Southern District of New York

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 a superseding indictment charging THERYN JONES, a/k/a “Ty,” a/k/a “Old Man Ty,” a/k/a “Tyballa,” 42, GYANCARLOS ESPINAL, a/k/a “Fatboy,” a/k/a “Slime,” 25, and ARIUS HOPKINS, a/k/a “Scrappy,” a/k/a “Scrap,” 25, with the January 2, 2014, murder of Shaquille Malcolm, 20.  JONES was arraigned on the superseding indictment yesterday.  ESPINAL and HOPKINS were previously arraigned on the charges.  The case is assigned to United States District Judge Lewis A. Kaplan. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the superseding indictment, the defendants are responsible for the murder of 20-year-old Shaquille Malcolm.  Now, thanks to the outstanding work of our partners at the NYPD, the defendants have been charged with this terrible crime.”

NYPD Commissioner James P. O’Neill said:  “The ability of investigators to bring about justice for Shaquille Malcolm and closure to his family is paramount.  The identification and arrest of the suspects in this case was a team effort that is the result of the cooperation that exists between the NYPD and our law-enforcement partners.  I thank and commend the NYPD investigators and the prosecutors for the Southern District of New York for their work in this investigation.”

According to the Superseding Indictment[1]: 

In 2013 and 2014, JONES, ESPINAL, and HOPKINS were involved in the distribution of crack cocaine and heroin in the Allerton section of the Bronx.  Because Malcolm and others were encroaching on JONES’s drug territory, and because Malcolm had previously assaulted ESPINAL, JONES and ESPINAL paid HOPKINS and another person (“CC-1”) to murder Malcolm.  On January 2, 2014, HOPKINS and CC-1 shot Shaquille Malcolm multiple times in the stairwell of an apartment building located at 2818 Bronx Park East in the Bronx, New York.  Malcolm died at the scene.

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The Superseding Indictment charges the defendants in three counts: using a firearm to commit murder in furtherance of a drug trafficking crime and aiding and abetting the same (Count One); murder while engaged in a conspiracy to distribute 280 grams and more of crack cocaine and aiding and abetting the same (Count Two); and conspiring to commit murder for hire (Count Three).  All three defendants face a maximum sentence of life in prison or death.  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 Michael K. Krouse and Danielle R. Sassoon are in charge of the prosecution.

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

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the 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 JON E. MONTROLL, a/k/a “Ukyo,” was sentenced yesterday by U.S. District Judge Richard M. Berman to 14 months in prison.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jon Montroll lied to his investors and, after his lies caught the attention of the SEC, lied to them, too.  The sentence he received serves as a reminder that this Office will not overlook those who violate their obligation to be honest with investors and the regulators working to protect them.”

According to the Information, the allegations in the Complaint, and statements made during the proceedings in Manhattan federal court:

JON E. MONTROLL operated two online bitcoin services:  WeExchange Australia, Pty. Ltd. (“WeExchange”) and BitFunder.com (“BitFunder”).  WeExchange functioned as a bitcoin depository and currency exchange service.  BitFunder facilitated the purchase and trading of virtual shares of business entities that listed their virtual shares on the BitFunder platform.

Between the launch of Bitfunder, in or about December 2012, and at least in or about July 2013, MONTROLL converted a portion of WeExchange users’ bitcoins to his personal use without the users’ knowledge or consent.  For example, MONTROLL exchanged numerous bitcoins taken from WeExchange into United States dollars, then spent those funds on personal expenses, such as travel and groceries.

Beginning on or about July 18, 2013, MONTROLL promoted a security referred to as “Ukyo.Loan.”  As described by MONTROLL in a public post about Ukyo.Loan, MONTROLL encouraged investors to “think of [Ukyo.Loan] as a sort of round-about investment” in BitFunder and WeExchange and, at the same time, described Ukyo.Loan as “a personal loan” and “for private investment purposes.”  MONTROLL further promised to pay purchasers of Ukyo.Loan daily interest on their investment and promised shares could be “redeemed at face value anytime upon request.”

During the summer of 2013, one or more individuals (the “Hackers”) exploited a weakness in the BitFunder programming code to cause BitFunder to credit the Hackers with profits they did not, in fact, earn (the “Exploit”).  As a result, the Hackers were able to wrongfully withdraw from WeExchange approximately 6,000 bitcoins, with the majority of those coins being wrongfully withdrawn between July 28, 2013, and July 31, 2013.  As a result of the Exploit, BitFunder and WeExchange lacked the bitcoins necessary to cover what MONTROLL owed to users.

Notwithstanding the scope of the Exploit, MONTROLL failed to disclose the Exploit to users of BitFunder and WeExchange, or investors in Ukyo.Loan.  Instead, MONTROLL continued to promote and sell Ukyo.Loan to customers and, on at least one occasion, falsely represented to customers that BitFunder was commercially successful.  As a result of his omissions and misrepresentations, MONTROLL raised approximately 978 bitcoins through Ukyo.Loan after his discovery of the Exploit.

The SEC’s New York Regional Office began an investigation into BitFunder and the Exploit.  During the course of the investigation, MONTROLL provided the SEC with a falsified screenshot purportedly documenting, among other things, the total number of bitcoins available to BitFunder users in the WeExchange Wallet as of October 13, 2013.  Additionally, during sworn investigative testimony on both November 14, 2013, and October 6, 2015, MONTROLL provided materially false and misleading answers to certain questions about, among other things, the timing of MONTROLL’s discovery of the Exploit.

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In addition to a prison sentence, Judge Berman ordered MONTROLL, 38, of Saginaw, Texas, to serve three years of supervised release and to pay forfeiture in the amount of $167,480.

Mr. Berman praised the outstanding work of the Federal Bureau of Investigation.  He also thanked the Securities and Exchange Commission, which previously filed civil charges against MONTROLL in a separate action.

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

Audrey Strauss, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced that ANILESH AHUJA, a/k/a “Neil,” the founder, chief executive officer, and chief investment officer of Premium Point Investments LP (“PPI”), a Manhattan-based investment firm that managed hedge funds, and JEREMY SHOR, a former trader at PPI, were found guilty today of securities fraud-related offenses.  AHUJA and SHOR were convicted after a six-week trial in Manhattan federal court presided over by U.S. District Judge Katherine Polk Failla, for their participation in a scheme to inflate the net asset value (“NAV”) reported to investors for hedge funds managed by PPI, by more than $100 million.

Ms. Strauss said:  “Investors in our markets must be able to count on the truth and accuracy of the information they receive from those they entrust with their money.  As the jury’s verdict reflects, Ahuja and Shor failed to live up to that fundamental responsibility and investors lost significant money as a result.” 

According to the Indictment and based on the evidence presented at trial:

Premium Point Investments

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

The Scheme to Mismark Securities 

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

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

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

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AHUJA, 51, of New Rochelle, New York, and SHOR, 44, of New York, New York, were each found guilty on all four counts of the indictment: one count of conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison, and one count each of securities fraud, conspiracy to commit wire fraud, and wire fraud, each of which carries a maximum potential 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.

SHOR and AHUJA will be sentenced by Judge Failla at a future date.   

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

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Andrea M. Griswold, Joshua A. Naftalis, and Max Nicholas 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., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that ALAN KAUFMAN and TONY GEORGITON were arrested today and charged with bribery of a financial institution officer.  KAUFMAN and GEORGITON were charged with participating in a scheme in which KAUFMAN, who was then the chief executive officer of Melrose Credit Union (“Melrose CU”), accepted free housing and financing for the purchase of his personal residence from GEORGITON in exchange for the approval of millions of dollars in loans to GEORGITON’s companies at favorable terms.  KAUFMAN is also charged with accepting lavish vacations, including to Paris and Hawaii, as bribes from a media company, in exchange for Melrose CU purchasing increased advertising with that company.  The defendants are expected to be presented this afternoon before U.S. Magistrate Judge Henry B. Pitman.  The case is assigned to U.S. District Judge Lewis A. Kaplan.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Alan Kaufman conspired to take bribes from Tony Georgiton in exchange for favorable refinancing of millions of dollars of Melrose Credit Union loans to Georgiton’s companies.  In addition, Kaufman is alleged to have accepted Paris and Hawaii vacations in exchange for directing increased advertising payments to a media company.  Now, both Kaufman and Georgiton face criminal charges for their alleged self-dealing.”

FBI Assistant Director William F. Sweeney Jr. said:  “Lavish vacations, rent-free housing, and even naming rights to a ballroom were among the high-ticket items Kaufman received in this alleged scheme.  All of this was made possible through a series of illegal business dealings negotiated with Georgiton and a New York City-based media company – both of whom independently sought financial benefits of their own from Melrose Credit Union, where Kaufman served as chief executive officer.  Today’s charges highlight a series of fraudulent behaviors that raised red flags along the way.  The FBI will continue to be a major force in confronting those who think they can evade the law in order to make an easy profit.”

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

In 2010, GEORGITON purchased a home in Jericho, New York (the “Jericho Residence”), and permitted KAUFMAN to live in that home rent-free for over two years.  While KAUFMAN was living rent-free at the Jericho Residence, KAUFMAN personally approved the refinancing of over $60 million worth of loans at Melrose CU held by a company owned by GEORGITON with favorable terms.  The head of Melrose CU’s loan department refused to sign off on the loans given to GEORGITON because, among other things, he believed that the terms were too favorable and did not comply with Melrose CU’s loan policy.

In 2011, KAUFMAN sought approval from Melrose CU’s board of directors for Melrose CU to purchase the naming rights to a ballroom under construction in Astoria, Queens (the “Melrose Ballroom”).  That ballroom was owned by a company owned by GEORGITON.  KAUFMAN did not disclose to the Melrose board that he was living rent-free in a house owned by GEORGITON at the time he sought board approval for the naming rights acquisition.  Over the next four years, Melrose CU paid approximately $2 million to GEORGITON’s company for the naming rights to the Melrose Ballroom.

In 2013, KAUFMAN purchased the Jericho Residence from GEORGITON, with financing that largely came from GEORGITON.  To purchase the Jericho Residence, KAUFMAN took out a $200,000 loan from Melrose CU co-signed by GEORGITON and secured by GEORGITON’s shares in Melrose CU.  GEORGITON also gave KAUFMAN a $240,000 unsecured personal loan.  GEORGITON has never made a demand for payment on that personal loan and KAUFMAN has never made a payment on that personal loan.

In addition, from in or about 2010 through in or about 2015, KAUFMAN solicited and accepted lavish vacations and other gifts worth tens of thousands of dollars from a media company located in New York, New York (“Media Company-1”), in exchange for KAUFMAN’s approval of increased advertising spending by Melrose CU with Media Company-1.  For example, in 2010, Media Company-1 paid for KAUFMAN and his girlfriend, who also worked at Melrose CU, to fly to Paris, France, and stay at the Four Seasons George V Paris.  In 2012, Media Company-1 paid for KAUFMAN and his girlfriend to fly to Maui, Hawaii, and stay at the Four Seasons in Wailea.  In 2013, Media Company-1 paid for KAUFMAN and his girlfriend to attend the Super Bowl in New Orleans.

KAUFMAN did not seek approval for these vendor-paid trips from the Melrose CU board, nor did he disclose these vendor-paid trips to the Melrose CU board, in violation of Melrose CU’s anti-bribery policy.

        

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KAUFMAN is charged with one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison, and two counts of bribery of a financial institution officer, each of which carries a maximum sentence of 30 years in prison.  GEORGITON is charged with one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison, and one count of bribery of a financial institution officer, which carries a maximum sentence of 30 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding work of the FBI.  He also thanked the National Credit Union Administration for their efforts and ongoing support and assistance with the case.

The case is being handled by the Office’s Complex Frauds Unit, and Assistant U.S. Attorney Dina McLeod is in charge of the prosecution.                   

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, 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 indictment and arrest of DONALD BLAKSTAD for his participation in a scheme to trade on inside information that was misappropriated from Illumina, Inc. (“Illumina”), a San Diego-based biotechnology company whose stock trades on NASDAQ.  BLAKSTAD’s scheme yielded more than $6 million in illegal profits.

Mr. Berman also announced today the unsealing of charges against MARTHA BUSTOS, a certified public accountant formerly employed by Illumina, who pled guilty on June 28, 2019, and is cooperating with the Government.

BLAKSTAD was arrested this morning in San Diego, California, and will be presented today before United States Magistrate Judge William V. Gallo of the U.S. District Court for the Southern District of California.  In a separate action, the Securities and Exchange Commission (“SEC”) filed civil charges against BLAKSTAD and BUSTOS.

U.S. Attorney Geoffrey S. Berman said:  “Donald Blakstad allegedly used his connections to gather inside information that he and his associates then traded on, to the tune of more than $6 million in profits.  Trading stocks based on stolen information strikes at the foundation of our nation’s financial markets and today’s arrest and charges are part of our ongoing commitment to protecting the integrity of those markets.”

FBI Assistant Director-in-Charge Sweeney said:  “Those who base trading decisions on proprietary information they shouldn’t have access to are not only engaging in a practice that’s unfair, but also illegal.  Blakstad’s arrest today once again highlights the FBI’s ongoing efforts to eradicate this unlawful behavior and preserve the integrity of our financial markets.”

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

BLAKSTAD was the owner and principal of an investment fund known as Midcontinental Petroleum Inc., which purported to be in the business of soliciting investments in the oil and gas industry.  BUSTOS was a certified public accountant who worked in Illumina’s accounting department.  By virtue of her employment at Illumina, BUSTOS had access to material nonpublic information about Illumina’s financial condition, including its earnings. 

On multiple occasions, from 2016 through 2018, BLAKSTAD obtained inside information about Illumina’s financial condition from BUSTOS before Illumina publicly announced its quarterly financial results.  As BLAKSTAD knew, BUSTOS owed a duty to keep inside information about Illumina confidential. 

BLAKSTAD, aware of BUSTOS’s breach of duty to Illumina, used this inside information to make profitable trades in Illumina securities.  At times, BLAKSTAD tipped his associates so that they could trade Illumina stock and options based on the inside information.  At other times, in order to avoid detection, BLAKSTAD arranged for his associates to purchase Illumina securities for BLAKSTAD’s benefit in accounts controlled by his associates. 

Following the public announcement of Illumina’s earnings, BLAKSTAD and his associates sold the Illumina securities at a significant profit, sometimes exceeding more than 2,000 percent.  In total, BLAKSTAD and his associates made more than $6 million in profits from purchasing and selling Illumina securities. 

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BLAKSTAD, 60, of San Diego, California, is charged with the offenses set forth in the chart attached to this release.  

On June 28, 2019, BUSTOS, 31, of San Diego, California, pled guilty in Manhattan federal court before Magistrate Judge Gabriel W. Gorenstein to three counts: conspiracy to commit securities fraud, securities fraud, and conspiracy to commit wire fraud.  The maximum sentences for each charge are included in the attached chart. 

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

Mr. Berman praised the work of the FBI, and thanked the SEC for its assistance.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Edward A. Imperatore and Brendan F. Quigley are in charge of the prosecution.

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

Count

Charge

Maximum Penalties

1

Conspiracy to Commit Securities Fraud (18 U.S.C. § 371)

 

Five years in prison and a $250,000 fine or twice the gross gain or loss from the offense

2

Securities Fraud (15 U.S.C. §§ 78j(b) & 78ff; 17 C.F.R. § 240.10b-5; 18 U.S.C. § 2)

20 years in prison and a $5,000,000 fine or twice the gross gain or loss from the offense

3

Securities Fraud (15 U.S.C. §§ 78j(b) & 78ff; 17 C.F.R. § 240.10b-5; 18 U.S.C. § 2)

20 years in prison and a $5,000,000 fine or twice the gross gain or loss from the offense

4

Conspiracy to Commit Wire Fraud (18 U.S.C. § 1349)

20 years in prison and a $250,000 fine or twice the gross gain or loss from the offense

5

Wire Fraud (18 U.S.C.  §§ 1343 & 2)

20 years in prison and a $250,000 fine or twice the gross gain or loss from the offense

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced that JEFFREY EPSTEIN was arrested Saturday and charged with sex trafficking of minors and conspiracy to commit sex trafficking of minors.  The indictment unsealed today alleges that, between 2002 through 2005, EPSTEIN sexually exploited and abused dozens of underage girls by enticing them to engage in sex acts with him in exchange for money.  Epstein allegedly worked with several employees and associates to ensure that he had a steady supply of minor victims to abuse, and paid several of those victims themselves to recruit other underage girls to engage in similar sex acts for money.  He committed these offenses in locations including New York, New York, and Palm Beach, Florida.  EPSTEIN is expected to be presented in Manhattan federal court this afternoon before U.S. Magistrate Judge Henry B. Pitman.  The case is assigned to U.S. District Judge Richard M. Berman.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Jeffrey Epstein abused underage girls for years, operating a scheme in which girls he victimized would recruit others for Epstein to exploit and abuse.  Epstein exploited girls who were vulnerable to abuse, enticed them with cash payments, and escalated his conduct to include sex acts, often occurring at his residence on the Upper East Side of Manhattan.  While the charged conduct is from a number of years ago, the victims – then children and now young women – are no less entitled to their day in court.  My Office is proud to stand up for these victims by bringing this indictment.”

FBI Assistant Director William F. Sweeney Jr. said:  “We are asking anyone who may have been victimized by Jeffrey Epstein, or anyone who may have information about his alleged criminal behavior, to please call us.  The number is 1-800-CALL-FBI.  We want to hear from you, regardless of the age you are now, or whatever age you were then, no matter where the incident took place.  The bravery it takes to call us might empower others to speak out about the crimes committed against them.  It is important to remember there was never, nor will there ever be an excuse for this type of behavior.  In the eyes of the FBI, the victims will always come first.”

NYPD Commissioner James P. O’Neill said:  “Today’s charges serve as a warning to individuals who continue to prey upon some of our society’s most vulnerable population: we are coming for you.  I thank and commend the U.S. Attorney’s Office for the Southern District and the FBI for their tireless efforts to ensure child predators are taken off our streets.  The NYPD will continue to work with our law enforcement partners to eradicate the trafficking of children in our city and nation and work to bring justice to victims of these heinous crimes.”

If you believe you are a victim of the sexual abuse perpetrated by Jeffrey Epstein, please contact the FBI at 1-800-CALL FBI, and reference this case.

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

From at least 2002 through at least 2005, JEFFREY EPSTEIN enticed and recruited, and caused to be enticed and recruited, dozens of minor girls to visit his mansion in New York, New York (the “New York Residence”), and his estate in Palm Beach, Florida (the “Palm Beach Residence”), to engage in sex acts with him, after which he would give the victims hundreds of dollars in cash.  In order to maintain and increase his supply of victims, EPSTEIN also paid certain victims to recruit additional underage girls whom he could similarly abuse.  In this way, EPSTEIN created a vast network of underage victims for him to sexually exploit, often on a daily basis, in locations including New York and Palm Beach.

