Southern District of New York

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.                                       

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the conviction in Manhattan federal court of MICHAEL MENDLOWITZ, the former CEO and part owner of a payment-processing company that operated under various names, including Commerce Payment Systems (“CPS”), for defrauding its merchant customers.  The jury convicted MENDLOWITZ yesterday for wire fraud and conspiracy to commit wire fraud following a four-week trial before U.S. District Judge Vernon S. Broderick.  Richard Hart, a CPS sales manager, previously pled guilty before Judge Broderick to one count of conspiracy to commit an offense against the United States.

U.S. Attorney Geoffrey S. Berman said:  “Michael Mendlowitz preyed on small business owners, defrauding thousands of them.  Small businesses are entitled to be dealt with fairly and billed at the rates that are actually promised.  Mendlowitz’s victims got sold a bill of goods and were duped into overpaying.”

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

MENDLOWITZ and Hart operated a fraud scheme through a payment-processing company that operated under various names, including CPS.  MENDLOWITZ and Hart lured in customers with false claims of “no hidden fees” and false promises that specified rates and fees were “guaranteed for life.”  In truth, however, CPS customers, including thousands of small businesses located throughout the country, were charged all manner of hidden and increased rates and fees.  In furtherance of the fraud, MENDLOWITZ directed senior employees of CPS to significantly increase rates on customer accounts with no disclosure to customers that they would in fact be charged those increased rates.  In addition, MENDLOWITZ deleted three pages from the customers’ contracts that contained terms and conditions that directly contradicted representations made to customers during the sales process.  As part of the fraud scheme, MENDLOWITZ falsely told representatives of CPS’s parent company that those terms and conditions had been provided to customers.

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MENDLOWITZ, 44, of Woodmere, New York, was found guilty of one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum term of 20 years in prison. Hart, 39, of East Meadow, New York, pled guilty to one count of conspiracy to commit an offense against the United States, which carries a maximum term of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. 

Mr. Berman praised the outstanding investigative work of the U.S. Postal Inspection Service.   

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys David Abramowicz, Jilan Kamal, Dina McLeod, and David Raymond Lewis are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Gregory W. Ehrie, Special Agent-in-Charge of the Newark Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a criminal Complaint in Manhattan federal court charging GUNJIT MALHOTRA, GURJEET SINGH, and JAS PAL with participating in a conspiracy that for several years exploited elderly victims by remotely accessing their computers and convincing victims to pay for computer support services they did not need, and which were never actually provided.  The conspiracy netted at least $1.3 million for the conspirators.  MALHOTRA and PAL were arrested yesterday and were presented before Magistrate Judge Debra Freeman.  SINGH was arrested yesterday in St. Louis, Missouri, and will be presented before a magistrate judge today.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants devised a sophisticated scheme that involved accessing victims’ computers to charge them for unnecessary repairs or repair services they never performed.  By targeting the elderly, the defendants took advantage of some of our society’s must vulnerable members, and they now face criminal consequences for their alleged predatory conduct.”

FBI Special Agent-in-Charge Gregory W. Ehrie said:  “The scheme charged is the latest scam to victimize unsuspecting people who are just looking for assistance.  The FBI is constantly on the lookout for criminals posing as legitimate businesses but we want the public to be more aware, as well.  Make sure you are calling a reputable company at the number listed on their website, not through a random pop-up on the computer or from a robo-call left on your voicemail.  And, above all, report anything suspicious to law enforcement.”

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

MALHOTRA, SINGH, PAL, and others engaged in a scheme in which they and their co-conspirators purported to provide computer repair services to victims located throughout the United States, many of whom are elderly.  The defendants and their co-conspirators provided their victims’ false and misleading information to extract payment for computer repair services.  For example, the defendants and their co-conspirators:  (i) claimed to be associated with major technology software companies when, in fact, they were not; (ii) promised to provide computer services when none were provided; and (iii) represented that computer repair services were needed when they knew that was false.  As part of their scheme, the defendants and their co-conspirators accessed their victims’ computers and caused them to freeze or, in other instances, installed software on their victims’ computers and caused their victims’ email accounts to send emails that thanked the perpetrators for providing computer services.  In connection with the scheme, the defendants and others established several companies.  The victims typically sent payments to those companies via private and commercial interstate mail carrier, among other methods.  In total, the defendants and their co-conspirators have obtained from their victims more than $1.3 million.

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MALHOTRA, 30, of Ghaziabad, India, SINGH, 22 of Queens, New York, and PAL, 54, of Queens, New York, have each been charged with one count of conspiracy to commit mail fraud, which carries a maximum sentence of 20 years in prison, and one count of conspiracy to access a protected computer in furtherance of fraud, which carries a maximum sentence of five years in prison.  SINGH was also charged with aggravated identity theft, which carries a mandatory minimum sentence of two years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FBI in this investigation.

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

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

 

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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, 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, Commissioner of the New York City Police Department (“NYPD”), announced the arrest of TOMER OSOVITZKI, a/k/a “Tom Osovitzki,” for wire fraud and aggravated identity theft.  OSOVITZKI was arrested earlier today in Aventura, Florida, and was presented in the Southern District of Florida.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Tomer Osovitzki manipulated the approval system for credit cards to push charges through that he knew were unauthorized and would have been declined.  Additionally, Osovitzki allegedly used his clients’ credit card account information to make unapproved charges.  Now, Osovitzki and his company are grounded and he must answer for his crimes.”

FBI Assistant Director William F. Sweeney Jr. said:  “The FBI works each day trying to thwart these types of complex financial crimes.  There were victims harmed by Osovitzki’s alleged scheme, since he used his clients’ credit cards to pay for flights they didn’t purchase.  Fraudsters seem to forget there is a paper trail when it comes to financial transactions and they will eventually get caught.”

NYPD Commissioner James P. O’Neill said:  “These charges reflect how eager criminals are to exploit a victim’s personal information and profit through fraud.  I commend the NYPD detectives, FBI agents, and prosecutors of the US Attorney’s Office for the Southern District for their efforts and cooperation in this investigation into wire fraud and aggravated identity theft.  Together, we will continue to be relentless in fighting crime that impacts the people we serve wherever, and however, it occurs.”

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

OSOVITZKI was the founder and president of a company that was in the business of brokering airline and private charter flights (“Osovitzki’s Company”).  OSOVITZKI perpetrated a scheme to defraud aircraft charter companies and other merchants, a credit card company (the “Credit Card Company”), and credit card payment processors of more than $2.1 million by, among other things, inducing or causing aircraft charter companies, other merchants, the Credit Card Company and credit card payment processors to process credit card transactions under the false pretense that they had been approved by the Credit Card Company.    

From March 2017 through March 2018, OSOVITZKI and agents of Osovitzki’s Company repeatedly used credit cards issued by the Credit Card Company to OSOVITZKI, his wife, and his mother, as payment for aircraft charter flights and other goods and services.  These transactions were or would have been declined by the Credit Card Company had they been processed normally through a credit card point-of-sale device, because the cards had been cancelled by the Credit Card Company, or because the accounts did not have sufficient available credit.  OSOVITZKI and agents of Osovitzki’s Company provided fraudulent authorization codes to the merchants in order to dupe them into processing “force-post” transactions.  OSOVITZKI told the merchants that he had obtained these authorization codes from the Credit Card Company.  This was not true.  However, based on these false representations, merchants conducted “force-post” transactions.  Because the authorization codes had not in fact been provided by the Credit Card Company, the transactions were later declined.

Osovitzki’s Company also used credit card account numbers belonging to its customers to pay for more than $1.3 million of charter flights those customers had not requested, authorized, or utilized, including at least one flight for which OSOVITZKI was a listed passenger.  

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OSOVITZKI, 42, of Aventura, Florida, has been charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory minimum consecutive sentence of two years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of OSOVITZKI will be determined by a judge.

If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact the Victim/Witness Unit at the U.S. Attorney’s Office for the Southern District of New York at (866) 874-8900.  For additional information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html

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

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an Indictment in Manhattan federal court charging SAVRAJ GATA-AURA, a/k/a “Sam Aura,” with wire fraud and conspiracy to commit wire fraud for engaging in a scheme to defraud victims by making material misrepresentations about the management and operations of a company called Bar Works Inc. and related entities (“Bar Works”).  GATA-AURA was arrested this morning and will be presented later today in Manhattan federal court before U.S. District Judge Richard M. Berman. 

In addition, U.S. Attorney Berman announced the unsealing of a guilty plea, on May 8, 2019, by RENWICK HADDOW, a/k/a “Jonathan Black,” 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”).  HADDOW was originally charged in June 2017 and extradited from Morocco in April 2018.  HADDOW, who pled guilty to an Information charging him with wire fraud and conspiracy to commit wire fraud, is cooperating with the Government in this investigation.  HADDOW’s case has been assigned to U.S. District Judge Laura Taylor Swain.

U.S. Attorney Geoffrey S. Berman stated:  “Renwick Haddow, a U.K. citizen, had a long track record of financial misconduct in the U.K., so much so that British regulatory authorities imposed an eight-year ban barring Haddow from serving as director of any financial institution.  Haddow then turned his sights toward the U.S., using the alias ‘Jonathan Black’ and fraudulently soliciting investments in Bar Works.  Haddow and co-defendant Savraj Gata-Aura allegedly solicited funds from investors with fictitious claims about Bar Works’ management and performance.  They are now being held to account for the blizzard of lies they told to get money from their unsuspecting victims.”

According to the Indictment unsealed today, the Information to which HADDOW pled, a previously filed Complaint against HADDOW, and other court documents:[1]

GATA-AURA and HADDOW are citizens of the United Kingdom who principally resided in New York from at least September 2015 through at least June 2017.  Prior to moving to New York, HADDOW was sanctioned and sued by British regulators for operating a variety of investment schemes in which investors lost money.  Those sanctions and related lawsuits were publicized online, using HADDOW’s real name.

From September 2015 through at least about June 2017, GATA-AURA and others partnered with HADDOW in soliciting investments in Bar Works through material misrepresentations concerning, among other things, the identity of Bar Works’ management and the financial condition of that company.  Specifically, HADDOW adopted the alias “Jonathan Black” to further hide his role in Bar Works in light of the negative publicity on the internet about his regulatory history in the United Kingdom.  Notwithstanding HADDOW’s control over Bar Works, HADDOW caused the Bar Works offering materials to list Black as the chief executive officer of Bar Works and claim that Black had an extensive background in finance and past success with start-up companies.  HADDOW also made material misrepresentations to investors about, among other things, the operations and historical performance of both Bar Works and Bitcoin Store.

GATA-AURA spearheaded efforts to raise millions of dollars in investments into Bar Works while misrepresenting that “Jonathan Black” was the company’s CEO.  GATA-AURA recruited agents to sell workspace leases in Bar Works and provided them with offering documents and other information that concealed HADDOW’s control and ownership interests in Bar Works, and affirmatively misrepresented that “Jonathan Black” ran the company.  Between September 2015 and June 2017, Bar Works raised over $36 million from investors.  GATA-AURA personally obtained at least $3.1 million in exchange for his participation in the scheme.

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SAVRAJ GATA-AURA, 33, 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.

Mr. Berman praised the investigative work of the FBI and thanked the Securities and Exchange Commission for its assistance. 

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

 

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

Audrey Strauss, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Patricia Tarasca, the Special Agent-in-Charge of the New York Region for the Federal Deposit Insurance Corporation Office of Inspector General (“FDIC OIG”), announced today the unsealing of an indictment charging STEPHEN M. CALK with financial institution bribery for corruptly using his position as the head of a federally insured bank to issue millions of dollars in high-risk loans to a borrower in exchange for a personal benefit: assistance from the borrower in obtaining a senior position with an incoming presidential administration.  CALK is expected to be presented this afternoon before U.S. Magistrate Judge Debra Freeman.

Ms. Strauss said:  “As alleged, Stephen M. Calk abused the power entrusted to him as the top official of a federally insured bank by approving millions of dollars in high-risk loans in an effort to secure a personal benefit, namely an appointment as Secretary of the Army or another similarly high-level position in the incoming presidential administration.  Calk’s alleged attempt to obtain such an appointment was unsuccessful, and the loans he approved were ultimately downgraded by the bank’s primary regulator.  Thanks to the outstanding work of the FBI and FDIC OIG, Calk’s alleged corrupt scheme has now resulted in a federal criminal charge.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Calk went to great lengths to avoid banking violations in an attempt to secure a senior position in a presidential administration. He curried favor with an influential borrower, exploited his position as CEO of a bank and its holding company, and exercised control over the bank and the borrower’s loans, intentionally turning his back on the many red flags posted along the way.  His attempt at petitioning for political favors was unsuccessful in more ways than one – he didn’t get the job he wanted, and he compromised the one he had.”  

FDIC OIG Special Agent-in-Charge Patricia Tarasca said:  “Today’s indictment charges Stephen Calk with misusing his position as Chairman and Chief Executive Officer of a bank for his own personal gain.  The FDIC Office of Inspector General remains committed to investigating cases where bank officials cause multimillion-dollar losses to a financial institution and undermine its integrity.  We will continue to work with our law enforcement partners to bring to justice those who commit such offenses.”

According to the allegations in the Indictment:[1]

CALK, the Bank, and the Borrower

STEPHEN M. CALK is the chairman and chief executive officer of the “Bank,” a federal savings association headquartered in Chicago, Illinois, with an office in New York, New York.  The Bank is owned in its entirety by the “Holding Company,” a Chicago-based bank holding company, and CALK is the chairman, chief executive officer, and owner of approximately 67% of the Holding Company.

The “Borrower” was, at all relevant times, a lobbyist and political consultant.  Beginning in or about March 2016, the Borrower held a senior role with a presidential campaign (the “Presidential Campaign”), and from June 2016 through August 2016, he served as chairman of the Presidential Campaign.  After the Borrower’s formal role with the Presidential Campaign concluded in or about August 2016, the Borrower continued to be informally involved in the campaign.  Beginning in or about November 2016, when the candidate for whom the Borrower had been working was elected President of the United States, the Borrower provided informal input to the presidential transition team (the “Presidential Transition Team”).

The Corrupt Scheme

Between in or about July 2016 and January 2017, CALK engaged in a corrupt scheme to exploit his position as the head of the Bank and the Holding Company in an effort to secure a valuable personal benefit for himself, namely, the Borrower’s assistance in obtaining for CALK a senior position in the presidential administration.  During this time period, the Borrower sought millions of dollars in loans from the Bank.  CALK understood that the Borrower urgently needed these loans in order to terminate or avoid foreclosure proceedings on multiple properties owned by the Borrower and the Borrower’s family.  Further, CALK believed that the Borrower could use his influence with the Presidential Transition Team to assist CALK in obtaining a senior administration position.

CALK thus sought to leverage his control over the Bank and the loans sought by the Borrower to his personal advantage.  Specifically, CALK offered to, and did, cause the Bank and Holding Company to extend $16 million in loans to the Borrower in exchange for the Borrower’s requested assistance in obtaining a high-level position in the presidential administration.  For example, and while the Borrower’s loans were pending approval, CALK provided the Borrower with a ranked list of the governmental positions he desired, which started with Secretary of the Treasury, and was followed by Deputy Secretary of the Treasury, Secretary of Commerce, and Secretary of Defense, as well as 19 ambassadorships similarly ranked and starting with the United Kingdom, France, Germany, and Italy.

In approving these loans to the Borrower, CALK was aware of significant red flags regarding the Borrower’s ability to repay the loans, such as his history of defaulting on prior loans.  Moreover, given the size of the loans, the Borrower’s debt became the single largest lending relationship at the Bank.  In order to enable the Bank to issue these loans without violating the Bank’s legal limit on loans to a single borrower, CALK authorized a maneuver never before performed by the Bank, in which the Holding Company – which CALK also controlled – acquired a portion of the loans from the Bank.

During the same time period, the Borrower provided CALK with valuable personal benefits.  First, in or about the summer of 2016, during the Presidential Campaign – and just days after CALK and the rest of the Bank’s credit committee conditionally approved a proposed $9.5 million loan to the Borrower – the Borrower appointed CALK to a prestigious economic advisory committee affiliated with the campaign.  And second, in or about late November and early December 2016 – after the presidential candidate had been elected president, after the Borrower’s first loan from the Bank had been issued, and while a second set of loans worth more than $6 million sought by the Borrower was pending approval by the Bank – the Borrower used his influence with the Presidential Transition Team to assist Calk, recommending CALK for an administration position.  Due to the Borrower’s efforts, CALK was formally interviewed for the position of Under Secretary of the Army in or about early January 2017 at the Presidential Transition Team’s principal offices in New York, New York.  CALK was not ultimately hired.

As a result of its independent review of the Bank’s loans to the Borrower, in or around July 2017, the bank’s primary regulator, the Office of the Comptroller of the Currency (“OCC”), downgraded the credit quality of those loans to “substandard,” concluding that the Bank’s classification of them as satisfactory had been inappropriate.  Moreover, to conceal the unlawful nature of his scheme, CALK made false and misleading statements to the OCC regarding the loans to the Borrower.  Among other things, CALK falsely stated to the OCC regulators that he had never desired a position in the presidential administration. 

In or about October 2017, the Borrower was charged with federal crimes and the U.S. Government sought the forfeiture of the Borrower’s interests in properties securing the loans he had received from the Bank.  The Borrower subsequently ceased making loan payments to the Bank, and the Bank and the Holding Company foreclosed on the cash collateral securing the loans and have currently written off the remaining principal balance – totaling over $12 million – as a loss.

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STEPHEM M. CALK, 54, is charged with one count of financial institution bribery, which carries a maximum sentence of 30 years in prison.

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

Ms. Strauss praised the outstanding investigative work of the FBI and FDIC OIG.

This case is being handled by the Office’s Public Corruption Unit and Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorneys Paul M. Monteleoni, Douglas S. Zolkind, and Benet J. Kearney are 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 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., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the indictment today of MICHAEL AVENATTI on fraud and aggravated identity theft charges.  As alleged, AVENATTI used misrepresentations and a fraudulent document purporting to bear his client’s name and signature to convince his client’s literary agent to divert money owed to AVENATTI’s client to an account controlled by AVENATTI.  AVENATTI then spent the money principally for his own personal and business purposes.  The fraud and aggravated identity theft case is assigned to U.S. District Judge Deborah Batts of the Southern District of New York.

AVENATTI was separately indicted today on extortion charges, which were the subject of a previous Complaint and arrest of AVENATTI, relating to his alleged attempt to extract more than $20 million in payments from Nike, Inc., by threatening to use his ability to garner publicity to inflict substantial financial and reputational harm on the company if his demands were not met.  That case is assigned to U.S. District Judge Paul Gardephe of the Southern District of New York.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Michael Avenatti abused and violated the core duty of an attorney – the duty to his client.  As alleged, he used his position of trust to steal an advance on the client’s book deal.  As alleged, he blatantly lied to and stole from his client to maintain his extravagant lifestyle, including to pay for, among other things, a monthly car payment on a Ferrari.  Far from zealously representing his client, Avenatti, as alleged, instead engaged in outright deception and theft, victimizing rather than advocating for his client.”

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

From August 2018 through February 2019, AVENATTI defrauded a client (“Victim-1”) by diverting money owed to Victim-1 to AVENATTI’s control and use.  After assisting Victim-1 in securing a book contract, AVENATTI allegedly stole a significant portion of Victim-1’s advance on that contract.  He did so by, among other things, sending a fraudulent and unauthorized letter purporting to contain Victim-1’s signature to Victim-1’s literary agent, which instructed the agent to send payments not to Victim-1 but to a bank account controlled by AVENATTI.  As alleged, Victim-1 had not signed or authorized the letter, and did not even know of its existence.

