term, JONES, 39, of Brooklyn, New York, was sentenced to five years of supervised release and ordered to forfeit $10,000.   

Mr. Berman praised the outstanding investigative work of the New York City Police Department, Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an Indictment charging RANDY MARTINEZ, a/k/a “Rampage,” with the October 17, 2011, murder of Davon Jackson.  MARTINEZ was presented today before U.S. Magistrate Judge Stewart D. Aaron.  This case is assigned to U.S. District Judge Naomi Reice Buchwald.   

U.S. Attorney Geoffrey S. Berman said: “As alleged in the Indictment, Randy Martinez exchanged gunfire with members of a rival gang, during which 16-year-old Davon Jackson was shot in the head and killed.  On the eight-year anniversary of Jackson’s death, the defendant now faces prosecution for this terrible crime, thanks to the persistence of our partners at the NYPD.”

NYPD Commissioner James P. O’Neill stated:  “Today’s indictment comes eight years to the day after a 16-year-old was struck by gunfire and killed in the Bronx.  The NYPD will never tolerate gangs and the violence that they are too often responsible for.  I thank the detectives and our law enforcement partners for their tireless work in this case.”

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

MARTINEZ was a member of the Young Gunnaz, a violent gang operating in the Bronx, New York, that engaged in narcotics trafficking and acts of violence, including murder and attempted murder.  On October 17, 2011, MARTINEZ exchanged gunfire with members of a rival gang in the vicinity of 146th Street and Third Avenue in the Bronx, New York, during which Davon Jackson, 16, was shot in the head and killed. 

*                      *                     *

Martinez, 28, of the Bronx, New York, is charged with one count of murder in aid of racketeering, which carries a maximum sentence of life in prison or death, and a mandatory minimum sentence of life in prison, and one count of using a firearm to commit murder in furtherance of a crime of violence and aiding and abetting the same, which carries a maximum sentence of life in prison or death, and a mandatory minimum sentence of five years in prison.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

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

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Samson Enzer and Danielle R. Sassoon are in charge of the prosecution.

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

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth 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, and Jonathan D. Larsen, Special Agent in Charge of the New York Office of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced today the arrest of LORENZO ALMANZAR for preparing fraudulent tax returns containing more than $400,000 in fraudulent deductions and making false statements to federal agents.  ALMANZAR was presented in Manhattan federal court today before U.S. Magistrate Judge Stewart D. Aaron. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Lorenzo Almanzar used his accounting skills to bilk the government of thousands of dollars.  Almanzar now faces 30 counts of criminal tax charges, and the possibility of time behind bars.”

IRS-CI New York Special Agent in Charge Jonathan D. Larsen said:  “Well-intentioned taxpayers can be victimized by tax return preparers who mislead people into taking credits or deductions they aren’t entitled to in order to increase their fee or burnish their reputation.  As Almanzar learned today when he was arrested, there are serious consequences for allegedly defrauding his clients.  IRS-CI special agents are committed to identifying and prosecuting unscrupulous tax return preparers.”

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

From 2014 through 2017, ALMANZAR owned and operated a business called Future International Corp. (“Future”) in the Bronx, New York, which purported to offer tax preparation services.  As alleged in the Complaint, ALMANZAR prepared fraudulent returns that fabricated and falsely overstated various items, including, among other things, medical expenses, charitable expenses, and unreimbursed employee business expenses.  Additionally, ALMANZAR made false statements to federal agents during the course of their investigation into those fraudulent returns.

ALMANZAR prepared multiple fraudulent tax returns containing more than $400,000 in fraudulent deductions, which resulted in a tax loss of at least $57,000.

*                *                *

ALMANZAR, 63, of White Plains, New York, is charged with 30 counts of aiding and assisting the preparation of false and fraudulent tax returns, each of which carries a maximum sentence of three years in prison, and one count of making false statements to federal agents, which carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Berman praised the outstanding investigative work of Special Agents from IRS-CI.  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.

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

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the 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 today that the United States has filed a federal civil rights lawsuit against real estate firm ATLANTIC DEVELOPMENT GROUP, LLC (“ATLANTIC”), and its principal, PETER FINE, for engaging in a pattern or practice of violations of the accessible design and construction requirements of the Fair Housing Act (“FHA”).  Specifically, the United States alleges that ATLANTIC and FINE have designed and constructed more than 6,000 apartments in 68 rental buildings throughout the Bronx, Manhattan, and Westchester County that do not comply with the FHA’s accessibility requirements.  The lawsuit seeks a court order directing ATLANTIC and FINE to retrofit these buildings to make them accessible to people with disabilities, to make changes to policies and procedures, and to compensate individuals who suffered discrimination due to the inaccessible conditions.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “The Fair Housing Act’s accessibility provisions were enacted to ensure that people with disabilities are not consigned to second-class status when it comes to housing.  These rights under the FHA apply equally to residents who live in affordable housing as those living in luxury high-rises.  With today’s lawsuit, real estate firms and developers in this District – including developers of affordable housing like Atlantic and Fine – should know that this Office will continue to use all available tools to enforce the FHA’s promise of accessibility in housing for people with disabilities.”

The FHA’s accessible design and construction provisions require multifamily housing complexes constructed after January 1991 to have basic features accessible to persons with disabilities.  According to the Complaint, ATLANTIC and FINE failed to comply with the FHA’s accessibility requirements in designing and constructing 68 rental buildings that contain more than 6,000 apartments.  As alleged in the Complaint, the inaccessible conditions include, among others:

• Excessively high thresholds at building entrances and entrances to common use areas like community rooms;
• Entrance ramps that lack handrails on both sides;
• Insufficient clear floor space in bathrooms within individual apartments;
• Insufficient widths between sinks or refrigerators and opposing ranges or counters in kitchens within individual apartments;
• Excessively high thresholds at entrances to individual apartments and within individual apartments; and
• Common use bathrooms that lack pipe insulation and toilet grab-bars.

           

The Complaint also alleges that these types of inaccessible conditions recur throughout the rental buildings developed by ATLANTIC and FINE across more than 15 years and involving multiple architects.  Further, according the Complaint, many of the rental buildings at issue are designated for low-income residents, and FINE, through ATLANTIC, earned substantial profits from those developments on account of having received so-called 421-a tax exemption certificates for developing low-income rental properties.

Due to the inaccessible conditions at the rental buildings they designed and constructed, the Complaint alleges that ATLANTIC and FINE engaged in a pattern or practice of resistance to the full enjoyment of rights protected by the FHA and in denying such rights to people with disabilities.  The Complaint seeks a court order directing ATLANTIC and FINE to retrofit the individual apartments as well as the public and common use areas in the 68 rental buildings so that they are accessible, to adopt policies and procedures to ensure FHA compliance in future constructions, and to compensate people who suffered discrimination due to the inaccessible conditions.

People who believe they may have experienced discrimination due to the inaccessible conditions at the 68 rental buildings developed by ATLANTIC and FINE may contact the Civil Rights Complaint Line at (212) 637-0840, use the Civil Rights Complaint Form available on the United States Attorney’s Office’s website http://www.justice.gov/usao/nys/civilrights.html, or send a written report to:

U.S. Attorney’s Office, Southern District of New York

86 Chambers Street, 3rd Floor

New York, New York 10007

Attention: Chief, Civil Rights Unit

The case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorneys Li Yu, Jacob Lillywhite, Steven Kochevar, and Natasha Teleanu are in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging AMILCAR ROMERO, a/k/a “Soldado,” JAIME SANTANA, a/k/a “Smiley,” JOSE GARCIA, a/k/a “Tricky,” and ALEXANDER RIVERA, a/k/a “Extrano,” with racketeering conspiracy and narcotics distribution conspiracy.  CRISTIAN GUERRERO-MELGARES, a/k/a “Enigma,” and GUSTAVO LLEVANO-RIVERA are charged in the narcotics conspiracy count.  Several defendants also face firearms charges.

GARCIA, GUERRERO-MELGARES, and RIVERA were arrested this morning and will be presented today before Magistrate Judge Stewart D. Aaron.  SANTANA was arrested last night and will be presented today in the Middle District of Tennessee.  ROMERO is currently in state custody in California on other charges and will be transferred to federal custody in New York and presented at a later date.  LLEVANO-RIVERA remains at large.  The case is assigned to U.S. District Judge William H. Pauley III.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “The defendants in this case include alleged leaders of the L.A. Program of MS-13, operating across the United States.  They and their co-defendants are alleged to have engaged in acts of violence, narcotics distribution, and the use of firearms.  Thanks to our remarkable partners at HSI and the NYPD, the defendants now face federal charges for these very serious crimes.”

HSI Special Agent-in Charge Peter C. Fitzhugh said:  “Today, three high ranking members of MS-13 were arrested for various charges, including, racketeering, drug distribution and firearms offenses.  These three gang members allegedly utilized violence and intimidation in order to further their criminal enterprise.  HSI New York and our other field offices around the country continue to work with our local law enforcement partners to combat MS-13.  It is only through these coordinated efforts that we will be able to disrupt and ultimately dismantle this gang.”

NYPD Commissioner James P. O’Neill said:  “Targeting gangs and crews, and preventing the violence so often associated with their illegal activities, continues to be among the highest priorities for the NYPD and our law enforcement partners.  By precisely targeting the relatively small percentage of individuals responsible for committing much of the violence in New York, we are making the safest large city in America even safer.  We remain relentless in our efforts to identify, arrest, and prosecute anyone who allegedly involves themselves in such criminal behavior.”

According to the allegations in the Indictment unsealed today in Manhattan federal

court as well as court filings[1]:

ROMERO, SANTANA, GARCIA, and RIVERA are members of a transnational racketeering enterprise known as Mara Salvatrucha, or MS-13, which operates throughout North and Central America, including in El Salvador, Mexico, New York, California, Texas, Virginia, Tennessee, and North Carolina.  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 MS-13 committed, conspired, attempted, and threatened to commit acts of violence; distributed and possessed with intent to distribute narcotics, including methamphetamine and cocaine; and obtained, possessed and used firearms.

MS-13 is organized into chapters called “cliques.”  Groups of cliques, in turn, are aligned as “programs.”  Each program is governed by a group of senior gang leaders known as the “table.”  ROMERO, SANTANA, and GARCIA are high-ranking members of the table of the “L.A. Program” of MS-13.

*                *                *

ROMERO, 50, SANTANA, 39, GARCIA, 31, and RIVERA, 31, are charged with one count of racketeering conspiracy, which carries a statutory maximum sentence of life in prison. Those four defendants, as well as GUERRERO-MELGARES, 32, and LLEVANO-RIVERA, 23, are charged with one count of conspiracy to distribute and possess with intent to distribute: (i) 50 grams and more of methamphetamine, (ii) 500 grams and more of mixtures and substances containing a detectable amount of methamphetamine, and (iii) mixtures and substances containing a detectable amount of cocaine, which carries a statutory maximum sentence of life in prison, and a mandatory minimum sentence of 10 years in prison. SANTANA, GARCIA, and GUERRERO-MELGARES are charged with possessing, carrying, and using firearms during, 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.  SANTANA and RIVERA are charged with possessing firearms while unlawfully or illegally in the United States, which carries a statutory maximum sentence of 10 years in prison.

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

Mr. Berman praised the investigative work of HSI and the NYPD.

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

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

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Indictment as well as the referenced letter constitute 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, announced that GLENN BLICHT, the former president of a labor union (the “Union”), pled guilty today to violating the Taft-Hartley Act by demanding and accepting approximately $150,000 in bribe payments from an employer (the “Employer”).  In exchange for these bribes, BLICHT did not represent Union members’ interests.  BLICHT pled guilty before United States District Judge Analisa Torres, to whom BLICHT’s case is assigned.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As the president of a labor union, Glenn Blicht’s duty was to fight for his union members.  Instead, for many years, he demanded and accepted bribes – and in return, he sold out his union members.  Our Office is committed to prosecuting those who abuse positions of trust for their own gain.”

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

From 2009 through the present, BLICHT served as an officer of the Union, including as its president for many years.  In that role, BLICHT had a duty to act in the best interests of the Union and its members, including by avoiding personal financial conflicts of interest with the Union.  Nevertheless, BLICHT demanded and received cash payments from the Employer, which employed a number of members of the Union.  In exchange for these bribes, BLICHT declined to file arbitration claims on behalf of Union members.  In total, BLICHT received approximately $150,000 in bribes from the Employer over approximately 10 years. 

In communications, a number of which were recorded, BLICHT repeatedly referred to the bribe payments as “tickets,” in which each ticket equaled a $1,000 bribe.  BLICHT instructed an official of the Employer (the “Official”) as to the number of “tickets” to pay BLICHT each time.  Indeed, during the past year, the Official met with BLICHT several times and paid him bribes on approximately four occasions, at the direction of law enforcement.  Each of these meetings was recorded.  For instance, on July 26, 2019, BLICHT received a $10,000 cash bribe from the Official at a restaurant in New York, New York; BLICHT was arrested outside this restaurant, in possession of the $10,000 bribe.

*                *                *

BLICHT, 57, of Wilton, Connecticut, pled guilty to one count of demanding or receiving prohibited payments as a labor union official, which carries a maximum sentence of five years in prison.  Under the terms of his plea agreement, BLICHT has agreed to a 13-year ban, which generally prohibits him from, among other things, being employed by a labor union or employee benefit plan, pursuant to Title 29, United States Code, Sections 504 and 1111.  BLICHT has also agreed to forfeit $150,000 and to pay restitution.  The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

Sentencing before Judge Torres is scheduled for February 12, 2020, at 3:00 p.m.

Mr. Berman praised the Department of Labor’s Office of Inspector General and Employee Benefits Security Administration, the Internal Revenue Service-Criminal Investigation Division, and the Federal Bureau of Investigation for their outstanding work on the investigation.  Mr. Berman also thanked the Department of Justice’s Labor-Management Racketeering Unit of the Organized Crime and Gang Section for their assistance in this case.

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 Department of Justice announced that TÜRKİYE HALK BANKASI A.S., aka “Halkbank,” was charged today in a six-count indictment with fraud, money laundering, and sanctions offenses related to the bank’s participation in a multibillion-dollar scheme to evade U.S. sanctions on Iran.  The case is assigned to United States District Judge Richard M. Berman. 

“Halkbank, a Turkish state-owned bank, allegedly conspired to undermine the United States Iran sanctions regime by illegally giving Iran access to billions of dollars’ worth of funds, all while deceiving U.S. regulators about the scheme,” said Assistant Attorney General for National Security John C. Demers. “This is one of the most serious Iran sanctions violations we have seen, and no business should profit from evading our laws or risking our national security.”

“The facts that emerged at the full, fair, and public trial of Halkbank’s deputy general manager, which culminated in a jury’s January 2018 guilty verdict against him, illustrated senior Halkbank management’s participation in this brazen scheme to circumvent our nation’s Iran sanctions regime," said U.S. Attorney Geoffrey S. Berman.  "As alleged in today’s indictment, Halkbank’s systemic participation in the illicit movement of billions of dollars’ worth of Iranian oil revenue was designed and executed by senior bank officials.  The bank’s audacious conduct was supported and protected by high-ranking Turkish government officials, some of whom received millions of dollars in bribes to promote and protect the scheme.  Halkbank will now have to answer for its conduct in an American court.” 

“As we allege today, Halkbank, a Turkish financial institution whose majority shareholder is the government of Turkey, willfully engaged in deceptive activities designed to evade U.S. sanctions against Iran," said FBI Assistant Director-in-Charge William F. Sweeney Jr.   "Halkbank illegally facilitated the illicit transfer of billions of dollars to benefit Iran, and for far too long the bank and its leaders willfully deceived the United States to shield their actions from scrutiny.  That deception ends today.  The FBI will aggressively pursue those who intentionally violate U.S. sanctions laws and attempt to undercut our national security.”  

According to the allegations in the indictment, returned today in Manhattan federal court:

From approximately 2012, up to and including approximately 2016, TÜRKİYE HALK BANKASI A.S. (Halkbank) was a foreign financial institution organized under the laws of and headquartered in Turkey.  The majority of Halkbank’s shares are owned by the Government of Turkey.  Halkbank and its officers, agents, and co-conspirators directly and indirectly used money service businesses and front companies in Iran, Turkey, the United Arab Emirates, and elsewhere to violate and to evade and avoid prohibitions against Iran’s access to the U.S. financial system, restrictions on the use of proceeds of Iranian oil and gas sales, and restrictions on the supply of gold to the Government of Iran and to Iranian entities and persons.  Halkbank knowingly facilitated the scheme, participated in the design of fraudulent transactions intended to deceive U.S. regulators and foreign banks, and lied to U.S. regulators about Halkbank’s involvement.

High-ranking government officials in Iran and Turkey participated in and protected this scheme.  Some officials received bribes worth tens of millions of dollars paid from the proceeds of the scheme so that they would promote the scheme, protect the participants, and help to shield the scheme from the scrutiny of U.S. regulators.

The proceeds of Iran’s sale of oil and gas to Turkey’s national oil company and gas company, among others, were deposited at Halkbank, in accounts in the names of the Central Bank of Iran, the National Iranian Oil Company (NIOC), and the National Iranian Gas Company.  During the relevant time period, Halkbank was the sole repository of proceeds from the sale of Iranian oil by NIOC to Turkey.  Because of U.S. sanctions against Iran and the anti-money laundering policies of U.S. banks, it was difficult for Iran to access these funds in order to transfer them back to Iran or to use them for international financial transfers for the benefit of Iranian government agencies and banks.  As of in or about 2012, billions of dollars’ worth of funds had accumulated in NIOC and the Central Bank of Iran’s accounts at Halkbank.