EPSTEIN’s victims were as young as 14 at the time he abused them, and were, for various reasons, often particularly vulnerable to exploitation.  Moreover, EPSTEIN knew that many of his victims were under 18, including because, in some instances, victims expressly told him they were underage.

In creating and maintaining this network of minor victims in multiple states to abuse and exploit sexually, EPSTEIN worked with others, including employees and associates who facilitated his conduct by, among other things, contacting victims and scheduling their sexual encounters with EPSTEIN at the New York Residence and at the Palm Beach Residence.

In both New York and Florida, EPSTEIN perpetuated this abuse in similar ways.  Victims were initially recruited to provide “massages” to EPSTEIN, which became increasingly sexual in nature and would typically include one or more sex acts.  EPSTEIN paid his victims hundreds of dollars in cash for each encounter.

In particular, during encounters at the New York Residence, victims would be taken to a room where they would perform a massage on EPSTEIN, during which EPSTEIN would frequently escalate the nature and scope of physical contact with his victims to include, among other things, sex acts such as groping and direct and indirect contact with the victims’ genitals.  In connection with the encounters, EPSTEIN, or one of his employees or associates, typically paid each victim hundreds of dollars in cash.  Once minor victims were recruited, EPSTEIN or his employees or associates would contact victims to schedule appointments for “massages.”  As a result, many victims were abused by EPSTEIN on multiple subsequent occasions.

To further enable him to abuse underage girls, EPSTEIN asked and enticed certain of his victims to recruit additional minor girls to perform “massages” and similarly engage in sex acts with EPSTEIN.  When a victim would recruit another underage girl for EPSTEIN, he paid both the victim-recruiter and the new victim hundreds of dollars in cash.  Through these victim-recruiters, EPSTEIN maintained a steady supply of new victims to exploit, and gained access to dozens of additional underage girls to abuse.

*                      *                      *

JEFFREY EPSTEIN, 66, is charged with one count of sex trafficking of minors, which carries a maximum sentence of 40 years in prison, and one count of conspiracy to engage in sex trafficking of minors, which carries a maximum sentence of five years in prison.

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

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

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Alex Rossmiller, Alison Moe, and Maurene Comey are in charge of the prosecution, with assistance from the Office’s Human Trafficking Co-Coordinator, Abigail Kurland.

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment, and the 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, and James P. O’Neill, Police Commissioner of the City of New York (“NYPD”), announced today the unsealing of a superseding indictment and the arrest of EDUARDO RODRIGUEZ, a police officer with the NYPD, for conspiring to commit bank and loan fraud, as well as making false statements to federal law enforcement officers.  RODRIGUEZ was arrested this morning and will be presented this afternoon before U.S. Magistrate Judge Barbara C. Moses.  The case is assigned to U.S. District Judge William H. Pauley III.

U.S. Attorney Geoffrey S. Berman stated:  “As alleged, Eduardo Rodriguez, an officer with the New York Police Department, misled a financial institution about his intentions for a loan.  Instead of using the loan proceeds for a car, he allegedly used the money for other purposes.  If anything, law enforcement officers should be held to a higher standard than the general public.  At a minimum, they should be expected to obey the law.”

NYPD Commissioner James P. O’Neill said:  “There is no place in the NYPD for criminal or unethical behavior.  NYPD officers swear an oath to uphold the law and protect the public. If an officer fails to uphold this oath, they must be held accountable.”

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

In June 2017, RODRIGUEZ agreed with at least two other individuals (identified in the Superseding Indictment as CC-1 and CC-2) to submit an application to a lending institution (“Lender-1”) for an automobile loan for the express – but false – purpose of financing RODRIGUEZ’s purchase of a vehicle from a real automobile dealer that RODRIGUEZ did not own and never intended to own.  In connection with that application, Lender-1 issued to RODRIGUEZ a loan (“Loan-1”) and, specifically, a check representing the proceeds of that loan.  RODRIGUEZ, in turn, endorsed that check and provided it to CC-1 and CC-2 with the understanding they would deposit and withdraw money against that check for RODRIGUEZ’s enrichment.

In March 2018, USPIS inspectors interviewed RODRIGUEZ, and he falsely denied any involvement in applying for, or any knowledge about, Loan-1. 

In April 2018, RODRIGUEZ was again interviewed by federal law enforcement officers.  Although RODRIGUEZ admitted during that interview that he did, in fact, endorse the check issued in connection with Loan-1, RODRIGUEZ claimed to have endorsed the check and provided it to CC-1 and CC-2 for the purpose of CC-1 and/or CC-2 returning the check to Lender-1.  That statement was false: as noted, RODRIGUEZ endorsed the check not for the purpose of returning it to Lender-1 but to obtain proceeds from Loan-1.  Similarly, although RODRIGUEZ admitted during the April 2018 interview that he did, in fact, work with CC-1 to obtain Loan-1, RODRIGUEZ denied any previous relationship with CC-1, stating in substance and in part that CC-1 had contacted RODRIGUEZ without any prior prompting by RODRIGUEZ.  That statement was false: RODRIGUEZ had a prior business relationship with CC-1 dating back to at least December 2015 and had been in substantial telephone contact long before when he claimed he first met CC-1.

*                *                *

RODRIGUEZ, 41, of Goshen, New York, is charged with one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison; one count of conspiracy to commit loan fraud, which carries a maximum sentence of five years in prison; and one count of making false statements, which carries a maximum sentence of five years in prison.

The statutory 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 the U.S. Postal Inspection Service and the Internal Affairs Bureau of the NYPD. 

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

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Superseding Indictment and the description of the Superseding 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 TODD CAPSER pled guilty this morning before U.S. District Judge J. Paul Oetken to one count of wire fraud, in connection with a $43 million fraud scheme. 

U.S. Attorney Geoffrey S. Berman said:  “Todd Capser purported to be a legitimate businessman and convinced a Canadian financial institution to lend him more than $43 million.  But the loan was based on a mountain of false information from Capser.  Then, to further his fraud, Capser attempted to induce other financial institutions to loan him additional money.  Today, Capser admitted his guilt and now faces significant time in prison for his crimes.”

According to the Indictment and other documents filed in the case, as well as statements made during the plea proceedings:

From January 2016 through April 2019, CAPSER perpetrated a scheme to defraud a financial institution based in Toronto, Canada (“Financial Institution-1”), by inducing it, through false and misleading representations and omissions, to loan approximately $43.3 million to an entity incorporated by CAPSER (“Capser Entity-1”), for the purchase of two chemical and oil tankers (the “Tankers”).

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

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

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

*                *                *

CAPSER, 47, of Billings, Montana, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  CAPSER is scheduled to be sentenced by Judge Oetken on November 8, 2019.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation (“FBI”).  He also thanked the Billings Resident Agency of the FBI’s Salt Lake City Field Office and the United States Attorney’s Office for the District of Montana for their assistance with the investigation.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GARY TURNER was sentenced to 27 years in prison for the April 2018 murder of 17-year-old Samuel Ozuna.  TURNER was sentenced in Manhattan federal court by United States District Judge Jesse M. Furman, before whom TURNER previously pled guilty.

U.S. Attorney Geoffrey S. Berman said:  “Gary Turner killed Samuel Ozuna in order to keep his membership in a crew operating in the Carver Houses in East Harlem.  For this callous crime, Turner will now spend decades in prison.  We thank our partners at the NYPD for their outstanding work on this case.”

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

On April 24, 2018, TURNER shot and killed Samuel Ozuna in the vicinity of the George Washington Carver Houses (the “Carver Houses”) on 104th Street in East Harlem.  On that night, TURNER, a member of a crew operating in the Carver Houses, was inside the lobby of a building in the Carver Houses when he learned that individuals whom he understood to be from the nearby Washington Houses were coming to the area.  TURNER’s crew was engaged in a rivalry with a crew from the Washington Houses.  Soon thereafter, approximately four individuals, including Mr. Ozuna, ran toward the Carver Houses building, and as they approached, TURNER fired multiple shots in their direction.  TURNER continued to fire as they fled.  TURNER’s gunshots struck and killed Mr. Ozuna.                      

*                *                *

In addition to his prison term, TURNER, 25, was sentenced to five years of supervised release.

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

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Lauren B. Schorr and Jacob Warren are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ERNESTO LOPEZ, a New York-licensed medical doctor who wrote thousands of medically unnecessary prescriptions for oxycodone and fentanyl over an approximately three-year period, was sentenced today in Manhattan federal court to five years in prison.  LOPEZ was previously found guilty, in February 2019, of conspiring to distribute narcotics and distribution of narcotics after a jury trial before United States District Judge Denise L. Cote, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman stated:  “Today’s sentence serves as a message that a doctor who doles out narcotics without regard to his patients’ medical needs and addictions is no more than a drug dealer.  Lopez will serve a substantial sentence for his reprehensible conduct, having betrayed the public’s and his patients’ trust for his own financial gain.”

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

Oxycodone and fentanyl are highly addictive, narcotic opioids that are used to treat severe pain conditions.  Oxycodone prescriptions are in high demand and have significant cash value to drug dealers, who sell them on the street for large amounts of money.  For example, 30-milligram oxycodone tablets have a current street value of approximately $20 to $30 per pill in New York City, with street prices even higher in other parts of the country.  Thus, a single prescription for 120 30-milligram tablets of oxycodone can net an illicit distributor $2,400 in cash or more.  Fentanyl patches are also commonly abused and sold for cash on the street by drug dealers.  Because it is so potent, fentanyl frequently results in overdoses that can lead to respiratory depression and death.   

From approximately 2015 until his arrest in November 2017, LOPEZ operated medical clinics located in New York, New York; Jackson Heights, New York; and Franklin Square, New York, where LOPEZ wrote thousands of prescriptions for large quantities of oxycodone and fentanyl in exchange for cash payments.  In total, LOPEZ wrote prescriptions for nearly one million oxycodone pills, with a street value of approximately $20 million.  LOPEZ typically charged $200 to $300 in cash for patient visits, despite the fact that nearly 80 percent of his patients maintained health insurance.  During many of these visits, LOPEZ performed no meaningful physical examination of patients and did not attempt to diagnose them.  LOPEZ prescribed large quantities of oxycodone, most frequently 120 30-milligram tablets, and fentanyl patches, often to patients who demonstrated clear signs of drug addiction and whose test results showed that they were not taking – and therefore were redistributing – the oxycodone he prescribed.

In addition to prescribing medically unnecessary oxycodone and fentanyl patches, LOPEZ also prescribed to many patients a fentanyl-based spray intended to treat breakthrough cancer pain, for which those patients had no legitimate medical need.  In connection with those prescriptions, LOPEZ submitted an application to INSYS Therapeutics to join a “speaker’s program,” wherein doctors received payments in exchange for prescribing the fentanyl-based spray to patients.

At the time of LOPEZ’s arrest, agents recovered hundreds of fentanyl sprays and patches from the closet of his residence, along with approximately $729,000 in cash.    

*              *             *

In addition to the prison sentence, LOPEZ, 76, of Flushing, New York, was sentenced to three years of supervised release, was ordered to pay a fine in the amount of $50,000, and was ordered to forfeit $1,400,000.   

Mr. Berman praised the outstanding investigative work of the DEA’s New York Tactical Diversion Squad.  Mr. Berman also thanked the New York City Police Department, the Department of Health and Human Services, the New York City Department of Investigation, the New York State Office of the Medicaid Inspector General, the New York City Human Resources Administration, the Nassau County Police Department and Asset Forfeiture Unit, the Nassau County District Attorney’s Office, the New York County District Attorney’s Office, and the New York State Department of Financial Services for their work on the investigation.

Parts of this case were conducted under the auspices of the Organized Crime Drug Enforcement Task Force (OCDETF), a partnership between federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations and those primarily responsible for the nation’s illegal drug supply.

This matter is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Nicholas Folly, Elizabeth Hanft, Michael McGinnis, and Daniel Richenthal are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field 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 a superseding federal indictment charging JAHSON FEVERIE, a/k/a “Jah,” with racketeering conspiracy, including the September 27, 2016, murder of Yunior Manion, 21, in the Bronx, New York.

U.S. Attorney Geoffrey Berman said:  “As alleged, the defendant was a member of a violent gang who killed an innocent young man in a pointless, gang-related dispute.  We thank the FBI and the NYPD for their outstanding work investigating this terrible murder.  We will continue our efforts with our law enforcement partners to prevent such senseless acts of violence.”

FBI Assistant Director William F. Sweeney Jr. said:  “No one deserves to be killed at the hands of someone else, but Yunior Manion was innocently standing on the street and got caught in a gang war crossfire.  He lost his life over drugs and guns.  The FBI New York Metro Safe Streets Task Force won’t let the violence and crime these gangs thrive on go unchecked.  We will use every method necessary to stop these criminals and restore safety in the communities they have terrorized.”

NYPD Commissioner James P. O’Neill said:  “The individual arrested in this case allegedly took the life of an innocent bystander while recklessly discharging a firearm at a rival gang member.  The NYPD and our partners in law enforcement will continue to target gun violence and street gangs by dismantling their networks and taking dangerous criminals off our streets.”

According to the Indictment[1]: 

FEVERIE is a member of the “Wild Card” set of the Crips gang.  Members of the gang sold drugs and used guns to further the aims of the Wild Cards.  On September 27, 2016, FEVERIE fired a gun at rival gang members.  FEVERIE instead hit and killed Yunior Manion, an innocent bystander.

*                      *                     *

FEVERIE, 18, of the Bronx, New York, was arrested this morning in the Bronx, New York, and presented and arraigned before U.S. Magistrate Judge Barbara C. Moses.  This case is assigned to U.S. District Judge Loretta A. Preska.

FEVERIE is charged with conspiring to commit racketeering through the commission of various criminal acts, including murder, in violation of Title 18, United States Code, Section 1962(d), which carries a maximum term of life in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

The prosecution of this case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Adam Hobson, Gina Castellano, and Hagan Scotten are in charge of the prosecution.

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LEONARD MATHEWS was sentenced to 17 years in prison for ordering a shooting that left three people injured, and for distributing crack cocaine.  MATHEWS was convicted of assault with a dangerous weapon in aid of racketeering, as well as firearms, ammunition, and crack cocaine distribution offenses following a seven-day jury trial in October 2018.  The sentence was imposed by U.S. District Judge J. Paul Oetken.

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

MATHEWS is a leader, or “big homie,” in the Gangsta Milla Bloods, or “GMB,” a subset of the United Bloods Nation gang that operates in the Bronx and engages in racketeering activity, including narcotics distribution.  On October 20, 2017, MATHEWS ordered a subordinate gang member to shoot someone with whom MATHEWS previously had a physical altercation.  The shooting resulted in the injury of three innocent bystanders on Morris Avenue between East Kingsbridge Road and East 196th Street in the Bronx.  On the night of the shooting, following a closed-door meeting with MATHEWS and other members of the gang, the same Bloods foot soldier that MATHEWS ordered to do the shooting stabbed and left for dead one of the principal witnesses to the shooting.

*              *             *

Judge Oetken sentenced MATHEWS, 27, of the Bronx, New York, to 84 months in prison on one count of aiding and abetting or willfully causing assault with a dangerous weapon in aid of racketeering, one count of aiding and abetting or willfully causing the possession of ammunition by a felon, and one count of distribution and possession with intent to distribute crack cocaine.  In addition, Judge Oetken sentenced MATHEWS to a mandatory minimum sentence of 10 years in prison for one count of aiding and abetting or willfully causing the discharge of a firearm during and in relation to a crime of violence, to be served consecutively to the 84-month sentence imposed on the other counts.

Mr. Berman praised the investigative efforts of the Bronx Violent Crimes Squad of the New York City Police Department.

The case is being prosecuted by the Office’s General Crimes Unit.  Assistant United States Attorneys Justin V. Rodriguez, Dominic A. Gentile, 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 Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations, announced today the unsealing of a Complaint in Manhattan federal court charging PAUL A. RINFRET with securities fraud and wire fraud charges.  The Complaint alleges that RINFRET engaged in a years-long scheme to defraud investors by selling limited partnership interests in an entity through which RINFRET purported to trade in futures contracts relating to the S&P 500 utilizing a bespoke algorithm he had developed.  RINFRET allegedly touted extremely high returns on his trading.  In truth and in fact, as alleged, RINFRET simply stole most of the investors’ money in order to fund his lavish lifestyle.  RINFRET was arrested this morning in Manhasset, New York, and will be presented this afternoon before Magistrate Judge Robert W. Lehrburger in Manhattan federal court. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Paul Rinfret deceived 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 Hamptons vacation home.  He lied about how their money was growing.  His alleged lies stop today.  We will work tirelessly with our law enforcement partners to stop this kind of alleged Ponzi scheme in its tracks and bring defendants like Rinfret to justice.” 

Special Agent-in-Charge Melendez said:  “As alleged, Paul Rinfret willfully and continually defrauded his investors, the very people he was tasked with serving, in a multimillion-dollar Ponzi scheme that served to enrich only him.  The special agents of our El Dorado Task Force will continue to expose such fraud at the national and international levels and assure that such financial predators are brought to justice.”

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

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 more than $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, is charged with 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 statutory maximum and minimum 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.

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

Mr. Berman praised the investigative work of the New York Field Office of Homeland Security Investigations.  He also thanked the Newark Field Office of Homeland Security Investigations, under the direction of Special Agent-in-Charge Brian Michael.  Mr. Berman also thanked the United States Postal Inspection Service, the United States Internal Revenue Service, the New York City Police Department, and the New York City Sherriff’s Office, which assisted in the investigation.  Mr. Berman also thanked the Securities and Exchange Commission, which has brought and filed a civil enforcement action against the defendant. 

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

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ROBERT MERLO was sentenced today to 42 months in prison and STEPHEN DECKER was sentenced on June 12, 2019, to 57 months in prison for participating in a scheme to steal more than $2 million in stock certificates from the apartment of a deceased Manhattan woman, open a brokerage account in her name in order to liquidate the stocks, and then use those stolen assets to attempt to purchase over $2 million worth of gold coins.  MERLO was convicted of conspiracy to commit wire fraud, wire fraud, and aggravated identity theft after a four-day trial in March 2019.  DECKER pled guilty to the same charges in January 2019. The sentence was imposed by U.S. District Judge Lewis A. Kaplan.  

U.S. Attorney Geoffrey S. Berman said:  “Robert Merlo and Stephen Decker engaged in a conspiracy to steal stock certificates from a deceased woman, liquidate them, and convert the proceeds for themselves.  Their conduct was the financial equivalent of grave-robbing, and the sentences they received reflect the seriousness of their crimes.”