Specifically, prior to Victim-1’s literary agent wiring the second of four installment payments due to Victim-1 as part of the book advance, AVENATTI sent a letter to Victim-1’s literary agent purportedly signed by Victim-1 that instructed the literary agent to send all future payments to a client trust account in Victim-1’s name and controlled by AVENATTI.  The literary agent then wired $148,750 to the account, which AVENATTI promptly began spending for his own purposes, including on airfare, hotels, car services, restaurants and meal delivery, online retailers, payroll for his law firm and another business he owned, and insurance.  When Victim-1 began inquiring of AVENATTI as to why Victim-1 had not received the second installment, AVENATTI lied to Victim-1, telling Victim-1 that he was still attempting to obtain the payment from Victim-1’s publisher.  Approximately one month after diverting the payment, AVENATTI used funds recently received from another source to pay $148,750 to Victim-1, so that Victim-1 would not realize that AVENATTI had previously taken and used Victim-1’s money.

Approximately one week later, pursuant to AVENATTI’s earlier fraudulent instructions, the literary agent sent another payment of $148,750 of Victim-1’s book advance to the client account controlled by AVENATTI.  AVENATTI promptly began spending the money for his own purposes, including to make payments to individuals with whom AVENATTI had a personal relationship, to make a monthly lease payment on a luxury automobile, and to pay for airfare, dry cleaning, hotels, restaurants and meals, payroll, and insurance costs.  Moreover, to conceal his scheme, and despite repeated requests to AVENATTI, as Victim-1’s lawyer, for assistance in obtaining the book payment that Victim-1 believed was missing, AVENATTI led Victim-1 to believe that Victim-1’s publisher was refusing to make the payment to the literary agent, when, as AVENATTI knew, the publisher had made the payment to the literary agent, who had then sent the money to AVENATTI pursuant to AVENATTI’s fraudulent instructions.

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AVENATTI, 48, of Los Angeles, California, is charged in the fraud and aggravated identity theft indictment with one count of wire fraud, which carries a maximum penalty of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory term of imprisonment of two years in addition to the sentence imposed for the wire fraud charge. 

AVENATTI is charged in the extortion indictment with one count of conspiracy to transmit interstate communications with intent to extort, which carries a maximum penalty of five years in prison, one count of conspiracy to commit extortion, which carries a maximum penalty of 20 years in prison, one count of transmission of interstate communications with intent to extort, which carries a maximum penalty of two years in prison, and one count of extortion, which carries a maximum penalty of 20 years in prison.  

The maximum potential sentences in both cases 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 work of the FBI and the Special Agents of the United States Attorney’s Office for the Southern District of New York, and noted that the investigation is ongoing.

The cases are being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Matthew Podolsky, Robert L. Boone, and Robert B. Sobelman are in charge of the prosecutions.

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that CHRISTIAN TORO was sentenced today by United States District Judge Richard M. Berman to 70 months in prison for stockpiling explosive materials and manufacture of a destructive device.  TORO previously pled guilty before Judge Berman.  Tyler Toro, TORO’s co-defendant and brother, who also pled guilty, is scheduled to be sentenced on May 29, 2019.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Today’s sentence serves as a message that building and stockpiling destructive devices are grave offenses in and of themselves.  Thanks to the outstanding work of the Joint Terrorism Task Force in eliminating this destructive threat in its nascent stages, Christian Toro and his brother were apprehended before they could carry out any attack with the device they were building.  Christian Toro has nevertheless received a substantial sentence for seriously endangering the public (including minor children) and inspiring fear throughout his community with his conduct.”

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

Between approximately October 2017 and February 2018, CHRISTIAN TORO and Tyler Toro conspired to build and possess a destructive device at their residence in the Bronx, New York (the “Residence”).  CHRISTIAN TORO, a former teacher at a high school in Harlem, New York (the “School”), paid students from the School for their assistance in manufacturing the destructive device, giving them approximately $50 per hour in return for the students’ work dismantling fireworks and storing the explosive powder contained within those fireworks in containers.  TORO encouraged one of those students to call in a bomb threat to the School in December 2017.  TORO also had on his School laptop a copy of a book that provided instructions for, among other things, manufacturing explosive devices.

On February 15, 2018, law enforcement agents searched the Residence pursuant to a judicially authorized search warrant.  In a bedroom shared by TORO and Tyler Toro, law enforcement agents recovered the components for building an improvised explosive device and other dangerous substances, including: (i) a glass jar containing low explosive powder; (ii) a strip of magnesium metal; (iii) approximately 20 pounds of iron oxide; (iv) approximately five pounds of aluminum powder; (v) a mixture of iron oxide and aluminum powder, the key ingredients for thermite (used in incendiary bombs); (vi) approximately five pounds of potassium nitrate; (vii) a cardboard box containing firecrackers; and (viii) metal spheres and C02 cartridges, which can be used as fragmentation for a bomb.  On the Residence’s fire escape, agents also found a jar of improvised napalm, consisting of gasoline and Styrofoam.

Also in the Residence, law enforcement agents found a handwritten diary labeled with Tyler Toro’s name, which stated, among other things, “WE ARE TWIN TOROS STRIKE US NOW, WE WILL RETURN WITH NANO THERMITE” and “I AM HERE 100%, LIVING, BUYING WEAPONS.  WHATEVER WE NEED.”  Agents also recovered a page inside a notebook found in the Residence labeled “Operation Flash,” with a ledger appearing to delineate the hours worked and payment owed to one of the School’s students for that student’s work on the destructive device.

*                *                *

In addition to his prison sentence, CHRISTIAN TORO, 28, was sentenced to three years of supervised release.

Mr. Berman praised the excellent work of the Federal Bureau of Investigation’s (“FBI”) New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorney Elizabeth A. Hanft is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Guido Modano, Special Agent-in-Charge of the New York Field Office of the Department of Justice Office of the Inspector General (“DOJ OIG”), announced today the unsealing of a nine-count indictment charging federal correctional officer COLIN AKPARANTA with four counts of sexual abuse of a ward, four counts of abusive sexual contact, and one count of deprivation of civil rights.  The charges stem from AKPARANTA’s alleged sexual abuse of four female inmates housed at the Metropolitan Correctional Center (“MCC”), a Manhattan detention facility that houses federal inmates, spanning the years 2012 through 2018.  AKPARANTA was arrested today and will be presented and arraigned in Manhattan federal court before U.S. Magistrate Judge Debra Freeman later today.  AKPARANTA’s case is assigned to U.S. District Judge Lorna G. Schofield. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Colin Akparanta was a predator in uniform, exploiting his position to sexually abuse multiple inmates over a several-year period.  No inmate in a Bureau of Prisons facility should fear sexual abuse at the hands of a correctional officer, and thankfully, Akparanta will have no more victims.  I encourage all victims of this or similar conduct to contact my Office at the number below.” 

DOJ OIG Special Agent-in-Charge Guido Modano said:  “Correctional officers have a duty to protect federal inmates, but Akparanta allegedly abused his power over female inmates.  Our office is committed to bringing to justice any Justice Department employee who commits sex crimes in federal correctional institutions.”

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

AKPARANTA has been employed as a correctional officer at the MCC since 2004.

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

           

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COLIN AKPARANTA, 42, of Irvington, New Jersey, is charged with four counts of sexual abuse of a ward, which carries a maximum sentence of 15 years in prison, four counts of abusive sexual contact, which carries a maximum sentence of two years in prison, and one count of deprivation of civil rights, which carries a maximum sentence of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

Any individuals who believe they have information concerning COLIN AKPARANTA or any similar conduct should contact the United States Attorney’s Office at (866) 874-8900.

Mr. Berman praised the investigative work of the DOJ Office of the Inspector General and the Special Agents of the United States Attorney’s Office. 

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

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that TROY YOUNG, a/k/a “Hollywood,” 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.  YOUNG also pled guilty to murdering Gevontay Owens-Grant, a gang rival, after an altercation broke out at a Valentine’s Day-themed party at a Newburgh club.  YOUNG and others were also injured during the shooting.  YOUNG faces a maximum term of life in prison and will be sentenced before United States District Judge Cathy Seibel later this year.

U.S. Attorney Geoffrey S. Berman said:  “Troy Young has admitted to shooting at gang rivals during a crowded Valentine’s Day party and to killing 21-year-old Gevontay Owens-Grant.  This murder demonstrated a disregard for the value of human life that epitomizes these senseless gang rivalries.  Young now faces a significant term in prison for this shooting, the type of tragic event that happens too often on our city streets.”

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 also 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. 

YOUNG was a member of Southside.  On February 12, 2017, YOUNG, aided and abetted by others, murdered Owens-Grant, who was from another part of Newburgh, after a fight broke out during a party at a club.  Multiple other people fired guns inside and outside the club that night, and several others were injured, including YOUNG, who was partially paralyzed after being shot the same night he killed Owens-Grant.

 

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YOUNG, 24, of Newburgh, was arrested in January 2018 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.  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 YOUNG, added additional firearms charges against certain defendants, and charged four defendants with committing two separate murders as part of their involvement in Southside, including the murder of Owens-Grant.  To date, 18 defendants have pled guilty.

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 PAUL VAN MANEN was found guilty yesterday of conspiring to distribute heroin and fentanyl that resulted in the death of Michael Ogno, a 26-year-old man from Staten Island, New York and the serious bodily injury of another individual.  A unanimous jury convicted VAN MANEN after an eight-day trial before United States District Judge Paul A. Crotty.  Kenneth Charlton, who was tried with VAN MANEN, was acquitted of the charge against him. 

U.S. Attorney Geoffrey S. Berman said:  “As proven at trial, Paul Van Manen peddled poison to the community of Staten Island and its vicinity, causing one of his many victims to die from a tragic overdose, despite knowing of a non-fatal overdose just two months earlier from the group’s drugs.  Today’s verdict should send a message to those who flood our community’s streets with lethal drugs.  We will continue to work with our law enforcement partners to prosecute and convict criminals seeking to profit from the current public health crisis afflicting our city.”

According to court documents and the evidence at trial:

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

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PAUL VAN MANEN, 51, of Staten Island and South Amboy, New Jersey, faces a maximum sentence of life in prison, and a mandatory minimum term of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  A sentencing date for VAN MANEN before Judge Crotty has not yet been set. 

In addition to VAN MANEN, ten other defendants have been convicted in connection with the conspiracy.  MEDIN KOSIC was sentenced to 168 months in prison.  MIRSAD BOGDANOVIC was sentenced to 160 months in prison.  MICHAEL NUNEZ was sentenced to 150 months in prison.  ALEXANDER BUCCI was sentenced to 50 months in prison.  The remaining defendants have yet to be sentenced. 

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

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

Yesterday, a jury returned a guilty verdict against Ali Kourani, a.k.a. “Ali Mohamad Kourani,” a.k.a. “Jacob Lewis,” a.k.a. “Daniel,” on all eight counts in the Indictment, which charged him with terrorism, sanctions and immigration offenses for his illicit work as an operative for Hizballah’s external attack-planning component.  Kourani is scheduled to be sentenced on Sept. 27, 2019, by the Honorable Alvin K. Hellerstein, who presided over the eight-day trial.  Assistant Attorney General for National Security John C. Demers, U.S. Attorney Geoffrey S. Berman for the Southern District of New York, Assistant Director Michael McGarrity of the FBI’s Counterterrorism Division and Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office made the announcement.

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

“Ali Kourani was recruited, trained and deployed by Hizballah’s Islamic Jihad Organization to plan and execute acts of terrorism in the United States,” said U.S. Attorney Berman.  “Kourani’s chilling mission was to help procure weapons and gather intelligence about potential targets in the U.S. for future Hizballah terrorist attacks.  Some of the targets Kourani surveilled included JFK Airport and law enforcement facilities in New York City, including the federal building at 26 Federal Plaza in Manhattan.  Today, Kourani has fittingly been convicted for his crimes in a courthouse that stands in the shadow of one of his potential targets.”

“This case shows Hizballah’s Islamic Jihad Organization is a threat to the American people and not just to those living abroad,” said FBI Assistant Director McGarrity.  “The IJO enlisted Kourani to help plan an attack on high profile U.S. locations where many people could have been killed or injured.  Thanks to the New York Joint Terrorism Task Force his plans were not carried out.”

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

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

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

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

Kourani and certain of his relatives were in Lebanon during the summer 2006 conflict between Israel and Hizballah, when a residence belonging to his family was destroyed.  At some point by 2008, IJO recruited Kourani to its ranks.  In August 2008, Kourani submitted an application for naturalization in the United States in which he falsely claimed, among other things, that he was not affiliated with a terrorist organization.  In April 2009, Kourani became a naturalized citizen and was issued a United States passport.  Despite claiming in his passport application that he had no travel plans, Kourani traveled to Guangzhou, China – the location of Guangzhou Company-1 – on May 3, 2009.  He later claimed to the FBI that the purpose of the trip was to meet with medical device manufacturers and other businessmen.  

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

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

Kourani, 34, of the Bronx, New York, was convicted of providing material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; conspiracy to provide material support and resources to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; receiving military-type training from a designated foreign terrorist organization, which carries a sentence of 10 years in prison or a fine; conspiracy to receive military-type training from a designated foreign terrorist organization, which carries a maximum sentence of five years in prison; conspiracy to possess, carry, and use firearms and destructive devices during and in relation to crimes of violence, which carries a maximum sentence of life in prison; making and receiving a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, which carries a maximum sentence of 20 years in prison; conspiracy to make and receive a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, which carries a maximum sentence of 20 years in prison; and naturalization fraud in connection with an act of international terrorism, which carries a maximum sentence of 25 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as the defendant’s sentence will be determined by Judge Hellerstein.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ANTHONY MARRACCINI, the former chief of the Harrison Police Department, was sentenced to 18 months in prison for tax evasion.  MARRACCINI pled guilty in January 2019 before U.S. District Judge Kenneth M. Karas, who imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “When Anthony Marraccini became a police officer in the Town of Harrison, he swore to uphold the law.  Instead, he violated the public’s trust when he evaded more than $902,000 in federal and state income taxes.  Today’s sentence serves as a reminder that the laws of our land apply to all, regardless of position or power.”

According to the allegations contained in the Information:

During the relevant time period of 2011 to 2016, MARRACCINI was the Chief of Police for the Town of Harrison, New York.  MARRACCINI also owned and operated Coastal Construction Associates LLC (“Coastal Construction”), a construction business, and was also employed as a salesperson for two title companies.  In addition, MARRACCINI owned several residential rental properties.  MARRACCINI reported some of Coastal Construction’s revenue and expenses, and the rental income from some of his rental properties, on his personal federal income tax return.

MARRACCINI failed to report all of Coastal Construction’s revenue on his income tax returns from 2011 through 2016.  Instead, he deposited some checks Coastal Construction received for construction work into his personal bank accounts.  He also cashed some checks Coastal Construction received at a check cashing service and kept the cash for his personal use.  In some instances, MARRACCINI deposited checks Coastal Construction received into Coastal Construction’s bank accounts but took portions of the deposits as cash, thus reducing the amounts of the deposits on Coastal Construction’s bank account statements.  MARRACCINI then falsely represented to his tax return preparers that Coastal Construction’s bank account statements showed the vast majority of the company’s revenue for each year.

MARRACCINI failed to report more than $2.3 million in revenue for Coastal Construction for the tax years 2011 through 2016.

MARRACCINI also failed to report a total of more than $199,800 in rents received from two rental homes he owned in Purchase, New York, from 2011 through 2015.  In addition, MARRACCINI failed to report $24,500 in rents he received from a rental home he owned in Rye, New York, in 2013 and 2014.

In total, MARRACCINI failed to report more than $2.5 million in revenue from Coastal Construction and the rental properties, thereby evading more than $782,000 in federal income tax and more than $119,000 in state income tax, from 2011 through 2016.

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In addition to the prison term, MARRACCINI, 54, of West Harrison, New York, was sentenced to one year of supervised release and ordered to pay a $25,000 fine.

Mr. Berman praised the outstanding investigative work of the IRS-CI and the Special Agents of the United States Attorney’s Office for the Southern District of New York. 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that a jury returned a guilty verdict today against Ali Kourani, a/k/a “Ali Mohamad Kourani,” a/k/a “Jacob Lewis,” a/k/a “Daniel,” on all eight counts in the Indictment, which charged him with terrorism, sanctions, and immigration offenses for his illicit work as an undercover terrorist operative for Hizballah’s external attack-planning component.  KOURANI is scheduled to be sentenced on September 27, 2019, by the Honorable Alvin K. Hellerstein, who presided over the eight-day trial.

U.S. Attorney Geoffrey S. Berman said:  “Ali Kourani was recruited, trained, and deployed by Hizballah’s Islamic Jihad Organization to plan and execute acts of terrorism in the United States.  Kourani’s chilling mission was to help procure weapons and gather intelligence about potential targets in the U.S. for future Hizballah terrorist attacks.  Some of the targets Kourani surveilled included JFK Airport and law enforcement facilities in New York City, including the federal building at 26 Federal Plaza in Manhattan.  Today, Kourani has fittingly been convicted for his crimes in a courthouse that stands in the shadow of one of his potential targets.”

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

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

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

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

KOURANI and certain of his relatives were in Lebanon during the summer 2006 conflict between Israel and Hizballah, when a residence belonging to his family was destroyed.  At some point before 2008, IJO recruited KOURANI to its ranks.  In August 2008, KOURANI submitted an application for naturalization in the United States in which he falsely claimed, among other things, that he was not affiliated with a terrorist organization.  In April 2009, KOURANI became a naturalized citizen and was issued a United States passport.  Despite claiming in his passport application that he had no travel plans, KOURANI traveled to Guangzhou, China – the location of Guangzhou Company-1 – on May 3, 2009.  He later claimed to the FBI that the purpose of the trip was to meet with medical device manufacturers and other businessmen. 

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

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

*                      *                      *

KOURANI, 34, of the Bronx, New York, was convicted of providing material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; conspiracy to provide material support and resources to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; receiving military-type training from a designated foreign terrorist organization, which carries a sentence of 10 years in prison or a fine; conspiracy to receive military-type training from a designated foreign terrorist organization, which carries a maximum sentence of five years in prison; conspiracy to possess, carry, and use firearms and destructive devices during and in relation to crimes of violence, which carries a maximum sentence of life in prison; making and receiving a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, which carries a maximum sentence of 20 years in prison; conspiracy to make and receive a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, which carries a maximum sentence of 20 years in prison; and naturalization fraud in connection with an act of international terrorism, which carries a maximum sentence of 25 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as the defendant’s sentence will be determined by Judge Hellerstein.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LUIDJI BENJAMIN, a/k/a “Zoe,” was found guilty of conspiracy to commit sex trafficking and sex trafficking of a minor following a five-day jury trial before U.S. District Judge Jed S. Rakoff.

Manhattan U.S. Attorney Geoffrey Berman said:  “As proven in court today, Luidji Benjamin callously preyed on vulnerable girls to prostitute for his own financial gain.  This sexual predator ruined the lives of at least two young women, advertising their bodies for commercial sex.  Today a jury convicted Benjamin of his horrific crimes and he now faces at least 10 years in prison for his depravity.”       

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

From late 2015 to December 2015, BENJAMIN engaged in sex trafficking and commercial sexual exploitation of two minor victims.  BENJAMIN recruited, enticed, harbored, transported, provided, obtained, and maintained women for the purpose of commercial sex, including one minor victim (“Victim-1”) who resided at a residential treatment facility located in Westchester County, which provided housing for at-risk troubled children and adolescents on behalf of department of social services for certain counties in New York State.

BENJAMIN recruited Victim-1 to engage in commercial sex through a social media website, and he used Backpage.com and Craiglist.com, online classifieds websites, to post advertisements for commercial sex.  Certain of these advertisements included graphic images, including of Victim-1 performing oral sex on the defendant.  BENJAMIN directed Victim-1 to engage in commercial sex acts in cars and residences throughout Queens, New York. 

The defendant and a co-conspirator also recruited a second minor victim (“Victim-2”) to engage in commercial sex acts.  BENJAMIN and his co-conspirator spent the proceeds of this scheme on marijuana, liquor, and other goods for themselves. 

