Southern District of New York

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 former Venezuelan official Hugo Armando Carvajal Barrios, a/k/a “El Pollo,” was arrested today in Madrid, Spain, based on an Interpol Notice related to the charge filed in Indictment 11 Cr. 205 in the Southern District of New York.  The Indictment charges Carvajal with participating in a conspiracy to import cocaine into the United States, including a 5.6-ton shipment of cocaine transported from Venezuela to Mexico in April 2006.[1]  The U.S. Attorney’s Office for the Southern District of New York plans to seek the extradition of Carvajal Barrios from Spain. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Hugo Armando Carvajal Barrios, a former high-ranking official of Venezuelan military intelligence, allegedly conspired with others to traffic more than five tons of cocaine into the United States since at least 2006. Barrios’s arrest exemplifies this Office’s resolve to bring those who contribute to the illicit global drug trade to justice. No matter the rank or level of influence of an individual, we will continue to pursue and prosecute those who bring deadly drugs into this country in a U.S. court of law.”

Special Agent in Charge Christopher T. Tersigni said:  “Today’s arrest of Hugo Armando Carvajal Barrios is yet another example of DEA’s commitment to stemming the flow of dangerous illicit drugs into our country.  Despite his status as a former government official in Venezuela, Carvajal Barrios is not above the law.  The DEA is grateful to our international partners for their efforts in helping to bring this drug-trafficker to justice.

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Carvajal Barrios, 56, a Venezuelan national residing in Venezuela, among other places, is charged with conspiring to import cocaine into the United States.  If convicted, Carvajal Barrios faces a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.  The mandatory minimum and maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Berman praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit and Miami Field Division, Homeland Security Investigations, the U.S. Treasury Department Office of Foreign Assets Control, and the U.S. Department of Justice’s Office of International Affairs.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Emil J. Bove III, Amanda L. Houle, and Matthew J. Laroche, with assistance from Adam Fels of the U.S. Attorney’s Office for the Southern District of Florida.

[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 Division of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an indictment yesterday charging five defendants with allegedly engaging in the distribution of cocaine and cocaine base throughout the Southern District of New York.  All five defendants were taken into federal custody on April 10 and April 11, 2019.  The defendants were presented in White Plains federal court yesterday before United States Magistrate Paul E. Davison.  This case is assigned to U.S. District Judge Kenneth M. Karas.

U.S. Attorney Geoffrey S. Berman said:  “Our Office is committed to targeting, arresting, and prosecuting criminals that peddle addictive and dangerous drugs to our community.  Thankfully, our law enforcement partners are just as dedicated to this important cause.”

FBI Assistant Director William F. Sweeney Jr. said:  “The insidious spread of potentially deadly, illegal drugs harms the small towns outside of the city in the same way it harms the big city.  No one is immune to the crime and violence that accompanies the drug trade.  The FBI Hudson Valley Safe Streets Task Force would like to thank all the dedicated law enforcement agencies who took part in this and other investigations for their work in making our communities safer.”

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

From at least in or about 2016 up to and including in or about October 2018, in the Southern District of New York and elsewhere, RONALD MILLER, a/k/a “Solo,” JASON PARADIES, FRANK NESBITT, a/k/a “Nitty” COREY WEBB, and KIYON WEBB, conspired to distribute five kilograms and more of cocaine and 280 grams of cocaine base. 

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The defendants RONALD MILLER, a/k/a “Solo,” JASON PARADIES, FRANK NESBITT, a/k/a “Nitty” COREY WEBB, and KIYON WEBB, face a maximum term of life in prison, and a mandatory term of 10 years in prison. 

 A chart containing the names of the defendants who were arrested and charged yesterday, and the charges and maximum penalties they face, is attached.

The statutory maximum sentences are prescribed by Congress and are provided here for information purposes only, as any sentencings of the defendants would be determined by the respective judges.

Mr. Berman praised the outstanding investigative work of the FBI Hudson Valley Safe Streets Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the New York State Police, the Dutchess County Sheriff’s Office, the City of Poughkeepsie Police Department, and the City of Kingston Police Department.

These case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Samuel L. Raymond and Courtney Heavey are in charge of the prosecutions.

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment 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 Jonathan D. Larsen, the Acting Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced today that EVERSLEY E. BARRETT, the owner of a tax preparation business named Eversley Tax, in New Windsor, New York, was charged with assisting the preparation of false and fraudulent tax returns and tax evasion.  BARRETT surrendered to authorities this morning and was presented before U.S. Magistrate Judge Paul E. Davison in White Plains federal court.

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

From in or about 2012 through 2016, BARRETT’s tax preparation business prepared and submitted to the IRS, on average, over 700 tax returns each year.  Some of these tax returns were false and fraudulent in that they contained various fabricated and fraudulently inflated items such as filing statuses, rental real estate losses, unreimbursed employee business expenses, gifts to charity, real estate-related expenses and application of certain tax credits.  BARRETT’s inclusion of these false and fraudulent deductions led the returns to fraudulently claim refunds. 

As alleged in the indictment, BARRETT also prepared and filed his own tax returns.  From in or about 2012 through 2016, BARRETT’s tax returns also contained many of the same fabricated and fraudulently inflated items, such as filing statuses, rental real estate losses, unreimbursed employee expenses, gifts to charity and real estate-related expenses.  In addition, BARRETT, who received many of his fees for his tax preparation services in cash, failed to report more than $300,000 in gross receipts for Eversley Tax for the tax years 2012 through 2015.

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BARRETT, 64, is charged in 84 counts. The first 83 counts charge him with aiding and assisting the preparation of false and fraudulent U.S. tax returns, each of which carries a maximum sentence of three years in prison and a maximum fine of $250,000.  He is also charged with one count of attempting to evade or defeat tax, which carries a maximum sentence of five years in prison and a maximum fine of $250,000.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised IRS-CI for their outstanding work in the investigation.

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

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 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 Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing today of an Indictment in Manhattan federal court charging a doctor who practiced in Manhattan, GORDON FREEDMAN, with 16 counts of distributing oxycodone, fentanyl, and other controlled substances to a particular patient, including one count for distributing fentanyl that caused the patient’s death.  FREEDMAN was arrested this morning, and is expected to be presented before U.S. Magistrate Judge Sarah Netburn in Manhattan federal court this afternoon.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Physicians take an oath to practice medicine for the sole purpose of improving their patients’ health.  Instead, Gordon Freedman allegedly used his medical license to overprescribe dangerous opioids to a patient.  When overprescribing deadly fentanyl for no legitimate medical purpose, it is just a matter of time before luck runs out – and in this case it has – as a patient of Freedman’s has allegedly suffered a fatal overdose as a result of Freedman’s alleged misconduct.”    

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Everyone knows the inherent danger in buying and selling drugs on the street, but when doctors overprescribe legal substances in lethal quantities, they too contribute to the overall drug epidemic. These drugs pose a real threat to our society. We hope to send the message today that there’s no quick fix for doctors who hide behind their prescription pad—this is criminal activity, and it will be treated as such.” 

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

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

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

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FREEDMAN, 58, of Mount Kisco, New York, is charged with one count of distributing controlled substances resulting in the death of another, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 20 years in prison.  FREEDMAN is also charged with 15 counts of distributing controlled substances, 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 sentence for the defendant will be determined by the judge.

In March 2018, FREEDMAN was indicted in a separate case, U.S. v. Gordon Freedman et al., 18 Cr. 217 (KMW), on charges of conspiracy to violate the Anti-Kickback Statute, violation of the Anti-Kickback Statute, and conspiracy to commit honest services wire fraud. Trial in that case is scheduled to begin November 4, 2019, before the Honorable Kimba M. Wood.

Mr. Berman praised the FBI and the New York City Police Department (“NYPD”) for their investigative efforts and ongoing support and assistance with the case.

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

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that ELIANA BAUTA pled guilty in Manhattan federal court to her involvement in a scheme to steal over $300,000 in funds from the New York City Human Resources Administration (“HRA”).  BAUTA perpetrated the offenses in her capacity as an HRA employee.  BAUTA pled guilty today before U.S. District Judge Valerie E. Caproni to federal program theft.  BAUTA also pled guilty on March 25, 2019 before Judge Caproni to conspiring to commit wire fraud.  Co-defendant GERALDINE PEREZ pled guilty before Judge Caproni on February 5, 2019, to her role in the HRA scheme and also to a separate fraudulent scheme involving more than $90,000 of stolen or fraudulently issued U.S. Treasury checks.  Co-defendant ERIC GONZALES pled guilty before Judge Caproni on February 5, 2019, to misdemeanor bank theft.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “HRA employees like Eliana Bauta are trusted to use their positions to help people in need.  Instead, as she has now admitted, Bauta egregiously abused that trust, working with her co-conspirators to steal hundreds of thousands of dollars intended for New York’s needy.  As the guilty pleas in this case indicate, we remain vigilant in seeking out and prosecuting abuses of trust by City employees and remain committed to ensuring that federal and local funds go to their intended recipients.”

According to the Complaint, the Indictment, and statements made in the plea proceedings today and on February 5 and March 25, 2019:                 

HRA is an agency of the City of New York responsible for administering the majority of the City’s public assistance programs.  Among other things, HRA provides temporary, emergency cash assistance to individuals and families with social service and economic needs to assist them in reaching self-sufficiency.  The emergency assistance is funded by the federal government as well as by New York State and the City.

Since 2015, the City Department of Investigation-Office of Inspector General (“DOI-OIG”) has been investigating two related schemes in which an HRA employee – BAUTA – defrauded HRA and the City by using her position to commit public assistance fraud.  BAUTA worked as a Job Opportunity Specialist for HRA from approximately January 2008 to on or about May 23, 2018.  As a Job Opportunity Specialist, BAUTA was at various points responsible for interviewing benefits applicants, compiling and submitting applicants’ paperwork, and disbursing applicants’ benefits.

In the first of the two schemes, BAUTA is alleged to have caused the fraudulent issuance of emergency benefits funds to relatives and acquaintances, including GERALDINE PEREZ and ERIC GONZALES, among others, who in truth and in fact did not qualify for those funds.  For example, BAUTA altered a police report submitted by an actual HRA client by changing the name of the victim to a family member’s name, and then entered the doctored report into HRA systems in support of a request for benefits to be issued to that family member.  On another occasion, BAUTA submitted a request for emergency benefits to be issued to an individual after an alleged disaster, but no such disaster had occurred.  Both PEREZ and GONZALEZ were knowing recipients of such fraudulently issued funds and shared the proceeds with BAUTA.

In the second scheme, BAUTA is alleged to have obtained access to and misappropriated emergency benefits checks issued to actual HRA clients.  Instead of providing the checks to the legitimate clients in need of emergency funding, BAUTA gave them to PEREZ and GONZALES, among other of BAUTA’s relatives and associates, who deposited the checks in their own bank accounts and withdrew the funds, and then shared the proceeds with BAUTA.  In total, the two schemes resulted in losses to HRA of at least $309,000 in public funds.

In addition to obtaining stolen HRA checks into her bank account and the bank accounts of family members, PEREZ also deposited or caused to be deposited into these same accounts improperly obtained United States Treasury checks that were issued to other individuals as tax refunds.  In total, 23 such checks worth more than $91,000 were deposited into bank accounts of PEREZ and her family members and associates.  PEREZ then split the proceeds with a tax preparer who assisted in the scheme.

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BAUTA, 35, of the Bronx, New York, pled guilty to one count of federal program theft, which carries a maximum potential sentence of 10 years in prison; and one count of conspiracy to commit wire fraud, which carries a maximum potential sentence of 20 years in prison. 

PEREZ, 60, of the Bronx, New York, pled guilty to one count of conspiracy to commit federal program theft, which carries a maximum potential sentence of five years in prison; and one count of receiving stolen government money or property, which carries a maximum potential sentence of 10 years in prison. 

GONZALES, 26, of the Bronx New York, pled guilty to one count of misdemeanor bank theft, which carries a maximum potential sentence of one year in prison. 

The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge.  BAUTA is scheduled to be sentenced before Judge Caproni on July 17, 2019.  PEREZ is scheduled to be sentenced before Judge Caproni on May 16, 2019.  GONZALES is scheduled to be sentenced before Judge Caproni on June 20, 2019.

Mr. Berman praised the investigative work of DOI and the Internal Revenue Service.  

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Paul Monteleoni and Catherine Ghosh are in charge of the prosecution.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced today that IVAN NIEVES was convicted of vandalism for defacing a sign on the grounds of the African Burial Ground National Monument by writing a threatening racial slur on it.  The conviction follows a bench trial before U.S. Magistrate Judge Ona T. Wang.

U.S. Attorney Geoffrey S. Berman said:  “The protections of the First Amendment do not extend to defacing federal property.  Ivan Nieves was rightly found guilty today for defacing the African Burial Ground National Monument with racial slurs.”

According to the evidence presented during the trial: 

On the morning of November 1, 2018, NIEVES wrote “Kill N----rs” in large bold letters across the face of a signpost entitled “A Place of Remembrance” in front of the African Burial Ground National Monument, which is located at the corner of Duane Street and Elk Street in Manhattan.  The monument commemorates the skeletal remains of approximately 15,000 African slaves who built the early City of New York.  Those remains were discovered in 1991 buried 30 feet beneath the streets of the city across more than six acres in lower Manhattan.

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NIEVES, 57, of the Bronx, New York, was convicted of one count of vandalism, which carries a maximum penalty of six months in prison.  NIEVES was acquitted of one count of disorderly conduct.  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.  NIEVES is scheduled to be sentenced before Judge Wang on July 17, 2019, at 11:00 a.m.

Mr. Berman praised the outstanding investigative work of the Federal Protective Service, the New York City Police Department Hate Crimes Task Force, and the United States Park Police.  Mr. Berman also thanked the National Park Service for its dedication and assistance.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Jacob R. Fiddelman and Sagar K. Ravi are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Michael C. Mikulka, Special Agent-in-Charge, New York Region, U.S. Department of Labor, Office of Inspector General (“DOL-OIG”), and James P. O’Neill, Police Commissioner of the City of New York (“NYPD”), announced that VINCENT ESPOSITO pled guilty today to conspiring to commit racketeering offenses with members and associates of the Genovese Crime Family of La Cosa Nostra.  ESPOSITO pled guilty before U.S. Magistrate Judge Sarah Netburn.  

U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, for more than a decade Vincent Esposito made millions with members of the Genovese Crime Family by extorting payments, demanding kickbacks, committing fraud, and instilling fear.  Thanks to an extensive investigation by our law enforcement partners, Esposito has been unmasked as a criminal and put out of business.”

FBI Assistant Director William F. Sweeney Jr. said:  “The shakedown of union officials, racketeering and extortion may sound like throwback behavior of mobsters who operated decades ago.   However, the bread and butter of the mafia is to make money, so the illegal enterprises they’ve always engaged in are being used even in the modern era.  The FBI New York Organized Crime Task Force will investigate whatever illicit activity the mob chooses to pursue, in order to stop their criminal behavior.”

DOL-OIG Special Agent in Charge Michael C. Mikulka said:  “Vincent Esposito engaged in a scheme to extort annual cash payments from a union official by threatening violence or the loss of their position if they did not give in to his extortionate demands.  Esposito’s guilty plea affirms the U.S. Department of Labor Office of Inspector General’s commitment to protecting unions and their members from those who seek to exploit unions for their own personal gain.  We will continue to work with our local and federal law enforcement partners to ensure unions can operate in a fair and just environment and function within the confines of federal law.”

Police Commissioner James P. O’Neill said:  “The NYPD, its law enforcement partners and others in government are committed to eradicating organized crime in the City of New York.  Associates of La Cosa Nostra – or any other enterprise that seeks to enrich its members through racketeering and the threat of violence – should know that investigators will build strong cases against them and they will be prosecuted.  I want to thank the members of the NYPD, the FBI, the Southern District and the members of the U.S. Department of Labor’s Office of Inspector General and Office of Labor-Management Standards for their work on this case.”    

According to the Indictment and statements made during public court proceedings:

La Cosa Nostra, also known as the “Mob” or the “Mafia,” operates through entities known as “Families.”  One of the Families operating in the New York City area is the Genovese Crime Family.  For years, continuing until 2017, ESPOSITO conspired with other members and associates of the Genovese Crime Family to commit a wide range of crimes to enrich themselves, including multiple acts of extortion, honest services fraud, and bribery.  Among other things, ESPOSITO directed the long-running extortion of a union official (“Official-1”) for annual tribute payments of more than over $10,000, and had a number of lower-ranking members of the enterprise collect money and convey threats to Official-1 on Esposito’s behalf.  In another extortion scheme, ESPOSITO’s co-conspirators extorted a different union official (“Official-2”) and a financial adviser (the “Adviser”) for a cut of commissions made from union investments.

At the time of ESPOSITO’s arrest, the FBI executed a search warrant on his home and seized more than $3.8 million in U.S. currency hidden throughout the residence, along with an unregistered handgun, ammunition, brass knuckles, and lists of made members of the Genovese Crime Family.  As part of today’s guilty plea, ESPOSITO agreed to forfeit the more than $3.8 million seized by the FBI as criminal proceeds resulting from the offense. 

Mr. Berman also announced that two other co-defendants, FRANK COGNETTA and VINCENT D’ACUNTO, both former union officials, previously pled guilty to conspiracy to commit racketeering.  As part of the conspiracy, D’ACUNTO participated in the extortion of Official-1.  Also as part of the conspiracy, COGNETTA engaged in various schemes to defraud his union of his honest services by, among other things, soliciting and accepting bribes and steering union benefit plans into investments in exchange for kickbacks, which resulted in more than $1 million in unlawful payments.  Charges remain pending against two of ESPOSITO’s co-defendants, Steven Arena and Frank Giovinco, with trial scheduled for June 17, 2019, before U.S. District Court Judge Victor Marrero.  The charges in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.

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ESPOSITO, 51, pled guilty to one count of conspiracy to commit racketeering, which carries a maximum sentence of 20 years in prison.  The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  ESPOSITO’s sentencing is scheduled for July 10, 2019, before Judge Marrero.

Mr. Berman praised the outstanding investigative work of the FBI, the U.S. Department of Labor’s Office of Inspector General and Office of Labor-Management Standards, the NYPD, and the Special Agents of the United States Attorney’s Office for the Southern District of New York.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Kimberly J. Ravener, Jared Lenow, and Jason M. Swergold are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that two defendants have been sentenced to prison by U.S. District Judge Gregory H. Woods in connection with a scheme to steal client information and funds from a bank.  SECONEY BROWN and ANTOINETTE MITCHELL-BROWN, who are married, previously pled guilty to participating in a conspiracy to commit bank fraud.

U.S. Attorney Geoffrey S. Berman said:  “Antoinette Mitchell-Brown stole client information from a bank at which she was employed and, with the help of her husband, Seconey Brown, used that information in an attempt to steal hundreds of thousands of dollars from the bank customers.  Now, they have been sentenced to prison.”

According to the allegations in the Indictment filed in connection with this case, other filings in Manhattan federal court, and statements made at the sentencing hearings in this case:

From September 2016 until December 2016, BROWN and MITCHELL-BROWN engaged in a scheme to fraudulently obtain funds from more than 25 accounts at Bank-1, at which MITCHELL-BROWN was then employed.  In furtherance of the scheme, MITCHELL-BROWN stole victims’ bank account information from her employer and used that information to, among other things, write checks for thousands of dollars from victims’ accounts and initiate wire transfers from victims’ accounts to bank accounts controlled by members of the scheme.  BROWN, among other things, paid members of the scheme or otherwise induced other individuals (some of whom provided unwitting assistance) to cash or deposit the fraudulent checks from MITCHELL-BROWN, and to provide the proceeds to BROWN, or, at BROWN’s direction, other individuals.  In total, the defendants’ scheme fraudulently obtained almost $100,000 and attempted to obtain at least an additional $660,000.

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In addition to the prison term, BROWN, 26, of East Orange, New Jersey, was sentenced to 2 years of supervised release, and was ordered to pay $93,123.14 in restitution.

MITCHELL-BROWN, 42, of East Orange, New Jersey, was sentenced by Judge Woods on April 4, 2019, to 366 days in prison and two years of supervised release, and was ordered to pay $93,123.14 in restitution.

Mr. Berman praised the outstanding investigative work of the FDIC Office of Inspector General and the United States Postal Inspection Service.  Mr. Berman also thanked U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the East Orange Police Department for their assistance in the investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Louis A. Pellegrino and Robert B. Sobelman are in charge of the prosecution.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced today the unsealing of an indictment charging four defendants with a multi-year conspiracy to distribute one kilogram or more of heroin in or around Middletown, New York.  Three defendants were arrested today in Orange County, New York, and were presented this afternoon before U.S. Magistrate Judge Paul E. Davison, who ordered the defendants held without bail.  One additional defendant was arrested today in the Eastern District of Pennsylvania and was presented in federal court in that district. 

As alleged in the Indictment,[1] from at least in or about 2015 up to and including in or about 2018, LUIS ORTIZ, a/k/a “Colla,” FELIX VELEZ, CARMEN TORRES, a/k/a “Evaliz,” and JOSE COLON conspired to distribute one kilogram and more of a mixture and substance containing a detectable amount of heroin.  

