Southern District of New York

Robert Khuzami, Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced that GARY HIRST was sentenced today by U.S. District Judge Ronnie Abrams to 8 years imprisonment for defrauding a Native American tribal entity and numerous pension fund investors of tens of millions of dollars in connection with the issuance of bonds by the tribal entity.  HIRST pled guilty May 15, 2018, to conspiracy to commit securities fraud, securities fraud, investment adviser fraud, and conspiracy to commit investment adviser fraud before U.S. Magistrate Judge Barbara Moses. 

Attorney for the United States Robert Khuzami said:  “This complex and brazen securities fraud scheme lined the pockets of Gary Hirst and his co-defendants but left the Native American tribal entity, the Wakpamni Lake Community Corporation $60 million in debt.  Hirst, who is already in prison for a separate securities scheme prosecuted by this Office, now faces additional time behind bars for this criminal conspiracy.”

According to the allegations contained in the Indictment filed against HIRST and statements made in related court filings and proceedings, including the trial of co-defendants John Galanis, Devon Archer, and Bevan Cooney:

From March 2014 through April 2016, HIRST, Jason Galanis, John Galanis, Devon Archer, Bevan Cooney, Michelle Morton, and Hugh Dunkerley, engaged in a fraudulent scheme to misappropriate the proceeds of bonds issued by the Wakpamni Lake Community Corporation (“WLCC”), a Native American tribal entity (the “Tribal Bonds”), and to use funds in the accounts of clients of asset management firms controlled by HIRST, Morton, and others to purchase the Tribal Bonds, which the clients were then unable to redeem or sell because the bonds were illiquid and lacked a ready secondary market.

The WLCC was convinced to issue the Tribal Bonds through false and fraudulent representations by John Galanis.  Simultaneously, Jason Galanis, with the backing of Archer and Cooney, worked to acquire Hughes Capital Management (“Hughes”), a registered investment adviser.  HIRST and Morton were installed as Hughes’s chief investment officer and chief executive officer, respectively.  Within weeks of taking control of Hughes, HIRST and Morton placed the entire $28 million first series of Tribal Bonds with Hughes clients but failed to disclose material facts about the Tribal Bonds, including that the Tribal Bonds fell outside the investment parameters set forth in the investment advisory contracts of certain Hughes clients.  Indeed, HIRST himself signed the trade tickets to purchase the bonds after other employees of Hughes refused to do so.  In addition, Hughes’s clients were not told about substantial conflicts of interest with respect to the issuance and placement of the Tribal Bonds before the Tribal Bonds were purchased on these clients’ behalf. 

The defendants and their co-conspirators then misappropriated the proceeds of the first Tribal Bond issuance.  Specifically, although the Tribal Bonds were supposed to be invested in an annuity, the proceeds were deposited into an account opened by HIRST and over which both HIRST and Dunkerley had signatory authority.  HIRST and Dunkerley, at the direction of Jason Galanis, then transferred significant amounts of the bond proceeds from that account to support the defendants’ business and personal interests.  Jason Galanis, for example, used a portion of the proceeds of the first Tribal Bond issuance to finance the purchase of a $10 million luxury apartment in Tribeca.  John Galanis, similarly, secretly received $2.35 million in proceeds of the first bond issuance, which he spent on a variety of personal expenses and luxury items, including cars, jewelry, and hotel expenses. 

In addition, after John Galanis induced the WLCC to issue a second round of Tribal Bonds, Archer and Cooney used $20 million of bond proceeds from the first issuance to buy the entirety of the second issuance.  As a result of the use of recycled proceeds to purchase additional issuances of Tribal Bonds, the face amount of Tribal Bonds outstanding increased and the amount of interest payable by the WLCC increased, but the actual bond proceeds available for investment on behalf of the WLCC did not increase.  The bonds purchased by Archer and Cooney were then used to meet net capital requirements at two broker dealers in which Archer and Cooney had interests.  Cooney also obtained a $1.2 million loan based on his purported ownership of the bonds, which he subsequently failed to repay.  In addition, millions of dollars in bond proceeds from the bond issuances were used to finance the acquisition of companies that the defendants and their co-conspirators acquired as part of a strategy to build a financial conglomerate.

In the spring of 2015, John Galanis induced the WLCC to issue an additional $16 million worth of Tribal Bonds.  Simultaneously, Jason Galanis, Archer, and others – in consultation with HIRST – purchased a second investment adviser, Atlantic Asset Management (“Atlantic”), and installed Morton as the chief executive officer.  Within days of obtaining control of Atlantic, Morton placed the entirety of the $16 million Tribal Bond with an Atlantic client, without the client’s consent and without disclosing the fact that the Tribal Bonds were outside the client’s investment parameters and that numerous conflicts of interest existed.  The proceeds of the $16 million issuance were again not invested in an annuity as promised, but instead were diverted, among other things, to finance the defendants’ acquisition of another company in furtherance of their plan to build a financial conglomerate and to make payments to one of the broker dealers in which Archer and Cooney had interests.  HIRST also directed that significant portions of the bond proceeds be funneled through other secret accounts and used to purchase significant portions of a technology stock’s IPO – which was itself secretly controlled by several of the defendants.

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In addition to the prison term, GARY HIRST, 66, was sentenced to 3 years of supervised release.  HIRST was also ordered to forfeit $1.3 million and to make restitution in the amount of $43,785,176.

Jason Galanis, who pled guilty to conspiracy to commit securities fraud, securities fraud, and investment adviser fraud, was sentenced to a term of 173 months in prison on August 11, 2017.  Michelle Morton, who pled guilty to conspiracy to commit securities fraud and investment adviser fraud, is scheduled to be sentenced on November 30, 2018.  John Galanis, who was convicted at trial of conspiracy to commit securities fraud and securities fraud, is scheduled to be sentenced on November 2, 2018.  Devon Archer and Bevan Cooney, who were convicted at trial of conspiracy to commit securities fraud and securities fraud, are scheduled to be sentenced on November 9, 2018.  Hugh Dunkerley, who pled guilty to conspiracy to commit securities fraud, two counts of securities fraud, bankruptcy fraud, and falsification of records with the intent to obstruct a government investigation, is scheduled to be sentenced on March 8, 2019.

This conviction represents HIRST’s second conviction in this District in a little more than a year.  On August 3, 2017, following his conviction at trial, HIRST was sentenced by U.S. District Judge P. Kevin Castel to 78 months in prison in connection with his participation in a scheme to manipulate the market for Gerova Financial Group, Ltd., a publicly traded company listed on the New York Stock Exchange, and to defraud the shareholders of that company. 

Mr. Khuzami praised the work of the U.S. Postal Inspection Service and the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Rebecca Mermelstein, Brendan F. Quigley, and Negar Tekeei are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that AVTANDIL KHURTSIDZE, a former world boxing champion and the chief enforcer for Razhden Shulaya, was sentenced to 10 years in prison by United States District Judge Katherine B. Forrest, following KHURTSIDZE’s conviction in June on charges of racketeering and fraud conspiracy.   

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Avtandil Khurtsidze, a former middleweight boxing champion and heavyweight enforcer for the Shulaya Enterprise – a massive ‘elite’ criminal enterprise of the former Soviet Union – was convicted of intimidating and punishing associates of the organization.  Thanks to our dedicated law enforcement partners around the globe, Khurtzide’s reign of extortion and violence has been halted, as he is now sentenced to 10 years in federal prison.”

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

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

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

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

KHURTSIDZE also participated in a scheme to defraud casinos by targeting particular models of electronic slot machines using a complicated algorithm designed to predict the behavior of those machines.  Shulaya and other members of the Enterprise obtained the technology used to commit that fraud through violence, including through the 2014 kidnapping of a software engineer in Las Vegas.  KHURTSIDZE, working at Shulaya’s direction, then assisted in refining that technology by training lower-level members of the Shulaya Enterprise to execute this casino scam using smartphones and software developed by the Shulaya Enterprise.

Following a two-week trial before the Honorable Katherine B. Forrest, KHURTSIDZE was found guilty of one count of racketeering conspiracy and one count of wire fraud conspiracy.      

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In addition to the prison term, KHURTSIDZE, 38, of Kutaisi, Republic of Georgia, was sentenced to two years of supervised release

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

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that ROBERTO RODRIGUEZ pled guilty today before United States Magistrate Judge Henry B. Pitman to conspiracy to commit securities fraud and fraud in connection with a tender offer for his role in an insider trading scheme involving material nonpublic information misappropriated from an investment bank by Daniel Rivas, a former employee at the bank.  In August 2017, RODRIGUEZ, Michael Siva, 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 securities trades based on information misappropriated by Rivas.  Rivas and an additional participant, James Moodhe, had previously pled guilty and are cooperating with the Government in this investigation.  Since the unsealing of the Indictment, Sablon, Zoquier, and Rogiers, in addition to RODRIGUEZ, have pled guilty and will be sentenced by U.S. District Judge Alison J. Nathan.[1]

U.S. Attorney Geoffrey S. Berman said:  “As Roberto Rodriguez admitted today, he traded on confidential corporate information stolen by his longtime friend Daniel Rivas, reaping millions of dollars in illegal profits.  Further, Rodriguez and another conspirator, Rodolfo Sablon, planned to use these illicit proceeds as seed money to start their own investment fund, intending to give an ownership stake to Rivas.  Our Office is committed to identifying and prosecuting insider trading networks that undermine our nation’s securities markets.”

According to the allegations contained in the Indictment filed against RODRIGUEZ 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 Rodriguez Tipping Chain

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

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

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

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

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

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RODRIGUEZ, 33, of Miami, Florida, pled guilty to one count of conspiracy to commit securities fraud and fraud in connection with a tender offer (Count 21), 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.  RODRIGUEZ will be sentenced before Judge Nathan. 

The allegations contained in the Indictment as to Michael Siva, the sole defendant who had not pleaded guilty, are merely accusations, and he is presumed innocent unless and until proven guilty.

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.  

[1] As for the defendant who has not pled guilty (Michael Siva), the charges described herein constitute only allegations, and Siva is presumed innocent unless and until proven guilty.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that TYRONE FELDER, a/k/a “Man Man,” was found guilty of participating in the fatal carjackings of two livery cab drivers: Maodo Kane, who was killed in the Bronx on August 5, 2014, and Aboubacar Bah, who was killed in the Bronx on August 12, 2014.  FELDER was also found guilty of participating in two armed robberies in Yonkers on August 5, 2014, as well as firearms offenses related to the carjackings and the robberies.  The jury convicted FELDER yesterday on all nine counts of the Indictment following a two-week trial before U.S. District Judge Vincent L. Briccetti.

U.S. Attorney Geoffrey S. Berman said:  “Tyrone Felder’s days of reckless and deadly violence are over.  This unanimous verdict means that Felder will spend the rest of his life in prison, but it will not bring back the two men that Felder murdered.”

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

On August 5, 2014, FELDER participated in the armed carjacking of Maodo Kane.  During the course of the carjacking, FELDER shot and killed Mr. Kane in the vicinity of Hunter Avenue, in the Bronx.  FELDER then used the stolen car to participate in two gunpoint robberies of businesses in Yonkers.  Subsequently, on August 12, 2014, FELDER participated in the carjacking of Aboubacar Bah.  During the course of the carjacking, FELDER shot and killed Mr. Bah in the vicinity of Bryant Avenue, in the Bronx.

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FELDER, 29, was found guilty of two counts of carjacking resulting in death, two counts of robbery, four counts of firearms possession, and one count of conspiracy to commit robbery.  FELDER faces a maximum potential sentence of life in prison and a mandatory minimum sentence of 100 years in prison, which must run consecutively to any other term of imprisonment imposed.  FELDER is scheduled to be sentenced by Judge Briccetti on January 18, 2019.

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

Mr. Berman praised the outstanding investigative work of the New York City Police Department, the City of Yonkers Police Department, and the Federal Bureau of Investigation’s Westchester County Safe Streets Task Force.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that GREVY GERARD PIERRE-LOUIS, a/k/a “Cadillac Slim,” a/k/a “Caddy,” pled guilty yesterday before Chief United States District Judge Colleen McMahon to conspiracy to commit sex trafficking and conspiracy to transport minors interstate for the purpose of prostitution. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “The defendant spent most of his adult life profiting from his victimization of girls and women through extreme physical and psychological abuse.  All the while, he bragged about being a pimp and a player.  Thanks to the extraordinary work of the FBI, the defendant’s so-called game is now over, and he will face the consequences of his actions.  We can only hope that the defendant’s guilty plea brings some measure of justice for the survivors of his vicious crimes.”

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

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

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PIERRE-LOUIS, 46, of Queens, New York, was arrested on August 17, 2016, and has been in federal custody since.  PIERRE-LOUIS pled guilty to one count of conspiracy to commit sex trafficking, which carries a maximum sentence of life in prison; and one count of conspiracy to transport minors interstate for the purpose of prostitution, which carries a mandatory minimum sentence of ten years in prison, and a maximum sentence of life 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.

PIERRE-LOUIS is scheduled to be sentenced by Judge McMahon on December 12, 2018.

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

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

A New York-licensed attorney and former partner at a New York law firm pleaded guilty today to conspiracy to defraud the United States and tax evasion arising from a scheme to embezzle millions of dollars from a deceased client’s estate, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Geoffrey S. Berman for the Southern District of New York.

“The fiduciary duty that a lawyer owes to a client is paramount to the practice of law,” said Principal Deputy Assistant Attorney General Zuckerman. “The Justice Department will prosecute and seek just punishment against any attorney who victimizes their clients for their own personal gain.”

“As he admitted in court today, Steven Etkind violated the law, the canons of his profession, and the trust of his client by stealing more than $3.5 million from the client’s estate,” said U.S. Attorney Berman. “Etkind now awaits sentencing for his crimes.”

According to court documents and statements made in court, Steven M. Etkind was a partner at a New York law firm’s tax, trusts and estates group and a Certified Public Accountant.  Etkind performed legal work for a successful entrepreneur client, who passed away in 2008, naming Etkind as the co-executor of his $35 million estate.

The client’s will directed the creation of two charitable trust private foundations, funded with assets from the client’s estate, for the sole purpose of donating to 501(c)(3) charitable organizations, including those aimed at assisting Jewish-sponsored organizations.  Etkind was named co-trustee of these trusts. 

Beginning in 2009, Etkind and his co-conspirator set up a phony charitable organization, the United Jewish Education Foundation (UJEF), and used it to steal more than $3.5 million from these charitable trusts.  As part of the conspiracy, Etkind directed that donations from the trusts be first made to legitimate Jewish charitable organizations in order to give the disbursements the appearance of legitimate donations.  Etkind and his co-conspirator then redirected the funds to accounts of UJEF, the phony charity that his co-conspirator controlled. 

Etkind subsequently directed his co-conspirator to write checks, totaling $327,500, to a bank account in the name of JE Capital Holding Corp., a nominee corporate entity that Etkind controlled exclusively.  Etkind further directed more than $3 million to be used in 2010 to purchase a 6,300 square-foot home with a swimming pool in Southampton, New York.  The Southampton property was purchased for the use and enjoyment of Etkind and his family.  Etkind later transferred title of the property to JE Trust, a nominee trust he controlled. 

To conceal his embezzlement, Etkind filed, and caused to be filed, fraudulent personal, corporate, and charitable trust returns with the Internal Revenue Service (IRS).  During the course of a subsequent audit of UJEF by the IRS Tax Exempt & Government Entities Division, Etkind and his co-conspirator made several false and misleading statements, including about the true ownership of the Southampton Property.         

United States District Judge John G. Koelt scheduled Etkind's sentencing for January 18, 2019.  Etkind faces a statutory maximum sentence of five years in prison on the conspiracy charge and five years in prison for tax evasion.  He also faces a period of supervised release, restitution, and monetary penalties. 

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Berman praised the outstanding efforts by special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorneys Jorge Almonte and Jack A. Morgan of the Tax Division, who are prosecuting the case, as well as the IRS’s Tax Exempt & Government Entities Division for their assistance in the investigation.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Richard E. Zuckerman, the Principal Deputy Assistant Attorney General for the Tax Division of the Department of Justice, announced that STEVEN M. ETKIND, a New York-licensed attorney and a Certified Public Accountant, pled guilty today to conspiracy to defraud the United States and tax evasion arising from a scheme to embezzle millions of dollars from a deceased client’s estate.  ETKIND pled guilty before United States District Judge John G. Koeltl.

Manhattan U.S. Attorney Berman said:  “As he admitted in court today, Steven Etkind violated the law, the canons of his profession, and the trust of his client by stealing more than $3.5 million from the client’s estate.  Etkind now awaits sentencing for his crimes.”

Principal DAAG Zuckerman said:  “The fiduciary duty that a lawyer owes to a client is paramount to the practice of law.  The Justice Department will prosecute and seek just punishment against any attorney who victimizes their clients for their own personal gain.”

According to the allegations contained in the Indictment to which ETKIND pled guilty and statements made in court:

ETKIND was a partner at a New York law firm and served as head of the law firm’s Tax, Trusts, and Estates practice group.  ETKIND performed legal work for a successful entrepreneur client who, prior to his death in 2008, named ETKIND as co-executor of his $35 million estate.

The client’s will directed the creation of two charitable trust private foundations, funded with assets from the client’s estate, for the sole purpose of donating to 501(c)(3) charitable organizations, including those aimed at assisting Jewish-sponsored organizations.  ETKIND was named co-trustee of these trusts. 

Beginning in 2009, ETKIND and his co-conspirator set up a phony charitable organization, the United Jewish Education Foundation (“UJEF”), and used it to steal more than $3.5 million from these charitable trusts.  As part of the conspiracy, ETKIND directed that donations from the trusts be first made to legitimate Jewish charitable organizations in order to give the disbursements the appearance of legitimate donations.  ETKIND and his co-conspirator then redirected the funds to accounts of UJEF, the phony charity that his co-conspirator controlled. 

ETKIND subsequently directed his co-conspirator to write checks, totaling $327,500, to a bank account in the name of JE Capital Holding Corp., a nominee corporate entity that ETKIND controlled exclusively.  ETKIND further directed more than $3 million to be used in 2010 to purchase a 6,300 square-foot home with a swimming pool in Southampton, New York.  The Southampton property was purchased for the use and enjoyment of ETKIND and his family.  ETKIND later transferred title of the property to JE Trust, a nominee trust he controlled. 

To conceal his embezzlement, ETKIND filed, and caused to be filed, fraudulent personal, corporate, and charitable trust returns with the Internal Revenue Service (“IRS”).  During the course of a subsequent audit of UJEF by the IRS Tax Exempt & Government Entities Division, ETKIND and his co-conspirator made several false and misleading statements, including about the true ownership of the Southampton Property.          

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ETKIND, 56, of New York, New York, pled guilty to one count of conspiracy to defraud the United States and one count of tax evasion, each of which carries a maximum sentence of five years in prison.  As part of the plea agreement, ETKIND agreed to pay restitution in the amount of $1,208,245 to the IRS, which represents the additional tax due and owing as a result of ETKIND’s filing of false individual income tax returns for the 2009 and 2010 calendar years.  Sentencing is scheduled for January 18, 2019, before Judge Koeltl.

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 Judge Koeltl.

Mr. Berman and Mr. Zuckerman praised the outstanding efforts by special agents of IRS Criminal Investigation.  Mr. Berman also thanked the U.S. Department of Justice’s Tax Division and the IRS’s Tax Exempt & Government Entities Division for their assistance in the investigation. 

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Special Assistant United States Attorneys Jorge Almonte and Jack A. Morgan (of the Tax Division) are in charge of the prosecution. 

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website, https://www.justice.gov/tax.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James D. Robnett, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today MARY BOONE, a Manhattan art gallery owner, pled guilty to charges arising from her filing of federal income tax returns that falsely claimed approximately $1.6 million in personal expenses as tax deductible business expenses in 2011.  BOONE pled guilty before U.S. District Judge Alvin K. Hellerstein. 

U.S. Attorney Geoffrey S. Berman said:  “Mary Boone, a Manhattan art gallery owner, admitted to cheating the U.S. tax system by blatantly lying about her expenses and playing a shell game with bank accounts to hide her true assets.  While tax evasion may seem like a victimless crime, it isn’t; all Americans must pay their taxes.  And as Boone has learned, tax laws are not abstract.”

IRS-CI Special Agent-in-Charge James D. Robnett said:  “Operating a Manhattan art gallery did not entitle Mary Boone to evade paying her taxes.  It is a felony offense that carries severe consequences.  By falsely claiming millions of dollars of personal expenses as business expenses, Ms. Boone cheated all Americans, since law abiding citizens are expected to pay their fair share.”

According to the allegations contained in the Information to which BOONE pled guilty and statements made in court: 

BOONE owns and operates an art gallery (the “Gallery”) with two locations in Manhattan, New York.  At all relevant times, BOONE operated the Gallery as a partnership and was solely responsible for the Gallery’s finances.  In 2011, BOONE held a 90 percent partnership interest in the Gallery.  

In 2012, BOONE caused her accountant to file false and fraudulent 2011 federal income tax returns for the Gallery and for BOONE individually.  BOONE caused the Gallery’s 2011 partnership return, Form 1065, to report a false business loss of approximately $52,521, whereas, in reality, the Gallery made a profit of approximately $3.7 million in 2011.  BOONE perpetrated this tax fraud in part by using business funds to pay for over $1.6 million in personal expenses and then falsely claiming these personal expenses as business deductions.  For example, in 2011, BOONE issued approximately $800,000 in business checks to pay for the remodeling of BOONE’s Manhattan apartment, as well as approximately $120,000 more in business checks to pay for rent and other expenses for a second Manhattan apartment where BOONE lived while the remodeling was underway.  In order to conceal the personal nature of these and other expenses, and thereby evade income taxes, BOONE falsely characterized approximately $1.6 million in personal expenses as tax deductible business expenses in handwritten check registers that BOONE provided to her accountant.  For example, BOONE falsely characterized a $500,000 payment to a contractor for remodeling BOONE’s apartment as “commission.” 

BOONE also caused the 2011 Form 1065 to report a false business loss by artificially inflating the Gallery’s stated expenses and, to a lesser degree, the Gallery’s stated income.  BOONE did so by, among other things, providing check registers to her accountant that falsely characterized transactions such as bank transfers as income or expenses.  For example, in 2011, BOONE transferred approximately $9.5 million from one business bank account to another, and falsely characterized these bank transfers as tax deductible business expenses, such as commissions to artists.

Through this conduct, BOONE also caused her 2011 individual income tax return, Form 1040, to be materially false.  Instead of reporting BOONE’s partnership share of the Gallery’s $3.7 million profit, BOONE’s 2011 Form 1040 reported BOONE’s personal income as limited to a payment of approximately $50,000 and interest income of approximately $60,000, and offset that reported income by BOONE’s share of the Gallery’s false reported business loss.  Through this scheme, BOONE evaded over $1.2 million in federal taxes and reported a false tax liability of merely $335 on the Form 1040. 

BOONE engaged in similar tax fraud schemes for the calendar years 2009 and 2010.  In all, BOONE caused the IRS losses totaling over $3 million, not including penalties and interest.

