Southern District of New York

Adam Raishani, aka “Saddam Mohamed Raishani,” 32, of the Bronx, New York, pleaded guilty to attempting to provide and conspiring to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization.

Assistant Attorney General for National Security John C. Demers and U.S. Attorney Geoffrey S. Berman for the Southern District of New York made the announcement.  Raishani pleaded guilty today to a Superseding Information in Manhattan federal court before U.S. District Judge Ronnie Abrams.

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

Beginning in at least the fall of 2015, Raishani conspired with another ISIS supporter (“CC-1”) to provide material support to ISIS by means of CC-1 traveling abroad to join and fight for ISIS.  On or about Oct. 30, 2015, CC-1 departed from JFK Airport for Istanbul, Turkey, where he planned to cross into Syria to join ISIS.  Raishani arranged for CC-1’s transportation from the Bronx, New York, to John F. Kennedy International Airport (“JFK Airport”), and Raishani accompanied CC-1 from the Bronx to JFK Airport.

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

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

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

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

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

*                      *                      *

Raishani, pleaded guilty to one count of attempting to provide material support or resources to a designated foreign terrorist organization, namely, ISIS, which carries a maximum sentence of 20 years in prison, and one count of conspiring to provide material support or resources to ISIS, which carries a maximum sentence of 5 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.  Sentencing is scheduled for March 8, 2019, before Judge Abrams.

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

Assistant U.S. Attorneys Sidhardha Kamaraju, Jane Kim, and George D. Turner of the Southern District of New York are in charge of the prosecution, with assistance from Trial Attorney Kevin Nunnally of the Counterterrorism Section of the Department of Justice’s National Security Division.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the filing of a Superseding Indictment against JOHN TORTORA JR. a/k/a “Johnny T,” charging him with destruction of evidence, falsifying records, and obstruction of justice.  TORTORA was previously indicted on charges of racketeering conspiracy, murder in aid of racketeering, and murder for hire in United States v. Tortora, 18 Cr. 537 (SHS).  He was arrested on August 2, 2018, and has remained in custody since that time. TORTORA will be arraigned on the new charges on November 19, 2018 before the Honorable Sidney H. Stein at the United States Courthouse in Manhattan. 

Manhattan U.S. Attorney Geoffrey Berman said:  “As alleged in the Superseding Indictment, in an attempt to hide his illegal racketeering activity, the defendant was willing to destroy evidence and obstruct justice.  Thanks to the ongoing efforts of the FBI and the Yonkers Police Department, the defendant’s alleged attempts to impede the criminal justice process have  resulted in his being charged with additional federal crimes.”

The charges in the Superseding Indictment[1] arise from TORTORA’s alleged role in destroying video recording evidence, and in the subsequent creation of a letter containing false information about the destruction of that evidence, which was provided to the U.S. Attorney’s Office.  As alleged in the Superseding Indictment, these acts were undertaken with the intent to impede the investigation into the racketeering activities of the Genovese Crime Family of La Cosa Nostra. 

            *                      *                      *

In addition to the previous charges of conspiracy to commit racketeering, murder in aid of racketeering, and murder for hire, TORTORA, 61, of Yonkers, New York, is charged with destruction of evidence, which carries a maximum penalty of 20 years in prison, falsifying records, which carries a maximum penalty of 20 years in prison, and obstruction of justice, which carries a maximum penalty of 20 years in prison.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

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

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 below constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John C. Demers, the Assistant Attorney General for National Security, announced that ADAM RAISHANI, a/k/a “Saddam Mohamed Raishani,” pled guilty to attempting to provide and conspiring to provide material support to the Islamic State of Iraq and al-Sham (“ISIS”).  RAISHANI pled guilty today to a Superseding Information in Manhattan federal court before U.S. District Judge Ronnie Abrams.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, Adam Raishani helped another man travel to Syria to join and train with ISIS, and he plotted to make that trip himself to carry out his own desire to wage violent jihad.  Thanks to the excellent work of the FBI and the NYPD, Raishani’s trip to ISIS was canceled at the airport.  This would-be ISIS terrorist now awaits sentencing for his crimes.”

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

Beginning in at least the fall of 2015, RAISHANI conspired with another ISIS supporter (“CC-1”) to provide material support to ISIS by means of CC-1 traveling abroad to join and fight for ISIS.  On or about October 30, 2015, CC-1 departed from JFK Airport for Istanbul, Turkey, where he planned to cross into Syria to join ISIS.  RAISHANI arranged for CC-1’s transportation from the Bronx, New York, to John F. Kennedy International Airport (“JFK Airport”), and RAISHANI accompanied CC-1 from the Bronx to JFK Airport.

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

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

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

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

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

*                      *                      *

RAISHANI, 32, of the Bronx, New York, pled guilty to one count of attempting to provide material support or resources to a designated foreign terrorist organization, namely, ISIS, which carries a maximum sentence of 20 years in prison, and one count of conspiring to provide material support or resources to ISIS, which carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.  Sentencing is scheduled for March 8, 2019, at 3:00 p.m., before Judge Abrams.

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James D. Robnett, Special Agent in Charge, Internal Revenue Service-Criminal Investigations (“IRS-CI”), announced charges today against nine individuals for their participation in a long-running scheme to file thousands of fraudulent tax returns using the stolen identities of children, resulting in millions of dollars in estimated loss to the United States Treasury.  Eight of the defendants were arrested this morning and will be presented before U.S. Magistrate Judge Barbara C. Moses today.  MARCOS DE JESUS PANTALEON remains at large.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants used their experience as tax preparers to skirt U.S. tax laws by using the stolen identities of children to help increase their clients’ tax returns.  All told, the defendants’ years’ long scheme resulted in tens of millions of dollars in questionable credits.  Now the defendants’ businesses are shut down – literally – and the defendants face significant time in prison for tax fraud.”

IRS-CI Special Agent in Charge James D. Robnett said:  “Stealing the identities of children to file false tax returns is reprehensible.  These individuals allegedly demonstrated a blatant disregard of the integrity of the United States tax system and caused immeasurable hardship to innocent victims.  IRS-CI special agents are determined to investigate these crimes and protect the honest taxpayers.”

According to the allegations in the Complaint[1] unsealed this morning and information in the public record:

Under federal law, taxpayers may be entitled to claim certain tax credits, including the Earned Income Tax Credit (“EITC”) available to qualifying low and moderate income working individuals and families.  If the individual claims the EITC based on having a child, the individual must list the name and Social Security Number (“SSN”) of the child on his or her tax return, along with completing a separate schedule that contains the child’s name, SSN, year of birth, relationship to the taxpayer, and how many months the child lived with the taxpayer during the tax year.

Starting in 2009, and continuing for multiple years, ARIEL JIEMENEZ, a/k/a “Melo,” IRELINE NUNEZ, ANA YESSENIA JIMENEZ, EVELIN JIMENEZ, LEYVI CASTILLO, CINTHIA FEDERO, GUILLERMO ARIAS MONCION, MARCOS DE JESUS PANTALEON, a/k/a “Junior,” and JOSE CASTILLO, a/k/a “Jairo,” abused the EITC program with their knowledge of the tax system by using the stolen identities of numerous children to file thousands of fraudulent tax returns for their clients.  These clients were not supporting, residing with, or related to the children they claimed as a dependent.  Rather, they paid the defendants between $1,000 and $1,500 for each child falsely added to their returns.  The inclusion of these false dependents allowed clients to claim tax refunds they were not entitled to, chiefly the EITC.

All of the defendants initially worked together at the same tax-preparation business.  In approximately 2013, MONCION, PANTALEON, and JOSE CASTILLO started their own tax-preparation business.  In approximately 2014, JOSE CASTILLO left to start his own, third tax-preparation business.  All three businesses engaged in the same conduct of possessing stolen identities of children and adding those identities to clients’ tax returns in exchange for a fee.

The tax returns filed by the defendants’ associated businesses indicate markedly high rates of returns seeking the EITC.  For example, for returns filed from tax year 2010 through 2017, between 56 percent and 74 percent of all returns prepared by the defendants’ businesses claimed the EITC.  In contrast, between 34 percent and 39 percent of all tax returns filed in the Bronx, New York, and between 18 percent and 21 percent of all tax returns filed nationwide for the same time period sought the EITC.

In total, between 2009 and the present, the returns filed by the defendants’ businesses claimed more than $44 million in the EITC.

In addition to the fraud described above, EVELIN JIMENEZ, LEYVI CASTILLO, FEDERO, MONCION, and JOSE CASTILLO each fraudulently claimed dependents on their own personal tax returns.

*                      *                      *

A chart listing the defendants, and the charges and maximum penalties they face is attached.  The statutory maximum penalties 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 IRS-CI.  He also thanked the New York City Department of Investigation for its assistance.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Daniel G. Nessim, Ni Qian, and Daniel C. Richenthal are 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.

Defendant

Charges

Maximum Penalties

Ariel Jimenez, a/k/a “Melo” (34, of New York, New York)

Conspiracy to defraud the United States with respect to claims

Conspiracy to commit wire fraud

Aggravated Identity Theft

32 years in prison

Mandatory minimum of two years in prison to be imposed consecutively to any other sentence

Ireline Nunez (36, of New York, New York)

Conspiracy to defraud the United States with respect to claims

Conspiracy to commit wire fraud

Aggravated Identity Theft

32 years in prison

Mandatory minimum of two years in prison to be imposed consecutively to any other sentence

Ana Yessenia Jimenez (36, of New York, New York)

Conspiracy to defraud the United States with respect to claims

Conspiracy to commit wire fraud

Aggravated Identity Theft

32 years in prison

Mandatory minimum of two years in prison to be imposed consecutively to any other sentence

Evelin Jimenez (32, of New York, New York)

Conspiracy to defraud the United States with respect to claims

Conspiracy to commit wire fraud

Aggravated Identity Theft

Subscribing to a false return

35 years in prison

Mandatory minimum of two years in prison to be imposed consecutively to any other sentence

Leyvi Castillo (35, of New York, New York)

Conspiracy to defraud the United States with respect to claims

Conspiracy to commit wire fraud

Aggravated Identity Theft

Subscribing to a false return

35 years in prison

Mandatory minimum of two years in prison to be imposed consecutively to any other sentence

Cinthia Federo (31, of New York, New York)

Conspiracy to defraud the United States with respect to claims

Conspiracy to commit wire fraud

Aggravated Identity Theft

Subscribing to a false return (two counts)

38 years in prison

Mandatory minimum of two years in prison to be imposed consecutively to any other sentence

Guillermo Arias Moncion (32, of New York, New York)

Conspiracy to defraud the United States with respect to claims (two counts)

Conspiracy to commit wire fraud (two counts)

Aggravated Identity Theft

Subscribing to a false return (four counts)

74 years in prison

Mandatory minimum of two years in prison to be imposed consecutively to any other sentence

Marcos De Jesus Pantaleon, a/k/a “Junior” (28, of New York, New York)

Conspiracy to defraud the United States with respect to claims (two counts)

Conspiracy to commit wire fraud (two counts)

Aggravated Identity Theft

62 years in prison

Mandatory minimum of two years in prison to be imposed consecutively to any other sentence

Jose Castillo, a/k/a “Jairo” (42, of New York, New York)

Conspiracy to defraud the United States with respect to claims (three counts)

Conspiracy to commit wire fraud (three counts)

Aggravated Identity Theft

Subscribing to a false return

95 years in prison

Mandatory minimum of two years in prison to be imposed consecutively to any other sentence

[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 ARIEL ACOSTA, a/k/a “A-Loc,” a/k/a “Blue,” a/k/a “True Blue,” was sentenced today to 160 months in prison for firearms and narcotics trafficking.  ACOSTA and his co-conspirators sold seven guns, including an AK-47 assault rifle and a SKS assault rifle, a silencer, ammunition, and a bulletproof vest to undercover officers.  ACOSTA pled guilty in Manhattan federal court in April 2018 to one count of conspiring to distribute crack cocaine and one count of unlicensed firearms dealing.  United States District Judge Kimba M. Wood imposed today’s sentence.

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

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

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

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

*                *                *

In addition to the prison term, ACOSTA, 24, of the Bronx, New York, was sentenced to four years of supervised release.  Of the nine members of the Hughes Avenue Crew charged in this case, eight have pled guilty.  Charges against one defendant are currently pending before United States District Judge Victor Marerro.               

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Ashan M. Benedict, Special Agent-in-Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), and Daniel A. Nigro, Commissioner of the New York City Fire Department (“FDNY”), announced today that REDHWAN SALEH and ANTOINE BOSTICK were convicted by a jury in connection with their participation in an arson in the Bronx, New York.  The verdict followed a four-day trial before the Honorable William H. Pauley III.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “A unanimous Manhattan jury has found Redhwan Saleh guilty of planning and paying three men to execute the arson of a competing deli in his Riverdale neighborhood.  Saleh and his co-defendant, Antoine Bostick, have found out the hard way that playing with fire usually leads to getting burned, and possibly prison.”

ATF Special Agent-in-Charge Ashan M. Benedict said:  “The callous actions of Redhwan Saleh and Antoine Bostick caused extensive damage to property and could have resulted in serious injury or harm to first responders and the general public.  Thanks to the efforts of the ATF/ NYPD/ FDNY Arson and Explosive Task Force, the individuals responsible were brought to justice.  I would like to thank the United States Attorney’s office for their work in prosecuting this case.”

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

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

In addition to SALEH and BOSTICK, two other individuals have been convicted in connection with this case.  ARTHUR CHERRY pled guilty to conspiracy to commit arson and arson, among other crimes.  RICHARD SANCHEZ pled guilty to conspiracy to commit arson.

*              *             *

SALEH, 37, of Brooklyn, New York, was convicted of conspiracy to commit arson, which carries a maximum sentence of five years in prison, and arson, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison.  SALEH will be sentenced by Judge Pauley on March 15, 2019.

BOSTICK, 32, of New Rochelle, New York, was convicted of conspiracy to commit arson, which carries a maximum sentence of five years in prison.  BOSTICK was found not guilty of arson.  BOSTICK will be sentenced by Judge Pauley on March 15, 2019.

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

Mr. Berman praised the investigative efforts of the Strategic Explosive and Arson Response Task Force of the ATF, the NYPD, and the FDNY.

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

Cesar Altieri Sayoc, aka Cesar Randazzo, aka Cesar Altieri, and aka Cesar Altieri Randazzo, 56, was charged today in a 30-count Indictment for offenses relating to his alleged execution of a domestic terrorist attack in October 2018, which involved the mailing of 16 improvised explosive devices (IEDs) to 13 victims throughout the country. 

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 Office, and Police Commissioner James P. O’Neill of the NYPD made the announcement.  The case is assigned to U.S. District Judge Jed S. Rakoff.

“According to court filings, Cesar Sayoc mailed 16 IEDs to more than a dozen victims throughout the country, including current and former elected leaders.  Less than five days after the first IED was discovered, he was tracked down and arrested, thanks to the outstanding work of the FBI, the U.S. Postal Inspection Service and other law enforcement partners,” said Assistant Attorney General Demers. 

“Cesar Sayoc allegedly targeted former high-ranking officials such as President Barack Obama, President Bill Clinton, Vice President Joe Biden, Secretary of State Hillary Clinton, and others, as well as CNN, by sending explosive packages to them through the U.S. Postal Service,” said U.S. Attorney Berman.  “Sayoc’s alleged conduct put numerous lives at risk.  It was also an assault on a nation that values the rule of law, a free press, and tolerance of differences without rancor or resort to violence.  Thanks to the diligent and determined work of our law enforcement partners here and across the country, it took just five days to identify and apprehend Sayoc and end his reign of terror.  He now faces justice from a nation of laws.”

 “As alleged, Cesar Sayoc deliberately targeted 13 individuals with 16 improvised explosive devices, attempting to create an atmosphere of fear and intimidation from California to the eastern seaboard,” said Assistant Director in Charge Sweeney.  “Thanks to the seamless integration of FBI JTTFs across the country, working side-by-side with many other law enforcement agencies and first responders, his campaign of terror was brought to a rapid conclusion just five days after the discovery of the first device.  The FBI remains steadfast in our mission to protect the American public, and we will move with speed to bring justice to anyone seeking to harm our communities.”

“I commend everyone involved in investigating and prosecuting this case, particularly the agents and detectives on the FBI’s Joint Terrorism Task Force in New York, which includes 56 agencies and 300 individuals – 113 of them NYPD cops,” said Commissioner O’Neill.  “Standing shoulder to shoulder with the FBI, the ATF, the U.S. Marshals, the U.S. Postal Inspection Service, the New York State Police, and others, we said from the outset that we would identify and bring to justice the person allegedly responsible for these acts.  We could make that promise because of our proven history of effective partnership.  The public’s vigilance also greatly assisted this investigation and helped lead to today’s 30-count indictment.  What is clear is that New Yorkers are always resilient in the face of threats – we refuse to back down, and we will never be deterred.”

According to the Indictment, Complaint, other court filings, and statements made during court proceedings[1]: 

Between Oct. 22 and Nov. 2, the FBI and the U.S. Postal Service recovered 16 padded manila envelopes containing IEDs allegedly mailed by Sayoc from Florida to addresses in New York, New Jersey, Washington, D.C., Delaware, Atlanta and California.  Sayoc’s alleged victims, listed alphabetically, were former Vice President Joseph Biden, Senator Cory Booker, former CIA Director John Brennan, former Director of National Intelligence James Clapper, former Secretary of State Hillary Clinton, CNN, Robert De Niro, Senator Kamala Harris, former Attorney General Eric Holder, former President Barack Obama, George Soros, Thomas Steyer, and Representative Maxine Walters.

Each of the 16 envelopes allegedly mailed by Sayoc had similar features, including the return addressee “Debbie Wasserman Shultz” at an address in “Florids,” six self-adhesive postage stamps bearing the American flag, and address labels printed on white paper with blank ink in similar typeface and font size.  Each of the 16 envelopes also contained an IED.  The 16 IEDs also had similar features, including approximately six inches of PVC pipe packed with explosive material, a small clock, and wiring.  Some of the IEDs also contained shards of glass. 

Preliminary analysis by the FBI has revealed forensic evidence linking 11 of the 16 mailings to Sayoc.  Specifically, latent fingerprints on two of the envelopes have been identified to Sayoc, and there are possible DNA associations between a DNA sample collected from Sayoc prior to his arrest in this case and DNA found on components from 10 of the IEDs (including one of the IEDs that was mailed in an envelope from which a latent fingerprint identified to Sayoc was recovered).

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

Sayoc possessed a cellphone at the time of his arrest, and the FBI’s ongoing forensic analysis of the device has revealed additional evidence.  For example, Sayoc allegedly used the phone to conduct the following Internet searches, among others, on the dates indicated:

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

Sayoc’s phone also contained photographs of some of the victims.

*                      *                      *

Sayoc, a U.S. citizen, is charged in the Indictment with 30 counts:  one count of six different offenses for each of the five IEDs that he allegedly mailed to Clinton, Brennan, Clapper, Soros and De Niro in the Southern District of New York.  In aggregate, the 30 counts in the Indictment carry a potential maximum penalty of life imprisonment, and a mandatory minimum penalty of life imprisonment.  A chart providing more information regarding the charges and potential penalties is set forth below.  The statutory penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Counts

Charge

Penalties Per Count

1 – 5

Using a weapon of mass destruction

Maximum per count: life

6 – 10

Interstate transportation of an explosive

Maximum per count: 20 years

11 – 15

Conveying a threat in interstate commerce

Maximum per count: 5 years

16 – 20

Unlawful use of mails

Maximum per count: 10 years

21 – 25

Carrying an explosive during the commission of a felony

Minimum for first conviction: 10 years

Minimum for additional convictions: 20 years

26 – 30

Using and carrying a destructive device in furtherance of a crime of violence

Maximum per count: life

Minimum for first conviction: 30 years

Minimum for additional convictions: life

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 U.S. Postal Inspection Service.  Mr. Demers and Mr. Berman also thanked the U.S. Attorney’s Office for the Southern District of Florida for its assistance.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, John C. Demers, the Assistant Attorney General for National Security, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Police Commissioner of the City of New York (“NYPD”), announced today that Cesar Altieri Sayoc, a/k/a “Cesar Randazzo,” “Cesar Altieri,” and “Cesar Altieri Randazzo,” was charged today in Manhattan federal court in a 30-count Indictment for offenses relating to his alleged execution of a domestic terrorist attack in October 2018, which involved the mailing of 16 improvised explosive devices (“IEDs”) to 13 victims throughout the country.  The case is assigned to U.S. District Judge Jed S. Rakoff.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Cesar Sayoc allegedly targeted former high-ranking officials such as President Barack Obama, President Bill Clinton, Vice President Joe Biden, Secretary of State Hillary Clinton, and others, as well as CNN, by sending explosive packages to them through the U.S. Postal Service.  Sayoc’s alleged conduct put numerous lives at risk.  It was also an assault on a nation that values the rule of law, a free press, and tolerance of differences without rancor or resort to violence.  Thanks to the diligent and determined work of our law enforcement partners here and across the country, it took just five days to identify and apprehend Sayoc and end his reign of terror.  He now faces justice from a nation of laws.”

Assistant Attorney General John C. Demers said:  “According to court filings, Cesar Sayoc mailed 16 IEDs to more than a dozen victims throughout the country, including current and former elected leaders.  Less than five days after the first IED was discovered, he was tracked down and arrested, thanks to the outstanding work of the FBI, the U.S. Postal Inspection Service and other law enforcement partners.” 

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Cesar Sayoc deliberately targeted 13 individuals with 16 improvised explosive devices, attempting to create an atmosphere of fear and intimidation from California to the eastern seaboard.   Thanks to the seamless integration of FBI JTTFs across the country, working side-by-side with many other law enforcement agencies and first responders, his campaign of terror was brought to a rapid conclusion just five days after the discovery of the first device.  The FBI remains steadfast in our mission to protect the American public, and we will move with speed to bring justice to anyone seeking to harm our communities.”

