Southern District of New York

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and David E. Beach, the Special Agent-in-Charge of the New York Field Office of the United States Secret Service (“USSS”), announced today that EMEKA NNAWUBA, a/k/a “Benjamin Alabie,” who is a member of the United States Army Reserves, has been charged with participating in a scheme to defraud banks and launder the proceeds of frauds perpetrated against dozens of victims.  NNAWUBA was arrested late yesterday, and will be presented today before Chief United States Magistrate Judge Erin L. Wiedemann in Fayetteville, Arkansas.  The case has been assigned to United States District Judge Katherine Polk Failla.

U.S. Attorney Geoffrey S. Berman said:  “Emeka Nnawuba allegedly laundered money for a scheme that trolled dating websites in order to steal money from the accounts of unsuspecting women.  Especially so close to Valentine’s Day, this case serves as a cautionary reminder to be especially wary of those who view dating sites as a predatory opportunity.  Nnawuba’s alleged luck in love has run out, as he potentially faces a lengthy period of time alone . . . in federal prison.”

U.S. Secret Service White Plains Resident Agent-in-Charge Julie Goodwin said:  “The charges announced today illustrate the Secret Service's commitment to aggressively investigating financial crimes.  I would like to thank HSI and the U.S. Attorney's Office for their cooperation and partnership in this case.”

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

From at least 2016 until 2018, NNAWUBA participated in a scheme to defraud banks and launder the proceeds of frauds perpetrated against dozens of victims.  Among other things, NNAWUBA used false identities and false passports to open bank accounts; received or attempted to receive nearly $1,000,000 in fraud proceeds; withdrew tens of thousands of dollars of fraud proceeds in cash; and transferred hundreds of thousands of dollars of fraud proceeds to bank accounts controlled by co-conspirators in an effort to conceal the source of funds.

The funds laundered by NNAWUBA were procured principally by (a) romance scams, in which members of the scheme trolled dating websites to find unsuspecting women and stole their money on false pretenses; and (b) business compromise scams, in which members of the scheme impersonated individuals, professionals, or businesses in the course of otherwise ordinary financial transactions, and then fraudulently induced the counterparties to those transactions to transfer funds to bank accounts controlled and operated by NNAWUBA or other members of the scheme.

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NNAWUBA, 29, of Fayetteville, Arkansas, is charged with one count of participating in a conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison, and one count of participating in a conspiracy to commit money laundering, 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.  

Five other individuals previously were charged and pled guilty in connection with their participation in the scheme. 

On February 12, 2018, Ifeanyi Ezeji pled guilty to participating in a conspiracy to commit money laundering.  On May 31, 2018, Judge Failla sentenced IFEANYI EZEJI to 40 months in prison and three years of supervised release, and ordered him to forfeit $2,080,347.14 and pay restitution in the amount of $873,891.31.

On May 31, 2018, Christopher Ezeji pled guilty to passport counterfeiting.  On October 4, 2018, Judge Failla sentenced Christopher Ezeji to five years of probation, and ordered him to forfeit $500.00 and pay restitution in the amount of $873,891.31.

On June 22, 2018, Peter Abbah pled guilty to aggravated identity theft.  On October 2, 2018, Judge Failla sentenced Abbah to 24 months in prison and one year of supervised release, and ordered him pay restitution in the amount of $218,498.76.

On July 27, 2018, Michael Akhiero pled guilty to participating in a conspiracy to commit bank fraud.  Akhiero is scheduled to be sentenced by Judge Failla on March 14, 2019.

On January 11, 2019, Okechukwu Peter Ezika pled guilty to engaging in monetary transactions in property derived from specified unlawful activity.  Ezika is scheduled to be sentenced by Judge Failla on April 10, 2019.

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Mr. Berman praised the outstanding investigative work of the USSS, and thanked United States Immigration and Customs Enforcement’s Homeland Security Investigations for its assistance. 

The prosecution is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Juliana N. Murray and Robert B. Sobelman are in charge of the prosecution. 

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ELIZABETH ANN PIERCE, the former Chief Executive Officer of a telecommunications company based in Anchorage, Alaska, pled guilty today in Manhattan federal court to wire fraud and aggravated identity theft in connection with a scheme to use forged guaranteed revenue contracts fraudulently to induce investors to invest more than $250 million into her company for the construction of a fiber optic cable network in Alaska.  PIERCE pled guilty before U.S. District Judge Edgardo Ramos.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As she admitted today, Elizabeth Ann Pierce engaged in a brazen, multi-year scheme to obtain over $250 million from investors by misrepresenting that she had guaranteed revenue contracts with multiple telecommunications services companies.  But in fact, the defendant faked those contracts, forged other people’s signatures on them, and then lied to cover up her fraud.  She abused her executive position and is now being held accountable for her crimes.” 

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

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

Between May 2015 and July 2017, PIERCE engaged in a scheme to induce two investment companies to provide more than $250 million to construct the Fiber Optic Cable System by providing them with eight forged broadband capacity sales contracts and related order forms under which Quintillion would obtain guaranteed revenue once the Fiber Optic Cable System was built (the “Fake Revenue Agreements”).  Under the Fake Revenue Agreements, four telecommunications services companies appeared to have made binding commitments to purchase specific wholesale quantities of capacity from Quintillion at specified prices.  The cumulative value of the Fake Revenue Agreements was more than $24 million during the first year of the subsea segment’s operation, approximately $10 million during the first year of the terrestrial segment’s operation, and approximately $1 billion over the life of the Fake Revenue Agreements.  In reality, the Fake Revenue Agreements were completely worthless because PIERCE had forged the counterparties’ signatures.

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

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

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PIERCE, age 55, now of Austin, Texas, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison, and eight counts of aggravated identity theft, each of which carries a mandatory 2-year term of imprisonment, of which at least 2 years must be consecutive to any term of imprisonment imposed on the wire fraud count.

PIERCE is scheduled to be sentenced by U.S. District Judge Edgardo Ramos on May 16, 2019, at 11:00 a.m.

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John B. Devito, the Special Agent-in-Charge of the New York Field Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an indictment charging FRANK BRANDON, a/k/a “Trizzy,” an alleged member of the “Milla Bloods” gang, with the February 23, 2014, murder of Gashier Mendy, 24, inside the Saint Nicholas Houses in Manhattan, and related offenses.  BRANDON was taken into federal custody this morning in Gloversville, New York, and was presented this afternoon before United States Magistrate Judge Kevin Nathaniel Fox.  The case is assigned to U.S. District Judge Edgardo Ramos.

U.S. Attorney Geoffrey S. Berman said:  “Almost five years ago, Gashier Mendy was shot dead, her life tragically and brutally taken.  As alleged in today’s indictment, Frank Brandon killed her.  Thanks to the outstanding efforts of the NYPD and ATF, Brandon now faces murder charges for his heinous crime.”

ATF Special Agent-in-Charge John B. Devito said:  “Frank Brandon, an alleged member of the ‘Milla Bloods’ gang, was charged with a number of federal offenses including the murder of a young woman.  ATF and our law enforcement partners stand united at the frontline in the fight against violent crime.  We will aggressively pursue and bring to justice any individual bent on bringing heinous acts of violence into their communities.  I would like to thank the members of the ATF/ NYPD Joint Robbery Task Force for their tireless efforts on this case.  I would also like to thank the United States Attorney’s Office for their work in prosecuting this case.    

According to the allegations in the Indictment[1]:

BRANDON was a member of the “Milla Bloods,” a gang that operated in Manhattan and engaged in racketeering activity, including acts of violence and narcotics distribution.  On February 23, 2014, in furtherance of his gang activity, BRANDON shot and killed Gashier Mendy inside 240 West 129th Street.

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BRANDON, 32, of Gloversville, New York, is charged in the Indictment with one count of murder in aid of racketeering, in violation of Title 18, United States Code, Sections 1959(a)(1) and 2; one count of murder through the use of a firearm, in violation of Title 18, United States Code, Sections 924(j) and 2; one count of being a felon in possession of ammunition, in violation of Title 18, United States Code, Sections 922(g)(1) and 2; and one count of conspiracy to distribute and possess with intent to distribute methamphetamines and marijuana, in violation of Title 21, United States Code, Section 846.  BRANDON faces a mandatory minimum penalty of death or life in prison.

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

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

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorney Dominic A. Gentile is in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that NORMAN SEABROOK, the former president of the Correction Officers’ Benevolent Association (“COBA”) was sentenced to 58 months in prison for his role in a bribery scheme in which he accepted a $60,000 bribe payment, and the promise of future bribe payments, in exchange for SEABROOK’s investment of millions of dollars of COBA money in a hedge fund.  SEABROOK was found guilty of honest services fraud offenses on August 18, 2018, after a 10-day trial in Manhattan federal court.  Today’s sentence was imposed by U.S. District Judge Alvin K. Hellerstein.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Tens of thousands of hardworking correction officers once looked to Norman Seabrook as their leader and champion.  Seabrook now stands convicted of betraying them for a bag full of cash and the promise of more.  His conduct resulted not simply in the membership’s loss of faith in its leader, but the loss of millions of dollars in retirement benefits due to union members.  My Office has worked tirelessly with our law enforcement partners to hold Seabrook and those who conspired with him to account.  Today’s sentence sends an important message to any other person in a position of power that no one is above the law, and that violating a sacred trust in return for a cash payoff will land you on the wrong side of a prison door.”           

According to the allegations in the Indictment, Superseding Indictment, and Complaint, other filed documents, and the evidence at trial:

COBA is New York City’s largest correction officers union and the largest municipal jail union in the United States.  COBA represents over 20,000 active and retired correction officers in New York City, including at Rikers Island.  NORMAN SEABROOK, the defendant, was the president of COBA for over 20 years.  SEABROOK wielded enormous power over the affairs of COBA, and was rarely questioned by his executive board, as he had the ability to affect their assignments, pay, and hours.  SEABROOK’s control extended to the union’s finances, including the administration of its “Annuity Fund,” a retirement benefits program funded by the City of New York that invests more than $70 million for correction officers’ retirements.  

Toward the end of 2013, on a trip to the Dominican Republic with, among others, Jona Rechnitz, a real estate businessman who is now a cooperating witness for the Government, SEABROOK told Rechnitz that he worked hard to invest COBA’s money and was not getting anything out of it, and it was time that “Norman Seabrook got paid.”  Rechnitz was friendly with and had done business with Murray Huberfeld, a founder and part owner of Platinum Partners (“Platinum”), a Manhattan-based hedge fund that principally ran two funds.  Rechnitz was aware that Platinum was looking to attract public and institutional investors – as opposed to its more typical investor set of high net-worth individuals – and told Huberfeld that SEABROOK would likely invest COBA money in Platinum if Huberfeld were willing to pay SEABROOK money on the side.  Huberfeld agreed to the proposition, and Huberfeld worked out a formula in which SEABROOK would be paid a kickback of a portion of the profits from COBA’s investment that Huberfeld estimated would be between $100,000 and $150,000 per year.

SEABROOK then began investing COBA’s money, at first going through the motions of having Platinum make a pitch to COBA’s Annuity Fund board and having advisers conduct diligence.  Those advisers included attorneys who wrote letters expressing concern that public pensions like COBA do not typically invest in higher-risk vehicles like hedge funds.  SEABROOK concealed those letters from the other members of COBA’s Annuity Fund Board in order to secure their approval for the investment.  In March 2014, COBA’s Annuity Fund made a $10 million investment in one of Platinum’s funds.  In June 2014 – this time without running the investment by the COBA Board or seeking any approval – SEABROOK invested $5 million, or 40 percent, of COBA’s own assets in the same fund, money that had been set aside for use in the event of a union emergency.  In August 2014, the Annuity Fund invested another $5 million in Platinum.  By that point, COBA was the largest investor in that Platinum fund for all of 2014, and amounted to more than half of all incoming investments for the fund.  At the same time, Platinum was experiencing significant redemptions by other investors.

Toward the end of 2014, SEABROOK wanted the first of his kickback payments, and demanded it from Rechnitz.  Huberfeld told Rechnitz that the fund had not performed as well as expected, and that he could pay SEABROOK only $60,000.  Rechnitz agreed to lay out the cash, and Huberfeld agreed to reimburse Rechnitz on Platinum’s behalf.  Huberfeld suggested that to paper over the reimbursement, Rechnitz invoice Platinum for a number of Rechnitz’s courtside tickets to New York Knicks games, in the amount of $60,000, and Platinum would then cut a check to Rechnitz.

Rechnitz paid SEABROOK the first $60,000 kickback on December 11, 2014.  Before meeting SEABROOK that evening, Rechnitz went to one of SEABROOK’s favorite stores, Salvatore Ferragamo on Fifth Avenue in Manhattan, and bought an expensive men’s handbag for SEABROOK.  Rechnitz put the money in the bag, and met SEABROOK a few blocks away in SEABROOK’s COBA sport utility vehicle with tinted windows, where he handed SEABROOK the bag.  Rechnitz and SEABROOK had dinner with two other persons nearby, then attended a Torah dedication ceremony nearby, after which SEABROOK left Manhattan.  These events have been corroborated by, among other things, phone records, emails, license plate reader records, surveillance footage, and a receipt from Salvatore Ferragamo.  On the same day, Rechnitz’s assistant prepared a $60,000 invoice to Platinum for Knicks tickets, which Rechnitz forwarded by email to Huberfeld.  Three days later, Platinum paid Rechnitz by check.

Huberfeld, through another associate, Jeremy Reichberg, continued to lobby SEABROOK for more money in 2015.  However, after a lawsuit filed by a former COBA board member referred to the Platinum investments, and the U.S. Attorney’s Office grand jury investigation resulted in subpoenas to Platinum and COBA in May 2015, no further investments were made.  As part of the lawsuit, SEABROOK filed a false affidavit in which he claimed that COBA’s board members had authorized his unilateral and unauthorized June 2014 transfer of $5 million of union funds to Platinum.  He also claimed that he himself had paid for his March 2014 trip to Israel when it had, in fact, been paid for by Rechnitz.  This lie under oath served to hide SEABROOK’s connection to the Platinum Partners investment and the bribe arrangement behind it.

On May 25, 2018, Huberfeld pled guilty to one count of conspiracy to commit wire fraud in connection with the use of the sham invoice as part of his role in the conspiracy.  He is due to be sentenced by Judge Hellerstein on February 12, 2019, and faces a maximum sentence of five years in prison. 

On January 2, 2019, Reichberg was found guilty of honest services fraud, conspiracy, and obstruction of justice in connection with a separate scheme in which he and Rechnitz provided gifts and benefits to a number of high-level officers of the New York City Police Department (“NYPD”) in exchange for official police action for themselves and their associates.  He is due to be sentenced by U.S. District Judge Gregory H. Woods on April 4, 2019.

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In addition to the prison term, SEABROOK, 58, of the Bronx, New York, was sentenced to three years of supervised release, and ordered to pay restitution in the amount of $19 million.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the NYPD Internal Affairs Bureau.

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Martin Bell, Russell Capone, and Lara Pomerantz are in charge of the prosecution.

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., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), announced that JESUS WILFREDO ENCARNACION, a/k/a “Jihadistsoldgier,” “Jihadinhear,” “Jihadinheart,” “Lionofthegood,” was arrested last night at John F. Kennedy International Airport (“JFK Airport”) in Queens, New York.  ENCARNACION was charged by a criminal Complaint earlier today with attempting and conspiring to provide material support to Lashkar e-Tayyiba (“LeT”), a Pakistan-based designated foreign terrorist organization responsible for multiple high-profile attacks, including the infamous Mumbai attacks in November 2008.  ENCARNACION is expected to be presented later today before Magistrate Judge Henry B. Pitman in Manhattan federal court.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Jesus Encarnacion, a Manhattan man, plotted to travel to Pakistan to join and train with the terrorist organization Lashkar e-Tayyiba, which is infamous around the world for perpetrating the lethal 2008 Mumbai terror attacks and other atrocities.  The excellent work of the FBI and NYPD stopped Encarnacion’s alleged plan to support this deadly terrorist organization before he took flight, and now he will face federal terrorism charges.”

Assistant Attorney General John C. Demers said:  “Encarnacion allegedly attempted to travel to Pakistan to join a foreign terrorist organization and conspired with another individual to provide that organization with material support.  The National Security Division is committed to identifying and holding accountable those who seek to join and support designated foreign terrorist organizations.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, not only did Mr. Encarnacion express a desire to execute and behead people, he scheduled travel and almost boarded a plane so he could go learn how to become a terrorist.  These organizations are using the internet and social media to appeal to the most barbaric impulses in people, and train them to kill.  The FBI New York Joint Terrorism Task Force will continue to do all it can to stop these alleged criminals before innocent people are killed.”

NYPD Police Commissioner James P. O’Neill said:  “As alleged, Jesus Encarnacion had expressed his desire to commit a terrorist attack while living in New York City and never abandoned those plans.  Allegedly, one of his stated motives for traveling overseas was to get the training and experience he believed he needed to someday return to the United States and carry out attacks.  I want to commend the FBI Agents, NYPD Detectives and representatives of 54 other agencies that make up the Joint Terrorism Task Force for the investigation that led to this arrest.”

As alleged in the criminal Complaint,[1] filed today in Manhattan federal court:

In November 2018, ENCARNACION expressed his desire to join a terrorist group in an online group chat, where he met another individual (“CC-1”).  CC-1 introduced ENCARNACION to an individual who, unbeknownst to CC-1 or ENCARNACION, was in fact an undercover FBI employee (“UC-1”).  ENCARNACION repeatedly expressed, in the course of recorded communications through a social media service with CC-1 and through an encrypted messaging service with UC-1, his allegiance to and support for LeT, which, since approximately 2001, has been designated as a Foreign Terrorist Organization by the United States Secretary of State. 

Over the past several months, ENCARNACION has discussed his desire and plans to join LeT overseas so that he could receive training and participate in violent acts of terrorism.  For example, ENCARNACION told UC-1 that he was “ready to kill and die in the name of Allah” and sought UC-1’s assistance to help ENCARNACION travel to abroad to serve as an “executioner” for LeT, stating, “I want to execute.  I want to behead.  Shoot.”  ENCARNACION further stated that he aspired to commit terrorist attacks (“a bombing and shooting”) in the United States, but lacked “guidance” and “guns” to do so.

During the months that followed, ENCARNACION and UC-1 agreed on a plan that ENCARNACION believed would allow him to join LeT in Pakistan.  ENCARNACION told UC-1 that he had made arrangements to travel to a particular city in Europe (the “European City”), as the first step of traveling to Pakistan to join LeT.  ENCARNACION purchased an airline ticket for a flight scheduled to depart on February 7, 2019, from JFK Airport, to the European City.  On February 7, ENCARNACION traveled to JFK Airport, where he was arrested by the FBI after he attempted to board that flight.

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ENCARNACION, 29, of Manhattan, is charged with one count of attempting to provide material support to a designated foreign terrorist organization and one count of conspiring to provide material support to a designated foreign terrorist organization, each of which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Berman praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which consists of agents from the FBI, detectives from the NYPD, and officers from numerous other agencies, including U.S. Customs and Border Protection, which assisted significantly in this case.  Mr. Berman also thanked the Counterterrorism Section of the Department of Justice’s National Security Division.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys David W. Denton Jr. and Kimberly J. Ravener are in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced that JOSE LOPEZ, a/k/a “Joey,” was arrested yesterday for selling heroin that caused the death of Luxi Gong in October 2018.  LOPEZ was presented yesterday in Manhattan federal court before U.S. Magistrate Judge Henry B. Pitman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, with little regard for human life, Jose Lopez lined his pockets by allegedly advertising and selling a highly potent form of heroin.  In fact, as alleged, even after he learned that the drugs he sold killed a 25-year-old woman, he continued to sell his poison.  Now, Lopez faces life in prison for his alleged crimes.”

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

LOPEZ used online bulletin boards and social media to advertise and sell a particularly potent form of heroin.  On October 27, 2018, one of LOPEZ’s customers, a 25-year-old Manhattan woman named Luxi Gong, was found dead in her apartment.  Following an investigation by the NYPD, LOPEZ was identified as the person who had distributed heroin to Gong, resulting in her death.  LOPEZ continued to sell heroin even after he was informed that Gong had overdosed from the drugs he sold.

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LOPEZ, 26, of Manhattan, New York, was charged with distribution and possession with intent to distribute heroin, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 20 years in prison.  The maximum and minimum sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

U.S. Attorney Berman praised the outstanding work of the NYPD.  

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Adam S. Hobson 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 herein, constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John B. Devito, Special Agent-in-Charge of the New York Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and Cynthia Brann, Commissioner of the New York City Department of Correction, announced that ANTHONY TEJADA, a/k/a “YM,” an inmate at the Rikers Island correctional facility, was arrested yesterday for attempting to hire a hitman to murder his half-brother.  TEJADA was presented today in Manhattan federal court before U.S. Magistrate Judge Ona T. Wang.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, while incarcerated at Rikers Island, Anthony Tejada attempted to hire a hitman to murder his half-brother.  Now, thanks to the dedicated work of our law enforcement partners, Tejada’s alleged plan has been foiled, he faces federal charges, and his intended victim is safe.”

ATF Special Agent-in-Charge John B. Devito said:  “As alleged, Tejada’s actions could have resulted in serious bodily harm and or the death of an innocent individual.  Thanks to the efforts of the ATF/ NYPD Joint Robbery Task Force and our partners in the Department of Correction, a crime of violence was averted.  ATF stands with its law enforcement partners’ commitment to ridding the streets of individuals seeking to spread violence in their community.  I would like to thank the United States Attorney’s Office for its leadership and guidance throughout this investigation.”

NYC Department of Correction Commissioner Cynthia Brann said:  “This investigation and the resulting arrest, yet again sends a very clear message to those in DOC custody.  You will be prosecuted if you commit crimes in custody, and if convicted you will face prison time.  I am proud of our Correction Intelligence Bureau’s steadfast commitment to keeping our officers, those in our custody, and the people of New York City safe.  And I want to thank our fellow law enforcement partners for working to help bring this individual to justice.”

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

On October 1, 2018, TEJADA was arrested and charged in New York State court with the attempted murder of TEJADA’s half-brother (“Victim-1”).  TEJADA was detained at the Rikers Island correctional facility. 

