Southern District of New York

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced today the unsealing of a Complaint charging KEVIN SETO, a U.S. Customs and Border Protection Officer (“CBP”), and HIU KIT DAVID CHONG, a/k/a “Hk David,” a former administrator at a private research university, in connection with a bribery scheme that involved SETO accepting bribes and gratuities from CHONG and others in exchange for disseminating confidential law enforcement and immigration information and providing special treatment while processing the entry of foreign nationals and other individuals into the United States at JFK Airport in Queens, New York.  SETO was arrested yesterday afternoon and will be presented today before U.S. Magistrate Judge Gary Stein.  CHONG was arrested this morning and will be presented later today in the Central District of California.

“New Yorkers trust and rely on the integrity of our U.S. Customs and Border Protection Officers, who are tasked with the critical mission of safeguarding and protecting our borders,” said U.S. Attorney Jay Clayton.  “As alleged, Kevin Seto breached that trust and jeopardized the safety of our borders by accepting bribes and gratuities from Hiu Kit David Chong and others in exchange for access to confidential law enforcement and immigration information and special treatment for foreign nationals and others entering the United States at JFK Airport.  These charges highlight this Office’s commitment to pursuing those, including members of law enforcement, who seek to profit by abusing their positions of public trust.”   

“Kevin Seto, a CBP officer, allegedly accepted bribes in exchange for providing others with confidential law enforcement information and expediting the entry process for various visitors, to include foreign nationals,” said FBI Assistant Director in Charge Christopher G. Raia.  “Seto’s alleged participation exposed sensitive information to unauthorized recipients and leveraged his access to bypass travel regulations.  The FBI will never tolerate any individual who abuses their authority to prioritize personal financial gain over the security of our country’s borders.”

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

From at least in or about 2018 through at least in or about 2024, SETO, a CBP officer stationed at JFK International Airport, and Henry Yau, who was a Supervisory Detention and Deportation Officer with Immigration and Customs Enforcement (“ICE”),[2] participated in a scheme to obtain bribes and gratuities from friends and acquaintances in exchange for disseminating confidential law enforcement and immigration information and processing the entry of foreign nationals and other individuals into the United States.  One of the individuals who paid bribes and gratuities to SETO and Yau in exchange for such benefits was CHONG, who was an Assistant Director in the Office of Graduate Admissions at a private research university based in Southern California (“University-1”) between in or about September 2008 and in or around March 2016.[3]

For example, SETO and Yau disseminated confidential law enforcement and immigration information—from password-protected law enforcement databases to which they had access as law enforcement officers working within the United States Department of Homeland Security (“DHS”)—to CHONG on multiple occasions, either relating to CHONG himself or foreign nationals that CHONG was seeking to assist with entry into the United States.  The information that SETO and Yau disclosed to CHONG included confidential information regarding the status of a criminal investigation into CHONG. Additionally, SETO on multiple occasions facilitated the entry into the United States of CHONG or other individuals at CHONG’s request at JFK Airport, following international travel, allowing CHONG and these other individuals to bypass long lines at passport control and take advantage of expedited screening.

In exchange for these benefits from SETO and Yau, CHONG provided a subsidized hotel suite and various goods to SETO and offered to pay cash to Yau.  In addition to CHONG, SETO and Yau also improperly provided confidential law enforcement and immigration information and/or assistance with entry into the United States to a variety of other foreign nationals and United States citizens.  On at least two occasions, SETO provided entry assistance to individuals for the explicit purpose of bypassing secondary inspections or the payment of applicable duties on goods that the individuals purchased abroad.  In exchange for providing these benefits, SETO and Yau were offered, among other things, cash payments, dinners at expensive restaurants, and top-shelf bottles of alcohol.

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SETO, 38, of Queens, New York, and CHONG, 41, of El Monte, California, are each charged with conspiracy to receive and accept bribes and gratuities, which carries a maximum sentence of five years in prison; conspiracy to convert government records and property and disclose agency records containing individually identifiable information, which carries a maximum sentence of one year in prison; and identity theft conspiracy, which carries a maximum sentence of 15 years in prison.  SETO is also charged with obstruction of justice, which carries a maximum sentence of 20 years in prison; and making false statements to law enforcement, which carries a maximum sentence of five years in prison.

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

Mr. Clayton praised the outstanding investigative work of the FBI.  Mr. Clayton also thanked CBP’s Office of Professional Responsibility and the DHS Office of Inspector General for their assistance with the investigation.  

This case is being handled by the Office’s Public Corruption Unit and Violent Organizations & Crime Unit.  Assistant U.S. Attorneys Andrew K. Chan, James Ligtenberg, and Ni Qian 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.

[2] On December 12, 2024, Yau was charged by a grand jury sitting in the Southern District of New York with one count of identity theft conspiracy, in violation of 18 U.S.C. § 1028(f); four counts of conspiracy to convert records and property of the United States and disclose agency records containing individually identifiable information, in violation of 18 U.S.C. § 371; one count of conversion of records and property of the United States, in violation of 18 U.S.C. § 641; and one count of disclosure of agency records containing individually identifiable information, in violation of 5 U.S.C. § 552a(i)(1).  See United States v. Henry Yau, S8 23 Cr. 572 (CM), Dkt. 50 (S.D.N.Y. Dec. 12, 2024).  The charges against Yau, which remain pending, are merely accusations and Yau is presumed innocent unless and until proven guilty

[3] On or about June 15, 2020, CHONG pleaded guilty in the United States District Court for the Central District of California to wire fraud in connection with a scheme to obtain graduate school admission slots for unqualified Chinese nationals at University-1 in exchange for thousands of dollars in cash.  On or about September 17, 2020, CHONG was sentenced to one year of probation.  See United States v. Hiu Kit David Chong, 20 Cr. 171 (MWF) (C.D. Cal.).

United States Attorney for the Southern District of New York, Jay Clayton, Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, and Special Agent in Charge of the New York Regional Office of the Federal Deposit Insurance Corporation’s Office of Inspector General (“FDIC-OIG”), Patricia Tarasca, announced today the unsealing of an Indictment charging DANIEL CHU, the founder and former CEO of Tricolor Holdings LLC, with orchestrating a years-long financial crimes enterprise that defrauded multiple banks and other private credit providers.  CHU and DAVID GOODGAME, Tricolor’s former COO, are also charged with bank fraud and wire fraud offenses in connection with schemes to fraudulently double-pledge collateral to multiple lenders and manipulate the characteristics of collateral to make ineligible, near-worthless assets appear to meet lender requirements.  Both defendants were arrested today.  CHU will be presented later today in the Southern District of Florida, and GOODGAME will be presented tomorrow in the Northern District of Texas.  

Also unsealed today are the guilty pleas of JEROME KOLLAR, Tricolor’s former CFO, and AMERYN SEIBOLD, a former finance executive at Tricolor, in connection with their participation in the conspiracy.  KOLLAR and SEIBOLD pled guilty to fraud charges before U.S. District Judge Lewis J. Liman on December 16, 2025.  Both are cooperating with the Government.

“As alleged in the indictment, CEO Daniel Chu was the leader of an elaborate scheme to defraud creditors of Tricolor,” said U.S. Attorney Jay Clayton.  “At his direction, Tricolor repeatedly lied to banks and other credit providers, including by falsifying auto-loan data and ‘double pledging’ collateral.  Fraud became an integral component of Tricolor’s business strategy.  The resulting billion-dollar collapse harmed banks, investors, employees and customers.  It also undermines confidence in our financial system.  New Yorkers and all Americans want continuing criminal enterprises shut down and their leaders brought to justice whether they are on our streets or in our markets.”

“These four executives allegedly conspired to defraud lenders based on bogus collateral,” said FBI Assistant Director in Charge Christopher G. Raia.  “The defendants’ alleged manipulation not only ripped off multiple banks but also violated the integrity of our credit markets.  The FBI will never tolerate any company that makes fraud part of its business.”

“As alleged, the defendants in this case participated in a years-long fraudulent scheme that deceived the lenders of Tricolor,” said FDIC-OIG Special Agent in Charge Patricia Tarasca.  “The FDIC-OIG stands firm in its commitment to working with our law enforcement partners to investigate all allegations of fraud that target financial institutions, as we seek to preserve the integrity of our Nation’s financial system.”

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

From in or about 2018 through in or about 2025, CHU, GOODGAME, KOLLAR, and SEIBOLD conspired to defraud the lenders and asset-backed securities investors of Tricolor Holdings, LLC and its affiliates (“Tricolor”), a subprime auto retailer and financing company.  CHU, Tricolor’s founder and chief executive officer; GOODGAME, Tricolor’s chief operating officer; and others operated Tricolor through systematic fraud.  At CHU’s direction, multiple Tricolor executives repeatedly double-pledged collateral to multiple lenders and manipulated the characteristics of collateral to make ineligible, near-worthless assets appear to meet lender requirements.  By in or about August 2025, Tricolor had pledged approximately $2.2 billion of collateral to lenders and investors, but Tricolor had only approximately $1.4 billion of real collateral.  The difference—consisting of approximately $800 million in bogus collateral—resulted from the series of schemes and the conspiracy in which CHU, GOODGAME, KOLLAR, SEIBOLD, and others participated. Over time, this series of fraudulent schemes had a profound effect on Tricolor, which obtained hundreds of millions of dollars in cash advances; on CHU, who used a portion of the funds to enrich himself; and on Tricolor’s lenders, who extended billions in loans based on fabricated data and false statements.

In or about the summer of 2025, lenders confronted CHU and others at Tricolor about problems with Tricolor’s collateral.  In a series of secretly recorded phone calls, CHU and his conspirators concocted plans to conceal or explain away the fraud.  For example, on or about August 17, 2025, CHU proposed blaming certain loan data discrepancies on fictitious deferment policies.  CHU acknowledged, however, that “where we would have an issue is if, if they sent an auditor and they said, pull this up on your screen, right, that would be a problem.”  KOLLAR agreed, stating, “Yes. That would be bad.”  These efforts to conceal failed.

Unable to explain or excuse Tricolor’s fraud, CHU turned his sights on blaming others.  On another recorded phone call, CHU compared Tricolor’s circumstances to the circumstances of Enron, the energy trading firm that collapsed into bankruptcy following the discovery of accounting fraud and other misconduct.  Specifically, CHU and others discussed the possibility that they could blame the banks for ignoring red flags and use that threat as leverage to extract a favorable settlement.  CHU proposed using artificial intelligence tools to search for key words that GOODGAME could use in a discussion with a lender.  After another participant described an Enron-related litigation, CHU stated: “Enron obviously has a nice ring to it, right? <laugh>, I mean, Enron, Enron raises the blood pressure of the lender when they see that <laugh>.  It, it has to, right? I’m not— […] Cause who wants to be thrown in the category?”  CHU later said, “That Enron case is fucking perfect, I think.”

CHU, recognizing that Tricolor was, in his words, “basically history,” turned his attention to extracting millions of dollars from the company.  As Tricolor approached collapse, and after CHU observed that the company was “definitely insolvent,” he directed KOLLAR to pay him the final installments of a $15 million bonus.  On or about August 19 and 20, 2025—roughly three weeks before Tricolor placed more than 1,000 employees on unpaid leaves of absence and before the company filed for bankruptcy—CHU received two payments from Tricolor totaling $6.25 million.  CHU used some of this money to purchase a multimillion-dollar property in Beverly Hills, California on or about August 27, 2025.

Unable to maintain its access to loans, and unable to sustain its business without substantial cash, Tricolor filed for Chapter 7 bankruptcy on September 10, 2025.  By that time, the company’s largest lenders had advanced and were owed more than $900 million as a result of the fraudulent double-pledging and collateral manipulation schemes that CHU had orchestrated, and in which GOODGAME had knowingly participated as the company’s chief operating officer, for years.

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A chart containing the names, ages, residences, charges, and maximum penalties for the defendants is attached.

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

Mr. Clayton praised the outstanding work of the FBI and the FDIC-OIG.  Mr. Clayton also thanked the U.S. Securities and Exchange Commission for its assistance and cooperation in the investigation.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Micah F. Fergenson and Justin V. Rodriguez 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.

Defendant,

Age, and

Residence

CHU,

62,

Miami,

FL

Continuing Financial Crimes Enterprise, 18 U.S.C. § 225 (Count One)

Conspiracy to Commit Bank Fraud and Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1349 (Count Two)

Bank Fraud, 18 U.S.C. § 1344 (Count Three)

Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1343 (Count Four)

Life in prison

Mandatory minimum sentence of 10 years in prison

30 years in prison

30 years in prison

30 years in prison

GOODGAME,

49,

Waxahachie,

TX

Conspiracy to Commit Bank Fraud and Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1349 (Count Two)

Bank Fraud, 18 U.S.C. § 1344 (Count Three)

Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1343 (Count Four)

30 years in prison

30 years in prison

30 years in prison

KOLLAR,

62,

Shady Shores,

TX

Conspiracy to Commit Bank Fraud and Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1349 (Count One)

Bank Fraud, 18 U.S.C. § 1344 (Count Two)

Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1343 (Count Three)

False Statements to Financial Institutions, 18 U.S.C. § 1014 (Count Four)

Conspiracy to Commit Securities Fraud, 18 U.S.C. § 371 (Count Five)

Securities Fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Six)

Destruction of Records, 18 U.S.C. § 1519 (Count Seven)

30 years in prison

30 years in prison

30 years in prison

30 years in prison

Five years in prison

20 years in prison

20 years in prison

SEIBOLD,

31,

Princeton,

TX

Conspiracy to Commit Bank Fraud and Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1349 (Count One)

Bank Fraud, 18 U.S.C. § 1344 (Count Two)

Wire Fraud Affecting a Financial Institution, 18 U.S.C. § 1343 (Count Three)

False Statements to Financial Institutions, 18 U.S.C. § 1014 (Count Four)

Conspiracy to Commit Securities Fraud, 18 U.S.C. § 371 (Count Five)

Securities Fraud, 15 U.S.C. §§ 78j(b) & 78ff (Count Six)

Destruction of Records, 18 U.S.C. § 1519 (Count Seven)

30 years in prison

30 years in prison

30 years in prison

30 years in prison

Five years in prison

20 years in prison

20 years in prison

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

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced the unsealing of an Indictment today charging 12 members of an East Harlem-based narcotics trafficking organization with conspiring to distribute narcotics and with possessing firearms in furtherance of the narcotics trafficking conspiracy stemming from their conduct in and around the “Johnson  Houses”—a  colloquial name  for  the James  Weldon  Johnson Residential Community, a public housing development under the control of the New York City Housing Authority (“NYCHA”).  BRIAN GONZALEZ, a/k/a “Bmakk,” BRIAN NIN, a/k/a “BDot,” IRA BOYCE, a/k/a “Zaza,” JOSE HERNANDEZ, JAHDEEN WILLIAMS, PERCY CARRION, CAESAR HERNANDEZ, and QUADIR DAVONISH, a/k/a “Skii Dotty” were arrested today and will be presented before U.S. Magistrate Judge Gary Stein.  BRYAN COWAN, a/k/a “Chapo,” was previously in custody.  JAFFARI HOPWAH, a/k/a “Baby Wuu,” DANIEL JONES, a/k/a “D Cash,” and RICHARD FARQUHARSON, a/k/a “Smooth” remain at large. This case has been assigned to U.S. District Judge Sideny H. Stein.

“As alleged in the Indictment, these defendants distributed substantial quantities of narcotics into the community, putting lives in danger,” said U.S. Attorney Jay Clayton.  “These defendants degraded the quality of life for Johnson Houses residents and the surrounding community by selling drugs in common areas including lobbies, courtyards, and a children’s playground.  New York City residents should be able to live in NYCHA complexes, free from the dangers of drugs and guns.  Thanks to the extraordinary work of our partners at the FBI and NYPD, the defendants now face federal charges for their crimes and the Johnson Houses are safer.”

“For years, these 12 defendants allegedly utilized the Johnson Houses to facilitate their open-air drug market and generate an illicit revenue stream,” said FBI Assistant Director in Charge Christopher G. Raia.  “This joint investigation with NYPD Manhattan North Narcotics dismantled an alleged trafficking conspiracy disrupting the safety of a public housing development with a continual revolving door of drugs and firearms.  During the nationwide initiative, Coast to Coast, our local Operation Empire Heat takedown reflects the FBI’s steadfast commitment to coordinating with our local law enforcement partners to protect innocent New Yorkers from the unlawful activities of any criminal organization.”

As alleged in the Indictment unsealed today in Manhattan federal court and other court papers and proceedings:[1]

From at least in or about 2022 up to and including December 2025 in the Southern District of New York and elsewhere, GONZALEZ, NIN, COWAN, HOPWAH, BOYCE, JOSE HERNANDEZ, JONES, WILLIAMS, FARQUHARSON, CARRION, CAESAR HERNANDEZ, and DAVONISH, used a building within the Johnson Houses—and that building’s adjoining courtyard—as an open drug market in which they sold a variety of controlled substances, including crack cocaine and fentanyl, to customers who streamed into the building to buy the drugs.  They did this by occupying the building’s lobby at all hours of the day and night, often holding cross-body bags or fanny packs where drug products would be stored. At times, the drug products were also kept in a building mailbox.  Members of the conspiracy also exploited other parts of the building to facilitate their business.  They used specific apartments to package and store drugs, and they used utility boxes throughout the building stairwells to stash their drug products, drug paraphernalia (such as syringes), and firearms.

In addition to possessing and storing firearms in communal locations, such as building utility boxes, some members of the conspiracy also carried firearms at and around the building, and on several occasions, a member of the conspiracy brandished and discharged a firearm within, or in the vicinity of, the Johnson Houses. 

Several members of the conspiracy have been arrested at least once in recent years on state charges based on their possession of narcotics that were packaged for sale and/or possession of a firearm.  The drug business in and around the building nevertheless continued unabated. 

During simultaneous arrests and searches conducted today law enforcement agents seized the following items, among other things:

• a Building “stash” apartment: five firearms, two of which were “long” guns, capsules, bags, and baggies of suspected narcotics, and various drug paraphernalia and mixing material.
• NIN’s apartment: one firearm, one magazine, and two boxes of ammunition.
• CAESAR HERNANDEZ’s apartment: a large bag of suspected cocaine, a gun-cleaning kit, and a .40-caliber shell casing. 

Below is a picture of the “long” guns that were seized.

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All defendants are charged with conspiracy to distribute and possess with intent to distribute 280 grams or more of cocaine base (“crack”), 40 grams or more of fentanyl, and quantities of heroin and cocaine, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.  The defendants are also charged with possessing firearms in furtherance of the narcotics trafficking offense, which carries a mandatory minimum sentence of five years in prison to be served consecutively to any other sentence imposed, and a maximum sentence of life in prison.

A chart containing the names of the defendants, their ages, and places of residence is set forth below.

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

The prosecution of this case is being handled by the Office’s Violent Organizations and Crime Unit.  Assistant U.S. Attorneys Frank J. Balsamello and Diarra Guthrie 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.

Name

Age

Place of Residence

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

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Field Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), Bryan DiGirolamo, and Commissioner of the New York City Police Department (“NYPD”), Jessica S. Tisch, announced the unsealing of an Indictment charging DAVID MALDONADO in connection with a November 14, 2025, daytime shooting in which MALDONADO fired 12 rounds from a machine gun on a public street in the Bronx. MALDONADO was arrested and presented today before U.S. Magistrate Judge Gary Stein.  The case is assigned to U.S. District Judge Jed S. Rakoff.

"As alleged, David Maldonado used a machine gun conversion device to spray bullets on a Bronx street,” said U.S. Attorney Jay Clayton. “New Yorkers want brazen, gun toting criminals off our streets and we hear them.  Thanks to the prompt response of our law enforcement partners, Maldonado will now have to answer for his alleged crimes.”

“The ATF/NYPD Crime Gun Enforcement Team is committed to keeping illegal machine guns out of the hands of criminals and away from our communities,” said ATF Special Agent in Charge Bryan DiGirolamo.  “We thank the New York City Police Department and the US Attorney’s Office for the Southern District of New York for their continued partnership in keeping the public safe.”

“David Maldonado allegedly put New Yorkers at serious risk when he fired a fully automatic ghost gun in broad daylight on a public street, while NYPD detectives were nearby,” said NYPD Commissioner Jessica S. Tisch.  “Our detectives did exactly what they do best—they ran toward the danger, moved quickly to stop the threat, and our streets are safer because of their actions.  I thank the NYPD investigators, our partners at the ATF, and the U.S. Attorney’s Office for their continued work to hold violent offenders accountable.”

As alleged in the Indictment, and in public statements made in public court proceedings:[1]

On or about November 14, 2025, at around 4:00 p.m., MALDONADO, who has been previously convicted of multiple felony offenses, discharged a machine gun in the vicinity of East 170th Street and Third Avenue in the Bronx, including two shots that struck a nearby vehicle. 

Detectives of the NYPD, who were in the vicinity of the gunshots, spotted and promptly apprehended MALDONADO, who was in possession of an unserialized Polymer 80, model PF940C, 9x19mm caliber firearm, also known as a “ghost gun.”  During the shooting, MALDONADO used a semi-automatic handgun with an illegal machine gun conversion device installed, which converted his firearm into a fully automatic machine gun capable of shooting more than one shot with a single pull of the trigger.  Photographs of the firearm and magazine seized from MALDONADO and the conversion device that was installed on the pistol slide are below:

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MALDONADO, 53, of New York, New York, is charged with one count of possession of ammunition after felony conviction, which carries a maximum sentence of 15 years in prison; and one count of possession of a machine gun, which carries a maximum sentence of 10 years in prison. 

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

Mr. Clayton praised the outstanding investigative work of the NYPD and the ATF.

This case is being handled by the Office’s Violent Organizations & Crime Unit.  Assistant U.S. Attorney Brandon D. Harper 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.

United States Attorney for the Southern District of New York, Jay Clayton, announced that KEVIN PEREZ, a/k/a “Kay Flock,” was sentenced today to 30 years in prison for committing violent crimes as the leader of a Bronx-based gang, known as “Sev Side/DOA.”  In March 2025, a jury convicted PEREZ of racketeering conspiracy, attempted murder and assault with a deadly weapon in aid of racketeering, and a firearm discharge offense following a two-week trial before U.S. District Judge Lewis J. Liman, who imposed today’s sentence.

“Kevin Perez used violence and fame to fuel fear and intimidation across the Bronx,” said U.S. Attorney Jay Clayton.  “Perez and his gang members carried out a string of shootings that struck both rival gang members and innocent bystanders.  Perez also used his platform as a prominent rapper to celebrate his violence: threatening his rivals, bragging about his shootings, and taunting his victims.  His brazen actions unleashed a series of back-and-forth retaliatory shootings that killed and injured far too many people in the Bronx.  Thanks to the hard work of the women and men of this Office and our law enforcement partners, today’s sentence brings New Yorkers what they want: violent, gun-toting gang leaders off our streets.”  

According to the indictment, public court filings, and the evidence presented at PEREZ’s trial:

Since at least 2020, PEREZ was the leader of a gang based on East 187th Street in the Bronx, known as Sev Side/DOA, which is short for “Dumping on” (shooting) “Anything” or “Dead on Arrival.”  Members of the gang committed violence against gang rivals to protect their territory, enhance the reputation and wealth of Sev Side/DOA, and increase their status within the gang.  The gang primarily supported itself through bank and wire fraud, which in turn funded PEREZ’s music career.

Throughout 2020 and until his arrest in late 2021, PEREZ and his co-conspirators carried out a string of shootings.  The violence included a June 20, 2020, shooting in which a gang rival was struck in the jaw and several other victims were hit.  Days after the shooting, PEREZ and his co-conspirators put out a music video that bragged about the shooting.  PEREZ was also held responsible for attempted murders on June 26, 2020; August 10, 2020; and November 10, 2021, which collectively resulted in multiple people being shot.  The evidence also showed that, while committing this violence, PEREZ used his status as a recognized “drill rap” artist to celebrate his gang’s crimes. PEREZ put out songs—several of which received millions of views—that glorified his violence, threatened more of it, and taunted rival gang members who had been murdered.

In imposing today’s sentence, Judge Liman remarked that the defendant “taunted, celebrated, and created a culture of violence” and that the harm the defendant caused “was immense.”

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In addition to his prison term, PEREZ, 22, of the Bronx, New York, was sentenced to five years of supervised release. 

Mr. Clayton praised the outstanding investigative work of the New York City Police Department and Department of Homeland Security – Homeland Security Investigations, and also thanked the New York County District Attorney’s Office for its assistance.

The case is being handled by the Office’s Violent Organizations and Crime Unit.  Assistant U.S. Attorneys Ni Qian, Michael R. Herman, Patrick R. Moroney, Elizabeth A. Espinosa, and Jim Ligtenberg are in charge of the prosecution, with the assistance of Paralegal Specialists Ananya Sankar and David Naguib.

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation, Christopher G. Raia, announced today the unsealing of an Indictment charging GIOVANNI PENNETTA, the manager of Sestante Capital LLC (“Sestante”), a Manhattan-based investment adviser and private equity firm, with securities fraud, wire fraud, and aggravated identity theft. The charges in the Indictment arise from an alleged scheme by PENNETTA to fraudulently induce multiple investment clients to part with millions of dollars in exchange for economic exposure to shares of non-public companies.  PENNETTA was arrested on Sunday afternoon at John F. Kennedy International Airport and will be presented today before U.S. Magistrate Judge Gary Stein.  The case has been assigned to U.S. District Judge Jed S. Rakoff.