NYPD Commissioner James P. O’Neill said:  “I commend everyone involved in investigating and prosecuting this case, particularly the agents and detectives on the FBI’s Joint Terrorism Task Force in New York, which includes 56 agencies and 300 individuals – 113 of them NYPD cops.  Standing shoulder to shoulder with the FBI, the ATF, the U.S. Marshals, the U.S. Postal Inspection Service, the New York State Police, and others, we said from the outset that we would identify and bring to justice the person allegedly responsible for these acts.  We could make that promise because of our proven history of effective partnership.  The public’s vigilance also greatly assisted this investigation and helped lead to today’s 30-count indictment.  What is clear is that New Yorkers are always resilient in the face of threats – we refuse to back down, and we will never be deterred.”

According to the Indictment, Complaint, other court filings, and statements made during court proceedings[1]: 

Between October 22 and November 2, 2018, the FBI and the U.S. Postal Service recovered 16 padded manila envelopes containing IEDs allegedly mailed by Sayoc from Florida to addresses in New York, New Jersey, Washington, D.C., Delaware, Atlanta, and California.  Sayoc’s alleged victims, listed alphabetically, were former Vice President Joseph Biden, Senator Cory Booker, former CIA Director John Brennan, former Director of National Intelligence James Clapper, former Secretary of State Hillary Clinton, CNN, Robert De Niro, Senator Kamala Harris, former Attorney General Eric Holder, former President Barack Obama, George Soros, Thomas Steyer, and Representative Maxine Waters.

Each of the 16 envelopes allegedly mailed by Sayoc had similar features, including the return addressee “Debbie Wasserman Shultz” at an address in “Florids,” six self-adhesive postage stamps bearing the American flag, and address labels printed on white paper with black ink in similar typeface and font size.  Each of the 16 envelopes also contained an IED.  The 16 IEDs also had similar features, including approximately six inches of PVC pipe packed with explosive material, a small clock, and wiring.  Some of the IEDs also contained shards of glass. 

Preliminary analysis by the FBI has revealed forensic evidence linking 11 of the 16 mailings to Sayoc.  Specifically, latent fingerprints on two of the envelopes have been identified to Sayoc, and there are possible DNA associations between a DNA sample collected from Sayoc prior to his arrest in this case and DNA found on components from 10 of the IEDs (including one of the IEDs that was mailed in an envelope from which a latent fingerprint identified to Sayoc was recovered).

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

Sayoc possessed a cellphone at the time of his arrest, and the FBI’s ongoing forensic analysis of the device has revealed additional evidence.  For example, Sayoc allegedly used the phone to conduct the following Internet searches, among others, on the dates indicated:

• • July 15, 2018: “hilary Clinton hime address”
  • July 26, 2018: “address Debbie wauserman Shultz”
  • September 19, 2018: “address kamila harrias”
  • September 26, 2018: “address for barack Obama”
  • September 26, 2018: “michelle obama mailing address”
  • September 26, 2018: “joseph biden jr”
  • October 1, 2018: “address cory booker new jersey”
  • October 20, 2018: “tom steyers mailing address”
  • October 23, 2018: “address kamala harris”

Sayoc’s phone also contained photographs of some of the victims.

*                      *                      *

SAYOC, 56, of South Florida, is charged in the Indictment with 30 counts:  one count of six different offenses for each of the five IEDs that he allegedly mailed to Clinton, Brennan, Clapper, Soros, and De Niro in the Southern District of New York.  In aggregate, the 30 counts in the Indictment carry a potential maximum penalty of life imprisonment, and a mandatory minimum penalty of life imprisonment.  A chart providing more information regarding the charges and potential penalties is set forth below.  The statutory penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Mr. Berman and Mr. Demers praised the outstanding efforts of the Federal Bureau of Investigation’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department, New York State Police, Westchester County Police Department, the U.S. Postal Inspection Service, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.  Mr. Berman and Mr. Demers also thanked the U.S. Attorney’s Office for the Southern District of Florida for its assistance.

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

Counts

Charge

Penalties Per Count

1 – 5

Using a weapon of mass destruction

Maximum per count: life

6 – 10

Interstate transportation of an explosive

Maximum per count: 20 years

11 – 15

Conveying a threat in interstate commerce

Maximum per count: 5 years

16 – 20

Unlawful use of mails

Maximum per count: 10 years

21 – 25

Carrying an explosive during the commission of a felony

Minimum for first conviction: 10 years

Minimum for additional convictions: 20 years

26 – 30

Using and carrying a destructive device in furtherance of a crime of violence

Maximum per count: life

Minimum for first conviction: 30 years

Minimum for additional convictions: life

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that GEORGE DOUMANIS and EMANUEL PANTELAKIS were sentenced in Manhattan federal court to 53 months and one year and one day in prison, respectively, for defrauding investors in Terminus Energy, Inc., a publicly traded penny stock, of over $7 million.  DOUMANIS and PANTELAKIS each pled guilty on December 1, 2017, to one count of conspiracy to commit securities fraud before U.S. District Judge Andrew L. Carter Jr., who also imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “George Doumanis and Emanuel Pantelakis lured investors for a supposed fuel cell technology they knew was a fiction.  They duped victims into investing over $7 million with misleading documents, and they used more than $1 million of that to pay their own personal expenses.  Today they learned the true price of that kind of criminal deceitfulness.”

According to the allegations contained in the Indictment filed against DOUMANIS, PANTELAKIS, and their co-conspirator, and statements made in related court filings and proceedings:

From at least February 2008 until at least 2014, DOUMANIS and PANTELAKIS, along with their co-conspirator Danny Pratte, who previously pled guilty, engaged in a scheme to defraud investors in the publicly traded company Terminus Energy, Inc. (“Terminus”), by inducing victims to invest in Terminus stock through material misrepresentations and omissions and by misappropriating investor funds for their own purposes.

Terminus was purportedly producing and marketing a commercially viable solid oxide “fuel cell” as an alternative energy source.  DOUMANIS and PANTELAKIS sold shares of Terminus to investors through private offerings.  In connection with such sales, DOUMANIS and PANTELAKIS provided investors with private placement memorandums (“PPMs”) that contained materially false and misleading statements.  For example, the PPMs falsely stated that (i) Terminus had completed its goal of developing a working fuel cell in mid-2008; (ii) Terminus would use specified investor funds to make payment on third-party development contracts designed to manufacture a working fuel cell; and (iii) Terminus would pay no more than 10 percent in sales commissions.  In truth, and as DOUMANIS and PANTELAKIS well knew, (i) there was no working fuel cell; (ii) the third-party contracts had been cancelled after Terminus failed to make payment to the third parties; and (iii) unregistered salespeople were receiving commissions far in excess of 10 percent.  The PPMs also failed to accurately disclose the involvement of either DOUMANIS, who was barred from involvement in penny stocks as a result of a 2003 conviction for conspiracy to commit securities fraud, wire fraud, and mail fraud, or PANTELAKIS, who had been permanently barred by the Financial Industry Regulatory Authority (“FINRA”) following allegations that he had made fraudulent misrepresentations to customers in connection with the sale of securities.  DOUMANIS and PANTELAKIS also caused similar misrepresentations to be made in business plans, executive summaries, and presentations shared with potential investors, as well as in publicly available press releases.  Through these false and misleading statements, DOUMANIS and PANTELAKIS fraudulently induced investors to purchase over $7 million of Terminus stock.

Rather than use the investor money as promised, DOUMANIS and PANTELAKIS misappropriated the funds for their own use and for use by co-conspirators.  DOUMANIS personally received at least $573,201 and PANTELAKIS personally received at least $428,997.  In addition, the unregistered salespeople collectively received undisclosed commissions of more than $1.5 million.

*                    *                    *

In addition to their prison terms, DOUMANIS, 60, of Rocky Point, New York, and PANTELAKIS, 43, of Queens, New York, were sentenced to three years of supervised release, forfeiture money judgments in the amount of $573,201 and $428,997, respectively, and restitution in an amount to be determined by the Court at a later date.

Danny Pratte pled guilty to one count of conspiracy to commit securities fraud and was sentenced by Judge Carter on October 19, 2018.

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

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

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

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Real estate developer Michael D’Alessio admitted today to misappropriating investor funds intended for specific luxury development projects by funneling them into shell accounts he controlled.  In typical Ponzi-like fashion, D’Alessio comingled over $58 million of investor funds and used them to cash out early investors, cover debts, and pay his own personal gambling debts.  When D’Alessio eventually went into bankruptcy, he perpetrated yet another fraud by trying to conceal assets.  Today this fraudster has taken responsibility for his actions and faces time in a considerably less luxurious property – federal prison.”

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

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

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

However, in reality, from at least in or about 2015 through in or about April 2018, D’ALESSIO misappropriated investor funds for his own use and benefit, and made other material misrepresentations.  Upon receiving investor funds, D’ALESSIO typically channeled those funds through a series of bank accounts held in the name of shell companies owned and controlled by D’ALESSIO.  D’ALESSIO then used much of those investor funds for his own benefit, including to pay off debts and prior investors, and to fund significant gambling and other personal expenses.  D’ALESSIO took steps to conceal his fraud, including deceiving investors regarding the progress of various real estate projects and using money raised from investors to make monthly payments to investors in different projects in the manner of a Ponzi scheme.  D’ALESSIO defrauded investors out of approximately $58 million.

In 2018, D’ALESSIO went into involuntary bankruptcy under Chapter 7 of Title 11 of the United States Code.  In connection with this bankruptcy proceeding, captioned In re Michael D’Alessio, No. 18-22552 (Bankr. S.D.N.Y.), D’ALESSIO submitted forms that fraudulently omitted money and property belonging to his estate, and made a false declaration under penalty of perjury concerning his money and property.    

*                      *                      *           

D’ALESSIO, 53, of New York, New York, pled guilty to one count of committing wire fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; and one count of concealing assets from a bankruptcy court, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  Sentencing is scheduled for March 22, 2019, at 10:00a.m. 

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JAMES ROSEMOND, a/k/a “Jimmy the Henchman,” was sentenced today to life plus 30 years in prison for ordering the murder of Lowell Fletcher, a/k/a “Lodi Mack.”  A jury convicted ROSEMOND of murder-for-hire, conspiracy to commit murder-for-hire, and firearms offenses following a nine-day retrial before United States District Judge Lewis A. Kaplan, who sentenced ROSEMOND.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “James Rosemond’s thirst for revenge following the assault of his son left 32-year-old Lowell Fletcher dead on a dark Bronx street.  Our Office has fought for justice for Fletcher’s family for more than four years and through three jury trials.  Now, Rosemond’s fate has been sealed and he has been sentenced to spend the rest of his life in prison for this crime.”

According to court papers and the evidence at trial:

ROSEMOND, 53, of New York, New York, was the founder of Czar Entertainment, a rap music management company, and also the head of a large-scale cocaine trafficking organization.  In March 2007, members and associates of a rival rap music group known as “G-Unit,” including Marvin Bernard, a/k/a “Tony Yayo,” and Lowell Fletcher, a/k/a “Lodi Mack,” assaulted ROSEMOND’s son.  ROSEMOND’s son was not seriously injured in the assault, and Fletcher ended up serving prison time for his involvement in the assault.  Nevertheless, in 2009, ROSEMOND recruited a crew of men to murder Fletcher upon his release from prison by promising at least $30,000 in payment for killing Fletcher.  At ROSEMOND’s direction, members of the murder crew selected a dark and secluded location for the murder in the vicinity of Mount Eden and Jerome Avenues in the Bronx, and lured Fletcher to that spot.  When Fletcher arrived there in the evening on September 27, 2009, a member of the murder crew stepped out of the shadows and fired five bullets into Fletcher’s back and arms using ROSEMOND’s .22 caliber handgun with a silencer.  Fletcher died later that night.  On October 2, 2009, ROSEMOND had a trusted employee of his cocaine organization provide a kilogram of cocaine – worth about $30,000 in street value – to a member of his murder crew as payment for the murder. 

*                *                *

At the conclusion of ROSEMOND’s first trial, in February and March 2014, a mistrial was declared after the jury was unable to reach a unanimous verdict on the counts against ROSEMOND relating to the murder-for-hire of Fletcher.  At ROSEMOND’s second trial in December 2014, ROSEMOND was convicted on all counts.  On appeal to the United States Court of Appeals for the Second Circuit, ROSEMOND argued in part that his conviction in this murder-for-hire case should be overturned because certain rulings by the trial court effectively barred him from advancing a line of defense that ROSEMOND wanted to pursue – namely, ROSEMOND’s claim that although he ordered hitmen to shoot Fletcher, he did not intend for the shooting to result in Fletcher’s death.  In November 2016, the Second Circuit vacated ROSEMOND’s conviction and remanded the case for a new trial, which began November 6, 2017, and ended on November 28, 2017, when a unanimous jury found ROSEMOND guilty of all the charges against him.

Mr. Berman thanked and praised the U.S. Drug Enforcement Administration, the New York City Police Department, the U.S. Department of Homeland Security, and the U.S. Marshals Service for their persistence and outstanding work in this investigation. 

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  The trial was conducted by Assistant U.S. Attorneys Samson Enzer, Drew Skinner, and Elizabeth Hanft.

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 Division of the Federal Bureau of Investigation (“FBI”), and George P. Beach II, the Superintendent of the New York State Police (“NYSP”), announced today the unsealing of a Complaint charging seven men with operating a national stolen car ring involving approximately 60 stolen cars worth approximately $3.1 million.  The defendants are charged with conspiracy and the possession, sale, and transportation of stolen cars.  Four of the defendants were arrested today and will be presented in White Plains federal court before United States Magistrate Judge Lisa Margaret Smith.  The other three defendants were arrested and will be presented before federal judges in Florida, Pennsylvania, and Rhode Island.

U.S. Attorney Geoffrey S. Berman stated:  “As alleged, these defendants operated a nationwide stolen car ring involving stolen luxury cars worth more than $3 million.  They stole from rightful owners and used a criminal network of thieves, fraudsters, and forgers to line their pockets, all while driving themselves around in stolen Lamborghinis, Range Rovers, and other pilfered prizes.  With our partners at the FBI and the State Police, we have slapped a boot onto these fast-paced heists, and will now tow the defendants off to justice.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. stated:  “As alleged, these individuals conspired to steal property, defraud state and local authorities, and unwittingly involve private citizens in an auto-theft ring spanning the country.  This kind of criminal activity undermines public confidence and destabilizes communities.  Thanks to the diligence and hard work by law enforcement, these arrests have put the brakes on this criminal enterprise.”

NYSP Superintendent George P. Beach II stated:  “Through this collaborative investigation among law enforcement partners at all levels, we have uncovered a highly organized, national car theft operation that was allegedly responsible for victimizing car buyers all across the country.  I want to commend the efforts of all of those involved in bringing this alleged criminal activity to an end and for the outstanding work that led to the arrests in this case.”

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

From October 2017 through November 2018, MARVIN WILLIAMS, NICHOLAS DIXON, a/k/a “Robbie,” JASON HIGNEY, BESAR ISMAILI, STEVEN KLEIN, LASHAUMBA RANDOLPH, and ABDURAHAMIN SHABAZZ, a/k/a “Abdurahmin Shebazz,” a/k/a “Abdur,” operated a stolen car ring, during which they (1) obtained stolen cars from, among other places, Michigan and Florida; (2) transported the stolen cars to, among other places, the Southern District of New York and Connecticut, for resale; (3) created and/or obtained false titles, registrations, and temporary license plates for the stolen cars; (4) used the false car records to deceive car buyers and the South Dakota Division of Motor Vehicles; and (5) used online markets, such as eBay, to solicit buyers of the stolen cars across the country, including in the Southern District of New York.

*                *                *

WILLIAMS, 32, of Torrington, Connecticut, DIXON, 43, of Tamarac, Florida, HIGNEY, 39, of Terryville, Connecticut, and KLEIN, 55, of Easton, Connecticut, are each charged with the sale or transportation of stolen vehicles and conspiracy to do the same, which carries a maximum sentence of 10 years in prison.  ISMAILI, 37, of Waterbury, Connecticut, RANDOLPH, 44, of Atlanta, Georgia, and SHABAZZ, 45, of Providence, Rhode Island, are each charged with conspiracy to sell and transport stolen vehicles, which carries a maximum sentence of five years in prison.

Mr. Berman praised the outstanding investigative work of the FBI and the State Police.  Mr. Berman also thanked the Waterbury Police Department, the Connecticut State Police, the South Dakota Division of Motor Vehicles, the South Dakota Lake County Treasurer’s Office, and the National Insurance Crime Bureau for their assistance in the investigation.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Emily Deininger and David Felton are 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 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, Keith Kruskall, Acting Special Agent-in-Charge of the New York Field Office of the Drug Enforcement Administration (“DEA”), Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and George P. Beach II, the Superintendent of the New York State Police (“NYSP”), announced today that PEDRO VICIOSO DE LIMA, a/k/a “Pep,” a/k/a “Pepo,” VICTOR HIDALGO, a/k/a “Jordan,” a/k/a “Vico,” DAVID PEREZ, a/k/a “Bori,” a/k/a “Macho,” JACINTO GARCIA, a/k/a “Cuba,” SIXTO VANCAMPER-BRITO, a/k/a “Cito,” CESAR GIL, a/k/a “Ralphy,” JUAN GIL CABRAL, a/k/a “Menor,” ANTHONY BELLIARD, a/k/a “Jafet Montas,” a/k/a “Café,” MAYRA MONSANTO, a/k/a “La Flaca,” RICKY ROSA, a/k/a “Pra,” a/k/a “Black,” a/k/a “Moreno,” MINERVA VENTURA, a/k/a “La Bori,” MARK VIERA, a/k/a “Leo,” a/k/a “Biz,” ROMEO SUNCAR, a/k/a “Stacks,” and ANTONIO YERIS ALMONTE, a/k/a “Ciobao,” have been charged with participating in a conspiracy to distribute heroin.  Eleven of the defendants were arrested yesterday evening and this morning and will be presented before United States Magistrate Judge Robert W. Lehrburger in Manhattan federal court this afternoon.  PEREZ and ROSA remain at large, and GIL will be transferred from immigration detention next week.  The case has been assigned to United States District Judge Colleen McMahon.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants operated a distribution network of highly addictive and dangerous drugs, which has been plaguing a Washington Heights community for years.  Even after they realized the potency of the drugs they were distributing and selling – and the overdose risk those drugs posed – the defendants allegedly continued to sell their poison in order to protect their brand.  Today’s arrests are part of our continued commitment, along with our law enforcement partners, to stop the flow of heroin and fentanyl onto the streets of New York City.”

DEA Acting Special Agent-in-Charge Keith Kruskall said:  “Today's heroin is deadlier for two reasons: fentanyl potency and traffickers’ motives.  Two to three milligrams of fentanyl can be fatal.  And, traffickers, not chemists, are pushing their toxic mixture of heroin and fentanyl on our streets for no reason other than money.  New York law enforcement is weeding out those responsible for the record number of fatal overdoses in our city and warning users that every dose could be their last dose.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “These individuals allegedly distributed fentanyl laced heroin out of a building on 167th street, with a total disdain for the lives of their customers.  This investigation rids the community of Washington Heights of alleged criminals that continue to fuel the opioid epidemic.  Opioid addiction touches families and communities across our country, and we will remain focused on criminals who seek to distribute these highly addictive drugs with little regard for the lives ruined.”

NYPD Commissioner James P. O’Neill said:  “Abuse of heroin and the deadly additive fentanyl has cut a wide swath across our nation, affecting people from all walks of life, in every neighborhood. To combat this scourge, the NYPD and our partners on the Drug Enforcement Strike Force are relentless in our work to shut down illegal drug supplies, to send dealers away with meaningful prison sentences and, ultimately, to save New Yorkers’ lives. For dismantling this alleged dangerous drug organization based in Washington Heights, I congratulate and thank everyone involved in this important case.”

According to the allegations in the Indictment:[1]

The defendants were members of a drug trafficking organization (the “DTO”) that operated in Manhattan, New York, and controlled heroin sales from a building at 501 West 167th Street (the “DTO’s Drug Building”) and the surrounding vicinity (the “DTO’s Drug Territory”).  As a means of marketing its heroin and fentanyl-laced heroin, and to ensure that the only heroin sold in the DTO’s Drug Territory belonged to the DTO, the DTO placed stamps on the glassines of heroin and fentanyl-laced heroin that it sold to customers.  Among the stamps the DTO used were “Annuit Coeptis,” “Toyota,” “Ras Baraka,” and “Porsche.”  From July 2016 to October 2018, the DTO is estimated to have distributed more than 85 kilograms of heroin, much of it laced with fentanyl.

Glassines marked with the DTO’s stamps were recovered at the scene of fatal and nonfatal suspected overdoses of individuals who were believed to be customers of the DTO.  For example, on March 29, 2018, an individual died of a suspected heroin overdose in a building across the street from the DTO’s Drug Building, and glassines marked with the stamps “Ras Baraka” and “Porsche” were recovered at the scene of the overdose death, along with a slip of paper with the name and phone number of a member of the DTO.  Certain members of the DTO were aware of suspected overdoses resulting from the use of fentanyl-laced heroin sold by the DTO.  The DTO was nevertheless reluctant to change the stamps it used to label the DTO’s heroin and fentanyl-laced heroin because the stamps were known by the DTO’s customers, and the DTO wanted to maintain its reputation for selling a strong product.

*                      *                      *

LIMA, 49, HIDALGO, 58, PEREZ, 36, GARCIA, 61, VANCAMPER-BRITO, 51, GIL, 26, GIL CABRAL, 28, BELLIARD, 29, MONSANTO, 59, ROSA, 32, VENTURA, 64, VIERA, 46, SUNCAR, 33, and ALMONTE, 26, each of New York, New York, are each charged with one count of conspiring to distribute heroin, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the DEA’s New York Organized Crime Drug Enforcement Strike Force.  The Strike Force comprises agents and officers of the DEA, the New York City Police Department, Homeland Security Investigations, the New York State Police, the U.S. Internal Revenue Service Criminal Investigative Division, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Secret Service, the U.S. Marshals Service, the New York National Guard, the Clarkstown Police Department, the U.S. Coast Guard, the Port Washington Police Department, and the New York State Department of Corrections and Community Supervision.  The Strike Force is 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 (“OCDTEF”) program.