*                *                *

BOONE, 66, of New York, New York, pled guilty to two counts of filing a false federal income tax return, each of which carries a maximum sentence of three years in prison.  BOONE has agreed to pay restitution to the IRS in the amount of at least $3,097,160, which represents the additional tax due and owing as a result of BOONE’s filing of false individual and corporate income tax returns for the calendar years 2009, 2010, and 2011.  Sentencing is scheduled for January 18, 2019, at 11 a.m. before Judge Hellerstein.

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 work of IRS Criminal Investigation in this case.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Angel M. Melendez, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), James J. Hunt, Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), today announced the unsealing of a superseding indictment charging five defendants with various racketeering and narcotics offenses.  Three defendants are charged in connection with their roles in the August 2, 2009, murder of Derrick Moore, 22, in the Bronx.

One of the defendants, LUIS ORTIZ, 41, was presented last week before United States Magistrate Judge Barbara C. Moses.  Two of the defendants, HECTOR MARRERO, 27, and PETER GONZALEZ, 29, were arrested this morning and will be presented later today before United States Magistrate Judge Henry B. Pitman.  The remaining two defendants, STEVEN BROWN, 39, and RAFAEL REYES, 37, are already in federal custody on other charges, and will be presented at a later date.  The case has been assigned to United States District Judge Katherine Polk Failla.

Manhattan U.S. Attorney Geoffrey Berman said:  “As alleged in the superseding indictment, members of the Taylor Avenue and Creston Avenue Crews wreaked havoc on the streets of New York.  On August 2, 2009, that violence resulted in the murder of Derrick Moore.  He was 22 years old.  Today, thanks to the dedication and perseverance of the NYPD, the DEA, and HSI, the defendants face charges for their alleged crimes.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “The members of these two crews are alleged to have been in involved in a slew of illegal activity ranging from drug trafficking to committing murder.  We have seen the violence of street gangs bleed out into our communities, pushing their deadly drugs and committing violent acts. Strong collaborative efforts and information sharing are the foundation for law enforcement in New York to be more effective in ridding the streets of these alleged criminals.”

DEA Special Agent-In-Charge James J. Hunt said:  “This investigation linked a brutal crime to members of a drug gang, which exemplifies the relationship between drug trafficking and violence.  I commend our law enforcement partners on their hard work and collaboration.” 

According to the allegations contained in the superseding indictment[1] and statements made in court:

The Taylor Avenue Crew was a criminal enterprise that operated principally in and around Taylor Avenue in the Bronx, New York, from at least 2007 up to and including 2015.  Members of the Taylor Avenue Crew sold crack cocaine and committed acts of violence in that area.

The Creston Avenue Crew was a criminal enterprise that operated principally in and around Creston Avenue in the Bronx, New York, from at least 2003 up to and including 2011.  Members of the Creston Avenue Crew sold cocaine and marijuana, and committed acts of violence, in that area.           

Members of the Taylor and Creston Avenue Crews associated with each other and assisted each other by, among other things, carrying out acts of violence on each other’s behalf upon request by the leaders of the respective crews.  One such act of violence was the murder of Derrick Moore on August 2, 2009.  This murder was committed by Creston Avenue Crew members RAFAEL REYES and LUIS ORTIZ to assist Taylor Avenue Crew member STEVEN BROWN.

*                *                *

Count One of the Indictment charges BROWN with murder in aid of racketeering activity.  Count Two of the Indictment charges REYES and ORTIZ with murder in aid of racketeering activity.  Count Three of the Indictment charges BROWN, REYES, and ORTIZ with murder in connection with a drug crime.  Count Four charges BROWN, REYES, and ORTIZ with murder through the use of a firearm.  Counts One through Four all relate to the murder of Derrick Moore.

Count Five of the Indictment charges MARRERO and GONZALEZ with participating in a conspiracy to distribute crack cocaine.

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

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

Assistant U.S. Attorneys Maurene Comey, Jessica Lonergan, and Jason Swergold 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 Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

COUNT

CHARGE

DEFENDANTS

PENALTIES

1

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

STEVEN BROWN

Mandatory minimum of life in prison

2

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

RAFAEL REYES

LUIS ORTIZ

Mandatory minimum of life in prison

3

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

STEVEN BROWN

RAFAEL REYES

LUIS ORTIZ

Maximum: life in prison

Minimum:  20 years in prison

4

Murder through use of a firearm

18 U.S.C. § 9249(j)

STEVEN BROWN

RAFAEL REYES

LUIS ORTIZ

Maximum: life in prison

Minimum: 5 years in prison

5

Narcotics conspiracy

21 U.S.C. § 846

HECTOR MARRERO

PETER GONZALEZ

Maximum: Life in prison

Minimum: 10 years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment in Manhattan federal court charging MICHAEL D’ALESSIO with wire fraud in connection with his years-long scheme to defraud investors in luxury real estate development projects in Manhattan, the Hamptons, Westchester, and elsewhere. D’ALESSIO was arrested this morning in New York, New York, and will be presented this afternoon before Magistrate Judge Barbara C. Moses in Manhattan federal court.  The case is assigned to U.S. District Judge Jessie M. Furman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Michael D’Alessio, former president and CEO of a real estate development firm, allegedly sought investments to develop specific real estate projects. In reality, D’Alessio allegedly comingled investor funds and used them to pay his own debt, fund his own gambling, and pay personal expenses. Michael D’Alessio has lost his alleged gamble to swindle his investors, as he now faces significant time in federal prison.” 

Assistant Director-in-Charge Sweeney said: “Investors believed they would get a return on their money, so they put their faith in Mr. D’Alessio.  Instead of growing those investments, he allegedly used the money for his gambling problem and to pay off his debts.  Even though he attempted to use money from one project to pay monthly installments to investors in another project, investor funds were not used for their stated purpose. Now he will face justice, and the FBI New York will work tirelessly to get investors’ money back.”

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

A career real estate developer and general contractor, D’ALESSIO 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. 

In truth and in fact, and contrary to the representations that he made to investors, from at least in or about 2015 through in or about April 2018, D’ALESSIO misappropriated investor funds for his own use and benefit.  Upon receiving investor funds, D’ALESSIO 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 those investor funds for his own benefit, including to pay off debts, and to fund significant gambling and other personal expenses.  D’ALESSIO took additional steps to conceal his fraud, including deceiving investors regarding the progress of development on real estate projects and raising money from new investors to make monthly payments to investors in different projects in the manner of a Ponzi scheme. 

D’ALESSIO, 52, of New York, New York, is charged with committing wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

*                      *                      *

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.

The charge contained in the Indictment is merely an accusation, and the defendant is presumed innocent unless and until proven guilty.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney, Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), Scott J. Lampert, Special Agent in Charge of the New York Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), Thomas P. DiNapoli, the New York State Comptroller, and Carl E. DuBolis, Orange County Sheriff, announced the unsealing today of an indictment charging JAMES SPINA, JEFFREY SPINA, ANDREA GROSSMAN, and KIMBERLY SPINA with participating in a widespread health care fraud scheme through their fraudulent operation of Dolson Avenue Medical (“DAM” or the “Practice”), a multi-disciplinary medical clinic located in Middletown, New York.  The defendants were all arrested today, and presented in federal district court in White Plains.  This case has been assigned to U.S. District Court Judge Kenneth M. Karas.

Berman also today announced the guilty plea of CHARLES BAGLEY, a licensed medical doctor formerly affiliated with DAM and other businesses, to conspiracy to commit health care fraud, charged in a separate Information unsealed today. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these four defendants purported to run a legitimate medical clinic that provides care and rehabilitation to patients.  Instead, the defendants allegedly put aside their medical and fiduciary obligations for greed, attempting to bilk insurance companies and federally-funded Medicare out of more than $80 million.  Thanks to the coordinated efforts of federal and state investigative agencies, the defendants will have to answer for their alleged crimes.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Patients go to a doctor hoping they will help them get better.  The subjects in this investigation allegedly performed treatments patients didn’t need, double billed for procedures and up-coded. The FBI New York agents and our law enforcement partners uncovered tens of millions of dollars in losses.  This type of fraud eventually ends up costing all patients more money when they seek medical attention.  We will continue to work tirelessly to stop health care fraudsters hoping to make millions while the patients they should be treating continue to suffer.”

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “This indictment should serve as a warning to any health care provider that dares to put personal profit ahead of proper patient care.  HHS-OIG, along with our law enforcement partners, will continue to aggressively pursue those who seek to undermine the federally funded health care programs intended for our most vulnerable Americans.”

New York State Comptroller Thomas P. DiNapoli said:  “The Spinas and their associates allegedly swindled tens of millions of dollars by fraudulently billing health insurers including the NYS Health Insurance Program and the State Insurance Fund.  An alleged theft of this magnitude is appalling when so many hard-working people experience rising health care costs.  Now, their alleged scams have been exposed, thanks to my partnership with U.S. Attorney Berman, the FBI, the U.S. Department of Health and Human Services Inspector General and the Orange County Sheriff's Office.”

Orange County Sheriff Carl E. DuBois said:  "The Orange County Sheriff’s Office is dedicated to the collaboration with its federal partners in combating crime in the region.  We are committed to our partnership with the FBI in the relentless pursuit of justice."

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

From 2011 through September 2017, DAM was a registered medical service corporation in New York State that purported to provide a variety of pain management and rehabilitation services including physical medicine and rehabilitation, chiropractic services, physical therapy, diagnostic testing, and acupuncture.  DAM primarily provided treatment services from its clinic located at 201 Dolson Avenue, Middletown, New York.

In addition to DAM, at least eight other corporations, including four other medical corporations, billed Medicare and other health insurance providers (the “Insurance Providers”) from 201 Dolson Avenue (the “Associated Businesses”).  On paper, DAM and the Associated Businesses appeared to be separate entities owned by multiple different qualified individuals.  But in reality, JAMES SPINA and JEFFREY SPINA, who are doctors of chiropractic - not medical doctors - were the true owners and operators of the different medical service corporations.

According to the indictment, JAMES SPINA and JEFFREY SPINA, together with GROSSMAN, made all corporate decisions for DAM and the Associated Businesses.  In particular, JAMES SPINA and JEFFREY SPINA ran the day-to-day operations of the businesses.  They controlled payroll, the hiring and firing of employees, corporate expenses, like employee compensation and rent, and billing to Insurance Providers.  Further, JAMES SPINA and JEFFREY SPINA were the financial beneficiaries of DAM and its Associated Businesses. 

JAMES SPINA and JEFFREY SPINA, however, went to great lengths to conceal their control and ownership of DAM and the Associated Businesses.  In particular, JAMES SPINA and JEFFREY SPINA recruited medical doctors and other professionals to serve as the nominee owners of DAM and the Associated Businesses.  JAMES SPINA and JEFFREY SPINA further concealed their ownership of DAM and the Associated Businesses by transferring revenues of these companies into other companies they owned.  To further disguise these transfers, JAMES SPINA and JEFFREY SPINA drafted fake lease and marketing agreements between DAM and the Associated Businesses and purported real estate and marketing companies they owned and referred to the payments as “rent” or “marketing fees.”  The defendants also used phony and non-existent addresses for the corporations so that it would appear that DAM and the Associated Businesses were operating out of separate locations.

As alleged, in operating the multiple fraudulent businesses, JAMES SPINA and JEFFREY SPINA, routinely showed little, if any, regard for which medical services or treatments were medically necessary, or even whether the services were actually provided to patients, and instead operated DAM and billed Insurance Providers to maximize DAM’s reimbursements and ultimately, their own profits.  In particular, JAMES SPINA and JEFFREY SPINA, with assistance from GROSSMAN, the bookkeeper for DAM and its Associated Businesses, and KIMBERLY SPINA, an administrator at the Practice: (a) submitted and caused to be submitted claims to Insurance Providers for medically unnecessary services and procedures; (b) submitted and caused to be submitted claims to Insurance Providers for medical services that were not rendered; (c) double billed, i.e., submitted and caused to be submitted multiple claims for the same service to two different Insurance Providers; (d) altered and fabricated medical records; and (e) obstructed and impeded audits by Medicare and other Insurance Providers to conceal their fraud.

As a consequence of the above-described scheme, the majority of the claims submitted by DAM and the Associated Businesses to Medicare and other Insurance Providers were false and fraudulent.  The submitted claims during the relevant time period totaled more than $80,000,000, resulting in losses of tens of millions of dollars. 

As alleged in a separate Information filed today in White Plains federal court:

CHARLES BAGLEY, a licensed medical doctor affiliated with DAM and the Associated

Businesses, participated in the health care fraud scheme, whereby BAGLEY, a licensed medical doctor, agreed with others to submit, and cause to be submitted, false claims to Medicare and other health care benefit programs to obtain reimbursement to which he and his co-conspirators were not entitled. 

*                *                *

BAGLEY, 69, of Great Neck, New York, pled guilty today to one count of conspiracy to commit health care fraud, which carries a maximum sentence of 10 years in prison.  The defendant will be sentenced at a future date.  The case is assigned to United States District Judge Nelson S. Román.

JAMES SPINA, 59, of Middletown, New York, JEFFREY SPINA, 56, of Middletown, New York, ANDREA GROSSMAN, 59, of Loch Sheldrake, New York, and KIMBERLY SPINA, 54, of Woodbourne, New York, are each charged with one count of conspiring to commit health care fraud and one count of health care fraud, each of which carries a maximum sentence of 10 years in prison.   In addition, JAMES SPINA and JEFFREY SPINA are charged with one count of obstructing and impeding a federal audit, with carries a maximum sentence of five years in prison.

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

Manhattan U.S. Attorney Geoffrey S. Berman praised the outstanding investigative work of the FBI, HHS-OIG, the New York State Office of the State Comptroller, and the Orange County Sheriff’s Office.  He also thanked the Orange County District Attorney’s Office, the Sullivan County District Attorney’s Office, the National Insurance Crime Bureau, Liberty Mutual Insurance, and USAA Insurance for their assistance.

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Kathryn Martin and Emily Deininger 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 Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney, Assistant Director in Charge, Federal Bureau of Investigation (the “FBI”), David L. Hunt, Inspector General of the Federal Communications Commission (the “FCC-OIG”), and Thomas P. Zugibe, the District Attorney for Rockland County, announced today the return of an Indictment charging SIMON GOLDBRENER, a/k/a “Simon Goldbrenner,” a/k/a “Shimon Goldbrenner,” PERETZ KLEIN, SUSAN KLEIN, a/k/a “Suri Klein,” BEN KLEIN, a/k/a “Benzion Klein,” a/k/a “Benzi Klein,” MOSHE SCHWARTZ, SHOLEM STEINBERG, and ARON MELBER, a/k/a “Aharon Melber,” with conspiracy to commit wire fraud and wire fraud charges in connection with the federal program known as “E‑rate,” which provides subsidies for affordable telecommunications equipment and related services to qualified schools This case has been assigned to United States District Judge Kenneth M. Karas.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, for years, these defendants stole money from the E‑rate program, billing the E-rate program for equipment and services which were not in fact provided. The defendants allegedly fraudulently obtained millions of dollars in E rate funds to which they were not entitled, and which should lawfully have been spent to help provide access to technology to educate underprivileged children. This indictment is important not only because fraudsters should be held to account for their crimes, but also because the next generation of students should have access to telecommunication services, internet access, and related equipment, irrespective of their means and in spite of the fact that people like the defendants seek to line their own pockets at the expense of underprivileged children.”

FBI Assistant Director in Charge William F. Sweeney said:  “Schools have to fight for every dollar these days to supply their students with the high-tech, expensive equipment and technology they need in this day and age to succeed in life. The suspects in this investigation allegedly used funding from a program designed to give underprivileged schools internet access to pad their own bank accounts.  To add insult to injury, school officials, who see the day-to-day struggle to even find money for pencils and paper, were allegedly involved in the scheme.  The FBI and our law enforcement partners will hold these criminals accountable, and stop others from defrauding not only the government and tax payers, but students who depend on these programs to get a better education.”

Rockland County District Attorney Thomas P. Zugibe said:  “These individuals concocted a scheme that not only defrauded taxpayers, but also deprived local students of access to affordable technology equipment and Internet service. In short, the defendants are accused of shamelessly stealing millions of federal dollars earmarked to broaden young minds. The Rockland County District Attorney's Office will continue to work collaboratively with the U.S. Attorney and FBI to root out fraud and abuse - especially misconduct that impacts children. Offenders must be dealt with swiftly to prevent further fraud of this magnitude from occurring.”

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

The E‑rate distributes funds to schools and libraries mostly serving economically disadvantaged children, so that those institutions can afford needed telecommunication services, internet access, and related equipment. Over 30,000 applications from schools and libraries seeking funds to serve economically disadvantaged children were received each year during the relevant time period; every year, requests for E‑rate funds have exceeded funds available. In order to obtain those funds, educational institutions certify that they are purchasing equipment and services from a private vendor; if approved, the program defrays the cost by up to 90%. The educational institution is supposed to enter into an open bidding process in order to select a vendor, and the educational institution and vendor submit a series of certifications that they comply with a number of requirements of the E‑rate program. A school applying for E‑rate funds may employ a consultant, but that consultant must be independent of the vendors competing to sell E‑rate funded equipment and services.

PERETZ KLEIN, SUSAN KLEIN, BEN KLEIN, and SHOLEM STEINBERG (collectively, the “Vendor Defendants”) held themselves out as vendors to schools participating in the E‑rate program. Corporations controlled by the Vendor Defendants requested over $35 million in E‑rate funds, and received over $14 million in E‑rate funds, from in or about 2010 to in or about 2016.

SIMON GOLDBRENER and MOSHE SCHWARTZ (collectively, the “Consultant Defendants”) held themselves out as consultants who assisted educational institutions that desired to participate in the E rate program. The Consultant Defendants, and individuals acting at their direction, completed and filed E‑rate documents that resulted in the payment of millions of dollars in E‑rate funds to the Vendor Defendants.

ARON MELBER is an official at a private religious school in Rockland County, New York. MELBER and his school have participated in the E‑rate program with certain of the Vendor Defendants and Consultant Defendants, and filed certifications purporting to have obtained authorized E‑rate funded equipment and services from Vendor Defendants selected through a fair and open bidding process. From in or about 2009 through in or about 2015, MELBER’s school received over one million dollars in E‑rate funds.

From at least 2009 up to and including 2016, certain private religious schools, including MELBER’s school, sought and received E‑rate funds for the purpose of paying the Vendor Defendants for equipment and services that the schools, the Vendor Defendants, and the Consultant Defendants falsely claimed the Vendor Defendants had provided to the schools.

However, the schools never received millions of dollars’ worth of these items and services. In other cases, the schools, Vendor Defendants, and Consultant Defendants requested hundreds of thousands of dollars of sophisticated technology that served no real purpose for the student population. For example, from 2009 through 2015, one day care center that served toddlers from the ages of 2 through 4 requested over $700,000—nearly $500,000 of which was ultimately funded—for equipment and services—including video conferencing and distance learning, a “media master system,” sophisticated telecommunications systems supporting at least 23 lines, and high-speed internet—from companies controlled by PERETZ KLEIN and SUSAN KLEIN, using the Consultant Defendants as their consultants. In still other instances the schools received equipment and services that fulfilled the functions for which the schools had requested E‑rate funds (such as providing the school with internet access), but the schools, Vendor Defendants, and Consultant Defendants materially overbilled the E‑rate program for the items provided, in order to enrich themselves at the expense of the underprivileged children the program was designed to serve.

As alleged, the defendants also perverted the fair and open bidding process required by the E‑rate program. The Consultant Defendants—who held themselves out in filings as independent consultants working for the schools, but, in truth, worked with and for the Vendor Defendants—and the Vendor Defendants presented the schools with forms to sign or certify, awarding E‑rate funded contracts to the Vendor Defendants. As a result of false and misleading E‑rate filings, the Vendor Defendants received millions of dollars in E‑rate funds for equipment and services that the Vendor Defendants did not in fact provide and which the schools did not use, and the Consultant Defendants accepted payments totaling hundreds of thousands of dollars from the Vendor Defendants, despite falsely presenting themselves as independent of the Vendor Defendants.

In return for their participation in the scheme to defraud the E‑rate program, certain schools and school officials received a variety of improper benefits from the Vendor Defendants, including: a percentage of the funds fraudulently obtained from E‑rate for equipment and services that were not in fact provided to the schools; free items paid for with E‑rate funds but not authorized by the program, such as cellphones for school employees’ personal use and alarm systems and security equipment (which the E‑rate program does not authorize) installed at the schools; and free services for which the E‑rate program authorizes partial reimbursement (such as internet access) but for which the Schools did not—contrary to their statements in filings—make any payment at all.

The defendants and the counts with which they are charged in the Superseding Indictment are set forth in the attached list.

* * *

Mr. Berman thanked the FBI, the FCC-OIG, and the Rockland County District Attorney’s Office for their outstanding work on the investigation. This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Michael D. Maimin, Hagan Scotten, and Vladislav Vainberg 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.

18-296                                                                                                                                                                                                             ###

United States v. Simon Goldbrener, et al.

Defendant

Age

Residence

Charges and Maximum Penalties

Simon Goldbrener

55

Monsey, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (three counts): 20 years in prison per count

Peretz Klein

64

Spring Valley, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Susan Klein

57

Spring Valley, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Ben Klein

39

Monsey, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Moshe Schwartz

45

Monroe, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

Sholem Steinberg

39

Monsey, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (two counts): 20 years in prison per count

Aron Melber

42

Monsey, New York

Conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 (one count): 20 years in prison

Wire fraud, in violation of 18 U.S.C. §§ 1343 and 2 (one count): 20 years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOEL BRANFORD, a/k/a “Joel Bransord,” a/k/a “Jose Cabeza,” was sentenced on August 27, 2018, by U.S. District Judge Gregory H. Woods to 168 months in prison for conspiring to import cocaine into the United States.  BRANFORD pled guilty before Judge Woods on June 22, 2017.

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

In January 2010, BRANFORD, who had previously fled the United States to Panama, conspired to import more than 100 kilograms of cocaine via a container ship to be sent to the Port of New York-New Jersey.  In January 2010, law enforcement officers intercepted the container and found inside more than approximately 100 kilograms of cocaine.  On January 29, 2010, law enforcement authorities intercepted, pursuant to a Court-authorized wiretap, a telephone conversation during which BRANFORD threatened a co-conspirator, whom BRANFORD believed had stolen the shipment that was seized by law enforcement.  Throughout 2010, Panamanian law enforcement intercepted calls by BRANFORD, during which BRANFORD regularly discussed making large shipments of narcotics in containers. 

BRANFORD also used weapons in the course of his narcotics trafficking business.  In July 2010, Panamanian law enforcement searched BRANFORD’s residence and vehicle and found two firearms, four magazines, and 223 bullets, along with 21 cellphones.  Previously, in 2003, law enforcement officers searched BRANFORD’s home in Virginia, where he lived at the time, and recovered two firearms, including a semi-automatic submachine gun, and two bullet-proof vests, as well as cocaine.

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In addition to his prison sentence, BRANFORD, 46, was sentenced to five years of supervised release. 