Halkbank participated in several types of illicit transactions for the benefit of Iran that, if discovered, would have exposed the bank to sanctions under U.S. law, including (i) allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold for the benefit of the Government of Iran; (ii) allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold that was not exported to Iran, in violation of the so-called “bilateral trade” rule; and (iii) facilitating transactions fraudulently designed to appear to be purchases of food and medicine by Iranian customers, in order to appear to fall within the so-called “humanitarian exception” to certain sanctions against the Government of Iran, when in fact no purchases of food or medicine actually occurred.  Through these methods, Halkbank illicitly transferred approximately $20 billion worth of otherwise restricted Iranian funds.

Senior Halkbank officers acting within the scope of their employment and for the benefit of Halkbank concealed the true nature of these transactions from officials with the U.S. Department of the Treasury so that Halkbank could supply billions of dollars’ worth of services to the Government of Iran without risking being sanctioned by the United States and losing its ability to hold correspondent accounts with U.S. financial institutions.

The purpose and effect of the scheme in which Halkbank participated was to create a pool of Iranian oil funds in Turkey and the United Arab Emirates held in the names of front companies, which concealed the funds’ Iranian nexus.  From there, the funds were used to make international payments on behalf of the Government of Iran and Iranian banks, including transfers in U.S. dollars that passed through the U.S. financial system in violation of U.S. sanctions laws.

Halkbank is charged with (1) conspiracy to defraud the United States, (2) conspiracy to violate the International Emergency Economic Powers Act (IEEPA), (3) bank fraud, (4) conspiracy to commit bank fraud, (5) money laundering, and (6) conspiracy to commit money laundering.

The Department of Justice has previously charged nine individual defendants, including bank employees, the former Turkish Minister of the Economy, and other participants in the scheme.   See S4 15 Cr. 867 (RMB).  On Oct. 26, 2017, Reza Zarrab pled guilty to the seven counts with which he was charged.  On Jan. 3, 2018, a jury convicted former Halkbank deputy general manager Memet Hakkan Atilla of five of the six counts with which he was charged, following a five-week jury trial.   The remaining individual defendants are fugitives. 

Assistant Attorney General Demers and U.S. Attorney Berman praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division, and the Department of Justice, National Security Division, Counterintelligence and Export Control Section. 

This case is being handled by the Office’s Terrorism and International Narcotics Unit and Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Michael D. Lockard, Sidhardha Kamaraju, David W. Denton Jr., Jonathan Rebold, and Kiersten Fletcher 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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, the Assistant Attorney General for National Security, and William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that TÜRKİYE HALK BANKASI A.S., a/k/a “Halkbank,” was charged today in a six-count Indictment with fraud, money laundering, and sanctions offenses related to the bank’s participation in a multibillion-dollar scheme to evade U.S. sanctions on Iran.  The case is assigned to United States District Judge Richard M. Berman. 

U.S. Attorney Geoffrey S. Berman stated:  “The facts that emerged at the full, fair, and public trial of Halkbank’s deputy general manager, which culminated in a jury’s January 2018 guilty verdict against him, illustrated senior Halkbank management’s participation in this brazen scheme to circumvent our nation’s Iran sanctions regime.  As alleged in today’s indictment, Halkbank’s systemic participation in the illicit movement of billions of dollars’ worth of Iranian oil revenue was designed and executed by senior bank officials.  The bank’s audacious conduct was supported and protected by high-ranking Turkish government officials, some of whom received millions of dollars in bribes to promote and protect the scheme.  Halkbank will now have to answer for its conduct in an American court.” 

Assistant Attorney General for National Security John C. Demers said:  “Halkbank, a Turkish state-owned bank, allegedly conspired to undermine the United States Iran sanctions regime by illegally giving Iran access to billions of dollars’ worth of funds, all while deceiving U.S. regulators about the scheme.  This is one of the most serious Iran sanctions violations we have seen, and no business should profit from evading our laws or risking our national security.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “As we allege today, Halkbank, a Turkish financial institution whose majority shareholder is the government of Turkey, willfully engaged in deceptive activities designed to evade U.S. sanctions against Iran.  Halkbank illegally facilitated the illicit transfer of billions of dollars to benefit Iran, and for far too long the bank and its leaders willfully deceived the United States to shield their actions from scrutiny.  That deception ends today.  The FBI will aggressively pursue those who intentionally violate U.S. sanctions laws and attempt to undercut our national security.”  

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

From approximately 2012, up to and including approximately 2016, TÜRKİYE HALK BANKASI A.S. (“Halkbank”) was a foreign financial institution organized under the laws of and headquartered in Turkey.  The majority of Halkbank’s shares are owned by the Government of Turkey.  Halkbank and its officers, agents, and co-conspirators directly and indirectly used money service businesses and front companies in Iran, Turkey, the United Arab Emirates, and elsewhere to violate and to evade and avoid prohibitions against Iran’s access to the U.S. financial system, restrictions on the use of proceeds of Iranian oil and gas sales, and restrictions on the supply of gold to the Government of Iran and to Iranian entities and persons.  Halkbank knowingly facilitated the scheme, participated in the design of fraudulent transactions intended to deceive U.S. regulators and foreign banks, and lied to U.S. regulators about Halkbank’s involvement.

High-ranking government officials in Iran and Turkey participated in and protected this scheme.  Some officials received bribes worth tens of millions of dollars paid from the proceeds of the scheme so that they would promote the scheme, protect the participants, and help to shield the scheme from the scrutiny of U.S. regulators.

The proceeds of Iran’s sale of oil and gas to Turkey’s national oil company and gas company, among others, were deposited at Halkbank, in accounts in the names of the Central Bank of Iran, the National Iranian Oil Company (“NIOC”), and the National Iranian Gas Company.  During the relevant time period, Halkbank was the sole repository of proceeds from the sale of Iranian oil by NIOC to Turkey.  Because of U.S. sanctions against Iran and the anti-money laundering policies of U.S. banks, it was difficult for Iran to access these funds in order to transfer them back to Iran or to use them for international financial transfers for the benefit of Iranian government agencies and banks.  As of in or about 2012, billions of dollars’ worth of funds had accumulated in NIOC and the Central Bank of Iran’s accounts at Halkbank.

Halkbank participated in several types of illicit transactions for the benefit of Iran that, if discovered, would have exposed the bank to sanctions under U.S. law, including (i) allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold for the benefit of the Government of Iran; (ii) allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold that was not exported to Iran, in violation of the so-called “bilateral trade” rule; and (iii) facilitating transactions fraudulently designed to appear to be purchases of food and medicine by Iranian customers, in order to appear to fall within the so-called “humanitarian exception” to certain sanctions against the Government of Iran, when in fact no purchases of food or medicine actually occurred.  Through these methods, Halkbank illicitly transferred approximately $20 billion worth of otherwise restricted Iranian funds.

Senior Halkbank officers, acting within the scope of their employment and for the benefit of Halkbank, concealed the true nature of these transactions from officials with the U.S. Department of the Treasury so that Halkbank could supply billions of dollars’ worth of services to the Government of Iran without risking being sanctioned by the United States and losing its ability to hold correspondent accounts with U.S. financial institutions.

The purpose and effect of the scheme in which Halkbank participated was to create a pool of Iranian oil funds in Turkey and the United Arab Emirates held in the names of front companies, which concealed the funds’ Iranian nexus.  From there, the funds were used to make international payments on behalf of the Government of Iran and Iranian banks, including transfers in U.S. dollars that passed through the U.S. financial system in violation of U.S. sanctions laws.

*                *                *

Halkbank is charged with (1) conspiracy to defraud the United States, (2) conspiracy to violate the International Emergency Economic Powers Act (“IEEPA”), (3) bank fraud, (4) conspiracy to commit bank fraud, (5) money laundering, and (6) conspiracy to commit money laundering.

The Office has previously charged nine individual defendants, including bank employees, the former Turkish Minister of the Economy, and other participants in the scheme.   See S4 15 Cr. 867 (RMB).  On October 26, 2017, Reza Zarrab pled guilty to the seven counts with which he was charged.  On January 3, 2018, a jury convicted former Halkbank deputy general manager Memet Hakkan Atilla of five of the six counts with which he was charged, following a five-week jury trial.   The remaining individual defendants are fugitives. 

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

This case is being handled by the Office’s Terrorism and International Narcotics Unit and Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Michael D. Lockard, Sidhardha Kamaraju, David W. Denton Jr., Jonathan Rebold, and Kiersten Fletcher are in charge of the prosecution.

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

 

---

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that PAUL VAN MANEN was sentenced today to 23 years in prison for conspiring to distribute heroin and fentanyl that resulted in the death of Michael Ogno, a 26-year-old man from Staten Island, New York, and the serious bodily injury of another individual.  A unanimous jury convicted VAN MANEN in May 2019 after an eight-day trial before United States District Judge Paul A. Crotty. 

U.S. Attorney Geoffrey S. Berman said:  “Paul Van Manen peddled the fentanyl-laced heroin that caused the death of Michael Ogno.  He made that sale fully aware that the same formulation had caused a nonfatal overdose just two months prior.  The lengthy sentence should send a message to those who sell lethal drugs like fentanyl.”

According to court documents and the evidence at trial:

From at least in or about 2013 up to and including in or about January 2018, VAN MANEN sold heroin, including heroin laced with fentanyl, to customers on Staten Island and in New Jersey.  On October 4, 2017, VAN MANEN drove a co-conspirator (“CC-1”) to Brooklyn, New York, where they both obtained heroin from the conspiracy’s primary supplier, Medin Kosic.  The next morning, CC-1 overdosed after using some of the narcotics, which were subsequently found to be laced with fentanyl.  Despite knowing about this overdose, VAN MANEN continued to sell heroin – including heroin laced with fentanyl – to members of the Staten Island community.  On December 1, 2017, VAN MANEN sold heroin to Michael Ogno, a 26-year-old resident of Staten Island.  Ogno used the heroin, which again was laced with fentanyl, and died from an overdose.  VAN MANEN continued to sell heroin after Ogno’s death. 

*                      *                     * 

In addition to the prison sentence, PAUL VAN MANEN, 51, of Staten Island and South Amboy, New Jersey, was sentenced to five years of supervised release. 

U.S. Attorney Geoffrey S. Berman praised the outstanding work of the New York Drug Enforcement Administration Strike Force, the New York City Police Department, and the Richmond County District Attorney’s Office. 

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Catherine Ghosh, Ryan Finkel, Jessica Fender, and Stephanie Lake are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JEFFREY WADA, a former employee of the Public Company Accounting Oversight Board (the “PCAOB”), was sentenced today to nine months in prison for participating in a scheme to defraud the PCAOB by obtaining, disseminating, and using confidential lists of which KPMG audits the PCAOB would be reviewing so that KPMG could improve its performance in PCAOB inspections.  Wada was convicted of wire fraud charges in March 2019 following a month-long trial before U.S. District Judge J. Paul Oetken, who imposed today’s sentence. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jeffrey Wada violated not just the terms of his employment with the PCAOB but also the law when he provided confidential information about upcoming audit reviews to co-conspirators at KPMG.  Wada hoped to secure a job at KPMG.  What he got was a nine-month prison sentence.” 

According to the evidence presented at trial:

The PCAOB is a nonprofit corporation overseen by the SEC that inspects the audit work performed by registered accounting firms (“Auditors”) with respect to the financial statements of publicly traded companies (“Issuers”).  The PCAOB inspects the largest U.S. accounting firms on an annual basis.  As part of the inspection process, the PCAOB chooses a selection of audits performed by the accounting firm for a closer review, commonly referred to as an inspection.  Until shortly before an inspection occurs, the PCAOB does not disclose which audits are being inspected, or the focus areas for those inspections, because it wants to ensure that an Auditor does not perform additional work or modify its work papers in anticipation of an inspection.  Following the completion of an inspection, the PCAOB issues an Inspection Report containing any negative findings or “comments” with respect to both the specific audits reviewed and the accounting firm more generally. 

KPMG is one of the largest accounting firms in the world.  In recent years, KPMG fared poorly in PCAOB inspections and in 2014 received approximately twice as many comments as its competitor firms.  By at least in or about 2015, KPMG was engaged in efforts to improve its performance in PCAOB inspections, including but not limited to recruiting and hiring former PCAOB personnel.   

KPMG’s efforts to improve inspection results, however, were not limited to legitimate means.  Instead, between 2015 and 2017, KPMG executives worked to illicitly acquire valuable confidential PCAOB information concerning which KPMG audits would be inspected in an effort to game the system and improve inspection results. 

WADA was an Inspections Leader at the PCAOB, who was obligated to keep confidential the PCAOB’s nonpublic information.  WADA joined the conspiracy in the fall of 2015 and began passing confidential information to KPMG.  In March 2016, WADA provided Cynthia Holder, a KPMG employee, with confidential information on certain of the PCAOB’s 2016 inspection selections.  Holder, in turn, provided the 2016 inspection selections to Sweet, who passed them to KPMG executives David Middendorf, Thomas Whittle, and David Britt.  Middendorf, Whittle, Sweet, and Britt then agreed to launch a stealth program to “re-review” the audits that had been selected, and agreed to keep their stealth re-reviews within their “circle of trust.”  In order to cover up their illicit conduct, other KPMG engagement partners were given a false explanation for the re-reviews.  The stealth re-review program allowed KPMG to strengthen its work papers, and, in some cases, identify deficiencies or perform new audit work that had not been done during the live audit.

In January 2017, WADA, who had been passed over for promotion at the PCAOB, again stole valuable confidential PCAOB information, misappropriating a preliminary list of confidential 2017 inspection selections for KPMG audits and passing it on to Holder, referring to it in a voicemail as the “grocery list.”  At the same time, WADA provided Holder with his resume and sought her assistance in helping him to acquire employment at KPMG.  Sweet shared the preliminary inspection selections provided by WADA with Whittle, who in turn shared it with Middendorf, who approved its use to improve the audits on the list.

In February 2017, WADA texted Holder saying “I have the grocery list. . . . All the things you’ll need for the year.”  WADA then spoke to Holder and provided her with the full confidential 2017 final inspection selections.  Holder again shared the stolen information with Sweet, who shared it with Middendorf, Whittle, and Britt, so that it could be acted upon to improve the audits on the list. 

In 2017, a KPMG partner who received early notice that her engagement was on the confidential 2017 inspection list reported the matter to her supervisor.  The matter was ultimately reported to KPMG’s Office of General Counsel.    

*                      *                      *

In addition to a prison sentence, WADA, 55, of Tustin, California, was sentenced to three years of supervised release.  Restitution amount was deferred to a later date.   

Mr. Berman praised the investigative work of the United States Postal Inspection Service and also thanked the Securities and Exchange Commission. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Rebecca Mermelstein, Jordan Estes, Margaret Graham, and Martin Bell are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced a superseding indictment today against BRANDON BECKER, the former CEO of CardReady, LLC (“CardReady”), on charges of fraudulently operating a credit card laundering scheme that enabled access to the credit card system for certain deceptive businesses, including an underlying telemarketing scheme.  From about 2012 through 2015, according to the Indictment, the telemarketing scheme raised over $19 million from thousands of customers who received cold calls promising to reduce their overall debt burdens for fees of up to $1,495.  The scheme resulted in many complaints of fraud and deceptive tactics and requests for millions of dollars in refunds and chargebacks.  The charges include that, from approximately 2012 through 2015, BECKER and his co-conspirators enabled the scheme by creating dozens of sham merchant accounts and false merchant applications, defrauding an associated credit card processing company and a federally insured bank into processing more than $19 million in payments for the scheme.

BECKER was originally arrested at Los Angeles International Airport on September 22, 2019.  He is scheduled to appear for arraignment on the instant charges on October 17, 2019, before United States District Judge Loretta A. Preska.

U.S. Attorney Berman said:  “As our society relies ever more on credit cards and electronic payments, both individual citizens and corporations have every right to expect truthfulness and fair dealing in the marketplace – not fraud and deceit.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “People cringe when they see a telemarketer calling because they fear being scammed.  This investigation is proof that fear isn’t misplaced.  It also shows those who are allegedly scamming innocent victims aren’t getting away with their crimes.  The FBI and our law enforcement partners are paying attention, and maybe one day the phone ringing won’t mean people losing their money.”

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

BECKER, was the CEO of CardReady, a Los-Angeles based company acting as a sales agent in the credit card processing industry.  As part of its business as a sales agent, CardReady found merchants who wanted credit card processing services, and submitted merchant applications on behalf of those merchants to an Independent Sales Organization (“ISO”), referred to in the Indictment as the “New York ISO.”  The New York ISO then evaluated the merchant applications, and referred acceptable merchant accounts for processing up the chain to Payment Processor-1 and to Bank-1.  Bank-1 and Payment Processor-1, in turn, processed payments to merchants for purchases by customers who had used credit cards.

In or about 2012, BECKER negotiated a deal with the principal of Telemarketer-1 to provide credit card processing for Telemarketer-1.  Under this deal, CardReady would retain approximately one-third of Telemarketer-1’s credit card sale transactions in exchange for providing Telemarketer-1 access to the credit card processing network.  For roughly the next two years, Telemarketer-1 was engaged in a marketing scheme in which it cold-called customers and offered services, including debt consolidation and interest-rate reduction, which were prohibited by the applicable guidelines from Bank-1 and other associated processing entities (the “Guidelines”), and which – as BECKER knew – would produce chargebacks from dissatisfied customers far in excess of the number and rate of chargebacks permitted under the Guidelines.

In securing payment card processing for Telemarketer-1, BECKER concealed that Telemarketer-1 was the true underlying merchant.  Instead, BECKER and his co-conspirators, over a period of more than 20 months, created approximately 26 sham merchant companies, each headed by a “signer” (the “Sham Merchants” and the “Sham Merchant Accounts”).  The 26 signers for the 26 Sham Merchants typically had no business of their own, and lacked knowledge of Telemarketer-1’s business.  In return for signing the paperwork provided to them, the signers were paid a nominal fee from CardReady.  BECKER and his co-conspirators prepared and coordinated fraudulent merchant applications for each of the Sham Merchants, through merchant applications that falsely described the Sham Merchants to make them look like legitimate independent businesses and to make it more likely that the associated Sham Merchant Account would be approved for processing by the New York ISO, Payment Processor-1, and Bank-1.  The merchant application for each Sham Merchant also concealed the Sham Merchant’s true association with Telemarketer-1.