The defendants each face a maximum sentence of life imprisonment, and a mandatory minimum term of 10 years in prison.  The statutory maximum and minimum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the respective judges.

Mr. Berman praised the outstanding investigative work of the FBI, the New York State Police, the City of Middletown Police Department, and the Orange County Sheriff’s Office.

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

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment set forth herein constitute only of 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 MELANIE WILLIAMS-BETHEA, the former director of financial aid at Teachers College, Columbia University, and two former Teachers College students, MAWULI HORMEKU and CARMEN CANTY, were sentenced to prison terms for their respective roles in illicitly obtaining hundreds of thousands of dollars from Teachers College through a years-long bribery and kickback scheme.  WILLIAMS-BETHEA was sentenced today by U.S. District Judge Alison J. Nathan, who previously sentenced HORMEKU and CANTY.  The defendants received the following sentences:

MELANIE WILLIAMS-BETHEA

40 months in prison

MAWULI HORMEKU

12 months and one day in prison

CARMEN CANTY

  3 months in prison

WILLIAMS-BETHEA pled guilty to conspiracy to commit bribery on October 17, 2018; HORMEKU pled guilty to committing bribery on July 26, 2018; and CANTY pled guilty to committing bribery on July 31, 2018.  Two additional students who participated in the scheme, ANNICE KPANA and KYLA THOMAS, also have pled guilty and are scheduled to be sentenced later this month.

U.S. Attorney Geoffrey S. Berman said:  “These defendants exploited and stole from an institution of higher learning, taking money that was intended to help provide opportunities for individuals training to teach future generations.  They cumulatively pocketed more than $2 million, and their prison sentences reflect the significant harm caused by their conduct.”

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

From 2008 through 2017, the defendants engaged in bribery and kickback schemes resulting in the loss of more than $2 million from Teachers College.  WILLIAMS-BETHEA, who was employed by Teachers College as the director of financial aid during the relevant time period, perpetrated the scheme by approving aid payments to HORMEKU, CANTY, KPANA, and THOMAS (collectively, the “Students”) far in excess of their actual need, and then obtaining portions of the unjustified aid allotments she approved as kickback payments from the Students. 

Specifically, WILLIAMS-BETHEA approved excessive “cost of attendance” figures for the Students that did not comport with their actual needs or costs of living, which had the effect of increasing the amount of financial aid they were eligible to receive, and by then approving stipends for the Students up to – and at times exceeding – these inflated amounts.  To facilitate some of the stipends, WILLIAMS-BETHEA created fraudulent stipend request forms for financial awards to the Students, which gave the appearance that professors or other administrators had requested stipends, when in fact they had not, and then approved the fraudulently requested stipends herself.

After WILLIAMS-BETHEA facilitated these awards of unjustified financial aid, HORMEKU, CANTY, KPANA, and THOMAS paid WILLIAMS-BETHEA nearly $1 million in kickbacks.

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In addition to the prison terms, Judge Nathan ordered WILLIAMS-BETHEA, 49, to pay restitution and forfeiture in the amount of $2,067,349; ordered HORMEKU, 39, to pay restitution and forfeiture in the amount of $620,010; and ordered CANTY, 40, to pay restitution and forfeiture in the amount of $166,105.

Mr. Berman praised the investigative work of the Department of Education, Office of the Inspector General in this investigation.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LUIS OMAR VARGAS, an unlicensed dentist, was sentenced to two years in prison for defrauding health insurance companies by billing for false claims, billing for claims performed by him as an unlicensed provider, and for conspiring to pay kickbacks to his patients.  VARGAS was convicted after two-week jury trial before U.S. District Judge Ronnie Abrams, who imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “Luis Omar Vargas and his co-defendants devised a scheme to defraud insurance companies by charging them for services never performed.  In addition, Vargas, who is not a licensed dentist, charged insurance companies for services he was not even licensed to perform.  Now Vargas will spend time in prison for his financial crimes.”

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

From 2012 through November 2017, in the Southern District of New York and elsewhere, VARGAS and others conspired and participated in a scheme to defraud insurance providers of more than $2 million.  VARGAS and others induced patients to be seen at a dental clinic on the Upper West Side of Manhattan by offering patients a $25 cash kickback.  Once the patients were in the door, VARGAS and his co-conspirators charged insurance companies for services that were never performed and for services performed by VARGAS that he was not licensed to perform.

*                *                *

In addition to the prison term, VARGAS, 46, of Roselle, New Jersey, was sentenced to two years of supervised release and ordered to pay $959,150 in restitution.

Co-defendant Dr. Mehmet Dikengil, 71, pled guilty on September 13, 2018, to one count of conspiracy to commit mail fraud, one count of health care fraud, and one count of conspiracy to violate the Anti-Kickback statute, and was sentenced on January 25, 2019, to two years in prison.  Anna Jones, 60, pled guilty on August 14, 2018, to one count of theft of government funds, and was sentenced on February 14, 2019, to three years of probation.

 Mr. Berman praised the outstanding investigative work of the U.S. Department of Health and Human Services-Office of Inspector General in this investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Alexandra N. Rothman, Ryan B. Finkel, and Kristy J. Greenberg are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that MICHAEL D’ALESSIO was sentenced to 72 months in prison for operating a years-long scheme to defraud investors in his luxury real estate development projects in Manhattan, the Hamptons, Westchester, and elsewhere, and for making false claims and concealing assets in connection with his bankruptcy case.  D’ALESSIO pled guilty on November 8, 2018, before U.S. District Judge Jesse M. Furman, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Michael D’Alessio promised investors that he would develop and build luxury properties that would yield big returns.  When the real estate market took a downturn, D’Alessio resorted to fraud.  In the end, all he built was a Ponzi scheme that he used to rip off his investors of their hard-earned life savings to the tune of $58 million.  Today, D’Alessio was sentenced to six years in prison for this brazen fraud.  Others who would consider funding a life of luxury with the proceeds of fraud should take heed.  We will continue to work with our law enforcement partners to see that such fraud is met with justice, and that those who would commit such crimes understand that crime doesn’t pay.”

According to the Indictment, Superseding Information, and statements made in court filings and proceedings:        

D’ALESSIO, a real estate developer and general contractor, served as the president and chief executive officer of a real estate investment and development firm specializing in the design, construction, and management of both residential and commercial real estate properties (“Company-1”).  D’ALESSIO and Company-1 developed, and purported to develop, luxury residential real estate properties in Manhattan, the Hamptons, Westchester, and elsewhere.

D’ALESSIO typically followed the same pattern in each real estate investment project:  he sought investments by offering for sale shares in a newly formed limited liability company (“LLC”) named after the location of the parcel of real estate to be developed and sold (the “Target Property”).  In exchange for a purchase of shares in the LLC, D’ALESSIO promised a guaranteed monthly interest payment and a share in the profits from the sale of the Target Property.  In soliciting investors, D’ALESSIO made numerous representations to potential investors, including that investor funds would be used only to develop the relevant Target Property and to cover related business expenses of the relevant LLC.

However, in reality, from 2015 through April 2018, D’ALESSIO misappropriated investor funds for his own use and benefit, and made other material misrepresentations.  For example, in the case of a purported luxury condominium development on the Upper East Side, D’Alessio represented to investors that the building would be delivered to him vacant.  In reality, however, and as D’Alessio knew, the property was inhabited by rent-controlled tenants who could not be easily evicted.  In contrast to his representations of a speedy development project and a viable investment opportunity, no substantial changes could be made to the property while those tenants remained in occupancy. 

Upon receiving investor funds, D’ALESSIO typically channeled those funds through a series of bank accounts held in the names of shell companies owned and controlled by D’ALESSIO.  D’ALESSIO then used much of those investor funds for his own benefit, including to pay off debts and prior investors, and to fund significant gambling and other personal expenses.  D’ALESSIO took steps to conceal his fraud, including deceiving investors regarding the progress of various real estate projects and using money raised from investors to make monthly payments to investors in different projects in the manner of a Ponzi scheme.  D’ALESSIO defrauded investors out of approximately $58 million.

In 2018, D’ALESSIO went into involuntary bankruptcy under Chapter 7 of Title 11 of the United States Code.  In connection with this bankruptcy proceeding, captioned In re Michael D’Alessio, No. 18-22552 (Bankr. S.D.N.Y.), D’ALESSIO submitted forms that fraudulently omitted money and property belonging to his estate, and made a false declaration under penalty of perjury concerning his money and property.  Specifically, at the time of D’Alessio’s arrest in August 2018, law enforcement agents found $44,000 in cash, including $30,000 in a gym bag alongside a firearm.  Following the arrest, law enforcement agents also learned about a bank account controlled by D’Alessio — which had not been reported in the bankruptcy — that carried a cash balance of $3,047.16.  D’Alessio’s cell phone also contained text messages between D’Alessio and another individual in which D’Alessio stated: “I need some of my money tomorrow for Italy” and “I need my 100k I gave you to hold.”  All together, D’Alessio concealed at least $143,047.16 from the Bankruptcy Court. 

*                      *                      *        

In addition to the prison term, D’ALESSIO, 53, of New York, New York, was sentenced to three years of supervised release and order to pay forfeiture in the amount of $58,090,047.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that CRAIG CARTON was sentenced to 42 months in prison for securities fraud, wire fraud, and conspiracy to commit those offenses.  CARTON was convicted after a one-week trial before Chief U.S. District Judge Colleen McMahon, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Radio personality Craig Carton solicited investments for his ticket buying scheme by claiming to have an in with the operator of two New York-area arenas and a major concert promotion company.  He talked of his ability to buy blocks of tickets to live events and sell them for a profit on the secondary market.  But the talk-show host was all talk.  Carton’s purported agreements to buy blocks of tickets were part of an elaborate fiction.  Today he has learned that the price of defrauding investors is a term in prison.”

As set forth in the Complaint, Indictment, and the evidence presented at trial:

CARTON and Joseph Meli worked together to induce investors to provide them with millions of dollars, based on representations that the investor funds would be used to purchase blocks of tickets to concerts, which would then be resold on the secondary market.  CARTON and Meli purportedly had access to those blocks of tickets based on agreements that Meli had with a company that promotes live music and entertainment events (the “Concert Promotion Company”) and that CARTON had with a company that operates two arenas in the New York metropolitan area (the “Sports and Entertainment Company”).  In fact, neither the Concert Promotion Company nor the Sports and Entertainment Company had any such agreement with CARTON, co-defendant Michael Wright, Meli, or any entity associated with them.  After receiving the investor funds, CARTON, Wright, and Meli misappropriated those funds, using them to, among other things, pay personal debts and repay prior investors as part of a Ponzi-like scheme.   

In the fall of 2016, CARTON, Wright, and Meli exchanged emails and text messages regarding their existing debts.  On September 5, 2016, for example, Wright emailed CARTON and Meli, “for the sake of our conversation tomorrow,” and outlined “the debt past due and due next week.”  Wright listed several apparent creditors, to whom he, Meli, and/or CARTON were personally indebted for over $1 million.  Wright listed eight possible options for repaying the debt, including “Run to Costa Rica, change name, and start life all over again – may not be an option.”  CARTON responded to Wright and Meli, stating “don’t forget I have $1m coming tomorrow from ticket investor[.]  will need to be discussed how to handle.”  On September 7, 2016, CARTON emailed Wright and Meli, referenced a potential investor (“Investor-1”) in an upcoming holiday concert tour, and suggested “borrow[ing] against projected profits” on that investment. 

Later in the fall of 2016, CARTON began negotiating with a hedge fund (the “Hedge Fund”) regarding a transaction in which the Hedge Fund would extend CARTON capital to finance CARTON’s purchase of event tickets, which CARTON would then resell at a profit.  In early December 2016, Meli texted CARTON and Wright and discussed using the Hedge Fund’s capital “to repay debts,” and not for the purchase of tickets. 

The next day, December 7, 2016, CARTON emailed the Hedge Fund five agreements between (i) Meli and a company controlled by Meli (the “Meli Entity”) and (ii) the Concert Promotion Company.  In each of the purported agreements, the Concert Promotion Company agreed to sell the Meli Entity up $10 million worth of tickets to different concert tours.  However, these agreements were fraudulent and had not, in fact, been entered into by the Concert Promotion Company.

The following day, the Hedge Fund and CARTON executed the revolving loan agreement (the “Revolving Loan Agreement”), under which the Hedge Fund agreed to provide CARTON with up to $10 million, for the purpose of funding investments in the purchase of tickets for events.  The Revolving Loan Agreement provided, in sum and substance, that the proceeds of the loan would be used only to purchase tickets pursuant to agreements for the acquisition of tickets, including the agreements with the Concert Promotion Company, and for limited business expenses.  The Hedge Fund would receive a share of the profits from the resale of the tickets.

The Hedge Fund then sent $700,000 to the Meli Entity to finance the purchase of tickets pursuant to the agreements between the Meli Entity and the Concert Promotion Company.  Meli, however, then sent this money to a bank account controlled by Wright, who then, on December 12, sent $200,000 to CARTON’s personal bank account (the “CARTON Bank Account”), which CARTON then wired to a casino.  Also on December 12, Wright sent another $500,000 to an individual who had previously lent CARTON $500,000, which was due to be repaid that day.

Later in December 2016, the Hedge Fund sent an additional $1.9 million to the Meli Entity, to finance the purchase of tickets pursuant to agreements between the Meli Entity and the Concert Promotion Company.  Once again, the Concert Promotion Company had not entered into any such agreements.  Meli, Wright, and CARTON engaged in text messages regarding the disposition of these funds.  Some of the money was used by Meli to repay two individuals who had previously invested with Meli in a related scheme involving the purported investment in the resale of tickets, and by CARTON to pay casinos and to pay Investor-1 a purported return on an earlier investment in a ticket-related venture, among other things.

CARTON also induced the Hedge Fund to wire $2 million to the Sports and Entertainment Company, based on a purported agreement CARTON purportedly had with the Sports and Entertainment Company (the “Sports and Entertainment Company Agreement”).  The Sports and Entertainment Company Agreement purportedly gave an entity controlled by CARTON (the “CARTON Entity”) the right to purchase $2 million of tickets to concerts at one of the venues operated by the Sports and Entertainment Company.  CARTON, among other things, sent the Hedge Fund a copy of the Sports and Entertainment Company Agreement that purportedly had been signed by the chief executive officer of the Sports and Entertainment Company.  However, this agreement was fraudulent and had never been entered into by the Sports and Entertainment Company or signed by the chief executive officer. 

On December 20, 2016, when the Hedge Fund wired the $2 million to the Sports and Entertainment Company, CARTON contacted the Sports and Entertainment Company and told them, in sum and substance, that the wire had been sent in error and should be sent to the bank account for an entity operated by CARTON and Wright, for which Wright is the signatory.  After the money was rewired to that account, Wright wired $966,000 to Wright’s personal bank account and $700,000 to the CARTON Bank Account.  CARTON then wired approximately $188,000 from the CARTON Bank Account, including at least $133,000 in wires to several casinos.

*                *                *

In addition to the prison term, CARTON, 50, of New York, New York, was sentenced to three years of supervised release and ordered to pay $4,835,186.56 in restitution and to forfeit $4,590,000.  CARTON’S co-defendant, Michael Wright, pled guilty on September 27, 2018, to one count of wire fraud and was sentenced to 21 months in prison. 

Joseph Meli pled guilty to securities fraud in October 2017 and is currently serving a 78-month sentence imposed by U.S. District Judge Kimba M. Wood in April 2018.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and thanked the Boston Regional Office of the U.S. Securities and Exchange Commission.

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced today that RODOLFO SABLON, a/k/a “Rudy,” was sentenced to six months in prison for his role in an insider trading scheme based on material nonpublic information misappropriated from an investment bank by Daniel Rivas, a former employee at the bank.  In July 2018, SABLON pled guilty to conspiracy to commit securities fraud and fraud before U.S. Magistrate Judge Debra Freeman.  U.S. District Judge Alison J. Nathan imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “Today’s sentencing of Rodolfo Sablon closes the book on this multimillion-dollar, multi-pronged insider trading scheme.  Sablon and his co-defendants acted as though the securities laws that are designed to keep our nation’s marketplace fair did not apply to them.  However, as they all have learned, our office is committed to identifying and prosecuting these types of insider trading networks.”

According to the allegations contained in the Indictment filed against SABLON and his co-conspirators, and statements made in related court filings and proceedings:

The Investment Bank and Rivas

From August 2013 through May 2017, Rivas was employed as a technology consultant in the Research and Capital Markets Technology Group of an investment bank (the “Investment Bank”).  In this role, Rivas had access to an internal, proprietary system maintained by the Investment Bank (the “Deal Tracking System”) containing material nonpublic information (“Inside Information”) about potential and unannounced merger and acquisition transactions, including tender offers, involving the Investment Bank.  The Investment Bank’s written policies prohibited the unauthorized disclosure of confidential information, which included Inside Information.  Rivas had a duty, among other obligations, to maintain the confidentiality of all of the Investment Bank’s confidential information, including the Inside Information. 

Overview of Insider Trading Schemes

From August 2014 through April 2017, Rivas violated the duties of confidentiality he owed to the Investment Bank by serially misappropriating material nonpublic information from the Investment Bank’s Deal Tracking System and passing that information along to friends so that they could utilize it to make profitable trades.  On more than 50 occasions between August 2014 and April 2017, Rivas provided Inside Information about contemplated but unannounced merger and acquisition (“M&A”) transactions and tender offer transactions involving clients and prospective clients of the Investment Bank to friends who used that information to purchase and sell securities.  In total, the insider trading based on Inside Information misappropriated by Rivas resulted in illicit profits of more than $5 million through trading in more than two dozen securities.  The Inside Information was passed through three tipping chains.    

The Sablon Tipping Chain

SABLON was a member of the second of three tipping chains outlined in the Indictment.  In this tipping chain, Rivas passed inside information to SABLON and co-defendant Roberto Rodriguez, a childhood friend of Rivas with whom Rodriguez had maintained a close relationship as adults. 

Since 2014, Rodriguez lived and worked in Miami, Florida, with SABLON, with whom he was also friends.  In 2015, Rodriguez introduced Rivas to SABLON.  Rivas and SABLON then communicated with each other directly and developed an independent relationship. 

In the fall of 2015, Rivas disclosed to Rodriguez that Rivas had access to Inside Information by virtue of his position as a corporate insider at an Investment Bank.  At Rodriguez’s request, Rivas also agreed to share Inside Information with SABLON.  While Rivas had originally agreed to divulge Inside Information to Rodriguez because of their history of friendship, Rivas also learned that Rodriguez and SABLON intended to start an investment fund with the proceeds of the insider trading scheme.  Rivas understood that in exchange for the Inside Information Rivas was providing to Rodriguez and SABLON, Rivas would be invited to join the investment fund as a partner once it was successfully launched.

At first, Rivas communicated with Rodriguez and SABLON primarily via phone and text message.  As the scheme progressed, however, Rodriguez and SABLON increased their efforts to hide their illegal activity.  On several occasions, Rivas met personally with Rodriguez and/or SABLON in Miami in order to provide them with Inside Information.  Rivas also provided Rodriguez and SABLON with Inside Information using an encrypted mobile messaging application (the “Messaging App”), which allows users to set a timer to messages to irretrievably “self-destruct.”

In order to maximize the illicit profits that could be earned using Rivas’s Inside Information, Rodriguez and SABLON, in consultation with Rivas, initiated an aggressive strategy of purchasing short-term, out-of-the money call options.  In total, from 2015 through April 2017, Rodriguez and SABLON earned more than $2 million in illicit profits through insider trading in more than two dozen securities based on Inside Information divulged by Rivas.

*                *                *

In addition to the prison term, SABLON, 39, of Miami, Florida, was sentenced to two years of supervised release, including six months in a community confinement center.  SABLON was also ordered to pay $923,566 in forfeiture and a $5,000 fine.

Co-defendant Siva pled guilty on October 18, 2018, to one count of conspiracy to commit securities fraud and fraud and was sentenced to 18 months in prison on February 22, 2019.  Co-defendant Rodriguez pled guilty on September 7, 2018, to conspiracy to commit securities fraud and fraud and was sentenced to one year and one day in prison.  Co-defendant Jhonatan Zoquier pled guilty on August 6, 2018, to conspiracy to commit securities fraud and was sentenced to three months in prison.  Co-defendant Jeffrey Rogiers pled guilty on August 13, 2018, to conspiracy to commit securities fraud and was sentenced to three months in prison.

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

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Andrea M. Griswold and Samson Enzer are in charge of the prosecution.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that eight defendants have been sentenced in connection with their participation in a scheme to defraud victims – many of whom were elderly – by soliciting payments over the telephone.  ARASH KETABCHI, a/k/a “Zach Peterson,” RAYMOND QUILES, CHRISTOPHER WILSON, a/k/a “Eric Fields,” JACK KAVNER, a/k/a “Bob Wiley,” a/k/a “Phil Powers,” JOSEPH McGOWAN, and ANTHONY MEDEIROS pled guilty in 2018.  ANDREW OWIMRIN, a/k/a “Andrew Owens,” a/k/a “Jonathan Stewart,” and SHAHRAM KETABCHI, a/k/a “Steve Ketabchi,” were convicted following a 12-day trial before United States District Judge Sidney H. Stein. 