The prosecution is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Jessica Greenwood, Aline R. Flodr, and Dominic Gentile 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 announced that ANDREW OWIMRIN, a/k/a “Andrew Owens,” a/k/a “Jonathan Stewart,” and SHAHRAM KETABCHI, a/k/a “Steve Ketabchi,” were found guilty today in Manhattan federal court of conspiring to commit wire fraud and conspiring to commit money laundering in connection with a telemarketing scheme.  OWIMRIN and KETABCHI were convicted following 12-day trial before United States District Judge Sidney H. Stein.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Andrew Owimrin and Shahram Ketabchi conspired to target and victimize elderly people through aggressive and deceptive telemarketing.  The various so-called investment opportunities were really just variations on fraudulent schemes to steal investors’ money.  Now Owimrin and Ketabchi await sentencing for their crimes.”

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

Beginning in at least October 2013 through March 21, 2017, OWIMRIN and KETABCHI worked for telemarketing companies (the “Telemarketing Companies”) that engaged in a fraudulent scheme (the “Telemarketing Scheme”), by which they promised to earn victims (the “Victims”) money in exchange for particular Victims making an initial cash “investment” in business development, website design, grant applications, or tax preparation services.  Many Victims, the majority of whom are over 70 years old, “invested” thousands of dollars with the Telemarketing Companies, but did not earn any of the promised returns.  When Victims sought refunds, or fought credit card charges, the Telemarketing Companies provided explanations and documentation to the credit card companies falsely representing that the Victims had received the promised services.  OWIMRIN worked as a sales representative for two of the Telemarketing Companies, Olive Branch Marketing and A1 Business Consultants.  KETABCHI, who worked for A1 Business Consultants, was responsible for, among other things, the submission of false documentation to the credit card companies in order to challenge the Victims’ attempts to recover their funds.

Thirteen other individuals have been convicted in connection with this case:

Defendant Name

Companies

Count(s) of Conviction

Arash Ketabchi

A1 Business Consultants,

Elevated Business Consultants,

Element Business Services

Conspiracy to Commit Wire Fraud

(18 U.S.C. § 1349)

William Sinclair

Olive Branch Marketing,

Paramount Business Solutions

Wire Fraud and Conspiracy to Commit Wire Fraud

(18 U.S.C. §§ 1343, 1349)

Conspiracy to Commit Money Laundering

(18 U.S.C. § 1956(h))

Michael Finocchiaro

Olive Branch Marketing,

Paramount Business Solutions

Wire Fraud and Conspiracy to Commit Wire Fraud

(18 U.S.C. §§ 1343, 1349)

Conspiracy to Commit Money Laundering

(18 U.S.C. § 1956(h))

Narcotics Conspiracy

(21 U.S.C. § 846)

Joseph McGowan

Carlyle Management Group,

Vanguard Business Solutions

Conspiracy to Commit Wire Fraud

(18 U.S.C. § 1349)

Christopher Wilson

Olive Branch Marketing,

Paramount Business Solutions,

CTO Consulting

Conspiracy to Commit Wire Fraud

(18 U.S.C. § 1349)

Jack Kavner

Carlyle Management Group,

Vanguard Business Solutions

Conspiracy to Commit Wire Fraud

(18 U.S.C. § 1349)

Daniel Quirk

Carlyle Management Group,

Vanguard Business Solutions

Wire Fraud and Conspiracy to Commit Wire Fraud

(18 U.S.C. §§ 1343, 1349)

Conspiracy to Commit Money Laundering

(18 U.S.C. § 1956(h))

Narcotics Conspiracy

(21 U.S.C. § 846)

Peter DiQuarto

Elenchus Business Services

Harbinger Capital

Wire Fraud and Conspiracy to Commit Wire Fraud

(18 U.S.C. §§ 1343, 1349)

Conspiracy to Commit Money Laundering

(18 U.S.C. § 1956(h))

Narcotics Conspiracy

(21 U.S.C. § 846)

Thomas O’Reilly

CTO Consulting

Obstruction of Justice

(18 U.S.C. § 1519)

Raymond Quiles

Prestige Worldwide

Conspiracy to Commit Wire Fraud

(18 U.S.C. § 1349)

Brooke Marcus

First Trend

Tri-Star

Elite Business Services

Conspiracy to Commit Wire Fraud

(18 U.S.C. § 1349)

Anthony Medeiros

Virtual Business Plus

Narcotics Conspiracy

(21 U.S.C. §§ 846)

Conspiracy to Commit Wire Fraud

(18 U.S.C. § 1349)

*                      *                      *

OWIMRIN, 29, of Hackensack, New Jersey, and KETABCHI, 47, of Rancho Santa Margarita, California, were each convicted of one count of conspiring to commit wire fraud and one count of conspiring to commit money laundering, each of which carries a maximum sentence of 20 years in prison.  OWIMRIN and KETABCHI are scheduled to be sentenced by Judge Stein on February 12, 2019, at 2:30 p.m. and 3:30 p.m., respectively.

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 Department of Homeland Security, Homeland Security Investigations and the New York City Police Department. 

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

If you believe to have been a victim of the telemarketing companies listed above, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office for the Southern District of New York, at 866-874-8900 or wendy.olsen@usdoj.gov.  You may also report it to Detective Christopher Bastos at 917-480-7167 or christopher.bastos@nypd.org.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the conviction of CRAIG CARTON for securities fraud, wire fraud, and conspiracy to commit those offenses.  CARTON’s co-defendant, Michael Wright, pled guilty before U.S. Magistrate Judge Stewart D. Aaron in September 2018 for his participation in the scheme.  CARTON is scheduled to be sentenced on February 27, 2018, at 4 p.m. by Chief U.S. District Judge Colleen McMahon, who presided over the one-week trial.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Radio personality Craig Carton solicited investments for his ticket buying scheme by touting his show business contacts and ability to buy blocks of tickets to live events such as Metallica, Barbra Streisand, and others, and sell them for a profit on the secondary ticket market. As a unanimous Manhattan jury has found, Carton was all talk.  Carton fabricated contracts for blocks of tickets and spent the almost $7 million he collected from investors on gambling and personal expenses.  We commend the jury for seeing through Carton’s blatant lies, and holding him responsible for his Ponzi-like scheme. Today’s verdict is a win for investors; lying to them is a federal crime.”

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

CARTON and another individual (“CC-1”) worked together to induce investors to provide them with millions of dollars, based on representations that the investor funds would be used to purchase blocks of tickets to concerts, which would then be re-sold on the secondary market.  CARTON and CC-1 purportedly had access to those blocks of tickets based on agreements that CC-1 had with a company that promotes live music and entertainment events (the “Concert Promotion Company”) and that CARTON had with a company that operates two arenas in the New York metropolitan area (the “Sports and Entertainment Company”).  In fact, neither the Concert Promotion Company nor the Sports and Entertainment Company had any such agreement with CARTON, Wright, CC-1, or any entity associated with them.  After receiving the investor funds, CARTON, Wright, and CC-1 misappropriated those funds, using them to, among other things, pay personal debts and repay prior investors as part of a Ponzi-like scheme.   

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

Later in the fall of 2016, CARTON began negotiating with a hedge fund (the “Hedge Fund”) regarding a transaction in which the Hedge Fund would extend CARTON capital to finance CARTON’s purchase of event tickets, which CARTON would then re-sell at a profit.  In early December 2016, CC-1 texted CARTON and Wright and discussed using the Hedge Fund’s capital “to repay debts,” and not for the purchase of tickets. 

The next day, December 7, 2016, CARTON emailed the Hedge Fund five agreements between (i) CC-1 and a company controlled by CC-1 (the “CC-1 Entity”) and (ii) the Concert Promotion Company.  In each of the purported agreements, the Concert Promotion Company agreed to sell the CC-1 Entity up $10 million worth of tickets to different concert tours.  However, as alleged, these agreements were fraudulent and had not, in fact, been entered into by the Concert Promotion Company.

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

The Hedge Fund then sent $700,000 to the CC-1 Entity to finance the purchase of tickets pursuant to the agreements between the CC-1 Entity and the Concert Promotion Company.  CC-1, however, then sent this money to a bank account controlled by Wright, who then, on December 12, sent $200,000 to CARTON’s personal bank account (the “CARTON Bank Account”), which CARTON then wired to a casino.  Also on December 12, Wright sent another $500,000 to an individual who had previously lent CARTON $500,000, which was due to be repaid that day.

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

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

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

*                *                *

CARTON, 49, of New York, New York, was convicted of one count of conspiracy to commit securities fraud and wire fraud, one count of wire fraud, and one count of securities fraud.  The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense.  The securities fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense.  The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and thanked the Boston Regional Office of the U.S. Securities and Exchange Commission, which has filed civil charges against CARTON and CC-1 in a separate action. 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that LEIBYS MERCEDES was found guilty today of conspiring to distribute heroin.  A unanimous jury convicted MERCEDES after a four-day trial before United States District Judge Kenneth M. Karas. 

U.S. Attorney Geoffrey S. Berman said:  “As proven at trial, Leibys Mercedes contributed to the rising tide of heroin that is plaguing Westchester County and its vicinity.  The verdict should send a message to criminals who seek to profit by flooding our community’s streets with lethal drugs.”

According to court documents and the evidence at trial:

From January 2017 up to July 2017, LEIBYS MERCEDES, a/k/a “Celly,” conspired to distribute 100 grams and more of heroin.  MERCEDES supplied heroin to other dealers in the Yonkers area.

*                *                *

MERCEDES, 37, of the Bronx, New York, was convicted of conspiracy to distribute heroin, which carries a maximum sentence of 40 years in prison, and a mandatory minimum terms of five years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

MERCEDES is scheduled to be sentenced on April 9, 2018, before Judge Karas.

Mr. Berman praised the outstanding work of the Drug Enforcement Administration’s Westchester Resident Office and the Narcotics Unit of the City of Yonkers Police Department.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Samuel L. Raymond, Daniel M. Loss, Celia Cohen, and Michael D. Maimin are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a criminal complaint charging DAVID SMOTHERMON with wire fraud, in connection with a scheme to hide from his employer trading losses he incurred, by causing false entries to be made in the employer’s accounting system.  SMOTHERMON was arrested yesterday in Houston, Texas, and is expected to be presented in federal court in Houston today.

U.S. Attorney Geoffrey Berman said:  “As alleged, David Smothermon lied to his employer to conceal trading losses.  He allegedly caused others to make false entries in his company’s accounting system to cover up the losses and reap substantial compensation.  Smothermon’s actions allegedly caused his employer significant financial harm.  Thanks to the FBI, David Smothermon has been apprehended and awaiting prosecution for his alleged self-dealing.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “As alleged, after incurring significant trading losses, Smothermon took advantage of his position and manipulated the system to hide those losses from his employer and save his own skin.  As a direct result of his selfish and criminal actions, the company lost millions of dollars, and other workers lost their livelihoods.  We don’t take these crimes lightly, and we will continue to investigate and bring to justice any individual who criminally misuses his or her position for personal gain.”

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

From 2005 through early September 2016, SMOTHERMON worked for a privately owned firm, headquartered in Manhattan, engaged in the international marketing, distribution, and trading of commodities products (the “Company”).  SMOTHERMON ran a subsidiary of the Company, based in Houston, Texas, specializing in the trading of liquefied petroleum gas or “LPG” (the “Subsidiary”).  The Subsidiary engaged in two forms of LPG trading: entering into and executing contracts for the purchase and sale of barrels of LPG, and trading financial derivative products related to LPG in an over-the-counter market.

From December 2015 up to and September 2016, SMOTHERMON caused false entries to be entered into an electronic accounting system used by the Company in an effort to hide substantial trading losses generated by the Subsidiary’s derivatives trading.  SMOTHERMON repeatedly caused others working for the Subsidiary to make false entries in the accounting systems.  For example, in or about August 2016, SMOTHERMAN instructed an employee to make a change in the accounting system to make it appear that a contract for the purchase of LPG entitled the Subsidiary to purchase twice as much LPG as was in fact contracted for, at the same price, essentially doubling the Subsidiary’s profits.   

SMOTHERMON caused these false entries to be made in an effort to retain his job and the significant compensation due to him in connection with his employment, including a bonus of more than $14 million awarded to him in May 2016.  As a result of the false entries made at SMOTHERMON’s direction, the Company overestimated the Subsidiary’s potential profits by in excess of approximately $35 million.

In the face of an upcoming audit of the Subsidiary by the Company, SMOTHERMAN resigned in or about September 2016.  In part as a result of the false entries discovered by the Company in the period that followed, the Company liquidated the derivatives positions held by the Subsidiary at a substantial loss and laid off workers.

*                *                *

SMOTHERMON, 48, of Houston, Texas, is charged in the Complaint with one count of wire fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the investigative work of the FBI in this case.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Katherine Reilly is in charge of the prosecution.

The charge contained in the Complaint is merely an accusation, 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 herein, constitute only allegations, and every fact described should be treated as an allegation.

U.S. Attorney Geoffrey S. Berman said: “Late last year, Akayed Ullah detonated a bomb during the bustle of morning rush hour under the Port Authority Bus Terminal. Ullah’s sinister purpose was to harm and terrorize as many innocent people in his path as possible, by using deadly violence to make a political statement. Ullah’s conviction by a unanimous jury of New Yorkers falls on an Election Day, which fittingly underscores the core principles of American democracy and spirit: Americans engage in the political process through votes, not violence. Today, Ullah stands convicted, he faces a potential life sentence, and his purpose failed.  New York City remains a shining symbol of freedom and hope.”

Akayed Ullah, 28, of Brooklyn, New York, and a lawful permanent resident from Bangladesh, was convicted today on all six counts of the Indictment, which charged him with offenses related to the detonation and attempted detonation of a bomb in a subway station near the New York Port Authority Bus Terminal in New York City on Dec. 11, 2017.  Ullah, who faces a possible sentence of life in prison, is scheduled to be sentenced on April 5, 2019, by the Honorable Richard J. Sullivan, who presided over the one-week trial. 

Assistant Attorney General for National Security John C. Demers and U.S. Attorney Geoffrey S. Berman for the Southern District of New York made the announcement.

“Less than a year ago, Ullah constructed a pipe bomb and detonated it in a mass transit hub in the heart of New York City to harm and terrorize as many people as possible, all on behalf of ISIS.  His crime reminds us that the threat of radical Islamist terrorism remains real,” said Assistant Attorney General Demers.  “This guilty verdict holds Ullah accountable, and he faces a potential life term in federal prison for his crimes. I want to thank all the agents and prosecutors whose outstanding work made this result possible.”

“Late last year, Akayed Ullah detonated a bomb during the bustle of morning rush hour under the Port Authority Bus Terminal,” said U.S. Attorney Berman.  “Ullah’s sinister purpose was to harm and terrorize as many innocent people in his path as possible, by using deadly violence to make a political statement.  Ullah’s conviction by a unanimous jury of New Yorkers falls on Election Day, which fittingly underscores the core principles of American democracy and spirit:  Americans engage in the political process through votes, not violence.  Today, Ullah stands convicted, he faces a potential life sentence, and his purpose failed.  New York City remains a shining symbol of freedom and hope.”

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

Islamic State of Iraq and Al-Sham 

ISIS is a foreign terrorist organization based in the Middle East and Africa whose publicly stated purpose is the establishment of an Islamic state or caliphate based in the Middle East and Africa that encompasses all Muslims worldwide.  ISIS has pursued the objective of an Islamic state through, among other things, killing and deliberate targeting of civilians, mass executions, persecution of individuals and communities on the basis of their religion, nationality, or ethnicity, kidnapping of civilians, forced displacement of Shia communities and minority groups, killing and maiming of children, rape, and other forms of sexual violence.  ISIS has recruited thousands of foreign fighters from across the globe to assist with its efforts to expand its so-called caliphate in Iraq, Syria, and other locations in Africa and the Middle East, and has leveraged technology to spread its violent extremist ideology and for incitement to commit terrorist acts. 

The Dec. 11, 2017 Attack

On Dec. 11, 2017, at approximately 7:20 a.m., Akayed Ullah detonated an improvised explosive device (“IED”) inside a subway terminal (the “Subway Terminal”) in or around the New York Port Authority Bus Terminal located at West 42nd Street and Eighth Avenue in New York, New York (the “December 11 Attack”).  Shortly after the blast, members of the Port Authority of New York and New Jersey Police Department (“PAPD”) located Ullah lying on the ground in the vicinity of the explosion.  Surveillance footage captured Ullah walking through the Subway Terminal and detonating his IED. 

Ullah was taken into custody by law enforcement.  During the course of Ullah’s arrest, law enforcement officers located on his person and in the surrounding area what appeared to be the components of an exploded pipe bomb (the “Pipe Bomb”).  Specifically, law enforcement located, among other items, (i) a nine-volt battery inside Ullah’s pants pocket; (ii) wires connected to the battery and running underneath Ullah’s jacket; (iii) two plastic zip ties underneath Ullah’s jacket; (iv) several fragments of a metal pipe, including pieces of a metal end cap, on the ground; (v) the remnants of what appeared to be a Christmas tree lightbulb attached to wires; (vi) metal screws; and (vii) pieces of what appear to be plastic zip ties, among other items.

After Ullah was taken into custody, he was transferred to Bellevue Hospital, where he made statements to law enforcement officers after waiving his Miranda rights.  During that interview, Ullah stated, among other things, the following:  

• Ullah constructed the Pipe Bomb and carried out the Dec. 11 Attack.  Ullah was inspired by ISIS to carry out the Dec. 11 Attack, and stated, among other things, “I did it for the Islamic State.”
• Ullah constructed the Pipe Bomb at his residence in Brooklyn (“the Residence”).
• The Pipe Bomb was composed of a metal pipe, which Ullah filled with explosive material that he created.  Ullah used Christmas tree lights, wires, and a nine-volt battery as a trigger to detonate the Pipe Bomb.  Ullah filled the Pipe Bomb with metal screws, which he believed would cause maximum damage.  Ullah used zip ties to secure the Pipe Bomb to his body.
• Ullah carried out the Dec. 11 Attack in part because of the United States Government’s policies in, among other places, the Middle East.  One of Ullah’s goals in carrying out the Dec. 11 Attack was to terrorize as many people as possible.  He chose to carry out the attack on a work day because he believed that there would be more people present.
• Ullah’s radicalization began no later than approximately 2014.  Ullah viewed pro-ISIS materials online, including a video instructing, in substance, that if supporters of ISIS were unable to travel overseas to join ISIS, they should carry out attacks in their homelands.  He began researching how to build IEDs on the Internet approximately one year prior to the attack.
• On the morning of Dec. 11, 2017, shortly before carrying out the attack, Ullah posted a statement on his Facebook account referring to the President of the United States, stating, in substance, “Trump you failed to protect your nation.”  Ullah also posted a statement that he believed would be understood by members and supporters of ISIS to convey that Ullah carried out the attack in the name of ISIS.

Items Recovered from Ullah’s Residence

On Dec. 11, 2017, law enforcement agents searched the Residence pursuant to a judicially authorized search warrant.  Law enforcement agents recovered, among other items, (i) multiple pieces of metal pipes; (ii) pieces of wire and fragments of what appear to be Christmas tree lights; (iii) multiple screws consistent with the screws recovered at the scene of the Dec. 11 Attack; and (iv) a passport in Ullah’s name with multiple handwritten notations, including: “O AMERICA, DIE IN YOUR RAGE.” 

 *                     *                      *

Ullah was convicted of one count of provision of material support and resources to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; one count of using and attempting to use a weapon of mass destruction, which carries a maximum sentence of life in prison; one count of bombing and attempting to bomb a place of public use, which carries a maximum sentence of life in prison; one count of destruction of property by means of fire or explosives, which carries a mandatory minimum sentence of five years in prison and a potential maximum sentence of 20 years in prison; and use of a destructive device in furtherance of a crime of violence, namely, the use and attempted use of a weapon of mass destruction, which carries a mandatory minimum consecutive sentence of 30 years in prison and potential maximum of life, all in connection with Ullah’s alleged detonation of an explosive device in New York City.

 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 Judge Sullivan. 

Mr. Demers and Mr. Berman praised the outstanding investigative efforts of the FBI, the NYPD, the Department of Homeland Security, Homeland Security Investigations (“HSI”), and the PAPD.  Ullah’s conviction is the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York, the FBI’s Joint Terrorism Task Force – which consists of law enforcement officers of the FBI, NYPD, HSI, PAPD, and other agencies – and the U.S. Department of Justice’s National Security Division.

Assistant U.S. Attorneys Shawn G. Crowley, Rebekah Donaleski, and George D. Turner of the Southern District of New York are in charge of the prosecution, with assistance from Trial Attorney Jerome J. Teresinski of the Counterterrorism Section of the Justice Department’s National Security Division.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John C. Demers, the Assistant Attorney General for National Security, announced that a jury returned a guilty verdict today against AKAYED ULLAH in Manhattan federal court on all six counts of the Indictment, which charged him with offenses related to the detonation of a bomb in a subway station near the New York Port Authority Bus Terminal in New York City on December 11, 2017.  ULLAH, who faces a possible sentence of life in prison, is scheduled to be sentenced on April 5, 2019, by the Honorable Richard J. Sullivan, who presided over the one-week trial. 

U.S. Attorney Geoffrey S. Berman said:  “Late last year, Akayed Ullah detonated a bomb during the bustle of morning rush hour under the Port Authority Bus Terminal.  Ullah’s sinister purpose was to harm and terrorize as many innocent people in his path as possible, by using deadly violence to make a political statement.  Ullah’s conviction by a unanimous jury of New Yorkers falls on Election Day, which fittingly underscores the core principles of American democracy and spirit:  Americans engage in the political process through votes, not violence.  Today, Ullah stands convicted, he faces a potential life sentence, and his purpose failed.  New York City remains a shining symbol of freedom and hope.”