Mr. Berman praised the investigative work of the Drug Enforcement Administration, including the High Intensity Drug Trafficking Areas Program and the Special Operations Division, as well as the Department of Homeland Security – Homeland Security Investigations, and thanked the Customs and Border Protection, the Port Authority of New York/New Jersey, and the Waterfront Commission of New York/New Jersey for their assistance in this investigation.  Mr. Berman also thanked DEA’s Panama City, San Jose (Costa Rica), and Belgium Country Offices, the Department of Justice’s Office of International Affairs, and the Panamanian National Police for their cooperation and assistance.

This matter is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys David Abramowicz, Amanda Houle, and Matthew Podolsky are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that MARCOS ELIAS, a Brazilian citizen and resident, was extradited from Switzerland.  In June 2018, ELIAS traveled to Switzerland and was arrested on the basis of a provisional arrest warrant for participating in a scheme to fraudulently obtain more than $750,000 at financial institutions headquartered in Manhattan using false representations and the stolen identities of Brazilian account holders at those institutions.  ELIAS arrived in the Southern District of New York this afternoon, and will be presented today in Manhattan federal court before U.S. Magistrate Judge Barbara C. Moses.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Brazilian Marcos Elias stole over $750,000 from a Manhattan financial institution through a sophisticated wire fraud scheme involving a front company in Panama and a bank account in Luxembourg.  Thanks to the extraordinary work of the FBI, today’s extradition shows that defendants who target American financial institutions from abroad will be subject to the long arm of American justice.”

FBI Assistant Director William F. Sweeney Jr. said:  “People all over the world fear having their identities stolen by criminals who use the information to break the law.  Pretending to be an employee of the account holder, the suspect allegedly stole hundreds of thousands of dollars that didn’t belong to him.  He’s now been brought back to the United States to face justice, and return the money he stole.”

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

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

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

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

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ELIAS, 47, of São Paulo, Brazil, is charged with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 30 years; one count of wire fraud, which carries a maximum sentence of 30 years; one count of receipt of stolen property, which carries a maximum sentence of 10 years; and two counts of aggravated identity theft, which each carry a mandatory consecutive minimum sentence of two years.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, James J. Hunt, the Special Agent-in-Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced additional charges in a Superseding Indictment against a member of the “MacBallas” gang based in the Andrew Jackson and Melrose Houses in the Bronx.  In the Superseding Indictment, which was returned today, NATHANIEL FLUDD, a/k/a “Juntao,” is charged with the September 15, 2011, murder of Jose Webster, a/k/a “Spillz.”

FLUDD and a co-defendant were previously charged with the 2011 murder of Daniel Delgado in an Indictment unsealed on June 27, 2018.  That Indictment also charges 20 members and associates of the MacBallas with racketeering, narcotics trafficking, robbery, and firearms offenses. In addition to the new charges related to the Webster murder, the Superseding Indictment re-alleges the charges that had previously been brought in the Indictment against FLUDD and 19 others. The case is assigned to U.S. District Judge Denise L. Cote.  FLUDD and the 19 other defendants will be arraigned on the new charges later in the week.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, Jose Webster was murdered in 2011 by Nathaniel Fludd and other members of the violent MacBallas gang. We thank our law enforcement partners for their extraordinary efforts investigating this murder. With their help, we will continue our efforts to eradicate this senseless gang violence from our communities.”

DEA Special Agent-in-Charge James J. Hunt said:  “The comprehensive investigations into gang-related crime have an uncanny knack for uncovering and linking additional crimes to defendants. In this case, we identified not just one, but two murders committed by one of the gang members, Nathaniel Fludd.  I commend the agents, detectives, and prosecutors for their diligent work on this investigation.”

Mr. Berman praised the outstanding investigative work of the NYPD’s Bronx Violent Crimes Squad and the New York Field Division of the DEA.

The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Christopher Clore, Jordan Estes, and Maurene Comey are in charge of the prosecution.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the guilty plea of VICTOR CASADO to his role in a scheme to smuggle contraband into the Metropolitan Correctional Center (“MCC”), a Manhattan detention facility that houses federal inmates, in exchange for cash bribes.  CASADO, a former federal correctional officer, pled guilty to one count of conspiracy to commit bribery and to introduce contraband into prison before U.S. District Judge Richard J. Sullivan.

U.S. Attorney Geoffrey S. Berman said:  “As a correctional officer, Victor Casado’s duty was to ensure the security of the Metropolitan Correctional Center and the safety of inmates in his care.  Instead of honoring that duty, he betrayed it, taking bribes to smuggle contraband into a jail that houses federal inmates.  This Office will continue to stop the corruption of our criminal justice system by those entrusted with supervising incarcerated individuals and keeping them safe.”

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

CASADO was employed as a correctional officer at the MCC from 2012 until his resignation in July 2018.

On multiple occasions in 2016 and 2017, CASADO smuggled cellphones, alcohol, over-the-counter medications, and food into the MCC in exchange for bribe payments from inmates.  These bribes were funneled to CASADO by non-incarcerated relatives or associates of the inmates, either in cash or by wire transfer.  For example, on multiple occasions, CASADO received bribes from an inmate (“Inmate-1”), transferred by one of Inmate-1’s attorneys, totaling more than $25,000, in exchange for smuggling alcohol and cellphones, among other contraband, into the MCC for Inmate-1.  Additionally, CASADO also requested and received thousands of dollars in payments from another inmate (“Inmate-5”), which were delivered to CASADO by Inmate-5’s relatives and a paralegal who represented him.  Inmate-5 paid CASADO at CASADO’s insistence, ostensibly to fund travel by CASADO to the Dominican Republic.

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CASADO, 35, of the Bronx, New York, pled guilty to one count of conspiracy to commit bribery and to introduce contraband into prison.  The charge carries a maximum term of five years in prison.  CASADO is scheduled to be sentenced by Judge Sullivan on January 11, 2019.  The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the Department of Justice, Office of Inspector General.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Jessica Lonergan and Nicolas Roos are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Guido Modano, Special Agent-in-Charge of the New York Field Office of the Department of Justice Office of the Inspector General (“DOJ OIG”) announced today the unsealing of a criminal Complaint in Manhattan federal court charging federal correctional officer DARIO QUIRUMBAY with taking a bribe in exchange for smuggling contraband into the Metropolitan Correctional Center (“MCC”), a Manhattan detention facility that houses federal inmates. QUIRUMBAY was arrested this morning and will be presented today before Magistrate Judge Robert W. Lehrburger.

U.S. Attorney Geoffrey S. Berman said: “As alleged, Dario Quirumbay abused the trust placed in him by the Department of Justice and used his position to enrich himself by smuggling prohibited contraband inside a correctional facility in exchange for cash. Now he finds himself on the other side of the law.”

DOJ OIG Special Agent-in-Charge Guido Modano said:  “Corruption has no place in our federal correctional system and will not be tolerated.  The OIG is committed to investigating allegations of corrupt employees within the Federal Bureau of Prisons and the Department of Justice.”               

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

QUIRUMBAY has been employed as a correctional officer at the MCC since 2016.

QUIRUMBAY, in exchange for approximately $1,000, agreed to smuggle two cellphones into the MCC and also provided an inmate with alcohol.  QUIRUMBAY met with a relative of one of the inmates in his custody to retrieve his cash bribe and two Apple iPhones, which QUIRUMBAY then delivered to an inmate inside the MCC. 

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QUIRUMBAY, 29, of Jersey City, New Jersey, has been charged in the Complaint with one count of conspiracy to commit bribery and to provide contraband in a prison, which carries a maximum prison term of five years; one count of bribery, which carries a maximum prison term of 15 years; one count of providing contraband in a prison, which carries a maximum prison term of one year; one count of conspiracy to commit honest services wire fraud, which carries a maximum prison term of 20 years.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the DOJ Office of the Inspector General in this investigation.

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Brian A. Benczkowski, Assistant Attorney General for the Criminal Division, announced that DAVID WALDMAN pled guilty today to conducting an extensive cyberstalking and threats campaign that targeted a woman he dated for several months in 2014.  WALDMAN pled guilty before U.S. Magistrate Court Judge Robert W. Lehrburger.

Beginning in April 2014 and shortly after WALDMAN and the victim ended their relationship, WALDMAN began an extensive cyberstalking campaign that continued intermittently until the date of WALDMAN’s arrest.  Over the course of almost four years, WALDMAN sent the victim hundreds of text messages, voicemail messages, and email messages, and made voluminous posts on a variety of online platforms, in which he claimed, among other assertions, that she had been diagnosed with bipolar and narcissistic personality disorder, used drugs, and fabricated claims that she had been a victim of child sexual abuse.  In his online communications, WALDMAN also repeatedly threatened to show up at the victim’s apartment and office and threatened to injure, torture, and sexually assault her.  WALDMAN also sent email messages to the victim’s employers, accusing her of being a “habitual drug user,” and claiming that he would sue her for defamation, theft, illegal trespass, violating HIPAA, and engaging in other “illegal behaviors.” 

Over the course of the alleged cyberstalking campaign, the victim obtained multiple state court orders of protection against WALDMAN.

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WALDMAN, 49, of Inwood, New York, pled guilty to one count of cyberstalking, which carries a maximum sentence of five years.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

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

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Nicholas Chiuchiolo and Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section are in charge of the prosecution.

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

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 a federal grand jury in White Plains, New York returned an Indictment yesterday charging GUY PARISI, a Westchester attorney, with conspiracy, mail fraud and false statements.  These charges arise from PARISI’s attempt to embezzle funds from a decedent’s estate for which he served as a court-appointed administrator.  PARISI was arrested yesterday morning and was presented before the United States District Judge Paul E. Davison

U.S. Attorney Geoffrey S. Berman said:  “Guy Parisi, a Westchester attorney, allegedly embezzled funds from an estate which he was a court-appointed fiduciary. Parisi allegedly shirked his responsibilities to the estate in order to serve his own greed. Now he faces justice in a criminal court.”

Inspector-in-Charge Peter R. Rendina said:  “Mr. Parisi allegedly took advantage of the trust given to him by his client, when instead of doing the right thing, he created a company to greedily enrich himself of fees he would not lawfully be entitled to receive. Postal Inspectors and their law enforcement partners uphold the truth and those who do not must face justice.”

Comptroller Thomas P. DiNapoli said:  “Instead of protecting the interests of the estate, Mr. Parisi abused the trust placed in him by allegedly attempting to pocket millions of dollars meant for the beneficiaries by using a fictitious company.  Thanks to my ongoing partnerships with United States Attorney Geoffrey Berman and the United States Postal Inspection Service, he will now be held accountable for his actions.  My office will continue to work with law enforcement across the State to protect unclaimed funds in our custody.”

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

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

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

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

PARISI was interviewed by a Postal Inspector in or about November 2017.  He falsely told the Postal Inspector that he had worked with Stokes in the past and that Stokes’s fee was five percent of the value of the assets held by the Comptroller.

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PARISI, 71, of Rye, New York, is charged with one count of conspiracy, which carries a maximum sentence of five years in prison; one count of mail fraud, which carries a maximum sentence of 20 years in prison; and one count of making a false statement, which carries a maximum sentence of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as 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.

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

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

Robert Khuzami, Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James D. Robnett, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the guilty plea of MICHAEL COHEN to charges of tax evasion, making false statements to a federally-insured bank, and campaign finance violations.  The plea was entered followed the filing of an eight-count criminal information, which alleged that COHEN concealed more than $4 million in personal income from the IRS, made false statements to a federally-insured financial institution in connection with a $500,000 home equity loan, and, in 2016, caused $280,000 in payments to be made to silence two women who otherwise planned to speak publicly about their alleged affairs with a presidential candidate, thereby intending to influence the 2016 presidential election.  COHEN pled guilty today before U.S. District Judge William H. Pauley III.

Attorney for the United States Robert Khuzami said:  “Michael Cohen is a lawyer who, rather than setting an example of respect for the law, instead chose to break the law, repeatedly over many years and in a variety of ways.  His day of reckoning serves as a reminder that we are a nation of laws, with one set of rules that applies equally to everyone.”   

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “This investigation uncovered crimes of fraud, deception and evasion, conducted through a string of financial transactions that were carefully constructed and concealed to protect a variety of interests.  But as we all know, the truth can only remain hidden for so long before the FBI brings it to light.  We are all expected to follow the rule of law, and the public expects us - the FBI - to enforce the law equally.  Today, Mr. Cohen has been reminded of this important lesson, as he acknowledged with his guilty plea.”

IRS-CI Special Agent-in-Charge James D. Robnett said:  “Today’s guilty plea exemplifies IRS Special Agents' rigorous pursuit of tax evasion and sends the clear message that the tax laws apply to everybody. Mr. Cohen’s greed to hide his income from the IRS cheats all the honest taxpayers, and we should not expect law abiding citizens to foot the bill for those who circumvent the system to evade paying their fair share.”

According to the allegations in the Information unsealed today as well as statements made in Manhattan federal court:

From 2007 through January 2017, COHEN was an attorney and employee of a Manhattan-based real estate company (the “Company”).  COHEN held the title of “Executive Vice President” and “Special Counsel” to the owner of the Company (“Individual-1”).  In January 2017, COHEN left the Company and began holding himself out as the “personal attorney” to Individual-1, who by that time had become the President of the United States.

In addition to working for and earning income from the Organization, at all times relevant to this Information, COHEN owned taxi medallions in New York City and Chicago worth millions of dollars.  COHEN owned these taxi medallions as investments and leased the medallions to operators who paid COHEN a portion of the operating income.

The Tax Evasion Scheme

In late 2013, COHEN retained an accountant (“Accountant-1”) for the purpose of handling COHEN’s personal and entity tax returns.  After being retained, Accountant-1 filed amended 2011 and 2012 Form 1040 tax returns with the Internal Revenue Service (“IRS”).  For tax years 2013 through 2016, Accountant-1 prepared individual returns for COHEN and returns for COHEN’s medallion and real estate entities.  To confirm he had reviewed and approved these returns, both COHEN and his wife signed a Form 8879 for tax years 2013 through 2016, and filed manually for tax year 2012.  Between 2012 and the end of 2016, COHEN earned more than $2.4 million in income from a series of personal loans made by COHEN to a taxi operator to whom COHEN leased certain of his Chicago taxi medallions (“Taxi Operator-1”), none of which he disclosed to the IRS. 

As a further part of the scheme to evade paying income taxes, COHEN also concealed more than $1.3 million in income he received from another taxi operator to whom COHEN leased certain of his New York medallions (“Taxi Operator-2”).  This income took two forms.  First, COHEN did not report the substantial majority of a bonus payment of at least $870,000, which was made by Taxi Operator-2 in 2012 to induce COHEN to allow Taxi Operator-2 to operate certain of COHEN’s medallions.  Second, between 2012 and 2016, COHEN concealed nearly $1 million in taxable income he received from Taxi Operator-2’s operation of certain of COHEN’s taxi medallions.

To ensure the concealment of this additional operator income, COHEN arranged to receive a portion of the medallion income personally, as opposed to having the income paid to COHEN’s medallion entities.  Paying the medallion entities would have alerted Accountant-1, who prepared the returns for those entities, to the existence of the income such that it would have been included on COHEN’s tax returns.  

As a further part of his scheme to evade taxes, COHEN also hid the following additional sources of income from Accountant-1 and the IRS:

• A $100,000 payment received, in 2014, for brokering the sale of a piece of property in a private aviation community in Ocala, Florida.
• Approximately $30,000 in profit made, in 2014, for brokering the sale of a Birkin Bag, a highly coveted French handbag that retails for between $11,900 to $300,000, depending on the type of leather or animal skin used. 
• More than $200,000 in consulting income earned in 2016 from an assisted living company purportedly for COHEN’s “consulting” on real estate and other projects.

In total, COHEN failed to report more than $4 million in income, resulting in the avoidance of taxes of more than $1.4 million due to the IRS.

False Statements to a Bank

In 2010, COHEN, through companies he controlled, executed a $6.4 million promissory note with a bank (“Bank-1”), collateralized by COHEN’s taxi medallions and personally guaranteed by COHEN.  A year later, in 2011, COHEN personally obtained a $6 million line of credit from Bank-1 (the “Line of Credit”), also collateralized by his taxi medallions.  By February 2013, COHEN had increased the Line of Credit from $6 million to $14 million, thereby increasing COHEN’s personal medallion liabilities at Bank-1 to more than $20 million. 

In November 2014, COHEN refinanced his medallion debt at Bank-1 with another bank (“Bank-2”), who shared the debt with a New York-based credit union (the “Credit Union”).  The transaction was structured as a package of individual loans to the entities that owned COHEN’s New York medallions.  Following the loans’ closing, COHEN’s medallion debt at Bank-1 was paid off with funds from Bank-2 and the Credit Union, and the Line of Credit with Bank-1 was closed.

In 2013, in connection with a successful application for a mortgage from another Bank (“Bank-3”) for his Park Avenue condominium (the “2013 Application”), COHEN disclosed only the $6.4 million medallion loan he had with Bank-1 at the time.  As noted above, COHEN also had a larger, $14 million Line of Credit with Bank-1 secured by his medallions, which COHEN did not disclose in the 2013 Application.  

In February 2015, COHEN, in an attempt to secure financing from Bank-3 to purchase a summer home for approximately $8.5 million, again concealed the $14 million Line of Credit.  Specifically, in connection with this proposed transaction, Bank-3 obtained a 2014 personal financial statement COHEN had provided to Bank-2 while refinancing his medallion debt.  Bank-3 questioned COHEN about the $14 million Line of Credit reflected on that personal financial statement, because COHEN had omitted that debt from the 2013 Application to Bank-3.  COHEN misled Bank-3, stating, in writing, that the $14 million Line of Credit was undrawn and that he would close it.  In truth and in fact, COHEN had effectively overdrawn the Line of Credit, having swapped it out for a fully drawn, larger loan shared by Bank-2 and the Credit Union upon refinancing his medallion debt.  When Bank-3 informed COHEN that it would only provide financing if COHEN closed the Line of Credit, COHEN lied again, misleadingly stating in an email: “The medallion line was closed in the middle of November 2014.” 

In December 2015, COHEN contacted Bank-3 to apply for a home equity line of credit (“HELOC”).  In so doing, COHEN again significantly understated his medallion debt.  Specifically, in the HELOC application, COHEN, together with his wife, represented a positive net worth of more than $40 million, again omitting the $14 million in medallion debt with Bank-2 and the Credit Union.  Because COHEN had previously confirmed in writing to Bank-3 that the $14 million Line of Credit had been closed, Bank-3 had no reason to question COHEN about the omission of this liability on the HELOC application.  In addition, in seeking the HELOC, COHEN substantially and materially understated his monthly expenses to Bank-3 by omitting at least $70,000 in monthly interest payments due to Bank-2 on the true amount of his medallion debt. 

In April 2016, Bank-3 approved COHEN for a $500,000 HELOC.  By fraudulently concealing truthful information about his financial condition, COHEN obtained a HELOC that Bank-3 would otherwise not have approved. 

Campaign Finance Violations

The Federal Election Campaign Act of 1971, as amended, Title 52, United States Code, Section 30101, et seq., (the “Election Act”), regulates the influence of money on politics.  At all relevant times, the Election Act set certain limitations and prohibitions, among them: (a) individual contributions to any presidential candidate, including expenditures coordinated with a candidate or his political committee, were limited to $2,700 per election, and presidential candidates and their committees were prohibited from accepting contributions from individuals in excess of this limit; and (b) Corporations were prohibited from making contributions directly to presidential candidates, including expenditures coordinated with candidates or their committees, and candidates were prohibited from accepting corporate contributions.

On June 16, 2015, Individual-1 began his presidential campaign.  While COHEN continued to work at the Company and did not have a formal title with the campaign, he had a campaign email address and, at various times, advised the campaign, including on matters of interest to the press, and made televised and media appearances on behalf of the campaign. 

In August 2015, the Chairman and Chief Executive of Corporation-1, a media company that  owns, among other things, a popular tabloid magazine  (“Chairman-1” and “Magazine-1,” respectively”), in coordination with COHEN and one or more members of the campaign, offered to help deal with negative stories about Individual-1’s relationships with women by, among other things, assisting the campaign in identifying such stories so they could be purchased and their publication avoided.  Chairman-1 agreed to keep COHEN apprised of any such negative stories.

Consistent with the agreement described above, Corporation-1 advised COHEN of negative stories during the course of the campaign, and COHEN, with the assistance of Corporation-1, was able to arrange for the purchase of two stories so as to suppress them and prevent them from influencing the election.

First, in June 2016, a model and actress (“Woman-1”) began attempting to sell her story of her alleged extramarital affair with Individual-1 that had taken place in 2006 and 2007, knowing the story would be of considerable value because of the election.  Woman-1 retained an attorney (“Attorney-1”), who in turn contacted the editor-in-chief of Magazine-1 (“Editor-1”), and offered to sell Woman-1’s story to Magazine-1.  Chairman-1 and Editor-1 informed COHEN of the story. At COHEN’s urging and subject to COHEN’s promise that Corporation-1 would be reimbursed, Editor-1 ultimately began negotiating for the purchase of the story.

On August 5, 2016, Corporation-1 entered into an agreement with Woman-1 to acquire her “limited life rights” to the story of her relationship with “any then-married man,” in exchange for $150,000 and a commitment to feature her on two magazine covers and publish more than 100 magazine articles authored by her.  Despite the cover and article features to the agreement, its principal purpose, as understood by those involved, including COHEN, was to suppress Woman-1’s story so as to prevent it from influencing the election.       

Between late August 2016 and September 2016, COHEN agreed with Chairman-1 to assign the rights to the non-disclosure portion of Corporation-1’s agreement with Woman-1 to COHEN for $125,000.  COHEN incorporated a shell entity called “Resolution Consultants LLC” for use in the transaction.  Both Chairman-1 and COHEN ultimately signed the agreement, and a consultant for Corporation-1, using his own shell entity, provided COHEN with an invoice for the payment of $125,000.  However, in early October 2016, after the assignment agreement was signed but before COHEN had paid the $125,000, Chairman-1 contacted COHEN and told him, in substance, that the deal was off and that COHEN should tear up the assignment agreement.   

Second, on October 8, 2016, an agent for an adult film actress (“Woman-2”) informed Editor-1 that Woman-2 was willing to make public statements and confirm on the record her alleged past affair with Individual-1.  Chairman-1 and Editor-1 then contacted COHEN and put him in touch with Attorney-1, who was also representing Woman-2.  Over the course of the next few days, COHEN negotiated a $130,000 agreement with Attorney-1 to himself purchase Woman-2’s silence, and received a signed confidential settlement agreement and a separate side letter agreement from Attorney-1. 

COHEN did not immediately execute the agreement, nor did he pay Woman-2.  On the evening of October 25, 2016, with no deal with Woman-2 finalized, Attorney-1 told Editor-1 that Woman-2 was close to completing a deal with another outlet to make her story public.  Editor-1, in turn, texted COHEN that “[w]e have to coordinate something on the matter [Attorney-1 is] calling you about or it could look awfully bad for everyone.”  Chairman-1 and Editor-1 then called COHEN through an encrypted telephone application.  COHEN agreed to make the payment, and then called Attorney-1 to finalize the deal.

