Southern District of New York

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that JOSE SANTIAGO-ORTIZ was found guilty of murder, participating in a narcotics conspiracy, and firearms offenses yesterday after a one-week jury trial before the Honorable Lewis A. Kaplan.

U.S. Attorney Geoffrey S. Berman said:  “A unanimous jury convicted Jose Santiago-Ortiz of killing Jerry Tide in cold blood.  In addition, Santiago-Ortiz was convicted of narcotics conspiracy and firearms offenses.  We hope today’s verdict will bring some solace to the victim’s family, while also taking a violent offender off the street.”

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

On September 11, 2010, SANTIAGO-ORTIZ shot and killed Jerry Tide in the vicinity of Jerome Avenue and 182nd Street in the Bronx.  Between 2010 and November 2015, SANTIAGO-ORTIZ was the leader of a violent heroin trafficking enterprise that trafficked kilogram quantities of heroin, stamped “Flow,” in the Bronx and to Rutland, Vermont. SANTIAGO-ORTIZ killed Jerry Tide in part to increase SANTIAGO-ORTIZ’s position within the Flow Heroin Enterprise.  In addition, in 2015, members of the Flow Heroin Enterprise engaged in several shootings with rival drug dealers in the Bronx.

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SANTIAGO-ORTIZ, 27, of the Bronx, New York, was found guilty of one count of murder in aid of racketeering, which carries a mandatory sentence of life in prison; one count of murder while engaged in a narcotics conspiracy, 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 one kilogram and more of heroin, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison; and one count of using firearms in furtherance of a narcotics conspiracy, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of life in prison.

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

SANTIAGO-ORTIZ is scheduled to be sentenced on September 18, 2018.

Mr. Berman thanked the FBI’s New York Field Division for their work on the investigation.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Shawn Crowley, Lauren Schorr, and George Turner are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that EDWARD DURANTE, a/k/a “Ted Wise,” a/k/a “Efran Eisenberg,” a/k/a “Yulia,” a/k/a “Ed Simmons,” was sentenced today to 216 months in prison for defrauding at least 100 investors of more than $15 million.  DURANTE was also sentenced for his perjurious testimony during an SEC deposition.  DURANTE pled guilty on August 23, 2016, to conspiracy to commit securities fraud, securities fraud, money laundering, and perjury.  DURANTE was sentenced today by United States District Judge Andrew L. Carter Jr.

U.S. Attorney Geoffrey S. Berman said:  “The fraud scheme for which Edward Durante was sentenced today began while he was still in prison from a prior securities fraud conviction.  Durante returned to what he knew best, lying to investors – many of whom were retirees who lost their life savings – about how their money would be used, and concealing his manipulation of the securities market.  Edward Durante is now a twice-sentenced securities fraud felon.”

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

2001 Securities Fraud Conviction

In December 2001, DURANTE was convicted in federal court of conspiracy to commit securities fraud, wire fraud, and money laundering, as well as making false statements in connection with a market manipulation scheme in which the defendant also used the alias “Ed Simmons.”  The defendant was sentenced to 121 months in prison and was released in or about 2009, the year he began the current scheme.  In connection with that scheme, DURANTE was ordered to pay disgorgement and prejudgment interest totaling over $39 million.  DURANTE was also barred from certain activities in connection with the securities industry, including the sale of securities. 

Private Placement Securities Fraud Involving VGTL

After being released from prison, between 2009 and in or about March 2015, DURANTE and his co-conspirators fraudulently induced victims to invest in private shares of VGTL by, among other things, concealing from investors that DURANTE controlled the entities selling the shares; that DURANTE was prohibited from any association with the sale of securities; and that DURANTE was previously convicted of crimes related to a similar scheme to defraud.  Furthermore, DURANTE and certain of his co-conspirators lied to investors by (a) representing that their investments would be used to fund the operations and growth of VGTL in connection with potential reverse mergers, when in reality no reverse mergers were ever consummated and investor funds were instead used primarily to benefit the defendants personally; and (b) representing that the investors would receive an eight percent dividend on their investments until their private shares could be sold at a promised premium on the public market, when, in reality, no interest payments were ever provided to the investors and many investors never obtained VGTL stock certificates or the ability to sell the stock.  In order to fund his illegal scheme, DURANTE used a network of brokers, including co-conspirators Larry Werbel and Abida Khan, investment advisers in Cleveland, Ohio, and Los Angeles, California, respectively, to induce investors to buy shares of VGTL. 

Manipulation of the Market for Shares of VGTL

DURANTE also engaged in a scheme to control and manipulate the publicly traded stock of VGTL in order to artificially inflate the stock price and trading volume so as to profit from his own sales of VGTL stock and to further induce investments in private shares of VGTL.  To that end, through entities he controlled, DURANTE held a majority of the publicly traded stock of VGTL.  DURANTE recruited co-conspirator Christopher Cervino, a broker, to open brokerage accounts associated with DURANTE-controlled entities and investors who were clients of Werbel and Khan, many of whom did not know that brokerage accounts under their names had been opened with Cervino.  Werbel and Khan, along with DURANTE, induced their clients to purchase VGTL stock through Cervino – sometimes without the clients’ knowledge or permission – while DURANTE and Cervino ensured that many of these purchases were matched with sales of VGTL stock by DURANTE-controlled accounts.  The result of these transactions was that DURANTE and his co-conspirators were effectively taking both sides of a single transaction in VGTL stock in order to artificially control VGTL’s stock price.  The efforts of DURANTE and his co-conspirators to artificially inflate the market for VGTL increased the stock price from approximately $.25 per share in April 2012 to as much as $1.90, and dramatically inflated the trading volume, which increased DURANTE’s ability to raise private investments in VGTL.  To compensate Cervino for his efforts to control and manipulate the market in VGTL, DURANTE made at least two cash payments to Cervino totaling $35,000.  Moreover, DURANTE then laundered proceeds from the scheme to accounts controlled by him and his co-conspirators, concealing the true nature of these transactions by utilizing wire transfers among multiple accounts in the names of other individuals.  

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In addition to the 18-year prison term, DURANTE, 64, was sentenced to three years of supervised release and ordered to forfeit $15,404,231.            

Abida Khan and Christopher Cervino, each of whom was found guilty after trial of conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, and wire fraud, and – with respect to Khan only – aggravated identity theft and investment adviser fraud, were sentenced on January 18, 2018.  Khan was sentenced to 53 months in prison; Cervino was sentenced to one year and one day in prison.  Larry Werbel, who pled guilty to conspiracy to commit securities fraud and to investment adviser fraud, does not have a final date for sentencing.  Walter Reissman, another co-conspirator, pled guilty to conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, wire fraud, and making false statements to federal officers.  Co-conspirator Kenneth Wise pled guilty to conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering, and money laundering.  Reissman and Wise were sentenced, on February 23, 2018, and March 6, 2018, respectively, to time served.

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

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

Robert Khuzami, Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced that GARY HIRST pled guilty today to defrauding a Native American tribal entity and various investment advisory clients of tens of millions of dollars in connection with the issuance of bonds by the tribal entity and the subsequent sale of those bonds through fraudulent and deceptive means.  HIRST pled guilty to conspiracy to commit securities fraud, securities fraud, investment adviser fraud, and conspiracy to commit investment adviser fraud before U.S. Magistrate Judge Barbara Moses. 

Mr. Khuzami said:  “Today, Gary Hirst admitted that he and his co-conspirators placed tens of millions of dollars of Native American bonds with clients of an investment advisory firm, without telling those clients about numerous conflicts of interest surrounding the issuance and placement of the bonds.  In addition, Hirst and his co-conspirators then misappropriated the bond proceeds, by failing to invest the money as promised and instead using it to finance their other business endeavors and to pay personal expenses.  Now, thanks to the dedicated work of the U.S. Postal Inspection Service and the FBI, Hirst will have to answer for his crimes.”

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

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

The WLCC was convinced to issue the Tribal Bonds through false and fraudulent representations by John Galanis.  Once the Tribal Bonds were issued, HIRST and Morton used funds belonging to clients of two related investment advisers, Hughes Capital Management, Inc. (“Hughes”) – where HIRST served as Chief Investment Officer – and Atlantic Asset Management, LLC (“Atlantic”), to purchase the Tribal Bonds, even though HIRST and Morton were well aware that material facts about the Tribal Bonds had been withheld from clients in whose accounts they were placed, including the fact that the Tribal Bond purchases fell outside of the investment parameters set forth in the investment advisory contracts of certain Hughes clients and of the Atlantic pooled investment vehicle in which the Tribal Bonds were purchased.  In addition, HIRST and his co-defendants failed to apprise clients of Hughes and Atlantic regarding substantial conflicts of interest with respect to the issuance and placement of the Tribal Bonds before the Tribal Bonds were purchased on these clients’ behalf. 

Hughes and Atlantic clients were provided no prior notice that HIRST and Morton caused them to purchase the Tribal Bonds.  When these clients learned about the purchase of the Tribal Bonds in their accounts, several of them demanded that the Tribal Bonds be sold.  However, because there was no ready secondary market for the Tribal Bonds, no Tribal Bonds have been sold from any Hughes or Atlantic client accounts. 

Documents governing the Tribal Bonds specified that an investment manager would invest the proceeds of the Tribal Bonds in investments that would generate annuity payments sufficient to pay interest on the Tribal Bonds and provide funds to the WLCC to be used for tribal economic development purposes.  In fact, none of the proceeds of the Tribal Bonds were turned over to the investment manager specified in the closing documents.  Instead, significant portions of the proceeds were misappropriated by the defendants for their personal and professional use. 

Specifically, the proceeds of the Tribal Bonds were deposited into a bank account in the name of Wealth Assurance Private Client Corporation (“WAPCC”), an entity controlled by HIRST and Dunkerley.  Dunkerley transferred more than $38 million from the WAPCC account to an account controlled by Jason Galanis, who then misappropriated more than $8.5 million of the proceeds for his personal use, including for expenses associated with his home, jewelry and clothing purchases, travel and entertainment, and restaurant meals. 

In addition, a portion of the misappropriated proceeds were recycled and provided by Jason Galanis to entities affiliated with Archer and Cooney in order to enable Archer and Cooney to purchase subsequent Tribal Bonds issued by the WLCC.  As a result of the use of recycled proceeds to purchase additional issuances of Tribal Bonds, the face amount of Tribal Bonds outstanding increased and the amount of interest payable by the WLCC increased, but the actual bond proceeds available for investment on behalf of the WLCC did not increase. 

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GARY HIRST, 65, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5,000,000 or twice the gross gain or loss from the offense; one count of conspiracy to commit investment adviser fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; and one count of investment adviser fraud, which also which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.       

Jason Galanis, 47, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5,000,000 or twice the gross gain or loss from the offense; and one count of conspiracy to commit investment adviser fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.   On August 11, 2017, Galanis was sentenced principally to a term of 173 months in prison. 

Hugh Dunkerley, 44, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; two counts of securities fraud, each of which carries a maximum sentence of 20 years in prison and a maximum fine of $5,000,000 or twice the gross gain or loss from the offense; one count of bankruptcy fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense; and one count of falsification of records with the intent to obstruct a Government investigation, which carries a maximum sentence of 20 years in prison and a maximum fine of $5,000,000 or twice the gross gain or loss from the offense.

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

Trial against the remaining defendants is scheduled to begin on May 22, 2018, before U.S. District Judge Ronnie Abrams.

The guilty plea in this matter is HIRST’s second conviction in this District on charges of securities fraud.  On September 28, 2016, HIRST was convicted following a jury trial before U.S. District Judge P. Kevin Castel for several offenses relating to a scheme to manipulate the market for shares of Gerova Financial Group, Ltd. (“Gerova”), a publicly traded company listed on the New York Stock Exchange.  In that case, HIRST was sentenced to a term of 78 months in prison.

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

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

[1]  As for the defendants who have not pled guilty (John Galanis, Michelle Morton, Devon Archer, and Bevan Cooney) the description of the charges set forth herein constitute only allegations.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that DARIN WEBB was arrested this morning on wire fraud charges stemming from his scheme to defraud a Manhattan-based literary agency (the “Agency”) and its clients of more than $3.4 million.  WEBB provided bookkeeping services for the Agency and carried out his scheme by making unauthorized transfers from the Agency’s bank accounts, and then making changes to the Agency’s accounting system to evade detection.  WEBB was arrested this morning in Manhattan, and will be presented today before United States Magistrate Judge Barbara C. Moses.

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Darin Webb, a bookkeeper for a firm in the book business, cooked the firm’s books to conceal a multimillion-dollar embezzlement.  Now he is in custody and facing prosecution.” 

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Darin Webb was responsible for the financial welfare of the agency whose accounts he oversaw, but instead of upholding his fiscal responsibilities, he spent his time swindling more than $3.4 million from his victims.  Cooking the books rarely pays off in the long run, as the defendant has learned today.”

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

From in or about 2001 through in or about March 2018, DARIN WEBB, the defendant, was engaged as a bookkeeper for the Agency.  From at least January 2011 through March 2018, WEBB used his position as the Agency’s bookkeeper to transfer more than $3.4 million of funds, belonging to the Agency and the Agency’s clients, from the Agency’s bank accounts to bank accounts that WEBB controlled.  In order to evade detection of his criminal conduct and carry out his scheme, WEBB made changes to the Agency’s accounting records to disguise the nature of the transfers.

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WEBB, 47, of Manhattan, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the Court.

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

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

Robert Khuzami, Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced that a grand jury in the Southern District of New York has returned an Indictment charging SOHRAB SHARMA, a/k/a “Sam Sharma,” RAYMOND TRAPANI, a/k/a “Ray,” and ROBERT FARKAS, a/k/a “RJ,” a/k/a “Bob,” the three co-founders of a startup company called Centra Tech, Inc. (“Centra Tech”), that purported to offer cryptocurrency-related financial products, with conspiring to commit, and the commission of, securities and wire fraud in connection with a scheme to induce victims to invest millions of dollars’ worth of digital funds for the purchase of unregistered securities, in the form of digital currency tokens issued by Centra Tech, through material misrepresentations and omissions.  SHARMA, TRAPANI, and FARKAS were all arrested last month based on criminal complaints filed by this Office charging them with the same crimes. 

Following their arrests, this Office and the Federal Bureau of Investigation (“FBI”) seized 91,000 Ether units, consisting of digital funds raised from victims as part of the charged scheme.  This seized digital currency is presently worth more than $60 million.  The case has been assigned to United States District Judge Lorna G. Schofield.

Mr. Khuzami said:  “As alleged, the defendants conspired to capitalize on investor interest in the burgeoning cryptocurrency market.  They allegedly made false claims about their product and about relationships they had with credible financial institutions, even creating a fictitious Centra Tech CEO.  Whether traditional or cutting-edge, investment vehicles can’t legally be peddled with falsehoods and lies.”

According to the allegations in the Indictment filed in this case, the criminal complaints previously unsealed in this case, and in other filings and statements at public court proceedings in the case:[1]

After SHARMA and TRAPANI worked together at a luxury car rental company in Florida called “Miami Exotics,” they and FARKAS co-founded a startup company called Centra Tech that claimed to offer cryptocurrency-related financial productions, including a purported debit card, the “Centra Card,” that supposedly allowed users to spend various types of cryptocurrency to make purchases at any establishment that accepts Visa or Mastercard payment cards.  In approximately July 2017, SHARMA, TRAPANI, and FARKAS began soliciting investors to purchase unregistered securities, in the form of digital tokens issued by Centra Tech, through a so-called “initial coin offering” or “ICO.”  As part of this effort, SHARMA, TRAPANI, and FARKAS, in oral and written offering materials that were disseminated via the internet, represented: (a) that Centra Tech had an experienced executive team with impressive credentials, including a purported CEO named “Michael Edwards” with more than 20 years of banking industry experience and a master’s degree in business administration from Harvard University; (b) that Centra Tech had formed partnerships with Bancorp, Visa, and Mastercard to issue Centra Cards licensed by Visa or Mastercard; and (c) that Centra Tech had money transmitter and other licenses in 38 states, among other claims.  Based in part on these claims, victims provided millions of dollars’ worth of digital funds in investments for the purchase of Centra Tech tokens.  In or about October 2017, at the end of Centra Tech’s ICO, those digital funds raised from victims were worth more than $25 million.  Due to appreciation in the value of those digital funds raised from victims, those digital funds are presently worth more than $60 million.    

The representations that SHARMA, TRAPANI, and FARKAS made to help secure these investments, however, were false.  In fact, the purported CEO “Michael Edwards” and another supposed member of Centra Tech’s executive team are fictitious people who were fabricated to dupe investors; Centra Tech had no such partnerships with Bancorp, Visa, or Mastercard; and Centra Tech did not have such licenses in a number of those states.

SHARMA, TRAPANI, and FARKAS were well aware of the falsity of such claims.  For example, with respect to Centra Tech’s purported partnerships with Bancorp, Visa, and Mastercard, SHARMA engaged in a cellphone text message conversation with TRAPANI on or about July 31, 2017, in which they discussed Centra Tech’s lack of actual partnerships with banks or credit card companies.  During that exchange, SHARMA wrote:  “Should write down a list of places to call tomorrow,” “For the conbranded [sic] card.”  Later in the exchange, SHARMA wrote:  “Gotta get it going on the banks today plz.”  SHARMA also subsequently wrote:  “We just need to get s [sic] banking license,” “Need our direct agreement with visa,” “Or MasterCard,” “That’s the move,” “Cut out the middle man,” “I wish we just knew someone.” 

With respect to Centra Tech’s purported CEO “Michael Edwards,” SHARMA text-messaged TRAPANI on or about July 29, 2017, that they “Need to find someone who looks like Michael,” “Team photos,” “He’s real lol,” “Everyone real,” “Except Jessica,” “And Mike.”  Similarly, SHARMA later wrote during that same exchange:  “Gonna kill both Ceo and her,” “Gonna say they were married and got into an accident.” 

Finally, with respect to Centra Tech’s purported money transmitter and other licenses in 38 states, SHARMA had a text message conversation with TRAPANI and FARKAS on or about August 30, 2017, about applying for state licenses that Centra Tech had previously represented it already held in 38 states.  For example, SHARMA wrote in one message on or about August 30, 2017, to TRAPANI and FARKAS:  “Gotta apply for all licenses,” “Should I even say this.” 

On or about May 2, 2018, this Office and the FBI seized, pursuant to a judicially authorized seizure warrant, 91,000 Ether units, consisting of digital funds raised from victims who purchased digital tokens issued by Centra Tech during its ICO based on fraudulent misrepresentations and omissions.  The seized funds are presently worth more than $60 million. 

In a separate action, the United States Securities and Exchange Commission (the “SEC”) has filed civil charges against SHARMA, TRAPANI, and FARKAS.           

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SHARMA, 27, TRAPANI, 27, and FARKAS, 31, are all residents of Florida.  All three of them are charged in a four-count Indictment with one count of conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison; one count of conspiracy to commit wire fraud, which carries a maximum potential sentence of 20 years in prison; one count of securities fraud, which carries a maximum potential sentence of 20 years in prison; and one count of wire fraud, which carries a maximum potential sentence of 20 years in prison.  In addition to potential prison sentences, each of these charges also carries potential financial penalties.  The maximum potential prison sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. 

Mr. Khuzami praised the work of the FBI and thanked the SEC for its assistance.  Mr. Khuzami also thanked the Department of Homeland Security, Homeland Security Investigations (“DHS-HIS”) and the District Attorney’s Office for New York County for their assistance in this case.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Samson Enzer and Negar Tekeei are in charge of the prosecution.  Assistant United States Attorney Daniel Tracer is in charge of the forfeiture aspects of the case. 

The allegations contained in the charging documents in this case 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 Complaints and the Indictment, and the description of the Complaints and the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York,  James J. Hunt, Special Agent in Charge of the U.S. Drug Enforcement Administration’s New York Field Division (“DEA”), Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), George P. Beach II, the Superintendent of the New York State Police (“NYSP”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the arrests and unsealing of Complaints charging MIGUEL ESCANO, EMANUELLI RIVERA, and PEDRO DISLA ROJAS with conspiring to distribute heroin and more than 100 grams of carfentanil, a controlled substance analogue of fentanyl.  ESCANO, RIVERA, and ROJAS were presented yesterday before Magistrate Judge James L. Cott in Manhattan federal court.

U.S. Attorney Geoffrey S. Berman said:  “These defendants are alleged to have been engaged in the production and distribution of large quantities of carfentanil.  Carfentanil is a potentially lethal drug 100 times more potent than fentanyl.  As little as .00002 grams can kill.  A substance meant as an elephant tranquilizer should not be hitting the streets as a recreational drug.  Thanks to our law enforcement partners for their efforts to stem the tide of lethal opioids.”

DEA Special Agent-In-Charge James J. Hunt said:  “This investigation is about more than just arrests and seizures, it is a public health warning.  Carfentanil is death, and drug dealers are packaging it for sale on the streets of New York City.  Law enforcement is battling the opioid suppliers on the front lines and this drug has the potential to double or triple overdose rates if we don’t get it off the streets quickly and warn users of its extreme danger.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “The individuals charged today are alleged to have introduced a drug that is one hundred times more potent than fentanyl to our Bronx neighborhoods.  Law enforcement is paying close attention to those who are profiting in this nefarious drug game to ensure that the perpetrators are arrested and face prosecution.”

NYPD Commissioner James P. O’Neill said:  “Anyone who continues to peddle this poison on the streets of New York City should be prepared for the full weight of our nation’s best investigators to bear down on them.  I commend everyone involved in this case, particularly the members of the New York Drug Enforcement Strike Force, as they have proven again just how effective our law enforcement partnerships really are.”

State Police Superintendent George P. Beach II said:  “The work of the New York Drug Enforcement Task Force stopped these dangerous and potentially deadly drugs before they could reach the streets of New York.  We have no tolerance for those who allegedly continue to traffic narcotics with no regard to the damage they inflict in our communities, and anyone who does can expect to end up in prison.  We will continue to work with our federal and local partners to prevent the flow of these illegal drugs from reaching our neighborhoods.”

According to the allegations in the Complaints[1]:

On three separate occasions between January and March 2018, ESCANO sold an individual acting at the direction of law enforcement a substance containing carfentanil in transactions that involved 50 grams, 70 grams, and 70 grams, respectively.  RIVERA assisted with the January 2018 sale.  Carfentanil is used as a tranquilizing agent for elephants and other mammals, is 100 times more potent than fentanyl, and can be lethal in doses of as little as 20 micrograms depending on the way it is administered and other factors.  