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

From approximately March 2016 to February 2017, MERLO and DECKER engaged in a scheme with others known and unknown designed to steal over $2 million from a deceased Manhattan woman (the “Victim”).  As part of the scheme, DECKER and another co-conspirator, who both worked in the Victim’s building, stole stock certificates valued at over $2 million from the Victim’s Manhattan apartment after the Victim’s death.  DECKER approached MERLO, a New Jersey-based insurance agent and DECKER’s longtime friend, to find a way to monetize the stock certificates.  In August 2016, MERLO and DECKER agreed with others to make false representations to a financial institution (“Company-1”) in order to open a brokerage account (the “Account”) in the Victim’s name, deposit the stolen stock certificates into the Account, and sell the shares in the brokerage account, resulting in a cash balance of over $2 million.  MERLO agreed to help launder the cash balance in the brokerage account, approaching several individuals to carry out his plan.  MERLO, DECKER, and their co-conspirators then attempted to purchase $2 million in gold coins using the assets in the Account.  MERLO, DECKER, and the other co-conspirators met several times over the course of months and communicated using prepaid or “burner” phones regarding the fraudulent scheme. 

*                *                *

Judge Kaplan sentenced MERLO, 55, of Secaucus, New Jersey, to a mandatory minimum sentence of two years in prison on the aggravated identity theft count and 18 months in prison on the remaining counts, to be served consecutively to the two-year term of imprisonment.  In addition, Judge Kaplan ordered restitution in the amount of $75,000; the balance of the over $2 million in proceeds from the stolen stock certificates were previously recovered, as a result of the  investigation by the Federal Bureau of Investigation “FBI”), and returned to the Victim’s estate.   

Judge Kaplan sentenced DECKER, 61, of Secaucus, New Jersey, to a mandatory minimum sentence of two years in prison on the aggravated identity theft count and 33 months in prison on the remaining counts, to be served consecutively to the two-year term of imprisonment.

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

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Cecilia Vogel, Sarah Mortazavi, Dina McLeod, and Alexandra Rothman are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Scott J. Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s New York Region (“HHS-OIG”), announced today that the United States filed and settled a civil fraud lawsuit against FUSION PHYSICAL THERAPY AND SPORTS WELLNESS, P.C. (“FUSION”), and its founder and CEO, CAROLYN SUE MAZUR (“MAZUR”), alleging that FUSION and MAZUR violated the False Claims Act by fraudulently billing Medicare for physical therapy services that were not reimbursable under that program.  Specifically, FUSION and MAZUR falsely claimed to Medicare that various services had been provided or supervised by a physical therapist who was credentialed in the Medicare program and therefore authorized to bill Medicare for reimbursement when, in fact, the services were provided or supervised by other non-credentialed personnel.  Under the settlement, approved yesterday by U.S. District Judge Ronnie Abrams, FUSION and MAZUR admitted to the wrongful conduct and agreed to pay $37,500.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Medicare requires all health care providers accurately to report information relating to claimed services.  This requirement is critical to ensure quality of care and patient safety.  Fusion Physical Therapy side-stepped this rule by lying to Medicare about who actually provided the services, and is now being held accountable.”   

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Health care professionals are expected to bill the taxpayer-funded Medicare program correctly.  Along with our law enforcement partners, HHS-OIG will continue to ensure individuals and entities billing federal health care programs do so in an honest manner.”

According to the Government’s Complaint-in-Intervention, MAZUR and FUSION knew that Medicare rules prohibited them from billing Medicare for services performed or supervised by non-credentialed physical therapists.  MAZUR and FUSION also knew that Medicare rules prohibited them from misrepresenting to Medicare the individual physical therapist who had provided the services underlying a claim for reimbursement.  In spite of this knowledge, FUSION and MAZUR billed Medicare for services that had been rendered by non-credentialed providers and made false representations regarding the true identity of the providers who rendered the services.

As part of the settlement, MAZUR and FUSION agreed to pay $37,500 and admitted that:

• Defendants understood that they were prohibited by Medicare rules from submitting claims for reimbursement for certain professional services provided by a healthcare provider other than the individual associated with the National Provider Identifier (“NPI”) listed on each claim.
   
• Defendants also understood that, in order to receive reimbursement from Medicare for physical therapy services, the physical therapist listed on each relevant claim must be enrolled as a provider in the Medicare program at the time the services are rendered.
   
• Defendants submitted to Medicare false claims for services that had been performed by physical therapists other than the physical therapist whose NPI was listed on the claim.
   
• In some cases, the physical therapist who actually provided the claimed services was not enrolled as a Medicare provider at the time the claimed services were rendered.
   

*                *                *

Mr. Berman praised the outstanding investigative work of HHS-OIG.  This case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Charles S. Jacob and Jessica Jean Hu are in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Michael C. Mikulka, Special Agent-in-Charge of the U.S. Department of Labor, Office of Inspector General, New York Region (“DOL-OIG”), Andriana Vamvakas, New York Regional Director, U.S. Department of Labor Office of Labor-Management Standards (“DOL-OLMS”), and Margaret Garnett, Commissioner, New York City Department of Investigation (“DOI”), announced today the unsealing of an Indictment charging leaders of two local chapters of the United Brotherhood of Carpenters and Joiners of America (the “Union”) with accepting tens of thousands of dollars in cash bribes in return for guaranteeing admission to hundreds of prospective union members.  SALVATORE TAGLIAFERRO, the president of the Local 926 chapter of the Union, and JOHN DEFALCO, the vice president of the Local 157 chapter of the Union, were each charged with one count of honest services wire fraud, one count of conversion of union assets, and one count of conspiracy, in connection with their involvement in a scheme to solicit cash bribes in exchange for union membership.  DEFALCO was also charged with one count of witness tampering and one count of obstruction of justice, in connection with his attempts to interfere with the investigation of the scheme.  TAGLIAFERRO and DEFALCO, who were arrested this morning, are expected to be presented later today.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants abused their leadership positions to line their pockets at the expense of their union and its members, whose interests they were duty bound to protect.  By allegedly demanding and accepting cash bribes in return for union membership, the defendants not only betrayed their union, but personally profited off the needs of those seeking work.  The charges announced today reflect our tireless commitment to working with our law enforcement partners to root out corruption in union leadership and our commitment to bringing to justice those who corrupt their positions.”

DOL-OIG Special Agent-in-Charge Michael Mikulka said:  “An important mission of the Office of Inspector General is to investigate allegations relating to labor racketeering and corruption in labor unions.  We will continue to work with our law enforcement partners to investigate these types of allegations.”

DOL-OLMS New York Regional Director Andriana Vamvakas said:  “Safeguarding financial integrity and combatting financial malfeasance in labor unions is a very high priority for OLMS.  This indictment sends a clear message that OLMS will fully investigate and seek justice when anyone attempts to use their union position for personal financial gain at the expense of union members.”

DOI Commissioner Margaret Garnett said:  “These defendants allegedly conspired to sell sought-after union memberships for thousands of dollars, giving those who paid the steep price unearned access to coveted union construction projects and other exclusive benefits while the defendants collected the cash, according to the charges. Organized labor must be safeguarded from corruption that attempts to undermine its mission to protect the rights of working New Yorkers. DOI was proud to assist its partners at the Office of the U.S. Attorney for the Southern District of New York, the U.S. Department of Labor and the U.S. Department of Labor Inspector General in investigating this case.”

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

From at least in or about 2017 up through and including in or about June 2019, TAGLIAFERRO and DEFALCO abused their positions as officers of local chapters of the Union by soliciting and accepting cash bribes from prospective Union members in exchange for securing the bribe payers’ admission to the Union.  In particular, DEFALCO and other co-conspirators identified prospective members and solicited cash payments from them, often in the amount of $1,500.  Then, once prospective members made the payments, DEFALCO sent those individuals’ names to TAGLIAFERRO, who used his authority as president of the Local 926 to ensure that they were accepted into the Local 926 and received Union membership cards, even though many such bribe payers did not have Union jobs and were not eligible for admission to the Union.  Hundreds of new members were admitted to the Local 926 as a result of this scheme.  DEFALCO and TAGLIAFERRO shared the bribe payments and made at least tens of thousands of dollars from the scheme.

DEFALCO and TAGLIAFERRO also took numerous steps to conceal their conduct from investigators, and DEFALCO attempted to tamper with witnesses and obstruct the federal investigation.  Among other things, DEFALCO pressured one co-conspirator to sign an affidavit falsely exculpating him and directed that co-conspirator falsely to exculpate DEFALCO, TAGLIAFERRO, and others if questioned.  DEFALCO and TAGLIAFERRO also discussed a false cover story to explain the involvement of another co-conspirator in the scheme, and DEFALCO instructed that co-conspirator to repeat this false cover story to a federal grand jury investing his conduct.  DEFALCO also instructed a co-conspirator to delete incriminating text messages between them that were responsive to a federal grand jury subpoena served on the co-co-conspirator.

*                *                *

TAGLIAFERRO, 54, of Staten Island, New York, and DEFALCO, 51, of Secaucus, New Jersey, each are charged with one count of conspiracy, which carries a maximum sentence of five years in prison; one count of conversion of union assets, which carries a maximum sentence of five years in prison; and one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison.  DEFALCO alone is also charged with one count of witness tampering and one count of obstruction of justice, each of which carries a maximum penalty of 20 years in prison.

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

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

Mr. Berman praised the investigative work of DOL-OIG, DOL-OLMS, and DOI.

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment and its description 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 TODD SCHLIFSTEIN, a doctor who practiced in Manhattan, pled guilty today to conspiracy to violate the Anti-Kickback Statute, in connection with a scheme to prescribe Subsys, a potent fentanyl-based spray, in exchange for bribes and kickbacks from Subsys’s manufacturer, Insys Therapeutics.  SCHLIFSTEIN pled guilty before U.S. Magistrate Judge Sarah Netburn.  The case is assigned to U.S. District Judge Kimba M. Wood.

U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Todd Schlifstein prescribed patients a powerful fentanyl drug in exchange for bribes and kickbacks from the drug’s manufacturer.  This case shows that doctors who let illegal payments corrupt their medical judgment will be held accountable.”

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

The Insys Speakers Bureau

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

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

SCHILFSTEIN’s Participation in the Scheme

SCHLIFSTEIN, a doctor certified in physical medicine and rehabilitation, worked at a medical office in Manhattan.  From in or about March 2014 until in or about September 2015, SCHLIFSTEIN received approximately $127,100 in Speaker Program fees from Insys in exchange for prescribing large volumes of Subsys.  SCHLIFSTEIN became approximately the 19th-highest prescriber of Subsys nationally in the second quarter of 2015, accounting for approximately $593,373 in total net sales of the drug during that quarter.

*                *                *

SCHILFSTEIN, 50, of New York, New York, pled guilty to one count of conspiracy to violate the Anti-Kickback Statute, which carries a maximum sentence of five years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  SCHLIFSTEIN is scheduled to be sentenced by Judge Wood on September 26, 2019.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation, and thanked the Department of Health and Human Service’s Office of Inspector General for its participation in the investigation.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JASON POLANCO, a/k/a “Jin,” a/k/a “Wolfman,” was found guilty today of the August 31, 2014, murder of Shawn Ross, a/k/a “S.B.,” on Decatur Avenue in the Bronx, as well as participating in a narcotics conspiracy, a robbery conspiracy, the robbery of a Citgo gas station in the Bronx, and the discharge of a firearm in connection with the Citgo robbery.   A jury convicted POLANCO today on all six counts of the Indictment following a one-week trial before U.S. District Judge Paul A. Engelmayer.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “This morning, a unanimous jury found that Jason Polanco is a drug dealer, a robber, and a killer.  We hope that the family of Shawn Ross finds a measure of justice in today’s verdict.  We thank the NYPD, ATF, and DEA for their outstanding work on this case, and for their invaluable partnership with our office.”

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

On August 31, 2014, POLANCO shot and killed Shawn Ross, a/k/a “S.B.,” in connection with POLANCO’s membership in a drug crew that controlled drug sales on Decatur Avenue between 194th and 195th Streets in the Bronx.  This drug crew was responsible for distributing over a kilogram of heroin, as well as quantities of marijuana, from at least 2011 through 2015.  In 2014 and 2015, POLANCO and other members of the crew also committed a string of armed robberies of businesses across Manhattan and the Bronx, including the robbery of a Citgo gas station on Pelham Parkway in the Bronx.  During the Citgo robbery, POLANCO carried a loaded firearm, which he fired just feet away from a customer.

*                      *                     *

POLANCO, 29, was found guilty of one count of participating in a conspiracy to distribute and to possess with intent to distribute one kilogram and more of heroin and quantities of marijuana, in violation of 21 U.S.C. §§ 841(b)(1)(A), 841(b)(1)(D), and 846, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life; one count of murder through the use of a firearm, in violation of 18 U.S.C. § 924(j), which carries a mandatory minimum sentence of five years in prison and a maximum sentence of life; one count of murder while engaged in a narcotics offense, in violation of 21 U.S.C. § 848(e), which carries a mandatory minimum sentence of 20 years in prison and a maximum sentence of life; one count of participating in a conspiracy to commit Hobbs Act robberies, in violation of 18 U.S.C. § 1951, which carries a maximum sentence of 20 years in prison; one count of committing a Hobbs Act robbery, in violation of 18 U.S.C. § 1951, which carries a maximum sentence of 20 years in prison; and one count of discharging a firearm in connection with the robbery, in violation of 18 U.S.C. § 924(c)(1)(A)(iii), which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life.

Mr. Berman praised the outstanding investigative work of the New York City Police Department, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the U.S. Drug Enforcement Administration.

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Celia V. Cohen, Danielle R. Sassoon, and Gina Castellano are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that STEVEN L. HENNING, a certified public accountant who was a partner at a Manhattan accounting firm, pled guilty today to participating in two wire fraud schemes.  In the first, he falsely claimed to have entered into multimillion-dollar intellectual property deals and defrauded investors out of $2 million.  In the second, he falsely claimed to have entered into client engagements and defrauded an employer out of over $270,000. 

U.S. Attorney Geoffrey S. Berman said:  “Steven Henning admitted today that he defrauded investors and then continued committing crime by defrauding an employer who hired him after he left his partnership at a Manhattan accounting firm.  Through the frauds, he stole over $2.2 million.  He will now have to answer for his actions.”

According to the Information filed today to which HENNING pled guilty, as well as other public information, HENNING, a CPA at a Manhattan accounting firm, established his own firm called OpportunIP, which he allegedly told victims was a company specializing in assisting other entities in taking intellectual property to the market.  Henning induced victims to invest in OpportunIP by providing them with false documents showing OpportunIP’s involvement in multi-million dollar transactions that would reap millions of dollars in future profits.  Ultimately, the victims learned that the deals did not exist and they were victims of an alleged scheme to defraud them out of millions of dollars.

As further alleged in the information, after leaving the Manhattan accounting firm, HENNING sought employment with a firm in Chicago, Illinois (the “Chicago Firm”).  He induced the Chicago firm to hire him and provide him with $240,000 in draw payments based on false and fraudulent statements, including by sending the Chicago Firm fraudulent contracts.

*                *                *

HENNING, 58, pled guilty to two counts of wire fraud, which carry 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 before Judge Cathy Seibel has been scheduled for October 18, 2019.

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

Mr. Berman praised the outstanding investigative work of the U. S. Postal Inspection Service and the SEC Office of Inspector General.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that HARBIR PARMAR was sentenced in White Plains federal court to three years in prison for kidnapping and wire fraud.  PARMAR pled guilty on March 11, 2019, before U.S. District Judge Vincent L. Briccetti, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Many people rely on rideshare apps to navigate New York safely.  But when a woman hailed an ridesharing car driven by Harbir Parmar, her ride home took a turn for the worst.  With Parmar’s lengthy prison term, he will no longer be able to take advantage of ridesharing customers.”

According to the Indictment and statements made during today’s plea proceedings:

On February 21, 2018, PARMAR, who worked as a driver for a ridesharing company (“Company-1”), picked up an individual (“Victim-1”) in New York, New York, who sought to be driven to White Plains, New York.  After Victim-1 fell asleep in the backseat of the vehicle, PARMAR changed Victim-1’s destination in Company-1’s mobile application to an address in Boston, Massachusetts, and proceeded to drive toward that location.  When Victim-1 awoke, the vehicle was in Connecticut.  Victim-1 requested that she be taken to White Plains or to the police station, but PARMAR refused.  PARMAR instead dropped Victim-1 off on the side of I-95 in Branford, Connecticut.  Victim-1 went to a nearby convenience store where she sought assistance.    

In addition, from December 2016 through February 2018, PARMAR sent false information about the destinations of Company-1’s customers through Company-1’s mobile application on several occasions.  At times, he also sent false information about the application of a cleaning fee to be applied to the accounts of Company-1’s customers.  In these instances, customers of Company-1 filed complaints with Company-1 about being overcharged for their rides.  These instances have resulted in thousands of dollars in improper charges to the accounts of Company-1’s customers. 

*             *             *

In addition to the prison term, PARMAR, 25, of Howard Beach, New York, was sentenced to three years of supervised release and ordered to pay $3,642 in restitution and forfeiture.

Mr. Berman praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force, which comprises investigators from the FBI, U.S. Probation Office, New York State police, Westchester County Department of Public Safety, Westchester County District Attorney’s Office, the New York City Police Department, Yonkers Police Department, Greenburgh Police Department, Mount Vernon Police Department, and the Peekskill Police Department.    

The case is being handled by the Office’s White Plains Division.  Assistant United States Attorney Jamie Bagliebter is in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Angel M. Melendez, Special Agent-in-Charge of the New York Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today that five stolen architectural drawings created in 1896 of a historic synagogue in the city of Lodz, Poland (the “Drawings”), will be returned to the Polish government.  The Drawings were taken out of a larger set housed at the Polish state archive in Lodz in around 1999, and the identity of the thief or thieves remains unknown.

U.S. Attorney Geoffrey S. Berman said:  “A part of Poland’s cultural heritage and historical record were stolen from their state archive 20 years ago.  Now, thanks to a New York couple who are doing the right thing, and to HSI for doing its typically excellent work in this field, these important drawings are being returned to the government of Poland.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “On the heels of the 75th anniversary of D-Day, returning these drawings to Poland that represent a piece of human history the Nazis attempted to erase underscores the importance of preserving our world history through cultural patrimony for future generations.  We continue to pursue criminals who steal and traffic property that belongs to the peoples of the world, while returning those items found to their rightful owners, in this case, Poland.”

The ink-and-watercolor Drawings depict the interior, exterior facades, and floor plans of the Stara Synagogue, which used to stand on Wolborska Street in Lodz.  The Stara Synagogue was originally built in 1809 and moved to a new building around 1859 and 1861.  The Drawings were made by the prominent Lodz architect Adolf Zeligson in connection with significant renovations to the synagogue that began in around 1897.  The Stara Synagogue was later burned down during the Nazi occupation in around 1939, and no trace remains.     

Almost 10 years after the theft, the Drawings were put up for sale by an international auction house and were purchased by a Manhattan couple, Meredith Berkman and Daniel Mintz. After Ms. Berkman and Mr. Mintz were informed that the Drawings had been stolen from the Polish state archive, they readily and voluntarily agreed to turn over the Drawings to HSI so that they could be returned to Poland. 

The U.S. Attorney’s Office and HSI are now sending the Drawings back to the Polish government.