The next day, on October 26, 2016, COHEN emailed an incorporating service to obtain the corporate formation documents for another shell corporation, Essential Consultants LLC, which COHEN had incorporated a few days prior.  Later that afternoon, COHEN drew down $131,000 from the fraudulently obtained HELOC and requested that it be deposited into a bank account COHEN had just opened in the name of Essential Consultants.  The next morning, on October 27, 2016, COHEN went to Bank-3 and wired approximately $130,000 from Essential Consultants to Attorney-1.  On the bank form to complete the wire, COHEN falsely indicated that the “purpose of wire being sent” was “retainer.”  On November 1, 2016, COHEN received from Attorney-1 copies of the final, signed confidential settlement agreement and side letter agreement.

COHEN caused and made the payments described herein in order to influence the 2016 presidential election.  In so doing, he coordinated with one or more members of the campaign, including through meetings and phone calls, about the fact, nature, and timing of the payments.  As a result of the payments solicited and made by COHEN, neither Woman-1 nor Woman-2 spoke to the press prior to the election.

In January 2017, COHEN in seeking reimbursement for election-related expenses, presented executives of the Company with a copy of a bank statement from the Essential Consultants bank account, which reflected the $130,000 payment COHEN had made to the bank account of Attorney-1 in order to keep Woman-2 silent in advance of the election, plus a $35 wire fee, adding, in handwriting, an additional “$50,000.”  The $50,000 represented a claimed payment for “tech services,” which in fact related to work COHEN had solicited from a technology company during and in connection with the campaign.  COHEN added these amounts to a sum of $180,035.  After receiving this document, executives of the Company “grossed up” for tax purposes COHEN’s requested reimbursement of $180,000 to $360,000, and then added a bonus of $60,000 so that COHEN would be paid $420,000 in total.  Executives of the Company also determined that the $420,000 would be paid to COHEN in monthly amounts of $35,000 over the course of 12 months, and that COHEN should send invoices for these payments.        

On February 14, 2017, COHEN sent an executive of the Company (“Executive-1”) the first of his monthly invoices, requesting “[p]ursuant to [a] retainer agreement, . . . payment for services rendered for the months of January and February, 2017.”  The invoice listed $35,000 for each of those two months.  Executive-1 forwarded the invoice to another executive of the Company (“Executive-2”) the same day by email, and it was approved.  Executive-1 forwarded that email to another employee at the Company, stating: “Please pay from the Trust. Post to legal expenses. Put ‘retainer for the months of January and February 2017’ in the description.”

Throughout 2017, COHEN sent to one or more representatives of the Company monthly invoices, which stated, “Pursuant to the retainer agreement, kindly remit payment for services rendered for” the relevant month in 2017, and sought $35,000 per month.  The Company accounted for these payments as legal expenses.  In truth and in fact, there was no such retainer agreement, and the monthly invoices COHEN submitted were not in connection with any legal services he had provided in 2017.

During 2017, pursuant to the invoices described above, COHEN received monthly $35,000 reimbursement checks, totaling $420,000.   

*                      *                      *

COHEN, 51, of NEW YORK, NEW YORK, pleaded guilty to five counts of willful tax evasion; one count of making false statements to a bank; one count of causing an unlawful campaign contribution; and one count of making an excessive campaign contribution.

COHEN’S sentencing is scheduled for December 12 at 11 a.m.

A chart identifying the charges and the maximum penalties applicable to COHEN is below.

Count

Charge

Maximum Penalty

1-5

Tax Evasion

5 years in prison

6

Making false statements to a federally insured bank

30 years in prison

7

Causing an unlawful corporate contribution

5 years in prison

8

Making an excessive campaign contribution

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 sentencings of the defendant will be determined by the judge.

Mr. Khuzami praised the work of the FBI, the IRS, and the Special Agents of the U.S. Attorney’s Office. 

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Andrea M. Griswold, Rachel Maimin, Thomas McKay, and Nicolas Roos are in charge of the prosecution.  

Geoffrey S.  Berman, the United States Attorney for the Southern District of New York, announced that physician EWALD J. ANTOINE was sentenced today by U.S. District Judge Lorna G. Schofield to one year and one day in prison for his participation in a $30 million scheme to defraud Medicare and the New York State Medicaid Program.  ANTOINE falsely posed as the owner of two medical clinics, which were actually owned by a corrupt businessman, and falsely claimed that he had examined and treated hundreds of patients whom he had not in fact seen.  ANTOINE pled guilty on January 11, 2018, to health care fraud and conspiracy to commit health care fraud, mail fraud, and wire fraud.   

U.S. Attorney Geoffrey S. Berman said:  “The Medicare and Medicaid programs are intended to provide essential medical services to the elderly and the needy, not to enrich corrupt doctors and other fraudsters.  The real victims in this case are U.S. taxpayers and needy patients with legitimate medical needs.  Today’s sentence sends a strong message that those who cheat Medicare and Medicaid, including physicians who abuse their licenses and professional oaths, will be held accountable.”

According to the Indictment and other documents filed in federal court, as well as statements made during ANTOINE’s plea proceeding and sentencing:

Between 2007 and 2013, Aleksandr Burman owned and operated six medical clinics in Brooklyn (the “Clinics”) that fraudulently billed Medicare and Medicaid approximately $30 million for medical services and supplies that were not provided, were provided without regard to medical necessity, or were otherwise fraudulently billed.  Under New York State law, medical clinics must be owned and operated by a medical professional.  To circumvent this requirement, Burman, who was not a medical professional, hired doctors to pose as the nominal owners of each of the Clinics.  ANTOINE was one of those doctors, agreeing to sign a variety of fraudulent documents that falsely represented to banks, Medicare, Medicaid, and others that ANTOINE was the sole owner of Sunlight Medical and Psychiatric Services, P.C., and Coney Island Medical Services, P.C., two of the six Clinics.  ANTOINE and his co-conspirators also helped prepare false medical records to support fraudulent reimbursement claims submitted to Medicare and Medicaid.  ANTOINE signed medical charts falsely stating that he had examined patients, and wrote prescriptions and referrals for medically unnecessary and/or non-existent tests and supplies.

*          *          *

In addition to the prison term, ANTOINE, 67, of Valley Stream, New York, was sentenced to three years of supervised release.  Judge Schofield also ordered ANTOINE to pay restitution of $1,825,544 and to forfeit $269,412 in ill-gotten gains.

ANTOINE is the eighth defendant, and the second physician, who has been sentenced after pleading guilty in this case and a related case. The other defendants include:  Aleksandr Burman, the leader of the scheme, who was sentenced in a related case on May 8, 2017, to 10 years in prison; Marina Burman, the former wife of Aleksandr Burman and the owner of a related medical supply company, sentenced on May 17, 2018, to three years in prison; Mustak Y. Vaid, a physician sentenced on August 1, 2018, to 18 months in prison; Asher Oleg Kataev, a Burman business partner, sentenced on May 31, 2018, to three years in prison; Alla Tsirlin, a Clinic office manager, sentenced on June 5, 2018, to one year and one day in prison; and Edward Miselevich and Ivan Voychak, Burman’s partners who jointly ran a related ambulette company, sentenced on June 12 and July 19, 2018, respectively, to three years in prison each.

Three additional defendants – a doctor (Paul J. Mathieu), a physical therapist (Hatem Behiry), and an occupational therapist (Lina Zhitnik) – are scheduled to go to trial before Judge Schofield on November 26, 2018.  These three remaining defendants are presumed innocent unless and until proven guilty.

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

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney David Raymond Lewis is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, David M. Hoovler, the Orange County District Attorney, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and John Ewanciw, the Chief of the City of Middletown Police, today announced the unsealing of indictments charging a total of 19 members and associates of two rival street gangs operating in Middletown New York:  Guap Gang and Coke Wave Boys.  The gangs are charged in separate courts Six Guap Gang members are charged in federal court with narcotics conspiracy and firearms offenses in United States v. John McGuigan, et al., 18 Cr. 585 (the “Guap Gang Indictment”).  Thirteen “Coke Wave Boys” members or associates are charged in Orange County Courts with offenses including murder, conspiracy, narcotics and weapons offenses.

Three defendants—JOHN McGUIGAN, DUANE KIRBY, and DESMEN AGOSTO— were taken into federal custody yesterday morning.  They were presented in White Plains federal court yesterday before U.S. Magistrate Judge Paul E. Davison.  One defendant, CHRISTOPHER SHELP, remains at large.  CHRISTOPHER ANDERSON and DARIUS MONROE were previously in federal custody and will be transported to White Plains federal court to be arraigned on the Guap Gang Indictment in the coming days.

U.S. Attorney Geoffrey S. Berman stated:  “To protect their drug territory, these alleged rival gang members sowed fear in the community by acquiring and using guns to escalate their feud.  Today’s arrests are a product of continued cooperation between federal, state, and local partners to stamp out gang violence and stem the tide of drugs in Middletown.”

Orange County District Attorney David M. Hoovler stated:  “We will not tolerate the rise of violent street gangs hoping to profit from the devastation that narcotics are already wreaking on our communities. The murder of Coree White is further proof that where there is organized narcotics dealing, gun violence inevitably follows. I commend the City of Middletown Police Department for recognizing the connection between violence and organized narcotics activity.  Only through the coordinated efforts of various law enforcement agencies can we stem the rise of narcotics gangs. I thank the New York State Police, Orange County Sheriff’s Office Special Operations Group, and the Bureau of Alcohol, Tobacco, Firearms and Explosives for partnering with the City of Middletown Police Department, and my office, in the investigation of “Coke Wave” and their associates. I commend the Federal Bureau of Investigation and the United States Attorney’s Office for the Southern District of New York for their investigation and prosecution of members of the “Guap Gang,” and thank them for working with us to make Middletown safer.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. stated:  “Most fear the violent streets gangs in the bigger cities in our area, but these criminal enterprises have now infected the small towns outside the cities hoping to control territory.  The FBI Hudson Valley Safe Streets Task Force has been working hand-in-hand with our law enforcement partners in Orange County, and Middletown, NY to stop these gangs by taking out the leadership, and sending a message to others who want to fill that hole - they will face the same fate.”

City of Middletown Police Chief John Ewanciw stated:  “The alleged crimes of the individuals charged in today’s indictments are understandably very disturbing to the residents of the City of Middletown.   For too long, the Coke Wave Boys and Guap Gang engaged in violent and dangerous activities that threatened the safety of our community, and it was their reckless disregard for human life that resulted in the death of Coree White on August 17, 2017.  I will not stand for this type of violence in our City, and I am committed to continuing our work with our partners on the federal, state, and local levels to ensure that these types of gangs are eradicated from our community.  I would like to thank the family of Coree White for their patience and support during this in-depth and complex investigation.  I would also like to thank the men and women of my agency, as well as those of all the other partner agencies, for their hard-work and dedication in seeing this investigation to its conclusion.  Our work undoubtedly does not end here today, however, the City of Middletown is a safer community because of the arrests and indictments made during ‘Operation Wipeout.’”

Middletown Sheriff Carl E. DuBois stated:  “I have been committed to the FBI Safe Streets Task Force and as a result of this commitment our communities are safer today.”

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

From about 2016 to the present, JOHN McGUIGAN, a/k/a “Jack,” a/k/a “Rico,” a/k/a “White Boy,” DUANE KIRBY, a/k/a “Ace,” a/k/a “Eddie,” a/k/a “Flea,” a/k/a “Montana,” DESMEN AGOSTO, a/k/a “Feddi Green,” CHRISTOPHER ANDERSON, a/k/a “Bo,” a/k/a “Drama,” DARIUS MONROE, a/k/a “Boosie,” a/k/a “Loso,” and CHRISTOPHER SHELP, a/k/a “Silence,” agreed to violate the narcotics laws of the United States by distributing and possessing with the intent to distribute heroin in and around Middletown, New York.

Additionally, McGUIGAN and KIRBY used and carried a firearm in furtherance of the drug trafficking crime.  MONROE also illegally possessed a firearm after having been previously convicted of a felony. 

*                      *                     *

A chart outlining the charges against the federal defendants is below.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the sentence will be determined by the court.

Mr. Berman praised the outstanding investigative work of the FBI, the City of Middletown Police Department, and the New York State Troopers.  Mr. Berman thanked the Orange County District Attorney’s Office for its invaluable partnership in the case. 

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Gillian Grossman and Allison Nichols are in charge of the prosecution.

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

CHARGE(S)

DEFENDANT(S)

MAXIMUM PENALTIES

Narcotics conspiracy

(Conspiracy to distribute and possess with intent to distribute 1 kilogram and more of heroin.)

JOHN McGUIGAN, 28 years old

    a/k/a “Jack,”

    a/k/a “Rico,”

    a/k/a “White Boy,”

DUANE KIRBY, 29 years old

    a/k/a “Ace,”

    a/k/a “Eddie,”

    a/k/a “Flea,”

    a/k/a “Montana,”

DESMEN AGOSTO, 29 years old

    a/k/a “Feddi Green,”

CHRISTOPHER ANDERSON, 27 years old

    a/k/a “Bo,”

    a/k/a “Drama,”

DARIUS MONROE, 28 years old

    a/k/a “Boosie,”

    a/k/a “Loso,” and

CHRISTOPHER SHELP, 25 years old

    a/k/a “Silence”

Life in prison

Mandatory minimum: 10 years in prison

Possession of a Firearm in Furtherance of a Drug Trafficking Crime

JOHN McGUIGAN,

    a/k/a “Jack,”

    a/k/a “Rico,”

    a/k/a “White Boy,” and

DUANE KIRBY,

    a/k/a “Ace,”

    a/k/a “Eddie,”

    a/k/a “Flea,”

    a/k/a “Montana”

Life in prison

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

Felon in Possession of a Firearm

DARIUS MONROE,

    a/k/a “Boosie,”

    a/k/a “Loso,”

10 years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that the United States has reached a settlement with the City of New York (“the City”), the New York City Department of Correction (“DOC”), and the New York City Health and Hospitals Corporation (“HHC”) to resolve its investigation into violations of Title II of the Americans with Disabilities Act.  Under the agreement, the City, DOC, and HHC must provide inmates with disabilities equal access to services, programs, and activities by, among other things, timely providing inmates with needed accommodations, including auxiliary aids and services, assistive devices, and medical equipment.  In addition, DOC has agreed to make hundreds of architectural modifications to the Rikers Island units that house inmates with significant mobility and visual impairments and to DOC’s visitation areas to bring these facilities into compliance with applicable accessibility standards.      

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For too long, the City has been violating the ADA by depriving inmates with disabilities of their right to have equal access to services, programs, and activities available in the jail setting, and by failing to make its visitation areas fully accessible to individuals with disabilities.  Through this agreement, the City has committed to providing needed accommodations to inmates with disabilities, as well as making visitation areas more accessible to members of the public with disabilities.” 

As part of its investigation, the Office conducted on-site inspections of (a) the North Infirmary Command Annex, including the unit where DOC houses male inmates with significant mobility and visual impairments; (b) the area of Rose M. Singer Center where DOC houses female inmates with significant mobility and visual impairments and the common areas used by these inmates; and (c) the Central Visits Control Building and the visitation areas of each of the jails operated by DOC.  The Office also reviewed DOC’s ADA policies and training, records relating to requests for accommodations submitted by or on behalf of inmates, and information concerning the availability of programs and services at City jails. 

The Office identified widespread violations of applicable architectural accessibility standards for each of the facilities inspected.  In addition, the Office found that DOC failed to consistently:  (a) timely and adequately respond to accommodation requests from inmates with disabilities; (b) place inmates with mobility and visual impairments in accessible housing areas; (c) provide inmates with mobility impairments with access to appropriate mobility devices; and (d) ensure that hearing impaired inmates have equal access to telecommunications services.

The out-of-court settlement agreement requires the City, DOC, and HHC to:

• Complete hundreds of architectural modifications to the facilities that were inspected.  The City will retain an independent architect to determine whether the required modifications have been performed and comply with applicable standards.
• Provide appropriate auxiliary aids and services to inmates who are deaf, have hearing loss, have speech disabilities, are blind, or have low vision.
• Provide safe and appropriate assistive devices and medical equipment to meet the needs of inmates with disabilities.
• Promptly address complaints concerning the functioning or condition of any auxiliary aid, assistive device, or medical equipment.
• Provide inmates who are deaf, have hearing loss, or have speech disabilities with access to a TTY device, a hearing aid compatible telephone, the New York Relay Service, and, within three years, a Video Relay Service or an alternative way to communicate via a video link.
• Evaluate new inmates to determine whether they have any physical, mental, intellectual, or developmental disabilities and are in need of an accommodation.
• Place inmates with vision or mobility disabilities in accessible housing units where they will have access to all areas of the facility that inmates are permitted to use, including but not limited to common housing areas, recreational areas, worship areas, libraries, dining areas, visitation areas, medical treatment areas, mental health treatment areas, and areas where educational or vocational programs are offered.
• Promptly respond to requests by or on behalf of inmates to be transferred to more accessible housing.
• Adopt and implement a new policy governing how requests for accommodations and ADA complaints are submitted, processed, reviewed, resolved, and tracked.
• Maintain a computerized system to accurately track information concerning requests for accommodations and ADA complaints. 
• Develop and provide new ADA training to DOC and HHC staff.
• Submit bi-annual compliance reports to the U.S. Attorney’s Office.

*                      *                     *

This case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorneys Jeffrey K. Powell and Lara Eshkenazi are in charge of the case.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that RUBIN MOYE, a/k/a “Nut,” a high-ranking member of the Crips gang, was sentenced to 192 months in prison for the unlawful possession of a firearm and for ordering the assault of an individual he believed might testify against him.  MOYE was convicted on April 28, 2017, following a one-week jury trial before U.S. District Judge George B. Daniels, who also imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Rubin Moye illegally carried a loaded gun in the Bronx, and after he was caught red-handed, he ordered the violent assault of a suspected witness.  Together with our law enforcement partners, we will aggressively prosecute those who threaten our communities with illegal guns.  And we will not tolerate efforts to threaten or retaliate against witnesses who speak up about these crimes.”

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

On March 3, 2016, MOYE, a high-ranking member of the Crips gang, unlawfully possessed a loaded .38 caliber Taurus revolver (“the Firearm”) while driving in the Bronx, New York.  When MOYE failed to signal a right turn, two New York City Police Department (“NYPD”) officers conducted a routine traffic stop of MOYE’s vehicle.  MOYE, who was driving without a license, could not produce identification.  The officers asked MOYE to step out of the car and patted him down, discovering the Firearm inside MOYE’s pants.  MOYE possessed the Firearm despite having previously been convicted of two felonies, including a conviction for manslaughter in 1999 stemming from an incident in which MOYE shot several individuals, killing one and wounding two others. 

MOYE was subsequently charged with being a felon in possession of a firearm, in violation of Title 18, United States Code, Section 922(g)(1), and he proceeded to trial in January 2017.  In connection with that trial, which resulted in a hung jury, MOYE ordered inmates to assault an incarcerated individual (the “Victim”) who MOYE anticipated might testify against him at trial.  As a result, during MOYE’s first trial, the Victim was violently attacked by two other inmates.

MOYE was retried in April 2017 and found guilty of the firearms offense, as well as of witness intimidation, in violation of Title 18, United States Code, Section 1512(a)(2), and of witness retaliation, in violation of Title 18, United States Code, Section 1513(a)(2). 

*                *                *

In addition to the prison term, MOYE, 35, of the Bronx, New York, was sentenced to five years of supervised release. 

Mr. Berman praised the outstanding investigative efforts of the New York City Police Department, including members of the 43rd Precinct Anti-Crime Unit and the Violent Crimes Squad, and the Federal Bureau of Prisons.  He also thanked the Office of the Bronx County District Attorney for its assistance. 

The case is being handled by the Office’s Violent and Organized Crimes Unit.  Assistant U.S. Attorneys Frank Balsamello, Matthew Hellman, and Matthew Laroche are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that SALVATORE DELLIGATTI was sentenced today in Manhattan federal court to 25 years in prison for conspiring to participate in the Genovese Organized Crime Family of La Cosa Nostra through a pattern of racketeering activity, conspiring and attempting to commit murder in aid of racketeering, conspiring to commit murder-for-hire, and other related offenses.  DELLIGATTI, 42, was previously convicted by a jury following a three-week trial, and was sentenced in Manhattan federal court by the U.S. District Judge Katherine B. Forrest.

U.S. Attorney Geoffrey S. Berman said:  “Salvatore Delligatti, an associate of the Genovese Crime Family, recruited individuals to ambush and kill his intended victim, even providing them with a gun and getaway car.  Now, thanks to the outstanding work of our law enforcement partners, Delligatti will spend 25 years in prison.”

According to court papers filed in Manhattan federal court, other public filings, and the evidence presented in court during the trial:

From at least in or about 2010 through in or about 2015, DELLIGATTI was an associate of the Genovese Organized Crime Family of La Cosa Nostra.  During this period, DELLIGATTI conspired with others to participate in and conduct the affairs of the Genovese Family through a pattern of racketeering activity that included a murder conspiracy, an extortion conspiracy, and the operation of an illegal sports betting business.  In particular, in May and June 2014, DELLIGATTI hired several individuals from the Bronx to ambush DELLIGATTI’s intended victim outside the victim’s home in Queens.  DELLIGATTI offered to pay the individuals several thousand dollars for the murder, and provided them with, among other things, a loaded .38 caliber revolver and a getaway vehicle.  As a result of wiretap surveillance of DELLIGATTI by the Nassau County Police Department and the Nassau County District Attorney’s Office, the individuals hired by DELLIGATTI were apprehended just a few blocks from the intended victim’s residence on June 8, 2014.

*                *                *

Mr. Berman praised the outstanding investigative work of the Nassau County Police Department and the Federal Bureau of Investigation.  He also thanked the Nassau County District Attorney’s Office, the Diplomatic Security Service of the United States Department of State, and the Special Agents of the United States Attorney’s Office for the Southern District of New York. 

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Samson Enzer, Jordan Estes, and Jason Swergold are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the guilty plea of PAUL DEAN, to his role in a scheme to obtain approval of gun licenses by the New York City Police Department (“NYPD”) License Division in exchange for cash payments and non-monetary bribes.  DEAN, once second-in-command of the License Division, pled guilty to one count of conspiracy to commit bribery before U.S. District Judge Edgardo Ramos.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Paul Dean betrayed his duty as a former leader within the New York City Police Department to protect and serve the public.  Instead of assuring the integrity of the License Division he oversaw – a division charged with protecting the public safety by restricting access to firearms – he sought to corrupt it by bribing the very officers once under his command.  This Office will continue to stop such corruption which undermines the public’s confidence in the law enforcement officers and institutions sworn to serve us all.”