“As alleged, Giovanni Pennetta took advantage of investors by promising access to private, pre-IPO companies he did not control and never had access to,” said U.S. Attorney Jay Clayton.  “American investors deserve honesty in all markets, including the private investment markets.  When someone lies to investors and pockets their money instead, this Office and our law enforcement partners will step in to protect investors and the integrity of our markets.”

“Giovanni Pennetta allegedly stole millions of dollars from clients attempting to expand their own businesses with lies about his economic access and influence,” said FBI Assistant Director in Charge Christopher G. Raia.  “Pennetta allegedly abused his managerial position to attract potential victims before moving their intended investment funds from their wallets to his own.  The FBI maintains its unwavering stance against any business managers deceiving others to selfishly enrich themselves.”

As alleged in the Indictment unsealed today in Manhattan federal court:

PENNETTA is the managing member of Sestante, which is based in Manhattan.  Sestante, in turn, is the managing member of, and an investment adviser to, NextGenTech Investments LLC (“NextGenTech”), a private fund that purports to offer investors economic exposure to equity securities through membership interests in series controlled by the fund.

From 2019 through the present, PENNETTA repeatedly misrepresented to victims that he had access to shares of private companies and could offer investment interests in those shares through NextGenTech.  When investors transferred money to PENNETTA, however, he accepted the victims’ funds but did not provide them with the investment interests he had promised because, in fact, PENNETTA did not have access to the shares and had intentionally misled investors when he had told them otherwise.

Many of PENNETTA’s misrepresentations centered around his access to shares of Anduril Industries, Inc. (“Anduril”), a private defense technology company.  Invoking supposed connections with individuals associated with Anduril, PENNETTA represented to victims that he had access to Anduril shares and offered to sell his victims economic exposure to those shares by having them purchase membership interests in particular series of NextGenTech.  In furtherance of this scheme, PENNETTA provided his victims with falsified documents purporting to show his access to Anduril shares and that particular series of NextGenTech offered exposure to Anduril shares.

PENNETTA’s representations were false.  In fact, PENNETTA did not have access to Anduril shares, and NextGenTech did not have exposure to Anduril shares. The victims who paid NextGenTech millions of dollars based on PENNETTA’s promises received no economic exposure to Anduril shares whatsoever. Instead, PENNETTA transferred much of the victims’ funds to his personal bank account.

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PENNETTA, 50, of New York, New York and Italy, is charged with securities fraud and wire fraud, each of which carries a maximum sentence of 20 years in prison, and aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison. 

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

Mr. Clayton praised the outstanding work of the FBI and the U.S. Securities and Exchange Commission.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Alexandra N. Rothman and Samuel P. Rothschild are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, announced the guilty plea today of NATHAN AUSTAD, a/k/a “Snoopy,” in connection with a scheme to hack thousands of user accounts at a fantasy sports and betting website (the “Betting Website”) and sell access to those accounts in order to steal hundreds of thousands of dollars from the true users, including victims in the Southern District of New York.  AUSTAD pled guilty today to conspiracy to commit computer intrusion before U.S. District Judge Ronnie Abrams.

“Today’s guilty plea shows our Office’s commitment to holding cybercriminals who hack and steal from our citizens to account,” said U.S. Attorney Jay Clayton.  “Austad and his co-defendants robbed their victims, including New Yorkers, and shamelessly sold their private account information online.  Let this be a warning: hackers and cybercriminals who target New Yorkers will be brought to justice.  The women and men of our Office are watching and are committed to protecting the public from cyber intrusions, theft, and the online criminal markets that enable them.”

According to the charging documents and statements made in public filings and public court proceedings:

On or about November 18, 2022, AUSTAD and others launched a “credential stuffing attack” on the Betting Website.  During a credential stuffing attack, a cyber threat actor collects stolen credentials, or username and password pairs, obtained from other large-scale data breaches of other companies, which can often be purchased on the dark web.  The threat actor then systematically attempts to use those stolen credentials to obtain unauthorized access to accounts held by the same user with other companies and providers in order to compromise accounts where the user has maintained the same password.  Here, in connection with the attack on the Betting Website, AUSTAD and his co-conspirators made a series of attempts to log into the Betting Website user accounts using a large list of stolen credentials.

AUSTAD and his co-conspirators successfully compromised approximately 60,000 user accounts at the Betting Website (the “Victim Accounts”) through the credential stuffing attack.  In some instances, AUSTAD and his co-conspirators were able to add a new payment method of their own on the account (i.e., to a newly added financial account belonging to the hacker) and then use it to withdraw all the existing funds in the Victim Account to themselves, thus stealing the funds in each affected Victim Account.  Using this method, AUSTAD and others stole approximately $600,000 from approximately 1,600 Victim Accounts on the Betting Website.

Access to the Victim Accounts was also sold on various websites that traffic in stolen accounts, which are frequently referred to as “Shops.”  AUSTAD directly controlled and profited from his own shop, which was named after the character Snoopy from the Peanuts comic strip.  A photo of AUSTAD’s Shop website with victim companies redacted is below:

On or about December 2, 2022, AUSTAD messaged about the existence of this investigation, “everyone shouldve been prepared for this before cashing out lol,” and a co-conspirator replied, “lol fbi can’t do shit.”  On or about May 19, 2023, AUSTAD messaged about the existence of this investigation, “like we didnt know the risk when we started lol . . . everyone knows their committing fraud.”

AUSTAD also controlled cryptocurrency accounts that received cryptocurrency worth approximately $465,000, including proceeds of his crimes.

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AUSTAD, 21, of Farmington, Minnesota, pled guilty to one count of conspiring to commit computer intrusion, which carries a maximum sentence of five years in prison.

The maximum potential sentence is prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  AUSTAD is scheduled to be sentenced by Judge Abrams on April 10, 2026.

Mr. Clayton praised the outstanding work of the Federal Bureau of Investigation. 

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Kevin Mead and Micah Fergenson are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, announced that a jury found DWAYNE PULLIAM guilty today of Travel Act murder, participating in a conspiracy to distribute and possess with intent to distribute crack cocaine and heroin, and the distribution and possession with intent to distribute crack cocaine and heroin.  PULLIAM was found guilty following a one-week trial before U.S. District Judge Philip M. Halpern.

“In Carmel, New York, Dwayne Pulliam, a local drug dealer and employee of a drug rehabilitation center who had previously been convicted of and served over two decades for murder, killed one of his customers—Lori Lynn Campbell—whom he suspected of stealing crack cocaine from his business, and then drove her body to North Carolina, where he buried her in a shallow grave in the woods,” said U.S. Attorney Jay Clayton.  “With its verdict, the jury has held Pulliam responsible for Campbell’s murder, as well as for the harm that he sowed in both New York and Connecticut with his shameless dealing of crack and heroin.  This should serve as a lesson: if you commit a crime—if you commit a murder—law enforcement will pursue you relentlessly, and the career prosecutors of this Office and our law enforcement partners are committed to investigating and prosecuting these righteous cases.  If any member of the public has information that they wish to share with us about any unsolved murder, then we encourage you to come forward.”

According to the Indictment, public court filings, and the evidence presented at trial:

PULLIAM had a lengthy criminal history, including convictions in North Carolina in 1981 for breaking and entering and larceny and assault on a female, in 1985 for assault with a deadly weapon with intent to kill, in 1988 for possession of a firearm by a felon and trafficking cocaine, in 1992 for assault on a female and hit-and-run, and in New York in 1999 for intentional murder, for which PULLIAM was sentenced to 15 years to life in prison and released to lifetime parole on December 1, 2020.

After his release from prison, PULLIAM, who used the nickname “Doc,” got a job at a drug rehabilitation facility in Carmel, New York.  He also began distributing retail quantities of crack cocaine in New York and Connecticut, including for both money and sexual favors.  Additionally, he would use his customers as workers, paying them in drugs.

On or about March 28, 2022, Lori Lynn Campbell—one of PULLIAM’s customers—was at PULLIAM’s apartment in Carmel, New York.  PULLIAM suspected that Campbell was stealing crack from him and his business and “tested” her by leaving a small amount of crack cocaine in a room with her.  When PULLIAM returned, the crack was gone, and he confronted Campbell.  When Campbell tried to leave and to scream, PULLIAM strangled Campbell to death.  As PULLIAM later told one of his customers/workers, he “stopped her from screaming.”

PULLIAM picked up one of his customers/workers—who, among other things, would drive PULLIAM in return for drugs—and had the driver move Campbell’s car.  PULLIAM then brought his driver back to his apartment and showed the driver Campbell’s body, saying “there’s the culprit.”  PULLIAM, cajoling the driver with the promise of more drugs and threatening the driver’s family, got the driver to help him move Campbell’s body.  When PULLIAM put Campbell’s body in the trunk of his car, he used enough force to break one of her vertebrae.  PULLIAM then made his driver accompany him to North Carolina, where PULLIAM wrapped Campbell’s body in a plastic sheet, covered it with sulfur powder, and buried it in a shallow grave.  After PULLIAM and his driver returned to New York and Connecticut, PULLIAM continued selling drugs until he was arrested in this case.

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PULLIAM, 63, of Carmel, New York, was convicted of Travel Act murder, participating in a conspiracy to distribute and possess with intent to distribute heroin and 28 grams and more of crack cocaine, and distribution and possession with intent to distribute heroin and crack cocaine.  The Travel Act murder count carries a maximum sentence of life in prison, the narcotics conspiracy count carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison, and the narcotics count carries a maximum sentence of 20 years in prison.

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

Mr. Clayton praised the outstanding work of the Federal Bureau of Investigation and the Putnam County Sheriff’s Office, which also supported the prosecution through trial.  He also thanked the Danbury, Connecticut, Police Department, the Connecticut State Police, the Alamance County, North Carolina Sheriff’s Office, and the Caswell County, North Carolina Police Department.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Michael D. Maimin and T. Josiah Pertz are in charge of the prosecution, with the assistance of Paralegal Specialists Allison Tull and Casey Wilcox.

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), Naomi Gruchacz, and Assistant Director in Charge of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced today the filing of an Information charging NOSSON SKLAR, a/k/a “Nathan Sklar,” with engaging in a scheme to defraud health benefit programs through the submission of more than $20 million in fraudulent claims.  SKLAR also entered a guilty plea to the Information in a proceeding today before U.S. District Judge Nelson S. Román, to whom the case has been assigned.

“As he admitted today in court, Nosson Sklar spent years submitting millions of dollars in fraudulent medical claims to various health benefit programs,” said U.S. Attorney Jay Clayton.  “New Yorkers rely on honest billing to access care, and our Office will hold accountable those who drive up costs through criminal deception.”

“The defendant in this case brazenly submitted false claims to receive funds for rehabilitation services that were never provided under a doctor’s care,” said HHS-OIG Special Agent in Charge Naomi Gruchacz.  “HHS-OIG will continue to work with our law enforcement partners to hold accountable individuals who, to satisfy their own greed, exploit federal health care programs.”

“Nosson Sklar defrauded health care programs of more than $20 million by submitting illegitimate claims with forged unauthorized physician signatures,” said FBI Assistant Director in Charge Christopher G. Raia.  “Sklar, in his capacity as owner and CEO, violated the integrity of his company and a doctor at the expense of our healthcare system.  The FBI will always hold accountable anyone who abuses their position to bill for ghost services just to turn a profit.”

According to the Information, the Complaint previously filed against SKLAR, and other filings and statements made in court:        

SKLAR was the owner and chief executive officer of a company that operated a series of physical rehabilitation facilities around New York City (the “Rehabilitation Company”).  Between at least January 2020 and in or about July 2024, SKLAR submitted or caused others to submit more than $20 million in claims for medical services to various health care benefit programs, asserting that those services were rendered by a physician who worked with the Rehabilitation Company (“Victim-1”).  But that was false.  Victim-1 did not provide those services, did not work with the Rehabilitation Company during that time, and did not authorize SKLAR to submit bills in his name.

In or about July 2024, Victim-1 spoke with SKLAR on at least two occasions about the fraudulent bills.  During those conversations, SKLAR admitted that he had committed “fraud” by billing under Victim-1’s name, and that he did it “because [of] the money.”

Between at least in or about January 2020 and in or about July 2024, SKLAR caused more than $20 million in claims to be submitted to three separate health benefit programs (the “Health Plans”), which listed Victim-1 as having been the rendering provider for the Rehabilitation Company.  Approximately $12.4 million of those claims were eventually paid by the Health Plans.

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SKLAR, 56, of New York, New York, pled guilty to one count of health care fraud, which carries a maximum sentence of 10 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 defendant will be determined by a judge.

Mr. Clayton praised the investigative work of HHS-OIG and FBI.

This case is being prosecuted by the Office’s White Plains Division. Assistant U.S. Attorneys Jorja N. Knauer and David A. Markewitz are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, announced today the conviction of CARL ERIK RINSCH, a Los Angeles-based director and writer, for his role in a fraudulent scheme to steal $11 million from a subscription video on-demand streaming service (“Streaming Company-1”) in connection with a planned science fiction television show called “White Horse,” and then laundering that money.  The defendant was found guilty following a one-week trial before U.S. District Judge Jed S. Rakoff and is scheduled to be sentenced on April 17, 2026.

“Carl Erik Rinsch took $11 million meant for a TV show and gambled it on speculative stock options and crypto transactions,” said U.S. Attorney Jay Clayton.  “Today’s conviction shows that when someone steals from investors, we will follow the money and hold them accountable.”

As reflected in the Indictment, public filings, and the evidence presented at trial:

RINSCH is a film and television writer and director who partially completed a science fiction television show called “White Horse.”  In 2018, RINSCH reached an agreement with Streaming Company-1 in which Streaming Company-1 would both pay RINSCH for the existing episodes of White Horse and also fund completion of the rest of the show.  Between 2018 and 2019, Streaming Company-1 paid approximately $44 million for White Horse.

Between late 2019 and early 2020, RINSCH demanded even more money from Streaming Company-1 to complete White Horse.  Streaming Company-1 ultimately agreed to pay another $11 million and transferred those funds to a company RINSCH controlled on or about March 6, 2020.  The entirety of those funds was to be spent on the completion of White Horse.

But RINSCH did not use those funds to complete White Horse.  Instead, within days, RINSCH began transferring the funds he received through a number of different bank accounts before consolidating them in a personal brokerage account.  RINSCH then used those funds to make a number of personal and speculative purchases of securities.  His trading was unsuccessful, and in less than two months after receiving $11 million from Streaming Company-1, RINSCH had lost more than half of those funds.

Even after losing most of the $11 million, RINSCH still did not spend the remaining funds he had stolen on White Horse.  Instead, he used the money to speculate on cryptocurrency, and on personal expenses and luxury items, including at least $1.7 million on credit card bills; at least $3.3 million on furniture, antiques, and mattresses; at least $387,000 on a Swiss watch; and at least $2.4 million on five Rolls Royces and a red Ferrari.

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RINSCH, 48, of Los Angeles, California, was convicted of one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of money laundering, which carries a maximum sentence of 20 years in prison; and five counts of engaging in monetary transactions in property derived from specified unlawful activity, each of which carries a maximum sentence of 10 years in prison. 

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

Mr. Clayton praised the outstanding work of the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation. 

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Timothy V. Capozzi, Jackie Delligatti, David A. Markewitz, Kevin Mead, and Adam Sowlati are in charge of the prosecution with assistance from Paralegal Specialists Maria Larracuente and William Coleman.

United States Attorney for the Southern District of New York, Jay Clayton, announced today that DO HYEONG KWON was sentenced to 15 years in prison for committing wire fraud and conspiring to commit securities fraud, commodities fraud, and wire fraud in connection with KWON’s fraud centered around Terraform Labs PTE, Ltd. (“Terraform”), and the cryptocurrencies launched by Terraform.  KWON was extradited on December 31, 2024, and pled guilty in August 2025 before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence.

“Do Kwon devised elaborate schemes to mislead investors and inflate the value of Terraform’s cryptocurrencies for his own benefit,” said U.S. Attorney Jay Clayton.  “When his crimes caught up to him, Kwon embarked on a deceptive public relations campaign to cover up his fraud, laundered the proceeds of his illegal schemes, and sought to purchase political protection in foreign countries to evade criminal prosecution. Let there be no mistake, fraud is fraud whether it takes place on our streets, in our securities markets, or in our emerging and important digital asset ecosystem, and no matter where in the world criminals may seek refuge, the women and men of the Southern District of New York will relentlessly pursue justice for investors and protect the integrity of financial markets.”

According to the allegations in the Superseding Indictment and statements made in public court filings and proceedings:

From at least in or about 2018, up to and including in or about 2022, KWON orchestrated schemes to defraud purchasers of cryptocurrencies created and issued by Terraform.  Terraform was a blockchain and cryptocurrency company co-founded by KWON in 2018. Terraform distinguished the Terra blockchain from other competing blockchains by issuing so-called algorithmic stablecoins pursuant to what it called the “Terra Protocol.”  According to KWON and others, Terraform stablecoins maintained a steady value even under changing market conditions.  In or around September 2020, Terraform publicly announced the launch of Terraform’s stablecoin pegged to the U.S. dollar, TerraUSD (“UST”).  Terraform promotional materials claimed that, under the Terra Protocol, one UST could always be exchanged for $1 worth of LUNA, the Terra blockchain’s native token. Conversely, $1 worth of LUNA could always be exchanged for one UST.

KWON claimed that Terraform had used blockchain technology to create a self-contained, decentralized financial world with its own money, payment system, stock market, and savings bank.  KWON presented Terraform as having developed functioning, reliable financial technologies on the cutting edge of a movement towards “decentralized finance” (or “DeFi”), in that Terraform’s products purportedly operated largely through automated mechanisms and economic incentives, and that Terraform’s systems were governed by their users rather than by KWON and his associates and subordinates.

In fact, core Terraform products did not work as KWON advertised and were manipulated to create the illusion of a functioning and decentralized financial system in order to lure investors.  KWON engaged in this deceptive conduct in order to pump up the value of Terraform’s cryptocurrencies, which KWON and entities he controlled (a) possessed in large amounts and (b) sold to investors in exchange for billions of dollars’ worth of other assets.

The misrepresentations that KWON made in furtherance of his schemes to defraud included the following:

1. The Stablecoin Misrepresentations: KWON lied about the effectiveness of the system that lay at the heart of Terraform’s cryptocurrency empire, the “Terra Protocol,” which purportedly used a computer algorithm to maintain the value of Terraform’s so-called “stablecoin” pegged to the U.S. dollar, TerraUSD (“UST”), at a value of $1 for one UST.  Beginning at least in or about 2020, KWON and his associates advertised the Terra Protocol, including the economic incentives it created in the market, as sufficient on its own to maintain parity between one UST and one U.S. dollar.  In particular, KWON claimed that the Terra Protocol on its own had caused the successful restoration of UST’s $1 value after it dropped below 92 cents in or about May 2021.  That was a lie.  In truth, after the Terra Protocol on its own failed to cause the restoration of UST’s $1 peg in May 2021, KWON reached an agreement with executives at a high-frequency trading firm (the “Trading Firm”) to have the Trading Firm purchase large amounts of UST to artificially support UST’s $1 peg.  UST’s $1 peg was restored in May 2021 only after the Trading Firm strategically purchased millions of dollars of UST for the purpose of artificially propping up the peg.
2. The LFG Misrepresentations:  KWON lied about the governance of the Luna Foundation Guard Ltd. (the “LFG”), a purportedly independent body the creation of which KWON publicly announced in or about January 2022.  KWON claimed that the LFG was managed by a governing body that operated independently of Terraform and was tasked with deploying billions of dollars’ worth of financial reserves to defend UST’s peg.  In truth, KWON simultaneously controlled both the LFG and Terraform at all relevant times following the creation of the LFG; operated the LFG as an arm of Terraform rather than as an independent entity; repeatedly made significant financial decisions for the LFG without the prior approval of its governing body; and treated the LFG’s funds as interchangeable with Terraform’s funds when it suited KWON’s interests, resulting in KWON misappropriating hundreds of millions of dollars in assets from the LFG. KWON and others acting at his direction then sought to launder those misappropriated funds using a variety of transactions designed to conceal and disguise the nature, location, source, ownership, and control of the funds.
3. The Mirror Misrepresentations: KWON lied about the control, operation, and extent of user adoption of an investing application on the Terra blockchain called Mirror Protocol (“Mirror”), that purportedly allowed for the creation, buying, and selling of synthetic versions of stocks listed on United States securities exchanges.  KWON claimed that Mirror operated in a decentralized manner and that he and Terraform played no role in Mirror’s governance.  In truth, KWON and Terraform secretly maintained control over Mirror, and used automated trading bots to manipulate the prices of synthetic assets issued by Mirror.  KWON funded those manipulative trading bots in part by using a supply of one billion stablecoins that he created at the genesis of the Terra blockchain (the “Genesis Stablecoins”).  KWON also caused Terraform to inflate key user metrics to deceive investors about the extent of Mirror’s adoption and decentralization.
4. The Chai Misrepresentations: KWON falsely claimed that the Terra blockchain was being used to process billions of dollars in financial transactions for the Korean payment-processing application Chai.  KWON pointed to Chai’s purported use of the Terra blockchain as evidence that Terra had “real world” applications or uses, as distinct from competing cryptocurrency platforms.  In truth, Chai processed transactions through traditional financial processing networks, not the Terra blockchain.  To create the illusion that Chai processed transactions through the Terra blockchain, KWON and his co-conspirators used an automated process that copied transactions onto the Terra blockchain.  KWON used the Genesis Stablecoins in part to fund these fraudulent efforts.
5. The Genesis Coin Misrepresentations: When the Terra blockchain was first established in or about 2019, KWON arranged for it to have a preexisting supply of approximately one billion Terra stablecoins (the Genesis Stablecoins).  KWON provided limited, shifting, and knowingly false disclosures to investors about the Genesis Stablecoins.  Rather than using the Genesis Stablecoins solely for the purposes set forth in disclosures to investors, KWON used the Genesis Stablecoins for fraudulent purposes, such as funding (i) fake Chai blockchain transactions and (ii) trading bots to manipulate the prices of synthetic assets issued by Mirror.

Enticed, in part, by the fraudulent claims of KWON, both institutional and retail investors flocked to the Terra blockchain, such that, at its peak in the spring of 2022, the total market value of all UST and another Terraform cryptocurrency, LUNA, exceeded $50 billion.  KWON solicited and obtained investments from several investment firms in the United States and other locations, with the investments primarily consisting of agreements for the purchase or loan of Terraform’s cryptocurrencies built on the Terra blockchain.  Much of this growth followed KWON’s brazen deceptions about Terraform and its technology, including efforts by KWON and his associates to paper over UST’s vulnerabilities in May 2021 by secretly manipulating the market for UST.

By May 2022, UST’s peg began to break again.  By this time, the UST market was approximately nine times larger in terms of market capitalization and more than eight times larger in terms of daily trading volume relative to one year prior, in May 2021, when KWON sought to deceptively manipulate UST to maintain its $1 value.  While KWON was able to cover up the weaknesses of the Terra Protocol in May 2021, he was not able to do so in May 2022 when the market had expanded substantially.  As a result, UST and LUNA crashed, resulting in over $40 billion worth in investor losses.

After the crash of UST and LUNA in May 2022, and the initiation of government investigations in multiple jurisdictions into the crash, KWON sought to continue Terraform’s business operations and made public remarks about being in “full cooperation” with law enforcement inquiries.  In truth, KWON sought to evade accountability.  In a recorded conversation with an associate in or about August 2022, for example, KWON stated, in substance and in part, that his strategy with law enforcement investigating the crash of UST and LUNA was to “tell them to fuck off,” and that he had been taking steps to obtain “political protection” from multiple countries and was “pretty comfortable” that he would not be extradited to face criminal charges.

On or about March 23, 2023, KWON was arrested in Montenegro for trying to use a fraudulent passport.

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In addition to the prison term, KWON, 34, of the Republic of Korea, was ordered to forfeit over $19 million in proceeds from his illegal schemes, including his interest in Terraform and its cryptocurrencies.

Mr. Clayton praised the investigative work of the Federal Bureau of Investigation (“FBI”), FBI’s Virtual Assets Unit, FBI’s Economic Crimes Unit, FBI’s International Operations Division, and the Department of Justice’s Office of International Affairs for their assistance.  Mr. Clayton further thanked the U.S. Securities and Exchange Commission, which previously conducted a separate civil action against KWON.  Mr. Clayton commended the Ministry of Justice of the Republic of Montenegro and the Ministry of Justice of the Republic of Korea for their cooperation and assistance in this matter.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Marguerite B. Colson, Sarah Mortazavi, and Kimberly Ravener are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, Commissioner of the New York City Department of Investigation (“DOI”), Jocelyn E. Strauber, Special Agent in Charge of the New York Regional Office of the Federal Deposit Insurance Corporation’s Office of Inspector General (“FDIC-OIG”), Patricia Tarasca, and Special Agent in Charge of the New York Field Office of Internal Revenue Service-Criminal Investigation (“IRS-CI”), Harry T. Chavis, Jr., announced today the unsealing of an Indictment charging ANTHONY TEPEDINO—the founder, chief executive officer (“CEO”), and owner of a telecommunications construction and engineering company (the “Construction Company”) based in New Jersey—with commercial bribery, fraud, and witness tampering offenses.  TEPEDINO was arrested this morning and will be presented today before U.S. Magistrate Judge Barbara Moses.  The case is assigned to U.S. District Judge Richard M. Berman.