While an inmate at Rikers, TEJADA hired an individual he believed to be a hitman to murder Victim-1.  In fact, the person he hired to commit this murder was an undercover ATF agent.  TEJADA had multiple recorded conversations with the undercover agent, both over the phone and in person, in which TEJADA discussed the intended murder, and TEJADA agreed to pay the undercover agent $5,000 to commit the murder.

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TEJADA, 19, of Brooklyn, New York, is charged with one count of murder-for-hire, which carries a maximum sentence of 10 years in prison, and one count of solicitation to commit a crime of violence, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding work of the ATF, NYPD, and the New York City Department of Correction’s Intelligence Bureau.

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

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

[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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), Ruth M. Mendonça, Acting Inspector-in-Charge of the New York Field Division of the United States Postal Inspection Service (“USPIS”), and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of United States Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today that DANIEL BORER and JOSEPHINE McLAUGHLIN, who is an employee of the United States Postal Service, have been charged with importing synthetic cannabinoids from China and then using them to manufacture and distribute massive wholesale quantities of smokeable synthetic cannabinoids (“SSC”) throughout the United States.  Both defendants were arrested this morning, and will be presented this afternoon before United States Magistrate Judge David H. Hennessey in Boston, Massachusetts.  The case has been assigned to United States District Judge Naomi Reice Buchwald.  In addition, Mr. Berman announced today that JONATHAN RIENDEAU, who operated several websites on which he sold SSC, pled guilty and is cooperating with the Government.

U.S. Attorney Geoffrey S. Berman said:  “Trafficking of synthetic cannabinoids – sometimes called K2 or Spice – poses a serious threat to public health and safety.  Packaged attractively to appeal to teenagers and young adults, synthetic cannabinoids are in reality a toxic cocktail that can be very dangerous to consume.  As alleged, Daniel Borer and Josephine McLaughlin imported massive quantities of synthetic cannabinoids and distributed them in smokeable form to retail dealers throughout the United States.  Thanks to our law enforcement partners, Borer and McLaughlin have been arrested and their dangerous business has been dismantled.”

USPIS Acting Inspector in Charge Ruth M. Mendonça said:  “Josephine McLaughlin’s alleged violation of the employee code of conduct and ethics rules is appalling.  As an employee, she is entrusted to uphold the sanctity of the U.S. Mail and her alleged breach of trust has led to today’s arrest.  United States Postal Inspectors are committed to protecting the U.S. Mail and will ensure that those who violate this sanctity are brought to justice.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “These two defendants are alleged to distribute large quantities of synthetic cannabinoids, a dangerous product that could affect the brain much more powerfully than marijuana.  When it comes to a synthetic drug, it is rarely a harmless alternative.  Borer and McLaughlin are now out of business, making the communities we serve that much safer.”

NYPD Police Commissioner James P. O’Neill said:  “Anyone who seeks to profit by selling so-called designer drugs on America’s streets can expect the full weight of local, state, and federal law enforcement to bear down upon them. In recent years, thousands of New York City emergency room visits have been linked to the use of synthetic marijuana. And in just one three-day period last May, dozens of people in northern Brooklyn were hospitalized as a result of a what was described as an especially toxic batch. As for this specific investigation, I commend all of the NYPD’s partners, whose primary mission is to fight crime and keep people safe. Together, we are relentless in bringing justice to those responsible for this nationwide scourge.”

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

From at least February 2014 until February 2019, BORER and McLAUGHLIN operated a scheme to import synthetic cannabinoids from China and then use them to manufacture and distribute massive wholesale quantities of SSC, containing controlled substances and controlled substance analogues, throughout the United States.  SSC, which can be addictive, are often marketed as safe, legal alternatives to marijuana.  In fact, SSC are not safe and may affect the brain much more powerfully than marijuana; their actual effects can be unpredictable and, in some cases, more dangerous or even life-threatening.

BORER and McLAUGHLIN shipped SSC, colloquially referred to as “K2” or “Spice,” through the U.S. Mail to locations throughout the Unitd States.  Some of the SSC distributed by the scheme were branded with colorful graphics and distinctive names, including “Dead Man Walking,” “Klimax,” “Zero Gravity,” “Twilite,” “Psycho,” and “Get Real.”  The branded SSC were sometimes marked “not for human consumption,” or “potpourri.”  Other of the SSC were distributed in bulk quantities. 

*                      *                      *

On January 31, 2019, JONATHAN RIENDEAU, 38, of Port Saint Lucie, Florida, pled guilty before Judge Buchwald to six counts: three counts of conspiracy unlawfully to distribute controlled substances and controlled substance analogues; two counts of unlawful importation of controlled substances and controlled substance analogues; and one count of unlawfully distributing a controlled substance.  Each count carries a maximum sentence of 20 years in prison. 

BORER, 42, of Adams, Massachusetts, and McLAUGHLIN, 65, of Stoneham, Massachusetts, are each charged with three counts of conspiring unlawfully to import and distribute controlled substances and controlled substance analogues.  Each count carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.  

Mr. Berman praised the outstanding investigative work of NYPD, USPIS, and HSI, and thanked the United States Postal Service’s Office of the Inspector General, the Berkshire County (Massachusetts) Law Enforcement Taskforce, the Berkshire County (Massachusetts) District Attorney’s Office, and the Massachusetts State Police for their assistance.  The long-term investigation of this case was partially funded by the New York/New Jersey High Intensity Drug Trafficking Area (“HIDTA”), which is a federally funded crime fighting initiative and part of the Organized Crime Drug Enforcement Task Force program.

The prosecution is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Robert B. Sobelman is in charge of the prosecution. 

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that ROBERT ALEXANDER was arrested this morning on securities fraud and wire fraud charges stemming from his participation in a scheme to defraud investors by soliciting investments in his online gaming company (the “Company”) through false representations and using investor funds for his own personal use.    

ALEXANDER is expected to be presented today in Manhattan federal court before the U.S. Magistrate Judge Ona T. Wang. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Robert Alexander lied to investors in his online gaming company, fabricating information about his professional background and promising to use investor money solely to further the aims of the business.  Instead, Alexander allegedly used more than $1.3 million in investor funds on, among other things, gambling excursions, entertainment venues, and other personal expenses. As this arrest demonstrates, fraud on investors is no game, and we will continue to partner with the FBI to investigate and prosecute those who defraud investors.”

FBI Assistant Director-in-Charge William F. Sweeney, Jr. said:  “Time and time again, we come across evidence of investment funds being misappropriated to pay off personal debts or fund extravagant lifestyles. As evidenced by today’s arrest, those who allegedly use these funds for other than their intended purpose are taking a gamble—the bigger the risk does not always mean the greater the reward.”

According to the Complaint[1]:

Beginning in at least 2013 and continuing through in or about 2017, ALEXANDER engaged in a scheme to defraud investors in the Company.  Specifically, ALEXANDER solicited and maintained investments in the Company through numerous false representations, including concerning his own professional background, the Company’s financial condition, expected returns on investment, and assurances to investors that their investments would be used solely for the Company’s business purposes.  

Also in furtherance of his scheme and contrary to representations made to investors, ALEXANDER used more than approximately $1.3 million of the funds he obtained from investors for his own personal expenses instead of for the Company’s business purposes.  For example, ALEXANDER used investor funds to make payments toward his personal credit cards, to fund his gambling excursions to multiple casinos, to make rental payments for his personal residence, and to make car payments for a luxury car purchased for one of ALEXANDER’s family members.

*                      *                      *

ALEXANDER, 49, of Las Vegas, Nevada, was arrested this morning.  ALEXANDER is charged with one count of securities fraud and one count of wire fraud.  The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million or twice the gross gain or loss from the offense.  The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the work of the FBI.  He also thanked the Securities and Exchange Commission.  

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

The allegations 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 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 Christopher Tersigni, Special Agent in Charge of the United States Drug Enforcement Administration (“DEA”) Special Operations Division, announced today the extradition of HAJI ABDUL SATAR ABDUL MANAF, a/k/a “Haji Abdul Sattar Barakzai,” for attempting to import heroin into the United States, engaging in narco-terrorism for the benefit of the Taliban, and attempting to engage in narco-terrorism for the benefit of the Haqqani Network.  MANAF was taken into custody by Estonian authorities in Tallinn, Estonia, on October 9, 2018, and extradited to the United States today.  MANAF will be presented in Manhattan federal court later today.  The case is assigned to United States District Judge Paul A. Crotty.

U.S. Attorney Geoffrey Berman stated:  “As alleged, Manaf, already sanctioned by the Treasury Department for assisting the Taliban, attempted to import large quantities of heroin into the U.S., funneled heroin trafficking proceeds to the Taliban, and attempted to provide financial assistance to the Haqqani terrorist network.  Thanks to the DEA and international law enforcement partners, Manaf is in the U.S. and facing justice in this District.”           

Special Agent in Charge Christopher Tersigni stated:  “This action highlights the DEA’s ability to hold accountable not only those who reside within our borders, but also those operating in other countries.  Drug traffickers that bring harm to the citizens of this country must answer for their unlawful activities that have fueled the opioid epidemic.”

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

In June 2012, the United States Treasury Department sanctioned MANAF pursuant to the United States’ terrorism sanctions authority, Executive Order No. 13224, for storing or moving money for the Taliban through his money remitting business, the Haji Khairullah Haji Sattar Money Exchange.  

Beginning in January 2018, MANAF attempted to import large quantities of heroin into the United States; used the proceeds of heroin trafficking to benefit the Taliban; and attempted to provide financial support to the Haqqani Network.  Specifically, MANAF participated in in-person meetings, recorded telephone calls, and electronic communications with five men whom MANAF understood to be affiliated with an international drug trafficking organization.  During those meetings, MANAF helped arrange to import large quantities of heroin into the United States with the assistance of – and recognizing that some of the proceeds of that narcotics trafficking would be provided to – the Taliban and the Haqqani Network.  Four of these men were, in fact, DEA confidential sources.  The fifth was an undercover DEA agent (the “UC”).

The Haqqani Network and the Taliban have been and are engaged in highly public acts of terrorism against U.S. interests, including U.S. and coalition forces in Afghanistan.  In August 2018, MANAF sold the UC a 10-kilogram shipment of heroin (the “10 Kilo Shipment”) in Afghanistan, after the UC told MANAF that the heroin would ultimately be imported into the United States for sale in New York.  MANAF repeatedly told the UC that MANAF had paid the Taliban in connection with the production of the 10 Kilo Shipment, and reported that armed members of the Taliban would guard and transport future heroin shipments for MANAF and the UC.  In August 2018, MANAF facilitated the transfer of thousands of dollars of what he believed to be narcotics proceeds to individuals MANAF had been advised were members of the Haqqani Network.  MANAF subsequently agreed to supply the UC with thousand-kilogram loads of heroin for importation into the United States.

*                *                *

The Indictment charges MANAF, 53, a citizen of Afghanistan, in three counts: (1) attempting to import heroin into the United States, (2) narco-terrorism, and (3) attempted narco-terrorism.  If convicted, MANAF faces a maximum sentence of life imprisonment and a mandatory minimum sentence of 10 years in prison on Count One, and a maximum sentence of life imprisonment and a mandatory minimum sentence of 20 years in prison on each of Counts Two and Three.  The statutory minimum and maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Berman praised the outstanding investigative efforts of the DEA’s Special Operations Division’s Bilateral Investigations Unit; the DEA European Regional Director; the DEA Copenhagen, Canberra, Dubai, Islamabad, Kabul, New Delhi, and Sydney Country Offices; the Government of Estonia; and the Australian Criminal Intelligence Commission.  The defendant’s arrest and subsequent extradition are also the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York and the Department of Justice’s Office of International Affairs.

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the unsealing today of an Indictment charging four individuals, CHRISTOPHER HAMMATT, a/k/a “Craig Johnson,” SUSAN HAMMATT, JOSEPH HOATS, and EDWIN TANGLAO, with participation in multiple fraud schemes.  HOATS was arrested today in California and will be presented later this afternoon before U.S. Magistrate Judge Shashi H. Kewalramani.  The HAMMATTs are expected to surrender later today in Oregon and will be presented this afternoon in federal court there.  TANGLAO was already in custody on state charges in Texas.  The case is assigned to U.S. District Judge Paul G. Gardephe.    

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged in the Indictment, the defendants fraudulently enriched themselves at the expense of others, including small businesses in New York.  Equally disturbing is the Hammatts’ alleged use of the federal courts to perpetrate their fraud.  Now, as a consequence of their alleged conduct, the Hammatts will return to the Southern District of New York not as civil plaintiffs but as criminal defendants.” 

The Indictment unsealed today in Manhattan federal court alleges two fraud schemes.  As alleged in the Indictment[1]:

The first scheme arises from a civil lawsuit in the United States District Court for the Southern District of New York, in which CHRISTOPHER HAMMATT, a/k/a “Craig Johnson,” and SUSAN HAMMATT were plaintiffs.  The HAMMATTs’ lawsuit against a multinational car company based in Detroit, Michigan (“Car Company-1”), alleged that CHRISTOPHER HAMMATT, a lawyer by training, sustained “traumatic brain injury” when the airbags suddenly deployed in his vehicle, which was manufactured by Car Company-1.  While the HAMMATTs’ lawsuit was pending, the HAMMATTs created a fake $16.5 million settlement agreement, which included a forged signature of Car Company-1’s attorney, and used the fake settlement agreement to borrow approximately $75,000 from a litigation funding company. 

To carry out their fraud scheme, and to conceal their identities when communicating with victims, the HAMMATTs created the fake identity, “Craig Johnson,” who purported to be a “legal coordinator” who represented the HAMMATTs.  In that capacity, “Johnson” negotiated directly with legal funding companies to induce them to lend money to the HAMMATTs, using the fraudulent settlement agreement as collateral.  In one email, “Johnson” wrote to a legal funding company, “I know that they [the HAMMATTs] will be getting a large sum of money in about six months, but it is so sad to see this family suffer.  They are on food stamps and get donations from the Church for their kids clothing.” 

When the HAMMATTs’ fraud came to light, SUSAN HAMMATT submitted a declaration to the Court that contained numerous false statements regarding her and her husband’s involvement in the fraud.

The Indictment also alleges that each of the defendants participated in a scheme to defraud oil and gas trading companies.  Specifically, the defendants induced victims to transmit money to the defendants in exchange for large orders of oil and gas products that the defendants could not fulfill.  To conceal the nature of the fraud, the defendants created fake companies and fraudulent documents.  For example, the Indictment alleges that JOSEPH HOATS, an attorney, and SUSAN HAMMATT created the company “Shell Western Supply & Trading,” and used the Shell Oil Company logo without permission, as a means to trick victims.  The defendants succeeded in defrauding a New York-based victim of nearly $1.5 million as part of their oil and gas scheme. 

*                      *                      *

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

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

This case is being prosecuted by the Office’s General Crimes Unit.  Assistant U.S. Attorney Nicholas W. Chiuchiolo is in charge of the prosecution. 

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

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Wire fraud conspiracy

18 U.S.C. § 1349

CHRISTOPHER HAMMATT, a/k/a “Craig Johnson” (age 49)

SUSAN HAMMATT (age 44)

20 years in prison

2

Wire fraud

18 U.S.C. § 1343

CHRISTOPHER HAMMATT, a/k/a “Craig Johnson”

SUSAN HAMMATT

20 years in prison

3

Perjury

18 U.S.C. § 1621

SUSAN HAMMATT

5 years in prison

4

Wire fraud conspiracy

18 U.S.C. § 1349

CHRISTOPHER HAMMATT, a/k/a “Craig Johnson”

SUSAN HAMMATT

JOSEPH HOATS (age 69)

EDWIN TANGLAO (age 54)

20 years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that MARCOS ELIAS, a Brazilian citizen and resident, pled guilty today to conspiracy to commit wire fraud and aggravated identity theft for participating in a scheme to fraudulently obtain more than $750,000 at financial institutions headquartered in Manhattan using false representations and the stolen identities of Brazilian account holders at those institutions.  ELIAS was extradited from Switzerland to the Southern District of New York on August 28, 2018, and entered his pleas of guilty today in Manhattan federal court before U.S. District Judge Laura Taylor Swain.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Marcos Elias engaged in a sophisticated fraud scheme from Brazil to steal over $750,000 from a Manhattan financial institution.  He committed this truly international crime through a front company in Panama, a bank account in Luxembourg, and by using the stolen identity of a Brazilian account holder.  Elias now awaits sentencing for his crimes.”

According to allegations in the Complaint and the Indictment:

Since at least 2012, a Brazilian company (the “Client”) held an account at a financial institution headquartered in Manhattan (the “Firm”).   Beginning in or about June 2014, ELIAS was in correspondence with a Senior Vice President at the Firm (the “Firm Employee”) regarding the Client’s account.  The Firm Employee then began receiving emails purportedly from an employee of the Client (the “Client Employee”) instructing the Firm Employee to transfer the Client’s money to a bank account in Luxembourg (the “Luxembourg Account”) that appeared to be in the name of the Client.  Those emails were later determined to have been sent from an email address created the same day that was never used by the Client Employee and contained bogus wire instructions with the forged signature of the Client Employee.  As a result of the false documentation provided to the Firm Employee, on July 15, 2014, the Firm transferred approximately $752,000 from the Client’s account at the Firm to the Luxembourg Account (the “Fraudulent Transfer”), believing it to be a legitimate transfer requested by the Client.

In actuality, the Client did not authorize the Fraudulent Transfer, did not have any bank or brokerage accounts in Luxembourg, and did not send the emails to the Firm Employee requesting the transfer.  Instead, the Luxembourg Account that received the Fraudulent Transfer was beneficially owned by ELIAS and opened in the name of a company formed in Panama the week prior to the Fraudulent Transfer.  The Luxembourg Account was held in the name of a company containing the name of the Client in order to create the false impression that the Client’s funds were being transferred to an account beneficially owned by the Client when in fact such account was beneficially owned by ELIAS.

In addition to the scheme to defraud the Firm, ELIAS also attempted to fraudulently obtain money from a second financial institution headquartered in Manhattan using the name and purported passport of an account holder without authority.

                                                                          *                      *                      *

ELIAS, 47, of São Paulo, Brazil, pled guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 30 years, and one count of aggravated identity theft, which carries a mandatory consecutive minimum sentence of two years.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

ELIAS is scheduled to be sentenced by U.S. District Judge Laura Taylor Swain on April 4, 2019, at 11:00 a.m.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation.  Mr. Berman also thanked Switzerland’s Federal Office of Justice, the Zurich Police (Kantonspolizei Zürich), and the U.S. Department of Justice’s Office of International Affairs for their assistance with the extradition.

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 GUY PARISI, a Westchester attorney, pled guilty today to a mail fraud charge arising from his attempt to embezzle funds from a decedent’s estate for which he served as a court-appointed administrator.  PARISI entered the plea in White Plains federal court before U.S. Magistrate Judge Lisa Margaret Smith.

U.S. Attorney Geoffrey S. Berman said:  “As he admitted today, Guy Parisi, a Westchester attorney, flouted his fiduciary duty to the estate for which he was administrator.  He attempted to direct fees from the estate to a company he himself formed with a relative.  Now Parisi awaits sentencing for his crime.”

According to the allegations contained in the Indictment:

PARISI was appointed administrator of the estate of a former resident of Mt. Vernon, in or about April 2017.  His duties as administrator included collecting the assets of the estate.  As an administrator, PARISI had a fiduciary duty to the estate and to the decedent’s son, the sole beneficiary of his father’s will.  New York law provided for a fee for estate administrators like PARISI based on a percentage of the value of the estate’s assets.

A substantial part of the estate’s assets escheated to the State of New York as abandoned property between 2000 and 2008, when the estate was first presented to the Surrogate’s Court.  These assets were held in the custody of the New York State Comptroller.

In or about June 2017, PARISI, on behalf of the estate, retained Stokes Asset Recovery Services (“Stokes”) as the estate’s abandoned property location service in exchange for a fee of 15 percent of the value of the estate’s assets held by the Comptroller, which is the maximum fee allowed by New York law.  PARISI did not disclose, and actively concealed, that Stokes was owned by his relative, and that he and the relative had formed Stokes less than two weeks before he notified the Comptroller of his retention of Stokes, as he was required to do under New York law.  PARISI and the relative named Stokes after a Southampton, New York, street on which PARISI owned a waterfront vacation home.  At the time he retained Stokes, PARISI knew that the estate’s assets held by the Comptroller were worth several million dollars.

*                *                *

PARISI, 71, of Rye, New York, pled guilty to one count of mail fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as the sentence will be determined by the court.

PARISI is scheduled to be sentenced by U.S. District Judge Kenneth M. Karas on May 29, 2019.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Angel M. Melendez, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), John B. Devito, the Special Agent-in-Charge of the New York Field Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing today of a Superseding Indictment charging three additional individuals, ANTHONY ELLISON, a/k/a “Harv,” DENARD BUTLER, a/k/a “Drama,” and KINTEA MCKENZIE, a/k/a “Kooda B,” with racketeering and firearms offenses in connection with their membership in and association with the Nine Trey Gangsta Bloods, also known as “Nine Trey.”  A fourth defendant, KIFANO JORDAN, a/k/a “Shotti,” who was named in the original indictment, faces additional racketeering and firearms charges.

BUTLER was arrested yesterday.  ELLISON was already in custody on federal charges.  MCKENZIE is still at large.  The case is assigned to U.S. District Judge Paul A. Engelmayer.

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the superseding indictment, the new defendants in this case, like those previously charged, engaged in brazen acts of gun violence.  Thanks to our remarkable partners at HSI, ATF, and the NYPD, these defendants now face federal charges for their serious crimes.”

HSI Special Agent in Charge Angel M. Melendez said:  “Nine Trey has engaged in a pattern of racketeering reinforced by a reputation of extreme violence, best known for shootings, assaults and robberies in our city.  The new arrests in this case and the additional charges as part of this ongoing investigation should send a clear message to members of any gang that carry out acts of violence, that we are resolved in our joint efforts to promote a safe environment for our communities in New York City.”

ATF Special Agent in Charge John B. Devito said:  “Today’s charges demonstrate ATF’s and our law enforcement partners’ commitment to identify and investigate individuals that drive violent crime within our communities.  The members and associates of the Nine Trey Gangsta Bloods, also known as ‘Nine Trey,’ allegedly terrorized the public via a variety of crimes including violent armed robberies, assaults and shootings.  The ATF/ NYPD Joint Firearms Task Force will continue to work diligently with all of our partner agencies in order to best serve the community and protect the public.  I would like to personally thank the United States Attorney’s Office for their leadership and guidance throughout this investigation.”