As law enforcement officers prepared to execute a search warrant on a Bronx apartment on May 9, 2018, RIVERA exited the apartment and was arrested.  Law enforcement seized approximately 100 grams of suspected narcotics in connection with the arrest of RIVERA, which have not yet been tested because the substance needs to be examined in a laboratory environment in light of the potentially lethal nature of carfentanil.  Following the arrest of RIVERA, law enforcement officers searched the apartment and found ROJAS inside.  During the search, law enforcement officers seized, among other things, suspected narcotics and materials commonly used in the production and distribution of narcotics, such as respirator masks, grinders, strainers, glassine bags stamped with the names “Sweet Dreams” and “Nasty Boyz,” a wooden press, and a stamp with the words “My Angel.”  Law enforcement arrested ROJAS in connection with the search of the apartment.

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RIVERA, 32, of the Bronx, and Rojas, 38, of the Bronx, were each charged with one count of conspiring to distribute carfentanil and heroin, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years.

ESCANO, 30, of the Bronx, was charged with one count of conspiring to distribute carfentanil, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years.

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

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

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Michael D. Longyear and Nicolas Roos are in charge of the prosecution.

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

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

Sheldon Silver, the former New York State Assembly Speaker, took an oath to act in the best interests of the people of New York State.  As a unanimous jury found, he sold his public office for private greed. 

I commend the career prosecutors of our Office’s Public Corruption Unit, whose determination in securing this important conviction fittingly underscores the importance of pursuing cases against corrupt politicians, no matter the difficulty.  One of the most worthy endeavors of this Office is combatting public corruption.  We will continue to do so with the independence and resolve the Southern District is known for and the citizens of New York so rightly deserve.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division announced today that NG LAP SENG, a/k/a “David Ng,” the chairman of a Macau real estate development company, was sentenced today to 48 months in prison for his role in a scheme to bribe United Nations ambassadors to obtain support to build a conference center in Macau that would host, among other events, the annual United Nations Global South-South Development Expo.  NG was sentenced by U.S. District Judge Vernon S. Broderick.

NG was convicted on July 27, 2017, after a five-week trial, of two counts of violating the Foreign Corrupt Practices Act, one count of paying bribes and gratuities, one count of money laundering, and two counts of conspiracy.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Billionaire Ng Lap Seng corrupted the highest levels of the United Nations in pursuit of a multibillion-dollar real estate deal in Macau.  Ng exploited a center for international diplomacy as an instrument for his greedy intentions.  This Office is committed to policing official corruption wherever it may be found.”

Acting Assistant Attorney General John P. Cronan said:  “Corruption at any level of government undermines the rule of law and cannot be tolerated.  But corruption is especially corrosive when it occurs at an international body like the United Nations.  By paying bribes to two U.N. ambassadors to advance his interest in obtaining formal support for the Macau conference center project, Ng Lap Seng tried to manipulate the functions of the United Nations.  The sentence handed down today demonstrates that those who engage in corruption will pay a heavy price and serves as a reminder that no one stands above the law.”

According to the evidence presented at trial, NG, the chairman of the Sun Kian Ip Group, conspired with and paid bribes to Francis Lorenzo, a former UN Ambassador from the Dominican Republic, and John W. Ashe, the late former Permanent Representative of Antigua and Barbuda to the UN and the 68th President of the UN General Assembly (“UNGA”).  With the assistance of Jeff C. Yin, an accountant and co-conspirator who worked with NG and others and previously pled guilty to conspiring to defraud the United States, NG orchestrated a scheme with the principal objective of obtaining the formal support of the UN for a multibillion-dollar facility that NG hoped to build in Macau using the Sun Kian Ip Group (the “Macau Conference Center”).  NG wanted the Macau Conference Center to serve as a location for meetings, discussions, forums, and other events associated with the UN.  In particular, he wanted it to serve as the permanent home of the annual “Global South-South Development Expo,” which is run by the UN Office for South-South Cooperation, and is hosted in a different country or city every year.

The trial evidence showed that NG bribed Ambassador Ashe and Ambassador Lorenzo (together, the “Ambassadors”) in exchange for their agreement to use their official positions to advance NG’s interest in obtaining formal UN support for the Macau Conference Center.  As the evidence demonstrated at trial, NG paid the Ambassadors in a variety of forms.  For example, NG appointed Ambassador Lorenzo as the president of South-South News, a New York-based organization – funded by NG – which described itself as a media platform dedicated to advancing the implementation of the UN’s Millennium Development Goals, a set of philanthropic goals.  NG provided bribe payments to Ambassador Lorenzo through South-South News, and by transmitting payments from Macau to a company in the Dominican Republic affiliated with Ambassador Lorenzo’s brother (the “Dominican Company”).  Through South-South News, NG also made payments to Ambassador Ashe, including to Ambassador Ashe’s wife, who was paid for a no-show job as a “consultant” to South-South News, and to an account that Ambassador Ashe had established, purportedly to raise money for his role as president of UNGA. 

According to the trial evidence, one of the actions that the Ambassadors took in exchange for bribe payments, to advance NG’s objectives, was to submit an official document to the then-UN Secretary-General in support of the Macau Conference Center (the “UN Document”).  The UN Document claimed that there was a need to build the Macau Conference Center to support the UN’s global development goals.  Ambassador Ashe, aided by Ambassador Lorenzo, initially submitted the UN Document to the UNGA in or about late February 2012.  More than a year later, at NG’s behest, the Ambassadors revised the UN Document to refer specifically to NG’s company, the Macau Real Estate Development Company, as a partner in the Macau Conference Center project.  The UN Document requested that the Secretary-General circulate the UN Document “as a document of the sixty-sixth session of the General Assembly,” under a specific item of the official UNGA agenda.  The Secretary-General followed this request, thereby making the UN Document an official part of the UNGA record. 

                                                                                                                                                                *                      *                      *

In addition to the 48-month prison term, NG, 69, of Macau, China, was sentenced to three years of supervised release.  NG was also and ordered to pay a fine of $1 million, to forfeit $1.5 million, and to make restitution to the UN for its legal fees.  

Five other defendants have been charged in this matter.  Lorenzo and Heidi Hong Piao pled guilty to various charges, including bribery, and are awaiting sentencing.  Jeff C. Yin pled guilty to conspiracy to defraud the United States and was sentenced to seven months in prison.  Shiwei Yan pled guilty to bribery and was sentenced to 20 months in prison.  Co-defendant Ashe died in 2016 and the charges against him were dismissed. 

This case was investigated by the FBI and IRS-CI.  The Criminal Division’s Office of International Affairs provided significant assistance.  

This case is being prosecuted by the Office’s Public Corruption Unit and the Criminal Division’s Fraud Section.  Assistant U.S. Attorneys Daniel C. Richenthal, Janis M. Echenberg, and Douglas S. Zolkind, and Trial Attorney David A. Last of the Fraud Section, are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that PETER GALBRAITH KELLY JR., a former executive at Competitive Power Ventures (“CPV”), pled guilty to defrauding CPV by misrepresenting that the former Executive Deputy Secretary to the Governor, Joseph Percoco, had obtained state ethics approval for his wife to work at CPV.  After an eight-week jury trial, co-defendants Joseph Percoco and Steven Aiello were convicted of charges relating to bribery.  The jury was deadlocked on the charges against Kelly.  Joseph Gerardi was acquitted of all charges.  KELLY pled guilty to one count of conspiracy to commit wire fraud before United States District Judge Valerie E. Caproni.

U.S. Attorney Geoffrey Berman said:  “Braith Kelly was involved in a criminal scheme to bribe of one of the most powerful men in New York in exchange for favorable treatment for his energy company.  Today he pled guilty for his part in the scheme and now faces time in prison.  Corruption in Albany casts a shadow over the many honest public servants who do good work in the administration of government, and deprives the citizens of New York of the honest representation they deserve.”

According to the evidence introduced at trial, other proceedings in this case, and documents previously filed in Manhattan federal court:                                                                           

KELLY ran monthly payments to Percoco and his wife through a consultant who worked for the Energy Company in order to disguise the source of the payments.  KELLY also made sure that Percoco’s wife’s photograph and full name were not included in promotional materials for the Energy Company, and he falsely told his superiors at the Energy Company – on two separate occasions – that Percoco had obtained an ethics opinion from the Governor’s Office approving of Percoco’s wife’s employment with the Energy Company, when in fact no such opinion existed.  For his part, Percoco concealed the criminal scheme by failing to include the Energy Company as the source of payments on his State-mandated financial disclosure forms. 

                                                                                                                                                                                 *                      *                      *

KELLY, 54, of Canterbury, Connecticut, pled guilty to an Information that charges him with one count of Conspiracy to Commit Wire Fraud.  It carries a maximum penalty of five years in prison and a fine of the greatest of $250,000, twice the gross pecuniary gain derived from the offense, or twice the gross pecuniary loss to persons other than the defendant resulting from the offense.  KELLY is scheduled to be sentenced on September 28, 2018, by Judge Caproni.

Percoco was convicted on March 13, 2018, after an eight-week trial, of soliciting and accepting bribes in return for taking official state action to benefit CPV and Syracuse-based real estate developer COR Development (“COR”).  Percoco is scheduled to be sentenced by Judge Caproni on June 11, 2018.

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

U.S. Attorney Berman praised the work of the Buffalo Field Office of the Federal Bureau of Investigation and New York Office of the Internal Revenue Service-Criminal Investigation, which jointly conducted this investigation with special agents from the U.S. Attorney’s Office.  Mr. Berman also thanked the New York State Attorney General’s Office.

This case is being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Janis Echenberg, Robert Boone, David Zhou, and Matthew Podolsky are in charge of the prosecution.

The chairman of a real estate development company was sentenced today to 48 months in prison and three years of supervised release for his role in a scheme to bribe United Nations ambassadors to obtain support to build a conference center in Macau that would host, among other events, the annual United Nations Global South-South Development Expo.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Geoffrey S. Berman of the Southern District of New York, Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office and Special Agent in Charge James D. Robnett of the IRS Criminal Investigation’s (IRS-CI) New York Field Office made the announcement.

Ng Lap Seng, aka “David Ng,” 69, of Macau, China, was sentenced by U.S. District Judge Vernon S. Broderick of the Southern District of New York.  In addition to his prison sentence, Judge  Broderick ordered Ng to pay a $1 million fine and $302, 977 in restitution to the United Nations.  He also ordered a forfeiture money judgment of $1.5 million in forfeiture. Ng must report to the U.S. Marshals Service by July 10 to start his prison sentence.  Ng was convicted on July 27, 2017, after a five-week trial of two counts of violating the Foreign Corrupt Practices Act, one count of paying bribes and gratuities, one count of money laundering and two counts of conspiracy.

“Corruption at any level of government undermines the rule of law and cannot be tolerated,” said Acting Assistant Attorney General Cronan. “But corruption is especially corrosive when it occurs at an international body like the United Nations.  By paying bribes to two U.N. ambassadors to advance his interest in obtaining formal support for the Macau conference center project, Ng Lap Seng tried to manipulate the functions of the United Nations.  The sentence handed down today demonstrates that those who engage in corruption will pay a heavy price and serves as a reminder that no one stands above the law.”

“Billionaire Ng Lap Seng corrupted the highest levels of the United Nations in pursuit of a multibillion-dollar real estate deal in Macau,” said U.S. Attorney Berman. “Ng exploited a center for international diplomacy as an instrument for his greedy intentions.  This Office is committed to policing official corruption wherever it may be found.”

“Gaining the upper hand in a business venture by engaging in corrupt practices is bribery in its purest form. Today, Ng Lap Seng has learned the price he will have to pay for his actions,” said Assistant Director in Charge Sweeney. “I commend the investigators and prosecutors who continue to work together at home and abroad to vigorously enforce the law within the confines of the Foreign Corrupt Practices Act.”

“No matter if money is funneled through New York corporations or transferred offshore, IRS-CI is always ready to follow the money,” said IRS-CI Special Agent-in-Charge Robnett. “Today’s sentencing shows that IRS-CI is committed to rooting out public corruption by investigating individuals who misuse their positions of public trust for personal financial gain.”

According to the evidence presented at trial, Ng, the chairman of the Sun Kian Ip Group, conspired with and paid bribes to Francis Lorenzo, a former UN Ambassador from the Dominican Republic, and John W. Ashe, the late former Permanent Representative of Antigua and Barbuda to the UN and the 68th President of the UN General Assembly (UNGA).  With the assistance of Jeff C. Yin, an accountant and co-conspirator who worked with Ng and others and previously pleaded guilty to conspiring to defraud the United States, Ng orchestrated a scheme with the principal objective of obtaining the formal support of the UN for a multi-billion dollar facility that Ng hoped to build in Macau using the Sun Kian Ip Group (the “Macau Conference Center”).  Ng wanted the Macau Conference Center to serve as a location for meetings, discussions, forums, and other events associated with the UN.  In particular, he wanted it to serve as the permanent home of the annual “Global South-South Development Expo,” which is run by the UN Office for South-South Cooperation, and is hosted in a different country or city every year.

The trial evidence showed that Ng bribed Ambassador Ashe and Ambassador Lorenzo (together, the “Ambassadors”) in exchange for their agreement to use their official positions to advance Ng’s interest in obtaining formal UN support for the Macau Conference Center.  As the evidence demonstrated at trial, Ng paid the Ambassadors in a variety of forms.  For example, Ng appointed Ambassador Lorenzo as the President of South-South News, a New York-based organization — funded by Ng — which described itself as a media platform dedicated to advancing the implementation of the UN’s Millennium Development Goals, a set of philanthropic goals.  Ng provided bribe payments to Ambassador Lorenzo through South-South News by transmitting payments from Macau to a company in the Dominican Republic affiliated with Ambassador Lorenzo’s brother (the “Dominican Company”).  Through South-South News, Ng also made payments to Ambassador Ashe, including to Ambassador Ashe’s wife, who was paid in her capacity as a “consultant” to South-South News, and to an account that Ambassador Ashe had established, purportedly to raise money for his role as President of UNGA. 

According to the trial evidence, one of the actions that the Ambassadors took in exchange for bribe payments, to advance Ng’s objectives, was to submit an official document to the then-UN Secretary-General in support of the Macau Conference Center (the “UN Document”).  The UN Document claimed that there was a need to build the Macau Conference Center to support the UN’s global development goals.  Ambassador Ashe, aided by Ambassador Lorenzo, initially submitted the UN Document to the UNGA in or about late February 2012.  More than a year later, at Ng’s behest, the Ambassadors revised the UN Document to refer specifically to Ng’s company, the Macau Real Estate Development Company, as a partner in the Macau Conference Center project.  The UN Document requested that the Secretary-General circulate the UN Document “as a document of the 66th session of the General Assembly,” under a specific item of the official UNGA agenda.  The Secretary-General followed this request, thereby making the UN Document an official part of the UNGA record. 

Five other defendants have been charged in this matter.  Lorenzo and Heidi Hong Piao pleaded guilty to various charges, including bribery, and are awaiting sentencing.  Jeff C. Yin pleaded guilty to conspiracy to defraud the United States and was sentenced to seven months in prison.  Shiwei Yan pleaded guilty to bribery and was sentenced to 20 months in prison.  Co-defendant Ashe passed away in 2016 and the charges against him were dismissed. 

This case was investigated by the FBI and IRS-CI.  The Criminal Division’s Office of International Affairs provided significant assistance.  Assistant Chief David A. Last of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Daniel C. Richenthal, Janis M. Echenberg, and Douglas S. Zolkind of the Southern District of New York are prosecuting the case.  

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that LACY DOYLE pled guilty today in connection with her maintenance of a secret, undeclared bank account in Switzerland.  DOYLE pled guilty before United States District Judge Andrew L. Carter to subscribing to a false tax return.

U.S. Attorney Geoffrey Berman said:  “Lacy Doyle has admitted going to great lengths to hide millions of dollars in assets from the IRS in an overseas bank account.  Today’s guilty plea demonstrates that those who engage in elaborate and dishonest schemes to avoid paying their fair share of taxes will be caught and held responsible for their actions.”  

As alleged in the Indictment and other documents filed in the case, DOYLE, assisted by others – including Beda Singenberger, a Swiss citizen who ran a financial advisory firm – established and maintained undeclared bank accounts in Switzerland and hid those accounts from the IRS.  DOYLE used a sham entity to conceal from the IRS her ownership of some of the undeclared accounts and deliberately failed to report to the IRS the accounts and the income generated in the accounts.

In 2003, DOYLE’s father died, and DOYLE was appointed the executor of her father’s estate.  At that time, DOYLE and her father jointly held an account at Credit Suisse with a value of approximately $3,700,000.  DOYLE then made court filings falsely stating under penalty of perjury that the total value of her father’s estate was under $1 million when, in truth and fact, it was more than four times that amount.  Doyle initially held the secret inheritance from her father in an account at Credit Suisse under her own name.

Thereafter, in 2006, DOYLE, with Singenberger’s assistance, opened an undeclared Swiss bank account for the purpose of depositing the secret inheritance from her father.  The account was opened in the name of a sham foundation formed under the laws of Lichtenstein to conceal DOYLE’s ownership.  As of May 15, 2007, the account held assets valued at approximately $5,056,548.

In 2010, the sham foundation controlled by DOYLE was re-domiciled from Lichtenstein to Panama.  As of December 31, 2016, the sham foundation maintained assets of at least approximately $3,028,562.

Singenberger was charged on July 21, 2011, with conspiring with U.S. taxpayers and others to defraud the United States, evade U.S. income taxes, and file false U.S. tax returns.  He remains at large.

*                *                *

DOYLE, 61, who resides in Manhattan, faces a maximum term of three years in prison, and will be sentenced before Judge Carter.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the IRS and also thanked the U.S. Department of Justice’s Tax Division for their assistance.

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

Geoffrey S. Berman, United States Attorney for the Southern District of New York, announced that DANIEL DELVALLE, a/k/a “BD,” a/k/a “Danny,” 31, was sentenced today by United States District Judge Naomi Reice Buchwald to a term of 156 months in prison for his participation in the murder of Kenya Miller, 26, on June 29, 2010.  The sentence imposed by Judge Buchwald will be served consecutively to the 120-month prison term imposed on DELVALLE on June 4, 2014, by United States District Judge William H. Pauley III, for DELVALLE’s participation in a conspiracy to distribute crack cocaine.  

United States Attorney Geoffrey S. Berman said:  “Daniel Delvalle was responsible for the murder of 26-year-old Kenya Miller.  As a result of that horrible and senseless crime, he will spend 23 years in prison.  We thank our law enforcement partners for their outstanding efforts, and we will continue to work with them to keep our communities safe.”

According to the Indictment, and other documents filed in the case, as well as statements made during the sentencing proceedings:

Between approximately 2006 and 2012, two rival drug crews based their operations in and around the E. Roberts Moore Houses (the “Moore Houses”) in the vicinity of Cauldwell and Concord Avenues in the Bronx, New York.  One such crew was headed by DELVALLE.  Members of the DELVALLE crew primarily sold crack cocaine supplied to them by DELVALLE.  Members of the DELVALLE crew also possessed and used firearms in order to protect themselves and their drug territory, and they were responsible for a number of drug-related shootings in the area. 

On June 29, 2010, Miller was killed by a member of the DELVALLE crew (“CC-1”).  Miller’s murder was ordered by DELVALLE, who had been upset with Miller for allegedly assaulting members of the DELVALLE crew.  As a result, on the day of the murder, when DELVALLE saw Miller in the vicinity of the Moore Houses, DELVALLE told CC-1, in substance and in part, to retrieve a firearm and to kill Miller.  CC-1 followed those instructions: CC-1 retrieved a gun belonging to the DELVALLE crew, followed Miller into an apartment building, and then shot Miller several times in an elevator.    

*                *                  *

Mr. Berman praised the work of the New York City Police Department, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the Drug Enforcement Administration.                       

The case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Justina Geraci and Matthew Laroche are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the arrest of BILLY RIBEIRO ANDERSON, a/k/a “Anderson Albuquerque,” a/k/a “AlfabetoVirtual.”  ANDERSON was charged with three separate counts of computer fraud for obtaining unauthorized access to and committing defacements of the websites for the Combating Terrorism Center at the United States Military Academy in West Point, New York (“West Point”), and the Office of the New York City Comptroller (the “NYC Comptroller”).  ANDERSON was arrested earlier this morning at his residence in Torrance, California, and will be presented later today in federal court in Los Angeles, California.

U.S. Attorney Geoffrey S. Berman said:  “Billy Anderson allegedly used specialized computer skills and knowledge to hack important U.S. military and government websites, as well as over 11,000 other websites around the world.  Thanks to the outstanding work of the FBI’s cyber squads, criminals who compromise the integrity of government websites and network infrastructure will continue to be investigated vigorously and prosecuted to the fullest extent of the law.” 

Assistant Director-in-Charge William F. Sweeney Jr. said:  “Among other possible effects, website defacements can disrupt an organization’s operations and damage its credibility.  As alleged, Anderson committed more than 11,000 such acts over several years, impacting a wide spectrum of military, government and business entities.  The charges filed against Anderson should serve as a reminder that committing these acts of cyber vandalism will not be tolerated.”

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

Website defacements are acts of computer intrusion during which a hacker obtains unauthorized access to computers hosting Internet websites and then replaces the publicly available contents of the website with content generated by the hacker, thereby “defacing” the website.  Hackers frequently claim responsibility for defacements by listing their online pseudonyms as part of the defaced content.

From in or about 2015 through at least March 13, 2018, ANDERSON took responsibility for obtaining unauthorized access to, and committing more than 11,000 defacements of, various U.S. military, government, and business websites around the world under the online pseudonym “AlfabetoVirtual,” including websites for the Combating Terrorism Center at West Point and the NYC Comptroller.

On or about July 10, 2015, a website owned by the NYC Comptroller was defaced, and ANDERSON, using the online pseudonym “AlfabetoVirtual,” claimed responsibility for the intrusion and defacement.  The contents of the NYC Comptroller website were modified to display the text “Hacked by AlfabetoVirtual,” “#FREEPALESTINE” and “#FREEGAZA.”  The defacement was performed by exploiting security vulnerabilities associated with the version of a plugin being used on the website.   

On or about October 4, 2016, a website for the Combating Terrorism Center at West Point was defaced, and ANDERSON, using the online pseudonym “AlfabetoVirtual,” claimed responsibility for the intrusion and defacement.  The content of the Combating Terrorism Center website was modified to display the text “Hacked by AlfabetoVirtual.”  The defacement was performed by an unauthorized administrative account that exploited a known cross-site script vulnerability, thereby enabling ANDERSON to bypass access controls and target an internal Combating Terrorism Center website address. 

ANDERSON also committed unauthorized intrusions of thousands of web servers located around the world by surreptitiously installing malicious code on victim web servers that provided ANDERSON with administrative rights to the victimized web servers, thereby enabling ANDERSON to commit defacements and otherwise to maintain persistent unauthorized access to the victimized web servers.  