“As alleged, Anthony Tepedino turned a major construction company into his personal cash machine, stealing from companies that serve New Yorkers, bribing insiders, and lying to banks to keep the scheme alive,” said U.S. Attorney Jay Clayton.  “Fraud and corruption hurt real people in this city, and we will hold accountable any executive who abuses the trust placed in them.”

"Anthony Tepedino allegedly stole millions of dollars from his own company by fabricating fake businesses, invoices, and even a story to conceal his misconduct,” said FBI Assistant Director in Charge Christopher G. Raia.  “Rather than serve the best interest of his company, Tepedino allegedly abused his rank as CEO and founder to mislead trusted customers and steer their money into his private accounts.  The FBI will continue to investigate those who exploit their authoritative position to defraud others for personal profits.”

“As alleged, this defendant engaged in various fraud schemes, stealing millions of dollars from a company he founded and controlled through the use of shell companies and fake documents, and using some of those stolen funds to make commercial bribe payments to a co-conspirator in exchange for steering new contracts, also worth millions, to his company,” said DOI Commissioner Jocelyn E. Strauber.  “I thank the U.S. Attorney’s Office for the Southern District of New York and our federal law enforcement partners for their work on this important investigation.”

“The FDIC-OIG is pleased to join our law enforcement colleagues in announcing this indictment,” said FDIC-OIG Special Agent in Charge Patricia Tarasca.  “The charges reflected in this indictment reinforce the FDIC-OIG’s commitment to investigating allegations of fraud, bribery, and other crimes, as we seek to preserve the integrity of our Nation’s financial system.”

“The allegations against Tepedino paint a rainbow of fraud and criminal acts over more than half a decade,” said IRS-CI Special Agent in Charge Harry T. Chavis, Jr.  “Bribery, bank fraud, and stealing from his own company are on the list of ways he’s alleged to have funded his life of luxury.  IRS-CI continues to partner in investigations and use its financial expertise to subject alleged conduct like Tepedino’s to justice.”

As alleged in the Indictment:[1]

From at least in or about 2018 through in or about 2024, TEPEDINO—the CEO, founder, and sole shareholder of the Construction Company—engaged in a series of schemes to defraud the Construction Company’s largest customer (the “Victim Company”), its largest creditor (the “Victim Bank”), and the Construction Company itself.  To carry out these schemes, TEPEDINO and others formed shell companies, created fake invoices, and looted the Construction Company of more than $5 million. TEPEDINO then used some of those proceeds to bribe an employee of the Victim Company and to make millions of dollars in payments to himself, his relatives, and to his creditors.

The Construction Company was in operation for over a decade and eventually grew to earn up to hundreds of millions of dollars in revenue annually and to employ more than 500 people.  TEPEDINO abused his position as the head of the Construction Company to steal from the company, fund a lavish lifestyle, and commit commercial bribery, bank fraud, wire fraud, and aggravated identity theft. 

Beginning in or about 2018, TEPEDINO and a co-conspirator (“CC-1”) submitted false invoices to the Construction Company to generate fraudulent payments to a non-operational shell company (“Shell Company-1”) controlled by CC-1. To conceal their scheme, TEPEDINO and CC-1 falsely claimed Shell Company-1 was owned by a third party (“Individual-1”) and had CC-1 impersonate Individual-1 when communicating with the Construction Company on behalf of Shell Company-1.  This scheme continued until at least in or about September 2024, by which time TEPEDINO and CC-1 had stolen at least $5 million from the Construction Company. 

From in or about 2020 through in or about September 2024, TEPEDINO used some of the money he stole from the Construction Company to fund more than $1 million in commercial bribe payments to a second co-conspirator (“CC-2”), who was a senior manager at the Victim Company.  These bribe payments were made in exchange for CC-2 steering new contracts worth millions of dollars to the Construction Company, assigning work to the Construction Company, and approving invoices submitted by the Construction Company.  In total, the Victim Company paid the Construction Company more than $300 million during the approximately four years that Tepedino was bribing CC-2.

While defrauding the Construction Company and bribing CC-2, TEPEDINO also committed bank fraud.  From in or about late 2021 through early 2022, TEPEDINO sought more than $18 million in commercial credit from the Victim Bank on behalf of the Construction Company.  As part of this credit application, TEPEDINO made and caused to be made false statements and omissions regarding the Construction Company’s relationship with Shell Company-1 and his dealings with CC-2. 

Finally, to conceal his offense conduct from law enforcement, in or about September 2024 and thereafter, TEPEDINO attempted to engage in witness tampering by seeking to cause CC-1 and CC-2 to adopt false exculpatory narratives to explain their criminal conduct.

*               *                *

TEPEDINO, 61, of Manalapan, New Jersey, is charged with one count of conspiracy to commit wire fraud and honest services wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; one count of honest services wire fraud, which carries a maximum sentence of 20 years in prison; one count of aggravated identity theft, which carries a mandatory consecutive sentence of two years in prison; one count of bank fraud, which carries a maximum sentence of 30 years in prison; and one count of witness tampering, which carries a maximum sentence of 20 years in prison. 

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

Mr. Clayton praised the outstanding investigative work of the FBI, DOI, FDIC-OIG, IRS-CI, and the Special Agents and Task Force Officers of the U.S. Attorney’s Office for the Southern District of New York.

The prosecution of this case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Jessica Greenwood, Matthew King, and Daniel H. Wolf are in charge of the prosecution.

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

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

United States Attorney for the Southern District of New York, Jay Clayton, announced that a jury returned a guilty verdict against ANTHONY WALLACE for kidnapping a minor, coercion and enticement of a minor to engage in illegal sex, transportation of a minor across state lines to engage in illegal sex, and possession and production of child pornography.  WALLACE was convicted following a week-long jury trial before U.S. District Judge Mary Kay Vyskocil.

“Anthony Wallace used lies, threats, and violence to sexually abuse a 15-year-old minor victim over the course of a month, ultimately bringing the victim to the Bronx where he forced her to stay with him in a barricaded apartment,” said U.S. Attorney Jay Clayton.  “The victim eventually was able to escape and alert law enforcement, and I commend her for her bravery.  Our Office remains unwavering in our commitment to protecting children and ensuring that those who harm them face the full weight of the justice system.”

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

In March 2024, WALLACE met a 15-year-old girl (the “Minor Victim”) in Binghamton, New York.  Over the next four weeks, WALLACE subjected the Minor Victim to escalating physical, sexual, and psychological abuse.  At first, WALLACE kept the Minor Victim against her will in an apartment in Binghamton.  There, WALLACE assaulted the Minor Victim and forced her to disguise her appearance by dyeing her hair and wearing a mask.  WALLACE also gave the Minor Victim a steady stream of drugs, including methamphetamine and marijuana.  While in Binghamton, WALLACE created child pornography of the Minor Victim, which he kept on his cellphone.

On April 1, 2024, WALLACE transported the Minor Victim from Binghamton, New York, across state lines, ultimately bringing her to the Bronx, New York, where he kept her in a barricaded apartment.  While in the Bronx, WALLACE continued to physically assault the Minor Victim and forcibly raped her.

On April 4, 2024, the Minor Victim escaped through the window of the Bronx apartment while WALLACE was sleeping.  The Minor Victim immediately called 911 and was eventually returned home to her parents.

*                *                *

WALLACE, 32, of the Bronx, New York, was convicted of kidnapping a minor, which carries a mandatory minimum sentence of 20 years in prison and a maximum sentence of life in prison; coercion and enticement of a minor to engage in illegal sex, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; transportation of a minor across state lines to engage in illegal sex, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; possession of child pornography, which carries a maximum sentence of 10 years in prison; and production of child pornography, which carries a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 years in prison.

The minimum and maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  WALLACE is scheduled to be sentenced on April 23, 2026.

Mr. Clayton praised the outstanding investigative work of the Federal Bureau of Investigation’s Child Exploitation and Human Trafficking Task Force and the New York City Police Department.  He also thanked the Broome County Sheriff’s Office for their assistance in this investigation.

The prosecution is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Ariana L. Bloom, Remy Grosbard, Joseph H. Rosenberg, and Alexandra N. Rothman are in charge of the prosecution, with the assistance of Paralegal Specialists Samantha Roberts and Benjamin Coolman.

United States Attorney for the Southern District of New York, Jay Clayton, United States Attorney for the Eastern District of New York, Joseph Nocella, Jr., Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Ricky J. Patel, Special Agent in Charge of the New York Field Office of Internal Revenue Service Criminal Investigation (“IRS-CI”), Harry T. Chavis, Jr., and Commissioner of the New York City Police Department (“NYPD”), Jessica S. Tisch, joined federal partners on Dec. 10 to announce the establishment of the Homeland Security Task Force (“HSTF”) New York.

Co-led by HSI and the FBI, the HSTF New York will serve as a first-of-its-kind task force that utilizes a whole-of-government approach to identify, disrupt and dismantle criminal cartels, foreign gangs, and transnational criminal organizations (“TCOs”) in New York and throughout the United States.

“We hear what New Yorkers want: they want our parks, schools, housing developments, subways, and streets to be safe and feel safe,” said U.S. Attorney Jay Clayton.  “Together with our federal partners and the NYPD, the Southern District is committed to delivering safe streets and a better quality of life for all New Yorkers.  In the last year, we have collectively investigated and charged: members of Tren de Aragua and many other brutally violent gangs with murders, sex trafficking, and narcotics distribution; over a dozen narco-terrorists and members of state-sponsored drug cartels with narcotics distribution; foreign nationals with fentanyl distribution; and most recently, 18 defendants in a wide narcotics sweep aimed at cleaning up Washington Square Park.  The women and men of the SDNY are actively engaged in similar matters and are committed to making New York safer each and every day.”

“The historic collaboration of this Task Force strengthens the mission to protect our citizens by standing between our Districts and the transnational criminal organizations, human smugglers, and cybercriminals who target us with drug trafficking, violence, and economic harm,” said U.S. Attorney Joseph Nocella, Jr.

“FBI New York proudly stands alongside our federal, state, and local partners to co-lead with HSI New York the New York Homeland Security Task Force,” said FBI Assistant Director in Charge Christopher G. Raia.  “By bringing the full force of the federal government, this task force will dismantle designated terrorist enterprises who are responsible for trafficking lethal drugs and weapons into our communities.  Through unified partnership, we will continue to defend the homeland from evolving threats, safeguard critical infrastructure, and strengthen national resilience.”

“The people of this city deserve to know that special agents and investigators at every level of law enforcement are standing side-by-side and collaborating under one roof, so that New Yorkers may go about their lives safely and comfortably,” said HSI Special Agent in Charge Ricky J. Patel.  “The HSTF New York and HSI, as its co-leader, are driving coordinated investigations that strike at the heart of criminal networks and schemes both here and abroad.  With unity as our strength and coordination as our advantage, we will outpace, outsmart, and outmaneuver transnational criminal organizations at every turn.”

“We are proud to have entered into this agreement with the New York Homeland Security Task Force as a partner and as the third agency on the Executive Committee,” said IRS-CI Special Agent in Charge Harry T. Chavis, Jr.  “Whether it is money laundering, Bank Secrecy Act violations, a complex financial fraud, or leveraging our tax authority, we will continue working in tandem with all the agencies under the HSTF umbrella to take criminals off the street and dismantle transnational criminal organizations.  Special Agents with IRS Criminal Investigation have long been known for lending their financial and tax expertise to complex investigations.  With this agreement, our special agents will continue to proactively leverage our knowledge and unique skills for the betterment of this new team.”

The mission of the HSTF is to identify and target for prosecution transnational criminal organizations engaged in diverse criminal schemes involving a myriad of federal violations both within the United States and throughout the world.  Violations include, but are not limited to drug trafficking, money laundering, weapons trafficking, human trafficking, alien smuggling, homicide, extortion, kidnapping, weapons trafficking, and other TCO- related violations where there is or may be a federal investigative interest.

HSTF New York will primarily focus on investigating TCO Foreign Terrorist Organizations (“FTOs”), and is working towards the disruption and full dismantlement of these criminal organizations, combining the full strength of the investigative and intelligence forces of the U.S. government.  One key component of the HSTF is the ability to combine information from our intelligence community partners with our law enforcement investigations to increase our effectiveness in combatting and dismantling the threat.

This task force model allows state, local, and federal law enforcement to extend our reach, share intelligence in real time, and target these threats at every level.

HSTF New York is comprised of law enforcement personnel from state and local law enforcement, including the NYPD, and federal entities from the U.S. Department of Homeland Security, the Department of Justice, the Department of Treasury, the Department of State, the Department of War, the Office of the Director of National Intelligence, and the Department of Labor.  Participating agencies include the Bureau of Alcohol, Tobacco, Firearms and Explosives; Diplomatic Security Service; the Drug Enforcement Administration; the New York City Police Department (NYPD); U.S. Citizenship and Immigration Services; U.S. Coast Guard; U.S. Customs and Border Protection; U.S. Marshals Service – Eastern District of New York; U.S. Marshals Service – Southern District of New York; U.S. Postal Inspection Service; and the U.S. Secret Service.

*                *                *

More About the Homeland Security Task Force (“HSTF”)

Homeland Security Task Forces (“HSTFs”) nationwide arrested more than 3,200 foreign terrorists, narcotraffickers, and gangbangers, and seized more than 91 metric tons of narcotics off American streets between August 25 and October 7 alone.

Prior to the creation of HSTF, the federal government had 1,000 competing task forces focused on transnational criminal organizations.  Since January, HSTF has established a new system and force in all 50 states and U.S. territories while coordinating and implementing operations with federal, state, local, tribal, and territorial law enforcement partners.  Department of War and Intelligence Community partners are also providing HSTF with logistics, intelligence, and operational support.

On August 25, HSTF officially launched its effort to protect the Homeland with a September Surge encompassing 400 operations nationwide. In just 43 days, HSTF’s nationwide operations resulted in 3,266 arrests and seizures including:

• 1,041 Sinaloa members,
• 856 Cartel Jalisco Nuevo Genaracion (“CJNG”) members,
• 641 MS-13 members,
• 456 Tren de Aragua members,
• 1,067 weapons
• More than $3,250,000 in currency
• Approximately 91 metric tons of narcotics

The HSTF will absorb several key components of the Organized Crime Drug Enforcement Task Force (“OCDETF”), which has now been retired, to serve as the foundation of the HSTFs, to include critical databases previously utilized by OCDETF, OCDETF Strike Force infrastructure, partnerships, and funding.

HSTFs differ from Safe Street Task Forces (“SSTF”) by focusing on combating multijurisdictional TCOs operating across national borders, while the SSTF will continue to focus on targeting domestic gangs and violence reduction efforts in partnership with state and local law enforcement.  When feasible, SSTF investigations could be enhanced by HSTF resources for maximum impact.

HSTFs differ from Joint Terrorism Task Forces (“JTTF”) by focusing on combating multijurisdictional cartel and international gang TCOs operating across national borders with the ultimate goal to disrupt and dismantle these organizations through prosecution while JTTF will continue to focus on protecting the homeland from foreign and domestic, ideological-based terrorism. 

United States Attorney for the Southern District of New York, Jay Clayton, announced that DANIEL BATISTA was sentenced today by U.S. District Judge Jesse M. Furman to 18 years in prison for enticing a minor and possessing child pornography.  BATISTA previously pled guilty on July 9, 2025, before U.S. Magistrate Judge Sarah L. Cave. 

“Daniel Batista paid a mother to create child pornography of her own daughter,” said U.S. Attorney Jay Clayton.  “He then used that child pornography both to gratify himself and to try to convince other parents to do the same.  Today, the victims, families, and all New Yorkers get justice.  Batista’s sentence reflects the seriousness of his crimes and our commitment to combat child sexual exploitation.” 

According to the allegations in the Information, public filings, and statements made in public court proceedings:       

In February 2024, while BATISTA was on probation following his guilty plea to forcibly touching the sexual or intimate parts of a 14-year-old girl on an MTA bus under New York penal law, BATISTA’s probation officers discovered more than a dozen deleted videos and images of child pornography on his cellphone. Several of the images depicted a particular prepubescent victim (“Minor Victim-1”).  Further investigation revealed that, in approximately January and February 2024, BATISTA paid the mother of Minor Victim-1 over $1,000 to produce child pornography of Minor Victim-1 and send it to BATISTA.  In addition, voice messages on BATISTA’s cellphone showed that BATISTA sometimes communicated directly with Minor Victim-1 and encouraged Minor Victim‑1 to make videos touching herself to send to BATISTA. BATISTA sent two images of child pornography depicting Minor Victim-1 to another parent to try to persuade that parent to produce child pornography of that parent’s children.

*                *                *

In addition to the prison term, BATISTA, 57, a citizen of the Dominican Republic, was sentenced to 10 years of supervised release.

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

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

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced the arrest of NIGEL TRENH in connection with a bomb hoax that resulted in the evacuation of a college dormitory in the Southern District of New York in August.  TRENH was arrested by the FBI on December 8, 2025, in Los Angeles and presented before U.S. Magistrate Judge Steve Kim in the Central District of California.  He will make his initial appearance in White Plains federal court on December 18, 2025. 

“As alleged, Nigel Trenh used social media to spread false information about a bomb and active shooter on a college campus, forcing an evacuation of students, family members, and college staff on their move-in day,” said U.S. Attorney Jay Clayton. “Hoaxes related to explosives and violence sow fear and panic, and waste limited law enforcement and emergency resources.”               

“Nigel Trenh allegedly posted misleading warnings of a bomb and active shooter at his former college, resulting in the full evacuation of a dormitory and first responders rushing to an empty scene,” said FBI Assistant Director in Charge Christopher G. Raia.  “Trenh’s alleged hoax unnecessarily incited fear on one of our local campuses and diverted law enforcement resources from legitimate calls.  May this arrest serve as a deterrent to others; the FBI is committed to investigating any individual who cries wolf about mass violence, regardless of where they may be located.”

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

TRENH, a former student at a college in the Southern District of New York (“College-1”), published the following anonymous post on August 29, 2025, on the social media platform Fizz, which warned of a bomb in the third-floor restroom of a College-1 dormitory and an active shooter on campus: 

When College-1 students saw the post on the morning of August 29, 2025, they reported it to College-1 security personnel, who in turn reported it to local law enforcement.  Within minutes, law enforcement officers from multiple agencies responded to the report and converged on campus, evacuating the dormitory to conduct a full sweep of the premises with the support of K9 units.  This sweep ultimately confirmed that the post was a hoax. 

As alleged, the August 29 Fizz post was part of a broader pattern of unsolicited threatening and/or harassing communications sent by TRENH to College-1 personnel, including e-mails and messages making express reference to on-campus violence and school shootings.  TRENH’s communications continued even after he was questioned by federal law enforcement officers regarding the August 29 bomb hoax.   

*                *                *

TRENH, 22, of Los Angeles, California, is charged with maliciously conveying false information involving an explosive, which carries a maximum sentence of 10 years in prison, and false information and a hoax involving explosives and firearms, which carries a maximum sentence of five years in prison. 

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

Mr. Clayton praised the outstanding investigative work of the FBI New York Office Hudson Valley Safe Streets Task Force, together with the Town of Poughkeepsie Police Department, the Dutchess County Sheriff’s Office, the City of Poughkeepsie Police Department, the New York State Police, and the FBI’s Los Angeles Field Office.                

The prosecution is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney John Sarlitto 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.

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), Bryan DiGirolamo, announced the arrest of JYEREONNE RANSOM and KENNETH CRUTE in connection with a string of armed robberies in Mount Vernon and New York, New York.  RANSOM and CRUTE were arrested on December 6, 2025, and presented today in White Plains federal court before U.S. Magistrate Judge Judith C. McCarthy, who ordered them detained.

"As alleged, over the course of three weeks in November, Jyereonne Ransom and Kenneth Crute carried out a series of gunpoint robberies,” said U.S. Attorney Jay Clayton.  “When offenders choose gun violence in New York, we will work to get them off the street using our robust federal investigative tools and partnerships, and they will be charged with serious federal crimes, often carrying mandatory minimums and consecutive sentences, so that they remain off the street.”

“These arrests stem directly from the strong collaboration between ATF NY’s Hudson Valley Field Office and the Mount Vernon Police Department,” said ATF Special Agent in Charge Bryan DiGirolamo.  “By combining our expertise and resources, we were able to swiftly stop a pattern of armed robberies that threatened innocent lives.  Our agencies remain firmly committed to safeguarding our communities, and the U.S. Attorney’s Office for the Southern District of New York will now take the case forward.  This type of violence creates fear within the community, and we refuse to tolerate it.  We will persist in doing everything we can to reduce violent gun crime in our streets.”

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

RANSOM and CRUTE committed a string of robberies between November 10, 2025, and November 29, 2025, including: a November 10, 2025, gunpoint robbery of a restaurant in upper Manhattan; a November 12, 2025, gunpoint robbery of a restaurant in Mount Vernon; a November 19, 2025, gunpoint robbery of a gas station in Mount Vernon; and a November 29, 2025, robbery of a restaurant in Mount Vernon.

*               *                *

RANSOM, 19, of New York, New York, is charged with conspiracy to commit Hobbs Act robbery and four counts of Hobbs Act robbery, each of which carries a maximum sentence of 20 years in prison; and three counts of brandishing a firearm in furtherance of a crime of violence, each of which carries an additional mandatory minimum sentence of seven years in prison and must be served consecutively to any other prison terms imposed.     

CRUTE, 18, of New York, New York, is charged with conspiracy to commit Hobbs Act robbery and three counts of Hobbs Act robbery, each of which carries a maximum sentence of 20 years in prison; and two counts of brandishing a firearm in furtherance of a crime of violence, each of which carries an additional mandatory minimum sentence of seven years in prison and must be served consecutively to any other prison terms imposed.     

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

Mr. Clayton praised the outstanding investigative work of the ATF Hudson Valley Field Office, the City of Mount Vernon Police Department, the New York City Police Department, and the Westchester County Department of Public Safety.

The case is being handled by the Office’s White Plains Division. Assistant U.S. Attorney Jake Sidransky 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.

United States Attorney for the Southern District of New York, Jay Clayton, announced that HUGO RODRIGUEZ, a/k/a “Juice,” was sentenced today by U.S. District Judge J. Paul Oetken to 15 years in prison for his role as “Duarte,” or leader, of the violent gang Own Every Dollar (“OED”). 

“Too many New York neighborhoods are plagued by gang violence and drug trafficking,” said U.S. Attorney Jay Clayton.  “New Yorkers deserve better.  The women and men of our Office will continue to target gun violence and drug trafficking.”

As alleged in the Indictment and statements made in public filings and public court proceedings:

RODRIGUEZ served as the “Duarte” of OED, a subset of the Trinitarios gang based in and around the Washington Heights area of Manhattan.  The prosecution in this case has involved the convictions of 22 members of OED for five murders, more than 10 attempted murders, multiple robberies, and the control and operation of an extensive drug trafficking network that sold large quantities of fentanyl, heroin, cocaine, and crack cocaine.

RODRIGUEZ served time for New York state convictions involving a shooting and the possession of dangerous contraband while in jail.  While on parole after his release, he attempted to murder a gang rival in broad daylight in Washington Heights on August 12, 2021.  He also engaged in a gunpoint robbery on February 14, 2022, in Washington Heights, in which a victim was pistol-whipped, and trafficked narcotics, including heroin, while on parole.

Since his August 1, 2022, arrest in this case, he has been detained pretrial in federal prison.  During that time, he has been sanctioned for fighting, testing positive for methamphetamine, and possessing an 11-inch shiv.  He has also been separately prosecuted and convicted by the U.S. Attorney’s Office for the Eastern District of New York for a jail assault.

For much of his time in OED, RODRIGUEZ held the role of “Duarte,” which is the highest leadership role in the gang.

*               *                *

In addition to the prison term, RODRIGUEZ, 29, of Brooklyn, New York, was sentenced to five years of supervised release.

Mr. Clayton praised the outstanding work of the New York City Police Department, the Drug Enforcement Administration, and the New York Drug Enforcement Task Force.  Mr. Clayton also thanked the Manhattan District Attorney’s Office, the Bronx District Attorney’s Office, the Office of the Special Narcotics Prosecutor, the New York State Police, and the NYPD Task Force Officers assigned to this Office for their assistance in the investigation.

This case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Sarah L. Kushner, Kevin Mead, Ashley C. Nicolas, and Alexandra Messiter are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), Bryan DiGirolamo, Commissioner of the New York City Fire Department (“FDNY”), Robert S. Tucker, and Commissioner of the New York City Police Department (“NYPD”), Jessica S. Tisch, announced the filing of a Complaint charging HIRAM CARRERO with arson resulting in injury to another person in connection with a December 1, 2025, incident in Midtown Manhattan.  CARRERO was presented today before U.S. Magistrate Judge Robert W. Lehrburger.

“As alleged, Hiram Carrero committed a horrific arson, starting a fire inside of a New York City subway car where a victim was sleeping,” said U.S. Attorney Jay Clayton.  “As a result of that arson, the victim has suffered severe injuries.  The New York City subway is the heart of our City, with millions of people who live and work here relying on it every day.  New Yorkers have the right to be safe and feel safe when they ride the subway, and our Office is committed to that result.”