NYPD Commissioner James P. O’Neill said:  “In working to reduce crime past already record-lows in New York City, the NYPD is relentless in our pursuit of the relatively small percentage of the population driving the violence and disorder.  We are achieving this, with pinpoint accuracy, because of the full and willing partnership of New Yorkers in every neighborhood and the unrivaled assistance of our law-enforcement partners.  I commend the U.S. Attorney for the Southern District, and the members of Homeland Security Investigations and the ATF, for helping us dismantle groups responsible for shootings, robberies, drug-dealing, and more.  Together, we are making the safest large city in America even safer.”

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

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

The Superseding Indictment charges JAMEL JONES, a/k/a “Mel Murda,” ROLAND MARTIN, a/k/a “Ro Murda,” KIFANO JORDAN, a/k/a “Shotti,” ANTHONY ELLISON, a/k/a “Harv,” DENARD BUTLER, a/k/a “Drama,” JESNEL BUTLER, a/k/a “Ish,” FUGUAN LOVICK, a/k/a “Fu Banga,” KINTEA MCKENZIE, a/k/a “Kooda B,” FAHEEM WALTER, a/k/a “Crippy,” and AARON YOUNG, a/k/a “Bat,” with racketeering and firearms offenses. 

Count One of the Superseding Indictment charges JONES, MARTIN, JORDAN, ELLISON, DENARD BUTLER, JESNEL BUTLER, WALTER, and YOUNG with participating in a racketeering conspiracy for their criminal involvement in Nine Trey.  Count Two charges JONES, MARTIN, JORDAN, ELLISON, DENARD BUTLER, JESNEL BUTLER, WALTER, and YOUNG with using and carrying firearms, which were brandished and discharged, in connection with the racketeering conspiracy.  Counts Three through Five charge MARTIN, JORDAN, DENARD BUTLER, JESNEL BUTLER, and WALTER in connection with a gunpoint robbery in the vicinity of West 40th Street and 8th Avenue in Manhattan on April 3, 2018.  Counts Six and Seven charge LOVICK in connection with his shooting at rivals of Nine Trey in the Barclays Center in Brooklyn on April 21, 2018.  Counts Eight through Ten charge JORDAN and MCKENZIE in connection with a shooting at a rival of Nine Trey at a hotel in Times Square in Manhattan on June 2, 2018.  Counts Eleven and Twelve charge MARTIN, JORDAN, JESNEL BUTLER, and WALTER with agreeing to shoot an individual who had shown disrespect to Nine Trey, resulting in an innocent bystander being shot, in the vicinity of Fulton Street and Utica Avenue in Brooklyn on July 16, 2018.  Counts Thirteen through Fifteen charge ELLISON in connection with his kidnapping and assaulting another member of Nine Trey near the intersection of Bedford Avenue and Atlantic Avenue in Brooklyn on July 22, 2018.  Count Sixteen charges JONES and YOUNG with conspiracy to distribute heroin, fentanyl, MDMA, and marijuana from 2015 to 2018.  Count Seventeen charges YOUNG with using and carrying firearm in connection with the narcotics conspiracy.  Count Eighteen charges JONES with possessing with intent to distribute one kilogram and more of mixtures and substances containing a detectable amount of heroin on November 15, 2018. 

*                      *                     *

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

Mr. Berman praised the outstanding investigative work of HSI, ATF, and the NYPD.  He also thanked the United States Attorney’s Office for the Eastern District of New York, the Manhattan District Attorney’s Office, the Brooklyn District Attorney’s Office, and the New York City Department of Correction’s Intelligence Bureau for their assistance in the investigation.

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

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

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Racketeering conspiracy

18 U.S.C. § 1962(d)

JAMEL JONES (age 38)

ROLAND MARTIN (age 37)

KIFANO JORDAN (age 36)

ANTHONY ELLISON (age 31)

DENARD BUTLER (age 26)

JESNEL BUTLER (age 36)

FAHEEM WALTER (age 29)

AARON YOUNG (age 28)

20 years in prison

2

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

18 U.S.C. § 924(c)

JAMEL JONES

ROLAND MARTIN

KIFANO JORDAN

ANTHONY ELLISON

DENARD BUTLER

JESNEL BUTLER

FAHEEM WALTER

AARON YOUNG

Life in prison

Mandatory minimum of 10 years in prison

3

Violent crime in aid of racketeering (April 3, 2018)

18 U.S.C. § 1959

ROLAND MARTIN

KIFANO JORDAN

DENARD BUTLER

JESNEL BUTLER

FAHEEM WALTER

20 years in prison

4

Violent crime in aid of racketeering (April 3, 2018)

18 U.S.C. § 1959

ROLAND MARTIN

KIFANO JORDAN

DENARD BUTLER

JESNEL BUTLER

FAHEEM WALTER

3 years in prison

5

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

18 U.S.C. § 924(c)

ROLAND MARTIN

KIFANO JORDAN

DENARD BUTLER

JESNEL BUTLER

FAHEEM WALTER

Life in prison

Mandatory minimum of 7 years in prison

6

Violent crime in aid of racketeering (April 21, 2018)

18 U.S.C. § 1959

FUGUAN LOVICK (age 40)

20 years in prison

7

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

18 U.S.C. § 924(c)

FUGUAN LOVICK

Life in prison

Mandatory minimum of 10 years in prison

8

Violent crime in aid of racketeering (June 2, 2018)

18 U.S.C. § 1959

KIFANO JORDAN

KINTEA MCKENZIE (age 21)

20 years in prison

9

Violent crime in aid of racketeering (June 2, 2018)

18 U.S.C. § 1959

KIFANO JORDAN

KINTEA MCKENZIE

3 years in prison

10

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

18 U.S.C. § 924(c)

KIFANO JORDAN

KINTEA MCKENZIE

Life in prison

Mandatory minimum of 10 years in prison

11

Violent crime in aid of racketeering

(July 16, 2018)

18 U.S.C. § 1959

ROLAND MARTIN

KIFANO JORDAN

JESNEL BUTLER

FAHEEM WALTER

10 years in prison

12

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

18 U.S.C. § 924(c)

ROLAND MARTIN

KIFANO JORDAN

JESNEL BUTLER

FAHEEM WALTER

Life in prison

Mandatory minimum of 10 years in prison

13

Violent crime in aid of racketeering

(July 22, 2018)

18 U.S.C. § 1959

ANTHONY ELLISON

Life in prison

14

Violent crime in aid of racketeering

(July 22, 2018)

18 U.S.C. § 1959

ANTHONY ELLISON

20 years in prison

15

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

18 U.S.C. § 924(c)

ANTHONY ELLISON

Life in prison

Mandatory minimum of 7 years in prison

16

Conspiracy to distribute narcotics

21 U.S.C. § 846

JAMEL JONES

AARON YOUNG

Life in prison

Mandatory minimum of 10 years in prison

17

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

18 U.S.C. § 924(c)

AARON YOUNG

Life in prison

Mandatory minimum of 5 years in prison

18

Possession of a controlled substance with intent to distribute

21 U.S.C. § 841

JAMEL JONES

Life in prison

Mandatory minimum of 10 years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York (“SDNY”), Ben Carson, Secretary of the U.S. Department of Housing and Urban Development (“HUD”), and Andrew Wheeler, Acting Administrator of the U.S. Environmental Protection Agency (“EPA”), announced today the signing of an administrative agreement (“Agreement”) with the NEW YORK CITY HOUSING AUTHORITY (“NYCHA”) and the CITY OF NEW YORK (the “City”) requiring NYCHA, under the supervision of a federal monitor, to fundamentally reform its operations and remedy living conditions for its residents, including lead paint hazards, mold growth, pest infestations, lack of heat, and inadequate elevator service.  The Agreement, which went into effect immediately and does not require court approval, resolves the United States’ claims against NYCHA detailed in the Complaint filed in United States District Court on June 11, 2018 (the “Complaint”), which will be dismissed without prejudice.  The Complaint alleged that for years NYCHA had violated and was continuing to violate basic federal health and safety regulations, including regulations requiring NYCHA to protect children from lead paint and otherwise provide decent, safe, and sanitary housing.  The Complaint further alleged that NYCHA repeatedly made false statements to HUD and the public regarding its lead paint compliance, and intentionally deceived HUD inspectors.

U.S. Attorney Geoffrey S. Berman stated:  “NYCHA’s failure to provide decent, safe, and sanitary housing is simply unacceptable, and illegal.  Children must be protected from toxic lead paint, apartments must be free of mold and pest infestations, and developments must provide adequate heat in winter and elevator service.  This Office has not wavered from its commitment to better living conditions for NYCHA residents.  Today’s Agreement will improve the lives of the more than 400,000 New Yorkers who call NYCHA home.  The Agreement goes beyond the prior proposed Consent Decree by providing strict, enforceable standards that NYCHA must meet by particular deadlines for the five critical living conditions, including requiring both the immediate remediation of lead paint in apartments with children under 6 years old and, over time, 100 percent abatement of all lead paint in all NYCHA developments, as well as a change in NYCHA leadership.”

HUD Secretary Ben Carson said:  “This is a very positive outcome, one that I believe can bring meaningful change to living conditions of the many thousands of families who depend upon NYCHA for their housing.  But there is still a lot of work to be carried out.  We look forward to continuing what has been a productive working relationship with the Mayor and his team.  HUD will continue to advocate for the hundreds of thousands of children, women, and men in New York City whose lives and livelihoods depend on having safe, fair, and affordable housing.  They deserve nothing less.”

Acting EPA Administrator Andrew Wheeler said:  “Under today’s agreement, New York City commits to provide the resources and institutional reforms needed to end NYCHA’s pattern and practice of endangering the health of children living in New York’s public housing.  EPA will be vigilant and is prepared to reinstate our litigation should they fail to meet those commitments and continue to harm children by violating lead paint safety regulations.”

Based on NYCHA’s misconduct as detailed in the Complaint, the Secretary of HUD declared today that NYCHA is in substantial default of its covenant to provide decent, safe, and sanitary housing.  The purpose of the Agreement is to remedy the deficient physical conditions in NYCHA properties, ensure that NYCHA complies with its obligations under federal law, reform the management structure of NYCHA, and facilitate cooperation and coordination between HUD, NYCHA, and the City.

Specifically, the Agreement requires NYCHA to remediate living conditions at NYCHA properties by specific deadlines and meet strict, objective compliance standards regarding lead paint hazards, mold growth, pest infestations, and inadequate heating and elevator service.  With respect to lead paint hazards, for example, the Agreement requires NYCHA to take action within 30 days to visually inspect all non-exempt units built before 1978 where NYCHA believes a child under 6 resides or routinely visits and remediate any deteriorated lead-based paint in the apartment, and, over time, to abate all lead paint in all NYCHA developments.  The Agreement further obligates NYCHA to establish three new critical functions:  a Compliance Department, an Environmental Health and Safety Department, and a Quality Assurance Unit.  In addition, the Agreement requires the City to select a new chief executive officer for NYCHA from a list of qualified professionals jointly compiled by HUD, the U.S. Attorney’s Office, and the City. 

The Agreement also renews the City’s commitment, reflected in the June 2018 proposed Consent Decree, to provide an additional $1 billion in capital funds to NYCHA over the next four years and an additional $200 million in capital funds each subsequent year for the duration of the Agreement.  Also, the agreement locks in an additional $4 billion in City funds budgeted through 2027.

Pursuant to the Agreement, a federal monitor, selected by HUD and the U.S. Attorney’s Office in consultation with NYCHA and the City, will oversee NYCHA’s reform efforts.  Beyond the specifically enumerated remedial actions required under the Agreement, NYCHA will develop action plans, subject to the monitor’s approval, to remediate living conditions at NYCHA and meet the compliance standards set forth in the Agreement.  The monitor and NYCHA also will collaboratively develop a plan to overhaul NYCHA’s organizational, management, and workforce structure, informed by a new comprehensive study from an independent third-party consultant.  Throughout the term of the Agreement, the monitor is required to engage with the community, including NYCHA residents, resident groups, and stakeholders, regarding matters covered by the Agreement, and provide public reports detailing NYCHA’s progress.  The cost of the monitor shall be paid by the City.

*                *                *

Mr. Berman thanked HUD, HUD Office of Inspector General, and EPA for their invaluable assistance in this matter.

This case is being handled by the Office’s Environmental Protection Unit in the Civil Division.  Assistant United States Attorneys Robert William Yalen, Mónica P. Folch, Jacob Lillywhite, Talia Kraemer, and Sharanya Mohan are in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that PAUL DEAN was sentenced to 18 months in prison by the U.S. District Judge Edgardo Ramos today in connection with a bribery scheme involving the approval of gun licenses by the New York City Police Department (“NYPD”) License Division.  Specifically, DEAN, who as second-in-command of the License Division had accepted gifts and favors in connection with his approval of gun licenses, conspired upon his retirement from the NYPD to open his own “expediting” business in which he would pay bribes to his fellow NYPD officers, once his subordinates in the License Division, to issue gun licenses to DEAN’s clients. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As a high-ranking officer and supervisor in the NYPD’s License Division, Paul Dean was entrusted with ensuring the integrity of the process for issuing gun licenses in New York City.  Instead of embracing that trust and focusing on the safety of New Yorkers, he monetized it for his own benefit, and enabled officers under his command to do the same.  Together with our partners in law enforcement, my office has worked tirelessly to make sure those efforts by Dean and others involved ended not with dollar signs, but in prison cells.  We will continue to root out corrupt law enforcement officers where we find them, while commending the vast majority of officers who, unlike Dean, serve the City of New York honestly and honorably.” 

According to the Indictment and Complaint filed in this case, other public filings, and statements made during the plea proceeding:

DEAN was a member of the NYPD from 1994 through 2016, and was assigned to the License Division from 2008 through 2016.  DEAN, a lieutenant, was one of the highest-ranking members of the License Division and, from approximately November 2014 through November 2015, regularly ran its day-to-day operations.  Co-defendant Robert Espinel was a member of the NYPD from 1995 through his retirement in 2016, and was assigned to the License Division from 2011 through 2016. 

From at least 2013 through 2016, multiple NYPD officers in the License Division serving under DEAN’s command, including David Villanueva and Richard Ochetal, solicited and accepted bribes from gun license expediters – including Frank Soohoo, Alex Lichtenstein, a/k/a “Shaya,” and co-defendant Gaetano Valastro, a former NYPD detective – in exchange for providing assistance to the expediters’ clients in obtaining gun licenses quickly and often with little to no diligence.  DEAN, aware of this bribery arrangement, approved many of the gun license applications submitted by these expediters, despite the fact that no substantial due diligence had been performed on them.  As part of the scheme, licenses were issued for individuals with substantial criminal histories, including arrests and convictions for crimes involving weapons or violence, and for individuals with histories of domestic violence. 

DEAN accepted things of value from the expediters whose applications he approved, including $1,000 cash from Lichtenstein, catered meals and alcohol from Soohoo, and gun equipment from Valastro.  DEAN also accepted gifts and favors directly from applicants whose licenses he approved, including free meals at restaurants, free liquor from a liquor distributor, free beer and soda from a beverage distributor, free car repairs from car shops, and free entertainment.

In 2015, dissatisfied with the fact that private gun expediters were profiting thousands of dollars per gun license applicant when DEAN and others did the work to approve those applications, DEAN and Espinel decided to retire and go into the expediting business themselves.  In order to ensure the success of their business, DEAN and Espinel planned to bribe Villanueva and Ochetal, who were still in the License Division, to enable their clients to get special treatment.  They also agreed with Valastro to run their expediting and bribery scheme out of Valastro’s gun store.  According to the plan, Valastro would benefit from the scheme because DEAN and Espinel would steer successful applicants to Valastro’s store to buy guns.  They also tried to corner the expediting market by forcing other expediters to work through them.  Specifically, DEAN and Espinel attempted to coerce Frank Soohoo, another gun license expediter, into sharing his expediting clients with them by threatening to use their influence in the License Division to shut down Soohoo’s expediting business if Soohoo refused to work with, and make payments to, DEAN and Espinel.

Espinel and Valastro have previously pled guilty and are awaiting sentence.  Villanueva, Ochetal, Lichtenstein, and Soohoo have also pled guilty in case number 16 Cr. 342 (SHS).  Lichtenstein was sentenced by the U.S. District Judge Sidney H. Stein to 32 months in prison, and the remaining defendants are awaiting sentence.

*                *                *

In addition to the prison term, DEAN, 46, was sentenced to two years of supervised release, a fine of $7,500, and forfeiture of $1,000.

Mr. Berman thanked the Federal Bureau of Investigation and the New York City Police Department, Internal Affairs Division, for their outstanding investigative work in this matter.

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorney Kimberly Ravener is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that Lancelot Paul Lutchman was sentenced to 10 years in prison for his possession of files containing sexually explicit images of a minor.  Lutchman pled guilty on September 12, 2018, before U.S. District Judge Paul A. Crotty, who imposed today’s sentence.   

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For Lancelot Lutchman’s crimes against children, he will spend 10 years in federal prison.  Our Office remains committed to finding and prosecuting criminals who prey on and abuse children.”

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

Between January 31, 2016, and January 21, 2017, LUTCHMAN used a peer-to-peer file sharing network to share approximately 845 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 January 26, 2017, law enforcement officers executed a search warrant for LUTCHMAN’s apartment and recovered his laptop computer, which contained numerous files of child pornography.  As officers were entering the apartment, LUTCHMAN hid the laptop in his oven. 

*                *                *

In addition to the prison term, LUTCHMAN, 44, of the Bronx, was sentenced to five years of supervised release.

Mr. Berman praised the New York City Police Department for its outstanding investigative work.  Mr. Berman also thanked the Bronx District Attorney’s Office for its invaluable assistance with this matter. 

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Kyle A. Wirshba and Daniel Loss 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 U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today that THOMAS IRIGOYEN and NICHOLAS OFEI COFIE were charged with conspiring to commit wire and mail fraud in connection with a scheme to defraud actors in New York City and elsewhere.  IRIGOYEN was arrested in California and will be presented today before a U.S. Magistrate Judge of the Central District of California, and COFIE was arrested in New York City and will be presented this afternoon before U.S. Magistrate Judge Barbara C. Moses in federal court in Manhattan.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Irigoyen and Cofie preyed on actors in New York and elsewhere, falsely offering their victims the chance to act in commercials, and ‘paying’ them upfront fees with fictitious money orders or checks.  The victims were then allegedly duped into paying phantom ‘wardrobe consultants’ by withdrawing funds against the bogus money orders, and left liable for the withdrawals.  The defendants’ own alleged role-playing performances have earned them arrests on federal charges.” 

HSI Special Agent-in-Charge Angel M. Melendez said:  “As alleged, this fraudulent scheme, operating out of New York and California, sought to exploit the aspirations of young actors, defrauding them of thousands of dollars.  These two individuals allegedly used professional actors, misled them for their own gain while crushing their dreams in the process.  But now, thanks to the diligent work of law enforcement, they will face the consequences of their alleged crimes.”

NYPD Commissioner James P. O’Neill said:  “These charges reflect the increasingly sophisticated ways criminals target people eager to find success in new and potentially lucrative careers.  Something that will never change, however, is the focused determination of the NYPD and our law enforcement partners to keep people safe by fighting crime wherever it may lurk – including in the dark corners of cyberspace.  I thank the U.S. Attorney for the Southern District and Homeland Security Investigations, whose members helped us uncover and identify the individuals named in this complaint.  Together, we demonstrate time and again that we are patient and that our collaborative forces have a long reach.  We will continue to be relentless in our mission to dismantle these types of operations and bring those who run them to justice.”

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

Between approximately December 2016 and the present, IRIGOYEN and COFIE participated in a conspiracy that took advantage of aspiring actors.  As part of the scheme, IRIGOYEN and COFIE offered aspiring actors the opportunity to act in a commercial, provided those actors with an upfront payment in the form of a fake money order or check, and persuaded the actors to withdraw money against the fake money orders or checks and to transfer a substantial portion of the withdrawn money to so-called “wardrobe consultants” via wire transfer, the mail, and converting the money into cryptocurrency.

In the end, the jobs promised to the actors were fictitious, the financial instruments provided to the actors were fake, and the wardrobe consultants were non-existent.  The victims of the scheme were left liable for the value of the fake financial instruments they had deposited into and transferred out of their respective bank accounts.

In the course of the conspiracy, IRIGOYEN purchased postage and mailed more than 450 envelopes from fictitious production companies to actors.  IRIGOYEN also received payments that actors believed they were sending to “wardrobe consultants.”  A bank account controlled by COFIE was presented to at least one actor-victim as an account affiliated with a “wardrobe consultant.”

In addition to the scheme described above, COFIE is also charged with one count of wire fraud for his role in defrauding a female who was tricked into believing she was entering a romantic relationship with a third party and who then transferred thousands of dollars into bank accounts under COFIE’s control.

*                      *                     *

IRIGOYEN, 51, of Kingsburg, California, and COFIE, 36, of the Bronx, New York, are each charged with one count of conspiring to commit mail fraud and wire fraud, which carries a maximum sentence of 20 years.  COFIE is separately charged with an additional count of wire fraud, which carries a maximum sentence of 20 years.

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

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

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LAMONT EVANS, a former men’s basketball coach at the University of South Carolina (“South Carolina”) and later at Oklahoma State University (“OSU”), pled guilty in Manhattan federal court today to taking approximately $22,000 in cash bribes from athlete advisers in exchange for using his influence over South Carolina and OSU basketball players to retain the services of the advisers paying the bribes.  EVANS pled guilty before U.S. District Judge Edgardo Ramos.   

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Lamont Evans, formerly a men’s basketball coach at South Carolina and Oklahoma State, abused his position as a mentor and coach for personal gain.  Evans took bribes from unscrupulous agents and financial advisers to steer his players to those agents and advisers.  A scheme Evans apparently thought was a slam-dunk actually proved to be a flagrant foul.”

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

EVANS was a men’s basketball coach at South Carolina until on or about April 2016, and then at OSU until shortly after his arrest.  Beginning in 2016, and continuing into September 2017, when EVANS was arrested, EVANS received approximately $22,000 in cash bribes from current and aspiring financial advisers and/or managers for professional athletes in exchange for EVANS’s agreement to exert his influence over certain student-athletes EVANS coached at South Carolina and OSU to retain the services of the bribe payers once those players entered the National Basketball Association (“NBA”).  