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

*                      *                      *

BECKER, 48, of Los Angeles, California, is charged in four counts, conspiracy to commit wire fraud and bank fraud, conspiracy to make false statements to a bank, wire fraud, and bank fraud.  Counts One and Four carry maximum sentences of 30 years in prison, and maximum fines of $1 million or twice the gross gain or loss from the offense.  Counts Two and Three carry maximum sentences of 20 years in prison, and maximum fines of $250,000 or twice the gross gain or loss from the offense.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.           

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

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

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

 

---

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced today that SYLVIA ASH, presiding judge of the Kings County Supreme Court, Commercial Division, and former chair of the board of directors of Municipal Credit Union (“MCU”), was charged in Manhattan federal court with conspiracy to obstruct justice and obstruction of justice, arising from a scheme to seek to influence and impede an ongoing federal investigation into fraud and corruption at MCU, a non-profit, multibillion-dollar financial institution.  U.S. Attorney Berman also announced today that Joseph Guagliardo, a/k/a “Joseph Gagliardo,” a former New York City Police Department Officer and former member of MCU’s supervisory committee, was charged separately with embezzlement, fraud, and controlled substance offenses arising from abuse of his position as a member of the supervisory committee.  Guagliardo was arrested in Brooklyn, New York, yesterday afternoon and was presented before U.S. Magistrate Judge Ona T. Wang in Manhattan federal court.  ASH was arrested at LaGuardia Airport this morning and is expected to appear before Magistrate Judge Wang in Manhattan federal court this afternoon.

U.S. Attorney Geoffrey S. Berman said:  “The charges announced today reflect the latest in our ongoing work to uncover criminal conduct at the highest levels of MCU, a multibillion-dollar, federally insured credit union.  As alleged, Sylvia Ash, a sitting state court judge, took repeated steps to obstruct a federal investigation into significant financial misconduct at MCU during Ash’s tenure as chair of the board of directors.  Joseph Guagliardo allegedly abused his position as an MCU supervisory committee member to enrich himself and his family.”

According to the allegations contained in the two Complaints unsealed today in Manhattan federal court, publicly available information, and prior court filings:[1]

Municipal Credit Union

MCU is a non-profit financial institution headquartered in New York, New York, which is federally insured by the National Credit Union Administration (“NCUA”).  MCU is the oldest credit union in New York State and one of the oldest and largest in the country, providing banking services to more than 500,000 members, and with more than $2.9 billion in member accounts, each of which is federally insured for at least $250,000 by the National Credit Union Share Insurance Fund, which is administered by the NCUA.  Membership in MCU is generally available to employees of New York City and its agencies, employees of the federal and New York state governments who work in New York City, and employees of hospitals, nursing homes, and similar facilities located within New York State.

At all relevant times, MCU was supposed to be overseen by a board of directors (the “Board”) and a supervisory committee (the “Supervisory Committee”), each of which was composed of volunteer members of MCU, who were not to be compensated.  According to New York banking law, the Supervisory Committee’s duties included supervision of the actions of MCU’s Board and officers.  MCU’s written conflict of interest policy, which was regularly distributed to Board members, Supervisory Committee members, and others, provided, among other things, that members of MCU’s “Board of Directors and Supervisory Committee may not do business with the Credit Union, either individually or as representative of any business entity.”

ASH

ASH is a New York State Supreme Court Justice in Kings County.  ASH has served as a judge in the New York State court system since at least approximately 2006, first as a Kings County Civil Court Judge, and, commencing in 2011, as a Kings County Supreme Court Justice.  In or about January 2016, ASH was appointed to be the presiding judge in the Kings County Supreme Court’s Commercial Division.

ASH served on MCU’s Board from in or about May 2008 until on or about August 15, 2016, when she resigned.  ASH also served as a trustee of MCU’s pension plan, a position from which she resigned on or about October 31, 2016.  From in or about May 2015 until her resignation from the Board, ASH served as the chair of the Board.

Guagliardo

GUAGLIARDO is a former officer with the New York City Police Department, who retired in or about 1989.  In or about 1993, GUAGLIARDO joined the Supervisory Committee of MCU, a volunteer position, and remained in that position until he was removed from that position by the New York State Department of Financial Services on or about May 24, 2018, except for a brief period of time when he served as a member of MCU’s Board in or about 2008.  While he was a Supervisory Committee member, GUAGLIARDO sought to and did use his position to oversee aspects of MCU’s security and fraud department, including serving in the role of vice president of MCU’s security and fraud department while that position was vacant.

Kam Wong

From on or about at least 2007 until on or about June 12, 2018, Kam Wong served as MCU’s chief executive officer (“CEO”) and president.  On or about May 8, 2018, Wong was charged and arrested by the United States Attorney’s Office for the Southern District of New York, and, on or about June 12, 2018, Wong was terminated by MCU.  On or about December 2, 2018, Wong pled guilty to a multimillion-dollar embezzlement from MCU, and acknowledged, in his written plea agreement, among other things, endeavoring to obstruct and impede and obstructing and impeding the administration of justice with respect to the criminal investigation into this matter, and agreeing with one or more others to do the same.

ASH’s Alleged Obstruction of Justice

From at least in or about 2012 through 2016, while serving as an MCU Board member and while Wong was CEO, ASH received annually tens of thousands of dollars in reimbursements and other benefits from MCU, including airfare, hotels, food and entertainment expenses for her and a guest to attend conferences domestically and abroad, as well as payment for phone and cable bills, and electronic devices.  Even after her resignation from the Board, Wong continued to provide or cause MCU to provide ASH with benefits, such as Apple devices. 

In or about January 2018, after Wong had been approached by federal law enforcement agents investigating potential financial misconduct by Wong involving MCU and in an attempt to protect Wong, ASH agreed to and did sign a false and misleading memorandum purporting to explain and justify millions of dollars in payments that Wong had received from MCU, which was then provided by Wong to law enforcement officers.

Subsequently, ASH agreed to and did continue to seek to influence and impede the federal investigation in multiple ways, including by (i) concealing and deleting relevant text messages and email messages and wiping her MCU-issued Apple iPhone in a further effort to destroy and impair the availability of evidence that had been sought by federal grand jury subpoenas, and (ii) making false and misleading statements to federal law enforcement officers in interviews conducted as part of a federal criminal investigation.

            GUAGLIARDO’s Alleged Embezzlement, Fraud, and Unlawful Provision of Controlled Substances to Wong

GUAGLIARDO engaged in a long-running scheme to defraud MCU, with the agreement and assistance of, among others, Wong.  Among other things, GUAGLIARDO defrauded and embezzled from MCU by causing it to direct more than $250,000 to a purported security company created and controlled by GUAGLIARDO, but operated in another’s name, which did little to no real work for MCU.  GUAGLIARDO also defrauded and embezzled from MCU by over-billing for more than $200,000 for purported web advertising services provided by a non-profit organization that GUAGLIARDO also controlled. 

In addition, during substantially the same period in which GUAGLIARDO was committing and concealing these offenses, GUAGLIARDO participated in a scheme to unlawfully distribute controlled substances to Wong, in the form of prescription drugs, some of which were obtained from GUAGLIARDO’s spouse, who worked as a doctor affiliated with a public hospital, and some of which were obtained from a doctor affiliated with the New York City Police Department.

*                *                *

ASH, 62, of Brooklyn, New York, is charged with one count of conspiracy to obstruct justice, which carries a maximum penalty of five years in prison; and two counts of obstruction of justice, each of which carries a maximum penalty of 20 years in prison.

GUAGLIARDO, 62, of Brooklyn, New York, is separately charged with one count of conspiracy to embezzle from a federal credit union, which carries a maximum penalty of five years in prison; one count of embezzlement, one count of conspiracy to defraud a financial institution, and one count of defrauding a financial institution, each of which carries a maximum penalty of 30 years in prison; and one count of conspiracy to distribute controlled substances, and one count of distribution of controlled substances, each of which carries a maximum penalty of 20 years in prison.  

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

U.S. Attorney Berman praised the outstanding work of the Special Agents of the United States Attorney’s Office.  Mr. Berman also thanked the New York County District Attorney’s Office, the New York State Department of Financial Services, and the New York City Police Department Internal Affairs Bureau for their assistance.

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

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

 

---

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

Defendants Orchestrated Scheme to Advance Their Business Interests and the Political Interests of At Least One Ukrainian Government Official Through Contributions and Donations to Multiple Candidates and Campaign Committees in Violation of Campaign Finance Laws; Two Others Charged in Foreign Donor Scheme

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 Field Office of the Federal Bureau of Investigation (“FBI”), announced that LEV PARNAS, IGOR FRUMAN, DAVID CORREIA and ANDREY KUKUSHKIN were charged in a four-count indictment alleging that each of the defendants conspired to violate the ban on foreign donations and contributions in connection with federal and state elections.  In addition, PARNAS and FRUMAN were charged with conspiring to make contributions in connection with federal elections in the names of others, and with making false statements to and falsifying records to obstruct the administration of a matter within the jurisdiction of the Federal Election Commission (“FEC”).  PARNAS and FRUMAN were arrested yesterday evening at Washington Dulles International Airport and will be presented at 2:00 p.m. this afternoon before U.S. Magistrate Judge Michael S. Nachmanoff in the Eastern District of Virginia.  KUKUSHKIN was arrested yesterday in California and will be presented at 10:30 a.m. Pacific Time before U.S. Magistrate Judge Jacqueline Scott Corley in the Northern District of California.  CORREIA remains at large.  The case is assigned to U.S. District Judge J. Paul Oetken in the Southern District of New York.

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the Indictment, the defendants broke the law to gain political influence while avoiding disclosure of who was actually making the donations and where the money was coming from.  They sought political influence not only to advance their own financial interests but to advance the political interests of at least one foreign official – a Ukrainian government official who sought the dismissal of the U.S. ambassador to Ukraine.  Protecting the integrity of our elections – and protecting our elections from unlawful foreign influence – are core functions of our campaign finance laws.  And as this Office has made clear, we will not hesitate to investigate and prosecute those who engage in criminal conduct that draws into question the integrity of our political process.”

FBI Assistant Director William F. Sweeney Jr. said:  “Campaign finance laws exist for a reason.  The American people expect and deserve an election process that hasn’t been corrupted by the influence of foreign interests, and the public has the right to know the true source of campaign contributions.  These allegations aren’t about some technicality, a civil violation, or an error on a form.  This investigation is about corrupt behavior and deliberate law breaking.  The FBI takes the obligation to tackle corruption seriously – there are no exceptions to this rule.”

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

Through its election laws, Congress prohibits foreign nationals from making contributions, donations, and certain expenditures in connection with federal, state, and local elections.  The election laws also prohibit individuals from using straw donors to make legal contributions in their own names, rather than in the name of the true source of the funds.  The purpose of these laws is to prevent the electoral system from illegal foreign influence, and to further inform candidates, their campaign committees, federal regulators and the public of the true sources of contributions.  In or about 2018, the defendants violated these laws by, among other things, agreeing to facilitate foreign donations to federal and state candidates, and agreeing to make straw donations to federal candidates in an effort to conceal true sources of the funds. 

The Straw Donor Scheme

In or about March 2018, PARNAS and FRUMAN began attending political fundraising events in connection with federal elections and making substantial contributions to candidates, joint fundraising committees, and independent expenditure committees with the purpose of enhancing their influence in political circles and gaining access to politicians.  PARNAS and FRUMAN, who had no significant prior history of political donations, sought to advance their personal financial interests and the political interests of at least one Ukrainian government official with whom they were working.

In or about May 2018, to obtain access to exclusive political events and gain influence with politicians, PARNAS and FRUMAN made a $325,000 contribution to an independent expenditure committee (“Committee-1”) and a $15,000 contribution to a second independent expenditure committee (“Committee-2”).  Despite the fact that the FEC forms for these contributions required PARNAS and FRUMAN to disclose the true donor of the funds, they falsely reported that the contributions came from Global Energy Producers (“GEP”), a purported liquefied natural gas (“LNG”) import-export business that was incorporated by FRUMAN and PARNAS around the time the contributions were made.  In truth and in fact, the donations to Committee-1 and Committee-2 did not come from GEP funds.  Rather, the donations came from a private lending transaction between FRUMAN and third parties, and never passed through a GEP account.  PARNAS and FRUMAN deliberately made the contributions in GEP’s name in order to evade federal reporting requirements and to conceal that they were the true source of the contributions, including so as to hide from creditors the fact that they had access to funding.  When media reports about the GEP contributions first surfaced, an individual working with PARNAS remarked, “[t]his is what happens when you become visible . . . the buzzards descend,” to which PARNAS responded, “[t]hat’s why we need to stay under the radar. . . .” 

Among other donations alleged to have been made in furtherance of the scheme, in or about May and June 2018, PARNAS and FRUMAN committed to raise $20,000 or more for a then-sitting U.S. Congressman (“Congressman-1”).  At and around the same time PARNAS and FRUMAN committed to raising those funds for Congressman-1, PARNAS met with Congressman-1 and sought Congressman-1’s assistance in causing the U.S. Government to remove or recall the then-U.S. Ambassador to Ukraine (the “Ambassador”).  PARNAS’s efforts to remove the Ambassador were conducted, at least in part, at the request of one or more Ukrainian government officials.  Moreover, in an effort to reach their contribution commitment to Congressman-1 and further their political goals, in or about June 2018, after FRUMAN had already made a maximum $2,700 contribution to Congressman-1, FRUMAN paid for another maximum $2,700 contribution to Congressman-1 that was made and reported in PARNAS’s name.

In response to a complaint filed with the FEC regarding the $325,000 contribution to Committee-1, and to further conceal the true source of the funds used to make certain of their donations, in or about October 2018, PARNAS and FRUMAN submitted sworn affidavits to the FEC that contained false statements, including that the contribution to Committee-1 “was made with GEP funds for GEP purposes” and that  “GEP is a real business enterprise funded with substantial bona fide capital investment; its major purpose is energy trading, not political activity.”

The Foreign Donor Scheme

Beginning in or around July 2018, PARNAS, FRUMAN, CORREIA, and KUKUSHKIN made plans to form a recreational marijuana business (the “Business Venture”) that would be funded by Foreign National-1, a Russian national, and required gaining access to retail marijuana licenses in particular states, including Nevada (the “Business Venture”).  To further the Business Venture, PARNAS, FRUMAN, CORREIA, and KUKUSHKIN planned to use Foreign National-1 as a source of funding for donations and contributions to state and federal candidates and politicians in Nevada, New York, and other states to facilitate acquisitions of retail marijuana licenses. 

In or about September and October 2018, CORREIA drafted a table of political donations and contributions, which was subsequently circulated to the defendants and Foreign National-1.  The table described a “multi-state license strategy” to make between $1million and $2 million in political contributions to federal and state political committees.  The table also included a “funding” schedule of two $500,000 transfers.  Foreign National-1 then arranged for two $500,000 wires on or about September 18, 2018, and October 16, 2018, to be sent from overseas accounts to a U.S. corporate bank account controlled by FRUMAN and another individual. 

PARNAS, FRUMAN, CORREIA, and KUKUSHKIN then used those funds transferred by Foreign National-1, in part, to attempt to gain influence and the appearance of influence with politicians and candidates.  For example, on or about October 20, 2018, PARNAS, FRUMAN, and KUKUSHKIN attended a campaign rally for a candidate for a statewide office in Nevada (“Candidate-1”), at which a different Nevada state candidate was present (“Candidate-2”). Following that event, on or about November 1, 2018, a donation in the amount of $10,000 was made to Candidate-2 in FRUMAN’s name, but it was funded with funds from Foreign National-1.  On or about November 1, 2018, a donation in the amount of $10,000 was made to Candidate-1 in FRUMAN’s name, but it was funded with funds from Foreign National-1.  On or about November 4, 2018, PARNAS asked KUKUSHKIN to arrange for additional funding from Foreign National-1 to make an additional donation to Candidate-1, to which KUKUSHKIN responded that the $1 million Foreign National-1 had already provided to GEP was “in order to cover all the donations whatsoever.”  Further communications confirm the defendants’ use of foreign funds – and, in particular, funds from Foreign National-1 – to make the donations described above.  For example, on or about October 30, 2018, Foreign National-1 wrote to PARNAS, FRUMAN, and KUKUSHKIN that he had “fulfilled all my obligations completely,” including “500 [for] Nevada” in order to “work on obtaining licenses [in] these states.”  KUKUSHKIN similarly noted in response that “Money transferred by [Foreign National-1] to [GEP] was to support the very specific people & states (per [FRUMAN’s] table) in order to obtain green light for licensing.” 

Although PARNAS, FRUMAN, CORREIA, and Foreign National-1 continued to meet into the spring of 2019, the Business Venture did not come to fruition.

*                      *                      *

PARNAS, 47, FRUMAN, 53, CORREIA, 44, all Florida residents, and KUKUSHKIN, 46, a California resident, are each charged with one count of conspiring to violate the ban on foreign donations and contributions in connection with federal and state elections, which carries a maximum sentence of five years in prison.  PARNAS and FRUMAN are also each charged with one count of conspiring to make contributions in connection with federal elections in the names of others, which carries a maximum sentence of five years in prison; one count of making false statements, which carries a maximum sentence of five years in prison; and one count of falsifying records to obstruct the administration of a matter within the jurisdiction of the FEC, which carries a maximum sentence of 20 years in prison.

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

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

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Rebekah Donaleski and Nicolas Roos are in charge of the prosecution.