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ANDERSON, 41, of Torrance, California, is charged with two counts of computer fraud for causing damage to a protected computer, each of which carries a maximum sentence of 10 years in prison, and one count of computer fraud for unauthorized access to a United States Government computer, which carries a maximum sentence of one year in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FBI.  Mr. Berman also thanked the Computer Crime Investigative Unit of the United States Army Criminal Investigation Command and the Brazilian Federal Police Cyber Crime Unit for their assistance with the investigation.  

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

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

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

Audrey Strauss, the Attorney for the United States, acting under authority conferred by 28 U.S.C. § 515, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the arrests of ANILESH AHUJA, a/k/a “Neil,” the founder, chief executive officer, and chief investment officer of a New York-based investment firm that managed hedge funds focused on structured credit products (“the Firm”), AMIN MAJIDI, a former partner and portfolio manager at the Firm, and JEREMY SHOR, a former trader at the Firm. 

Ms. Strauss said:  “Investors rely on a hedge fund’s performance numbers when deciding whom to trust with their capital.  To compete with other peer funds, Neil Ahuja, founder of an investment firm, allegedly manipulated the firm’s performance numbers, using fraudulently inflated values for the firm’s securities holdings and lying to investors about how the firm would mark its positions.  By allegedly cooking the books, Ahuja and his co-defendants made the fund appear more attractive to would-be investors and dissuaded current investors from withdrawing their investments.  We will continue to work with our law enforcement and regulatory partners to ensure that investors are provided accurate information when making important investment decisions.”

FBI Assistant Director William F. Sweeney Jr. said:  “The defendants’ alleged practice of intentionally misleading investors and mismarking securities held in the funds they managed allowed them to charge higher fees and hold captive money that would have likely been withdrawn had their clients been aware of the hedge fund’s actual value. Their initial success was based on self-imposed target returns, supported by reverse engineering tactics, but in the end, they missed their mark.”      

AHUJA, MAJIDI, and SHOR are charged with participating in a scheme, from in or about 2014 through in or about 2016, to commit securities fraud and wire fraud relating to the mismarking of certain securities held in hedge funds that the Firm managed, thus fraudulently inflating the net asset value (“NAV”) of those funds as reported to investors and potential investors.  At its peak, the mismarking across all funds managed by the Firm exceeded $200 million.  In addition, Ms. Strauss announced today the unsealing of charges against ASHISH DOLE, a former chief risk officer and trader at the Firm, and FRANK DINUCCI, JR., a former salesman at a broker-dealer.  Both DOLE and DINUCCI have pled guilty and are cooperating with the Government.

AHUJA was arrested in New York, New York, this morning.  MAJIDI was arrested at his home in Armonk, New York, this morning.  SHOR self-surrendered to the authorities in New York, New York, this morning.

AHUJA, MAJIDI, and SHOR will be presented and arraigned later today before United States District Judge Katherine Polk Failla.  DOLE’s case is assigned to United States District Judge John G. Koeltl.  DINUCCI’s case is assigned to United States District Judge Alvin K. Hellerstein.

In a separate action, the Securities and Exchange Commission (“SEC”) filed civil charges against AHUJA, MAJIDI, and SHOR.

According to the allegations in the charging documents unsealed today in Manhattan federal court, including the Indictment,[1] and statements made in court proceedings:

The Firm

As alleged in the Indictment, in or about 2008, ANILESH AHUJA, a/k/a “Neil,” co-founded the Firm, where he was the chief executive officer and chief investment officer.  The Firm managed hedge funds focused primarily on structured credit products, including residential mortgage backed securities (“RMBS”).   Before founding the Firm, AHUJA had been the head of the RMBS group at a prominent global investment bank.

The Firm’s flagship mortgage credit fund (the “Hedge Fund”) was launched in or about October 2009.  A segregated ERISA fund held the same positions as the Mortgage Credit Fund.  In 2013, the Firm launched a new fund (the “New Issue Fund”) that purchased and securitized pools of mortgages that were not issued or guaranteed by a government agency.  At various relevant times between 2008 and 2016, the Firm managed billions of dollars in assets, in excess of $5 billion at the Firm’s peak.

From in or about 2008 through in or about June 2016, AMIN MAJIDI worked at the Firm, first as the chief risk officer and, beginning in or about 2014, as a partner and the portfolio manager for the Hedge Fund.  From in or about early 2014 through in or about March 2016, JEREMY SHOR was employed by the Firm as a trader, where he focused on non-agency RMBS – i.e., RMBS securities that were not issued by a government agency.   

The Scheme to Mismark Securities

As alleged in the Indictment, from at least in or about 2014 through at least in or about 2016, AHUJA, MAJIDI, SHOR, and others, including DOLE and DINUCCI, participated in a scheme to defraud the Firm’s investors and potential investors in the Hedge Fund and the New Issue Fund by deceptively mismarking each month the value of certain securities held in those funds, and thus fraudulently inflating the NAV of those funds as reported to investors and potential investors.  At times, the NAV was overstated by more than $200 million across the funds managed by the Firm.

This benefited the Firm in at least two ways.  First, the Firm was able to charge its investors higher management and performance fees.  Second, the Firm was able to forestall redemptions by investors who would have requested a return of their funds had they known the Firm’s true performance and operating health.

The mismarking scheme evolved as a result of demands by AHUJA and MAJIDI that the Firm maintain its track record of success and keep pace with the performance of peer funds, regardless of market conditions or the actual performance of the funds.  To achieve the goal of posting competitive returns, AHUJA and MAJIDI set an inflated “target” return for the Hedge Fund at the end of each month, which was based in part on the performance of peer funds.  As part of the scheme, MAJIDI, frequently in the presence of AHUJA, directed the members of the trading desk, including SHOR, DOLE, and others, that the Firm must meet its “target” performance number for the month.  The traders at the Firm were then tasked with “reverse engineering” marks to meet the “targets.”

The Firm mismarked securities using two illicit methods.  In the first method, the Firm secured fraudulently inflated price quotes for particular securities from corrupt brokers.  AHUJA, MAJIDI, SHOR, and others then relied on these inflated quotes to set correspondingly inflated marks for their bonds.  Specifically, AHUJA and MAJIDI were aware that SHOR had access to corrupt brokers – including DINUCCI – and directed SHOR, along with DOLE and others, to use these corrupt brokers to secure the inflated quotations they needed to hit their internal “targets.”  While DINUCCI initially resisted some of the inflated marks that SHOR requested that he provide, DINUCCI eventually agreed to parrot back the exact marks SHOR had requested.  In exchange for sending these inflated marks, DINUCCI expected that SHOR and the Firm would use DINUCCI and his firm as a broker. 

In the second method, AHUJA, MAJIDI, SHOR, and others relied on corrupt brokers to secure “spreads” that could be used to inflate the NAV of the funds to meet the internal “targets.”  Specifically, SHOR, DOLE, and others – with the knowledge and approval of AHUJA and MAJIDI – secured and misused “spreads” from corrupt brokers, including DINUCCI.  A spread is typically the difference between a bid and an ask for a given security.  But SHOR obtained so-called “sector spreads” from DINUCCI for use in mismarking the Firm’s positions.  Sector spreads are the difference between the bid and the ask for entire sectors of securities (e.g., non-agency RMBS), not the bid and ask for specific securities.  Because a sector spread reflected the difference between the cheapest and most expensive securities within an entire sector, it would be at least as large as (and almost certainly significantly larger than) the spread for a given bond in that sector.  Generally, the Firm’s valuation policy required the Firm to mark a position at the “mid,” i.e., between the bid and the ask.  The Firm used sector spreads to fraudulently create what it called an “implied mid,” or “imputed mid,” for particular securities.  Where a broker supplied the Firm with a bid, the Firm added half of the sector spread to “calculate” the implied mid of a bond.  SHOR, DOLE, and MAJIDI internally referred to this use of implied or imputed mids as “the lever” – because it could be used to manipulate the NAV to meet AHUJA’s fraudulent targets. 

*                      *                      *

AHUJA, 49, of New York, New York, MAJIDI, 52, of Armonk, New York, and SHOR, 46, of New York, New York, are each charged with four counts:  one count of conspiracy to commit securities fraud; one count of conspiracy to commit wire fraud; one count of securities fraud; and one count of wire fraud.  Count One carries a maximum sentence of five years in prison, and Counts Two through Four each carry a maximum sentence of 20 years in prison.  The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.

On April 6, 2017, DINUCCI, 35, of New York, New York, pled guilty before Judge Hellerstein to four counts:  one count of conspiracy to commit securities fraud and wire fraud; one count of securities fraud; one count of wire fraud; and one count of making false statements.  Counts One and Four each carry a maximum sentence of five years in prison, and Counts Two and Three each carry a maximum sentence of 20 years in prison.  The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.

On November 13, 2017, DOLE, 34, of White Plains, New York, pled guilty before Judge Koeltl to two counts:  one count of conspiracy to commit securities fraud and wire fraud; and one count of securities fraud.  Count One carries a maximum sentence of five years in prison, and Count Two carries a maximum sentence of 20 years in prison.  The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.

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

Ms. Strauss praised the work of the FBI and thanked the SEC for its assistance. 

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, James J. Hunt, the Special Agent in Charge of the New York Division of the Drug Enforcement Administration (“DEA”), James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and George P. Beach II, the Superintendent of the New York State Police, announced an Indictment charging RICKY RIOS, JEANETTE SANTIAGO, ADRIEL VASQUEZ, CINDY GARCIA, and ULTIMO MONTILLA with a conspiracy to distribute oxycodone pills.  The case has been assigned to United States District Judge Paul A. Engelmayer. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants created a network spanning New York City to Connecticut for the distribution of tens of thousands of highly addictive and dangerous pills, helping to fuel the opioid epidemic plaguing our nation.  We are committed, along with our law enforcement partners, to stopping the diversion of prescription opioids.”

DEA Special Agent in Charge James J. Hunt said:  “This organization monopolized on opioid addiction by pushing tens of thousands of oxycodone pills throughout the Northeast, allegedly.  Every day, more than 100 Americans die from opioid overdoses; both law enforcement and our community members are focused on bringing to justice drug trafficking organizations that exploit addiction for profit.” 

NYPD Commissioner James P. O’Neill said:  “I commend all the dedicated members of the federal task force who investigated and took down the individuals responsible for diverting and selling these pills on the streets of New York.  Cases like this perfectly highlight the value of the NYPD’s law enforcement partnerships at every level of government.”

Superintendent George P. Beach II said:  “Oxycodone is a highly addictive medication, and the operators of this trafficking ring profited by illegally diverting tens of thousands of doses for sale on the streets, knowing it would be abused. I thank our federal and local partners for their efforts to put a stop to this illegal trafficking operation.”

As alleged in the underlying Complaints and the Indictment charging the defendants in Manhattan federal court[1]:

The defendants were members of a drug trafficking organization (the “DTO”) that operated in the Bronx, among other places.  The defendants and other members and associates of the DTO obtained oxycodone pills from individuals with prescriptions, stored and packaged those pills in an apartment in the Bronx, and then resold them.  Between November 2016 and February 2018, the defendants and other members and associates of the DTO were responsible for diverting and selling tens of thousands of oxycodone pills. 

*                *                *

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

The Indictment was the result of a long-term investigation by the DEA’s Drug Enforcement Task Force, which comprises agents and officers of the DEA, the New York City Police Department, and the New York State Police.  This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Michael K. Krouse is in charge of the prosecution.

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

DEFENDANT

AGE

RESIDENCE

MAXIMUM PENALTY

RICKY RIOS

49

Seymour, CT

20 years in prison

JEANETTE SANTIAGO

37

Bronx, NY

20 years in prison

ADRIEL VASQUEZ

37

Yonkers, NY

20 years in prison

CINDY GARCIA

40

Yonkers, NY

20 years in prison

ULTIMO MONTILLA

40

Bronx, NY

20 years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the arrest and unsealing of a Complaint charging THAYSHIKA TORRES with distributing the heroin and fentanyl that resulted in a non-fatal overdose and a subsequent fatal overdose of Elizabeth Stephens in December 2016.  The Complaint also alleges that TORRES distributed heroin between September 2016 and December 2016.  TORRES was arrested this morning by the NYPD, and will be presented later today before U.S. Magistrate James L. Cott in Manhattan federal court. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Thayshika Torres sold the heroin that resulted in the non-fatal overdose of Elizabeth Stephens on December 2, 2016.  Then, just three weeks later, Torres allegedly sold Stephens a dose of fentanyl that ended her life.  Working with the NYPD, we will continue to target anyone who sells these dangerous drugs in New York City, from large-scale international drug traffickers to street-corner dealers.”

NYPD Commissioner James P. O’Neill said:  “The NYPD, in close collaboration with all of our law enforcement partners, are relentless in pursuing anyone who illegally sells narcotics and preys on people’s vulnerabilities.  It is imperative that we save as many lives as possible while combatting this opioid crisis that knows no boundaries – which touches every aspect of our society, regardless of race, occupation, or economic status.”

According to the allegations in the Complaint[1]:

On December 2, 2016, Elizabeth Stephens, a 39-year-old resident of the Bronx, suffered a non-lethal overdose from heroin inside the apartment building in which TORRES was living.  Emergency Medical Services personnel revived Stephens and brought her to the emergency room.  Just hours after Stephens’s December 2 overdose, she sent a text message to TORRES asking TORRES to “let people know that stuff is strong.” 

On December 23, 2016, Stephens suffered a fatal overdose in the same apartment building.  That morning, Stephens placed three phone calls to TORRES between approximately 10:56 a.m. and 11:57 a.m.  These were the last outgoing calls placed from Stephens’s phone.  Less than an hour after the last call, at approximately 12:49 p.m., a resident of TORRES’s apartment building found Stephens lying outside the elevator in a hallway three floors above TORRES’s apartment.  Shortly thereafter, Stephens was pronounced dead at a local hospital.  An autopsy revealed that Stephens died from a lethal dose of opioids. 

TORRES also sold heroin to undercover officers and confidential informants both before and after Stephens’s overdoses, including on September 2, 2016, October 18, 2017, October 24, 2017, February 22, 2018, and February 27, 2018.  Laboratory testing confirmed that the heroin TORRES sold on October 18 and 24, 2017, also contained fentanyl. 

*                *                *

TORRES, 37, of the Bronx, is charged with two counts of distribution and possession with intent to distribute heroin.  TORRES faces a maximum sentence of life in prison and a mandatory minimum sentence of 20 years in prison on each count based upon her distribution of the heroin that led to Elizabeth Stephens’s non-fatal overdose on December 2, 2016, and her distribution of the fentanyl that led to Stephens’s fatal overdose on December 23, 2016.

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

Mr. Berman praised the outstanding investigative work of the NYPD in this case. 

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Stephanie Lake is in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that KAM WONG, the chief executive officer and president of the oldest New York credit union (the “Credit Union”), a non-profit financial institution, was charged in Manhattan federal court with fraud, embezzlement, and aggravated identity theft offenses related to defrauding the Credit Union in connection with hundreds of thousands of sham expense reimbursements.  WONG was arrested this morning and is scheduled to appear before U.S. Magistrate Judge James L. Cott in Manhattan federal court later today. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, the CEO and president of New York’s oldest credit union abused his position of trust as a guardian of municipal, state, and federal workers’ financial accounts to enrich himself.  Kam Wong allegedly stole money from the credit union’s earnings that were intended to reward the credit union’s members, not line Wong’s pockets.  I want to thank my Office’s Special Agents for their dedicated efforts in this ongoing investigation.”

According to the allegations contained in the Complaint[1] unsealed today in Manhattan federal court and publicly available documents:

KAM WONG, the defendant, is the CEO and president of the Credit Union, a non-profit financial institution headquartered in New York, New York, which is federally insured.  The Credit Union is the oldest credit union in New York State and one of the oldest and largest in the country, providing bank services to more than 425,000 members, including municipal, state, and federal workers in New York City.  The Credit Union’s earnings are intended to be directed back to its members in the form of more favorable rates and fewer and lower fees for products and services.

From at least 2013 through January 2018, WONG engaged in a long-running multi-faceted scheme to obtain money from the Credit Union to which he was not entitled, and took steps to seek to conceal what he had done.  Among other things, WONG allegedly embezzled from and defrauded the Credit Union by submitting sham invoices (the “Sham Invoices”) for dental work never performed on him or paid by him, and, as a result, obtained reimbursement for hundreds of thousands of dollars of such nonexistent dental work, as well as for his alleged personal tax liability for these and other payments or benefits.

In addition to the alleged fraud in connection with dental reimbursements, the ongoing investigation has revealed that WONG obtained numerous other payments from the Credit Union under suspicious or questionable circumstances.  These include millions of dollars in cash payments in lieu of a long-term disability insurance policy, as well as millions more for taxes to cover those payments; reimbursement payments for repairs to a luxury vehicle the Credit Union leased to WONG, which repair work was already covered by insurance; cash withdrawals from a Credit Union business credit card for purportedly “testing” the Credit Union’s ATMs; substantial educational, housing, and living expenses for two of WONG’s friend’s relatives, whom the Credit Union hired at his direction to be interns; tens of thousands of dollars in annual cash advances, for which WONG provided no supporting documentation; and payments for 320 days of purportedly unused sick leave, in violation of WONG’s contract and the Credit Union’s policies. 

WONG generally deposited the proceeds of his scheme into a Credit Union account, from which, between July 2013 and January 2018, he then withdrew approximately $1.9 million from ATMs, over the course of more than 2,500 transactions, an average of more than one-and-a-half transactions per day.  From this account, WONG also spent at least approximately $3.55 million on New York State Lottery tickets.

In or about January 2018, after WONG learned about the investigation, WONG misled federal agents and Credit Union Board members in order to, after the fact, explain and justify some of these payments.  On or about February 22, 2018, WONG was placed on leave by the Credit Union’s Board of Directors upon the recommendation of a Special Committee overseeing an internal investigation prompted by this criminal investigation.

*                *                *

WONG, 62, of Valley Stream, Long Island, is charged with one count of embezzlement from a federally insured credit union, one count of bank fraud, one count of wire fraud, each of which carries a maximum penalty of 30 years in prison, and one count of aggravated identify theft, which carries a mandatory two-year consecutive term in prison. 

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

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

The case is being prosecuted by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Eli J. Mark and Daniel C. Richenthal are in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that RICHARD BREGA, the former owner of Brega D.O.T. Maintenance Corp. in Rockland County, was found guilty by a federal jury in White Plains of fraud, bribery, and theft of government property.  The convictions were for BREGA’s billing the Rockland Board of Cooperative Educational Services (“Rockland BOCES”) for maintenance of school buses that was never performed, and bribery of a Rockland BOCES official.  The convictions resulted from a three-week trial before the United States District Judge Kenneth M. Karas.  BREGA is scheduled to be sentenced by Judge Karas on October 17, 2018.

U.S. Attorney Geoffrey S. Berman said:  “As a unanimous jury found, Richard Brega engaged in fraud, bribery, and theft of government property.  The scheme not only defrauded Rockland school districts and the federal government by billing for bus maintenance work that was not performed, but it also put children at risk of riding unsafe buses.  Now Brega awaits sentencing for his crimes.”

The evidence at trial showed, among other things, the following:

Rockland BOCES serves eight school districts in Rockland County.  Among the services that Rockland BOCES offers to its students – particularly children with special physical, intellectual, and emotional needs – is transportation, for which it has a fleet of buses and other vehicles (hereinafter collectively referred to as “Rockland BOCES buses” and “bus fleet”), some of which are specially equipped for students with physical disabilities.  Rockland BOCES receives federal funding each year, often in excess of $1 million.

BREGA owned and controlled vehicle repair and transportation companies in Rockland County, including Brega D.O.T. Maintenance Corp. (“Brega DOT”), a fleet maintenance repair shop.  From in or about 2008 or 2009, through in or about 2015, Brega DOT provided vehicle repair service and maintenance for Rockland BOCES bus fleet, including regular preventive maintenance (“Preventive Maintenance”), which is supposed to involve a thorough and detailed inspection and testing of the buses at Brega DOT’s facility, designed to ensure that the buses are defect-free and safe to operate with children aboard.  Brega DOT would fix any problems with the buses that it found during Preventative Maintenance inspections before releasing the buses back to Rockland BOCES.  Brega DOT also created invoices documenting the work done and provided those invoices to Rockland BOCES for payment.  Rockland BOCES’ director of transportation, William Popkave, would then approve the invoice as accurately stating work that was performed on Rockland BOCES buses, and Rockland BOCES would mail payment to Brega DOT.

From in or about 2012 through in or about 2014, BREGA stole money from Rockland BOCES by, among other things, billing Rockland BOCES for Preventative Maintenance inspections that were never performed.  To do so, BREGA directed his employees to prepare fraudulent invoices, as well as fraudulent supporting documentation, giving the false appearance that his company had performed regular Preventive Maintenance inspections on certain buses, when in fact those buses were not even brought to Brega DOT and Preventative Maintenance inspections were not performed.

To create the fraudulent invoices, and to obtain payment from Rockland BOCES for work that was never performed, BREGA bribed Popkave – who oversaw upkeep and maintenance of its buses – with tens of thousands of dollars’ worth of free personal vehicle repairs.  Popkave sent BREGA lists of buses and their mileages so that BREGA could create fraudulent invoices and supporting documentation, and thereafter approved payment of the fraudulent invoices at Rockland BOCES, even though Popkave and BREGA knew that the buses had not even been to Brega DOT on the days for which Brega DOT billed Rockland BOCES, and had not received Preventative Maintenance inspections.

*                      *                     *

BREGA, 50, of Rockland County, was convicted of three counts: (1) mail fraud, which carries a maximum potential penalty of 20 years in prison; (2) bribery concerning a program receiving federal funds, which carries a maximum potential penalty of 10 years in prison; and (3) theft concerning a program receiving federal funds, which carries a maximum potential penalty of 10 years in prison.  

Popkave, 62, who currently resides in Florida, pled guilty before Magistrate Judge Judith C. McCarthy on January 24, 2017, to five counts: (1) conspiracy to commit mail fraud, which carries a maximum potential penalty of 20 years in prison; (2) mail fraud, which carries a maximum potential penalty of 20 years in prison; (3) theft concerning a program receiving federal funds, which carries a maximum potential penalty of 10 years in prison; (4) bribery concerning a program receiving federal funds, which carries a maximum potential penalty of 10 years in prison; and (5) obstruction of justice, which carries a maximum potential penalty of 20 years in prison. 

The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as the sentencings of the defendants would be determined by the judge.  BREGA will be sentenced on October 17, 2018.  Popkave will be sentenced at a future date.