*                *                *

BENJAMIN, 23, of Queens, New York, was convicted of one count of conspiracy to commit sex trafficking, which carries a maximum sentence of life in prison, and one count of sex trafficking of a minor, which carries a mandatory minimum of 10 years in prison and a maximum sentence of life in prison.  The minimum and maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the Court.

This prosecution is part of an ongoing investigation that, including BENJAMIN, has charged 19 defendants, set forth in eight indictments, for the sex trafficking of at least 13 minor girls and young adults in New York State’s social services system. 

Any individuals who believe that they have information that may be relevant to this investigation should contact the FBI at (212) 384-1000 or https://tips.fbi.gov/.

Mr. Berman thanked the FBI and the NYPD for their outstanding work in this matter and, in particular, the New York Child Exploitation and Human Trafficking Task Force.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Mollie Bracewell, Jacob Gutwillig, and Richard Cooper are in charge of the prosecution. 

Geoffrey S. Berman, 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 JAMIE FRIERSON was arrested for robbing a bank in the Bronx on May 8, 2019, 15 days after he was released from federal prison in connection with convictions for five previous bank robberies in Manhattan.  FRIERSON was arrested this morning.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, nine days after being released from a stint in prison for bank robbery, ‘Broadway Bandit’ Jamie Frierson was back for a repeat performance, this time brazenly robbing a bank in the Bronx.  His alleged threats of violence have again endangered the safety of New Yorkers.  Thankfully, due to the hard work and rapid response of the FBI/NYPD Violent Crime Task Force, Frierson is now in custody.”

FBI Assistant Director William F. Sweeney Jr. said:  “After being released from federal prison for robbing banks, Jamie Frierson allegedly went right back to the very crime that put him in jail in the first place.  He clearly did not learn a lesson.  Our FBI/NYPD Violent Crimes Task Force worked hard to track Mr. Frierson down before he was able to hit yet another bank.”

Commissioner James P. O’Neill  said:  “The rapid apprehension of this individual wouldn’t be possible without the active cooperation between the banking community and our local, state and federal law enforcement partners.  By precisely targeting the relatively small percentage of people responsible for committing much of the violence in New York, we are making the safest large city in America even safer.  We remain relentless in our efforts to identify, arrest, and prosecute anyone who involves themselves in such behavior whether it is on our streets or in our jails.”

According to the allegations in the Complaint[1] unsealed today and public court records:

On May 8, 2019, at approximately 2:54 p.m., FRIERSON entered a bank (“Bank-1”) at 120 East Fordham Road between Creston Avenue and East 190th Street in the Bronx, New York.  Upon approaching a teller window at Bank-1, FRIERSON passed a note to a bank teller (“Teller-1”), which read:  “I AM ARMED GIVE ME ALL OF IT!  100’S, 50’S, 20, 10 IMMEDIATELY NO DIE PACKS.”  After providing Teller-1 with the note, FRIERSON told Teller-1, in substance and in part: “Give me all hundreds.  Give me all your money.  I’m armed.”  Teller-1 gave FRIERSON approximately $200 of Bank-1’s money and FRIERSON fled.

FRIERSON was previously charged and convicted in the Southern District of New York after a jury trial for committing five bank robberies in Manhattan between August 16, 2017, and August 29, 2017.  Evidence at trial established that the defendant committed these robberies by passing notes to tellers threatening that FRIERSON had a gun.  FRIERSON was released from prison on April 29, 2019.

*                *                *

FRIERSON, 49, of New York, New York, has been charged with one count of bank robbery, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FBI/NYPD Violent Crime Task Force and the NYPD Warrants – BRONX/JAWS Team.  

The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Aline R. Flodr, Sheb Swett, and Sagar K. Ravi 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 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 Jeffrey E. Shuren, M.D., director of the Center for Devices and Radiological Health at the U.S. Food and Drug Administration (“FDA”), announced today that the U.S. has settled civil fraud claims under the False Claims Act against CAREFUSION CORPORATION (“CAREFUSION”), a medical device distributor based in San Diego, California, for buying and selling medical devices that were not approved or cleared by the FDA.  These unapproved and uncleared devices were then used by medical providers in medical procedures, and the providers submitted claims for reimbursement to federal healthcare programs, such as Medicare and Medicaid, for those procedures.  As part of the settlement, approved May 7, 2019, by U.S. District Judge Edgardo Ramos, CAREFUSION agreed to pay the Government $3.3 million and admitted to buying and selling medical devices that had not received the requisite approval or clearance from the FDA.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Medical devices that do not have the required FDA approval or clearance cannot be bought and sold for use on patients.  When unapproved devices are used in medical procedures, it presents a public health and safety risk, and federal health insurance programs should not foot the bill.  Medical device distributors must follow FDA rules and this Office will continue to hold them accountable when they don’t.”

Director Jeffrey E. Shuren, M.D. said:  “Americans rely on FDA oversight to ensure that their medical devices are safe and effective.  When companies sell devices without proper authorization, they may be putting patients’ health at risk.  We will continue to investigate and bring to justice companies that attempt to subvert the regulatory functions of the FDA, which are intended to protect the public health.  We commend the efforts of the Department of Justice for their vigorous pursuit of justice in this matter.”

Since 1976, many different kinds of medical devices must, depending on the degree of patient risk, be approved or cleared by the FDA before they can be marketed for use on patients.  There is a grandfather exception for medical devices that were legally in commerce prior to 1976, which are known as “pre-amendment” devices.  To qualify for pre-amendment status, the device’s owner (typically the manufacturer) must, among other things, have marketed the device prior to May 28, 1976. 

In the settlement, CAREFUSION admitted to distributing medical devices for which the device manufacturer (the “Manufacturer”) had not obtained the required approvals or clearances from the FDA and for which the Manufacturer could not demonstrate that the pre-amendment exception applied.  In particular, CAREFUSION admitted that:

 

• From 2007 to 2014, the Manufacturer sold devices for which the Manufacturer (i) had not obtained approval or clearance from the FDA to market; (ii) was relying on the pre-amendment status exemption to market, but (iii) lacked the required evidence to demonstrate that the devices qualified for the pre-amendment status exemption.

 

• During that period, CAREFUSION purchased devices from the Manufacturer that the Manufacturer wrongly claimed qualified for the pre-amendment status exception, and then sold those devices to hospitals and other health care providers.

 

• Some of those devices were used in procedures for which providers submitted claims for reimbursement to federal health care programs. 

 

• While the Manufacturer provided CAREFUSION with the evidence on which it was relying to justify its claim that the devices qualified for the pre-amendment status exemption, that evidence was insufficient.

 

• After the FDA issued a warning letter to the Manufacturer in 2014 and the Manufacturer issued recall notices for the devices at issue, CAREFUSION ceased selling and distributing the devices. 

 

Of the $3.3 million that CAREFUSION agreed to pay under the settlement, $2,821,539.92 will go to the United States and $478,460.08 will go to states adversely affected by CAREFUSION’s conduct through separate settlements with those states.

In connection with this settlement, the United States joined a private whistleblower lawsuit that had previously been filed under seal pursuant to the False Claims Act.  The whistleblower suit remains under seal as the Government continues its investigation.

Mr. Berman thanked the FDA, the Department of Health and Human Services Office of Inspector General, and the Centers for Medicare and Medicaid Services for their invaluable assistance in this matter.

The case is being handled by the Office’s Civil Frauds Unit.  Assistant United States Attorneys Sharanya Mohan and Mónica P. Folch are in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JEREMY REICHBERG was sentenced to 48 months in prison for bribery, corruption, and obstruction offenses related to his participation in a years-long scheme to bribe numerous high-ranking members of the New York City Police Department (“NYPD”).  Specifically, on January 2, 2019, REICHBERG was convicted of conspiracy, honest services fraud, and bribery charges after a two-month trial.  Today’s sentence was imposed by U.S. District Judge Gregory H. Woods.    

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For years, Jeremy Reichberg forged corrupt relationships with law enforcement through a stream of illegal payments and financial benefits.  In doing so, he eroded public confidence in the lifeblood of the City – an impartial New York City Police Department that treats all citizens equally.  He then attempted to cover it up by hiding evidence of his crimes.  Rather than buying himself special treatment and influence, Reichberg’s efforts have secured him multiple federal convictions and a significant prison sentence.”

In imposing today’s sentence, Judge Woods said:  “Reichberg engaged in an extended scheme . . . [in which] the instruments of government became tools for [Reichberg’s] own personal advancement.  This case was about much more than dollars and cents. . . .  It is important that the public be able to trust that its public officials act without fear or favor rather than spending time and public resources catering to the whims of well-heeled donors.”

According to the Superseding Indictment and Complaint filed in this case, and evidence presented at trial:   

The Bribery Scheme

Between 2008 and 2015, REICHBERG and a co-conspirator, Jona Rechnitz, orchestrated a scheme in which REICHBERG and Rechnitz provided numerous high-level New York City Police Department (“NYPD”) officials with financial and other benefits in order to obtain police-related favors in return, as opportunities arose.  REICHBERG and Rechnitz provided an array of gifts to the officers, including travel, home improvements, premium tickets to sporting events, expensive meals, and access to prostitutes, in order to have the officers effectively “on call” to provide police-related favors as REICHBERG and Rechnitz requested.  REICHBERG perpetrated the scheme, among other reasons, to monetize his contacts with the NYPD.  In particular, REICHBERG was an all-purpose “expediter” for individuals in his community, and – as a self-styled “NYPD Liaison” and as state chaplain with the New York State Police (which he was not) – he was paid in order to assist people at large with their problems with the NYPD and other pockets of local government. 

Over the course of the scheme, REICHBERG and Rechnitz corrupted or attempted to corrupt several officers, including the Chief of Department for the NYPD, the highest ranking uniformed officer in the NYPD; his executive officer; a deputy inspector and commanding officer of an Upper East Side precinct; and others.  Among the actions that those officers took at the request of REICHBERG and/or Rechnitz were police escorts for them and their friends, assistance with private disputes and investigations, the exercise of influence in decisions involving arrests and post-arrest treatment of individuals, the issuance of gun permits to civilians; and the deployment of official police vehicles (including police boats and a helicopter).

Obstruction of Justice

The night before he was arrested, REICHBERG called his brother over to his residence. REICHBERG gave his brother several fistfuls of business cards and cell phones and asked him to “hold” them.  The business cards included contacts for numerous officers REICHBERG had cultivated during the conspiracy.  Several of the phones contained text messages with those officers, including contemporaneous communications concerning many of the official acts mentioned above.  The next morning, REICHBERG was arrested and the FBI executed a search warrant at his home.  REICHBERG’s brother attempted to leave the home with the items during the search, but was stopped and searched by an FBI agent, who recovered the items.

*                *                *

REICHBERG, 45, of Brooklyn, New York, was convicted at trial of one count of conspiracy to commit bribery, one count of conspiracy to commit honest services fraud, one substantive count of honest services fraud, and one count of obstruction of justice. 

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

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Martin S. Bell, Jessica Lonergan, and Kimberly J. Ravener 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 Division of the Federal Bureau of Investigation (“FBI”), announced today that BRIAN ROBERSON, 42, of Fort Myers, Florida, pled guilty today to securities fraud before U.S. District Judge Cathy Seibel. 

According to the allegations contained in the Indictment and other court documents:

Starting in late 2010, ROBERSON, an investor (the “Investor”), and another partner (the “Partner”) met in New York, New York, and agreed to jointly develop and implement a high-frequency trading algorithm.  Among other things, ROBERSON falsely represented to the Investor and Partner that he was able to secure favorable terms at a securities clearing firm (the “Clearing Firm”) because he and his company, Savant Capital Management LLC (“Savant”), already held significant funds in an account there.  ROBERSON suggested that the Investor wire funds to Savant, which would be placed into an account at the Clearing Firm and could thereafter be used for trading based on the algorithm. 

In January 2011, at the direction of ROBERSON, and in reliance upon ROBERSON’s representations, the Investor wired more than $250,000 to an account controlled by ROBERSON.  Unbeknownst to the Investor, ROBERSON transferred only approximately $233,000 of the Investor’s funds to the Clearing Firm.  The remaining funds were withdrawn in cash or transferred to other bank accounts controlled by ROBERSON and misappropriated for his personal benefit.

By April 2011, ROBERSON ceased making payments to the vendor responsible for development of the trading algorithm, and the Investor contacted ROBERSON and requested the return of his remaining investment funds, which the Investor understood, based on ROBERSON’s previous representations, were intact.  ROBERSON returned a portion of the Investor’s funds, totaling approximately $50,000.  Unbeknownst to the Investor, however, ROBERSON misappropriated the remainder of the Investor’s funds to cover trading losses and fees in ROBERSON’s accounts at the Clearing Firm, and by transferring a portion of the Investor’s funds to bank accounts belonging to ROBERSON and his family members up through and including in October 2011, when ROBERSON’s account at the Clearing Firm was closed.  ROBERSON ultimately used the Investor’s funds for his and his family’s personal benefit, including the purchase of expensive jewelry.

ROBERSON pled guilty to one count of securities fraud, which carries a maximum sentence of 25 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

ROBERSON is scheduled to be sentenced by Judge Seibel on August 26, 2019, at 10:00 a.m.

Mr. Berman praised the investigative work of the FBI.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that REBECCA BAYUO, a Bronx tax preparer, was sentenced yesterday to three years in prison for committing three different tax fraud schemes that involved using stolen identities to obtain fraudulent tax refunds.  BAYUO was convicted of 12 counts of aiding and assisting the preparation of false tax returns, one count of theft of government funds, one count of aggravated identity theft, and two counts of subscribing to false tax returns, after a two-and-a-half-week jury trial.  The charges arose from BAYUO’s preparation of false tax returns on behalf of her clients, her filing of false tax returns in the names of victims whose identities she had previously stolen, and her filing of false tax returns on her own behalf.  The sentence was imposed by U.S. District Judge John G. Koeltl.

U.S. Attorney Geoffrey S. Berman stated:  “Rebecca Bayou, a tax preparer in the Bronx, used stolen identities to file false tax returns – and collect the refunds – for dozens of victims in her money-making scheme.  Tax fraud does not just cheat the government of the funds needed to provide the critical services we all use, it victimizes all honest taxpayers paying into the system. Today’s sentence is a perfect example of the consequence often awaiting tax cheats – they go to prison.”

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

BAYUO owned and operated Breakthrough Insurance Brokerage, a tax preparation business, located in the Bronx, New York.  From in or about 2010 through in or about 2014, BAYUO used stolen identifying information of victims to file fraudulent federal income tax returns, which generated tax refunds to which BAYUO was not entitled.  Specifically, BAYUO repeatedly used stolen identities of dozens of victims to file false tax returns and unlawfully collect tax refunds in their names for herself from the Internal Revenue Service (“IRS”).  As a result of BAYUO’s criminal conduct, many of the victims were unable to file tax returns as required by law, and were deprived of tax refunds to which they were entitled, and on which they were counting.

In addition, from in or about 2011 through in or about 2012, BAYUO prepared and submitted to the IRS fraudulent tax returns for her clients that resulted in increased tax refunds, to which her clients were not entitled.  Among other things, BAYUO charged her clients an additional fee in exchange for providing them with the stolen identities of children as false “dependents” to claim on their tax returns.  BAYUO recycled the same stolen identities as false “dependents” for numerous tax returns, over at least a four-year time period.   

Finally, from in or about 2014 to in or about 2015, BAYUO filed false personal income tax returns in her own name, and included in those filings personal identifying information she had stolen from other individuals.  Specifically, on her own tax returns BAYUO included false “dependents,” whose identities she had stolen, in order to obtain a larger tax refund to which she was not entitled. 

*                *                *

Judge Koeltl sentenced BAYUO to a mandatory minimum sentence of two years in prison on the aggravated identity theft count and one year in prison on the remaining counts, to be served consecutively to the two-year term prison term.  In addition, Judge Koeltl imposed forfeiture in the amount of $76,985 and restitution in the amount of $127,356.

Mr. Berman praised the outstanding investigative work of the Internal Revenue Service.  The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Mollie Bracewell and Cecilia Vogel 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 today the unsealing of an indictment against four defendants charged with conducting a wide-ranging business email compromise fraud scheme.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these four men and others engaged in a profitable charade, posing as legitimate business counterparties to their victims, whom they deceived into sending them millions of dollars.  Now, thanks to the FBI, the defendants are no longer in a position to defraud anyone.”

FBI Assistant Director William F. Sweeney Jr. said:  “The subjects in this alleged scheme made it look so realistic that they were able to maintain it for several years, stealing millions of dollars from the victims.  This type of insidious fraud and cybercrime can do major harm to our financial system and the agency victims.  Our job each day in the New York FBI is to mitigate the damage and assist agencies and businesses in thwarting the threat these criminals pose.”

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

During the relevant time period, CYRIL ASHU, a/k/a “Akem Maleke,” a/k/a “Zabi Malik,” a/k/a “Bill Zambia Morgan,” a/k/a “Anibal Vasquez Roblero,” a/k/a “Baker Lee Walter,” IFEANYI EKE, a/k/a “Luthur Mulbah Doley,” JOSHUA IKEJIMBA, a/k/a “Johnson Ifeanyi Gbono,” a/k/a “Alfred Henshaw,” a/k/a “Peterson Kamara Lawson,” a/k/a “Ganiru Paul Thompson,” and CHINEDU IRONUAH, a/k/a “John Akuba Annan,” a/k/a “Kenneth Kwame Emerson,” a/k/a “Andrew Kamsi Mong,” a/k/a “Emmanuel Mong,” a/k/a “George Wallace,” a/k/a “George Weah,” a/k/a “Frederick Werner,” the defendants, and others known and unknown, engaged in a fraudulent business email compromise (“BEC”) scheme designed to deceive various victims, including an intergovernmental organization headquartered in New York City, into diverting commercial payments from their intended beneficiaries to bank accounts controlled by the defendants and their co-conspirators.

The defendants executed this fraudulent scheme by, among other things, obtaining fraudulent identification documents in false names, registering and incorporating shell companies, and opening fake bank accounts at various banks throughout the United States.  Victims were successfully tricked into wiring funds in accordance with fraudulent wiring instructions sent from fake email accounts, which were designed to resemble email accounts for individuals and companies with whom those victims had business relationships.  The defendants defrauded numerous victims of millions of dollars during the period from 2016 through July 2018.

CYRIL ASHU and IFEANYI EKE were arrested yesterday morning in Atlanta, Georgia and presented in the Northern District of Georgia.  JOSHUA IKEJIMBA was arrested yesterday afternoon in Houston, Texas, and will be presented the Southern District of Texas.  One defendant, CHINEDU IRONUAH, remains at large.

*                *                *

CYRIL ASHU, 34, of Georgia, IFEANYI EKE, 32, of Georgia, JOSHUA IKEJIMBA, 24, of Texas, and CHINEDU IRONUAH, 32, of Texas, are each charged with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and one count of wire fraud, in violation of 18 U.S.C. § 1343.  The charges of conspiracy to commit wire fraud and wire fraud each carry a maximum penalty of 20 years in prison.  CYRIL ASHU is also charged with one count of aggravated identity theft, which carries a mandatory sentence of two years in prison.   

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

Mr. Berman praised the outstanding investigative work of the FBI, as well as the assistance of prosecutors in the Northern District of Georgia, the Southern District of Texas, and the Western District of Texas. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Olga Zverovich and Jarrod L. Schaeffer are in charge of the prosecution.

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the 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, John B. Devito, the Special Agent-in-Charge of the New York Field Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced the arrest of TORRIE JOHNSON, a/k/a “Torrie Terrel Johnson,” a/k/a “Black,” for trafficking 25 firearms from South Carolina into New York City, and for being a felon in possession of a firearm.  JOHNSON was arrested and presented before U.S. Magistrate Judge Ona T. Wang in the Southern District of New York earlier today.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Torrie Johnson traveled from South Carolina to sell more than two dozen firearms illegally to an undercover officer in New York in the span of less than four months.  Stopping the flow of illegal guns into New York is essential to keep our city safe, and arresting alleged prolific gun traffickers is fundamental in that effort.”