In one meeting recorded during the investigation, Evans explained how “every guy I recruit and get is my personal kid,” and that “the parents believe in me and what I do … that’s why I say, if I need X, so if I do take X for that, it’s going to generate [business] toward you guys,” referring to the bribers.  Evans also stated in a call recorded during the investigation how this arrangement was “generating more wealth” for the scheme participants, because they were “able to scratch my back, scratch yours, and help each other with different things and . . . at the same time get compensated and then . . . just go from there.”  In return for the cash bribes EVANS received, EVANS facilitated a meeting between the bribe payers and a player at OSU, and a meeting between the bribe payers and a relative of a different player attending South Carolina, for the purpose of pressuring those players to retain the financial services of the bribe payers.

In addition to today’s plea, Emanuel Richardson, a/k/a “Book,” a former men’s basketball coach at the University of Arizona, and Anthony Bland, a/k/a “Tony,” a former men’s basketball coach at the University of Southern California, both previously pled guilty, pursuant to plea agreements with the Government, in connection with this scheme.  Munish Sood, a financial adviser, also previously pled guilty, pursuant to a cooperation agreement with the Government, in connection with this scheme.

*                *                *

EVANS, 41, of Stillwater, Oklahoma, pled guilty to one count of conspiracy to commit bribery.  As a condition of his plea, EVANS agreed to forfeit $22,000.  The charge carries a maximum term of five years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  Sentencing is scheduled for May 10, 2019, before Judge Ramos.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ROCCO FAZZOLARI, who previously served as the president of a labor union (the “Union”) and a trustee of the Union’s employee welfare benefit plan (the “Plan”), was sentenced today to 37 months in prison for embezzling from the Union and the Plan, concealing this embezzlement through false filings with the U.S. Department of Labor, and for participating in a kickback scheme.  Through these embezzlement and kickback schemes, FAZZOLARI and a co-conspirator illegally obtained a total of more than $1.3 million from the Union and the Plan.  FAZZOLARI previously pled guilty before United States District Judge Analisa Torres, who imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Rocco Fazzolari abused his position as the president of a labor union, taking more than $1 million through embezzlement and kickback schemes.  Most of this money was taken from an employee benefit plan, which was established to provide medical care for union members.  For his crimes, he is now headed to federal prison.”

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

From at least in or about 2012 through in or about June 2016, FAZZOLARI repeatedly used Union funds to pay for his personal expenses, including payments for spa treatments, a gym membership, a second car, medical expenses, dues for an actors’ union, personal credit card charges, and ATM cash withdrawals.  FAZZOLARI then “reimbursed” the Union with funds from the Plan.  The Plan was established to provide, among other things, medical, surgical, and hospital care or benefits to Union members.  In total, FAZZOLARI embezzled more than $128,000 from the Union over approximately four years, and improperly transferred more than $89,000 from the Plan to “reimburse” the Union. 

In addition, from at least in or about 2000 through in or about June 2016, FAZZOLARI engaged in a kickback scheme with another individual (“CC-1”).  Using Plan funds, FAZZOLARI paid CC-1’s company, Acclaim Administrators, Inc. (“Acclaim”), more than $1.1 million for purported services, even though Acclaim did not actually provide the Plan with these services.  CC-1 then kicked back the vast majority of these payments to FAZZOLARI.

*              *             *

In addition to his prison term, ROCCO FAZZOLARI, 58, of Manhasset Hills, New York, was also ordered to serve three years of supervised release, to forfeit $941,828, and to pay restitution of $1,288,810.75.  Under the terms of his plea agreement, FAZZOLARI has agreed to a 13-year ban, pursuant to 29 U.S.C. §§ 504 and 1111, which generally prohibits him from, among other things, being employed by a labor union or employee benefit plan.

Mr. Berman praised the Department of Labor’s Office of Inspector General, Employee Benefits Security Administration, Office of Chief Accountant, and Office of Labor-Management Standards for their outstanding investigative work.  Mr. Berman also thanked the Federal Bureau of Investigation and the Department of Justice’s Labor-Management Racketeering Unit of the Organized Crime and Gang Section for their assistance in this case.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that MICHAEL BONANNO, a New York City Police Department (“NYPD”) detective, pled guilty today to his role in a bank fraud scheme that used stolen checks and bank account numbers from New York-based victims.  BONANNO pled guilty to one count of bank fraud and one count of conspiracy to commit bank fraud before U.S. District Judge Paul G. Gardephe.  Bonanno’s co-conspirator, Domenic Aiello, previously pled guilty before Magistrate Judge Debra Freeman on January 4, 2019.

U.S. Attorney Geoffrey S. Berman said:  “Instead of upholding his duty to investigate and enforce the law, Michael Bonanno, who was at the time a detective in the NYPD’s Crime Stoppers unit, broke the law by brazenly attempting to swindle hundreds of thousands of dollars from residents of New York.  I commend the FBI and the Internal Affairs Bureau of the NYPD for their outstanding work in this investigation.”

According to the Information and Complaint filed in this case, other public filings, and statements made during the plea proceeding:

BONANNO is an NYPD detective and was a member of the NYPD Crime Stoppers unit, which receives and investigates anonymous tips about criminal activity from members of the community.

From November 2016 to March 2017, BONANNO and Aiello stole and attempted to steal hundreds of thousands of dollars from the bank accounts of multiple New York residents in two ways.  First, on over 20 occasions, BONANNO and Aiello made payments on BONANNO’s mortgage and credit card bills using stolen account information from various victims.  Second, on at least 15 occasions, BONANNO and Aiello attempted to deposit fraudulent and stolen checks in BONANNO’s bank accounts. 

*                      *                     *

BONANNO, 44, who resides in Staten Island, New York, pled guilty to one count of bank fraud and one count of conspiracy to commit bank fraud.  Each count carries a maximum term of 30 years in prison.  BONANNO is scheduled to be sentenced by Judge Gardephe on April 26, 2019.  The maximum potential penalties 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 investigative work of the Federal Bureau of Investigation and the Internal Affairs Bureau of the NYPD in this investigation.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Nicolas Roos and Danielle R. Sassoon 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 Office of the U.S. Postal Inspection Service (“USPIS”), Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), Matthew Modafferi, Special Agent in Charge, U.S. Postal Service, Office of Inspector General, Northeast Area Field Office (“USPS-OIG”), and Joseph Fucito, New York City Sheriff, announced today the unsealing of an Indictment in Manhattan federal court charging SHAO JUN GUO, JIAN JIANG FENG, YUE JUAN CHEN, ZHURONG GAO, SHUI YING LIN, and WO KIT CHENG with conspiring to traffic contraband cigarettes and trafficking contraband cigarettes.  The defendants were arrested yesterday and will be presented before U.S. Magistrate Judge Robert W. Lehrburger today.  The case is assigned to U.S. District Judge Jesse M. Furman.  The defendants will be arraigned before Judge Furman on January 31, 2019, at 11:00 a.m.

As alleged in the Indictment, SHAO JUN GUO, JIAN JIANG FENG, YUE JUAN CHEN, ZHURONG GAO, SHUI YING LIN, and WO KIT CHENG conspired to traffic more than $30 million of contraband cigarettes to avoid approximately $30 million in taxes.  The case is assigned to United States District Judge Jesse M. Furman.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants trafficked in massive quantities of contraband cigarettes, defrauding city, state, and federal governments of millions of dollars in tax revenue.  That is lost tax revenue that would be used to fund research into cancer and other smoking-related illnesses, and to fund cessation and anti-smoking programs.  These defendants’ alleged scheme to make millions, cheat taxing authorities, and deny funds for healthcare programs has gone up in smoke.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “These defendants thought they could get away with their scheme to distribute contraband cigarettes, avoiding regulations put in place to protect the public, businesses and the City from fraud.  Their illegal profit went up in smoke.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “For the past six years these defendants smuggled untaxed cigarettes into the United States causing lost revenue to the U.S. economy to the tune of $30 million dollars in unpaid taxes.  Whether it be drugs, counterfeit goods or untaxed cigarettes, smuggling items into the United States is a crime that we at HSI take very seriously as we work every day to secure our borders.”

USPS-OIG Special Agent-in-Charge Matthew Modafferi said:  “In certain instances, the Special Agents of the U.S. Postal Service, Office of Inspector General will work with their law enforcement partners to stop those who use the U.S. Mail to facilitate their crimes.  We would like to thank the U.S. Attorney’s Office, USPIS, HSI, and New York City Sheriff’s Department for their collaborative efforts in developing this investigation.”

Sheriff Joseph Fucito said:  “The alleged criminal conduct of the defendants deprives all New Yorkers of significant tax revenues.  These lost revenues impact public safety, education, health, housing, and social services. The New York City DOF Sheriff’s Department will continue to investigate and pursue criminal conduct to ensure these invaluable services are sustained.”  

According to the allegations in the Indictment unsealed today in Manhattan federal court[1]:  From June 2013 through January 2019, the defendants engaged in a scheme to smuggle and traffic $30 million of untaxed cigarettes in the United States to avoid at least $30 million in taxes. 

*                *                *

SHAO JUN GUO, 42, of Brooklyn, New York, JIAN JIANG FENG of New York, New York, YUE JUAN CHEN, 41, of Bayside, New York,  ZHURONG GAO, 66, of New York, New York, SHUI YING LIN, 43, of Brooklyn, New York, and WO KIT CHENG, 44, of Brooklyn, New York, have each been charged with one count of conspiracy to traffic contraband cigarettes, which carries a maximum prison term of five years; and one count of trafficking contraband cigarettes, which carries a maximum prison term of five years.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the USPIS, HSI, and the New York City Sheriff’s Department.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Ryan B. Finkel, Elizabeth Espinosa, and Andrew Chan are in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Christopher Tersigni, the Special Agent in Charge of the Special Operations Division of the U.S. Drug Enforcement Administration (“DEA”), announced today that charges have been filed in Manhattan federal court against former Honduran mayor Amilcar Alexander Ardon Soriano and, in a separate Superseding Indictment, Mario Jose Calix Hernandez.  The charges in each indictment include conspiring to import cocaine into the United States and related weapons offenses involving the use and possession of machineguns and destructive devices.  The United States is seeking the defendants’ extraditions from Honduras and Guatemala.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Amilcar Alexander Ardon Soriano and Mario Jose Calix Hernandez each conspired to import massive quantities of cocaine into the U.S. and used heavy weaponry to protect drug shipments.  Ardon Soriano allegedly used his position as a Honduran mayor to facilitate his own drug trafficking, and to exact a ‘tax’ on other traffickers, making millions of dollars in the process.  Thanks to the DEA, both men now face criminal charges in the U.S.”

As alleged in the Indictments filed in federal court:[1]

From at least in or about 2004, up to and including in or about 2016, multiple drug-trafficking organizations in Honduras and elsewhere worked together, and with support from certain prominent public and private individuals, including Honduran politicians and law enforcement officials, to receive multi-ton loads of cocaine sent to Honduras from, among other places, Colombia via air and maritime routes, and to transport the drugs westward in Honduras toward the border with Guatemala and eventually to the United States.  For protection from official interference, and in order to facilitate the safe passage through Honduras of multi-hundred-kilogram loads of cocaine, drug traffickers paid bribes to public officials, including certain mayors and members of the National Congress of Honduras.

Ardon Soriano was previously the mayor of El Paraíso, Copán, in Honduras.  Between approximately 2000 and approximately 2015, including at times while acting as mayor of El Paraíso, ARDON SORIANO engaged in large-scale drug trafficking activities with traffickers located in, among other places, Colombia, Honduras, Guatemala, and Mexico.  Ardon Soriano is the second former Honduran mayor charged in the Southern District of New York with crimes related to drug trafficking.  In July 2018, Arnaldo Urbina Soto, the former mayor of Yoro, Honduras, was charged in a separate Indictment with conspiring to import cocaine into the United States and related firearms offenses.  See United States v. Urbina Soto, et al., 18 Cr. 497 (DLC).

As alleged in the Indictment, ARDON SORIANO participated in processing, receiving, transporting, and distributing large loads of cocaine that arrived in Honduras via planes and go-fast vessels.  In Honduras, ARDON SORIANO had access to at least one cocaine laboratory as well as a clandestine airstrip that was used to receive cocaine-laden aircraft dispatched from South America.  ARDON SORIANO and others participated in providing heavily armed security for cocaine shipments transported within Honduras, including by members of the Honduran National Police and drug traffickers armed with, among other weapons, machineguns.  ARDON SORIANO also leveraged his power in El Paraíso by charging a per-kilogram tax on cocaine transported by other traffickers through the area that he controlled.  As a result of these illegal activities, ARDON SORIANO earned millions of dollars from the distribution and sale of the cocaine that he worked with others to import into the United States.  ARDON SORIANO used some of the drug proceeds to fund political campaigns in Honduras for himself and one or more of his associates.

As alleged in a separate Superseding Indictment, between in or about 2005 and in or about 2016, CALIX HERNANDEZ participated in large-scale drug trafficking with traffickers located in, among other places, Colombia, Honduras, Guatemala, and Mexico.  Like ARDON SORIANO, CALIX HERNANDEZ and others participated in providing heavily armed security for cocaine shipments transported within Honduras, including by members of the Honduran National Police and drug traffickers armed with, among other weapons, machineguns.  CALIX HERNANDEZ’s co-defendant and alleged co-conspirator is Juan Antonio Hernandez Alvarado, a/k/a “Tony Hernandez,” a former member of the National Congress of Honduras and the brother of the current president of Honduras.  On November 23, 2018, Hernandez Alvarado was arrested in Miami.  He was subsequently brought to the Southern District of New York and faces the same drug trafficking and firearms charges as CALIX HERNANDEZ as well as an additional charge of making false statements to U.S. federal agents.  

*                *                *

ARDON SORIANO, 43, a citizen of Honduras, is charged in three counts:  (1) conspiring to import cocaine into the United States, (2) using and carrying machineguns and destructive devices during, and possessing machineguns and destructive devices in furtherance of, the cocaine importation conspiracy, and (3) conspiring to use and carry machineguns and destructive devices during, and to possess machineguns and destructive devices in furtherance of, the cocaine importation conspiracy. 

CALIX HERNANDEZ, 36, a citizen of Honduras, is charged in three counts in a separate Superseding Indictment:  (1) conspiring to import cocaine into the United States, (2) using and carrying machineguns and destructive devices during, and possessing machineguns and destructive devices in furtherance of, the cocaine importation conspiracy, and (3) conspiring to use and carry machineguns and destructive devices during, and to possess machineguns and destructive devices in furtherance of, the cocaine importation conspiracy. 

If convicted, ARDON SORIANO and CALIX HERNANDEZ each face a mandatory minimum sentence of 10 years in prison and a maximum term of life in prison on Count One, a mandatory minimum sentence of 30 years in prison and a maximum term of life in prison on Count Two, and a maximum term of life on Count Three.

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

Mr. Berman praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit, New York Strike Force, and Tegucigalpa Country Office.  Mr. Berman also thanked the U.S. Department of Justice’s Office of International Affairs and the U.S. Attorney’s Offices for the Eastern District of Virginia and the Southern District of Florida.

These cases are being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Emil J. Bove III and Mathew J. Laroche are in charge of the prosecutions.

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

[1] As the introductory phrase signifies, the entirety of the text of the Indictment charging Ardon Soriano, and the separate Superseding Indictment charging Calix Hernandez, as well as the descriptions of the Indictments set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, 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 ANTHONY MARRACCINI pled guilty today to tax evasion before U.S. District Judge Kenneth M. Karas in White Plains federal court. 

U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, former Harrison Police Chief Anthony Marraccini failed to report more than $2.5 million he earned through his ownership of a construction company and several rental properties.  At a time when he was the top law enforcement officer in Harrison, Marraccini broke the law and evaded more than $780,000 in income taxes.  Sworn officers of the law should be held to a higher standard.  At a bare minimum, they should be expected to obey the law.”

IRS-CI Acting Special Agent in Charge Jonathan D. Larsen said:  “As the Chief of Police for the Town of Harrison, Anthony Marraccini held a position of trust in the eyes of the public. That trust was broken when he decided to commit a serious tax felony.  The laws of the land apply to everybody, regardless of position or power.  IRS-CI special agents will continue their work to ensure that everybody pays their fair share.”

According to the allegations contained in the Information:

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

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

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

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

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

*                *                *

MARRACCINI, 54, of West Harrison, New York, pled guilty to one count of tax evasion, which carries a maximum sentence of five years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as the sentence will be determined by the court. 

MARRACCINI is scheduled to be sentenced by Judge Karas on May 16, 2019.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that LAVELLEOUS PURCELL, a/k/a “King Casino,” a/k/a “Mike Hill,” was sentenced today by United States District Judge Denise L. Cote to 216 months in prison for sex trafficking by force, fraud, and coercion, and other related offenses.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Lavelleous Purcell, a violent and notoriously brutal predator, used physical violence and intimidation to force women into sexual servitude for his financial enrichment.  Appropriately, Purcell has now been sentenced to surrender his own freedom for many years.”

According to the Indictment filed in Manhattan federal court, previous court filings, and statements made at public proceedings:

From at least in or about 2012 to in or about 2017, LAVELLEOUS PURCELL, a/k/a “King Casino,” a/k/a “Mike Hill,” the defendant engaged in the sex trafficking and commercial sexual exploitation of numerous women across the country, including in New York, Pennsylvania, and North Carolina.  The defendant recruited, enticed, harbored, transported, provided, obtained, and maintained women for the purposes of commercial sex, and he used violent force, threats of force, coercion, intimidation, and fear to force at least one woman to engage in commercial sex for his own profit.  For example, the defendant strangled and choked certain of his victims, he hit and threatened to hit certain of his victims, and he kidnapped certain of his victims. 

The victims of the defendant’s prostitution business were required to follow a strict set of rules, which the defendant enforced through threats, fear, intimidation, and violence.  The defendant’s rules required his victims to:  make money for the defendant through prostitution, give the defendant all money earned from any commercial sex acts, call the defendant “Daddy,” not speak to men other than the defendant, not look at any men other than the defendant, not talk back to the defendant, not disrespect the defendant, not have boyfriends, not wear sneakers or loose-fitting clothing, and brand themselves with a tattoo bearing the defendant’s alias, “Casino,” on their necks. 

The defendant recruited women to engage in commercial sex through social media websites, and he used Backpage.com, an online classifieds website, to post advertisements for commercial sex.  The defendant also booked various rental cars and hotel rooms to transport women across state lines to engage in commercial sex.  Meanwhile, the defendant boasted about the violence he used against women and his prostitution of women through social media posts, phone, text, and online communications, and in person. 

*                *                *

In addition to his prison sentence, PURCELL, 40, was sentenced to five years of supervised release.

Mr. Berman thanked the FBI and the NYPD for their outstanding investigative work in this matter.  Mr. Berman also thanked the New York County District Attorney’s Office for its assistance with this investigation. 

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Sheb Swett, Jane Kim, and Margaret Graham are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Gregory E. Demske, Chief Counsel to the Inspector General of the U.S. Department of Health and Human Services (“HHS-OIG”), Scott J. Lampert, Special Agent in Charge of HHS-OIG’s New York Regional Office, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Leigh-Alistair Barzey, Special Agent-in-Charge of the Defense Criminal Investigative Service (“DCIS”) Northeast Field Office, Michael C. Mikulka, Special Agent-in-Charge, New York Region, U.S. Department of Labor Office of Inspector General (“DOL-OIG”), Matthew Modafferi, Special Agent in Charge, U.S. Postal Service, Office of Inspector General, Northeast Area Field Office (“USPS-OIG”), and Thomas W. South, Deputy Assistant Inspector General for Investigations, U.S. Office of Personnel Management, Office of the Inspector General (“OPM-OIG”), announced today that the United States filed and settled two healthcare fraud lawsuits against national pharmacy chain WALGREENS BOOTS ALLIANCE, INC. (“WALGREENS”), pursuant to which WALGREENS must pay the United States and state governments a total of $269.2 million.  The first settlement, approved on January 16, 2019, by U.S. District Judge Paul A. Crotty and unsealed today, requires WALGREENS to pay $209.2 million to resolve allegations that it improperly billed Medicare, Medicaid, and other federal healthcare programs for hundreds of thousands of insulin pens it knowingly dispensed to program beneficiaries who did not need them.  The second settlement, approved on January 15, 2019, by U.S. District Judge J. Paul Oetken and unsealed today, requires WALGREENS to pay $60 million to resolve allegations that it overbilled Medicaid by failing to disclose to and charge Medicaid the lower drug prices that WALGREENS offered the public through a discount program.  In both settlements, WALGREENS admitted and accepted responsibility for conduct the Government alleged in its complaints under the False Claims Act.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Medicare and Medicaid provide essential healthcare coverage to millions of people across this country.  The financial integrity of these programs depends on truthful and accurate billing by pharmacies like Walgreens.  Overbilling and improper billing of Medicare and Medicaid unduly burden taxpayers and put the solvency of these vital healthcare programs at risk.  This Office will hold healthcare providers to account when they fail to deal honestly with federal programs.”

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Walgreens engaged in practices that undermined the integrity of the Medicare and Medicaid programs, compromised patient care, and wasted taxpayer dollars.  Along with our law enforcement partners, HHS-OIG will continue to protect the individuals that depend on federally funded health care programs, and ensure that companies that do business with those programs do so in an honest fashion.”

DCIS Special Agent-in-Charge Leigh-Alistair Barzey said:  “Health care fraud impacting the U.S. Department of Defense (DoD) is a top investigative priority for the DCIS.  The settlements announced today by the U.S. Attorney’s Office are the direct result of a joint investigative effort by the DCIS, the FBI, HHS OIG, DoL OIG, OPM OIG, Postal OIG, and the U.S. Department of Justice.  The successful resolution of these cases demonstrates the DCIS’s ongoing commitment to work with its law enforcement partners to combat health care fraud, protect Defense Health Agency funds, and ensure the integrity of TRICARE, the DoD’s health care system.”