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

 

---

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GREGORY BAYARD was sentenced to 24 months in prison in White Plains federal court for embezzling approximately $1.4 million from a decedent's estate for which he served as a court-appointed administrator.  BAYARD had pled guilty to one count of wire fraud on October 23, 2018.  U.S. District Judge Cathy Seibel imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Gregory Bayard was obligated to ensure that the assets of a decedent he represented were protected and that the rightful beneficiaries received their inheritances.  But Bayard disregarded his fiduciary duties when he embezzled more than $1.4 million from his client’s estate.  Now, a judge has ordered him to repay the estate and spend two years behind bars.”

According to the allegations contained in court documents:

BAYARD was appointed administrator of the estate of a former resident of Mt. Vernon by the Surrogate’s Court in 2008.  His duties as administrator included collecting the assets of the estate.  As an administrator, BAYARD had a fiduciary duty to the estate and to the decedent’s son, the sole beneficiary of his father’s will.  New York law provides for a fee to estate administrators like BAYARD based on a percentage of the value of the estate’s assets.

In 2009, the decedent’s son retained an attorney and filed a motion in the Surrogate’s Court to remove BAYARD as the administrator of his father’s estate.  While the motion was pending, BAYARD embezzled more than $1.4 million from the estate’s bank account.  From June 2011 to June 2012, BAYARD wrote approximately 14 checks totaling more than $435,000 from the estate’s account to himself.  From December 2012 to May 2016, BAYARD caused more than 70 electronic wire transfers of a total of more than $1 million from the estate’s account to his personal account.  BAYARD spent the money on home renovations, college tuition, and other personal expenses, and transferred some of the money to family members.

*                *                *

In addition to the prison term, BAYARD, 59, of Scotch Plains, New Jersey, was sentenced to three years of supervised release and was ordered to pay restitution in the amount of $1,457,739.

Mr. Berman praised the outstanding investigative work of the U.S. Postal Inspection Service and the New York State Comptroller. 

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney James McMahon is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an Indictment charging JAMAL ADAMSON, a/k/a “J-Rock,” and HASAHN MURRAY, a/k/a “Sauce,” with the June 20, 2010, murder of David Moore, 23, in New York, New York.  ADAMSON was arrested today and will be presented this afternoon before U.S. Magistrate Judge Ona T. Wang.  MURRAY is in New York state custody and is being transferred to federal custody.  This case is assigned to United States District Judge Gregory H. Woods.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Over nine years ago, David Moore was shot and killed during a gang dispute in Manhattan.  Now, thanks to the outstanding work of the NYPD and the Special Agents of our Office, Jamal Adamson and Hasahn Murray have been charged for their alleged participation in that heinous crime.” 

NYPD Commissioner James P. O’Neill said:  “This case reflects the NYPD’s continued effort to eradicate violent street crime by targeting those most responsible.  I am grateful to these hard-working investigators and our law enforcement partners for ensuring these two alleged dangerous criminals will be held to account for their alleged actions.”

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

On or about June 20, 2010, in the vicinity of East 122nd Street and Lexington Avenue in New York, New York, ADAMSON and MURRAY, both members of a gang operating in East Harlem known as the Cash Money Boys (or “CMB”) participated in the murder of David Moore, during which David Moore was shot and killed.

*                *                *

ADAMSON, 26, of New York, New York, and MURRAY, 25, also of New York, New York, are each charged with one count of murder in aid of racketeering, which carries a maximum sentence of life in prison, and one count of using a firearm to commit murder, which carries a maximum sentence of life in prison, and a mandatory minimum sentence of five years in prison.  The maximum and minimum 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 NYPD and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York.

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Maurene Comey, Jacob Warren, and Tara LaMorte are in charge of the prosecution.

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

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth 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, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Troy Miller, Director, Field Operations, New York, U.S. Customs and Border Protection (“CBP”), and James P. O’Neill, the Police Commissioner for the City of New York (“NYPD”), today announced the unsealing of an indictment and two superseding indictments charging 18 defendants with participating in an international conspiracy to commit a variety of offenses, including access device fraud, wire fraud, bank fraud, and aggravated identity theft.

Defendants NIKOLAOS LIMBERATOS, a/k/a “Nicu Limberto,” CRISTIAN COSTEA, a/k/a “Momo,” THEOFRASTOS LYMBERATOS, ANDREW ELIOPOULOS, PETER SAMOLIS, KELLY KARKI LAM, and IULIANA MIHAILESCU were arrested this morning and will be presented in federal court in Manhattan before U.S. Magistrate Judge Ona T. Wang later today.  Defendants MIRCEA CONSTANTINESCU, a/k/a “Sobo,”ALIN HANES CALUGARU, IONELA CONSTANTINESCU, a/k/a “Pitica,” and GEORGE SERBAN were also arrested this morning and will be presented in federal court in Miami before U.S. Magistrate Judge Lauren F. Louis later today.  Defendant FLORIAN CLAUDIU MARTIN, a/k/a “Florin Claudiu,” a/k/a “Johnny Ion,” a/k/a “Jane Hotul,” a/k/a “Petru Andrioaie,” a/k/a “Petru Andrioane,” was arrested this morning in Cabo San Lucas, Mexico, and defendant RAUL IONUT VIDRASAN, a/k/a “Michu,” a/k/a “The Boy,” was arrested this morning in Perugia, Italy.  Defendants VALENTIN PETRESCU, a/k/a “Gico Cosmin Giscan,” a/k/a “Zoltan Pruma,” DRAGOS DIACONU, MADLIN ALEXANDRU ANCA, a/k/a “Mateo Fernandez Alejandro,” and CRISTIAN ULMANU, a/k/a “Boris Moravec,” are currently in custody on other charges and will be transferred to federal custody in New York and presented at a later date.  The case has been assigned to U.S. District Judge Laura Taylor Swain.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants participated in a wide-ranging international ATM skimming and money laundering operation, using their technological know-how to steal tens of millions of dollars from financial institutions and individual victims.  Thanks to the FBI, CBP, and the NYPD, the defendants are in custody and facing felony charges for their alleged offenses.”

FBI Assistant Director William F. Sweeney Jr. said:  “An extremely frustrating thing to experience, you grab cash from an ATM but then find out your bank information was stolen and your account drained.  The scheme detailed here cost victims money, time, and effort to get their finances returned and their identities restored, which can be an infuriating long process.  The FBI New York Cyber Crimes Task Force and our law enforcement partners have worked exhaustively to find the members of this criminal organization, and the arrests and charges are a testament to their hard work stopping these thieves from creating more havoc for anyone trying to access their hard-earned money.”

CBP Director of New York Field Operations Troy Miller said:  “This case serves as a great example of collaborative law enforcement efforts to combat international debit card schemes.  U.S. Customs and Border Protection in coordination with our partners at FBI and the NYPD will continue to work tirelessly to ensure that criminals associated with transnational criminal organizations are brought to justice.”

NYPD Commissioner James P. O’Neill said:  “The NYPD and its law enforcement partners are committed to dismantling criminal enterprises that leverage attacks against our cyber infrastructure.  We comprehensively confront everything from highly-sophisticated transnational groups, like this one, to those criminals who exploit our citizens with cyber-enabled scams.  I want to thank our federal partners and NYPD detectives for their coordination and tireless efforts in bringing this important case.”

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

From 2014 until September 2019, FLORIAN CLAUDIU MARTIN, a/k/a “Florin Claudiu,” a/k/a “Johnny Ion,” a/k/a “Jane Hotul,” a/k/a “Petru Andrioaie,” a/k/a “Petru Andrioane,” ALEX DONATI, RAUL IONUT VIDRASAN, a/k/a “Michu,” a/k/a “The Boy,” MIRCEA CONSTANTINESCU, a/k/a “Sobo,” NIKOLAOS LIMBERATOS, a/k/a “Nicu Limberto,” CRISTIAN COSTEA, a/k/a “Momo,” ALIN HANES CALUGARU, IONELA CONSTANTINESCU, a/k/a “Pitica,” THEOFRASTOS LYMBERATOS, ANDREW ELIOPOULOS, VALENTIN PETRESCU, a/k/a “Gico Cosmin Giscan,” a/k/a “Zoltan Pruma,” PETER SAMOLIS, KELLY KARKI LAM, GEORGE SERBAN, DRAGOS DIACONU, MADLIN ALEXANDRU ANCA, a/k/a “Mateo Fernandez Alejandro,” CRISTIAN ULMANU, a/k/a “Boris Moravec,” and IULIANA MIHAILESCU participated in a transnational organization that engaged in what is colloquially referred to as “ATM skimming” (the “Skimming Organization”).  The Skimming Organization unlawfully obtained victim accountholders’ debit card account information by using advanced technological devices to surreptitiously record the debit card numbers and personal identification numbers at automatic teller machines (“ATMs”), and then manufacturing counterfeit and fraudulent debit cards that bore the victim accountholders’ account information.  The Skimming Organization’s members then used those cards to fraudulently withdraw cash from victims’ bank accounts.

Certain of the defendants directed, or worked in, teams that the Skimming Organization deployed across the United States in order to carry out ATM skimming attacks, casing ideal locations for the attacks, installing skimming devices on ATMs, removing those devices, and cashing out large numbers of fraudulent debit cards manufactured as a result of the skimming operations.  Other defendants assisted in receiving packages containing skimming devices or component parts that were shipped from other parts of the U.S. and from abroad.  Other defendants assisted in engineering the skimming devices that the Skimming Organization used.  Still other defendants laundered the proceeds of the skimming attacks through bank accounts, properties, businesses, and the transportation of bulk cash.

The defendants carried out hundreds of ATM skimming operations across the U.S., including in New York and at least 17 other states.  The scheme defrauded financial institutions and individual victims of more than $20 million.

*                *                *

Each defendant is charged with one count of conspiracy to commit access device fraud, which carries a maximum sentence of 7 ½ years in prison; one count of conspiracy to commit wire and bank fraud, which carries a maximum sentence of 30 years in prison; and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison, consecutive to any other sentence imposed.  FLORIAN CLAUDIU MARTIN, a/k/a “Florin Claudiu,” a/k/a “Johnny Ion,” a/k/a “Jane Hotul,” a/k/a “Petru Andrioaie,” a/k/a “Petru Andrioane,” MIRCEA CONSTANTINESCU, a/k/a “Sobo,” NIKOLAOS LIMBERATOS, a/k/a “Nicu Limberto,” CRISTIAN COSTEA, a/k/a “Momo,” ALIN HANES CALUGARU, and KELLY KARKI LAM are also charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.  FLORIAN CLAUDIU MARTIN, a/k/a “Florin Claudiu,” a/k/a “Johnny Ion,” a/k/a “Jane Hotul,” a/k/a “Petru Andrioaie,” a/k/a “Petru Andrioane” is also charged with two counts of bank fraud, each of which carry a maximum sentence of 30 years in prison.  ALEX DONATI is also charged with one count of access device fraud, which carries a maximum sentence of 10 years in prison. 

The statutory maximum and minimum 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.  A chart with the defendants’ ages, places of residence, and nationalities is below.

Mr. Berman praised the outstanding investigative work of the FBI, CBP, and the NYPD, and thanked the United States Postal Inspection Service, INTERPOL-Rome, INTERPOL-Mexico City, and Mexico’s Agencia de Investigación Criminal and Instituto Nacional de Migración for their assistance.  

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Elizabeth A. Hanft, Daniel M. Loss, Samuel P. Rothschild, and Robert B. Sobelman 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.

Defendant

Age

Place of Residence

Nationality

FLORIAN CLAUDIU MARTIN,

a/k/a “Florin Claudiu,”

a/k/a “Johnny Ion,”

a/k/a “Jane Hotul,”

a/k/a “Petru Andrioaie,”

a/k/a “Petru Andrioane,”

44

Cabo San Lucas, Mexico

Romania

ALEX DONATI

51

Cabo San Lucas, Mexico

Romania

RAUL IONUT VIDRASAN,

a/k/a “Michu,” a/k/a “The Boy”

27

Perugia, Italy

Romania

MIRCEA CONSTANTINESCU, a/k/a “Sobo”

44

Cooper City, Florida

Romania

NIKOLAOS LIMBERATOS, a/k/a “Nicu Limberto”

53

Deer Park, New York

Greece

CRISTIAN COSTEA, a/k/a “Momo”

44

Queens, New York

Romania

ALIN HANES CALUGARU

39

Sunny Isles, Florida

Romania

IONELA CONSTANTINESCU, a/k/a “Pitica”

35

Cooper City, Florida

Romania

THEOFRASTOS LYMBERATOS

36

Queens, New York

United States

ANDREW ELIOPOULOS

34

Queens, New York

United States

VALENTIN PETRESCU, a/k/a “Gico Cosmin Giscan,” a/k/a “Zoltan Pruma”

32

Russellville, Arkansas

Romania

PETER SAMOLIS

30

Queens, New York

United States

KELLY KARKI LAM

42

New York, New York

United States

GEORGE SERBAN

32

Miami, Florida

Romania

DRAGOS DIACONU

41

Nashville, Tennessee

Romania

MADLIN ALEXANDRU ANCA, a/k/a “Mateo Fernandez Alejandro”

22

Nashville, Tennessee

Romania

CRISTIAN ULMANU, a/k/a “Boris Moravec”

54

Russellville, Arkansas

Romania

IULIANA MIHAILESCU

42

Queens, New York

Romania

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and Superseding Indictments, 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 today that the United States filed a civil lawsuit to resolve potential claims to “Site avec 5 personnages” (the “Painting”), an acrylic work on canvas by renowned 20th century-artist Jean Dubuffet (1901-1985) that was last known to be the personal property of Michel Cohen (“Cohen”), a former art dealer who has been under indictment for wire and mail fraud since 2003.  The Federal Bureau of Investigation (“FBI”) came into the possession of the Painting during the course of its investigation into Cohen, who, according to the indictment against him previously filed in this District, induced numerous national and international art galleries, collectors, and investors to consign to him expensive works of art and to give him large sums of money as part of fraudulent transactions.  The civil action filed today, known as an interpleader, seeks to allow the Government to divest itself of the Painting in favor of the party with the rightful claim to it, as determined by the Court. The case is assigned to U.S. District Judge Jed S. Rakoff.   

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Michel Cohen fled the United States rather than face charges that he used others’ expensive artworks to defraud his numerous victims. With this civil action, we ensure that a valuable painting that he left behind when he fled will end up with the rightful owner.” 

As alleged in the Government’s complaint-in-interpleader, the Painting is one of a series of largely abstract canvases that Jean Dubuffet, a prolific French avant-garde artist and founder of the “Art Brut” or “raw art” movement, and was completed in 1981.  The Painting’s catalogue raisonné number is E183, in Catalogue des travaux de Jean Dubuffet : Psycho-sites (1981 - 1982), fasc. XXXIV.  Similar paintings from this series have sold at auction in recent years for hundreds of thousands of dollars.  The Painting was initially the property of the Dubuffet estate, before it was sold to a purchaser in Asia through a Paris gallery in 1993.  The Painting’s provenance between 1993 and 1996, the earliest known date that it was in Cohen’s possession, is unknown.  Cohen has not had possession of the Painting since 2001, when he left it with a New York art dealer to attempt its sale.  That sale never occurred and Cohen has never made an attempt to reclaim the Painting, which was since deposited with the FBI.  The complaint names as interpleader defendants Cohen, as the last known claimed owner of the Painting, and Sotheby’s Financial Services, Inc., an art financing company which has a 2002 civil judgment from New York Supreme Court against Cohen for defrauding it of over a million dollars.  The complaint also names several John Does, individuals and entities who are unknown at this time but may also hold judgments against Cohen or may have had title to the Painting prior to 1996.  If you hold a court judgment against Cohen or believe you have a claim to title of the Painting, please contact the U.S. Attorney’s Office at (866) 874-8900. 

*                *                *

Mr. Berman thanked the FBI for its ongoing efforts in this matter.

This case is being handled by the Office’s Civil Division.  Assistant United States Attorney Stephen Cha-Kim is in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that PAUL A. RINFRET pled guilty to participating in a Ponzi scheme in which he obtained approximately $19 million in total from victims through a variety of lies and misrepresentations.  RINFRET pled guilty to one count of wire fraud and one count of securities fraud before U.S. District Judge Gregory H. Woods.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Paul Rinfret callously lied to investors at every step.  He lied about his past returns to get them to invest.  He lied about having invested all of their money, when he was actually spending much of it on things like jewelry, cars, and a house in the Hamptons.  To keep investors appeased, Rinfret lied about how their money was growing.  Today, Rinfret has admitted to his scheme, through which he obtained approximately $19 million, and now faces a prison term for his lies.” 

According to the allegations contained in the Complaint and the Indictment:

From at least 2016 through 2019, RINFRET engaged in a scheme to defraud potential and actual investors in an entity called Plandome Partners L.P. for his own personal gain and for the gain of his family members.  RINFRET offered potential investors the ability to invest in Plandome Partners through the purchase of limited partnership interests.  In soliciting investments, RINFRET falsely represented to potential and actual investors (the “Victims”) that he would use all of their investment funds to trade futures contracts tied to the Standard & Poor’s 500 index using a propriety trading algorithm he had developed, taking for himself a fee equivalent to 25% of the net profits on the trades. 

Through his fraudulent scheme, RINFRET obtained approximately $19 million in total from approximately six Victims on the false claim that he would utilize their investment funds for trading.  RINFRET’s lies and misrepresentations were varied and many.  For example, RINFRET claimed that Plandome Partners traded through certain brokerage accounts, one of which simply did not exist, and two of which were not open at a time when RINFRET claimed to be trading in those accounts. 