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

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

From at least 2013 through 2016, multiple NYPD officers in the License Division serving under DEAN’s command, including David Villanueva and Richard Ochetal, solicited and accepted bribes from gun license expediters in exchange for providing assistance to the expediters’ clients in obtaining gun licenses quickly and often with little to no diligence.  They obtained bribes from at least three expediters: Gaetano Valastro, a/k/a “Guy,” Frank Soohoo, and Alex Lichtenstein, a/k/a “Shaya.”  Valastro was a former NYPD detective who retired in 1999, and who operated a gun store out of which he sold guns, gun paraphernalia, and gun safety courses.

The bribes included cash payments, paid vacations, food and liquor, the services of prostitutes, and free guns, among other things.  In exchange, Villanueva, Ochetal, and the other officers approved, expedited, and upgraded licenses for clients of Valastro, Lichtenstein, and Soohoo.  They did so by foregoing standard License Division diligence, including by failing to interview the applicants and failing to investigate the business-based need for applicants to carry guns.  They approved licenses for individuals with substantial criminal histories, including arrests and convictions for crimes involving weapons or violence, and for individuals with histories of domestic violence.

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

*                *                *

DEAN, 44, of Wantagh, New York, pled guilty to one count of conspiracy to commit bribery.  The charge carries a maximum term of five years in prison.  DEAN is scheduled to be sentenced by Judge Ramos on November 15, 2018.  The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the New York City Police Department, Internal Affairs Bureau.

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Russell Capone and Kimberly Ravener are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and David E. Beach, Special Agent in Charge of the New York Field Office of the United States Secret Service (“USSS”), announced charges today against six individuals in a fraud conspiracy from December 2017 through July 2018.  BRIAN CAPELLAN, NELSON ALBA DEJESUS, JEAN MEDINA, JONTHAN MORA, JESUS ALBERTO REMOND, EMMANOL DIONIS BAEZ RODRIGUEZ, and their associates allegedly engaged in a scheme to fraudulently obtain cellular phones from a cellular phone provider by accessing victim accounts online and adding names as authorized users of the accounts.  Five defendants were arrested in the Southern District of New York and will be presented today before United States Magistrate Judge Paul E. Davison.  DEJESUS remains at large.

U.S. Attorney Geoffrey S. Berman said:  “The defendants allegedly accessed cellphone user accounts to fraudulently obtain cellphones worth more than $750,000.  Thanks to the Secret Service, the defendants’ mobile phone scam has been immobilized.”

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

From at least in or about December 2017 through and including July 2018, BRIAN CAPELLAN, NELSON ALBA DEJESUS, JEAN MEDINA, JONTHAN MORA, JESUS ALBERTO REMOND, and EMMANOL DIONIS BAEZ RODRIGUEZ, together and with others, perpetrated a scheme to fraudulently obtain cellular phones.  During the scheme, the defendants added their names as authorized users on existing accounts with a telecommunications company that provides cellular telephone services (the “Victim Accounts”).  The registered owners of these Victim Accounts did not know or authorize these additions.  Once the names were added as authorized users, the defendants purchased cellular phones in person as part of a handset upgrade and charged the cost of the cellular phones to the Victim Accounts.  The six defendants alone are responsible for over $750,000 in losses for their roles in the scheme. 

*                *                *

CAPELLAN, 22, of the Bronx, New York, DEJESUS, 25, of Yonkers, New York, MEDINA, 19, of the Bronx, New York, MORA, 27, of the Bronx, New York, REMOND, 27, of the Bronx, New York, and BAEZ RODRIGUEZ, 31, of Hollywood, Florida, are each charged with one count of conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of New York Field Office Electronic Crimes Task Force of the United States Secret Service and the Special Agents of the U.S. Attorney’s Office, as well as the DEA New York Drug Enforcement Task Force, for their assistance. 

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), and Shawn Harris, Commissioner of the Mount Vernon Police Department (“MVPD”), announced today the unsealing of a complaint charging two defendants with allegedly engaging in carjacking and, in furtherance of the carjacking, possessing, brandishing, and discharging firearms.  The defendants, CHESTER BROWN and TRAVIS SINCLAIR, were presented in White Plains federal court this afternoon before United States Magistrate Judge Paul E. Davison and ordered detained.  BROWN was taken into federal custody on August 15; SINCLAIR was previously in federal custody based on prior pending criminal charges.

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

On or about July 27, 2018, BROWN and SINCLAIR, the defendants, entered a car in Mount Vernon carrying guns.  The defendants threatened and punched the driver; BROWN hit the driver with his gun, which discharged.  When the driver ran from his vehicle, at least one of the defendants fired gun shots toward him.  These shots injured a person sitting in another car. 

*                      *                     * 

BROWN and SINCLAIR each face a maximum term of life in prison, and a mandatory term of 10 years in prison. 

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

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

These cases are being handled by the Office’s White Plains Division.  Assistant United States Attorneys Jamie Bagliebter and Samuel L. Raymond 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 herein constitute only allegations, and every fact described should be treated as an allegation.

“Norman Seabrook was once one of the most powerful union leaders in this City.  Today he stands convicted of taking a $60,000 bribe to invest $20 million of his union members’ money in a fund that ultimately went belly-up, losing $19 million.  Seabrook’s is the fifth major public corruption conviction by our Office in as many months:  the governor’s right-hand man, the Speaker of the New York State Assembly, the Senate Majority Leader, and the key executive in the Buffalo Billion case.  I commend the hard-working members of the FBI who worked on all of these investigations, and the career prosecutors of this office who prosecuted this case: Martin Bell, Lara Pomerantz, and the chief of our public corruption unit, Russell Capone.  As long as there are public servants who put self-interest above the people they are sworn to serve, public corruption will remain a top priority of this Office.”

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JAMEL GODDARD, a/k/a “Payroll,” was sentenced today by United States District Judge Loretta A. Preska to 292 months in prison for his role as the leader of a sex trafficking conspiracy.  GODDARD pled guilty on February 26, 2018, to one count of conspiracy to commit sex trafficking of a minor.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “For years, Jamel Goddard preyed on vulnerable victims and exploited them for financial gain.  For his brazen and violent conduct, Goddard now faces a substantial prison term.  Today’s sentence should serve as a powerful message to the sex trafficking industry that such reprehensible conduct will not be tolerated.”

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

Between approximately 2012 until approximately July 2017, GODDARD operated and led a sex trafficking and prostitution enterprise (the “Enterprise”) that recruited vulnerable women and a 15-year-old girl and subsequently exploited them for GODDARD’s personal financial gain.  GODDARD typically recruited victims who lacked education, a stable home, and family support.  He required the women he trafficked to engage in sex acts with multiple customers in a single day, operating from hotel rooms in the Bronx, Brooklyn, upstate New York, New Jersey, Connecticut, Rhode Island, and Florida, and using classifieds websites to advertise for commercial sex.  GODDARD kept all or most of the victims’ earnings, which sometimes amounted to thousands of dollars in a single day, for himself.

Throughout the course of the Enterprise, GODDARD employed physical violence and threats of force to exert control over his victims.  On multiple occasions, GODDARD hit or punched victims for, among other things: being, in GODDARD’s view, disrespectful; owing GODDARD money; or holding back their earnings from commercial sex from GODDARD.

During prior periods of imprisonment, GODDARD continued to operate the Enterprise while incarcerated, communicating directives and threats to his victims by phone.  On one such occasion, GODDARD warned a victim to “watch what I do when I get out.”

*              *             *

In addition to his prison sentence, GODDARD, 32, was sentenced to 10 years of supervised release. 

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the New York City Police Department.

This matter is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Elizabeth A. Hanft, Sagar K. Ravi, and Alexandra N. Rothman are in charge of the prosecution.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that JESUS RODRIGUEZ-JIMENEZ was sentenced today to 30 years in prison by United States District Judge Katherine B. Forrest in Manhattan federal court.  RODRIGUEZ-JIMENEZ ran an international money laundering business with ties to Mexico, Italy, Hungary, Panama, and China, facilitating the movement of hundreds of millions of dollars in drug proceeds on behalf of drug cartels in Mexico and Central America.  Through a web of front companies, shell bank accounts, and money couriers throughout the United States and Europe, RODRIGUEZ-JIMENEZ successfully laundered in excess of $250 million, directly facilitating the trafficking of massive quantities of narcotics throughout the world. 

U.S. Attorney Geoffrey S. Berman said:  “Jesus Rodriguez-Jimenez led an international money laundering operation that handled the proceeds of cocaine and heroin trafficking by Mexican and Central American cartels.  The Rodriguez-Jimenez organization laundered more than a quarter of a billion dollars in illegal drug trafficking proceeds through front companies, sham bank accounts, and money drops in several U.S. cities.  Thanks to the efforts of the DEA, Rodriguez-Jimenez will now spend considerable time in prison for his crimes.”

According to the charging and other documents filed in the case, as well as statements made during RODRIGUEZ-JIMENEZ’s sentencing proceeding:

Since July 2013, the U.S. Drug Enforcement Administration (“DEA”) has been investigating JESUS RODRIGUEZ-JIMENEZ’s international money laundering organization and its cartel clients, which together have been involved in trafficking hundreds of kilograms of cocaine and heroin, among other narcotics, and laundering narcotics proceeds through a variety of methods, including through a network of shell corporations under their control.  To date, the investigation has resulted in charges against eight defendants, including the successful extradition of alleged high-level money launderer Filippo Magni from Italy earlier this summer. 

Through a network of front companies, couriers, and his own armored car company, RODRIGUEZ-JIMENEZ succeeded in repatriating millions of drug dollars from the streets of New York, Chicago, Detroit, Philadelphia, and other cities across the United States, back to cartel interests in Mexico.  By introducing these drug dollars into the banking system, RODRIGUEZ-JIMENEZ was able to move money wherever the cartel interests directed it, including repatriating this value to Mexico through trade-based money laundering:  At the direction of his cartel clients, RODRIGUEZ-JIMENEZ would wire drug dollars to companies in China, Hong Kong, and Taiwan.  These companies would, in turn, ship merchandise to Mexico or other drug producing countries.  There, merchants would accept the shipment of goods, and pay a reduced price, in local currency, to the cartels.  In this way, RODRIGUEZ-JIMENEZ turned street cash in the United States into value in Mexico.

RODRIGUEZ-JIMENEZ controlled his laundering empire through fear and intimidation.  For example, in July 2015, pursuant to the investigation, the DEA seized $100,000 in drug money in Atlanta from Organization courier Sergio Urbina (ultimately a co-defendant of RODRIGUEZ-JIMENEZ).  When he learned of the seizure, RODRIGUEZ-JIMENEZ ordered Urbina to come to Monterrey, Mexico, to explain himself.  After enduring a multiple-day interrogation by RODRIGUEZ-JIMENEZ’s underlings, complete with the administration of a false polygraph test, RODRIGUEZ-JIMENEZ coerced Urbina to execute a false promissory note that RODRIGUEZ-JIMENEZ later used to try to hold Urbina liable for the value of the seizure – even commencing a fraudulent civil action against Urbina, which RODRIGUEZ-JIMENEZ continued to pursue from jail.

In total, RODRIGUEZ-JIMENZ laundered at least $250 million on behalf of the cartels during the course of the scheme.

*                      *                     *

In addition to the prison term, RODRIGUEZ-JIMENZ, 47, of Monterrey, Mexico, was ordered to forfeit $284 million in laundered funds.

Mr. Berman praised the outstanding work of the Las Vegas Division of the DEA and the Las Vegas Office of the Internal Revenue Service, Criminal Investigation, in the investigation of this case.

This case is being handled by this Office’s Money Laundering and Asset Forfeiture Unit.  Assistant United States Attorneys Andrew C. Adams and Noah Falk are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Richard E. Zuckerman, the Principal Deputy Assistant Attorney General for the Tax Division of the Department of Justice, and Don Fort, Chief, Internal Revenue Service-Criminal Investigation (“IRS-CI”), announced the filing of criminal charges against ZÜRCHER KANTONALBANK (“ZKB”), a financial institution headquartered in Zurich, Switzerland.  ZKB is charged with conspiring to help U.S. taxpayer-clients evade their U.S. tax obligations, file false federal tax returns, and otherwise hide hundreds of millions of dollars in offshore bank accounts held at ZKB.

Mr. Berman also announced a deferred prosecution agreement with ZKB (the “Agreement”), under which ZKB admitted to its unlawful conduct in assisting U.S. taxpayer-clients in violating their legal duties.  The admissions are contained in a detailed Statement of Facts attached to the Agreement.  The Agreement requires ZKB to pay a total of $98.5 million.  The $98.5 million figure reflects, in part, a credit given to ZKB because of its cooperation in this case.  However, the amount of ZKB’s cooperation credit was reduced by the Government due to ZKB’s actions, as described in the Statement of Facts, in dissuading two indicted ZKB bankers from cooperating with U.S. authorities for years after their indictment.  Those indicted bankers, STEPHAN FELLMANN and CHRISTOF REIST, also pled guilty today. 

The criminal charge against ZKB is contained in an Information (the “Information”) alleging one count of conspiracy to willfully and knowingly (1) defraud the IRS, (2) file false federal income tax returns, and (3) evade federal income taxes.  If ZKB abides by all of the terms of the Agreement, the Government will defer prosecution on the Information for three years and then seek to dismiss the charges. 

ZKB has also agreed to provide ongoing assistance to the Department of Justice, including providing detailed information about accounts in which U.S. taxpayers have a direct or indirect interest, including detailed information as to other banks that transferred funds into those accounts or that accepted funds when the ZKB accounts were closed.  In addition, ZKB has agreed to cooperate with prosecutors in making treaty requests to Switzerland or other countries for account information.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “ZKB and two of its bankers have admitted to conspiring to assist U.S. taxpayers in evading their tax obligations.  The bank enabled taxpayers to hide accounts from the IRS and actively sought to win the business of Americans looking to evade taxes.  After doing so, ZKB dissuaded the two bankers from cooperating with U.S. authorities, which has today resulted in a reduction in the bank’s cooperation credit.  The substantial financial penalties imposed on the bank, and the two bankers’ pleas, should make clear that helping U.S. taxpayers to be tax evaders will not be tolerated.”

Principal Deputy Assistant Attorney General Richard E. Zuckerman said:  “ZKB and the other defendants in this case knew that U.S. taxpayers were maintaining undisclosed ‘black money’ accounts at ZKB in order to avoid their tax obligations and did nothing to prevent it.  Today’s agreement and guilty pleas send a clear message that this type of conduct will not be tolerated.  The Department will continue to work with our partners at IRS-CI to prosecute financial institutions and individuals that conspire to defraud the United States.”

IRS-CI Chief Don Fort said:  “Today’s resolution with ZKB and the guilty pleas of two bank employees send a strong message of enforcement and commitment to the international banking community as well as U.S. taxpayers.  When individuals and entities hide behind shell corporations and anonymous bank accounts, they are not only cheating the U.S. government, they are cheating the honest taxpaying citizens who are obeying the law and doing the right thing.”        

According to the Information, statements made during the proceedings today, and other documents filed in Manhattan federal court, including the Statement of Facts to the Agreement:

The Offense Conduct

From at least in or about 2002 through in or about 2009, ZKB helped certain U.S. taxpayers with accounts at ZKB evade their U.S. tax obligations, file false federal tax returns with the IRS, and otherwise hide accounts held at ZKB from the IRS (hereinafter, “undeclared accounts”).  ZKB did so by opening and maintaining undeclared accounts for U.S. taxpayers at ZKB, and by allowing third-party asset managers to open undeclared accounts for U.S. taxpayers at ZKB.  ZKB held approximately 2,000 undeclared accounts on behalf of U.S. taxpayer-clients, who collectively evaded over $39 million in U.S. taxes, between 2002 and 2013.

In furtherance of a scheme to help U.S. taxpayers hide assets from the IRS and evade taxes, ZKB undertook, among other actions, the following:

• ZKB entered into approximately 349 “code word agreements” with U.S. taxpayer-clients under which the bank agreed not to identify the U.S. taxpayers by name on bank documents, but rather to identify the U.S. taxpayers by code name, in order to reduce the risk that U.S. tax authorities would learn the identities of the U.S. taxpayers.  ZKB understood that a primary reason why U.S. taxpayers sought these “code word” accounts was to evade detection by U.S. tax authorities.
   
• ZKB opened and maintained accounts for many U.S. taxpayer-clients held in the name of non-U.S. corporations, foundations, trusts, or other legal entities (collectively, “structures”), thereby helping those U.S. taxpayers conceal their beneficial ownership of the accounts.  Some of the structures had no business purpose (“sham structures”), but rather, existed solely for the purpose of helping ZKB’s U.S. taxpayer-clients hide their offshore assets.
   
• ZKB agreed to hold bank statements and other mail relating to approximately 750 accounts of U.S. domiciled taxpayer-clients at ZKB’s offices in Switzerland, rather than send them to U.S. taxpayer-clients in the United States, which helped ensure that documents reflecting the existence of the accounts remained outside the United States and beyond the reach of U.S. tax authorities.
   
• ZKB solicited new business through the website www.swiss-bank-accounts.com, which was operated by a third party, and which resulted in the opening of accounts at ZKB for U.S. taxpayer-clients whose accounts were undeclared.

ZKB knew that certain U.S. taxpayer-clients were maintaining undeclared accounts at ZKB in order to evade their U.S. tax obligations, in violation of U.S. law.  ZKB understood the legal prohibitions regarding tax evasion to be distinct from ZKB’s obligations under its Qualified Intermediary Agreement.  Certain ZKB bankers commonly used the term “Schwarzgeld” – German for “black money” – internally to refer to undeclared accounts, including those held by U.S. citizens.  Until the middle of 2008, ZKB did not prevent any U.S. persons from opening an account if they refused to fill out a Form W-9, even though ZKB knew that such accounts were, or were highly likely to be, undeclared.  Indeed, in May 2006, internal ZKB documents explicitly discussed the profitability of “[n]on-disclosed U.S. persons.”

At its high-water mark in 2008, ZKB had approximately $794 million in assets under management relating to undeclared accounts held by U.S. taxpayer-clients.  From 2002 through 2013, ZKB earned approximately $21 million in profits on approximately $24 million gross revenues from its undeclared U.S. taxpayer accounts, including accounts held through structures.   

In early 2008, U.S. enforcement actions against the Swiss banking institution UBS became public.  In or about July 2008, UBS announced that it would cease providing cross-border private banking services to U.S.-domiciled clients.  Rather than immediately closing down its own U.S. taxpayer undeclared accounts as a result of the UBS investigation, ZKB, through its external asset manager (“EAM”) desk, instead treated UBS’s decision to stop accepting U.S. taxpayer-clients as a business opportunity, and actively sought to increase its U.S. taxpayer-client base.  ZKB gained many U.S. taxpayer-clients through EAMs working with the bank.

However, in 2008 and 2009, at the same time as ZKB’s EAM Desk proactively sought to increase its U.S. taxpayer-client base, ZKB also began implementing a number of measures that gradually limited securities accounts held by U.S. taxpayer-clients.  At first the restrictions applied only to former UBS clients, but ZKB expanded its restrictions over time.  By June of 2009, ZKB decided to close its business with all U.S. domiciled clients holding securities accounts, and in 2011, ZKB decided to exit its business with all remaining U.S.-domiciled customers.  By 2012, ZKB had closed virtually all accounts held by U.S. domiciled taxpayers, and for those U.S. clients domiciled outside of the U.S., ZKB sought a Form W-9 and proof of U.S. tax compliance.  ZKB has now terminated all U.S. cross-border business.

Indictment of ZKB Employees and ZKB’s Response to the Indictment

Despite ZKB’s cooperation with the Government in this case, the Government views the actions of ZKB with respect to indicted bankers FELLMANN and REIST, described in the Statement of Facts, as inconsistent with a policy of full cooperation.  Those actions, accordingly, have reduced the amount of cooperation credit afforded by the Government to ZKB.

In December 2012, three ZKB bankers – FELLMANN, REIST, and Otto Hüppi – were charged in the Southern District of New York with conspiracy to defraud the United States and the IRS for their role in ZKB’s offense.  Although ZKB retained independent U.S. counsel for the bankers, beginning in 2013 and continuing through 2015, ZKB’s in-house counsel and, at times, ZKB employees from the Human Resources department and other departments, regularly met with FELLMANN and REIST.  At those meetings, which were not attended by FELLMANN and REIST’s independent U.S. counsel, ZKB, among other things, made statements that caused FELLMANN and REIST to feel dissuaded from reaching out to the U.S. Attorney’s Office in order to explore the possibility of cooperating.  In addition, ZKB’s in-house counsel suggested to FELLMANN that he did not have any information of value to contribute to the U.S. Attorney’s Office’s ongoing investigation.  Furthermore, based on conversations with ZKB, FELLMANN and REIST felt that their continued employment at ZKB and ZKB’s ongoing payment of their legal fees would be threatened should they take steps that were viewed by ZKB as inconsistent with the bank’s own interests.  Due in part to these discussions with ZKB, FELLMANN and REIST did not seek to cooperate with the investigation until the summer of 2015, approximately two and a half years after being indicted.

            *                *                *

FELLMANN, 53, a Swiss citizen, and REIST, 60, a Swiss citizen, each pled guilty to one count of conspiracy to willfully fail to file returns, supply information, or pay tax.  FELLMANN and REIST each face a maximum sentence of one year in prison.  The statutory maximum sentence is prescribed by Congress and is provided here for information purposes only, as any sentences imposed on the defendants will be determined by the judge.

FELLMANN and REIST are each scheduled to be sentenced before U.S. District Judge J. Paul Oetken on November 30, 2018.

Hüppi remains a fugitive.

Mr. Berman praised the outstanding investigative work of IRS-CI, and thanked the Justice Department’s Tax Division for its assistance in the investigation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Sarah E. Paul, Noah Solowiejczyk, and Andrew D. Beaty are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that PETER G. JOHNSON was sentenced to 36 months in prison for leading a scheme to defraud a group of lenders (the “Banks”) by submitting false “borrowing base” reports designed to secure and maintain a $400 million line of credit for his cocoa trading company, Transmar Commodity Group Ltd. (“Transmar” or the “Company”).  JOHNSON pled guilty on March 9, 2018, to one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution.  The sentence was imposed by United States District Judge Jed S. Rakoff.

U.S. Attorney Geoffrey S. Berman said:  “Peter G. Johnson, CEO of Transmar, a commodities trading company specializing in cocoa trading, previously admitted to his role in a scheme to defraud the banks which extended high lines of credit to Transmar.  Johnson and his co-defendants fudged the company’s required reports, which banks used to gauge the amount they extended Transmar, to make the company seem financially healthier, thus receiving higher credit than deserved.  All told, Johnson’s scheme led to the bankruptcy of Transmar, unpaid debt of over $350 million, and now he has been sentenced to 36 months in prison time.”

According to the allegations in the Indictment and other documents filed in federal court, as well as statements made in public court proceedings:

Transmar was a closely-held, family-run cocoa commodity trading company.  PETER G. JOHNSON was Transmar’s founder, President, and chief executive officer. 

From at least 2014 through at least December 2016, Transmar maintained a credit facility from the Banks that varied from approximately $250 million to approximately $400 million.  To secure and maintain these hundreds of millions of dollars in credit, PETER G. JOHNSON, his son, Peter B. Johnson, Transmar’s Vice President of Finance, Thomas Reich, and others schemed to misrepresent material information about Transmar’s finances, making it appear that Transmar had far more credit-eligible collateral than it actually had.