*                *                *

Mr. Berman thanked HSI’s Cultural Property, Art, and Antiquities Group for their handling of the investigation.  He also thanked Ms. Berkman and Mr. Mintz for their assistance and cooperation.  The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorney David Zhou 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, Police Commissioner of the City to New York (“NYPD”), today announced the unsealing of two Indictments charging DAVID ESPINAL, a/k/a “D-Block,” and MICHAEL CASTILLO, a/k/a “Squirrel,” with murder for hire and the March 10, 2011, murder of Hector Arias in the Bronx, New York. 

ESPINAL was taken into custody this morning in the Eastern District of Pennsylvania and will be presented in federal court in that District today.  CASTILLO was taking into custody this morning in the Northern District of Texas and will be presented in federal court in that District today.  This case is assigned to U.S. District Judge John G. Koeltl.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, eight years ago, David Espinal and Michael Castillo reduced the value of a man’s life to a dollar figure.  Their arrests today show that the passage of time does not insulate alleged murderers from investigation, apprehension, and prosecution. We hope that brings some measure of relief to the family of Hector Arias.”

FBI Assistant Director William F. Sweeney Jr. said:  “Mr. Espinal was so deadly serious about selling marijuana, he allegedly hatched a plan to kill a rival.  He and the man he’s accused of hiring to carry out the murder have been on the run since 2011.  They most likely believed they were in the clear, thinking no one was looking for them after all these years.  The FBI Westchester County Safe Streets Task Force and our law enforcement partners don’t let time stand in the way of catching alleged murderers and bringing them to justice.”

Police Commissioner James P. O’Neill said:  “Today’s charges are evidence that NYPD investigators do not forget victims, and they do not ever forget the justice that is owed to those victims’ families.  All New Yorkers deserve to be safe, and to feel safe.  The NYPD and our colleagues at the U.S. Attorney’s Office for the Southern District will stop at nothing until every street, in every neighborhood of New York City, is as safe as our safest streets are today.”

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

In or around March 2011, ESPINAL hired CASTILLO to murder Hector Arias.  On March 10, 2011, CASTILLO carried out the plan and murdered Arias by shooting him in the vicinity of 712 East Gun Hill Road in the Bronx, New York.  ESPINAL paid CASTILLO for murdering Arias.  The murder plot arose out of a conspiracy to distribute marijuana.

*                      *                     *                                           

A chart containing the names of the defendants charged in the Indictments, and the charges and maximum and minimum penalties they face, is attached.  The statutory maximum and minimum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FBI in this case.  Mr. Berman also thanked the NYPD and the United States Probation Office for their assistance in the investigation.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Jamie Bagliebter, Maurene Comey, Scott Hartman, and Jacqueline Kelly are in charge of the prosecutions.

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

United States v. David Espinal, 19 Cr. 428

United States v. Michael Castillo, S1 19 Cr. 428

CHARGE(S)

DEFENDANT(S)

MAXIMUM PENALTIES

Murder for Hire

DAVID ESPINAL (age 44)

MICHAEL CASTILLO (age 36)

Life in prison or death

 

Mandatory minimum: Life in prison

Murder through Use of a Firearm

DAVID ESPINAL

MICHAEL CASTILLO

Life in prison or death

 

Mandatory minimum:

5 years in prison

Travel Act Murder

DAVID ESPINAL

MICHAEL CASTILLO

Life in prison

 

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictments, as well as the descriptions of the Indictments 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 that IBRAHIM ISSA, a/k/a “Tony Issa,” was sentenced today in Manhattan federal court to 60 months in prison.  ISSA was previously found guilty in December 2018 of bribery of public officials and tax fraud after a federal jury trial before Chief United States District Judge Colleen McMahon, who imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “Ibrahim Issa bribed Postal Service managers with cash, lavish meals, gifts, and trips in exchange for lucrative vehicle maintenance and repair jobs on Postal Service vehicles.  Then, to compound the felony, Issa evaded both corporate and personal income taxes.”

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

From at least in or about 2012 up to and including in or about August 2016, ISSA, who owned and operated numerous auto repair and maintenance companies in the New York area and elsewhere, paid bribes to United States Postal Service Vehicle Maintenance Facility (“VMF”) managers in order to obtain work repairing and maintaining vehicles belonging to the Postal Service.  ISSA provided cash, gifts, lavish meals, and trips to these VMF managers in exchange for receiving work for his companies.  As a result of some of these bribes, ISSA received millions of dollars in fees from the Postal Service. 

In addition, from at least in or about 2012 up to and including in or about August 2016, ISSA conspired with others to evade paying federal income taxes for his auto repair and maintenance companies by misreporting income and expenses to the IRS.  ISSA also signed and subscribed to false personal income tax returns.  As a result of ISSA’s tax fraud through his companies and personally, ISSA failed to pay hundreds of thousands of dollars in taxes due and owing.

*              *             *

In addition to the prison sentence, ISSA, 57, of New York, New York, was sentenced to three years of supervised release, and was ordered to pay restitution to the IRS in the amount of $557,176.     

Mr. Berman praised the outstanding work of the United States Postal Service Office of the Inspector General and the Internal Revenue Service.

This matter is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Kyle Wirshba, Elizabeth Hanft, and Noah Solowiejczyk are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that REDHWAN SALEH was sentenced to 63 months in prison for his participation in an arson in the Bronx, New York.  SALEH was convicted following a four-day trial before the Honorable William H. Pauley III, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Today, New York City deli owner Redhwan Saleh learned that his attempt to burn down his competition – literally – comes at a steep price: more than five years in prison.”

According to allegations in the Superseding Indictment, other filings in Manhattan federal court, and the evidence presented at trial:

SALEH owned a deli near the intersection of 242nd Street and Broadway in the Riverdale section of the Bronx.  After SALEH learned that a competing deli was about to open a few stores down from his, SALEH paid three men, including co-defendant Antoine Bostick, to set the new deli on fire.  On September 11, 2016, a few weeks before the new deli opened, Bostick climbed onto the new deli’s roof, poured gasoline down the vent pipe, and lit the gas on fire.  The new deli and a neighboring store both suffered extensive fire damage and the new deli’s opening was substantially delayed.

*              *             *

In addition to the prison term, SALEH, 38, of Brooklyn, New York, was sentenced to three years of supervised release and ordered to pay $50,000 in restitution.

Bostick, 32, of New Rochelle, New York, was convicted of conspiracy to commit arson and was sentenced by Judge Pauley on March 15, 2019, to 50 months in prison and ordered to pay $50,000 in restitution.

In addition to SALEH and Bostick, two other individuals have been convicted in connection with this case.  Arthur Cherry pled guilty to conspiracy to commit arson and arson and was sentenced by Judge Pauley on March 15, 2019, to time served, three years of supervised release, and ordered to pay $50,000 in restitution.  Richard Sanchez pled guilty to conspiracy to commit arson and was sentenced by Judge Pauley on February 1, 2019, to 28 months in prison, three years of supervised release, and ordered to pay $50,000 in restitution.

Mr. Berman praised the investigative efforts of the Strategic Explosive and Arson Response Task Force of the Bureau of Alcohol, Tobacco, Firearms and Explosives, the New York Police Department, and the Fire Department of New York.

The case is being prosecuted by the Office’s General Crimes Unit.  Assistant United States Attorneys Adam S. Hobson and Thomas McKay are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JAMES FELTON was found guilty of the June 11, 2016, murder of Marvin Harris, whom FELTON shot 13 times, as well as the December 11, 2016, murder of Jose Morales, whom FELTON shot in the head.  FELTON was also found guilty of conspiring to distribute crack cocaine, heroin, cocaine, and marijuana, and related firearms offenses.  FELTON was convicted following a one-week trial before U.S. District Judge William H. Pauley III.

U.S. Attorney Geoffrey S. Berman said:  “James Felton brutally executed two men on the streets of the Bronx as part of his efforts to control the drug trade in his community.  Now Felton stands convicted of his crimes.  We thank our partners at Homeland Security Investigations and the New York City Police Department for their extraordinary work on this case.”

According to the allegations in the Indictment and the evidence presented in court during the trial:

Between 2010 and 2017, FELTON was a member of a long-running narcotics conspiracy and criminal enterprise centered around 240 East 175th Street in the Bronx, New York.  On June 11, 2016, at the corner of East 175th Street and Monroe Avenue in the Bronx, FELTON shot Marvin Harris 13 times, killing him, 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, then shot Jose Morales in the head, killing him.

FELTON also committed other firearms offenses in connection with his membership in the drug conspiracy and criminal enterprise.

*                      *                      *

FELTON, 50, of the Bronx, was convicted of conspiring to distribute at least 280 grams of crack cocaine and quantities of heroin, cocaine, and marijuana; two counts of murder through use of a firearm; two counts of murder while engaged in a narcotics conspiracy; two counts of murder in aid of racketeering; using, carrying, possessing, brandishing, and discharging firearms in relation to a drug trafficking crime, on occasions other than the Harris and Morales murders; and four counts of possessing a firearm or ammunition after sustaining a felony conviction.  FELTON faces a mandatory minimum sentence of life imprisonment plus an additional mandatory minimum sentence of 75 years in prison, which must run consecutively to any other term of imprisonment imposed.  

FELTON is scheduled to be sentenced before Judge Pauley on October 4, 2019.

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, and Philip R. Bartlett, the Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced that GEORGE PAPADAKOS, the former Director of Finance of the Greek Orthodox Archdiocese of America (“GOAA”), pled guilty today to embezzling more than $60,000 of GOAA funds for personal expenses.  PAPADAKOS surrendered this morning and pled guilty before U.S. Magistrate Judge Sarah Netburn.  PAPADAKOS’s case is assigned to U.S. District Judge Richard M. Berman.

U.S. Attorney Geoffrey S. Berman stated:  “As Director of Finance of the Greek Orthodox Church, George Papadakos was supposed to serve his Church, not himself.  As he admitted today, he embezzled from the Church for nearly six years.  For this sin, he faces the possibility of time in a federal prison.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “Mr. Papadakos used his position at the Greek Orthodox Archdiocese of America to steal from the hand who employed him.  Today’s plea is a reflection that Karma always comes from a higher authority and justice escapes no one.”

According to the allegations in the Information to which PAPADAKOS pled guilty, as well as statements made in court during the plea proceeding:

Between 2012 and September 2017, PAPADAKOS, the Director of Finance for GOAA, repeatedly embezzled from GOAA.  He charged approximately $66,499 to a corporate credit card for personal expenses without GOAA’s authorization.  These personal expenditures included charges for home improvements, clothing, a gym membership, iTunes, and medical bills.  During the period of PAPADAKOS’s embezzlement, GOAA was enduring financial difficulties.

*              *             *

PAPADAKOS, 52, of Westfield, New Jersey, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  Under the terms of his plea agreement, PAPADAKOS has agreed to both forfeiture and restitution of $66,499.

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. 

PAPADAKOS is scheduled to appear before Judge Berman on June 24, 2019, at 11:00 a.m., in part to set a schedule for PAPADAKOS’s sentencing proceeding.

Mr. Berman praised USPIS for its outstanding work on this case and noted that the investigation is ongoing.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that ELIZABETH ANN PIERCE, the former chief executive officer (“CEO”) of Quintillion, a telecommunications company in Alaska, was sentenced today in Manhattan federal court to 60 months in prison for defrauding investors in New York of more than $270 million during her time as CEO.  PIERCE previously pled guilty before U.S. District Judge Edgardo Ramos, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Elizabeth Ann Pierce, the then-CEO of Quintillion, placed her ambition above the law.  In order to raise over $270 million to build a fiber optic cable system in northern Alaska, she repeatedly lied to her investors and forged the signatures of her customers’ executives on fake revenue contracts.  When her scheme started to unravel, she tried to delay exposure with yet more lies and forged documents.  She will now serve five years in prison for her crime.”

According to the Complaint, the Indictment, statements made in court, and publicly available documents:

Until July 2017, PIERCE was the chief executive officer of Quintillion, a telecommunications company based in Anchorage, Alaska, that built, operates, and markets a high-speed fiber optic cable system (the “Quintillion System”).  The Quintillion System consists of three segments: a subsea segment that spans the Alaskan Arctic, a terrestrial segment that runs north to south along the Dalton Highway, and a land-based network of fibers that connects the subsea and terrestrial segments.  The Quintillion System is connected to the lower 48 states through other existing networks.

Between May 2015 and July 2017, PIERCE engaged in a scheme to induce two New York-based investment companies to provide more than $270 million to construct the Quintillion System by providing them with eight forged broadband capacity sales contracts and related order forms under which Quintillion would obtain guaranteed revenue once the Quintillion System was built (the “Fake Revenue Agreements”).  Under the Fake Revenue Agreements, four telecommunications services companies appeared to have made binding commitments to purchase specific wholesale quantities of capacity from Quintillion at specified prices.  The cumulative value of the Fake Revenue Agreements was approximately $1 billion over the life of the Fake Revenue Agreements.  In reality, the Fake Revenue Agreements were completely worthless because PIERCE had forged the counterparties’ signatures.

Certain of the Fake Revenue Agreements never existed at all, while others were falsified versions of genuine revenue agreements.  PIERCE fabricated the terms of the false versions of the agreements to make them more favorable to Quintillion and, therefore, more appealing to investors than the genuine agreements.  For example, under one of the Fake Revenue Agreements, the customer purportedly agreed to buy from Quintillion increasing quantities of gigabits per second of capacity over a period of 20 years.  That agreement, if genuine, would have assured Quintillion hundreds of millions of dollars in future revenue.  In reality, negotiations over that deal had ended unsuccessfully, a fact that PIERCE never disclosed to the investors.  Under another Fake Revenue Agreement, the customer purportedly agreed to buy a fixed, predetermined amount of capacity from Quintillion regardless of subsequent market conditions.  In truth, that customer was not obligated to buy any capacity.

Over the course of the scheme, PIERCE tried to cover up her fraud, by continuing to negotiate with the telecommunications companies in hopes of reaching agreements identical to the ones she forged.  Her efforts were mostly unsuccessful.  PIERCE completely failed to secure any revenue contract with one of those telecommunications companies, and the agreements she reached with the other three companies contained less favorable terms for Quintillion than the Fake Revenue Agreements, such as a smaller mandatory capacity purchase commitment, or no commitment at all.  PIERCE hid these genuine, but inferior, contracts from the investment companies and her own staff.  When Quintillion and the investment companies ultimately discovered the fraud in mid-2017, they learned that the real contracts PIERCE actually negotiated would generate only a fraction of the anticipated guaranteed revenue of the Fake Revenue Agreements she forged.

As part of PIERCE’s overall scheme, she also swindled two individual investors (together, the “Individual Victims”) out of a total of $365,000.  PIERCE led these individuals to believe that they would acquire ownership interests in Quintillion when, in fact, she used half of one victim’s money and all of the other victim’s investment for her own personal benefit.  These individuals have received no shares and none of their money back from PIERCE.

After the terrestrial system was built, PIERCE attempted to prevent the discovery of the Fake Revenue Agreements by accelerating the timing of incoming payments under certain genuine agreements to make those payments appear to be based on the Fake Revenue Agreements.  PIERCE also sought to prevent Quintillion from invoicing one of the customers that had no real contract with Quintillion by fabricating email correspondence that gave the impression she was terminating a contractual relationship, when in fact no such relationship existed.  PIERCE’s scheme started to unravel when another customer disputed invoices that it received from Quintillion pursuant to one of the Fake Revenue Agreements.  Shortly thereafter, in the midst of Quintillion’s internal investigation, PIERCE abruptly resigned.  Quintillion self-reported PIERCE’s conduct to the Department of Justice.

*                *                *

In addition to her term of imprisonment, PIERCE, age 55, now of Austin, Texas, was sentenced to three years of supervised release, and was ordered to forfeit $896,698.00 and all of her interests in Quintillion and a property in Texas.  PIERCE will also be subject to a restitution order to her victims to be entered at a later date.

Mr. Berman praised the outstanding work of the Federal Bureau of Investigation.

This case is prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Sarah Lai and Vladislav Vainberg are in charge of the prosecution.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JACQUELINE GRAHAM was convicted at trial on Wednesday, June 12, 2019, of participating in a conspiracy to commit bank fraud, wire fraud, and mail fraud in connection with a fraudulent debt-elimination scheme to defraud homeowners and banks.  GRAHAM was found guilty of the one count she faced after a two-week trial before U.S. District Judge Nelson S. Román.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Jacqueline Graham preyed on vulnerable homeowners who could not afford their mortgage payments during a time of crisis in the housing market.  Because of her greed, these homeowners ended up financially worse off than when they found her.  We will continue to work with our law enforcement partners to bring to justice those who victimize the vulnerable.”

According to the Indictment in the case and the evidence presented at trial:

From at least 2011 to at least 2012, JACQUELINE GRAHAM partnered with Bruce Lewis and John Ruzza in operating the Valhalla, New York-based Terra Foundation (“Terra”) – which was originally known as the Pillow Foundation – which held itself out as a business that would investigate and eliminate mortgage loans in exchange for fees, soliciting clients who were having difficulties making their mortgage payments.  In fact, however, Terra engaged in a wide-ranging scheme to defraud clients, county clerks’ offices, and banks.

The fraudulent scheme, which was created by GRAHAM and Lewis, involved Terra performing “audits” of clients’ mortgages, sending pseudo-legal paperwork to the banks and/or lenders holding the mortgages, and ultimately filing purported mortgage discharges with the relevant county clerks’ offices, which discharges were signed by Lewis or other co-conspirators, claiming falsely to represent the banks and/or mortgage lenders.  As a result, anyone doing a title search for one of Terra’s clients would see that the client’s mortgage had been satisfied.  The mortgages had not, however, been discharged, and the mortgages were eventually reinstated, after the clients paid their fees.

In order to effectuate the scheme, GRAHAM, Lewis, and Ruzza involved others, including Rocco Cermele, who was Terra’s director of operations and who recruited clients, among other duties; Paula Guadagno, who did real estate title work for, and filed discharges on behalf of, Terra; and Anthony Vigna, a lawyer and CPA who worked in Terra’s offices.

To profit from their scheme, GRAHAM and her co-conspirators charged various fees to Terra’s clients.

In total, GRAHAM and her co-conspirators filed over 60 fraudulent discharges in Westchester and Putnam Counties in New York, and in Connecticut.  The fraudulent discharges claimed to discharge mortgages with a total loan principal of nearly $38 million.

*                *                *

GRAHAM, 53, formerly of Levittown, Pennsylvania, was convicted of one count of conspiracy to commit bank fraud, wire fraud, and mail fraud.  The count carries a maximum sentence of 30 years in prison.  

Lewis, 67, formerly of Alaska and Washington State, pled guilty to one count of wire fraud relating to the Terra scheme, which carries a maximum sentence of 20 years in prison.

Vigna, 61, of Thornwood, New York, pled guilty to one count of participating in a conspiracy to commit bank fraud, wire fraud, and mail fraud relating to the Terra scheme, which carries a maximum sentence of five years in prison.

Cermele, 56, of Yonkers, New York, pled guilty to one count of participating in a conspiracy to commit mail, wire, and bank fraud, and one count of wire fraud, each relating to the Terra scheme, each of which carries a maximum potential sentence of 30 years in prison, and three additional counts of wire fraud relating to other crimes, each of which carries a maximum potential sentence of 20 years in prison.