Assistant Attorney General John C. Demers said:  “Less than a year ago, Ullah constructed a pipe bomb and detonated it in a mass transit hub in the heart of New York City to harm and terrorize as many people as possible, all on behalf of ISIS.  His crime reminds us that the threat of radical Islamist terrorism remains real.  This guilty verdict holds Ullah accountable, and he faces a potential life term in federal prison for his crimes.  I want to thank all the agents and prosecutors whose outstanding work made this result possible.”

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

Islamic State of Iraq and Al-Sham

ISIS is a foreign terrorist organization based in the Middle East and Africa whose publicly stated purpose is the establishment of an Islamic state or caliphate based in the Middle East and Africa that encompasses all Muslims worldwide.  ISIS has pursued the objective of an Islamic state through, among other things, killing and deliberate targeting of civilians, mass executions, persecution of individuals and communities on the basis of their religion, nationality, or ethnicity, kidnapping of civilians, forced displacement of Shia communities and minority groups, killing and maiming of children, rape, and other forms of sexual violence.  ISIS has recruited thousands of foreign fighters from across the globe to assist with its efforts to expand its so-called caliphate in Iraq, Syria, and other locations in Africa and the Middle East, and has leveraged technology to spread its violent extremist ideology and for incitement to commit terrorist acts.

The December 11, 2017 Attack

On December 11, 2017, at approximately 7:20 a.m., ULLAH detonated an improvised explosive device (“IED”) inside a subway terminal (the “Subway Terminal”) in or around the New York Port Authority Bus Terminal located at West 42nd Street and Eighth Avenue in New York, New York (the “December 11 Attack”).  Shortly after the blast, members of the Port Authority of New York and New Jersey Police Department (“PAPD”) located ULLAH lying on the ground in the vicinity of the explosion.  Surveillance footage captured ULLAH walking through the Subway Terminal and detonating his IED. 

ULLAH was taken into custody by law enforcement.  During the course of ULLAH’s arrest, law enforcement officers located on his person and in the surrounding area components of an exploded pipe bomb (the “Pipe Bomb”).  Specifically, law enforcement located, among other items, (i) a nine-volt battery inside ULLAH’s pants pocket; (ii) wires connected to the battery and running underneath ULLAH’s jacket; (iii) two plastic zip ties underneath ULLAH’s jacket; (iv) several fragments of a metal pipe, including pieces of a metal end cap, on the ground; (v) the remnants of a Christmas tree lightbulb attached to wires; (vi) metal screws; and (vii) pieces of plastic zip ties, among other items.

After ULLAH was taken into custody, he was transferred to Bellevue Hospital, where he made statements to law enforcement officers after waiving his Miranda rights.  During that interview, ULLAH stated, among other things, the following:  

• ULLAH constructed the Pipe Bomb and carried out the December 11 Attack.  ULLAH was inspired by ISIS to carry out the December 11 Attack, and stated, among other things, “I did it for the Islamic State.”
• ULLAH constructed the Pipe Bomb at his residence in Brooklyn (“the Residence”).
• The Pipe Bomb was composed of a metal pipe, which ULLAH filled with explosive material that he created.  ULLAH used Christmas tree lights, wires, and a nine-volt battery as a trigger to detonate the Pipe Bomb.  ULLAH filled the Pipe Bomb with metal screws, which he believed would cause maximum damage.  ULLAH used zip ties to secure the Pipe Bomb to his body.
• ULLAH carried out the December 11 Attack in part because of the United States Government’s policies in, among other places, the Middle East.  One of ULLAH’s goals in carrying out the December 11 Attack was to terrorize as many people as possible.  He chose to carry out the attack on a work day because he believed that there would be more people present.
• ULLAH’s radicalization began no later than approximately 2014.  ULLAH viewed pro-ISIS materials online, including a video instructing, in substance, that if supporters of ISIS were unable to travel overseas to join ISIS, they should carry out attacks in their homelands.  He began researching how to build IEDs on the Internet approximately one year prior to the attack.
• On the morning of December 11, 2017, shortly before carrying out the attack, ULLAH posted a statement on his Facebook account referring to the President of the United States, stating, in substance, “Trump you failed to protect your nation.”  ULLAH also posted a statement that he believed would be understood by members and supporters of ISIS to convey that ULLAH carried out the attack in the name of ISIS.

Items Recovered from ULLAH’s Residence

On December 11, 2017, law enforcement agents searched the Residence pursuant to a judicially authorized search warrant.  Law enforcement agents recovered, among other items, (i) multiple pieces of metal pipes; (ii) pieces of wire and fragments of Christmas tree lights; (iii) multiple screws consistent with the screws recovered at the scene of the December 11 Attack; and (iv) a passport in ULLAH’s name with multiple handwritten notations, including: “O AMERICA, DIE IN YOUR RAGE.” 

 *                     *                      *

ULLAH, 28, of Brooklyn, New York, was convicted of one count of provision of material support and resources to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; one count of using and attempting to use a weapon of mass destruction, which carries a maximum sentence of life in prison; one count of bombing and attempting to bomb a place of public use, which carries a maximum sentence of life in prison; one count of destruction of property by means of fire or explosives, which carries a mandatory minimum sentence of five years in prison and a potential maximum sentence of 20 years in prison; and use of a destructive device in furtherance of a crime of violence, namely, the use and attempted use of a weapon of mass destruction, which carries a mandatory minimum consecutive sentence of 30 years in prison and potential maximum of life, all in connection with ULLAH’s alleged detonation of an explosive device in New York City.

 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 Judge Sullivan.

Mr. Berman and Mr. Demers praised the outstanding investigative efforts of the Federal Bureau of Investigation (“FBI”), the New York City Police Department (“NYPD”), the Department of Homeland Security, Homeland Security Investigations (“HSI”), and the PAPD.  ULLAH’s conviction is the result of the close cooperative efforts of the U.S. Attorney’s Office for the Southern District of New York, the FBI’s Joint Terrorism Task Force – which consists of law enforcement officers of the FBI, NYPD, HSI, PAPD, and other agencies – and the U.S. Department of Justice’s National Security Division.

The prosecution is being handled by the Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Shawn G. Crowley, Rebekah Donaleski, and George D. Turner are in charge of the prosecution, with assistance from Trial Attorney Jerome J. Teresinski of the Counterterrorism Section of the Justice Department’s National Security Division.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John Gore, Acting Assistant Attorney General, announced today that Hudson Valley Federal Credit Union (“Hudson Valley”) has agreed to pay $95,000 to resolve allegations that it violated the Servicemembers Civil Relief Act (“SCRA”) by repossessing vehicles owned by SCRA-protected service members without first obtaining the required court orders.  Under the agreement, Hudson Valley has agreed to pay $65,000 to compensate seven service members whose cars it unlawfully repossessed and will pay a civil penalty of $30,000 to the United States. 

This Office launched an investigation into Hudson Valley’s repossession practices after learning of two private lawsuits filed in the Southern District of New York.  In both lawsuits, the plaintiffs alleged that Hudson Valley violated the SCRA by repossessing the plaintiffs’ vehicles after plaintiffs had entered military service.  This Office’s subsequent investigation identified seven additional violations and revealed that, prior to August 2014, Hudson Valley did not have any written policies or procedures that addressed the SCRA’s protections against non-judicial auto repossessions.  

Hudson Valley, headquartered in Poughkeepsie, New York, is one of the largest credit unions in the country, and has committed to protecting service members’ rights in the future.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Protecting service members is a high priority for this Office and the country.  We are pleased that Hudson Valley has taken these remedial steps, and this Office will continue to protect the rights of men and women in uniform.”

Acting Assistant Attorney General John Gore said:  “Financial institutions must recognize and honor their responsibilities to our men and women in uniform.  Our nation depends upon the selfless devotion and sacrifice of our service members and we must ensure that they receive all rights and protections afforded to them by law.”

The agreement requires Hudson Valley to provide $10,000 in compensation to each of the six affected service members, plus any lost equity in the vehicle with interest.  An additional service member, whose vehicle was repossessed but returned within 24 hours, will receive $5,000.  Hudson Valley has also taken steps to repair the credit of the affected service members. 

The agreement resolves the claims and causes of action asserted in the United States’ Complaint against Hudson Valley filed in the U.S. District Court for the Southern District of New York.

For more information about the United States’s SCRA enforcement efforts, please visit www.servicemembers.gov.  Service members and their dependents who believe that their rights under SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office.  Office locations may be found at www.legalassistance.law.af.mil/content/locator.php. 

This case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorney Ellen Blain is in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Scott J. Lampert, Special Agent in Charge for the New York Office of Inspector General of the U.S. Department of Health and Human Services (“HHS-OIG”), announced today a settlement of a civil fraud lawsuit against DR. KENNETH S. FELDER (“FELDER”) and METROPOLITAN RETINA ASSOCIATES, INC. (“METROPOLITAN RETINA”).  The settlement resolves claims under the False Claims Act alleging that FELDER and METROPOLITAN RETINA billed Medicare and Medicaid for (1) substandard fluorescein angiography tests that were of such poor quality that they lacked all diagnostic value and were effectively worthless; and (2) ophthalmic ultrasounds that were either not performed or lacked any supporting documentation.  Under the terms of the settlement approved by U.S. District Judge Alison J. Nathan, FELDER and METROPOLITAN RETINA admitted and accepted responsibility for their conduct and agreed to pay $2,064,559 to the United States.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Dr. Kenneth Felder and Metropolitan Retina defrauded taxpayers when they billed Medicare and Medicaid for diagnostic tests that were shoddy, undocumented, and sometimes not performed at all.  This settlement sends a strong message that such conduct will not be tolerated.”

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “The irresponsible behavior by Metropolitan Retina Associates and Dr. Kenneth Felder compromised the integrity of the Medicare and Medicaid programs, and wasted millions of taxpayer dollars.  HHS-OIG will continue to ensure that providers who do business with federally funded health care programs do so in an honest fashion.”

METROPOLITAN RETINA is an ophthalmology practice that is wholly owned by FELDER, with offices in Brooklyn and Manhattan.  As part of the settlement, FELDER and METROPOLITAN RETINA admit, acknowledge, and accept responsibility for the following conduct: 

• FELDER and METROPOLITAN RETINA frequently submitted claims to Medicare and Medicaid for fluorescein angiograms that lacked any diagnostic or medical value because the images were distorted and/or were taken from angles that made it impossible to evaluate the patients’ conditions. 
• Medicare or Medicaid would not have paid for these procedures had they known that the fluorescein angiograms lacked any diagnostic or medical value. 
• FELDER and METROPOLITAN RETINA frequently submitted claims to Medicare and Medicaid for ultrasounds of the eye that either were not performed or were not supported by any medical record documentation. 
• Medicare and Medicaid would not have paid for these ultrasounds had they known that the ultrasounds either were not performed or were not supported by documentation in the medical records.
• As a result of billing for the medical procedures described above, FELDER and METROPOLITAN RETINA received substantial reimbursement from Medicare and Medicaid to which they were not entitled.

*                *                *

Mr. Berman thanked the Office of the Inspector General for HHS for its assistance. 

The case is being handled by the Office’s Civil Division.  Assistant U.S. Attorneys Brandon Cowart and Jacob M. Bergman are in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that REBECCA BAYUO, a Bronx tax preparer, was convicted in Manhattan federal court yesterday of preparing false tax returns on behalf of her clients, filing false tax returns in the names of victims whose identities she had previously stolen, and filing false tax returns on her own behalf.  BAYUO was convicted after a two-and-half week jury trial before U.S. District Judge John G. Koeltl.

U.S. Attorney Geoffrey S. Berman stated:  “Rebecca Bayuo now stands convicted of multiple counts of tax fraud after she abused her position of trust as a tax preparer by systematically violating the nation’s income tax laws.  By repeatedly filing fraudulent tax returns for her clients, including using stolen identities to increase tax refunds, Bayuo stole tens of thousands of dollars directly from the U.S. Treasury.  For these egregious crimes, Bayuo now faces significant time in federal prison.”

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

BAYUO owned and operated Breakthrough Insurance Brokerage, a tax preparation business, located in the Bronx, New York.  From 2010 through 2014, BAYUO used stolen identifying information of victims to file fraudulent federal income tax returns, which generated tax refunds to which BAYUO was not entitled.  Specifically, BAYUO repeatedly used stolen identities of dozens of victims, including 11 New York residents who testified at trial, to file false tax returns and unlawfully collect tax refunds from the Internal Revenue Service (“IRS”) in their names for herself.  As a result of BAYUO’s criminal conduct, many of the victims were unable to file tax returns as required by law, and were deprived of tax refunds to which they were entitled.

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

Finally, from 2014 to 2015, BAYUO filed false personal income tax returns in her own name, and included in those filings personal identifying information belonging to other individuals that she had stolen.  Specifically, on her own tax returns, BAYUO included false “dependents,” whose identities she had stolen, in order to obtain a larger tax refund to which she was not entitled.  Three of the victims of this scheme testified at trial.

*                *                *

BAYUO, 48, of the Bronx, New York, was convicted of 12 counts of aiding and assisting the preparation of false tax returns, each of which carries a maximum sentence of three years in prison; one count of theft of government funds, which carries a maximum sentence of 10 years in prison; one count of aggravated identity theft, which carries a mandatory minimum sentence of two years in prison; and two counts of subscribing to false tax returns, each of which carries a maximum sentence 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. 

BAYUO is scheduled to be sentenced on April 12, 2019, at 10:00 a.m.

Mr. Berman praised the outstanding investigative work of the IRS.  The prosecution of this case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Mollie Bracewell, Cecilia Vogel, and Sarah E. Paul are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that WILLIAM TIERNEY pled guilty today in Manhattan federal court to conspiring to commit wire fraud for inducing donations to six political action committees (“PACs”) he established and operated by misrepresenting the activities and expenditures of the PACs.  TIERNEY was arrested and charged in connection with this scheme in May 2018, and he pled guilty today to one count of conspiracy to commit wire fraud before U.S. District Judge Jesse M. Furman. 

Manhattan U.S. Attorney Berman said:  “William Tierney admitted today that he secretly operated numerous political action committees to obtain small-dollar donations from people who believed their hard-earned money would support the causes described in solicitation calls and mailings.  In reality, the PACs were political action committees in name only, contributing less than 1 percent of the money they raised to candidates for office and instead enriching the defendant, who now faces prison time for his crimes.  This is the first-ever federal prosecution of fraudulent scam PACs, but it won’t be the last.”

According to the allegations set forth in the Complaint and Information filed against TIERNEY in Manhattan federal court, and statements made in public court filings and proceedings, including TIERNEY’s guilty plea hearing:

TIERNEY defrauded tens of thousands of donors to six political action committees that he established, controlled, and operated.  These scam PACs were fraudulent entities operated to enrich the defendant, targeting victims across the country to raise funds on the basis of false and misleading representations.  The scam PACs purported to support voter education regarding – and the political campaigns of those who supported – various causes, including autism awareness, law enforcement, and pro-life causes, including through purported “coast to coast” education and advocacy campaigns, working with local groups and organizations, and “investing every penny . . . in the big races to come.”  In truth, virtually all of the money raised was either paid to TIERNEY or used to perpetuate the fraud through additional telemarketing, fundraising, and overhead expenditures.  Less than 1 percent of the money obtained by the scam PACs was contributed to candidates for office.

TIERNEY perpetrated the fraud through various deceptive means and methods.  For example, he created and utilized a web of shell pass-through entities to conceal and disguise the fraud.  Donated funds were transferred to these shell entities, which were given names that suggested activities related to marketing, consulting, and communications efforts, including for issue-specific causes – so that payments to the shell entities would appear to be for legitimate expenditures, including when publicly disclosed in Federal Election Commission (“FEC”) filings.  In at least one instance, a website was created for one of the shell entities, falsely stating that the entity provided direct marketing and political consulting services to trade associations, candidate campaigns, political action committees, and nonprofit organizations.  In fact, these and the other shell entities TIERNEY created had no active operations or employees, were retained by no outside “clients,” and served only to funnel and disguise financial transactions involving money donated to certain scam PACs.

TIERNEY also instructed two companies that made telemarketing solicitation calls for certain scam PACs to create their own shell companies – which he referred to as “Stealth LLCs” – with names that concealed any connection with their parent telemarketing vendors.  This prevented the FEC, donors, and other members of the public from being able to learn from required FEC disclosure forms that multiple scam PACs were in fact paying the same telemarketing vendors. 

To facilitate the fraudulent scheme, TIERNEY used the fake identity of “Bill Johnson” when meeting and corresponding with officials at certain fundraising call centers.  Another fake identity, “Emma Smith,” was used in fundraising solicitations, and was described as a “Volunteer Coordinator” for one of the PACs; in fact, neither Emma Smith nor the position of “Volunteer Coordinator” actually existed.  TIERNEY also undertook efforts to avoid press coverage of the scam PACs more generally, despite the scam PACs’ claims in solicitation materials of national advocacy and awareness campaigns.

*                      *                      *

TIERNEY, 46, of Arizona, pled guilty to one count of conspiring to commit wire fraud, which carries a maximum sentence of five years in prison, and agreed to forfeit and pay restitution in an amount of at least $1.4 million.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as the sentence of the defendant will be determined by the court.

TIERNEY is scheduled to be sentenced by Judge Furman on February 7, 2019.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today that ISHI WONEY was charged with sex trafficking and other offenses involving the sexual exploitation of young women.  WONEY was arrested yesterday in New Jersey and will be presented today before U.S. Magistrate Judge Sarah Netburn in federal court in Manhattan this afternoon.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Ishi Woney engaged in a vile form of exploitation, using force and other coercion to compel young women to engage in paid sex for his enrichment.  We will continue to work with the FBI and NYPD to protect prospective victims of human trafficking and arrest and prosecute their predators.” 

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “As alleged, Woney compelled his victim to engage in prostitution through force and coercion, and he used both this victim and Corinna Slusser, who has been missing since September 2017, in online advertisements promoting prostitution.  Human trafficking is a top priority for the FBI, and, as today’s charges demonstrate, we will continue to aggressively pursue justice for the victims of these heinous crimes.  Ms. Slusser was last seen in Queens, New York, and we ask anyone with information concerning her whereabouts to contact us as 1-800-CALL-FBI or online at tips.fbi.gov.”

NYPD Commissioner James P. O’Neill said:  “Today’s charges further affirm the NYPD’s unwavering commitment to protecting the victims of sex trafficking in and around the five boroughs of New York City.  This crime is among the most heinous in society, and it is our job – and the job of all of our local, state, and federal law enforcement partners – 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.  I thank and commend the U.S. Attorney’s Office for the Southern District and the FBI for collaborating with us on this critical case.  And we urge anyone who has any information related to this case, or any other, to contact law enforcement.  Together, we will continue to make the safest large city in the nation even safer.”

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

Between approximately September 2017 and the present, WONEY engaged in sex trafficking by using force, fraud, and coercion to compel at least one female victim (“Victim-1”) to engage in sex acts in the Bronx and other locations in exchange for money.  WONEY also transported Victim-1 to multiple states, including New York, to engage in prostitution, and purchased online advertisements promoting prostitution, some of which featured Victim-1 and Corinna Slusser, who has been a missing person since September 20, 2017, and was last seen in Queens, New York.  

If you have any information related to the whereabouts of Corinna Slusser, please contact the FBI at 1-800-CALL-FBI or online at tips.fbi.gov, or the NYPD at 800-577-TIPS.

*                      *                     *

The charges in the Complaint against WONEY, 23, of New York, New York, are included in the chart 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 defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of FBI 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 defendant is presumed innocent unless and until proven guilty.

Count

Charge

Mandatory Minimum Prison Term

Maximum Prison Term

One

Use of an Interstate Facility to  Promote, Manage, and Carry on Prostitution

N/A

5 Years

Two

Mann Act

N/A

10 Years

Three

Sex Trafficking by Means of Force, Threats, Fraud, and Coercion

15 Years

Life

[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 SHANNADE CLERMONT pled guilty to one felony count of wire fraud for making and attempting more than $20,000 in fraudulent charges using the stolen debit card information of a deceased man she had visited for a prostitution date.  CLERMONT pled guilty before U.S. District Judge Naomi Reice Buchwald.

U.S. Attorney Geoffrey S. Berman said:  “Former reality TV ‘Bad Girl’ Shannade Clermont stole debit card information from a man she visited for a prostitution date in his Manhattan apartment.  When he died of an overdose, Clermont used the deceased man’s identity to make tens of thousands of dollars in fraudulent purchases.  She has now pled guilty to fraud and faces time in federal prison.  This case demonstrates that in reality, those who commit debit card fraud will be prosecuted to the fullest extent of the law.”      

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

The NYPD and the United States Attorney’s Office for the Southern District of New York have been investigating the overdose death of a male individual (the “Victim”), who was found dead on the morning of February 1, 2017, in his apartment at 250 East 53rd Street in Manhattan, New York (the “Victim Apartment”).  During the course of that investigation, law enforcement learned that CLERMONT visited the Victim for a prostitution date at the Victim Apartment the previous evening (January 31, 2017), and stole two debit cards from his wallet.  CLERMONT then used the stolen debit card information to make or attempt to make more than $20,000 in fraudulent purchases during the months following the Victim’s death, including to pay her rent and phone bills, purchase flights, and make several online purchases of thousands of dollars of clothing and other merchandise.

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

                                                                                                                                                                                         *                      *                      *

CLERMONT, 24, of Georgia, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years.  Sentencing before Judge Buchwald is scheduled for February 13, 2019 at 2:30pm.

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that MAMDOUH ABDEL-SAYED, a former full-time lecturer at the City University of New York’s Medgar Evers College (“Medgar Evers College” or the “College”), was sentenced to six months in prison for selling sham Medgar Evers College certificates that purported to represent the completion of health care courses at the College.  ABDEL-SAYED pled guilty on May 30, 2018, before U.S. District Judge Vernon S. Broderick, who imposed today’s sentence.    