“The swift arrest in this case demonstrates what is possible when our agencies work as one,” said ATF Special Agent in Charge Bryan DiGirolamo.  “ATF New York Special Agents, the NYPD Detectives, and FDNY Fire Marshals brought their unique strengths to bear to identify and locate the suspect responsible for this violent act.  The ATF NY Arson and Explosives Task Force is dedicated to protecting this city, and we will continue working with our partners to bring justice to those who threaten public safety.  Our partnership with the Southern District of New York remains central to seeking justice.”

“This alleged outrageous and senseless attack received an immediate response from our elite joint task force,” said FDNY Commissioner Robert S. Tucker.  “Our Fire Marshals worked side by side with our partners in the NYPD and ATF to identify and apprehend this suspect quickly.  Their work has removed a dangerous individual from the streets of New York City and the FDNY will continue to work closely with our public safety partners to keep New Yorkers safe.”

“Hiram Carrero showed a complete disregard for human life when he allegedly set a sleeping New Yorker on fire inside a subway car,” said NYPD Commissioner Jessica S. Tisch.  “This attack is among the most serious acts of violence a person can commit, and it has no place in our city—above or below ground.  This case also reflects the exceptional work of the NYPD’s Detective Bureau, whose investigators worked closely with our federal partners to identify the individual responsible.  And it comes at a time when the last five months have been the safest for subway riders in recorded history.  I am grateful to our detectives, our responding officers, and the U.S. Attorney’s Office for their swift and coordinated work on this case.”

According to the allegations in the Complaint and statements made in open Court:

At approximately 3:03 a.m., CARRERO entered a northbound train at the 34th Street – Penn Station subway stop. He picked up a piece of paper from the subway car (depicted in the screenshot below), lit it on fire near where the victim was sleeping, and jumped out of the car just as the doors were closing.

Video from inside the train car shows that as the train traveled north towards the 42nd Street – Times Square subway stop, the fire flared up, engulfing the victim’s legs and a portion of the train car in flames.  When the train arrived at 42nd Street – Times Square, the victim emerged, burning from the train (depicted in a screenshot below).

Law enforcement partners on the platform responded to the victim immediately and extinguished the fire.  The victim was rushed to the hospital in critical condition.

*                *                *

CARRERO, 18, is charged with arson resulting in injury to another person, which carries a mandatory minimum sentence of seven years in prison and a maximum sentence of 40 years in prison.

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

Mr. Clayton praised the outstanding investigative work of the ATF and NYPD, and the FDNY Fire Marshals.  Mr. Clayton also thanked the United States Marshals Service for their assistance in this case.

The prosecution is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Cameron Molis 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.

United States Attorney for the Southern District of New York, Jay Clayton, Administrator of the Drug Enforcement Administration (“DEA”), Terrance C. Cole, and Special Agent in Charge of the New York Field Office of Internal Revenue Service Criminal Investigation ("IRS-CI"), Harry T. Chavis, Jr., announced today the unsealing of an Indictment charging PAUL CAMPO and ROBERT SENSI with narcoterrorism, terrorism, narcotics distribution, and money laundering charges. CAMPO and SENSI were arrested yesterday afternoon in New York. The case has been assigned to U.S. District Judge Paul G. Gardephe.

“As alleged, Paul Campo and Robert Sensi conspired to assist CJNG, one of the most notorious Mexican cartels that is responsible for countless deaths through violence and drug trafficking in the United States and Mexico,” said U.S. Attorney Jay Clayton.  “As part of that support, the defendants laundered hundreds of thousands of dollars they believed to be CJNG drug proceeds, agreed to launder millions more, and even agreed to use their financial expertise to facilitate cocaine trafficking right here in New York City.  By participating in this scheme, Campo betrayed the mission he was entrusted with pursuing for his 25-year career with the DEA. CJNG is a violent and corrupting criminal enterprise that New Yorkers want broken. I commend the extraordinary efforts of the DEA in aggressively pursuing CJNG and those who support their deadly and corrupt efforts, no matter who they may be.”

“The indictment of former Special Agent Paul Campo sends a powerful message: those who betray the public trust—past or present—will be held to account to the fullest extent of the law,” said DEA Administrator Terrance C. Cole.  “The alleged conduct occurred after he left DEA and was unrelated to his official duties here, but any former agent who chooses to engage in criminal activity dishonors the men and women who serve with integrity and undermines the public’s confidence in law enforcement.  We will not look the other way simply because someone once wore this badge.  There is no tolerance and no excuse for this kind of betrayal.”

“It’s alleged Campo betrayed the public’s trust in support of a violent organization like CJNG, but today's indictment demonstrates that criminals who traffic in narcotics and launder illegitimate profits can't evade detection from IRS Criminal Investigation and our law enforcement partners,” said IRS-CI Special Agent in Charge Harry T. Chavis, Jr. “This is a significant step towards holding the Campo and his coconspirator accountable for their role in conspiring to hide millions of dollars gained from narcotics distribution.”

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

CJNG is a Mexico-based transnational criminal group overseen by Nemesio Ruben “El Mencho” Oseguera-Cervantes that controls a significant portion of the narcotics trafficking trade. CJNG illicitly transports cocaine, methamphetamine, fentanyl, and other controlled substances into the United States.  CJNG also engages in money laundering and other criminal activities, including acts of violence and intimidation.  On February 20, 2025, the United States Secretary of State designated CJNG as a Foreign Terrorist Organization under Section 219 of the Immigration and Nationality Act.

PAUL CAMPO worked for the DEA for approximately 25 years, first as a Special Agent in New York and eventually rising to become a high-level DEA official, specifically the Deputy Chief of the Office of Financial Operations.  CAMPO retired from DEA in or about January 2016.  

In late 2024, ROBERT SENSI began meeting with a confidential source working at the direction of law enforcement (“CS-1”), who was posing as a member of CJNG.  SENSI told CS-1 that he had a friend who used to be in charge of DEA’s financial operations who could assist CJNG by laundering narcotics proceeds and providing CS-1 with sensitive DEA information about sources and investigations.

After these initial meetings, CAMPO and SENSI together met with CS-1 on several occasions.  During these conversations, CAMPO and SENSI agreed to launder money for CS‑1 by, among other things, converting cash into cryptocurrency and making investments in real estate.  CAMPO and SENSI further advised CS-1 about fentanyl production and explored procuring commercial drones and military-grade weapons and equipment for CJNG, including AR-15 semi-automatic rifles, M4 carbines, M16 rifles, grenade launchers, and rocket-propelled grenades.  As part of these discussions, CAMPO and SENSI often boasted about and relied heavily on CAMPO’s prior federal law enforcement experience and expertise regarding financial investigations and drug cartels.

Regarding the drones, in one meeting, CS‑1 explained to CAMPO, “what we do with the drones, we put explosives and we just send it over there, boom”; in another conversation, CS‑1 asked SENSI how much C-4 explosive the drones could carry, to which SENSI responded, in sum and substance, approximately six kilograms, which is enough to “blow up the whole f------ . . . I don’t want to say.”

As part of the scheme, CAMPO and SENSI agreed to launder approximately $12,000,000 of CJNG narcotics proceeds; laundered approximately $750,000 by converting cash into cryptocurrency; and provided a payment for approximately 220 kilograms of cocaine on the understanding that the payment would trigger the distribution and sale of the narcotics worth approximately $5,000,000, for which CAMPO and SENSI would (i) receive directly a portion of the narcotics proceeds as profit; and (ii) receive a further commission upon the laundering of the balance of the narcotics proceeds.

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CAMPO, 61, of Oakton, Virginia, and SENSI, 75, of Boca Raton, Florida, are each charged with one count of conspiring to commit narcoterrorism, which carries a mandatory minimum sentence of 20 years in prison and a maximum sentence of life in prison; one count of conspiring to distribute and possess with intent to distribute cocaine, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; one count of conspiring to provide material support and resources to CJNG, a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; and one count of conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison. 

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

Mr. Clayton also expressed appreciation for the assistance of the U.S. Attorney’s Offices for the Southern District of Florida, Eastern District of North Carolina, and Eastern District of Virginia, and the Department of Justice’s National Security Division, Counterterrorism Section.

This case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorney Varun A. Gumaste is in charge of the prosecution, with assistance from Trial Attorney James Donnelly of the Counterterrorism Section.

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

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

United States Attorney for the Southern District of New York, Jay Clayton, and Administrator of the Drug Enforcement Administration (“DEA”), Terrance C. Cole, announced that MIDENCE OQUELI MARTINEZ TURCIOS, a former Honduran military official and congressman, was sentenced today to 262 months in prison for conspiring to import cocaine into the United States and for his participation in multiple related acts of violence.  MARTINEZ TURCIOS previously pled guilty to one count of cocaine importation conspiracy and was sentenced by U.S. District Judge Lewis A. Kaplan, who presided over MARTINEZ TURCIOS’s December 2024 Fatico hearing.

“For years, Midence Oqueli Martinez Turcios partnered with violent drug traffickers and other corrupt officials to send tons of cocaine to the United States,” said U.S. Attorney Jay Clayton.  “He will now rightfully spend decades in prison.  I thank the career prosecutors of this Office and our steadfast partners at the DEA’s Special Operations Division, Bilateral Investigations Unit, for their commitment to holding accountable those who abuse their positions to flood this country with cocaine.”

“Martinez Turcios abused the trust of the Honduran people and the responsibilities of elected office,” said DEA Administrator Terrance C. Cole.  “Instead of serving his country, he turned a seat in the Honduran Congress into a channel for cartel influence, allowing violence and cocaine to flow into communities in Honduras and across the United States.  When public officials, regardless of where they are, choose to stand with the cartels, they become part of the threat we are sworn to confront.  Today’s sentence sends a clear message: those who betray their oath and enable cartel violence will be brought to justice.”

As reflected in the charging instruments and other public filings, statements in public court proceedings in this and related prosecutions, and evidence presented at the December 2024 Fatico hearing:

MARTINEZ TURCIOS was a key member of the Cachiros, which was one of the largest and most violent drug trafficking organizations in Honduras, responsible for trafficking more than 100 tons of cocaine to the United States between approximately 2003 and 2013 and dozens of drug-related murders.  The Cachiros trafficked ton-quantities of cocaine by relying upon, among others, corrupt Honduran government, military, and police officials at the highest levels in Honduras, who were paid bribes in exchange for protecting the Cachiros’s drug shipments and providing them with sensitive military and law enforcement information.  To facilitate their drug trafficking operation, the Cachiros also relied upon hitmen from the notorious street gang La Mara Salvatrucha, or “MS-13,” to protect drug shipments and carry out murders.

MARTINEZ TURCIOS began partnering with the Cachiros in approximately 2003.  Over the next decade, MARTINEZ TURCIOS, who previously served in the Honduran military and was related to the leaders of the Cachiros, carried out acts of violence alongside the Cachiros.  For example, in 2006, when MARTINEZ TURCIOS was not appointed to be Minister of Security—a position that would have allowed him to further support the Cachiros’s drug operation—he ordered the murder of the Honduran politician who failed to deliver on his promise to appoint MARTINEZ TURCIOS to that position.  Shortly thereafter, MARTINEZ TURCIOS also ordered the murder of a Honduran journalist who had spoken publicly about MARTINEZ TURCIOS’s association with the Cachiros—a request that resulted in not only the murder of the journalist, but also the journalist’s significant other.  On other occasions, in 2008 and 2011, MARTINEZ TURCIOS himself pulled the trigger in shootings that killed multiple victims who had taken actions adverse to the Cachiros’s interests.  Prior to killing one of those victims, MARTINEZ TURCIOS tortured the victim by putting a rope around the victim’s neck and choking him, as well as putting pins in his fingertips.  MARTINEZ TURCIOS also participated in the 2012 kidnapping of a drug rival who was later tortured and murdered.

Between approximately 2009 and 2014, while MARTINEZ TURCIOS served as a congressman in Honduras, he also worked directly with the Cachiros to receive ton-quantity cocaine shipments at clandestine airstrips located throughout Honduras.  Once the Cachiros’s cocaine shipments arrived by aircraft at clandestine airstrips, MARTINEZ TURCIOS led teams of armed men as they transported cocaine shipments across Honduras on its way to the United States.  MARTINEZ TURCIOS also used his military experience to train MS-13 hitmen on how to transport and protect the Cachiros’s cocaine shipments.  And, finally, MARTINEZ TURCIOS abused his elected position to facilitate the Cachiros’s laundering of drug proceeds by serving as a nominal owner for one of the Cachiros’s front companies, Ganaderos, thus providing the company with an appearance of legitimacy. 

MARTINEZ TURCIOS’s involvement in narco-corruption and support for the Cachiros continued even after U.S. authorities had publicly identified the Cachiros as a major drug cartel.  Indeed, in January 2014, after the U.S. Department of Treasury’s Office of Foreign Assets Control sanctioned the Cachiros and several of their front companies, including Ganaderos, MARTINEZ TURCIOS participated in a meeting with a group of violent drug traffickers and corrupt Honduran politicians.  The purpose of the meeting was to align their efforts and support a particular political candidate for President of the Honduran National Congress who could continue protecting their drug trafficking interests.  The meeting, which was video recorded, was yet another example of the systemic narco-corruption that MARTINEZ TURCIOS and his co-conspirators helped perpetuate in Honduras during that time.

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In addition to the prison term, MARTINEZ TURCIOS, 65, was sentenced to five years of supervised release.

Mr. Clayton praised the outstanding efforts of the DEA’s Special Operations Division Bilateral Investigations Unit, and Tegucigalpa Country Office, as well as the U.S. Department of Justice’s Office of International Affairs for securing the arrest and March 2023 extradition from Honduras of MARTINEZ TURCIOS.

This case is being handled by the Office’s National Security and International Narcotics Unit.  Assistant U.S. Attorneys Jacob H. Gutwillig and David J. Robles are in charge of the prosecution. 

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services Office of the Inspector General (“HHS-OIG”), Naomi D. Gruchacz, Acting Special Agent in Charge of the Northeast Field Office of the Defense Criminal Investigative Service (“DCIS”), Christopher M. Silvestro, and Special Agent in Charge of the U.S. Office of Personnel Management Office of the Inspector General (“OPM-OIG”), Derek M. Holt, announced that the United States has filed and settled a healthcare fraud lawsuit against national retail pharmacy chain CVS PHARMACY, INC. (“CVS”).  The settlement resolves allegations that, from 2010 through 2020, CVS violated the False Claims Act in connection with its billing and dispensing of insulin pens to patients enrolled in Government healthcare programs (“GHPs”), including Medicare, Medicaid, TRICARE, and the Federal Employees Health Benefits Program.  Specifically, the Government alleges that CVS improperly requested and received GHP reimbursement for premature refills, dispensed more insulin pens than patients needed according to their prescriptions, and falsely under-reported the days-of-supply of insulin that its pharmacies dispensed. 

Under the settlement approved by U.S. District Judge John G. Koeltl, CVS agreed to pay a total sum of $37.76 million, with $24,446,240 to be paid to the United States and the remainder to be paid to various states.  As part of the settlement, CVS also admitted and accepted responsibility for certain conduct alleged by the Government in its complaint, including that GHPs paid CVS substantial amounts for insulin pen refills that were ineligible for reimbursement and CVS pharmacies dispensed more insulin to GHP beneficiaries than they needed.

“CVS engaged in a decade-long practice of repeatedly prematurely refilling insulin prescriptions for patients and improperly billing government healthcare programs for more insulin than patients needed,” said U.S. Attorney Jay Clayton.  “These programs rely on pharmacies to follow appropriate refill schedules and to accurately report the amount of medicine dispensed, which CVS pharmacies frequently failed to do.  This settlement reflects our continued commitment to holding pharmacies to account, enforcing rules designed to keep costs down, and protecting taxpayer dollars.”      

“Companies that participate in federal health care programs are required to obey laws meant to protect the integrity of program funds, including the responsibility to bill only for services and supplies eligible for reimbursement,” said HHS-OIG Special Agent in Charge Naomi D. Gruchacz.  “Working closely with our law enforcement partners, HHS-OIG will continue to investigate allegations of improper billing to safeguard our taxpayer-funded federal healt​hcare system and the millions of enrollees who rely on its programs.”

“Investigating false claims against TRICARE, the healthcare system for military members and their families, is a top priority for the Defense Criminal Investigative Service, the criminal investigative arm of the Department of Defense’s Office of Inspector General,” said DCIS Acting Special Agent in Charge Christopher M. Silvestro.  “This announcement underscores our commitment to working with our law enforcement partners and the Department of Justice to protect TRICARE against unwarranted and fraudulent expenses.”

“Knowingly submitting claims for medically unnecessary insulin refills exploits benefits that federal employees rely on to manage their health, increasing the cost of care and wasting taxpayer dollars,” said OPM-OIG Special Agent in Charge Derek M. Holt.  “We thank our agents, law enforcement partners, and the Department of Justice for their dedication to investigating and pursuing these improper billing practices that undermine the Federal Employees Health Benefits Program.”

Insulin pens (hard plastic, pen-shaped cases containing syringes filled with insulin solution) are a common way for diabetic patients to self-administer insulin.  During the relevant period, manufacturers frequently distributed insulin pens in five-pen cartons with each pen containing 300 units (3 mL) of insulin solution.  Insulin prescriptions must set forth the “directions for use,” which typically designate both how much insulin to administer and the frequency and/or timing of when to administer it.

When pharmacies seek reimbursement from GHPs for insulin pens, they are required to report, among other data, the “quantity dispensed” and the “days-of-supply.”  The “quantity dispensed” means the total amount of medication dispensed to a patient when the pharmacy fills the prescription, and the “days-of-supply” refers to the number of days that the quantity dispensed is expected to last if taken as directed by the prescriber.  Typically, pharmacists calculate days-of-supply by dividing the total quantity of medication dispensed by the patient’s “daily dose,” i.e., the amount of medication that the prescriber directs the patient to use each day.

GHP plans, and pharmacy benefit managers (“PBMs”) working on their behalf, typically set limits on the days-of-supply that a pharmacy may dispense when filling prescriptions (such as a 30-day supply), and reject reimbursement claims for fills that exceed those limits.  GHPs and PBMs also deny reimbursement for prematurely refilled prescriptions—refills dispensed before the beneficiary would have consumed a substantial portion of the previously-dispensed quantity of medication if taken as prescribed.  PBMs use automated processes to review claims for reimbursement submitted by pharmacies and deny claims that are submitted too far in advance of the expected refill date.  The ability of PBMs to detect and reject reimbursement claims for premature refills depends on pharmacies complying with their obligations to accurately report days-of-supply data.

Dispensing insulin in full cartons containing five pens can exceed applicable days-of-supply limits, resulting in claim rejections.  PBMs developed rules to address reimbursement when dispensing medications like insulin in the smallest commercially-available container would exceed the days-of-supply limit.  Some PBMs required pharmacies to seek an override of the limit and then to resubmit the claim reporting the accurate days-of-supply actually dispensed so the PBM could verify when the next refill would be needed.  Other PBMs permitted pharmacies to submit claims reporting the maximum days-of-supply allowed, even if that number was lower than the actual supply dispensed.  Importantly, however, those PBMs still required pharmacies to track and use the actual days-of-supply dispensed to determine when patients would actually need a refill.  All PBMs prohibited pharmacies from seeking reimbursement for premature refills, regardless of container size.  

As alleged in the Government’s Complaint:

From January 1, 2010, through December 31, 2020 (the “Covered Period”), CVS violated the FCA by knowingly submitting, or causing to be submitted, false claims to GHPs for reimbursement for insulin pens where CVS: dispensed more insulin to GHP beneficiaries than was specified by their prescriptions and refilled GHP beneficiary prescriptions substantially before GHP beneficiaries needed the refills; falsely under-reported the days-of-supply for the insulin refills, which often prevented PBMs from detecting that the refills were premature; and failed to comply with applicable rules when refilling insulin prescriptions requiring pharmacies to calculate refill dates using the actual days-of-supply dispensed. 

To fill insulin prescriptions as quickly as possible and to ensure that reimbursement claims for insulin pens were not rejected, CVS instructed its pharmacy staff simply to report the maximum days-of-supply allowed under the beneficiary’s plan when dispensing full insulin pen cartons, which was often lower than the actual days-of-supply dispensed.  Many CVS pharmacies did not internally document and use the actual days-of-supply dispensed to determine when patients could next refill their prescription.  To the contrary, CVS’ dispensing software calculated refill dates automatically based on inaccurate days-of-supply data reported to the PBM.  As a result, CVS pharmacy staff repeatedly refilled prescriptions prematurely, dispensing substantially more insulin to GHP beneficiaries than they actually needed and substantially sooner than they needed it according to their prescriptions. As a result, some GHP beneficiaries accumulated large quantities of unused insulin, which was both wasteful and potentially dangerous as insulin can expire.

CVS management was well aware that it was over-dispensing insulin.  PBMs conducted periodic audits of CVS pharmacies and repeatedly found violations of the dispensing rules, including reporting invalid days-of-supply data, refilling insulin pen prescriptions too soon, and dispensing insulin pens in excess of the quantities authorized by the prescription.  PBMs issued chargebacks to CVS based on these violations.  For several years, CVS management knew that insulin pens were among the drug products most frequently subject to chargebacks for premature refills.   Yet, despite these audit findings, CVS failed to take necessary steps to address this long-standing problem during the Covered Period.

Under the settlement, CVS admitted, among other things, that:

• During much of the covered period, many CVS pharmacies did not break open insulin pen cartons when dispensing insulin pens. As a result, at times, CVS pharmacies dispensed amounts of insulin that exceeded applicable days-of-supply limits.  When a claim for reimbursement was rejected for exceeding the limit, some CVS pharmacies did not obtain overrides and re-submit the claim listing the actual days-of-supply dispensed as required by some PBMs.  Instead, CVS pharmacies often reported the maximum days-of-supply allowed under the beneficiary’s insurance plan for insulin pens when resubmitting the claim, which was lower than the actual days-of-supply dispensed.  While certain PBMs allowed this practice because the carton was the smallest commercially-available container for the medication, CVS pharmacies at times did not adhere to the appropriate refill intervals for patients that were to be based on the actual days-of-supply dispensed.
• During much of the covered period, CVS customers with insulin-pen prescriptions who enrolled in CVS’ optional auto-refill program received automatic prompts notifying them that their refilled prescriptions were available to be picked up.  CVS’ auto-refill logic calculated prescription refill dates based on the days-of-supply data recorded by pharmacy staff and sent customers refill notifications based on those dates.  When pharmacy staff recorded days-of-supply numbers that were lower than the actual days-of-supply dispensed, the system would at times calculate refill dates for patients that were premature.  As a result, some CVS pharmacies dispensed insulin pen refills to GHP beneficiaries before the beneficiaries needed more insulin and before the GHP plan or PBM would have approved such refills for reimbursement.
• At times during the covered period, GHPs and the payors working on their behalf paid CVS substantial amounts for insulin pen refills that were ineligible for reimbursement, and CVS pharmacies dispensed more insulin to GHP beneficiaries than they needed.

In connection with the filing of the lawsuit and settlement, the Government joined five private whistleblower lawsuits that had previously been filed under seal pursuant to the False Claims Act.

Mr. Clayton praised the outstanding investigative work of the HHS-OIG, DOD-OIG, OPM-OIG, the Department of Veterans Affairs OIG, and the U.S. Postal Service OIG.

This case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Pierre Armand is in charge of the case. 

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Ricky J. Patel, announced that FAISIL McCANTS pled guilty today before U.S. District Judge Jed S. Rakoff to possessing and brandishing a machine gun in connection with an August 27, 2025, daytime armed robbery and shooting in which McCANTS fired 15 rounds on a public street in East Harlem, striking and killing a 69-year-old woman.  McCANTS is scheduled to be sentenced on March 31, 2026, at 3:00 p.m.

“Faisil McCants fired 15 bullets in a matter of seconds in the middle of the day, killing a 69-year-old innocent woman who was doing nothing more than standing by her walker on an East Harlem street,” said U.S. Attorney Jay Clayton.  “This type of senseless violence cannot and will not be tolerated.  The people of this City expect and deserve to be able to walk our streets without fear.  Thanks to the swift and tireless work of our partners at HSI and the NYPD, McCants will now face justice for his August 2025 crime.  His plea today underscores our Office’s unwavering commitment to investigating and prosecuting those who use guns to destroy communities and lives.”    

“Nearly three months ago, Robin Wright’s life was cut short in what can only be described as a senseless, avoidable, and absolutely unacceptable tragedy,” said HSI Special Agent in Charge Ricky J. Patel.  “With today’s guilty plea, an admitted violent criminal will spend decades in prison with no choice but to relive the events—and the decisions—that landed him there, while an innocent woman’s grieving family prepares for their first holiday season without her.  Protecting New Yorkers is non-negotiable, and HSI New York, alongside our law enforcement partners, will use every tool at our disposal in doing just that.”

As alleged in public court filings, statements in public court proceedings, and the charging documents in the case:

On or about August 27, 2025, shortly before 12:30 p.m., McCANTS and two co-conspirators (“CC-1” and “CC-2”) robbed a drug dealer (“Individual-1”) near East 109th Street and Madison Avenue in Manhattan, New York.  During the robbery, McCANTS and his co-conspirators got into a physical altercation with Individual-1 before both McCANTS and CC-1 grabbed backpacks from Individual-1—which contained marijuana—and then fled north on Madison Avenue, turning onto East 110th Street.

McCANTS pulled a black firearm (equipped with a machine-gun conversion device) out of his right sweatshirt pocket and fired 15 shots in quick succession in the general direction of Individual-1.  A photograph of McCants firing is below:

A 69-year-old woman (the “Victim”) standing with a walker on the northwest corner of East 110th Street and Madison Avenue—in the direction that McCANTS shot the firearm—was struck by gunfire.  The Victim was transported to the hospital, where she was pronounced dead.