Further, RINFRET used only a small portion of the Victims’ invested funds to engage in actual trading.  Instead, RINFRET used most of the Victims’ money to purchase luxury goods and high-end vacation rentals for himself and family members.  For example, RINFRET used the Plandome Partners account to spend almost $50,000 on a luxury Hamptons vacation rental, more than $40,000 on jewelry, and tens of thousands of dollars on the event venue where his son held his engagement party. 

When RINFRET did actually engage in trading with Victims’ funds, he generated losses.  But, to prevent his Victims from seeking a return of their money, and to induce additional investments, RINFRET falsely reported excellent investment performance results to the Victims through false and fraudulent monthly account statements that RINFRET typically emailed to the Victims.  RINFRET also sent fabricated brokerage account statements to the Victims.  

*                *                *

RINFRET, 70, of Manhasset, New York, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of securities fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

RINFRET is scheduled to be sentenced by Judge Woods on February 10, 2020. 

Mr. Berman praised the outstanding work of Homeland Security Investigations and also thanked the New York City Police Department, which assisted in the investigation.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that CARL ANDERSON, a state licensed doctor, pled guilty today to writing medically unnecessary prescriptions for oxycodone.  ANDERSON pled guilty before U.S. Magistrate Judge Kevin N. Fox, and will be sentenced before U.S. District Court Judge Lorna G. Schofield at a later date.

U.S. Attorney Geoffrey S. Berman said: “As a physician, Carl Anderson should have been the first line of defense in the ongoing opioid epidemic.  Instead, as he admitted in federal court today, in exchange for cash payments, Anderson conspired with others to dispense dangerous and addictive opiates that were being sold on the street.  He now faces serious prison time for his actions.”

According to allegations in the Indictment and other documents filed in federal court, 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 $30 each in New York City, with street prices even higher in other parts of the country.  A single prescription for 180 30-milligram tablets of oxycodone can net an illicit distributor $5,400 in cash or more.

From at least approximately 2006 until his arrest in October 2018, ANDERSON operated a medical clinic in Staten Island, New York, where he wrote thousands of medically unnecessary oxycodone prescriptions in exchange for cash.  ANDERSON prescribed large quantities of oxycodone pills to patients he knew had no legitimate medical need for the medication, including his co-defendant Arthur Grande, who sold the pills on the streets of New York.  ANDERSON often held “patient visits” without appointments in the middle of the night – sometimes at 3:00 or 4:00 a.m. and sometimes at his home – and required “patients” to pay $150 to $200 per prescription in cash.  Many “patients” traveled from long distances, displayed visible signs of addiction to narcotics, or were plainly not taking, and instead were selling, their pills.  When ANDERSON was arrested in October 2018, the Drug Enforcement Administration (“DEA”) found over $200,000 in illicit drug proceeds in his home.

While pleading guilty today, ANDERSON admitted that he “violated [his] duties granted to [him] as a licensed physician,” “willfully turned a blind eye to . . . suspicions,” and participated in a “scheme” that “amounted to . . . diversion” of oxycodone.  As part of his guilty plea today, ANDERSON agreed to the forfeiture of $264,164 in drug proceeds that were seized from his home.   

*                      *                     *

ANDERSON, 58, of Staten Island, pled guilty to one count of conspiring to distribute and possess with intent to distribute oxycodone.  ANDERSON’s co-defendant, Arthur Grande, pled guilty to the same offense on October 1, 2019.  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 investigative work of the DEA Tactical Diversion Squad in New York, which comprises agents and officers from the DEA, the New York City Police Department, the New York State Police, the Town of Orangetown Police Department, the Rockland County Drug Task Force, the Westchester County Police Department, and the New York City Department of Investigation.  He also acknowledged the assistance of the Department of Health & Human Services. 

The case is being prosecuted by the Office’s Narcotics Unit.  Assistant U.S. Attorney Nicolas Roos is in charge of the prosecution. 

 Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that DAVID JONES was sentenced by United States District Judge Nelson S. Román to 30 months in prison for his participation in a scheme by which he and others fraudulently convinced users of a dating website into believing that they had sent sexually explicit images to underage children and faced criminal prosecution if they did not pay to avoid involvement by law enforcement.  JONES previously pled guilty on May 14, 2019.

Manhattan U.S. Attorney Geoffrey S. Berman stated:  “David Jones scared his victims into sending him money by fraudulently convincing victims they were in peril of criminal prosecution for child exploitation.  In the end, this cruel and temporarily profitable scheme by Jones earned him a prison term and surrender of his ill-gotten gains.” 

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

Beginning in August 2017, Homeland Security Investigations (“HSI”) began identifying various individuals who reported that they had been extorted after using a dating website (the “Website”).  In general, each victim reported communicating on the Website with an individual the victim believed was an adult.  Then, after the victim received and shared sexually-explicit photos with the person the victim believed was an adult, the victim was contacted by a person who claimed that the victim had communicated with an underage minor and needed to pay the minor’s family to prevent law enforcement involvement.  The victims made payments via money transfers through Western Union and Walmart and/or through the purchase of Green Dot MoneyPak cards.

In total, at least 28 victims of the criminal scheme were identified.  Together, those victims paid over $40,000 to DAVID JONES and his co-conspirators.  The victims were located in numerous states including Florida, Montana, Tennessee, Arizona, and New York.  In connection with the scheme, DAVID JONES and his co-conspirators made phone calls from South Carolina to Mahopac, New York.        

Mr. Berman praised the efforts of Homeland Security Investigations, the South Carolina Department of Corrections - Police Services Unit, and the Greenville County Sheriff’s Office in connection with this investigation.

Judge Román ordered that the 30-month term of imprisonment run consecutive to the sentence JONES is currently serving in South Carolina.  In addition, he imposed a period of supervised release of three years to follow the imprisonment, and ordered forfeiture in the amount of $27,066 and restitution in the amount of $41,459.51.                     

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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that VLADIMIR ZISKIND pled guilty to participating in a scheme to target elderly persons to solicit purchases of stock in a series of valueless companies through a variety of lies and misrepresentations.  ZISKIND pled guilty to one count of conspiracy to commit securities fraud and one count of securities fraud before U.S. District Judge Vernon S. Broderick.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Vladimir Ziskind callously preyed on elderly victims, cold-calling them with a time-sensitive offer to purchase an ‘IPO’ of a company that was ‘doing great.’  In reality, the companies for which Ziskand purported to be selling IPOs were under his control, and there was zero legitimate investment opportunity for his victims.  Ziskand has admitted to his scheme, which netted over $2 million, and now faces a prison term for his lies.”

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

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

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

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

*                *                *

ZISKIND, 51, of Brooklyn, New York, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum penalty of five years in prison, and one count of securities fraud, which carries a maximum penalty of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

ZISKIND is scheduled to be sentenced by Judge Broderick on January 16, 2020, at 2:30 p.m.

Mr. Berman praised the outstanding work of the FBI.

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

 

---

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that JAMES FELTON was sentenced today to life plus 75 years in prison for the June 11, 2016, murder of Marvin Harris, whom FELTON shot 13 times, and the December 11, 2016, murder of Jose Morales, whom FELTON shot in the head.  FELTON’s sentence also encompassed his participation in a drug conspiracy and firearms offenses.  FELTON was convicted on June 19, 2019, after a jury trial before U.S. District Judge William H. Pauley III, who imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “James Felton murdered two people in cold blood and attempted to murder two others.  The sentence imposed today is a just punishment for a brutal, unrepentant killer.  We thank our partners at Homeland Security Investigations and the New York City Police Department for their outstanding work on this case and for their dedication in bringing Felton to justice.”

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

Between 2010 and 2017, FELTON was a member of a long-running narcotics conspiracy centered around 240 East 175th Street in the Bronx, New York, as well as a criminal enterprise consisting of members of his family and other associates.  On June 11, 2016, at the corner of East 175th Street and Monroe Avenue, FELTON shot Marvin Harris 13 times after Harris insulted FELTON and challenged FELTON’s status within the drug territory.  Six months later, at the corner of East 175th Street and Weeks Avenue, one block away from the scene of the Harris murder, FELTON shot rival drug dealer Edwin Romero four times, attempted to shoot Romero’s girlfriend, and shot Jose Morales in the head, killing him.

*                      *                      *

In addition to the prison term, FELTON, 50, of the Bronx, New York, was sentenced to five years of supervised release. 

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 CHRISTIAN DAWKINS was sentenced to twelve months and a day in prison, and MERL CODE was sentenced to 3 months in prison, after having been found guilty in May 2019 of engaging in a scheme to bribe multiple NCAA Division I men’s college basketball coaches.  The defendants were sentenced in Manhattan federal court by U.S. District Judge Edgardo Ramos, who also presided over the jury trial.   Both sentences are in addition, and will run consecutive, to sentences previously imposed on both defendants by U.S. District Judge Lewis A. Kaplan for their roles in a separate scheme to defraud Adidas-sponsored universities by making illicit cash payments to the families of college-bound student-athletes and concealing those payments from the schools.

Manhattan U.S. Attorney Geoffrey S. Berman said: “Christian Dawkins and Merl Code have now been sentenced to prison a second time for their roles in corrupting the world of college basketball.  The sentences imposed this week should make crystal clear to other members of the basketball underground exposed during the various prosecutions brought by this Office that bribery is still a crime, even if the recipient is a college basketball coach, and one that will result in term of incarceration.”

According to the allegations contained in the Complaint, Indictment, Superseding Indictment, and evidence presented during the trial in Manhattan federal court:

Overview of the Scheme

DAWKINS and CODE agreed to pay bribes to various NCAA Division I men’s college basketball coaches in exchange for those coaches’ exerting their influence over the student-athletes that they coached in order to retain the services of DAWKINS and a new sports management business (the “Dawkins Company”) that he had recently started.

Prior to founding the Dawkins Company, from in or about 2015 until in or about May 2017, DAWKINS worked for a major sports agency recruiting high school and college basketball players as clients.  In connection with his work for the sports agency, DAWKINS paid bribes to Lamont Evans, who at the time was an assistant coach at the University of South Carolina, in order for Evans to exert his official influence over student-athletes he coached to retain the services of the sports agency that employed DAWKINS.  DAWKINS subsequently introduced Louis Martin Blazer III, a financial advisor who, unbeknownst to DAWKINS, was cooperating with the Government, and Munish Sood, another financial advisor, to Lamont Evans in order for them to continue paying bribes to him.    

In or about May 2017, DAWKINS was terminated from his job at the sports agency and started the Dawkins Company with Munish Sood and another investor who, unbeknownst to DAWKINS, was an undercover law enforcement officer (“UC-1”).  In order to recruit future clients, DAWKINS proposed, among other things, paying bribes to coaches at various NCAA Division I universities so that these coaches would steer their student-athletes to retain the services of the Dawkins Company.  DAWKINS thereafter proposed paying bribes to Emanuel “Book” Richardson, an assistant coach at the University of Arizona.  Soon thereafter, DAWKINS arranged for Richardson to travel to New York City in order to receive a $5,000 cash bribe.  Weeks later, Richardson requested an additional $15,000 from DAWKINS, which Richardson said he would use in order to secure the commitment of a top high school basketball player to attend the University of Arizona, who Richardson would then steer to retain the services of DAWKINS and his company.  DAWKINS arranged for UC-1 and Munish Sood to pay Richardson an additional $15,000 cash bribe in New Jersey in or about July 2017. 

In or about June 2017, DAWKINS introduced Sood, UC-1, and Blazer, among others, to MERL CODE, who at the time was a consultant for Adidas, in order for CODE to work with the Dawkins Company to recruit future clients.  During the initial meeting, DAWKINS, CODE, Sood, Blazer and UC-1 discussed, among other things, CODE’s ability to identify and connect the Dawkins Company with corrupt college basketball coaches willing to accept money.  At the end of the meeting, CODE received a $5,000 cash payment from UC-1 on behalf of the Dawkins Company. 

In or about July 2017, DAWKINS and CODE discussed by telephone, among other things, CODE introducing UC-1 to various men’s college basketball coaches at an upcoming recruiting event in Las Vegas, Nevada, and that CODE would be paid $5,000 for each men’s college basketball coach that he introduced to DAWKINS and UC-1.  CODE later sent a text message to DAWKINS containing a list of coaches that CODE had set up meetings with in Las Vegas, Nevada, including the dates and times of each of the meetings, for the purpose of DAWKINS and his company arranging to bribe them.  In advance of the meetings, CODE advised UC-1 and DAWKINS that they should tell the coaches they would meet with that they would be available to provide them with money in the future, including with respect to any future financial needs these coaches had in connection with recruiting. 

In Las Vegas, several coaches received cash bribes during their meetings with DAWKINS, and other coaches DAWKINS agreed to pay later as needed, in exchange for them using their influence to steer players to the Dawkins Company. Anthony Bland, an assistant coach at the University of Southern California, and an assistant coach from Creighton University -- two of the coaches that were on the list of meetings that CODE sent to DAWKINS by text message -- met with DAWKINS, UC-1 and Blazer in Las Vegas in July 2017 and accepted cash bribes.  During the meeting in Las Vegas, Bland accepted a cash bribe and confirmed that he would use his influence to steer student-athletes at the University of Southern California to retain the Dawkins Company.  During the trip to Las Vegas, Nevada, DAWKINS, Blazer and UC-1 also met with a third coach from Texas Christian University and paid this coach a cash bribe, as well. 

After these meetings, DAWKINS discussed with college coaches who had been bribed players that they could steer to DAWKINS and his new company.  For example, in August 2017, Anthony Bland, an assistant coach at the University of Southern California, facilitated meetings between DAWKINS and Sood, and the family members of a then-current student-athlete on the University of Southern California men’s basketball team, as well as a family member of a different student-athlete who was a rising freshman planning to play for the University of Southern California men’s basketball team the next season.  During a meeting on the campus of the University of Southern California in or about August 2017, Bland informed DAWKINS and Sood that if they continued to fund payments to family members of University of Southern California men’s college basketball players and recruits that Bland would use his position as an assistant coach to influence these players to retain the Dawkins Company.  

*                *                *

DAWKINS, 26, of Los Angeles, California, and CODE, 45, of Greer, South Carolina, were also sentenced to 2 years of supervised release. 

Mr. Berman praised the work of the FBI and the Special Agents of the United States Attorney’s Office for the Southern District of New York.

The case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Robert L. Boone, Noah Solowiejczyk, and Eli J. Mark are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that VALENTYN BELAN, a/k/a “Belan Valentin,” a/k/a “Belan Valentyn,” a/k/a “Belan Valentyn Volodymyrovych,” a/k/a “Belan Valentyn Voldymyrovich,” a/k/a “Valentino,” was sentenced to 109 months in prison for a sophisticated fraud scheme lasting more than 10 years during which BELAN invented and promoted fake business opportunities purportedly located in Ukraine and elsewhere.  BELAN previously pled guilty to the scheme on May 29, 2019, and he was sentenced today by U.S. District Judge Gregory H. Woods.

U.S. Attorney Geoffrey S. Berman said:  “For years, Valentyn Belan headed an elaborate fraud in which he convinced his victim to part with more than $20 million to invest in fake business opportunities.  In fact, he created false documents and photos, and even arranged for fake meetings with his co-conspirators to perpetuate the fraud.  Today’s sentence, and the judge’s order to forfeit the $20 million in profit, ensures that Belan is punished for his crimes.”

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

For more than a decade, BELAN was the mastermind behind a scheme to defraud a Hong Kong national through fake business opportunities that included, among others things, sham investments in real estate, rare earth mines, and oil interests.  In order to induce the victim to invest in those fraudulent opportunities, BELAN employed a litany of elaborate misrepresentations, including numerous falsified documents and photographs, and he orchestrated multiple fake meetings around the world with co-conspirators pretending to be business partners and government officials.  Over the course of the scheme, from October 2008 through December 2018, BELAN defrauded his victim of more than $20 million. 

*                *                *

In addition to the prison term, BELAN, 39, of Kherson, Ukraine, was sentenced to three years of supervised release, ordered to forfeit $20,107,243, representing proceeds traceable to the charged offense, and to pay restitution in the amount of $13,309,918.

In addition to BELAN, Olena Chumachenko and Nika Khrystych were charged in connection with the fraudulent scheme.  Chumachenko pled guilty to a separate charge of visa fraud and was sentenced to a term of probation by U.S. District Judge Edgardo Ramos.  Khrystych remains at large.  All charges against Khrystych are merely allegations, and she is presumed innocent unless and until proven guilty.

Mr. Berman praised the outstanding investigative work of Special Agents from the U.S. Attorney’s Office for the Southern District of New York, and thanked agents with the U.S. Department of State and U.S. Customs and Border Protection for their excellent assistance throughout the investigation. 

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, announced that ALJERMIAH MACK, a/k/a “Nuke,” and ANTHONY ELLISON, a/k/a “Harv,” were found guilty today of racketeering conspiracy in connection with their membership in the Nine Trey Gangsta Bloods (“Nine Trey”), a violent gang that operated in New York City.  ELLISON was also found guilty of kidnapping, maiming, and assault with a dangerous weapon, in connection with his membership in Nine Trey.  MACK was also found guilty of conspiring to distribute more than one kilogram of heroin.  The convictions followed a two-week trial before the Honorable Paul A. Engelmayer.

U.S. Attorney Geoffrey S. Berman said:  “Aljermiah Mack and Anthony Ellison were high-ranking members of Nine Trey, a ruthless gang, and were responsible for terrible acts of violence and the trafficking of dangerous narcotics throughout New York City.  They now stand convicted of their crimes, and will no longer be able to inflict harm on the people of this city.”

According to court documents and the evidence at trial:

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

MACK, 33, a high-ranking member of Nine Trey, conspired with other members of Nine Trey to distribute heroin and MDMA throughout New York City. 

ELLISON, 32, another high-ranking member of Nine Trey, kidnapped and robbed a fellow Nine Trey member on or about July 22, 2018, in order to enhance his status within the gang.  In addition, on or about October 24, 2018, ELLISON slashed an individual in the face in retaliation for the shooting of one of ELLISON’s associates earlier that evening.