ATF Special Agent in Charge John B. Devito said:  “As alleged, Johnson was responsible for transporting over two dozen firearms to the streets of New York.  Illegal firearms trafficking often has a nexus to a host of other violent crimes in our community.  Thanks to the efforts of the ATF/ NYPD Joint Firearms Task Force a trafficking scheme that could have put many at risk was dismantled and destroyed.  ATF and its law enforcement partners stand committed to ridding our communities of these illegal guns and those responsible for putting them on the streets.  I would like to thank the United States Attorney’s Office for their work in prosecuting this case.”

NYPD Commissioner James P. O’Neill said:  “While New York City continues to see record reductions in gun related violence, we must remain ever vigilant against illegal firearm trafficking in order to protect the people and communities we serve.  This arrest demonstrates that the cooperation with our local, state and federal law enforcement partners is producing real results that keep people safe, and ensure they feel safe too.”

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

On at least five occasions between January 23, 2019, and May 9, 2019, TORRIE JOHNSON, a/k/a “Torrie Terrel Johnson,” a/k/a “Black,” sold firearms to an undercover NYPD detective (the “UC”).  In total, JOHNSON sold 25 firearms to the UC in Manhattan and the Bronx, including a variety of 9 millimeter, .32, .38, .40, .45, and .380 caliber pistols and revolvers, as well as hundreds of rounds of assorted ammunition.

JOHNSON purchased the firearms in South Carolina, and transported them to New York for the purpose of selling them there.  On at least two occasions, the UC specifically told JOHNSON that he was planning to transport the firearms that JOHNSON had sold him to a foreign country, and resell them there for a profit.  JOHNSON also told the UC that he was attempting to obtain for sale to the UC a Century Arms Mini Draco AK-47 semi-automatic pistol.

JOHNSON, 41, of Sumter, South Carolina, has been charged with one count of firearms trafficking, in violation of 18 U.S.C. §§ 922(a)(1)(A) and 2, which carries a maximum sentence of five years in prison, and one count of being a felon in possession of a firearm, in violation of 18 U.S.C. §§ 922(g)(1) (2), which carries a maximum sentence of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

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

Mr. Berman praised the outstanding investigative work of the ATF, the NYPD, and the Joint Firearms Task Force.

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.

 

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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.

Assistant Attorney General for National Security John C. Demers, U.S. Attorney Geoffrey S. Berman for the Southern District of New York, Assistant Director John Brown of the FBI’s Counterintelligence Division and Assistant Director William F. Sweeney Jr. of the FBI’s New York Field Office announced today the filing of a civil forfeiture complaint against M/V Wise Honest (the “Wise Honest”), a 17,061-ton, single-hull bulk carrier ship registered in the Democratic People’s Republic of Korea (“DPRK” or “North Korea”).  The Wise Honest, one of North Korea’s largest bulk carriers, was used to illicitly ship coal from North Korea and to deliver heavy machinery to the DPRK.  Payments for maintenance, equipment, and improvements of the Wise Honest were made in U.S. dollars through unwitting U.S. banks.  This conduct violates longstanding U.S. law and United Nations Security Council resolutions. 

“This sanctions-busting ship is now out of service,” said Assistant Attorney General Demers.  “North Korea, and the companies that help it evade U.S. and U.N. sanctions, should know that we will use all tools at our disposal — including a civil forfeiture action such as this one or criminal charges — to enforce the sanctions enacted by the U.S. and the global community.  We are deeply committed to the role the Justice Department plays in applying maximum pressure to the North Korean regime to cease its belligerence.”

“Today’s civil action is the first-ever seizure of a North Korean cargo vessel for violating international sanctions,” said U.S. Attorney Berman.  “Our Office uncovered North Korea’s scheme to export tons of high-grade coal to foreign buyers by concealing the origin of their ship, the Wise Honest.  This scheme not only allowed North Korea to evade sanctions, but the Wise Honest was also used to import heavy machinery to North Korea, helping expand North Korea’s capabilities and continuing the cycle of sanctions evasion.  With this seizure, we have significantly disrupted that cycle.  We are willing and able to deploy the full array of law enforcement tools to detect, deter, and prosecute North Korea’s deceptive attempts to evade sanctions.”

“Although barred from doing business in this country, North Korea continues to violate U.S. and international sanctions while simultaneously taking advantage of unwitting U.S. companies,” said Assistant Director Brown.  “The FBI is committed to ensuring that North Korea be held responsible for their blatant disregard for U.S. law.  I am proud of the work done by the many men and women of the FBI who pursued this case.”

“Working with our law enforcement and intelligence partners around the world gives the FBI the ability to interdict illicit activity globally,” said Assistant Director in Charge Sweeney.  “Our counterintelligence efforts are squarely focused on protecting the American people. This seizure should serve as a clear signal that we will not allow foreign adversaries to use our financial systems to fund weapons programs which will be used to threaten our nation.”

According to the documents filed today in Manhattan federal court:

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

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

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

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

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

The Wise Honest is currently in the custody of the United States, having previously been seized pursuant to a warrant issued in the Southern District of New York.

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

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, John C. Demers, Assistant Attorney General for National Security, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation, and John Brown, Assistant Director of the Counterintelligence Division of the Federal Bureau of Investigation, announced today the filing of a civil forfeiture complaint against M/V Wise Honest (the “Wise Honest”), a 17,061-ton, single-hull bulk carrier ship registered in the Democratic People’s Republic of Korea (“DPRK” or “North Korea”).  The Wise Honest, one of North Korea’s largest bulk carriers, was used to illicitly ship coal from North Korea and to deliver heavy machinery to the DPRK.  Payments for maintenance, equipment, and improvements of the Wise Honest were made in U.S. dollars through unwitting U.S. banks.  This conduct violates longstanding U.S. law and United Nations Security Council resolutions. 

U.S. Attorney Geoffrey S. Berman said:  “Today’s civil action is the first-ever seizure of a North Korean cargo vessel for violating international sanctions.  Our Office uncovered North Korea’s scheme to export tons of high-grade coal to foreign buyers by concealing the origin of their ship, the Wise Honest.  This scheme not only allowed North Korea to evade sanctions, but the Wise Honest was also used to import heavy machinery to North Korea, helping expand North Korea’s capabilities and continuing the cycle of sanctions evasion.  With this seizure, we have significantly disrupted that cycle.  We are willing and able to deploy the full array of law enforcement tools to detect, deter, and prosecute North Korea’s deceptive attempts to evade sanctions.”

Assistant Attorney General John C. Demers said:  “This sanctions-busting ship is now out of service.  North Korea, and the companies that help it evade U.S. and U.N. sanctions, should know that we will use all tools at our disposal — including a civil forfeiture action such as this one or criminal charges — to enforce the sanctions enacted by the U.S. and the global community.  We are deeply committed to the role the Justice Department plays in applying maximum pressure to the North Korean regime to cease its belligerence.”

FBI Assistant Director William F. Sweeney Jr. said:  “Working with our law enforcement and intelligence partners around the world gives the FBI the ability to interdict illicit activity globally.  Our counterintelligence efforts are squarely focused on protecting the American people.  This seizure should serve as a clear signal that we will not allow foreign adversaries to use our financial systems to fund weapons programs which will be used to threaten our nation.”

FBI Assistant Director John Brown said:  “Although barred from doing business in this country, North Korea continues to violate U.S. and international sanctions while simultaneously taking advantage of unwitting U.S. companies.  The FBI is committed to ensuring that North Korea be held responsible for their blatant disregard for U.S. law.  I am proud of the work done by the many men and women of the FBI who pursued this case.”

According to the documents filed today in Manhattan federal court:

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

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

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

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

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

The Wise Honest is currently in the custody of the United States, having previously been seized pursuant to a warrant issued in the Southern District of New York.

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

The case is being handled by the Office’s Terrorism and International Narcotics as well as the Money Laundering and Transnational Criminal Enterprises Units.  Assistant U.S. Attorneys David W. Denton Jr. and Benet J. Kearney of the U.S. Attorney’s Office for Southern District of New York, and Trial Attorney Christian Ford of the National Security Division’s Counterintelligence and Export Control Section are in charge of this case. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that FUGUAN LOVICK, a/k/a “Fu Banga,” pled guilty today in Manhattan federal court to a shooting that he committed inside the Barclays Center on April 21, 2018, as part of his participation in the Nine Trey Gangsta Bloods (“Nine Trey”).  U.S. District Judge Paul A. Engelmayer accepted the defendant’s guilty plea.

U.S. Attorney Geoffrey S. Berman said:  “Today, Fuguan Lovick admitted to a brazen and dangerous act of violence.  While inside the Barclays Center with Tekashi 6ix 9ine and other Nine Trey gang members, Lovick fired a gun to intimidate rival gang members.  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.  As admitted in open court today, on April 21, 2018, LOVICK discharged a firearm inside the Barclays Center in Brooklyn in order to scare rival gang members. 

*               *               *

LOVICK, 42, of Brooklyn, New York, pled guilty to assault with a dangerous weapon in aid of racketeering, which carries a maximum sentence of 20 years in prison, and to brandishing a firearm in furtherance of a crime of violence, which carries a mandatory minimum sentence of seven years in prison and a maximum sentence of life.  LOVICK is scheduled to be sentenced before Judge Engelmayer on August 19, 2019.

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 Kings County District Attorney’s Office 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.

Geoffrey S.  Berman, the United States Attorney for the Southern District of New York, announced today that medical doctor PAUL J. MATHIEU and physical therapy doctor HATEM BEHIRY were each found guilty of participating in a $30 million scheme to defraud Medicare and the New York State Medicaid Program.  The defendants were convicted following a six-week jury trial before U.S. District Judge Lorna G. Schofield.

U.S. Attorney Geoffrey S. Berman said:  “These corrupt doctors betrayed their medical training, their professions, and their Medicare and Medicaid billing privileges.  They chose not to heal, but to harm, the taxpaying public – the real victims of this scheme.”

According to the evidence presented during the trial and statements made in related court filings and proceedings:

Between 2007 and 2013, MATHIEU fraudulently posed as the owner of three of six medical clinics in Brooklyn (the “Clinics”), which were all in fact owned by co-conspirator Alexksandr Burman.  During that time period, the Clinics fraudulently billed Medicare and Medicaid approximately $30 million for medical services and supplies that were medically unnecessary and/or not provided.  Throughout this time period, MATHIEU fraudulently posed as the owner of three of those clinics, in order to satisfy a New York State law requirement that medical clinics must be owned and operated by a medical professional. 

For the last three-and-a-half years of the scheme, MATHIEU also directly participated in the fraudulent billing practices of the Clinics, by visiting several of the Clinics on a weekly basis, where he would sign stacks of false and fraudulent medical charts, and issue referrals for expensive additional testing, occupational therapy, and physical therapy, including for physical therapy purportedly provided by defendant BEHIRY.   During this time period, MATHIEU saw no patients at all, simply falsifying enormous stacks of phony medical records falsely stating that he had seen and treated such patients.  

BEHIRY similarly participated in the fraudulent billing practices of the Clinics, by pretending to provide physical therapy to many of those same patients, most of whom were receiving cash kickbacks for coming to the Clinics.  In fact, BEHIRY was engaged in an empty charade designed to create the appearance of physical therapy, while almost no therapy was actually being provided to many patients.  To further the fraud, BEHIRY also prepared and oversaw the preparation of a huge quantity of phony medical and billing records.  Among other things, BEHIRY completed thousands of fabricated reports, in which patients were described almost identically, and with little or no regard for actual medical conditions or needs.  As with MATHIEU, many of the charts were for patients whom BEHIRY and his team had not evaluated or provided therapy to at all.

In addition to his role in the Clinics, MATHIEU also wrote unneeded prescriptions for adult diapers and other incontinence products, which were filled at Universal Supply Depot, a medical supply company also owned by Burman’s wife.  MATHIEU was so prolific in this regard that, throughout the period of the fraud, he was regularly a top prescriber of adult diapers in the State of New York.  MATHIEU continued to write such prescriptions, even after the Clinics were closed down because Medicare stopped paying any of the clinics’ claims.

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PAUL J. MATHIEU, 53, of Morristown, New Jersey, and HATEM BEHIRY, 51, of Brooklyn, New York, were each convicted of one count each of conspiracy to commit health care fraud, mail fraud, and wire fraud; and conspiracy to make false statements relating to a health care program; as well as the substantive offenses of health care fraud, mail fraud, and wire fraud.  The conspiracy to commit health care fraud, mail fraud and wire count, and the substantive mail fraud and wire fraud counts each carry a maximum sentence of 20 years in prison.  The substantive health care fraud count carries a maximum sentence of 10 years in prison, and the conspiracy to make false statements relating to health care carries a maximum sentence of five years in prison.  Each count also carries a maximum fine of $250,000, or twice the gross gain or loss from the offense.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the Court.

MATHIEU and BEHIRY bring to 15 the number of defendants convicted in this and related cases.  The other defendants include:  Aleksandr Burman, 57, the leader of the scheme, who was sentenced in a related case on May 8, 2017, to 120 months in prison; Marina Burman, 56, the former wife of Aleksandr Burman and the owner of Universal Supply Depot, was sentenced on May 17, 2018, to 36 months in prison; Mustak Y. Vaid, 45, a physician, was sentenced on August 1, 2018, to 18 months in prison; Ewald J. Antoine, 68, a physician, was sentenced on August 21, 2018, to 18 months in prison; Asher Oleg Kataev, 50, a Burman business partner, was sentenced on May 31, 2018, to 36 months in prison; Alla Tsirlin, 49, a Clinic office manager, was sentenced on June 5, 2018, to a year and a day in prison; and Edward Miselevich, 46, and Ivan Voychak, 39, Burman partners who jointly ran a related ambulette company, were sentenced on June 12, 2018, and July 19, 2018, respectively, to 36 months in prison each.  In addition, Lina Zhitnik, 52, and Dina Cabana Rubenstein, 39, occupational therapists, Valery Volsky, 60, a bookkeeper, Olga Kharuk, 47, and Natalya Grabovskaya, 48, office managers, have each also pled guilty for their participation in this scheme and are awaiting sentencing.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Christopher T. Tersigni, the Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), today announced that Estonian residents JEVGENI BOKOV, VIKTOR LITVINTSUK, AMID MAGERRAMOV, NIKOLAI NIFTALIJEV, and VITALI VORONJUK have been charged in an Indictment filed in Manhattan federal court with narcotics trafficking and money laundering offenses, including conspiracy to import carfentanil and fentanyl into the United States.  In the course of the investigation, law enforcement seized more than five kilograms of mixtures and substances containing carfentanil, representing one of the largest seizures of fentanyl analogue in the DEA’s history.  The defendants were arrested in Estonia in September 2018, based on the charges in this case.  Today, BOKOV, MAGERRAMOV, and VORONJUK were extradited to the United States, and they will be arraigned before U.S. Magistrate Judge Ona T. Wang this afternoon.  LITVINTSUK was previously extradited to the United States and arraigned before U.S. Magistrate Judge Henry B. Pitman on February 6, 2019.  NIFTALIJEV remains in custody in Estonia, where proceedings for his extradition to the United States are pending.  The case has been assigned to U.S. District Judge J. Paul Oetken. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “The arrest of these five defendants for allegedly conspiring to traffic large quantities of carfentanil – a drug 1,000 times more potent than heroin – is yet another important case brought by this Office and the DEA in keeping deadly drugs out of our neighborhoods.  A key component in battling the opioid epidemic is disrupting the supply chain, and today is another important step in that fight.”

Special Agent in Charge Christopher T. Tersigni said:  “Fentanyl and carfentanil are extremely dangerous and deadly.  Two milligrams of fentanyl, the amount of two grains of salt, can kill a person, and carfentanil is even more potent.  We are pleased to see these individuals brought to justice as we continue to fight to keep this poison out of the United States.”

According to the allegations in the Indictment and the Complaints previously filed against the defendants:[1]

Between October 2017 and August 2018, the defendants conspired to import large quantities of carfentanil and fentanyl into the United States.  Carfentanil is a fentanyl analogue approximately 1,000 times more potent than heroin, and is used commercially to sedate large animals, such as elephants.  During that period, the defendants participated in a series of recorded meetings and telephone communications with an individual they understood to be affiliated with an international drug trafficking organization, for the purpose of arranging to import narcotics into the United States.  That individual was, in fact, a confidential source working with the DEA (the “CS”).  LITVINTSUK, MAGERRAMOV, NIFTALIJEV, and VORONJUK prepared and distributed a total of more than five kilograms of substances containing carfentanil for importation into the United States.  In addition, BOKOV laundered hundreds of thousands of U.S. dollars, which he understood to be illicit narcotics proceeds, from Europe to the United States.

In mid-October 2017, MAGERRAMOV and BOKOV met together with the CS in a country in Eastern Europe (“Country-1”).  During the meeting, the CS informed MAGERRAMOV and BOKOV that the CS was a member of a Colombian drug cartel that distributed narcotics in the United States and laundered the resulting proceeds.  Several days later, on October 20, 2017, the CS met with BOKOV to discuss laundering money for the purported cartel.  At the meeting, BOKOV agreed to transfer narcotics proceeds for the cartel from Europe to the United States.  Between fall 2017 and spring 2018, the CS provided BOKOV with approximately €250,000 in cash, which BOKOV had been informed constituted narcotics proceeds, and BOKOV agreed to transfer the cash to a bank account in New York City, which was in fact controlled by the DEA.  Over the course of multiple transactions, BOKOV transferred the funds, less a five percent commission, from Europe to the New York bank account. 

Throughout late 2017 and early 2018, the CS also participated in a series of meetings with LITVINTSUK, MAGERRAMOV, NIFTALIJEV, and VORONJUK to discuss narcotics transactions.  During the meetings, LITVINTSUK, MAGERRAMOV, NIFTALIJEV, and VORONJUK agreed to provide the CS with fentanyl in a country in Europe (“Country-2”), with the understanding that the fentanyl would be transported to the United States, mixed with heroin and other controlled substances, and sold to the cartel’s customers in New York City, among other places.

In May 2018, MAGERRAMOV coordinated the delivery of samples of carfentanil to the CS in Country-2.  On May 9, 2018, MAGERRAMOV, NIFTALIJEV, and VORONJUK delivered three samples of narcotics to an agreed-upon location in Country-2.  The three samples were seized by law enforcement, tested in a laboratory, and found to contain approximately 550 grams of mixtures and substances containing carfentanil.  The CS later informed MAGERRAMOV that the three samples had been transported to the United States, that the purported cartel was satisfied with the quality of the narcotics, and that the CS wanted to purchase additional carfentanil from MAGERRAMOV and his associates.

In late May 2018, MAGERRAMOV arranged to have additional carfentanil delivered to the CS for importation into the United States.  On May 30, 2018, VORONJUK delivered a package of narcotics to an agreed-upon location in Country-2.  The package was seized by law enforcement, tested in a laboratory, and found to contain approximately 5.2 kilograms of mixtures and substances containing carfentanil.  The CS subsequently reported to MAGERRAMOV that the carfentanil had been transported to the United States.     

During June and July 2018, the CS continued to meet and communicate with the defendants about arranging additional narcotics transactions in the future and payment for the carfentanil that had been delivered.  On July 17, 2018, the CS provided BOKOV with approximately $20,000, and BOKOV agreed to transfer that money to an account controlled by MAGERRAMOV, with the understanding that the $20,000 payment was for additional carfentanil that would be imported into the United States.