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McCANTS, 18, of New York, New York, pled guilty to one count of use, carrying, and possession of a machine gun, which carries a mandatory minimum sentence of 30 years in prison and a maximum sentence of life in prison. 

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

Mr. Clayton praised the outstanding investigative work of Homeland Security Investigations and the New York City Police Department.  He also thanked the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Marshals Service, the New York State Department of Corrections and Community Supervision, the New York State Board of Parole, the Manhattan District Attorney’s Office, and the Special Agents of the U.S. Attorney’s Office for the Southern District of New York.

This case is being handled by the Office’s Violent Organizations & Crime Unit.  Assistant U.S. Attorneys Alexandra S. Messiter, Kathryn Wheelock, and Brandon D. Harper are in charge of the prosecution.   

United States Attorney for the Southern District of New York, Jay Clayton, announced that DAVID SMOTHERMON was sentenced today by U.S. District Judge Alvin K. Hellerstein to three years in prison.  In May 2025, SMOTHERMON pled guilty to one count of wire fraud in connection with a scheme to defraud his employer by hiding trading losses. 

“David Smothermon engaged in a fraudulent scheme that always ends badly: he concealed trading losses and inflated performance, induced his firm to award him a $15 million bonus, and when the losses were discovered, his firm was devastated,” said U.S. Attorney Jay Clayton.  “That devastation cost hundreds of jobs, including in New York.  Our Office has no tolerance for insiders who like to enrich themselves at the expense of our fellow New Yorkers.”   

As reflected in the Indictment and other court filings:

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

From at least in or about December 2015 up to and including in or about September 2016, SMOTHERMON caused false entries to be made into an electronic accounting system used by the Company in an effort to hide substantial trading losses.  Specifically, SMOTHERMON falsely inflated the marks, i.e., the values he assigned to individual trading positions in the Financial Trading book, and he directed other individuals to alter the terms of Physical Trading contracts in the company’s accounting system to make it appear as though those contracts were substantially more profitable than they were. In doing so, SMOTHERMON concealed over $240 million in trading losses.  SMOTHERMON took these steps in order to obtain a large, discretionary bonus that he knew the Company was considering in early 2016.  Ultimately, in May 2016, the Company awarded SMOTHERMON a bonus of approximately $15 million, of which approximately $11.6 million was paid immediately in cash.

In late August 2016, SMOTHERMON was contacted by a senior Company executive to alert him that the Company had unearthed a discrepancy between a Physical Trading contract and what was entered into the accounting system.  Thereafter, on or about September 1, 2016, SMOTHERMON resigned from the Company and admitted to a Company executive that he had been mispricing his trading book.  The Company ultimately concluded that SMOTHERMON had concealed more than $240 million in trading losses.  Upon this discovery, the Company realized considerable losses that resulted in the significant downsizing of the company and the layoffs of hundreds of employees.

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In addition to the prison term, SMOTHERMON, 55, of Houston, Texas, was sentenced to three years of supervised release and ordered to forfeit $11,600,000 and pay restitution in the amount of $19,550,081.  As a condition of his plea agreement, SMOTHERMON paid $8 million of this restitution amount in May 2025, after entering his guilty plea.  SMOTHERMON also paid an additional $300,000 prior to sentencing.

Mr. Clayton praised the investigative work of the Federal Bureau of Investigation in this case.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Qais Ghafary and Matthew Weinberg are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, Commissioner of the New York City Department of Investigation (“DOI”), Jocelyn E. Strauber, Acting Inspector General of the U.S. Department of Housing and Urban Development, Office of Inspector General (“HUD-OIG”), Brian D. Harrison, Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Ricky J. Patel, Special Agent in Charge of the Northeast Region of the U.S. Department of Labor, Office of Inspector General (“DOL-OIG”), Jonathan Mellone, and Special Agent in Charge of the New York Field Office of Internal Revenue Service – Criminal Investigation (“IRS-CI”), Harry T. Chavis, announced that all 70 employees of the New York City Housing Authority (“NYCHA”) who were arrested and charged in February 2024 have now been convicted of bribery, fraud, or extortion offenses. 

Of the 70 defendants charged in February 2024 with accepting bribes in exchange for awarding NYCHA repair contracts, three defendants were convicted after jury trials, 56 defendants pled guilty to felony offenses, and 11 defendants pled guilty to misdemeanor offenses.  Sentencings are ongoing, but sentences imposed to date range up to 48 months in prison.  The defendants were collectively responsible for accepting over $2.1 million in bribes in exchange for awarding NYCHA contracts worth over $15 million.  As a result of the convictions, the defendants will collectively pay over $2.1 million in restitution to NYCHA and will forfeit over $2 million in criminal proceeds.        

“Today’s plea of the 70th and final NYCHA pay-for-play contracting scheme defendant marks an important milestone in one of the largest single-day corruption cases in the history of the Justice Department,” said U.S. Attorney Jay Clayton.  “All 70 charged defendants have now been convicted for attempting to criminally leverage the contracting process of work for affordable housing for New Yorkers to line their own pockets.  NYCHA residents deserve better.  New Yorkers deserve better.  This broad and swift action demonstrates our Office’s commitment to combatting corruption in our nation’s largest public housing authority—home to 1 in every 17 New York City residents.”            

“Today, the last of the 70 NYCHA employees charged with bribery and extortion in connection with the awarding of micro-purchase contracts pled guilty, closing the chapter on an investigation in which DOI and our federal partners exposed widespread corruption that touched almost one-third of NYCHA’s 365 developments in each of the five boroughs,” said DOI Commissioner Jocelyn E. Strauber.  “All the defendants, many of them supervisors, now have taken responsibility for separate schemes that, in total, involved more than $15 million in no-bid contracts, awarded in exchange for the payment of more than $2.1 million in bribes to employees who chose to serve themselves instead of the residents of NYCHA, driving up costs of maintenance and improvements in a public housing system dependent on scarce resources.  To date, approximately $2 million in restitution to NYCHA and nearly $2 million in forfeiture has been ordered.  Equally important, DOI’s 14 recommendations to improve controls with respect to NYCHA’s micro-purchase contracting have been implemented – three of which were similar to DOI’s 2021 recommendations that were rejected by NYCHA.  I thank the U.S. Attorney’s Office for the Southern District of New York and our federal law enforcement partners for their commitment to thwart corruption that drains public housing resources, and NYCHA for the implementation of much-needed contracting reforms.”

“Today’s final guilty plea is an important milestone in bringing to an end the egregious pay-to-play bribery scheme that wasted millions of dollars that should have benefited HUD tenants in New York and raised serious questions about the integrity of NYCHA operations,” said HUD-OIG Acting Inspector General Brian D. Harrison.  “All 70 of the NYCHA employees who failed to uphold the basic duty of not stealing from public housing have now admitted guilt or been found guilty at trial within two years of indictment, a testament to the investigative excellence of HUD OIG and its law enforcement partners.  We are grateful to the U.S. Attorney’s Office for its support and prosecutions in this case and know that this sends a clear signal to corrupt public officials that they will be held accountable.”

“Nearly two years ago, HSI New York and our law enforcement partners announced a sweeping investigation that uncovered a brazen corruption and extortion scheme that marked the largest number of federal bribery charges in a single day in history,” said HSI Special Agent in Charge Ricky J. Patel.  “Today’s guilty plea is the latest step in exposing a scheme that exploited NYCHA’s operations, shortchanged its communities, and siphoned trust and resources from NYCHA residents—New Yorkers who deserve better.  Working in lockstep with our federal, state, and local law enforcement counterparts, HSI will keep pressing forward to protect New Yorkers and ensure that anyone who attempts to jeopardize their well-being faces decisive consequences.”

“An important part of the mission of DOL-OIG is to investigate fraud and other federal crimes involving matters within the jurisdiction of the Office of Inspector General,” said DOL-OIG Special Agent in Charge Jonathan Mellone.  “The seventy convictions obtained in this investigation send a clear message that public corruption will not be tolerated.  We are committed to working closely with our law enforcement partners to investigate those who exploit governmental programs and the American workers.”

“IRS-CI will continually use its unique expertise in tax and finance to find leverage in assisting with complex investigations,” said IRS-CI Special Agent in Charge Harry T. Chavis.  “We are proud to build on our law enforcement partnerships to continue to bring criminals to justice.”

According to information contained in court filings and public court proceedings, including as proven at trial:

NYCHA is the largest public housing authority in the country, providing housing to 1 in 17 New Yorkers in 335 developments across the City and receiving over $1.5 billion in federal funding from the U.S. Department of Housing and Urban Development every year.  When repairs or construction work require the use of outside contractors, services must typically be purchased via a bidding process.  However, at all times relevant to the cases referenced above, when the value of a contract was under a certain threshold (up to $10,000), designated staff at NYCHA developments could hire a contractor of their choosing without soliciting multiple bids.  This “no-bid” process was faster than the general NYCHA procurement process, and selection of the contractor required approval of only the designated staff at the development where the work was to be performed.

The defendants, all of whom were NYCHA employees during the time of the relevant conduct, demanded and received cash in exchange for NYCHA contracts by either requiring contractors to pay up front in order to be awarded the contracts or requiring payment after the contractor finished the work and needed a NYCHA employee to sign off on the completed job so the contractor could receive payment from NYCHA.  The defendants typically demanded approximately 10% to 20% of the contract value—between $500 and $2,000 depending on the size of the contract—but some defendants demanded even higher amounts.

*                *                *

Mr. Clayton praised the outstanding investigative work of DOI, HUD-OIG, HSI, DOL-OIG, and IRS-CI, which work together collaboratively as part of the HSI Document and Benefit Fraud Task Force, as well as the special agents and task force officers of the U.S. Attorney’s Office for the Southern District of New York.  Mr. Clayton also expressed appreciation for the cooperation and support of NYCHA’s senior executive leadership.

These cases are handled by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Jerry J. Fang, Jacob R. Fiddelman, Meredith Foster, Catherine Ghosh, and Justin Horton are in charge of the prosecutions, and Assistant U.S. Attorneys Emily Deininger, Jane Kim, Benjamin Burkett, Matthew J. King, and Amanda C. Weingarten also handled individual cases.

United States Attorney for the Southern District of New York, Jay Clayton, announced that MARIO POWELL was sentenced by U.S. District Judge John P. Cronan to 97 months in prison for assaulting a corrections officer with a contraband weapon on May 30, 2020, while incarcerated at the Metropolitan Correctional Center, New York (“MCC”).  In September 2025, POWELL was convicted of assaulting a corrections officer with a deadly and dangerous weapon and possession of prison contraband following a five-day trial before Judge Cronan.

“Mario Powell brazenly ambushed a corrections officer at the Metropolitan Correction Center in New York City, trying to slit his throat,” said U.S. Attorney Jay Clayton.  “This sentence shows that violence in our corrections facilities will trigger meaningful consequences.”

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

On May 30, 2020, at the MCC, POWELL forcibly assaulted a corrections officer with a deadly and dangerous weapon and, in doing so, lacerated the officer’s neck.  In order to commit the attack, POWELL obtained and possessed a weapon made of razor blades.

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In addition to the prison term, POWELL, 34, of the Bronx, New York, was sentenced to three years of supervised release.

Mr. Clayton thanked former MCC staff for their assistance and praised the outstanding investigative work of the Federal Bureau of Investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Thomas John Wright, Henry L. Ross, and Leslie B. Arffa are in charge of the prosecution.

Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, Nicolas Roos announced today the sentencings of KEONNE RODRIGUEZ and WILLIAM LONERGAN HILL, the co-founders of Samourai Wallet (“Samourai”), a cryptocurrency mixer that facilitated over $237 million in illegal transactions.  RODRIGUEZ, the Chief Executive Officer of Samourai, and HILL, the Chief Technology Officer, participated in a conspiracy to operate a money transmitting business in which they knowingly transmitted criminal proceeds.  The over $237 million dollars of criminal proceeds laundered through Samourai came from, among other things, drug trafficking, darknet marketplaces, cyber-intrusions, frauds, sanctioned jurisdictions, murder-for-hire schemes, and a child pornography website.  RODRIGUEZ and HILL were respectively sentenced to five and four years in prison.  U.S. District Judge Denise L. Cote sentenced RODRIGUEZ on November 6, 2025, and HILL on November 19, 2025. 

“The sentences the defendants received send a clear message that laundering known criminal proceeds—regardless of the technology used or whether the proceeds are in the form of fiat or cryptocurrency—will face serious consequences,” said Attorney for the United States Nicolas Roos.  “These sentences reflect the harmful impact that money laundering services have on victims by making it virtually impossible for victims to recover their stolen funds. Our office will continue to work tirelessly to hold accountable those who profit by helping criminals hide their criminal proceeds.”

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

Beginning around 2015, RODRIGUEZ and HILL began developing Samourai, a mobile application that was designed and operated as a service for transmitting criminal proceeds.  The defendants engineered Samourai around two services specifically intended to conceal the nature of illicit transactions. The first, a Bitcoin mixing service known as “Whirlpool,” coordinated batches of Bitcoin exchanges between groups of Samourai users.  Through this process, the original source of particular Bitcoin holdings became obscured within the blockchain’s transactional record, effectively preventing law enforcement agencies and cryptocurrency exchanges from tracing funds back to their origins.  The second service, called “Ricochet,” enabled users to introduce additional and unnecessary intermediate transactions—known as “hops”—between sending and receiving addresses.  This feature served a similar obfuscation purpose, making it substantially more difficult for monitoring entities to establish connections between cryptocurrency transfers and potential illicit activities.  The scale of these operations was considerable: from Ricochet’s launch in 2017 and Whirlpool’s inception in 2019, more than 80,000 Bitcoin—valued at over $2 billion at the time—passed through these services.  Samourai collected fees for both services, estimated to have a total value of more than $6 million.

RODRIGUEZ and HILL actively promoted Samourai to criminal users and encouraged criminal activity.  HILL marketed Samourai as a transmittal service for criminal proceeds on Dread, a darknet forum dedicated to discussing illegal marketplace activities.  In one exchange on that platform, a user asked about the most “secure methods to clean dirty BTC” to make it “untraceable, clean” and ensure the user would “never get caught.”  HILL responded by writing that “Samourai Whirlpool is a much better option” than a competitor service to “clean dirty BTC.”  Similarly, in July 2020, RODRIGUEZ engaged in a Twitter exchange in which he personally encouraged the hackers of a social media platform to “feed” and “send” the criminal proceeds into Samourai’s Whirlpool.  When the hackers ultimately used a different cryptocurrency mixing service to launder the proceeds of the hack, RODRIGUEZ and HILL expressed their disappointment.

The defendants also had a clear understanding that Samourai was, in fact, used for money laundering.  In a WhatsApp exchange, when asked to explain the concept of “mixing,” RODRIGUEZ described the process as “money laundering for bitcoin.”  The defendant’s own marketing materials acknowledged that customers would include “Dark/Grey Market participants” moving proceeds from “illicit activity.”

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In addition to their terms of prison, RODRIGUEZ, 37, of Harmony, Pennsylvania, and HILL, 67, a U.S. national who was arrested in Portugal at the request of the United States, were each sentenced to three years of supervised release.  Judge Cote also ordered that RODRIGUEZ and HILL each pay a fine of $250,000.  RODRIGUEZ and HILL have paid a total of $6,367,139.69 in forfeiture, representing the fees Samourai earned, in satisfaction of an order to forfeit $237,832,360.55, the larger sum representing the total traceable criminal proceeds for which Samourai executed transactions. 

Mr. Roos praised the investigative work of Internal Revenue Service-Criminal Investigation and the Federal Bureau of Investigation (“FBI”).  He also acknowledged the assistance of the Justice Department’s Office of International Affairs, Europol, the Portuguese Judicial Police, the Procuradoria-Geral da República, the Icelandic Police, and the FBI Field Office in Pittsburgh for their assistance in the investigation of this case.

The Justice Department’s Office of International Affairs provided substantial assistance to secure the July 2024 extradition from Portugal of HILL.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the Illicit Finance and Money Laundering Unit.  Assistant U.S. Attorneys Andrew K. Chan, David R. Felton, and Cecilia Vogel are in charge of the prosecution. 

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Division of the U.S. Drug Enforcement Administration (“DEA”), Frank A. Tarentino, announced today the unsealing of Complaints charging MUJAHED ALI and QUIRINO GARCIA DIAZ with conspiracy to distribute narcotics.  The defendants were arrested yesterday in Manhattan, and GARCIA DIAZ was arrested at their Inwood smoke shop, from which they sold drug traffickers a variety of drug paraphernalia, including cutting agents—i.e., substances added to narcotics to increase their volume (and thus their saleable quantity) and to modify their effects.  The investigation of the smoke shop led agents to multiple large-scale narcotics mills and other drug operations in Manhattan, the Bronx, and New Jersey and the seizures of large volumes of fentanyl, cocaine, and methamphetamine, as well as multiple firearms.  The defendants will be presented today before U.S. Magistrate Judge Katharine H. Parker.

“Businesses, small or large, that engage in drug trafficking will be brought to justice,” said U.S. Attorney Jay Clayton.  “As alleged, this Inwood smoke shop helped traffickers pump lethal narcotics into our city.  New Yorkers want this stopped and we hear them.”

“Once again, we see the reckless lengths individuals are willing to go as they conspire, distribute, and profit from the sale of fentanyl, a drug that is singlehandedly destroying our communities and devastating families,” said DEA Special Agent in Charge Frank A. Tarentino.  “The alleged use of a smoke shop to conceal their narcotics trafficking, which in turn led to the discovery of six drug mills, underscores their willingness to sacrifice the safety of our neighborhoods for personal gain.  Illicit narcotic mills have no place in our communities, and the DEA will continue to do everything we can to eliminate these operations and hold those responsible accountable for their actions.”  

According to the allegations contained in the Complaints:

Between in or about August 2024 and in or about October 2025, ALI, GARCIA DIAZ, and others used the Inwood smoke shop to sell cutting agents and drug paraphernalia to drug traffickers, who would then use the smoke shop’s products to increase their quantities of narcotics and package them for sale.  ALI, GARCIA DIAZ, and their co-conspirators sold cutting agents to an undercover officer who explicitly indicated that he was purchasing those substances to mix with narcotics, including cocaine and heroin. ALI and his co-conspirators also gave suggestions on which cutting agents to use with certain types of narcotics. For example, on one occasion, ALI suggested that an undercover officer purchase and use a particular cutting agent, fish scale, to mix with the undercover officer’s cocaine because fish scale would make his drug product “shine the most.”

Over the course of the approximately 14-month period during which ALI, GARCIA DIAZ, and their co-conspirators sold cutting agents and drug paraphernalia from the Inwood smoke shop, law enforcement investigated customers who had appeared to purchase cutting agents and/or drug paraphernalia from the shop and identified at least six narcotics mills as well as other locations where narcotics were being stored.  This led to the arrests of at least eight drug traffickers, including owners and operators of narcotics mills, and the seizure of bulk quantities of narcotics, including fentanyl, cocaine, and methamphetamine, in addition to multiple firearms and ammunition that the traffickers possessed in connection with their drug businesses.

Below are photographs of certain of the narcotics mills that ALI, GARCIA DIAZ, and their co-conspirators supplied with cutting agents and/or drug paraphernalia sold out of the Inwood smoke shop:

Fentanyl Seized from a Manhattan Narcotics Mill Searched on August 14, 2024

Fentanyl and Heroin Seized from a Bronx Narcotics Mill on August 27, 2024

Fentanyl Seized from a Bronx Narcotics Mill on September 11, 2024

Cocaine Seized from a Bronx Narcotics Mill on September 16, 2024

Fentanyl Seized from a New Jersey Narcotics Mill on October 16, 2024 

Fentanyl, Methamphetamine, Cocaine, Three Loaded Firearms, and Ammunition Seized from a Bronx Narcotics Mill on August 11, 2025

Following the defendants’ arrests, law enforcement searched the Inwood smoke shop and a storage unit next to the shop that was used by the defendants. Inside the storage unit, law enforcement found a room full of narcotics cutting agents and another room full of drug paraphernalia and equipment used to mix, press, and package narcotics, including three kilogram presses used to press narcotics powder into kilogram-sized bricks, numerous sifters, grinders, scales, and hundreds of thousands of glassine envelopes, small vials, and small plastic bags, all commonly used to package narcotics.  Below are photographs of the room containing narcotics cutting agents: 

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ALI, 41, a citizen of the United States and Yemen, and GARCIA DIAZ, 35, a citizen of Mexico, are each charged with one count of conspiracy to distribute narcotics, which carries a maximum sentence of life 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 a judge.

Mr. Clayton praised the outstanding investigative work of the DEA’s New York Field Division.

The case is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorney Connie L. Dang is in charge of the prosecution.

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

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced today the unsealing of an Indictment charging DEREK WACHOB with wire fraud in connection with his multi-year scheme to defraud individual investors, a bank, an investment firm, and at least two steel pipe distributors of at least $66 million.  WACHOB was arrested today in Sapulpa, Oklahoma, and will be presented this afternoon in the Northern District of Oklahoma.  The case is assigned to U.S. District Judge J. Paul Oetken.

“Derek Wachob claimed to be a billionaire and successful CEO, but as alleged, that image was built on lies,” said U.S. Attorney Jay Clayton.  “He stole more than $66 million from a range of victims that included some of his closest friends, then used those funds to maintain a lifestyle of expensive cars, vacation homes, private jets, helicopters, and yachts.  The steel industry is a pillar of our manufacturing community, where honest and hard-working success is to be celebrated, but there is no place for fraud.  This Office will work relentlessly to bring high-flying fraudsters to justice.”

“Derek Wachob allegedly stole at least $66 million from investors, including some of his closest friends, and financial institutions to secretly fund his failing company and extravagant lifestyle through false promises of profitable business ventures,” said FBI Assistant Director in Charge Christopher G. Raia.  “Wachob allegedly abused his authority as CEO to entice his targets with a mirage of success while shrouding the truth in deceit.  The FBI remains committed to investigating any business leader who siphons from the accounts of trusting victims for personal enrichment.”

As alleged in the Indictment:[1]

From at least in or about October 2022 through in or about August 2024, WACHOB—the Chief Executive Officer of a large manufacturer of steel pipes based in Sapulpa, Oklahoma (“Company-1”)—engaged in a scheme to defraud individual investors, a bank, an investment firm, and at least two steel pipe distributors of at least $66 million.  To obtain money from each of the victims, WACHOB lied and misled the victims by, among other things, falsely claiming to offer purported business opportunities based on future steel purchases that WACHOB pledged to make.  WACHOB used these misrepresentations to take millions of dollars from even some of his closest friends.  Instead of using the victims’ money as promised, WACHOB spent the funds to maintain his extravagant lifestyle of expensive cars, vacation homes, private jets, helicopters, and yachts, and prop up Company-1, which was struggling financially and in debt.

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WACHOB, 53, of Sapulpa, Oklahoma, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.

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

Mr. Clayton praised the outstanding work of the FBI.  Mr. Clayton also thanked the U.S. Attorney’s Office for the Northern District of Oklahoma for its assistance.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Danielle Kudla and Adam Sowlati are in charge of the prosecution.

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

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

United States Attorney for the Southern District of New York, Jay Clayton, announced the unsealing of an Indictment charging THOMAS DOYLE, a/k/a “AJ” or “Austin Doyle,” with wire fraud in connection with an alleged scheme by DOYLE to defraud the owner of the painting “Mother and Child on a Hammock” by the 19th-century French Realist painter Gustave Courbet.  DOYLE was previously convicted in the Southern District of New York in 2011 of a separate art-related fraud.  DOYLE was arrested yesterday morning in Norwalk, Connecticut, and presented in the Southern District of New York.  The case has been assigned to U.S. District Judge Arun Subramanian. 

“The art market is largely based on trust,” said U.S. Attorney Jay Clayton.  “As alleged, Thomas Doyle breached that trust by telling the owner of a valuable painting a series of brazen lies to trick the owner into giving him the painting so he could keep the profits from the sale of the painting for himself.  The women and men of the Southern District of New York and our law enforcement partners will continue to work diligently to root out this type of bad actor.”

As alleged in the Indictment unsealed yesterday in Manhattan federal court:

Between December 2022 and March 2025, DOYLE defrauded an art dealer (“Victim-1”) in connection with the sale of the painting “Mother and Child on a Hammock” (the “Hammock”) by Gustave Courbet.  In December 2022, DOYLE introduced himself to Victim-1 over email, representing himself to be in the business of buying and selling art.  Over the next few years, DOYLE and Victim-1 communicated over email and WhatsApp Messenger regarding artworks, and DOYLE made various misrepresentations to Victim-1 about himself, including falsely stating that he managed the “art side” of a family trust with assets worth billions of dollars.

In June 2024, DOYLE and Victim-1 began discussing the Hammock, which Victim-1 owned and was selling.  Victim-1 agreed to let DOYLE take custody of the Hammock to facilitate its viewing by a potential buyer.

In or about July 2024, DOYLE told Victim-1 that he had a potential buyer for the Hammock, and Victim-1 authorized DOYLE to sell the painting on his behalf for $550,000.  By early August 2024, DOYLE falsely informed Victim-1 that he had sold the Hammock for that price.