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation, the Rockland County District Attorney’s Office, and the United States Department of Transportation Office of Inspector General.  Mr. Berman also thanked the United States Department of Education, Office of Inspector General, for its assistance.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Michael D. Maimin and Benjamin Allee are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Acting Assistant Attorney General John M. Gore of the Civil Rights Division, and Angel M. Melendez, Special Agent in Charge of the New York Field Office of ICE’s Homeland Security Investigations (“HSI”), announced the extradition of EFRAIN GRANADOS-CORONA, a/k/a “Chavito,” a/k/a “Cepillo,” EMILIO ROJAS-ROMERO, ALAN ROMERO-GRANADOS, a/k/a “El Flaco,” and PEDRO ROJAS-ROMERO, who are charged together with RAUL ROMERO-GRANADOS, a/k/a “Chicarcas,” a/k/a “El Negro,” ISAAC LOMELI-RIVERA,” a/k/a “Giro,” JULIO SAINZ-FLORES, a/k/a “Rogelio,” and JUAN ROMERO-GRANADOS, a/k/a “Chegoya,” a/k/a “El Guero,” with sex trafficking offenses in a 23-count Superseding Indictment (the “Indictment”) in the United States District Court for the Southern District of New York.  EFRAIN GRANADOS-CORONA and EMILIO ROJAS-ROMERO were extradited to the United States from Mexico on April 26, 2018, and presented before United States Magistrate Judge Stewart D. Aaron on April 27, 2018.  ALAN ROMERO-GRANADOS and PEDRO ROJAS-ROMERO were extradited to the United States from Mexico on May 2, 2018, and presented yesterday before United States Magistrate Judge Debra Freeman.  This case is assigned to United States District Judge Andrew J. Carter, Jr.

The Indictment, which was returned under seal on September 15, 2016, alleges that the defendants are members of an international sex trafficking organization that exploited and trafficked adult and minor women in Mexico and in the United States from at least 2000 to 2016.  Members of the defendants’ sex trafficking organization, which operated largely as a family business, used false promises, physical and sexual violence, and threats to force and coerce adult and minor women to engage in commercial sex for the organization’s profit in both Mexico and the United States. 

As part of a coordinated bilateral law enforcement action, six defendants located in Mexico – EFRAIN GRANADOS-CORONA, EMILIO ROJAS-ROMERO, ALAN ROMERO-GRANADOS, PEDRO ROJAS-ROMERO, JULIO SAINZ-FLORES, and JUAN ROMERO-GRANADOS – were arrested in Mexico and taken into custody by Mexican authorities pursuant to provisional arrest warrants requested by the United States in August 2016.  As noted, the first four of these defendants were extradited to the United States from Mexico within the past week.  The fifth of these defendants, JULIO SAINZ-FLORES, was previously extradited to the United States from Mexico on June 8, 2017, and was presented in Manhattan federal court before Chief United States Magistrate Judge Gabriel W. Gorenstein on June 9, 2017.  JUAN ROMERO-GRANADOS remains in Mexico pending extradition proceedings.  The two defendants who were arrested in the United States, RAUL ROMERO-GRANADOS and ISAAC LOMELI-RIVERA, were presented in Manhattan federal court on October 27, 2016, before United States Magistrate Judge Kevin Nathaniel Fox. 

U.S. Attorney Geoffrey S. Berman said:  “Sex trafficking is a heinous crime that violates both the rule of law and the most basic standards of human dignity.  These defendants allegedly deprived women and girls of their freedom, and forced them into prostitution against their will.  The scope of devastation these defendants allegedy inflicted on countless victims is beyond comprehension.  But now they face significant criminal charges in an American court, and will have to answer for their allegedly reprensible actions.  Our office is dedicated to combatting this demoralizing crime and helping survivors reclaim their lives.”

Acting Assistant Attorney General John M. Gore of the Civil Rights Division said:  “The Civil Rights Division will not tolerate anyone violating an individual’s rights and freedoms through sex trafficking.  We will continue to work with our law enforcement partners to vindicate the rights of victims and survivors of sex trafficking by dismantling transnational organized trafficking enterprises and putting an end to these egregious civil rights violations.”

HSI Special Agent in Charge Angel M. Melendez said:  “These four individuals were transported more than 2,000 miles from Mexico to be held accountable for the callous criminal actions alleged in this case.  Those extradited, along with others, allegedly operated a family business centered on making money from exploiting females they forced into sex slavery.  Now these traffickers will face justice where they allegedly made their income, right here in New York.  Human Trafficking remains a priority for HSI, whose primary focus is to rescue victims and release them from the grip of their captors.”

As alleged in the Indictment:[1] 

EFRAIN GRANADOS-CORONA, RAUL ROMERO-GRANADOS, ISAAC LOMELI-RIVERA, JULIO SAINZ-FLORES, JUAN ROMERO-GRANADOS, ALAN ROMERO-GRANADOS, PEDRO ROJAS-ROMERO, and EMILIO ROJAS-ROMERO, the defendants, are members of an international sex trafficking organization (the “STO”).  Many of the members of the STO are related by blood, marriage, and community.  For example:  EFRAIN GRANADOS-CORONA is the uncle of RAUL ROMERO-GRANADOS, ISAAC LOMELI-RIVERA, JUAN ROMERO-GRANADOS, and ALAN ROMERO-GRANADOS; PEDRO ROJAS-ROMERO and EMILIO ROJAS-ROMERO are brothers; JUAN ROMERO-GRANADOS and ALAN ROMERO-GRANADOS are also brothers; and ISAAC LOMELI-RIVERA is RAUL ROMERO-GRANADOS’s brother-in-law.

Between 2000 and the present, members of the STO (the “Traffickers”) have used false promises, physical and sexual violence, threats of the same, lies, and coercion to force and coerce adult and minor women (the “Victims”) to work in prostitution in both Mexico and the United States.

In most cases, a Trafficker entices a Victim – frequently a minor – in Mexico.  The Trafficker then uses multiple means to isolate the Victim from her family.  In some cases, the Trafficker uses romantic promises to induce the Victim to leave her family and live with him.  In other cases, the Trafficker rapes the Victim, making it difficult for her to return to her family due to the associated stigma of the rape.  Once a Victim is separated from her family, the Trafficker frequently monitors her communications, keeps her locked in an apartment, leaves her without food, and engages in physical or sexual violence against the Victim.  Traffickers often tell Victims that the Traffickers owe a significant debt and that the Victim must work in prostitution to assist in repaying the debt.  Traffickers typically begin forcing the Victims to work in prostitution in Mexico, frequently in a neighborhood of Mexico City known as “La Merced.”   Victims are often required to see at least 20 to 40 customers per day.  Traffickers monitor the number of clients a Victim sees by surveilling the Victim, communicating with brothel workers, and by counting the number of condoms provided to a Victim.  Traffickers typically require the Victims to turn over all of the prostitution proceeds to the Traffickers. 

After a Victim has worked in prostitution in Mexico for some time, Traffickers typically arrange for the Victim to be smuggled into the United States.  Members of the STO assist one another in making smuggling arrangements.  In many cases, multiple Traffickers and multiple Victims are smuggled into the United States together.  In other cases, one Trafficker may remain in Mexico while arranging for a Victim to be smuggled together with another Trafficker and other Victims.

Once in the United States, the members of the STO generally maintain their Victims at one of several shared apartments in New York City.  Victims living in the same apartment are frequently forbidden to communicate with one another.  Once in the United States, Traffickers continue to use physical and sexual violence, threats of the same, lies, and coercion to force the Victims to work in prostitution. 

In most cases, the Trafficker or another member of the STO provides a Victim with contact information with which to find work.  The Victims typically work weeklong shifts either in a brothel, or in a “delivery service.”  In a delivery service, the Victim is delivered to a customer’s home by a “driver.”  These brothels and delivery services are located both within New York and in surrounding states, including, but not limited to, Connecticut, Maryland, Virginia, New Jersey, and Delaware.

Generally, each customer pays $30-35 for 15 minutes of sex.  Of that, half of the money typically goes to the driver (in the case of a delivery service) or to the brothel.  The other $15 goes to the Victim, who is then typically forced to give all of the proceeds to the Trafficker.  When a Trafficker is unavailable, a Victim may also give the proceeds to another member of the STO.

The Traffickers then frequently send, or have their Victims send, some of the prostitution proceeds to Traffickers’ family members and associates in Mexico by wire transfer.  Such transfers provide financial assistance to the Traffickers’ families and provide financial support to the Traffickers themselves if they return to Mexico. 

*                      *                     *                      

Since 2009, the Department of Justice – through the Civil Rights Division’s Human Trafficking Prosecution Unit – and HSI have collaborated with Mexican law enforcement counterparts in a Bilateral Human Trafficking Enforcement Initiative aimed at strengthening high-impact prosecutions under both U.S. and Mexican law.  The initiative is aimed at dismantling human trafficking networks operating across the United States-Mexico border, bringing human traffickers to justice, reuniting victims with their children, and restoring the rights and dignity of human trafficking victims held under the trafficking networks’ control.  These efforts have resulted in successful prosecutions in both Mexico and the United States, including U.S. federal prosecutions of over 50 defendants in multiple cases in New York, Georgia, Florida, and Texas since 2009, and numerous Mexican federal and state prosecutions of associated sex traffickers.  In announcing the extradition, U.S. Attorney Geoffrey S. Berman and Acting Assistant Attorney General John M. Gore of the Civil Rights Division commended U.S. and Mexican law enforcement partners for their shared and continued commitment to coordinated bilateral anti-trafficking efforts.

Mr. Berman also praised the outstanding investigative work of HSI, the work of the Mexican government, and Mexican law enforcement in executing the arrests and preparing for the extradition of the defendants to the United States, and the assistance provided by the New York City Police Department, the State Department, the Civil Rights Division’s Human Trafficking Prosecution Unit, and the Criminal Division’s Office of International Affairs.  The Justice Department also acknowledged the non-governmental victim service providers and advocates for their dedicated efforts to restore and improve the lives of survivors of trafficking and their families in connection with this case and others.

*                      *                     *

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

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

The prosecution is being handled by the Violent and Organized Crime Unit of the U.S. Attorney’s Office for the Southern District of New York.  Assistant U.S. Attorneys Kristy J. Greenberg, Jacqueline C. Kelly, Elinor L. Tarlow, and Jane Kim are in charge of the prosecution.

United States v. Efrain Granados-Corona, a/k/a “Chavito,” a/k/a “Cepillo,” et al.,

S2 16 Cr. 324 (ALC)

COUNT / CHARGE

DEFENDANT(S)

MANDATORY MINIMUM PENALTIES

MAXIMUM PENALTIES

Count 1: Conspiracy to Commit Sex Trafficking

18 U.S.C. § 1594

EFRAIN GRANADOS-CORONA,

   a/k/a “Chavito,”

   a/k/a “Cepillo,”

RAUL ROMERO-GRANADOS,

   a/k/a “Chicarcas,”

   a/k/a “El Negro,”

ISAAC LOMELI-RIVERA,

   a/k/a “Giro,” 

JULIO SAINZ-FLORES,

   a/k/a “Rogelio,”

JUAN ROMERO-GRANADOS,

   a/k/a “Chegoya,”

   a/k/a “El Guero,” ALAN ROMERO-GRANADOS,

   a/k/a “El Flaco,”

PEDRO ROJAS-ROMERO,

EMILIO ROJAS-ROMERO

N/A

Life in prison

Count 2: Sex Trafficking of a Minor by Force, Fraud, or Coercion

18 U.S.C. §§ 1591(a), (b)(1), (b)(2), and 2 

RAUL ROMERO-GRANADOS,

   a/k/a “Chicarcas,”

   a/k/a “El Negro”

15 years in prison

Life in prison

Count 3: Sex Trafficking of a Minor by Force, Fraud, or Coercion

18 U.S.C. §§ 1591(a), (b)(1), (b)(2), and 2 

EFRAIN GRANADOS-CORONA,  a/k/a “Chavito,”

a/k/a “Cepillo”

15 years in prison

Life in prison

Count 4:

Sex Trafficking of a Minor by Force, Fraud, or Coercion

18 U.S.C. §§ 1591(a), (b)(1), (b)(2), and 2 

JULIO SAINZ-FLORES,

   a/k/a “Rogelio”

15 years in prison

Count 5:

Sex Trafficking of a Minor by Force, Fraud, or Coercion

18 U.S.C. §§ 1591(a), (b)(1), (b)(2), and 2 

EFRAIN GRANADOS-CORONA,

   a/k/a “Chavito,”

   a/k/a “Cepillo,”

RAUL ROMERO-GRANADOS,

   a/k/a “Chicarcas,”

   a/k/a “El Negro”

15 years in prison

Life in prison

Count 6:

Sex Trafficking by Force, Fraud, and Coercion

18 U.S.C. §§ 1591(a), (b)(1), and 2 

EFRAIN GRANADOS-CORONA,

   a/k/a “Chavito,”

   a/k/a “Cepillo,”

RAUL ROMERO-GRANADOS,

   a/k/a “Chicarcas,”

   a/k/a “El Negro,”

PEDRO ROJAS-ROMERO

15 years in prison

Life in prison

Count 7: Sex Trafficking by Force, Fraud, and Coercion

18 U.S.C. §§ 1591(a), (b)(1), and 2 

ISAAC LOMELI-RIVERA,

   a/k/a “Giro”

15 years in prison

Life in prison

Count 8: Sex Trafficking by Force, Fraud, and Coercion

18 U.S.C. §§ 1591(a), (b)(1), and 2 

ISAAC LOMELI-RIVERA,

   a/k/a “Giro”

15 years in prison

Life in prison

Count 9: Sex Trafficking by Force, Fraud, and Coercion

18 U.S.C. §§ 1591(a), (b)(1), and 2 

JUAN ROMERO-GRANADOS,

   a/k/a “Chegoya,”

   a/k/a “El Guero”

15 years in prison

Life in prison

Count 10: Sex Trafficking by Force, Fraud, and Coercion

18 U.S.C. §§ 1591(a), (b)(1), and 2 

ALAN ROMERO-GRANADOS,

   a/k/a “El Flaco”

15 years in prison

Life in prison

Count 11:

Sex Trafficking by Force, Fraud, and Coercion

18 U.S.C. §§ 1591(a), (b)(1), and 2 

EMILIO ROJAS-ROMERO

15 years in prison

Life in prison

Count 12:

Sex Trafficking by Force, Fraud, and Coercion

18 U.S.C. §§ 1591(a), (b)(1), and 2 

PEDRO ROJAS-ROMERO,

EMILIO ROJAS-ROMERO

15 years in prison

Life in prison

Count 13:

Transportation of a Minor for Purposes of Prostitution

18 U.S.C. §§ 2423(a) and 2 

EFRAIN GRANADOS-CORONA,

   a/k/a “Chavito,”

   a/k/a “Cepillo”

10 years in prison

Life in prison

Count 14:

Transportation of a Minor for Purposes of Prostitution

18 U.S.C. §§ 2423(a) and 2 

RAUL ROMERO-GRANADOS,

   a/k/a “Chicarcas,”

   a/k/a “El Negro”

10 years in prison

Life in prison

Count 15:

Transportation of a Minor for Purposes of Prostitution

18 U.S.C. §§ 2423(a) and 2 

RAUL ROMERO-GRANADOS,

   a/k/a “Chicarcas,”

   a/k/a “El Negro”

10 years in prison

Life in prison

Count 16:

Transportation of a Minor for Purposes of Prostitution

18 U.S.C. §§ 2423(a) and 2 

JULIO SAINZ-FLORES,

   a/k/a “Rogelio”

10 years in prison

Life in prison

Count 17: Transportation for Purposes of Prostitution

18 U.S.C. §§ 2421 and 2

EFRAIN GRANADOS-CORONA,

   a/k/a “Chavito,”

   a/k/a “Cepillo”

N/A

10 years in prison

Count 18:

Transportation for Purposes of Prostitution

18 U.S.C. §§ 2421 and 2

ISAAC LOMELI-RIVERA,

   a/k/a “Giro”

N/A

10 years in prison

Count 19: Transportation for Purposes of Prostitution

18 U.S.C. §§ 2421 and 2

ISAAC LOMELI-RIVERA,

   a/k/a “Giro”

N/A

10 years in prison

Count 20:

Transportation for Purposes of Prostitution

18 U.S.C. §§ 2421 and 2

JUAN ROMERO-GRANADOS,

   a/k/a “Chegoya,”

   a/k/a “El Guero”

N/A

10 years in prison

Count 21:

Transportation for Purposes of Prostitution

18 U.S.C. §§ 2421 and 2

ALAN ROMERO-GRANADOS,

   a/k/a “El Flaco”

N/A

10 years in prison

Count 22:

Transportation for Purposes of Prostitution

18 U.S.C. §§ 2421 and 2

PEDRO ROJAS-ROMERO

N/A

10 years in prison

Count 23:

Transportation for Purposes of Prostitution

18 U.S.C. §§ 2421 and 2

EMILIO ROJAS-ROMERO

N/A

10 years in prison

DEFENDANT

AGE

RESIDENCE

EFRAIN GRANADOS-CORONA,

     a/k/a “Chavito,”

     a/k/a “Cepillo”

42

Mexico

RAUL ROMERO-GRANADOS,

     a/k/a “Chicarcas,”

     a/k/a “El Negro”

34

New York

ISAAC LOMELI-RIVERA,

     a/k/a “Giro”

35

New York

JUAN ROMERO-GRANADOS,

     a/k/a “Chegoya,”

     a/k/a “El Guero”

32

Mexico

JULIO SAINZ-FLORES,

   a/k/a “Rogelio”

36

Mexico

ALAN ROMERO-GRANADOS,

     a/k/a “El Flaco”

24

Mexico

PEDRO ROJAS-ROMERO

38

Mexico

EMILIO ROJAS-ROMERO

36

Mexico

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today a settlement of a civil fraud lawsuit against CityMD.  This settlement resolves federal claims under the False Claims Act, 31 U.S.C. § 3729 et seq., alleging that CityMD billed Medicare for services rendered by physicians who did not actually perform those services, and billed Medicare for more expensive and complex services than were actually provided to patients.  Under the terms of the settlement approved yesterday by U.S. District Judge Katherine Polk Failla, CityMD admitted and accepted responsibility for its conduct and agreed to pay $6,606,251.40 in damages to the United States.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “CityMD improperly billed Medicare at significant cost to taxpayers.  This settlement holds CityMD accountable both through the significant monetary payment and the detailed admissions made by CityMD.” 

CityMD manages and operates approximately 88 Urgent Care centers, located primarily in the New York City metropolitan area.  As part of the settlement, CityMD admits, acknowledges, and accepts responsibility for the following conduct:

• CityMD billed Medicare for lengthier and/or more complex services or procedures than the services or procedures it actually provided to patients or that were supported with documentation in the medical records.  Had CityMD billed Medicare for the services actually rendered or supported by the documents in the medical records, it would have received a lower rate of reimbursement from the Medicare program.
   
• Medicare rules generally prohibit medical providers, such as CityMD, from seeking reimbursement from the Medicare program for services rendered by a physician unless that physician is both enrolled with the Medicare program when the services are rendered and has reassigned his or her Medicare benefits to the billing provider (collectively known as being “credentialed” with the Medicare program).
   
• CityMD is generally prohibited from billing Medicare for services rendered by an uncredentialed physician unless and until he or she is credentialed with the Medicare program. 
   
• CityMD employed a number of physicians who were not credentialed with the Medicare program at the time CityMD billed Medicare for their services.
   
• CityMD falsely billed Medicare for services rendered by these uncredentialed physicians using the National Provider Identification numbers of other credentialed physicians who did not actually render the services in question. 
   

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

*                *                *

Mr. Berman noted that CityMD cooperated fully with this investigation.    

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that four defendants have been sentenced to significant prison terms by United States District Judge Katherine B. Forrest for their participation in two bank burglaries.  In April and May 2016, MICHAEL MAZZARA, CHARLES KERRIGAN, and ANTHONY MASCUZZIO, assisted by CHRISTOPHER KERRIGAN, stole more than $20 million in cash, jewelry, collectables, and other valuables from the banks’ vaults and safe deposit boxes.

U.S. Attorney Geoffrey S. Berman said:  “By using blow torches to cut through bank roofs, and subsequently into vaults and safe deposit boxes, these defendants deprived hundreds of unsuspecting victims of their valuables, priceless heirlooms, and cherished keepsakes.  As a result, the defendants will serve serious prison sentences.  We will now be able to reunite many of the stolen items, including religious artifacts, jewelry, baseball cards, and coins, with their rightful owners.”

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

In April and May 2016, MAZZARA, CHARLES KERRIGAN, MASCUZZIO, and CHRISTOPHER KERRIGAN formed a crew that burglarized banks in Brooklyn and Queens, New York, by cutting into the banks’ vaults and the safe deposit boxes inside.  MAZZARA, CHARLES KERRIGAN, and MASCUZZIO, with the assistance of CHRISTOPHER KERRIGAN, burglarized an HSBC Bank branch located at 4406 13th Avenue in Brooklyn from about April 8 through April 10, 2016, and burglarized a Maspeth Federal Savings Bank branch located at 64-19 Woodhaven Boulevard in Queens, New York, from about May 19 to May 22, 2016.  On both occasions, the burglars used acetylene blowtorches to cut into the top of the banks’ vaults from the roof of the building.  At the Maspeth Federal Savings Bank branch, they shielded their activities from view by constructing a plywood shed on the roof of the bank.  The burglars then entered the vaults from above and took cash belonging to the bank and broke open customers’ safe deposit boxes, stealing the valuables inside.  In total, the crew obtained more than $600,000 in cash and more than $20 million in valuables from the safe deposit boxes from both banks.  Surveillance footage captured some of the burglars’ activities as they prepared for and executed the burglaries.  Financial records and video surveillance also showed MAZZARA and MASCUZZIO purchasing some of the supplies that appear to have been used in the Maspeth burglary. 

During the course of the investigation of the burglaries, the Federal Bureau of Investigation (“FBI”) and New York City Police Department (“NYPD”) executed multiple search warrants at locations in Brooklyn, Long Island, and Pennsylvania, and seized items that had been taken from safe deposit boxes during the burglaries.  In addition, as part of their plea agreements, MAZZARA and MASCUZZIO returned other items that had been stolen from the safe deposit boxes.  In total, more than 200 items that were stolen from safe deposit boxes – including religious artifacts, jewelry, and collectibles – have been recovered as a result of this investigation.

*                *                *           

MAZZARA, 46, of Brooklyn, New York, was sentenced by Judge Forrest on April 13, 2018, to a total term of 135 months in prison. 

In addition to the burglaries, CHARLES KERRIGAN, 42, of Brooklyn, New York, pled guilty to one count of witness retaliation while on pre-trial release, in connection with his assault of an individual who he believed had provided information regarding the burglaries to the FBI and NYPD.  CHARLES KERRIGAN was sentenced by Judge Forrest on April 11, 2018, to a total term of 200 months in prison.

MASCUZZIO, 38, of Brooklyn, New York, was sentenced by Judge Forrest on May 4, 2018, to a total term of 84 months in prison, and three years of supervised release.