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

All defendants are awaiting sentencing.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Berman also thanked the Office of the Westchester County District Attorney’s Office and the Department of Housing and Urban Development for their assistance in the case.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys David Felton, Michael Maimin, and James McMahon are in charge of the prosecutions.

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 today that DAVID WAGNER and MARC LAWRENCE were arrested this morning on securities fraud and wire fraud charges stemming from their operation of a number of corporate entities (collectively referred to as “Downing”) as a Ponzi-like scheme.  WAGNER and LAWRENCE solicited over $8 million from investors through materially false and misleading statements regarding, among other things, Downing’s financial condition, use of investor proceeds, sources of funding, ability to pay salaries to employee-investors, and investment portfolio.  Then, WAGNER and LAWRENCE misappropriated a significant portion of those funds and used them for, among other things, the payment of management fees, the repayment of prior investors, and personal expenses.   WAGNER was arraigned earlier today in the United States District Court for the District of Rhode Island and LAWRENCE will be presented later today in the United States District Court for the Middle District of Florida.  The case has been assigned to U.S. District Judge Ronnie Abrams.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, David Wagner and Marc Lawrence were no more scrupulous than practitioners of three-card Monte or the shell game, but for much higher stakes.  They allegedly offered employee-investors the opportunity to get in on the ground floor of a multimillion-dollar venture capital business, but what the employee-investors really got was fleeced.  Now Wagner and Lawrence are in custody and facing serious criminal charges.”

FBI Assistant Director William F. Sweeney Jr. said:  “Wagner and Lawrence sought money up front from employee investors who believed their principals were acting in good faith.  It turns out, as we allege, they were not.  The ones who stood to lose the most in this scheme knew the least about the risks they were taking.  Illegal investment schemes of any kind will ultimately be faced with intense scrutiny, especially those that aim to capitalize on the losses of others.”

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

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

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

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

Finally, in or about January 2017, WAGNER obtained a $400,000 loan and $100,000 grant from the Connecticut Department of Economic and Community Development (“CTDECD”) for Cliniflow on the basis of materially false statements made by WAGNER to the CTDECD.  WAGNER transferred a majority of the funds obtained from the State of Connecticut, which were required to be used for Cliniflow’s purported relocation from New York to Connecticut, to other Downing entities and also used a portion of the funds to purchase a luxury car for his daughter.

*                      *                      *

WAGNER, 54, of East Greenwich, Rhode Island, and LAWRENCE, 54, of St. Petersburg, Florida, are each charged in five counts – namely, two counts of securities fraud, one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, and one count of wire fraud.  Conspiracy to commit securities fraud carries a maximum sentence of five years in prison.  Each of other charges carries a maximum sentence of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.

Mr. Berman praised the work of the FBI, and thanked the United States Securities and Exchange Commission and the Enforcement Section of the Massachusetts Securities Division for their assistance. 

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

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

 

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

Geoffrey S. Berman, 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 the unsealing of a federal indictment charging VANCE COLLINS, a/k/a “Big AK,” 50, and RAMON RAMIREZ, a/k/a “Obendy,” 48, with hiring a hitman to murder an individual believed to be having an affair with RAMIREZ’s wife.  COLLINS was arrested this morning in the Bronx and RAMIREZ was arrested this morning in Staten Island.  The target of their murder-for-hire plan was not killed.  Both defendants were presented this afternoon before United States Magistrate Judge Katharine H. Parker and detained.  The case has been assigned to United States District Judge P. Kevin Castel.

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the indictment, Vance Collins and Ramon Ramirez put a price on another human’s life when they hired someone to kill a person believed to be having an affair with Ramirez’s spouse.  Thanks to the work of our remarkable law enforcement partners, Collins and Ramirez now stand charged in federal court for their alleged roles in this terrible crime.”

FBI Assistant Director William F. Sweeney Jr. said:  “Murder-for-hire cases are more common than one might think, and the FBI has a number of investigative resources and federal laws we can tap into to help us prevent these potential crimes.  But the fact that the plan allegedly concocted by Collins and Ramirez was ultimately unsuccessful shouldn’t overshadow the gravity of this situation – the intent was the same, regardless of the outcome.”    

According to the allegations in the Indictment[1]:

In or about late 2017, COLLINS and RAMIREZ hired another person to murder a man believed to be having an affair with RAMIREZ’s wife, and conspired to carry out this murder-for-hire plot from 2017 through 2018, in violation of 18 U.S.C. §§ 1958 and 2.  Each charge in the two-count indictment carries a maximum penalty of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

*                      *                     *

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

This case is being handled by the Office’s Violent and Organized Crime Unit and White Plains Division.  Assistant United States Attorneys Christopher Brumwell and Celia V. Cohen are in charge of the prosecution.               

 

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

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 today the indictment of ROLAND MATHYS for his participation in a scheme to trade on material, nonpublic information (the “Inside Information”) regarding a tender offer by Sanofi, S.A (“Sanofi”) for Bioverativ, Inc. (“Bioverativ”).  After the tender offer was announced, MATHYS’s trading yielded over $4.7 million in illegal profits.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Roland Mathys engaged in insider trading, and profited to the tune of nearly $5 million – until his scheme was exposed.  He allegedly used confidential information about a pending acquisition of a company to purchase call options in that company, knowing that the value of these options would balloon after the acquisition was publicly announced.  Working with the FBI and the SEC, we remain committed to policing the marketplace to take the profit out of cheating.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Every time someone engages in insider trading, they illegally stack investment odds in their favor.  Mathys’s alleged behavior is not only dishonorable, but illegal.  While this type of activity might initially prove profitable, in the long run there’s nothing to be gained.”

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

Background of Sanofi’s Tender Offer for Bioverativ

On November 3, 2017, Sanofi, a multinational pharmaceutical company headquartered in Paris, France, delivered to Bioverativ, a multinational biotechnology company headquartered in Waltham, Massachusetts, a non-binding proposal offering to acquire all outstanding shares of Bioverativ at a price of $98.50 per share in cash.  Bioverativ specialized in the development and commercialization of therapies for the treatment of hemophilia, and its stock was traded under the ticker symbol “BIVV” on the NASDAQ Stock Exchange.  On December 5, 2017, Sanofi and Bioverativ entered into a confidentiality agreement regarding the acquisition negotiations.  On December 18, 2017, representatives of Sanofi and Bioverativ met in New York, New York, for a management presentation, which included a review of Bioverativ’s business, products and pipeline, operations, and projections.  On January 4, 2018, Sanofi indicated that it would be willing to pursue an acquisition of Bioverativ at a price of $105 per share, subject to Sanofi’s successful completion of due diligence and Bioverativ’s agreement to engage exclusively with Sanofi.  On January 6, 2018, Sanofi and Bioverativ executed an exclusivity agreement, which provided Sanofi with the right, through January 26, 2018, to negotiate exclusively the potential acquisition of all the outstanding shares of Bioverativ at the price of $105 per share.

The Sanofi Executive Acquires Inside Information About the Acquisition of Bioverativ and Discloses it to his Family Member

By January 7, 2018, Individual-1, in connection with his employment as an executive vice president at Sanofi, learned that an acquisition of Bioverativ by Sanofi was being negotiated, that such an acquisition was likely to happen, and that such an acquisition would take place in the near future, which Inside Information he had a duty to keep confidential.  On or about January 8, 2018, during a telephone conversation, Individual-1 disclosed to his family member, Individual-2, Inside Information regarding Sanofi’s planned acquisition of Bioverativ. Specifically, Individual-1 told Individual-2, in sum and substance, that Sanofi was acquiring a Boston-based biotech company involved in developing a hemophilia drug.

Individual-2 Discloses Inside Information about the Acquisition of Bioverativ to MATHYS

Between January 8, 2018, and January 12, 2018, Individual-2 disclosed to his friend MATHYS Inside Information regarding Sanofi’s planned acquisition and the fact that Individual-2 had learned the Inside Information from Individual-1.  Based on MATHYS’s prior dealings with Individual-1, MATHYS knew that Individual-1 was an executive vice president at Sanofi.

From January 12, 2018, through on January 19, 2018, MATHYS purchased approximately 1,607 Bioverativ call option contracts, all with an expiration date of February 16, 2018, for a total purchase price of approximately $170,071.  MATHYS’s purchases constituted a significant percentage of the trading in Bioverativ call options on each day, as shown in the table below.

Date of purchase

Number of call option contracts purchased

Strike price

Average premium paid

Percentage

of trading

by MATHYS

1/12/18

342

$65

$2.44

75%

1/12/18

370

$70

$0.79

82%

1/12/18

100

$75

$0.59

96%

1/16/18

100

$75

$0.80

97%

1/17/18

20

$65

$2.29

32.2%

1/17/18

100

$75

$0.50

95%

1/18/18

300

$75

$0.59

100%

1/19/18

275

$75

$0.56

50%

 

The Acquisition is Announced, and Bioverativ’s Share Price Increases by Approximately 62%

On the evening of Sunday, January 21, 2018, Sanofi and Bioverativ entered into a merger agreement (the “Merger Agreement”).  Pursuant to the Merger Agreement, Sanofi would commence a tender offer no later than 15 business days after the date of the Merger Agreement, to acquire all of the outstanding shares of common stock of Bioverativ, at a purchase price of $105.00 per share (the “Tender Offer”), which represented a premium of approximately 64% over Bioverativ’s closing price the prior trading day.

On the morning of Monday, January 22, 2018, prior to the opening of the financial markets in Paris and New York, Sanofi and Bioverativ issued a joint press release announcing the signing of the Merger Agreement (the “Announcement”).

On January 22, 2018, following the Announcement, Bioverativ shares opened trading at $104.21 per share, reached an intra-day high of $104.30 per share, and closed at $103.79 per share, an increase of approximately 62% over the closing price on the prior trading day.  Since Bioverativ shares had begun trading on the NASDAQ in January 2017, they had never closed at or above $64.12.

MATHYS’s Insider Trading Generates an Illicit Profit of Over $4.7 Million

On January 22, 2018, MATHYS sold all the Bioverativ call option contracts that had a strike price of $65 or $70, for a net profit of approximately $2,518,622.70.  On January 23 and 26, 2018, he sold 325 Bioverativ call option contracts with a strike price of $75, for a net profit of approximately $711,000.81.

On January 26, 2018, at the request of his relationship manager at Credit Suisse, Ltd. (the “Relationship Manager”), MATHYS executed a declaration in which he represented that his transactions in Bioverativ call options were based only on publicly available information and/or personal market analysis, and that no Inside Information was used.  MATHYS also stated to the Relationship Manager that MATHYS was extremely surprised by the developments relating to Bioverativ, that he had nothing to do with Bioverativ or Sanofi, and that he did not have any information relating to Bioverativ’s acquisition when he purchased Bioverativ options.  

On February 8, 2018, the Securities and Exchange Commission (the “SEC”) obtained a preliminary injunction freezing the approximately $3,229,623.51 in proceeds that MATHYS had generated from selling a portion of the Bioverativ call options (the “Preliminary Injunction”).  On February 16, 2018, pursuant to a court order, the SEC directed the liquidation of the remaining 550 Bioverativ call option contracts, which resulted in net profits of approximately $1,568,732.47, which were also frozen pursuant to the Preliminary Injunction.

Between February 8, 2018, and February 10, 2018, MATHYS acknowledged to Individual-2, in sum and substance, that MATHYS had traded in Bioverativ based on the Inside Information that MATHYS had obtained from Individual-2.

*                    *                    *

MATHYS, 32, is a citizen and resident of Switzerland.

MATHYS is charged with one count of fraud in connection with a tender offer, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the Court.  The case has been assigned to U.S. District Judge Denise Cote.

Mr. Berman praised the work of the FBI, and thanked the SEC for its assistance.

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

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, David Bernhardt, the United States Secretary of the Interior, and Christopher T. Tersigni, the Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that MOAZU KROMAH, a/k/a “Ayoub,” a/k/a “Ayuba,” a/k/a “Kampala Man,” AMARA CHERIF, a/k/a “Bamba Issiaka,” MANSUR MOHAMED SURUR, a/k/a “Mansour,” and ABDI HUSSEIN AHMED, a/k/a “Abu Khadi,” were charged in an indictment for participating in a conspiracy to traffic in rhinoceros horns and elephant ivory, both protected wildlife species, valued at more than $7 million that involved the illegal poaching of more than approximately 35 rhinoceros and more than approximately 100 elephants.  In addition, KROMAH, CHERIF, and SURUR were charged with conspiracy to commit money laundering, and SURUR and AHMED were charged with participating in a conspiracy to distribute and possess with intent to distribute more than 10 kilograms of heroin.  KROMAH, a citizen of Liberia, was arrested in Uganda on June 12, 2019, and expelled to the United States.  He was arraigned before U.S. Magistrate Judge Katharine H. Parker earlier today and detained.  CHERIF, a citizen of Guinea, was arrested in Senegal on June 7, 2019, and remains in custody in Senegal pending a process through which his extradition, deportation or other lawful removal to the United States is being considered by Senegalese authorities.  SURUR and AHMED, both citizens of Kenya, remain fugitives.  The case has been assigned to U.S. District Judge Gregory H. Woods.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants are members of an international conspiracy to traffic in not only heroin but also rhino horns and elephant ivory.  The alleged enterprise, responsible for the illegal slaughter of dozens of rhinos and more than 100 elephants, was as destructive to protected species as it was lucrative.  The excellent work of the Fish and Wildlife Service and the DEA has put the brakes on an operation that allegedly peddled dead protected species and potentially deadly narcotics.”           

Secretary of the Interior David Bernhardt said:  “Wildlife trafficking will not be tolerated. It is often intertwined with other major types of criminal activity including conspiracy, smuggling, money laundering and narcotics – all of which are included in the indictment today.  The U.S. Department of the Interior remains committed to combating the illegal wildlife trade through the END Wildlife Trafficking Act and the President’s Executive Order on Transnational Organized Crime.  I would like to thank the U.S. Fish and Wildlife Service Office of Law Enforcement, U.S. Attorney’s Office, U.S. Department of Justice, and others who help bring wildlife traffickers, and other criminals, to justice.  Together, we can protect some of the world’s most iconic species while ensuring the safety and livelihood of the American people.”  

DEA Special Agent in Charge Christopher T. Tersigni said:  “DEA’s global investigations with our foreign counterparts often involve transnational criminal networks involved in a wide array of unlawful acts – from drug trafficking to conspiring to commit acts of terror to international money laundering to human trafficking – that undermine the rule of law everywhere.  These suspected criminal masterminds not only conspired to traffic huge amounts of heroin to New York, but also directed a multimillion-dollar poaching scheme to traffic in rhinoceros horns and elephant ivory – both endangered wildlife species.  DEA investigations throughout the world consistently illustrate the lengths and heinous acts these global criminal individuals and networks will commit to further their illicit enterprises.”

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

KROMAH, CHERIF, SURUR, and AHMED were members of a transnational criminal enterprise (the “Enterprise”) based in Uganda and surrounding countries that was engaged in the large-scale trafficking and smuggling of rhinoceros horns and elephant ivory, both protected wildlife species.  Trade involving endangered or threatened species violates several U.S. laws, as well as international treaties implemented by certain U.S. laws.

From at least in or about December 2012 through at least in or about May 2019, KROMAH, CHERIF, SURUR, and AHMED conspired to transport, distribute, sell, and smuggle at least approximately 190 kilograms of rhinoceros horns and at least approximately 10 tons of elephant ivory from or involving various countries in East Africa, including Uganda, the Democratic Republic of the Congo, Guinea, Kenya, Mozambique, Senegal, and Tanzania, to buyers located in the United States and countries in Southeast Asia.  Such weights of rhinoceros horn and elephant ivory are estimated to have involved the illegal poaching of more than approximately 35 rhinoceros and more than approximately 100 elephants.  In total, the estimated average retail value of the rhinoceros horn involved in the conspiracy was at least approximately $3.4 million, and the estimated average retail value of the elephant ivory involved in the conspiracy was at least approximately $4 million.

Typically, the defendants exported and agreed to export the rhinoceros horns and elephant ivory for delivery to foreign buyers, including those represented to be in Manhattan, in packaging that concealed the rhinoceros horns and elephant ivory in, among other things, pieces of art such as African masks and statues.  The defendants received and deposited payments from foreign customers that were sent in the form of international wire transfers, some which were sent through U.S. financial institutions, and paid in cash.

On a number of occasions, KROMAH, SURUR, and AHMED met with a confidential source (“CS-1”), both together and separately, concerning potential purchases of elephant ivory and rhinoceros horn.  During these meetings and at other times via phone calls and an electronic messaging application, CS-1 discussed with KROMAH, SURUR, and AHMED, in substance and in part, the terms of the sale, including the price, weight, or size of the rhinoceros horns, payment, destination, and delivery options.  CS-1 also discussed with CHERIF via phone calls and electronic messages, in substance and in part, the terms of the sales, as well as how to send payment for the rhinoceros horns from a United States bank account located in Manhattan.  On or about March 16, 2018, law enforcement agents intercepted a package containing a black rhinoceros horn sold by the defendants to CS-1 that was intended for a buyer represented to be in Manhattan.  From in or about March 2018 through in or about May 2018, the defendants offered to sell CS-1 additional rhinoceros horns of varying weights, including horns weighing up to seven kilograms.  On or about July 17, 2018, law enforcement agents intercepted a package containing two white rhinoceros horns sold by the defendants to CS-1 that was intended for a buyer represented to be in Manhattan.  

Separately, from at least in or about August 2018 through at least in or about May 2019, SURUR and AHMED conspired to distribute and possess with intent to distribute more than approximately 10 kilograms of heroin to a buyer represented to be located in New York.

                                                            *                      *                      *

KROMAH, 49, CHERIF, 54, SURUR, 59, and AHMED, 56, are each charged with one count of conspiracy to commit wildlife trafficking and two counts of wildlife trafficking, each of  which carries a maximum sentence of five years in prison.  KROMAH, CHERIF, and SURUR are also each charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years.  Finally, SURUR and AHMED are each charged with one count of conspiracy to distribute and possess with intent to distribute one kilogram or more of heroin, which carries a maximum sentence of life imprisonment, and a mandatory minimum sentence of 10 years’ imprisonment.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the United States Fish and Wildlife Service and the DEA, and he thanked law enforcement authorities and conservation partners in Uganda for their assistance in the investigation.  Mr. Berman also thanked the U.S. Department of Justice’s Office of International Affairs for their assistance and noted that the investigation is continuing. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Sagar K. Ravi and Jarrod L. Schaeffer 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.

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment and its description set forth below 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, Angel M. Melendez, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), and James P. O’Neill, the Police Commissioner of the City of New York (“NYPD”), announced that CLAUDIUS ENGLISH was convicted yesterday of multiple counts of sex trafficking minors, attempted sex trafficking of minors as young as 8 years old, kidnapping of a minor, and using a firearm to commit the kidnapping.