Instead, DOYLE’s associate (“Associate-1”), acting on DOYLE’s behalf, offered the Hammock for consignment to a Manhattan gallery (“Gallery-1”).  DOYLE provided Associate-1  with a false provenance for the Hammock that was passed on to Gallery-1, stating, among other things, that the Hammock had been purchased from Victim-1 in 2019.  Gallery-1 sold the Hammock on October 1, 2024, for $125,000 to an art collector.  On October 3, 2024, Gallery-1 wired $115,000, which were the sale proceeds of the Hammock minus commission, to Associate-1.  That same day, Associate-1 paid DOYLE $109,250 for the Hammock.

DOYLE never remitted to Victim-1 any proceeds from the sale of the Hammock.  By February 2025, DOYLE had spent all the proceeds from the sale of the Hammock on personal expenses and his own debts.  DOYLE subsequently falsely blamed his failure to pay Victim-1 on the purported buyer, fraudulently claiming the buyer had yet to pay when in fact DOYLE had been paid and was spending the proceeds of the Hammock sale.

On March 4, 2025, DOYLE admitted by email to Victim-1 that DOYLE had “betrayed” and “lied” to Victim-1 about the Hammock.

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DOYLE, 68, of Connecticut, is charged with one count of wire fraud, which carries a maximum prison term of 20 years.

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

Mr. Clayton praised the outstanding work of the Federal Bureau of Investigation’s Art Crime Team.

This case is being handled by the Office’s Illicit Finance and Money Laundering Unit.  Assistant U.S. Attorney Cecilia Vogel is in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Ricky J. Patel, Commissioner of the New York City Police Department (“NYPD”), Jessica S. Tisch, and Superintendent of the New York State Police (“NYSP”), Steven G. James, announced the unsealing of a Complaint charging eight defendants in connection with operating a years-long stolen car ring involving more than approximately 100 stolen cars, primarily Honda, Acura, and Jeep vehicles, worth approximately millions of dollars.  The defendants are charged with conspiracy to possess and sell stolen vehicles, wire fraud, and conspiracy to commit wire fraud.  Six of the defendants were arrested yesterday and presented in Manhattan federal court before U.S. Magistrate Judge Robyn F. Tarnofsky.

“New Yorkers have every right to expect safety and security on our streets and in our homes,” said U.S. Attorney Jay Clayton.  “New Yorkers are smart.  They know that car theft rings and other fraud schemes inflict great harm on their victims and cost all of us.  As alleged, the eight men charged stole cars from the streets of New York, time and again, and trafficked them to unsuspecting buyers along the East Coast, causing millions of dollars in losses.  Yesterday’s arrests reinforce that when thieves prey upon hardworking New Yorkers, the women and men of the SDNY and our law enforcement partners will bring them to justice on behalf of all law-abiding New Yorkers.”

“This announcement highlights HSI New York's unwavering commitment to ensuring a safer community and to pursuing all individuals and co-conspirators allegedly tied to this auto theft ring,” said HSI Special Agent in Charge Ricky J. Patel.  “This is not a victimless crime; a stolen car disrupts daily life and inflicts lasting harm on innocent New Yorkers, robbing them of their sense of security and stability.  The public deserves to know their neighborhoods are safe, that they can park their vehicles without fear, and that their hard-earned purchases are protected.  HSI New York, in collaboration with our law enforcement partners, will continue to identify, dismantle, and deter the criminal networks that exploit our neighborhoods and threaten our livelihoods.”

“Hondas continue to represent a significant number of auto thefts in New York City, and the NYPD is doing exactly what we do best to combat crime: finding the criminals responsible and stopping their illegal operations,” said NYPD Commissioner Jessica S. Tisch.  “Through precision policing and a multi-year investigation, the world’s greatest detectives dismantled this massive criminal ring – and I want to thank the NYPD investigators for their commitment to this case, as well as HSI and the U.S. Attorney’s Office for their continued partnership.”

“Through collaboration among law enforcement partners at all levels, we have intercepted a highly organized car theft operation that was responsible for victimizing car buyers across the East Coast,” said NYSP Superintendent Steven G. James.  “The defendants had no regard for the financial damage they inflicted or for the safety of the victims.  I commend the efforts of all those involved in bringing this criminal activity to an end and for the outstanding work that led to the charges in this case.”

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

From approximately March 2022 through November 2025, the defendants and others conspired to steal cars—primarily those parked on the street in the Bronx or Queens, New York—and sell them to unsuspecting buyers across the East Coast.  After stealing the cars, the defendants and their co-conspirators stashed them in so-called lay-up spots for a cooling-off period to avoid law enforcement detection. Meanwhile, they took steps to disguise the fact that the cars had been stolen.  They altered the cars’ Vehicle Identification Numbers (“VINs”) and then obtained services for the cars—often an oil change—using the new, fake VINs.  This allowed the defendants to obtain vehicle history reports that appeared to show genuine maintenance and other activity, thereby helping the defendants to trick purchasers into believing that the car was not stolen.  The defendants then offered to sell the stolen cars, generally starting on a social media platform that allows users to buy and sell products and then completing the sale in person. 

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PEDRO MANUEL LOPEZ MARTE, 38, of the Bronx, New York; JERRY LOPEZ PAULINO, 33, of the Bronx; SERGIO DIAZ RAMIREZ, 35, of the Bronx; PEDRO ROJAS, 62, of the Bronx; JUSTIN MARTHA, 24, of the Bronx; ERICK ROJAS CRUZ, 27, of the Bronx; JOSE FERREIRA, 48, of the Bronx; and RONALD ARIAS SANTOS, 30, of Hempstead, New York, are each charged with one count of conspiracy to possess and sell stolen vehicles, which carries a maximum sentence of five years in prison; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; and one count of wire fraud, which carries a maximum sentence of 20 years in prison.

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

Mr. Clayton praised the efforts of the NYPD Auto Crime Division Major Case Team, the special agents and task force officers from the HSI New York Seaport Trade Group, and the NYSP Auto Theft Unit.

The case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney James Mandilk 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.

“Our pre-IPO markets are important to investors, entrepreneurs, and our economy.  Their integrity is critical to our continued leadership in technology, healthcare, energy, and other key industries.  A unanimous jury has found that Michael Castillero, Francine Lanaia, and Brian Martinsen committed securities fraud, wire fraud, and investment adviser fraud through their firm, StraightPath Venture Partners.  The defendants used high-pressure sales tactics, false and misleading disclosures, and hidden exorbitant fees to defraud retail investors seeking to invest in private companies that had not yet had initial public offerings.  I commend the career prosecutors and law enforcement agents for their work to protect investors in this important marketplace.  We and our law enforcement partners are focused on our pre-IPO markets and our listed small cap markets.  Our message is clear:  marketing and trading in less well-known securities does not give you a pass to commit fraud.”

Jay Clayton, the United States Attorney for the Southern District of New York, Christopher G. Raia, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and Jessica S. Tisch, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging ANDREW NGUYEN, a former NYPD officer, with bribery, narcotics, firearms, and robbery offenses in connection with NGUYEN’s alleged participation in a drug trafficking enterprise while NGUYEN was an officer with the NYPD. NGUYEN was arrested this morning and was presented today before U.S. Magistrate Judge Henry J. Ricardo. The case is assigned to U.S. District Judge Analisa Torres.

“The NYPD is the most professional and most effective police department in the world,” said U.S. Attorney Jay Clayton. “New Yorkers rely on and trust the women and men of the NYPD. As alleged, Andrew Nguyen not only breached that trust for profit, but he also committed crimes against his fellow New Yorkers. New Yorkers, including our thousands of dedicated NYPD officers, want him brought to justice.”

Assistant Director in Charge Raia said: “Andrew Nguyen allegedly levied his official position as an NYPD officer to accept more than $30,000 in bribes in exchange for transporting narcotics and providing unauthorized armed protection to their illicit operations. Nguyen’s alleged support to a drug trafficking enterprise directly violated the oath he swore to uphold as well as the public’s trust. While the vast majority of our NYPD partners are deeply committed to honoring their duty to protect and serve, the FBI will never tolerate those who besmirch the badge for personal profit.”

“The NYPD holds its officers to the highest standards, and it’s an affront to our department when someone so blatantly abuses the public’s trust,” said NYPD Commissioner Tisch. “Andrew Nguyen allegedly endangered the communities he was sworn to protect and put his fellow officers’ lives in danger. The NYPD has zero tolerance for corruption of any kind, and I thank the members of the department who investigated this case and our partners in the FBI and U.S. Attorney’s Office for their support in rooting out this misconduct.”

As alleged in the Indictment and in statements made in court:

For approximately three years, between at least in or about 2020 and at least in or about November 2023, NGUYEN repeatedly abused his position as a police officer in the NYPD by soliciting and accepting tens of thousands of dollars in bribe payments in exchange for assisting another individual (“CC-1”) with the operation of CC-1’s drug trafficking enterprise.

First, NGUYEN transported drugs, including approximately eight kilograms of cocaine, for CC-1 while NGUYEN was armed with a firearm, including a 9‑millimeter Glock Model 26 pistol, which was NGUYEN’s NYPD-authorized off-duty firearm, and in possession of NYPD credentials and an NYPD parking placard, which NGUYEN planned to use to evade arrest in the event he was pulled over by other members of the NYPD or, in the case of his firearm, to protect CC-1 if violence occurred.

Second, NGUYEN drove CC-1 to drug meetings, again while possessing a firearm, including his NYPD-authorized off-duty firearm, NYPD credentials, and an NYPD parking placard

Third, NGUYEN queried names of other drug dealers in NYPD databases at the request of CC-1, provided that confidential information to CC‑1, and, at least once, offered to arrest one of those drug dealers for CC-1 in exchange for payment.

Fourth, NGUYEN, in exchange for payment from CC-1, used an NYPD vehicle to conduct an unsanctioned car stop of CC-1, during which NGUYEN purported to seize drugs and drug proceeds from CC-1. Following the car stop, NGUYEN submitted false reports to the NYPD regarding the car stop, to help CC-1 avoid repayment of a drug-trafficking-related debt.

Fifth, NGUYEN expressed a willingness to, in exchange for payment from an associate of CC-1 (“CC-2”), kidnap two drug dealers who owed money to CC-2 by conducting an unsanctioned arrest of those individuals, although this plan never came to fruition. 

Sixth, NGUYEN conspired with CC-1 and another criminal associate of CC-1 (“CC-3”) to rob a drug-money courier under the guise of NGUYEN conducting another unsanctioned car stop, although NGUYEN and his co-conspirators did not carry out their agreement to commit the robbery.

In addition, in or about November and December 2023, law enforcement conducted an undercover operation during which NGUYEN transported what NGUYEN believed to be five kilograms of cocaine in exchange for $5,000 from CC-1. In truth, the “drugs” were sham and NGUYEN had obtained them from an undercover law enforcement officer whom NGUYEN believed was a drug dealer.   

Overall, NGUYEN, who was at all relevant times an officer in the NYPD, accepted more than $30,000 in bribe payments from CC-1 (and solicited tens of thousands of dollars in additional bribes) in connection with NGUYEN’s participation in CC-1’s drug trafficking enterprise.

At the time of NGUYEN’s arrest earlier today, law enforcement searched NGUYEN’s home pursuant to a judicially authorized search warrant. During that search, a number of firearms and ammunition were found in plain view, including: (i) a Glock 19 pistol that was fully loaded with hollow-point ammunition; (ii) two AR-15-style rifles; (iii) a short-barreled rifle; (iv) a fully loaded high-capacity drum magazine containing 60 rounds of ammunition; (v) several AR-15-style magazines loaded with ammunition; and (vi) substantial amounts of other ammunition, including additional hollow-point ammunition.

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NGUYEN, 41, of Harriman, New York, is charged with (i) one count of honest services wire fraud, which carries a maximum sentence of twenty years in prison; (ii) one count of conspiracy to commit honest services wire fraud, which carries a maximum sentence of twenty years in prison; (iii) one count of conspiracy to solicit and receive a bribe, which carries a maximum sentence of five years in prison; (iv) one count of solicitation and receipt of a bribe, which carries a maximum sentence of ten years in prison; (v) one count of conspiracy to distribute and possess with intent to distribute (a) 5 kilograms and more of mixtures and substances containing a detectable amount of cocaine and (b) marijuana, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; (vi) one count of possession of a firearm in furtherance of a drug trafficking offense, which carries a mandatory minimum sentence of 5 years in prison, which must be served consecutively to any other term of in prison, and a maximum sentence of life in prison; (vii) one count of conspiracy to commit Hobbs Act robbery, which carries a maximum sentence of 20 years in prison; and (viii) one count of attempted distribution and possession with intent to distribute 5 kilograms and more of mixtures and substances containing a detectable amount of cocaine, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison.

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

Mr. Clayton praised the outstanding investigative work of the FBI and the NYPD’s Internal Affairs Bureau.

The case is being handled by the Office’s Public Corruption Unit and Narcotics Unit. Assistant United States Attorneys Matthew J. King and Jonathan Rebold are in charge of the prosecution.

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United States Attorney for the Southern District of New York, Jay Clayton, and the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation, Christopher G. Raia, announced today the unsealing of an Indictment charging BRADLEY HEPPNER, the founder of Beneficient, with securities fraud, wire fraud, conspiracy to commit securities fraud and wire fraud, false statements to auditors, and falsification of records. The charges in the Indictment arise from an alleged scheme by HEPPNER and others to fraudulently extract funds from GWG Holdings, Inc., a publicly traded company for which HEPPNER served as chairman, through the use of a shell company he controlled, the Highland Consolidated Limited Partnership (“HCLP”). HEPPNER was arrested this morning in Dallas, Texas, and will be presented tomorrow in the Northern District of Texas. The case has been assigned to U.S. District Judge Jed S. Rakoff. 

“As alleged, Heppner abused his role as a public company executive to loot the company and to funnel money into his own pockets,” said U.S. Attorney Jay Clayton. “When executives like Heppner lie and cheat to enrich themselves at the expense of everyday investors, they corrupt the integrity of our public markets. The women and men of the SDNY and our law enforcement partners will continue to work tirelessly to protect investors and the markets.”

“While serving as chairman of GWG, a publicly traded company, Bradley Heppner allegedly misappropriated more than $150 million. In furtherance of this scheme, Heppner allegedly falsified documents, made misleading statements to investors and auditors, and obstructed an investigation by regulatory authorities. GWG’s subsequent bankruptcy resulted in over $1 billion in losses to retail investors. The FBI will continue to hold accountable any individual who defrauds investors for their own gain,” said FBI Assistant Director in Charge Christopher G. Raia.

As alleged in the Indictment unsealed today in Manhattan federal court:

BRADLEY HEPPNER was the founder of Beneficient, a financial services startup. HCLP was a shell company that HEPPNER also controlled. In order to obtain a payout for himself, HEPPNER created a $141 million debt that Beneficient purportedly owed to HCLP. Over time, HEPPNER gained control and influence over GWG Holdings, Inc., a Nasdaq-listed financial services company. GWG historically raised capital through bonds—called L bonds—sold to retail investors, predominately retirees seeking income-generating investments. HEPPNER installed himself as chairman of GWG’s board of directors and appointed his friends and associates as GWG’s board members.

Between 2018 and 2021, HEPPNER made false and misleading statements to a special committee of GWG’s board to induce them to authorize investments by GWG in Beneficient, in part to pay off the debt Beneficient purportedly owed to HCLP. When the special committee inquired about who controlled HCLP, HEPPNER represented that HCLP was independent, disclaimed influence over it, and denied that he would personally receive the payments on the purported debt. Those representations were false and misleading. HCLP was controlled by HEPPNER. And when GWG authorized payments to satisfy what it believed were arm’s length debts owed to a third-party lender, those funds flowed through multiple corporate entities and ultimately to HEPPNER’s personal accounts. Beneficient received at least approximately $300 million from GWG. And HEPPNER received more than $150 million of these GWG funds through his HCLP entity. HEPPNER used the funds he received from GWG for personal expenses, including to fund his lifestyle and to renovate his Dallas mansion and improve his East Texas ranch.

In addition, in or about 2019, HEPPNER made false and misleading statements and prepared false documents to deceive Beneficient’s auditors in connection with the preparation of Beneficient’s and GWG’s audit. As a publicly held company, GWG was required to report to the United States Securities and Exchange Commission its quarterly and annual financial statements, and to have its annual financial statements audited by independent certified public accounts. By the end of 2018, because GWG held a large interest in Beneficient, Beneficient’s audit was required to be incorporated into GWG’s annual SEC filings. As part of this audit, Beneficient’s auditors considered whether HCLP was independent of HEPPNER, and whether one of the friends HEPPNER had installed to run HCLP was also independent. Because neither was true, HEPPNER prepared, and directed others to prepare, backdated paperwork, misleading letters, and fraudulent emails, which were sent to the auditors and were material to the auditors’ accounting determinations.

In late 2020, GWG received a subpoena from the SEC in connection with an ongoing enforcement investigation of GWG and Beneficient. HEPPNER falsified minutes from an October 2019 board meeting by adding language to the minutes to make it appear that HEPPNER had disclosed to Beneficient his history of borrowing money from HCLP. In truth, HEPPNER had never disclosed this information to GWG or Beneficient. HEPPNER later caused the falsified Board minutes to be sent to the SEC.

In June 2021, HEPPNER resigned from his position on GWG’s board, and by the end of 2021, HEPPNER had separated Beneficient from GWG. Thereafter, GWG filed for Chapter 11 bankruptcy, unable to satisfy more than one billion in obligations to tens of thousands of retail bondholders.

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HEPPNER, 59, of Dallas, Texas, is charged with securities fraud, wire fraud, false statements to auditors, and falsification of records, each of which carries a maximum sentence of 20 years in prison. HEPPNER is also charged with conspiracy to commit securities fraud and wire fraud, which carries a maximum sentence of five years in prison.

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

Mr. Clayton praised the outstanding work of the FBI. Mr. Clayton also expressed appreciation for the assistance of the U.S. Securities and Exchange Commission.

This case is being handled by SDNY’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Thomas Burnett, Daniel G. Nessim, and Alexandra Rothman are in charge of the prosecution.

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United States Attorney for the Southern District of New York Jay Clayton and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”) Christopher G. Raia announced today that a jury returned a guilty verdict on October 27, 2025, against RAI THOMAS for sex trafficking of a minor and use of interstate facilities to promote sex trafficking and prostitution.  U.S. District Judge Nelson S. Román presided over the trial. 

“Crimes relating to sexual abuse of minors are among the most heinous crimes in our society,” said U.S. Attorney Jay Clayton.  “Rai Thomas’s actions were particularly egregious because he targeted a teen in crisis and preyed on her when she was at her most vulnerable.  This Office is dedicated to protecting the children of New York. This conviction should serve as a lesson: if you target a child—any child—the prosecutors of this Office and our law enforcement partners will bring you to justice.” 

FBI Assistant Director Christopher G. Raia said: “Rai Thomas organized an elaborate sex trafficking scheme across the city to repeatedly exploit a minor victim simply to enrich himself. Thomas targeted an especially vulnerable minor, enticing her into commercial sex work with utter disregard for her wellbeing. The FBI will never tolerate any individual who advertises and uses children as sexual objects to fill their own piggy banks.”

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

Between January and February 2022, THOMAS trafficked Minor Victim-1 to engage in commercial sexual activity across multiple hotels within the Bronx and Brooklyn, New York.  Minor Victim-1 had been living in a children’s group home at the time that THOMAS trafficked her.  THOMAS facilitated and benefited from the scheme in numerous ways, including by enticing Minor Victim-1 to engage in commercial sex; coordinating the transportation of Minor Victim-1 to hotels; reserving the hotel rooms in which she engaged in commercial sex; facilitating the advertisement of Minor Victim-1 on the internet to customers for commercial sex; and profiting from the sex trafficking scheme.

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RAI THOMAS, 31 of Mount Vernon, New York, was convicted of (1) sex trafficking of a minor, which carries a mandatory minimum term of 10 years in prison and a maximum term of life in prison, and (2) use of interstate facilities to promote unlawful activity, which carries a maximum sentence of five years in prison.

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

The sentencing of THOMAS is scheduled for February 13, 2026, before Judge Román. 

Mr. Clayton praised the outstanding investigative work of the Federal Bureau of Investigation’s Hudson Valley Safe Streets Task Force, the Town of Poughkeepsie Police Department, the Dutchess County Sheriff’s Office, the City of Poughkeepsie Police Department, and the New York City Police Department. 

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Qais Ghafary, Kaiya Arroyo, and Jorja Knauer represented the Government at trial, with the assistance of Paralegal Specialists Gabriela Salerno, Samantha Olsen, and Shannon Becker.

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United States Attorney for the Southern District of New York, Jay Clayton, announced that CAMERON MCEWEN was sentenced to 210 months in prison by U.S. District Judge Philip M. Halpern for the receipt of sexually explicit photographs of a 16-year-old minor via a social media application and for committing this offense after having previously committed a state crime related to sexual abuse of a minor.

“Child pornography is a scourge on our society,” said U.S. Attorney Jay Clayton.  “It leaves deep and lasting scars. It turns the stomach of every parent. Cameron McEwen met his victims via social media coercing them online to send him sexually explicit pictures and videos. Wherever predators lurk, including online, our Office will use every tool available to find and prosecute them.”

FBI Assistant Director in Charge Christopher G. Raia said: “Cameron McEwen extorted a minor female victim with threats against her friends and family to force compliance with his perverted sexual demands. Not only did McEwen sexually exploit a teenage girl across the country, but he continued to seek additional victims for twisted gratification. May this sentencing emphasize the FBI’s commitment to protecting our vulnerable populations from sexual predators, regardless of where they may be located.”

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

MCEWEN was convicted in Orange County Court on January 13, 2022, of rape in the second degree where he, being eighteen years old or more, engaged in sexual intercourse and oral sexual conduct with a person less than fifteen years old. 

In April 2023, MCEWEN used multiple Snapchat accounts to communicate with and coerce a 16-year-old girl (the “Victim”) to send him sexually explicit photographs of herself.  MCEWEN initially threatened the Victim’s eighteen-year-old friend, telling the friend that he would release her sexually explicit photographs and harm her if she did not get another person to send him additional explicit material.  The friend sought out the Victim, who connected with MCWEN on Snapchat, where MCEWEN demanded sexually explicit material from the Victim.  In addition, MCEWEN engaged in similar schemes with other victims. 

Individuals with information concerning the sexual exploitation of children are urged to call 1-800-Call-FBI.

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In addition to the prison term, MCEWEN, 23, of Middletown, New York, was sentenced to a lifetime term of supervised release.

Mr. Clayton praised the efforts of the Federal Bureau of Investigation agents in both Alaska and New York, the New York State Police Troop F, and the Middletown Police Department.  He also thanked the Ketchikan Police Department for its participation and support. 

The prosecution is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney Kathryn Wheelock is in charge of the prosecution.   

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Jay Clayton, the United States Attorney for the Southern District of New York; Christopher G. Raia, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”); and Jessica S. Tisch, the Commissioner of the New York City Police Department (“NYPD”), announced that TAREK BAZROUK was sentenced on October 28, 2025 to 17 months in prison for committing hate crimes in connection with his repeated assaults of Jewish victims in New York City between 2024 and 2025.  The sentence was imposed by U.S. District Judge Richard M. Berman.

“Tarek Bazrouk repeatedly attacked Jewish victims at protests relating to the Israel/Hamas war,” said U.S. Attorney Jay Clayton.  “He targeted these New Yorkers based on their religion and national origin.  And he was undeterred by multiple arrests following these assaults, instead quickly returning to violently targeting Jews.  The prosecution of this case and the sentence imposed make clear that New Yorkers will not tolerate hate-based violence and that this Office will aggressively prosecute those who perpetrate senseless crimes of hate.”

FBI Assistant Director in Charge Christopher G. Raia said: “Despite repeated arrests, Tarek Bazrouk continued to attack Jewish victims while shamelessly expressing his hatred for those of the Jewish faith and demonstrating his support for anti-Semitic terrorist organizations. Bazrouk’s relentless torment violated these New Yorkers’ ability to safely express their beliefs through protests and religious outerwear. May this sentencing highlight the FBI’s intolerance of any individual who allows hate and prejudice to justify violent rhetoric and actions against others.”

NYPD Commissioner Jessica S. Tisch said: “Tarek Bazrouk not only targeted and assaulted his victims because of their faith — he attacked every Jewish New Yorker who should be able to practice their religion freely and without fear,” said NYPD Commissioner Jessica S. Tisch. “This sentencing sends a clear message: antisemitism or any act of violence driven by hate will never be tolerated in our city, and the NYPD will continue to hold accountable anyone who threatens the religious identity of New Yorkers. I thank the NYPD investigators, the FBI, and the prosecutors in the U.S. Attorney’s Office for their unwavering work in bringing Tarek Bazrouk to justice."

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

Over the course of approximately nine months, BAZROUK physically assaulted three Jewish individuals at protests concerning the Israel/Hamas war.  First, on April 15, 2024, BAZROUK—while wearing a green headband typically worn by Hamas terrorists—attended a protest concerning the Israel/Hamas war in Lower Manhattan, outside the New York Stock Exchange.  During the protest, BAZROUK was arrested by officers from the NYPD after lunging at a group of pro-Israel protestors.  As BAZROUK was being escorted to an NYPD vehicle, BAZROUK kicked a different individual—Victim-1, a Jewish college student—in the stomach.  At the time of the assault, Victim-1 was standing near other Jewish protestors, who were wearing kippahs (that is, brimless skullcaps traditionally worn by Jewish men), carrying Israeli flags, and singing Jewish songs.