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Mamdouh Abdel-Sayed put his greed before the public’s health when he provided fake healthcare program certificates to students – certificates that allowed people with little to no relevant education to work in the healthcare field.  Thankfully Abdel-Sayed’s money-making scheme was discovered and he will serve time in federal prison for his misdeeds.”

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

MAMDOUH ABDEL-SAYED was a full-time lecturer in the Biology Department at Medgar Evers College.  From at least 2013 through 2017, without authorization from Medgar Evers College, ABDEL-SAYED purported to teach health care courses at the College on topics such as Electrocardiograms, Phlebotomy, and Sonography, and provided students with sham certificates of completion for the courses, in exchange for which ABDEL-SAYED charged fees of up to $1,000 per certificate, which money he kept for himself.  ABDEL-SAYED attempted to avoid scrutiny from the College’s security guards in conducting the unauthorized courses.    

In addition to charging fees for the unauthorized courses and sham certificates, ABDEL-SAYED encouraged students to use the certificates in obtaining employment in the health care field, including at New York City-area hospitals.  When asked by employment agencies to verify the authenticity of the certificates, ABDEL-SAYED falsely informed the agencies that the certificates were issued by Medgar Evers College.  In fact, ABDEL-SAYED created the sham certificates himself, and provided them to students even if the students did not attend his unauthorized courses, so long as the students paid ABDEL-SAYED for the certificates.  In addition, ABDEL-SAYED distributed copies of purported national certification examinations – which he informed students on a recorded conversation it was “illegal” for them to possess – in order to assist the students in passing licensing examinations supposedly administered by the State for certain medical techniques. 

After ABDEL-SAYED became aware of the investigation, he instructed an undercover law enforcement investigator, who had posed as a student and purchased several unauthorized certificates from him, to provide false information to federal law enforcement agents and to conceal those certificates from the agents.   ABDEL-SAYED has been on administrative leave from the College since his arrest.

*                *                *

In addition to the prison term, ABDEL-SAYED, 69, of Kearny, New Jersey, was sentenced to six months of home confinement, two years of supervised release, and ordered to pay $20,000 in restitution and $20,000 forfeiture. 

Mr. Berman praised the investigative work of the New York State Inspector General’s Office and the U.S. Department of Education - Office of Inspector General. 

The case is being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorney Eli J. Mark is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today the filing of charges against DAVID JONES, DAVID DUWAYNE TAYLOR, KRISTIN KNIGHT, and DESTINY BISHOP for engaging in a scheme by which they fraudulently duped their victims into believing that they had sent sexually explicit images to underage children and faced criminal prosecution if they did not pay to avoid involvement by law enforcement. 

TAYLOR, KNIGHT, and BISHOP were presented in federal court in South Carolina on October 18 and 19, 2018.  BISHOP was presented on Friday, October 26, 2018, before U.S. Magistrate Judge Paul E. Davison in White Plains federal court and released on a personal recognizance bond.  KNIGHT was presented on October 29, 2018, before U.S. Magistrate Judge Judith McCarthy in White Plains federal court and released on a personal recognizance bond.  JONES was presented this morning before U.S. Magistrate Judge Judith C. McCarthy.  TAYLOR is expected to appear in federal court in White Plains in the next several days.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants scared their victims into sending them money by fraudulently convincing them they were in peril of criminal prosecution for child exploitation.  This alleged fraud was not only cruel, it was also profitable for the defendants – until they were arrested.”

HSI Special Agent in Charge Angel M. Melendez said:  “These individuals allegedly chose their targets specifically to create vulnerabilities, seeking simply to make a profit through deceit and extortion.  Anyone can fall victim to a criminal scheme, so it is important to remain diligent in text messaging and online communications, and to contact law enforcement if criminal activity is suspected.”

As alleged in the Complaint unsealed October 18, 2018, in White Plains federal court[1]:

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

*                *                *

JONES, 28, of Greenville, South Carolina, TAYLOR, 28, of Easley, South Carolina, KNIGHT, 28, of Greer, South Carolina, and BISHOP, 21, of Greenville, South Carolina, are each charged with one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge.

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

Mr. Berman stated that the investigation is ongoing.  Anyone with relevant information is asked to contact Homeland Security Investigations at 866-DHS-2-ICE.                        

The prosecution is being handled by the Office’s White Plains Division.  Assistant United States Attorney Marcia S. Cohen is in charge of the prosecution.  

[1] As the introductory phrase signifies, the entirety of the text of the Complaint, as well as 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 MARTIN MITCHELL, a/k/a “Tyliek,” a member of a violent street gang in the Bronx called the “Big Money Bosses” (“BMB”), was sentenced yesterday to 327 months in prison for his gang-related crimes, including the June 22, 2014, murder of 17-year-old Keshon Potterfield.  MITCHELL pled guilty on December 30, 2016, to conspiracy to commit racketeering and to killing Potterfield, and was sentenced yesterday by U.S. District Judge Alison J. Nathan.

U.S. Attorney Geoffrey S. Berman said:  “Martin Mitchell was sentenced to more than 27 years in prison for the cowardly murder of Keshon Potterfield, a teenager whom Mitchell shot in the back.  This significant sentence will take a violent offender off the street and, hopefully, provide Keshon Potterfield’s family some measure of justice.  We will continue to work with our law enforcement partners to prevent gang violence and keep our streets safe.”

According to court documents and statements made during the public proceedings in this case:

BMB is a subset of the “Young Bosses,” or “YBz” street gang, which operates throughout New York City.  Between 2007 and 2016, members and associates of BMB committed numerous acts of violence against rival gang members in the Bronx – including murders, attempted murders, and armed robberies – and sold crack cocaine, marijuana, and oxycodone.   

MITCHELL was a member of BMB.  On June 22, 2014, MITCHELL and other members of BMB attended a birthday party in the backyard of a residence on East 232nd Street in the Bronx.  MITCHELL obtained a gun from fellow BMB member Donque Tyrell, a/k/a “Polo Rell,” then used that gun to shoot and kill Potterfield as he ran from the BMB members.  As part of the plea agreement he signed, MITCHELL also admitted to attempting to murder two other rival gang members on different occasions, armed robbery, and drug trafficking.

*                      *                     *

MITCHELL, 23, of the Bronx, was arrested in this case as a result of a multi-year investigation by the New York City Police Department’s (“NYPD”) Bronx Gang Squad, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Violent Gang Unit, the New York Field Division of the Drug Enforcement Administration, and the Joint Firearms Task Force of the Bureau of Alcohol, Tobacco, Firearms, and Explosives into gang violence in the Northern Bronx.

Mr. Berman praised the outstanding work of the NYPD’s Bronx Homicide Task Force, the NYPD’s 47th Precinct Detective Squad, the NYPD’s Bronx Gang Squad, HSI, DEA, and ATF.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Rachel Maimin, Hagan Scotten, Jessica Feinstein, Drew Skinner, and Allison Nichols are in charge of the prosecution.

Geoffrey S. Berman and Richard P. Donoghue, the United States Attorneys for the Southern and Eastern Districts of New York, respectively, announced today that special telephone numbers have been set up to receive complaints of possible violations of federal election laws relating to the upcoming general elections in New York City and other counties in their districts. 

The United States Attorneys said that their Offices will be available to receive complaints at the following numbers on Tuesday, November 6, 2018:

(646) 369-4739                       (for Manhattan, Bronx, Dutchess, Orange, Putnam, Rockland, Sullivan, and Westchester counties)

(718) 254-6790                       (for Brooklyn, Queens, Staten Island, Nassau, and Suffolk counties)

In addition, complaints of possible violations of federal election laws may be made directly to the Federal Bureau of Investigation at (212) 384-1000.

The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur.  The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on Election Day.

Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.  It also contains special protections for the rights of voters, and provides that they can vote free from acts that intimidate or harass them.  For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting, may violate federal voting rights law.  Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.

The right to vote is a cornerstone of American democracy.  We all must ensure that those who are entitled to vote exercise that right if they choose, and that those who seek to corrupt it are brought to justice. 

The United States Attorneys also noted that the following additional telephone numbers are available on Election Day for citizens to call for routine inquiries, such as where to vote or how late the polls are open, or to register complaints that may concern violations of New York State election laws:

IN NEW YORK CITY

City Board of Elections

Main Office: (866) 868-3692

TTY #: (212) 487-5496

IN COUNTIES OUTSIDE NEW YORK CITY

County Boards of Elections

Dutchess                                 (845) 486-2473

Nassau                                     (516) 571-8683

Orange                                    (845) 360-6500

Orange (Spanish language)    (855) 331-2444

Putnam                                    (845) 808-1300

Rockland                                 (845) 638-5172

Suffolk                                    (631) 852-4500

Sullivan                                   (845) 807-0400

Westchester                            (914) 995-5700

Assistant United States Attorney David J. Kennedy is responsible for overseeing the handling of complaints of voting rights abuses and election fraud for the Southern District of New York.

Assistant United States Attorney Erik Paulsen is responsible for overseeing the handling of complaints of voting rights abuses and election fraud for the Eastern District of New York.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GARY TANNER, a former executive at Valeant Pharmaceuticals International, Inc. (“Valeant”), was sentenced today to 1 year and 1 day in prison, and ANDREW DAVENPORT, the former chief executive officer (“CEO”) of Philidor Rx Services LLC (“Philidor”), was sentenced today to 1 year and 1 day in prison, after having been found guilty by a federal jury for engaging in a multimillion-dollar kickback scheme.  TANNER and DAVENPORT were sentenced in Manhattan federal court by Senior United States District Judge Loretta A. Preska, who also presided over the defendants’ four-week jury trial in May 2018.

U.S. Attorney Geoffrey S. Berman said:  “Gary Tanner and Andrew Davenport conspired to deceive and defraud Tanner’s employer, Valeant, in order to enrich them both.  Tanner was entrusted to manage Valeant’s relationship with Davenport’s company.  Instead, they devised a scheme to pillage Valeant and share the proceeds.  Now Tanner and Davenport have been sentenced for their crimes.”

According to the allegations in the charging documents, statements made in court proceedings, and the evidence introduced at trial:   

Valeant is a publicly traded pharmaceutical manufacturer headquartered in Canada, with its principal place of business in New Jersey.  Philidor was a specialty mail order pharmacy that was formed in or about January 2013 with the assistance of Valeant.  During the course of Philidor’s existence, at least 90 percent of the drugs dispensed by Philidor were Valeant-branded drugs. 

TANNER was the Valeant executive primarily responsible for managing Valeant’s relationship with Philidor.  TANNER was also responsible more broadly for Valeant’s alternative fulfillment (“AF”) program.  Through its AF program, Valeant sought to increase doctor prescriptions and patient purchases of Valeant pharmaceuticals instead of generic substitutes or alternatives by helping obtain insurance coverage for those drugs or providing other incentives for prescription and purchase of Valeant drugs.  As part of his work at Valeant, TANNER interacted directly with Philidor’s executives, including DAVENPORT, and senior Valeant executives. 

Valeant and Philidor began negotiations for Valeant to purchase Philidor, and Valeant ultimately purchased an option to buy Philidor (the “Option”) in exchange for $133 million in payments to Philidor’s owners, and the promise of $100 million in additional milestone payments if Philidor were to meet certain sales targets.  Despite the duty of loyalty owed by TANNER to Valeant, during negotiations relating to the Option, TANNER and DAVENPORT secretly made preparations for TANNER to receive a multimillion-dollar kickback out of the money that Valeant was going to pay Philidor’s owners for the Option.  Among other things, TANNER and DAVENPORT set up shell company bank accounts in order to launder the kickbacks to TANNER.  While these preparations were underway, TANNER secretly advised DAVENPORT on his negotiations with Valeant.  TANNER did this in contravention of his duties to Valeant and despite the fact that he was also internally advising Valeant in its negotiations with DAVENPORT about the Option.   

In addition to secretly helping DAVENPORT negotiate against Valeant in exchange for the promise of a kickback from DAVENPORT, TANNER took other actions to benefit Philidor and DAVENPORT personally, and against the direction of his supervisors at Valeant.  For example, TANNER’s supervisors directed him to identify other pharmacies that Valeant could use to distribute its drugs, in order to minimize the risks of overreliance on Philidor.  TANNER deceived his supervisors into believing that he was pursuing their direction in good faith when, in fact, he lied about participating in meetings and doing due diligence on potential competitors to Philidor.  In addition, TANNER helped Philidor and DAVENPORT secure favorable payment terms.

In order to keep their scheme hidden from Valeant, TANNER often used a Philidor email account that TANNER maintained in the name of “Brian Wilson” to communicate with DAVENPORT.  TANNER also pretended to be Brian Wilson in at least one meeting that he and DAVENPORT participated in on behalf of Philidor. 

In December 2014, Valeant acquired the Option.  DAVENPORT, through two different entities that he controlled, received approximately $50 million of the $133 million that Valeant paid.  DAVENPORT transferred $9.7 million of that amount to TANNER through a shell company he controlled, and then to a shell company controlled by TANNER, an entity called Befrielse Consolidated, LLC (“Befrielse”).  TANNER concealed his receipt of this money from Valeant, in violation of his fiduciary duties to Valeant, and in violation of Valeant’s conflict of interest policies.  Prior to receiving the funds, TANNER had repeatedly certified to Valeant that he was in full compliance with Valeant’s Standards of Business Conduct, which prohibited any conflicts of interest without full disclosure and approval by company management. 

After the Option purchase was completed, TANNER continued to use his position at Valeant to advance the interests of Philidor and DAVENPORT, including by resisting Valeant’s efforts to collect payments from Philidor owed to Valeant and pursuing milestone payments under the terms of the Option that he secretly expected to share in.  In communications concerning the scheme, using TANNER’s secret Brian Wilson email account, DAVENPORT discussed with TANNER how TANNER would secretly continue to promote DAVENPORT’s interests, even while he purported to represent Valeant’s interests as the Valeant executive responsible for Philidor.  Among other things, DAVENPORT stated that he pictured his and TANNER’s “butch and sundance ride into the sunset (or off the cliff as in the flick),” to which TANNER responded, using the secret Brian Wilson account: “[G]ave me a good chuckle when I just saw it. Will have to keep playing the game :).”  

*                      *                      *

In addition to the prison sentence, Judge Preska sentenced TANNER, 41, of Gilbert, Arizona, and DAVENPORT, 50, of Haverford, Pennsylvania, to two years of supervised release, and ordered each to forfeit approximately $9.7 million.

TANNER and DAVENPORT were found guilty by a unanimous jury on May 22, 2018, of conspiracy to commit honest services wire fraud, honest services wire fraud, conspiracy to violate the Travel Act, and conspiracy to commit money laundering.   

Mr. Berman praised the work of the Federal Bureau of Investigation, and thanked the United States Securities and Exchange Commission for its cooperation and assistance. 

This case was prosecuted by the Office’s Securities and Commodities Fraud Task Force and its Complex Frauds and Cyber Crime Unit.  Assistant U.S. Attorneys Richard Cooper and Amanda Kramer are in charge of the prosecution.   

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that IRFAN AMANAT, the former owner and manager of Enable Invest Ltd. (“Enable”), a Dubai-based investment fund, was found guilty yesterday in Manhattan federal court of various securities fraud-related offenses, after a trial presided over by U.S District Judge Paul G. Gardephe.  This follows the December 2017 conviction of co-defendants Omar Amanat and Kaleil Isaza Tuzman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As the jury found, Irfan Amanat lied to auditors, investors, and the SEC about millions of dollars of KIT digital and Maiden Capital funds that were lost or misappropriated.  Irfan Amanat now awaits sentencing for his multimillion-dollar deception.”    

According to the Indictment and other filings in Manhattan federal court and the evidence presented at trial, AMANAT was engaged in two related criminal schemes:

The first scheme involved a fraud on investors in Maiden Capital LLC (“Maiden Capital”), a hedge fund based in Charlotte, North Carolina.  Stephen Maiden was the managing member of Maiden Capital.  Between in or about March 2009 and in or about June 2012, AMANAT, along with Maiden and others, devised and carried out a scheme to hide the fact that investments by Maiden Capital in Enable, an investment vehicle owned and managed by AMANAT, had been lost.  To facilitate the scheme, Maiden, with AMANAT’s assistance, generated fictitious client account statements that failed to disclose millions of dollars in Enable-related losses. 

The second scheme involved accounting fraud at KIT digital (“KITD”), a publicly traded company based in New York, New York, and Prague, Czech Republic.  From at least in or about 2009 through in or about 2012, AMANAT, along with Tuzman, KITD’s former CEO, and Robin Smyth, KITD’s former CFO, engaged in an illegal scheme to deceive KITD shareholders, members of the investing public, KITD’s independent auditors, and others concerning KITD’s true operating performance and financial results.  Instead of informing KITD’s auditors and investors that millions of dollars that KITD had invested with Enable had been lost or fraudulently misappropriated, AMANAT falsely represented that KITD’s investment with Enable was sound and earning steady interest.

Following the jury’s verdict, the government moved for AMANAT to be remanded into custody because, as alleged by the government, AMANAT attempted to obstruct justice by seeking to procure false bank documents in order to falsely demonstrate that two cooperating witnesses who testified at the trial and the 2017 trial had been paid for their testimony.  An evidentiary hearing on this issue commenced and will continue at a later date. 

*                *                *

AMANAT, 46, was found guilty of one count of conspiracy to commit wire fraud, and one count of wire fraud, each of which carries a maximum penalty of 20 years in prison, and one count of aiding and abetting investment advisor fraud, and one count of conspiracy to commit securities fraud, make false statements in annual and quarterly SEC reports, and make false statements to auditors, each of which carries a maximum penalty of five years in prison. 

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

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the U.S. Postal Inspection Service.  He also thanked the SEC. 

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging LUIS SEMIDAY, a/k/a “PopOff,” RICHARD JIMENEZ, a/k/a “Showtime,” KEVIN CRUZ, a/k/a “Juice,” IRA LAWSON, a/k/a “Malachi,” and CURTIS HINES, a/k/a “Curt,” a/k/a “Gz,” with robbery conspiracy, robbery, and murder through the use of a firearm.  The charges arise out of a robbery of a marijuana dealer in the Bronx on February 4, 2018, during which Jonathan Tuck was unintentionally shot and killed.  JIMENEZ, CRUZ, LAWSON, and HINES were arrested yesterday and this morning, and will be presented this afternoon before U.S. Magistrate Judge Sarah Netburn.  SEMIDAY is still at large.  The case is assigned to U.S. District Judge Edgardo Ramos.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged in the Indictment, the defendants planned and carried out the violent armed robbery of a marijuana dealer in the Bronx.  In the course of that robbery, 25-year-old Jonathan Tuck was killed.  Thanks to the extraordinary efforts of the NYPD and the Special Agents of our Office, five defendants now face charges for their role in these terrible crimes.”

NYPD Commissioner James P. O’Neill said:  “I applaud the tireless work of our NYPD detectives and our partners at the Southern District, whose close collaboration led to today’s charges.  We have zero tolerance for crime and violence of any kind in our city, and New Yorkers in every neighborhood deserve to feel safe on our streets.  Today, these five men are correctly being held accountable for their actions – which include, tragically, ending another man’s life.”

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

On February 4, 2018, SEMIDAY, JIMENEZ, CRUZ, LAWSON, and HINES planned and carried out a gunpoint robbery of a drug dealer at 2334 Washington Avenue in the Bronx.  During the course of the robbery, Jonathan Tuck was unintentionally shot and killed.       

*                *                *

SEMIDAY, 22, of the Bronx, New York, JIMENEZ, 21, of New York, New York, CRUZ, 23, of the Bronx, New York, LAWSON, 24 of the Bronx, New York, and HINES, 20, of the Bronx, New York, are each charged with one count of robbery conspiracy, which carries a maximum sentence of 20 years in prison; one count of robbery, which carries a maximum sentence of 20 years in prison; and one count of murder through the use of a firearm, which carries a maximum sentence of death or life in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the NYPD and the Special Agents of the U.S Attorney’s Office for the Southern District of New York.  He added that the investigation is continuing.

This case is being handled by the Office’s Violent & Organized Crime Unit.  Assistant United States Attorneys Andrew K. Chan 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.

[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, James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and Keith Kruskall, Acting Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), today announced the unsealing of an Indictment and a Complaint charging a total of 11 defendants with committing various narcotics and firearms offenses in the Bronx, New York.

Manhattan U.S. Attorney Geoffrey S. Berman stated:  “Today’s charges target multiple forms of alleged drug dealing and the gun violence that accompanies the drug trade.  From feeding the opioid crisis through the sale of Oxycodone, to pouring crack into our streets, to possessing and firing guns to secure drug territory, the alleged conduct of these 11 defendants fueled a cycle of addiction and violence.  The joint investigative work of the NYPD and the DEA leading to today’s arrests reflects the ongoing commitment of federal and local authorities to break this cycle.”

DEA Acting Special Agent-In-Charge Keith Kruskall said:  “DEA supports the NYPD in their efforts to protect New Yorkers from drug traffickers and the associated violence.  This investigation identified and arrested crew members who allegedly pushed oxycodone, crack, and marijuana into user’s hands, threatening neighbors with drug addiction and gun violence.”

NYPD Commissioner James P. O’Neill said:  “The NYPD is relentless in our commitment to fight crime and keep all New Yorkers safe.  By directly answering community concerns and enhancing our solid working relationships with the Southern District and the DEA, we are consistently able to remove drug dealers from our neighborhoods and avert the violence so often associated with their criminal activities.”

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

Between 2015 through 2018, JENCY DIAZ, a/k/a “JC,” KEVIN MORA, a/k/a “Jaffy,” CERENE MAYES, a/k/a “Mama,” HOWARD AYLLON, a/k/a “Kapo,” MYRON DECOSTA, and CARLA DECOSTA, conspired to sell Oxycodone.

In 2013 and 2014, KEVIN MORA, ARTURO MORA, a/k/a “Etho,” and WHYKEE JOHNSON, conspired to sell crack cocaine and marijuana and possessed firearms in furtherance of that conspiracy, some of which were brandished and discharged.