The scheme centered on periodic “borrowing base” reports (“BB Reports”) that the Banks required Transmar to submit, sometimes as frequently as weekly, as a condition to continued credit extension.  The BB Reports were supposed to accurately reflect and quantify those portions of Transmar’s collateral that qualified for financing under the terms of credit agreements between Transmar and the Banks. 

Beginning no later than 2014, Transmar employees, acting with JOHNSON’s knowledge and at his direction, manipulated the BB Reports and related documents to give the false impression that Transmar had sufficient eligible collateral to support the amount of credit the Banks were extending.  The manipulation involved, among other devices, counting inventory that Transmar had already sold or was otherwise ineligible for inclusion, counting accounts receivable for which Transmar had already received payment, recording fake accounts receivable, and arranging “circle” transactions through which amenable third-party intermediaries agreed to “buy” goods from Transmar with Transmar’s own money, funneled to the third parties through Euromar Commodities GMBH, Transmar’s affiliate.

Following the discovery of the fraud, Transmar filed for bankruptcy in December 2016.  At that time, the Company owed the Banks approximately $360 million.
                                                                                                                                                                   

*                      *                      *           

In addition to the prison term, JOHNSON, 69, of Harding Township, New Jersey, was sentenced to two years of supervised release.

Peter B. Johnson, 39, of Morristown, New Jersey, and Thomas Reich, 60, of Montvale, New Jersey, each pled guilty to the same offenses for their participation in the scheme to defraud the Banks.  They are scheduled to be sentenced on September 17 and 21, 2018, respectively.

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

This case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit.  Assistant U.S. Attorneys Benet J. Kearney and Daniel M. Tracer are in charge of the prosecution.   

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that JEFFREY ROGIERS pled guilty today before United States District Judge Alison J. Nathan to conspiracy to commit securities fraud and fraud in connection with a tender offer for his role in an insider trading scheme relating to material nonpublic information misappropriated from an investment bank by Daniel Rivas, a former employee at the bank.  In August 2017, ROGIERS, as well as Michael Siva, Roberto Rodriguez, Rodolfo Sablon, and Jhonatan Zoquier, were arrested and charged in a 54-count Indictment for their involvement in three overlapping insider trading chains, all stemming from information misappropriated by Rivas.  Prior to the unsealing of the Indictment last year, Rivas and another participant in the scheme, James Moodhe, pled guilty and both have been cooperating with the Government in this investigation.  Since the unsealing of the Indictment, Sablon and Zoquier, in addition to ROGIERS, have pled guilty and will be sentenced by Judge Nathan.[1] 

U.S. Attorney Geoffrey S. Berman said:  “Jeffrey Rogiers traded on stolen confidential corporate information that he received, through a friend, from an insider at an investment bank in order to generate illicit profits.  Our Office and our law enforcement partners remain committed to identifying and prosecuting those who engage in such abuses of our nation’s securities markets.”

According to the allegations contained in the Indictment filed against ROGIERS 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 the 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 the misappropriated Inside Information 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 Rogiers Tipping Chain

With respect to ROGIERS, Rivas passed inside information to his close friend Zoquier, who passed inside information to his close friend ROGIERS. 

From at least 2013 through August 2017, Rivas and Zoquier, who lives and works in New Jersey, had a close relationship.  ROGIERS lived and worked in California as a computer and network security analyst and had a close relationship with Zoquier.  In or about 2013, Zoquier introduced Rivas to ROGIERS.  In or about 2015, at Zoquier’s request, Rivas and ROGIERS met in person and Rivas explained to ROGIERS the nature of the Inside Information to which he had access.  Between at least in or about March 2016 and in or about April 2017, Rivas repeatedly provided Zoquier with Inside Information misappropriated from the Investment Bank so that Zoquier could execute profitable trades.  Beginning in approximately March 2016, Zoquier began sharing the Inside Information he received from Rivas with ROGIERS so that ROGIERS could execute profitable trades for himself.  Throughout the time that ROGIERS was obtaining Inside Information from Zoquier, ROGIERS understood that Rivas was the source of the Inside Information.  In addition to trading himself, ROGIERS also caused at least one other individual to execute profitable trades based on the Inside Information. 

In total, Zoquier and ROGIERS caused trades generating more than $200,000 in illicit profits based on Rivas’s Inside Information.

*                *                *

ROGIERS, 34, of Oakland, California, pled guilty to one count of conspiracy to commit securities fraud and fraud in connection with a tender offer (Count Thirty-Nine of the Indictment), 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 sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  ROGIERS will be sentenced before United States District Alison J. Nathan later this year. 

Sablon and Zoquier, two of the co-defendants named in the Indictment along with ROGIERS, have also pled guilty and will be sentenced by Judge Nathan.  Any trial of the remaining co-defendants, Siva and Rodriguez, will occur next year before Judge Nathan, on charges of conspiracy to commit securities fraud and fraud in connection with a tender offer, conspiracy to commit wire fraud, multiple counts of securities fraud, and tender offer fraud.  The allegations contained in the Indictment as to those defendants are merely accusations, and they are presumed innocent unless and until proven guilty.

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

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

[1] As for the defendants who have not pled guilty (Michael Siva and Roberto Rodriguez), the charges described herein constitute only allegations.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Ashan M. Benedict, the Special Agent-in-Charge of the New York Field Division of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and Daniel A. Nigro, the Commissioner of the New York City Fire Department (“FDNY”), announced today the arrest of JAMAL DEESE in connection with a string of arsons in New York, which occurred from August 5, 2018, through August 7, 2018.  DEESE was arrested yesterday evening, and was presented today in Manhattan federal court before the U.S. Magistrate Judge Katharine H. Parker.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Jamal Deese set more than a dozen fires in midtown Manhattan locations during a three-day span.  His alleged serial arsons threatened public safety and necessitated the deployment of valuable firefighting and law enforcement resources.  Thanks to the work of the ATF, NYPD, and FDNY, Deese is in custody and will be prosecuted.” 

ATF Special Agent-in-Charge Ashan M. Benedict said:  “The defendant’s alleged conduct placed New Yorkers, commuters, and visitors at extreme and indiscriminate risk of injury or worse, and had the potential to cause extensive damage to businesses and property.  While we are fortunate that there were no known injuries, the defendant will nonetheless face the consequences for his alleged arson spree.  I’d like to thank the members of ATF’s SEAR Task Force and the U.S. Attorney’s Office for their efforts thus far in this investigation.”

NYPD Commissioner James P. O’Neill said:  “The potential for serious injury or death was very real as Jamal Deese allegedly went on a spree across a swath of Midtown Manhattan.  Fortunately, the collaborative efforts of our city and federal partners stopped him before further mayhem could occur.  Today’s arrest is the result of the type of quick and effective investigative work performed each day in New York City.”

FDNY Commissioner Daniel A. Nigro said:  “I’m proud of the outstanding collaborative investigation by the Arson Response Task Force to apprehend an individual whose alleged crimes needlessly put many lives in danger.  Arson is a dangerous, potentially deadly crime; and thanks to our Fire Marshals, NYPD Detectives and ATF agents, an alleged serial arsonist has been stopped before anyone could be injured.”

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

From August 5, 2018, through August 7, 2018, DEESE set trashcan fires in the bathrooms of at least four midtown restaurants.  He also set trashcan fires outside and inside the Amtrak terminal at Penn Station.  During the course of his arson spree, DEESE ignited at least 14 fires at Penn Station and in the restaurants.  DEESE was apprehended when he returned to one of the restaurants in which he had previously ignited a fire.

*                      *                     *

DEESE, 24, of Brooklyn, New York, is charged with four counts of arson, each of which carries a mandatory minimum sentence of five years in prison and a maximum 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Angel M. Melendez, the Special Agent in Charge of the New York Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced charges today against 12 individuals involved in a nationwide fraud conspiracy from 2014 to the present: ISAAC CONCEPCION AQUINO, a/k/a “Kaka,” MARIO DIAZ, a/k/a “Memin,” TOMAS GUILLEN, a/k/a “Diddy,” RONNIE DE LEON, JOSE ARGELIS DIAZ, JOEL PENA, JHONATAN DIAZ, a/k/a “Nino,” EDDY MORROBEL, RUDDY SANCHEZ, MICHAEL ROQUE, RAYNIEL ROBLES, and JOANDRA TEJADA GONZALEZ.  In connection with the fraud, the defendants and their associates improperly accessed more than 3,300 customers’ cellphone accounts, fraudulently obtained more than 1,200 cellphones, and caused losses exceeding $1 million.  Six defendants were arrested in the Southern District of New York and will be presented today before Magistrate Judge Katharine H. Parker: MARIO DIAZ, a/k/a “Memin,” TOMAS GUILLEN, a/k/a “Diddy,” JOSE ARGELIS DIAZ, JHONATAN DIAZ, a/k/a “Nino,” EDDY MORROBEL, and RAYNIEL ROBLES.  In addition, RONNIE DE LEON was arrested this morning in Ohio and will be presented this afternoon, in the Southern District of Ohio, before Chief Magistrate Judge Elizabeth A. Preston Deavers.

The following defendants remain un-apprehended at this time: ISAAC CONCEPCION AQUINO, a/k/a “Kaka,” JOEL PENA, RUDDY SANCHEZ, MICHAEL ROQUE, and JOANDRA TEJADA GONZALEZ.

U.S. Attorney Geoffrey S. Berman said:  “The defendants allegedly engaged in a sophisticated nationwide conspiracy to hack into the accounts of ordinary people and exploit those accounts for their own gain, obtaining valuable electronic devices at others’ expense.  The defendants allegedly perpetrated their scheme through various means, including buying victims’ account information over the dark web.  Thanks to the dedicated work of our partners at HSI, this alleged ring of cellphone fraudsters will now face the call of justice.”

HSI Special Agent in Charge Melendez said:  “Those arrested today were allegedly part of a fraud network operating in New York, the Dominican Republic and the Darknet.  Their activities left a trail of unsuspecting victims across the United States and cost businesses significant losses.  They traveled to 30 states to obtain cellphones that were later sold through fencing operations in the Bronx. Telecommunications fraud is a huge business and where there is a profit to be made by criminals, HSI’s longstanding El Dorado Task Force will follow the money to bring those perpetrators to justice.”

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

From at least 2014 to the present, a group of individuals (the “Fraud Ring”) perpetrated a wide-ranging scheme to obtain valuable, new electronic devices – primarily iPhones, but also iPads, tablets, and watches – at others’ expense.  During the course of the conspiracy, the Fraud Ring fraudulently obtained more than $1 million worth of devices.  To facilitate the scheme, the Fraud Ring traveled to at least 30 different states, but often brought or shipped the fraudulently obtained cellphones back to the Bronx, where they regularly sold them.

The Fraud Ring regularly engaged in intrusions into existing customers’ accounts with cellular service companies and obtained new phones or “upgrade” phones by paying only a small fee in the store, while charging the vast majority of the purchase price to existing customers’ accounts, without the consent or knowledge of these existing customers.  The scheme’s victims therefore included both customers, whose identities were stolen and/or whose accounts were accessed without authorization, and cellphone service providers, which typically bore financial losses for fraudulently obtained devices.

The Fraud Ring used various mechanisms to perpetrate their scheme, including buying cellphone customers’ personal identifying information (“PII”) over the dark web; phishing, in which the Fraud Ring sent a link to cellphone customers that, if pressed, allowed the Fraud Ring to hack into the customers’ accounts; using fraudulent identifications to persuade retail store employees that conspirators were someone else; and opening accounts using social security numbers that appeared to match conspirators’ names but in fact belonged to victims.

During the course of the investigation, HSI executed a search warrant on a suspected hub of the Fraud Ring in Mt. Vernon, New York (the “Residence”).  Law enforcement encountered six of the 12 charged defendants in the Residence and seized (among other things) approximately 47 electronic devices, including 12 computers.  Two IP addresses associated with the Residence were used to access at least approximately 3,300 cellphone company customer accounts, and to fraudulently purchase at least approximately 1,294 cellphones.  The seized computers contained various indicators of involvement in the fraud, including:

• A 15-minute-long “How-to” video, which detailed the steps necessary to commit cellphone fraud, including how to use victim PII to fraudulently purchase devices;
• Many indicators that the computers had accessed the darkweb, several websites where victim PII is sold (sometimes for as little as $3), and cryptocurrency exchanges, including for Bitcoin; and
• Numerous Google searches in furtherance of the fraud (e.g., “best buy upgrade checker phone,” “att activate phone,” “verizon.com check order status,” “check my order status sprint,” “add authorized user last name,” “California driver license number format,” “Utah driver license photo,” and “most common last names for Spanish rich people”).

*                *                *

Each of the 12 defendants is charged with one count of conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison, and one count of aggravated identity theft, which carries a mandatory minimum penalty of two years in prison, which must run consecutively to any other term of imprisonment imposed.  The maximum and mandatory minimum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Michael D. Neff and Brett M. Kalikow 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 herein constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that JAMIE FRIERSON was found guilty of five robberies in connection with a robbery spree in Manhattan, during which thousands of dollars were stolen.  FRIERSON was convicted after a three-day trial before U.S. District Judge Analisa Torres.

U.S. Attorney Geoffrey S. Berman said:  “Jaime Frierson went on a one-man crime spree, brazenly attempting to rob five Manhattan banks in broad daylight in less than two weeks. Frierson threatened the lives of bank tellers to get away with thousands of dollars in cash, endangering the safety of New Yorkers and traumatizing bank employees.  This swift verdict shows that our community will not stand for these acts.”

According to the allegations in the Complaint and evidence at trial:

On August 16, 2017, FRIERSON entered a bank in midtown Manhattan and handed a bank teller a note claiming that he had a gun, demanding money, and threatening violence.  In response, the teller gave FRIERSON approximately $1,500 in United States currency.  Frierson then fled.

On August 18, 2017, FRIERSON entered a bank on the Upper West Side of Manhattan and handed a bank teller a note claiming he had a gun, demanding money, and threatening violence.  After FRIERSON was unable to obtain any money, he fled the bank.

On August 24, 2017, FRIERSON entered a bank on the Upper West Side of Manhattan and handed a bank teller a note claiming he had a gun, demanding money, and threatening to kill bank employees.  In response, the teller gave FRIERSON approximately $2,000 in United States currency.  FRIERSON then fled.

On August 29, 2017, FRIERSON entered a bank in Harlem and handed a bank teller two notes claiming he had a gun, demanding money, and threatening to kill bank employees.  After FRIERSON was unable to obtain any money, he fled the bank.

On August 29, 2017, FRIERSON entered a bank on the Upper West Side of Manhattan and handed a bank teller a note claiming that he was armed, demanding money, and threatening to kill bank employees.   In response, the teller gave FRIERSON over $8,000 in United States currency.  FRIERSON then fled.

*                *                *

FRIERSON, 47, of New York, New York, was convicted of three counts of robbery and two counts of attempted robbery.  FRIERSON is facing a maximum sentence of 20 years in prison on each count, and is scheduled to be sentenced on December 10, 2018, before Judge Torres.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation and the New York City Police Department.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that MICHAEL LUCIANO and PHILIP LUCIANO, a father and son, pled guilty today to selling fentanyl and oxycodone over the “dark web,” including on AlphaBay.  Fentanyl is a synthetic opioid that is significantly more potent than heroin, and is a major contributor to overdose fatalities.  The defendants also admitted to selling fentanyl that substantially contributed to a victim’s non-fatal overdose in 2015.  MICHAEL LUCIANO and PHILIP LUCIANO pled guilty before United States Magistrate Judge Katharine H. Parker, and were remanded into federal custody.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “The defendants’ fentanyl contributed to a victim’s overdose, which fortunately, the victim survived.  Subsequently, the defendants used the dark web – a place where some criminals think they can hide – to sell fentanyl and oxycodone, two highly addictive and potentially lethal opioids.  I commend our partners at HSI for bringing this father-son duo’s misconduct out of the dark.”

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

From at least in or about January 2015 through July 2017, MICHAEL LUCIANO and PHILIP LUCIANO conspired to distribute fentanyl, butyryl fentanyl (a fentanyl analogue), and oxycodone.  They sold these narcotics both in person and – from at least February 2016 through July 2017 – over the dark web.  In March 2015, the LUCIANOs sold fentanyl to a repeat customer who overdosed, was administered naloxone, taken to the hospital, and survived.  The overdose victim sent text messages to PHILIP LUCIANO from the hospital, stating, “I called you / Your dad at the house and saw him / I got back home and shot some.  I thought it might have been too much, especially considering my last dose of sub was Saturday.  I became unresponsive and my friend called an ambulance.  They gave me narcan and I’m at the hospital now / Can I settle up and get 60 more tomorrow?”  PHILIP LUCIANO replied, “Give me a call when u can.” 

Despite this overdose in 2015, the LUCIANOs continued to sell drugs, including over the darkweb in 2016 and 2017.  On AlphaBay, they sold narcotics using the vendor name “Zane61.”  AlphaBay customers repeatedly provided positive feedback on fentanyl and oxycodone they purchased from Zane61.  One of the LUCIANOs’ AlphaBay customers wrote, for example:  “Great stealth, fast shipping, legit product. Perfect 10/10.”  During a confession in July 2017, MICHAEL LUCIANO told HSI agents, among other things, that PHILIP LUCIANO had handled the technological aspects of their drug transactions over the darkweb, PHILIP had reported to MICHAEL drug orders they had received online, and MICHAEL had shipped the narcotics, via the United States Postal Service, to the LUCIANOs’ customers.

*                *                *

MICHAEL LUCIANO, 59, and PHILIP LUCIANO, 30, both of Staten Island, each pled guilty to one count of conspiracy to distribute and possess with intent to distribute three controlled substances – fentanyl, butyryl fentanyl (a fentanyl analogue), and oxycodone.  This charge carries a mandatory minimum sentence of five years in prison and a maximum sentence of 40 years in prison.  The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as the defendants’ sentences will be determined by the judge.  Sentencing has been scheduled for November 8, 2018, before United States District Judge Lewis A. Kaplan.

Mr. Berman praised HSI for its outstanding work on the investigation.  Mr. Berman also thanked the U.S. Postal Inspection Service, U.S. Customs and Border Protection, and the New York City Police Department for their valuable assistance in this investigation.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, 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 arrests of CHRISTOPHER COLLINS, a Congressman representing the 27th District of New York, CAMERON COLLINS, the son of CHRISTOPHER COLLINS, and STEPHEN ZARSKY, the father of CAMERON COLLINS’s fiancée, on charges of participating in a scheme to commit insider trading relating to securities of Innate Immunotherapeutics (“Innate”), an Australian biotechnology company on whose Board of Directors CHRISTOPHER COLLINS served.  As alleged in the Indictment, in June 2017, CHRISTOPHER COLLINS, who possessed material, nonpublic information through his service on Innate’s board of directors, betrayed his duties of trust and confidence to Innate by providing inside information to his son, CAMERON COLLINS, about confidential drug trial results so that his son and others, including ZARSKY, could trade before the drug trial results were publicly announced.  As a result of CHRISTOPHER COLLINS’s illegal tips, CAMERON COLLINS, ZARSKY, and others who received the inside information avoided a total of approximately $768,000 in losses.  When later interviewed by the FBI, CHRISTOPHER COLLINS, CAMERON COLLINS, and ZARSKY each made false statements to cover up their participation in the insider trading scheme. 

CHRISTOPHER COLLINS, CAMERON COLLINS, and ZARSKY are each charged with conspiracy, securities fraud, wire fraud, and making false statements to the FBI.  All three defendants surrendered this morning and will be presented and arraigned at 2:30 p.m. today before United States District Judge Vernon S. Broderick in federal court in the Southern District of New York. 

In a separate action, the United States Securities and Exchange Commission (“SEC”) filed a civil action against CHRISTOPHER COLLINS, CAMERON COLLINS, and ZARSKY.

U.S. Attorney Geoffrey S. Berman said:  “Congressman Christopher Collins is charged with insider trading and lying to the FBI, as are his son, Cameron Collins, and Stephen Zarsky, the father of Cameron’s fiancée.  As alleged, Christopher Collins tipped confidential corporate information to his son, who traded on the inside information and passed it on to others, including Zarsky.  Zarsky allegedly also traded on the information and tipped others.  Representative Collins, who, by virtue of his office, helps write the laws of this country, acted as if the law did not apply to him.  These charges are a reminder that this is a nation of laws, and everyone stands equal before the bar of justice.  The charges demonstrate again that no matter what the alleged crime, or who allegedly committed it, we stand dedicated to the pursuit of justice, without fear or favor.” 

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Congressman Christopher Collins sat on Innate Immunotherapeutics’ Board of Directors for a period of more than three years, spanning the run-up to the company’s clinical drug trial announcement in 2017.  When he received confidential information that the drug had failed its trial, he tipped off investors with whom he shared a personal relationship, as we allege.  Congressman Collins thought giving his family and friends a heads-up about material, nonpublic information would benefit them in the long run, but here's a better inside tip for those who think they can play by different rules:  Access to this kind of information carries with it a significant responsibility, especially for those who hold a position of trust in our society.  Act honorably and in accordance with the law, and do not lie to a special agent of the FBI.” 

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

The Insider Trading Scheme

The Scheme

In or about June 2017, CHRISTOPHER COLLINS, who, in addition to serving on Innate’s board of directors, was also one of Innate’s largest shareholders, participated in a scheme to commit insider trading.  Specifically, on or about June 22, 2017, CHRISTOPHER COLLINS learned that MIS416 – a multiple sclerosis drug that Innate was developing – had failed a critical drug trial that was meant to determine the drug’s clinical efficacy (the “Drug Trial”).  The negative Drug Trial results were highly confidential, and, as an insider who owed duties of trust and confidence to Innate, CHRISTOPHER COLLINS was obligated to keep the Drug Trial results secret until Innate publicly released them.  Instead, in breach of those duties, CHRISTOPHER COLLINS tipped his son, CAMERON COLLINS, who was also a substantial Innate shareholder, so that CAMERON COLLINS could make timely trades and tip others before Innate publicly released the Drug Trial results.  CAMERON COLLINS traded on the inside information and passed it to ZARSKY, as well as to three conspirators not named in the Indictment (“CC-1,” “CC-2,” and “CC-6”), so that they could utilize the information for the same purpose.  ZARSKY, in turn, traded on the information and used it to tip three more conspirators not named in the Indictment (“CC-3,” “CC-4,” and “CC-5,”) so that they too could engage in timely trades in Innate stock.  All of the trades preceded the public release of the negative Drug Trial results.

In total, these trades allowed CHRISTOPHER COLLINS, CAMERON COLLINS, and ZARSKY, as well as CC-1 through CC-6, to avoid over $768,000 in losses that they would have otherwise incurred if they had sold their stock in Innate after the Drug Trial results became public. 

The Drug Trial Results

In or about October 2014, Innate initiated a Phase 2B clinical trial of its primary drug, MIS416.  Successful completion of the Drug Trial was a necessary prerequisite to the commercialization of MIS416.  Because Innate had no other significant products in development, its stock price was tied to the success of MIS416.