U.S. Attorney Geoffrey S. Berman said:  “As a unanimous jury determined without hesitation, Claudius English engaged in a predatory reign of terror and exploitation of children – girls as young as 8 years old.  Thanks to HSI and the NYPD, English now awaits a lengthy prison sentence.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “English chose a business of preying on children as young at 8 and exploiting their innocence, forcing them to have sex with his already established clientele.  He carried out his predatory acts and targeted minors on the internet, once again highlighting the importance of internet safety.  The heinous acts of this individual robbed his victims of their childhood, and this guilty verdict will ensure that he faces time for his criminal actions.”

NYPD Commissioner James P. O’Neill said:  “The NYPD is committed to ensuring child predators are taken off our streets; we will continue working tirelessly to bring them to justice.  We remain committed to working with our law enforcement partners to ensure that individuals who engage in these reprehensible crimes are held accountable for the misery and anguish they cause.”

According to the evidence presented during the trial:

In 2013, CLAUDIUS ENGLISH sex trafficked multiple minor victims out of his apartment in the Bronx.  ENGLISH used the Internet to find, recruit, and lure minor victims to his apartment, where he photographed them in sexually suggestive poses.  ENGLISH then sent these photographs to his regular clients, and created advertisements that he posted on Backpage.  ENGLISH arranged for his clients to pay for sex with at least four minor victims who testified at trial.  Additionally, for one of his clients, ENGLISH took substantial steps to obtain and sex traffic girls as young as 13, 11, and 8. 

On November 15, 2013, ENGLISH lured a 14-year-old girl from New Jersey to his apartment for the purpose of selling her for sex.  When the victim resisted and said she wanted to leave, ENGLISH pointed a loaded gun at her head and refused.  After several hours, the victim convinced ENGLISH to accompany her outside.  Even though ENGLISH brought his gun with him, the victim ran away and called 911.  NYPD officers responded promptly enough that the victim was able to lead them back to ENGLISH’s apartment, where ENGLISH was caught trying to flee. 

*                      *                      *

ENGLISH, 45, of Bronx, New York, was convicted of conspiracy to commit sex trafficking of minors (COUNT ONE), four counts of sex trafficking of minors (COUNTS TWO, THREE, FOUR, and EIGHT), three counts of attempted sex trafficking of minors (COUNTS FIVE, SIX, and SEVEN), kidnapping a minor (COUNT NINE), and the use of a firearm in furtherance of the kidnapping (COUNT TEN).  ENGLISH faces a statutory maximum sentence of life, and a mandatory minimum sentence of 27 years. 

Mr. Berman praised the outstanding investigative work of HSI and NYPD, and expressed gratitude for the efforts of HSI’s New York Trafficking in Persons Unit.  Mr. Berman also expressed gratitude to the Bronx County District Attorney’s Office.   

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Michael K. Krouse, Ni Qian, and Frank Balsamello are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that WOOJAE JUNG, a/k/a “Steve Jung,” was sentenced in Manhattan federal court by U.S. District Judge Lewis A. Kaplan to three months in prison for insider trading.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Woojae Jung used material nonpublic information stolen from his investment bank employer to net nearly $130,000 in illegal gains.  His conviction and sentence signal that those who aim to profit by stealing confidential information from their employers and clients will be held accountable.  Our Office will continue to fight insider trading to protect the integrity of the marketplace.”

According to the Indictment, the allegations in the Complaint, and statements made during the proceedings in Manhattan federal court:

WOOJAE JUNG, a/k/a “Steve Jung,” worked at an investment bank (the “Investment Bank”) that provided, among other services, financing and consulting to clients in connection with mergers, acquisitions, and corporate restructurings.  The Investment Bank has offices around the world, including in New York, New York, and San Francisco, California.  JUNG was a vice president.  In his role as a vice president at the Investment Bank, JUNG had access to, among other materials, electronic files maintained on the Investment Bank’s computer server, including files containing material nonpublic information (“MNPI”) relating to various clients.

JUNG used his position at the Investment Bank to obtain MNPI about a number of the Investment Bank’s clients and then, in multiple instances, JUNG used that MNPI to execute profitable securities trades.  In an effort to conceal this illicit trading, JUNG conducted these illegal trades through a brokerage account held in the name of another person (the “Brokerage Account”).  In contravention of his employer’s rules about outside investment accounts, including that such accounts be disclosed to the Investment Bank, JUNG secretly accessed, used, and traded in the Brokerage Account repeatedly between in or about 2015 and in or about 2017, including on hundreds of occasions when the account was accessed through IP addresses subscribed in JUNG’s name.

Over the course of the scheme JUNG traded in the securities of at least 10 companies based on MNPI and made more than approximately $130,000.

*                *                *

In addition to the prison sentence, Judge Kaplan sentenced JUNG, 38, of San Francisco, California, to two years of supervised release and ordered him to pay a $30,000 fine and to forfeit $130,000.

Mr. Berman praised the outstanding work of the Federal Bureau of Investigation.  He also thanked the Securities and Exchange Commission, which previously filed civil charges against JUNG in a separate action.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JAMES MOORE was convicted at trial last Friday of wire fraud and conspiracy for engaging in a scheme to defraud investors by making material misrepresentations about the management and operations of a company called Bar Works Inc. and related entities (“Bar Works”).  MOORE was found guilty on June 7, 2019, of both counts he faced, after a one-week trial before the U.S. District Judge Richard M. Berman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “James Moore was part of a ring of insiders who helped conceal that Bar Works was run by a known fraudster.  Innocent and unaware investors lost millions of dollars thanks to his contributions to the scheme.  We will continue to work with our law enforcement partners to bring to justice those who prey upon the investing public.”

According to the Complaint and Indictment in the case and evidence presented at trial:

From 2015 to 2016, MOORE and others partnered with Renwick Haddow, who is also a British citizen, in soliciting investments into workspace leases in a co-working business called Bar Works through material misrepresentations concerning, among other things, the identity of Bar Works’ management.  Previously, Haddow had been disqualified as a director of any United Kingdom company for eight years, and was sued by the Financial Conduct Authority, a British regulator, for operating investment schemes that lost investors substantially all of their money.  These sanctions and lawsuit were publicized extensively online.

In order to conceal his role at Bar Works because of the negative publicity on the internet related to past investment schemes and government sanctions in the U.K., Haddow adopted the alias “Jonathan Black.”  Notwithstanding Haddow’s control over Bar Works, MOORE and others knowingly distributed the Bar Works offering materials listing Black as the Chief Executive Officer of Bar Works and claiming that Black had an extensive background in finance and past success with start-up companies.  As MOORE well knew, “Jonathan Black,” was an entirely fictitious person, created to mask Haddow’s control of Bar Works.  Among other things, MOORE helped devise pitch materials that contained the misrepresentation, coordinated a substantial sales force to recruit investors knowing that the materials contained the falsehood, advised Haddow as to how to continue to conceal the truth concerning the identity of “Jonathan Black,” and affirmatively represented to agents for investors that he was communicating with CEO “Jonathan Black.”  MOORE also received in excess of $1.6 million in commissions for his participation in the scheme.

Last month, U.S. Attorney Berman announced the unsealing of a guilty plea, on May 8, 2019, by Haddow in which he admitted to his own involvement in the fraudulent scheme related to Bar Works, as well as to making material misrepresentations and misappropriating investment funds in another company created by Haddow called Bitcoin Store Inc. (“Bitcoin Store”), and agreed to cooperate with the Government.  Haddow’s case has been assigned to U.S. District Judge Laura Taylor Swain.

Further, last month Mr. Berman also announced the unsealing of charges against

Savraj Gata-Aura, another citizen of the United Kingdom, in connection with the same scheme.  As alleged in the Superseding Indictment containing those charges, Gata-Aura also partnered with Haddow in soliciting investments into workspace leases through material misrepresentations similar to MOORE’s by affirmatively misrepresenting that “Jonathan Black” ran the company.  Overall, the scheme is believed to have fraudulently raised more than $50 million from unwitting investors.

*                *                *

MOORE, 58, of the United Kingdom and Miami, Florida, was convicted of one count of wire fraud and one count of wire fraud conspiracy.  Each charge carries a maximum sentence of 20 years in prison.

Savraj Gata-Aura, a/k/a “Sam Aura,” 33, of the United Kingdom and New York City, has been charged with one count of wire fraud and one count of wire fraud conspiracy relating to the Bar Works scheme.  Each charge carries a maximum sentence of 20 years in prison.

Haddow, 50, pled guilty to one count each of wire fraud and wire fraud conspiracy relating to the Bar Works scheme, and one count each of wire fraud and wire fraud conspiracy relating to the Bitcoin Store scheme.  Each charge carries a maximum sentence of 20 years in prison.

The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the respective judges.  The charges against Gata-Aura are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

Mr. Berman praised the investigative work of the FBI and thanked the Securities and Exchange Commission, which has separately brought civil actions against MOORE, Haddow, and Gata-Aura, for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Vladislav Vainberg and Martin S. Bell are in charge of the prosecution.   

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LAMONT EVANS, a former assistant men’s basketball coach at the University of South Carolina (“South Carolina”) and Oklahoma State University (“OSU”), and EMANUEL RICHARDSON, a/k/a “Book,” a former assistant men’s basketball coach at the University of Arizona (“Arizona”), were each sentenced to three months in prison, and that ANTHONY BLAND, a/k/a “Tony,” a former assistant men’s basketball coach at the University of Southern California (“USC”), was sentenced to a term of probation, each for accepting cash bribes from athlete advisers in exchange for using their influence over the student-athletes they coached to retain the services of the advisers paying the bribes.  The defendants were sentenced this week in Manhattan federal court by U.S. District Judge Edgardo Ramos.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Anthony Bland, Emanuel Richardson, and Lamont Evans, all former men’s basketball coaches at NCAA Division I universities, abused their positions as mentors and coaches for personal gain.  They took bribes from unscrupulous agents and financial advisers to steer their players to those agents and advisers.  For their crimes, Richardson and Evans will serve time in federal prison, while Bland will serve a sentence of probation.  These convictions and sentencings send a strong message that bribery in the world of college basketball is a crime, and that those who participate in such crimes will be held accountable for their corrupt actions.”

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

Overview of the Scheme

The U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation (“FBI”) have been investigating the criminal influence of money on coaches and student-athletes who participate in intercollegiate basketball governed by the NCAA.  The investigation revealed that numerous basketball coaches at NCAA Division I universities, including EVANS, RICHARDSON, and BLAND, received bribes and agreed to receive bribes in exchange for agreeing to pressure and exert influence over student-athletes under their control to retain the services of the bribe payers, including Christian Dawkins, Merl Code, and Munish Sood, once the athletes entered the National Basketball Association (“NBA”).  

Beginning in 2016, and continuing into September 2017, when EVANS was arrested, EVANS received approximately $22,000 in cash bribes from current and aspiring financial advisers and/or managers, including Dawkins and Sood, in exchange for EVANS’s agreement to exert his influence over certain student-athletes EVANS coached at South Carolina and OSU to retain the services of the bribe payers once those players entered the NBA.  In one meeting recorded during the investigation, EVANS explained how “every guy I recruit and get is my personal kid,” and that “the parents believe in me and what I do . . . that’s why I say, if I need X, so if I do take X for that, it’s going to generate [business] toward you guys,” referring to the bribe payers.  EVANS also stated in a call recorded during the investigation how this arrangement was “generating more wealth” for the scheme participants, because they were “able to scratch my back, scratch yours, and help each other with different things and . . . at the same time get compensated and then . . . just go from there.”  In return for the cash bribes EVANS received, EVANS, including at in-person meetings, attempted to pressure a player at OSU, and a relative of a different player attending South Carolina, into retaining the financial services of the bribe payers.

Beginning in or around February 2017, and continuing into September 2017, when RICHARDSON was arrested, RICHARDSON received approximately $20,000 in cash bribes from Dawkins and Sood in exchange for RICHARDSON’s agreement to exert his influence over certain student-athletes RICHARDSON coached at Arizona to retain the services of Dawkins and Sood once those players entered the NBA.  For example, in discussing his commitment to steering Arizona players to retain the bribe payers upon entering the NBA, RICHARDSON told an undercover FBI agent and others, during a recorded meeting, “I used to let kids talk to three or four guys, but I was like, why would you do that?  You know that’s like taking a kid to a BMW dealer, a Benz dealer, and a Porsche dealer.  They like them all . . . You have to pick for them.”  In return for the cash bribes RICHARDSON received, RICHARDSON facilitated a meeting between the bribe payers, including Dawkins and Sood, and a relative of a player attending Arizona for the purpose of pressuring that player to retain the financial services of the bribe payers.

Beginning in or around July 2017, and continuing into September 2017, when BLAND was arrested, Dawkins paid a cash bribe to BLAND in exchange for BLAND’s agreement to exert his influence over certain student-athletes BLAND coached at USC,  and to retain Dawkins’s and Sood’s business management and/or financial advisory services once those players entered the NBA.  In particular, as BLAND told Dawkins and Sood during a recorded meeting, in return for their bribe payment, “I definitely can get the players. . . .  And I can definitely mold the players and put them in the lap of you guys.”  As part of the scheme, BLAND facilitated a meeting between Dawkins and Sood and a relative of a player attending USC, and a meeting between Dawkins and Sood and a relative of a USC recruit, both for the purpose of pressuring those players to retain the financial services of Dawkins and Sood.

*                *                *

In addition to the prison sentences, Judge Ramos ordered LAMONT EVANS, 41, of Deerfield Beach, Florida, to pay forfeiture in the amount of $22,000, EMANUEL RICHARDSON, 46, of Tucson, Arizona, to pay forfeiture in the amount of $20,000, and ANTHONY BLAND, 39, of Gardena, California, to pay forfeiture in the amount of $4,100.  Each of the three defendants was sentenced to two years of supervised release, and EVANS and BLAND were also each sentenced to 100 hours of community service.

Christian Dawkins and Merl Code were each found guilty by a unanimous jury on May 8, 2019, of one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison.  Dawkins was also convicted of an additional count of bribery, which carries a maximum sentence of 10 years in prison.  Sentencing is scheduled for August 15, 2019, before Judge Ramos.

Munish Sood, a financial adviser, previously pled guilty, pursuant to a cooperation agreement with the Government, in connection with this scheme and is awaiting sentence. 

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 that MUFTAU ADAMU, a/k/a “Muftau Adams,” a/k/a “Muftau Iddrissu,” was sentenced today to 51 months in prison in connection with a fraud scheme based in the Republic of Ghana (“Ghana”) involving the theft of over $10 million through business email compromises and romance scams that targeted elderly victims from at least 2014 through 2018.  ADAMU pled guilty to conspiracy to commit wire fraud on February 12, 2019, before U.S. Magistrate Judge Kevin Nathaniel Fox.  U.S. District Judge Denise L. Cote imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Muftau Adamu and his co-defendants conspired with others in Ghana to steal millions of dollars from businesses and vulnerable individuals across the United States through business email compromises and romance scams.  Today’s sentencing sends a message that those who facilitate frauds will face significant time in jail.  We will continue to work with our law enforcement partners to investigate and prosecute such fraud schemes, no matter where they originate.”

According to allegations in the Complaints and the Indictment filed in the case:

Between 2014 and 2018, ADAMU, TOUREY AHMED RUFAI, a/k/a “Joe Thompson,” a/k/a “Joe Terry,” a/k/a “Rufai A Tourey,” a/k/a “Ahmed Rufai Tourey,” and PRINCE NANA AGGREY were members of a criminal enterprise (the “Enterprise”) based in Ghana that committed a series of business email compromises and romance scams against individuals and businesses located across the United States, including in the Southern District of New York. 

The objective of the Enterprise’s business email compromise fraud scheme was to deceive businesses into wiring funds into accounts controlled by the Enterprise.  First, members of the Enterprise created email accounts with slight variations of email accounts used by employees of a victim company or third parties engaged in business with a company to “spoof” or impersonate those employees or third parties.  These fake email accounts were specifically designed to trick other employees of the company with access to the company’s finances into thinking the fake email accounts were authentic.  The fake email accounts were used to send instructions to wire money to certain bank accounts and also included fake authorization letters for the wire transfers that contained forged signatures of company employees.  By using this method of deception, the Enterprise sought to trick the victims into transferring hundreds of thousands of dollars to bank accounts the victims believed were under the control of legitimate recipients of the funds as part of normal business operations, when, in fact, the bank accounts were under the control of members of the Enterprise, including ADAMU, RUFAI, and AGGREY.

The Enterprise conducted the romance scams by using electronic messages sent via email, text messaging, or online dating websites that deluded the victims, many of whom were vulnerable men and women over the age of 60 who lived alone, into believing the victim was in a romantic relationship with a fake identity assumed by members of the Enterprise.  Once members of the Enterprise had gained the trust of the victims using the fake identity, they used false pretenses to cause the victims to wire money to bank accounts the victims believed were controlled by their romantic interests, when, in fact, the bank accounts were controlled by members of the Enterprise.  At times, the members of the Enterprise also used false pretenses to cause the victims to receive funds into the victims’ bank accounts, which, unbeknownst to the victims, were fraud proceeds, and to transfer those funds to accounts under the control of members of the Enterprise.  The members of the Enterprise, posing as the romantic interest of the victims, also introduced the victims to other individuals purporting to be, for example, consultants or lawyers, who then used false pretenses to cause the victims to wire money to bank accounts controlled by members of the Enterprise. 

ADAMU, RUFAI, AGGREY, and their co-conspirators received or otherwise directed the receipt of more than $10 million in fraud proceeds from victims of the Enterprise in bank accounts that they controlled in the Bronx, New York.  Some of these bank accounts were opened using fake names, stolen identities, or shell companies in order to avoid detection and hide the true identities of the members of the Enterprise controlling those accounts.  Once the defendants received the fraud proceeds in bank accounts under their control, the defendants withdrew, transported, and laundered those fraud proceeds to other members of the Enterprise, including those located in Ghana.     

*                      *                      *

In addition to the prison term, ADAMU, 30, of the Bronx, New York, was sentenced to three years of supervised release and ordered to forfeit $114,281.51 and pay restitution of $443,000 to victims. 

RUFAI, 33, of the Bronx, New York, pled guilty to conspiracy to commit wire fraud on  January 9, 2019, and was sentenced by Judge Cote on April 12, 2019, to 48 months in prison, three years of supervised release, and ordered to forfeit $109,868.61 and pay restitution of $320,449.97 to victims. 

AGGREY, 43, of the Bronx, New York, pled guilty to conspiracy to commit wire fraud on January 28, 2019, and was sentenced by Judge Cote on May 10, 2019, to 30 months in prison, three years of supervised release, and ordered to forfeit $71,595.60 and pay restitution of $431,884.00 to victims. 