Between April 2018 and the present, ALAN ARIAS, WALTHER CASTILLO, a/k/a “Walter,” and RUDY DELGADO, conspired to sell more than 280 grams of crack cocaine in and around the Bronx, New York. 

Seven defendants were taken into federal custody in the Bronx this morning.  Those defendants will be presented in Manhattan federal court today before U.S. Magistrate Judge Sarah Netburn.  CARLA DECOSTA was arrested in Delaware this morning and will be presented in federal court there today.  JOHNSON was already in federal custody and will be arraigned at a future date.  Defendants ARTURO MORA and ALAN ARIAS remain at large.

*                      *                     *

Charts containing the names of the defendants who were charged today, and the charges and maximum penalties they face, are attached.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the respective judges.

Mr. Berman praised the outstanding investigative work of the NYPD and the DEA.  Mr. Berman also thanked the Bronx District Attorney’s Office for its assistance in the case.

These cases are being handled by the Office’s Violent and Organized Crime Unit and Narcotics Unit.  Assistant United States Attorneys Frank Balsamello, Maurene Comey, and Adam Hobson are in charge of the prosecutions.

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

United States v. Jency Diaz, et al., 18 Cr. 749

United States v. Alan Arias, et al., 18 Mag. 9136

CHARGE(S)

DEFENDANT(S)

MAXIMUM PENALTIES

Narcotics conspiracy

(Conspiracy to distribute and possess with intent to distribute Oxycodone.)

JENCY DIAZ,

    a/k/a “JC” (27 years old)

KEVIN MORA,

    a/k/a “Jaffy” (30 years old)

CERENE MAYES,

    a/k/a “Mama” (59 years old)

HOWARD AYLLON,

    a/k/a “Kapo” (30 years old)

MYRON DECOSTA (39 years old)

CARLA DECOSTA (45 years old)

20 years in prison

Narcotics conspiracy

(Conspiracy to distribute and possess with intent to distribute crack cocaine.)

KEVIN MORA,

    a/k/a “Jaffy”

ARTURO MORA,

    a/k/a “Etho” (29 years old)

WHYKEE JOHNSON

20 years in prison

Possession and discharge of a firearm in furtherance of a drug trafficking crime

KEVIN MORA,

    a/k/a “Jaffy”

ARTURO MORA,

    a/k/a “Etho”

WHYKEE JOHNSON (32 years old)

Life in prison

Mandatory minimum: ten years in prison, to be imposed consecutively to any other sentence

Narcotics conspiracy

(Conspiracy to distribute and possess with intent to distribute 280 grams or more of crack cocaine.)

ALAN ARIAS (25 years old)

WALTHER CASTILLO,

    a/k/a “Walter” (33 years old)

RUDY DELGADO (33 years old)

Life in prison

Mandatory minimum: 10 years in prison

[1] As the introductory phrase signifies, the entirety of the texts of the Indictment and the Complaint, as well as the descriptions of the Indictment and 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, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), George P. Beach II, the Superintendent of the New York State Police (“NYSP”), Robert Mir, the Chief of the Village of Monticello Police Department, and Michael A. Schiff, the Sullivan County Sheriff, announced the unsealing of an Indictment on October 26 charging a total of 10 defendants with participating in a narcotics conspiracy in Sullivan County, New York.

As alleged in the Indictment unsealed last Friday in White Plains federal court and a Complaint that was previously filed in the same case[1]:

In at least 2017 and 2018, JHOAN ADAMES, a/k/a “Chelo,” 29, ROLANDO NIEVES, a/k/a “Rolo,” 31, JASON NIEVES-PINO, 27, JOSE NIEVES-HERRERA, 49, JOSE RUBERT, 52, PERVIS MARCUS, 56, JUSTIN FABRICANT, 30, ANICASIO HERNANDEZ, a/k/a “Nick,” 40, OSVALDO MANGUALBONET, 47, FRANK VELEZ, a/k/a “Frankie,” 49, conspired to sell narcotics.  In particular, ROLANDO NIEVES, JASON NIEVES-PINO, JOSE NIEVES-HERRERA, JOSE RUBERT, and PERVIS MARCUS, conspired to sell 280 grams or more of crack cocaine and 500 grams or more of cocaine.  JHOAN ADAMES and FRANK VELEZ conspired to sell 280 grams or more of crack cocaine, and JUSTIN FABRICANT, ANICASIO HERNANDEZ, and OSVALDO MANGUALBONET conspired to sell 500 grams or more of cocaine.  Members of the conspiracy distributed cocaine and crack cocaine in different locations in Sullivan County, New York, including in the parking lot of an apartment complex in the Village of Monticello.   During the course of this investigation, law enforcement purchased more than 280 grams of crack cocaine and more than 100 grams of powder cocaine from members of the conspiracy during controlled purchases.

*                *                *

Seven defendants were taken into federal custody last week.  Those seven defendants were presented in White Plains federal court on Friday, October 26, before U.S. Magistrate Judge Paul E. Davison.  Two additional defendants were previously arrested in August 2018.  Defendant ADAMES remains at large.                                   

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

Mr. Berman praised the outstanding investigative work of the FBI, the New York State Police, the Village of Monticello Police Department, and the Sullivan County Sheriff’s Department.  Mr. Berman also thanked the Sullivan County District Attorney’s Office and the Orange County Sheriff’s Department for their assistance in the case.

These cases are being handled by the Office’s White Plains Division.  Assistant United States Attorneys Samuel Raymond and Maurene Comey are in charge of the prosecution.

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

CHARGE(S)

DEFENDANT(S)

MAXIMUM PENALTIES

Narcotics conspiracy

(Conspiracy to distribute and possess with intent to distribute 280 grams or more of crack cocaine.)

JHOAN ADAMES

ROLANDO NIEVES

JASON NIEVES-PINO

JOSE NIEVES-HERRERA

JOSE RUBERT

PERVIS MARCUS

FRANK VELEZ

Life in prison

Mandatory minimum: 10 years in prison

Narcotics conspiracy

(Conspiracy to distribute and possess with intent to distribute 500 grams or more of cocaine.)

ROLANDO NIEVES

JASON NIEVES-PINO

JOSE NIEVES-HERRERA

JOSE RUBERT

PERVIS MARCUS

JUSTIN FABRICANT

ANICASIO HERNANDEZ

OSVALDO MANGUALBONET

40 years in prison

Mandatory minimum:

5 years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York announced today that DAVID OHNMACHT, a registered sex offender, was sentenced to 390 months in prison for enticing a 14-year-old girl via Instagram to engage in sexual conduct and for engaging in this criminal conduct while a registered sex offender.  OHNMACT manipulated the girl into taking sexually-explicit images of herself and sending them to him online.  OHNMACHT pled guilty on May 31, 2018, before U.S. District Judge Nelson Roman, who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman stated:  “This case underlines the urgent need for law enforcement to continue its efforts to protect children from those who prey on them.  As today’s sentencing demonstrates, we will use every tool available to law enforcement to prosecute and punish those who sexually exploit children.” 

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

On August 19, 2003, OHNMACHT was convicted in Westchester County Court of multiple sexual abuse and sexual assault charges including Sexual Abuse in the Third Degree, Possessing an Obscene Sexual Performance by a Child less than 16 years old, Rape in the First Degree, Use of a Child less than 17 years of age in a Sexual Performance, and Sexual Abuse in the First Degree.  As a result of these convictions, OHNMACHT was sentenced to a term of 40 months to 10 years in prison.  After serving approximately nine years in prison, OHNMACHT was released on November 1, 2011.  He then began a five-year term of post-release supervision with New York State Parole that ended on November 1, 2016.

From November 2016 through February 2017, OHNMACHT communicated online with a 14-year-old girl (“Victim-1”) using two different Instagram accounts.  OHNMACHT purported to be a 19-year-old male on one of the Instagram accounts and a teenage girl on the other account.  OHNMACHT manipulated Victim-1 into taking and transmitting sexually-explicit images of Victim-1 to OHNMACHT.  OHNMACHT told Victim-1 that if she did not make and transmit additional images, he would expose Victim-1’s prior images to her friends on Instagram. 

*          *          *

In addition to the prison term, OHNMACHT, 37, of Katonah, New York, was sentenced to 10 years of supervised release. 

Mr. Berman praised the efforts of the Federal Bureau of Investigation, the New Hanover County Sheriff’s Office in Wilmington, North Carolina, and the Bedford Police Department in connection with this investigation.

The prosecution is being handled by the Office’s White Plains Division.  Assistant United States Attorney Marcia S. Cohen is in charge of the prosecution.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that SHOLOM MURATOV and MENACHEM ABRAMOV were convicted yesterday, following a seven-day trial in Manhattan federal court, of conspiring to defraud diamond sellers in Mumbai, India out of more than $12 million in loose diamonds. MURATOV will be sentenced on March 26, 2019 and ABRAMOV will be sentenced on March 28, 2019, by Judge Lorna G. Schofield, who presided over the trial.

Ten other defendants have previously pled guilty in connection with their participation in this and related schemes.

Manhattan U.S. Attorney Geoffrey S. Berman said: “These defendants engaged in a brazen, multi-million dollar fraud scheme extending from New York to Mumbai.  Thanks to the outstanding work of our law enforcement partners, these fraudsters have been convicted at trial and will be sentenced for their crime.

According to the evidence presented at trial:

From in or about December 2015, up to and including at least in or about December 2016, MURATOV and ABRAMOV participated in a coordinated and wide-ranging conspiracy to defraud a group of diamond wholesalers in Mumbai (the “Victim Merchants”) out of millions of dollars in loose diamonds known as “melee” diamonds. The scheme involved numerous misrepresentations to the Victim Merchants, including but not limited to: (i) the defendants’ corporate affiliations; (ii) the longevity and track records of those corporations; (iii) that the defendants were not affiliated with one another, and, most significantly; (iv) purporting to agree to payment terms proposed by the Victim Merchants in order to induce the Victim Merchants to release diamonds without having received full payment.  Together, through these fraudulent misrepresentations, the defendants succeeded in convincing the Victim Merchants to provide them over $12 million worth of loose diamonds, for which MURATOV, ABRAMOV, and their co-conspirators provided no payment.  Members of the conspiracy then sold the diamonds in Manhattan’s Diamond District.

*          *          *

MENCHAM ABRAMOV, 32, and SHOLOM MURATOV, 36, have been convicted of conspiring to commit mail fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. 

Mr. Berman praised the outstanding work of the FBI, the CBP, and the NYPD.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a superseding indictment against TAN WEE BENG, a/k/a “WB,” for conspiring to use the U.S. financial system to conduct millions of dollars’ worth of transactions to finance shipments of goods to the Democratic People’s Republic of Korea (“DPRK” or “North Korea”) by a Singapore-based commodities company (“Company-1”), of which TAN WEE BENG is a director and part-owner.  The Indictment charges TAN WEE BENG with conspiring to violate United States sanctions on the DPRK by conducting those illicit transactions on behalf of North Korean entities; laundering funds in connection with those illegal transactions; defrauding several financial institutions by concealing the true nature of these transactions; and obstructing the enforcement of the sanctions regime by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”).  In addition to these criminal charges, today OFAC designated TAN WEE BENG, Company-1, and another affiliated entity for sanctions, based on the illicit support for North Korea and clandestine financial conduct charged in the Indictment.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “North Korea’s illicit attempts to hide its activities around the world undermine the integrity of the global financial system.  But the DPRK has not acted alone – unscrupulous profiteers in other nations facilitate this malign conduct through their willingness to lie and cheat to conceal their dealings with a pariah state, including by lying to major U.S. banks and laundering money on North Korea’s behalf.  But Tan Wee Beng can no longer hide behind those alleged falsehoods.  He is now a fugitive from American justice, and we look forward to working with our foreign partners to bring Beng to the U.S. to answer for his alleged crimes.”         

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Beng conducted illicit transactions totaling millions of dollars in support of North Korean entities in blatant violation of a host of economic sanctions the United States has established against North Korea and North Korean entities.  The charges unsealed today should serve as a reminder that the FBI will continue to aggressively investigate violations of economic sanctions lawfully imposed by our government.  While Beng remains at large, the FBI is committed to working with its international partners to bring Beng to justice.”

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

Beginning in 2008, the President has repeatedly found that the DPRK constitutes an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States and declared a national emergency to deal with the threat.  Pursuant to these Presidential declarations, the United States has instituted a host of economic sanctions against North Korea and North Korean entities pursuant to the International Emergency Economic Powers Act (the “IEEPA”).  This sanctions regime prohibits, among other things, financial transactions involving the United States (including U.S. banks) that were intended for the benefit of North Korea or North Korean entities.

Separately, both the United States and the United Nations (the “UN”) have designated for sanctions particular North Korean entities responsible for supporting the regime’s illicit activities.  One such entity, Daedong Credit Bank (“DCB”), was designated by OFAC in June 2013 and by the UN in March 2016.  According to OFAC, DCB is “responsible for managing millions of dollars of transactions in support of the North Korean regime’s destabilizing activities,” and the UN reported that DCB “has knowingly facilitated transactions by using deceptive financial practices.”

Beginning in 2011, TAN WEE BENG conspired to use commodities businesses, including Company-1, of which TAN WEE BENG was both an owner and director, and front companies in Singapore, Thailand, Hong Kong, and elsewhere to violate and evade both prohibitions against North Korea’s access to the U.S. financial system and prohibitions on dealings with certain North Korean entities identified by the U.S. Department of the Treasury, including DCB.  In particular, TAN WEE BENG conspired to deceive U.S. financial institutions into conducting financial transactions on behalf of and for the benefit of DCB and other North Korean entities and persons.  Those illicit transactions were used to launder money from DCB and other North Korean entities and persons to make payments to Company-1 for shipments to North Korea.

*                *                *

TAN WEE BENG, 41, is a resident and citizen of Singapore.  He is charged with conspiracies to violate the IEEPA, to commit bank fraud, to commit money laundering, and to obstruct the lawful functions of OFAC, as well as with substantive counts of bank fraud and money laundering.  The bank fraud counts carry a maximum sentence of 30 years in prison.  The conspiracy to violate the IEEPA and money laundering counts each carry a maximum sentence of 20 years in prison.  The conspiracy to defraud the United States count carries a maximum sentence of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

TAN WEE BENG remains at large.  The United States looks forward to working with our foreign partners to bring BENG to justice.

Mr. Berman praised the outstanding investigative work of the FBI and its New York Field Office, Counterintelligence Division, and thanked the Department of Justice’s National Security Division, Counterintelligence and Export Control Section and Office of International Affairs for their assistance.

The prosecution of this case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorneys David W. Denton, Jr., Amanda L. Houle, and Jane Kim 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 announced that BAKTASH AKASHA ABDALLA, a/k/a “Baktash Akasha,” and IBRAHIM AKASHA ABDALLA, a/k/a “Ibrahim Akasha,” pled guilty yesterday in Manhattan federal court to conspiring to import and importing heroin and methamphetamine, conspiring to use and carry machineguns and destructive devices in connection with their drug-trafficking crimes, and obstructing justice by paying bribes to Kenyan officials in an effort to avoid being extradited to the United States.  The defendants were provisionally arrested in Kenya on November 9, 2014, after providing 99 kilograms of heroin and two kilograms of methamphetamine during the course of the investigation to confidential sources acting at the direction of the Drug Enforcement Administration (“DEA”).  Their bribery scheme was thwarted on January 29, 2017, when the defendants were expelled from Kenya and DEA agents brought them to the United States for prosecution.  The defendants pled guilty today before U.S. Magistrate Judge Katharine H. Parker, and they will be sentenced by U.S. District Judge Victor Marrero.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Baktash Akasha Abdalla and his brother, Ibrahim Akasha Abdalla, were the leader and deputy of a sophisticated international drug trafficking network, responsible for tons of narcotics shipments throughout the world. Not only did they manufacture and distribute narcotics for over two decades, they kidnapped, beat, and murdered others who posed a threat to their enterprise. When the brothers encountered legal interference, they bribed Kenyan officials — including judges, prosecutors, and law enforcement officers—in an effort to avoid facing the charges against them in the United States. Today’s pleas put two of the most prolific drug traffickers in the world out of business, and ensure that tons of dangerous narcotics will never reach our shores.”

According to the Superseding Indictment, other court filings, and statements made during court proceedings[1]: 

The defendants operated a sprawling and lucrative international drug business, which involved the distribution of multi-ton quantities of narcotics including hashish, ephedrine, methamphetamine, and methaqulone—a Schedule I controlled substance commonly referred to in Europe, South Africa, and elsewhere as “Mandrax” or “mandies,” and in the United States as “Quaaludes.”  For almost two decades, BAKTASH AKASHA ABDALLA acted as the leader of the Akasha Organization, and IBRAHIM AKASHA ABDALLA functioned as his brother’s deputy.  The defendants engaged in acts of violence to protect the reputation of the Akasha Organization and their drug-trafficking business.  For example, in 2014, the defendants kidnapped and assaulted a rival drug trafficker in Kenya named David Armstrong.  The defendants helped orchestrate the murder in South Africa of an associate of Armstrong, who was known as “Pinky” and was shot approximately 32 times in the street.  The defendants subsequently participated in an altercation at a public shopping mall in Kenya with an Armstrong associate named Stanley Livondo, during which IBRAHIM AKASHA ABDALLA threatened Livondo with a pistol in the mall. 

By early 2014, the defendants and other members of the Akasha Organization were working to import ton quantities of methaqualone precursor chemicals into Africa in order to fuel the production of the illicit pills in South Africa.  The defendants used the proceeds of their methaqualone-related business to pursue other illegal ventures, including efforts to import ephedrine that was produced illegally by Avon Lifesciences in India, so that the Akasha Organization and others could manufacture methamphetamine in Africa.  In connection with these methamphetamine-production efforts, the defendants aligned the Akasha Organization and other associates with co-defendant MUHAMMAD ASIF HAFEEZ, a/k/a “Sultan,” and worked together to establish a methamphetamine-production facility in Mozambique.  But the defendants, HAFEEZ, and other co-conspirators were forced to abandon their plan after law enforcement authorities seized approximately 18 tons of ephedrine from an Avon Lifesciences factory in Solapur, India, including several tons of ephedrine that the defendants and HAFEEZ planned to use to manufacture methamphetamine in Mozambique.

Over the course of several months beginning in March 2014, during telephone calls and meetings in Nairobi and Mombasa, Kenya, the defendants agreed to supply, and in fact did supply, multi-kilogram quantities of heroin and methamphetamine to individuals they believed to be representatives of a South American drug-trafficking organization, but who were in fact confidential sources (the “CSes”) working at the direction and under the supervision of the DEA.  The defendants negotiated on behalf of the Akasha Organization to procure and distribute hundreds of kilograms of heroin from suppliers in the Afghanistan/Pakistan region and to produce and distribute hundreds of kilograms of methamphetamine, which they understood would ultimately be imported into the United States. 

During a meeting in Mombasa, Kenya, in April 2014, BAKTASH AKASHA ABDALLA introduced a CS via Skype to one of his heroin suppliers in Pakistan, who said he could provide 420 kilograms of 100 percent pure heroin—which he called “diamond” quality—for distribution in the United States.  Thereafter, in June 2014, a co-defendant began discussing with the CSes his ability to procure methamphetamine precursor chemicals and to establish labs to produce methamphetamine for importation to the United States.  In a meeting in Mombasa in September 2014, BAKTASH AKASHA ABDALLA introduced another co-defendant as a narcotics transporter from Afghanistan who moved ton quantities of narcotics using ships.  BAKTASH AKASHA ABDALLA and a co-defendant also described HAFEEZ to the CSes as one of the top drug traffickers in the world. 

In September and October 2014, IBRAHIM AKASHA ABDALLA personally delivered one-kilogram samples of methamphetamine and heroin to the CSes in Nairobi on behalf of the Akasha Organization.  In early November, IBRAHIM AKASHA ABDALLA personally delivered an additional 98 kilograms of heroin to the CSes in Nairobi on behalf of the Akasha Organization.  A few days later, IBRAHIM AKASHA ABDALLA also delivered another kilogram of methamphetamine. In the course of these negotiations, the Akasha Organization provided a total of 99 kilograms of heroin and two kilograms of methamphetamine to the CSes, and agreed to provide hundreds of kilograms more of each. 

The defendants, along with Gulam Hussein and Vijaygiri Anandgiri Goswami, were provisionally arrested by Kenyan Anti-Narcotics Unit officers on November 9, 2014, in Mombasa, Kenya, prior to another planned meeting with the CSes.  At the time of the provisional arrests in Kenya, 500 kilograms of heroin brokered by HAFEEZ were being transported through international waters to the defendants in Africa.  The defendants directed the ship to return to the Afghanistan/Pakistan region rather than risk interdiction upon arrival.  Following the arrests and during pending extradition proceedings, the defendants continued to distribute ton quantities of narcotics.  They used some of the drug proceeds to bribe Kenyan officials— including judges, prosecutors, and law enforcement officers—in an effort to avoid facing the charges against them in the United States.    

On January 29, 2017, the Kenyan government expelled the defendants, and the DEA brought them to the Southern District of New York for prosecution.  HAFEEZ was provisionally arrested in London in August 2017, and the United States has requested his extradition from the United Kingdom.

*                      *                      *

BAKTASH AKASHA ABDALLA, 41, and IBRAHIM AKASHA ABDALLA, 29, each pleaded guilty to conspiring to import heroin into the United States, conspiring to import methamphetamine into the United States, distributing heroin while knowing and intending that the drugs would be imported into the United States, and distributing methamphetamine while knowing and intending that the drugs would be imported into the United States.  Each of these four crimes carries a maximum sentence of life imprisonment and a mandatory minimum sentence of 10 years in prison.  The defendants also pleaded guilty to participating in a conspiracy to carry and use machineguns and destructive devices during and in relation to, and to possess machineguns and destructive devices in furtherance of, drug-trafficking offenses, which carries a maximum sentence of life imprisonment.  Finally, the defendants pleaded guilty to obstruction of justice, which carries a maximum sentence of 20 years in prison.  The maximum and minimum 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.  The defendants are scheduled to be sentenced before Judge Marrero on February 1, 2019.