The Drug Trial was widely expected to be completed around the summer of 2017.  For example, on or about June 9, 2017, Innate’s chief executive officer (“CEO”) sent various individuals, including CHRISTOPHER COLLINS, an email stating that “the delivery date for [the] review and ‘verdict’” of the Drug Trial “will [] occur at COB on US Thursday June 22nd.”  As the summer progressed, individuals within Innate remained optimistic that MIS416’s Drug Trial results would be positive.  The initial Drug Trial results were made available by trial administrators to Innate’s CEO on June 22, 2017.  These results established that MIS416 lacked therapeutic value in the treatment of multiple sclerosis.  The results were not publicly released at that time.  Instead, they were released publicly on June 26, 2017, after the U.S. markets had closed (the “Public Announcement”).  Innate’s stock price subsequently crashed, dropping 92% on the first trading day following the Public Announcement. 

Dissemination of the Drug Trial Results

On or about June 22, 2017, at approximately 6:55 p.m., Innate’s CEO sent an email describing the Drug Trial results to the company’s board of directors, including CHRISTOPHER COLLINS.  The email explained to Innate’s board of directors for the first time that the Drug Trial had been a failure.  The email began, in part, “I have bad news to report,” and continued to explain that “the top line analysis of the ‘intent to treat’ patient population (ie every subject who was successfully enrolled in the study) would pretty clearly indicate[s] ‘clinical failure.’”  The email continued, “Top-line 12-month data . . . show no clinically meaningful or statistically significant differences in [outcomes] between MIS416 and placebo,” and concluded by stating, “No doubt we will want to consider this extremely bad news. . . .” 

At the time CHRISTOPHER COLLINS received this email, he was attending the Congressional Picnic at the White House.  At 7:10 p.m., CHRISTOPHER COLLINS replied to the email, stating, in part, “Wow.  Makes no sense.  How are these results even possible???”  After responding to the Innate CEO’s email, CHRISTOPHER COLLINS called his son, CAMERON COLLINS.  They traded six missed calls between 7:11 p.m. and 7:15 p.m..  At 7:16 p.m., CHRISTOPHER COLLINS and CAMERON COLLINS spoke for more than six minutes.  During that six-minute phone call, CHRISTOPHER COLLINS told CAMERON COLLINS, in sum and substance, that MIS416 had failed the Drug Trial.

CHRISTOPHER COLLINS did not trade himself, and his Innate stock ultimately declined by millions of dollars in value when the Drug Trial results were made public on June 26, 2017.  As CHRISTOPHER COLLINS well knew, however, he was virtually precluded from trading his own shares for practical and technical reasons.  For example, CHRISTOPHER COLLINS was already under investigation by the Office of Congressional Ethics (“OCE”) in connection with his holdings in, and promotion of, Innate.  Indeed, he had been interviewed by OCE personnel on or about June 5, 2017, just 17 days earlier.  Accordingly, he did not trade his own stock and instead tipped CAMERON COLLINS.

Trading and Tipping by CAMERON COLLINS and ZARSKY

CAMERON COLLINS began placing orders to sell his Innate shares the morning after he received inside information from CHRISTOPHER COLLINS.  Between the morning of Friday, June 23, 2017, and the close of the market on Monday, June 26, 2017, CAMERON COLLINS sold approximately 1,391,500 shares of Innate stock.  These sales allowed CAMERON COLLINS to avoid approximately $570,900 in losses. 

Furthermore, after learning the Drug Trial results from CHRISTOPHER COLLINS, on or about the night of June 22, 2017, CAMERON COLLINS provided the Drug Trial results to at least the following three sets of individuals so that they could trade in advance of the Public Announcement:  (1) his now fiancée, CC-1; (2) ZARSKY and ZARSKY’s wife, CC-2; and (3) CAMERON COLLINS’s friend, CC-6.  Collectively, these individuals avoided approximately $186,620 in losses as a result of their trading on inside information. 

On or about the morning of June 23, 2017, ZARSKY provided the negative Drug Trial results that he had learned from CAMERON COLLINS and CC-1 to at least the following individuals, among others, or otherwise caused them to trade or attempt to trade in advance of the Public Announcement: (1) his brother, CC-3; (2) his sister, CC-4; and (3) his longstanding friend, CC-5.  Collectively, these individuals avoided approximately $10,900 in losses as a result of their trading on inside information.

Concealment of Trading

After the Public Announcement, CHRISTOPHER COLLINS took steps to prevent the public from learning that CAMERON COLLINS had sold significant portions of his Innate stock on or about June 23, 2017, and June 26, 2017, before the Public Announcement.  For example, on or about June 28, 2017, one of CHRISTOPHER COLLINS’s staff members issued a statement to a local reporter.  This statement stated that “Neither Christopher Collins, [nor] his daughter . . . have sold shares prior, during or after Innate’s recent stock halt,” and that “Cameron Collins has liquidated all his shares after the stock halt was lifted, suffering a substantial financial loss.”  This statement was written in a manner designed to mislead the public into believing that CAMERON COLLINS had not sold any Innate shares prior to the Public Announcement.  As CHRISTOPHER COLLINS explained in an email about press coverage surrounding Innate, “We want this to go away.”

False Statements to the FBI

On or about April 25, 2018, Special Agents from the FBI separately interviewed CHRISTOPHER COLLINS, CAMERON COLLINS, and ZARSKY.  During these interviews, and as detailed in the Indictment, CHRISTOPHER COLLINS, CAMERON COLLINS, and ZARSKY made false statements to the FBI to cover up their participation in the insider trading scheme. 

*                      *                      *

A chart identifying the charges and the maximum penalties applicable to CHRISTOPHER COLLINS, CAMERON COLLINS, and ZARKSY is below.

Count

Charge

Defendants

Maximum Penalty

1

Conspiracy to commit securities fraud (18 U.S.C. § 371)

All

5 years in prison

2

Securities fraud (15 U.S.C. §§ 78j(b) & 78ff; Title 18 U.S.C. § 2)

CHRISTOPHER COLLINS; CAMERON COLLINS

20 years in prison

3

Securities fraud (15 U.S.C. §§ 78j(b) & 78ff; Title 18 U.S.C. § 2)

All

20 years in prison

4

Securities fraud (15 U.S.C. §§ 78j(b) & 78ff; Title 18 U.S.C. § 2)

CHRISTOPHER COLLINS; CAMERON COLLINS

20 years in prison

5-7

Securities fraud (15 U.S.C. §§ 78j(b) & 78ff; Title 18 U.S.C. § 2)

All

20 years in prison

8

Securities fraud (15 U.S.C. §§ 78j(b) & 78ff; Title 18 U.S.C. § 2)

CHRISTOPHER COLLINS; CAMERON COLLINS

20 years in prison

9

Conspiracy to commit wire fraud (18 U.S.C. §§ 1349)

All

20 years in prison

10

Wire fraud (18 U.S.C. §§ 1343 & 2)

All

20 years in prison

11

False Statements (18 U.S.C. §§ 1001 & 2)

CHRISTOPHER COLLINS

5 years in prison

12

False Statements (18 U.S.C. §§ 1001 & 2)

CAMERON COLLINS

5 years in prison

13

False Statements (18 U.S.C. §§ 1001 & 2)

STEPHEN ZARSKY

5 years in prison

Defendants’ Ages and Residences

Defendant

Residence

Age

Christopher Collins

Clarence, New York

68

Cameron Collins

Morristown, New Jersey

25

Stephen Zarsky

Summit, New Jersey

66

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

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

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Scott Hartman, Robert W. Allen, Max Nicholas, and Damian Williams are in charge of the prosecution.  

The allegations 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 today the conviction in Manhattan federal court of PATRICK MURACA for wire fraud and making false statements.  The jury found MURACA guilty on both counts of the Superseding Indictment following a trial before United States District Judge Ronnie Abrams.

U.S. Attorney Geoffrey S. Berman stated:  “Patrick Muraca, who promised investors their money would be used to expand his businesses, instead used those funds for personal expenses, including rent, payments on two mortgages, and expenses related to his fiancée’s restaurant. Thanks to the investigative work of the FBI, Muraca has been convicted of his fraudulent scheme.”           

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

In 2016, MURACA, the former President of Nuclea Biotechnologies, Inc., founded two new businesses: NanoMolecularDX LLC (“NMDX”) and MetaboRx LLC (“Metabo”).  Between 2016 and July 2017, MURACA solicited and obtained more than approximately $1 million from investors by making false and misleading representations that the investors’ money would be used to expand the business of NMDX and Metabo.  MURACA then misappropriated hundreds of thousands of dollars of investors’ funds and used the misappropriated money for personal expenses.  For example, MURACA spent tens of thousands of dollars of investor funds on rent, utilities, and food distributor expenses related to the operation of a restaurant owned by his fiancée.  In addition, MURACA wrote more than approximately $175,000 in checks to himself from the bank accounts associated with NMDX and Metabo.  MURACA also used investor funds to make payments on his mortgage and the mortgage on a home belonging to his mother and for hundreds of dollars in purchases at a cigar store and a tattoo and piercing establishment, among other businesses.

MURACA was arrested by the Federal Bureau of Investigation (“FBI”) in July 2017.  On November 17, 2017, MURACA met with a Special Agent with the FBI and an Assistant United States Attorney.  In the course of the November 17, 2017 meeting, Muraca made a material false statement about his use of investor funds.

*                *                *

MURACA, 49, of Pittsfield, Massachusetts, was found guilty of one count of wire fraud, which carries a maximum term of 20 years in prison, and one count of making false statements to federal law enforcement, which carries a maximum term of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  A sentencing date has not yet been set.

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

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys David Abramowicz, Katherine Reilly, and Christopher DiMase are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Angel M. Melendez, Special Agent in Charge for U.S. Immigration and Customs Enforcement’s (“ICE”), Homeland Security Investigations (“HSI”), and James P. O’Neill, the Commissioner of the New York City Policy Department (“NYPD”), announced charges today against five individuals for conspiring to traffic in more than $70 million worth of counterfeit Nike Air Jordans.  Defendants MIYUKI SUEN, JIAN MIN HUANG, SONGHUA QU, KIN LUI CHEN, and FANGRANG QU are charged with importing hundreds of thousands of athletic shoes from China into the United States.  Once those shoes arrived, the defendants and other co-conspirators affixed counterfeit Nike-trademarked logos to those shoes in New York, and sold the now-counterfeit Air Jordans in the United States.  All five defendants were arrested this morning and will be presented before U.S. Magistrate Katharine H. Parker today.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “The five defendants in this case allegedly counterfeited over $70 million in fake Nike shoes and sold them to buyers on the U.S. market.  I commend our law enforcement partners for helping to bring today’s charges, which send a clear message to would-be counterfeiters: ‘Just don’t do it.’”

ICE HSI Special Agent-in-Charge Angel M. Melendez said:  “These five individuals are alleged to have been a part of a large scale counterfeiting scheme, importing nearly a half million pairs of knock-off Nike sneakers.  These counterfeiting networks can be both detrimental to our economy and threaten our national security, and HSI will continue to take every measure in investigating and dismantling these organizations.”

According to the allegations in the Complaint:

From at least in or about January 2016 up to and including in or about July 2018, SUEN, HUANG, SONGHUA QU, KIN LUI CHEN, and FANGRANG QU, the defendants, imported at least 42 shipping containers holding an estimated more than 380,000 pairs of sneakers from China.  These sneakers were manufactured to resemble Nike Air Jordans.  Once these shoes arrived, the defendants added trademarked logos to the shoes, rendering them counterfeit.  The defendants then stored the counterfeit Nike Air Jordans in multiple storage units and warehouses in New York City and elsewhere. 

On August 7, 2018, pursuant to court-authorized search warrants, federal law enforcement agents conducted searches of a warehouse, storage units, and a residence related to this scheme, and found thousands of counterfeit shoes, counterfeit trademarks, and machinery to finish counterfeit shoes.  The estimated loss attributable to the defendants’ efforts amounts to more than $70 million.

*                      *                      *

SUEN, 43, HUANG, 42, and CHEN, 53, of New York, New York, and SONGHUA QU, 54, and FANGRANG QU, 31, of Hicksville, New York, are each charged with one count of conspiring to traffic in counterfeit goods, and one count of trafficking in counterfeit goods.  Each defendant faces a maximum potential sentence of 20 years in prison.

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

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOHN FARCHIONE, a former Manager at a public utility company (the “Public Utility”), pled guilty today in Manhattan federal court to four felony counts in connection with a scheme to steal more than $4 million from the Public Utility and its customers between 2005 and 2016.  During that time period, FARCHIONE obtained and kept millions of dollars in customer payments intended for the Public Utility and then manipulated the Public Utility’s computer and accounting systems to conceal the theft.  FARCHIONE pled guilty before U.S. District Judge J. Paul Oetken to one count of honest services fraud, one count of mail fraud, one count of conspiracy to commit mail fraud, and one count of aggravated identity theft.

U.S. Attorney Geoffrey S. Berman said:  “As he has now admitted, for more than a decade, John Farchione abused his position to steal millions of dollars from his employer, a public utility company New Yorkers rely upon.  We will continue to work aggressively to protect New York’s public utilities and their customers from such brazen criminal conduct.”

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

From at least in or about 2005, up to and including in or about November 2016, FARCHIONE orchestrated fraudulent schemes that allowed him to steal millions of dollars from the Public Utility.

FARCHIONE, who was employed by the Public Utility as a manager in Customer Operations during the relevant time period, devised and implemented the scheme, using his knowledge of the Public Utility’s billing and payment processes.  FARCHIONE carried out the scheme with a co-conspirator, Louis Bendel, who has previously pled guilty in connection with his role in the scheme.  Bendel operated a business that aggregated payments from customers of the Public Utility for the purpose of passing such payments on to the Public Utility.  FARCHIONE and Bendel effected the fraud in part through conspiring to submit fraudulent checks and payments to the Public Utility, in amounts owed by customers who provided cash to Bendel believing he would submit those payments to the Public Utility on their behalf. 

In fact, however, FARCHIONE and Bendel kept the customer cash for themselves and submitted fraudulent checks to the Public Utility that purported to convey aggregated payments by multiple customers of the Public Utility.  FARCHIONE, by virtue of his position as an employee of the Public Utility, was able to conceal the nature of the fraudulent checks, and thereby perpetuate the fraudulent scheme, through his knowledge of and access to the Public Utility’s account payment system.

Additionally, FARCHIONE and Bendel conspired to create false and fraudulent positive balances on certain customer accounts related to the scheme, and then caused the Public Utility to issue refunds that were not actually due, the proceeds of which were obtained and shared by FARCHIONE and Bendel.

*                      *                      *

FARCHIONE, 65, pled guilty to one count each of honest services fraud, which carries a maximum sentence of 20 years in prison; mail fraud, which carries a maximum sentence of 20 years in prison; conspiracy to commit mail fraud, which carries a maximum sentence of 20 years in prison; and aggravated identity theft in connection with the fraudulent schemes, which carries a mandatory sentence of two years in prison, to be served consecutively to any other sentence imposed.  The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.  In addition, FARCHIONE will be subject to financial penalties including restitution and forfeiture in amounts to be determined at sentencing.

FARCHIONE is scheduled to be sentenced by Judge Oetken on November 16, 2018.

Mr. Berman praised the outstanding work 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 Sidhardha Kamaraju 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 Field Office of the Federal Bureau of Investigation (“FBI”), and Charles Gardner, the Commissioner of the City of Yonkers Police Department (“YPD”), announced the arrest of JOHN TORTORA JR., a/k/a “Johnny T,” on charges of racketeering conspiracy, murder in aid of racketeering, and murder for hire.  The murder charges arise out of TORTORA’s role in the November 11, 1997, murder of Richard Ortiz, 29, in Yonkers.  TORTORA was arrested this morning in Yonkers by FBI agents and Yonkers PD detectives.  TORTORA will be presented later today before the U.S. Magistrate Judge Gabriel W. Gorenstein at the United States Courthouse in Manhattan.  The case has been assigned to United States District Judge Sidney H. Stein.  An initial pretrial conference is scheduled for August 14, 2018, at 3:00 p.m., before Judge Stein.

Manhattan U.S. Attorney Geoffrey Berman said:  “As alleged in the indictment, the defendant was responsible for the stabbing death of Richard Ortiz over 20 years ago.  Today, thanks to the remarkable dedication and perseverance of the FBI and the Yonkers Police Department, the defendant faces charges for his crimes.”

FBI Assistant Director William F. Sweeney Jr. said:  “The arrest of John Tortora should remind everyone that justice delayed is not justice denied.  Whether a crime was allegedly committed decades ago or just days ago, the FBI will maintain the same tenacity and we will be relentless toward ensuring those who commit violent crimes be held accountable for their actions.  The FBI New York Office never does these investigations alone, and we want to thank the Yonkers Police Department for their help in successfully solving a case from more than 20 years ago.”

Yonkers Police Commissioner Charles Gardner said:  “This arrest for the 1997 murder of Mr. Ortiz demonstrates the resolve and commitment of law enforcement to hold those accountable for their actions and serves as a warning to all members of La Cosa Nostra engaging in violent criminal activity in our communities.  We will continue to work with our federal partners to aggressively target alleged criminals and criminal enterprises operating in our City. 

I would like to thank the U.S. Attorney’s Office for the Southern District of New York and the FBI for their invaluable support and efforts in this investigation.”

According to the allegations contained in the Indictment[1] and statements made in court:

From in or about 1997 up to and including in or about 2018, TORTORA, an associate and later a member of the Genovese Crime Family, along with other members and associates of La Cosa Nostra, committed a wide range of crimes, including murder, extortion, gambling, and narcotics trafficking.  In particular, TORTORA hired others to kill Richard Ortiz in order to further the goals of the Genovese Family.  As a result, on November 11, 1997, Ortiz was brutally stabbed multiple times, causing his death.

*                      *                      *

TORTORA, 61, of Yonkers, New York, is charged with conspiracy to commit racketeering, murder in aid of racketeering, and murder for hire.  A chart showing the charges and maximum penalties for each count of the Indictment is below. 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.

COUNT

CHARGE

MAXIMUM PENALTY

1

Conspiracy to commit racketeering

Life in prison

2

Murder in aid of racketeering

Mandatory life in prison or the death penalty

3

Murder for hire

Mandatory life in prison or the death penalty

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 Lonergan, Jessica Fender, and Lauren Schorr 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 Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.  

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth 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, Michael C. Mikulka, Special Agent-in-Charge, New York Region, U.S. Department of Labor Office of Inspector General (“DOL-OIG”), and Thomas Licetti, Acting New York Regional Director of the U.S. Department of Labor-Employee Benefits Security Administration (“DOL-EBSA”), announced that SALVATORE ARMAO, the founder and managing partner of an accounting firm (the “Firm”), pled guilty today to making false filings with DOL in order to conceal an embezzlement scheme in which more than $100,000 was embezzled from a labor union (the “Union”) and its employee welfare benefit plan (the “Plan”).  ARMAO pled guilty before United States District Judge Vernon S. Broderick.

U.S. Attorney Geoffrey S. Berman said:  “As a professional accountant and certified fraud examiner, Salvatore Armao was supposed to serve as a check on labor fraud, not a facilitator of it.  As he admitted today, Armao knowingly submitted false filings with the Department of Labor and the Internal Revenue Service in order to facilitate and conceal a long-running embezzlement scheme involving a labor union.”

 DOL-OIG Special Agent-in-Charge Michael C. Mikulka said:  “Salvatore Armao, a CPA and Certified Fraud Examiner for Armao LLP, should have been the first line of defense in protecting the members of a union, and the fund serving members and their families.  Instead, he abused his position by filing false documents to conceal a multi-year embezzlement scheme.  We will continue to work with the Employee Benefit Security Administration, the Office of Labor-Management Standards, and our law enforcement partners to safeguard the assets of union members.”

DOL-EBSA Acting New York Regional Director Thomas Licetti said:  “Accurate reporting is an essential part of maintaining employee benefit plan integrity.  EBSA’s efforts in this case exemplify our commitment to protecting employee benefits and working in coordination with fellow federal agencies.”

According to the allegations in the Complaint and the Information to which ARMAO pled guilty, as well as statements made in court:

From at least in or about 2010 through in or about 2014, the president of the Union, who also served as a trustee of the Plan (the “President-Trustee”), repeatedly used Union funds to pay for his personal expenses, including payments for spa treatments, a gym membership, a second car, medical expenses, dues for an actors’ union, personal credit card charges, and ATM cash withdrawals.  The President-Trustee used his Union credit card to pay for personal expenses and then “reimbursed” the Union with funds transferred from the Plan.  In total, the President-Trustee embezzled more than $100,000 from the Union over approximately three years. 

During the period of the embezzlement, the Firm served as the accountant and auditor for the Union and the Plan.  To facilitate and conceal the President-Trustee’s embezzlement, ARMAO falsely classified as “loans” the personal expenses for which the President-Trustee paid using Union and Plan funds in accounting records and in DOL filings for the Union.  In at least 2012, 2013, and 2014, ARMAO falsely classified the President-Trustee’s personal expenses as loans in DOL filings for the Union.  ARMAO also provided false information on DOL filings for the Plan, concealing from DOL the President-Trustee’s prohibited transfers of tens of thousands of dollars from the Plan to the Union which, in turn, facilitated and concealed the President-Trustee’s use of Union funds to pay his personal expenses.  ARMAO repeatedly caused these false filings to be made to DOL despite being a Certified Fraud Examiner. 

Under the terms of his plea agreement, ARMAO has agreed to a 13-year ban, pursuant to 29 U.S.C. §§ 504 and 1111, which generally prohibits him from, among other things, being employed by a labor union or employee benefit plan.

*                      *                      *

SALVATORE ARMAO, 64, of Howard Beach, New York, pled guilty to a one-count Information charging him with making false statements in employee benefit plan records and reports required by the Employee Retirement Income Security Act of 1974 (“ERISA”).  This offense carries a maximum sentence of five years in prison.  The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  ARMAO’s sentencing is scheduled for November 8, 2018, at 2:30 p.m., before Judge Broderick.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that physician MUSTAK Y. VAID was sentenced today by U.S. District Judge Lorna G. Schofield to 18 months in prison for his participation in a $30 million scheme to defraud Medicare and the New York State Medicaid Program.  VAID falsely posed as the owner of a medical clinic, when that clinic was in fact owned by a corrupt businessman, and falsely claimed that he had examined and treated hundreds of patients whom he had not in fact seen.  VAID pled guilty on November 13, 2017, to health care fraud and conspiracy to commit health care fraud, mail fraud, and wire fraud before U.S. Magistrate Judge Henry B. Pitman.

U.S. Attorney Geoffrey S. Berman said:  “The Medicare and Medicaid programs are designed to provide essential medical care to the elderly and the needy, not to enrich corrupt doctors and other fraudsters.  The real victims of Mustak Vaid and his co-conspirators are U.S. taxpayers and needy patients with legitimate medical needs.  Today’s sentence sends a strong message that those who cheat Medicare and Medicaid, including physicians and other health care providers who abuse their positions of trust, will be held accountable and will face serious penalties.”