DOL-OIG Special Agent-in-Charge Michael C. Mikulka said:  “Walgreens defrauded the U.S. Department of Labor’s (DOL) Federal Employees’ Compensation Act Program and other health care programs out of millions of dollars by over-dispensing insulin pens at the risk of potentially causing harm to beneficiaries.  We will continue to work with our law enforcement partners to protect the integrity of DOL’s benefit programs.”

USPS-OIG Special Agent in Charge Matthew Modafferi said:  “This settlement sends a clear message to pharmaceutical chains to follow the law.  Pharmacies that attempt to take advantage of federal benefit systems will be pursued by the Special Agents of the U.S. Postal Service Office of Inspector General, their law enforcement partners, and the U.S. Attorney’s Office.”

OPM-OIG Deputy Assistant Inspector General for Investigations Thomas W. South said:   “The OPM-OIG has zero tolerance for fraud against the Federal Employees Health Benefits Program.  Today’s settlement reflects our commitment to pursuing and preventing improper and illegal billing practices that waste taxpayer dollars and increase the cost of medical care.  I would like to thank the DOJ attorneys, OPM-OIG agents, and their law enforcement partners for all their hard work.”

Insulin Pens Settlement

The United States’ complaint alleges that WALGREENS routinely submitted false days-of-supply data to federal healthcare programs when it sought federal reimbursement for insulin pens it dispensed to federal beneficiaries who did not need them.  Specifically, WALGREENS engaged in two practices that resulted in the fraudulent submissions.  First, WALGREENS configured its electronic pharmacy management system to prevent its pharmacists from dispensing less than a full box of five insulin pens, even when patients did not need that much insulin.  Second, when a full box of insulin pens exceeded the federal healthcare program’s limit on the total days of supply (i.e., the total number of daily doses) that could be dispensed and reimbursed at that time, WALGREENS evaded this restriction by falsely stating in its reimbursement claims that the total days of supply did not go over the limit.  As a result, federal healthcare programs paid WALGREENS millions of dollars for insulin that many beneficiaries did not actually need, and substantial quantities of valuable medication were wasted.  This conduct also opened the door to potential healthcare risks and abuse, such as the improper resale of insulin pens on the Internet.

The settlement requires WALGREENS to pay approximately $168 million to the United States, and WALGREENS has agreed separately to pay approximately $41.2 million to state governments.[1]  Under the settlement, WALGREENS admitted, among other things, that:

• When a federal health program denied a claim from WALGREENS because the reported days of supply for a full carton of five insulin pens exceeded the federal program’s days-of-supply limit, it was WALGREENS’s  practice to dispense and bill for the full carton and reduce the reported days of supply to conform to the program’s days-of-supply limit; and
• WALGREENS thus repeatedly reported days-of-supply data to federal health programs that were different from, and lower than, the days-of-supply calculated according to the standard pharmacy billing formula.
   

Discount Drug Pricing Settlement
The United States’ complaint in this case alleges that WALGREENS operated a program called the Prescription Savings Club (the “PSC”), under which customers received discounts when they ordered drugs from WALGREENS.  Medicaid regulations directed WALGREENS to seek Medicaid reimbursement only at the lowest of certain drug price points, including the “usual and customary price” (“U&C price”).  Medicaid rules of many states defined the U&C price as the price offered through discount programs like the PSC.  Contrary to these requirements, WALGREENS did not disclose to Medicaid the discount drug prices it offered customers through the PSC when it sought reimbursement from Medicaid.  As a result, Medicaid programs paid WALGREENS more in reimbursements than they would have paid had WALGREENS disclosed the lower PSC prices.
The settlement requires WALGREENS to pay a total of $60 million, of which approximately $32 million is to the United States and approximately $28 million will go to state governments.  Under the settlement, WALGREENS admitted, among other things, that:

• Customers who enrolled in the PSC were eligible to receive discounts for thousands of types of drugs, and WALGREENS offered a savings guarantee under which PSC enrollees could recoup through a store credit the difference between the amount they paid to enroll in a given year and the amount they received in discounted savings in that year; and
• In submitting claims for reimbursement to Medicaid, WALGREENS did not identify its PSC program prices as its U&C prices for the drugs on the PSC program formulary, which resulted in the States paying more in reimbursement than they would have paid if WALGREENS had identified its PSC program prices.

Both cases arose from lawsuits filed by whistleblowers under the False Claims Act.  

In connection with these settlements, WALGREENS has entered into a Corporate Integrity Agreement with HHS-OIG.  The Corporate Integrity Agreement reaches broadly across WALGREENS’s retail and specialty pharmacies that bill federal health care programs.  Board oversight, multi-site claims reviews to be conducted by an Independent Review Organization, and other Corporate Integrity Agreement requirements seek to foster adherence to federal health care program requirements and thereby protect the programs.

Mr. Berman praised the outstanding investigative work of the HHS-OIG, FBI, DOD-OIG, DOL-OIG, USPS-OIG, and OPM-OIG.  He also thanked the Medicaid Fraud Control Units for Indiana, Washington, New York, and Texas for their assistance in these cases.

These cases are being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Li Yu and Jessica Jean Hu are in charge of the insulin pens case against Walgreens, and former Assistant U.S. Attorney Christopher Harwood was in charge of the discount drug pricing case against Walgreens.

[1] The Medicaid program is primarily administered by the states but financed jointly by federal and state funds.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that EMANUEL RICHARDSON, a/k/a “Book,” a former men’s basketball coach at the University of Arizona (“Arizona”), pled guilty in Manhattan federal court today to taking approximately $20,000 in cash bribes from athlete advisers in exchange for using his position to influence Arizona basketball players on his team to retain the services of the advisers paying the bribes.  RICHARDSON pled guilty before U.S. District Judge Edgardo Ramos.  

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, Emanuel Richardson, a former Arizona men’s basketball coach, abused his position as a mentor and coach to student-athletes for his own personal gain.  Richardson, entrusted to help players develop as athletes and young men, instead helped himself to the cash offered by unscrupulous agents and financial advisers.”

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

RICHARDSON, a former men’s basketball coach at Arizona, agreed to accept cash bribes in return for agreeing to exert his influence over student-athletes on Arizona’s Division I men’s basketball team to retain the services of the bribe-payers once the student-athletes entered the National Basketball Association (“NBA”).  

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

In addition to today’s plea, Anthony Bland, a/k/a “Tony,” a former men’s basketball coach at the University of Southern California, previously pled guilty, pursuant to a plea agreement with the Government, in connection with this scheme.  Munish Sood, a financial adviser, also previously pled guilty, pursuant to a cooperation agreement with the Government, in connection with this scheme

*                *                *

RICHARDSON, 46 years old, of Tucson, Arizona, pled guilty to one count of conspiracy to commit bribery.  As a condition of his plea, RICHARDSON agreed to forfeit $20,000.  The charge carries a maximum term of five years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.  Sentencing is scheduled for April 24, 2019, before Judge Ramos.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing today of an Indictment charging WILLIAM BAZEMORE, WARREN BRYANT, and MARQUIS JACKSON with racketeering, sex trafficking, and drug trafficking offenses. 

Two defendants were taken into custody last night and today and will be presented and arraigned before U.S. Magistrate Judge Katharine H. Parker later today.  A third defendant is in state custody and will be transferred to federal custody.  The case is assigned to U.S. District Judge Analisa Torres.

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the indictment, this organization trafficked significant quantities of drugs across the northeast of the United States and forced women, through violence, threats of violence, and coercive tactics, to further the drug business and engage in prostitution for the organization’s financial benefit.  Thanks to the extraordinary work of the FBI, the NYPD, and Special Agents in the U.S. Attorney’s Office, the defendants will now face justice in federal court.”

NYPD Commissioner James P. O’Neill said:  “Today’s charges further affirm the NYPD’s unwavering commitment to protecting the survivors of sex trafficking.  This crime is among the most heinous in our society.  Our job is to ensure that anyone who would seek to profit through the abuse and exploitation of another human being be brought to justice swiftly and successfully.  To that end, I thank and commend the U.S. Attorney’s Office for the Southern District and the FBI for their unparalleled support in building this critical case.  Together, we will continue to make the safest large city in the nation even safer.”

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

WILLIAM BAZEMORE, WARREN BRYANT, and MARQUIS JACKSON were members of a criminal enterprise (the “Organization”) involved in various criminal acts, including drug distribution, sex trafficking, kidnapping, and obstruction of justice, in and around New York City, Maine, and Connecticut.  Members and associates of the Organization transported heroin and crack cocaine between New York, Connecticut, and Maine, including by, using female addicts as drug couriers to secrete drugs on their persons and transport drugs and drug proceeds in vehicles controlled by the Organization.  Members and associates of the Organization also exploited female addicts who were drug customers by engaging in, among other things, sex trafficking by force, fraud, and coercion; the interstate transport of the women for the purpose of prostitution; and kidnapping. Specifically, the Organization used violence and threats of violence to force women to come to New York to engage in prostitution for the benefit of the Organization, or to remain in New York against their will, and took actions to prevent women from cooperating with law enforcement against the Organization.  

Count One of the Indictment charges WILLIAM BAZEMORE, a/k/a “Yaya,” a/k/a “Nudie,” a/k/a “Jack,” WARREN BRYANT, a/k/a “Blue,” and MARQUIS JACKSON, a/k/a “CT,” a/k/a “Pootie,” with participating in a racketeering conspiracy for their criminal involvement in the Organization.  Count Two charges BAZEMORE, BRYANT, and JACKSON with participating in a narcotics conspiracy to distribute and possess with intent to distribute crack cocaine and heroin.  Count Three charges BAZEMORE, BRYANT, and JACKSON with conspiring to commit sex trafficking.  Count Four charges BAZEMORE and BRYANT with engaging in sex trafficking.  Count Five charges BAZEMORE and BRYANT with transporting an individual from Maine to New York for the purpose of engaging in prostitution.  Count Six charges BAZEMORE with using a cellphone and the Internet to promote, manage and carry on a criminal business engaged in sex trafficking and prostitution. 

*                      *                     *           

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

Mr. Berman praised the outstanding investigative work of the FBI, the NYPD, and the Special Agents in the U.S. Attorney’s Office. 

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

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

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Racketeering conspiracy

18 U.S.C. § 1962(d)

WILLIAM BAZEMORE (age 38)

WARREN BRYANT (age 24)

MARQUIS JACKSON (age 30)

Life in prison

2

Narcotics distribution conspiracy

21 U.S.C. §§ 846, 841(b)(1)(A), 841(b)(1)(B)

WILLIAM BAZEMORE

WARREN BRYANT

MARQUIS JACKSON

Life in prison

Mandatory minimum of 10 years in prison

3

Conspiracy to commit sex trafficking

18 U.S.C. § 1594

WILLIAM BAZEMORE

WARREN BRYANT

MARQUIS JACKSON

Life in prison

4

Sex trafficking

18 U.S.C. § 1591

WILLIAM BAZEMORE

WARREN BRYANT

Life in prison

Mandatory minimum of 10 years in prison

5

Transportation for purpose of prostitution

18 U.S.C. § 2421

WILLIAM BAZEMORE

WARREN BRYANT

Maximum of 10 years in prison

6

Use of interstate commerce to promote unlawful activity

18 U.S.C. § 1952

WILLIAM BAZEMORE

Maximum of five years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that CLINT EDWARDS was charged yesterday in two counts with threatening a United States District Judge for the Southern District of New York and threatening an Assistant United States Attorney for the Southern District of New York.

On November 30, 2018, EDWARDS was sentenced in federal court on a separate criminal charge.  EDWARDS disrupted the sentencing proceeding by threatening to assault, murder, and otherwise harm the United States District Judge who was imposing the sentence and the Assistant United States Attorney who was prosecuting the case. 

U.S. Attorney Geoffrey S. Berman stated:  “The safety of our prosecutors and federal judges is of paramount importance, and any threats made against them will be prosecuted to the fullest extent of the law.”

*                *                *

EDWARDS, 28, of New Windsor, New York, is charged with one count of threatening to assault and murder a United States judge and one count of threatening to assault and murder a federal law enforcement officer.  Each count carries a maximum sentence of 10 years in prison.   The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

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

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Peter J. Davis 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.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today the unsealing of an indictment charging NATALYA VLADIMIROVNA VESELNITSKAYA, a national of the Russian Federation, with obstruction of justice. 

VESELNITSKAYA was an attorney assisting the defendants against the Government’s claims for forfeiture and civil money laundering penalties in United States v. Prevezon Holdings, Ltd., et al., 13 Civ. 6326.  In the Prevezon case, the Government sought to prove that VESELNITSKAYA’s clients had received and laundered a portion of the proceeds of a Russian tax refund fraud scheme involving corrupt Russian officials that was uncovered by Sergei Magnitsky, a Russian legal adviser who had participated in reporting the fraud to Russian authorities but was then arrested in a retaliatory proceeding.

In the course of representing the defendants in the Prevezon action, VESELNITSKAYA submitted to the U.S. District Court for the Southern District of New York (the “Court”) an intentionally misleading declaration in opposition to a Government motion. VESELNITSKAYA’s declaration presented supposed investigative findings by the Russian government – findings purportedly exonerating VESELNITSKAYA’s clients – under the false pretense that these findings had been independently drafted by the Russian government.  As alleged, however, VESELNITKSAYA concealed from the Court that she, as a member of the defense team in the Prevezon action, had participated in drafting those supposed exculpatory investigative findings in secret cooperation with a senior Russian prosecutor.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Fabricating evidence – submitting false and deceptive declarations to a federal judge – in an attempt to affect the outcome of pending litigation not only undermines the integrity of the judicial process, but it threatens the ability of our courts and our Government to ensure that justice is done.  We take seriously our responsibility to protect the integrity of the judicial proceedings in this District, and we will not stand idly by while outside influences seek to corrupt and pervert that process.”

Special Agent-in-Charge Angel M. Melendez said:  “Russian Attorney Natalya Veselnitskaya is now a wanted person in the United States for intentionally misleading U.S. investigators, regarding Prevezon Holdings’ role in the $230 million dollar tax fraud scheme perpetrated by a criminal organization that included in its ranks corrupt Russian officials.  This investigation brought to light how Veslnitskaya secretly schemed with a senior Russian prosecutor to provide false information to U.S. law enforcement in an attempt to influence the legal proceedings in the Southern District of New York.  The determined efforts of HSI New York’s El Dorado Task Force and the U.S. Attorney’s Office reflect how seriously we take the rule of law in the United States.  Veselnitskaya is now on notice and will have to answer for her futile actions.”

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

The Prevezon Action

The U.S. Attorney’s Office for the Southern District of New York filed the Prevezon action on September 10, 2013, seeking to recover several million dollars’ worth of property, mainly New York real estate, on the ground that this property was involved in laundering a portion of the proceeds of a Russian tax fraud scheme (the “Russian Treasury Fraud”).

The Complaint in the Prevezon action alleged that the Russian Treasury Fraud was an elaborate tax refund fraud scheme in which a criminal organization including corrupt Russian government officials defrauded Russian taxpayers out of approximately 5.4 billion rubles, or over $200 million.  Among other things, the Complaint alleged that the Russian Treasury Fraud consisted of stealing the corporate identities of three companies held by a foreign investment fund advised by an investment company (“Investment Company-1”), manufacturing false contractual defaults against the stolen companies, and claiming tax refunds on the basis of those false corporate liabilities. 

The Complaint also alleged that persons associated with Investment Company-1, including Sergei Magnitsky, attempted to report the Russian Treasury Fraud to Russian authorities but were subject to retaliatory prosecutions by the Russian government; that the proceeds from the Russian Treasury Fraud were moved through an elaborate network of shell companies; and that approximately $1.96 million was ultimately transferred by shell companies to a real estate company (“Real Estate Company-1”) that was a defendant in the Prevezon Action.  VESELNITSKAYA, an attorney based in Russia, was retained to assist the defendants in the Prevezon Action.

The MLAT Request and the Russian MLAT Response

In March 2014, the U.S. Government sent the Russian Government a request pursuant to a Mutual Legal Assistance Treaty (the “MLAT Request”), seeking – for use in the Prevezon Action – records proving the commission of the Russian Treasury Fraud and Russian bank records showing the flow of the Russian Treasury Fraud’s proceeds.

In August 2014, the Russian Government responded to the MLAT Request.  Instead of providing the requested records, the Russian Government sent the U.S. Government a report from the Russian Prosecutor General’s Office (the “Russian MLAT Response”). 

The Russian MLAT Response consisted of a number of supposed investigative findings purportedly from a Russian government investigation.  These supposed findings purported to exonerate all Russian government personnel of participating in the Russian Treasury Fraud; to exonerate Real Estate Company-1 of receiving proceeds of the Russian Treasury Fraud; and to accuse people associated with Investment Company-1 of committing the Russian Treasury Fraud.  Among the persons the Russian MLAT Response purported to accuse of committing the Russian Treasury Fraud was Magnitsky.

The Veselnitskaya Declaration

In November 2015, the Government moved for partial summary judgment in the Prevezon Action, seeking a ruling that the Russian Treasury Fraud had occurred and constituted a predicate offense for money laundering.  The defendants in the Prevezon Action responded, claiming that the motion should be denied because the Russian Treasury Fraud had supposedly been committed by people associated with Investment Company-1 without the involvement of any Russian government officials. 

As support for these claims, the defendants in the Prevezon Action submitted a declaration by VESELNITSKAYA (the “Veselnitskaya Declaration”).  The Veselnitskaya Declaration attached the Russian MLAT Response, characterized it as exculpatory evidence corroborating the defense’s claims, and claimed that VESELNITSKAYA had gone to great lengths to obtain a copy of it.  According to her declaration, VESELNITSKAYA had sought a copy from the Russian Prosecutor General’s Office and been refused, leading her to file a Russian court action to obtain an order compelling the Russian prosecutors to furnish her with a copy.

Veselnitskaya’s Secret Cooperation with the Russian Prosecutor

As alleged, however, VESELNITSKAYA had secretly worked with a senior Russian prosecutor to help draft the Russian MLAT Response.  Emails from an account used by VESELNITSKAYA reveal that she sent multiple drafts of the document to the personal email account of a Russian prosecutor in the Prosecutor General’s Office, which drafts made numerous edits and insertions to the Russian MLAT Response.

A number of the insertions VESELNITSKAYA sent the Russian prosecutor were incorporated – either in rephrased form or at times essentially verbatim – into the final Russian MLAT Response sent by the Russian Government to the U.S. Government.  Among the insertions that VESELNITSKAYA sent to the Russian prosecutor – and that appeared in some form in the final Russian MLAT Response – were some claims that were featured in the Prevezon defendants’ opposition to the Government’s summary judgment motion.  These claims were supposed evidence that persons associated with Investment Company-1, not corrupt Russian Government officials, committed the Russian Treasury Fraud.

In addition to working with VESELNITSKAYA to draft the Russian MLAT Response, the Russian prosecutor also sent VESELNITSKAYA a draft of a formal complaint against the Prosecutor General’s Office (i.e., against the office where the Russian prosecutor worked) seeking a copy of the Russian MLAT Response for VESELNITSKAYA.  Such a formal complaint would falsely make it appear – consistent with the Veselnitskaya Declaration – that VESELNITSKAYA was only able to obtain the Russian MLAT Response through formal legal means and was not a party to its very drafting.

VESELNITSKAYA’s declaration did not disclose any of these facts to the Court.  When VESELNITSKAYA characterized the Russian MLAT Response as exculpatory, she did not disclose that she had helped to write it.  When she claimed that she had been refused a copy of the Russian MLAT Response by the Prosecutor General’s Office and resorted to a Russian court to obtain a copy of it, she did not disclose that she had helped to write it, or that a member of that office had helped her file a complaint against his own office to get a copy. 

The Court denied the Government’s motion for partial summary judgment – the outcome VESELNITSKAYA had sought in submitting her declaration.  The Prevezon Action continued and the case settled before trial.

*                *                *

NATALYA VLADIMIROVNA VESELNITSKAYA, 43, a citizen and resident of Russia, is charged with one count of obstruction of justice, which carries a maximum sentence of 10 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the assigned judge.

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

The case is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit and its Public Corruption Unit.  Assistant United States Attorneys Paul M. Monteleoni and Benet J. Kearney are in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William Cheung, the Acting Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that MICHAEL GYURE, the executive director of a private club in Manhattan, pled guilty today to filing false federal income tax returns.  GYURE pled guilty before U.S. District Judge Naomi Reice Buchwald. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, while serving as the executive director of a private club in Manhattan, Michael Gyure ripped off the IRS.  Gyure’s filing of false tax returns is no laughing matter, and he now awaits sentencing for this crime.”

IRS-CI Acting Special Agent in Charge William Cheung said:  “Gyure’s attempt to evade tax by filing false tax returns was a theft from the American public.  It is a felony that carries severe consequences.  As we start the tax filing season, it is a timely reminder of the overarching principle of IRS’s enforcement strategy:  We protect the integrity of the tax system by ensuring everyone pays the right amount of tax.”

According to allegations contained in the Information to which GYURE pled guilty and other documents filed in federal court, as well as statements made in public court proceedings:

At all times relevant to the conduct outlined in the Information, GYURE was the executive director of a private club (the “Club”) located in Manhattan.  In 2012, GYURE entered into an employment agreement with the Club entitling him to the payment of certain personal expenses.  Between 2012 and 2016, GYURE received more than approximately $273,000 in reimbursements and direct payments from the Club to pay for personal expenses including, among other things, the purchase of wine sent to GYURE’s home, international travel for GYURE and his family members, and purchases of clothing and groceries.  Additionally, during this same period, the Club reclassified more than $160,000 in loans that had previously been made to GYURE as additional compensation, above and beyond GYURE’s salary.  The payments for personal expenses made to GYURE and the reclassification of loans as additional compensation to GYURE came at a time when the Club was attempting to address a decrease in revenues and cash management issues.  By in or about 2015, for example, the Club was asking vendors to accept reduced or late payments and, during the period between 2015 and 2016, the Club failed to pay several hundred thousand dollars in sales taxes to the State of New York.

In each of tax year 2012, 2013, 2014, and 2015, GYURE caused to be filed with the IRS income tax returns that understated his income by failing to report the income he earned from the Club as payments of personal expenses and additional compensation due to reclassification of loans.  During the period between tax years 2012 and 2016, GYURE caused losses to the IRS of more than $150,000.