*                *                *

MACK and ELLISON were convicted of racketeering conspiracy, which carries a maximum sentence of 20 years in prison.  ELLISON was also convicted of kidnapping, maiming, and assault with a dangerous weapon in aid of racketeering, which carry maximum sentences of life in prison, 30 years in prison, and 20 years in prison, respectively.  MACK was also convicted of narcotics conspiracy, which carries a maximum sentence of life in prison, with a mandatory minimum of 10 years in prison.  ELLISON was acquitted of one count of assault with a dangerous weapon, and MACK was acquitted of a firearms offense.  The statutory penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.   

MACK is scheduled to be sentenced by Judge Engelmayer on February 19, 2020.  ELLISON is scheduled to be sentenced on February 26, 2020.           

Mr. Berman praised the outstanding investigative work of the New York City Police Department, Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOHN GERACI pled guilty in Manhattan federal court today to conspiring to commit securities and wire fraud.  GERACI’s plea stems from his participation in a scheme to defraud clients of his company, Meridian Capital Asset Management.  GERACI caused two clients (“Victim-1” and “Victim-2”) to invest in a hedge fund called the Meridian Matrix Long Short Fund (the “Meridian Matrix Fund”).  Between in or about December 2015 and November 2016, GERACI provided fictitious account statements and updates to Victim-1 and Victim-2, telling them that their investment was worth millions when, in reality, GERACI knew that large portions of it had been stolen by the Meridian Matrix Fund’s administrator.  GERACI eventually liquidated the Meridian Matrix Fund and misappropriated significant portions of the remaining funds.  Although he had recovered over $1 million of Victim-1 and Victim-2’s investment, GERACI falsely told them that their entire investment had been lost, and improperly used their money to pay his own personal and business expenses. 

GERACI was arrested on August 7, 2018, and pled guilty today before United States District Judge Alison J. Nathan. 

U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, John Geraci lied to his clients about how much of their money was lost in investments with Nicholas Mitsakos.  What wasn’t actually lost to Mitsakos was stolen by Geraci.  Now Geraci, like Mitsakos, is a convicted felon.”

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

JOHN GERACI was the principal and founder of Meridian Capital Asset Management.  In or about February 2015, GERACI was introduced to another individual, Nicholas Mitsakos, who purported to operate a hedge fund called Matrix Capital (“Matrix”).  Mitsakos told GERACI that Matrix had tens of millions of dollars under management and had achieved annual returns between 19.4% and 66.3% from 2012 to 2014.  GERACI and Mitsakos subsequently entered into an arrangement whereby GERACI would raise money for Mitsakos, Mitsakos would manage that money through a new vehicle, the Meridian Matrix Fund, and GERACI and Mitsakos would then split any fees that the Meridian Matrix Fund generated.  As part of this arrangement, GERACI solicited Victim-1 and Victim-2 to invest approximately $2 million in the Meridian Matrix Fund, in large part by relying on Mitsakos’s claims about his supposed fund’s assets under management and performance returns.

In or about December 2015, however, GERACI learned that Mitsakos had only invested approximately $1.2 million of Victim-1 and Victim-2’s investment, and had misappropriated significant portions of the remaining money.  GERACI also learned that Mitsakos never had any actual assets under management, and that his performance returns were accordingly fictitious and misleading.  Nonetheless, GERACI never told Victim-1 or Victim-2 that their investment was in jeopardy or had been solicited with misleading information.  To the contrary, GERACI sent Victim-1 and Victim-2 updates that hid Mitsaskos’s misappropriation and falsely claimed that their investment had appreciated.  GERACI sent these fictitious updates even after GERACI had liquidated the Meridian Matrix Fund’s trading positions in or about June 2016.

In or about August 2016, Mitsakos was charged in this District with securities fraud and other offenses.  In or about September 2016, GERACI changed course: instead of providing fictitious account updates to Victim-1 and Victim-2, GERACI told them, in substance and in part, that their entire investment had been wiped out through Mitsakos’s fraud.  GERACI did this even though he had ultimately received approximately $1.1 million of Victim-1 and Victim-2’s investment back from Mitsakos after liquidating the Meridian Matrix Fund’s trading positions.  Rather than returning this amount to Victim-1 and Victim-2, GERACI used it to pay for his own personal and business expenses, including, for example, payments on a BMW automobile, a gym membership, gas, groceries, travel expenses, and his cellphone bill.

In addition to sending false account updates to Victim-1 and Victim-2 even after learning that Mitsakos had lied about his fund’s assets and performance and that Mitsakos had stolen significant portions of Victim-1 and Victim-2’s investment, GERACI continued to try to raise money for an investment related to Meridian Matrix Fund from others.  In attempting to do so, moreover, GERACI relied on the same representations about Matrix’s assets and performance that he knew to be false.   

Mitsakos pled guilty to conspiring to commit securities fraud and wire fraud on May 25, 2017, and on November 7, 2017, was sentenced to 30 months in prison by the Honorable Denny Chin, a judge on the United States Court of Appeals for the Second Circuit who was sitting by designation in the Southern District of New York. 

*                      *                      *

GERACI, 62, pled guilty to one count of conspiring to commit securities and wire fraud. This charge carries a maximum term 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.

GERACI will be sentenced on January 23, 2020.

Mr. Berman praised the investigative work of the United States Postal Inspection Service 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 United States Attorneys Jared Lenow and Drew Skinner are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that DAVID BRITT, a former KPMG partner who was the co-head of the Banking and Capital Markets Group within the audit group of KPMG’s Department of Professional Practice (“DPP”), pled guilty today to participating in a scheme to defraud the PCAOB by obtaining, disseminating, and using confidential lists of which KPMG audits the PCAOB would be reviewing so that KPMG could improve its performance in PCAOB inspections.  BRITT pled guilty to one count of conspiracy to commit wire fraud before the Honorable J. Paul Oetken.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “David Britt, a former KPMG partner, admitted today to obtaining confidential lists that contained the information on which KPMG audits would be reviewed by the PCAOB.  Using the playbook he illicitly acquired, Britt used that information to improve the results his of firm’s audits.  Independent reviews of accounting firm audits exist to ensure their integrity and accuracy.  David Britt corrupted that process and now faces time in federal prison.”

According to the allegations contained in the Indictment filed against BRITT and statements made in related court proceedings, including the trial of co-defendants David Middendorf and Jeffrey Wada:

The PCAOB is a nonprofit corporation overseen by the SEC that inspects the audit work performed by registered accounting firms with respect to the financial statements of publicly traded companies.  The PCAOB inspects the largest U.S. accounting firms on an annual basis.  As part of the inspection process, the PCAOB chooses a selection of audits performed by the accounting firm for a closer review.  Until shortly before an inspection occurs, the PCAOB does not disclose which audits are being inspected, or the focus areas for those inspections, because it wants to ensure that an auditor does not perform additional work or modify its work papers in anticipation of an inspection.  Following the completion of an inspection, the PCAOB issues an Inspection Report containing any negative findings or “comments” with respect to both the specific audits reviewed and the accounting firm more generally. 

KPMG is one of the largest accounting firms in the world.  In recent years, KPMG fared poorly in PCAOB inspections, and in 2014 received approximately twice as many comments as its competitor firms.  By at least in or about 2015, KPMG was engaged in efforts to improve its performance in PCAOB inspections, including but not limited to recruiting and hiring former PCAOB personnel, including Brian Sweet.  At the time, BRITT was a partner in DPP, which was broadly responsible for the quality of KPMG’s audits and KPMG’s performance in PCAOB inspections.

KPMG’s efforts to improve inspection results, however, were not limited to legitimate means.  Instead, between 2015 and 2017, BRITT, David Middendorf, Thomas Whittle, Cynthia Holder, Brian Sweet, and Jeffrey Wada worked to illicitly acquire valuable confidential PCAOB information concerning which KPMG audits would be inspected, in an effort to game the system and improve inspection results.  For example, during Sweet’s first week of employment at KPMG in 2015, BRITT, Middendorf, and Whittle began asking Sweet for confidential PCAOB information about which KPMG audits would be inspected by the PCAOB that year. 

In March 2016, Holder obtained the PCAOB’s confidential 2016 inspection selections for KPMG from Wada, who was still working at the PCAOB but who had recently been passed over for a promotion.  Wada – who was not responsible for KPMG inspections at the PCAOB– accessed and stole valuable confidential information from the PCAOB and passed it on to Holder.  Holder, in turn, provided the 2016 inspection selections to Sweet, who passed them to Middendorf, Whittle, and BRITT.  Middendorf, Whittle, BRITT, and Sweet then agreed to launch a stealth program to “re-review” the audits that had been selected.  In order to cover up their illicit conduct, BRITT gave other KPMG engagement partners a false explanation for the re-reviews.  The stealth re-review program allowed KPMG to double-check its audit work, strengthen its work papers, and, in some cases, identify deficiencies or perform new audit work that had not been done during the live audit.

In January 2017, Wada, who had again been passed over for promotion at the PCAOB, again stole valuable confidential PCAOB information, misappropriating a preliminary list of confidential 2017 inspection selections for KPMG audits and passing it on to Holder.  At the same time, Wada provided Holder with his resume and sought her assistance in helping him to acquire employment at KPMG.  Sweet shared the preliminary inspection selections provided by Wada with Whittle and BRITT, while noting that the information was only preliminary.  Whittle’s response was to ask Sweet to confirm that they would get the final list as well.

In February 2017, Wada texted Holder saying “I have the grocery list. . . .  All the things you’ll need for this year.”  Wada then spoke to Holder and provided her with the full confidential 2017 final inspection selections.  Holder again shared the stolen information with Sweet, who shared it with Middendorf, Whittle, and BRITT, so that it could be acted upon to improve the audits on the list. 

In 2017, a KPMG partner who received early notice that her engagement was on the confidential 2017 inspection list reported the matter, and it was ultimately reported to KPMG’s Office of General Counsel. 

*                      *                      *

DAVID BRITT, 56, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  Sentencing is scheduled for May 8, 2020 before the Honorable J. Paul Oetken. 

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

Mr. Berman praised the investigative work of the United States Postal Inspection Service and also thanked the Securities and Exchange Commission, which has brought an administrative proceeding against BRITT. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Jordan Estes, Margaret Graham, Martin Bell, and Rebecca Mermelstein are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that CAMERON COLLINS, the son of former United States Congressman Christopher Collins, and STEPHEN ZARSKY, the father of CAMERON COLLINS’s fiancée, pled guilty to participating in a scheme to commit insider trading in the stock of Innate Immunotherapeutics, a biopharmaceutical company for which Christopher Collins served on the board of directors.

U.S. Attorney Geoffrey S. Berman said:  “Insider trading corrupts the integrity of our markets.  The strength of our financial system depends on investors knowing that everyone is playing by the rules.  Today’s guilty pleas reaffirm the commitment of this Office and our law enforcement partners to protecting and defending those values.”

The following facts are based on the allegations contained in the Superseding Indictment and statements made in related court filings and proceedings:

The Insider Trading Scheme

The Scheme

In or about June 2017, Christopher Collins, who, in addition to serving on Innate’s board of directors, was also one of Innate’s largest shareholders, participated in a scheme to commit insider trading.  Specifically, on or about June 22, 2017, Christopher Collins learned that MIS416 – a multiple sclerosis drug that Innate was developing – had failed a critical drug trial that was meant to determine the drug’s clinical efficacy (the “Drug Trial”).  The negative Drug Trial results were highly confidential, and, as an insider who owed duties of trust and confidence to Innate, Christopher Collins was obligated to keep the Drug Trial results secret until Innate publicly released them.  Instead, in breach of those duties, Christopher Collins tipped his son, CAMERON COLLINS, who was also a substantial Innate shareholder, so that CAMERON COLLINS could make timely trades and tip others before Innate publicly released the Drug Trial results.  CAMERON COLLINS traded on the inside information and passed it to the father of his fiancée, STEPHEN ZARSKY, as well as to three individuals not named in the Superseding Indictment (“Individual-1,” “Individual-2,” and “Individual-6”), so that they could utilize the information for the same purpose.  ZARSKY, in turn, traded on the information and used it to tip three more individuals not named in the Superseding Indictment (“Individual-3,” “Individual-4,” and “Individual-5,”) so that they too could engage in timely trades in Innate stock.  All of the trades preceded the public release of the negative Drug Trial results.

In total, these trades allowed CAMERON COLLINS and ZARSKY, and Individual-1 through Individual-6, to avoid over $768,000 in losses that they would have otherwise incurred if they had sold their stock in Innate after the Drug Trial results became public. 

The Drug Trial Results

In or about October 2014, Innate initiated a Phase 2B clinical trial of its primary drug, MIS416.  Successful completion of the Drug Trial was a necessary prerequisite to the commercialization of MIS416.  Because Innate had no other significant products in development, its stock price was tied to the success of MIS416.

The Drug Trial was widely expected to be completed around the summer of 2017.  For example, on or about June 9, 2017, Innate’s chief executive officer (“CEO”) sent various individuals, including Christopher Collins, an email stating that “the delivery date for [the] review and ‘verdict’” of the Drug Trial “will [] occur at COB on US Thursday June 22nd.”  As the summer progressed, individuals within Innate remained optimistic that MIS416’s Drug Trial results would be positive.  The initial Drug Trial results were made available by trial administrators to Innate’s CEO on June 22, 2017.  These results established that MIS416 lacked therapeutic value in the treatment of multiple sclerosis.  The results were not publicly released at that time.  Instead, they were released publicly on June 26, 2017, after the U.S. markets had closed (the “Public Announcement”).  Innate’s stock price subsequently crashed, dropping 92% on the first trading day following the Public Announcement. 

Dissemination of the Drug Trial Results

On or about June 22, 2017, at approximately 6:55 p.m., Innate’s CEO sent an email describing the Drug Trial results to the company’s Board of Directors, including Christopher Collins.  The email explained to Innate’s Board of Directors for the first time that the Drug Trial had been a failure.  The email began, in part, “I have bad news to report,” and continued to explain that “the top line analysis of the ‘intent to treat’ patient population (ie every subject who was successfully enrolled in the study) would pretty clearly indicate[s] ‘clinical failure.’”  The email continued, “Top-line 12-month data . . . show no clinically meaningful or statistically significant differences in [outcomes] between MIS416 and placebo,” and concluded by stating, “No doubt we will want to consider this extremely bad news. . . .” 

At the time Christopher Collins received this email, he was attending the Congressional Picnic at the White House.  At 7:10 p.m., Christopher Collins replied to the email, stating, in part, “Wow.  Makes no sense.  How are these results even possible???”  After responding to the Innate CEO’s email, Christopher Collins called his son, CAMERON COLLINS.  They traded six missed calls between 7:11 p.m. and 7:15 p.m..  At 7:16 p.m., Christopher Collins and CAMERON COLLINS spoke for more than six minutes.  During that six-minute phone call, Christopher Collins told CAMERON COLLINS, in sum and substance, that MIS416 had failed the Drug Trial.

Trading and Tipping by CAMERON COLLINS and ZARSKY

CAMERON COLLINS began placing orders to sell his Innate shares the morning after he received inside information from Christopher Collins.  Between the morning of Friday, June 23, 2017 and the close of the market on Monday, June 26, 2017, CAMERON COLLINS sold approximately 1,391,500 shares of Innate stock.  These sales allowed CAMERON COLLINS to avoid approximately $570,900 in losses. 

Furthermore, after learning the Drug Trial results from Christopher Collins, on or about the night of June 22, 2017, CAMERON COLLINS provided the Drug Trial results to at least the following three sets of individuals so that they could trade in advance of the Public Announcement:  (1) his fiancée, Individual-1; (2) ZARSKY and ZARSKY’s wife, Individual-2; and (3) CAMERON COLLINS’s friend, Individual-6.  Collectively, these individuals avoided approximately $186,620 in losses as a result of their trading on inside information. 

On or about the morning of June 23, 2017, ZARSKY provided the negative Drug Trial results that he had learned from CAMERON COLLINS and Individual-1 to at least the following individuals, among others, or otherwise caused them to trade or attempt to trade in advance of the Public Announcement: (1) his brother, Individual-3; (2) his sister, Individual-4; and (3) his longstanding friend, Individual-5.  Collectively, these individuals avoided approximately $10,900 in losses as a result of their trading on inside information.

*                      *                      *

CAMERON COLLINS, 26, and STEPHEN ZARSKY, 67, each pled guilty to one count of conspiracy to commit securities fraud, 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 defendants will be determined by the Judge. 

Mr. Berman praised the outstanding work of the FBI 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 Scott Hartman, Max Nicholas, and Damian Williams 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”), Donald Halmy, Chief of the Peekskill Police Department, and Thomas Gleason, Commissioner of the Westchester County Police Department, announced today the unsealing of an Indictment and Complaint collectively charging 13 defendants with narcotics distribution offenses in and around Westchester County, New York.  The defendants, WENDELL JONES, JESSE DABBS, JASON BOGAN, BYRON MOUNTAIN, SARAH GILLON, DOROTHY MCALLISTER, a/k/a “Dot,” GUSTAVO GONZALEZ, a/k/a “Tavo,” KEVIN HERBIN, WILLIE SIMS, a/k/a “Black,” MAURICE ELLIS, ISAAC MALLORY, a/k/a “Face,” HAKIM ANDERSON, a/k/a “Hak,” and RAHMEL GARRAWAY, a/k/a “Major,” were presented in White Plains federal court this afternoon before United States Magistrate Judge Lisa Margaret Smith.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants trafficked crack cocaine, an addicting and potentially deadly product that devastates communities throughout the Southern District of New York.  Thanks to the FBI, the Peekskill Police Department, and the Westchester County Police Department, the defendants are in custody and facing federal criminal charges.”