Approximately eight months later, on December 9, 2024, BAZROUK assaulted another individual at a protest relating to the Israel/Hamas war next to Columbia University.  The victim of the second assault—Victim-2—is a Jewish student who attended Columbia.  On the date of the assault, Victim-2 and his brother were wearing kippahs, Victim-2 had an Israeli flag draped around his shoulders, and Victim-2 was singing Jewish songs.  As the protest continued, BAZROUK—with his mouth covered—stole an Israeli flag from Victim-2’s brother and fled.  After Victim-2 and his brother followed BAZROUK through a crowd to retrieve the flag, BAZROUK snuck up beside Victim-2 and struck him in the face with a closed fist.

Roughly one month later, on January 6, 2025, BAZROUK assaulted a third Jewish victim—Victim-3—at a protest concerning the Israel/Hamas war near 1st Avenue and East 18th Street in Manhattan.  At this protest, Victim-3 was wearing an Israeli flag around his shoulders, a hat with an Israeli flag, and a chain with a Jewish star.  During the protest, BAZROUK, who was wearing a keffiyeh on his face, made contact with Victim-3’s shoulder and wrapped his foot around Victim-3’s ankle.  Victim-3 attempted to push BAZROUK away and cursed at him.  BAZROUK then punched Victim-3 in the nose with a closed fist.

Pursuant to judicially authorized warrants, law enforcement subsequently searched cellphones used by BAZROUK.  Evidence from those devices revealed BAZROUK’s anti-Semitic bias and his support for anti-Jewish terrorist groups including Hamas, demonstrating his motivation for repeatedly assaulting Jewish victims.  In text messages, for example, BAZROUK identified himself as a “Jew hater,” labeled Jews as “worthless,” extorted “Allah” to “get us rid of [Jews],” called an acquittance a “Fucking Jew,” and told a friend to “slap that bitch” in reference to a woman with an Israeli sticker on her laptop.  BAZROUK also told a friend that he was “mad happy” to have learned that certain of his family members overseas are part of Hamas.  BAZROUK’s phones also contained extensive pro-Hamas and pro-Hizballah propaganda, showing his support for organizations that have murdered thousands of Jews and Israelis.

*                *                *

In addition to his prison term, BAZROUK, 20, of New York, New York, was sentenced to three years of supervised release.

Mr. Clayton praised the outstanding work of the FBI and thanked the Manhattan District Attorney’s Office and the NYPD for their assistance.

This case is being handled by the Office’s Civil Rights and Human Trafficking Unit in the Criminal Division.  Assistant U.S. Attorneys Sam Adelsberg and Jim Ligtenberg are in charge of the prosecution.

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Jay Clayton, the United States Attorney for the Southern District of New York and Stefanie Roddy, the Special Agent in Charge of the Newark Field Office of the Federal Bureau of Investigation (“FBI”), announced that DONOVAN HALL was sentenced on October 30, 2025, to 49 months in prison for making interstate threats and the interstate stalking of Jewish victims in New York City.  The sentence was imposed by U.S. District Judge Jennifer H. Rearden.

“Donovan Hall targeted Jewish victims with a sustained campaign of intimidation, terror, and harassment,” said U.S. Attorney Jay Clayton.  “The approximately 1,000 threats he sent to these New Yorkers were alarming and brazen.  The prosecution of this case and the sentence imposed make clear that this Office will aggressively bring to justice those who perpetrate senseless crimes of hate.” 

Special Agent in Charge Roddy said: “Hall’s sentencing speaks volumes about the severity of his crimes, and the seriousness with which the law takes them. After being remanded for approximately 10 months, Hall’s guilty plea still resulted in the near-maximum sentence allowed for his calculated campaign of anti-Semitic rhetoric. His reign of fear is over and serves as a reminder to those who think they can hide behind computers, phone lines, and texts - the FBI treats all threats of violence with the utmost seriousness. The FBI will not relent in seeking justice for the victims of these egregious crimes.”

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

Over a period of three months, HALL contacted several individuals located in New York, New York (the “Victims”) approximately 1,000 times and made anti-Semitic and violent threats to torture, mutilate, rape, and murder them and their families.   In particular, starting in August 2024, HALL made dozens of threatening phone calls—many of which were anti-Semitic in nature—to the Jewish owner of a hotel located in Manhattan, the owner’s family members, and hotel staff.  During these calls, HALL threatened numerous times to kill the Victims.

In October 2024, HALL escalated his threatening conduct by texting photographs of two firearms and a machete to the hotel owner, along with threats to use those weapons to harm the owner and his family.  During a search of HALL’s residence in Arizona conducted on November 22, 2024, the firearms depicted in the text messages, among other weapons and ammunition, were recovered.  The two firearms—neither of which is registered in HALL’s name—were located alongside his wallet in his backpack.  One of the firearms was loaded.

HALL’s threats toward the Victims were part of a larger pattern of death threats sent to various other individuals.  The targets of his threats are located throughout the U.S.  In these communications, HALL consistently used violent and threatening language, and often targeted Jews.

*                *                *

In addition to his prison term, HALL, 35, of Mesa, Arizona, was sentenced to three years of supervised release. 

Mr. Clayton praised the outstanding work of the FBI’s Newark Field Office.  Mr. Clayton also thanked the New York Police Department, the U.S. Attorney’s Office for the District of Arizona, the FBI Phoenix Field Office, the Mesa Police Department, and the Clifton Police Department in Clifton, New Jersey.

This case is being handled by the Office’s Civil Rights and Human Trafficking Unit in the Criminal Division.  Assistant U.S. Attorney Sam Adelsberg is in charge of the prosecution.

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The Justice Department announced today that RAFAT AMIROV, a/k/a “Farkhaddin Mirzoev,” a/k/a “Pᴎᴍ,”  a/k/a “Rome,” and POLAD OMAROV, a/k/a “Araz Aliyev,” a/k/a “Polad Qaqa,” a/k/a “Haci Qaqa,” were each sentenced yesterday to 25 years’ in prison for their participation in a murder-for-hire plot targeting Masih Alinejad, a journalist, author, and human rights activist, on behalf of the Government of Iran.  In March 2025, Amirov and Omarov were found guilty of murder-for-hire, attempted murder in aid of racketeering, and related charges, following a two-week trial before U.S. District Judge Colleen McMahon, who imposed today’s sentences.

“The defendants and their criminal associates came chillingly close to gunning down an Iranian-American journalist on the streets of New York.” said Assistant Attorney General for National Security John A. Eisenberg.  “Tehran has long sought to silence Ms. Alinejad, and after multiple failed kidnapping attempts, turned to Omarov and Amirov and their organization to stalk and murder her.  This case is part of a well-documented and disturbing rise in plots involving criminal networks paid by Iran to target dissidents in the United States and around the world. We are committed to holding accountable those who join forces with this vile regime to violate our national sovereignty or threaten U.S. citizens.”

“The Government of Iran, a sponsor of terrorism, assassination, and espionage around the globe, brazenly brought its efforts to murder Masih Alinejad to New York,” said U.S. Attorney for the Southern District of New York Jay Clayton.  “The plot exposed at trial involved actors on three continents, culminating with a hitman with an AK-47 outside Ms. Alinejad’s apartment in Brooklyn.  Yesterday’s sentences send a clear message:  the DOJ and our partners will expose and severely punish those who target U.S. citizens and bring terror to our community.”

“This sentencing marks a victory for justice and a clear warning to those who seek to export repression onto U.S. soil,” said Assistant Director Roman Rozhavsky of the FBI’s Counterintelligence Division. “The plot, orchestrated by the Iranian government to assassinate a dissident living in America, demonstrates the lengths to which authoritarian actors will go to silence voices of freedom. The FBI remains steadfast in its mission to defend the homeland from anyone who participates in transnational repression and threatens our democratic values.”

FBI Assistant Director in Charge Christopher G. Raia said: “Rafat Amirov and Polad Omarov, two highly ranked members of the Russian Mob, attempted to assassinate Masih Alinejad to permanently silence her criticism of the Iranian government and public advocacy of human rights. These defendants operated as unlawful enforcers for a foreign government to target an American journalist on our nation’s soil. May yesterday’s sentencing emphasize the FBI’s steadfast commitment to protecting Americans against any foreign actor seeking to inflict terror and physical harm to further a political agenda.”

According to the Superseding Indictment, public court filings, and the evidence presented at trial:

AMIROV and OMAROV were high-ranking members of an Azerbaijani faction of the Russian Mob (the “Organization”) who worked with other members of the Organization to kill Masih Alinejad on instructions from high-ranking members of the Islamic Revolutionary Guard Corps (“IRGC”). Ms. Alinejad has previously been the target of multiple plots by the Government of Iran to intimidate, harass, and kidnap her for her work as a journalist, author, and human rights activist who has publicized the Government of Iran’s human rights abuses, especially its discriminatory and oppressive treatment of women, repression of political expression, and killings of Iranians engaged in peaceful protests against the regime.  As recently as 2020 and 2021, Iranian intelligence officials and assets plotted to kidnap Ms. Alinejad from within the U.S. for rendition to Iran in an effort to silence her criticism of the Iranian regime.   

After its efforts to kidnap Ms. Alinejad from the U.S. failed in 2020 and 2021, the IRGC turned to AMIROV—a Vor, or Thief-in-Law, the highest rank in the Russian Mob—and OMAROV—the cousin of a powerful Vor who aspired to become a Vor himself—to locate, surveil, and murder her.  The IRGC offered AMIROV $500,000 for Ms. Alinejad’s murder and provided him with targeting information about Ms. Alinejad, including her home address.  Beginning in approximately July 2022, AMIROV sent this targeting information to OMAROV. OMAROV, in turn, communicated this information to Khalid Mehdiyev, another member of the Organization who had been residing in Yonkers, New York, so that Mehdiyev could surveil Ms. Alinejad and murder her.  AMIROV and OMAROV arranged the delivery of $30,000 to Mehdiyev from the IRGC’s advance payment; Mehdiyev used a portion of these funds to buy an AK-47 style assault rifle, two magazines, and 66 rounds of ammunition.

In late July 2022, Mehdiyev repeatedly traveled to Ms. Alinejad’s neighborhood to surveil her residence and locate her.  Mehdiyev sent photographs, videos, and updates on his stakeouts to OMAROV, who passed them on to AMIROV.  AMIROV gave OMAROV intelligence about Ms. Alinejad’s home, location, and family members provided by his IRGC contacts to assist Mehdiyev’s attempts to locate and kill Ms. Alinejad.  On July 24, 2022, Mehdiyev reported to OMAROV from Ms. Alinejad’s residence that he was “at the crime scene.”  On July 27, 2022, OMAROV told AMIROV that Mehdiyev was ready to kill Ms. Alinejad, writing “this matter will be over today.  I told them to make a birthday present for me.  I pressured them, they will sleep there this night.”  On July 28, 2022, Mehdiyev sent OMAROV a video taken from inside the car that Mehdiyev was driving with the assault rifle and a message reading, “we are ready.”  As OMAROV continued to update AMIROV about Mehdiyev’s readiness, AMIROV cautioned OMAROV, “let him keep the car clean.”  When Mehdiyev drove away from surveilling the residence on July 28, 2022, he was stopped after a traffic violation and, during a search of the vehicle, police officers found the assault rifle; 66 rounds of ammunition, including one in the chamber of the assault rifle; approximately $1,100 in cash; gloves; and a black ski mask.

After Mehdiyev was arrested and placed into custody, OMAROV contacted Mehdiyev’s mother and threatened to kill her and her other son if she did not locate Mehdiyev, in part because the IRGC was demanding the return of its money.

In addition to their prison terms, AMIROV, 46, of Iran; OMAROV, 41, of the country of Georgia, were sentenced to a $500 special assessment.

Mr. Clayton praised the outstanding investigative work of the FBI and its New York Field Office Counterintelligence-Cyber Division and the New York FBI Iran Threat Task Force.  Mr. Clayton also thanked the New York City Police Department (“NYPD”) and the NYPD Intelligence Bureau, as well as the Department of Justice’s National Security Division and the Department of Justice’s Office of International Affairs, for their assistance. Mr. Clayton also thanked the authorities in the Czech Republic.

This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Michael D. Lockard, Jacob H. Gutwillig, and Matthew J.C. Hellman are in charge of the prosecution, with assistance from Trial Attorneys Christopher Rigali and Leslie Esbrook of the National Security Division’s Counterintelligence and Export Control Section.

Jay Clayton, the United States Attorney for the Southern District of New York, John A. Eisenberg, the Assistant Attorney General for National Security, and Christopher G. Raia, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that RAFAT AMIROV, a/k/a “Farkhaddin Mirzoev,” a/k/a “Pᴎᴍ,”  a/k/a “Rome,” and POLAD OMAROV, a/k/a “Araz Aliyev,” a/k/a “Polad Qaqa,” a/k/a “Haci Qaqa,” were each sentenced yesterday to 25 years’ imprisonment for their participation in a murder-for-hire plot targeting Masih Alinejad, a journalist, author, and human rights activist, on behalf of the Government of Iran.  In March 2025, Amirov and Omarov were found guilty of murder-for-hire, attempted murder in aid of racketeering, and related charges, following a two-week trial before U.S. District Judge Colleen McMahon, who imposed yesterday’s sentences.

“The Government of Iran, a sponsor of terrorism, assassination, and espionage around the globe, brazenly brought its efforts to murder Masih Alinejad to New York," U.S. Attorney Jay Clayton said.  "The plot exposed at trial involved actors on three continents, culminating with a hitman with an AK-47 outside Ms. Alinejad’s apartment in Brooklyn.  Yesterday’s sentences send a clear message:  the DOJ and our partners will expose and severely punish those who target U.S. citizens and bring terror to our community.”

Assistant Attorney General John A. Eisenberg said: “The defendants and their criminal associates came chillingly close to gunning down an Iranian-American journalist on the streets of New York.  Tehran has long sought to silence Ms. Alinejad, and after multiple failed kidnapping attempts, turned to Omarov and Amirov and their organization to stalk and murder her.  This case is part of a well-documented and disturbing rise in plots involving criminal networks paid by Iran to target dissidents in the United States and around the world. We are committed to holding accountable those who join forces with this vile regime to violate our national sovereignty or threaten U.S. citizens.”

FBI Assistant Director in Charge Christopher G. Raia said: “Rafat Amirov and Polad Omarov, two highly ranked members of the Russian Mob, attempted to assassinate Masih Alinejad to permanently silence her criticism of the Iranian government and public advocacy of human rights. These defendants operated as unlawful enforcers for a foreign government to target an American journalist on our nation’s soil. May yesterday’s sentencing emphasize the FBI’s steadfast commitment to protecting Americans against any foreign actor seeking to inflict terror and physical harm to further a political agenda.”

According to the Superseding Indictment, public court filings, and the evidence presented at trial:

AMIROV and OMAROV were high-ranking members of an Azerbaijani faction of the Russian Mob (the “Organization”) who worked with other members of the Organization to kill Masih Alinejad on instructions from high-ranking members of the Islamic Revolutionary Guard Corps (“IRGC”). Ms. Alinejad has previously been the target of multiple plots by the Government of Iran to intimidate, harass, and kidnap her for her work as a journalist, author, and human rights activist who has publicized the Government of Iran’s human rights abuses, especially its discriminatory and oppressive treatment of women, repression of political expression, and killings of Iranians engaged in peaceful protests against the regime.  As recently as 2020 and 2021, Iranian intelligence officials and assets plotted to kidnap Ms. Alinejad from within the U.S. for rendition to Iran in an effort to silence her criticism of the Iranian regime.  

After its efforts to kidnap Ms. Alinejad from the U.S. failed in 2020 and 2021, the IRGC turned to AMIROV—a Vor, or Thief-in-Law, the highest rank in the Russian Mob—and OMAROV—the cousin of a powerful Vor who aspired to become a Vor himself—to locate, surveil, and murder her.  The IRGC offered AMIROV $500,000 for Ms. Alinejad’s murder and provided him with targeting information about Ms. Alinejad, including her home address.  Beginning in approximately July 2022, AMIROV sent this targeting information to OMAROV. OMAROV, in turn, communicated this information to Khalid Mehdiyev, another member of the Organization who had been residing in Yonkers, New York, so that Mehdiyev could surveil Ms. Alinejad and murder her.  AMIROV and OMAROV arranged the delivery of $30,000 to Mehdiyev from the IRGC’s advance payment; Mehdiyev used a portion of these funds to buy an AK-47 style assault rifle, two magazines, and 66 rounds of ammunition.

In late July 2022, Mehdiyev repeatedly traveled to Ms. Alinejad’s neighborhood to surveil her residence and locate her.  Mehdiyev sent photographs, videos, and updates on his stakeouts to OMAROV, who passed them on to AMIROV.  AMIROV gave OMAROV intelligence about Ms. Alinejad’s home, location, and family members provided by his IRGC contacts to assist Mehdiyev’s attempts to locate and kill Ms. Alinejad.  On July 24, 2022, Mehdiyev reported to OMAROV from Ms. Alinejad’s residence that he was “at the crime scene.”  On July 27, 2022, OMAROV told AMIROV that Mehdiyev was ready to kill Ms. Alinejad, writing “this matter will be over today.  I told them to make a birthday present for me.  I pressured them, they will sleep there this night.” On July 28, 2022, Mehdiyev sent OMAROV a video taken from inside the car that Mehdiyev was driving with the assault rifle and a message reading, “we are ready.”  As OMAROV continued to update AMIROV about Mehdiyev’s readiness, AMIROV cautioned OMAROV, “let him keep the car clean.”  When Mehdiyev drove away from surveilling the residence on July 28, 2022, he was stopped after a traffic violation and, during a search of the vehicle, police officers found the assault rifle; 66 rounds of ammunition, including one in the chamber of the assault rifle; approximately $1,100 in cash; gloves; and a black ski mask.

After Mehdiyev was arrested and placed into custody, OMAROV contacted Mehdiyev’s mother and threatened to kill her and her other son if she did not locate Mehdiyev, in part because the IRGC was demanding the return of its money. 

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In addition to their prison terms, AMIROV, 46, of Iran; OMAROV, 41, of the country of Georgia, were sentenced to a $500 special assessment.

Mr. Clayton praised the outstanding investigative work of the FBI and its New York Field Office Counterintelligence-Cyber Division and the New York FBI Iran Threat Task Force.  Mr. Clayton also thanked the New York City Police Department (“NYPD”) and the NYPD Intelligence Bureau, as well as the Department of Justice’s National Security Division and the Department of Justice’s Office of International Affairs, for their assistance. Mr. Clayton also thanked the authorities in the Czech Republic.

This case is being handled by the Office’s National Security and International Narcotics Unit. Assistant U.S. Attorneys Michael D. Lockard, Jacob H. Gutwillig, and Matthew J.C. Hellman are in charge of the prosecution, with assistance from Trial Attorneys Christopher Rigali and Leslie Esbrook of the National Security Division’s Counterintelligence and Export Control Section. 

United States Attorney for the Southern District of New York, Jay Clayton, announced that CARLOS RAMIREZ, a/k/a “Guerra,” was sentenced today to life in prison for his participation in a racketeering conspiracy and two murders committed as a member of the Sunset Trinitarios, a violent street gang.  RAMIREZ was found guilty following a two-week trial before U.S. District Judge Jesse M. Furman, who imposed today’s sentence.

​“As a member of the Sunset Trinitarios, Carlos Ramirez was an unapologetic killer and responsible for brutal violence that endangered the lives of far more people than the two teenagers whom he murdered in 2013 and 2014,” said U.S. Attorney Jay Clayton.  “After he was arrested and charged for these crimes, he was undeterred and attempted to stab to death the former leader of his own gang in a gruesome and vicious attack while incarcerated.  He will never walk the streets of New York again, and this Office will continue to work with our law enforcement partners to bankrupt the cartels, dismantle the gangs, and remove from our streets all those who pursue death and violence as a way of life.”

According to the Indictment, public court filings, and the evidence presented at trial:

From 2010 to 2024, members of the Sunset Trinitarios, a violent drug trafficking organization and street gang founded in Sunset Park in Brooklyn, New York, committed a terrifying number of violent crimes, including multiple murders and attempted murders and numerous gunpoint robberies all across the metropolitan area.  RAMIREZ was one of the members of the Sunset Trinitarios during this period, and he rose to multiple positions of leadership within the gang, both out on the street and when he was incarcerated in the custody of state and federal detention facilities in New York City.  As a “devil soldier messenger” of the Sunset Trinitarios, which came to celebrate the murder of innocent victims and their purported delivery to the devil, RAMIREZ obtained two identical tattoos memorializing the two murders he committed on behalf of the gang.

On October 23, 2013, RAMIREZ participated in the murder of Michael Beltre, who was seventeen years old.  Beltre was shot multiple times on the street in the Bronx after RAMIREZ struck him and held him for another gang member to shoot.

On November 2, 2014, RAMIREZ murdered Jordanny Correa, who was nineteen years old.  RAMIREZ shot Correa multiple times at point-blank range inside an apartment in the Bronx.  

On February 28, 2023, RAMIREZ attempted to murder a former leader of the Sunset Trinitarios inside the Metropolitan Detention Center in Brooklyn.  RAMIREZ committed this attack because he believed that this former leader had previously supplied information to law enforcement.  With the help of others, RAMIREZ slashed and stabbed the victim with a knife, causing severe injuries to the victim’s face and the rest of his body in multiple locations.

10 others of RAMIREZ’s co-conspirators and fellow members of the Sunset Trinitarios previously pled guilty and have received sentences that have ranged from multiple years through life in prison.

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Mr. Clayton praised the outstanding investigative work of the New York Drug Enforcement Task Force, the Federal Bureau of Prisons, and the New York City Department of Correction.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Thomas John Wright, Brandon D. Harper, and Timothy Ly are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, announced that SHARON TONEY‑FINCH, who made false public claims about assisting homeless veterans, was sentenced today to 12 months and one day by U.S. District Judge Vincent L. Briccetti for a years-long scheme to defraud military veterans’ charities and falsely claiming that she was a Purple Heart recipient.  TONEY-FINCH previously pled guilty in March 2025 to wire fraud and stolen valor offenses.  In issuing the Court’s sentence, Judge Briccetti described TONEY-FINCH’s conduct as “appalling” and “disrespectful to [her] fellow veterans.” 

“Sharon Toney-Finch falsely claimed to be a Purple Heart recipient and used her foundation to defraud donors and others induced by that lie,” said U.S. Attorney Jay Clayton.  “Let today’s sentence reaffirm that fraud built on lies about service and sacrifice will carry a heavy price.”

As alleged in the Indictment and in statements made in public filings and public court proceedings:

TONEY-FINCH is an Army veteran and founder of the Yerik Israel Toney Foundation (the “YIT Foundation”), a registered 501(c)(3) charity that was established in Sullivan County.  TONEY-FINCH was honorably discharged from the U.S. Army with various commendations, but she never received a Purple Heart award.

TONEY-FINCH’s YIT Foundation reportedly strived to raise awareness of premature births, offer assistance to premature babies and their families, and provide a place to stay or transportation while the babies were in the neonatal intensive care unit.  The YIT Foundation also claimed to help homeless and low-income military service veterans in need of living assistance.

In fact, the YIT Foundation was largely a fraud.  TONEY-FINCH helped virtually no military veterans and, instead, used the money that had been donated to the YIT Foundation by bona fide military veterans’ charities principally for her own benefit, including to pay for her BMW, a gym membership, travel, meals, and other personal expenses.  In raising funds for the YIT Foundation, TONEY-FINCH also lied extensively about her military service, claiming falsely that she had been injured in an improvised explosive device attack in Iraq and doctoring her military discharge paperwork to reflect that she had received a Purple Heart, among other things.  In total, TONEY-FINCH obtained approximately $85,000 as part of the scheme.

For example, in June 2022, TONEY-FINCH induced a local foundation that donates money to charities that serve veterans, food pantries, and domestic violence survivors to give the YIT Foundation $10,000 ostensibly to fund the construction of housing for homeless veterans.  TONEY-FINCH used this grant money not to construct a home for veterans but rather principally to pay for her luxury vehicle and for her personal expenses at bars, restaurants, and gyms.

In May 2023, TONEY-FINCH made national news after claiming to a newspaper that the YIT Foundation had been supporting numerous homeless veterans who were being evicted from a hotel in Newburgh to make room for migrants who were being bussed from New York City.  This claim caused at least one donor to wire the YIT Foundation $25,000.  TONEY‑FINCH’s claims about housing homeless veterans who were supposedly displaced by migrants were false.

In the process of soliciting other donations for the YIT Foundation, TONEY-FINCH frequently and fraudulently held herself as a military hero who had received a Purple Heart medal.  For example, in September 2021, TONEY-FINCH submitted a doctored military discharge certificate to the National Purple Heart Hall of Honor and was honored at a Purple Heart ceremony alongside commissioned military officers.  And in July 2022, TONEY-FINCH appeared on a video podcast to discuss the YIT Foundation and her claimed military record.  At the outset of this appearance, TONEY-FINCH stated that she is the founder of the YIT Foundation and falsely claimed that she was “a Purple Heart and Valor Award recipient.”  TONEY-FINCH then told an elaborate and false story about being the victim of an improvised explosive device attack in Iraq, in which TONEY-FINCH supposedly sustained injuries that required dozens of surgeries and simultaneously saved the lives of multiple fellow servicemembers.