*                *                *

GYURE, 50, of New York, New York, pled guilty to one count of filing false federal income tax returns, which carries a maximum sentence of three years in prison.  GYURE has agreed to pay restitution to the IRS in the amount of at least $156,920, which represents the additional tax due and owing as a result of GYURE’s underpayment of income taxes for the tax years 2012 through 2016.  Sentencing is scheduled for April 22, 2019, at 2:45 p.m., before Judge Buchwald. 

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

Mr. Berman praised the outstanding investigative work of IRS-CI, the U.S. Postal Inspection Service, and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York in this case.

  This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Katherine Reilly and Sheb Swett are in charge of the prosecution.

“As a unanimous jury found, Jeremy Reichberg orchestrated a years-long bribery scheme that led to tens of thousands of dollars in benefits being provided to a select group of NYPD officers to provide Reichberg with a private, paid police force.  These illegal acts clearly undermine the mission of the NYPD and leave the citizens of New York City poorer, and Reichberg’s subsequent attempt to hide evidence of his scheme from law enforcement cannot be tolerated.  We respect the jury’s verdict as to James Grant, and we thank the jurors for their service during this lengthy trial.  Our Office will continue to work with the NYPD and the FBI to prevent corruption.”

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, today announced the appointment of Laura Grossfield Birger as Chief of the Office’s Criminal Division.

Ms. Birger returns to the Office from the law firm of Cooley LLP, where she was a partner representing individuals and entities in white collar criminal, complex civil, and regulatory matters.  Ms. Birger was previously an Assistant United States Attorney in the Office for 10 years, from 1997 to 2007, serving in the Criminal Division.  From 2004 to 2007, Ms. Birger was chief of the General Crimes Unit, and from 2003 to 2004, she was Deputy Chief of the Appeals Unit.  Ms. Birger graduated magna cum laude from Brown University in 1990 and from Yale Law School in 1993.  Upon graduation from law school, Ms. Birger served as a law clerk to United States District Judge Norma L. Shapiro of the Eastern District of Pennsylvania.

In making the appointment, Manhattan U.S. Attorney Geoffrey S. Berman said:  “I am extremely pleased that Laura Birger will be returning to public service as Chief of the Office’s Criminal Division.  Laura was an outstanding AUSA during her prior tour in the Office and is an accomplished criminal defense lawyer.  I am confident that with her intellect, energy, vision, and leadership, Laura will be a terrific Criminal Division Chief.  I welcome Laura’s return, and I thank Lisa Zornberg for her more than two years of exceptional service as Chief of the Criminal Division.”

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that ANTHONY BLAND, a/k/a “Tony,” a former men’s basketball coach at the University of Southern California (“USC”), pled guilty in Manhattan federal court today to taking a cash bribe from athlete advisers in exchange for using his influence over USC college basketball players to retain the services of the advisers paying the bribes.  BLAND pled guilty before U.S. District Judge Edgardo Ramos.  Munish Sood, a financial adviser, previously pled guilty, pursuant to a cooperation agreement with the Government, in connection with this scheme.  

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, Tony Bland, a former USC men’s basketball coach, abused his position as a mentor and coach to student-athletes and aspiring professionals.  He treated his players not as young men to counsel and guide, but as opportunities to enrich himself.  Now Tony Bland awaits sentencing for his crime.”

 According to the Complaint, the Indictment, statements made in court, and publicly available documents[1]: 

BLAND, a former men’s basketball coach at USC, agreed to accept a cash bribe in connection with agreeing to exert his influence over student-athletes on USC’s Division I men’s basketball team to retain the services of the bribe-payers, including once the student-athletes entered the National Basketball Association.   BLAND’s co-defendants, with BLAND’s knowledge and approval, also funneled additional money to USC student-athletes and their families in connection with efforts to sign these potential professional athletes.

Beginning in or around July 2017, and continuing into September 2017, when BLAND was arrested, BLAND’s co-defendants paid and/or facilitated the payment of a cash bribe to BLAND in exchange for BLAND’s agreement to exert his influence over certain student-athletes BLAND coached at USC to retain BLAND’s co-defendant’s business management and/or financial advisory services once those players entered the NBA.  In particular, as BLAND told Christian Dawkins and Munish Sood, during a recorded meeting, in return for their bribe payment, “I definitely can get the players. . . .  And I can definitely mold the players and put them in the lap of you guys.”  In addition, and as part of the scheme, with BLAND’s knowledge and approval, Dawkins and Sood paid or facilitated the payment of an additional $9,000 directly to the families of two student-athletes at USC.  In return, BLAND facilitated a meeting between Dawkins and Sood and a relative of a different player attending USC for the purpose of pressuring that player to retain the financial services of Dawkins and Sood.

*                *                *

BLAND, 38, of Los Angeles, California, pled guilty to one count of conspiracy to commit bribery.  As a condition of his plea, BLAND agreed to forfeit $4,100.  The charge carries a maximum term of five years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.  Sentencing is scheduled for April 2, 2019, before Judge Ramos.

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

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

The charges contained in the Indictment against Christian Dawkins, Merl Code, Emmanuel Richardson, and Lamont Evans are merely accusations, and Dawkins, Code, Richardson, and Evans are presumed innocent unless and until proven guilty.  Trial is scheduled to commence against the other defendants on April 22, 2019.

Code and Dawkins are scheduled to be sentenced on March 5, 2019, by U.S. District Judge Lewis A. Kaplan in United States v. Gatto, No. 17 Cr. 686 (LAK), based on their conviction for participating in a separate wire fraud scheme to make payments to the families of men’s basketball student-athletes in connection with their decisions to matriculate in Adidas-sponsored Division I schools.

[1] The descriptions set forth below of conduct by BLAND’s co-defendants constitute only allegations, and every fact described should be treated as an allegation with respect to BLAND’s co-defendants, including Christian Dawkins, Merl Code, Emmanuel Richardson, and Lamont Evans.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and George P. Beach II, Superintendent of the New York State Police (“NYSP”), announced today the arrests of NACHMAN HELBRANS, MAYER ROSNER, ARON ROSNER, and JACOB ROSNER, all of whom were charged by complaint with kidnapping two children in Woodridge, New York, and unlawfully transporting them to Mexico.  With the help of Mexican law enforcement partners, the children were recovered this morning in the town of Tenango del Air in Mexico.  Plans are underway to bring them back to the United States and reunite them with their mother. 

ARON ROSNER was arrested in New York City on December 23, 2018, and presented in White Plains federal court before U.S. Magistrate Judge Lisa Margaret Smith the following day.  On or about December 27, 2018, NACHMAN HELBRANS, MAYER ROSNER, and JACOB ROSNER were deported from Mexico by Mexican immigration authorities, and arrived in New York City.  They were arrested yesterday and presented today in White Plains federal court before U.S. Magistrate Judge Paul E. Davison.

U.S. Attorney Geoffrey S. Berman said:  “As alleged in the Complaint, the defendants engaged in a terrifying kidnapping of two children in the middle of the night, taking the children across the border to Mexico.  Thankfully, the kidnappers were no match for the perseverance of the FBI, the New York State Police, and Mexican authorities, and the children were recovered this morning after a nearly three-week search.  These charges and arrests send a clear message that if you are involved in child abduction we will find you and bring you to justice.”  

Assistant Director-in-Charge Sweeney said:  “As alleged, the defendants are leaders and members of Lev Tahor who kidnapped two innocent children to continue their lives with the group in violation of a legitimate, court-ordered child custody arrangement.  This case demonstrates the FBI will never cease our efforts to bring justice to those who would victimize our nation’s most vulnerable citizens in blatant disregard for our laws.  I would like to thank the multitude of domestic and international partners who worked tirelessly, shoulder-to-shoulder with us to bring this case to a successful conclusion.”

State Police Superintendent George P. Beach II said:  “Through great police work, two children are being returned home safely to their mother.  I applaud the teamwork and interagency coordination that lead to getting these suspects into police custody, and these children to safety.  We will continue to work with our partners to seek justice on behalf of those who have been victimized and to protect the members of our communities.” 

According to the allegations in the Complaints unsealed in White Plains federal court:[1]

On or about December 8, 2018, two children (the “Victims”), ages 12 and 14, were kidnapped from a residence in the Village of Woodridge, Sullivan County, New York (the “Residence”), where they were staying with their mother (the “Mother”).  Approximately six weeks earlier, the Mother had fled from an organization in Guatemala called Lev Tahor.

Lev Tahor is an extremist Jewish sect based in Guatemala.  Public news reports indicate that children in Lev Tahor are often subject to physical, sexual, and emotional abuse.  The Mother was previously a voluntary member of Lev Tahor and her father was its founder and former leader, Rabbi Shlomo Helbrans.  According to the Mother, the new leader of Lev Tahor, her brother NACHMAN HELBRANS, is more extreme than her father had been, and, as a result, she fled from the group.  Prior to her escape, the Mother spoke out against the growing extremism within Lev Tahor.  The Mother indicated that it was not safe to keep her children there.  Upon entering the United States, the mother was granted temporary sole custody of the Victims, along with her four other children, in Kings County Family Court and an Order of Protection was issued against the Victims’ biological father on behalf of all six children.

As part of their investigation, law enforcement agents interviewed a participant in the kidnapping who was a member of Lev Tahor for over 19 years before leaving the organization approximately three months ago (“CC-1”).  CC-1 stated that the current leaders of Lev Tahor include MAYER ROSNER and NACHMAN HELBRANS.  CC-1 also stated that NACHMAN HELBRANS is considered the Rabbi and leader of Lev Tahor, that ARON ROSNER is the brother of MAYER ROSNER, and that JACOB ROSNER a/k/a “Chaim Rosner,” is the son of MAYER ROSNER. 

NACHMAN HELBRANS, MAYER ROSNER, JACOB ROSNER, and ARON ROSNER participated in the scheme to kidnap the Victims.  HELBRANS was captured in surveillance footage with the Victims at an airport outside Scranton, Pennsylvania, on the day of the kidnapping.  In the footage, HELBRANS and the Victims are wearing modern clothing inconsistent with the clothing typically worn by members of Lev Tahor.   MAYER ROSNER participated in the planning conversations for the kidnapping and attempted to persuade CC-1 to leave the country once the Victims had been transported to Mexico.  JACOB ROSNER, who is considered within Lev Tahor to be the husband of the 14-year old Victim, also participated in the planning conversations for the kidnapping and purchased the clothing worn by HELBRANS and the Victims during the kidnapping.  ARON ROSNER helped fund the kidnapping and organized conference calls with several co-conspirators over the course of the kidnapping during which co-conspirators discussed hotels in Mexico as well as purchases of flights, bus tickets, credit cards, and food for the Victims.

*                *                *

            ARON ROSNER, 45, of Brooklyn, New York, MAYER ROSNER, 42, of Guatemala, JACOB ROSNER, 20, of Guatemala, and NACHMAN HELBRANS, 36, of Guatemala, are each charged with one count of kidnapping, which carries a maximum sentence of life in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding work of the FBI and members of the FBI Hudson Valley Safe Streets Task Force, the New York State Police and the members of Troops F and NYC, United States Customs and Border Protection, the Sullivan County District Attorney’s Office, the Rockland County District Attorney’s Office, the Rockland County Sheriff’s Department, the Spring Valley Police Department, the Village of Woodridge Police Department, and our law enforcement partners in Mexico.  Mr. Berman also thanked the Department of Justice’s Office of International Affairs for its assistance.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Sam Adelsberg and Jamie Bagliebter in charge of the prosecution.

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

[1] As the introductory phrase signifies, the entirety of the texts of the Complaints and the descriptions of the Complaints 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 ROBERT GARCIA, the former president and chief of the Briarcliff Manor Fire Department (“BMFD”), was sentenced today by U.S. District Judge Cathy Seibel to one year and one day in prison for charges arising out of his embezzlement of more than $120,000 from the BMFD.  GARCIA pled guilty before Judge Seibel on July 2, 2018, to one count of embezzlement from a program receiving federal funds.

U.S. Attorney Geoffrey S. Berman said:  “Robert Garcia lined his pockets with Briarcliff Manor Fire Department and Fire Council money to pay personal expenses, and then lied about it to cover his tracks.  Now Garcia will go to prison for his crime.”

According to documents filed in court, GARCIA was elected to the position of Second Assistant Chief of the BMFD in or about April 2013.  His election to that position also made him an officer of the Briarcliff Manor Fire Council, which oversees the Briarcliff Manor Fire Department.  GARCIA was thereafter elected to different administrative and operational positions within the BMFD, including first assistant chief, chief, treasurer and president.  As a result, GARCIA was also an officer of the Fire Council from in or about April 2013 through in or about April 2017.  GARCIA was given signatory authority over bank accounts held by the Fire Council and the BMFD starting in April 2013.

From in or about May 2013 to in or about March 2017, GARCIA embezzled money from the BMFD and the Fire Council by writing checks drawn on the BMFD's and Fire Council's bank accounts that he made payable to himself.  GARCIA then deposited these checks into his personal bank accounts.  He used the embezzled proceeds to pay personal expenses.  GARCIA covered up his thefts by making material misstatements on written reports he gave to the Fire Council about the purposes and payees of the checks he had written to himself when he acted as the BMFD’s treasurer from in or about 2014 through in or about April 2017.  GARCIA embezzled more than $120,000 from the BMFD and the Fire Council by writing approximately 150 checks to himself.          

*                *                *

In addition to the prison sentence, GARCIA, 51, of Ossining, New York, was sentenced to two years of supervised release and assessed a $20,000 fine.  GARCIA paid full restitution to the BMFD prior to sentencing. 

Mr. Berman praised the outstanding investigative work of the IRS, FBI, New York State Comptroller, and New York State Police.

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

Defendants Were Members of the APT 10 Hacking Group Who Acted in Association with the Tianjin State Security Bureau and Engaged in Global Computer Intrusions for More Than a Decade, Continuing into 2018, Including Thefts from Managed Service Providers and More Than 45 Technology Companies

The unsealing of an indictment charging Zhu Hua (朱华), aka Afwar, aka CVNX, aka Alayos, aka Godkiller; and Zhang Shilong (张士龙), aka Baobeilong, aka Zhang Jianguo, aka Atreexp, both nationals of the People’s Republic of China (China), with conspiracy to commit computer intrusions, conspiracy to commit wire fraud, and aggravated identity theft was announced today.

The announcement was made by Deputy Attorney General Rod J. Rosenstein, U.S. Attorney Geoffrey S. Berman for the Southern District of New York, Director Christopher A. Wray of the FBI, Director Dermot F. O’Reilly of the Defense Criminal Investigative Service (DCIS) of the U.S. Department of Defense, and Assistant Attorney General for National Security John C. Demers.

Zhu and Zhang were members of a hacking group operating in China known within the cyber security community as Advanced Persistent Threat 10 (the APT10 Group).  The defendants worked for a company in China called Huaying Haitai Science and Technology Development Company (Huaying Haitai) and acted in association with the Chinese Ministry of State Security’s Tianjin State Security Bureau. 

Through their involvement with the APT10 Group, from at least in or about 2006 up to and including in or about 2018, Zhu and Zhang conducted global campaigns of computer intrusions targeting, among other data, intellectual property and confidential business and technological information at managed service providers (MSPs), which are companies that remotely manage the information technology infrastructure of businesses and governments around the world, more than 45 technology companies in at least a dozen U.S. states, and U.S. government agencies.  The APT10 Group targeted a diverse array of commercial activity, industries and technologies, including aviation, satellite and maritime technology, industrial factory automation, automotive supplies, laboratory instruments, banking and finance, telecommunications and consumer electronics, computer processor technology, information technology services, packaging, consulting, medical equipment, healthcare, biotechnology, pharmaceutical manufacturing, mining, and oil and gas exploration and production.  Among other things, Zhu and Zhang registered IT infrastructure that the APT10 Group used for its intrusions and engaged in illegal hacking operations.

“The indictment alleges that the defendants were part of a group that hacked computers in at least a dozen countries and gave China’s intelligence service access to sensitive business information,” said Deputy Attorney General Rosenstein.  “This is outright cheating and theft, and it gives China an unfair advantage at the expense of law-abiding businesses and countries that follow the international rules in return for the privilege of participating in the global economic system.”

“It is galling that American companies and government agencies spent years of research and countless dollars to develop their intellectual property, while the defendants simply stole it and got it for free” said U.S. Attorney Berman.  “As a nation, we cannot, and will not, allow such brazen thievery to go unchecked.”

“Healthy competition is good for the global economy, but criminal conduct is not.  This is conduct that hurts American businesses, American jobs, and American consumers,” said FBI Director Wray.  “No country should be able to flout the rule of law – so we’re going to keep calling out this behavior for what it is: illegal, unethical, and unfair.  It's going to take all of us working together to protect our economic security and our way of life, because the American people deserve no less."

“The theft of sensitive defense technology and cyber intrusions are major national security concerns and top investigative priorities for the DCIS,” said DCIS Director O’Reilly.  “The indictments unsealed today are the direct result of a joint investigative effort between DCIS and its law enforcement partners to vigorously investigate individuals and groups who illegally access information technology systems of the U.S. Department of Defense and the Defense Industrial Base.  DCIS remains vigilant in our efforts to safeguard the integrity of the Department of Defense and its enterprise of information technology systems.”

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

Overview

Zhu Hua (朱华), aka Afwar, aka CVNX, aka Alayos, aka Godkiller, and Zhang Shilong (张士龙), aka Baobeilong, aka Zhang Jianguo, aka Atreexp, the defendants, both nationals of China, were members of a hacking group operating in China known within the cyber security community as the APT10 Group, or alternatively as “Red Apollo,” “CVNX,” “Stone Panda,” “MenuPass,” and “POTASSIUM.”  The defendants worked for Huaying Haitai in Tianjin, China, and acted in association with the Chinese Ministry of State Security’s Tianjin State Security Bureau.  From at least in or about 2006 up to and including in or about 2018, members of the APT10 Group, including Zhu and Zhang, conducted extensive campaigns of intrusions into computer systems around the world.  The APT10 Group used some of the same online facilities to initiate, facilitate and execute its campaigns during the conspiracy.

Most recently, beginning at least in or about 2014, members of the APT10 Group, including Zhu and Zhang, engaged in an intrusion campaign to obtain unauthorized access to the computers and computer networks of MSPs for businesses and governments around the world (the MSP Theft Campaign).  The APT10 Group targeted MSPs in order to leverage the MSPs’ networks to gain unauthorized access to the computers and computer networks of the MSPs’ clients and to steal, among other data, intellectual property and confidential business data on a global scale.  For example, through the MSP Theft Campaign, the APT10 Group obtained unauthorized access to the computers of an MSP that had offices in the Southern District of New York and compromised the data of that MSP and certain of its clients involved in banking and finance, telecommunications and consumer electronics, medical equipment, packaging, manufacturing, consulting, healthcare, biotechnology, automotive, oil and gas exploration, and mining.

Earlier, beginning in or about 2006, members of the APT10 Group, including Zhu and Zhang, engaged in an intrusion campaign to obtain unauthorized access to the computers and computer networks of more than 45 technology companies and U.S. government agencies, in order to steal information and data concerning a number of technologies (the Technology Theft Campaign).  Through the Technology Theft Campaign, the APT10 Group stole hundreds of gigabytes of sensitive data and targeted the computers of victim companies involved in aviation, space and satellite technology, manufacturing technology, pharmaceutical technology, oil and gas exploration and production technology, communications technology, computer processor technology, and maritime technology.

In furtherance of the APT10 Group’s intrusion campaigns, Zhu and Zhang, among other things, worked for Huaying Haitai and registered malicious domains and infrastructure.  In addition, Zhu, a penetration tester, engaged in hacking operations on behalf of the APT10 Group and recruited other individuals to the APT10 Group, and Zhang developed and tested malware for the APT10 Group.

The MSP Theft Campaign

In furtherance of the MSP Theft Campaign, Zhu, Zhang, and their co-conspirators in the APT10 Group engaged in the following criminal conduct:

• First, after the APT10 Group gained unauthorized access into the computers of an MSP, the APT10 Group installed multiple variants of malware on MSP computers around the world. To avoid antivirus detection, the malware was installed using malicious files that masqueraded as legitimate files associated with the victim computer’s operating system.  Such malware enabled members of the APT10 Group to monitor victims’ computers remotely and steal user credentials. 
• Second, after stealing administrative credentials from computers of an MSP, the APT10 Group used those stolen credentials to connect to other systems within an MSP and its clients’ networks. This enabled the APT10 Group to move laterally through an MSP’s network and its clients’ networks and to compromise victim computers that were not yet infected with malware. 
• Third, after identifying data of interest on a compromised computer and packaging it for exfiltration using encrypted archives, the APT10 Group used stolen credentials to move the data of an MSP client to one or more other compromised computers of the MSP or its other clients’ networks before exfiltrating the data to other computers controlled by the APT10 Group.

Over the course of the MSP Theft Campaign, Zhu, Zhang, and their co-conspirators in the APT10 Group successfully obtained unauthorized access to computers providing services to or belonging to victim companies located in at least 12 countries, including Brazil, Canada, Finland, France, Germany, India, Japan, Sweden, Switzerland, the United Arab Emirates, the United Kingdom, and the United States.  The victim companies included at least the following:  a global financial institution, three telecommunications and/or consumer electronics companies; three companies involved in commercial or industrial manufacturing; two consulting companies; a healthcare company; a biotechnology company; a mining company; an automotive supplier company; and a drilling company. 

The Technology Theft Campaign

Over the course of the Technology Theft Campaign, which began in or about 2006, Zhu, Zhang, and their coconspirators in the APT10 Group successfully obtained unauthorized access to the computers of more than 45 technology companies and U.S. Government agencies based in at least 12 states, including Arizona, California, Connecticut, Florida, Maryland, New York, Ohio, Pennsylvania, Texas, Utah, Virginia and Wisconsin.  The APT10 Group stole hundreds of gigabytes of sensitive data and information from the victims’ computer systems, including from at least the following victims: seven companies involved in aviation, space and/or satellite technology; three companies involved in communications technology; three companies involved in manufacturing advanced electronic systems and/or laboratory analytical instruments; a company involved in maritime technology; a company involved in oil and gas drilling, production, and processing; and the NASA Goddard Space Center and Jet Propulsion Laboratory.  In addition to those victims who had information stolen, Zhu, Zhang, and their co-conspirators successfully obtained unauthorized access to computers belonging to more than 25 other technology-related companies involved in, among other things, industrial factory automation, radar technology, oil exploration, information technology services, pharmaceutical manufacturing, and computer processor technology, as well as the U.S. Department of Energy’s Lawrence Berkeley National Laboratory. 