U.S. Attorney Geoffrey S. Berman said:  “Motivated by greed and the possibility of a quick payday, these defendants aggressively targeted the elderly and other vulnerable victims by convincing them to invest their money in various businesses.  In reality, these so-called opportunities were just fraudulent schemes to steal victims’ money.  Now, they have all been sentenced to prison.”

According to the allegations in the complaint and indictments filed in connection with this case, other filings in Manhattan federal court, and evidence presented at the trial of OWIMRIN and SHAHRAM KETABCHI:

Beginning in October 2013 through March 2017, ARASH KETABCHI, WILSON, KAVNER, McGOWAN, and others operated a group of telemarketing companies (the “Telemarketing Companies”) that engaged in a fraudulent scheme (the “Telemarketing Scheme”), by which they promised to earn victims (the “Victims”) money in exchange for particular Victims making an initial cash “investment” in business development, website design, grant applications, or tax preparation services.  Many Victims, the majority of whom are over 70 years old, “invested” thousands of dollars with the Telemarketing Companies, but did not earn any of the promised returns.  When Victims of the Telemarketing Scheme sought refunds, or fought credit card charges, the Telemarketing Companies provided explanations and documentation to the credit card companies falsely representing that the Victims had received the promised services.  QUILES operated a company that provided so-called “fulfillment” services for the Telemarketing Companies, whereby QUILES’s company would send nominal items, such as boilerplate pamphlets, to Victims in order to help the Telemarketing Companies falsely demonstrate to credit card companies that they had provided services to the Victims.  OWIMRIN and MEDEIROS worked as sales representatives for the Telemarketing Companies.  SHAHRAM KETABCHI was responsible for, among other things, the submission of documents to the credit card companies in order to challenge the Victims’ attempts to recover their funds.

Five other individuals have pled guilty in connection with this case, and await sentencing:

Defendant Name

Companies

Count(s) of Conviction

William Sinclair

Olive Branch Marketing,

Paramount Business Solutions

Wire Fraud and Conspiracy to Commit Wire Fraud

(18 U.S.C. §§ 1343, 1349)

Conspiracy to Commit Money Laundering

(18 U.S.C. § 1956(h))

Michael Finocchiaro

Olive Branch Marketing,

Paramount Business Solutions

Wire Fraud and Conspiracy to Commit Wire Fraud

(18 U.S.C. §§ 1343, 1349)

Conspiracy to Commit Money Laundering

(18 U.S.C. § 1956(h))

Narcotics Conspiracy

(21 U.S.C. § 846)

Daniel Quirk

Carlyle Management Group,

Vanguard Business Solutions

Wire Fraud and Conspiracy to Commit Wire Fraud

(18 U.S.C. §§ 1343, 1349)

Conspiracy to Commit Money Laundering

(18 U.S.C. § 1956(h))

Narcotics Conspiracy

(21 U.S.C. § 846)

Peter DiQuarto

Olive Branch Marketing,

Carlyle Management Group,

Vanguard Business Solutions.

A1 Business Consultants

Wire Fraud and Conspiracy to Commit Wire Fraud

(18 U.S.C. §§ 1343, 1349)

Conspiracy to Commit Money Laundering

(18 U.S.C. § 1956(h))

Narcotics Conspiracy

(21 U.S.C. § 846)

Brooke Marcus

First Trend,

Tri-Star,

Elite Business Services

Conspiracy to Commit Wire Fraud

(18 U.S.C. § 1349)

 

*                      *                      *

ARASH KETABCHI, 45, of Wayne, New Jersey, was sentenced by Judge Stein on March 27, 2019, to 87 months in prison and three years of supervised release, and ordered to forfeit $1,059,803.84 and to pay $563,427.99 in restitution.

RAYMOND QUILES, 41, of Old Bridge, New Jersey, was sentenced by Judge Stein on March 27, 2019, to 366 days in prison and three years of supervised release, ordered to perform 480 hours of community service, and to forfeit $542,673.30.

CHRISTOPHER WILSON, 33, of Teaneck, New Jersey, was sentenced by Judge Stein on April 3, 2019, to 78 months in prison and three years of supervised release, and ordered to forfeit $485,818.84 and to pay $397,850.80 in restitution.

JACK KAVNER, 32, of West New York, New Jersey, was sentenced by Judge Stein on April 3, 2019, to 51 months in prison and three years of supervised release, and ordered to forfeit $150,000 and to pay $1,705,586.05 in restitution.

JOSEPH McGOWAN, 32, of Port Chester, New York, was sentenced by Judge Stein on April 3, 2019, to 72 months in prison and three years of supervised release, and ordered to forfeit $1,763,582.05 and to pay $1,705,586.05 in restitution.

ANDREW OWIMRIN, 29, of Montvale, New Jersey, was sentenced by Judge Stein on March 27, 2019, to 52 months in prison and three years of supervised release, and ordered to forfeit $100,000.

SHAHRAM KETABCHI, 48, of Rancho Mission Viejo, California, was sentenced by Judge Stein on March 28, 2019, to four months in prison, three years of supervised release, including six months of home confinement, and 480 hours of community service.  SHAHRAM KETABCHI was also ordered to forfeit $30,825 and to pay $563,427.99 in restitution.

ANTHONY MEDEIROS, 38, of Bloomfield, New Jersey, was sentenced by U.S. District Court Judge Nelson S. Román on September 11, 2018, to 66 months in prison and three years of supervised release.   

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

The prosecution is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Kiersten A. Fletcher, Benet J. Kearney, and Robert B. Sobelman are in charge of the prosecution. 

If you believe you have been a victim of these telemarketing companies:  A1 Business Consultants, Elevated Business Consultants, Element Business Services, Prestige Worldwide Enterprises, Olive Branch Marketing, CTO Consulting, Carlyle Management Group, or Vanguard Business Solutions, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the U.S. Attorney’s Office for the Southern District of New York, at 866-874-8900 or wendy.olsen@usdoj.gov.  You may also report it to Detective Christopher Bastos of the New York City Police Department at 917-480-7167 or christopher.bastos@nypd.org.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JOSE RAMON ONTIVEROS, a dual citizen of the United States and Mexico, was sentenced to 32 years in prison by United States District Judge Gregory H. Woods for running a drug trafficking organization that shipped hundreds of kilograms of cocaine across the United States, and arranged for the kidnapping, torture, and murder of Oscar Contreras, a member of the organization, in August 2012.   

Manhattan U.S. Attorney Geoffrey S. Berman stated:  “For years, Jose Ramon Ontiveros ran a drug trafficking organization that flooded New York City with large amounts of cocaine.  When the organization’s operations were threatened by the apparent theft of drug proceeds by one of its workers, Ontiveros and others responded with brutal violence that resulted in the torture and death of Oscar Contreras.  Today’s sentence sends a message that we will aggressively prosecute those who engage in drug trafficking and violence, and we hope the sentence brings a small measure of comfort to Mr. Contreras’s family.”

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

From in or about 2008 through in or about February 2013, ONTIVEROS, 57, oversaw a drug trafficking organization (the “DTO”) based out of California that shipped large amounts of cocaine to New York City and other parts of the East Coast.  The DTO was supplied by the Sinaloa Cartel in Mexico, and transported the cocaine from California to the East Coast using hidden compartments in tractor trailers.  ONTIVEROS not only oversaw the DTO’s operations in the United States, but also served as the go-between between members of the Sinaloa Cartel in Mexico and the DTO.  Between 2008 and 2013, the DTO shipped over 450 kilograms of cocaine to the East Coast, and brought back millions of dollars in drug proceeds.

In or about August 2012, the DTO suspected that one of its drivers, Oscar Contreras, had stolen approximately $1 million in drug proceeds from the DTO.  ONTIVEROS and other members of the DTO arranged for Contreras to be kidnapped and tortured by a local street gang (the “Street Gang”) in Ontario, California, in order to locate the missing money.  Contreras was brutally tortured for several days before being killed by members of the Street Gang.

ONTIVEROS previously pled guilty on September 5, 2018, to conspiracy to distribute and possess with intent to distribute five kilograms and more of cocaine.  As part of his guilty plea, ONTIVEROS admitted that he and other members of the DTO agreed to kidnap and torture Contreras, and that in the course of being tortured, Contreras was murdered.

Mr. Berman praised the outstanding investigative work of the Drug Enforcement Administration.  He also thanked the San Bernardino County District Attorney’s Office and the Ontario Police Department for their participation and support in this investigation and prosecution.

This prosecution is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Jason M. Swergold, Benet Kearney, and Michael Longyear are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that SHANNADE CLERMONT was sentenced to one year in prison for making and attempting more than $20,000 in fraudulent charges using debit card information she stole from a man who died during the course of a prostitution date with her.  CLERMONT pled guilty to one count of wire fraud in November 2018 before U.S. District Judge Naomi Reice Buchwald, who also presided over today’s sentencing. 

U.S. Attorney Geoffrey S. Berman said:  “Former reality TV ‘Bad Girl’ Shannade Clermont lived up to her on-screen persona, as she admitted to stealing the debit card information from a man she visited for a prostitution date in his Manhattan apartment.  When the man died of an overdose, instead of notifying the authorities or calling for help, Clermont callously chose to use the man’s debit card information to make tens of thousands of dollars in illegal purchases.  As Shannade Clermont has now learned, her real-life bad behavior has real-life consequences, and has now landed her in federal prison.”      

According to the allegations contained in the Complaint and Indictment to which CLERMONT pled guilty and other filings in the case:

The New York City Police Department (“NYPD”) and the United States Attorney’s Office for the Southern District of New York had been investigating the overdose death of a male individual (the “Victim”), who was found dead on the morning of February 1, 2017, in his apartment at 250 East 53rd Street in Manhattan, New York (the “Victim Apartment”).  During the course of that investigation, law enforcement learned that CLERMONT visited the Victim for a prostitution date at the Victim Apartment the previous evening (January 31, 2017), and stole the information for two debit cards in his wallet.  CLERMONT admitted that she stole the debit card information after the Victim passed out during the prostitution date.  CLERMONT then used the stolen debit card information to make or attempt to make more than $20,000 in fraudulent purchases during the months following the Victim’s death, including to pay her rent and phone bills, to purchase flights, and to make several online purchases of thousands of dollars of luxury clothing and other merchandise, including, among other items, Valentino shoes, a Phillip Plein jacket, Beats headphones, as well as a gift certificate at a beauty salon.

CLERMONT also created and used a fake email account in the Victim’s name to falsely represent to third parties that she was the Victim, in order to commit fraud using the Victim’s identity.  Specifically, on April 3, 2017, approximately two months after the Victim’s death, the fake email account was used to register an account with Western Union in the name of the Victim, which was used to initiate a fraudulent money transfer of $1,000 from the Victim to CLERMONT. 

In an interview by law enforcement after she was arrested, Clermont stated, in substance and in part, that she committed this crime at least in part due to the stress of keeping up her public image.

*                      *                      *

In addition to the prison sentence, CLERMONT, 25, of Los Angeles, California, was sentenced to three years of supervised release and ordered to forfeit $5,775.27 and pay $4,696.40 in restitution. 

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

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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JAMEL JONES, a/k/a “Mel Murda,” pled guilty today in Manhattan federal court to racketeering and narcotics offenses as part of his participation in the Nine Trey Gangsta Bloods (“Nine Trey”).  U.S. District Judge Paul A. Engelmayer presided over the defendant’s guilty plea.

U.S. Attorney Geoffrey S. Berman said:  “Today, Jamel Jones admitted in open court to his involvement in Nine Trey and distributing drugs for the gang.  We will continue to work with our law enforcement partners to keep our communities safe and vigorously investigate and prosecute those who bring violence and drugs into our communities.”

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.  Members and associates of Nine Trey enriched themselves by committing robberies and selling drugs, such as heroin, fentanyl, furanyl fentanyl, MDMA, dibutylone, and marijuana. 

*                *                *

JONES, 38, of Brooklyn, pled guilty to one count of racketeering conspiracy for his involvement in Nine Trey, which carries a maximum sentence of 20 years in prison; and one count of participating in a narcotics distribution conspiracy, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 40 years in prison.  JONES’S sentencing has been scheduled for July 17, 2019, at 2:30 p.m. before Judge Engelmayer.

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that TYRONE FELDER, a/k/a “Man Man,” was sentenced to life in prison plus 34 years for killing two livery cab drivers during fatal carjackings: Maodo Kane, whom FELDER killed in the Bronx on August 5, 2014, and Aboubacar Bah, whom FELDER killed in the Bronx on August 12, 2014.  FELDER was also sentenced for participating in two armed robberies in Yonkers on August 5, 2014, as well as firearms offenses related to the carjackings and the robberies.  A jury found FELDER guilty on September 6, 2018, after a trial before U.S. District Judge Vincent L. Briccetti, who also imposed today’s sentence. 

United States Attorney Geoffrey S. Berman said:  “Tyrone Felder cruelly killed two innocent men who were simply trying to earn an honest living.  The swift action of the FBI, the NYPD, and the Yonkers Police Department stopped him before he could kill again.  Now Felder will spend the rest of his life behind bars.”

In pronouncing the sentence, Judge Briccetti said he was “astonished by the audacity and brutality” of FELDER’s crimes.

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

On August 5, 2014, FELDER and three other men carjacked Maodo Kane in order to steal his cab.  FELDER and his crew forced Mr. Kane to drive to an isolated street near Hunter Avenue in the Bronx.  After another carjacker pulled Mr. Kane from his vehicle, FELDER shot Mr. Kane once in the back of his head, killing him.  FELDER’s crew then used the stolen car to commit two gunpoint robberies of businesses in Yonkers.

Subsequently, on August 12, 2014, the same crew carjacked Aboubacar Bah, again to steal his car to use in robberies.  When Mr. Bah resisted, FELDER shot him in the back of the head inside his vehicle on Bryant Avenue in the Bronx.  Mr. Bah’s vehicle careened down the street, crashing into parked cars before coming to a stop.  FELDER and his crew pulled Mr. Bah’s body from the car and drove off in the vehicle, intending to commit further robberies.   The carjackers soon abandoned the cab and their plans because they believed police were onto them. 

The Federal Bureau of Investigation (“FBI”), the New York City Police Department (“NYPD”), and Yonkers Police Department caught FELDER and his crew several days later.  Among other investigative techniques, the special agents and detectives working the case gathered surveillance video from dozens of cameras in the Bronx and Yonkers, piecing together the crew’s movements during their crimes.

*                      *                     *

FELDER’s co-defendants, Kareem Martin, a/k/a “Jamal Walker,” Takiem Ewing, a/k/a “Mulla,” and Tommy Smalls, a/k/a “Tommy Guns,” previously pled guilty to participating in the fatal carjackings described above and await sentencing by Judge Briccetti. 

Mr. Berman praised the outstanding investigative work of the NYPD, the City of Yonkers Police Department, and the FBI’s Westchester County Safe Streets Task Force.

The case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Michael Gerber, Scott Hartman, Hagan Scotten, Anden Chow, and Celia Cohen are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the Homeland Security Investigations (“HSI”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the arrest of JONATHAN SCHWEITZER for possession and distribution of child pornography.  SCHWEITZER was arrested today and presented before United States Magistrate Judge Robert W. Lehrburger. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Jonathan Schweitzer received, possessed, and distributed child pornography, including depictions of young children.  The allegations are particularly disturbing in light of Schweitzer’s position as a school teacher.  We will continue to work with our law enforcement partners to protect children.”

Special Agent-in Charge Angel M. Melendez said:  “Schweitzer works in a position of trust, responsible for teaching the young people of New York City for more than a decade.  Yet, he is alleged to have shared and received child pornography in various dark-web chatrooms.  The abuse and exploitation of children for viewing pleasure is abhorrent, and we will seek to arrest those predators so that they face justice for their actions.”

Police Commissioner James P. O’Neill said:  “This individual allegedly violated his professional trust as a teacher to commit one of the most heinous crimes imaginable.  I’d like to thank our local, state and federal law enforcement partners involved in this case for their hard work and diligence to ensure that those allegedly responsible for these egregious offenses are held accountable for their actions.” 

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

Between at least February 2019 and March 2019, SCHWEITZER, who is employed as a teacher at a high school located in the Bronx, used a peer-to-peer file sharing network to share approximately 10 unique video files known to contain child pornography.  The child pornography included depictions of prepubescent children engaged in sexual activity with other children or adults.  On April 3, 2019, law enforcement officers executed a search warrant at SCHWEITZER’S apartment and recovered his laptop computer, which contained numerous files containing child pornography.

SCHWEITZER, 41, of the Bronx, New York, is charged with one count of distribution and receipt of child pornography, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison, and one count of possession of child pornography, which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

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

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Elizabeth A. Espinosa 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.

 

Adam Raishani, aka “Saddam Mohamed Raishani,” 32, of the Bronx, New York, was sentenced to 20 years in prison to be followed by 20 years of supervised release for attempting to provide and conspiring to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization. 

Assistant Attorney General for National Security John C. Demers and U.S. Attorney Geoffrey S. Berman for the Southern District of New York made the announcement. Raishani pleaded guilty to a Superseding Information on Nov. 14, 2018, before U.S. District Judge Ronnie Abrams, who also imposed today’s sentence.

“Raishani tried to leave his young family to travel overseas to join ISIS,” said Assistant Attorney General Demers.  “Fortunately, he was arrested before he could leave the country.  Raishani is the latest in the long line of would-be terrorists whom we have arrested and prosecuted before they could accomplish their mission to provide material support to ISIS overseas.  I commend the agents, analysts, and prosecutors who are responsible for this result.”

“Adam Raishani may be a U.S. citizen, but he pledged his allegiance to the Islamic State of Iraq and al-Sham, the terrorist organization that seeks to destroy the ideals inherent to America,” said U.S. Attorney Berman.  “In his efforts to show support to the organization, he helped another man make a trip to the Middle East so that he could join and train.  Then, a year later, Raishani decided to follow him, leaving Raishani’s wife and child behind in the United States.  Thankfully law enforcement was there to arrest him before he could make his dream of jihad a reality.  Now, Raishani will spend the next 20 years of his life behind bars for his treachery.”

According to the Superseding Information, other court filings, and statements made during court proceedings:

Beginning in the fall of 2015, Raishani conspired with another ISIS supporter (CC-1) to provide material support and resources to ISIS.  Raishani and CC-1 agreed to travel overseas to join and wage jihad for ISIS, with CC-1 to depart first.  On Oct. 30, 2015, CC-1 departed from JFK Airport for Istanbul, Turkey, where he planned to cross into Syria to join and fight for ISIS.  Raishani helped coordinate CC-1’s transportation from the Bronx, New York, to John F. Kennedy International Airport (JFK Airport), and Raishani accompanied CC-1 from the Bronx to JFK Airport.

Raishani continued communicating with CC-1 following CC-1’s departure, using an encrypted email application in an effort to avoid law enforcement detection.  For example, on Jan. 2, 2016, Raishani sent an email to CC-1 stating:  “Glad tidings brother. Its [sic] been some time since your voyage. I pray to Allah The ALL MIGHTY to grant you success. Until next time.”[1]  On April 1, 2016, Raishani sent another email to CC-1 stating:  “I hope Allah has bestowed you what you were seeking. . . . May Allah grant you sincere and clean intentions and make you among the righteous in Janatal Firdaus [a reference to Islamic paradise]. . . . Please return this email and respond to what we agreed upon before your departure. Until next time.”  On May 3, 2016, CC-1 responded to Raishani, indicating that he had succeeded in joining the Islamic State.  CC-1 informed Raishani that CC-1 was “fine and well,” that CC-1 “wished you [Raishani] were here with me,” and that “here we are living with izza [honor].”

Also in May 2016, CC-1 posted content on a particular social media application (Application-1) indicating that CC-1 was living in the Islamic State and fighting on its behalf.  For example, CC-1 sent messages to another user of Application-1 stating:  “I’m living in the Islamic state safely and secure by the permission of Allah,” “[h]ere we are fighting the kuffars [non-believers],” and “I left the land of kuffars now I’m living in the khilafah [the caliphate].”  CC-1 also posted a photograph on Application-1 that shows CC-1 carrying an assault rifle and the flag of ISIS. 

Between January and June of 2017, Raishani had a series of meetings with individuals who were, unbeknownst to Raishani, a confidential source working at the direction of law enforcement and an undercover law enforcement officer.  In the course of those meetings, Raishani admitted that he had previously helped another person (CC-1) travel overseas to join ISIS, and stated that he intended to travel overseas to join ISIS himself.  During those meetings, Raishani also downloaded and viewed violent ISIS propaganda videos, and expressed his desire to wage jihad on behalf of ISIS and his belief that the Quran can be read to justify the violence, including beheadings, perpetrated by ISIS.   

By April 2017, Raishani was actively planning to travel abroad to join ISIS.  Raishani indicated that he aspired to join ISIS in Syria and that he aimed to travel before the end of Ramadan, an Islamic holy month that ran from approximately May 26 through June 24 of 2017.  In June 2017, Raishani made preparations to leave, including by paying off debts and purchasing clothing that he intended to wear for training with ISIS overseas.  Raishani indicated his intention to meet an ISIS member in Turkey, who would facilitate Raishani’s joining the terrorist organization in Syria.  In the course of communications with an undercover law enforcement officer, Raishani conveyed that he was prepared to die, to martyr himself, for ISIS.  On June 21, 2017, Raishani attempted to board a flight bound for Turkey (via Portugal) at JFK Airport, at which point law enforcement officers arrested him.