Mr. Berman praised the outstanding efforts of the Special Operations Division of the DEA, Bilateral Investigations Unit.  Mr. Berman also thanked the DEA Dubai Country Office, the DEA Nairobi Country Office, the DEA Pretoria Country Office, the DEA New Delhi Country Office, the U.S. Department of Justice’s Office of International Affairs, Kenya’s Anti-Narcotics Unit, Kenya’s Director of Public Prosecutions, Kenya’s Director of Criminal Investigations, local Nairobi law enforcement officers, and the Government of Kenya.

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

The charges contained in the Indictment against MUHAMMAD ASIF HAFEEZ, a/k/a “Sultan,” are merely accusations, and HAFEEZ is presumed innocent unless and until proven guilty.

[1] The descriptions set forth below of conduct by co-defendant MUHAMMAD ASIF HAFEEZ, a/k/a “Sultan,” constitute only allegations, and every fact described should be treated as an allegation with respect to HAFEEZ.

Robert Khuzami, Attorney for the United States, acting under authority conferred by 28 U.S.C. § 515, announced today that former New York State Senate Majority Leader DEAN SKELOS was sentenced today to 51 months in prison after having been found guilty by a federal jury of using his official position to obtain more than $300,000 in bribes and extortion payments that were paid to his son, ADAM SKELOS, in exchange for DEAN SKELOS’s official acts.  ADAM SKELOS, who was convicted by the same jury, was also sentenced to four years in prison.  The defendants had previously been found guilty of the same offenses by a jury in December 2015, but their convictions were overturned by the U.S. Court of Appeals for the Second Circuit as a result of the Supreme Court’s decision in McDonnell v. United States. DEAN SKELOS and ADAM SKELOS were sentenced in Manhattan federal court by U.S. District Judge Kimba M. Wood, who also presided over both jury trials.   

Deputy U.S. Attorney Robert Khuzami said:  “Former State Senate Majority Leader Dean Skelos was entrusted with enormous power and responsibility, power a unanimous jury of his peers has now concluded for a second time that Skelos repeatedly abused in pursuit of illegal payments to his son, Adam Skelos.  The sentences imposed today are but a small down-payment to correct the damage they did to our citizens’ faith in state government.  At the same time, these same citizens can have faith that those who abuse the public trust for their personal benefit will be caught and sentenced to substantial prison terms.”

In imposing today’s sentence of DEAN SKELOS, Judge Wood found that he had lied during his testimony at trial, and cited several examples of DEAN SKELOS’s dishonesties.  Judge Wood increased his sentence to account for his false testimony.

According to the evidence introduced at trial, court filings, and statements made in Manhattan federal court:

From 2011 to 2015, DEAN SKELOS served as Majority Leader and Co-Majority Leader of the New York State Senate, a position that gave him significant power over the operation of New York State government.  DEAN SKELOS repeatedly used this power to pressure companies with business before New York State to make payments to his son, ADAM SKELOS, who substantially depended on these companies for his income.  DEAN SKELOS and ADAM SKELOS were able to secure these illegal payments through implicit and explicit representations that DEAN SKELOS would use his official position to benefit those who made the payments, and punish those who did not.  In total, DEAN SKELOS obtained over $300,000 in payments to ADAM SKELOS through persistent and repeated pressure applied to senior executives of three different companies that needed legislation passed in the New York State Senate and other official actions from DEAN SKELOS. 

The Glenwood Scheme

Beginning in late 2010, and continuing for approximately two years, DEAN SKELOS repeatedly solicited payments for ADAM SKELOS from representatives of Glenwood Management Corp. (“Glenwood”), a major New York City real estate company.  DEAN SKELOS’s solicitations for payments to ADAM SKELOS took place during the same meetings when Glenwood’s representatives were asking for DEAN SKELOS’s assistance with New York State legislation that was crucial to Glenwood’s profitability.  As a result of the sustained pressure from DEAN SKELOS, representatives of Glenwood arranged for a $20,000 direct payment to ADAM SKELOS and further arranged for Abtech Industries (“Abtech”), an Arizona-based storm water technology company in which Glenwood’s founding family owned a stake, to make $4,000 monthly payments to ADAM SKELOS.  Glenwood arranged for these payments to ADAM SKELOS due to the company’s substantial dependence on DEAN SKELOS for real estate tax abatements and other real estate legislation favorable to Glenwood, and based in part on statements from DEAN SKELOS that he would punish those in the real estate industry who defied him. 

The Abtech Scheme

After successfully obtaining ADAM SKELOS’s Abtech consulting contract for $4,000 per month, DEAN SKELOS assisted Abtech in causing Nassau County to issue a request for proposal (“RFP”) for a public works project that was tailored to Abtech’s storm water technology.  DEAN SKELOS and ADAM SKELOS then threatened to use DEAN SKELOS’s official powers to block Abtech’s bid for the RFP unless the company sharply increased ADAM SKELOS’s payments.  Abtech ultimately agreed to increase ADAM SKELOS’s payments to $10,000 per month because the company feared that, if it did not meet the defendants’ demands, it would lose the Nassau County contract that was critical to its business.  In return for the payments to ADAM SKELOS, and to ensure that they would continue, DEAN SKELOS facilitated the approval of Abtech’s $12 million contract with Nassau County and thereafter took numerous additional official actions to benefit Abtech. 

For example, when Abtech and ADAM SKELOS believed Nassau County was insufficiently funding the company’s project, DEAN SKELOS pressured Nassau County officials to make additional funds available.  In January 2015, DEAN SKELOS was intercepted in a call with the Nassau County Executive in which he asked for an explanation for the lack of funding, complaining on behalf of ADAM SKELOS that “somebody feels like they’re getting jerked around the last two years.”  The next day, DEAN SKELOS traveled with the County Executive and his Deputy to the funeral of a New York City Police Department officer, where DEAN SKELOS reiterated in person his demand that the County expedite payments to Abtech. 

DEAN SKELOS also used his official position in an attempt to direct a portion of a $5.4 billion sum that the State had recovered in litigation with financial services companies (the “Settlement Funds”) in a way that would benefit water projects and contracts that were being pursued by Abtech.  For example, at the same time ADAM SKELOS was attempting to obtain additional Abtech storm water projects with local municipalities by claiming that the projects could be funded through State funds, DEAN SKELOS was advocating for a portion of the Settlement Funds to be allocated for storm water projects. 

DEAN SKELOS also used his official position in an attempt to enact State “design-build” legislation that was being sought by Abetch and that Nassau County officials had explained was necessary to implement fully the $12 million contract with Abtech.  Nassau County officials provided DEAN SKELOS with proposed legislation that DEAN SKELOS stated he would support if backed by the Governor.  In a recorded call on ADAM SKELOS’s “burner” phone, ADAM SKELOS told a representative of Abtech that DEAN SKELOS had privately assured ADAM SKELOS that DEAN SKELOS was “going to be sure that [the design-build legislation] gets done.”  Later, ADAM SKELOS told Abtech’s representatives that while design-build legislation would not be enacted as part of the April 2015 budget process, DEAN SKELOS would continue to pursue it in the legislative session continuing through June 2015.  The defendants were arrested in May 2015 before their plan to enact the legislation could be completed.

The PRI Scheme

During the same time period as the Glenwood and Abtech schemes, DEAN SKELOS pressured yet a third company, called Physician Reciprocal Insurers (“PRI”), to pay ADAM SKELOS.  PRI is a major medical malpractice insurance firm, whose existence depends on New York State legislation that exempts the firm from being liquidated even though its liabilities exceed its assets.  Similar to the Glenwood scheme, DEAN SKELOS solicited payments to ADAM SKELOS from PRI during the same conversations when PRI was seeking DEAN SKELOS’s support for the extension of this legislation that was critical to PRI’s business. 

In response to the pressure from DEAN SKELOS to find sources of payment to ADAM SKELOS, PRI agreed to, among other things, give ADAM SKELOS a full-time job with benefits.  Even though ADAM SKELOS was expected to work 40 hours per week, he treated his PRI position as a “no show” job from the outset of his employment.  When ADAM SKELOS’s supervisor told ADAM SKELOS that he was expected to show up to work, ADAM SKELOS berated him and told him “[g]uys like you . . . couldn’t shine my shoes. . . . And if you talk to me like that again, I will smash your fucking head in.”  When the CEO of PRI told DEAN SKELOS that ADAM SKELOS was not showing up to work and was mistreating the other employees, DEAN SKELOS expressed no concern about ADAM SKELOS’s conduct and simply told the CEO to “[w]ork [it] out.”  Based on this conversation, among others, the CEO understood that if he did not continue to pay ADAM SKELOS, despite his non-performance and misconduct at work, he was risking DEAN SKELOS taking legislative action against PRI.  Later, when former Senator Alphonse D’Amato, one of PRI’s lobbyists, reiterated to DEAN SKELOS that ADAM SKELOS was not showing up to work and was being disruptive when he actually did show up, DEAN SKELOS also dismissed Senator D’Amato’s concerns and told him that ADAM SKELOS needed the income and benefits from PRI.

DEAN SKELOS did not inform any of the companies he pressured to pay ADAM SKELOS that, between 2011 and 2014, ADAM SKELOS was making between $230,000 and $441,000 per year.  

During the time period that PRI was paying ADAM SKELOS, DEAN SKELOS repeatedly voted to extend PRI’s legislative protection from liquidation as well as other legislation that was being sought by PRI.

*                      *                      *

In addition to the prison sentence, Judge Wood ordered DEAN SKELOS, 70, of Rockville Centre, New York, to pay a $500,000 fine.  DEAN SKELOS also was sentenced to one year of supervised release.  In imposing a fine on DEAN SKELOS, Judge Wood took into account the tax-payer funded pension that DEAN SKELOS would be receiving.  In addition to the prison term, Judge Wood sentenced ADAM SKELOS, 36, also of Rockville Centre, to three years of supervised release. 

DEAN SKELOS and ADAM SKELOS were found guilty by a unanimous jury on July 17, 2018, of conspiracy to commit extortion under color of official right, conspiracy to commit honest services wire fraud, three counts of extortion under color of official right, and three counts of soliciting and receiving bribes.  

Mr. Khuzami praised the work of the Criminal Investigators of the United States Attorney’s Office and the Federal Bureau of Investigation, who jointly conducted this investigation.  

This case was prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Edward B. Diskant, Douglas S. Zolkind, and Thomas A. McKay are in charge of the prosecution.

Robert S. Khuzami, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced the convictions of JAMES GATTO, a/k/a “Jim,” MERL CODE, and CHRISTIAN DAWKINS for conspiring to defraud universities by funneling illicit payments to the families of high-school and college basketball players and concealing those payments – which were prohibited by university policies and NCAA rules – from the schools.  GATTO, the Director of Global Basketball Sports Marketing at Adidas, CODE, an Adidas consultant, and DAWKINS, an aspiring manager of professional athletes, will be sentenced on March 5, 2019, at 10:00 a.m. by Judge Kaplan, who presided over the four-week trial.

Two other scheme participants, MUNISH SOOD, a financial advisor, and THOMAS “T.J.” GASSNOLA, a former Adidas consultant, previously pled guilty in connection with their participation in the fraudulent scheme. 

Mr. Khuzami said:  “Today’s convictions expose an underground culture of illicit payments, deception and corruption in world of college basketball.  These defendants now stand convicted of not simply flouting the rules but breaking the law for their own personal gain.  As a jury has now found, the defendants not only deceived universities into issuing scholarships under false pretenses, they deprived the universities of their economic rights and tarnished an ideal which makes college sports a beloved tradition by so many fans all over the world.”

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

Overview of the Scheme

As found by the jury, GATTO, CODE, and DAWKINS brokered and facilitated the payments funded by Adidas to the families of high school and college aged basketball players in connection with decisions by those players to commit to Adidas-sponsored schools and a promise that the players also would retain the services of DAWKINS and sign lucrative endorsement deals with Adidas upon turning professional.  The payments, which the defendants took great lengths to conceal from the victim-universities, served to defraud the relevant universities in several ways.  First, because the illicit payments to the families of student-athletes rendered those student-athletes ineligible to participate in collegiate athletics, scheme participants conspired to conceal these payments from the universities, thereby causing them to provide or agree to provide athletic-based scholarships and financial aid under false and fraudulent pretenses. Indeed, the defendants and their co-conspirators, who included the families of the student-athletes and, in certain instances, one or more corrupt coaches at the universities, knew that, for the scheme to succeed and the athletic scholarships to be awarded, the illicit payments had to be concealed from the universities, and that certifications, falsely representing that the student-athletes were eligible to compete in Division I athletics, would be submitted to the universities.

Second, the scheme participants further defrauded the universities by depriving the universities of significant and necessary information regarding the non-compliance with NCAA rules by the relevant student-athletes and their families, and, in some cases, by certain corrupt coaches involved in the scheme.  In doing so, the scheme participants interfered with the universities’ ability to control their assets and created a risk of tangible economic harm to the universities, including, among other things, decision-making about the distribution of their limited athletic scholarships; the possible disgorgement of certain profit-sharing by the NCAA; monetary fines; restrictions on athlete recruitment and the distribution of athletic scholarships; and the potential ineligibility of the universities’ basketball teams to compete in NCAA programs generally, and the ineligibility of certain student-athletes in particular.

Allegations Involving the University of Louisville

Beginning in approximately May 2017, GATTO, CODE, DAWKINS, and others worked together to illicitly funnel approximately $100,000 from Adidas to the father of Brian Bowen, then a top-rated high school basketball player, in connection with Bowen’s commitment to play at the University of Louisville, a school whose athletic programs are sponsored by Adidas.  Because the payments to the family of Bowen were both in violation of NCAA rules and illegal, the defendants took steps to conceal them from the University, including funneling the money indirectly through an amateur team affiliated with CODE and a corporation controlled by DAWKINS.  The payments were all funded by Adidas pursuant to phony invoices approved by GATTO, and the first installment was delivered to Bowen’s father in cash in July 2017 in a parking lot in New Jersey.

Allegations Involving the University of Kansas

Between 2016 and 2017, GATTO and GASSNOLA worked together to funnel approximately $90,000 from Adidas to the family of Billy Preston, then a high school basketball player, in connection with Preston’s commitment to play at the University of Kansas, a university whose athletic programs are sponsored by Adidas.  To conceal the payments from the University, GATTO routed the money to Billy Preston’s family indirectly, through an Adidas-sponsored amateur team affiliated with GASSNOLA, and pursuant to sham invoices which GATTO approved.

In addition, in the summer of 2017, GATTO and GASSNOLA agreed to funnel money to the legal guardian of Silvio De Sousa, then a high school basketball player, in connection with De Sousa’s commitment to play at the University of Kansas.  In one instance, GATTO and GASSNOLA were intercepted over a wiretap discussing a $20,000 payment to the legal guardian.

Allegations Involving the North Carolina State University

In approximately November 2015, GATTO and GASSNOLA agreed to funnel approximately $40,000 from Adidas to the family of Dennis Smith Jr., then a high school basketball player, in order to stop Smith Jr. from de-committing from North Carolina State University, a university whose athletic programs are sponsored by Adidas.  GASSNOLA flew to North Carolina to personally deliver the money in cash to a basketball coach at North Carolina State University, who then routed the money to Smith Jr.’s family.  After GASSNOLA made the payment, GATTO reimbursed GASSNOLA via his Adidas-sponsored amateur team. 

*          *          *

GATTO, 48, of Wilsonville, Oregon, CODE, 44, of Greer, South Carolina, and DAWKINS, 25, of Atlanta, Georgia, were each convicted of one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carry a maximum sentence of 20 years in prison.  GATTO was also convicted of an additional count of wire fraud.

Mr. Khuzami thanked the FBI and the Special Agents of the U.S. Attorney’s Office of the Southern District of New York for their tireless efforts during the investigation and prosecution of this case.

The case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Edward B. Diskant, Noah Solowiejczyk, Eli J. Mark, and Aline R. Flodr 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 Division of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging four defendants with participating in a criminal organization that committed a series of burglaries and engaged in the interstate transportation of stolen goods between 2006 and 2017.  DAMIR PEJCINOVIC, a/k/a “Damian,” a/k/a “CoCo,” GZIMI BOJKOVIC, a/k/a Jimmy,” ADRIAN FISEKU, and ELVIS CIRIKOVIC, a/k/a “Gorilla,” were arrested this morning and will be presented today before Magistrate Judge Katharine H. Parker.  The case is assigned to U.S. District Judge Victor Marrero.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged in the indictment, the defendants were part of a sophisticated criminal enterprise that carried out burglaries on both sides of the Atlantic, to the tune of more than $10 million.  Thanks to the outstanding efforts of our partners at the FBI and the NYPD, the defendants now face significant federal charges.”

FBI Special Assistant Director-in-Charge William F. Sweeney Jr. said:  “Today’s charges bring to an end an alleged criminal enterprise whose activity spanned more than a decade and included more than a dozen individual incidents that occurred across the United States and around the world.  This investigation demonstrates the FBI/NYPD Joint Violent Crimes Task Force’s unwavering commitment to bringing justice to these groups, in spite of the challenges created by time or distance.  I would like to thank all of our national and international partners for their contributions to this investigation.  Our success in bringing this case to prosecution would not have been possible without them.”

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

Between 2006 and April 2017, PEJCINOVIC, BOJKOVIC, FISEKU, and CIRIKOVIC participated in a criminal organization whose members and associates engaged in, among other things, the commission of burglaries and interstate transportation and sale of stolen goods.  The criminal organization operated principally in New York City, California, New Jersey, Pennsylvania, Florida, Massachusetts, Maine, and Europe.  Members and associates of the organization committed, conspired to commit, and attempted to commit numerous burglaries of jewelry stores and banks, as well as the interstate transportation and sale of stolen property from the burglaries.  PEJCINOVIC, BOJKOVIC, FISEKU, CIRIKOVIC, and other members and associates of the criminal organization committed the following burglaries and attempted burglaries, among others:

• Between February 2006 and March 2006, PEJCINOVIC and two others participated in a burglary of a restaurant and an attempted burglary of a jewelry store in Portland, Oregon.
• On March 29, 2008, PEJCINOVIC, BOJKOVIC, CIRIKOVIC, and one other participated in a burglary of a jewelry store in Manhattan, which resulted in the theft of jewelry valued at more than $2.5 million.
• On October 11, 2008, PEJCINOVIC and CIRIKOVIC participated in an attempted burglary of a jewelry store in Germany, attempting to steal gold valued at more than €10 million.
• On July 26, 2009, PEJCINOVIC, BOJKOVIC, and two others participated in a burglary of a jewelry store in Manhattan, which resulted in the theft of jewelry valued at more than $850,000.
• On August 25, 2010, PEJCINOVIC and one other participated in an attempted burglary of a jewelry store in Manhattan.
• On August 28, 2010, PEJCINOVIC, BOJKOVIC, and two others participated in a burglary of a jewelry store in Beverly Hills, which resulted in the theft of jewelry valued at more than $70,000.
• On September 5, 2010, PEJCINOVIC and two others participated in a burglary of a jewelry store in Kansas City, Kansas, which resulted in the theft, interstate transportation, and sale of jewelry valued at more than $1 million.
• On February 19, 2011, PEJCINOVIC, CIRIKOVIC, FISEKU, and two others participated in a jewelry store in Los Angeles, which resulted in the theft, interstate transportation, and sale of jewelry valued at more than $3 million.
• In the summer of 2011, PEJCINOVIC and one other participated in an attempted burglary of a jewelry store in Brooklyn, New York.
• On September 16, 2011, PEJCINOVIC, CIRIKOVIC, and three others participated in a burglary of a jewelry store in Los Angeles, which resulted in the theft of jewelry valued at more than $150,000.
• In the fall of 2012, PEJCINOVIC, BOJKOVIC, and two others participated in an attempted burglary of a bank in Philadelphia.
• On June 30, 2012, PEJCINOVIC, CIRIKOVIC, and two others participated in an attempted burglary of a bank in Scarsdale, New York.
• On July 22, 2012, PEJCINOVIC and two others participated in an attempted burglary of a jewelry store in Manhattan.
• In the fall of 2013, PEJCINOVIC, BOJKOVIC, CIRIKOVIC, and one other participated in the burglary of a jewelry store in New Jersey.
• On December 31, 2016, PEJCINOVIC, BOJKOVIC, FISEKU, and one other participated in the burglary of a jewelry store in Manhattan, which resulted in the theft, interstate transportation, and sale of jewelry valued at more than $3 million.
• On March 20, 2017, PEJCINOVIC, BOJKOVIC, FISEKU, and one other participated in the burglary of a jewelry store in Los Angeles, which resulted in the theft of jewelry valued at more than $2 million.              

*                *                *

PEJCINOVIC, 44, of New York, New York, BOJKOVIC, 36, of Staten Island, New York, FISEKU, 35, of Staten Island, New York, and CIRIKOVIC, 35 of Woodhaven, New York, are each charged with one count of racketeering conspiracy, which carries a maximum sentence of 20 years in prison; and one count of conspiracy to commit interstate transportation of stolen property and bank burglary, which carries a maximum sentence of five years in prison.  In addition, PEJCINOVIC, BOJKOVIC, and FISEKU are charged with one count of interstate transportation of stolen property, which carries a maximum sentence of 10 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.

Mr. Berman praised the investigative work of the FBI and the NYPD.  Mr. Berman also thanked the Los Angeles Police Department, Beverly Hills Police Department, Kansas City Police Department, Portland Police Department, German authorities, Interpol, Europol, the U.S. Department of Justice’s Office of International Affairs, and the Manhattan District Attorney’s Office for their assistance in this investigation.  He added that the investigation is continuing.