Finally, the APT10 Group compromised more than 40 computers in order to steal sensitive data belonging to the Navy, including the names, Social Security numbers, dates of birth, salary information, personal phone numbers, and email addresses of more than 100,000 Navy personnel.

*                *                *

Zhu and Zhang are each charged with one count of conspiracy to commit computer intrusions, which carries a maximum sentence of five years in prison; one count of conspiracy to commit wire fraud, 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 defendants will be determined by the assigned judge.  The charges contained in the Indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.

The case was investigated by the FBI, including the New Orleans, New Haven, Houston, New York, Sacramento, and San Antonio Field Offices; DCIS; and the U.S. Naval Criminal Investigative Service (NCIS).  Mr. Rosenstein, Mr. Berman and Mr. Demers praised the outstanding investigative work of, and collaboration among, the FBI, DCIS, and NCIS.  They also thanked the U.S. Attorney’s Office for the District of Connecticut, and the Department of Defense’s Computer Forensic Laboratory for their assistance in the investigation.

Assistant U.S. Attorney Sagar K. Ravi of the Southern District of New York’s Complex Frauds and Cybercrime Unit is in charge of the prosecution, with assistance provided by Trial Attorney Matthew Chang of the National Security Division’s Counterintelligence and Export Control Section.

Rod J. Rosenstein, the Deputy Attorney General of the United States, Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Christopher A. Wray, the Director of the Federal Bureau of Investigation (“FBI”), Dermot F. O’Reilly, Director of the Defense Criminal Investigative Service (“DCIS”) of the U.S. Department of Defense, and John C. Demers, the Assistant Attorney General for National Security, announced today the unsealing of an indictment charging ZHU HUA (朱华), a/k/a “Afwar,” a/k/a “CVNX,” a/k/a “Alayos,” a/k/a “Godkiller,” and ZHANG SHILONG (张士龙), a/k/a “Baobeilong,” a/k/a “Zhang Jianguo,” a/k/a “Atreexp,” both nationals of the People’s Republic of China (“China”), with conspiracy to commit computer intrusions, conspiracy to commit wire fraud, and aggravated identity theft.

ZHU and ZHANG were members of a hacking group operating in China known within the cyber security community as Advanced Persistent Threat 10 (the “APT10 Group”).  The defendants worked for a company in China called Huaying Haitai Science and Technology Development Company (“Huaying Haitai”) and acted in association with the Chinese Ministry of State Security’s Tianjin State Security Bureau. 

Through their involvement with the APT10 Group, from at least in or about 2006 up to and including in or about 2018, ZHU and ZHANG conducted global campaigns of computer intrusions targeting, among other data, intellectual property and confidential business and technological information at managed service providers (“MSPs”), which are companies that remotely manage the information technology infrastructure of businesses and governments around the world, more than 45 technology companies in at least a dozen U.S. states, and U.S. government agencies.  The APT10 Group targeted a diverse array of commercial activity, industries, and technologies, including aviation, satellite, and maritime technology, industrial factory automation, automotive supplies, laboratory instruments, banking and finance, telecommunications and consumer electronics, computer processor technology, information technology services, packaging, consulting, medical equipment, healthcare, biotechnology, pharmaceutical manufacturing, mining, and oil and gas exploration and production.  Among other things, ZHU and ZHANG registered IT infrastructure that the APT10 Group used for its intrusions and engaged in illegal hacking operations.

Rod J. Rosenstein, the Deputy Attorney General of the United States said:  “The indictment alleges that the defendants were part of a group that hacked computers in at least a dozen countries and gave China’s intelligence service access to sensitive business information.  This is outright cheating and theft, and it gives China an unfair advantage at the expense of law-abiding businesses and countries that follow the international rules in return for the privilege of participating in the global economic system.”

Manhattan U.S. Attorney Geoffrey S. Berman said:  “It is galling that American companies and government agencies spent years of research and countless dollars to develop their intellectual property, while the defendants simply stole it and got it for free.  As a nation, we cannot, and will not, allow such brazen thievery to go unchecked.”

FBI Director Christopher A. Wray said:  “Healthy competition is good for the global economy, but criminal conduct is not.  This is conduct that hurts American businesses, American jobs, and American consumers.  No country should be able to flout the rule of law – so we’re going to keep calling out this behavior for what it is: illegal, unethical, and unfair.  It's going to take all of us working together to protect our economic security and our way of life, because the American people deserve no less.”

DCIS Director Dermot F. O’Reilly said:  “The theft of sensitive defense technology and cyber intrusions are major national security concerns and top investigative priorities for the DCIS.  The indictments unsealed today are the direct result of a joint investigative effort between DCIS and its law enforcement partners to vigorously investigate individuals and groups who illegally access information technology systems of the U.S. Department of Defense and the Defense Industrial Base.  DCIS remains vigilant in our efforts to safeguard the integrity of the Department of Defense and its enterprise of information technology systems.”

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

Overview

ZHU HUA (朱华), a/k/a “Afwar,” a/k/a “CVNX,” a/k/a “Alayos,” a/k/a “Godkiller,” and ZHANG SHILONG (张士龙), a/k/a “Baobeilong,” a/k/a “Zhang Jianguo,” a/k/a “Atreexp,” the defendants, both nationals of China, were members of a hacking group operating in China known within the cyber security community as the APT10 Group, or alternatively as “Red Apollo,” “CVNX,” “Stone Panda,” “MenuPass,” and “POTASSIUM.”  The defendants worked for Huaying Haitai in Tianjin, China, and acted in association with the Chinese Ministry of State Security’s Tianjin State Security Bureau.  From at least in or about 2006 up to and including in or about 2018, members of the APT10 Group, including ZHU and ZHANG, conducted extensive campaigns of intrusions into computer systems around the world.  The APT10 Group used some of the same online facilities to initiate, facilitate, and execute its campaigns during the conspiracy.

Most recently, beginning at least in or about 2014, members of the APT10 Group, including ZHU and ZHANG, engaged in an intrusion campaign to obtain unauthorized access to the computers and computer networks of MSPs for businesses and governments around the world (the “MSP Theft Campaign”).  The APT10 Group targeted MSPs in order to leverage the MSPs’ networks to gain unauthorized access to the computers and computer networks of the MSPs’ clients and to steal, among other data, intellectual property and confidential business data on a global scale.  For example, through the MSP Theft Campaign, the APT10 Group obtained unauthorized access to the computers of an MSP that had offices in the Southern District of New York and compromised the data of that MSP and certain of its clients involved in banking and finance, telecommunications and consumer electronics, medical equipment, packaging, manufacturing, consulting, healthcare, biotechnology, automotive, oil and gas exploration, and mining.

Earlier, beginning in or about 2006, members of the APT10 Group, including ZHU and ZHANG, engaged in an intrusion campaign to obtain unauthorized access to the computers and computer networks of more than 45 technology companies and U.S. government agencies, in order to steal information and data concerning a number of technologies (the “Technology Theft Campaign”).  Through the Technology Theft Campaign, the APT10 Group stole hundreds of gigabytes of sensitive data and targeted the computers of victim companies involved in aviation, space and satellite technology, manufacturing technology, pharmaceutical technology, oil and gas exploration and production technology, communications technology, computer processor technology, and maritime technology.

In furtherance of the APT10 Group’s intrusion campaigns, ZHU and ZHANG, among other things, worked for Huaying Haitai and registered malicious domains and infrastructure.  In addition, ZHU, a penetration tester, engaged in hacking operations on behalf of the APT10 Group and recruited other individuals to the APT10 Group, and ZHANG developed and tested malware for the APT10 Group.

The MSP Theft Campaign

In furtherance of the MSP Theft Campaign, ZHU, ZHANG, and their coconspirators in the APT10 Group engaged in the following criminal conduct:

• First, after the APT10 Group gained unauthorized access into the computers of an MSP, the APT10 Group installed multiple variants of malware on MSP computers around the world.  To avoid antivirus detection, the malware was installed using malicious files that masqueraded as legitimate files associated with the victim computer’s operating system.  Such malware enabled members of the APT10 Group to monitor victims’ computers remotely and steal user credentials. 

• Second, after stealing administrative credentials from computers of an MSP, the APT10 Group used those stolen credentials to connect to other systems within an MSP and its clients’ networks.  This enabled the APT10 Group to move laterally through an MSP’s network and its clients’ networks and to compromise victim computers that were not yet infected with malware. 

• Third, after identifying data of interest on a compromised computer and packaging it for exfiltration using encrypted archives, the APT10 Group used stolen credentials to move the data of an MSP client to one or more other compromised computers of the MSP or its other clients’ networks before exfiltrating the data to other computers controlled by the APT10 Group.

 

Over the course of the MSP Theft Campaign, ZHU, ZHANG, and their coconspirators in the APT10 Group successfully obtained unauthorized access to computers providing services to or belonging to victim companies located in at least 12 countries, including Brazil, Canada, Finland, France, Germany, India, Japan, Sweden, Switzerland, the United Arab Emirates, the United Kingdom, and the United States.  The victim companies included at least the following:  a global financial institution, three telecommunications and/or consumer electronics companies; three companies involved in commercial or industrial manufacturing; two consulting companies; a healthcare company; a biotechnology company; a mining company; an automotive supplier company; and a drilling company. 

The Technology Theft Campaign

Over the course of the Technology Theft Campaign, which began in or about 2006, ZHU, ZHANG, and their coconspirators in the APT10 Group successfully obtained unauthorized access to the computers of more than 45 technology companies and U.S. Government agencies based in at least 12 states, including Arizona, California, Connecticut, Florida, Maryland, New York, Ohio, Pennsylvania, Texas, Utah, Virginia, and Wisconsin.  The APT10 Group stole hundreds of gigabytes of sensitive data and information from the victims’ computer systems, including from at least the following victims:  seven companies involved in aviation, space and/or satellite technology; three companies involved in communications technology; three companies involved in manufacturing advanced electronic systems and/or laboratory analytical instruments; a company involved in maritime technology; a company involved in oil and gas drilling, production, and processing; and the NASA Goddard Space Center and Jet Propulsion Laboratory.  In addition to those victims who had information stolen, ZHU, ZHANG, and their coconspirators successfully obtained unauthorized access to computers belonging to more than 25 other technology-related companies involved in, among other things, industrial factory automation, radar technology, oil exploration, information technology services, pharmaceutical manufacturing, and computer processor technology, as well as the U.S. Department of Energy’s Lawrence Berkeley National Laboratory. 

Finally, the APT10 Group compromised more than 40 computers in order to steal sensitive data belonging to the Navy, including the names, Social Security numbers, dates of birth, salary information, personal phone numbers, and email addresses of more than 100,000 Navy personnel.

*                *                *

ZHU HUA (朱华), a/k/a “Afwar,” a/k/a “CVNX,” a/k/a “Alayos,” a/k/a “Godkiller,” and ZHANG SHILONG (张士龙), a/k/a “Baobeilong,” a/k/a “Zhang Jianguo,” a/k/a “Atreexp,” the defendants, are citizens and residents of China.  ZHU and ZHANG are each charged with one count of conspiracy to commit computer intrusions, which carries a maximum sentence of five years in prison; one count of conspiracy to commit wire fraud, 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 defendants will be determined by the assigned judge.

The case was investigated by the FBI, including the New Orleans, New Haven, Houston, New York, Sacramento, and San Antonio Field Offices; DCIS; and the U.S. Naval Criminal Investigative Service (“NCIS”).  Mr. Berman praised the outstanding investigative work of, and collaboration among, the FBI, DCIS, and NCIS.  He also thanked the United States Attorney’s Office for the District of Connecticut and the Department of Defense’s Computer Forensic Laboratory for their assistance in the investigation.

The 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, with assistance provided by Trial Attorney Matthew Chang of the National Security Division’s Counterintelligence and Export Control Section.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that IBRAHIM ISSA, a/k/a “Tony Issa,” was found guilty yesterday of bribery of public officials and tax fraud.  A unanimous jury convicted ISSA after a two-week trial before Chief United States District Judge Colleen McMahon.

U.S. Attorney Geoffrey S. Berman said:  “As proven at trial, Ibrahim Issa provided cash, lavish meals, and trips to managers of U.S. Postal Service Vehicle Maintenance Facilities (“VMFs”) in exchange for lucrative vehicle maintenance and repair jobs on Postal Service vehicles.  In addition, Issa evaded and conspired to evade both corporate and personal income taxes.”

According to court documents and the evidence at trial:

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

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

*              *             *

IBRAHIM ISSA, 56, of Manhattan, New York, was convicted of one count of bribery (which carries a maximum sentence 15 years in prison), one count of conspiracy to file a false corporate tax return (five years in prison), one count of corporate tax evasion (five years in prison), one count of aiding and abetting the filing of a false corporate tax return (three years in prison), and three counts of signing and subscribing a false personal tax return (each of which carries a maximum penalty of three years in prison).

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  ISSA is scheduled to be sentenced on April 30, 2019, at 4:00 p.m., before Chief Judge McMahon.

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

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Shawn Harris, Commissioner of the Mount Vernon Police Department, announced the unsealing of a federal indictment charging BARRY JOHNSON, 26, with aiding and abetting the murder of David DeGrace, 36, on August 26, 2018, in furtherance of a marijuana distribution conspiracy.  JOHNSON was arrested this morning in Mount Vernon and will be presented this afternoon before United States Magistrate Judge Lisa M. Smith.

U.S. Attorney Geoffrey S. Berman said:  “Last summer, David DeGrace was shot dead, the victim of senseless drug-related violence.  As alleged, Barry Johnson aided and abetted that murder.  Thanks to the work of our remarkable law enforcement partners, Johnson now stands charged in federal court for his role in this terrible crime.”

FBI Assistant Director William F. Sweeney Jr. said:  “In addition to the scourge of addiction, the drug trade brings violence and fear to our communities.  As alleged, Barry Johnson aided and abetted the death of David DeGrace for no other reason than to further that drug trade. The FBI and our partners are committed to eradicating drugs and associated criminal activity from our streets.”

Commissioner Shawn Harris said:  “I anticipate the arrest and prosecution of Barry Johnson will bring some closure to the family of David DeGrace.  This case is another example of a successful inter-agency investigation that lead to the arrest of a violent offender.  I express thanks to U.S. Attorney Geoffrey S. Berman and FBI Assistant Director William F. Sweeney Jr. for their continued support to hold those accountable who engage in violent criminal activity.  The men and women of the FBI Westchester County Safe Streets Task Force and the Mount Vernon Police Department are endlessly working together to make Mount Vernon a safer city.”

*                      *                     *

According to the allegations in the Indictment[1]:

On or about August 26, 2018, JOHNSON aided and abetted the murder of David DeGrace in Mount Vernon, New York, in furtherance of a marijuana distribution conspiracy.

JOHNSON is charged with one count of aiding and abetting the murder of DeGrace through the use of a firearm during and in relation to a narcotics trafficking offense, in violation of 18 U.S.C. §§ 924(j) and 2.  This charge carries a maximum penalty of death or life in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

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

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and Joseph F. Schaller, Commissioner of the New Rochelle Police Department (“NRPD”), announced today a Complaint charging JEFFREY STOVER, 46, with possessing a firearm and ammunition after having been convicted of a felony.  The defendant was arrested today and presented in White Plains federal court before United States Magistrate Judge Lisa Margaret Smith. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendant unlawfully possessed and discharged a firearm, endangering the lives of many in our community.  Thanks to the FBI, the New Rochelle Police Department, and the New York State Department of Corrections and Community Supervision, the defendant is in custody and facing federal criminal charges.”

FBI Assistant Director William F. Sweeney Jr. said:  “For a convicted felon, even possessing a firearm or ammunition is a felony – and as alleged, Stover not only was in possession of a gun, he discharged it on a public street, showing reckless disregard for public safety. As today’s arrest shows, the FBI and our law enforcement partners are committed to ensuring the safety of our communities.”

NRPD Commissioner Joseph F. Schaller said:  “This is yet another example of local, State, and federal law enforcement agencies working together to achieve positive results in removing alleged dangerous felons from our streets and enhancing the safety and quality of life in our community.”

*                      *                     *

According to the allegations in the Complaint[1]:

On or about December 15, 2018 and December 20, 2018, STOVER, after having been convicted of a felony, possessed ammunition and a firearm, which STOVER discharged on or about December 15, 2018 in downtown New Rochelle.  STOVER is charged with two counts of being a felon in possession of ammunition and/or a firearm in violation of 18 U.S.C. § 922(g)(1).  These charges carry a maximum penalty of 10 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorney Jim Ligtenberg 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 phase 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 FRANKIE BEQIRAJ was sentenced to 25 years in prison for leading a conspiracy to distribute heroin, cocaine, oxycodone, and alprazolam in the Bronx and Westchester.  BEQIRAJ personally distributed heroin that resulted in the death of Robert Vivolo, a 25-year-old man from City Island, New York.  BEQIRAJ was convicted after trial on June 11, 2018, before United States District Judge Richard M. Berman, who also imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Frankie Beqiraj ran a crew of employees that distributed heroin throughout the City Island community, often hiring addicts and paying them in cash and drugs.  His callousness and greed ultimately led to the overdose death of 25-year-old Robert Vivolo.  Now, Beqiraj has been sentenced for his crimes and will spend significant time in prison.”

According to court documents and the evidence at trial:

From July 2016 to January 2017, BEQIRAJ was the principal drug supplier of the small Bronx community of City Island.  BEQIRAJ employed workers, who were themselves heroin addicts and were supplied drugs by BEQIRAJ, to deliver narcotics to his customers using prepaid phones supplied by BEQIRAJ.  These workers were paid their salaries in money and heroin.  Through his organization, BEQIRAJ distributed large quantities of heroin, cocaine, oxycodone, and alprazolam.

On October 21, 2016, BEQIRAJ sold heroin to Robert Vivolo, a recovering heroin addict, on City Island, New York.  BEQIRAJ’s heroin caused Vivolo to die from an overdose that night.

The Court also found that, on or about January 9, 2017, one of Beqiraj’s workers distributed heroin to three additional individuals, all of whom overdosed.  One of those individuals died as a result of the overdose; the two others survived, having been revived with naloxone.

*              *             *

In addition to the prison term, BEQIRAJ, 28, of the Bronx, New York, was sentenced to five years of supervised release.

U.S. Attorney Berman praised the outstanding work of the New York City Police Department’s Bronx Narcotics Heroin Overdose Team, the New Rochelle Police Department, and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York.

This matter is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys David W. Denton Jr. and Elizabeth A. Hanft are in charge of the prosecution.   

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the filing of a complaint charging DARRELL JONES with possessing a firearm subsequent to having been convicted of a felony.  JONES was taken into federal custody today, presented before United States Magistrate Judge Lisa M. Smith, and ordered detained. 

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

Officers with the U.S. Drug Enforcement Administration (“DEA”) and Mount Vernon Police Department (“MVPD”), executed a search warrant of an apartment believed to be JONES’s on November 26, 2018, where they found, among other things, mail addressed to JONES, a 9 millimeter CANIK TP9SF handgun with the slide separated from the receiver, and approximately 300 grams of a white substance believed to be heroin.  An agent with the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) has confirmed that the CANIK handgun was manufactured outside New York.  JONES has nine prior state felony convictions, including seven felony convictions for possession, attempted possession, or sale of controlled substances. 

*                *                *

Based on the charges in the current complaint, JONES faces a maximum of 10 years in prison, with the possibility of a mandatory minimum of 15 years in prison.

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

Mr. Berman praised the outstanding investigative work of the DEA Westchester Residential Office, the Mount Vernon Police Department, and the ATF.

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

The charge 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 herein constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that RAZHDEN SHULAYA, a vor v zakone or “thief-in-law,” was sentenced today to 45 years in prison by United States District Judge Loretta A. Preska.  The sentence followed the June 2018 trial conviction of SHULAYA and Avtandil Khurtsidze, a boxing world champion and Shulaya’s violent enforcer, on racketeering and related charges in connection with a sprawling and violent criminal enterprise operating in New York, New Jersey, Pennsylvania, Nevada, and abroad.  Khurtsidze was sentenced on September 7, 2018, to 10 years in prison by U.S. District Judge Katherine B. Forrest.           

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Razhden Shulaya led a vast and violent criminal enterprise engaged in an array of criminal schemes that included extortion, theft, trafficking in stolen goods, and fraud.  Shulaya, a ‘thief-in-law,’ is a convicted thief under U.S. law, and has deservedly been sentenced to a lengthy prison term.”

As established by the evidence at trial:

The Shulaya Enterprise was an organized criminal group operating under the direction and protection of RAZHDEN SHULAYA a/k/a “Brother,” a/k/a “Roma,” a “vor v zakone” or “vor,” which are Russian phrases translated roughly as “Thief-in-Law” or “Thief,” and which refer to an order of elite criminals from the former Soviet Union who receive tribute from other criminals, offer protection, and use their recognized status as vor to adjudicate disputes among lower-level criminals.  As a vor, SHULAYA had substantial influence in the criminal underworld and offered assistance to and protection of the members and associates of the Shulaya Enterprise.  Those members and associates, and SHULAYA himself, engaged in widespread criminal activities, including acts of violence, extortion, the operation of illegal gambling businesses, fraud on various casinos, identity theft, credit card frauds, trafficking in large quantities of stolen goods, money laundering through a fraudulently established vodka import-export company, payment of bribes to local law enforcement officers, and the operation of a Brooklyn-based brothel.

The Shulaya Enterprise operated through groups of individuals, often with overlapping members and/or associates, dedicated to particular criminal tasks.  While many of these crews were based in New York City, the Shulaya Enterprise had operations in various locations throughout the United States (including in New Jersey, Pennsylvania, Florida, and Nevada) and abroad.  Most members and associates of the Shulaya Enterprise were born in the former Soviet Union and many maintained substantial ties to Georgia, Ukraine, and the Russian Federation, including regular travel to those countries, communication with associates in those countries, and the transfer of criminal proceeds to individuals in those countries.