Following Raishani’s arrest, the FBI searched Raishani’s Bronx residence pursuant to a search warrant.  Among the evidence recovered was a letter from Raishani addressed to members of his family, which the FBI found in a safe in Raishani’s bedroom.  In the letter, Raishani – who left behind his wife and young son when he attempted to travel to Syria to join ISIS – advised his wife that she could still choose to “[j]oin” him in the Islamic State, and he expressed regret that she did not share his radical views and that he had been unable to convince her to accompany him to join ISIS.  Raishani also wrote:  “Do Not Divulge this document and other documents that I have giv[en] to you to the authorities.  Do not believe their plots.  Do not divulge my absences but instead say I went to do volunteering outside the country with my medical skills and health background.”

*                      *                      *

In addition to the prison term, Raishani, 32, of the Bronx, New York, was sentenced to 20 years of supervised release.

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 NYPD, and the NYPD’s Intelligence Division.  Mr. Demers and Mr. Berman also thanked the New York Office of U.S. Customs and Border Protection.

Assistant U.S. Attorneys Sidhardha Kamaraju, Jane Kim, and George D. Turner are in charge of the prosecution, with assistance from Trial Attorney Kevin C. Nunnally of the Counterterrorism Section.

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[1] Communications and conversations discussed herein are described in substance and in part.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the return to its rightful owner of a painting looted by the Nazis during World War II.  The piece, A Scholar Sharpening His Quill, painted in 1639 by Salomon Koninck (the “Painting”), was stolen from the children and heirs of renowned Jewish art collector Adolphe Schloss.  Schloss was a prominent Jewish art collector in Paris whose large collection of Old Master paintings (the “Schloss Collection”) was regarded as among the most significant private collections of Dutch and Flemish paintings assembled in prewar France.

Manhattan U.S. Attorney Geoffrey Berman said:  “The campaign of cultural plunder that the Nazis directed against millions of innocent Jews was sadistic and unjust.  That is why restitution in this case is more than returning a material good, but restoring a physical part of lost heritage.  After nearly 80 years of being lost, this painting has been found and we are returning it to the Schloss family.”

During World War II, the Nazis created a division known as the Einsatzstab Reichleiter Rosenberg (the “ERR”) in order to “study” Jewish life and culture as part of the Nazis’ propagandist mission against the Jews.  Principally, the ERR confiscated artworks and other cultural holdings of “the enemies of the Reich” on a massive scale, and registered and identified those artworks – even photographing them – thereby leaving behind a detailed record of the works that they stole.  ERR records and photographs of art and cultural artifacts looted by the Nazis are digitized and available in an online database created by the Conference on Jewish Material Claims Against Germany, and this database includes a photograph of the Painting taken by the ERR during World War II.

Upon the outbreak of World War II in 1939, the Schloss heirs moved the Schloss Collection from Paris to Chateau de Chambon, a township in Southern France, in an attempt to protect the collection from looting by the Nazis.  Due to its value and significance, the ERR made substantial efforts to locate and loot the Schloss Collection.  In 1943, the Schloss Collection was ultimately looted by the ERR from its holding place in Chateau de Chambon.  The Nazis took 262 paintings from the Schloss Collection, including the Painting, and transported them to a depot located at the Jeu de Paume, a prewar museum in Paris that was operated by the ERR during the war.  Ultimately, the Painting was selected by the Nazis to be transported to the the “Führerbau,” Hitler’s headquarters in Munich, from where it and many other paintings disappeared in the aftermath of the war.

The Painting resurfaced in November 2017, when a Chilean private collector (the “Consignor”) attempted to sell the painting through a New York-based auction house.  When the Painting arrived in New York from Chile, it was determined that it was the same Painting that came from the Schloss collection and had been looted by the Nazis.  When the Consignor was informed of this, the Consignor stated that her father had purchased the Painting from Walter Andreas Hofer in Munich in 1952.  Hofer was Hermann Göring’s chief purchasing agent and as such was a key player in the confiscation and looting of Jewish art collections during the Nazi era.  In 1950, after being tried in absentia by a French military tribunal for his role in art plundering during World War II, Hofer was found guilty and sentenced to 10 years in prison.

The United States Attorney’s office filed a complaint seeking civil forfeiture of the painting on October 19, 2018, and Judge George B. Daniels entered a judgment of forfeiture on March 11, 2019.  The United States today returns the painting to the Schloss heirs, and welcomes two members of the family to New York to accept the painting.

Mr. Berman thanked the FBI’s Art Crime Team for their assistance.

The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorney Thane Rehn is in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John C. Demers, the Assistant Attorney General for National Security, announced that ADAM RAISHANI, a/k/a “Saddam Mohamed Raishani,” was sentenced to 20 years in prison for attempting to provide and conspiring to provide material support to the Islamic State of Iraq and al-Sham (“ISIS”).  RAISHANI pled guilty to a Superseding Information on November 14, 2018, before U.S. District Judge Ronnie Abrams, who also imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Adam Raishani may be a U.S. citizen, but he pledged his allegiance to the Islamic State of Iraq and al-Sham, the terrorist organization that seeks to destroy the ideals inherent to America.  In his efforts to show support to the organization, he helped another man make a trip to the Middle East so that he could join and train.  Then, a year later, Raishani decided to follow him, leaving Raishani’s wife and child behind in the United States.  Thankfully law enforcement was there to arrest him before he could make his dream of jihad a reality.  Now, Raishani will spend the next 20 years of his life behind bars for his treachery.”

Assistant Attorney General John C. Demers said:  “Raishani tried to leave his young family to travel overseas to join ISIS.  Fortunately, he was arrested before he could leave the country.  Raishani is the latest in the long line of would-be terrorists whom we have arrested and prosecuted before they could accomplish their mission to provide material support to ISIS overseas.  I commend the agents, analysts, and prosecutors who are responsible for this result.”

According to the Superseding Information, other court filings, and statements made during court proceedings:

Beginning in the fall of 2015, RAISHANI conspired with another ISIS supporter (“CC-1”) to provide material support and resources to ISIS.  RAISHANI and CC-1 agreed to travel overseas to join and wage jihad for ISIS, with CC-1 to depart first.  On October 30, 2015, CC-1 departed from JFK Airport for Istanbul, Turkey, where he planned to cross into Syria to join and fight for ISIS.  RAISHANI helped coordinate CC-1’s transportation from the Bronx, New York, to John F. Kennedy International Airport (“JFK Airport”), and RAISHANI accompanied CC-1 from the Bronx to JFK Airport.

RAISHANI continued communicating with CC-1 following CC-1’s departure, using an encrypted email application in an effort to avoid law enforcement detection.  For example, on January 2, 2016, RAISHANI sent an email to CC-1 stating:  “Glad tidings brother. Its [sic] been some time since your voyage.  I pray to Allah The ALL MIGHTY to grant you success.  Until next time.”[1]  On April 1, 2016, RAISHANI sent another email to CC-1 stating:  “I hope Allah has bestowed you what you were seeking. . . . May Allah grant you sincere and clean intentions and make you among the righteous in Janatal Firdaus [a reference to Islamic paradise]. . . . Please return this email and respond to what we agreed upon before your departure.  Until next time.”  On May 3, 2016, CC-1 responded to RAISHANI, indicating that he had succeeded in joining the Islamic State.  CC-1 informed RAISHANI that CC-1 was “fine and well,” that CC-1 “wished you [RAISHANI] were here with me,” and that “here we are living with izza [honor].”

Also in May 2016, CC-1 posted content on a particular social media application (“Application-1”) indicating that CC-1 was living in the Islamic State and fighting on its behalf.  For example, CC-1 sent messages to another user of Application-1 stating:  “I’m living in the Islamic state safely and secure by the permission of Allah,” “[h]ere we are fighting the kuffars [non-believers],” and “I left the land of kuffars now I’m living in the khilafah [the caliphate].”  CC-1 also posted a photograph on Application-1 that shows CC-1 carrying an assault rifle and the flag of ISIS. 

Between January and June of 2017, RAISHANI had a series of meetings with individuals who were, unbeknownst to RAISHANI, a confidential source working at the direction of law enforcement and an undercover law enforcement officer.  In the course of those meetings, RAISHANI admitted that he had previously helped another person (CC-1) travel overseas to join ISIS, and stated that he intended to travel overseas to join ISIS himself.  During those meetings, RAISHANI also downloaded and viewed violent ISIS propaganda videos, and expressed his desire to wage jihad on behalf of ISIS and his belief that the Quran can be read to justify the violence, including beheadings, perpetrated by ISIS.   

By April 2017, RAISHANI was actively planning to travel abroad to join ISIS.  RAISHANI indicated that he aspired to join ISIS in Syria and that he aimed to travel before the end of Ramadan, an Islamic holy month that ran from approximately May 26 through June 24 of 2017.  In June 2017, RAISHANI made preparations to leave, including by paying off debts and purchasing clothing that he intended to wear for training with ISIS overseas.  RAISHANI indicated his intention to meet an ISIS member in Turkey, who would facilitate RAISHANI’s joining the terrorist organization in Syria.  In the course of communications with an undercover law enforcement officer, RAISHANI conveyed that he was prepared to die, to martyr himself, for ISIS.  On June 21, 2017, RAISHANI attempted to board a flight bound for Turkey (via Portugal) at JFK Airport, at which point law enforcement officers arrested him.

Following RAISHANI’s arrest, the FBI searched RAISHANI’s Bronx residence pursuant to a search warrant.  Among the evidence recovered was a letter from RAISHANI addressed to members of his family, which the FBI found in a safe in RAISHANI’s bedroom.  In the letter, RAISHANI – who left behind his wife and young son when he attempted to travel to Syria to join ISIS – advised his wife that she could still choose to “[j]oin” him in the Islamic State, and he expressed regret that she did not share his radical views and that he had been unable to convince her to accompany him to join ISIS.  RAISHANI also wrote:  “Do Not Divulge this document and other documents that I have giv[en] to you to the authorities.  Do not believe their plots.  Do not divulge my absences but instead say I went to do volunteering outside the country with my medical skills and health background.”          

*                      *                      *

In addition to the prison term, RAISHANI, 32, of the Bronx, New York, was sentenced to 20 years of supervised release.

Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD, and the NYPD’s Intelligence Division.  Mr. Berman also thanked the Counterterrorism Section of the Department of Justice’s National Security Division, as well as the New York Office of U.S. Customs and Border Protection.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Sidhardha Kamaraju, Jane Kim, and George D. Turner are in charge of the prosecution, with assistance from Trial Attorney Kevin Nunnally of the Counterterrorism Section.

 

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[1] Communications and conversations discussed herein are described in substance and in part.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that ROBERT ACOSTA and JOSE DIAZ were convicted of the December 22, 1997, murders of Alex Ventura, 25, and Aneudis Almonte, 20.  The convictions follow a three-week trial before U.S. District Judge Kevin P. Castel. 

U.S. Attorney Geoffrey S. Berman said:  “More than two decades ago, two young men were brutally murdered in a Bronx stairwell.  Although the case went cold, members of the NYPD and the FBI worked tirelessly to solve it.  A unanimous jury has now held Acosta and Diaz responsible for this terrible crime.”

According to the evidence presented during the trial:

In the 1990s, ACOSTA was the leader of a large-scale drug trafficking organization that distributed hundreds of kilograms of cocaine out of several buildings in northern Manhattan.  In the summer of 1997, the murder victims stole more than $200,000 in drug money from a stash apartment that belonged to ACOSTA.  To retaliate, ACOSTA hired DIAZ to kill both men. 

On December 22, 1997, DIAZ and a co-conspirator (“CC-1”) lured the victims to an apartment building in the Bronx, ambushed them in a stairwell, and murdered them both.  CC-1 stabbed 20-year-old Almonte six times, including once in the chest.  DIAZ shot Ventura, 25, in the head from point-blank range.  In exchange for these murders, ACOSTA paid DIAZ $12,000.      

*                      *                      *

ACOSTA, 47, of Yonkers, New York was convicted of murder while engaged in a conspiracy to distribute five or more kilograms of cocaine (Counts One and Two), conspiracy to commit murder for hire (Count Three), and murder for hire (Counts Four and Five).  DIAZ, 53, of the Bronx, New York was convicted of conspiracy to commit murder for hire (Count Three), murder for hire (Counts Four and Five), and the use of a firearm to commit murder in furtherance of a crime of violence (Count Six).  ACOSTA and DIAZ each face a mandatory sentence of life in prison. 

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

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Laurie A. Korenbaum, Michael K. Krouse, and Nicholas W. Chiuchiolo are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JEREMY MILLUL pled guilty to participating in a scheme to trade on material, nonpublic information in advance of the Sherwin-Williams Company’s acquisition of the Valspar Corporation.  MILLUL pled guilty to one count of conspiracy to commit securities fraud before U.S. District Judge Jed S. Rakoff.

U.S. Attorney Geoffrey Berman said:  “As he admitted today, Manhattan jeweler Jeremy Millul received inside information about a publicly traded stock from a friend who worked as an analyst for a credit rating agency.  Millul then used that information to make illegal trades which earned him over $100,000 in illicit gains.  The integrity of financial institutions is critical to ensuring that the stock-buying public is trading in a fair market.  We will continue to aggressively prosecute those who share and utilize nonpublic information for their own personal gain.”

According to the allegations contained in the Complaint and Indictment filed against MILLUL and his co-conspirators, and statements made in related court filings and proceedings:[1]

Rating Evaluation Services and the Insider

When a company announces an acquisition, the acquiring company’s credit rating agency often evaluates, and ultimately issues a press release relating to, the impact that the acquisition could have on the acquiring company’s credit rating.  Therefore, companies often contact rating agencies before an acquisition is publicly announced in order to secure the rating agency’s views on how a possible acquisition could impact a company’s credit rating.  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, a credit rating agency in Manhattan (the “Firm”) assigned a credit ratings analyst (the “Analyst”), to work on an 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, the Analyst had access to material, nonpublic information (the “Inside Information”) about Sherwin-Williams’ acquisition of Valspar prior to the public announcement of the acquisition.  The Firm’s written policies prohibited the unauthorized disclosure of confidential information, which included the Inside Information.  During his tenure at the Firm, the Analyst reviewed and certified his duties of loyalty and confidentiality to the Firm and its clients.

The Insider Trading Scheme

In March 2016, the Analyst misappropriated the Inside Information about Sherwin-Williams’ acquisition of Valspar and passed it to MILLUL and Abell Oujaddou so that they could use it to make profitable trades.  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 the Analyst, as well as with a member of the Analyst’s immediate family.  The Analyst repeatedly provided MILLUL with Inside Information about the Valspar acquisition.  Although MILLUL had never owned a brokerage account in the United States and had never traded in U.S. securities prior to March 2016, he 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.

*                    *                    *

JEREMY MILLUL, 32, of New York, New York, pled guilty to one count of conspiracy to commit securities fraud, which 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 maximum potential sentence in this case is prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the Court.

MILLUL is scheduled to be sentenced before Judge Rakoff on July 30, 2019 at 4:00 p.m.

Abell Oujaddou previously pled guilty and awaits sentencing before U.S. District Judge Jed S. 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.

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that LATIQUE JOHNSON, a/k/a “La Brim,” a/k/a “Straight 2 Business,” a/k/a “Breezy,” a/k/a “Boss Dog,” BRANDON GREEN, a/k/a “Light,” a/k/a “Moneywell,” and DONNELL MURRAY, a/k/a “Don P,” were found guilty yesterday of racketeering conspiracy, narcotics trafficking conspiracy, and firearms offenses in connection with their membership in the “Blood Hound Brims” (“BHB”), a violent street and prison gang that operated in New York City, upstate New York, Pennsylvania, and elsewhere.  In addition, JOHNSON and MURRAY were found guilty of committing assault in aid of racketeering for a 2012 shooting at a fast food restaurant in the Bronx involving an AK-47 firearm.  JOHNSON was found guilty of attempted murder in aid of racketeering for ordering a 2012 shooting of rival gang members in the Bronx.  The convictions followed a five-week trial before the Honorable Paul G. Gardephe.

U.S. Attorney Geoffrey S. Berman said:  “Latique Johnson, Brandon Green, and Donnell Murray were leaders of the Blood Hound Brims, a ruthless gang, and were responsible for extensive narcotics trafficking and terrible violence.  They now stand convicted of their crimes, and will no longer be able to inflict harm on the people of this city.”

According to court documents and the evidence at trial:

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

The BHB used a hierarchical structure that was organized, in part, by geography, including New York City, and that was maintained, in part, through the payment of dues.  The founder and leader of the Gang was JOHNSON, and other members and associates of the BHB referred to JOHNSON as the “Godfather.”  The Gang was divided into several “pedigrees,” each of which had its own leadership structure which was approved by JOHNSON.  Other leadership positions included, among others, treasurers who collected dues from members of a particular pedigree, and individuals who performed security and disciplinary functions for the pedigree.  In addition to JOHNSON, GREEN, and MURRAY all held leadership positions within the Gang at different times.

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

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

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

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

*          *          *

A chart providing more information regarding the charges and potential penalties is set forth below.  The statutory penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

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

This case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Jessica Feinstein, Allison Nichols, and Andrew Chan are in charge of the prosecution.

COUNT

DEFENDANT

MAXIMUM PENALTY

Count One:  Racketeering Conspiracy

LATIQUE JOHNSON, 39, of the Bronx, New York

BRANDON GREEN, 36, of the Bronx, New York

DONNELL MURRAY. 39, of the Bronx, New York

Life in prison

 

 

Life in prison

 

 

20 years in prison

 

Count Two:  Assault in aid of racketeering

JOHNSON

 

MURRAY

20 years in prison

 

20 years in prison

Count Three:  Attempted murder in aid of racketeering

JOHNSON

10 years in prison

Count Four:  Narcotics conspiracy

JOHNSON

 

GREEN

 

MURRAY

Life in prison

 

Life in prison

 

20 years in prison

Count Five:  Firearms offense

JOHNSON

 

GREEN

 

MURRAY

Life in prison

 

Life in prison

 

Life in prison

 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that KIFANO JORDAN, a/k/a “Shotti,” pleaded guilty today in Manhattan federal court to firearms offenses in connection with a robbery and a non-fatal shooting carried out as part of his participation in the Nine Trey Gangsta Bloods (“Nine Trey”).  U.S. District Judge Paul A. Engelmayer presided over the defendant’s guilty plea.

U.S. Attorney Geoffrey S. Berman said:  “Today, Kifano Jordan admitted in open court to committing multiple acts of violence in furtherance of the Nine Trey enterprise.  This conduct is simply intolerable.  We continue our daily work with our law enforcement partners to keep our communities safe and to vigorously investigate and prosecute those who bring violence to our streets.”

As alleged in the underlying 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.  Members and associates of Nine Trey enriched themselves by committing robberies and selling drugs, such as heroin, fentanyl, furanly fentanyl, MDMA, dibutylone, and marijuana. 

*          *          *

JORDAN, 36, of Brooklyn, pled guilty to one count of using and possessing a firearm in furtherance of a crime of violence for an assault with a dangerous weapon that occurred in Manhattan on April 3, 2018, which carries a mandatory minimum sentence of five years in prison and must run consecutively to any other sentence imposed; and one count of discharging a firearm in furtherance of a crime of violence for a shooting that occurred in Brooklyn on April 21, 2018, which carries a mandatory minimum sentence of 10 years in prison and must run consecutively to any other sentence imposed. 

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.

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, Philip R. Bartlett, Inspector-in-Charge of the New York Field Division of the United States Postal Inspection Service (“USPIS”), and Jonathan D. Larsen, the Acting Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that KEITH BORGE, the former controller of the College of New Rochelle (“CNR”), pled guilty today before U.S. Magistrate Judge Judith C. McCarthy to one count of failing to pay over federal payroll taxes and one count of securities fraud in White Plains federal court.  The case has been assigned to United States District Judge Vincent L. Briccetti. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “By covering up CNR’s true financial condition, Keith Borge deprived CNR’s leaders of the opportunity to address the college’s financial problems for two years.  Borge defrauded CNR’s bondholders and left CNR with a $20 million tax liability.  He committed federal crimes for which he will now pay the price.” 

USPIS Inspector-in-Charge Philip R. Bartlett said:  “Investors rely on accurate financial reporting when deciding on where to invest their hard-earned money.  When executives create and distribute inaccurate financial statements, investors are unknowingly steered into making poor investment choices.  The United States Postal Inspection Service is committed to protecting American investors and bringing those who manipulate the financial system to justice.”

IRS-CI Acting Special Agent in Charge Jonathan D. Larsen said:  “As the tax filing deadline looms, it’s important for the American taxpayer to have confidence that when they are paying their taxes, their neighbor and co-workers are doing the same. And for those individuals who are considering evading their tax duty, they should consider the consequences which include potential imprisonment and civil penalties.”