CHRISTOPHER KERRIGAN, 41, of Staten Island, New York, was sentenced by Judge Forrest on March 30, 2018, to a total term of 90 months in prison.

In addition to the prison terms, Judge Forrest also ordered that the defendants forfeit more than $20 million.  Judge Forrest has adjourned the entry of an order of restitution to the victims of the burglaries until June 28, 2018, so that a final determination of the victims’ losses can be made.

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

If you believe you were a victim of this crime, and you wish to provide information to law enforcement, receive notice of future developments in the case, or review and/or claim any of the stolen items that were recovered during this investigation, please contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900.  For additional information, go to: http://www.usdoj.gov/usao/nys/victimwitness.html.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Benet J. Kearney and David W. Denton Jr. are in charge of the prosecution.

Robert Khuzami, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, announced the conviction of DAVID BLASZCZAK, a political intelligence consultant, CHRISTOPHER WORRALL, a government employee at the Centers for Medicare and Medicaid Services (“CMS”), and THEODORE HUBER and ROBERT OLAN, two partners and analysts at Deerfield Management Company, L.P., a healthcare-focused hedge fund in New York, New York (“Deerfield”).  BLASZCZAK, WORRALL, HUBER, and OLAN were convicted yesterday after a four-week trial before United States District Judge Lewis A. Kaplan. 

BLASZCZAK, WORRALL, HUBER, and OLAN were charged with participating in a scheme, from in or about 2009 through in or about 2014, to convert United States property, to defraud the United States, and to commit securities fraud and wire fraud for obtaining material nonpublic information from CMS and using it to execute profitable trades at Deerfield.

As part of the scheme, BLASZCZAK was charged with obtaining confidential and nonpublic information from CMS employees, including his friend, CHRISTOPHER WORRALL, who worked at CMS, and who was charged with breaching his duties as a CMS employee by providing confidential information to BLASZCZAK.  BLASZCZAK then was alleged to have provided this material nonpublic information in advance of market-moving CMS announcements to employees at Deerfield, including HUBER, OLAN, and Jordan Fogel, who allegedly recommended trades on the basis of the information.  Jordan Fogel, a former partner and analyst at Deerfield, previously pled guilty and is cooperating with the Government.  As a result of these trades, Deerfield reaped more than $7 million in profits.

BLASZCZAK was also charged in a separate scheme with obtaining confidential and nonpublic CMS information about cuts in CMS’s reimbursement rates for home health providers, and with providing that information to Christopher Plaford, a portfolio manager at Visium Asset Management, L.P., another healthcare-focused hedge fund in New York, New York (“Visium”).  Plaford then used BLASZCZAK’s information to execute trades, resulting in approximately $330,000 in profits.  Plaford has previously pled guilty to this conduct and is also cooperating with the Government. 

Deputy U.S. Attorney Robert Khuzami said:  “As a unanimous jury found, these defendants schemed to get highly sensitive and confidential information from CMS, a governmental entity, and feed it to a hedge fund to make illegal profits in the stock market.  Trading on confidential nonpublic government information is just as illegal as trading on corporate insider information.  Our Office is committed to policing and prosecuting both.”           

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

CMS

CMS, a component of the United States Department of Health and Human Services (“HHS”), administers Medicare and Medicaid, among other things.  CMS is also responsible for setting Medicare reimbursement rates for healthcare providers.  CMS spends more than $1 trillion annually and pays approximately one-third of the country’s health expenditures.  Accordingly, CMS rulemaking decisions, including decisions that affect how much the federal government will pay to reimburse medical providers for services rendered, have a substantial, market-moving impact on publicly traded companies that depend on government healthcare spending. 

WORRALL began working at CMS in or about 1999.  Beginning in January 2012, WORRALL worked in the Director’s Office for the Center for Medicare (“CM”), which gave WORRALL broad access to CMS’s confidential deliberations about upcoming reimbursement decisions.  WORRALL also served as a project manager for a confidential CMS database that contained CMS’s most up-to-date claims data that CMS used to inform its decision-making. 

David Blaszczak

At all relevant times, BLASZCZAK served as a consultant at a number of Washington, D.C.-based firms that, in exchange for a fee, provided so-called “political intelligence,” which included analysis about how changes in Government reimbursement rates would affect publicly traded healthcare-related companies.  Before becoming a political intelligence consultant, BLASZCZAK worked at CMS, eventually serving as a special assistant to the CMS Administrator.  BLASZCZAK met WORRALL while the two worked at CMS. 

As a former CMS employee, BLASZCZAK was well aware of CMS’s rules governing the dissemination of nonpublic information. 

Deerfield Management Company, L.P. 

At all relevant times, Deerfield managed multiple hedge funds specializing in healthcare-related investments.  As of 2017, Deerfield had more than $7 billion in assets under management.  HUBER, OLAN, and Fogel were partners and analysts at Deerfield, where their job was to analyze investment decisions and recommend potentially profitable trades for Deerfield.  Deerfield’s compliance manual prohibited its employees from committing insider trading.  

The Scheme to Convert and Use Confidential CMS Information 

As alleged in the Indictment, from at least in or about 2009 through in or about 2014, BLASZCZAK, WORRALL, HUBER, OLAN, Fogel, and others participated in a scheme to convert to their own use confidential and material nonpublic information from CMS concerning, among other things, CMS’s internal deliberations regarding coverage and reimbursement decisions.           

During this time period, Deerfield retained BLASZCZAK as a consultant who provided political intelligence related to, among other things, the content, likelihood, and timing of CMS reimbursement decisions.  As part of the scheme, HUBER, OLAN, and Fogel encouraged BLASZCZAK to obtain confidential and material nonpublic information from CMS insiders.  As HUBER, OLAN, and Fogel knew, these CMS insiders included BLASZCZAK’s former colleagues with whom he had close personal relationships, who were prohibited from disclosing such information to CMS outsiders.

BLASZCZAK obtained material nonpublic information from his close friend and former CMS colleague WORRALL.  BLASZCZAK and WORRALL were friends since their time working together at CMS.  BLASZCZAK also frequently offered to help WORRALL find lucrative private sector employment opportunities, in exchange for WORRALL giving BLASZCZAK confidential government information.  

BLASZCZAK conveyed the information obtained from WORRALL to HUBER, OLAN, and Fogel, who – knowing that BLASZCZAK had obtained the information improperly from a CMS insider – used the information to trade.  In exchange for being provided with this inside information, HUBER, OLAN, and Fogel caused Deerfield to pay BLASZCZAK more than $800,000 in consulting fees.

*                      *                      *

Defendants’ Ages and Residences

Defendant

Residence

Age

David Blaszczak

Isle of Palms, South Carolina

42

Christopher Worrall

Linthicum Heights, Maryland

40

Theodore Huber

Westport, Connecticut

56

Robert Olan

Rumson, New Jersey

47

Mr. Khuzami praised the work of the Federal Bureau of Investigation and U.S. Department of Health and Human Services, Office of the Inspector General, and thanked the Securities and Exchange Commission for its assistance. 

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Ian McGinley, Joshua A. Naftalis, and Brooke E. Cucinella are in charge of the prosecution.   

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrests of VLADIMIR ZISKIND, a/k/a “Mike Palmer,” KEITH ORLEAN, a/k/a “Jack Allen,” and KEVIN WEINZOFF, a/k/a “Mike Palmer,” and unsealing of a criminal complaint charging ZISKIND,  ORLEAN, and WEINZOFF with conspiracy, securities fraud, and wire fraud in connection with their scheme to target elderly persons to solicit purchases of stock in a series of valueless companies through a variety of lies and misrepresentations.  The defendants are expected to be presented this afternoon before U.S. Magistrate Judge Debra Freeman.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, the defendants worked together over several years to trick elderly individuals into investing millions of dollars in worthless stock.  The defendants allegedly deceived their victims into handing over their hard-earned money in exchange for nothing but lies and false promises.  Today’s arrests demonstrate that this profoundly harmful and cynical alleged conduct will not be tolerated.”

FBI Assistant Director William F. Sweeney Jr. said:  “We take all cases of securities fraud seriously, but there are few fraud schemes sleazier than defrauding elderly victims through deceit and manipulation.  The defendants allegedly solicited more than $2 million in stock purchases from their more than four dozen victims.  While nothing could restore the damage that has already been done, today we begin the process of holding those charged accountable for their actions.”

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

For several years, the defendants operated a fraudulent scheme in which a salesman named “Mike Palmer” would call elderly persons on the phone and offer them what he claimed was a time-sensitive opportunity to buy stock in certain companies.  In fact, there was no “Mike Palmer,” and the salesman was actually VLADIMIR ZISKIND or KEVIN WEINZOFF, who were taking turns using the fake alias.  The purported time-sensitive investment opportunity was also fabricated by the defendants, as the companies in which they solicited investments were actually companies under their control.  In one intercepted phone call conversation, ZISKIND described to KEITH ORLEAN his strategy for a successful investor sales pitch as: “You ram it down their fucking throat.”  In another intercepted call between ZISKIND and ORLEAN, upon learning that a particular victim investor died, ZISKIND remarked:  “I knew I should have pulled the last $10,000 out of him.”   

The most recent version of the defendants’ phony sales pitch included false representations about an impending initial public offering, or “IPO,” for their company, Digital Donations Technologies, Inc.  For example, in April 2018, one of the defendants assured a victim investor that “our company is doing great,” that the company had an offer for an IPO valued at approximately $300 million, and that defendant KEITH ORLEAN was considering a private sale of the company for more than $1.5 billion. In truth, however, the defendants knew that the company had little or no actual commercial value and that no such IPO or sale was taking place.   

The FBI estimates that since April 2014, the defendants have convinced more than approximately 50 elderly persons to purchase stock in companies controlled by one or more of the defendants based on false representations.  The defendants appear to have solicited more than $2 million in stock purchases from victims.

*                *                *

ZISKIND, 49, of Brooklyn, New York, ORLEAN, 60, of Dix Hills, New York, and WEINZOFF, 53, of Brooklyn, New York, are each charged with one count of conspiracy to commit securities fraud, one count of securities fraud, one count of conspiracy to commit wire fraud, and one count of wire fraud.  The securities fraud, wire fraud, and wire fraud conspiracy counts each carry a maximum penalty of 20 years in prison.  The conspiracy to commit securities fraud count carries a maximum penalty of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the outstanding work of the FBI.

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that EZRA CHOWAIKI pled guilty today to defrauding art dealers and collectors out of millions of dollars by entering into fraudulent agreements with these dealers and collectors to buy or sell artwork through his Manhattan art gallery (the “Gallery”), and using these dealers’ and collectors’ funds and artwork for unauthorized purposes, such as to repay other dealers to whom CHOWAIKI had outstanding debts.

U.S. Attorney Geoffrey S. Berman said:  “As he admitted today in federal court, Ezra Chowaiki ran a multimillion-dollar fraud on art dealers and collectors around the country.  In some instances, Chowaiki sold artwork, purportedly on consignment, without the owners’ authorization.  In other instances, he took money from clients purportedly to purchase artwork, and kept the money but purchased no art.  This Office is committed to holding the perpetrators of such fraud responsible and returning these valuable works of art to their rightful owners.”

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

Until November 2017, EZRA CHOWAIKI was the president and the minority owner of a private art gallery located on Park Avenue in New York, New York (the “Gallery”).  CHOWAIKI founded the Gallery in or about 2004, and since that time, CHOWAIKI has used the Gallery to facilitate the purchase, sale, and consignment of works of fine art, as well as for the hosting of various art exhibitions featuring works of art and sculptures by well-known artists such as Pablo Picasso, Alexander Calder, Marc Chagall, Edgar Degas, and others.  CHOWAIKI lost control of the Gallery in or about November 2017 when the Gallery filed for bankruptcy and was taken over by a trustee to oversee its liquidation.

Between at least in or about 2015 and 2017, through the Gallery, CHOWAIKI engaged in a scheme to deceive other dealers and collectors of fine artwork into sending him money or valuable artwork under the false pretenses that CHOWAIKI would engage in legitimate transactions such as the purchase, sale, or consignment of these and other artworks.  In truth, however, CHOWAIKI did not, and often could not, conduct the transactions as promised, and instead kept funds and artwork for himself and the Gallery, or sold or consigned them to others both in and outside the United States, without authorization.  Through these fraudulent transactions, CHOWAIKI fraudulently transferred over $16 million of artwork.

*                *                *

CHOWAIKI, 49, of Brooklyn, New York, pled guilty to one count of wire fraud.  That offense carries a maximum prison term of 20 years.  The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

CHOWAIKI is scheduled to be sentenced on September 12, 2018, at 4:00 p.m.

Mr. Berman praised the outstanding work of the Federal Bureau of Investigation (“FBI”).  To date, the FBI has seized millions of dollars of artwork that was fraudulently transferred through CHOWAIKI’s scheme.  Any person who believes he or she is a victim of this crime is encouraged to send an email to NYArtCrime@fbi.gov.

The case is being prosecuted by the Office’s Money Laundering and Asset Forfeiture Unit.  Assistant U.S. Attorney Daniel M. Tracer is in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that DANNY PRATTE pled guilty today to defrauding investors in Terminus Energy, Inc., a publicly traded penny stock.  PRATTE pled guilty to conspiracy to commit securities fraud before U.S. District Judge Andrew L. Carter Jr.

U.S. Attorney Geoffrey S. Berman said:  “Danny Pratte and his co-defendants induced investors to buy a penny stock called Terminus Energy, based on representations that Terminus was producing an alternative energy source.  Investors in the markets deserve honest and accurate information about the companies in which they invest.  Today’s plea is an example of what happens to those attempting to misrepresent stocks to investors.”

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

From at least February 2008 until at least 2014, PRATTE, along with his co-conspirators George Doumanis and Emanuel Pantelakis, both of whom previously pled guilty, engaged in a scheme to defraud investors in the publicly traded company Terminus Energy, Inc. (“Terminus”), by inducing victims to invest in Terminus stock through material misrepresentations and omissions and by misappropriating investor funds for their own purposes. 

Terminus was purportedly producing and marketing a commercially viable “fuel cell” as an alternative energy source.  PRATTE, who served as the chief executive officer of Terminus, and his co-conspirators sold shares of Terminus to investors through a private offering.  In connection with such sales, PRATTE and his co-conspirators provided investors with private placement memorandums (“PPMs”) that contained materially false and misleading statements.  For example, the PPMs falsely stated that (i) Terminus had completed its goal of developing a working fuel cell in mid-2008; (ii) Terminus would use specified investor funds to make payment on third-party development contracts designed to manufacture a working fuel cell; and (iii) Terminus would pay no more than 10 percent in sales commissions.  In truth, and as PRATTE and his co-conspirators well knew, (i) there was no working fuel cell; (ii) the third-party contracts had been cancelled after Terminus failed to make payment to the third parties; and (iii) unregistered salespeople were receiving commissions far in excess of 10 percent.  The PPMs also failed to accurately disclose the involvement of either Doumanis, who was barred from involvement in penny stocks as a result of a 2003 conviction for conspiracy to commit securities fraud, wire fraud, and mail fraud, or Pantelakis, who had been permanently barred by the Financial Industry Regulatory Authority (“FINRA”) following allegations that he had made fraudulent misrepresentations to customers in connection with the sale of securities.  PRATTE and his co-conspirators also caused similar misrepresentations to be made in business plans, executive summaries, and presentations shared with potential investors, as well as in publicly available press releases.  Through these false and misleading statements, PRATTE and his co-conspirators fraudulently induced investors to purchase nearly $8 million of Terminus stock.

Rather than use the investor money as promised, PRATTE and his co-conspirators misappropriated the funds for their own use and for use by co-conspirators.  PRATTE personally received approximately $1.7 million.  In addition, the unregistered salespeople collectively received undisclosed commissions of more than $1.5 million.

*                *                *

PRATTE, 64, of Columbia, Missouri, pled guilty to one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense. 

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

PRATTE is scheduled to be sentenced by Judge Carter on September 14, 2018, at 11:00 a.m.           

Doumanis and Pantelakis each plead guilty to one count of conspiracy to commit securities fraud and are scheduled to be sentenced by Judge Carter on June 13, 2018.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that HECTOR RIVERA was sentenced today to life in prison plus 25 years for murder-for-hire, murder-for-hire conspiracy, and use of a firearm resulting in death, in connection with his role in ordering the 2004 murder of Eduard Nektalov, a Manhattan diamond dealer.  RIVERA was convicted following a six-day trial in November 2017 before U.S. District Judge Paul A. Engelmayer, who imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “Hector Rivera ordered the execution-style murder of Eduard Nektalov, who was brazenly gunned down on a crowded street in midtown Manhattan nearly 14 years ago.  Thanks to the extraordinary work of our law enforcement partners, Rivera will now spend the rest of his life in prison.”

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

RIVERA was the leader of a violent robbery crew that operated in the Diamond District in midtown Manhattan.  In 2004, RIVERA commissioned the murder of Eduard Nektalov because of a business dispute between Nektalov and one of RIVERA’s criminal associates.  During the evening rush hour on May 20, 2004, a hitman hired by RIVERA followed Nektalov from his jewelry store on West 47th Street.  Less than a block from the store, the hitman shot Nektalov once in the head and twice in the back, in the middle of a crowded sidewalk on Sixth Avenue.  Nektalov was pronounced dead within 20 minutes of the shooting.  RIVERA paid the hitman and another participant a combined total of $30,000 to carry out the murder.

*                *                *

Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation and the New York City Police Department.  He also thanked the Manhattan District Attorney’s Office and the Bronx District Attorney’s Office for their assistance with the prosecution.  

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Scott Hartman and Jordan Estes are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of an Indictment charging GARY TURNER with the April 24, 2018, murder of Samuel Ozuna, 17, outside the George Washington Carver Houses in New York, New York.  TURNER was arrested this morning and was presented before U.S. Magistrate Judge Debra Freeman.  TURNER will be arraigned on May 8, 2018, at 2:30 p.m., before U.S. District Judge Jesse M. Furman, to whom the case has been assigned.

U.S. Attorney Geoffrey S. Berman said:  “Just a few days ago, as alleged in the indictment, Gary Turner murdered 17-year-old Samuel Ozuna.  Thanks to the outstanding efforts of the NYPD, Turner is now in custody and charged with this terrible crime.  We will continue our daily work with the NYPD to keep the streets safe and to vigorously investigate and prosecute those who wreak violence upon our community.”

NYPD Commissioner James P. O’Neill said:  “Violence will never be tolerated in New York City.  I commend all the professionals whose dogged investigative work enabled the NYPD and our law enforcement partners to swiftly identify, apprehend and bring this alleged killer to justice.”

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

On April 24, 2018, GARY TURNER shot and killed Samuel Ozuna in the vicinity of 60 East 104th Street in Manhattan.  TURNER killed Ozuna in part to maintain and increase his position in a racketeering enterprise operating in and around the George Washington Carver Houses.

*                *                *

TURNER is charged with using a firearm to commit murder in aid of racketeering, which carries a maximum sentence of death, or life in prison, and a mandatory minimum term of five years in prison.  The statutory maximum penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.           

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

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Lauren Schorr and Jacob Warren are in charge of the prosecution.           

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York and Angel M. Melendez, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today that OMAR ADONIS GUZMAN-MARTINEZ was sentenced to 30 years in prison for hiring others to viciously slash his ex-girlfriend (“Victim-1”) on June 2, 2015, in the Bronx, New York, and to murder her boyfriend (“Victim-2”) on March 20, 2016, in Santo Domingo, Dominican Republic.  At the times he planned and caused others to carry out those crimes, GUZMAN-MARTINEZ was incarcerated in the Federal Correctional Institution at Fort Dix, New Jersey (“FCI Fort Dix”), and he used contraband cellphones to stalk, threaten, and induce others to commit crimes of violence against his victims.  Today’s sentence is to run consecutively to the sentence GUZMAN-MARTINEZ was already serving on unrelated federal narcotics charges, which was due to end in 2025. 

GUZMAN-MARTINEZ, 46, of Santo Domingo, Dominican Republic, pled guilty on July 28, 2017, to interstate domestic violence, interstate stalking, interstate threats, and conspiracy, before U.S. District Judge Katherine B. Forrest, who also imposed today’s sentence.

U.S. Attorney Geoffrey S. Berman said:  “Omar Adonis Guzman-Martinez, already serving a prison term on narcotics charges, ordered and oversaw the brutal slashing of his ex-girlfriend and the cold-blooded contract killing of her boyfriend.  Today he has rightly been handed a lengthy additional prison term for the murder and mayhem he orchestrated from his prison cell.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “Even while incarcerated, Guzman-Martinez thought that he was above the law.  It was under his command that one individual was slashed and another was murdered.  But, it is clear that his actions are not without consequence.  His connection to these violent crimes has more than doubled his time in prison, and today’s sentencing serves as notice to criminals like Guzman-Martinez that they will be prosecuted to the fullest extent of the law.”

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

Throughout his incarceration in the United States, GUZMAN-MARTINEZ used contraband cellphones to engage in a course of conduct intended to harass, intimidate, and threaten Victim-1.  As part of that course of conduct, GUZMAN-MARTINEZ, among other things, caused co-conspirators to slash Victim-1 and to murder Victim-2. 

Specifically, in mid-June 2015, while incarcerated at FCI Fort Dix, GUZMAN-MARTINEZ began recruiting co-conspirators to carry out a violent slashing of Victim-1, with whom GUZMAN-MARTINEZ has two children.  GUZMAN-MARTINEZ eventually found two young men from Puerto Rico (the “Slashers”) who agreed to cut Victim-1 in exchange for payment.  GUZMAN-MARTINEZ then arranged for the Slashers to fly from Puerto Rico to Orlando, Florida, where they tried to find an opportunity to attack Victim-1.  When the Slashers failed to carry out the attack in Florida, GUZMAN-MARTINEZ arranged for them and Victim-1 to travel to the Bronx, New York, where the Slashers carried out the attack using box cutters.

By late-2015, GUZMAN-MARTINEZ had also started causing co-conspirators in the Dominican Republic to attempt to locate, stalk, surveil, and ultimately kill Victim-2, who was dating Victim-1 at the time.  By March 2016, GUZMAN-MARTINEZ had identified someone willing to carry out the shooting in return for payment (the “Shooter”), and he caused another co-conspirator to acquire a firearm for the Shooter to use.  Shortly before 1:00 a.m. on March 20, 2016, outside a nightclub in Sabana Perdida, Santo Domingo, the Shooter shot Victim-2 in the back of the head, killing him.  Victim-1 was present at the scene.  GUZMAN-MARTINEZ was in phone contact with co-conspirators as the shooting occurred and caused a sum of money to be paid to the Shooter for carrying out the murder.

*                *                *

Mr. Berman praised the outstanding investigative efforts of HSI, the New York City Police Department, the U.S. Bureau of Prisons, and Special Agent Investigators at the U.S. Attorney’s Office.