SHULAYA oversaw and personally committed multiple acts of brutal violence in his role as a vor.  Evidence at trial included testimony regarding SHULAYA’s pistol-whipping of his own family member; testimony regarding SHULAYA’s public beating of a supposedly disrespectful underling; and photographs of the badly disfigured face of SHULAYA’s former lieutenant, co-defendant Mamuka Chaganava.  SHULAYA, protected by Khurtsidze, acted with impunity in the brutal assault of Chagaanva, a man whom he previously had held in high regard, and SHULAYA took pride in the brutality of that assault:  SHULAYA photographed Chaganava’s battered face in order to share his “handiwork” with another vor. In later explaining that he was unafraid of any retribution or reports to law enforcement by Chaganava, SHULAYA explained the perceived power of his position:  “For him, I am a god.”

   SHULAYA accomplished additional acts of violence and extortion through Khurtsidze, formerly a middleweight boxing champion, who acted as SHULAYA’s chief enforcer.  Khurtsidze was captured on video twice assaulting others in service of the Shulaya Enterprise, participated in recorded acts of extortion of gambling debts, and planned additional acts of violence with SHULAYA targeting associates of the Shulaya Enterprise whom Khurtsidze and SHULAYA perceived as having disrespected SHULAYA’s status as a vor.

SHULAYA also orchestrated a scheme to defraud casinos by targeting particular models of electronic slot machines using a complicated algorithm designed to predict the behavior of those machines.  SHULAYA obtained the technology used to commit that fraud through violence, including through the 2014 kidnapping of a software engineer in Las Vegas.  SHULAYA refined that technology by training lower-level members of the Shulaya Enterprise to execute this casino scam using smartphones and software developed by the Enterprise.

Following a two-week trial before Judge Forrest, SHULAYA was found guilty of one count of racketeering conspiracy, one count of conspiring to traffic in stolen goods such as luxury watches, one count of conspiracy to traffic in contraband tobacco, one count of identification document fraud, and one count of wire fraud conspiracy.  

*                *                *

In addition to the prison term, SHULAYA, 41, of Saint Petersburg, Russia, was sentenced to three years of supervised release, and ordered to pay $2,169,270 in forfeiture and restitution in the amount of $550,000.

Mr. Berman praised the outstanding work of the Federal Bureau of Investigation and its Eurasian Organized Crime Squad, as well as U.S. Customs and Border Protection and the New York City Police Department for their investigative efforts and ongoing support and assistance with the case.

The prosecution of this case is being overseen by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Andrew C. Adams and Andrew Thomas are in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and Raymond P. Donovan, the Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), announced today that KAREEM DAVIS, an alleged member of the “Killbrook” gang based in the Mill Brook Houses in the Bronx, was arrested and charged in connection with the April 18, 2011, murder of Bolivia Beck, the girlfriend of a rival gang member.  Beck was shot and killed as she was being introduced to her boyfriend’s grandparents on a sidewalk in the Mill Brook Houses.  DAVIS will be arraigned in Manhattan federal court later today before United States Magistrate Judge Debra Freeman. 

Fifteen individuals were previously charged in an initial Indictment unsealed on October 11, 2017.  That Indictment charged four individuals, including Gary Davis, the brother of KAREEM DAVIS, with racketeering conspiracy, in connection with their membership in the Killbrook gang, and charged other individuals with narcotics conspiracy and firearms offenses.  On January 8, 2018, Gary Davis was charged with the 2011 murder of Beck.  The Superseding Indictment adds KAREEM DAVIS as the second defendant charged with that murder.  The case is assigned to U.S. District Judge Lorna G. Schofield. 

U.S. Attorney Geoffrey S. Berman said:  “Bolivia Beck was murdered in 2011, in the most horrible and tragic of circumstances.  Over seven years have passed, but our remarkable partners at the NYPD and DEA have remained committed to holding her killers accountable.  As a result, Kareem Davis now stands charged with this terrible crime.”

DEA Special Agent in Charge Raymond P. Donovan said: “This investigation into the Killbrook Gang uncovered a racketeering conspiracy involving drug trafficking, firearms offenses and murder. Allegedly, Bolivia Beck was put in the crosshairs of gang rivalry and gang violence by Kareem and Gary Davis, both of whom are charged with murder.  There is no place for criminal gang activity in our communities and law enforcement is working to remove threats of violence by putting those responsible in jail.”  

*                      *                     *

According to the allegations in the Superseding Indictment[1] and information in the public record:

On April 18, 2011, Bolivia Beck was struck in the head by a bullet as she was being introduced to her boyfriend’s grandparents on a sidewalk in the Mill Brook Houses.  The shooting occurred in broad daylight.  Beck died two days later from the gunshot wound.  The shooting arose out of an ongoing gang dispute between Killbrook and the rival “MBG” street gang. 

KAREEM DAVIS, 29, of the Bronx, New York, is charged in the Superseding Indictment with one count of racketeering conspiracy, one count of murder in aid of racketeering and aiding and abetting the same, and one count of murder through the use of a firearm and aiding and abetting the same.  DAVIS faces a maximum penalty of death or life in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

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

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Jordan Estes and Alexandra Rothman are in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced criminal charges against Central States Capital Markets, LLC (“CSCM”), consisting of one felony violation of the Bank Secrecy Act (“BSA”), based on CSCM’s willful failure to file a suspicious activity report (“SAR”) regarding the illegal activities of its customer Scott Tucker.  Today’s charge represents the first criminal BSA charge ever brought against a United States broker-dealer.  The case is assigned to United States District Judge Paul J. Oetken.  

Mr. Berman also announced an agreement (the “Agreement”) under which CSCM agreed to accept responsibility for its conduct by stipulating to the accuracy of an extensive Statement of Facts, pay a $400,000 penalty, and continue to enhance its BSA/Anti-Money Laundering (“AML”) compliance program.  Assuming CSCM’s continued compliance with the Agreement, the Government has agreed to defer prosecution for a period of two years, after which time the Government will seek to dismiss the charges.  The penalty shall be collected through CSCM’s forfeiture to the United States of $400,000 in a civil forfeiture action also filed today.

U.S. Attorney Geoffrey S. Berman stated:  “CSCM’s anti-money laundering program was operated with serious gaps in oversight, responsiveness, and diligence.  As a result, CSCM failed to investigate and report suspicious transactions relating to a historically significant pay-day lending fraud.  With today’s resolution, CSCM has accepted responsibility for its criminal conduct and committed to completing the reform of its anti-money laundering program.  Today’s charge makes clear that all actors governed by the Bank Secrecy Act – not only banks – must uphold their obligations to protect our economy from exploitation by fraudsters and thieves.”

According to the documents filed today in Manhattan federal court:

The Tucker Payday Lending Scheme

On October 13, 2017, Scott Tucker and his attorney, Timothy Muir, were convicted after trial in the United States District Court for the Southern District of New York of racketeering, wire fraud and money laundering for their roles in perpetrating a massive payday lending scheme.  As the jury found, from in or about the late 1990s through in or about 2013, through various companies that he owned and controlled (the “Tucker Payday Lenders”), Tucker extended short-term, high-interest, unsecured loans, commonly referred to as “payday loans,” to individuals around the country at interest rates as high as 700% or more and in violation of the usury laws of numerous states, including New York.  Tucker sought to inoculate himself against applicable usury laws by entering into a series of sham relationships with certain Native American tribes (the “Tribes”) in order to conceal his ownership and control of the Tucker Payday Lenders and gain the protection of tribal sovereign immunity – a legal doctrine that generally prevents states from enforcing their laws against Native American tribes.  To effectuate his scheme, Tucker assigned nominal ownership of his payday lending companies to certain corporations created under the laws of the tribes (the “Tribal Companies”).

CSCM’s Willful Failure to File a SAR in Violation of the BSA

CSCM failed to follow its written customer identification procedures and did not act upon red flags prior to opening investment accounts for the Tribal Companies, which were in fact controlled by Tucker.  CSCM discussed opening these accounts exclusively with Scott Tucker and his brother Blaine (the “Tuckers”).  Although CSCM received account opening documents signed by tribal officials granting only Blaine Tucker authorization over the accounts, CSCM routinely dealt with and took direction from Scott Tucker concerning the management of funds in the Tribal Companies’ accounts based solely on Scott Tucker’s oral assertions that he was a “consultant” to the Tribes.  At no point did CSCM obtain written verification of Tucker’s authority over the accounts.

CSCM also disregarded red flags that were known prior to opening the accounts.  In March 2012, Tucker explained to the CEO that he was involved in the payday lending business and that he had approached certain Native American tribes to operate the payday lending business in order to take advantage of the tribes’ sovereign immunity.  Tucker further explained that the payday lending business had generated large cash reserves and that he was approaching CSCM because the business’s existing bank, a small bank based in Florida (the “Florida Bank”), had asked Tucker to move excess accumulations of cash because of certain regulatory requirements it was unable to meet.  Neither the CEO, nor anyone at CSCM, attempted to verify this explanation.

Shortly thereafter, CSCM also became aware of additional red flags concerning the Tuckers and the Tribal Companies.  Specifically, CSCM learned that Tucker had been convicted of fraud in 1991 and, separately, found news reports from as early as 2011 alleging that the Tuckers were engaging in a “rent-a-tribe” scheme in which the Tribal Companies were used by the Tuckers to claim ownership and control over the payday lending businesses in order to exploit the Tribal Companies’ ability to assert sovereign immunity as a defense to charges that the payday lending business violated state usury laws.  CSCM also became aware of an action brought by the Federal Trade Commission (“FTC”) against the Tuckers and the Tribal Companies, among others, for engaging in unfair business practices, which included allegations that the Tribal Companies were not protected by sovereign immunity.  CSCM, including its CEO, did not act upon these red flags because Tucker assured CSCM that the FTC action would soon be resolved and all challenges brought by state regulators had been unsuccessful due to sovereign immunity.

In addition to ignoring these various warning signals, CSCM failed to monitor any transactions using Actimize, the AML tool provided to CSCM for that purpose.  Between December 2011 and December 2015, Actimize generated 103 alerts, but CSCM never checked any of the alerts, made any attempt to customize Actimize’s default parameters, or undertook a review to ensure that this tool was sufficient for its specific monitoring needs or was being appropriately utilized.  Further, although the Clearing Firm furnished CSCM with the ability to generate a report reflecting, among other things, the identities of third parties transferring funds via wire transactions to CSCM account holders, CSCM never generated such reports.

Numerous suspicious transactions went undetected and unreported by CSCM.  For example, between December 21, 2012, and March 13, 2013, 18 wire transfers totaling $40,518,000 were sent from accounts at the Florida Bank in the names of Tribal Companies to Tucker’s personal CSCM account.  The transfers were in even dollar amounts, and on several occasions two different Tribal Companies, associated with different tribes, transferred the same dollar amounts, on the same day, to Tucker’s personal CSCM account.  CSCM never asked Tucker or the Tribal Companies about any of these transactions.

Despite producing documents in connection with this Office’s criminal investigation and its awareness of the indictment against Tucker, CSCM did not file a SAR until long after Tucker was convicted at trial. 

*         *        *

The Government intends to recommend that the amounts forfeited by CSCM be distributed to victims of Tucker’s scheme, consistent with the applicable Department of Justice regulations, through the ongoing remission process.

Mr. Berman praised the outstanding investigative work of the Special Agents at the United States Attorney’s Office and thanked the Securities and Exchange Commission for its assistance with the investigation.

The prosecution is being handled by the Office’s Money Laundering and Transnational Criminal Enterprises Unit.  Assistant U.S. Attorney Andrew C. Adams is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that WOOJAE JUNG, a/k/a “Steve Jung,” pled guilty today to one of count of securities fraud relating to his scheme to buy stock based on material nonpublic information. JUNG’s plea was taken by U.S. Magistrate Judge Debra Freeman and will be transmitted to U.S. District Judge Lewis A. Kaplan for consideration.  

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Woojae Jung pled guilty today to using favorable material nonpublic information taken from his investment bank employer in order to generate illicit profits, netting nearly $130,000 in illegal gains.  Our Office will continue to fight insider trading and ensure that those who cheat in our financial markets are held to account.”

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

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

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

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

*                *                *

JUNG, 37, of San Francisco, California, pled guilty to one count of securities fraud, which carries a maximum penalty of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

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

Abdulrahman El Bahnasawy, 20, of Missausagua, Canada, was sentenced to 40 years in prison, and a lifetime of supervised release, for plotting to carry out terrorist attacks in New York City during the summer of 2016 in support of the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization.  El Bahnasawy pleaded guilty on Oct. 13, 2016, to a seven-count Superseding Information charging El Bahnasawy with terrorism offenses. 

Assistant Attorney General for National Security John C. Demers, U.S. Attorney Geoffrey S. Berman for the Southern District of New York, Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York field office, Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles field office, and Commissioner James P. O’Neill of the NYPD made the announcement.  The sentence was issued by U.S. District Judge Richard M. Berman.

“El Bahnasawy conspired with others to conduct terrorist attacks in New York City in support of ISIS, and came into this country to carry them out. Today’s sentence reflects the severity of his conduct and holds him accountable for his terrorist activities,” said Assistant Attorney General Demers.  “I want to commend the prosecutors, agents, and analysts who are responsible for this successful result.  The National Security Division is committed to identifying and holding accountable those who seek to harm to our country and our citizens.”

“In the name of ISIS, Abdulrahman El Bahnasawy planned an elaborate attack to wreak havoc and destruction on New York City,” said U.S. Attorney Berman.  “He planned to detonate bombs in Times Square and the New York City subway system, and to shoot civilians at concert venues.  Demonstrating his commitment to carry out the attacks, El Bahnasawy pinpointed bomb locations on a map of the subway system, and acquired an array of bomb-making materials.  El Bahnasawy aspired, in his words, to ‘create the next 9/11.’  Thanks to our law enforcement partners in New York, nationally, and internationally, this potentially devastating plot was thwarted.”

Using encrypted electronic messaging applications, El Bahnasawy, a 20-year-old Canadian citizen and resident, plotted with Talha Haroon, a 20-year-old U.S. citizen residing in Pakistan, and Russell Salic, a 38-year-old Philippines citizen and resident, to conduct bombings and shootings in heavily populated areas of New York City during the Islamic holy month of Ramadhan in 2016, all in the name of ISIS (the NYC Attacks).  El Bahnasawy acquired bomb-making materials and helped secure a cabin within driving distance of New York City to use for building explosive devices and staging the NYC Attacks.  Haroon allegedly made plans to travel from Pakistan to New York City to join El Bahnasawy in carrying out the attacks.  And as El Bahnasawy and Haroon prepared to execute the NYC Attacks, Salic allegedly wired money from the Philippines to the United States to help fund the terrorist operation.

An undercover FBI agent (the UC) infiltrated the co-conspirators’ terrorist plot, posing as an ISIS supporter prepared to join in the attacks.  The FBI arrested El Bahnasawy in May 2016 after he traveled from Canada to the New York City area in preparation for the attacks, and he has been in custody since that time.  Haroon was arrested in Pakistan in September 2016, and Salic was arrested in the Philippines in April 2017, based on Complaints filed against them in Manhattan federal court, and they remain in foreign custody pending proceedings for their extradition to the United States.

The charges contained in the Complaints filed against Haroon and Salic are merely accusations, and Haroon and Salic are presumed innocent unless and until proven guilty.

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 FBI’s Los Angeles and Denver Field Offices.  Mr. Demers and Mr. Berman also thanked the Royal Canadian Mounted Police, the FBI’s Cleveland Field Office, the FBI’s Legal Attaché Offices in Canada, Pakistan, and the Philippines, the New York State Police, the Department of Justice’s Office of International Affairs, and the U.S. Attorney’s Office for the Central District of California for their assistance.

Assistant U.S. Attorneys Negar Tekeei and George D. Turner of the Southern District of New York are in charge of the prosecution, with assistance from Trial Attorneys Joshua Champagne and Larry Schneider of the National Security Division’s Counterterrorism Section.

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 today that ABDULRAHMAN EL BAHNASAWY was sentenced to 40 years in prison for plotting to carry out terrorist attacks in New York City during the summer of 2016 in support of the Islamic State of Iraq and al-Sham (“ISIS”), a designated foreign terrorist organization.  EL BAHNASAWY pled guilty on October 13, 2016, before U.S. District Judge Richard M. Berman to a seven-count Superseding Information charging EL BAHNASAWY with terrorism offenses.  Judge Berman also imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “In the name of ISIS, Abdulrahman El Bahnasawy planned an elaborate attack to wreak havoc and destruction on New York City.  He planned to detonate bombs in Times Square and the New York City subway system, and to shoot civilians at concert venues.  Demonstrating his commitment to carry out the attacks, El Bahnasawy pinpointed bomb locations on a map of the subway system, and acquired an array of bomb-making materials.  El Bahnasawy aspired, in his words, to ‘create the next 9/11.’  Thanks to our law enforcement partners in New York, nationally, and internationally, this potentially devastating plot was thwarted.”

Assistant Attorney General John C. Demers said:  “El Bahnasawy conspired with others to conduct terrorist attacks in New York City in support of ISIS, and came into this country to carry them out.  Today’s sentence reflects the severity of his conduct and holds him accountable for his terrorist activities.  I want to commend the prosecutors, agents, and analysts who are responsible for this successful result.  The National Security Division is committed to identifying and holding accountable those who seek to harm to our country and our citizens.”

According to the Indictment, Superseding Information, and other court filings:

Using encrypted electronic messaging applications, EL BAHNASAWY, a 20-year-old Canadian citizen and resident, plotted with Talha Haroon, a 20-year-old U.S. citizen residing in Pakistan, and Russell Salic, a 38-year-old Philippines citizen and resident, to conduct bombings and shootings in heavily populated areas of New York City during the Islamic holy month of Ramadhan in 2016, all in the name of ISIS (the “NYC Attacks”).  EL BAHNASAWY acquired bomb-making materials and helped secure a cabin within driving distance of New York City to use for building explosive devices and staging the NYC Attacks.  Haroon allegedly made plans to travel from Pakistan to New York City to join EL BAHNASAWY in carrying out the attacks.  And as EL BAHNASAWY and Haroon prepared to execute the NYC Attacks, Salic allegedly wired money from the Philippines to the United States to help fund the terrorist operation.

An undercover FBI agent infiltrated the co-conspirators’ terrorist plot, posing as an ISIS supporter prepared to join in the attacks.  The FBI arrested EL BAHNASAWY in May 2016 after he traveled from Canada to the New York City area in preparation for the attacks, and he has been in custody since that time.  Haroon was arrested in Pakistan in September 2016, and Salic was arrested in the Philippines in April 2017, based on Complaints filed against them in Manhattan federal court, and they remain in foreign custody pending proceedings for their extradition to the United States.

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In addition to the prison term, EL BAHNASAWY, 20, of Mississauga, Canada, was sentenced to lifetime supervised release.

Mr. Berman and Mr. Demers 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 FBI’s Los Angeles and Denver Field Offices.  Mr. Berman and Mr. Demers also thanked the Royal Canadian Mounted Police, the FBI’s Cleveland Field Office, the FBI’s Legal Attaché Offices in Canada, Pakistan, and the Philippines, the New York State Police, the Department of Justice’s Office of International Affairs, and the U.S. Attorney’s Office for the Central District of California for their assistance.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Negar Tekeei and George D. Turner are in charge of the prosecution, with assistance from Trial Attorneys Joshua Champagne and Larry Schneider of the Department of Justice’s National Security Division.

The charges contained in the Complaints filed against Haroon and Salic are merely accusations, and Haroon and Salic are presumed innocent unless and until proven guilty.        

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that DOUGLAS E. CASTLE, the owner of Global Edge Technologies Group LLC, a financial consulting firm located in Somers, New York (“Global Edge”), was sentenced yesterday to 50 months in prison for defrauding certain investors (the “Victims”) out of over $800,000 dollars.  CASTLE pled guilty to one count of wire fraud on July 26, 2018.  The sentence was imposed by United States District Judge Kenneth M. Karas.

U.S. Attorney Geoffrey S. Berman said:  “Douglas E. Castle took money from investors under false pretenses, lied to the FBI, and then lied to victims by telling them he was working with the FBI.  Now he has been sentenced to more than four years in prison for his litany of lies.”

According to the Complaint, Information, and other documents filed in the case, as well as statements made during court proceedings:

On June 25, 2003, CASTLE was sentenced in federal court to 34 months in prison and three years of supervised release for his conviction on an investment fraud scheme that caused investor losses of over $1.2 million.  Approximately five years after completing supervised release on that offense, CASTLE perpetrated the investment fraud scheme for which he was sentenced yesterday.

From about 2014 through 2017, CASTLE defrauded at least three victims of over $800,000, including by encouraging an aging window (“Victim-1”) prematurely to withdraw funds from her tax-advantaged retirement savings account to invest with CASTLE.  CASTLE misrepresented that he would invest Victim-1’s funds with a United Kingdom-based investment firm (“Firm-1”) that purportedly guaranteed the safety of the invested principal.  CASTLE represented that he previously invested his own money with Firm-1, but that because Firm-1 had high minimum investment thresholds, Victim-1 could invest her funds only by adding her money on top of CASTLE’s investment.  For that reason, CASTLE said the investment would be structured as a loan between CASTLE’s own financial consulting firm, Global Edge, and Victim-1.  In truth, as CASTLE knew, Firm-1 did not exist, and CASTLE spent Victim-1’s money instead on his own personal expenses, cash withdrawals, and eventually, in overseas transfers to individuals in Ghana and elsewhere who perpetrated an advance fee scam on CASTLE himself.  CASTLE also defrauded at least two other victims into investing funds with him under false pretenses. 

On June 8, 2016, CASTLE participated in a voluntary interview with the FBI in which he lied about the source of a particular transfer of Victim-1’s money he made to a Ghana bank account.  After this meeting with the FBI, CASTLE continued to lie to victims to raise more money.  After CASTLE came to realize that he would not receive a multimillion-dollar windfall in exchange for transferring his and his victims’ money, CASTLE attempted to preclude his victims from reporting the fraud to law enforcement by falsely claiming that he was already working with the FBI and multiple other law enforcement agencies on their behalf to recover their funds. 

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In addition to his prison term, CASTLE, 64, of Somers, New York, was sentenced to three years of supervised release, a forfeiture money judgment in the amount of $825,000, and restitution in the amount of $849,800.

Mr. Berman praised the outstanding investigative work of the Federal Bureau Investigation and thanked the Department of Homeland Security, Homeland Security Investigations for their assistance.

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