FBI Assistant Director William F. Sweeney Jr. said:  “Long before the opioid epidemic started in this country, crack cocaine was destroying lives.  It persists as a preferred drug for many of these violent groups to sell, which means our FBI Westchester County Safe Streets Task Force is going after those dealers and their pushers.  I want to thank the local law enforcement agencies for the work they put into this investigation because their partnerships are vital to getting rid of the violence these criminals bring to these communities.”

Peekskill Police Chief Donald Halmy said:  “We have all seen the devastating effects that drugs have played in destroying individuals, families, and even communities.  We are committed to using every resource, from the local level to the federal level, to make sure that those responsible for this blight are apprehended and sentenced appropriately.  We commend all those involved who put in countless hours to help make Peekskill a better place to live today.”

Westchester County Police Commissioner Thomas Gleason said:  “The Westchester County Department of Public Safety remains committed to working with federal and local law enforcement to combat the distribution and sale of illegal narcotics in our county.  I am grateful to all of the law enforcement personnel and agencies that played a part in this successful investigation.”

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

From at least November 2018 until September 2019, WENDELL JONES, JESSE DABBS, JASON BOGAN, BYRON MOUNTAIN, SARAH GILLON, DOROTHY MCALLISTER, GUSTAVO GONZALEZ, and KEVIN HERBIN conspired to distribute 280 grams and more of crack cocaine.  In addition, from at least March 2019 until September 2019, WILLIE SIMS, MAURICE ELLIS, ISAAC MALLORY, HAKIM ANDERSON, and RAHMEL GARRAWAY conspired to distribute 28 grams and more of crack cocaine.  

*                *                *

Conspiring to distribute 280 grams and more of crack cocaine carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.  Conspiring to distribute 28 grams and more of crack cocaine carries a mandatory minimum sentence of five years in prison and a maximum sentence of 40 years in prison.

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

Mr. Berman praised the outstanding investigative work of the FBI Westchester County Safe Streets Task Force, the Peekskill Police Department, and the Westchester County Police Department.  The Westchester County Safe Streets Task Force comprises Special Agents and Task Force Officers from the FBI, US Probation, ATF, New York State Police, Westchester County PD, Westchester County DAs Office, NYPD, Yonkers PD, Mount Vernon PD, Peekskill PD, Greenburgh PD, and New Rochelle PD. 

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Jim Ligtenberg and Shiva Logarajah are in charge of the prosecution.

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

 

---

[1] As the introductory phrase signifies, the entirety of the texts of the Indictment and Complaint and the descriptions of the Indictment and Complaint 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, James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), Peter C. Fitzhugh, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Ray Donovan, the Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), announced today the unsealing of an indictment charging ARIEL TAVAREZ, a/k/a “A,” a/k/a “Mike,” CHRISTIAN BAEZ, LUIS MESON, a/k/a “Sito,” GREGORIS MARTINEZ, a/k/a “Greg,” KEVIN GRULLON, a/k/a “Kev,” a/k/a “JB,” and JOIFFREY URENA, a/k/a “Jeff,” a/k/a “Jay,” with conspiring to distribute heroin and cocaine through an on-demand drug delivery service called “Mike’s Candyshop.”  All six defendants were arrested today and will be presented before United States Magistrate Judge Kevin Nathaniel Fox in Manhattan federal court this afternoon.  The case has been assigned to United States District Judge Katherine Polk Failla.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants operated a covert on-demand delivery service for the distribution of highly addictive and dangerous drugs.  Allegedly, even after they realized the potency of the drugs they were distributing and selling, the defendants continued to sell their poison.  Today’s arrests are part of our continued commitment, along with our law enforcement partners, to stop the flow of heroin and cocaine onto the streets of New York City.  Thanks to the tireless efforts of law enforcement, Mike’s Candyshop is no longer open for business.”           

NYPD Commissioner James P. O’Neill said:  “The NYPD’s efforts to rid New York City streets of drug traffickers are greatly strengthened by our close partnerships with the U.S. Attorney for the Southern District, Homeland Security Investigations, and the Drug Enforcement Administration.  Anyone who deals in illegal narcotics must understand that the nation’s best investigators will stop at nothing to fight crime and keep safe all the people we serve.”

HSI Special Agent in Charge Peter C. Fitzhugh said:  “Those arrested today are alleged to have operated an on-demand drug distribution network known as ‘Mike’s Candyshop.’  This illicit enterprise allegedly allowed people to order heroin and cocaine to their doorstep simply by calling the business phone number with the same convenience as if they were ordering a pizza.  At least one overdose death is allegedly linked to this drug trafficking organization.  HSI’s coordination and information sharing with its partners at the NYPD, DEA and CBP have proven to be effective strategies in investigating drug trafficking organizations.  We know that we must continue to combat the trafficking and distribution of these dangerous narcotics in the hope of preventing future overdose deaths.”

DEA Special Agent in Charge Ray Donovan said:  “Traffickers take note, it is our job to investigate and arrest drug suppliers whose business leads to drug addiction, overdoses, and death.  This case gives new meaning to the term ‘candy’ and gave investigators a look into alleged drug delivery services in New York.  Our partnership with the U.S. Attorney’s Office, HSI, and NYPD will continue to identify alleged drug suppliers at all levels.”   

According to the allegations in the Indictment,[1] and statements made in Court:

The defendants were members of a drug trafficking organization (the “DTO”) that engaged in a drug delivery service, which identified itself as “Mike’s Candyshop.”  The DTO delivered heroin and cocaine on demand to customers in New York City, and distributed numerous kilograms of heroin and cocaine throughout the course of the conspiracy.  Mike’s Candyshop generally operated seven days per week, from approximately 6:00 p.m. to 12:00 a.m., with the exception of major holidays such as Thanksgiving, New Year’s Eve, and Labor Day.  Customers of the DTO placed delivery orders via text message to a centralized phone number (the “Candyshop Number”).  The operator of the Candyshop Number was usually TAVAREZ, a/k/a “A,” a/k/a “Mike,” one of the charged defendants and the leader of the DTO.  Using the Candyshop Number, TAVAREZ accepted customer orders and subsequently arranged for a courier working for the DTO to deliver the narcotics to the customer, usually within hours of the customer texting his or her order to the Candyshop Number.  Certain of the DTO members, including BAEZ, MESON, GRULLON, and URENA, served as couriers for the DTO, and regularly delivered and sold narcotics to the DTO’s customers in hand-to-hand drug transactions coordinated through the Candyshop Number.  MARTINEZ managed the DTO’s day-to-day supply of drugs and cash proceeds. 

The DTO stored heroin, cocaine, and cash from drug sales in various stash locations maintained by the DTO, including in Brooklyn, New York.  In an effort to avoid law enforcement detection, the DTO sold only to customers who had been referred by existing customers, periodically changed the Candyshop Number, used coded language to discuss narcotics, and delivered narcotics directly to customers at locations specified by the customer.

As a means of marketing its cocaine, and to ensure that the DTO’s customers knew the cocaine provided by the couriers belonged to the DTO, the DTO sold its cocaine in vials sealed with different colored tops.  On or about December 16, 2018, a customer of the DTO (“Victim‑1”) died of a drug overdose in Manhattan, New York.  At the scene of the overdose death, law enforcement officers recovered empty vials with colored tops, and a glassine next to a powder mixture containing, among other substances, heroin and cocaine, along with Victim-1’s cellphone.  Victim-1’s cellphone contained text messages showing that Victim-1 had ordered narcotics from the Candyshop Number on numerous occasions, including the day before Victim-1’s death.

*                      *                      *

BAEZ, 33, MESON, 31, MARTINEZ, 34, GRULLON, 25, and URENA, 27, each of New York, New York, and TAVAREZ, 38, of East Stroudsburg, Pennsylvania, are each charged with one count of conspiring to distribute heroin and cocaine, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of HSI, the DEA, and the NYPD.  He also thanked U.S. Customs and Border Protection for their assistance.

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

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

 

---

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

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 Office of the United States Postal Inspection Service (“USPIS”), announced that ANDREW GARSON was arrested today on wire fraud charges in connection with a multimillion-dollar scheme to defraud two public relations firms where GARSON worked, and a subsequent scheme to obtain New York State unemployment insurance benefits to which GARSON was not entitled.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As a public relations executive, Andrew Garson’s expertise in garnering positive attention for his clients is well known, even earning him a spot on the ‘40 Under 40’ in a popular industry magazine.  But behind the scenes, Garson allegedly schemed to steal from his employers, eventually costing them over $2 million in losses.  Andrew Garson has likely generated his own (negative) publicity, and now faces the possibility of serious time in federal prison.”

USPIS Inspector in Charge Philip R. Bartlett said:  “As alleged, Mr. Garson’s arrogance and disrespect for his employers and the rule of law was on full display in this case.  He allegedly lied and stole from his employers to feed his greed and fund his personal endeavors.  Mr. Garson may have plenty of time to utilize his keen public relations skills if convicted of the charges.”

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

Between approximately 2013 and 2018, GARSON was employed as an executive at two different marketing/public relations agencies located in New York, New York, the first between approximately 2013 and January 2018 (“PR Firm-1”), and the second between approximately January 2018 and November 2018 (“PR Firm-2”).  In his respective roles at those two firms, GARSON was responsible for working directly with clients, coordinating various marketing and public relations campaigns, and managing vendor relationships in connection with such campaigns.  In or about July 2018, GARSON was named a “40 Under 40” public relations executive by PR Week Magazine.  For years, however, GARSON engaged in a scheme to lie to his two employers, which fraudulently induced interstate wire transfers of funds and caused his employers millions of dollars in losses.        

One such series of misrepresentations by GARSON resulted in the unauthorized payment by PR Firm-2 of expenses owed to vendors in connection with marketing campaigns led by GARSON while employed at PR Firm‑1.  Over the course of GARSON’s first several months of employment at PR Firm-2, GARSON lied to certain vendors, stating that PR Firm-2 had agreed to cover expenses still owed to those vendors related to GARSON’s prior projects at PR Firm-1.  In fact, PR Firm-2 did not authorize the payment of those expenses.  In order to cause PR Firm-2 to effect payment of these expenses, GARSON created fraudulent invoices falsely claiming that the vendors were due payment for work performed on PR Firm-2 projects.  In this fashion, GARSON caused PR Firm-2 to pay substantial expenses to vendors with which GARSON had worked on projects while employed at PR Firm-1, thereby causing losses to PR Firm-2 in excess of $2.5 million.

In addition, while employed at PR Firm-1, GARSON used his corporate credit card for unauthorized personal expenses.  For example, in or about August 2017, GARSON purchased a luxury watch using his PR Firm-1 corporate credit card for approximately $14,000, claiming that that the expense related to event production for a client marketing event.  GARSON later sold the watch to a New Jersey jewelry store in or about December 2018 for approximately $4,000.  GARSON deposited the money that he earned from the sale of the watch into his personal bank account.

GARSON similarly defrauded PR Firm-2 with respect to the unauthorized use of his corporate credit card.  For example, GARSON submitted expense reports to PR Firm-2 in which he claimed the same expense for reimbursement on more than one occasion, causing PR Firm-2 to reimburse GARSON twice for the same expenditure.

After uncovering certain aspects of the fraud scheme perpetrated by GARSON, PR Firm-2 terminated GARSON in or about November 2018.  In the course of applying for unemployment insurance program benefits from the New York State Department of Labor following his termination, GARSON lied regarding the circumstances surrounding his separation from PR Firm-2.  According to the New York State Department of Labor, had GARSON truthfully conveyed the circumstances surrounding his termination from PR Firm-2, GARSON would have been ineligible for the receipt of unemployment insurance benefits.  As a result of his misrepresentations, between in or about December 2018 and in or about March 2019, GARSON received a total of over $5,000 in unemployment insurance benefits to which he was not entitled.  As part of the scheme, GARSON engaged in and caused others to engage in interstate wire communications.  For example, on at least one occasion GARSON logged onto the New York State Department of Labor’s unemployment website, hosted on a server located in New York, from a location in New Jersey.

*                      *                      *

GARSON, 37, of Rockville Centre, New York, is charged by Indictment with two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison.

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

Mr. Berman praised the outstanding investigative work of USPIS.

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

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

 

---

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), announced that MICHAEL BARRETO has been arrested for his scheme to produce and possess child pornography, and enticing a minor.  BARRETO was arrested yesterday in the Bronx, New York, and was presented today before United States Magistrate Judge Kevin Nathaniel Fox.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Michael Barreto groomed his victim by communicating via social media.  He then allegedly lured the teen to his apartment, gave him alcohol and drugs, and then filmed their sexual conduct.  Barreto has been arrested for his crime and faces significant time behind bars where he can no longer harm other children.”

HSI Special Agent in Charge Peter C. Fitzhugh said:  “In a not so chance encounter, Barreto allegedly lured his victim through social media to meet him.  He later filmed himself in a sexual encounter with the child.  This is harsh reminder to all parents about the need to stay involved with a child’s online activities.  HSI and the NYPD are committed to arresting predators like Barreto, those who prey on the young and steal their innocence.  It is equally important to ensure that children understand the dangers that lurk inside the world of the internet.”

NYPD Commissioner James P. O’Neill said:  “The NYPD and its law enforcement partners will never cease efforts to root out those who seek to exploit children, and we urge anyone with information about this despicable case – or any other case – to report it to the NYPD.”

As alleged in the criminal Complaint, which was unsealed today:[1] 

Between November 2017 and July 2019, BARRETO knowingly used a social media platform to communicate with and entice a minor (“Victim-1”).  In July 2019, BARRETO filmed sexual conduct between himself and Victim-1.  When law enforcement officers arrested BARRETO in September 2019 on separate criminal charges, they seized his mobile phone and found the July 2019 video.

*                      *                      *

BARRETO, 31, of the Bronx, is charged with one count of sexual exploitation of a child, which carries a minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison; one count of enticement of a minor, which carries a minimum sentence of 10 years in prison and a maximum sentence of life in prison; and one count of possession of child pornography, which carries a maximum sentence of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Any individuals who believe they have information that may be relevant to this investigation should contact the NYPD’s Special Victims Division 24-hour hotline at 212-267-RAPE (7273).

Mr. Berman praised the outstanding work of the NYPD and HSI.

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

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein 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, announced today that CHRISTOPHER COLLINS, who represented the 27th District of New York as a member of the U.S. House of Representatives, pled guilty to participating in a scheme to commit insider trading and to making false statements to federal law enforcement agents when interviewed about his conduct. 

U.S. Attorney Geoffrey S. Berman said:  “By virtue of his office, Christopher Collins helped write the laws of this country, but he acted as if the law did not apply to him.  Today, by pleading guilty, Collins acknowledged that while he was a member of Congress he committed insider trading and then lied to the FBI in an attempt to cover it up.  Today’s plea is a reminder that all citizens stand equal before the law in our criminal justice system.”

The following facts are based on the allegations contained in the Superseding Indictment and statements made in related court filings and proceedings:[1]

The Insider Trading Scheme

The Scheme

In or about June 2017, CHRISTOPHER COLLINS, who, in addition to serving on the board of directors of Innate Immunotherapeutics (“Innate”), an Australian biotechnology company, was also one of Innate’s largest shareholders, participated in a scheme to commit insider trading.  Specifically, on or about June 22, 2017, CHRISTOPHER COLLINS learned that MIS416 – a multiple sclerosis drug that Innate was developing – had failed a critical drug trial that was meant to determine the drug’s clinical efficacy (the “Drug Trial”).  The negative Drug Trial results were highly confidential, and, as an insider who owed duties of trust and confidence to Innate, CHRISTOPHER COLLINS was obligated to keep the Drug Trial results secret until Innate publicly released them.  Instead, in breach of those duties, CHRISTOPHER COLLINS tipped his son, Cameron Collins, who was also a substantial Innate shareholder, so that Cameron Collins could make timely trades and tip others before Innate publicly released the Drug Trial results.  Cameron Collins traded on the inside information and passed it to the father of his fiancée, Stephen Zarsky, as well as to three individuals not named in the Superseding Indictment (“Individual-1,” “Individual-2,” and “Individual-6”), so that they could utilize the information for the same purpose.  Zarsky, in turn, traded on the information and used it to tip three more individuals not named in the Superseding Indictment (“Individual-3,” “Individual-4,” and “Individual-5,”) so that they too could engage in timely trades in Innate stock.  All of the trades preceded the public release of the negative Drug Trial results.

In total, these trades allowed Cameron Collins and Zarsky, and Individual-1 through Individual-6, to avoid over $768,000 in losses that they would have otherwise incurred if they had sold their stock in Innate after the Drug Trial results became public. 

The Drug Trial Results

In or about October 2014, Innate initiated a Phase 2B clinical trial of its primary drug, MIS416.  Successful completion of the Drug Trial was a necessary prerequisite to the commercialization of MIS416.  Because Innate had no other significant products in development, its stock price was tied to the success of MIS416.

The Drug Trial was widely expected to be completed around the summer of 2017.  For example, on or about June 9, 2017, Innate’s chief executive officer (“CEO”) sent various individuals, including CHRISTOPHER COLLINS, an email stating that “the delivery date for [the] review and ‘verdict’” of the Drug Trial “will [] occur at COB on US Thursday June 22nd.”  As the summer progressed, individuals within Innate remained optimistic that MIS416’s Drug Trial results would be positive.  The initial Drug Trial results were made available by trial administrators to Innate’s CEO on June 22, 2017.  These results established that MIS416 lacked therapeutic value in the treatment of multiple sclerosis.  The results were not publicly released at that time.  Instead, they were released publicly on June 26, 2017, after the U.S. markets had closed (the “Public Announcement”).  Innate’s stock price subsequently crashed, dropping 92% on the first trading day following the Public Announcement. 