According to the allegations contained in the Information and other publicly filed documents:

From in or about 2011 to in or about August 2014, BORGE was the Vice President for Financial Affairs at CNR, a private college with its main campus in New Rochelle, New York.  From in or about August 2014 to in or about June 2016, BORGE was CNR’s controller.  CNR had approximately 500 to 900 paid employees, depending on the time of year.  CNR withheld both federal income tax and its employees’ contributions to Social Security and Medicare from its employees’ pay.  Federal law required that the college pay over those withheld taxes and contributions within one week of the day it paid its employees.  During that one-week period, CNR held those withheld taxes and contributions in trust for the federal government.

As controller, BORGE managed CNR’s financial affairs and was responsible for paying over withheld payroll taxes and contributions.  From the third quarter of 2014 through the second quarter of 2016, BORGE failed to do so.  By the end of the second quarter of 2016, BORGE had failed to pay over more than $20 million in combined federal and state payroll taxes and contributions.

BORGE also made false entries in CNR’s books and records to conceal the college’s actual financial condition.  As a result, CNR’s financial statements for its fiscal year ending June 30, 2015, reported the college had net assets of $25 million, which was overstated by at least $24 million.  Among other things, BORGE caused the financial statements to understate CNR’s liability for federal and state payroll taxes by approximately $11 million; to overstate accounts receivable by approximately $9.2 million by recognizing pledged donations twice; to understate accounts payable by at least $1.5 million by failing to enter unpaid vendor invoices into CNR’s books and records; and to overstate investment assets by at least $2.2 million by recognizing assets that did not exist and by failing to enter his withdrawals from CNR’s investment accounts into the college’s books and records.

BORGE caused CNR’s inaccurate financial statements for the fiscal year ending June 30, 2015, to be released to the public by, among other things, providing the financial statements to the Municipal Securities Rulemaking Board for publication on the Electronic Municipal Market Access web site, where they could be reviewed by the investing public.  As a result, investors in bonds issued by the college through the City of New Rochelle Industrial Development Agency were defrauded by BORGE’s materially false and misleading statements in CNR’s financial statements. 

*                *                *

BORGE, 62, of Valley Cottage, New York, is charged with one count of failing to pay over payroll taxes, which carries a maximum sentence of five years in prison, and one count of securities fraud, 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 sentence will be determined by the court.  BORGE is scheduled to be sentenced July 11, 2019, before Judge Briccetti. 

In a related case, the U.S. Securities and Exchange Commission brought a civil action today against BORGE in U.S. District Court in White Plains."

Mr. Berman praised the outstanding investigative work of the Postal Inspection Service and IRS-CI.  Mr. Berman also thanked the SEC for their investigative work. 

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys James McMahon and Daniel Loss are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Philip R. Bartlett, the Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service, announced that RICHARD DIVER was arrested on fraud charges in connection with his embezzlement from the asset management company where he worked as Chief Operating Officer.  Specifically, DIVER has been charged with investment advisor fraud in connection with his fraudulently overbilling the company’s clients by hundreds of thousands of dollars in fake management fees and rerouting those funds to his personal account, and with wire fraud for fraudulently diverting millions of dollars from the company’s payroll funds to his personal account over a period of several years.  DIVER was arrested today in Manhattan, and was presented before Magistrate Judge Katharine H. Parker in Manhattan Federal Court.

Manhattan U.S. Geoffrey S. Berman said: “Richard Diver occupied a position of great responsibility and great trust at the asset management company that employed him.  As alleged, he betrayed that trust, stealing from the company and defrauding its clients, all to fund his lavish personal spending.  We will continue to work with our law enforcement partners to root out fraud wherever it is found.”

Inspector-in-Charge Philip R. Bartlett said: “Mr. Diver allegedly used his position of trust to overcharge his clients to fund his spending habits and lavish lifestyle. In situations such as these, no one believes they will get caught; but when you allegedly cheat your clients and use the US Mail to facilitate a lie, be forewarned—Postal Inspectors and their law enforcement partners will eventually uncover your unlawful deeds and bring you to justice.”

As alleged in the Complaint unsealed today in Manhattan Federal Court:

DIVER was the Chief Operating Officer (“COO”) of a Manhattan-based asset management company (“Company-1”) that offers its customers investment planning and wealth management services.  As COO, DIVER’s responsibilities included overseeing the company’s payroll and billing functions. 

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

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

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

*                *                *

DIVER, 62 of New York New York, is charged with one count of investment advisor fraud and one count of wire fraud.  The wire fraud count carries a maximum potential sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The investment advisor fraud count carries a maximum sentence of five years in prison and a maximum fine of $10,000.  The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the investigative work of the U.S. Postal Inspection Service and thanked the New York Regional Office of the U.S. Securities and Exchange Commission, which has filed a civil action against DIVER in a separate action. 

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that WILLIAM BURANK pled guilty today to defrauding investors in a scheme in which he solicited funds based on false and fraudulent pretenses to purportedly invest in dinar, the currency of Iraq.  Upon obtaining the funds, BURBANK either lost or misappropriated them, and then lied to investors about the state of their investments.  BURBANK pled guilty to wire fraud before U.S. Magistrate Katharine H. Parker.  

 

U.S. Attorney Geoffrey Berman said:  “William Burbank’s fraud is one of the oldest frauds in the book – using his investors’ money to pay back other investors while lining his own pockets.  Burbank has now copped to his crimes and faces time in prison for his misdeeds.”

 

According to the allegations contained in the Indictment filed against BURBANK, and statements made in related court filings and proceedings:

 

From February 2010 through June 2018, BURBANK engaged in a Ponzi-like scheme to defraud more than 150 individual investors, including many U.S. military veterans and their families, of $2 million by soliciting funds through false and fraudulent pretenses.  Specifically, BURBANK falsely claimed to potential investors that their funds would be used to trade in off-exchange foreign currency, namely, to purchase quantities of the Iraqi dinar, through an Iraqi bank headquartered in Bagdad.  In truth and in fact, upon receiving investor funds, BURBANK used those funds to trade in his own brokerage accounts, to make payments to earlier investors, and for his personal expenses, among other things.  Additionally, during the course of his scheme, BURBANK hid from investors the fact that he had misappropriated and lost their funds.  In order to conceal the truth from investors, BURBANK provided them false information regarding the status of their investment, and engaged in a Ponzi-like scheme in which he used money obtained from new investors to make redemption payments to previous investors.

 

*                      *                      *

 

WILLIAM BURBANK, 63, of Virginia Beach, Virginia, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

 

BURBANK will be sentenced before U.S. District Judge Richard M. Berman on July 22, 2019, at 11:00 a.m.

 

U.S. Attorney Berman praised the work of the Federal Bureau of Investigation.

 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Troy Miller, Director, Field Operations, New York, U.S. Customs and Border Protection (“CBP”), announced today that the United States filed and settled a civil fraud lawsuit under the False Claims Act against BYER CALIFORNIA, INC. (“BYER”), a wholesaler of women’s and girls’ apparel.  The Government’s complaint alleges that for years one of BYER’s importers, Queen Apparel NY, Inc. (“Queen”), repeatedly falsified customs forms by undervaluing the garments it manufactured in Vietnam and imported into the United States for BYER.  This fraudulent practice substantially reduced the amount of import duties owed to the United States.  BYER was well aware that Queen was grossly undervaluing BYER’s garments in customs forms submitted to CBP.  Yet, BYER chose to continue sending work orders to Queen for garments that it understood would be imported into the country with false customs forms resulting in fraudulent underpayment of customs duties.  As part of the settlement, approved yesterday in Manhattan federal court by U.S. District Judge George B. Daniels, BYER admitted to and accepted responsibility for certain conduct alleged in the Government’s complaint and agreed to pay $325,000 to the United States.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “This Office is committed to combatting customs fraud.  Importers and the merchants who retain them will be held accountable when they evade customs duties by lying about the value of the goods they bring into the United States.”

HSI Special Agent in Charge Angel M. Melendez said:  “Byer California, Inc. defrauded the U.S. government for years, turning a blind eye to the fact that its supplier was undervaluing goods to avoid paying proper duties.  Because Byer did not take responsibility, U.S. Customs was denied more than a quarter of a million dollars of underpaid duties.  We will continue to work with CBP to ensure that businesses import goods in accordance with U.S. law.”

CBP Director of New York Field Operations Troy Miller said:  “The approved settlement today is a testament to the dedication of our partners in the United States Attorney's Office, Homeland Security Investigations, and the men and women of CBP in enforcing our nation’s trade laws and punishing those perpetrating this type of fraud.”

BYER, a California corporation headquartered in San Francisco, is a designer, manufacturer, and importer of women’s and girls’ apparel.  This business includes purchasing garments that are made overseas and imported into the United States, and selling those garments via department stores and national retail chains in the United States.

From 2009 to 2013, BYER purchased garments from Queen, which manufactured the garments in Vietnam in accordance with BYER’s guidelines and imported them into the United States for BYER.  The Government’s complaint alleges that during this time period, BYER knew that Queen repeatedly and falsely undervalued these garments on customs forms in order to evade lawful duties, yet continued to do business with Queen. 

As part of the settlement, BYER admitted that:

• Based on its reviews of documents provided by Queen, BYER understood that Queen falsely represented the value of garments in copies of documents that it was presenting to CBP, and that as a result of that undervaluation, Queen paid less than the required amount of import duties.
• Although BYER was substantially certain that during the relevant time period Queen presented entry forms to CBP that contained false valuations of the garments BYER was purchasing, BYER made no attempt to alert CBP or stop supplying Queen with additional work orders. 
• In September 2012, Queen’s owner tried to bribe BYER’s compliance manager with an envelope full of cash.  BYER rejected this attempted bribe, but continued to provide Queen with more work orders until April 2013, despite multiple warning signs that Queen was filing documents containing false valuations to CBP.

The United States filed a civil fraud lawsuit against Queen and its owner, Hank Choi, on February 20, 2019.  That case is pending.  The conduct in this matter was first brought to the attention of federal law enforcement by a whistleblower who filed a lawsuit under the False Claims Act. 

Mr. Berman praised the investigative work of HSI on this case.  He also thanked CBP for its assistance.

This case is being handled by the Office’s Civil Frauds Unit.  Assistant United States Attorney Kirti Vaidya Reddy is in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LEWIS STAHL, the owner of a Manhattan medical technology company, was sentenced to 30 months in prison for evading federal income taxes on more than $21 million in business income, which resulted in a loss to the U.S. Treasury of more than $6.3 million in taxes due and owing.  STAHL pled guilty to one count of tax evasion on September 27, 2018, before U.S. District Judge Ronnie Abrams, who imposed today’s sentence.  

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Lewis Stahl flagrantly evaded paying taxes on his business income, denying the federal government more than $6 million in taxes.  Knowing full well that he was committing a crime, Stahl will spend time behind bars for his wrongdoing.”

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

STAHL is an experienced businessperson who owns and operates a Manhattan medical software company (the “Medical Technology Company”) that develops and sells medical software applications.  The Medical Technology Company holds itself out as a provider of “computer ready” and “fully mobile” applications that allow physicians to prescribe medications and to order and view diagnostic information, lab results, and cardiology/radiology images.

Between 2010 and 2014, the Medical Technology Company earned more than $32 million in gross income.  Less business expenses, these earnings resulted in over $21 million in business income to STAHL, which he accessed by using business bank accounts and business credit cards.  STAHL used this money to fund the purchase of personal items for himself, such as clothing, jewelry, watches, real estate rentals, country club benefits, and a firearms collection.  Prior to 2015, despite earning this business income from the Medical Technology Company, STAHL deliberately avoided filing tax returns, and did not report any of the income to the Internal Revenue Service (the “IRS”). 

In March of 2015, an IRS revenue agent (the “IRS Revenue Agent”) contacted STAHL regarding his failure to file for the tax years 2010 through 2014, and asked STAHL to address the situation by filing delinquent Forms 1040 for those years (the “Delinquent Returns”).  Shortly thereafter, STAHL retained a certified public accountant (the “Accountant”) to file the Delinquent Returns for STAHL.  STAHL told the Accountant that he had failed to file tax returns in the past because he had payroll tax problems with the IRS and “stuck his head in the sand.”  He also told the Accountant that he did not have any personal bank accounts in his name because he believed the IRS would seize any such accounts.  STAHL further stated to the Accountant, falsely, that he was a “W-2” employee only of the Medical Technology Company, that his W-2 income was his only income, and that he had no ownership interest in the Medical Technology Company.  In truth and in fact, STAHL had an ownership interest in the Medical Technology Company, and had earned over $21 million in business income from the company, well beyond the income of a few hundred thousand dollars that was reflected on his W-2s.

The Accountant subsequently filed the Delinquent Returns for STAHL, which, as a result of the lies that STAHL told the Accountant, were false and fraudulent.  Specifically, the Delinquent Returns falsely claimed that STAHL’s total income was $38,652 in 2010; $7,115 in 2011; $84,615 in 2012; $100,000 in 2013; and $100,000 in 2014.  The Delinquent Returns further falsely reported that STAHL did not receive any business income in any of these years, and failed to include a Schedule C detailing the significant amount of business income that STAHL earned from the Medical Technology Company.  STAHL’s failure to report over $21 million in business income to the IRS – first by deliberately failing to file returns, and then by causing the false Delinquent Returns to be filed by the Accountant – resulted in a loss to the IRS of over $6.3 million in taxes due and owing. 

            *                *                *

In addition to the prison term, Judge Abrams ordered STAHL, 63, of Boca Raton, Florida, to serve three years of supervised release, and to make court-ordered restitution to the IRS. 

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

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Sarah E. Paul is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the arrest today of MICHAEL AVENATTI on federal extortion and interstate threat charges.  As alleged, AVENATTI, an attorney, attempted to extract more than $20 million in payments from a publicly traded company 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.  AVENATTI was simultaneously arrested on separate charges brought by the U.S. Attorney’s Office for the Central District of California.  AVENATTI will be presented today in Manhattan federal court before U.S. Magistrate Judge Katharine H. Parker.   

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Avenatti used illegal and extortionate threats for the purpose of obtaining millions of dollars in payments from a public company.  Calling this anticipated payout a retainer or a settlement doesn’t change what it was – a shakedown.  When lawyers use their law licenses as weapons, as a guise to extort payments for themselves, they are no longer acting as attorneys.  They are acting as criminals, and they will held responsible for their conduct.”

FBI Assistant Director in Charge William F. Sweeney Jr. said:  “As alleged, Michael Avenatti approached Nike last week with a list of financial demands in exchange for covering up allegations of misconduct on behalf of the company.  The lofty price tag included a $1.5 million payoff for Avenatti’s client and upwards of tens of millions of dollars for the legal services of his firm – services Nike never requested. This is nothing more than a straightforward case of extortion.  In the event anyone needs to be reminded, this type of behavior is illegal and it will not be tolerated – especially when committed by a lawyer who is supposed to use his license to practice law, not to willfully violate it.”

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

Background to the Extortion Scheme 

In a scheme that unfolded in less than a week, AVENATTI and a co-conspirator not named as a defendant in the Complaint (“CC-1”) used threats of economic and reputational harm to extort NIKE, Inc. (“Nike”), a multinational corporation engaged in, among other things, the marketing and sale of athletic apparel, footwear, and equipment.  Specifically, AVENATTI threatened to hold a press conference on the eve of Nike’s quarterly earnings call and the start of the annual National Collegiate Athletic Association (“NCAA”) men’s basketball tournament at which he would announce allegations of misconduct by employees of Nike.  AVENATTI stated that he would refrain from holding the press conference and harming Nike only if Nike made a payment of $1.5 million to a client of AVENATTI’s in possession of information damaging to Nike (“Client-1), and further agreed to “retain” AVENATTI and CC-1 to conduct an “internal investigation” – an investigation that Nike did not request – for which AVENATTI and CC-1 demanded to be paid, at a minimum, between $15 and $25 million.  Alternatively, and in lieu of such a retainer agreement, AVENATTI and CC-1 demanded a total payment of $22.5 million from Nike to resolve any claims Client-1 might have and additionally to buy AVENATTI’s silence.

The March 19 Meeting With Avenatti

As alleged, AVENATTI first met with representatives of Nike last Tuesday, March 19, 2019, in New York, New York.  At that meeting, AVENATTI claimed to represent a coach of an amateur youth travel basketball team sponsored by Nike, i.e., Client-1.  AVENATTI claimed the team coached by Client-1 had recently lost its sponsorship with Nike, one worth approximately $72,000 a year, and that his client had information that Nike employees had been engaged in illicit payments to the families of high school student athletes.  AVENATTI further stated that he planned to hold a press conference the next day announcing allegations of misconduct at Nike, and made clear that he had approached Nike now because he knew that the annual NCAA tournament – an event of significance to Nike and its brand – was about to begin, and further because he was aware that Nike’s quarterly earnings call was scheduled for March 21, 2019, thus maximizing the potential financial and reputational damage his press conference could cause to Nike.

AVENATTI further stated that he would refrain from holding that press conference and damaging Nike if Nike agreed to two demands: (1) Nike must pay $1.5 million to Client-1 as a settlement for any claims Client-1 might have regarding Nike’s decision not to renew its contract with the team coached by Client-1; and (2) Nike must hire AVENATTI and CC-1 to conduct an internal investigation of Nike, with a provision that if Nike hired another firm to conduct such an internal investigation, Nike would still be required to pay AVENATTI and CC-1 at least twice the fees of any other firm hired.  AVENATTI made clear that Nike would have to agree to accept those demands on a very short time frame.  Nike immediately contacted the United States Attorney’s Office for the Southern District of New York, which launched an investigation in conjunction with the FBI.

The March 20 Call With Avenatti

In a follow-up call on March 20, 2019, recorded by law enforcement, AVENATTI reiterated both his threat, stating, in substance and in part, that unless Nike immediately agreed to his financial demands, he would hold his press conference and, as AVENATTI threatened: “I’ll go and I’ll go take ten billion dollars off your client’s market cap.  But I’m not fucking around.”  During the same call, AVENATTI made clear that his demands included not simply that he and CC-1 be paid for an “internal investigation,” but that he be paid more than $9 million.  As AVENATTI stated during the call:  “I’m not fucking around with this, and I’m not continuing to play games. . . .  You guys know enough now to know you’ve got a serious problem.  And it’s worth more in exposure to me to just blow the lid on this thing.  A few million dollars doesn’t move the needle for me.  I’m just being really frank with you.  So if that’s what, if that’s what’s being contemplated, then let’s just say it was good to meet you, and we’re done.  And I’ll proceed with my press conference tomorrow. . . .  I’m not fucking around with this thing anymore.  So if you guys think that you know, we’re gonna negotiate a million five, and you’re gonna hire us to do an internal investigation, but it’s gonna be capped at 3 or 5 or 7 million dollars, like let’s just be done.”

The March 21 Meeting With Avenatti

On March 21, 2019, at the direction of law enforcement, representatives of Nike met again with AVENATTI and CC-1.  During the meeting, AVENATTI reiterated his demand for a

$1.5 million payment for his client and, with respect to his demand to be retained for an internal investigation, AVENATTI stated, in substance and in part, that he and CC-1 would require a $12 million retainer to be paid immediately and to be “deemed earned when paid,” with a minimum guarantee of $15 million in billings and a maximum fee of $25 million, “unless the scope changes.”  When informed by an outside attorney for Nike (“Attorney-1”) that Attorney-1 has never received a $12 million retainer from Nike and never done an investigation for Nike “that breaks $10 million,” AVENATTI responded, in substance and in part, by asking whether Attorney-1 has ever “held the balls of the client in your hand where you could take five to six billion dollars market cap off of them?”

When Attorney-1 asked, in substance and in part, whether Nike could resolve the demands just by paying Client-1, rather than retaining AVENATTI and CC-1, AVENATTI and CC-1 conferred privately.  AVENATTI then stated:  “If [Nike] wants to have one confidential settlement and we’re done, they can buy that for twenty-two and half million dollars and we’re done. . . .  Full confidentiality, we ride off into the sunset. . . .”  AVENATTI then laid out again his threat of harm to Nike, adding that “as soon as this becomes public, I am going to receive calls from all over the country from parents and coaches and friends and all kinds of people – this is always what happens – and they are all going to say I’ve got an email or a text message or – now, 90% of that is going to be bullshit because it’s always bullshit 90% of the time, always, whether it’s R. Kelly or Trump, the list goes on and on – but 10% of it is actually going to be true, and then what’s going to happen is that this is going to snowball . . . and every time we got more information, that’s going to be the Washington Post, the New York Times, ESPN, a press conference, and the company will die – not die, but they are going to incur cut after cut after cut after cut, and that’s what’s going to happen as soon as this thing becomes public.”

Shortly after the March 21, 2019, meeting ended, and consistent with the threats AVENATTI communicated, AVENATTI posted a message to Twitter writing, in reference to an article about a prior prosecution involving employees of a rival company:  “Something tells me that we have not reached the end of this scandal.  It is likely far far broader than imagined…”  

*                *                *

AVENATTI, 48, of Los Angeles, California, is charged 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 this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

Mr. Berman praised the 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 case is 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 prosecution.

 

---

[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.

There will be a press conference today at 2:30 p.m. to announce charges against attorney Michael Avenatti for attempting to extract more than $20 million in payments from a publicly traded company 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.  The press conference will be livestreamed on Facebook @USAOSDNY.  Relevant documents are attached.