The case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorneys Frank Balsamello and Jacob Warren are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that LURLYN A. WINCHESTER, a former Justice for the Town Court of Monroe, pled guilty today before U.S. Magistrate Judge Judith C. McCarthy, in federal court in White Plains, on charges that she made false statements in connection with an application for a loan she obtained to purchase a residence in Monroe in order to satisfy a residency requirement attached to her position as Town Justice, and obstruction of justice for providing Federal Bureau of Investigation (“FBI”)  task force members, who were questioning her about her mortgage loan, with false documents, including fabricated rent payment receipts. 

U.S. Attorney Geoffrey S. Berman said:  “As she admitted in court today, Lurlyn Winchester, in an attempt to fraudulently satisfy a residency requirement for a judgeship, lied and provided fake documents to secure a mortgage.  She then lied to FBI task force officers and provided them with fake documents in an attempt to cover up that crime.  Winchester’s lack of integrity and honesty did not merit a term on the bench.  Her crimes will likely earn her a term in prison.”

According to the allegations contained in the Indictment as well as statements made in public court proceedings:      

On or about November 5, 2013, LURLYN A. WINCHESTER, the defendant, was elected Town of Monroe Justice.  Under New York law, she was required to reside in Monroe in order to be eligible to hold that Town of Monroe Justice position.  At the time, she and her husband lived in a home in New City, New York (“the New City Home”), that they purchased in 1997.  In or about November 2013, WINCHESTER attempted to purchase a condominium in Monroe, New York (“Monroe Condominium-1”).  On or about December 17, 2013, WINCHESTER entered into a lease agreement with a tenant (“Tenant-1”) to rent the New City Home to Tenant-1.  At around that time, Tenant-1 provided WINCHESTER with a $7,500 check.  On a later date, Tenant-1 also provided WINCHESTER with a $1,500 check.

In or about March 2014, the deal to purchase Monroe Condominium-1 fell through and WINCHESTER returned $7,500 to Tenant-1.  In the same month, WINCHESTER entered into a contract to purchase a second condominium (“Monroe Condominium-2”), which was in the process of being built.

In or about June 2014, WINCHESTER began submitting applications for a residential loan and supporting documents to representatives of Hudson United, who, in turn, submitted these items to several lenders.  WINCHESTER represented, in the applications, that the New City Home was the couple’s “present address.”  She further represented in the applications that the loan was to be used to purchase Monroe Condominium-2.  On the loan applications and an Affidavit of Occupancy signed by WINCHESTER, she asserted that Monroe Condominium-2 would be their primary residence.

In or about late 2014, two lenders that had received WINCHESTER’s loan application for Monroe Condominium-2 declined to approve the loan.  The first did so because WINCHESTER had too much debt compared with her income.  The second did so after it reviewed documents the defendant submitted, upon the lender’s request, that were supposed to show that she intended to rent out her New City Home.  The documents she submitted included a phony lease agreement and copies of the $7,500 check and $1,500 check Tenant-1 had provided to her at the end of 2013 and in early 2014, at the time WINCHESTER was planning to purchase Monroe Condominium-1.  The lender rejected these, noting that the dates of the checks and the lease did not make sense.

Thereafter, Hudson United submitted WINCHESTER’s loan materials to a third lender, Plaza Home Mortgage (“Plaza”).  Plaza also requested information about WINCHESTER’s representation that she and her husband intended to move to Monroe Condominium-2 and rent out the New City Home.  In response, on or about February 6, 2015, WINCHESTER sent Hudson United a letter in which she stated that “in regard to our intent with the current primary residence, [New City Home], please be advised that we intend on renting the premises.”  She further represented that they “already have a prospective tenant who is anxiously awaiting to take occupancy of the residence.”

On or about February 27, 2015, Plaza informed Hudson United that it placed the loan in “suspend for decline status” because of insufficient income.  On or about March 20, 2015, based on WINCHESTER’s representation, Hudson United informed Plaza that there would be rental income from the New City Home.  As a condition for closing on the loan, Plaza requested, among other things, a copy of a fully executed 12-month lease and a canceled check for a security deposit.

In response, on or about March 27, 2015, WINCHESTER submitted to Hudson United, which then submitted to Plaza, the following items containing false statements: (1) a phony lease agreement providing that Tenant-1 was to going to pay $4,500 a month to lease the New City Home; and (2) a copy of two checks, made out to WINCHESTER, each in the amount of $4,500, dated March 23, 2015, signed by Tenant-1, and drawn on Tenant-1’s bank account.  The checks each contained a false notation indicating it was for the security deposit or first month’s rent for the New City Home.  Unbeknownst to Hudson United and Plaza, Tenant-1 did not intend to rent the New City Home and Tenant-1 did not provide the money to pay for a security deposit or first month’s rent.  In fact, WINCHESTER provided Tenant-1 with $9,000 to cover the two $4,500 checks Tenant-1 issued to WINCHESTER.

On or about April 2, 2015, WINCHESTER and Plaza closed on the loan and Plaza funded the purchase of Monroe Condominium-2.  Tenant-1 never moved to the New City Home and WINCHESTER did not move to Monroe Condominium-2. 

On or about July 28, 2016, members of an FBI task force conducting an investigation interviewed WINCHESTER, at her office in New City, about the statements she made in connection with the loan she received from Plaza Home Mortgage.

Thereafter, the defendant met with Tenant-1, enlisted Tenant-1’s support in providing a false story to investigators, and had Tenant-1 initial fabricated “rent receipts” that indicated that Tenant-1 made a total of $9,000 in incremental cash payments to WINCHESTER, between May 15, 2014, and January 16, 2015, as advance rent payments for the New City Home. 

On or about August 1, 2016, task force members returned to WINCHESTER’s New City office and interviewed her again.  During the interview, she gave them a number of documents designed to support her false account that Tenant-1 intended to rent the New City Home but decided, after the closing on Monroe Condominium-2 on April 2, 2015, not to move in.  The documents she provided to the task force members included, among other things, copies of the false and fabricated “rent receipts.”           

*                *                *

WINCHESTER, 59, of New City, New York, pled guilty to both counts of an indictment.  The first charged her with making false statements to a mortgage lending business, which carries a maximum sentence of 30 years in prison and a maximum fine of $1,000,000 or twice the gross gain or loss from the offense.  The second charged her with falsifying records in a federal investigation, with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of a federal department or agency, which carries a maximum sentence of 20 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

WINCHESTER’s sentencing is scheduled for August 28, 2018, at 2:00 p.m.

Mr. Berman praised the outstanding investigative work of the FBI.  He also thanked the Orange County Sheriff’s Office and the Orange County District Attorney’s Office for their assistance.

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

“Today Chief Judge Colleen McMahon notified me that the Court, pursuant to 28 U.S.C. § 546 (d), has appointed me United States Attorney for the Southern District of New York.  I thank the Court and I am grateful for its confidence in me.  I look forward to continuing the great tradition of this Office to pursue justice without fear or favor.  I consider it the honor of a lifetime and the greatest responsibility to serve the people of New York and the United States as U.S. Attorney.”

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that one of the leaders of the violent Bronx gang known as “18 Park,” MARQUIS WRIGHT was sentenced yesterday by U.S. District Judge Paul A. Engelmayer to 35 years in prison for firearms offenses in connection with two murders that he helped to commit on behalf of the gang.  WRIGHT, 30, had previously pled guilty to two counts of possessing and using firearms in connection with his role in the September 28, 2008, murder of Brandon Howard, 18, and the May 29, 2011, murder of Johnny Moore, 16.  WRIGHT’s co-defendant, Jonathan Rodriguez, who also participated in the murder of Brandon Howard, is scheduled to be sentenced on May 24, 2018. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “The tragic and senseless murders of Brandon Howard and Johnny Moore reflect the dangers of gang- and drug-related violence in our city.  While nothing can bring back Brandon Howard and Johnny Moore, Marquis Wright’s sentence means he will spend decades in prison and not pose a threat to others in the Bronx.  I want to thank our law enforcement partners for their tremendous work on this important investigation.” 

According to the allegations in court documents, including the Information and a previously filed criminal complaint, and statements made during court proceedings:

From 2006 to 2016, the 18 Park gang operated primarily in and around the Patterson Houses, a New York City public housing development in the Mott Haven area of the Bronx.  Members of 18 Park sold crack cocaine and marijuana on a near-daily basis, turning the area in and around the Patterson Houses into an open-air drug market.  18 Park members used firearms and violence to assert the gang’s control over the area.  WRIGHT served as one of the leaders of 18 Park, and played an integral role in running the gang’s drug trade.  

On September 28, 2008, WRIGHT accompanied Rodriguez to a house party at 315 East 143rd Street in order to confront 18-year-old Brandon Howard, whom WRIGHT and Rodriguez regarded as a rival.  Rodriguez brought a gun to the party.  Upon arriving at the party, WRIGHT served as a lookout for Rodriguez as Rodriguez confronted Howard in the hallway immediately outside the party and shot Howard to death.   

On May 29, 2011, WRIGHT drove another 18 Park member, Wali Burgos, to the vicinity of 2625 Third Avenue so that Burgos could shoot and kill a member of a rival gang.  Burgos did not shoot a rival gang member, but instead fired his gun into a crowd and killed 16-year-old Johnny Moore.  After the shooting, WRIGHT drove Burgos away from the scene of the crime.  Burgos previously pled guilty to racketeering conspiracy and admitted to his role in the murder of Johnny Moore.  On January 13, 2017, Burgos was sentenced to 262 months in prison. 

Mr. Berman thanked the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration, and the New York City Police Department for their work in this investigation.            

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Max Nicholas, Jordan Estes, Dina McLeod, and Samson Enzer are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that BENJAMIN CHOW, a/k/a “Ben Chow Zhou Bin,” a/k/a “Benjamin Bin Chow,” a/k/a “Bin Zhou,” was convicted today by a federal jury of conspiracy to commit securities fraud and seven counts of securities fraud in connection with an insider trading scheme relating to the securities of Lattice Semiconductor Corporation (“Lattice”).  CHOW’s conviction followed a 10-day trial before U.S. District Judge Gregory H. Woods of the Southern District of New York.  Sentencing has been scheduled for August 20, 2018, before Judge Woods. 

U.S. Attorney Geoffrey S. Berman said:  “As a unanimous jury found, Benjamin Chow tipped his friend about the potential acquisition of Lattice Semiconductor Corporation by private equity firms he managed.  Chow’s illegal tips reaped multimillion-dollar profits for his friend.  This illegal tipping erodes public confidence in our markets as well as being unlawful.  Protecting the integrity of our financial markets remains a top priority of this Office.”

According to the Indictment filed against CHOW, other filings in Manhattan Federal Court, and the evidence admitted at trial:

From approximately March to November 2016, CHOW provided a friend and business associate (“CC-1”) with material, nonpublic information relating to a potential merger between Lattice and private equity firms managed by CHOW, one based in Beijing, China (“Firm-1”), and one based in Palo Alto, California (“Firm-2”).  CC-1 in turn used such information to make millions of dollars in profitable securities trades through accounts opened in the names of family members and associates of CC-1. 

Specifically, as Managing Director of Firm-1 and later Managing Partner of Firm-2, CHOW obtained material nonpublic information regarding potential merger agreements between Lattice and Firm-1, and later, Firm-2.  Information concerning the potential merger agreements was subject, among other things, to nondisclosure agreements executed between Lattice and Firm-1, and later between Lattice and Firm-2. 

In violation of these agreements, on multiple occasions, through meetings in Beijing, China, voice messages, and text exchanges, CHOW provided CC-1 with material nonpublic information regarding the potential merger between Lattice and Firm-1, and later, Firm-2.  On multiple occasions, CC-1 made profitable trades in Lattice shortly after receiving the material nonpublic information from CHOW, yielding a total of at least approximately $5 million in profits for CC-1. 

*                *                *

CHOW, 45, of Los Altos, California, was convicted of one count of conspiring to commit securities fraud, which carries a maximum prison sentence of five years in prison, and seven counts of securities fraud, each of which carries a maximum sentence of 20 or 25 years in prison.  The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant United States Attorneys Max Nicholas, Scott Hartman, and Elisha J. Kobre are in charge of the prosecution. 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the arrest of MICHELLE FOLEY, a former employee of a Manhattan-based nonprofit organization that provides arts and mentoring programs to underserved youth.  FOLEY is charged with bank, wire, and access device fraud in connection with her theft of funds from the organization.  FOLEY will be presented today in Manhattan federal court before the U.S. Magistrate Judge Stewart D. Aaron.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Michelle Foley allegedly used her position at a nonprofit to steal funds intended for disadvantaged youth.  Rather than directing the organization’s funds to those in need, Foley allegedly used over $150,000 for her own selfish gain, including a trip to Disney World and a puppy.  Today Michelle Foley is charged with serious federal crimes for her alleged conduct.” 

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

The nonprofit organization, founded in 1998, is based in New York, New York, and provides arts and mentoring programs to low-income, homeless, and neglected children.  From at least in or about July 2017 up to and including in or about February 2018, FOLEY abused her position as the organization’s director of finance and operations by stealing more than $150,000 from the organization.  FOLEY issued unauthorized checks on behalf of the organization to herself, totaling more than $56,000, and obtained two corporate credit cards, which were linked to the organization’s bank account and which she used to make personal, unauthorized purchases.   During the course of her employment, FOLEY charged more than $100,000 to these credit cards, including by making payments for a puppy, home furnishings and appliances, and expenses associated with a trip to Disney World. 

*                      *                     *

FOLEY, 45, of Wilton, Connecticut, is charged with one count of bank fraud, which carries a maximum sentence of 30 years in prison, one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of access device fraud, which carries a maximum sentence of 10 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorney Elinor L. Tarlow is in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the conviction in Manhattan federal court of JOHN CHAMBERS for bribery, conspiracy to commit bribery, honest services fraud, and conspiracy to commit honest services fraud.  The jury convicted CHAMBERS today on all four counts of the Indictment following a one-week trial before U.S. District Judge William H. Pauley III.

U.S. Attorney Geoffrey S. Berman said:  “John Chambers, a former prosecutor, called himself a gun license ‘expediter.’  What a unanimous jury concluded today was that his expediting amounted to little more than bribing his contacts in the NYPD’s License Division.  On behalf of his clients, Chambers acted as an intermediary for individuals who sought to circumvent the legitimate gun licensing process, and in some cases had criminal records or were otherwise precluded from owning firearms at all.  The willingness of John Chambers to corrupt the gun License Division for his own benefit exposed the people of New York to unnecessary danger.  This Office will continue to root out the corruption that undermines the public’s confidence in the law enforcement officers and institutions sworn to serve us all.”

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

JOHN CHAMBERS, a former Assistant District Attorney in Kings County, is an attorney who represents individuals before the NYPD’s License Division, and who markets himself to potential clients as the “Top Firearms Licensing Attorney in NY.”  From at least 2010 through 2015, CHAMBERS gave NYPD Sergeant David Villanueva numerous valuable items, including tickets to sporting and entertainment events for Villanueva and his family, free dinners and lunches for Villanueva, sports memorabilia, a wristwatch with a retail price of approximately $8,500, and over $2000 in cash.

In exchange, Villanueva assisted CHAMBERS’s clients in several ways.  When licensees who were clients of CHAMBERS were subject to “incident investigations” – investigations by the License Division to determine whether a license should be suspended or revoked as a result of an incident – Villanueva would close these investigations more quickly and with more favorable outcomes than the applicants otherwise would receive.  For example, on multiple occasions, Villanueva continued licenses for CHAMBERS’s clients – returning their ability to keep and carry firearms – even when the appropriate disposition would have been a license revocation, based on incidents such as domestic incidents or accidental firearms discharges.  Villanueva also would modify the results of incident investigations after they were completed, such as changing a license revocation for multiple drunk driving arrests into a short suspension.  Villanueva would also cause CHAMBERS’s clients to receive shorter suspension periods than they would otherwise receive.  In addition, Villanueva ensured that renewal applications submitted by CHAMBERS’s clients, which typically take 30 to 40 days for approval, were renewed more expeditiously, sometimes as quickly as within one day.  He also upgraded the licenses of clients of CHAMBERS to full concealed carry licenses on an expedited basis and without sufficient documentation to justify the upgrade.

Villanueva also helped CHAMBERS renew gun licenses for clients before the Pistol Section of the Nassau County Police Department, where Villanueva had contacts.  Starting in or about 2012, CHAMBERS brought his clients’ renewal applications to Villanueva at One Police Plaza, and Villanueva mailed those applications to the Pistol Section using his NYPD License Division stationery.  Villanueva did so knowing that because he was submitting the renewal applications using his NYPD License Division stationery, the renewals would be approved in a significantly faster time for CHAMBERS’s clients than for other applicants.  In exchange, CHAMBERS gave Villanueva cash bribes, as well as tickets to sporting and entertainment events for Villanueva and his family.  CHAMBERS typically mailed Villanueva the cash by taping it to the inside of a magazine. 

*                *                *

CHAMBERS, 63, who resides in Manhattan, New York, was found guilty of one count of bribery, which carries a maximum term of 10 years in prison, one count of conspiracy to commit bribery, which carries a maximum term of five years in prison, one count of honest services fraud, which carries a maximum term of 20 years in prison, and one count of conspiracy to commit honest services fraud, which carries a maximum of 20 years in prison.

CHAMBERS is scheduled to be sentenced on August 9, 2018.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the NYPD Internal Affairs Bureau, and noted that the investigation is continuing.  

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

Robert Khuzami, the Attorney for the United States, Acting Under Authority Conferred by 28 U.S.C. § 515, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the arrest of RAYMOND TRAPANI, a/k/a “Ray,” a co-founder of a cryptocurrency company called Centra Tech, Inc. (“Centra Tech”), and the unsealing of a criminal complaint charging TRAPANI with securities fraud and wire fraud offenses in connection with a scheme to induce victims to invest more than $25 million in investments through material misrepresentations and omissions in connection with an initial coin offering.  TRAPANI was arrested this morning and will be presented in U.S. District Court for the Southern District of Florida.  Two other Centra Tech co-founders, Sohrab Sharma, a/k/a “Sam Sharma,” and Robert Farkas, a/k/a “RJ,” a/k/a “Bob,” were arrested earlier this month based on a criminal complaint charging them with the same crimes.

Deputy U.S. Attorney Robert Khuzami said:  “As alleged, Raymond Trapani conspired with his co-defendants to lure investors with false claims about their product and about relationships they had with credible financial institutions.  While investing in virtual currencies is legal, lying to deceive investors is not.”

According to the allegations in the criminal Complaint unsealed in Manhattan federal court against TRAPANI:[1]

After TRAPANI worked with Sharma and Farkas at a luxury car rental company called “Miami Exotics” in Florida, the three of them co-founded a company called Centra Tech that claimed to have developed a debit card, the “Centra Card,” that purportedly allowed users to spend cryptocurrency to make purchases at any establishment that accepts Visa or Mastercard.  In approximately July 2017, TRAPANI, along with Sharma and Farkas, began soliciting investors to purchase unregistered securities in the form of digital tokens issued by Centra Tech, through a so-called “initial coin offering” or “ICO.”  As part of this effort, TRAPANI and his co-conspirators, Sharma and Farkas, in oral and written offering materials that were disseminated via the internet, represented: (a) that Centra Tech had an experienced executive team with impressive credentials, including a purported CEO named “Michael Edwards” with more than 20 years of banking industry experience and a master’s degree in business administration from Harvard University; and (b) that Centra Tech had formed a partnership with Bancorp to have Bancorp issue Centra Cards licensed by Visa or Mastercard, among other claims.  Based in part on these claims, victims provided more than $25 million in investments for the purchase of Centra Tech tokens. 

The claims that TRAPANI and his co-conspirators, Sharma and Farkas, made to help secure these investments, however, were false.  In fact, the purported CEO “Michael Edwards” and another supposed member of Centra Tech’s executive team are fictional people who were fabricated to mislead investors, and Centra Tech had no relationships with Bancorp, Visa, or Mastercard.

On or about September 29, 2017 – the date on which the United States Securities and Exchange Commission (“SEC”) announced that it filed a civil complaint charging a company called “RECoin” and its founder, among others, with defrauding investors in an unregistered offering of securities styled as an initial coin offering – Sharma asked TRAPANI and Farkas to remove certain materials from Centra Tech’s website that contained “fufu,” or fake information, about Centra Tech’s purported relationship with Visa because, according to Sharma, “I rather cut any fufu . . . Now . . . Then worry . . . Anything that doesn’t exist current . . . We need to remove.”  Later that day, Sharma text messaged TRAPANI and Farkas that “Sec just shut down REcoin . . .  Read the article . . . We gotta clean up every single thing that we can’t do . . . And can’t offer today.”  Shortly thereafter, TRAPANI responded that RECoin “were pitching a straight security,” to which Sharma wrote “Yea . . . I know . . . But [still] fraud can be a word thrown around.”

In a separate action, the SEC filed civil charges against TRAPANI.  Earlier this month, the SEC also filed civil charges against Sharma and Farkas. 

*                      *                      *

TRAPANI, 27, is a resident of Florida.  TRAPANI is charged in a four-count criminal complaint with one count of conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison; one count of conspiracy to commit wire fraud, which carries a maximum potential sentence of 20 years in prison; one count of securities fraud, which carries a maximum potential sentence of 20 years in prison; and one count of wire fraud, which carries a maximum potential sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.          

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

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

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), Carl E. DuBois, the Orange County Sheriff (“OCSO”), and Doug Solomon, the Chief of the City of Newburgh Police Department (“CNPD”), announced the unsealing of an indictment and a complaint charging seven defendants with allegedly engaging in the distribution of cocaine throughout the Southern District of New York.  Three defendants were taken into federal custody on March 22.  Three defendants were taken into federal custody on April 17 and were presented in White Plains federal court yesterday afternoon before United States Magistrate Lisa M. Smith.  This case is assigned to U.S. District Judge Kenneth M. Karas.  Defendant TAMIKA SWEAT remains at large.

U.S. Attorney Geoffrey S. Berman said:  “Today we announce the indictment of seven individuals for conspiring to bring large amounts of cocaine to the streets of Newburgh.  I commend our law enforcement partners for another success in our collective effort to keep dangerous narcotics off our streets.

FBI Assistant Director William F. Sweeney Jr. said:  “Our partnerships we’ve established and cultivated with local law enforcement agencies proves cases like this are making a significant impact on our communities.  Those same communities are fighting the rising, deadly consequences of illegal drugs that are tearing families and neighborhoods apart.  The FBI won’t stop pursuing the suppliers and dealers each and every day, as long as the problem exists.”

Orange County Sheriff Carl E. DuBois said:  “I have made a commitment to protect the public from the scourge of illicit drug trafficking in Orange County and I commend the FBI Safe Streets Task Force for carrying out our mission to stop the plague of drugs from devastating our communities.”