U.S. Attorney Berman praised the outstanding investigative work of the Federal Bureau of Investigation (“FBI”) and the Internal Revenue Service, Criminal Investigation.  Mr. Berman also thanked U.S. Customs and Border Protection, Ghana’s Economic and Organised Crime Office, and the FBI Legal Attaché in Accra, Ghana, for their helpful assistance with the investigation.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Angel M. Melendez, the Special Agent in Charge of the New York Office of the U.S. Department of Homeland Security, Homeland Security Investigations (“HSI”), and Troy Miller, Director, Field Operations, New York, U.S. Customs and Border Protection (“CBP”), announced today the filing of criminal and civil charges against JOSEPH BAILEY, the CEO of a children’s apparel company headquartered in Manhattan.  BAILEY was charged, in an indictment unsealed today, with participating in a years-long scheme to defraud U.S. Customs and Border Protection (“CBP”) by submitting invoices to CBP that falsely understated the true value of the goods his company imported into the United States.  BAILEY’s scheme resulted in the loss of over $1 million in duty revenue to the United States.

BAILEY was arrested today, and will be presented before Chief U.S. Magistrate Judge Gabriel W. Gorenstein in Manhattan federal court later today.  The criminal case has been assigned to U.S. District Judge William H. Pauley III.  In addition, a civil fraud lawsuit against BAILEY and his companies, Stargate Apparel, Inc. (“STARGATE”) and Rivstar Apparel, Inc. (“RIVSTAR”), which is assigned to U.S. District Judge J. Paul Oetken, was unsealed in Manhattan federal court earlier today.  The civil complaint, which was filed on April 19, 2019, under seal, asserts that BAILEY, STARGATE, and RIVSTAR violated the False Claims Act by submitting invoices to CBP that falsely understated the true value of the goods they imported into the United States.  The conduct in this matter was first brought to the attention of federal law enforcement by a whistleblower who filed a lawsuit under the False Claims Act.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Joseph Bailey defrauded the United States by several schemes with one theme – misrepresenting the value of imported goods to avoid payment of customs duties.  Bailey now faces criminal charges for his alleged fraud, and the government’s civil suit seeks treble damages and penalties against Bailey and his companies.”

HSI Special Agent in Charge Angel M. Melendez said:  “Bailey is alleged to have undervalued imported goods, leading to a loss to the government of more than a million dollars in duty revenue.  It is important to remember that customs fraud is not a victimless crime, as it affects legitimate trade and business.  Trade enforcement is a priority for HSI, and we will continue to partner with CBP as we investigate those fraudsters and bring them to justice.”

CBP Director of New York Field Operations Troy Miller said:  “U.S. Customs and Border Protection provided a critical link in an ongoing investigation that resulted in the takedown of an elaborate criminal enterprise.  It is through our interagency partnerships, and collaborative approaches like the one leading to today’s arrests, that law enforcement successfully combats modern criminal organizations.”

According to the allegations in the Government’s indictment and civil complaint[1]:

From in or about 2007 to in or about 2015, BAILEY and other employees of STARGATE engaged in a scheme fraudulently to understate the value of goods imported into the United States.  During the charged time period, STARGATE purchased much of its merchandise from a manufacturer located in China (“Manufacturer-1”).  Starting shortly after STARGATE began doing business with Manufacturer-1 in 2007, through approximately 2010, BAILEY and others at STARGATE engaged in a double-invoicing scheme by which STARGATE would receive two sets of invoices from Manufacturer-1 for the same shipment of goods.  One invoice, referred to as the “pay by” invoice, was significantly higher and reflected the actual price paid by STARGATE for the goods.  The second invoice reflected a significantly lower price for the goods and was presented to CBP.  This allowed STARGATE to pay a fraudulently lower amount of customs duties.

In approximately 2010, BAILEY and other employees of Stargate began a new variation of the customs fraud scheme, involving invoices for “sample” goods, by which Manufacturer-1 would send two separate sets of invoices for a given shipment that together reflected the true price STARGATE actually paid to Manufacturer-1 for a particular shipment of clothing.  The first invoice, typically entitled the “commercial invoice,” described the goods purchased and was submitted to CBP.  The second invoice purportedly reflected amounts paid by STARGATE for “sample” goods and was not submitted to CBP.  Sample goods are not subject to customs duties.

The “samples” invoice was not, in fact, for samples actually purchased by STARGATE. Rather, it was a means to make an additional payment to Manufacturer-1 for actual goods purchased by Stargate without disclosing that payment to CBP.  Typically, the “samples” invoices reflected a unit price for sample goods that was significantly greater than the unit price for the non-sample goods reflected on the invoice submitted to CBP (for example, $70-$90 per unit on the “samples” invoice versus a $4 per unit price on the “commercial invoice”).  In addition, the “samples” invoice reflected the purchase of unusually large quantities of sample goods.  For example, the “samples” invoice reflected quantities as large as 24 or 48 pieces of a single color in a single style.

This multi-year fraud scheme resulted in the loss of over $1 million in duty revenue to the United States.

In addition to these allegations, the Government’s civil fraud complaint also alleges that BAILEY, STARGATE, and RIVSTAR engaged in similar schemes involving additional manufacturers.  Similar to the schemes involving Manufacturer-1, these schemes involved a second invoice, which purported to be for “samples,” “accessories,” “commissions,” or “testing costs,” but in reality reflected an additional payment made by the defendants for the same goods described in first invoice, but that was not submitted to CBP.  Through these schemes the defendants undervalued the goods that entered into the United States by tens of millions of dollars.

*                      *                      *

BAILEY is charged with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of falsely effecting the entry of goods into the United States, which carries a maximum sentence of two years.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  BAILEY, STARGATE, and RIVSTAR are also charged with civil claims under the False Claims Act, through which the Government may recover treble damages and civil penalties arising from his conduct.

Mr. Berman thanked HSI and U.S. Customs and Border Protection for their efforts and ongoing support and assistance with the case.

The criminal case is being handled by the Office’s Complex Frauds Unit, and Assistant U.S. Attorneys Dina McLeod and Dominika Tarczynska are in charge of the prosecution.

The civil case is being handled by the Office’s Civil Frauds Unit, and Assistant U.S. Attorneys Dominika Tarczynska and Jean-David Barnea are in charge of the matter.

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the unsealing today of a Superseding Indictment charging ALJERMIAH MACK, a/k/a “Nuke,” with racketeering, narcotics, and firearms offenses in connection with his membership in, and association with, the Nine Trey Gangsta Bloods, also known as “Nine Trey.”  The Superseding Indictment also contains charges against defendant ANTHONY ELLISON, a/k/a “Harv,” who was charged in a previous indictment with racketeering and firearms offenses.  The charges against ELLISON remain the same. 

MACK was taken into custody this afternoon.  He will be presented and arraigned before Chief U.S. Magistrate Gabriel W. Gorenstein later today.  The case is assigned to U.S. District Judge Paul A. Engelmayer.  

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the Superseding Indictment, Aljermiah Mack, like his Nine Trey co-conspirators, engaged in brazen acts of gun violence and narcotics dealing.  Thanks to our remarkable partners at HSI, ATF, and the NYPD, he now faces federal charges for his serious crimes.”

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

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

The Superseding Indictment charges MACK and ELLISON with racketeering and firearms offenses.  Count One of the Superseding Indictment charges MACK and ELLISON with participating in a racketeering conspiracy for their criminal involvement in Nine Trey.  Count Two charges MACK and ELLISON with using and carrying firearms, which were brandished and discharged, in connection with the racketeering conspiracy.  Counts Three through Five charge ELLISON in connection with his kidnapping and assaulting another member of Nine Trey near the intersection of Bedford Avenue and Atlantic Avenue in Brooklyn on or about July 22, 2018.  Count Six charges MACK with conspiracy to distribute heroin, fentanyl, and MDMA, from in or about 2015 to in or about 2018.  Count Seven charges MACK with using and carrying a firearm in connection with the narcotics conspiracy. 

*                      *                     *     

A chart containing the 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 investigative work of Homeland Security Investigations, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the New York City Police Department.  He also thanked the New York City Department of Correction’s Intelligence Bureau for its assistance in the investigation.

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

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

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Racketeering conspiracy

 

18 U.S.C. § 1962(d)

ALJERMIAH MACK (age 33)

ANTHONY ELLISON (age 31)

 

 

 

20 years in prison

2

Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a crime of violence, which was discharged

 

18 U.S.C. § 924(c)

ALJERMIAH MACK

ANTHONY ELLISON

 

 

 

Life in prison

 

Mandatory minimum of 10 years in prison

3

Violent crime in aid of racketeering

(July 22, 2018)

 

18 U.S.C. § 1959

ANTHONY ELLISON

Life in prison

4

Violent crime in aid of racketeering

(July 22, 2018)

 

18 U.S.C. § 1959

ANTHONY ELLISON

20 years in prison

5

Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a crime of violence, which was brandished

 

18 U.S.C. § 924(c)

ANTHONY ELLISON

Life in prison

 

Mandatory minimum of 7 years in prison

6

Conspiracy to distribute narcotics

 

21 U.S.C. § 846

ALJERMIAH MACK

Life in prison

 

Mandatory minimum of 10 years in prison

 

7

Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a narcotics trafficking offense

 

18 U.S.C. § 924(c)

ALJERMIAH MACK

Life in prison

 

Mandatory minimum of 5 years in prison

 

 

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[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, announced that HECTOR PALERMO was sentenced today by United States District Judge Gregory H. Woods to 188 months in prison for leading a drug trafficking conspiracy that operated in the Hunts Point section of the Bronx.  PALERMO pled guilty before U.S. Magistrate Judge Henry B. Pitman on November 19, 2018.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Today’s sentence sends a message that destructive drug trafficking in our communities will not be tolerated.  We continue our daily work with our law enforcement partners to keep the streets free of dangerous narcotics.”

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

Between approximately 2014 and 2017, PALERMO was one of the leaders of a violent drug trafficking organization that controlled the distribution of large amounts of crack cocaine in the Hunts Point section of the Bronx.  PALERMO managed all aspects of the organization, from the preparation of narcotics to the supervision of individuals who conducted hand-to-hand sales of narcotics. 

*                      *                     *

In addition to his prison sentence, PALERMO, 37, was sentenced to five years of supervised release.

Mr. Berman praised the excellent work of the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Homeland Security Investigations, and the New York City Police Department.  Mr. Berman also thanked the Bronx County District Attorney’s Office for their assistance in the investigation.    

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorney Sarah Krissoff is in charge of the prosecution.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced today that KAM WONG, the former chief executive officer (“CEO”) of Municipal Credit Union (“MCU”), a non-profit financial institution, was sentenced today in Manhattan federal court to 66 months in prison for defrauding and embezzling millions of dollars from MCU during his time as CEO.  WONG previously pled guilty to embezzlement from a federally insured credit union before U.S. District Judge John G. Koeltl, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “For years, Kam Wong, the then-CEO of New York’s oldest credit union, betrayed the credit union’s hard-working members from the perch of his executive suite by siphoning off millions of dollars in company money for his personal benefit.  Wong then tried to cover up what he had done by making false statements to federal investigators and creating false and misleading documents.  He will now serve a substantial prison sentence for his crime.  I commend the Special Agents of the U.S. Attorney’s Office, and our law enforcement partners, for their tireless efforts to protect the credit union’s members and expose misconduct in this ongoing investigation.”

According to the Complaint, the Information, other filings in Manhattan federal court, statements made in court and publicly available documents:

WONG, from 2007 until shortly after his arrest in May 2018, was the CEO and president of MCU, 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 588,000 members, including municipal, state, and federal workers in New York City.  MCU’s earnings are intended to be directed back to its members in the form of more favorable rates and fewer and lower fees for products and services.

During his tenure as CEO and president, despite publicly praising credit union values, WONG engaged in a long-running multi-faceted scheme to obtain money from MCU to which he knew he was not entitled, and took steps to seek to conceal what he had done.  Among other things, WONG embezzled from and defrauded MCU by submitting sham invoices for dental work never performed on him or paid by him, and, as a result, obtained reimbursement for hundreds of thousands of dollars of such nonexistent dental work.  In addition, WONG fraudulently caused MCU to pay him additional monies that he knew he was not entitled to receive, including millions of dollars of payments in lieu of purported long-term disability insurance, and for purported taxes owed on these and other employment benefits.  In total, WONG defrauded MCU out of at least approximately $9.9 million.

WONG also repeatedly misapplied money and other things of value from MCU, with respect to, among other things, the purchase of a Mercedes-Benz for his personal use; the leasing of multiple luxury vehicles for his personal use at the same time; the purchase of electronic devices (including, iPhones, iPads, and laptops) for personal use by WONG and others; reimbursement, as business expenses, of personal expenses, including hotel stays and expensive meals; purported reimbursement payments for repairs to luxury vehicles MCU had leased for WONG, which repair work was already covered by MCU’s insurance; cash advances to which he was not entitled; educational, housing, and living expenses for two of WONG’s friend’s adult relatives, whom WONG caused MCU to hire; and payments for leave days that did not comply with and exceeded what was provided for under his employment contract.  In addition, WONG caused MCU to pay hundreds of thousands of dollars to a former MCU Supervisory Committee member’s company, in violation of the MCU’s conflict of interest policy, so that the member would provide WONG with controlled substances for his personal use.

In January 2018, after WONG learned of the federal investigation, WONG sought to obstruct justice by making false statements to federal agents and creating false and misleading documents to try, after the fact, to explain and justify some of his illicit payments.

*                *                *

In addition to his prison term, WONG, 63, of Valley Stream, Long Island, was sentenced to three years of supervised release, and was ordered to forfeit $9,890,375 and to pay restitution in the same amount to MCU.

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 NCUA.

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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that SKYLAR DAVIS, a/k/a “S-Dot,” pled guilty today to involvement in a racketeering conspiracy in connection with his membership in “Southside,” a violent street gang that operated in the City of Newburgh, New York.  DAVIS pled guilty before U.S. District Judge Cathy Seibel to murdering Newburgh community member Samuel Stubbs during a robbery as Stubbs was playing cards on the sidewalk in front of a laundromat on Lander Street in Newburgh.  The two other men Stubbs was playing with were shot and wounded in the gunfire. 

As part of his guilty plea, DAVIS also admitted to committing or helping to commit an additional six nonfatal shootings of Southside’s gang rivals in Newburgh over an approximately nine-month period in 2015 and 2016.

U.S. Attorney Berman said:  “Skylar Davis’s string of shootings terrorized the residents of Newburgh for far too long, and his cold-blooded actions tragically caused the death of Sammy Stubbs, a longtime Newburgh resident who was just playing a neighborhood card game.  Davis now rightfully faces decades in jail for his crimes.”

According to the Indictment and other documents filed in the case, as well as statements made during the plea proceedings:

From at least 2014 through June 2017, the Southside gang was a criminal enterprise centered in and around the intersection of South Street and Chambers Street in an area of Newburgh known as the “Southside.”  In order to gain funds for the gang, protect the gang’s territory, and promote the gang’s standing, members of Southside engaged in, among other things, narcotics trafficking, robbery, and acts involving murder.  To that end, Southside members sold heroin, crack cocaine, and marijuana in the gang’s territory, promoted their gang affiliation on social media sites such as Facebook, possessed firearms, and engaged in shootings as part of their gang membership. 

DAVIS was a longtime member of Southside and one of the gang’s leaders.  On August 13, 2015, DAVIS, along with others, decided to rob a high-stakes card game that Stubbs was playing, outdoors, near the intersection of Lander and Courtney Streets in Newburgh.  DAVIS and a co-conspirator approached the three card players with guns drawn and then started firing.  All three men were hit by the ensuing gunfire, and Stubbs, 67, died of his injuries. 

The Stubbs murder was just one of many acts of violence DAVIS participated in as part of his leadership of the Southside gang.  Beginning in the summer of 2015, Southside engaged in a series of retaliatory shootings with its primary rival gang in Newburgh, the Yellow Tape Money Gang, or “YTMG,” and with other Newburgh gangs allied with YTMG.  As part of the plea entered today, DAVIS admitted to committing, assisting, and/or causing the following additional Newburgh shootings:

• The attempted murder of rival gang member Gabriel Warren, a/k/a “Stacks,” in the late summer or early fall of 2015;
• The attempted murder of rival gang member Armad Evans, a/k/a “Yellow,” on or about October 5, 2015;
• The attempted murder of rival gang member Tyrin Gayle, a/k/a “Spazzo,” and other YTMG members on or about December 11, 2015;
• The attempted murder of rival YTMG gang members on or about March 17, 2016;
• Aiding and abetting the attempted murder of rival gang member Romeo Herring on or about April 3, 2016; and
• The attempted murder of rival gang members in the vicinity of the 845 Lounge located at 778 Broadway on or about May 21, 2016.

*                      *                     *

DAVIS, 22, of Newburgh, New York, was arrested in June 2017 as a result of a multi-year investigation by the FBI’s Hudson Valley Safe Streets Task Force and the City of Newburgh Police Department into gang violence in Newburgh.  DAVIS was previously serving a 16-year sentence for New York State weapon and controlled substance offenses.  On June 14, 2017, Indictment 17 Cr. 364 (CS) was unsealed, charging 20 members and associates of Southside with racketeering conspiracy, narcotics conspiracy, and firearms charges.  Superseding Indictment S1 17 Cr. 364 (CS), unsealed in January of 2018, charged DAVIS and three other Southside members with committing two separate murders as part of their involvement in Southside, including the murder of Stubbs.

DAVIS faces a maximum term of life in prison and a mandatory minimum prison term of 25 years.  He will be sentenced before Judge Seibel later this year.

Mr. Berman praised the outstanding investigative work of the FBI, the Bureau of Alcohol, Firearms, Tobacco, and Explosives, and the City of Newburgh Police Department.  Mr. Berman thanked the Orange County District Attorney’s Office for its invaluable ongoing assistance in the case.  Mr. Berman also thanked the Town of Newburgh Police Department, the New York State Police, the Orange County Sheriff’s Department, the Town of New Windsor Police Department, and the New York Department of Corrections and Community Supervision for their assistance in the case. 

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Jacqueline Kelly, Allison Nichols, Maurene Comey, and Samuel Raymond are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that KINTEA MCKENZIE, a/k/a “Kooda B,” pled guilty today in Manhattan federal court in connection with a shooting outside a hotel in Times Square on June 2, 2018, in furtherance of the Nine Trey Gangsta Bloods (“Nine Trey”) criminal enterprise.  U.S. District Judge Paul A. Engelmayer accepted the defendant’s guilty plea.

U.S. Attorney Geoffrey S. Berman said:  “Today, Kintea McKenzie admitted his responsibility for a brazen shooting in bustling Times Square.  In coordination with Tekashi 6ix 9ine and other Nine Trey gang members, McKenzie arranged to have another individual shoot at a rival gang member.  We continue our daily work with our law enforcement partners to keep our communities safe and to vigorously investigate acts of violence committed by gang members.”

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

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

*                *                *

MCKENZIE, 21, of Brooklyn, pled guilty to assault with a dangerous weapon in aid of racketeering, which carries a maximum sentence of 20 years in prison. 

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

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.  He also thanked the New York County District Attorney’s Office for their assistance in the investigation.