*               *               *

BOKOV, 44, MAGERRAMOV, 38, NIFTALIJEV, 32, and VORONJUK, 36, all of Estonia, and LITVINTSUK, 39, of Russia, are charged with one count of conspiring to import 100 grams and more of carfentanil and 400 grams and more of fentanyl into the United States, and to manufacture and distribute 100 grams and more of carfentanil and 400 grams and more of fentanyl, intending that the narcotics would be imported into the United States.  That charge carries a maximum sentence of life imprisonment and a mandatory minimum sentence of 10 years’ imprisonment.  LITVINTSUK, MAGERRAMOV, NIFTALIJEV, and VORONJUK are also charged with two counts of manufacturing and distributing 100 grams and more of carfentanil, intending that it would be imported into the United States, each of which carries a maximum sentence of life imprisonment and a mandatory minimum sentence of 10 years in prison.  BOKOV is further charged with two counts of money laundering, each of which carries a maximum sentence of 20 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

Mr. Berman praised the outstanding efforts of the DEA’s Special Operations Division; the DEA’s Country Office in Copenhagen, Denmark; the United States Marshals Service; the U.S. Department of State, Diplomatic Security Service; the Estonia Central Criminal Police; the Estonia Office of the Prosecutor General; the Estonia Ministry of Justice; and the U.S. Department of Justice’s Office of International Affairs.

This case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Shawn G. Crowley and George D. Turner are in charge of the prosecution.

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

 

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[1] As the introductory phrase signifies, the entirety of the texts of the Indictment and Complaints charging the defendants 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 the conviction of CHRISTIAN DAWKINS and MERL CODE for conspiring to bribe various NCAA Division I men’s college basketball coaches.  DAWKINS was additionally found guilty of a substantive count of bribery.  The defendants were convicted after a two-and-a-half week trial before U.S. District Judge Edgardo Ramos. 

DAWKINS and CODE were both previously convicted for their roles in a scheme to defraud an Adidas-sponsored university by funneling payments from Adidas to the family of a high-school college basketball player and then concealing those payments from the school.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Today, Christian Dawkins and Merl Code were found guilty a second time for their roles in corrupting the world of college basketball, in this case for conspiring to bribe multiple Division I men’s basketball coaches.  And while their convictions mark the culmination of the criminal charges announced by this Office in September 2017, they should also make clear to those who might be tempted to engage in the sort of misconduct these prosecutions have only begun to expose:  that bribery is a crime, one this Office is prepared to charge criminally and prosecute to the full extent of the law.”

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

Overview of the Scheme

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

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

 

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

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

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

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

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

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DAWKINS, 26, of Atlanta, Georgia, and CODE, 45, of Greer, South Carolina, were each convicted of one count of conspiracy to commit bribery, which carries a maximum sentence of five years in prison.  DAWKINS was also convicted of a substantive bribery count, which carries a maximum sentence of 10 years in prison.  DAWKINS and CODE were acquitted of the other charges in the Indictment.  Both defendants will be sentenced before Judge Ramos at a future date.

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 ANDREEA DUMITRU, a/k/a “Andreea Dumitru Parcalaboiu,” an immigration attorney based in Queens, New York, was sentenced to five years in prison in connection with her operation of a scheme to submit fraudulent asylum applications to United States immigration authorities.  DUMITRU was convicted on November 19, 2018, of asylum fraud, making false statements to immigration authorities, and aggravated identity theft following a two-week trial before U.S. District Judge Lewis A. Kaplan, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Using lies and forgery, Andreea Dumitru, an immigration attorney, cheated the nation’s asylum program.  For her crimes, Dumitru will now spend five years in prison.”

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

Between 2013 through 2017, DUMITRU operated a scheme to submit fraudulent I-589 Forms in connection with applications for asylum.  Specifically, DUMITRU submitted more than 100 applications in which she knowingly made false statements and representations about, among other things, the applicants’ personal narratives of alleged persecution, criminal histories, and travel histories.  DUMITRU deliberately fabricated detailed personal stories of purported mistreatment of her clients, forged her clients’ signatures, and falsely notarized affidavits. 

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In addition to the prison term, DUMITRU, 43, of Queens, New York, was sentenced to one year of supervised release, and was ordered to forfeit $157,500.

Mr. Berman praised the outstanding investigative work of Homeland Security Investigations and United States Citizenship and Immigration Services, and thanked the Federal Bureau of Investigation and the United States Department of Justice’s Executive Office for Immigration Review for their assistance.

This case is being prosecuted by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Nicholas W. Chiuchiolo, Alison G. Moe, and Robert B. Sobelman are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing today of an Indictment charging TODD CAPSER with defrauding one financial institution of $43 million, and attempting to defraud at least nine other financial institutions of between $46 million and $52 million each.  CAPSER was arrested earlier today in Billings, Montana, and will be presented before Magistrate Judge Timothy J. Cavan of the District of Montana later this afternoon.  The case is assigned to U.S. District Judge J. Paul Oetken of the Southern District of New York.

U.S. Attorney Geoffrey S. Berman said:  “Todd Capser, as alleged, managed to mislead a Canadian financial institution into lending him more than $43 million, and tried to mislead other financial institutions into lending him tens of millions of dollars more, by creating mountains of false evidence of his solvency to represent himself as a legitimate business owner.  Capser is now in custody and faces significant time in prison for his alleged crimes.”

FBI Assistant Director William F. Sweeney Jr. said:  “Despite the fact that this was a $43 million fraud scheme, the alleged illegal conduct was fairly simple.  Omitting key information and falsifying loan documents are violations of federal law.  To make matters worse, Capser went so far as to claim his daughter was terminally ill in an effort to explain behavior that would have otherwise attracted negative attention.  Capser took a significant risk by conducting himself in this way.  Unfortunately for him, he miscalculated the reward.”

As alleged in the Indictment unsealed today:[1]

From January 2016 through April 2019, CAPSER and CAPSER’s father (“CC-1”) 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 and CC-1 attempted to induce at least nine other Financial Institutions to loan between $46 million and $52 million each to refinance the original loan.

CAPSER and CC-1 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, CC-1, and their 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.

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CAPSER, 47, of Billings, Montana, has been charged with one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.  CAPSER has also been charged with one count of aggravated identity theft, which carries a mandatory sentence of two years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

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

Mr. Berman praised the outstanding investigative work of the FBI.  He also thanked the FBI’s Billings Resident Agency 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.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that RASHAN MICHEL, the owner of a bespoke clothing business in Atlanta, Georgia, pled guilty in Manhattan federal court today to agreeing to facilitate bribes from a financial adviser to Chuck Connors Person (“Person”), a former Auburn University men’s basketball coach.  The bribes were provided in exchange for Person using his influence over Auburn basketball players to retain MICHEL’s services and the services of the financial adviser paying the bribes.  MICHEL pled guilty before U.S. District Judge Loretta A. Preska.   

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Rashan Michel was paid to facilitate bribe payments from a financial adviser to college basketball coaches.  His corruption of the system was significant but, sadly, far from unique.  Indeed, in the last year this Office has convicted nine defendants in connection with fraud or bribery in the world of college basketball.  We will continue to pursue those who offer or take bribes to influence student-athletes without regard to their interest.”

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

In the fall of 2016, MICHEL, the founder and operator of a clothing store that specialized in making bespoke suits for professional athletes, met a financial adviser and business manager who, unbeknownst to MICHEL, was providing information to law enforcement (“CW-1”).  MICHEL told CW-1 that MICHEL could introduce CW-1 to several college basketball coaches, including Person, who was then a men’s basketball coach at Auburn University, who would be willing to accept bribes from CW-1.  MICHEL and CW-1 agreed to offer such bribes in return for the coaches’ agreeing to exert their influence over student-athletes to retain the services of Michel and CW-1 once the student-athletes entered the National Basketball Association (“NBA”).  

In November 2016, MICHEL, who had a preexisting relationship with Person, arranged a meeting in Auburn, Alabama, to introduce CW-1 to Person and to broker the arrangement between CW-1 and Person whereby CW-1 would provide bribes to Person.  At that meeting, in exchange for bribes, Person agreed to exert his influence over certain student-athletes Person coached at Auburn University to retain the services of CW-1 and MICHEL once those players entered the NBA.  Over the next several months, in exchange for the bribes described above, Person did, in fact, arrange a meeting among CW-1, MICHEL and an Auburn student-athlete in Manhattan.  At that meeting, Person falsely touted CW-1’s qualifications as a financial adviser and business manager without disclosing that Person was, in fact, being bribed to recommend CW-1 to the student-athlete.  In connection with the bribery scheme, Person also steered the parent of a second student-athlete to CW-1.

In addition to brokering the bribery scheme with Person, MICHEL also solicited and received for himself tens of thousands of dollars in payments from CW-1 in exchange for introducing CW-1 to Person, and for promising to introduce CW-1 to other basketball coaches at NCAA Division I universities to engage in a similar bribery arrangement.  Ultimately, MICHEL did introduce one member of a university athletics department to CW-1 for the purpose of engaging in a similar scheme.  Working with MICHEL, CW-1 made payments to that individual, who in turn attempted to steer the parent of a student-athlete to CW-1.

In all, CW-1 paid more than $91,500 in bribes to Person, and paid MICHEL $24,000 for his role in the scheme.

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MICHEL, 44, of Atlanta, Georgia, pled guilty to one count of conspiracy to commit bribery.  As a condition of his plea, MICHEL agreed to forfeit $24,000.  The charge carries a maximum term of five years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.  Sentencing is scheduled for September 18, 2019, before Judge Preska.

Mr. Berman praised the work of the Federal Bureau of Investigation 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, Aline R. Flodr, Noah Solowiejczyk, and Eli J. Mark are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LOUIS PINA was sentenced to 39 months in prison for participating in a scheme to defraud drivers of two ride-sharing companies (“Company-1” and “Company-2”) by accessing those drivers’ accounts without authorization in order to divert driver funds to bank accounts controlled by PINA and other members of the scheme (the “Scheme”).  PINA previously pled guilty to one count of conspiracy to commit access device fraud and one count of aggravated identity theft before U.S. District Judge Jed S. Rakoff, who imposed today’s sentence.  PINA is the eighth defendant to have pled guilty in this case.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Louis Pina was a leader of a criminal consortium that deceived the drivers of two ride-sharing companies, enabling the criminals to access drivers’ accounts and steal millions of dollars.  Hard-working men and women who worked long hours to make a living had their accounts hacked into and their hard-earned money stolen.  Now Louis Pina is going to prison for his crimes.”

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

PINA and his co-defendants defrauded livery drivers and ride-sharing companies using mobile ride-sharing applications.  The Scheme targeted drivers associated with Company-1 and Company-2.  Scheme members called Company-1 and Company-2 drivers posing as Company-1 and Company-2 representatives, and deceived the drivers into providing unique personal identifiers and other information that was then used to obtain unauthorized access into the online Company-1 and Company-2 driver accounts.  Once members of the Scheme logged into Company-1 and Company-2 driver accounts without authorization, they altered information in those compromised accounts and diverted driver funds to bank accounts they controlled.  PINA personally called Company-1 and Company-2 drivers to obtain their login credentials, hacked the accounts of Company-1 and Company-2 drivers, and recruited others into the Scheme. Scheme members compromised hundreds of Company-1 and Company-2 driver accounts and stole millions of dollars from Company-1 and Company-2 driver accounts.

*                *                *

In addition to the prison term, Judge Rakoff ordered PINA, 24, of the Bronx, New York, to make court-ordered restitution in the amount of $198,663 to Company-1 and $243,112 to Company-2.

Mr. Berman praised the outstanding investigative work of the Special Agents of the United States Attorney’s Office for the Southern District of New York and the United States Secret Service.  Mr. Berman further thanked the Westchester County District Attorney’s Office for their assistance and cooperation throughout this case, and also thanked the FBI’s Westchester County Safe Streets Task Force for their assistance. 

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Sheb Swett and Noah Solowiejczyk are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that VICTOR GONZALEZ was sentenced yesterday in White Plains federal court to 235 months in prison for sex trafficking of minors and production of child pornography.  GONZALEZ pled guilty to these charges on January 24, 2019.  United States District Judge Cathy Seibel imposed yesterday’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Victor Gonzalez admitted to the reprehensible crimes of trafficking underage girls for his commercial benefit and producing child pornography of one of his victims.  He will now serve over 19 years in prison, were he will not be able to harm any more children.”

FBI Assistant Director William F. Sweeney Jr. said:  “It is our responsibility as a community to protect the vulnerable, and stop people like Mr. Gonzalez from ever harming girls again.  However, the FBI needs your help and law enforcement cannot do this on our own.  We work with dedicated detectives, community activists and charity organizations who do all they can to help these girls get away from these criminal and rebuild their lives.  We also need help from the community.  If you know of a young girl or boy in trouble, please contact the FBI at 212-384-1000.”

According to the Information and other filings in White Plains federal court:

From at least in or about 2014 to in or about June 2018, GONZALEZ engaged in the sex trafficking of three teenage girls (“Victim-1,” “Victim-2,” and “Victim-3”) for his own commercial benefit.  GONZALEZ solicited Victim-1, who was approximately 14 or 15 years old, and Victim-2, who was approximately 15 or 16 years old, for sex in exchange for money.  He met Victim-3, who was 17 years old, on an online dating website after he misrepresented himself as being in his 20’s.  After establishing a relationship with each of the victims, GONZALEZ, using online services and the telephone, posted online advertisements for commercial sex services with the minor victims and arranged for the victims to engage in those services with adult men.  He also transported the victims on numerous occasions to meet with those men in New York and Connecticut.  GONZALEZ further sexually abused the victims himself.  In addition, in or about January 2016, GONZALEZ produced a video containing child pornography of Victim-1, depicting GONZALEZ engaged in sexual activity with the victim. 

*                *                *

 In addition to his prison term, GONZALEZ, 41, of Millwood, New York, was sentenced to 10 years of supervised release and restitution in an amount to be determined by the Court at a later date.

Mr. Berman praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force, the Greenburgh Police Department, and the New Castle Police Department and thanked the Westchester County District Attorney’s Office and the White Plains Police Department for their assistance. 

This case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys Jacqueline Kelly and Christopher Brumwell are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOSEPH OLIVIERI, a physician who practiced in Manhattan, pled guilty today before U.S. District Judge Paul A. Crotty to participating in a conspiracy to illegally distribute oxycodone and other controlled substances.  OLIVIERI’s co-defendant MATTHEW BRADY pled guilty on April 30, 2019, to his role in the conspiracy.

U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Joseph Olivieri violated his oath to practice medicine for the sole purpose of improving his patients’ health and instead hid behind his medical license to sell addictive, dangerous narcotics.  He put his peoples’ lives at risk to line his own pockets.  He now faces time in prison for his crimes.”

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

OLIVIERI, a physician who practiced in New York, New York, participated in a five-year-long scheme to divert oxycodone and other controlled substances for illicit use.  OLIVIERI was one of the top 15 prescribers of opioids in New York State during much of the diversion scheme.  He prescribed over 250,000 pills of controlled substances, including highly addictive opioids such as oxycodone, oxymorphone, and morphine sulfate, to individuals he knew did not have a legitimate medical need for them.  OLIVIERI was paid in cash for these prescriptions, often by other individuals, including co-defendant MATTHEW BRADY, who arranged with OLIVIERI for individuals posing as “patients” to obtain the prescriptions from OLIVIERI, and then collected the pills for their unlawful re-sale.  Financial records show that OLIVIERI deposited more than $1 million in cash into his bank accounts during the scheme.

*                *                *

OLIVIERI, 72, of Scranton, Pennsylvania, pled guilty to one count of conspiracy to distribute controlled substances outside the scope of professional practice and not for a legitimate medical purpose, which carries a maximum sentence of 20 years in prison.  OLIVIERI is scheduled to be sentenced by Judge Crotty on August 5, 2019, at 11:00 a.m.

BRADY, 34, of Staten Island, New York, pled guilty on April 30, 2019, also before Judge Crotty, to one count of conspiracy to unlawfully distribute controlled substances, which carries a maximum sentence of 20 years in prison.  BRADY is scheduled to be sentenced by Judge Crotty on July 30, 2019, at 11:30 a.m.

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the defendants’ sentences will be determined by Judge Crotty.

Mr. Berman praised the outstanding investigative work of the New York City Police Department, United States Immigration and Customs Enforcement’s Homeland Security Investigations, the Federal Bureau of Investigation, and the Office of Inspector General of the United States Department of Health and Human Services.

The case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Tara La Morte, Robert B. Sobelman, and Daniel C. Richenthal are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York (“SDNY”), and Peter D. Lopez, Regional Administrator of the U.S. Environmental Protection Agency (“EPA”), announced today that the United States has filed a civil lawsuit against Chestnut Petroleum Distributor, Inc., and its affiliates CPD Energy Corp., CPD NY Energy Corp., Chestnut Mart of Gardiner, Inc., Chestnut Marts, Inc., Greenburgh Food Mart, Inc., Middletown Food Mart, Inc., and NJ Energy Corp. (collectively, “Defendants”), for violating the Resource Conservation and Recovery Act (“RCRA”) at 20 separate gas stations within the Southern District of New York and adjoining districts. 

U.S. Attorney Geoffrey S. Berman stated:  “As alleged in the complaint, Defendants repeatedly failed to comply with regulations designed to prevent gasoline leaks from threatening public health and the environment.  Today’s lawsuit seeks to hold Defendants accountable for their conduct and ensure that the public is protected in the future.”    

EPA Regional Administrator Peter D. Lopez said:  “Failure to monitor and maintain tanks to prevent leaks can pose a serious safety risk, as the leaking underground tanks can release toxic components that can seep into the soil and the groundwater.  This lawsuit seeks to hold the companies responsible for properly managing their tanks to reduce these risks where these gas stations are located.”                          

Petroleum products such as gasoline contain chemical compounds that pose substantial threats to human health.  Service stations typically store gasoline in underground storage tanks.  When operated conscientiously and monitored closely, underground storage tanks are a safe and effective means to store gasoline.  But when those tanks are not subjected to basic operational safeguards, they can endanger the public and the environment, for example by leaking petroleum into the water supply, discharging toxic vapors into the air, or even triggering fires or explosions.  EPA’s regulations under RCRA are designed to protect the public by requiring underground storage tank operators to reduce the likelihood of leaks, monitor for leaks so they can promptly be addressed, and maintain adequate insurance to conduct corrective action and compensate injured third parties when a leak occurs.

As alleged in the complaint filed in federal district court today, Defendants repeatedly violated RCRA and its related regulations at various times from 2011 to 2014.  These violations included failing to perform release (i.e., leak or spill) detection, and failing to maintain and provide records of release detection monitoring.  In some instances, Defendants failed to secure underground storage tanks that were temporarily closed, and failed to investigate or report suspected releases or unusual operating conditions.  Defendants also failed at times to maintain insurance policies sufficient to take corrective action and compensate third parties for bodily injury and property damage caused by accidental releases arising from the operation of the underground storage tanks. 

The lawsuit seeks injunctive relief and an order imposing civil penalties for Defendants’ violations. 

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This case is being handled by the Office’s Environmental Protection Unit.  Assistant United States Attorneys Christopher Connolly and Jennifer C. Simon are 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 Office of the Federal Bureau of Investigation (“FBI”), and Jonathan D. Larsen, Acting Special Agent in Charge of the New York Office of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced the arrest today of REGINALD FOWLER on charges of bank fraud and operating an unlicensed money transmitting business.  Bank fraud charges were also unsealed against co-conspirator RAVID YOSEF, who remains at large.  FOWLER and YOSEF, who worked for several related companies that provided fiat-currency banking services to various cryptocurrency exchanges (the “Crypto Companies”), allegedly participated in a conspiracy in which FOWLER made numerous false and misleading statements to banks to open bank accounts that were used to receive deposits from individuals purchasing cryptocurrency, and in which FOWLER and YOSEF falsified electronic wire payment instructions to conceal the true nature of a voluminous cryptocurrency exchange business.  Hundreds of millions of dollars flowed through the Crypto Companies’ accounts from banks located across the globe. FOWLER will be presented today in federal court in Phoenix, Arizona.  The case is assigned to U.S. District Judge Andrew L. Carter Jr.