City of Newburgh Police Chief Doug Solomon said:  “This case is another example of our collaboration with The Hudson Valley Safe Streets Task Force. We will continue to build cases against people who sell narcotics in our city. We will utilize all of our local, state and federal partners in accomplishing this goal. This case should act as yet another reminder of how dedicated we are to eliminating crime and making our neighborhoods safer for the residents of The City of Newburgh.”

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

From at least in or about 2017 up to and including in or about March 2018, in the Southern District of New York and elsewhere, EDWIN GUERRIER, a/k/a “Eddy F,” CARLOS FABIAN, and FERNANDO FERRER conspired to distribute 5 kilograms and more of cocaine; TAMIKA SWEAT, WILLIAM JONES, a/k/a “Polly,” MAURICE MURPHY, a/k/a “Marky D,” and EUGENE JOHNSON, conspired to distribute 500 grams and more of cocaine. 

*              *             *

The defendants EDWIN GUERRIER, CARLOS FABIAN, and FERNANDO FERRER face a maximum term of life in prison, and a mandatory term of 10 years in prison.  Defendants TAMIKA SWEAT, WILLIAM JONES, MAURICE MURPHY, and EUGENE JOHNSON face a maximum term of 40 years in prison, and a mandatory term of five years in prison.

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

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

Mr. Berman praised the outstanding investigative work of the FBI Hudson Valley Safe Streets Task Force, Orange County Sheriff’s Office, City of Newburgh Police Department. 

These cases are being handled by the Office’s White Plains Division.  Assistant United States Attorney Samuel L. Raymond is in charge of the prosecutions.

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

CHARGE(S)

DEFENDANTS

MAXIMUM PENALTIES

Narcotics conspiracy

(Conspiracy to distribute and possess with intent to distribute 5 kilograms and more of cocaine.)

EDWIN GUERRIER,

a/k/a “Eddy F,”

CARLOS FABIAN,

FERNANDO FERRER

Life in prison

Mandatory minimum: 10 years in prison

Narcotics conspiracy

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

TAMIKA SWEAT,

WILLIAM JONES,

a/k/a “Polly,”

MAURICE MURPHY,

a/k/a “Marky D,”

EUGENE JOHNSON

40 years in prison

Mandatory minimum: 5 years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that SAJID JAVED, an owner and operator of nine different pharmacies in the New York City area, pled guilty today to participating in a health care fraud scheme that used his pharmacies to submit more than $8.5 million in fraudulent claims to Medicare and Medicaid.  JAVED was arrested in 2016 as part of an unprecedented nationwide sweep led by the Medicare Fraud Strike Force, resulting in criminal and civil charges against more than 300 individuals for their alleged participation in health care fraud schemes involving approximately $900 million in false billings.  JAVED pled guilty in Manhattan federal court today before the Honorable Vernon S. Broderick. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, Sajid Javed fraudulently billed Medicare and Medicaid more than $8.5 million for drugs that were never actually dispensed.  He did this by inducing others to forego their prescription medications for kickbacks.  This scheme not only put patients at risk, it also contributed to the multibillion-dollar theft of federally funded public health care subsidies.”

According to the Complaint and the Superseding Information filed in Manhattan federal court, and statements made in connection with JAVED’s guilty plea:

While owning and operating nine different pharmacies in Brooklyn and Queens, JAVED perpetrated a multimillion-dollar scheme to defraud Medicare and Medicaid programs by seeking reimbursement for prescription drugs that were never distributed to customers.  From January 2013 through July 2015, JAVED obtained more than $8.5 million in reimbursements from Medicare and Medicaid for prescription drugs that his pharmacies never actually dispensed to customers.  JAVED tricked Medicare and Medicaid into paying these reimbursements by obtaining prescriptions from individuals who were willing to forego delivery of the medications in exchange for a share of the reimbursements.  JAVED offered to pay, and in fact paid, such kickbacks in furtherance of the unlawful scheme.           

*                *                *

JAVED, 47, of Fresh Meadows, Queens, pled guilty to one count of conspiracy to commit health care fraud, which carries a maximum sentence of five years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

JAVED is scheduled to be sentenced by Judge Broderick on August 24, 2018, at 2:30 p.m.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the Department of Health and Human Services Office of the Inspector General.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Christopher J. DiMase and Sarah E. Paul are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging PETER KALKANIS, BRYAN DUNCAN, KERRY GORDON, ROBERT LOCUST, and RYAN RAINFORD with conspiracy to commit mail and wire fraud, mail fraud, and wire fraud in connection with a scheme to obtain fraudulent insurance reimbursement and other compensation for fraudulent slip-and-fall accidents.  The Indictment also charges PETER KALKANIS with one count of aggravated identity theft.  The five defendants were arrested earlier this morning and will be presented today before United States Magistrate Stewart D. Aaron in Manhattan federal court.  The case has been assigned to United States District Judge Laura Taylor Swain.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants employed one of the oldest plays in the fraudster handbook – the fake slip-and-fall routine – to develop a network of ‘fall victims’ to obtain an astonishing $31 million in fraudulent insurance and compensation payouts.  Allegedly, some of the ‘victims’ went as far as having unnecessary surgery to increase the likelihood of a higher settlement.  Today, however, these defendants’ fraud careers are over, and they will be forced to answer for their alleged crimes.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “The intentional misrepresentation of an accidental slip and fall, and the subsequent defrauding of businesses and insurance companies, is a reprehensible crime in and of itself.  But perhaps the most shocking allegation revealed today is the fact that additional incentives were offered for participants to undergo surgery in order to receive payment for their involvement. One thing is for sure – the alleged activity carried out by Kalkanis and his co-conspirators was no accident, and neither are our charges today.”

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

Since 2013, the defendants have been engaged in a widespread fraud scheme through which the defendants defrauded businesses and insurance companies by staging slip-and-fall accidents and filing fraudulent lawsuits arising from those staged slip-and-fall accidents.  The fraud scheme participants recruited individuals to stage slip-and-fall accidents at particular locations throughout New York City and to claim that they injured themselves as a result of their accidents.  The recruited patients were directed to claim that they had injured themselves and to seek medical treatment. 

After the staged slip-and-fall accidents, recruited patients were referred to specific attorneys who would file lawsuits against the owners of the accident sites and/or insurance companies of the owners of the accident sites (the “Victims”).  The lawsuits did not disclose that the recruited patients had deliberately fallen at the accident sites or, in some cases, had not fallen at all.  During the course of the fraud scheme, the defendants, together with others known and unknown, attempted to defraud the Victims of at least $31,791,000.

The recruited patients were also instructed to receive ongoing chiropractic and medical treatment from certain chiropractors and doctors.  The fraud scheme participants advised the recruited patients that if they intended to continue with their lawsuits, they were required to undergo surgery.  As an incentive to getting surgery, the recruited patients were offered a payment after they completed surgery as well as a percentage of any settlement payment from their lawsuit. 

KALKANIS, a former chiropractor, was the organizer and leader of the scheme.  As alleged in the indictment, KALKANIS paid his co-defendants to recruit patients into the scheme and transport the patients to medical and attorney appointments.  KALKANIS also organized the recruited patients’ legal and medical appointments, and assisted in procuring the funding for the recruited patients’ medical treatment and lawsuits.

DUNCAN, GORDON, LOCUST, and RAINFORD helped recruit patients into the fraud scheme, transported patients to medical and legal appointments, identified potential accident sites, and coached recruited patients on faking their injuries. 

*                      *                     *

KALKANIS, 70, Queens, New York, DUNCAN, 30, Queens, New York, GORDON, 34, Queens, New York, LOCUST, 52, Brooklyn, New York, and RAINFORD, 28, Queens, New York, are each charged with one count of conspiracy to commit mail and wire fraud, which carries a maximum sentence of 20 years in prison; one count of mail 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.  KALKANIS is also charged with one count of aggravated identity theft, which carries a two year mandatory prison sentence.  The maximum potential sentences and minimum sentence in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the FBI and the NYPD.  Mr. Berman also thanked the National Insurance Crime Bureau for their assistance in the investigation. 

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Nicholas Folly, Alexandra Rothman, and Nicholas Chiuchiolo are in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), and Richard Conway, Chief of the Port Chester Police Department, announced today the unsealing of an Indictment charging CRISTIAN FERNANDEZ, JOHNNY FERNANDEZ, JESUS GONZALEZ, JUAN HERNANDEZ, JUAN PABLO RENDON-INZUNZA, NICOLE MAISONET, GABRIEL ORTIZ, a/k/a “Bebe,” MARIA ROLON, EDGARDO RUIZ, a/k/a “Roro,” HECTOR SANCHEZ, a/k/a “Tito,” GILBERT TORRES, FABIOLA VEGA, and JOHN VIEIRA, a/k/a “John-John,” with firearms and narcotics offenses.  The defendants have been charged as a result of their membership and participation in a transnational criminal organization that trafficked in firearms and narcotics, including heroin and methamphetamine.  Nine defendants were arrested or taken into federal custody on these charges today in various locations throughout the United States, namely Maryland, Massachusetts, Connecticut, and New York.  ORTIZ, who is in custody on state charges in Rochester, New York, will be transferred to federal custody as soon as possible.  ROLON, GONZALEZ, and INZUNZA have not been arrested to date. 

Six of the defendants – CRISTIAN FERNANDEZ, JOHNNY FERNANDEZ, JUAN HERNANDEZ, GILBERT TORRES, FABIOLA VEGA, and JOHN VIEIRA – were arraigned before United States Magistrate Judge Lisa Margaret Smith this afternoon in White Plains federal court.  Three other defendants –EDGARDO RUIZ, NICOLE MAISONET, and HECTOR SANCHEZ – will be presented today in federal courts in Maryland and Massachusetts. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, these defendants operated a nationwide drug distribution network to push heroin and methamphetamine onto U.S. streets.  Thanks to the dedicated work of the FBI and Port Chester Police, these defendants are behind bars and face significant prison time for their alleged crimes.”

FBI Assistant Director William F. Sweeney Jr. said:  “The members of this criminal organization created a spider web of illegal drug sales, moving their drugs from south of the border and crisscrossing the states allegedly attempting covering their tracks.  These are the types of operations contributing to the deadly epidemic of overdoses in our country, indiscriminately killing people of all ages and races.  The FBI Westchester County Safe Streets Task Force and our law enforcement partners have created such a vital working relationship that we are having a significant impact in stopping the flow of illegal drugs at the source.” 

Port Chester Police Chief Richard Conway said:  “I'm very proud our Department’s role in this investigation, which is perhaps the largest scale operation we have ever undertaken. Today’s arrests represent an example to us all of what can be accomplished when agencies work together.”

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

From 2017 to 2018, in the Southern District of New York and elsewhere, CRISTIAN FERNANDEZ, JOHNNY FERNANDEZ, JESUS GONZALEZ, JUAN HERNANDEZ, JUAN PABLO RENDON-INZUNZA, NICOLE MAISONET, GABRIEL ORTIZ, MARIA ROLON, EDGARDO RUIZ, HECTOR SANCHEZ, GILBERT TORRES, FABIOLA VEGA, and JOHN VIEIRA participated in a conspiracy to distribute and possess with intent to distribute controlled substances.  The criminal organization trafficked in both heroin and methamphetamine.  As part of the criminal organization, CRISTIAN FERNANDEZ and FABIOLA VEGA possessed firearms in furtherance of their narcotics trafficking and, together with co-defendants HERNANDEZ, RUIZ, and TORRES, participated in a conspiracy to deal in firearms without a license between 2017 and 2018.

*                *                *

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

Mr. Berman praised the outstanding investigative work of the FBI and the Port Chester Police Department.  Mr. Berman also thanked the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Westchester County Police Department, and the Peekskill Police Department for their assistance in this investigation. 

The prosecution is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Olga Zverovich and Sam Adelsberg 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.                                                     

United States v. Cristian Fernandez, et al.

CHARGE

DEFENDANTS

MAXIMUM PENALTIES

Count One

Narcotics Conspiracy

CRISTIAN FERNANDEZ

JOHNNY FERNANDEZ

JESUS GONZALEZ

JUAN HERNANDEZ,

JUAN PABLO RENDON-INZUNZA

NICOLE MAISONET

GABRIEL ORTIZ, a/k/a “Bebe”

MARIA ROLON

EDGARDO RUIZ, a/k/a “Roro”

HECTOR SANCHEZ, a/k/a “Tito”

GILBERT TORRES

FABIOLA VEGA

JOHN VIEIRA a/k/a “John-John”

As to defendants CRISTIAN FERNANDEZ, GONZALEZ, INZUNZA, ORTIZ, RUIZ, SANCHEZ, VEGA:

Life in prison with a mandatory minimum of 10 years in prison

As to defendants JOHNNY FERNANDEZ, HERNANDEZ, MAISONET, ROLON, TORRES, and VIEIRA:

40 years in prison with a mandatory minimum of five years in prison

Count Two

Conspiracy to Deal in Firearms without a License

CRISTIAN FERNANDEZ

JUAN HERNANDEZ

EDGARDO RUIZ, a/k/a “Roro” GILBERT TORRES

FABIOLA VEGA

Five years in prison

Count Three

Firearms Offense

FABIOLA VEGA

Life in prison with a mandatory minimum of five years in prison

Count Four

Firearms Offense

CRISTIAN FERNANDEZ

Life in prison with a mandatory minimum of five years in prison

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that JOSEPH MANUEL HUNTER, a U.S. citizen and former member of the U.S. Army, and two co-defendants, ADAM SAMIA and CARL DAVID STILLWELL, both U.S. citizens, were convicted by a federal jury today of offenses relating to the February 2012 murder of a woman in the Philippines.  The defendants’ conviction followed a 12-day trial before U.S. District Judge Ronnie Abrams of the Southern District of New York.  Sentencing has been scheduled for HUNTER on September 7, 2018, and for SAMIA and STILLWELL for September 14, 2018, before Judge Abrams. 

U.S. Attorney Geoffrey S. Berman said:  “This horrifying real-life murder-for-hire case included details usually seen in action movies.  Hunter, Samia, and Stillwell conspired to end the lives of people overseas whom they had never met.  Today a unanimous jury convicted them for their craven indifference to human life.  I commend the DEA for bringing this tragic story to a just ending.”

According to the Superseding Indictment against HUNTER, SAMIA, and STILLWELL, other filings in Manhattan federal court, and the evidence admitted at trial:

HUNTER served from 1983 to 2004 in the U.S. Army, where he attained the rank of sergeant first class.  While in the Army, HUNTER led air-assault and airborne infantry squads; served as a sniper instructor; and trained soldiers in marksmanship and tactics as a senior drill sergeant.  Since leaving the Army in 2004, HUNTER has arranged for the murders of multiple victims in exchange for money, among other completed acts of violence undertaken for pay. 

SAMIA is a self-described “Personal Protection/Security Industry” professional.  According to SAMIA’s résumé, he has worked as an “Independent Contractor” for clients in the Philippines, China, Papua New Guinea, the Democratic Republic of the Congo, and the Republic of the Congo; and has training in tactics and weapons, including handguns, shotguns, rifles, sniper rifles, and machineguns.  STILLWELL also purported to have training and experience in the field of information technology and to have worked at a firm in North Carolina that provides firearms training.

In 2011 and 2012, HUNTER, SAMIA, and STILLWELL agreed to commit murders-for-hire in overseas locations in exchange for salaries and bonus payments for each victim.  In early 2012, SAMIA and STILLWELL traveled from North Carolina to the Philippines, where HUNTER provided them with, among other things, information about their intended victims and firearms to use to commit the murders. 

In January and February 2012, SAMIA and STILLWELL surveilled their intended victims in the Philippines as they formulated their murder plans.  On February 12, 2012, SAMIA and STILLWELL killed one of their intended victims – a Filipino woman – in the Philippines by shooting her multiple times in the face (“Victim-1”).  After killing Victim-1, SAMIA and STILLWELL disposed of her body on a pile of garbage, where it was later found by local authorities.  HUNTER paid SAMIA and STILLWELL $35,000 each for completing the murder, and SAMIA and STILLWELL sent thousands of dollars from the payments they received to the United States using, among other methods, structured wire transfers in amounts under $10,000. 

In late February and early March 2012, SAMIA and STILLWELL returned from the Philippines to North Carolina, where they continued to reside until their July 2015 arrests on these charges.

*          *          *

HUNTER, 52, of Owensboro, Kentucky, SAMIA, 43, of Roxboro, North Carolina, and STILLWELL, 50, of Roxboro, North Carolina, were each convicted of one count of conspiring to commit murder-for-hire and one count of committing murder-for-hire, each of which carries a maximum sentence of life in prison and mandatory minimum sentence of life in prison; and one count of conspiring to murder and kidnap in a foreign country and one count of using and carrying a firearm during and in relation to a crime of violence, each of which carries a maximum sentence of life in prison.  SAMIA and STILLWELL were also each convicted 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 are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. 

The charges against the defendants were the result of the close cooperative efforts of the United States Attorney’s Office for the Southern District of New York; DEA’s Special Operations Division, Bilateral Investigations Unit; DEA’s Manila Country Office; DEA’s Atlanta Field Division, Raleigh Resident Office; DEA’s Louisville Field Division; the Durham Police Department; the Raleigh Police Department; the Harnett County Sherriff’s Office; the Wake County Sherriff’s Office; the Person County Sherriff’s Office; the Cary Police Department; the North Carolina State Bureau of Investigations; the Bureau of Alcohol, Tobacco, Firearms and Explosives, Greensboro Field Office; the Customs and Border Protection’s National Targeting Center; the Royal Thai Police; the Philippines National Bureau of Investigation; and the Philippines National Police; and the Department of Justice’s Office of International Affairs.  Mr. Berman also thanked the United States Attorney’s Office for the Middle District of North Carolina and the Department of Justice’s Computer Crime and Intellectual Property Section for their support and assistance.

This prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant United States Attorneys Rebekah Donaleski, Patrick Egan, and Emil J. Bove III are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the arrest of DANIEL JONES and the unsealing of a Complaint charging him with distributing the heroin that resulted in the death of Robert Martin Hill in Manhattan.  The Complaint also alleges that JONES conspired with others to distribute heroin between November 2017 and March 2018 in Manhattan, and that JONES distributed heroin on March 1 and March 6, 2018.  JONES was arrested yesterday afternoon by the NYPD, and was presented today before U.S. Magistrate Judge Stewart D. Aaron in Manhattan federal court. 

U.S. Attorney Geoffrey S. Berman said:  “As alleged, Daniel Jones peddled potentially lethal heroin in the East Village of Manhattan, and a dose he sold to Robert Martin Hill resulted in Hill’s death.  Working with the NYPD we will continue to combat the epidemic of lethal opioids.”

According to the allegations in the Complaint[1]:

On November 18, 2017, Robert Martin Hill, a 54-year-old resident of Manhattan, overdosed in his apartment.  The NYPD began investigating Mr. Hill’s death.  An autopsy conducted following Mr. Hill’s death revealed that he died from a lethal dose of opioids.  Four glassine bags were recovered from Mr. Hill’s pants pocket, which had the word “Gorilla” and a picture of a gorilla stamped in black ink.  The residue in the glassine bags tested positive for heroin.  The NYPD also obtained Mr. Hill’s cellphone.

As detailed in the Complaint, the NYPD was able to trace the last completed call that Mr. Hill made before he overdosed on November 18, 2017, to a cellphone used by JONES.  The NYPD learned that JONES was the superintendent of the building where Mr. Hill resided, and that JONES continued to sell heroin near that building in the East Village.  In March 2018, the NYPD made undercover buys of heroin from JONES on two occasions.  During the second undercover buy, JONES stated that he sold heroin to Mr. Hill, that he knew Mr. Hill recently died, and that he sold Mr. Hill heroin that was packaged in glassines with a gorilla stamp.

*                *                *

JONES, 53, of Manhattan, was charged with distribution and possession with intent to distribute heroin, and with conspiring to distribute heroin.  JONES faces a maximum sentence of life in prison and a mandatory minimum sentence of 20 years in prison based upon his distribution of the heroin that killed Mr. Hill.

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

Mr. Berman praised the outstanding investigative work of the NYPD in this case. 

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Michael K. Krouse is in charge of the prosecution.

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

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that RANDY WANG pled guilty to defrauding his former employer, a company based in Manhattan that manages a global airline alliance whose members consist of approximately 13 international airlines and their affiliates (the “Company”), by incurring more than $2.2 million in unauthorized charges on the Company’s credit card account.  WANG pled guilty to one count of wire fraud before U.S. District Judge John F. Keenan.

U.S. Attorney Geoffrey S. Berman said:  “As he admitted in court today, Randy Wang took advantage of his position at a major New York-based company to charge millions of dollars’ worth of nonbusiness purchases on the company’s credit card.  He now awaits sentencing for the theft and deceit that victimized his own employer.”

According to allegations contained in the Information filed against Wang and statements made in related court filings and proceedings:  

During the relevant time period, WANG was employed as a business manager for the Company, and for approximately the last two months of the scheme, WANG also served as the Company’s interim chief financial officer.  From at least in or about January 2016 through in or about October 2017, RANDY WANG, the defendant, incurred more than $2.2 million of unauthorized charges on the Company’s credit card account, by making hundreds of purchases at both online and brick-and-mortar retailers.  WANG’s purchases, which were entirely unrelated to his official duties and were not for the benefit of the Company, included approximately 443 laptop computers, 241 mobile electronic devices, 24 tablet computers, and numerous other electronics.  In order to evade detection of his criminal conduct, WANG made changes to the Company’s accounting records to disguise the nature of the credit card charges.

*                    *                    *

WANG, 34, of Bayside, Queens, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the Court.

Mr. Wang’s sentencing is scheduled for September 5, 2018, at 11:00 a.m.

Mr. Berman praised the work of Homeland Security Investigations and the El Dorado Task Force.  

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that the United States has settled a federal Fair Housing Act (“FHA”) lawsuit against GINSBURG DEVELOPMENT COMPANIES (“GINSBURG DEVELOPMENT”), which was filed in September 2016.  Under the settlement, GINSBURG DEVELOPMENT has agreed to make retrofits to two apartment complexes in Haverstraw, New York, the Riverside and the Parkside, which together contain more than 200 rental units, in order to make them more accessible to individuals with disabilities.  GINSBURG DEVELOPMENT also has committed to establish procedures to ensure that its future residential development projects will comply with the accessibility requirements of the FHA.  Additionally, the settlement requires GINSBURG DEVELOPMENT to provide up to $125,000 to compensate aggrieved persons and to pay a civil penalty of $50,000.  The resolution of this lawsuit was approved on April 12, 2018, by U.S. District Judge Nelson S. Román.  Previously, on September 28, 2016, the United States obtained in this lawsuit a court-ordered preliminary injunction on consent that requires GINSBURG DEVELOPMENT to ensure accessibility at four Westchester rental complexes currently under development – Saw Mill Lofts in Hastings-on-Hudson, Harbor Square Crossings in Ossining, and River Tides and 1177 Warburton Avenue in Yonkers. 