This case is being handled by the Office’s Violent & Organized Crime Unit.  Assistant United States Attorneys Andrew K. Chan and Margaret Graham 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 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, Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”) and Thomas P. DiNapoli, New York State Comptroller, announced that GREGORY BAYARD pled guilty to wire fraud today in White Plains federal court.  The charge arose out of BAYARD’s embezzlement of approximately $1.4 million from a decedent's estate for which he served as a court-appointed administrator.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As a fiduciary of an estate, Gregory Bayard’s duty was to protect the assets of the decedent and ensure that the rightful beneficiaries receive their inheritance.  Instead, Bayard violated his obligation and used the estate for his own use, spending nearly more than $1 million of the estate’s money on home renovations, college tuition, and other personal expenses.  Bayard now faces significant prison time for his crimes.”

USPIS Inspector-in-Charge Philip R. Bartlett said:  “Instead of being satisfied with the fees the law prescribed as an estate administrator, Gregory Bayard decided to steal from the fund he was hired to manage to bankroll his lavish lifestyle.  This case highlights the need for proper checks and balances to mitigate the risk of theft.  Inspectors caught this entrusted administrator with his hand in the cookie jar.”

New York State Comptroller Thomas P. DiNapoli said:  “Administrators should protect an estate and serve its heirs, not steal from them.  This is the second individual charged in trying to allegedly exploit this estate identified as part of our joint investigation.  I thank both U.S. Attorney Geoffrey Berman and the U.S. Postal Inspection Service for their collaboration on this case.”

According to the allegations contained in the Information:

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

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

*          *          *

BAYARD, 58, of Scotch Plains, New Jersey, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as the sentence will be determined by the court.

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, and Scott Lampert, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General’s (“HHS-OIG”) New York Region, announced today that the United States has settled civil healthcare fraud claims against VASCULAR ACCESS CENTERS, L.P., and related entities (collectively, “VAC”), for their submission of fraudulent claims for reimbursement by Medicare for vascular surgical procedures not covered under Medicare.  In connection with the settlement, which was approved on October 19, 2018, by U.S. District Judge Lorna G. Schofield, VAC agreed to pay at least $3.825 million and up to $18.3 million to resolve its False Claims Act liabilities.  In the settlement, VAC also admitted to and accepted responsibility for its conduct.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For years, Vascular Access Centers cheated taxpayers out of millions of dollars by billing Medicare for treatments that were clearly nonreimbursable, and in some cases by falsifying medical records to make it seem as if its billings were justified.  Through this settlement, VAC is being made to account for its misconduct.”

HHS-OIG Special Agent in Charge Scott Lampert said:  “Performing and billing for surgical procedures not allowed under Medicare rules will not be tolerated.  We will continue to work with our law enforcement partners to investigate these deceptive practices.”

According to the complaint filed in Manhattan federal court:

Patients with end-stage renal disease (“ESRD”) who are receiving dialysis may require vascular access surgical procedures, such as fistulagrams, where dye is injected into the patient’s vein or artery to visualize blood flow, and percutaneous transluminal angioplasties, in which wires and balloons are inserted into blood vessels that have narrowed in order to restore blood flow.  However, according to applicable Medicare billing rules, fistulagrams and angioplasties are not to be performed, and are not reimbursable, unless the patient has specific and documented clinical problems, such as significant difficulty receiving dialysis properly. 

During the relevant period, from July 2012 through December 2016, VAC operated at least 22 office-based surgical sites in 12 states and Washington, D.C.  VAC’s patients primarily consisted of ESRD patients undergoing dialysis treatment.  As a regular practice, VAC scheduled patients for fistulagrams and angioplasties three months in advance, and VAC performed fistulagrams and angioplasties on these patients as a matter of routine, regardless of whether there was a justifiable clinical reason to do so.  Furthermore, VAC sometimes misrepresented the medical conditions of patients in its medical records to make it seem as if they suffered from symptoms that would warrant the procedures.  VAC unlawfully billed Medicare for these procedures, which were excluded from Medicare coverage by the applicable rules.

*                      *                      *

As part of today’s settlement, VAC admitted that its centers regularly performed, and billed Medicare for, vascular surgery procedures as a prophylactic or screening measure, even though the patients presented without any documented evidence that they exhibited a need for therapies.  VAC also agreed to make payments totaling at least $3.825 million and up to $18.3 million over five years, based on its ability to pay and depending on certain financial contingencies.  In addition, VAC entered into an integrity agreement with HHS-OIG, through which it agreed to implement compliance measures and submit to monitoring by HHS-OIG.  Simultaneous with the settlement of this action, the United States is also settling a different lawsuit against VAC filed in the United States District Court for the Eastern District of Louisiana with overlapping claims.

The allegations of fraud stated in the Complaint were first brought to the attention of federal law enforcement by a whistle-blower who filed a lawsuit under the False Claims Act.

The case is being handled by the Office’s Civil Frauds Unit.  Assistant United States Attorney Jean-David Barnea is in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Ann Calvaresi Barr, the Inspector General of the United States Agency for International Development (“USAID”), announced the unsealing today of an indictment charging RENE DJESSA and DANIEL OHOYO, both nationals of the Democratic Republic of Congo (“DRC”), with conspiracy and theft of government property in connection with a scheme to divert tens of thousands of doses of anti-malarial medication funded by the President’s Malaria Initiative (“PMI”) for resale on the black market in East Africa.  DJESSA and OHOYO remain at large.

Manhattan U.S. Attorney Geoffrey S. Berman said:  As alleged, while hundreds of thousands of people died of malaria—many of whom could’ve been saved with the very medicines these defendants stole-- Rene Djessa and Daniel Ohoyo put their greed ahead of their humanity.  They stole life-saving anti-malarial medicines and sold them on the black market.  This crime is outrageous, and we will do everything in our power to ensure that these defendants are held to account for their actions.”

Inspector General Ann Calvaresi Barr said:  “Promoting integrity in the global health supply chain, including for anti-malarial medications, has been a long-standing priority for USAID Office of Inspector General.  This indictment shows not only how programs to provide these life-saving medications can be abused, but also my Office’s commitment to identifying and investigating the theft of U.S.-funded health commodities and holding offenders accountable.  I thank our Special Agents for their tremendous effort and the U.S. Attorney’s Office for the Southern District of New York for its steadfast prosecution in this case.”

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

The PMI and Anti-Malarial Medication

USAID is an independent federal agency that provides loans, grants, and technical assistance to assist countries with, among other things, global health issues, including malaria.  The PMI is a U.S. government-funded interagency initiative led by USAID.  The U.S. government launched the PMI in 2005 to support malaria prevention and treatment programs in certain high-burden countries in sub-Saharan Africa.  The PMI coordinates with foreign governments in 19 focus countries, including the DRC, to implement strategies to strengthen health systems and improve malaria prevention and treatment, including the procurement and distribution of antimalarial medication. 

Malaria is a serious and sometimes fatal mosquito-borne infectious disease caused by parasites.  In 2013—at the time of the criminal conduct alleged in the Indictment—an estimated 198 million cases of malaria occurred worldwide and approximately 500,000 people died, mostly children in the sub-Saharan African region.  Malaria must be diagnosed and treated promptly with an antimalarial drug to keep the illness from progressing and to prevent further spread of infection in the community. 

One of the malaria prevention and treatment measures funded by the PMI is the procurement and distribution of artemisinin-based combination therapies (“ACTs”) to treat individuals with uncomplicated malaria.  ACTs contain an artemisinin-based drug combined with another effective anti-malarial medication.  One type of ACT that the PMI procures and distributes to the 19 focus countries in sub-Saharan Africa is Coartem.  Coartem contains two active substances, artemether and lumefantrine, that work together to kill the parasites that cause malaria.  Coartem is taken orally and is effective in treating acute, uncomplicated malaria infections.  At the time of the criminal conduct alleged in the Indictment, Coartem was manufactured by a pharmaceutical company at a manufacturing facility in the Southern District of New York. 

In 2011, USAID personnel in the DRC discovered significant quantities of PMI-funded ACTs, including Coartem, being sold in various markets in Kinshasa, DRC.  Upon further inquiry, USAID determined that some of the Coartem being sold in the DRC had been procured through PMI funding for distribution in other sub-Saharan African countries, including Malawi, Angola, Mozambique, Zambia, Benin, Zimbabwe, and Ghana. 

The Coartem Diversion Scheme

From 2013 through 2015, DJESSA, OHOYO, and others engaged in a scheme to divert PMI-funded Coartem anti-malarial medication for resale on the wholesale black market in Kinshasa, DRC, and Brazzaville, Congo.  As detailed in the Indictment, between January 2013 and September 2015, USAID Office of Inspector General (“USAID-OIG”) Special Agents, operating in an undercover (“UC”) capacity, conducted numerous undercover purchases of PMI-funded Coartem from Djessa and Ohoyo in Kinshasa, DRC, and from a co-conspirator (“CC-1”) in Brazzaville, Congo.  The UCs posed as businessmen who wanted to purchase large quantities of Coartem on the black market for resale to their purported clients. 

A UC initially purchased Coartem from CC-1 in Brazzaville, who, in February 2013, introduced the UC to Ohoyo as CC-1’s supplier in Kinshasa.  Approximately one year later, after the UC had made several additional purchases of PMI-funded Coartem from OHOYO, Ohoyo introduced the UC to DJESSA as Ohoyo’s supplier.  Djessa claimed that he was the main supplier of Coartem in the DRC, Congo, and Angola, and that he had a supplier in Tanzania.  Djessa further stated that he could supply the UC with as much Coartem as he wanted.  The UCs subsequently made several undercover purchases of Coartem from Djessa, most recently in September 2015.  At the September 2015 meeting, Djessa told the UCs that he was aware that the Coartem was funded by the United States government. 

Altogether, the UCs purchased almost 2,100 dispenser boxes of Coartem from Djessa, Ohoyo, and CC-1 for approximately $63,000.  USAID-OIG confirmed that a majority of the Coartem purchased in the undercover operations was funded through the PMI (a portion of the purchased Coartem was determined to be counterfeit).  Each dispenser box of Coartem contained approximately 30 blister packs, each of which contained 6, 12, 18, or 24 individual Coartem tablets, depending on the weight of the patient for which the dispenser box was intended.  One blister pack represented a course of treatment for a single patient.  Thus, the approximately 2,100 boxes of Coartem that the UCs purchased from Djessa, Ohoyo, and CC-1 alone could have been used to treat nearly 63,000 persons suffering from malaria. 

            *                *                *

DJESSA, 41, and OHOYO, 32 of Kinshasa, DRC, are each charged with one count of conspiracy to steal U.S. government property, which carries a maximum sentence of five years in prison, and one count of theft of U.S. government property, which carries a maximum sentence of 10 years in prison. 

The statutory maximum sentences are prescribed by Congress and are provided here for information purposes only, as any sentence imposed on the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of USAID-OIG in this case.  Mr. Berman also thanked the U.S. Department of Justice’s Office of International Affairs for their assistance.

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

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth 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. Sweeny Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the filing of a civil forfeiture action seeking the return to its rightful owner of a painting looted by the Nazis during World War II.  The piece, A Scholar Sharpening His Quill, painted in 1639 by Salomon Koninck (the “Painting”), was allegedly stolen from the children and heirs of renowned Jewish art collector Adolphe Schloss.  Schloss was a prominent Jewish art collector in Paris whose large collection of Old Master paintings (the “Schloss Collection”) was regarded as among the most significant private collections of Dutch and Flemish paintings assembled in prewar France.

Manhattan U.S. Attorney Geoffrey Berman said:  “As alleged, this 1639 Old Master painting was owned by the Schloss family before it was stolen by the Nazis in France and transported to Munich to Hitler’s personal headquarters.  We can never reverse history and undo the horrors committed at the hands of the Nazis.  But we are steadfast in our determination to remember those who suffered and do what we can to return what was taken.”

According to the Complaint filed today in Manhattan federal court:

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

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

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

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that MICHAEL ARNSTEIN was sentenced today to nine months in prison for conspiring to forge a federal judge’s signature on counterfeit court orders that ARNSTEIN submitted to Google to get negative reviews about his business removed from Google search results.  ARNSTEIN pled guilty on September 15, 2017, before U.S. District Court Judge Andrew L. Carter Jr., who imposed today’s sentence.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Michael Arnstein’s blatant criminal scheme to exploit the authority of the federal judiciary for his company’s benefit was outrageous.  As Arnstein has learned, his attempts to remove negative reviews about his business from Google search results by forging a U.S. District Court judge’s signature may have worked in the short term, but it also earned him nine months in a federal prison.”

According to the allegations contained in the Complaint, the felony Information to which ARNSTEIN pled guilty, and statements made during court proceedings:

Between February 2014 and February 2017, ARNSTEIN engaged in a scheme to submit counterfeit federal court orders to Google, Inc. (“Google”) in an effort to get websites containing unfavorable postings about ARNSTEIN’s business de-indexed from Google’s internet search results.  In furtherance of this scheme, ARNSTEIN and others forged the signature of a United States District Judge for the Southern District of New York on more than 10 counterfeit court orders.  These counterfeit orders listed the websites containing purportedly defamatory information about ARNSTEIN’s business and ordered the removal of such information from the websites.  ARNSTEIN then submitted the counterfeit orders, which appeared to be valid on their face, to Google and requested that Google de-index the websites containing the purportedly defamatory information.  

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In addition to the prison term, ARNSTEIN, 41, of Yonkers, New York, was sentenced to three years of supervised release, the first five months of which ARNSTEIN must serve in home detention.  ARNSTEIN was also ordered to pay a fine of $20,000 and to perform 200 hours of community service during his term of supervised release.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation and the United States Marshals Service.  He also thanked Google for its helpful assistance in this investigation. 

The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Sheb Swett and Daniel S. Noble are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that a federal jury today found LAVELLOUS PURCELL, a/k/a “King Casino,” a/k/a “Mike Hill,” guilty of sex trafficking by force, fraud, or coercion, and related offenses.  PURCELL was convicted following a one-week jury trial before U.S. District Judge Denise L. Cote.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Lavellous Purcell, a/k/a ‘King Casino,’ was a pimp with a notoriously brutal set of rules he used to keep his victims under his control. Besides physical violence and intimidation, Purcell forced the women to dress and act in certain ways, and forced them to brand themselves with a tattoo of his alias, ‘Casino,’ on their necks. Purcell even boasted about his reprehensible abuse of women on social media. Now, Purcell has himself been branded as a felon by a unanimous jury, and faces life in federal prison. We hope today’s verdict brings at least some small measure of comfort to the victims of Purcell’s unconscionable crimes.”

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

From at least in or about 2012 to in or about 2017, LAVELLOUS 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 the defendant money 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. 

To date, law enforcement agents have identified numerous women who have engaged in commercial sex at the defendant’s direction.

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LAVELLOUS PURCELL, a/k/a “King Casino,” a/k/a “Mike Hill,” 40, of Hempstead, New York, was convicted of one count of sex trafficking by force, fraud, or coercion, one count of enticement to engage in prostitution, one count of transporting individuals in interstate commerce to engage in prostitution, one count of using interstate commerce to promote prostitution, and one count of conspiring to use interstate facilities to promote prostitution.  The defendant faces a mandatory minimum sentence of 15 years’ imprisonment, as well as maximum potential sentences that are prescribed by Congress and provided below for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Any individuals who believe they have information that may be relevant to the investigation should contact the FBI at 1-212-384-1000 or https://tips.fbi.gov/.

Mr. Berman thanked the FBI and 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, announced that NICHOLAS JOSEPH GENOVESE pled guilty today in Manhattan federal court to securities fraud for inducing investments in a hedge fund that he founded, Willow Creek Investments LP (“Willow Creek”), by misrepresenting his qualifications and professional background and concealing that he had prior felony convictions for fraud-related crimes.  In February 2018, GENOVESE was charged and arrested for perpetrating this fraud.  Today, GENOVESE pled guilty to one count of securities fraud before United States District Judge William H. Pauley III.  As part of his guilty plea, GENOVESE agreed to forfeit more than $13 million of proceeds of the securities fraud, including his interest in two watercraft that GENOVESE purchased with funds that he obtained from his victims.  

Manhattan U.S. Attorney Berman said:  “Nicholas Genovese admitted today that he duped victims into investing millions of dollars into his hedge fund, Willow Creek, based on false claims about his background and credentials.  Genovese brazenly lied to his victims, falsely claiming that he was an heir to a multimillion dollar fortune, that he had an Ivy League MBA, and that he had served in senior roles at major Wall Street firms.  In reality, Genovese was a confidence man with an extensive criminal record.  Now, Genovese has pled guilty to his audacious crimes and faces prison time for his misdeeds.” 

According to the allegations set forth in the Complaint and Indictment filed against GENOVESE in Manhattan federal court, and statements made in public court filings and proceedings including GENOVESE’s guilty plea hearing:

In 2015, GENOVESE began soliciting individuals to invest in the hedge fund that became Willow Creek, which was based in New York, New York.  In doing so, GENOVESE represented, among other things, that he was part of the Genovese family that had owned the Genovese Drug Store chain in the New York area and was an heir to this family’s fortune from the sale of that business for hundreds of millions of dollars in the late 1990s; that he had graduated from Dartmouth College’s Tuck School of Business; and that he had extensive Wall Street experience.  In particular, GENOVESE claimed that he had been a Goldman Sachs partner and a Bear Sterns portfolio manager before forming Willow Creek.  Based in part on these claims, victims invested more than $13 million with GENOVESE.

These representations were false.  GENOVESE is not related to the Genovese family that owned and sold the Genovese Drug Store Chain, did not attend the Tuck School of Business, and had never worked for Goldman Sachs or Bear Stearns.  GENOVESE also did not tell his investors that he had multiple prior felony convictions for fraud-related offenses including forgery, identity theft, and grand larceny.

When investors began to ask for their money back, GENOVESE put them off.  He told one investor that he would only return that investor’s funds after “the stars have aligned,” or else there would be a risk that almost all the money would be lost as a result of the purported impracticalities of unwinding unspecified trading positions.  Records indicate that GENOVESE lost approximately $8 million trading in TD Ameritrade accounts between January 2015 and December 2017.  GENOVESE also used proceeds of his fraud to purchase various luxury items, including two high-end mahogany boats.

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GENOVESE, 53, of New York, New York, pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison, and agreed to forfeit more than $13 million of proceeds of the securities fraud to the U.S. government (including his two mahogany boats).  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence of the defendant will be determined by Judge Pauley at GENOVESE’s sentencing, which has been scheduled for February 15, 2019 at 2 p.m.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and thanked the New York Regional Office of the United States Securities and Exchange Commission.

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that MICHAEL SIVA pled guilty today before U.S. District Judge Alison J. Nathan to conspiracy to commit securities fraud and fraud in connection with his role in an insider trading scheme based on material, nonpublic information misappropriated from an investment bank by Daniel Rivas, a former employee at the bank.  In August 2017, SIVA, Roberto Rodriguez, Rodolfo Sablon, and Jeffrey Rogiers were arrested and charged in a 54-count Indictment for their involvement in three insider trading schemes, all stemming from information misappropriated by Rivas.  Rivas and an additional participant, James Moodhe, had previously pled guilty and are cooperating with the government in this investigation.  Prior to SIVA’s guilty plea, the four other defendants each pled guilty.  All of the defendants will be sentenced by Judge Nathan.

U.S. Attorney Geoffrey S. Berman said:  “As Michael Siva admitted today, he knowingly used misappropriated confidential corporate information to place trades in the accounts of his brokerage clients in order to make it look like he was a talented stock selector.  In reality, Siva was a criminal.  Together with the trading of James Moodhe, Siva’s client from whom Siva obtained the illicit information, Siva’s trading resulted in millions in illicit profits on which Siva was paid tainted commissions.  Corrupt brokers like Siva will be held to account for their crimes.  This Office is committed to identifying and prosecuting inside information-sharing networks that undermine our nation’s securities markets.”

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

The Investment Bank and Rivas

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

Overview of Insider Trading Schemes

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

The Rivas-Moodhe-Siva Tipping Chain

SIVA was a member of the first of three tipping chains outlined in the Indictment.  In this tipping chain, Rivas passed inside information to Moodhe, whose daughter Rivas was living with and dating.  Moodhe then passed the inside information to SIVA, a broker and financial advisor at a global investment bank headquartered in Manhattan, New York.  Moodhe and SIVA had known each other for more than a decade and SIVA also became Moodhe’s broker. 

Between 2015 and 2017, Moodhe shared the inside information he received from Rivas with SIVA so that SIVA could execute profitable trades on behalf of his financial advisory clients and himself.  By at least early 2016, SIVA understood that the source of the stock tips provided by Moodhe was a corporate insider at an investment bank with whom Moodhe was friends. 

In order to keep their scheme from being exposed, including by SIVA’s employer, Moodhe and SIVA developed code phrases to use on the telephone so that Moodhe could surreptitiously provide SIVA with updated inside information.  To further hide their scheme, SIVA and Moodhe began going to various diners outside of New York City so that Moodhe could provide stock tips to SIVA in person.  During these meetings, Moodhe read from pieces of paper provided to him by Rivas, which contained detailed information about confidential impending deals, including ticker symbols, deal values and expected announcement dates.  In order to hide the fact that SIVA was placing trades in his client accounts based on illicit stock tips from Moodhe, SIVA also instructed Moodhe to mark his dirty trades “solicited” in his firm’s online trading platform, so that it would appear that SIVA had directed the trades as opposed to the suggestion coming from Moodhe.  On occasion, SIVA also instructed Moodhe to wait to trade on a tip from Rivas until SIVA could first trade in the security on behalf of his financial advisory clients, thereby making it look like SIVA had originated the idea. 

In total, between 2015 and 2017, SIVA and Moodhe used Inside Information Rivas provided to trade ahead of the public announcements of more than two dozen transactions, including numerous tender offers, allowing SIVA and Moodhe to generate illicit profits in excess of $3 million.  SIVA also earned thousands of dollars in commissions on the illegal trades entered on behalf of his clients.

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SIVA, 56, of Morristown, New Jersey, pled guilty to one count of conspiracy to commit securities fraud and fraud in connection with a tender offer, which carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain 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.  SIVA will be sentenced on February 11, 2018, before U.S. District Judge Alison J. Nathan. 

Mr. Berman praised the investigative work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for their assistance.  He added that the investigation is continuing.

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