U.S. Attorney Geoffrey S. Berman said:  “Reginald Fowler and Ravid Yosef allegedly ran a shadow bank that processed hundreds of millions of dollars of unregulated transactions on behalf of numerous cryptocurrency exchanges.  Their organization allegedly skirted the anti-money laundering safeguards required of licensed institutions that ensure the U.S. financial system is not used for criminal purposes, and did so through lies and deceit.  Thanks to the investigative work of the FBI and the IRS-CI, they will be prosecuted for their actions.”

FBI Assistant Director William F. Sweeney Jr. said:  “Lying to banks and skirting the regulations put in place by the banking industry is a violation of federal law, a crime both Fowler and Yosef are charged with today.  Taking it one step further, as alleged, Fowler himself directed the ebb and flow of significant amounts of money to and from these various bank accounts, despite the fact that he was not licensed to do so.  May this be a reminder to all that there are consequences to engaging in fraudulent behavior and risky business practices.”

IRS-CI Acting Special Agent in Charge Jonathan D. Larsen said:  “As this indictment shows, IRS-CI will continue to follow the money, no matter if it's virtual currency, to bring criminals to justice. This should serve as a warning to cyber-criminals who think they can hide behind virtual currency that IRS-CI is fully committed to unraveling these schemes.”

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

In or about 2018, REGINALD FOWLER, RAVID YOSEF, and others operated the Crypto Companies, and FOWLER opened and maintained bank accounts at various banks around the world on behalf of the Crypto Companies.  One of the Crypto Companies markets itself as a company that allows clients to deposit and withdraw government-backed, or “fiat,”  currency to numerous crypto exchanges, which are platforms where people can buy and sell cryptocurrency or “virtual currency.”  Users of one particular crypto exchange (“Exchange-1”) deposited government-backed currency into a bank account of the Crypto Companies (“Account-1”) that was opened and maintained by FOWLER at a specific international bank (“Bank-1”). Although Exchange-1 advertised itself as providing required “know your customer” and anti-money laundering verification services in connection with Exchange-1’s platform, this was false with respect to the shadow banking services provided by FOWLER and YOSEF.

As described in the Indictment, FOWLER and YOSEF conspired to, and did, misrepresent the nature of the Crypto Companies’ business and falsely stated to Bank-1 that Account-1 would be used to process real estate investments.  These misrepresentations also appeared on wire transfer instructions sent out from bank accounts opened and maintained by FOWLER and YOSEF, among others, on behalf of the Crypto Companies.  Records from Bank-1 reveal that dozens of individuals from various countries wired millions of dollars into Account-1, and, at the same time, Account-1 also wired millions of dollars to other individuals and companies.  Even though FOWLER was receiving and directing these monetary transactions, neither he nor any of the Crypto Companies were ever licensed as a money transmitting business, as required by federal law.     

*                      *                     *

FOWLER, 60, of Chandler, Arizona, and YOSEF, 36, of Tel Aviv, Israel, are each charged with one count of bank fraud and one count of conspiracy to commit bank fraud, each of which carries a maximum sentence of 30 years in prison.  FOWLER is also charged with one count of operating an unlicensed money transmitting business and one count of conspiracy to do the same, each of which carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of Special Agents from the FBI New York Money Laundering Investigations Squad and Special Agents from the IRS-CI.  

The prosecution of this case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant United States Attorneys Sheb Swett, David Zhou, and Jessica Fender 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 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 Christopher T. Tersigni, Special Agent in Charge of the United States Drug Enforcement Administration (“DEA”) Special Operations Division (“SOD”), announced today the extradition of MUHAMMAD KHALID KHAN for attempting to import heroin into the United States and laundering what he believed to be narcotics proceeds into the United States.  KHAN was taken into custody by Nigerian authorities in Lagos, Nigeria, on February 9, 2019, and extradited to the United States today.  He will be presented before United States Magistrate Judge Kevin Nathaniel Fox later today.  An initial conference is scheduled before United States District Judge Vernon S. Broderick, to whom the case is assigned, for May 1, 2019. 

U.S. Attorney Geoffrey Berman stated:  “As alleged, Muhammad Khalid Khan was making high-level heroin deals to send multi-hundred kilogram shipments at a time to the United States.  Unbeknownst to Khan, he was dealing with undercover law enforcement.  The extradition of Khan from halfway around the world to face justice in New York is emblematic of this Office’s commitment to keep potentially deadly heroin out of our neighborhoods.”           

DEA-SOD Special Agent in Charge Christopher T. Tersigni stated:  “Khan’s extradition to the United States means he will no longer be able to ship poison into our communities.  We look forward to bringing him to justice to answer for the crimes he is accused of.”

According to the allegations contained in the Complaint and Indictment,[1] which were unsealed today:

Beginning in October 2017, Khan, an Asia-based drug trafficker, began talking to and meeting with individuals who he believed were heroin traffickers interested in purchasing multi-kilogram quantities of heroin for importation into the United States and Australia.  Those individuals were, in fact, an undercover foreign law enforcement agent, a confidential source working at the DEA’s direction, and an undercover DEA agent posing as a New York-based heroin distributor.  Between approximately October 2017 and June 2018, Khan attempted to send hundreds of kilograms of heroin hidden in maritime shipping containers to New York City and Australia, and laundered hundreds of thousands of dollars of what he believed to be narcotics proceeds from Australia into the United States.  In January 2018, Khan sold a four-kilogram heroin sample to the undercover agents, with the understanding that two kilograms of heroin would be sold in the United States, and two kilograms would be sold in Australia.  Following the success of this sample shipment, KHAN planned to supply larger, multi-hundred kilogram quantities of heroin for importation to and distribution within the United States and Australia. 

*                *                *

The Indictment charges KHAN, 31, a citizen of Pakistan, in three counts: (1) attempting to import heroin into the United States, (2) international promotional money laundering, and (3) international concealment money laundering.  If convicted, KHAN faces a maximum sentence of life imprisonment and a mandatory minimum sentence of 10 years in prison on Count One, and a maximum sentence of 20 years on each of Counts Two and Three.  The statutory minimum and maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Berman praised the outstanding investigative efforts of the DEA’s Special Operations Division’s Bilateral Investigations Unit, New York Field Division Organized Crime Drug Enforcement Strike Force, Financial Investigations Unit, and DEA Dallas Field Division; the DEA Dubai, Islamabad, Kabul, Lagos, New Delhi, and Canberra Country Offices, and the Sydney Resident Office; the United States Central Command; the Royal Canadian Mounted Police; the Government of Nigeria; and the Australian Criminal Intelligence Commission.  The defendant’s arrest and subsequent extradition are also the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York and the Department of Justice’s Office of International Affairs.

The case is being prosecuted by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Rebekah Donaleski and Kimberly J. Ravener are in charge of the prosecution.

The allegations contained in the Complaint and 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 Complaint and Indictment and the description of the Complaint and 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 JOSEPH MELI and JAMES SINISCALCHI were charged this morning with securities fraud, wire fraud, and conspiracy to commit securities and wire fraud, stemming from their participation in a fraudulent Broadway ticket investment scheme wherein MELI and SINISCALCHI purported to use investor funds to purchase tickets to Broadway shows for resale on the secondary market, but instead appropriated investment funds for their personal use.

SINISCALCHI was arrested this morning and is expected to be presented today in Magistrate Court before the Hon. Kevin N. Fox.  MELI is presently incarcerated following his conviction in a prior federal case and will be presented when he arrives in the District.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Joseph Meli and James Siniscalchi engaged in a scheme to defraud investors by lying about purported access to blocks of Broadway tickets.  As alleged, the acting was all done by the defendants, who posed as legitimate businessmen but appropriated the money they said would be invested in theatre tickets.”  

According to the Complaint[1] unsealed today in Manhattan federal court and the Indictment and statements made in court proceedings related to MELI’s prior conviction:

Beginning in at least March 2017 through in or about April 2018, MELI and SINISCALCHI falsely represented to partners in a business entity (the “Entertainment Company”), that MELI and SINISCALCHI owned a large number of tickets to live events, or intended to purchase a large number of tickets to live events, and would sell those tickets to the Entertainment Company using investor money the Entertainment Company had solicited for the purpose of reselling those tickets on the secondary market for profit.  Representatives of the Entertainment Company, in reliance on statements made by MELI and SINISCALCHI, represented to investors that investor funds would be used to purchase bulk tickets to live shows, and promised investors a share of these profits.  In fact, MELI and SINISCALCHI failed to invest the investor monies as promised, but rather diverted investor monies to their own personal use, including sending $455,000 to a close relative of MELI’s, and $105,000 to a residential management company that managed an apartment MELI was leasing.

*                *                *

SINISCALCHI, 46, of New York, New York, and MELI, 44, of New York, New York, are each charged with one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, and one count of wire fraud.  The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense.  The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense.  The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The maximum potential sentences 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.

Mr. Berman praised the work of the Special Agents from the U.S. Attorney’s Office for the Southern District of New York and thanked the Securities and Exchange Commission for its assistance.  

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Sarah Mortazavi is in charge of the prosecution.

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that SEBASTIAN PINTO-THOMAZ, a former credit ratings analyst at Standard & Poor’s, was convicted today of participating in two schemes to trade on material, nonpublic information in advance of the Sherwin-Williams Company’s acquisition of the Valspar Corporation, following a seven-day jury trial before U.S. District Judge Jed S. Rakoff.

U.S. Attorney Geoffrey Berman said:  “Sebastian Pinto-Thomaz stole confidential information from his employer and passed it to two men he had known for years – and he did it for his own personal benefit.  While the defendant attempted to blame his mother for this conduct at trial, as a unanimous jury found, it was Pinto-Thomaz who committed insider trading.”

According to the evidence presented during the trial and statements made in related court filings and proceedings:

Rating Evaluation Services and the Insider

When a company announces an acquisition, the acquiring company often seeks the opinion of a credit rating agency regarding the potential impact that the acquisition could have on the acquiring company’s creditworthiness.  Therefore, companies often contact rating agencies before an acquisition is publicly announced.  All the major rating agencies offer a service – sometimes known as a Rating Evaluation Service (“RES”) – that provides the company with a rating committee decision with respect to a proposed acquisition.

In March 2016, Standard and Poor’s (“S&P”), a credit rating agency in New York, New York, assigned SEBASTIAN PINTO-THOMAZ, a credit ratings analyst, to work on a RES for the Sherwin-Williams Company (“Sherwin-Williams”) in advance of its contemplated but unannounced acquisition of the Valspar Corporation (“Valspar”).  In connection with this assignment, PINTO-THOMAZ received material, nonpublic information (the “Inside Information”) about Sherwin-Williams’s planned acquisition of Valspar prior to the public announcement of the acquisition.  S&P’s written policies prohibited the unauthorized disclosure of confidential information, which included the Inside Information.  During his tenure at S&P, PINTO-THOMAZ reviewed and certified his duties of loyalty and confidentiality to S&P and its clients.

The Insider Trading Scheme

In March 2016, PINTO-THOMAZ misappropriated the Inside Information about Sherwin-Williams’s acquisition of Valspar and passed it to Jeremy Millul, his friend, and Abell Oujaddou, his hairdresser, so that they could use it to make profitable trades in Valspar stock and options.  On March 21, 2016, the first trading day after the public announcement of the acquisition, the price of Valspar stock increased approximately 23 percent over the prior day’s close.

Millul is a Manhattan jeweler who had a close personal friendship with PINTO-THOMAZ.  After receiving a tip about the impending Valspar deal from PINTO-THOMAZ, Millul opened a brokerage account on March 13, 2016, and shortly thereafter purchased 480 shares of Valspar common stock.  On March 18, 2016, the last trading day before the acquisition was publicly announced, Millul also purchased 75 out-of-the-money Valspar call options.  After the acquisition was publicly announced, Millul sold his Valspar stock and options for approximately $106,806 in profits.

Oujaddou is a Manhattan hairstylist and salon owner who has known PINTO-THOMAZ for years, and who is close friends with PINTO-THOMAZ’s mother.  During a haircut on March 8, 2016, or March 9, 2016, PINTO-THOMAZ provided Oujaddou with the Inside Information about the impending Valspar deal in exchange for a portion of his trading profits.  Then, from March 10, 2016, through March 18, 2016, Oujaddou, who had never previously purchased Valspar or Sherwin-Williams securities, used the Inside Information he had received from PINTO-THOMAZ to purchase 8,630 shares of Valspar stock.  After the acquisition was publicly announced, Oujaddou sold his Valspar shares for approximately $192,080 in profits.  Following his successful trading, Oujaddou met PINTO-THOMAZ in the paint aisle of a hardware store and paid him a kickback.

Later, in June 2016, the Financial Industry Regulatory Authority (“FINRA”) sent S&P a list of individuals and entities that had traded in Valspar in advance of the public announcement of the acquisition (the “List”).  S&P forwarded the List to its employees who had worked on the Sherwin-Williams RES, including PINTO-THOMAZ, asking the employees to respond by stating whether they had a past or present relationship with any individual or entity on the List. Although both Oujaddou and Millul were on the List, PINTO-THOMAZ denied having a relationship with anyone on the List.

*                *                *

SEBASTIAN PINTO-THOMAZ, 32, of New York, New York, was convicted of two counts of conspiracy to commit securities fraud and two counts of securities fraud.  The conspiracy counts each carry a maximum prison term of five years; the securities fraud counts each carry a maximum sentence of 20 years.  The securities fraud charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the Court.

PINTO-THOMAZ is scheduled to be sentenced before Judge Rakoff on July 29, 2019, at 4:00 p.m.

Abell Oujaddou and Jeremy Millul each previously pled guilty and await sentencing before Judge Rakoff.

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 Christine I. Magdo and Andrew Thomas are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James C. Spero, Special Agent in Charge of the Tampa, Florida, Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today that nine defendants, OLUWASEUN ADELEKAN, a/k/a “Sean Adelekan,” OLALEKAN DARAMOLA, SOLOMON ABUREKHANLEN, GBENGA OYENEYIN, ABIOLA OLAJUMOKE, TEMITOPE OMOTAYO, BRYAN EADIE, ALBERT LUCAS, and ADEMOLA ADEBOGUN, were arrested for defrauding businesses and individuals of more than $3.5 million through business email compromises, a Russian oil scam, and a romance scam. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants deployed three different email schemes to defraud their victims.  The common denominator in all three schemes was the defendants’ alleged fleecing of their victims through fictitious online identities.  The schemes allegedly earned the defendants $3.5 million – and also arrests on federal felony charges.”

HSI Special Agent-in-Charge James C. Spero said:  “A transnational criminal organization allegedly conducting illicit domestic and international wire fraud has been dismantled thanks to the hard work of HSI Tampa and Special Agents from the U.S. Attorney’s Office for the Southern District of New York.  This case illustrates the unique investigative authority and international reach of HSI.”

As alleged in the Indictment[1] unsealed today from at least in or about July 2016, up to and including the present, the defendants participated in a scheme to defraud businesses and individuals through several categories of false and misleading representations, including but not limited to:

• Sending victims email messages that appeared to be, but were not, from legitimate business counterparties that included instructions to the victims to wire payment to those seemingly legitimate business counterparties into bank accounts that were actually under the control of, and/or maintained by, ADELEKAN, DARAMOLA, ABUREKHANLEN, OYENEYIN, OLAJUMOKE, OMOTAYO, EADIE, LUCAS, and ADEBOGUN (the “Business Email Compromise Scam”);
• Sending email messages and text messages to at least one victim offering an opportunity to invest in oil stored in Russian oil tank farms conditioned on that victim wiring upfront payments into bank accounts purportedly affiliated with the purported oil investment but actually opened by and under the control of ABUREKHANLEN, OLAJUMOKE, and OYENEYIN (the “Russian Oil Scam”); and
• Sending email messages and text messages to at least one victim from an individual (or individuals) purporting to be a female with romantic intentions toward the victim requesting, further to establishing a romantic relationship, the wiring of payment into a bank account under the control of OMOTAYO (the “Romance Scam”). 

In reliance on the foregoing false and misleading representations, the victims of the Business Email Scam, Russian Oil Scam, and Romance Scam wired or otherwise transferred in excess of $3.5 million into bank accounts opened in the names of shell companies and under the control of and/or maintained by the defendants. 

ABUREKHANLEN was arrested yesterday, April 24, 2019, in the Bronx, New York, and will be presented before U.S. Magistrate Judge Henry B. Pitman today.  ADELEKAN, OMOTAYO, LUCAS, EADIE, and ADEBOGUN were arrested earlier this morning in New York, New York, and will also be presented today before Judge Pitman.  OLAJUMOKE and OYENEYIN were arrested earlier this morning in Florida and will be presented in the Southern District of Florida later today.  DARAMOLA was arrested earlier this morning in Texas and will be presented in the Western District of Texas later today.

*                      *                     *

The defendants are each charged in the Indictment with one count of conspiring to commit wire fraud.  Each defendant faces a maximum potential sentence of 20 years in prison.  A chart containing names, age, place of residence, and nationality of the defendants is set forth below.

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

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

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 Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Defendant

Age

Place of Residence

Oluwaseun “Sean” Adelekan

36

New York, New York

Olalaken Daramola

35

Austin, Texas

Solomon Aburekhanlen

32

New York, New York

Gbenga Oyeneyin

32

Aventura, Florida

Abiola Olajumoke

46

Aventura, Florida

Temitope Omotayo

36

New York, New York

Bryan Eadie

35

New York, New York

Albert Lucas

29

New York, New York

Ademola Adebogun

38

New York, New York

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that VITALY BORKER was sentenced today in Manhattan federal court to two years in prison for one count of mail fraud, one count of wire fraud, and one count of conspiracy to commit mail and wire fraud in connection with his operation of the eyewear retail and repair website Opticsfast.com. 

BORKER pled guilty on March 20, 2018, before U.S. District Judge Paul G. Gardephe, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman stated:  “Vitaly Borker twice perpetrated criminal schemes involving the online sale and repair of eyewear, and today he was rightfully sentenced to prison for a second time.  Perhaps his second stint in federal prison will impress upon this shady businessman that seeking to make money by fraud and intimidation is a path to prison and not success.”

According to allegations made in the Complaint and Indictment to which BORKER pled guilty, as well as statements made in court proceedings:

BORKER founded Opticsfast.com in 2011 as an e-commerce eyeglass retail and repair business.  From at least 2011 through 2017, the defendant conducted a scheme to defraud individuals by inducing them to send their glasses to Opticsfast.com for repairs, then demanded exorbitant fees for repairs or return shipping, intimidated and harassed customers who requested refunds by subjecting them to a campaign of abusive emails and text messages, and threatened to discard glasses when customers disputed the fees.  In furtherance of the scheme, the defendant posted material false statements on Opticsfast.com’s website, falsely claiming the company used in-house laboratories staffed by trained technicians to perform repair work.  BORKER launched and operated Opticsfast.com after he was charged in a federal criminal case for his fraudulent operation of another eyewear retail and repair website, Decormyeyes.com, for which he was ultimately convicted and sentenced in a separate case.  BORKER continued his involvement in Opticsfast.com from prison even after he was incarcerated, and following his release from prison.

*                *                *

BORKER, 42, of Brooklyn, New York, was sentenced to two years in prison, to be followed by three years of supervised release, a $50,000 fine, and a $300 special assessment.

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

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Sarah Mortazavi, Jeffrey Coffman, Danielle Sasoon, and Nicholas Roos are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Ray Donovan, the Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), announced today criminal charges against Rochester Drug Co-Operative, Inc. (“RDC”), one of the 10 largest pharmaceutical distributors in the United States; Laurence F. Doud III, the company’s former chief executive officer; and William Pietruszewski, the company’s former chief compliance officer, for unlawfully distributing oxycodone and fentanyl, and conspiring to defraud the DEA.  Mr. Berman’s Office also filed a lawsuit against RDC for its knowing failure to comply with its legal obligation to report thousands of suspicious orders of controlled substances to the DEA. 