WHO: Geoffrey S. Berman, United States Attorney for the Southern District of New York

          William F. Sweeney, Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation                       

WHAT: Press Conference

WHEN: Monday, March 25, 2019 at 2:30 p.m.

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

             1 St. Andrew’s Plaza

              New York, NY 10007

CONTACT:    James Margolin, Nicholas Biase, Dawn Dearden

(212) 637-2600

NOTE:  Due to construction/renovation of the lobby-level entrance, entry is through the ground floor parking-level entrance.  Please allow extra time for entry and screening.  Please silence all cell phones, PDAs, and pagers before start of press conference. 

Geoffrey S. Berman, United States Attorney for the Southern District of New York, and Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, announced that CHI PING PATRICK HO, a/k/a “Patrick C.P. Ho,” a/k/a “He Zhiping,” was sentenced today to three years in prison for his role in a multi-year, multimillion-dollar scheme to bribe top officials of Chad and Uganda in exchange for business advantages for CEFC China Energy Company Limited (“CEFC China”).  HO was convicted of violations of the Foreign Corrupt Practices Act (“FCPA”), money laundering, and conspiracy to commit the same, in December 2018, after a one-week jury trial before U.S. District Judge Loretta A. Preska, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman stated:  “Patrick Ho schemed to bribe the leaders of Chad and Uganda in order to secure unfair business advantages for the Chinese energy company he served.  His actions were brazen, including offering the president of Chad $2 million in cash, hidden in gift boxes.  Foreign corruption undermines the fairness of international markets, erodes the public’s faith in its leaders, and is deeply unfair to the people and businesses that play by the rules.  Today’s sentence recognizes the severe harm caused by Ho’s actions.”

Assistant Attorney General Brian A. Benczkowski stated:  “Patrick Ho bribed officials at the highest levels of government in Chad and Uganda in pursuit of lucrative oil deals and other business opportunities, all while using a U.S.-based NGO to conceal his criminal scheme.  This kind of corruption undermines world markets and tilts the playing field against law-abiding companies and individuals.  The Department will continue to investigate and prosecute individuals and corporations that engage in foreign bribery.”

According to the Indictment, evidence presented at trial, information presented in connection with sentencing, and other publicly available materials:      

Overview

HO orchestrated and executed two bribery schemes to pay top officials of Chad and Uganda in exchange for business advantages for CEFC China, a Shanghai-based multibillion-dollar conglomerate that operates internationally in multiple sectors, including oil, gas, and banking.  At the center of both schemes was HO, the secretary-general of a non-governmental organization based in Hong Kong and Arlington, Virginia, and registered as a charitable entity in the United States, the China Energy Fund Committee (“CEFC NGO”), which held “Special Consultative Status” with the United Nations (“UN”) Economic and Social Council.  CEFC NGO was funded by CEFC China.

In the first scheme (the “Chad Scheme”), HO, on behalf of CEFC China, offered a $2 million cash bribe, hidden within gift boxes, to Idriss Déby, the president of Chad, in an effort to obtain valuable oil rights from the Chadian government.  In the second scheme (the “Uganda Scheme”), HO caused a $500,000 bribe to be paid, via wires transmitted through New York, New York, to an account designated by Sam Kutesa, the Minister of Foreign Affairs of Uganda, who had recently completed his term as the president of the UN General Assembly.  HO also schemed to pay a $500,000 cash bribe to Yoweri Museveni, the president of Uganda, and offered to provide both Kutesa and Museveni with additional corrupt benefits by “partnering” with them and their families in future joint ventures in Uganda.

The Chad Scheme

The Chad Scheme began in or about September 2014 when HO flew into New York to attend the annual UN General Assembly.  At that time, CEFC China – a multibillion-dollar energy company based in Shanghai, China – was working to expand its operations to Chad, and wanted to meet with President Déby as quickly as possible.  Through a connection, HO was introduced to Cheikh Gadio, the former Minister of Foreign Affairs of Senegal, who had a personal relationship with President Déby.  HO and Gadio met at CEFC China’s suite at Trump World Tower in midtown Manhattan, where HO enlisted Gadio to assist CEFC China in obtaining access to President Déby.

Gadio connected HO and CEFC China to President Déby.  In an initial meeting in Chad in November 2014, President Déby described to HO and CEFC China executives certain lucrative oil rights that were available for CEFC China to acquire.  Following that meeting, Gadio advised HO and CEFC China to send a technical team to Chad to investigate the oil rights and make an offer to President Déby grounded in factual data.  Instead, HO insisted on a prompt second meeting with President Déby.  The second meeting took place a few weeks later, in December 2014.  HO led a CEFC China delegation, which flew to Chad on a corporate jet with $2 million cash concealed within several gift boxes.  At the conclusion of a business meeting with President Déby, HO and the CEFC China executives presented him with the gift boxes. 

To the surprise of HO and the CEFC China executives, President Déby rejected the $2 million bribe offer, but later agreed to accept the money as a charitable donation to the country.  HO subsequently drafted a letter to President Déby falsely claiming that the cash had really been intended as a donation to the people of Chad all along.

HO and CEFC China did not obtain the unfair advantage that they had sought through the bribe offer, and by mid-2015, HO had turned his attention to a different so-called “gateway to Africa”:  Uganda.

The Uganda Scheme

The Uganda Scheme began around the same time as the Chad Scheme, when HO was in New York for the annual UN General Assembly.  HO met with Sam Kutesa, who had recently begun his term as the 69th president of the UN General Assembly (“PGA”).  HO, purporting to act on behalf of CEFC NGO, met with Kutesa and began to cultivate a relationship with him.  During the year when Kutesa served as PGA, HO and Kutesa discussed a “strategic partnership” between Uganda and CEFC China for various business ventures, to be formed once Kutesa returned to Uganda.

In or about February 2016 – after Kutesa had returned to Uganda and resumed his role as Foreign Minister, and Yoweri Museveni (Kutesa’s relative) had been reelected as the president of Uganda – Kutesa solicited a payment from HO, purportedly for a charitable foundation that Kutesa wished to launch.  HO agreed to provide the requested payment, but simultaneously requested, on behalf of CEFC China, an invitation to Museveni’s inauguration, business meetings with Museveni and other high-level Ugandan officials, and a list of specific business projects in Uganda in which CEFC China could participate.

In May 2016, HO and CEFC China executives traveled to Uganda.  Prior to departing, HO caused CEFC NGO to wire $500,000 to the account provided by Kutesa in the name of the so-called “foundation,” which wire was transmitted through New York, New York.  HO also advised his boss, Ye Jianming, the then-chairman of CEFC China, to provide $500,000 in cash to Museveni, ostensibly as a campaign donation, even though Museveni had already been reelected.  HO intended these payments to influence Kutesa and Museveni to use their official power to steer business advantages to CEFC China.

HO and CEFC China executives attended President Museveni’s inauguration and obtained business meetings in Uganda with Museveni and top Ugandan officials, including with the Department of Energy and Mineral Resources.  After the trip, HO requested that Kutesa and Museveni assist CEFC China in acquiring a Ugandan bank, as an initial step before pursuing additional ventures in Uganda.  HO also offered to “partner” with Kutesa and Museveni and/or their “family businesses,” making clear that both officials would share in CEFC China’s future profits.  In exchange for the bribes offered and paid by HO, Kutesa thereafter steered a bank acquisition opportunity to CEFC China.

*                      *                      *

In imposing sentence, Judge Preska explained that, as the UN Convention Against Corruption states:  “Corruption is an insidious plague” that is “found in all countries—big and small, rich and poor—but it is in the developing world that its effects are most destructive.”

In addition to his prison term, HO, 69, a citizen of the People’s Republic of China who resided in Hong Kong prior to his arrest in November 2017 and has been detained since his arrest, was fined $400,000.

Mr. Berman and Mr. Benczkowski praised the outstanding work of the Federal Bureau of Investigation and Internal Revenue Service-Criminal Investigation.  He also thanked the Department of Homeland Security, Homeland Security Investigations, and the Department of Justice, Criminal Division’s Office of International Affairs, for their assistance.

This case is being prosecuted by the Office’s Public Corruption Unit and the Criminal Division’s Fraud Section, FCPA Unit.  Assistant U.S. Attorneys Daniel C. Richenthal, Douglas S. Zolkind, and Catherine E. Ghosh, and Trial Attorney Paul A. Hayden of the Fraud Section, are in charge of the prosecution.

Chi Ping Patrick Ho, aka “Patrick C.P. Ho” and “He Zhiping,” was sentenced today to serve 36 months in prison for his role in a multi-year, multimillion-dollar scheme to bribe top officials of Chad and Uganda in exchange for business advantages for CEFC China Energy Company Limited (“CEFC China”) Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Geoffrey S. Berman for the Southern District of New York announced.  Ho was convicted of violations of the Foreign Corrupt Practices Act (FCPA), money laundering, and conspiracy to commit the same, in December 2018, after a one-week jury trial before U.S. District Judge Loretta A. Preska, who imposed today’s sentence.

In addition to his prison term, Ho, 69, a citizen of the People’s Republic of China who resided in Hong Kong prior to his arrest in November 2017 and has been detained since his arrest, was fined $400,000.  Following his prison sentence, Ho will be removed from the United States.

“Patrick Ho bribed officials at the highest levels of government in Chad and Uganda in pursuit of lucrative oil deals and other business opportunities, all while using a U.S.-based NGO to conceal his criminal scheme,” said Assistant Attorney General Benczkowski.  “This kind of corruption undermines world markets and tilts the playing field against law-abiding companies and individuals.  The Department will continue to investigate and prosecute individuals and corporations that engage in foreign bribery. ”

“Patrick Ho schemed to bribe the leaders of Chad and Uganda in order to secure unfair business advantages for the Chinese energy company he served,” said Manhattan U.S. Attorney Berman.  “His actions were brazen, including offering the president of Chad $2 million in cash, hidden in gift boxes.  Foreign corruption undermines the fairness of international markets, erodes the public’s faith in its leaders, and is deeply unfair to the people and businesses that play by the rules.  Today’s sentence recognizes the severe harm caused by Ho’s actions.”

According to the evidence presented at trial, Ho orchestrated and executed two bribery schemes to pay top officials of Chad and Uganda in exchange for business advantages for CEFC China, a Shanghai-based multibillion-dollar conglomerate that operates internationally in multiple sectors, including oil, gas, and banking.  During the course of the schemes, Ho served as the secretary-general of a non-governmental organization based in Hong Kong and Arlington, Virginia, and registered as a charitable entity in the United States, the China Energy Fund Committee (“CEFC NGO”), which held “Special Consultative Status” with the United Nations (UN) Economic and Social Council.  CEFC NGO was funded by CEFC China.

In the first scheme (the Chad Scheme), Ho, on behalf of CEFC China, offered a $2 million cash bribe, hidden within gift boxes, to Idriss Déby, the president of Chad, in an effort to obtain valuable oil rights from the Chadian government.  In the second scheme (the Uganda Scheme), Ho caused a $500,000 bribe to be paid, via wires transmitted through New York, New York, to an account designated by Sam Kutesa, the Minister of Foreign Affairs of Uganda, who had recently completed his term as the president of the UN General Assembly.  Ho also schemed to pay a $500,000 cash bribe to Yoweri Museveni, the president of Uganda, and offered to provide both Kutesa and Museveni with additional corrupt benefits by “partnering” with them and their families in future joint ventures in Uganda.

The Chad Scheme

The Chad Scheme began in or about September 2014 when Ho flew into New York to attend the annual UN General Assembly.  At that time, CEFC China – a multibillion-dollar energy company based in Shanghai, China – was working to expand its operations to Chad, and wanted to meet with President Déby as quickly as possible.  Through a connection, Ho was introduced to Cheikh Gadio, the former Minister of Foreign Affairs of Senegal, who had a personal relationship with President Déby.  Ho and Gadio met at CEFC China’s suite at Trump World Tower in midtown Manhattan, where Ho enlisted Gadio to assist CEFC China in obtaining access to President Déby

Gadio connected Ho and CEFC China to President Déby.  In an initial meeting in Chad in November 2014, President Déby described to Ho and CEFC China executives certain lucrative oil rights that were available for CEFC China to acquire.  Following that meeting, Gadio advised Ho and CEFC China to send a technical team to Chad to investigate the oil rights and make an offer to President Déby grounded in factual data.  Instead, Ho insisted on a prompt second meeting with President Déby.  The second meeting took place a few weeks later, in December 2014.  Ho led a CEFC China delegation, which flew to Chad on a corporate jet with $2 million cash concealed within several gift boxes.  At the conclusion of a business meeting with President Déby, Ho and the CEFC China executives presented him with the gift boxes. 

To the surprise of Ho and the CEFC China executives, President Déby rejected the $2 million bribe offer, but later agreed to accept the money as a charitable donation to the country.  Ho subsequently drafted a letter to President Déby falsely claiming that the cash had really been intended as a donation to the people of Chad all along.

Ho and CEFC China did not obtain the unfair advantage that they had sought through the bribe offer, and by mid-2015, Ho had turned his attention to a different so-called “gateway to Africa”:  Uganda.

The Uganda Scheme

The Uganda Scheme began around the same time as the Chad Scheme, when Ho was in New York for the annual UN General Assembly.  Ho met with Sam Kutesa, who had recently begun his term as the 69th president of the UN General Assembly (“PGA”).  Ho, purporting to act on behalf of CEFC NGO, met with Kutesa and began to cultivate a relationship with him.  During the year when Kutesa served as PGA, Ho and Kutesa discussed a “strategic partnership” between Uganda and CEFC China for various business ventures, to be formed once Kutesa returned to Uganda.

In or about February 2016 – after Kutesa had returned to Uganda and resumed his role as Foreign Minister, and Yoweri Museveni (Kutesa’s relative) had been reelected as the president of Uganda – Kutesa solicited a payment from Ho, purportedly for a charitable foundation that Kutesa wished to launch.  Ho agreed to provide the requested payment, but simultaneously requested, on behalf of CEFC China, an invitation to Museveni’s inauguration, business meetings with Museveni and other high-level Ugandan officials, and a list of specific business projects in Uganda in which CEFC China could participate.

In May 2016, Ho and CEFC China executives traveled to Uganda.  Prior to departing, Ho caused CEFC NGO to wire $500,000 to the account provided by Kutesa in the name of the so-called “foundation,” which wire was transmitted through New York, New York.  Ho also advised his boss, Ye Jianming, the then-chairman of CEFC China, to provide $500,000 in cash to Museveni, ostensibly as a campaign donation, even though Museveni had already been reelected.  Ho intended these payments to influence Kutesa and Museveni to use their official power to steer business advantages to CEFC China.

Ho and CEFC China executives attended President Museveni’s inauguration and obtained business meetings in Uganda with Museveni and top Ugandan officials, including with the Department of Energy and Mineral Resources.  After the trip, Ho requested that Kutesa and Museveni assist CEFC China in acquiring a Ugandan bank, as an initial step before pursuing additional ventures in Uganda.  Ho also offered to “partner” with Kutesa and Museveni and/or their “family businesses,” making clear that both officials would share in CEFC China’s future profits.  In exchange for the bribes offered and paid by Ho, Kutesa thereafter steered a bank acquisition opportunity to CEFC China.

The investigation was conducted by the FBI and IRS Criminal Investigation.  U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Department of Justice, Criminal Division’s Office of International Affairs provided assistance.

Trial Attorney Paul A. Hayden of the Criminal Division’s Fraud Section, FCPA Unit and Assistant U.S. Attorneys Daniel C. Richenthal, Douglas S. Zolkind, and Catherine E. Ghosh of the U.S. Attorney’s Office for Southern District of New York’s Public Corruption Unit are prosecuting the case.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, today announced the selection of Audrey Strauss as Deputy U.S. Attorney and Craig A. Stewart as Chief Counsel to the U.S. Attorney.  Ms. Strauss will replace Robert Khuzami on his departure April 12.  Rob will return to his home in Washington DC after commuting to the Office weekly while serving as Deputy U.S. Attorney. 

Mr. Stewart, who is leaving his partnership at Arnold & Porter, will return to the Office on March 25, 2019.  At that firm, his work consisted primarily of representing companies and individuals in connection with civil and appellate litigation and investigations by federal and state prosecutors and regulators.  Mr. Stewart served as an Assistant United States Attorney from August 1987 through October 1998 and worked in both the Civil and Criminal Divisions.  During his tenure, Mr. Stewart spent more than three years in the Civil Division, handling a mix of affirmative and defensive litigation, and then eight years in the Criminal Division, where he worked in the General Crimes, Narcotics, Special Narcotics, and Organized Crime units.  He also held a number of supervisory positions, including Chief of the Narcotics Unit, Deputy Chief of the Criminal Division and, finally, Chief Appellate Attorney.  Mr. Stewart earned his Juris Doctor degree at Harvard Law School in 1983, and also holds bachelor of arts and masters degrees from Yale University, where he graduated suma cum laude and Phi Beta Kappa. Following his graduation from law school, Mr. Stewart worked as a law clerk for the Honorable Constance Baker Motley, then the Chief United States District Judge for the Southern District of New York.

In making the appointments, Manhattan U.S Attorney Geoffrey S. Berman said:  “Rob Khuzami is an extraordinary and brilliant lawyer who has upheld the ideals of integrity and professionalism that characterize the work of this Office.  There can be no higher praise.  As an example of his extraordinary commitment to the Office, Rob has been commuting weekly from Washington, D.C., since January 2018.  While his desire to continue to serve remains strong, he understandably has decided to return home to his family.  Audrey Strauss, who has been invaluable as Senior Counsel, will undoubtedly continue the important work of the Deputy U.S. Attorney.  Additionally, I am pleased that Craig Stewart will be joining my leadership team as Chief Counsel.  I am certain that Audrey and Craig will support the Office with excellence and insight.” 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, 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 of LORRAINE SHANLEY today on charges of bank fraud and aggravated identity theft.  SHANLEY, the former volunteer treasurer of a nonprofit charity, allegedly participated in a scheme in which she obtained over $410,000 of the charity’s money meant for the families of New York City Police Department (“NYPD”) officers killed in the line of duty.  SHANLEY surrendered this morning and will be presented today in Manhattan federal court before U.S. Magistrate Judge James L. Cott.

U.S. Attorney Geoffrey S. Berman said:  “Lorraine Shanley allegedly capitalized on tragedy and monetized people’s generosity.  As alleged, Shanley stole over 20 percent of the donations to a charity whose sole mission is to help the families of NYPD officers killed in the line of duty.  Thanks to the investigative work of the IRS and special agents from our Office, Shanley will be prosecuted for her actions.”

IRS-CI Acting Special Agent in Charge Jonathan D. Larsen said:  “As alleged in the complaint, Lorraine Shanley violated her position of trust at a charity and victimized families who have already sacrificed so much.  IRS-CI is committed to following the money and investigating those individuals who steal from charities for their own personal gain.”

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

For many years, from at least 2010 to 2017, SHANLEY served as a volunteer treasurer for a charity that provides financial support to the families of NYPD officers killed in the line of duty (“Charity-1”).  During that time period, Charity-1 received approximately $1.9 million in donations, over 99 percent of which came from NYPD employees, from an average of 5,500 NYPD employees per year. 

SHANLEY was an authorized signatory on Charity-1’s bank account and credit card, and was authorized to use them for Charity-1’s operations.  But SHANLEY also used the bank account and credit card to benefit herself and her family members, fraudulently obtaining over $410,000 from 2010 to 2017.  For example, using Charity-1’s bank account and credit card, SHANLEY:

• Wrote at least $45,000 in checks that were either payable to family members, or that were made out to other people but which SHANLEY double endorsed and deposited into her own accounts;
• Paid approximately $29,000  for her grandchild’s private school tuition;
• Paid approximately $63,000 for legal services and expenses related to criminal charges against SHANLEY’s son;
• Paid approximately $32,000 for personal dental expenses and approximately $25,000 for landscaping on her personal residence; and
• Purchased over $8,000 in event tickets, including over $1,400 for Barbara Streisand concert tickets.

On many of the checks SHANLEY wrote for unauthorized purposes, SHANLEY forged the signature of another authorized signatory on Charity-1’s bank account.  SHANLEY’s fraudulent conduct was uncovered when a new volunteer with Charity-1 reviewed the charity’s tax returns and records as part of an effort to modernize the charity’s operations.

*                *                *

SHANLEY, 68, of Staten Island, New York, is charged with one count of bank fraud, which carries a maximum penalty of 30 years in prison, and one count of aggravated identity theft, which carries a mandatory minimum penalty of two years in prison, which must run consecutively to any other term of imprisonment imposed.  The maximum and mandatory minimum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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 IRS-CI.  He also thanked the New York City Police Department for their assistance.

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

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

 

---

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

 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the filing of a civil forfeiture action seeking the return to its rightful owner of a painting looted from a Kyiv museum in Nazi-controlled Ukraine in the closing days of World War II.  The piece, formerly entitled A Family Portrait and currently entitled An Amorous Couple or alternatively A Loving Glance (the “Painting”), painted by Pierre Louis Goudreaux, a student of Jean-Honoré Fragonard, was allegedly stolen from the Bohdan and Varvara Khanenko National Museum of the Arts in Kyiv, Ukraine, around 1943. 