According to the Indictment and other documents filed in federal court, as well as statements made during VAID’s plea proceeding and sentencing:

Between 2007 and 2013, Aleksandr Burman owned and operated six medical clinics in Brooklyn (the “Clinics”) that fraudulently billed Medicare and Medicaid approximately $30 million for medical services and supplies that were not provided, were provided without regard to medical necessity, or were otherwise fraudulently billed.  Under New York State law, medical clinics must be owned and operated by a medical professional.  To circumvent this requirement, Burman, who was not a medical professional, hired doctors to pose as the nominal owners of each of the Clinics.  VAID was one of those doctors, agreeing to sign a variety of fraudulent documents that falsely represented to banks, Medicare, Medicaid, and others that VAID was the sole owner of Ocean Side Medical of Brooklyn, P.C., one of the six Clinics.  VAID and his co-conspirators also helped prepare false medical records to support fraudulent reimbursement claims provided to Medicare and Medicaid.  VAID signed medical charts falsely stating that he had examined patients, and wrote prescriptions and referrals for medically unnecessary and/or non-existent tests and supplies.

VAID is the seventh defendant, and the first physician, who has been sentenced after pleading guilty in this case and a related case.  The other defendants include: 

• Aleksandr Burman, the leader of the scheme, who was sentenced in a related case on May 8, 2017, to 10 years in prison;
• Marina Burman, the former wife of Aleksandr Burman and the owner of a related medical supply company, was sentenced on May 17, 2018, to three years in prison;
• Asher Oleg Kataev, a Burman business partner, was sentenced on May 31, 2018, to three years in prison;
• Alla Tsirlin, a Clinic office manager, was sentenced on June 5, 2018, to a year and a day in prison;
• Edward Miselevich and Ivan Voychak, Burman’s partners who jointly ran a related ambulette company, were sentenced on June 12 and July 19, 2018, respectively, to three years in prison each.

In addition, physician Ewald J. Antoine has pled guilty and is scheduled to be sentenced on August 21, 2018.  Three additional defendants – a doctor (Paul J. Mathieu), a physical therapist (Hatem Behiry), and an occupational therapist (Lina Zhitnik) – are scheduled to go to trial before Judge Schofield on November 26, 2018.  These three remaining defendants are presumed innocent unless and until proven guilty.
 

*                *                *

In addition to the prison term, VAID, 45, of Roundtown, Michigan, was sentenced to three years of supervised release.  Judge Schofield also ordered VAID to pay restitution of $2,669,231 and to forfeit $103,843 in ill-gotten gains.

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

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys David Raymond Lewis and Won S. Shin are in charge of the prosecution.

On June 11, 2016, Jessica White did what so many parents love to do – she took her children to the playground.  There, she was killed before her children’s eyes, the victim of a stray bullet in a gang shooting.  Today, a jury in the Southern District of New York unanimously found that Stiven Siri-Reynoso gave the order for that shooting.  We recognize that this verdict cannot fill the gaping hole that Jessica’s death left in so many hearts.  But in the face of such tragedy, we, along with our law enforcement partners, maintain our commitment to ridding our neighborhoods and playgrounds of senseless gang violence.  That is what we accomplished today, thanks to the extraordinary efforts of the FBI and NYPD.

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that STIVEN SIRI-REYNOSO was found guilty of the June 11, 2016, murder of Jessica White, who was killed by a stray bullet while watching her children play in the playground of the John Adams Houses in the Bronx, New York.  SIRI-REYNOSO was convicted after an eight-day trial before Chief U.S. District Judge Colleen McMahon.

U.S. Attorney Geoffrey S. Berman:  “On June 11, 2016, Jessica White did what so many parents love to do – she took her children to the playground.  There, she was killed before her children’s eyes, the victim of a stray bullet in a gang shooting.  Today, a jury in the Southern District of New York unanimously found that Stiven Siri-Reynoso gave the order for that shooting.  We recognize that this verdict cannot fill the gaping hole that Jessica’s death left in so many hearts.  But in the face of such tragedy, we, along with our law enforcement partners, maintain our commitment to ridding our neighborhoods and playgrounds of senseless gang violence.  That is what we accomplished today, thanks to the extraordinary efforts of the FBI and NYPD.”

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

On June 11, 2016, Jessica White was struck and killed by a stray bullet while sitting on a bench watching her three children play on a playground at the John Adams Houses where she lived.  SIRI-REYNOSO, a member of the “Dominicans Don’t Play” or “DDP” street gang, was engaged in an ongoing gang dispute between the DDPs and the rival “Trinitarios” street gang involving, among other things, SIRI-REYNOSO’s drug sales near the John Adams Houses.  On the night of June 11, 2016, Trinitarios members tried to attack SIRI-REYNOSO.  In retaliation, SIRI-REYNOSO sent another individual to shoot at the Trinitarios.  One of the bullets fired by that individual struck and killed Jessica White.    

SIRI-REYNOSO also committed other crimes in connection with his membership in the DDP’s, including drug selling and robbery.

*                      *                      *

SIRI-REYNOSO, 24, of the Bronx, was convicted of conspiring to commit racketeering, conspiring to sell narcotics, murder in aid of racketeering, and murder through the use of a firearm.  SIRI-REYNOSO is facing a mandatory minimum sentence of life in prison, and is scheduled to be sentenced on October 30, 2018, before Judge McMahon.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation and the New York City Police Department. 

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Drew Skinner, Allison Nichols, and Frank Balsamello are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that former New York State Assembly Speaker SHELDON SILVER was sentenced this afternoon to seven years in prison after having been found guilty a second time by a federal jury of using his official position to obtain nearly $4 million in bribes in exchange for his official acts and obtaining another $1 million through laundering the proceeds of his crimes. SILVER had previously been found guilty of the same offenses by a jury in November 2015, but the conviction was 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.

SILVER was sentenced in Manhattan federal court by U.S. District Judge Valerie E. Caproni, who also presided over the two-week jury trial.   

U.S. Attorney Geoffrey S. Berman said:  “When he assumed his powerful position at the top of New York State government, Sheldon Silver took an oath to do the work of the people.  Instead, he leveraged his tremendous influence to pad his bank account and line his pockets.  Sheldon Silver has been given a lengthy sentence of seven years in federal prison.  We hope today’s fittingly stiff sentence sends a clear message: brokering official favors for your personal benefit is illegal and will result in prison time.  I thank the career prosecutors of this Office for their perseverance in this important case for the people of New York.”

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

For more than two decades, SHELDON SILVER served as Speaker of the New York State Assembly, a position that gave him significant power over the operation of state government.  SILVER used this immense power – including, in particular, his power over the real estate industry and his control over certain health care funding – to unlawfully and corruptly enrich himself.  Among other things, SILVER unlawfully solicited and obtained client referrals worth millions of dollars in exchange for his official acts, and attempted to disguise this money as legitimate outside income earned from his work as a private lawyer.  In particular, SILVER claimed, on financial disclosure forms required to be filed with New York State and in public statements, that the millions of dollars he received in outside income while also serving as Speaker of the Assembly came from a Manhattan-based law firm, Weitz & Luxenberg P.C., where SILVER claimed to work representing individual clients in personal injury actions.  These claims were materially false and misleading – and made to cover up unlawful payments SILVER received due to his official power and influence as an elected legislator and the Speaker of the Assembly.

The schemes provided SILVER with two different streams of unlawful income: (i) approximately $700,000 in kickbacks SILVER received by steering two real estate developers with business before the state legislature to a law firm with which he was associated, and (ii) more than $3 million in asbestos client referral fees SILVER received by, among other official acts, awarding $500,000 in state grants to a university research center of a physician who referred patients made ill by asbestos to Weitz & Luxenberg.

Unlawful Income From a Real Estate Law Firm

SILVER, a lawyer, entered into a corrupt relationship with Jay Arthur Goldberg, P.C., later known as Goldberg & Iryami, P.C., which specialized in making applications to New York City to reduce taxes assessed on properties.  Beginning in at least approximately 2000, SILVER approached a prominent developer of residential properties in Manhattan, Glenwood Management Corp. (“Glenwood”), and later approached another developer, The Witkoff Group LLC (“Witkoff”), and asked them to hire Goldberg & Iryami.  The developers – both of whom lobbied SILVER and others on real estate issues because their businesses depended heavily on favorable state legislation – agreed to use Goldberg & Iryami as SILVER had requested.  Over the years, Witkoff and Glenwood paid millions of dollars in legal fees to Goldberg & Iryami.  SILVER received a cut from the legal fees amounting to nearly $700,000.  SILVER had no public affiliation with Goldberg & Iryami and performed no legal work to earn those fees, which were payments for SILVER having arranged the business through his official power and influence. 

While continuing to receive the fees and in furtherance of the scheme, SILVER took official action beneficial to Glenwood and Witkoff.  For example, while SILVER was publicly associated with advocating for tenants, a proposal that benefitted Glenwood was in substantial part enacted in real estate legislation in 2011 with SILVER’s support.  SILVER also approved more than $1 billion dollars in state financing for Glenwood.

Unlawful Income From Asbestos Client Referrals

SILVER also entered into a corrupt arrangement with Dr. Robert Taub, who was a leading physician specializing in the treatment of asbestos-related diseases, through which SILVER issued state grants and otherwise used his official position to provide favors to Dr. Taub and his family so that Dr. Taub would refer and continue to refer his patients to SILVER at Weitz & Luxenberg, a firm with which SILVER was affiliated as counsel.  Specifically, SILVER arranged for New York State to fund two grants – each for $250,000, and paid out of a then-secret and un-itemized pool of funds controlled entirely by SILVER – for a research center Dr. Taub had established.  SILVER used his official position to provide Dr. Taub with other benefits as well, including helping to direct $25,000 in state funds to a not-for-profit organization for which one of Dr. Taub’s family members served on the board, and asking the CEO of a second not-for-profit to hire a second family member of Dr. Taub. 

From approximately 2005 until his arrest, SILVER received more than $3 million from legal fees Weitz & Luxenberg received from patients Dr. Taub had referred to SILVER at the firm while SILVER was agreeing to and taking official actions to benefit Dr. Taub.  SILVER did no legal work whatsoever on these asbestos cases, his sole role having been to use his official position and access to state funds to induce Dr. Taub to provide him with these lucrative referrals. 

Silver’s Efforts to Cover Up the Schemes

SILVER took various efforts to disguise his unlawful outside income and prevent the detection of his criminal schemes.  For years, SILVER listed on his official public disclosure forms that his outside income consisted of “limited practice of law in the principal subject area of personal injury claims on behalf of individual clients,” which was false and misleading.  Beginning in 2010, SILVER’s disclosures changed to state that the source of his legal income was a “Law Practice” that “includ[ed]” being of counsel to Weitz & Luxenberg.  SILVER never disclosed his relationship with Goldberg & Iryami or any work beyond what he claimed was a “personal injury” practice.

SILVER also repeatedly made false and misleading statements about his outside work and income in his public statements, including the following:

• SILVER claimed he performed legal work consisting of spending several hours each week evaluating legal matters brought to him by potential clients and then referring cases that appeared to have merit to lawyers at Weitz & Luxenberg.  In fact, SILVER did no such work on the asbestos cases and obtained those referrals to Weitz & Luxenberg based on his corrupt arrangement with Dr. Taub.
• SILVER claimed his law practice involved the representation of “plain, ordinary simple people.”  In fact, SILVER steered legal work to Goldberg & Iryami for some of the largest real estate developers in the state, for which favorable state legislation was critical to their business interests.
• SILVER claimed through his spokesperson that SILVER principally found clients by virtue of his having been a “lawyer for more than 40 years,” in a manner that was “not unlike any other attorney in this state, anywhere.”  In fact, SILVER received money from referring his lucrative asbestos and real estate developer clients solely by virtue of his official position.
• SILVER stated through his spokesperson that “[n]one of his clients have any business before the state.”  In fact, SILVER’s outside income included millions of dollars of fees obtained through Glenwood and Witkoff, both of which had significant business before the state, and Dr. Taub, to whose benefit SILVER provided state funding and other benefits related to SILVER’s official position. 

In addition, SILVER attempted to thwart the Moreland Commission to Investigate Public Corruption, by filing legal motions on behalf of the Assembly and taking other action to block the Moreland Commission’s investigation into legislators’ outside income.

Finally, SILVER laundered part of crime proceeds through private investment vehicles, not available to the public, which yielded him another $1 million in ill-gotten gains.

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In addition to the prison sentence, SILVER, 74, of New York, New York, was sentenced to three years of supervised release. 

SILVER was found guilty by a unanimous jury on May 11, 2018, of two counts of honest services wire fraud, two counts of honest services mail fraud, two counts of extortion under color of official right, and one count of engaging in illegal monetary transactions.  

U.S. Attorney Berman praised the work of the Special Agents of the United States Attorney’s Office and the Federal Bureau of Investigation, which jointly conducted this investigation.  

This case was prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Daniel C. Richenthal and Damian Williams are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that WILLIAM McFARLAND pled guilty today to one count of wire fraud, in connection with his operation of a sham ticket scheme in which he purported to sell tickets to exclusive fashion, music, and sporting events though NYC VIP Access, a company controlled by McFARLAND.  McFARLAND also pled guilty to one count of bank fraud for writing a check with the name and account number of one of his employees without authorization, and one count of making false statements to a federal law enforcement agent in which he, among other things, falsely denied the wire fraud and bank fraud conduct to which he now has pled guilty.  McFARLAND pled guilty before U.S. District Judge Naomi Reice Buchwald.  During today’s plea proceeding, McFARLAND affirmed his previously entered guilty plea to one count of wire fraud in connection with a scheme to defraud investors in a company controlled by MCFARLAND, Fyre Media Inc. (“Fyre Media”), as well as its subsidiary (“Fyre Festival LLC”), which was formed to hold a music festival over two weekends in the Bahamas.  McFARLAND also affirmed his previously entered guilty plea to one count of wire fraud in connection with a scheme to defraud a ticket vendor for the Fyre Festival.  Sentencing is scheduled for September 17, 2018 at 3:30 p.m. before Judge Buchwald.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “William ‘Billy’ McFarland, CEO of Fyre Media, previously pled guilty to defrauding investors of Fyre Media and the infamous Fyre Festival and a ticket vendor of over $26 million.  While that fraud case was pending, McFarland engaged in yet another scam, purporting to sell tickets through a company called NYC VIP Access to exclusive events, such as the 2018 Met Gala, Burning Man 2018, Coachella 2018, the 2018 Grammy Awards, and the Super Bowl.  McFarland concealed his association with NYC VIP Access so that he could solicit customers of Fyre Festival and his other company Magnises to buy tickets without raising suspicion.  These customers later learned that the tickets didn’t exist, and that this was just another fraud in McFarland’s disturbing pattern of deception.  McFarland’s fraudulent schemes cost real people real money, and now he faces real time in federal prison for his crimes.”

According to the allegations in the Complaint and Superseding Information to which McFARLAND pled guilty, as well as statements made in court:

On March 6, 2018, McFARLAND pled guilty before Judge Buchwald to one count of wire fraud in connection with a scheme to defraud over 80 investors in Fyre Media and Fyre Festival LLC of over $24 million, and one count of wire fraud in connection with a scheme to defraud a ticket vendor for the Fyre Festival of $2 million, in the case captioned United States v. William McFarland, 17 Cr. 600 (NRB).  In connection with that case, McFARLAND was on pretrial release from July 1, 2017, to June 12, 2018.

From at least in or about late 2017, up to and including at least in or about March 2018, McFARLAND owned and operated NYC VIP Access, a company based in New York, New York.  NYC VIP Access purported to be in the business of obtaining and selling for profit tickets to various exclusive events such as fashion galas, music festivals, and sporting events, including the following events, among others: the 2018 Met Gala, Burning Man 2018, Coachella 2018, the 2018 Grammy Awards, Super Bowl LII, and a Cleveland Cavaliers game and team dinner with Lebron James.  McFARLAND, while on pretrial release, perpetrated a scheme to defraud attendees of the Fyre Festival, former customers of Magnises (another company operated by McFARLAND), and other customers by soliciting them to purchase tickets from NYC VIP Access to these exclusive events when, in fact, no such tickets existed. 

In furtherance of the fraudulent ticket scheme and to conceal his involvement in NYC VIP Access, McFARLAND took steps to make NYC VIP Access appear as it if were controlled and operated by other individuals.  For example, in soliciting ticket sales, McFARLAND used an email account in the name of a then-employee (“Employee-1”) and a fake employee (the “Fake Employee”) to communicate with customers.  In addition, McFARLAND did not personally meet or speak with customers.  Instead, at the direction of McFARLAND, Employee-1 met and spoke with customers to solicit ticket sales.  McFARLAND also directed Employee-1 to sign the contracts between NYC VIP Access and the customers for the sham ticket sales.  

McFARLAND also took steps to conceal his receipt of the proceeds from the scheme.  McFARLAND arranged for customer payments to be made by wire transfer, or through a payment processor, to bank accounts to which McFARLAND or his associates had access, including bank accounts belonging to Employee-1 and McFARLAND’s driver (the “Driver”).  Alternatively, McFARLAND used mobile payment service accounts belonging to other NYC VIP Access employees to receive customers’ payments for tickets. Employee-1, the Driver and other NYC VIP Access employees then provided the ticket sale proceeds to McFARLAND in cash.  After McFARLAND induced customers to pay for the tickets, McFARLAND either did not provide tickets at all, or did not provide tickets as advertised.  Altogether, McFARLAND obtained approximately $150,000 in fraudulent ticket sales from at least 30 customer-victims of NYC VIP Access.

In or about March 2018, McFARLAND provided a forged check in the name of Employee-1 to the Driver, which the Driver attempted to deposit into the Driver’s bank account and would have resulted in the unauthorized withdrawal of funds from Employee-1’s bank account.

On or about June 20, 2018, in an in-person interview with a federal law enforcement agent about his involvement in NYC VIP Access, McFARLAND falsely stated, among other things, that (i) McFARLAND did not think that he would defraud customers from his prior businesses, Magnises and Fyre Festival, when he solicited them to buy tickets for NYC VIP Access; and (ii) Employee-1 authorized McFARLAND to write a check from Employee-1’s bank account for $25,000 in the name of Employee-1 to the Driver for the Driver to deposit into the Driver’s bank account.

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McFARLAND, 26, of New York, New York, pled guilty to one count of wire fraud while on pretrial release, which carries a maximum sentence of 30 years in prison, one count of bank fraud while on pretrial release, which carries a maximum sentence of 40 years in prison, and one count of making false statements, which carries a maximum sentence of 5 years in prison.  McFARLAND also affirmed his previously entered guilty plea to two counts of wire fraud, each of which carries a maximum sentence of 20 years in prison.  In connection with his previously entered plea, McFARLAND agreed to forfeit $26,040,099.48.  In connection with today’s guilty plea, McFARLAND agreed to forfeit an additional $151,206.80. 

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 Judge Buchwald.

Mr. Berman praised the investigative work of the FBI’s New York Field Office.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United State Attorney Kristy J. Greenberg is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that eight defendants have been sentenced to prison terms by United States District Judge Gregory H. Woods for their participation in a long-running scheme to steal mail from Bronx mailboxes.  All eight defendants previously pled guilty before Judge Woods.  Between May 2015 and at least January 2017, BRIAN MARTE, a/k/a “Trini Rabiia,” ERICKSON BATISTA, a/k/a “Niike Batista,” JUNIOR TAVERAS, a/k/a “Tuh Relambio,” ANGEL ARISTY, a/k/a “Frekiitho Lindo Colon,” LUIS ROSADO, a/k/a “El Menolsito Tejada,” EOSCATERYS POLANCO, BRAYAN RODRIGUEZ, a/k/a “New Black El Paisano,” and RONARDO BAEZ, a/k/a “Tuchokoo Baez,” the defendants, each participated in a scheme to steal mail and deposit stolen checks and money orders using other individuals’ debit cards. 

U.S. Attorney Geoffrey S. Berman said:  “These defendants ‘fished’ for checks and money orders from U.S. Postal Service mailboxes like shooting fish in a barrel, and in doing so caused serious harm to Bronx residents.  As a result of their crimes, the defendants have been delivered to the criminal justice system and will now serve prison sentences.”

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

Since 2015, U.S. Postal Inspection Service (“USPIS”) and other local and federal agencies, including the New York City Police Department (“NYPD”), Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, have been investigating mail theft from mailboxes in the Bronx, New York.  The investigation has revealed that individuals steal mail either by illicitly obtaining mail box keys or by “fishing.”  Fishing involves inserting homemade mail theft devices into mailboxes located on street corners or other publicly accessible places.  After gaining access to the mail in the mailbox, a thief typically will remove any mail that appears to contain checks or money orders.  During the beginning and end of the month, when many people mail checks for rent and bills, a thief can steal checks worth tens of thousands of dollars in a single night. 

After perpetrators fish checks and money orders out of mailboxes, they sell the checks and money orders to others, remove the payees’ names by “washing” the checks and money orders, or simply deposit the checks and money orders into a bank account.  In various iterations of the scheme, those bank accounts have belonged to the mail thieves, to complicit accountholders, or to unsuspecting third parties whose debits cards or personal identifying information have been stolen. 

Since late 2015, USPIS and NYPD enforcement operations have resulted in over 50 state arrests of individuals for theft of mail in the Claremont Park area of the Bronx, and over $750,000 in checks and money orders has been traced to these mail theft schemes.  The eight defendants sentenced by Judge Woods each participated in these related schemes.  Additionally, MARTE illegally possessed a defaced firearm.

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POLANCO, 24, of the Bronx, New York, was sentenced by Judge Woods on July 25, 2018, to a total term of 24 months in prison, and five years of supervised release. 

BATISTA, 26, of the Bronx, New York, was sentenced by Judge Woods on May 18, 2018, to a total term of 30 months in prison, and three years of supervised release. 

RODRIGUEZ, 24, of the Bronx, New York, was sentenced by Judge Woods on May 16, 2018, to a total term of seven months in prison, and three years of supervised release. 

ROSADO, 21, of the Bronx, New York, was sentenced by Judge Woods on April 17, 2018, to a total term of six months in prison, and three years of supervised release. 

MARTE, 21, of the Bronx, New York, was sentenced by Judge Woods on April 5, 2018, to a total term of 27 months in prison, and three years of supervised release.

TAVERAS, 20, of the Bronx, New York, was sentenced by Judge Woods on March 27, 2018, to a total term of 24 months in prison, and one year of supervised release. 

ARISTY, 20, of the Bronx, New York, was sentenced by Judge Woods on March 26, 2018, to a total term of 11 months in prison, and three years of supervised release.

BAEZ, 22, of the Bronx, New York, was sentenced by Judge Woods on March 19, 2018, to a total term of six months in prison, and three years of supervised release. 

In addition to the prison terms, Judge Woods also ordered that the defendants pay over $150,000 in restitution to victims of the offenses.

Mr. Berman praised the outstanding investigative efforts of the USPIS and NYPD.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Catherine Ghosh and Stephanie Lake are in charge of the prosecution.