Mr. Berman also announced an agreement (the “Agreement”) and consent decree under which RDC agreed to accept responsibility for its conduct by making admissions and stipulating to the accuracy of an extensive Statement of Facts, pay a $20 million penalty, reform and enhance its Controlled Substances Act compliance program, and submit to supervision by an independent monitor.  Assuming RDC’s continued compliance with the Agreement, the Government has agreed to defer prosecution for a period of five years, after which time the Government will seek to dismiss the charges.  The consent decree is subject to final approval by the court. 

U.S. Attorney Geoffrey S. Berman said:  “This prosecution is the first of its kind:  executives of a pharmaceutical distributor and the distributor itself have been charged with drug trafficking, trafficking the same drugs that are fueling the opioid epidemic that is ravaging this country.  Our Office will do everything in its power to combat this epidemic, from street-level dealers to the executives who illegally distribute drugs from their boardrooms.” 

DEA Special Agent in Charge Ray Donovan said:  “Today’s charges should send shock waves throughout the pharmaceutical industry reminding them of their role as gatekeepers of prescription medication.  The distribution of life-saving medication is paramount to public health; similarly, so is identifying rogue members of the pharmaceutical and medical fields whose diversion contributes to the record-breaking drug overdoses in America.  DEA investigates DEA Registrants who divert controlled pharmaceutical medication into the wrong hands for the wrong reason.  This historic investigation unveiled a criminal element of denial in RDC’s compliance practices, and holds them accountable for their egregious non-compliance according to the law.”

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

Violations of the Federal Narcotics Laws

From 2012 through March 2017, as alleged, RDC knowingly and intentionally violated the federal narcotics laws by distributing dangerous, highly addictive opioids to pharmacy customers that it knew were being sold and used illicitly.  At the direction of its senior management, including Doud and Pietruszewski, RDC supplied large quantities of oxycodone, fentanyl, and other dangerous opioids to pharmacy customers that its own compliance personnel determined were dispensing those drugs to individuals who had no legitimate medical need for them.  RDC distributed controlled substances to those pharmacies even after identifying “red flags” of diversion, including dispensing highly abused controlled substances in large quantities; dispensing primarily controlled substances; dispensing quantities of controlled substances in amounts consistently higher than accepted medical standards; accepting a high percentage of cash for controlled substance prescriptions; dispensing to out-of-state patients; and filling controlled substances prescriptions issued by practitioners acting outside the scope of their medical practice, under investigation by law enforcement, or on RDC’s “watch list.”  In addition, and at Doud’s direction, RDC frequently brought on pharmacy customers that had been terminated by other distributors. 

RDC’s employees, including in conversations with Doud and Pietruszewski, described some of the company’s customers as “very suspicious,” and even characterized particular pharmacies as a “DEA investigation in the making” or “like a stick of dynamite waiting for [the] DEA to light the fuse.”  Nonetheless, throughout the period in question, RDC, at the direction of Doud, increased its sales of oxycodone and fentanyl exponentially.  From 2012 to 2016, RDC’s sales of oxycodone tablets grew from 4.7 million to 42.2 million – an increase of approximately 800 percent – and during the same period RDC’s fentanyl sales grew from approximately 63,000 dosages in 2012 to over 1.3 million in 2016 – an increase of approximately 2,000 percent.  During that same time period, Doud’s compensation increased by over 125 percent, growing to over $1.5 million in 2016.

 Conspiracy to Defraud the DEA

From 2012 through March 2017, as alleged, RDC took steps to conceal its illicit distribution of controlled substances from the DEA and other law enforcement authorities.  Among other things, RDC made the deliberate decision not to investigate, monitor, or report to the DEA pharmacy customers that it knew were diverting controlled substances for illegitimate use.  Because it knew that reporting these pharmacies would likely result in the DEA investigating and shutting down its customers, RDC’s senior management, including Doud, directed the company’s compliance department – and in particular Pietruszewski – not to report them, and instead to continue supplying those customers with dangerous controlled substances that the company knew were being dispensed and used for illicit purposes.  Among other things, pursuant to Doud’s instructions, and contrary to the company’s representations to the DEA, RDC opened new customer accounts without conducting due diligence, and supplied those customers – some of whom had been terminated by other distributors – with dangerous controlled substances.

Additionally, RDC knowingly and willfully avoided filing suspicious order reports with the DEA as required by law.  Between 2012 through 2016, the company identified approximately 8,300 potentially suspicious “orders of interest,” including thousands of oxycodone orders, but the company reported only four suspicious orders to the DEA.  As alleged, RDC did not report suspicious orders in order to protect the profit being generated by customers dispensing large quantities of controlled substances.  As a result, the DEA’s ability to identify and prevent the illicit dispensing of highly addictive controlled substances by several of RDC’s pharmacy customers was impeded. 

*                      *                     *

ROCHESTER DRUG CO-OPERATIVE, INC., is a wholesale distributor of pharmaceutical products, including controlled substances, headquartered in Rochester, New York.  It is one of the nation’s 10 largest distributors of pharmaceutical products – and the fourth largest in the New York area – with over 1,300 pharmacy customers and over $1 billion in revenue per year.  RDC has been charged in an Information with conspiracy to violate the narcotics laws, conspiracy to defraud the United States, and willfully failing to file suspicious order reports.  RDC has also been sued in a civil complaint for its failure to file suspicious order reports.      

LAURENCE F. DOUD III, 75, of New Smyrna, Florida, has been charged with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years, and one count of conspiracy to defraud the United States, which carries a maximum prison term of five years. 

WILLIAM PIETRUSZEWSKI, 53, of Oak Ridge, New Jersey, has been charged with one count of conspiracy to distribute controlled substances, which carries a maximum sentence of life in prison and a mandatory minimum prison term of 10 years; one count of conspiracy to defraud the United States, which carries a maximum sentence of five years in prison; and one count of willfully failing to file suspicious order reports with the DEA, which carries a maximum sentence of one year in prison.  PIETRUSZEWSKI pled guilty to these charges, pursuant to a cooperation agreement, on April 19, 2019.

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

Mr. Berman praised the investigative work of the DEA’s Westchester Tactical Diversion Team, comprising Special Agents, Diversion Investigators, and Task Force Officers from the DEA, Westchester County Police Department, Town of Orangetown Police Department, Rockland County Sheriff’s Office, Woodbury Police Department, Yonkers Police Department, New Windsor Police Department, and Putnam County Sheriff’s Office.

The criminal cases are being handled by the Narcotics Unit of the Office’s Criminal Division.  Assistant U.S. Attorneys Stephanie Lake, Louis Pellegrino, Nicolas Roos, and Alexandra Rothman are in charge of the prosecutions.  The civil case against RDC is being handled by the Office’s Civil Division.  Assistant U.S. Attorneys Jacob M. Bergman and Jeffrey K. Powell are in charge of the case.

The charges contained in the Doud Indictment and RDC Information 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 against Doud 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 James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing today of an Indictment charging 11 members and associates of the 2200 Morris Avenue Crew with various racketeering, firearms, and narcotics offenses, and charging an additional three defendants with narcotics and firearms offenses.  ADONIS RAMIREZ, a/k/a “Frenchie,” is also charged with a September 28, 2017, attack on Charles DelToro that resulted in DelToro’s death on October 4, 2017.

Eight of the defendants, ADONIS RODRIGUEZ, a/k/a “Crazy,” a/k/a “Locotron,” JONATHAN ESPINAL, a/k/a “Twin,” DERIAN DEL CARMEN, a/k/a “Mel,” ELVIN PEREZ, a/k/a “Choco,” YISANDER RAMIREZ, a/k/a “Bean,” MARIO DELOSSANTOS, and DANIEL GONZALEZ were taken into custody last night and this morning.  They will be presented and arraigned before U.S. Magistrate Judge Barbara C. Moses later today.  Five of the defendants, ADONIS RAMIREZ, a/k/a “Frenchie,” DAVID GARCIA, a/k/a “Clippa,” BRANDON ESTEVEZ, a/k/a “Boppy,” JONATHAN MALDONADO, a/k/a “Tego,” and LOUIS RIVERA are currently incarcerated in state custody on other charges, and will be presented at a later date.  JEFFREY ESTEVEZ, a/k/a “J,” was already in federal custody, having been previously charged in federal court with narcotics trafficking.  JOSUE SANCHEZ, a/k/a “V,” remains at large.  The case is assigned to U.S. District Judge Deborah A. Batts.  

U.S. Attorney Geoffrey S. Berman said:  “As alleged, members of the 2200 Morris Avenue Crew wreaked havoc in the Bronx, engaging in brazen acts of violence, including murder and multiple attempted murders, as well as narcotics trafficking.  Thanks to the extraordinary work of the NYPD, the defendants will now face justice in federal court.”

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

The 2200 Morris Avenue Crew was a criminal enterprise involved in committing numerous acts of violence, including shootings, robberies, and assaults in the Bronx.  Members and associates of the 2200 Morris Avenue Crew engaged in violence to retaliate against rival gangs, to promote the standing and reputation of their gang, and to protect the gang’s narcotics business.  Members and associates of the 2200 Morris Avenue Crew enriched themselves by selling drugs, such as heroin, crack cocaine, cocaine, and marijuana.  

The Indictment charges BRANDON ESTEVEZ, ADONIS RAMIREZ, GARCIA, RODRIGUEZ, ESPINAL, DEL CARMEN, JEFFREY ESTEVEZ, MALDONADO, PEREZ, YISANDER RAMIREZ, and SANCHEZ with participating in a racketeering conspiracy.  Count Two of the Indictment charges ADONIS RAMIREZ with the murder in aid of racketeering of Charles DelToro.  Counts Three and Four charge BRANDON ESTEVEZ, MALDONADO, and PEREZ with participating in an attempted murder in aid of racketeering for a shooting of a rival gang member on February 11, 2018, and a related firearms offense.  Counts Five and Six charge JEFFREY ESTEVEZ with participating in an attempted murder in aid of racketeering for a shooting on May 25, 2018, and a related firearms offense.  Count Seven charges DEL CARMEN, MALDONADO, and RODRIGUEZ with attempted murder in aid of racketeering for a stabbing that occurred on June 19, 2018.  Count Eight charges ESPINAL with attempted murder in aid of racketeering.  Counts Nine and Ten charge SANCHEZ, YISANDER RAMIREZ, GARCIA, and DEL CARMEN with attempted murder in aid of racketeering for a shooting that occurred on March 24, 2019, and a related firearms offense.  Count Eleven charges all of the defendants with a narcotics trafficking conspiracy.  Count Twelve charges all of the defendants with possessing and using firearms in furtherance of the narcotics trafficking conspiracy charged in Count Eleven. 

*                *                *

Charts containing the names, ages, 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 the NYPD.  He also thanked the Special Agents of the United States Attorney’s Office for the Southern District of New York for their assistance in the investigation. 

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Karin Portlock and Jacob Warren are in charge of the prosecution.

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

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Racketeering conspiracy

 

18 U.S.C. § 1962(d)

JEFFREY ESTEVEZ (24)

ADONIS RAMIREZ (24)

DAVID GARCIA (19)

ADONIS RODRIGUEZ (24)

JONATHAN ESPINAL (25) DERIAN DEL CARMEN (23) BRANDON ESTEVEZ (24)

JONATHAN MALDONADO  (22)

ELVIN PEREZ (24)

YISANDER RAMIREZ (21)

JOSUE SANCHEZ (25)

 

 

 

Life in prison

2

Murder in aid of racketeering

 

18 U.S.C. § 1959

ADONIS RAMIREZ

 

 

Death or mandatory minimum of life in prison

 

 

3

Attempted murder in aid of racketeering

 

 

18 U.S.C. § 1959

BRANDON ESTEVEZ JONATHAN MALDONADO

ELVIN PEREZ

10 years in prison

4

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

 

18 U.S.C. § 924(c)

 

BRANDON ESTEVEZ JONATHAN MALDONADO

ELVIN PEREZ

Life in prison

 

Mandatory minimum of 10 years in prison

5

Attempted murder in aid of racketeering

 

18 U.S.C. § 1959

JEFFREY ESTEVEZ

10 years in prison

6

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

 

18 U.S.C. § 924(c)

 

JEFFREY ESTEVEZ

 

Life in prison

 

Mandatory minimum of 10 years in prison

7

Assault and attempted murder in aid of racketeering

 

 

18 U.S.C. § 1959

DERIAN DEL CARMEN

JONATHAN MALDONADO

ADONIS RODRIGUEZ

20 years in prison

8

Assault and attempted murder in aid of racketeering

 

 

18 U.S.C. § 1959

JONATHAN ESPINAL

20 years in prison

9

Attempted murder in aid of racketeering

 

 

18 U.S.C. § 1959

JOSUE SANCHEZ

YISANDER RAMIREZ

DAVID GARCIA

DERIAN DEL CARMEN

 

10 years in prison

10

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

 

18 U.S.C. § 924(c)

 

JOSUE SANCHEZ

YISANDER RAMIREZ

DAVID GARCIA

DERIAN DEL CARMEN

Life in prison

 

Mandatory minimum of 10 years in prison

11

Narcotics trafficking conspiracy

 

21 U.S.C. § 846

JEFFREY ESTEVEZ

ADONIS RAMIREZ

DAVID GARCIA

ADONIS RODRIGUEZ

JONATHAN ESPINAL

DERIAN DEL CARMEN BRANDON ESTEVEZ

JONATHAN MALDONADO 

ELVIN PEREZ

YISANDER RAMIREZ

JOSUE SANCHEZ

MARIO DELOSSANTOS (52)

DANIEL GONZALEZ (22)

LOUIS RIVERA (53)

Life in prison

 

Mandatory minimum of 10 years in prison

12

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

 

18 U.S.C. § 924(c)

JEFFREY ESTEVEZ

ADONIS RAMIREZ

DAVID GARCIA

ADONIS RODRIGUEZ

JONATHAN ESPINAL

DERIAN DEL CARMEN BRANDON ESTEVEZ

JONATHAN MALDONADO 

ELVIN PEREZ

YISANDER RAMIREZ

JOSUE SANCHEZ

MARIO DELOSSANTOS

DANIEL GONZALEZ

LOUIS RIVERA

Life in prison

 

Mandatory minimum of five years in prison

 

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GREVY GERARD PIERRE-LOUIS, a/k/a “Cadillac Slim,” a/k/a “Caddy,” was sentenced to 30 years in prison for conspiracy to commit sex trafficking and conspiracy to transport minors interstate for the purpose of prostitution.  PIERRE-LOUIS pled guilty on September 6, 2018 before Chief U.S. District Judge Colleen McMahon, who imposed today’s sentence. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Grevy Gerard Pierre-Louis spent almost 20 years engaged in depraved and extraordinarily violent sex trafficking of minor girls and adult women. As a result, he will now spend the next 30 years in prison. Our hope is that the brave survivors of the defendant’s heinous crimes will find a measure of justice in today’s sentence.”

Chief Judge Colleen McMahon called today’s sentence “just punishment for the ruination of all of those lives.”

According to the Indictment, Superseding Information, publicly-filed documents, and statements made in court:

Starting in 1998 and continuing through 2016, PIERRE-LOUIS compelled his victims to engage in prostitution through extreme violence, psychological and verbal abuse, coercion, and threats of violence to them and their family members.  PIERRE-LOUIS victimized at least nine girls and women in numerous states, all for his own profit. 

PIERRE-LOUIS employed a variety of criminal methods to compel his victims to engage in prostitution.  He used physical violence, sexual assault, threats of physical violence, threats of deportation, emotional and psychological abuse, and threats against family members.  For example, in addition to severe beatings and rapes, at various points he had his victims branded with tattoos; he hung one victim out a window; and he caused victims to kneel on dry rice so as to inflict severe pain.  The defendant kept all of the proceeds of his victims’ trafficking. 

*                      *                     *

In addition to the prison term, PIERRE-LOUIS, 47, of Queens, New York, was sentenced to 10 years of supervised release and ordered to pay restitution to his victims.

Mr. Berman praised the outstanding investigative work of the FBI.  Mr. Berman also thanked the New York City Police Department, the U.S. Attorney’s Office for the Southern District of Florida, the Miami Field Office of the FBI, the United States Secret Service, the City of Miami Police Department, the Miami Beach Police Department, and the Miramar Police Department for their cooperation throughout the investigation. 

The prosecution is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Amanda Kramer and Jessica K. Fender are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Adolphus P. Wright, Special Agent in Charge of the Miami Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that Guatemalan presidential candidate MARIO AMILCAR ESTRADA ORELLANA (“ESTRADA”) and JUAN PABLO GONZALEZ MAYORGA (“GONZALEZ”) have been charged in Manhattan federal court with conspiring to import cocaine into the United States and a related weapons offense of conspiring to use and possess machineguns.  ESTRADA and GONZALEZ were arrested earlier today in Miami, Florida, and will appear tomorrow before United States Magistrate Judge Jonathan Goodman in Miami federal court. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Estrada and Gonzalez conspired to solicit Sinaloa Cartel money to finance a corrupt scheme to elect Estrada president of Guatemala.  In return, the two allegedly promised to assist the cartel in using Guatemalan ports and airports to export tons of cocaine into the U.S.  As further alleged, Estrada and Gonzalez attempted to arrange the assassinations of political rivals.  Thanks to the DEA, Estrada stands no chance of election in Guatemala, but he and Gonzalez face justice in the United States.”

DEA Special Agent in Charge Adolphus P. Wright said:  “The DEA Miami Field Division is very happy with the arrests of Mario Estrada Orellana and Juan Gonzalez Mayorga.  Today’s action is the direct result of the strong partnership with our Guatemalan counterparts.  Together with our international law enforcement partners, we will continue our efforts to keep illegal drug trafficking from corrupting the just political systems of our Central and South American neighbors, as we also endeavor to prevent such activity from harming the United States.”

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

Since in or about December 2018, the DEA has been investigating several individuals (the “Estrada Conspiracy”) who attempted to solicit funding from international drug cartels to support ESTRADA’s presidential campaign (the “Estrada Campaign”).  During certain of these negotiations, members of the Estrada Conspiracy, including ESTRADA and GONZALEZ, interacted with purported members and associates of the Sinaloa Cartel – a powerful international drug-trafficking organization based in Mexico – who were, in fact, confidential sources (the “CSes”) acting at the DEA’s direction. 

During the course of these meetings and other communications, some of which were video and audio recorded, ESTRADA and GONZALEZ requested millions of dollars in drug proceeds from the Sinaloa Cartel to support the Estrada Campaign.  In exchange for financial support from the Sinaloa Cartel, ESTRADA and GONZALEZ agreed that if ESTRADA were elected president of Guatemala, ESTRADA would provide Guatemalan state-sponsored support to the Sinaloa Cartel’s drug trafficking activities.  Among other things, ESTRADA and GONZALEZ agreed to provide the Sinaloa Cartel with unfettered access to Guatemalan airports and maritime shipping locations so that the cartel could transport ton quantities of cocaine through Guatemala and ultimately into the United States.  ESTRADA also offered to appoint members of the Sinaloa Cartel to high-ranking government positions in Guatemala so that the CSes would be positioned to advance the Sinaloa Cartel’s drug trafficking activities. 

ESTRADA and GONZALEZ also directed the CSes to hire hitmen to assassinate political rivals to ensure that ESTRADA was elected president of Guatemala.  In particular, ESTRADA and GONZALEZ identified specific targets by name and agreed to provide the hitmen with firearms, including AK-47s, to carry out the murders.[2]

Origins of the Estrada Conspiracy

On or about January 6, 2019, one of the CSes (“CS-1”) met with GONZALEZ at his office in the vicinity of Guatemala City, Guatemala (the “January 6 Meeting”).  During the January 6 Meeting, GONZALEZ explained to CS-1, in substance and in part, that GONZALEZ was an active member of a political party in Guatemala (“Party-1”), and that Party-1’s presidential candidate was ESTRADA.  GONZALEZ told CS-1 that the Estrada Campaign needed drug cartel funding to compete in the upcoming presidential election, and he asked if CS-1 knew of any drug cartels that would be interested in providing such funding.  GONZALEZ also stated that ESTRADA, if elected president of Guatemala, would use various government agencies to support the cartel’s drug trafficking activities in Guatemala.  For example, GONZALEZ told CS-1 that, if a drug cartel provided funding to the Estrada Campaign and ESTRADA won, the Cartel would have direct influence on the appointed secretaries of the Interior, which oversees the police, and Defense, which oversees the military.         