Manhattan U.S. Attorney Geoffrey Berman said:  “Our Office has a long history of righting wrongs, no matter how long ago a crime was committed.  Today’s action is an example of our continued commitment to ensuring that art looted by Nazis more than 75 years ago is returned to its rightful owners.”

FBI Assistant Director in Charge William F. Sweeney Jr. said:  “The occupying forces during World War II believed they had the right to surround themselves with the spoils of their invasion, to include art work that didn't belong to them.  The Nazis secreted these works away from the public and over the course of decades many were lost forever.  The FBI New York Art Crime Team works diligently to restore these paintings and artifacts to their rightful owners because the some of the wounds of that dark time can be mended even decades later.”

According to the Complaint filed today in Manhattan federal court:

Before the outbreak of the World War II in the Soviet Union, the Khanenko Museum maintained the Painting under the name A Family Portrait, after the Painting had been willed to the Museum by art collector Vasilii Aleksandrovich Shchavinskii in 1924 upon his death.  The Painting is seen in numerous photographs of the interior of the Khanenko Museum in the 1930s.

As part of the invasion of the Soviet Union during World War II, German troops crossed the Dnieper River into Kyiv in August 1941.  To protect its inventory from the invading troops, the Khanenko Museum evacuated some of its artwork eastward into Soviet Russia, but the Painting was not listed in the checklists of the evacuated items.  When the German troops occupied Kyiv beginning in 1941, Nazi Germany occupied Ukraine through an administrative entity called the Reichskommissariat Ukraine (the “RKU”).  The RKU seized numerous pieces from the Khanenko Museum for display in the residences of occupying authorities.  The Painting was not listed in the ledger of such seized pieces.  When Soviet troops began approaching Kyiv to try to retake the city in 1943, the German authorities seized artwork for export to Germany, but the Painting was not listed in the German ledger of the exported artworks.  Kyiv became a military zone in the final days of the war in Ukraine, and retreating German troops looted many remaining valuables.

In July 1944, after the Soviet Union had re-taken Kyiv from Nazi rule, the Committee for Art under the Soviet of Ministers for the Ukrainian Soviet Socialist Republic began to review pieces stolen from the Khanenko Museum.  The Committee listed the Painting, under the title An Amorous Couple, as a missing piece when the review was completed in August 1948.

In January 2013, the Painting resurfaced when it was listed on the official website of a New York auction house (the “New York Auction House”).  The provenance accompanying the auction notice stated that the Painting had been held in a private collection in London and then a private collection in Massachusetts.  Further investigation by the FBI established that in December 1993, the Painting was purchased from an auction house in Deerfield, Massachusetts, by a New York art dealer (the “Art Dealer”).  The Art Dealer held the Painting until consigning it to the New York Auction House in January 2013.  The Painting was posted for auction under the alternate title of A Loving Glance. 

The U.S. Attorney’s Office and the FBI are seeking forfeiture of the painting so it can be returned to its rightful owners.

Mr. Berman thanked the FBI’s Art Crime Team for their assistance.

The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorney Samuel L. Raymond is in charge of the case.

Cesar Altieri Sayoc, aka “Cesar Randazzo,” “Cesar Altieri,” and “Cesar Altieri Randazzo,” pled guilty today to a 65-count Superseding Information in Manhattan federal court before U.S. District Judge Jed S. Rakoff.  In connection with the guilty plea, Sayoc admitted to mailing 16 improvised explosive devices (IEDs) to 13 victims throughout the country, including 11 current or former U.S. government officials, and that he intended to use the IEDs as weapons and to cause injuries.  Assistant Attorney General John C. Demers for the National Security Division, U.S. Attorney Geoffrey S. Berman for the Southern District of New York, Assistant Director Michael McGarrity of the FBI’s Counterterrorism Division, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office and Police Commissioner James P. O’Neill of the NYPD made the announcement.

“Cesar Sayoc has admitted to acts of domestic terrorism that are repulsive to all Americans who cherish a society built on respectful and non-violent political discourse, no matter how strongly held one’s views,” said Assistant Attorney General Demers.  “Our democracy will simply not survive if our political discourse includes sending bombs to those we disagree with.  I applaud the efforts of so many in our law enforcement community whose alertness and tirelessness led to the prompt arrest of the defendant before he was able to injure anyone, as well as those whose efforts led to today’s plea.”

“For five days in November 2018, Cesar Sayoc reigned terror across the country, sending high-ranking officials and former elected leaders explosive packages through the mail,” said U.S. Attorney Berman.  “Thankfully no one was hurt by these dangerous devices, but his actions left an air of fear and divisiveness in their wake.  Sayoc has taken responsibility for his crimes, and will soon be sentenced to significant time in prison.”

“This case shows that the FBI will be tenacious in pursuing all those who wish to intimidate those they disagree with by threatening violence,” said Assistant Director Michael McGarrity of the FBI’s Counterterrorism Division.  “When it comes to identifying and stopping those who terrorize our communities, we won’t hesitate to bring the full force of our combined resources of the FBI and our partners.”

“Sayoc's crimes were intended to incite fear among his targets and uncertainty among the general public, leading to a significant deployment of various law enforcement resources in a nationwide search to find him,” said Assistant Director Sweeney.  “When called upon, our FBI JTTFs across the country—along with our partner agencies—did what we do best, working swiftly, and side by side, to bring him to justice.  Unlike most of our investigations, this case played out in plain view from beginning to end.  The announcement of today's plea is as good a time as any to remind the public that our JTTFs are working behind the scenes on a daily basis, in much the same way, to keep our communities safe.”

“The NYPD and our law enforcement partners will continue to work tirelessly to keep New York City safe from threats of terror,” said Commissioner O’Neill.  “I commend the members of the New York Joint Terrorism Task Force, and the Southern District of New York for their work in this case.”

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

In October 2018, Sayoc mailed from Florida 16 padded envelopes, each containing an IED, to addresses in New York, New Jersey, Washington, D.C., Delaware, Atlanta, and California.  Sayoc packed each IED with explosive material and glass shards that would function as shrapnel if the IED exploded.  Sayoc also attached to the outside of each IED a picture of the intended victim marked with a red “X.”  As Sayoc admitted today during his plea, he designed the IEDs for use as weapons and mailed them understanding that they were capable of exploding and causing injuries and property damage.  In alphabetical order, Sayoc’s intended victims were former Vice President Joseph Biden, Senator Cory Booker, former CIA Director John Brennan, former Director of National Intelligence James Clapper, former Secretary of State Hillary Clinton, CNN, Robert De Niro, Senator Kamala Harris, former Attorney General Eric Holder, former President Barack Obama, George Soros, Thomas Steyer, and Representative Maxine Walters.  Between Oct. 22 and Nov. 2, 2018, the FBI and the U.S. Postal Service recovered all of the 16 IEDs mailed by Sayoc.

The FBI arrested Sayoc in Plantation, Florida, on Oct. 26, 2018—less than five days after the October 22 recovery of the first IED, which Sayoc mailed to Soros in New York.  The FBI seized a laptop from Sayoc’s van, which contained lists of physical addresses that match many of the labels on the envelopes that Sayoc mailed.  The lists were saved at a file path on the laptop that includes a variant of Sayoc’s first name:  “Users/Ceasar/Documents.”  A document from that path, titled “Debbie W.docx” and bearing a creation date of July 26, 2018, contained repeated copies of an address for “Debbie W. Schultz” in Sunrise, Florida, that is nearly identical, except for typographical errors, to the return address that Sayoc used on the packages.  Similar documents bearing file titles that include the name “Debbie,” and creation dates of Sept. 22, 2018, contain exact matches of the return address used by Sayoc on the 16 envelopes. 

Sayoc’s laptop also revealed extensive Internet search history related to his investigation of the intended victims and his desire to injure or kill them.  For example, Sayoc conducted the following Internet searches, among others, on the dates indicated in 2018:

• July 15: “hilary Clinton hime address”
• July 26: “address Debbie wauserman Shultz”
• Sept. 19: “address kamila harrias”
• Sept. 26: “address for barack Obama”
• Sept. 26: “michelle obama mailing address”
• Sept. 26: “joseph biden jr”
• Oct. 1: “address cory booker new jersey”
• Oct. 20: “tom steyers mailing address”
• Oct. 23: “address kamala harris”

*                      *                      *

Sayoc, 57, of Southern Florida, pled guilty to four sets of charges related to each of the 16 IEDs:  (1) sixteen counts of using a weapon of mass destruction; (2) sixteen counts of interstate transportation of an explosive device; (3) sixteen counts of conveying a threat in interstate commerce; and (4) sixteen counts of the illegal mailing of explosives with the intent to kill or injure another.  Sayoc also pled guilty to using an explosive to commit a felony, which relates to felonies committed in connection with the use and mailing of all 16 IEDs.  A chart identifying the charges and maximum penalties applicable to Sayoc is below.

Counts

Charge

Penalties Per Count

1 – 16

Using a weapon of mass destruction

Maximum per count: life

17 – 32

Interstate transportation of an explosive

Maximum per count: 10 years

33 – 48

Conveying a threat in interstate commerce

Maximum per count: 5 years

49 – 64

Illegal mailing of explosives with intent to kill or injure another

Maximum per count: 20 years

65

Carrying an explosive during the commission of a felony

Mandatory minimum: 10 years to run consecutively to any other sentence imposed

The maximum and minimum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.  The defendant is scheduled to be sentenced before Judge Rakoff on Sept. 12, 2019.

Mr. Demers and Mr. Berman praised the outstanding efforts of the Federal Bureau of Investigation’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department and the U.S. Postal Inspection Service.  Mr. Demers and Mr. Berman also thanked the U.S. Attorney’s Offices for the Southern District of Florida, the District of Columbia, the District of Delaware, the District of New Jersey, the Central District of California, the Eastern District of California, the Northern District of California and the Northern District of Georgia for their assistance in the investigation.  

Assistant U.S. Attorneys Sam Adelsberg, Emil J. Bove III, Jane Kim, and Jason A. Richman are in charge of the prosecution, with assistance from Trial Attorney David Cora of the Counterterrorism Section of the Department of Justice’s National Security Division.

 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, the Assistant Attorney General for National Security, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Philip R. Bartlett, Inspector-in-Charge of the New York Field Division of the United States Postal Inspection Service (“USPIS”), and James P. O’Neill, Police Commissioner of the City of New York (“NYPD”), announced today that CESAR ALTIERI SAYOC, a/k/a “Cesar Randazzo,” “Cesar Altieri,” and “Cesar Altieri Randazzo,” pled guilty today to a 65-count Superseding Information in Manhattan federal court before U.S. District Judge Jed S. Rakoff.  In connection with the guilty plea, SAYOC admitted to mailing 16 improvised explosive devices (“IEDs”) to 13 victims throughout the country, including 11 current or former U.S. government officials, and that he intended to use the IEDs as weapons and to cause injuries. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For five days in October 2018, Cesar Sayoc rained terror across the country, sending high-ranking officials and former elected leaders explosive packages through the mail.  Thankfully no one was hurt by these dangerous devices, but his actions left an air of fear and divisiveness in their wake.  Sayoc has taken responsibility for his crimes, and will soon be sentenced to significant time in prison.”

Assistant Attorney General for National Security John C. Demers said:  “Cesar Sayoc has admitted to acts of domestic terrorism that are repulsive to all Americans who cherish a society built on respectful and non-violent political discourse, no matter how strongly held one’s views.  Our democracy will simply not survive if our political discourse includes sending bombs to those we disagree with.  I applaud the efforts of so many in our law enforcement community whose alertness and tirelessness led to the prompt arrest of the defendant before he was able to injure anyone, as well as those whose efforts led to today’s plea.”

FBI Assistant Director William F. Sweeney Jr. said:  “Sayoc’s crimes were intended to incite fear among his targets and uncertainty among the general public, leading to a significant deployment of various law enforcement resources in a nationwide search to find him.  When called upon, our FBI JTTFs across the country – along with our partner agencies – did what we do best, working swiftly, and side by side, to bring him to justice.  Unlike most of our investigations, this case played out in plain view from beginning to end.  The announcement of today’s plea is as good a time as any to remind the public that our JTTFs are working behind the scenes on a daily basis, in much the same way, to keep our communities safe.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “Today’s plea represents the hard work of Postal Inspectors and their law enforcement partners to keep USPS employees, customers and the sanctity of the US Mail safe from those who wish to harm the American public based on their distorted political or ideological agenda.”

NYPD Commissioner James P. O’Neill said:  “The NYPD and our law enforcement partners will continue to work tirelessly to keep New York City safe from threats of terror.  I commend the members of the New York Joint Terrorism Task Force, and the Southern District of New York for their work in this case.”

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

In October 2018, SAYOC mailed from Florida 16 padded envelopes, each containing an IED, to addresses in New York, New Jersey, Washington, D.C., Delaware, Atlanta, Georgia, and California.  SAYOC packed each IED with explosive material and glass shards that would function as shrapnel if the IED exploded.  SAYOC also attached to the outside of each IED a picture of the intended victim marked with a red “X.”  As SAYOC admitted today during his plea, he designed the IEDs for use as weapons and mailed them understanding that they were capable of exploding and causing injuries and property damage.  In alphabetical order, SAYOC’s intended victims were former Vice President Joseph Biden, Senator Cory Booker, former CIA Director John Brennan, former Director of National Intelligence James Clapper, former Secretary of State Hillary Clinton, CNN, Robert De Niro, Senator Kamala Harris, former Attorney General Eric Holder, former President Barack Obama, George Soros, Thomas Steyer, and Representative Maxine Waters.  Between October 22 and November 2, 2018, the FBI and the U.S. Postal Service recovered all of the 16 IEDs mailed by SAYOC.

The FBI arrested SAYOC in Plantation, Florida, on October 26, 2018 – less than five days after the October 22 recovery of the first IED, which SAYOC mailed to Soros in New York.  The FBI seized a laptop from SAYOC’s van, which contained lists of physical addresses that match many of the labels on the envelopes that SAYOC mailed.  The lists were saved at a file path on the laptop that includes a variant of SAYOC’s first name:  “Users/Ceasar/Documents.”  A document from that path, titled “Debbie W.docx” and bearing a creation date of July 26, 2018, contained repeated copies of an address for “Debbie W. Schultz” in Sunrise, Florida, that is nearly identical, except for typographical errors, to the return address that SAYOC used on the packages.  Similar documents bearing file titles that include the name “Debbie,” and creation dates of September 22, 2018, contain exact matches of the return address used by SAYOC on the 16 envelopes. 

SAYOC’s laptop also revealed extensive Internet search history related to his investigation of the intended victims and his desire to injure or kill them.  For example, SAYOC conducted the following Internet searches, among others, on the dates indicated in 2018:

• July 15: “hilary Clinton hime address”
• July 26: “address Debbie wauserman Shultz”
• Sept. 19: “address kamila harrias”
• Sept. 26: “address for barack Obama”
• Sept. 26: “michelle obama mailing address”
• Sept. 26: “joseph biden jr”
• Oct. 1: “address cory booker new jersey”
• Oct. 20: “tom steyers mailing address”
• Oct. 23: “address kamala harris”

*                      *                      *

SAYOC, 57, of Southern Florida, pled guilty to four sets of charges related to each of the 16 IEDs:  (1) sixteen counts of using a weapon of mass destruction; (2) sixteen counts of interstate transportation of an explosive device; (3) sixteen counts of conveying a threat in interstate commerce; and (4) sixteen counts of the illegal mailing of explosives with the intent to kill or injure another.  SAYOC also pled guilty to using an explosive to commit a felony, which relates to felonies committed in connection with the use and mailing of all 16 IEDs.  A chart identifying the charges and maximum penalties applicable to SAYOC is below.

Counts

Charge

Penalties Per Count

1 – 16

Using a weapon of mass destruction

Maximum per count: life

17 – 32

Interstate transportation of an explosive

Maximum per count: 10 years

33 – 48

Conveying a threat in interstate commerce

Maximum per count: 5 years

49 – 64

Illegal mailing of explosives with intent to kill or injure another

Maximum per count: 20 years

65

Carrying an explosive during the commission of a felony

Mandatory minimum: 10 years to run consecutively to any other sentence imposed

 

 

The maximum and minimum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.  The defendant is scheduled to be sentenced before Judge Rakoff on September 12, 2019 at 4:00 p.m.

Mr. Berman and Mr. Demers praised the outstanding efforts of the Federal Bureau of Investigation’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department, and the U.S. Postal Inspection Service.  Mr. Berman and Mr. Demers also thanked the U.S. Attorney’s Offices for the Southern District of Florida, the District of Columbia, the District of Delaware, the District of New Jersey, the Central District of California, the Eastern District of California, the Northern District of California, and the Northern District of Georgia for their assistance in the investigation.  

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Sam Adelsberg, Emil J. Bove III, Jane Kim, and Jason A. Richman are in charge of the prosecution, with assistance from Trial Attorney David Cora of the Counterterrorism Section of the Department of Justice’s National Security Division.

Robert S. Khuzami, Attorney for the United States, acting under authority conferred by 28 U.S.C. § 515, and Peter D. Lopez, Regional Administrator of the U.S. Environmental Protection Agency (“EPA”), announced today that the United States has filed and simultaneously entered into a consent decree settling a civil lawsuit against COLUMBIA GAS TRANSMISSION LLC (“Columbia”), HENRY SCHEIN, INC. (“Schein”), and UNION CARBIDE CORPORATION (“UCC”) (collectively, the “Defendants”).  The lawsuit, brought pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) – commonly known as the Superfund statute – seeks to collect clean-up costs that  EPA has incurred since April 2004 in connection with its clean-up of mercury at the Port Refinery Superfund Site (the “Site”) in the Village of Rye Brook in Westchester County, New York.  The consent decree, which will be lodged with the District Court for a period of at least 30 days before it is submitted for the Court’s approval, provides for a combined payment of $179,647 by the Defendants.

Attorney for the United States Robert Khuzami said:  “Polluters must pay for the costs they have imposed on the community.  Each of these defendants arranged for the treatment or disposal of toxic mercury and contributed to significant contamination in a residential community.  Each is now paying a share of the costs.”

Regional Administrator Peter D. Lopez said:  “It is crucial for companies to take all necessary steps to limit people’s potential exposure to mercury. Exposure to mercury can harm the heart, kidneys, lungs, immune system and have other health impacts. EPA completed a successful cleanup in Rye Brook, held the parties accountable and continues to remain vigilant to ensure that the public is protected from unsafe releases of mercury.”

As alleged in the complaint filed today in White Plains federal court, each of these defendants arranged for the sale and transport of used or scrap mercury, or mercury-containing products, directly or indirectly to Port Refinery, Inc. (“Port Refinery”).  Port Refinery operated a mercury refining business out of a residence in Rye Brook, New York.  Port Refinery’s treatment and processing of the scrap mercury sent by the Defendants and other parties led to extensive releases of mercury, a hazardous substance, requiring two separate clean-up actions (“removals”) by EPA.  In connection with the second removal, which began in 2004, EPA has incurred costs at the site for a variety of investigative and clean-up activities, including, among other things, excavating and disposing of more than 9,300 tons of mercury-contaminated soil from the Site.

In the consent decree filed today, the Defendants admit and accept responsibility for the following:

• EPA has determined that from the 1970s through the early 1990s, Port Refinery engaged in, among other things, the business of mercury reclaiming, refining, and processing.
• Port Refinery operated in the Village of Rye Brook, Westchester County, New York, out of a two-story garage bordered by private residences on its south, east, and west sides.
• EPA has determined that Port Refinery took virtually no environmental precautions or safety measures during its mercury refinement process.
• EPA has determined that Port Refinery released a significant amount of mercury into the environment, contaminating the Site.
• EPA has determined that the Defendants’ mercury was comingled at the Site and contributed to the mercury released into the environment at the Site.

Pursuant to the consent decree, the Defendants will pay a total of $179,647 in costs incurred by EPA, consisting of $120,198 to be paid by UCC, $54,845 to be paid by Columbia, and $4,604 to be paid by Schein.

*                *                *

Today’s lawsuit is the United States’ fourth lawsuit against responsible parties to recover clean-up costs for the second removal at the Port Refinery site.  Prior to today’s settlement, the United States had recovered $647,582 from other responsible parties.  The United States is continuing to pursue its claims against additional potentially responsible parties.

The consent decree will be lodged with the District Court for a period of at least 30 days before it is submitted for the Court’s approval, to provide public notice and to afford members of the public the opportunity to comment on the consent decree.

This case is being handled by the Office’s Environmental Protection Unit.  Assistant U.S. Attorneys Anthony J. Sun and Natasha W. Teleanu are in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Carmen Rottenberg, Administrator of the U.S. Department of Agriculture’s (“USDA”) Food Safety and Inspection Service (“FSIS”), announced today the entry of a Consent Decree against defendants GEORGE MEAT MARKET, INC. (“GEORGE MEAT MARKET”), KWOK SIN NG, president of GEORGE MEAT MARKET, and ALICE YAN FUNG NG, vice president of GEORGE MEAT MARKET (collectively, “the defendants”), along with settling parties BEN MEAT MARKET, INC. (“BEN MEAT MARKET”), and its incorporator, BENSON NG, for violations of the federal Poultry Products Inspection Act and related regulations at their Manhattan meat market.