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that SAMIR SULLIVAN, a/k/a “S,” was sentenced today to 96 months in prison for four separate armed carjackings of cabs in Mt. Vernon and the Bronx in November 2018.  SULLIVAN pled guilty on January 28, 2019, before U.S. District Judge Cathy Seibel, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman stated:  “Four hardworking cab drivers were simply doing their jobs when Samir Sullivan terrified them by pointing a gun at their heads.  After threatening to shoot all four drivers and hitting one with his gun, Sullivan took their cabs, as well as their cash, wallets, and phones. Today’s lengthy sentence sends a message that this violent behavior will not be tolerated in this district.”

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

In the middle of the night and early morning on November 25 and 29, 2018, Sullivan and his partner committed four armed carjackings of cabs in Mt. Vernon and the Bronx.  To complete the carjackings, Sullivan pointed and held a gun at the heads of four scared cab drivers, pushed the gun against the sides of some of the drivers’ faces (at least one of whom pleaded for his life), demanded that the drivers give him everything they had, threatened to shoot if the drivers did not comply, threatened that he would kill one of the drivers, directed his partner to ransack the drivers’ pockets for cash, and hit the shoulders of one of drivers with the gun.  In addition to the cabs, which he would drive away and abandon before finding his next victim, SULLIVAN took the drivers’ cash, wallets, phones, and a jacket.

*                *                *

In addition to the prison term, SULLIVAN, 33, of Mt. Vernon, New York, was sentenced to three years of supervised release and ordered to forfeit the proceeds of the offenses and pay restitution to his victims.

Mr. Berman praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force and the Mount Vernon Police Department.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that EUGENE CASTELLE, a/k/a “Boobsie,” was found guilty of conspiracy to commit racketeering and operation of an illegal gambling business following a two-week trial before U.S. District Judge Alvin K. Hellerstein.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For years, Eugene Castelle used intimidation and threats of violence to line his pockets as a member of the Luchese Family of La Cosa Nostra.  Castelle now stands convicted of serious federal crimes.  Together with our law enforcement partners, we will continue to investigate and prosecute members of the Mafia.”

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

Between 2012 and January 2018, CASTELLE acted as a soldier in the Luchese Family of La Cosa Nostra, often referred to as the Mafia.  CASTELLE used his position in the Luchese Family to receive thousands of dollars, over multiple years, from a large-scale illegal sports betting business operating through off-shore websites in Costa Rica.  CASTELLE protected the business from other members of the Mafia, used threats of violence to collect debts owed to the business, and extorted the bookmaker for annual payments of “tribute.”  CASTELLE also committed other racketeering acts, such as holding a “no show” job as a carpenter at a construction project where he was paid a carpenter’s wages for many months without ever settting foot on the jobsite. 

*                      *                     *

CASTELLE, 59, of Staten Island, New York, was found guilty of one count of conspiracy to commit racketeering, which carries a maximum potential sentence of 20 years in prison, and one count of operation of an illegal gambling business, which carries a maximum potential sentence of five years.  The jury acquitted CASTELLE of one count of attempted extortion.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentence of the defendant will be determined by the judge.  CASTELLE is scheduled to be sentenced by Judge Hellerstein on September 20, 2019. 

Mr. Berman praised the outstanding investigative work of the Department of Homeland Security - Homeland Security Investigations, the Department of Labor, the Diplomatic Security Service, the Federal Bureau of Investigation, the New York City Police Department, and the Special Agents of the United States Attorney’s Office for the Southern District of New York.  Mr. Berman also thanked the Kings County District Attorney’s Office for their assistance in the investigation.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  The trial in this case was handled by Assistant United States Attorneys Hagan Scotten and Jacob R. Fiddelman.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that VIRGINIA BLANCO was sentenced yesterday to 10 years in prison for participating in the robbery of a Wells Fargo Bank branch in Yonkers, New York, in October 2013.  BLANCO was previously found guilty on all counts of a three-count Indictment that charged her with conspiracy to commit bank robbery, bank robbery, and aiding and abetting the discharge of a firearm in furtherance of the robbery.  The verdict came following a four-day jury trial in White Plains federal court before U.S. District Judge Cathy Seibel. 

U.S. Attorney Geoffrey S. Berman said:  “Virginia Blanco brazenly used her inside knowledge to further an armed robbery at a Wells Fargo Bank branch in Yonkers.  By providing the robbers with critical information about the Bank’s security, personnel, and procedures, she set the stage for the violent episode.  Blanco’s lengthy sentence makes clear that enablers and facilitators of bank robberies – even if they’re not the ones storming the bank, pulling the trigger, or directly terrorizing the innocent bystanders – will face justice for their conduct.”

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

In or about October 2013, BLANCO was working as a teller at a Wells Fargo Bank branch located at 500 Odell Avenue in Yonkers, New York (the “Bank”).  She conspired with co-defendant Giovanny Marte to rob the Bank and provided critical information to Marte that allowed him and his co-conspirators to carry out the robbery successfully.  On October 29, 2013, at approximately 3:17 p.m., Marte and three co-conspirators arrived at the Bank.  One co-conspirator remained in the car while Marte and two co-conspirators entered the Bank.  Marte and another robber each brandished a firearm and the third robber brandished a wood saw.  During the robbery, Marte fired two shots but did not hit anyone.  He accessed the vault, filled a laundry bag with approximately $303,500 in cash, and fled the Bank with the other robbers.  Following the robbery, BLANCO and Marte took a trip together to Aruba using proceeds from the robbery.

*                      *                      *

Judge Seibel sentenced BLANCO to a mandatory minimum sentence of 10 years in prison for aiding and abetting the discharge of a firearm in furtherance of the robbery, in addition to one day of imprisonment for the bank robbery conspiracy and the bank robbery.  The latter sentence will be served consecutively to the 10-year prison term.  In addition, Judge Seibel imposed restitution in the amount of $303,500.     

Mr. Berman praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force, which comprises agents and detectives of the FBI, United States Probation, the City of Yonkers Police Department, the City of Peekskill Police Department, the City of Mount Vernon Police Department, the New York City Police Department, the Westchester County Police, the Greenburgh Police Department, New York State Police and the Westchester County District Attorney’s Office.

The prosecution is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Sam Adelsberg, Jamie Bagliebter, Margery Feinzig, Douglas Zolkind, and James McMahon are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JEFFREY WEBER, a Long Island home-school tutor, was sentenced yesterday to 10 years in prison for attempted child enticement.  WEBER pled guilty on December 12, 2018, and was sentenced yesterday by U.S. Circuit Judge Richard J. Sullivan.   

U.S. Attorney Geoffrey S. Berman said:  “Jeffrey Weber, who by profession had regular contact with children, pled guilty to attempting to engage in sex with a 13-year-old girl.  He has now been sentenced to a lengthy term in prison, where he will not be able to prey on children.”

According to the Information and other filings filed in Manhattan federal court:

Between January 30, 2018, and February 14, 2018, WEBER, using email and text messages, engaged in sexually explicit communications with a law enforcement agent who was acting in an undercover capacity and posing as a 13-year-old girl.  WEBER initiated these conversations by responding to a Craigslist listing advertising “a younger girl looking for an older guy,” posted by the agent acting in an undercover capacity.  During these communications, WEBER discussed various sexual acts he wished to perform on the girl and made a plan to meet the girl at a diner in Manhattan and to then go to the girl’s nearby apartment for the purpose of engaging in sexual activity.  On February 14, 2018, Weber was arrested at the diner where he planned to meet the girl, carrying condoms, among other items.  Prior to his arrest, WEBER was employed as a tutor for children.

*                *                *

In addition to the prison term, WEBER, 59, of Seaford, New York, was sentenced to five years of supervised release.  WEBER will also be required to register as a sex offender subsequent to his release from prison. 

Mr. Berman praised the New York City Police Department’s Computer Crime Squad, which is part of the Internet Crimes Against Children (ICAC) Task Force, for their outstanding investigative work.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the arrest of EDWARD SHIN, the CEO of a Pennsylvania-based bank (the “Bank”), for taking bribes in connection with the Bank’s issuance of loans that were guaranteed by the United States Small Business Administration (“SBA”).  SHIN was arrested pursuant to a criminal complaint charging him with taking bribes by siphoning off a portion of commissions on SBA-guaranteed loans and causing the Bank to issue SBA-guaranteed loans to companies in which SHIN had a secret interest.  The charges are the culmination of a joint investigation by the Federal Deposit Insurance Corporation – Office of Inspector General (“FDIC-OIG”), Homeland Security Investigations (“HSI”), the SBA Office of the Inspector General (“SBA-OIG”), the Federal Bureau of Investigation (“FBI”), and the Office of the Special Inspector General for the Troubled Asset Relief Program (“SIGTARP”).  SHIN is expected for presentment this afternoon in Manhattan federal court before U.S. Magistrate Judge James L. Cott.

U.S. Attorney Geoffrey S. Berman said:  “Edward Shin, the CEO of a Pennsylvania bank, allegedly exploited his position as a bank officer to illegally issue Small Business Administration loans to entities in which he had a financial interest.  Furthermore, Shin allegedly took kickbacks on commissions for those loans from a third party who did no legitimate work in the loan process.  The Small Business Administration exists to provide funding to those pursuing the American dream through owning their own businesses.  Edward Shin is now charged with attempting to corrupt that process for his own personal gain.” 

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

The SBA helps Americans start, build, and grow businesses by guaranteeing certain loans made by banks to help those businesses succeed.  Between 2009 and 2012, EDWARD SHIN was the CEO of the Bank.  During that period, the Bank offered a range of financial products, including SBA-guaranteed loans to small businesses in the New York-New Jersey area, which the Bank could extend only on the condition that all aspects of those loans complied with SBA regulations and SBA’s standard operating procedures.  In particular, SBA regulations and procedures prohibited bank officers, including SHIN, from receiving any payments in connection with SBA-backed loans and prohibited banks from extending such loans to any institution in which a bank officer held an interest.

Notwithstanding these regulations, SHIN secretly solicited and received bribe payments in connection with SBA-guaranteed loans issued by the Bank and caused the Bank to extend SBA-guaranteed loans to companies in which SHIN had secret ownership interests.  Specifically, when the Bank issued a business loan involving a certain broker (the “Broker”), SHIN secretly arranged to receive a portion of the Broker’s fee.  On other occasions, when the Bank issued a business loan that did not involve the use of an actual broker, SHIN arranged to have the Broker inserted unnecessarily into the transaction solely to generate a broker fee that could be shared with SHIN; in fact, the Broker did no actual work to earn a commission on those transactions, but split the “broker’s fee” with SHIN as an illegal kickback.

SHIN also arranged for the Bank to issue SBA-guaranteed loans to businesses in which he secretly retained an ownership interest, in violation of SBA regulations and procedures.  For example, in or about December 2010, the Bank issued an SBA-guaranteed loan for approximately $950,000 to a business in New York, New York.  Although documents submitted to the Bank for purposes of securing the loan did not mention SHIN’s ownership interest, the business was secretly operated as a 50-50 partnership between SHIN and the Broker.  After the loan was issued in or about October 2014, this loan went into default status, ultimately resulting in a loss to the SBA of approximately $611,491. 

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SHIN, 56, of Ambler, Pennsylvania, is charged with one count of conspiracy to commit bank bribery, which carries a maximum potential sentence of five years in prison, and one count each of bank bribery, theft of funds by a bank officer, and conspiracy to commit wire fraud, each of which carries a maximum potential sentence of 30 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FDIC-OIG, HSI, FBI, SBA-OIG, and SIGTARP.

This case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Daniel M. Tracer and Tara M. La Morte are in charge of the prosecution.

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[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth 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 the conviction in Manhattan federal court of BRYAN DUNCAN, ROBERT LOCUST, and RYAN RAINFORD.  The jury convicted DUNCAN, LOCUST, and RAINFORD today for their participation in a conspiracy to commit mail and wire fraud following a three-week trial before U.S. District Judge Sidney H. Stein.  The jury also convicted DUNCAN of a second count of conspiracy to commit mail and wire fraud, along with one count of mail fraud and one count of wire fraud.  Co-conspirators Peter Kalkanis, a former chiropractor, and Kerry Gordon previously pled guilty before Judge Stein to conspiracy to commit mail and wire fraud, mail fraud, and wire fraud.  Kalkanis also pled guilty to aggravated identity theft. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Bryan Duncan, Robert Locust, and Ryan Rainford carried out a blatantly corrupt scheme, recruiting ‘patients,’ coaching them on how to stage trip-and-fall ‘accidents’ that were not accidents at all, and steering them to complicit lawyers, chiropractors, and doctors.  They recruited indigent people, including from homeless shelters – people they thought would be most willing to undergo unneeded surgeries for the minimal cut of the proceeds the defendants would share.  Duncan, Locust, and Rainford were tripped up by the justice system and have met their downfall.”

According to the allegations contained in the Indictment and Superseding Indictment, and the evidence presented in Court during the trial:

Between in or about 2013 through 2018, DUNCAN, LOCUST, and RAINFORD, the defendants, engaged in a widespread fraud scheme through which the defendants defrauded businesses and insurance companies by staging trip-and-fall accidents and filing fraudulent lawsuits arising from those staged trip-and-fall accidents.  Fraud scheme participants, including the defendants, recruited hundreds of individuals to stage trip-and-fall accidents at particular locations throughout New York City and to claim that they injured themselves as a result of their accidents.  Common accident sites used during the fraud scheme included cellar doors, cracks in concrete sidewalks, and purported “potholes.”  The defendants instructed the recruited patients to claim that they sustained injuries to particular areas of their bodies, including the knees, shoulders, and/or back – body parts that, if injured, would reap high recoveries in personal injury lawsuits.

After the staged trip-and-fall accidents, recruited patients were referred to specific attorneys who would file lawsuits against the owners of the accident sites and/or insurance companies of the owners of the accident sites (the “Victims”).  The lawsuits did not disclose that the recruited patients had deliberately fallen at the accident sites or, in some cases, had not fallen at all.  During the course of the fraud scheme, the defendants, together with others known and unknown, attempted to defraud the Victims of at least $31,791,000.

The recruited patients were also instructed to receive ongoing medical treatment from certain chiropractors and doctors.  The fraud scheme participants advised the recruited patients that if they intended to continue with their lawsuits, they were required to undergo surgery to increase the value of their fraudulent lawsuits.  The medical procedures included discectomies, spinal fusions, non-surgical epidural injections, and knee and shoulder surgeries.  As an incentive to getting surgery, the recruited patients were offered a payment after they completed surgery as well as a percentage of any settlement payment from their lawsuit.  Patients generally had two surgeries and received between $1,000 and $1,500 after each surgery.

The defendants recruited low-income individuals as patients – individuals desperate enough to undergo surgeries in exchange for these small post-surgery payments.  In some instances, the defendants even recruited patients from homeless shelters in New York City.  Over the course of the trial, more than 20 witnesses testified, including 11 patients who admitted to staging trip-and-fall accidents at the direction of DUNCAN, LOCUST, RAINFORD, or other co-conspirators.     

DUNCAN was one of the organizers and leaders of the scheme.  DUNCAN recruited patients into the scheme, organized the recruited patients’ legal and medical appointments, and assisted in procuring the funding for the recruited patients’ medical treatment and lawsuits.  DUNCAN, and his partner Kerry Gordon, made over $1 million in profit from the fraud scheme. 

LOCUST and RAINFORD helped recruit patients into the fraud scheme, transported patients to medical and legal appointments, identified potential accident sites, made payments to recruited patients, and coached recruited patients on faking their injuries. 

Peter Kalkanis was another organizer and leader of the scheme.  Kalkanis paid his co-defendants to recruit patients into the scheme and transport the patients to medical and attorney appointments.

DUNCAN was found guilty of two counts of conspiracy to commit mail and wire fraud, one count of mail fraud, and one count of wire fraud, each of which carries a maximum term of 20 years in prison.  LOCUST and RAINFORD were each found guilty of one count of conspiracy to commit mail and wire fraud, which carries a maximum term of 20 years in prison. 

The jury failed to reach a verdict as to DUNCAN, LOCUST, and RAINFORD on one count of mail fraud and one count of wire fraud.  

Kalkanis pled guilty to one count of conspiracy to commit mail and wire fraud, one count of mail fraud, and one count of wire fraud, each of which carries a maximum term of 20 years in prison.  Kalkanis also pled guilty to aggravated identity theft, which carries a mandatory term of imprisonment of two years. 

Gordon pled guilty to two counts of conspiracy to commit mail and wire fraud, two counts of mail fraud, and two counts of wire fraud, each of which carries a maximum term of 20 years in prison. 

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

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Mr. Berman praised the outstanding investigative work of the New York Field Office of the Federal Bureau of Investigation and the New York City Police Department.  Mr. Berman also thanked the National Insurance Crime Bureau for their assistance in the investigation. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Nicholas Folly, Alexandra Rothman, and Nicholas Chiuchiolo are in charge of the prosecution.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that former New York City Police Department (“NYPD”) detective SAED RABAH was sentenced to 24 months in prison for knowingly providing misinformation to a federal law enforcement officer in order to obstruct a narcotics investigation.  RABAH pled guilty December 14, 2018, and was sentenced today by U.S. District Judge Vincent L. Briccetti.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As an NYPD detective, Saed Rabah’s first duty was to uphold the law, not befriend known drug dealers and assist in their criminal enterprises.  Now Rabah, a convicted corrupt former police officer, will serve time alongside criminals he and his colleagues arrested.”

According to the Information and a previously filed criminal Complaint: 

The target of a narcotics investigation was a cooperator in another court proceeding, and RABAH was his handler.  Despite his obligation as a cooperator to engage in no further criminal conduct, the target continued to operate a sophisticated narcotics distribution business.  In May 2016, RABAH was contacted by law enforcement and informed that the target was under investigation for narcotics-related offenses.  In September 2016, RABAH was again contacted by law enforcement, this time about whether RABAH had a phone number for the target.  RABAH waited to respond and, when he did, intentionally provided a phone number for the target that RABAH knew the target was no longer using, rather than providing the target’s active phone number through which RABAH and the target were regularly communicating. 

As alleged in the Complaint, RABAH’s obstruction of the investigation was only one component of his corrupt relationship with the target.  RABAH and the target traveled to Las Vegas together in July 2016.  Moreover, RABAH warned the target when RABAH observed one of the target’s employees make a drug delivery in a manner that RABAH believed could have drawn the attention of law enforcement.

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In addition to the prison term, RABAH, 46, of Brooklyn, New York, was sentenced to one year of supervised release and ordered to forfeit $10,000.   

Mr. Berman praised the outstanding investigative work of the Drug Enforcement Administration’s (“DEA”) Westchester Tactical Diversion Squad, comprising agents and officers of the DEA, Yonkers Police Department, Orangetown Police Department, NYPD, Westchester County Police Department, Putnam County Sheriff’s Office, Rockland County Sheriff’s Office, New Windsor Police Department, and the Woodbury Police Department.  He also thanked the Special Agents of the United States Attorney’s Office for the Southern District of New York for their assistance.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorney Celia V. Cohen is in charge of the prosecution.