The next day, CS-1 met with GONZALEZ and ESTRADA in the vicinity of Guatemala City (the “January 10 Meeting”).   During the January 10 Meeting, CS-1 told ESTRADA that CS-1’s contacts in the Sinaloa Cartel could provide funding, but that the cartel had concerns about whether ESTRADA could provide the cartel with access to the Government of Guatemala.  ESTRADA responded that, if elected president, ESTRADA would appoint members of the Sinaloa Cartel to the Ministry of the Interior, the Ministry of Defense, and to positions controlling Guatemala’s seaports and airports.  ESTRADA also asked that CS-1 provide the names of three potential candidates for each position so ESTRADA could choose between them. 

The Defendants Meet Purported Sinaloa Cartel Representative CS-2

On or about February 7, 2019, GONZALEZ met with CS-1 and a second confidential source involved in this investigation (“CS-2”) in the vicinity of Guatemala City (the “February 7 Meeting”).   The February 7 Meeting was audio and video recorded.  During the February 7 Meeting, GONZALEZ asked, in substance and in part, whether CS-1 and CS-2 could assassinate certain other political rivals who were threats to win the election.  GONZALEZ stated that it “wouldn’t be difficult” to kill a particular candidate because the candidate was “hated,” but cautioned that another candidate was “well protected.”  GONZALEZ also stated that the Estrada Campaign “would pay you to do it” if the CSes carried out the requested murders.

The following day, on or about February 8, 2019, ESTRADA and GONZALEZ met with CS-1 and CS-2 in the vicinity of Guatemala City (the “February 8 Meeting”).  This meeting was audio and video recorded.  During the February 8 Meeting, ESTRADA told CS-1 and CS-2 that he could win the election if the Sinaloa Cartel provided the Estrada Campaign with approximately 10 to 12 million U.S. dollars.  ESTRADA explained that he needed to deliver a sizeable amount of money to each of the 22 districts in Guatemala so that he could obtain the necessary votes in each district and that he was planning to hire an individual for approximately $2 million to help build the Estrada Campaign’s online presence.

CS-2 stated that, in exchange for the drug money, CS-2 wanted ESTRADA to help the Sinaloa Cartel transport cocaine through airports in Guatemala.  CS-2 estimated that the Sinaloa Cartel would send approximately six cocaine-laden airplanes per month through Guatemala, each of which would carry multiple tons of cocaine, and that CS-2 would pay ESTRADA 10 percent of the approximate value of cocaine on each plane.  ESTRADA agreed to assist the Sinaloa Cartel’s activities in exchange for campaign financing as proposed by CS-2.  GONZALEZ and ESTRADA also again discussed assassinating political rivals, and ESTRADA provided CS-2 with the names of two individuals who were potential targets.  ESTRADA also identified one individual to target first, and he noted that this assassination would be easy to complete because the target had many enemies in Guatemala.  

February 2019 Meetings in Florida and Guatemala

On or about February 14, 2019, GONZALEZ met with CS-2 and an undercover officer (“UC-1”) in an undercover DEA warehouse (the “Warehouse”) in Florida (the “February 14 Meeting”).  This meeting was audio and video recorded.  During the February 14 Meeting, CS-2 introduced UC-1 to GONZALEZ as a hitman who was available for hire to carry out the assassinations proposed by GONZALEZ and ESTRADA. 

GONZALEZ then discussed with CS-2 and UC-1, in substance and in part, the Estrada Campaign’s desire to assassinate certain political rivals.  GONZALEZ identified the person he thought was easiest “to take out,” and stated that he wanted it done “as fast as possible.”  GONZALEZ also promised to provide CS-2 and UC-1 with more information on their initial targets, and GONZALEZ told them that “we want to see the public reaction after the first two hits” before going forward with the others.  GONZALEZ also told them that he could provide “lots of AK-47s” to carry out the job, and when UC-1 specified that he needed “3 AK-47s and 2 pistols,” GONZALEZ replied that “Mario [ESTRADA] will have everything ready for you.” 

During the meeting, CS-2 and UC-1 also showed GONZALEZ approximately $5 million in supposed drug proceeds for the Estrada Campaign.  GONZALEZ then placed a video call to ESTRADA.  During that call, GONZALEZ handed the phone to CS-2, and CS-2 used GONZALEZ’s phone to show ESTRADA the Warehouse and purported bulk currency in various locations in the Warehouse.     

On or about February 27, 2019, ESTRADA met with CS-1 and CS-2 on an undercover DEA yacht (the “UC Yacht”) in the vicinity of Miami, Florida (the “February 27 Meeting”).  This meeting was audio and video recorded.  During the February 27 Meeting, CS-2 and ESTRADA discussed, among other things, their agreement concerning how ESTRADA would support the Sinaloa Cartel’s drug trafficking if ESTRADA were elected president.  ESTRADA stated, in substance and in part, that he was “convince[d] that I’m going to win [the election]” and that after he won, ESTRADA would support the cartel’s drug trafficking activities in Guatemala.  In particular, ESTRADA agreed to accept the Sinaloa Cartel’s cocaine-laden planes at airports and ports in Guatemala.  ESTRADA also agreed to appoint cartel members to key government positions.  ESTRADA also told CS-2 that he no longer wanted CS-2 and UC-1 to move forward with the proposed assassinations.  ESTRADA explained that someone else was going to assassinate one of the potential targets, and ESTRADA thought it would bring too many problems if they proceeded with the other assassinations. 

March 2019 Meetings in Florida and Guatemala

On or about March 4, 2019, ESTRADA met with another individual (“CC-1”) and CS-1 at ESTRADA’s office in the vicinity of Guatemala City (the “March 4 Meeting”).  This meeting was audio recorded.  During the March 4 Meeting, ESTRADA stated, in substance and in part, that the Estrada Campaign urgently needed funds from the Sinaloa Cartel to pay its expenses.  ESTRADA, CC-1, and CS-1 discussed how they could deliver the Cartel’s money to the Estrada Campaign in Guatemala.  ESTRADA suggested that they use the UC Yacht to transport ESTRADA’s money.  ESTRADA then took out a map, and demonstrated how the UC Yacht could travel from Miami, through Cuba, before arriving in Guatemala.  CC-1 questioned whether law enforcement would detect the UC Yacht, and ESTRADA responded that those risks were mitigated by the fact that the UC Yacht was a luxury yacht, flying the American flag, and sailed by American citizens.  ESTRADA further explained that it might be easier to buy a yacht than to pay the transportation fees they had been discussing. 

On or about March 5, 2019, ESTRADA met again with CC-1 and CS-1 at ESTRADA’s office (the “March 5 Meeting”).  This meeting was audio recorded.  During the March 5 Meeting, ESTRADA stated, in substance and in part, that he was arranging for another crew to get involved to bring the balance of the money from the Sinaloa Cartel to Guatemala because ESTRADA had run out of money himself and his campaign was stalling.  ESTRADA also stated that he was separately working with a drug trafficker based in Guatemala, who was also supporting ESTRADA’s bid for president.  ESTRADA also told CS-1 that he heard that people from another drug cartel wanted to provide ESTRADA with funding as well.

*                *                *

The Complaint charges ESTRADA, 58, and GONZALEZ, 50, in two counts:  (1) conspiring to import cocaine into the United States and (2) conspiring to use and carry machine guns and destructive devices during, and to possess machine guns and destructive devices in furtherance of, the cocaine-importation conspiracy.  If convicted, ESTRADA and GONZALEZ each face a mandatory minimum sentence of 10 years’ imprisonment and a maximum term of life imprisonment on Count One, and a maximum term of life imprisonment on Count Two.

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

Mr. Berman praised the outstanding efforts of the DEA’s Miami Field Office and its Guatemala Country Office, as well as the U.S. Department of Justice’s Office of International Affairs.

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

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

 

---

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

[2] The DEA promptly notified local authorities about these threats.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ALEXIS VALDEZ, a/k/a “Lil Rico,” was sentenced today to 160 months in prison for firearms and narcotics trafficking.  VALDEZ and his co-conspirators sold seven guns, including an AK-47 assault rifle and a SKS assault rifle, a silencer, ammunition, and a bulletproof vest to undercover officers.  VALDEZ pled guilty in Manhattan federal court in April 2018 to one count of conspiring to distribute heroin and crack cocaine and one count of unlicensed firearms dealing.  U.S. District Judge Kimba M. Wood imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Alexis Valdez sought to put illegal guns and drugs on the streets of New York City.  For his crimes, he will serve more than 13 years in prison.  We will continue to work with our law enforcement partners to investigate and prosecute those who would put the people of our city in danger.”

According to the allegations contained in the Indictment and statements made in related court filings and proceedings:

From 2016 to August 2017, VALDEZ and other members of a drug trafficking organization (“DTO”) sold narcotics near Hughes Avenue and East Tremont Avenue in the Bronx, New York (the “Hughes Avenue DTO”).  VALDEZ personally sold crack cocaine to undercover officers on several occasions.  Members of the Hughes Avenue DTO, including VALDEZ, are also members and associates of the “Rolling 30s” neighborhood set of the nationwide Crips street gang.    

From October 2016 to May 2017, VALDEZ and two other men, who were both members of the Hughes Avenue DTO, sold firearms to undercover officers.  Over the course of six sales, undercover officers purchased seven firearms, including an AK-47 assault rifle, a SKS assault rifle, a shotgun, and several handguns, including one firearm with a defaced serial number.  VALDEZ and his co-conspirators also sold a silencer for a gun, ammunition, and a bulletproof vest to the undercover officers. 

*                *                *

In addition to the prison term, VALDEZ, 26, of the Bronx, New York, was sentenced to four years of supervised release.  All nine members of the Hughes Avenue DTO charged in this case have pled guilty. 

Mr. Berman praised the work of the New York City Police Department and the Drug Enforcement Administration in this investigation. 

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Drew Skinner and Anden Chow are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JAMES BECKISH and JOSEPH ANTHONY DEMARIA were sentenced to 48 and 36 months in prison, respectively, for their participation in a conspiracy to commit wire fraud in connection with a fraudulent scheme to place more than $7 million in unauthorized charges on the credit cards of thousands of consumers.  BECKISH and DEMARIA were sentenced by United States District Judge Edgardo Ramos.  

U.S. Attorney Geoffrey S. Berman said:  “Beckish and Demaria operated a scheme in which they purported to sell dietary supplements to consumers online.  In lieu of dietary supplements, consumers got nothing but headaches, credit card processors got ripped off, and Beckish and Demaria’s wallets got fatter.  Now they have been sentenced to prison and ordered to repay the money they stole.”   

According to the Complaint, the Information to which BECKISH and DEMARIA pled guilty, as well as court filings and statements made in public court proceedings:

Between 2013 and 2017, BECKISH, DEMARIA, and others participated in a fraudulent scheme to place recurring and unauthorized charges on thousands of victims’ credit cards.  As part of the scheme, the defendants created dozens of shell companies that purported to sell dietary supplements and similar products called “nutraceuticals” over the internet.  The defendants and their co-conspirators opened fraudulent bank accounts on behalf of the shell companies and applied for merchant accounts for the shell companies with credit card payment processors, sometimes by submitting fabricated records.  The defendants then used their merchant accounts to place unauthorized and recurring charges on thousands of credit cards, often without shipping any product to the cardholders.  As a result of the defendants’ criminal scheme, credit card processors paid millions of dollars in refunds for charges associated with the defendants’ companies in an attempt to refund affected consumers. 

BECKISH and DEMARIA were the leaders and organizers of this criminal enterprise, controlling the shell companies, overseeing and directing the actions of their co-conspirators, and making the decisions regarding how the scheme would operate and how the conspirators would evade law enforcement detection.  

In total, the defendant’s scheme resulted in at least $7,231,878 in fraudulent credit card charges over a one-year period. 

*                *                *

BECKISH and DEMARIA each pled guilty to one count of conspiracy to commit wire fraud on October 11, 2018.  In addition to the prison terms, BECKISH and DEMARIA were each sentenced to three years of supervised release and ordered to forfeit $7,231,878 and pay the same amount in restitution.

Mr. Berman praised the investigative work of the United States Secret Service. 

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Danielle Sassoon, Olga Zverovich, and Michael McGinnis are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the arrest of JOHN LAMBERT, a/k/a “Eric Pope,” for wire fraud and conspiracy to commit wire fraud.  LAMBERT was arrested earlier today in Bristol, Tennessee, and was presented in the Eastern District of Tennessee.

U.S. Attorney Geoffrey S. Berman stated:  “As alleged, John Lambert purported to be a high-powered attorney with an elite law school degree.  However, as we allege, Lambert was just a wolf in sheep’s clothing, swindling his victims of their hard-earned money.  Now, Lambert is in need of a real attorney as he must answer for his alleged crimes.”

FBI Assistant Director in Charge William F. Sweeney Jr. said:  “People typically seek the assistance of an attorney when they feel they’ve been wronged or in preparation for a significant life event that involves financial planning.  The fact that Lambert allegedly exploited those who believed he was advocating on their behalf makes his supposed criminal activity even more egregious.  While he’s not at risk of losing a law license, it doesn’t mean there won’t be consequences for his actions.”

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

LAMBERT and at least one co-conspirator perpetrated a scheme to defraud consumers of legal advice and services by falsely representing through web-based platforms for freelancing services, websites, emails, phones calls, and other means, that they were experienced attorneys who had attended elite law schools, when in fact they were not attorneys and had never attended law school.  Having misled their victims into believing they were highly qualified attorneys, LAMBERT and his co-conspirator then attempted to, and in some cases did, provide legal advice and services to their victims in exchange for which their victims paid money.

At least six individual and corporate victims paid LAMBERT for purported legal advice and services on a wide range of subjects, including issues with their credit reports, drafting a will, corporate and intellectual property law, and a dispute with a former employee.  One of the victims withdrew money from the victim’s 401(k) account to pay LAMBERT.

As alleged, LAMBERT used the alias “Eric Pope” when communicating with the victims, and falsely represented to at least some of them that he was an attorney at a law firm called “Pope and Dunn;” had attended an elite law school; was an expert in corporate, finance, and property law; had worked with hundreds of clients, including “tech moguls” and “entrepreneurs” in the United States and Europe; and was located in New York City.  But according to the Complaint, LAMBERT was not and had never been an attorney, and was not located in New York City.

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LAMBERT, 23, of Bristol, Tennessee, has been charged with one count of wire fraud and one count of conspiracy to commit wire fraud, each of which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of LAMBERT will be determined by a judge.

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

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

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.

 

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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, John F. Grasso, the Special Agent-in-Charge of the United States Social Security Administration, Office of the Inspector General, New York Field Division (“SSA-OIG”), and Jonathan D. Larsen, the Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced that GERARD SCPARTA, a former New York City Police Department (“NYPD”) officer, pled guilty to fraudulently obtaining over approximately $638,000 in disability benefits from the Social Security Administration (“SSA”) and underreporting income on his taxes by approximately $268,000.  SCPARTA lied to the SSA about his disability, falsely represented to the SSA that he could not work due to disability, and failed to report earnings from employment as required.  At the same time SCPARTA was collecting disability benefits, he earned a total of approximately $1.6 million working as a security guard and host at a strip club located in Manhattan.  SCPARTA pled guilty before U.S. District Judge Alison J. Nathan.  

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For two decades, former NYPD officer Gerard Scparta lied about being disabled to obtain over $638,000 in disability benefits through fraud, all while he was earning over $1.6 million as the host of a prominent strip club.  In doing so, he stole money from truly disabled individuals who are dependent on this important source of public support.  Then, not only did Scparta conceal his employment and income from the SSA by hiding behind a corporate entity purportedly owned by his wife, he also underreported his income to cheat on his taxes.  Particularly today, on Tax Day, this case shows that such brazen fraud and tax evasion will be prosecuted to the fullest extent of the law.”  

SSA-OIG Special Agent-in-Charge John F. Grasso said:  “Today’s plea is the latest step in our continued and ongoing effort to bring to justice all individuals who commit Social Security Disability fraud and other crimes that stem from that act.  I am very grateful for the efforts of our law enforcement partners involved in this investigation, to include the Internal Revenue Service Criminal Investigation Division, the New York City Department of Investigation and the continued commitment from the United States Attorney’s Office for the Southern District of New York.  I strongly encourage the public to report suspected instances of Social Security fraud to the OIG’s Fraud Hotline at 1-800-269-0271 or http://oig.ssa.gov/report.”

IRS-CI Acting Special Agent in Charge Jonathan D. Larsen said:  “The Special Agents of IRS-Criminal Investigation Division are sworn to protect the tax system and bring to justice those who would steal from the Treasury.  An oath similar in nature to one Mr. Scparta swore to as a law enforcement officer.”

According to the allegations contained in the Complaint and Information filed in federal court:

The SSA administers Social Security Disability Insurance (“SSD”), a federal benefits program that provides monthly cash benefits to individuals who have worked in the past and paid into Social Security, but who can no longer engage in any substantial gainful activity due to medical disabilities.  SSD is a disability benefit available only to individuals who have a qualifying disability and are unable to work in any profession.  In order to receive SSD, a beneficiary must certify that he or she is incapable of performing any gainful activity due to disability.  In addition, a beneficiary must report to the SSA all sources of income from work activity and any changes in the beneficiary’s medical condition, which are taken into account in determining whether the beneficiary is entitled to payments and the amount of those payments.  

Between in or about 1986 and in or about 1997, SCPARTA worked as a police officer with the NYPD.  In or about 1997, after reportedly sustaining an injury at the age of 32, SCPARTA was referred to an individual (“CC-1”) who helped him fraudulently obtain disability benefits.  Specifically, CC-1 submitted SSD application materials signed by SCPARTA that falsely stated, among other things, that SCPARTA suffered from severe depression and anxiety, could not do anything around his house, and was unable to work in any capacity.  In addition, CC-1 coached SCPARTA to make the same false statements to physicians who examined SCPARTA for the purpose of establishing his disability and submitting reports to the SSA.  Based on these false statements and representations by SCPARTA in documents and reports submitted to the SSA, the SSA approved SCPARTA to receive disability benefits from in or about 1997 onward.

In addition to lying about his disability status and inability to work, SCPARTA falsely claimed on multiple forms submitted to the SSA that he did not work, and failed to report earnings from employment as required.  In fact, from in or about April 2004 up to and including at least in or about December 2017, SCPARTA worked as a security guard and host at a strip club located in New York, New York (the “Strip Club”).  From in or about 1997 up to and including in or about 2017, SCPARTA received a total of over approximately $638,000 in disability benefits for himself, his wife, and his children, during which time SCPARTA earned approximately $1.6 million from his work at the Strip Club. 

Further, from in or about 2012 up to and including in or about 2017, SCPARTA engaged in tax evasion by concealing and attempting to conceal from the IRS the nature and extent of his income.  Specifically, SCARPTA utilized a nominee company registered to his wife to report income that SCPARTA earned from the Strip Club and falsely underreported that income by a total of approximately $268,602 for the tax years 2012 through 2016.

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SCPARTA, 54, of Campbell Hall, New York, pled guilty to one count of theft of government property, which carries a maximum sentence of 10 years in prison, and one count of tax evasion, which carries a maximum sentence of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

As part of today’s guilty plea, SCPARTA agreed to forfeit the $638,586 in Social Security disability benefits he obtained fraudulently, file accurate amended personal tax returns, and pay past taxes due and owing to the IRS for tax years 2012 through 2016.  SCPARTA is scheduled to be sentenced before Judge Nathan on July 16, 2019, at 12:45 p.m.

Mr. Berman praised the outstanding investigative work of the SSA-OIG and IRS-CI. Mr. Berman also thanked the Manhattan District Attorney’s Office and the New York City Department of Investigation for their assistance with the investigation.   

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