U.S. Attorney Geoffrey S. Berman stated:  “If it walks like a duck and quacks like a duck, it has to be USDA-inspected like a duck.  By disregarding regulations designed to ensure that food remains wholesome and unadulterated on its way to being consumed, the owners and operators of George Meat Market and Ben Meat Market put people at risk.  Today’s consent decree ensures that they will comply with the law and consumers can have confidence in the safety of the food they buy.”  

USDA Food Safety and Inspection Service Administrator Carmen Rottenberg said:  “The defendants repeatedly violated food safety laws and put consumers at risk for foodborne illnesses.  The United States enjoys the safest food supply in the world and we will hold the individuals accountable for their actions.” 

According to the Complaint filed in Manhattan federal court:

The Poultry Products Inspection Act (PPIA) protects the public health by imposing a set of inspections, labeling, and packaging requirements for poultry.  These inspection, labeling, and packaging requirements allow consumers to have confidence in the safety of their poultry products and permit public health officials to trace problems to their source.

Since 2009, the defendants repeatedly violated federal law by selling uninspected and misbranded roast ducks from their facility at 288 Grand Street, New York, New York – then operating under the name GEORGE MEAT MARKET – to wholesalers and retailers in New York City.  Although USDA inspectors repeatedly found the defendants in violation, issuing multiple notices of warning and a notice of alleged violation between 2009 and 2017, the defendants continued to violate the law.

In July 2018, the U.S. Attorney’s Office notified the defendants of the government’s intent to file suit to enjoin them from continuing to violate the PPIA.  In response, the defendants claimed that GEORGE MEAT MARKET would cease operations at the end of that month.  However, a USDA inspector visited the market at the end of July 2018 and found no indication that the market was closing.  The U.S. Attorney’s Office then filed this suit.

In the Consent Decree entered today, the defendants and settling parties admit, acknowledge, and accept responsibility for the following:

• Defendants GEORGE MEAT MARKET, KWOK SIN NG, and ALICE YAN FUNG NG have repeatedly sold non-federally inspected and misbranded whole roast duck and other poultry products to retailers for resale, in violation of federal law.
• GEORGE MEAT MARKET, KWOK SIN NG, and ALICE YAN FUNG NG have also failed to keep records that fully and correctly disclose all business transactions respecting such poultry products.
• By letter dated July 16, 2018, the United States notified the defendants of its intent to file suit under the PPIA.
• On July 24, 2018, BENSON NG incorporated BEN MEAT MARKET, a New York corporation with the same address as GEORGE MEAT MARKET, 288 Grand Street, New York, New York. 
• In August 2018, the defendants purported to transfer business operations to Ben Meat Market. 
• Defendants KWOK SIN NG and ALICE YAN FUNG NG, and settling party BENSON NG, continued to operate the business under the name BEN MEAT MARKET from August 2018 through the entry of this Consent Decree.

Pursuant to the Consent Decree, GEORGE MEAT MARKET, KWOK SIN NG, ALICE YAN FUNG NG, BEN MEAT MARKET, and BENSON NG are enjoined from (1) selling or transporting any poultry products required to be inspected and passed by USDA’s Food Safety and Inspection Service that have not been inspected and passed by USDA inspectors; (2) preparing or processing poultry and poultry products in unsanitary conditions; (3) not keeping records that fully disclose transactions involving poultry products; and (4) engaging in any other conduct that would violate the PPIA and related regulations.  The settling parties have also agreed to complete mandatory training in relevant federal law and regulations and agreed to certain conditions on transferring ownership of the meat market.  The settling parties are subject to additional actions, including civil monetary penalties, termination of exempt status, contempt sanctions, and other relief, if they violate the provisions of the Consent Decree.

Mr. Berman thanked the USDA for its assistance leading to the Complaint.  

This case is being handled by the Office’s Environmental Protection Unit, as part of its Food Safety Initiative.  Assistant United States Attorney Samuel Dolinger is in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, J. Russell George, U.S. Treasury Inspector General for Tax Administration, Office of Investigations (“TIGTA”), and Brian M. Hickey, Director, New York State Department of Taxation and Finance, Office of Internal Affairs (“NYSDTF”), announced today the arrest of defendant SALVATORE ARENA, who is charged with defrauding clients who trusted him to prepare and pay their taxes, and with misappropriating at least $600,000 of those clients’ funds for his own use.

U.S. Attorney Geoffrey S. Berman said:  “The ability of our government to maintain functions and provide necessary services relies heavily on tax revenue from ordinary Americans.  Self-reporting of taxes relies on the honesty of both taxpayers and tax professionals alike.  When individuals attempt to pervert the system for their own benefit – as we allege Salvatore Arena has done – law enforcement will be there to bring them to justice.”

TIGTA Treasury Inspector General J. Russell George said:  “TIGTA investigates allegations of wrongdoing by tax preparers that impedes tax administration and victimizes their clients.  Today’s arrest sends a clear message that TIGTA will work with its law enforcement partners to aggressively investigate and prosecute perpetrators that exploit the tax system to victimize others.”

NYSDTF Director Brian M. Hickey said:  “When tax preparers blatantly betray the trust of their clients for personal gain it casts a shadow over an entire industry and can deprive communities of revenue for vital services. We will continue to work with our partners in law enforcement to pursue unscrupulous preparers and hold them accountable for their crimes.”

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

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

ARENA defrauded multiple victims of at least $600,000 during the period from January 2014 through March 2019.

*                *                *

ARENA, 46, of Queens, New York, is charged with one count each of mail fraud, money laundering, and wire fraud, each of which carries a maximum sentence of 20 years in prison, and 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 the judge.

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

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

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

 

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

 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that EVALDAS RIMASAUSKAS, a Lithuanian citizen, pled guilty today to wire fraud arising out of his orchestration of a fraudulent business email compromise scheme that induced two U.S.-based Internet companies (the “Victim Companies”) to wire a total of over $100 million to bank accounts he controlled.  RIMASAUSKAS entered his guilty plea today in Manhattan federal court before U.S. District Judge George B. Daniels. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As Evaldas Rimasauskas admitted today, he devised a blatant scheme to fleece U.S. companies out of $100 million, and then siphoned those funds to bank accounts around the globe.  Rimasauskas thought he could hide behind a computer screen halfway across the world while he conducted his fraudulent scheme, but as he has learned, the arms of American justice are long, and he now faces significant time in a U.S. prison.”

According to the allegations contained in the Indictment:

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

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

Through these false and deceptive representations over the course of the scheme, RIMASAUSKAS caused the Victim Companies to transfer a total of over $100 million in U.S. currency from the Victim Companies’ bank accounts to Company-2’s bank accounts. 

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

*                *                *

RIMASAUSKAS, 50, of Vilnius, Lithuania, pled guilty to one count of wire fraud, which carries a maximum sentence of 30 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. 

RIMASAUSKAS is scheduled to be sentenced on July 24, 2019, at 10:00 a.m. before Judge Daniels. 

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that RICHARD LAUGEL was sentenced to 121 months in prison for detonating a pipe bomb in the Bronx on March 2, 2016, along with firearms and narcotics offenses.  LAUGEL pled guilty on November 8, 2018, before United States District Judge Paul A. Engelmayer, who also imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Richard Laugel’s dangerous attempt to harm his neighbor by detonating a car bomb was, thankfully, unsuccessful.  His cache of weapons was also seized, and his narcotics businesses ended thanks to the extraordinary work of our law enforcement partners, making New York City streets safer.  Now Laugel will serve a lengthy prison sentence for his crimes.”

According to the Information, other filings in Manhattan federal court, and evidence presented in court at sentencing:

On March 2, 2016, LAUGEL placed an improvised explosive device (“IED”) under the rear tire well of his neighbor’s car, which was parked near their apartment building in the Bronx, New York.  LAUGEL, a former United States Marine, had constructed the IED using a metal pipe bomb, which he packed with nails and explosives and attached to a butane canister to increase the potential lethality of the device.  LAUGEL used a remote-detonation device to activate the bomb after his neighbor entered the car and drove several blocks away.  The force of the explosion blew out the airbags in the car and buckled the car doors.  The neighbor was not injured by the explosion.

On May 22, 2018, agents with the Department of Homeland Security, Homeland Security Investigations (“HSI”), officers with the New York City Police Department (“NYPD”), and agents from the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) executed a search warrant at LAUGEL’s home in the Bronx.  Law enforcement recovered from LAUGEL’s home and garage, among other items:

• 575 rounds of assorted ammunition
• 8 silencers and 32 silencer parts
• 5 home-made pistols
• 2 commercially manufactured pistols, one of which had an obliterated serial number
• 2 “switches” to convert pistols into fully automatic weapons
• 1 bump stock

During a subsequent search of LAUGEL’s apartment located near his home, law enforcement recovered evidence consistent with the manufacturing of alprazolam for distribution to customers online, including a powder mixing machine, pill press dies to stamp pills, and boxes of alprazolam packaged for shipment to customers.

*                *                *

In addition to the prison term, LAUGEL, 39, of the Bronx, New York, was sentenced to three years of supervised release.

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

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Alison Moe and Jacob Warren are in charge of the prosecution.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that TOM SHIN was sentenced to two years in prison for aiding the preparation of a false tax return and wire fraud.  SHIN pled guilty on November 29, 2018, before U.S. District Court Judge Valerie E. Caproni, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Instead of honestly performing the tax services he was hired to do, Tom Shin used his expert knowledge in a scheme to defraud his clients of more than $1.3 million that was intended to pay taxes owed to the federal and state governments.  Today, Shin has been held accountable for breaching his clients’ trust.”

According to the allegations in the Complaint and Indictment to which SHIN pled guilty:

SHIN was hired to prepare joint federal and state tax returns for two individuals (the “Clients”) for tax year 2017.  SHIN showed the Clients completed tax return forms indicating that the Clients owed approximately $1.3 million in taxes.  However, SHIN actually filed false returns on behalf of the Clients without their knowledge, which concealed the Clients’ tax liability.  SHIN then, in connection with applications for extensions of time to file his personal tax returns, directed tax authorities to withdraw approximately $1.3 million from the Clients’ bank account, and then filed personal tax returns seeking an approximately $1.3 million refund.  The net result of the alleged scheme would have been a transfer of approximately $1.3 million from the Clients’ bank account to SHIN.

*          *          *

In addition to the prison term, SHIN, 36, of Staten Island, New York, was sentenced to two years of supervised release.  SHIN was also ordered to forfeit $335,394. 

U.S. Attorney Berman thanked the Internal Revenue Service and the New York State Department of Taxation and Finance for their outstanding work.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that RICHARD JOSEPHBERG pled guilty today to one count of tax evasion and three counts of willful failure to file tax returns.  In particular, JOSEPHBERG admitted that he deliberately evaded the assessment of hundreds of thousands of dollars in federal income taxes by fraudulently reporting a 2011 commission of approximately $1.5 million as a long-term capital gain, which was taxed at a much lower rate than ordinary income.  In addition, he admitted that he willfully failed to timely file any tax returns for the calendar years 2013 through 2015.  As part of his plea, JOSEPHBERG agreed to pay at least $1,275,624 in restitution to the IRS and the New York State Department of Taxation and Finance.  JOSEPHBERG pled guilty before United States Circuit Judge Richard J. Sullivan. 

U.S. Attorney Geoffrey S. Berman said:  “As he admitted, Richard Josephberg defrauded the IRS and evaded taxes by disguising more than $1.5 million in income as long-term capital gain.  He also admitted he failed to file tax returns for four years.  Now Josephberg awaits sentencing for his multifaceted tax dodge.”

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

JOSEPHBERG was previously convicted in September 2007, in the U.S. District Court for the Southern District of New York, of 16 counts of tax fraud and one count of health care fraud, which resulted in a sentence of 50 months in prison and three years’ supervised release.  While on supervised release for that conviction, he began engaging in the criminal conduct that formed the basis of today’s plea. 

Specifically, starting in late 2010, JOSEPHBERG began working for an investor relations firm (“Firm-1”) in Manhattan.  Through the individual who operated Firm-1, JOSEPHBERG secured a commission-based arrangement with another investment firm (“Firm-2”), which agreed to pay JOSEPHBERG a commission of approximately 15 percent of any profit generated by Firm-2 on financing deals originated by JOSEPHBERG.  For originating one such financing deal, JOSEPHBERG was entitled to commission payments totaling approximately $1.57 million in 2011.  After receiving payments totaling approximately $35,725 in his own name, JOSEPHBERG directed Firm-2 to issue the remaining commission payments in the name of a newly formed nominee corporate entity called “Almorli Advisors Inc.”  JOSEPHBERG opened a new bank account in the name of Almorli Advisors Inc. (“Almorli Bank Account-1”), and deposited payments totaling approximately $1.53 million into that account.

In March 2012, while preparing to file 2011 federal income tax returns, JOSEPHBERG took steps to evade paying hundreds of thousands of dollars in federal income taxes by disguising and concealing the type of income that JOSEPHBERG had received from Firm-2.  On or about March 27, 2012, JOSEPHBERG formed a second entity called “Almorli Advisors NY LLC,” which served as a shell company to insulate JOSEPHBERG from IRS scrutiny.  JOSEPHBERG caused his accountant to prepare a false 2011 partnership income tax return, Form 1065, in the name of Almorli Advisors NY LLC (the “2011 Form 1065”), listing JOSEPHBERG as a 99 percent partner and JOSEPHBERG’s son as a one percent partner.  To evade a substantial part of the income taxes due and owing for 2011, JOSEPHBERG caused the 2011 Form 1065 falsely to report the commission payments from Firm-2, totaling approximately $1,574,922, as a long-term capital gain, rather than ordinary income.  JOSEPHBERG’s purported 99 percent share of this false long-term capital gain flowed through to JOSEPHBERG’s 2011 individual income tax return, Form 1040.  JOSEPHBERG’s fraudulent misclassification of this income resulted in a reported tax liability that was hundreds of thousands of dollars lower than the true tax liability because individual long-term capital gains were taxed at a significantly lower rate than ordinary income.   

JOSEPHBERG also engaged in a scheme to evade the assessment of federal income taxes for calendar years 2013 through 2016.  During those years, JOSEPHBERG received substantial income from performing consulting and other professional services.  Despite earning substantial income, JOSEPHBERG failed timely to file any federal income tax returns for the calendar years 2013 through 2016 until after IRS agents informed JOSEPHBERG in May 2017 that he was under investigation.  In addition to not timely filing any tax returns, JOSEPHBERG took various affirmative steps to evade the assessment of taxes.  Among other things, JOSEPHBERG routed substantial amounts of income through Almorli Bank Account-1 and another bank account in the name of Almorli Advisors Inc., which bank accounts JOSEPHBERG controlled and used to pay for his personal expenses. 

JOSEPHBERG’s tax evasion and failure to file tax returns had a dual purpose:  by using corporate entities to conceal personal income, JOSEPHBERG was attempting both to evade paying his substantial outstanding tax liabilities from prior years (1997, 1998, and 2005) and to evade assessment of taxes for 2011 and 2013 through 2016, as charged in the Indictment.

*                      *                      *

JOSEPHBERG, 72, of Greenwich, Connecticut, pled guilty to one count of tax evasion for the tax year 2011, which carries a maximum sentence of five years in prison, and three counts of willful failure to file tax returns for the tax years 2013 through 2015, each of which carries a maximum sentence of one year 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.  As part of his plea, JOSEPHBERG agreed to pay at least $1,275,624 in restitution to the IRS and the New York State Department of Taxation and Finance.  JOSEPHBERG is scheduled to be sentenced by Judge Sullivan on July 15, 2019, at 2 p.m.

Mr. Berman praised the outstanding work of the Internal Revenue Service, Criminal Investigation, in this case.  Mr. Berman also thanked the New York State Department of Taxation and Finance for its assistance in the prosecution.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that CHUCK CONNORS PERSON, a former men’s basketball coach at Auburn University (“Auburn”), pled guilty in Manhattan federal court today to receiving approximately $91,500 in cash bribes from athlete advisers in exchange for using his influence over Auburn basketball players to retain the services of the advisers paying the bribes.  PERSON pled guilty before U.S. District Judge Loretta A. Preska.   

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he has now admitted, Chuck Person abused his position as a coach and mentor to student-athletes in exchange for personal gain.  In taking tens of thousands of dollars in cash bribes, Person not only placed personal financial gain above his obligations to his employer and the student-athletes he coached, but he broke the law.”

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

Over the course of a year, PERSON, a former men’s basketball coach at Auburn University until shortly after his arrest, agreed to accept cash bribes in return for agreeing to exert his influence over student-athletes on the Division I men’s basketball team he coached to retain the services of the bribe-payers, including once the student-athletes entered the National Basketball Association (“NBA”).  

Beginning in 2016, and continuing into September 2017, when PERSON was arrested, PERSON received approximately $91,500 in cash bribes from a financial adviser and business manager, who, unbeknownst to PERSON, was providing information to law enforcement (“CW-1”).  In exchange for the cash bribes, PERSON agreed to exert his influence over certain student-athletes PERSON coached at Auburn University to retain the services of CW-1 once those players entered the NBA.  The bribe payments are alleged to have been initially arranged by a co-conspirator who had a preexisting relationship with PERSON and operated a clothing store that specialized in making bespoke suits for professional athletes. 

Over the course of the scheme, and in exchange for the cash bribes described above, PERSON did, in fact, arrange multiple meetings between CW-1 and Auburn players and/or their family members.  In those meetings, 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.  In one recorded meeting, PERSON stressed to an Auburn University player the importance of keeping their relationship with CW-1 a secret.  Person stated, “most important part is that you  . . . don’t say nothing to anybody . . . don’t share with your sisters, don’t share with any of the teammates, that’s very important cause this is a violation . . . of rules, but this is how the NBA players get it done, they get early relationships, and they form partnerships.”   PERSON later told that player that CW-1 would purchase him a separate cell phone over which they could communicate so as to conceal the nature of the scheme.  

*                *                *

PERSON, 54, of Auburn, Alabama, pled guilty to one count of conspiracy to commit bribery.  As a condition of his plea, PERSON agreed to forfeit $91,500.  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 the judge.  Sentencing is scheduled for July 9th, 2019, before Judge Preska.

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, 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 JOHN PIERRE DUPONT, a/k/a “John Gary Rinaldo,” was arrested this morning and charged with wire fraud and aggravated identity theft for his role in a years-long, nationwide scheme to defraud thousands of donors who believed they were donating to political action committees and political campaigns.  The defendant is expected to be presented this afternoon in the District Court of Arizona.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, John Pierre Dupont operated multiple fake political action committees and falsely claimed to be raising money to support more than a dozen campaigns.  Thousands of donors believed their hard-earned money was being used to support the causes described in solicitations, but in reality, the scam PACs had no operations beyond the fundraising itself, and no funds were used to support candidates.  My Office will continue to ensure that fraudulent fundraising does not pay – indeed, will result in criminal prosecution – by rooting out scam PACs wherever we find them.”

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

From at least in or about 2015 up to and including the present, JOHN PIERRE DUPONT defrauded thousands of donors who believed they were donating to three political action committees established by DUPONT (the “Scam PACs”),[2] or to campaigns the Scam PACs falsely claimed to support.  DUPONT’s scheme resulted in more than $250,000 being donated through websites he controlled and operated, all of which was retained by DUPONT, both to enrich himself personally and to perpetuate the alleged crime.

The websites purported to be raising money in support of Democratic congressional and senate campaigns generally, as well as approximately 10 particular Senate candidates, a candidate for governor, and a candidate for president.  None of the money raised went either to those campaigns or to support those candidates whatsoever.  Another website operated by DUPONT purported to be raising money “to unite immigrant families” and provide services in connection with certain immigration policies.  In particular, the Foundation for Sanity in Politics PAC website claimed that donations would “go to help pay our volunteer attorneys’, doctors’, nurses’ and social workers’ costs and pay for transportation to unite immigrant families.”  In fact, that PAC had no volunteers, and dedicated no funds to paying for doctors, social workers, or any other professionals, advocacy, or political operations.

The scheme targeted victims across the country, raising funds on the basis of fraudulent representations that the donations would support the relevant causes, candidates, and campaigns.  Instead, virtually all of the money raised was paid to DUPONT or used to perpetuate the fraud through additional fundraising and overhead expenditures.  None of the money donated to the Scam PACs was spent on political contributions during the relevant time period, and DUPONT failed to report the donations, as required, in filings with the Federal Election Commission.

Donations collected by DUPONT during the relevant period totaled more than $250,000, none of which went to campaigns or support for any candidate or cause.

*                *                *

JOHN PIERRE DUPONT, 80, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison, and aggravated identity theft, which carries a mandatory two years in prison consecutive to any other sentence imposed.

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

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

If you think you are a victim of the scheme alleged in this press release, please contact Wendy Olsen, Victim & Witness Services for the U.S. Attorney’s Office for the Southern District of New York, at 866-874-8900.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Alex Rossmiller and Ryan Finkel are in charge of the prosecution.

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

 

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

[2] Businessmen for a Businessman President PAC, Foundation for Sanity in Politics PAC, and Democrats for Congress PAC.