Dissemination of the Drug Trial Results

On or about June 22, 2017, at approximately 6:55 p.m., Innate’s CEO sent an email describing the Drug Trial results to the company’s board of directors, including CHRISTOPHER COLLINS.  The email explained to Innate’s board of directors for the first time that the Drug Trial had been a failure.  The email began, in part, “I have bad news to report,” and continued to explain that “the top line analysis of the ‘intent to treat’ patient population (ie every subject who was successfully enrolled in the study) would pretty clearly indicate[s] ‘clinical failure.’”  The email continued, “Top-line 12-month data . . . show no clinically meaningful or statistically significant differences in [outcomes] between MIS416 and placebo,” and concluded by stating, “No doubt we will want to consider this extremely bad news. . . .” 

At the time CHRISTOPHER COLLINS received this email, he was attending the Congressional Picnic at the White House.  At 7:10 p.m., CHRISTOPHER COLLINS replied to the email, stating, in part, “Wow.  Makes no sense.  How are these results even possible???”  After responding to the Innate CEO’s email, CHRISTOPHER COLLINS called his son, Cameron Collins.  They traded six missed calls between 7:11 p.m. and 7:15 p.m..  At 7:16 p.m., CHRISTOPHER COLLINS and Cameron Collins spoke for more than six minutes.  During that six-minute phone call, CHRISTOPHER COLLINS told Cameron Collins, in sum and substance, that MIS416 had failed the Drug Trial.

Trading and Tipping by Cameron Collins and Zarsky

Cameron Collins began placing orders to sell his Innate shares the morning after he received inside information from CHRISTOPHER COLLINS.  Between the morning of Friday, June 23, 2017 and the close of the market on Monday, June 26, 2017, Cameron Collins sold approximately 1,391,500 shares of Innate stock.  These sales allowed Cameron Collins to avoid approximately $570,900 in losses. 

Furthermore, after learning the Drug Trial results from CHRISTOPHER COLLINS, on or about the night of June 22, 2017, Cameron Collins provided the Drug Trial results to at least the following three sets of individuals so that they could trade in advance of the Public Announcement:  (1) his fiancée, Individual-1; (2) Zarsky and Zarsky’s wife, Individual-2; and (3) Cameron Collins’s friend, Individual-6.  Collectively, these individuals avoided approximately $186,620 in losses as a result of their trading on inside information. 

On or about the morning of June 23, 2017, Zarsky provided the negative Drug Trial results that he had learned from Cameron Collins and Individual-1 to at least the following individuals, among others, or otherwise caused them to trade or attempt to trade in advance of the Public Announcement: (1) his brother, Individual-3; (2) his sister, Individual-4; and (3) his longstanding friend, Individual-5.  Collectively, these individuals avoided approximately $10,900 in losses as a result of their trading on inside information.

False Statements to the FBI

On or about April 25, 2018, special agents from the FBI separately interviewed CHRISTOPHER COLLINS, Cameron Collins, and Zarsky.  During these interviews, and as detailed in the Superseding Indictment, CHRISTOPHER COLLINS, Cameron Collins, and Zarsky made false statements to the FBI to cover up their participation in the insider trading scheme. 

*                      *                      *

CHRISTOPHER COLLINS, 69, pled guilty to one count of conspiracy to commit securities fraud, in violation of Title 18, United States Code, Section 371, which carries a maximum penalty of five years in prison, and one count of making false statements to law enforcement officials, in violation of Title 18, United States Code, Section 1001, which also carries a maximum penalty of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the Judge. 

COLLINS will be sentenced January 17, 2020. 

Mr. Berman praised the outstanding work of the FBI 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 Scott Hartman, Max Nicholas, and Damian Williams are in charge of the prosecution.  

The charges against Cameron Collins and Stephen Zarsky are merely accusations, and they are deemed innocent unless and until proven guilty.

 

---

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that a grand jury in the Southern District of New York has returned an indictment charging JON BARRY THOMPSON, a/k/a “J. Barry Thompson,” the principal of the cryptocurrency escrow company Volantis Escrow Platform LLC and the related company Volantis Market Making LCC (collectively “Volantis”) with commodities fraud and wire fraud offenses.  As alleged, THOMPSON took over $7 million from two victim companies after making false promises in connection with Bitcoin transactions.  THOMPSON was arrested in July based on a criminal complaint filed by this Office charging him with the same crimes.  The case has been assigned to U.S. District Judge Edgardo Ramos.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Jon Barry Thompson repeatedly lied to investors in cryptocurrencies about the safety of their investments made through his companies.  As a result of Thompson’s lies, investors lost millions of dollars.”

In a separate civil action, the U.S. Commodity Futures Trading Commission (“CFTC”) today filed civil charges against THOMPSON. 

As alleged in the Indictment and the criminal complaint previously filed in this case:[1]

THOMPSON claimed in promotional materials that Volantis “minimize[d] settlement default risk” in cryptocurrency transactions.  THOMPSON claimed that because Volantis acted as a custodian of assets for “both sides of the transaction, there is no risk of default.” 

 In June and July 2018, THOMPSON made false statements to one victim company (“Company-1”) to induce Company-1 to send Volantis over $3 million to fund the purchase of Bitcoin for Company-1.  THOMPSON falsely assured Company-1 that THOMPSON had the Bitcoin in hand and Company-1’s money could not be lost.  Even though THOMPSON had told Company-1 that before any transaction, “cash is with me, coin is with me,” THOMPSON sent over $3 million of Company-1’s money to a third-party entity purportedly in exchange for Bitcoin without first receiving any of the Bitcoin in hand.  After taking Company-1’s money, THOMPSON lied for days about the status of the transaction and the location of Company-1’s Bitcoin and money, which was never returned. 

In July 2018, THOMPSON made false statements to another victim company (“Company-2”) to induce Company-2 to send Volantis over $4 million to fund the purchase of Bitcoin for Company-2.  After receiving Company-2’s money, THOMPSON sent a substantial portion of the money to a third party without first receiving any Bitcoin in return.  THOMPSON never provided Company-2 with any Bitcoin, nor did he return Company-2’s money.  After receiving Company-2’s money, THOMPSON also lied to Company-2 about the location of the Bitcoin and the status of the transaction.

*                      *                      *

THOMPSON, 48, of Easton, Pennsylvania, is charged with two counts of commodities fraud, each of which carries a maximum sentence of 10 years in prison, and two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and also thanked the CFTC for its assistance. 

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

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

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the Indictment, and the description of the Complaint and 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 Peter C. Fitzhugh, the Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced today the unsealing of an Indictment charging JAMES T. BOOTH with securities fraud, wire fraud, and investment adviser fraud charges in connection with his years-long scheme to defraud customers of his financial services firm, Booth Financial Associates (“Booth Financial”).  Throughout the scheme, BOOTH solicited money from clients of Booth Financial and falsely promised to invest their money in securities offered outside of their ordinary advisory and brokerage accounts.  Instead, BOOTH used nearly all of the money to pay personal and business expenses.  In total, BOOTH fraudulently obtained nearly $5 million from his customers.  BOOTH was arrested this morning in Norwalk, Connecticut, and will be presented this afternoon before Magistrate Judge Kevin N. Fox in Manhattan federal court. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, James Booth convinced his clients that he would deliver solid and secure returns on their investments.  Instead, as alleged, Booth delivered only lies and deceit, and bilked some 40 clients of nearly $5 million.  Booth is now in federal custody and will have to answer for his alleged crimes.” 

Special Agent-in-Charge Peter C. Fitzhugh:  “In an elaborate scheme of false promises and deception, it is alleged that Booth attained almost $5 million by luring investors to move their assets with the guarantee of safer investments and higher returns.  Instead, Booth allegedly pocketed the money.  HSI New York’s El Dorado Task Force has investigated financial fraud cases for more than two decades, and with the continued law enforcement partnerships in these cases, we are able to arrest alleged fraudsters who seek to take advantage of the hopes and dreams of others for their own illicit gain.”

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

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

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

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

 

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

 

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

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

*          *          *

BOOTH, 74, of Norwalk, Connecticut, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, one count of securities fraud, which carries a maximum sentence of 20 years in prison, and one count of investment adviser fraud, 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.

Anyone with information about the crimes charged in the Indictment should call the United States Attorney’s Office at 866-874-8900.

Mr. Berman praised the investigative work of HSI New York and HSI Boston - New Haven, Connecticut.  Mr. Berman also thanked the U.S. States Postal Inspection Service, the U.S. Internal Revenue Service, the New York City Police Department, and the New York City Sherriff’s Office, which assisted in the investigation.  Mr. Berman also thanked the Securities and Exchange Commission, which has filed a civil enforcement action against the defendant. 

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

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

 

---

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that KEITH ORLEAN, a/k/a “Jack Allen,” pled guilty to participating in a scheme to target elderly persons to solicit purchases of stock in a series of valueless companies through a variety of lies and misrepresentations.  ORLEAN pled guilty to one count of conspiracy to commit securities fraud and one count of securities fraud before U.S. District Judge Vernon S. Broderick.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Keith Orlean purported to offer elderly victims time-sensitive investment opportunities.  In actuality, he was selling victims a package of false promises that yielded profit only for him and his co-defendants.  Orlean now awaits sentencing for his predatory practices.”

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

For several years, ORLEAN and his co-defendants operated a fraudulent scheme in which a salesman named “Mike Palmer” would call elderly persons on the phone and offer them what he claimed was a time-sensitive opportunity to buy stock in certain companies.  In fact, there was no “Mike Palmer,” and the salesman was actually one or the other of ORLEAN’s two co-defendants, who were taking turns using the fake alias.  The purported time-sensitive investment opportunity was also fabricated by the defendants, as the companies in which they solicited investments were actually companies under their control.  In one intercepted phone conversation, Co-defendant-1 described to ORLEAN his strategy for a successful investor sales pitch as:  “You ram it down their fucking throat.”  In another intercepted call between Co-defendant-1 and ORLEAN, upon learning that a particular victim investor died, Co-defendant-1 remarked:  “I knew I should have pulled the last $10,000 out of him.”   

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

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

*                *                *

ORLEAN, 61, of Dix Hills, New York, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum penalty of five years in prison, and one count of securities fraud, which carries a maximum penalty of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

ORLEAN is scheduled to be sentenced before Judge Broderick on January 10, 2020, at 3:00 p.m.

Mr. Berman praised the outstanding work of the FBI.

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

 

---

[1] As for ORLEAN’s co-defendants, the description of the charges set forth herein constitute only allegations.

On March 7, 2019, a five-count Indictment, S4 17 Cr. 630 (ER), was unsealed charging Ruja Ignatova with wire fraud, securities fraud, and money laundering offenses in connection with an alleged international pyramid scheme that involved the marketing of a purported cryptocurrency called “OneCoin.”  On May 28, 2019, co-defendant Konstantin Ignatov entered a not guilty plea to a one-count Information, S7 17 Cr. 630 (ER), charging him with conspiracy to commit wire fraud in connection with the OneCoin scheme.  Co-defendant Mark S. Scott has been charged in a one-count Indictment, S6 17 Cr. 630 (ER), alleging that he conspired to launder proceeds of the OneCoin scheme; Scott’s case is presently scheduled for trial on November 4, 2019.

Yesterday, the District Court entered an Order in the case, directing a series of entities and individuals – namely, OneCoin Ltd., OnePayments Ltd., OneNetwork Services Ltd., OneAcademy, OneLife, RavenR, Ruja Ignatova, Frank Ricketts, Manon Hubenthal, Irina Dilkinska, International Marketing Services GmBH, International Marketing Services Pte, International Marketing Strategies Ltd., and B&N Consult EOOD (collectively, the “Affected Parties”) – to Show Cause why the Court should not enter an Order finding that any privilege the Affected Parties may have in communications with counsel falls within the crime-fraud exception to the attorney-client privilege, or has otherwise been waived for failure to assert or defend such privilege.  The Order to Show Cause requires that the Affected Parties respond within 10 days of the entry of the Order, i.e., no later than October 7, 2019, due to intervening weekend days.

The District Court also unsealed a previously sealed Order dated July 23, 2019, regarding the application of the crime-fraud exception to certain materials in the case.  Copies of yesterday’s Order to Show Cause and the July 23, 2019, Order are appended to this press release.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), announced the unsealing of an Indictment charging RASHAWN WHIDBEE, a/k/a “RaBoy,” with the September 27, 2014, attempted robbery and murder of Cody Dubose, 24, in New York, New York.  WHIDBEE was arrested today and will be presented this afternoon before U.S. Magistrate Judge Robert W. Lehrburger.  This case is assigned to United States District Judge Edgardo Ramos.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Almost exactly five years ago, Cody Dubose was shot and killed during an attempted armed robbery in Manhattan.  Now, thanks to the outstanding work of the NYPD, Rashawn Whidbee has been charged for his alleged participation in that heinous crime.” 

NYPD Commissioner James P. O’Neill said:  “The NYPD, along with our partners in the U.S. Attorney’s Office for the Southern District, is making New Yorkers safer by focusing our resources on the small percentage of criminals responsible for much of the city’s violent crime. We remain relentless in our efforts to identify, arrest, and prosecute anyone who involves himself in such behavior.”

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

On or about September 27, 2014, in the vicinity of East 112th Street and Madison Avenue in New York, New York, WHIDBEE and others participated in an attempted robbery of money belonging to a drug dealer, during which Cody Dubose was shot and killed.

*                *                *

WHIDBEE, 32, of the Bronx, New York, is charged with one count of attempted robbery, which carries a maximum sentence of 20 years in prison, one count of conspiracy to commit robbery, which carries a maximum sentence of 20 years in prison, and one count of using a firearm to commit murder, which carries a maximum sentence of death or life in prison, and a mandatory minimum term of five years in prison.  The maximum and minimum 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 the NYPD.

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

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

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth 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 ANDREI TYURIN, a/k/a “Andrei Tiurin,” pled guilty in Manhattan federal court to computer intrusion, wire fraud, bank fraud, and illegal online gambling offenses in connection with his involvement in a massive computer hacking campaign targeting U.S. financial institutions, brokerage firms, financial news publishers, and other American companies.  These hacks included one of the largest thefts of customer data from a U.S. financial institution in history.  TYURIN is charged with committing these crimes with Gery Shalon, a/k/a “Garri Shalelashvili,” a/k/a “Gabriel,” a/k/a “Gabi,” a/k/a “Phillipe Mousset,” a/k/a “Christopher Engeham”; Joshua Samuel Aaron, a/k/a “Mike Shields”; and Ziv Orenstein, a/k/a “Aviv Stein,” a/k/a “John Avery,” in furtherance of securities market manipulation, illegal online gambling, and payment processing fraud schemes perpetrated by Shalon, Aaron, Orenstein, and their co-conspirators.  TYURIN pled guilty before U.S. District Judge Laura Taylor Swain. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Andrei Tyurin’s extensive hacking campaign targeted major financial institutions, brokerage firms, news agencies, and other companies.  Ultimately, he gathered the customer data of more than 80 million victims, one of the largest thefts of U.S. customer data from a single financial institution in history.  With today’s plea, Tyurin’s global reign of computer intrusion is over and he faces significant time in a U.S. prison for his crimes.”

According to the allegations contained in the Indictments to which TYURIN pled guilty, other filings in this case, and statements made during court proceedings, including TYURIN’s guilty plea hearing:

From approximately 2012 to mid-2015, TYURIN engaged in an extensive computer hacking campaign targeting financial institutions, brokerage firms, and financial news publishers in the U.S., including the theft of personal information of over 100 million customers of the victim companies.  TYURIN’s hack of one financial institution headquartered in Manhattan resulted in the theft of personal information of over 80 million customers, making it one of the largest theft of customer data from a U.S. financial institution in history.  TYURIN engaged in these crimes at the direction of Shalon and in furtherance of other criminal schemes overseen and operated by Shalon and his co-conspirators, including securities fraud schemes in the United States.  For example, in an effort to artificially inflate the price of certain stocks publicly traded in the U.S., Shalon and his co-conspirators marketed the stocks in a deceptive and misleading manner to customers of the victim companies whose contact information TYURIN stole in the intrusions.

In addition to the U.S. financial sector hacks, TYURIN also conducted cyberattacks against numerous U.S. and foreign companies in furtherance of various criminal enterprises operated by Shalon and his co-conspirators, including unlawful internet gambling businesses and international payment processors.  Nearly all of these illegal businesses, like the securities market manipulation schemes, exploited the fruits of TYURIN’s computer hacking campaigns.  Through these various criminal schemes, TYURIN, Shalon, and their co-conspirators obtained hundreds of millions of dollars in illicit proceeds.

*                *                *

TYURIN, 35, of Moscow, Russia, pled guilty to one count of conspiracy to commit computer hacking, which carries a maximum sentence of five years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of conspiracy to violate the Unlawful Internet Gambling Enforcement Act, which carries a maximum sentence of five years in prison; and one count of conspiracy to commit wire fraud and bank fraud, which carries a maximum sentence of 30 years in prison.  In addition, TYURIN pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 30 years in prison; and one count of conspiracy to commit computer hacking, which carries a maximum sentence of five years prison, which was transferred from the Northern District of Georgia for purposes of his plea. 

TYURIN is scheduled to be sentenced by Judge Swain on February 13, 2020.

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 Judge Swain.

Mr. Berman praised the investigative work of the FBI and the U.S. Secret Service, and expressed his sincere gratitude to the Chief Prosecutor’s Office of Georgia and the Ministry of Justice of Georgia for their support and assistance with the extradition proceedings.  He also thanked the Securities and Exchange Commission, Homeland Security Investigations, the Financial Industry Regulatory Authority, the Office of International Affairs of the U.S. Department of Justice for its assistance with the extradition, and the Financial Services Information Sharing and Analysis Center, which significantly aided the investigation by facilitating information-sharing among the victim institutions.

The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Eun Young Choi, Noah Solowiejczyk, and Sarah Lai are in charge of the prosecution.