*                *                *

In addition to the prison term, TONEY-FINCH, 43, of Newburgh, New York, was sentenced to three years of supervised release and ordered to pay $84,000 in restitution and $85,000 in forfeiture.

Mr. Clayton praised the work of the Federal Bureau of Investigation Hudson Valley White Collar Crime Task Force, the Orange County District Attorney’s Office, the Orange County Sheriff’s Office, the U.S. Department of Veterans Affairs – Office of Inspector General, and the U.S. Army Criminal Investigation Division.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Ryan W. Allison and Margaret N. Vasu are in charge of the prosecution.

Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, Amanda Houle announced that CHARLIE JAVICE was sentenced today to 85 months in prison for falsely and dramatically inflating the number of customers of her company, Frank, to fraudulently induce J.P. Morgan Chase (“JPMC”) to acquire Frank for $175 million.  JAVICE and her co-defendant, OLIVIER AMAR, were convicted of conspiracy, wire fraud, bank fraud, and securities fraud following a six-week jury trial in March 2025. Today’s sentence was imposed by U.S. District Judge Alvin K. Hellerstein.

“Javice perpetrated a $175 million fraud—repeatedly lying about the success of her startup company and even hiring a data scientist to create fake data to back up her lies.  For that, Javice has been sentenced to 85 months’ imprisonment and ordered to pay over $300,000,000,” said Attorney for the United States Amanda Houle.  “Today’s sentence sends a clear message that brazen frauds will be met with serious penalties.  Our Office will continue to work tirelessly to hold accountable those who seek to profit through fraudulent schemes and lies.”

As set forth in public filings and the trial record:

In or about 2017, JAVICE founded Frank, a for-profit company that offered an online platform designed to simplify the process of filling out the Free Application for Federal Student Aid (“FAFSA”).  FAFSA is a federal government form, available free of charge, that students use to apply for financial aid for college or graduate school.  JAVICE was Frank’s CEO.  AMAR was Frank’s Chief Growth Officer.

In or about 2021, JAVICE began to pursue the sale of Frank to a larger financial institution. Two major banks, one of which was JPMC, expressed interest and began acquisition processes with Frank.  JAVICE represented repeatedly to those banks that Frank had 4.25 million customers or “users.”  JAVICE explicitly defined “users”—to both banks—as individuals who had signed up for an account with Frank and for whom Frank therefore had at least four identified categories of data (i.e., first name, last name, email address, and phone number).  In fact, Frank had approximately 300,000 users.

When JPMC sought to verify the number of Frank’s users and the amount of data collected about them—information that was critical to JPMC’s decision to move forward with the acquisition process—JAVICE and AMAR fabricated a data set.  To do this, JAVICE and AMAR first asked Frank’s director of engineering to create an artificially generated (so-called “synthetic”) data set. The director of engineering raised concerns about the legality of the request, to which JAVICE responded, in substance and in part, “We don’t want to end up in orange jumpsuits.”  The director of engineering declined the request.

JAVICE then approached an outside data scientist and hired him to create the synthetic data set. After the data set was created, JAVICE provided that synthetic data set to an agreed-upon third-party vendor in an effort to confirm to JPMC that the data set had over 4.25 million rows.  JAVICE then caused the third-party vendor to convey to JPMC that the data set had over 4.25 million rows, consistent with JAVICE’s misrepresentations that Frank had 4.25 million users.

In reliance on JAVICE’s fraudulent representations about Frank’s users, JPMC agreed to purchase Frank for $175 million.  As part of the deal, JPMC hired JAVICE and other Frank employees.  JAVICE received over $21 million for selling her equity stake in Frank and, per the terms of the deal, was to be paid another $20 million as a retention bonus.

Unbeknownst to JPMC, at or about the same time that JAVICE was creating the fabricated data set, JAVICE and AMAR sought to purchase, on the open market, real data for over 4.25 million college students to cover up their misrepresentations.  JAVICE and AMAR succeeded in purchasing a data set of 4.5 million students for $105,000, but it did not contain all the data fields that JAVICE had represented to JPMC were maintained by Frank.  JAVICE then purchased an additional set of data on the open market to augment the data set of 4.5 million users.  After JPMC acquired Frank, JPMC employees asked JAVICE and AMAR to provide data relating to Frank’s users so that JPMC could begin a marketing campaign to those users.  In response, JAVICE provided what was supposedly Frank’s user data.  In fact, JAVICE fraudulently provided the data she and AMAR had purchased on the open market, at a small fraction of the price that JPMC paid to acquire Frank and its purported users.

*                      *                      *

In addition to the prison term, JAVICE, 31, of Miami Beach, Florida, was sentenced to three years of supervised release. The district court also imposed a forfeiture judgment of $22,360,977.48 and ordered restitution in the amount of $287,501,078.00 that is joint and several with AMAR. 

Ms. Houle praised the outstanding investigative work of the Special Agents from the U.S. Attorney’s Office for the Southern District of New York and Federal Deposit Insurance Corporation’s Office of Inspector General.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Nicholas W. Chiuchiolo, Micah F. Fergenson, and Georgia V. Kostopoulos are in charge of the prosecution.

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Attorney General for Civil Rights for the United States Department of Justice, Harmeet K. Dhillon, announced today that NEW CITY FUNDING CORP. (“NEW CITY”) has agreed to pay at least $120,000 to resolve allegations that it violated the Servicemembers Civil Relief Act (“SCRA”) by repossessing vehicles owned by SCRA-protected servicemembers without first obtaining the required court orders. Under the agreement, NEW CITY has agreed to pay $60,000 to compensate four servicemembers whose cars it unlawfully repossessed and will also pay a civil penalty of $60,000 to the United States.  NEW CITY has further agreed to provide information regarding additional repossessions and will compensate any additional servicemembers whose cars were repossessed in violation of the SCRA.  

The U.S. Attorney’s Office and the Department of Justice launched an investigation into NEW CITY’s repossession practices following the filing of a private lawsuit in the Southern District of New York.  In the lawsuit, the plaintiff alleged that NEW CITY violated the SCRA by repossessing the plaintiff’s vehicle after the plaintiff had entered military service.  The subsequent investigation identified four additional violations to date and revealed that NEW CITY regularly failed to adhere to its written policies and procedures regarding SCRA’s protections against non-judicial auto repossessions.

NEW CITY, headquartered in Stony Point, New York, provides auto financing to New Yorkers, many of whom are unable to obtain financing from traditional lending institutions. 

“New Yorkers support the women and men of our armed forces, and New Yorkers want our Office to stand up for the rights of our service members, particularly when they are deployed,” said U.S. Attorney Jay Clayton.  “The Servicemembers Civil Relief Act protects our troops from having their cars and other assets seized while serving, and our Office stands ready to enforce those protections.”

“By repossessing these vehicles, New City Funding disregarded the law and the duties it owed to members of our Armed Forces,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division.  “We will hold accountable any business that does not respect the legal rights of U.S. servicemembers.”

The agreement requires NEW CITY to provide $15,000 in compensation, plus any lost equity in the vehicle with interest, to each of the four affected servicemembers who have been identified to date and will provide similar compensation to any additional servicemembers subsequently identified whose rights under the SCRA were violated by NEW CITY.  NEW CITY will also take steps to repair the credit of the affected servicemembers.  NEW CITY will contact servicemembers to be compensated through this settlement in the upcoming months and will distribute payments at no cost to servicemembers.  As noted above, NEW CITY will also pay a $60,000 civil penalty to the United States.

Enforcement of the SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section and U.S. Attorney’s Offices throughout the country.  For more information about SCRA enforcement efforts, please visit www.servicemembers.gov.

Servicemembers and their dependents who believe that their rights under SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office.  Office locations may be found at legalassistance.law.af.mil.

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This case is being handled by the U.S. Attorney’s Office’s Civil Rights Unit in the Civil Division and the Civil Rights Division’s Housing and Civil Enforcement Section.  Assistant U.S. Attorney Dana Walsh Kumar of the U.S. Attorney’s Office and Trial Attorney Audrey M. Yap of the Civil Rights Division are in charge of the case.

The Justice Department today announced that New City Funding, a New York-based auto finance company, will pay over $120,000 to resolve allegations that it violated the Servicemembers Civil Relief Act (SCRA) by illegally repossessing vehicles owned by military servicemembers.

The Department alleges that New City Funding, a regional auto finance company based in Stony Point, New York, repossessed at least five vehicles owned by servicemembers without obtaining the court orders required by federal law.  The Department further alleges that New City took no steps to determine whether the owners of these vehicles were in military service prior to repossessing their cars, and, in some cases, went forward with repossessions even after they were told that the owner was on active duty.

“By repossessing these vehicles, New City Funding disregarded the law and the duties it owed to members of our Armed Forces,” said Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division. “We will hold accountable any business that does not respect the legal rights of U.S. servicemembers.”

“New Yorkers support the women and men of our armed forces, and New Yorkers want our Office to stand up for the rights of our service members, particularly when they are deployed,” said U.S. Attorney Jay Clayton for the Southern District of New York. “The Servicemembers Civil Relief Act protects our troops from having their cars and other assets seized while serving, and our Office stands ready to enforce those protections.”

Under the terms of the settlement, New City will pay at least $60,000 in compensation to affected servicemembers, forgive any unpaid balance on their accounts and take steps to repair damage to their credit. New City will also be required to pay a $60,000 civil penalty and make changes to its policies and training to avoid future violations.

The SCRA is a federal law that provides legal and financial protections for servicemembers and their families. The law prevents an auto finance or leasing company from repossessing a servicemember’s vehicle without first obtaining a court order, as long as the servicemember made at least one payment on the vehicle before entering military service.

This case was handled by the Civil Rights Division’s Housing and Civil Enforcement Section and the U.S. Attorney’s Office for the Southern District of New York. Since 2011, the Department has obtained over $483 million in monetary relief for over 148,000 servicemembers through its enforcement of the SCRA. For more information about the Department’s SCRA enforcement efforts, please visit www.servicemembers.gov.

Servicemembers and their dependents who believe that their rights under the SCRA may have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations can be found at legalassistance.law.af.mil.

Note: The Settlement Agreement can be read here

United States Attorney for the Southern District of New York, Jay Clayton, announced today that JUSTIN HEATH SMITH, a/k/a “Austin Wolf,” was sentenced to 19 years in prison for enticing a minor to engage in illegal sexual activity and for engaging in a pattern of activity involving prohibited sexual conduct.  SMITH’s sentence was imposed by U.S. District Judge Paul A. Engelmayer, who also presided over the guilty plea.

“Justin Heath Smith’s crimes against children are horrible,” said U.S. Attorney Jay Clayton.  “He targeted kids as young as seven, and every New Yorker wants him and those like him off our streets for as long as possible and never again near our children.  The women and men of our Office, and our law enforcement partners, are laser focused on ridding our streets of those who sexually exploit our children.  The message to predators from our Office is clear: there is no place for you in New York other than prison.”

According to the Information, the plea agreement, and statements made in court:

Since at least 2023, SMITH has repeatedly preyed on and tried to sexually exploit minor victims. In late 2023 or early 2024, SMITH and an adult male (“Male-1”) met with a 15-year-old minor, during which Male-1 performed oral sex on the minor while SMITH masturbated.  SMITH also had sex at least three times with an individual whom SMITH believed was 15 years old, but who was in fact an adult.  SMITH recorded one such encounter, a threesome with Male-1.

SMITH tried to make other arrangements to meet with other minors to engage in sexual activity.  In January 2024, SMITH made plans with another male (“Male-2”) to sexually abuse a purported nine-year-old child that Male-2 claimed to be babysitting.  SMITH traveled to Male-2’s building for the encounter, which Male-2 called off while SMITH was waiting downstairs.  In February 2024, SMITH also made plans to meet a purported 14-year-old for sex, including discussing the specific sex act that the purported minor would perform on SMITH.  SMITH provided his cross-streets so that the purported minor could travel to SMITH’s apartment.  The planned encounter did not ultimately occur.

SMITH also solicited child sexual abuse material from at least one minor and multiple individuals who purported to be minors.  For example, SMITH communicated with a 15-year-old minor and, after the minor told SMITH his age, SMITH asked the minor for sexually explicit materials.  The minor then sent SMITH a video showing the minor’s penis and anus.  SMITH also communicated with an individual online whose username contained the phrase “12M,” suggesting that the user was a 12-year-old male.  SMITH and the purported minor appear to have exchanged sexual photographs and discussed a possible meeting location. 

Prior to his arrest, SMITH made plans to meet with an individual who claimed to be the father of a seven-year-old child and who offered to make the child available to SMITH for sexual abuse.  Federal law enforcement executed a search warrant on SMITH’s residence before the planned encounter could occur.  Following that search, SMITH was found in possession of approximately 1,291 files containing child pornography, including around 75 files showing infants or toddlers and some videos depicting the violent rape of young children.  SMITH also shared child pornography with at least 15 other individuals.

Anyone who believes they have information concerning the exploitation of children is urged to contact the FBI at 1-212-384-1000 or https://tips.fbi.gov/.

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In addition to the prison term, SMITH, 44, of New York, New York, was sentenced to 10 years of supervised release and a $40,000 fine.

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

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

United States Attorney for the Southern District of New York, Jay Clayton, announced today the conviction in Manhattan federal court of MARIO POWELL for assaulting a corrections officer with a deadly and dangerous weapon and for possession of prison contraband.  The jury convicted POWELL following a five-day trial before U.S. District Judge John P. Cronan.

“Mario Powell brutally assaulted a federal corrections officer with a makeshift weapon made of razor blades,” said U.S. Attorney Jay Clayton.  “Today, a jury of his peers held Powell accountable for this vicious attack.  Our Office is proud to stand behind and pursue justice for our law enforcement partners who bravely put their lives on the line every day to protect the people of New York.”

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

On May 30, 2020, at the Metropolitan Correctional Center, POWELL forcibly assaulted a corrections officer with a deadly and dangerous weapon and, in doing so, lacerated the officer’s neck.  In order to commit the attack, POWELL obtained and possessed a weapon made of razor blades.

*                *                *

POWELL, 34, of the Bronx, New York, was convicted of one count of assault on a federal officer using a deadly or dangerous weapon, which carries a maximum sentence of 20 years in prison, and one count of possession of prison contraband, which carries a maximum sentence of five years in prison.

The maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  POWELL is scheduled to be sentenced by Judge Cronan on November 14, 2025.

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

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Thomas John Wright, Henry L. Ross, and Leslie B. Arffa are in charge of the prosecution, with the assistance of Paralegal Specialists Myrnette Millington and Phineas Santello.

United States Attorney for the Southern District of New York, Jay Clayton, Assistant Director in Charge of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, and Commissioner of the New York City Police Department (“NYPD”), Jessica S. Tisch, announced that SAUL ARISMENDY DE LA CRUZ, a/k/a “Nene,” a/k/a “Venom,” pled guilty today before U.S. Magistrate Judge Judith C. McCarthy to racketeering conspiracy in connection with his participation in a violent theft crew. As alleged, DE LA CRUZ, then a member of the NYPD, accepted bribes for providing crew members with confidential police information about potential victims and ongoing investigations.  When he learned that the FBI was planning to arrest members of the crew, he tipped them off, allowing them to flee.  DE LA CRUZ is scheduled to be sentenced on January 8, 2026, by U.S. District Judge Nelson S. Román.

“The NYPD is the best police department in the world and, sadly, Saul Arismendy De La Cruz turned his back on his colleagues and the people of New York,” said U.S. Attorney Jay Clayton.  “The NYPD and the people of New York deserve better, and we will pursue a sentence that matches the seriousness of De La Cruz’s conduct.”

“Saul De La Cruz, a former NYPD detective, provided confidential law enforcement information—including updates in active investigations—to a ring of thieves in exchange for monetary kickbacks,” said FBI Assistant Director in Charge Christopher G. Raia.  “His actions violated his oath to protect this city by enabling criminals to continue wreaking havoc on our local residents and ultimately evade arrest.  While the vast majority of NYPD officers uphold their sworn dedication to serve, the FBI will continue to hold accountable those who prioritize personal financial enrichment over their duty to others, especially to further the operations of illicit enterprises.”

“The NYPD holds its officers to the highest standards, and it’s an affront to our entire department when someone so blatantly violates them and abuses the public’s trust,” said NYPD Commissioner Jessica S. Tisch.  “Saul De La Cruz’s actions were not only highly illegal, but they put our officers at great risk and jeopardized our public safety work.  We will continue to work with our partners in the FBI and U.S. Attorney’s Office to root out any misconduct and ensure justice is always served.”

As alleged in the Indictment and Superseding Indictments unsealed in White Plains federal court:[1]

DE LA CRUZ was one of a number of defendants charged for participation in a violent theft crew led by the fugitive DAGOBERTO SOTO-RAMIREZ, a/k/a “Pito,” pictured below.

DAGOBERTO SOTO-RAMIREZ: WANTED BY THE FBI

Between 2017 and 2022, SOTO-RAMIREZ organized a crew that committed residential burglaries and home invasion robberies, repeatedly targeting small business owners.  The majority of the targeted victims were Asian American.  Armed with guns and other weapons, members of the crew stole money, jewelry, and other property from scores of homes in states across the country. Others took part in the crew’s criminal scheme, which also included the use of false identification, bank fraud, and laundering theft proceeds.  In addition, SOTO-RAMIREZ and other members of the conspiracy bribed DE LA CRUZ, first an officer and later a detective of the NYPD, who helped members of the crew escape arrest.  

SOTO-RAMIREZ remains a fugitive.  Anyone with information about his whereabouts should contact the FBI at 1-800-CALL-FBI. 

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DE LA CRUZ, 33, of Queens, New York, pled guilty to one count of racketeering conspiracy, which carries a maximum sentence of 20 years in prison.

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

Mr. Clayton praised the investigative work of the FBI, the Westchester County Joint Organized Crime Task Force, the New York Public Corruption Task Force, the Westchester County Department of Public Safety, the NYPD, the Nassau County Police Department, the New York State Police, and the Fort Lee Police Department.  He added that the investigation is ongoing.  

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Josiah Pertz and Jeffrey C. Coffman are in charge of the prosecution.

[1] As the introductory phrase signifies, the description of the Indictment and the other charging documents set forth in this release constitute only allegations, and every fact described should be treated as an allegation.

United States Attorney for the Southern District of New York, Jay Clayton, Special Agent in Charge of the New York Field Office of Homeland Security Investigations (“HSI”), Ricky J. Patel, Commissioner of the New York City Police Department (“NYPD”), Jessica S. Tisch, and Special Commissioner of the Office of the Special Commissioner of Investigation for the NYC School District (“SCI”), Anastasia Coleman, announced the unsealing of a Complaint charging CHRISTOPHER WARD with possessing and distributing hundreds of images and videos of child pornography that depict pre-pubescent children engaging in sexually explicit conduct.  WARD was arrested yesterday and presented before U.S. Magistrate Judge Sarah L. Cave in Manhattan federal court.

“Every day, Christopher Ward stood at the front of a classroom of first graders while allegedly storing hundreds of images exploiting children just like them,” said U.S. Attorney Jay Clayton.  “The women and men of our Office are committed to ridding New York of child pornography.  Together with our partners at Homeland Security Investigations and the New York City Police Department Special Investigations Unit, we will aggressively pursue and prosecute those who create, possess, and distribute child pornography.”

“Christopher Ward, a first-grade teacher, is accused of possessing and distributing child pornography, and even acknowledging his sexual attraction to his students—allegations that are chillingly disturbing and strike at the heart of every parent's fears,” said HSI Special Agent in Charge Ricky J. Patel. “With over four years spent in close proximity to young children, the gravity of these accusations cannot be overstated.  The safety of our children demands our unflinching attention, and HSI will not stop until the full facts are exposed and every offender faces the consequences.”

“When we send our children to school every day, we trust that they will be cared for and protected by their teachers. Instead, Christopher Ward made every parent’s worst nightmare a reality,” said NYPD Commissioner Jessica S. Tisch.  “These allegations are as sickening as they are illegal, and there is absolutely zero tolerance for anyone who exploits our most innocent in this way.  I want to thank the NYPD investigators and our partners at HSI, SCI, and the U.S. Attorney’s Office for putting an end to this horrific behavior and ensuring our children our safe.”

“Christopher Ward's actions as alleged are repugnant—and violate the trust of his school, his students, and the community overall,” said SCI Special Commissioner Anastasia Coleman.  “Possession of child pornography and other types of exploitation of minors are among the most serious issues society combats, and SCI works tirelessly to root out such misconduct from the New York City school district.  SCI is grateful for its partners in law enforcement for their efforts in bringing Christopher Ward to justice.”

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

From approximately September 2024 to approximately September 2025, WARD worked as a first-grade teacher at an elementary school in Queens, New York. Prior to that, from approximately January 2021 to approximately June 2024, WARD worked as a first-grade teacher at a school in Manhattan, New York.   

From at least in or about July 14, 2024, through in or about July 22, 2025, WARD possessed and distributed hundreds of images and videos constituting child pornography on his account with an electronic mobile messaging application.

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WARD, 37, of Farmingdale, New York, is charged with one count of receiving and distributing material containing child pornography, including files containing sexually explicit images of minors, and one count of possessing child pornography, including images and videos of prepubescent minors and minors who had not attained 12 years of age.  Both counts carry a maximum sentence of 20 years in prison.

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

Mr. Clayton praised the efforts of HSI, their agents and Task Force Officers; the NYPD Special Investigations Unit, Computer Crimes Squad; the SCI Investigators; the Complex Analytics and Social Media Enhancement Team at the New York/New Jersey High Intensity Drug Trafficking Area; the Special Agents and Task Force Officers of the U.S. Attorney’s Office for the Southern District of New York; and the Southern District of New York Digital Forensic Unit.

The case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Adabelle U. Ekechukwu 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.

United States Attorney for the Southern District of New York, Jay Clayton, announced that MICHAEL PALLESCHI, the former chairman and Chief Executive Officer of FTE Networks, Inc. (“FTE”), was sentenced today to 12 years in prison by U.S. District Judge Colleen McMahon for leading a years-long scheme to inflate FTE’s revenue, conceal liabilities and expenses, and embezzle company funds.  PALLESCHI previously pled guilty in August 2023 to conspiring to commit securities and wire fraud, making false statements in SEC filings and improperly influencing the conduct of audits, securities fraud, wire fraud, and aggravated identity theft.

“FTE’s financial statements were fraudulent, harming FTE’s investors and undermining confidence in our markets,” said U.S. Attorney Jay Clayton.  “Our Office is committed to personal accountability in white-collar crime and Michael Palleschi’s sentence reflects that commitment.”

As alleged in the Superseding Indictment and statements made in public filings and public court proceedings:

FTE was a telecommunications company based in Naples, Florida, and Manhattan.  As of December 2017, its stock traded on the New York Stock Exchange.  From 2014 to 2019, PALLESCHI was the chairman of FTE’s Board of Directors and its Chief Executive Officer.

From 2016 to early 2019, PALLESCHI and others at FTE caused FTE to issue approximately 70 convertible notes with a total principal balance of more than $22 million to private lenders.  The lenders could convert the notes to FTE’s common stock, either upon demand or upon default.  Issuers of such convertible notes must recognize on their financial statements liabilities and expenses that arise from the notes’ conversion features.  PALLESCHI and others caused FTE to recognize only the principal amounts and resulting interest expense on the company’s books, but not the substantial liabilities and expenses arising from the notes’ conversion features.  He and others also took steps to conceal the notes’ conversion features, including by providing FTE’s accountants with fake notes, creating fake board resolutions with forged directors’ signatures that purportedly authorized the issuance of the convertible notes, forging the signature of FTE’s transfer agent on letters provided to lenders and repeatedly lying to FTE’s auditors by falsely denying that the company had issued convertible debt.  As a result of this fraud with respect to convertible notes, PALLESCHI and others caused FTE to understate its debt derivative liabilities and warrant derivative liabilities and to fail to recognize losses on conversion derivative liabilities and losses on issuance of notes in 2017 and 2018.  

As part of a second fraudulent scheme, PALLESCHI and others caused FTE to recognize more than $13 million in fraudulent revenue.  This fraudulent revenue included more than $10 million in “unbilled” revenue that the conspirators represented FTE had earned from services it had supposedly provided to a large customer that had not yet accepted bills for those services.  FTE never provided any such services.  In addition, PALLESCHI and others caused FTE to recognize approximately $2.6 million as an account receivable for which there was no support.  When FTE’s auditors said that the account receivable should be written off, PALLESCHI and others created a fake email from a representative of the customer saying that the customer would “expedite payments” for more than $1.5 million for projects completed by FTE in 2016 and 2017.  The conspirators caused this fake email to be sent to FTE’s auditors so that FTE could continue to recognize the receivable.  As a result of this fraudulent recognition of revenue, FTE’s financial statements overstated the company’s accounts receivable by between 18% and 120% for each of the quarters in 2017 and 2018 and by approximately 477% for 2016.

PALLESCHI also embezzled corporate funds by taking personal trips on the company’s private jet and unauthorized stock issuances.  

At the sentencing, Judge McMahon said “this was a fraudulently run operation from the beginning.”

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In addition to the prison term, PALLESCHI, 50, of Naples, Florida, was sentenced to three years of supervised release and ordered to pay $13,541,707 in restitution and $546,846.75 in forfeiture.

Mr. Clayton praised the outstanding work of the Federal Bureau of Investigation. Mr. Clayton also thanked the Securities & Exchange Commission for their assistance with the case.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Peter Davis and James McMahon are in charge of the prosecution.