Manhattan U.S. Attorney Geoffrey S. Berman said:  “The Fair Housing Act’s accessibility provisions protect people with disabilities wherever they live.  Today’s settlement, just one day after the 50th anniversary of the FHA, is part of the Office’s ongoing effort to fulfill the Act’s promise of accessibility throughout the Southern District of New York.  All people, with or without physical limitations, should be able to live with dignity in accessible accommodations.” 

The FHA’s accessible design and construction provisions require new multifamily housing complexes constructed after January 1993 to have basic features accessible to persons with disabilities.  According to the allegations in the complaint and the factual admissions in the settlement stipulation, the Riverside and Parkside apartment complexes, which GINSBURG DEVELOPMENT designed and constructed, have a number of inaccessible features, including excessively high thresholds within individual units, insufficient clear floor spaces in bathrooms and kitchens, and doors in both individual units and common areas that are not wide enough to accommodate people in wheelchairs.    

Pursuant to the settlement, GINSBURG DEVELOPMENT agrees to make retrofits to both public and common use areas and individual units to ensure that Riverside and Parkside are accessible.  The settlement also requires GINSBURG DEVELOPMENT to establish procedures to ensure FHA compliance at its future development projects, including to retain an FHA compliance consultant to assess the design documents and conduct site visits to identify non-compliant conditions.  In addition, GINSBURG DEVELOPMENT agrees to institute policies and training to ensure that its employees and agents will comply with the FHA’s accessibility requirements.

The settlement requires GINSBURG DEVELOPMENT to provide up to $125,000 to compensate aggrieved persons.  Aggrieved persons may be entitled to monetary compensation from the fund created through today’s settlement.  Aggrieved individuals may include those who:

• Were discouraged from living at Riverside or Parkside because of the lack of accessible features;
• Have been hurt in any way by the lack of accessible features at Riverside or Parkside;
• Paid to have an apartment at Riverside or Parkside made more accessible to persons with disabilities; or
• Otherwise were discriminated against on the basis of disability at Riverside or Parkside as a result of the inaccessible design and construction of the properties.

Any individual who may be entitled to compensation can file a claim by contacting the Civil Rights Complaint Line at (212) 637-0840, using the Civil Rights Complaint Form available on the United States Attorney’s Office’s website http://www.justice.gov/usao/nys/ civilrights.html, or by sending a written claim to:

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

                        86 Chambers Street, 3rd Floor

                        New York, New York  10007

                        Attention:  Chief, Civil Rights Unit

Finally, the GINSBURG DEVELOPMENT also agrees to pay a civil penalty of $50,000.

Since 2010, the Office has filed nearly 30 lawsuits to enforce the FHA to combat racial, gender, and disability discrimination in housing, including in the areas of design and construction, sexual harassment, and fair lending.

The case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorneys Li Yu, Natasha W. Teleanu, Jacob Lillywhite, and Lauren Lively are in charge of the case.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced that RENWICK HADDOW has been extradited to the United States from Morocco and is expected to appear in the United States District Court for the Southern District of New York today.  HADDOW was charged by Complaint in June 2017 for engaging in schemes to defraud victims by making material misrepresentations and misappropriating investment funds in companies created by HADDOW called Bitcoin Store Inc. (“Bitcoin Store”) and Bar Works Inc. (“Bar Works”), as well as related entities HADDOW controlled.  In July 2017, HADDOW was arrested in Morocco on the basis of a provisional arrest warrant for participating in these schemes.

According to the allegations in the Complaint[1]:

RENWICK HADDOW is a citizen of the United Kingdom. From November 2014 through June 2017, HADDOW solicited investments in start-up companies he created and controlled, including Bitcoin Store — a purported online platform for purchasing, selling, and storing the digital currency known as “Bitcoin”—and Bar Works, which purports to be a company that adapts former restaurants, bar premises, and other locations into co-working spaces.  When doing so, HADDOW made material misrepresentations about, among other things, the management, operations, and historical performance of those companies.

For example, HADDOW concealed his interest in Bitcoin Store and fabricated the purported “experienced team of leading investment professionals” working at the company.  In connection with Bar Works, HADDOW adopted the alias “Jonathan Black” to further hide his role in the schemes.  HADDOW claimed that “Jonathan Black” had an extensive background in finance and had a role in setting up “Car Share,” a car-sharing app.

HADDOW solicited investments through agent brokers and through his control of InCrowd Equity Inc. (“InCrowd”), which represented itself as a type of crowdfunding portal through which investors could purchase shares of start-ups supposedly vetted by InCrowd.  HADDOW did so without disclosing to investors that he had an ownership interest in both InCrowd, on the one hand, and Bitcoin Store and Bar Works, on the other.  HADDOW also misappropriated without permission funds purportedly invested in Bitcoin Store and Bar Works for his own use and the use of others.

*                      *                      *

RENWICK HADDOW, 49, has been charged with two counts of wire fraud — one relating to the Bitcoin Store scheme and the other relating to the Bar Works scheme.  Each charge carries a maximum sentence of 20 years in prison.

Mr. Berman praised the investigative work of the FBI and thanked the Securities and Exchange Commission, which has brought civil actions against the defendant, for its assistance.  Mr. Berman also thanked Moroccan Ministry of Justice, the General Directorate of National Security of Morocco, the U.K. Financial Conduct Authority, the United States Marshals Service, and the Department of Justice’s Office of International Affairs, and noted that the investigation is continuing.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Vladislav Vainberg, Justin V. Rodriguez, Brooke E. Cucinella, and Martin Bell are in charge of the prosecution.   

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

Attorney General Jeff Sessions, Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), announced today that the Madoff Victim Fund established by the Department of Justice began its second distribution of $504.2 million in funds forfeited to the United States Government in connection with the Bernard L. Madoff Investment Securities LLC (“BLMIS”) fraud scheme.  These funds will be sent to more than 21,000 victims worldwide, the second of two payments totaling nearly $1.3 billion that the Madoff Victim Fund will return to victims.  More than $4 billion in assets have been recovered as compensation for losses suffered by the collapse of BLMIS, following the largest fraud in history.  Another $5 billion in assets recovered by the U.S. Attorney’s Office are being separately paid to Madoff victims through the BLMIS Customer Fund administered by the Securities Investor Protection Act Trustee.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Bernie Madoff committed history’s largest Ponzi scheme.  This Office prosecuted Madoff himself, and others who helped perpetrate his fraud, and continues to vigorously pursue money recoveries for his victims.  Today’s payment of more than $500 million is this Office’s second installment in a series of distributions that represent our ongoing commitment to find relief for victims of Madoff’s heinous crimes.”

Attorney General Jeff Sessions said: “In one of the most notorious and unconscionable financial crimes in history, Bernie Madoff robbed tens of thousands of individuals, pension plans, charitable organizations and others, all the while funding a lavish personal lifestyle.  Through the use of asset forfeiture, the Department of Justice has recovered over $4 billion of Mr. Madoff’s fraud, and we continue to work to compensate those he defrauded.  Last June, the Department approved more than 39,000 petitions for compensation.  Today, during National Crime Victims’ Rights Week, the Department returns more than a half-billion dollars to nearly 22,000 law-abiding people and organizations. We cannot undo the damage that Bernie Madoff has done, but today’s distribution will provide significant relief to many of the victims of one of the worst frauds of all time.”

FBI Assistant Director William F. Sweeney Jr. said:  “While today’s distribution of funds is indeed historical in scope, we understand no amount of money could ever restore the damage done by Madoff as a result of his selfish behavior and unforgivable financial crimes. To all of his many victims and their families, we realize this gesture may not provide the consolation necessary to remove the pain and suffering you have been brought to bear, but we are hopeful it provides some sense of relief, and we remain committed to achieve justice for all victims of inexcusable financial crimes.”

Since the early 1970s, BERNARD L. MADOFF (“MADOFF”) used his position as Chairman of BLMIS, the investment advisory business he founded, to steal billions from his clients.  On March 12, 2009, MADOFF pled guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family, and select members of his inner circle.  On June 29, 2009, United States District Judge Denny Chin sentenced MADOFF to 150 years in prison for running the largest fraudulent scheme in history.  Judge Chin ordered MADOFF to forfeit $170,799,000,000 as part of MADOFF’s sentence. 

The Madoff Victim Fund is funded through recoveries by the U.S. Attorney’s Office in various criminal and civil forfeiture actions, and is overseen by Richard Breeden, the former Chairman of the United States Securities and Exchange Commission, in his capacity as Special Master appointed by the Department of Justice to assist in connection with the victim remission proceedings.  

Of the approximately $4.05 billion that will be made available to victims through the Madoff Victim Fund, approximately $2.2 billion was collected as part of the civil forfeiture recovery from the estate of deceased MADOFF investor Jeffry Picower.  An additional $1.7 billion was collected as part of a Deferred Prosecution Agreement with JPMorgan Chase Bank N.A. for MADOFF-related Bank Secrecy Act violations.  Additional funds were collected through criminal and civil forfeiture actions against MADOFF and his co-conspirators, and certain MADOFF investors.

Mr. Berman praised the work of the FBI and the Madoff Victim Fund, and thanked the Money Laundering and Asset Recovery Section of the Department of Justice’s Criminal Division for their assistance.   

For more information about the Madoff Victim Fund, compensation to victims of BLMIS, eligibility criteria, and payment information, please visit www.madoffvictimfund.com.

The case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit.  Assistant United States Attorneys Jonathan Cohen, Louis A. Pellegrino, and Niketh Velamoor are in charge of the case.            

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of a complaint charging ELIZABETH ANN PIERCE with wire fraud in connection with a scheme to use forged guaranteed revenue contracts to fraudulently induce investors to invest more than $250 million in a fiber optic cable network in Alaska.  PIERCE surrendered this morning in New York, New York, to FBI agents and will be presented before Magistrate Judge Robert W. Lehrburger this afternoon.

U.S. Attorney Geoffrey S. Berman said:  “To realize her plan to build a fiber optic system that would service Alaska and connect it to the lower 48 states, Elizabeth Ann Pierce allegedly convinced two investment companies that she had secured signed contracts that would supposedly generate hundreds of millions of dollars in guaranteed future revenue from the system.  As it turned out, those sales agreements were worthless because the customers had not signed them.  Instead, as alleged, Pierce had forged counterparty signatures on contract after contract.  As a result of Pierce’s deception, the investment companies were left with a system that is worth far less than Pierce had led them to believe.”

Assistant Director William F. Sweeney said:  “It’s important for stakeholders to maintain a certain level of awareness into how their investments are being managed.  In this case, thanks to a customer who was paying close attention to their invoices and noticed something was up, Pierce’s alleged scheme began to fall apart.  The false agreements she tried to pass off as legitimate didn’t add up.  In the end, her alleged crime was discovered.  Today’s charges highlight our commitment to detecting financial crimes of all kinds, and protecting those victims who invest their hard-earned money with those looking to make an easy profit.”

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

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

Between May 2015, and July 2017, PIERCE engaged in a scheme to induce two investment companies to invest more than $250 million in the Fiber Optic System by providing them with forged broadband capacity sales contracts (the “Fake Revenue Agreements”).  Under the Fake Revenue Agreements, the customers – other telecommunications companies that resell capacity to end users such as businesses and households – appeared to have made binding commitments to purchase specific wholesale quantities of bandwidth from the Fiber Optic Company at specific prices.  The cumulative value of the Fake Revenue Agreements was more than $24 million during the first year of the subsea segment’s operation, approximately $10 million during the first year of the terrestrial segment’s operation, and approximately $1 billion over the life of the Agreements.  In fact, the Fake Revenue Agreements were completely worthless because PIERCE had forged the counterparties’ signatures.

Certain of the Fake Revenue Agreements never existed at all, while others were false versions of genuine revenue agreements that were more favorable to the Fiber Optic Company than the genuine agreements.  For example, under one of the Fake Revenue Agreements, the customer supposedly agreed to buy increasingly more gigabits per second of capacity over a period of 20 years from the Fiber Optic Company.  That contract, if genuine, would have assured the Fiber Optic Company of hundreds of millions of dollars in future revenue.  In reality, negotiations over that deal ended unsuccessfully, and PIERCE never disclosed that fact to the investors.  Under another Fake Revenue Agreement, the customer had purportedly agreed to buy a fixed, predetermined amount of capacity regardless of subsequent market conditions.  In actuality, that customer was not obligated to buy any capacity. 

PIERCE’s scheme began unraveling when a customer disputed invoices that it received from the Fiber Optic Company pursuant to one of the Fake Revenue Agreements.  Shortly thereafter, PIERCE abruptly resigned from the Fiber Optic Company.

*          *         *

PIERCE, age 54, of Anchorage, Alaska, is charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.

Mr. Berman praised the investigative work of the FBI.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Sarah Lai is in charge of the prosecution.  The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

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

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Patricia Tarasca, the Special Agent-in-Charge of the New York Region for the Federal Deposit Insurance Corporation (“FDIC”) Office of Inspector General, and Ruth M. Mendonca, the Acting Postal Inspector-in-Charge of the Newark Division of the United States Postal Inspection Service (“USPIS”), announced the unsealing today of an indictment charging SECONEY BROWN, ANTOINETTE MITCHELL-BROWN, a/k/a “Antoinette Mitchell-Morgan,” and ANTHONY ATKINSON with conspiracy to commit bank fraud and aggravated identity theft, in connection with a scheme to fraudulently obtain more than $700,000 from clients of a bank in New Jersey (“Bank-1”), at which MITCHELL-BROWN was employed during the scheme.  BROWN, MITCHELL-BROWN, and ATKINSON were arrested today and will be presented later today before U.S. Magistrate Judge Robert W. Lehrburger.  The case has been assigned to U.S. District Judge Gregory H. Woods.

U.S. Attorney Geoffrey S. Berman said:  “Antoinette Mitchell-Brown allegedly stole client information from a bank at which she was employed and, with the help of Seconey Brown and Anthony Atkinson, used that information in an attempt to steal hundreds of thousands of dollars from the very customers Mitchell-Brown was supposed to be serving.  Thanks to the work of the FDIC Office of Inspector General and the USPIS, the defendants’ alleged scheme has now been exposed.”

FDIC Special Agent-in-Charge Patricia Tarasca said:  “This indictment unsealed today holds the three defendants accountable for stealing bank account information from innocent victims and aiming to transfer more than $600,000 for their personal gain.  We are pleased to work with our law enforcement partners to investigate such matters of identity theft, as a way to protect banks from such abuses and the system’s integrity.”

Acting Postal Inspector-in-Charge Ruth M. Mendonca said:  “Through disguise and deceit, these defendants created an elaborate bank fraud scheme to defraud financial institutions and their customers.  The use of the U.S. Mail to facilitate any fraud scheme will never be tolerated by U.S. Postal Inspectors, who will continue to aggressively pursue these types of investigations.”

According to the allegations in the Indictment[1]:

From at least September 2016 until at least December 2016, MITCHELL-BROWN, BROWN, and ATKINSON engaged in a scheme to fraudulently obtain funds from more than 25 accounts at Bank-1, at which MITCHELL-BROWN was then employed.  In furtherance of the scheme, MITCHELL-BROWN stole victims’ bank account information from her employer and used that information to, among other things, write checks for thousands of dollars from victims’ accounts and initiate wire transfers from victims’ accounts to bank accounts controlled by members of the scheme.  BROWN and ATKINSON, among other things, paid members of the scheme or otherwise induced other individuals (some of whom provided unwitting assistance) to cash or deposit the fraudulent checks from MITCHELL-BROWN, and provide the proceeds to BROWN, ATKINSON, or, at BROWN and ATKINSON’s direction, other individuals.  In total, the defendants’ scheme fraudulently obtained more than $77,000 and attempted to obtain at least an additional $660,000.

*                *                *

BROWN, 25, and MITCHELL-BROWN, 41, both of East Orange, New Jersey, and ATKINSON, 22, of the Bronx, New York, are each charged with one count of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison, and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the assigned judge.

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

If you believe you were a victim of this crime, including a victim entitled to restitution, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact the Victim/Witness Unit at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900.  For additional information, go to http://www.usdoj.gov/usao/nys/victimwitness.html.

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

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

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

The Department of Justice today announced that on April 12, the Madoff Victim Fund (MVF) began its second distribution of $504 million in funds forfeited to the U.S. Government in connection with the Bernard L. Madoff Investment Securities LLC (BLMIS) fraud scheme, bringing the total distributed to over $1.2 billion.  These funds will be sent to over 21,000 victims across the globe. This distribution represents the second in a series of payments that will eventually return over $4 billion to victims as compensation for losses they suffered from the collapse of the BLMIS.  The MVF has received over 65,000 petitions from victims in 136 countries. 

Attorney General Jeff Sessions, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and U.S. Attorney Geoffrey S. Berman for the Southern District of New York made the announcement. 

“In one of the most notorious and unconscionable financial crimes in history, Bernie Madoff robbed tens of thousands of individuals, pension plans, charitable organizations and others, all the while funding a lavish personal lifestyle,” said Attorney General Sessions.  “Through the use of asset forfeiture, the Department of Justice has recovered over $4 billion of Mr. Madoff’s fraud, and we continue to work to compensate those he defrauded.  Last June, the Department approved more than 39,000 petitions for compensation.  Today, during National Crime Victims’ Rights Week, the Department returns more than a half-billion dollars to nearly 22,000 law-abiding people and organizations. We cannot undo the damage that Bernie Madoff has done, but today’s distribution will provide significant relief to many of the victims of one of the worst frauds of all time.”

“Bernie Madoff committed history’s largest Ponzi scheme,” said U.S. Attorney Berman.  “This Office prosecuted Madoff himself, and others who helped perpetrate his fraud, and continues to vigorously pursue money recoveries for his victims.  Today’s payment of more than $500 million is this Office’s second installment in a series of distributions that represent our ongoing commitment to find relief for victims of Madoff’s heinous crimes.”

For decades, Bernard L. Madoff used his position as Chairman of BLMIS, the investment advisory business he founded in 1960, to steal billions from his clients.  On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family and select members of his inner circle.  On June 29, 2009, U.S. District Judge Denny Chin sentenced Madoff to 150 years in prison for running the largest fraudulent scheme in history.  Judge Chin ordered Madoff to forfeit $170.799 billion as part of Madoff’s sentence.  

Of the approximately $4.05 billion that will be made available to victims, approximately $2.2 billion was collected as part of the historic civil forfeiture recovery from the estate of deceased Madoff investor Jeffry Picower.  An additional $1.7 billion was collected as part of a Deferred Prosecution Agreement with JPMorgan Chase Bank N.A. and civilly forfeited in a parallel action.  The remaining funds were collected through a civil forfeiture action against investor Carl Shapiro and his family, and from civil and criminal forfeiture actions against Bernard L. Madoff, Peter B. Madoff and their co-conspirators.

The MVF’s payouts would not have been possible without the extraordinary efforts of the U.S. Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section, the U.S. Attorney’s Office for the Southern District of New York, and the FBI in the prosecution of these crimes and the recovery of assets supporting the forfeiture in this case.  The MVF is overseen by Richard Breeden, former Chairman of the U.S. Securities and Exchange Commission, in his capacity as Special Master appointed by the Department of Justice to assist in connection with the victim remission proceedings.

More information about MVF and its compensation to victims of BLMIS is available on the MVF website at www.madoffvictimfund.com, such as eligibility criteria, process updates, and frequently asked questions.  Further questions may be directed to the MVF at 866-624-3670 or info@madoffvictimfund.com

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that ONYEKACHI EMMANUEL OPARA pled guilty today before U.S. District Judge Paul A. Crotty in Manhattan federal court to charges stemming from his participation in fraudulent business email compromise scams that targeted thousands of victims around the world, including the United States.  Collectively, the scams attempted to defraud victims of millions of dollars. 

U.S. Attorney Geoffrey S. Berman said:  “Onyekachi Emmanuel Opara ran a global email scam business that victimized thousands of people out of millions of dollars.  And even though he operated his so-called ‘business’ in a country halfway around the world, our Office’s global reach ensures that he will serve time in the United States for his crimes.”        

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

Between 2014 and 2016, OPARA and co-conspirator David Chukwuneke Adindu participated in Business Email Compromise scams (“BEC scams”) targeting thousands of victims around the world, including in the United States.  As part of the BEC scams, fraudulent emails were sent to employees of various companies, purportedly from their supervisors or from third party vendors, directing that funds be transferred to specified bank accounts.  The fraudulent emails were sent from either email accounts with a domain name that was very similar to the legitimate domain name of the purported sender, or the metadata in the emails had been modified so that the emails appeared as if they were from legitimate email addresses belonging to the purported sender.  After victims complied with the fraudulent wiring instructions, the transferred funds were quickly withdrawn or moved into different bank accounts controlled by members of the scheme.  In total, the BEC scams attempted to defraud millions of dollars from victims.

OPARA and others carried out BEC scams by exchanging information regarding: (1) bank accounts used for receiving funds from victims; (2) email accounts for communicating with victims; (3) scripts for requesting wire transfers from victims; and (4) lists of names and email addresses for contacting and impersonating potential victims.   

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OPARA, 29, of Lagos, Nigeria, was arrested in South Africa on the basis of a provisional arrest warrant in December 2016 and was extradited on January 22, 2018.  He pled guilty today to one count of conspiracy to commit wire fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.  OPARA is scheduled to be sentenced by Judge Crotty on July 11, 2018, at 11 a.m.

Adindu, 30, of Lagos, Nigeria, pled guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit identity theft, and was sentenced to 41 months in prison on December 14, 2017.

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

Mr. Berman praised the investigative work of the FBI.  Mr. Berman also thanked Oath’s E-Crime Investigations Team, the National Prosecuting Authority for South Africa, the South African Police Service, and noted that the investigation is continuing.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Andrew K. Chan and Daniel M. Loss are in charge of the prosecution.

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John F. Grasso, the Special Agent-in-Charge of the United States Social Security Administration, Office of the Inspector General, New York Field Division, announced that GERARD SCPARTA, a former New York City Police Department (“NYPD”) officer, SCOTT MARAIO, a former NYPD officer and former New York City Fire Department (“FDNY”) firefighter, and KENNETH RUBERO, a former NYPD detective, were arrested today for separate schemes to fraudulently obtain a total of more than $1 million in disability benefits from the Social Security Administration (“SSA”).  SCPARTA lied to the SSA about his disability, and SCPARTA, MARAIO, and RUBERO each falsely represented to the SSA that they could not work due to disability and failed to report earnings from employment as required.  At the same time SCPARTA, MARAIO, and RUBERO were collecting disability benefits, each of them were working in various positions and earning hundreds of thousands of dollars.  SCPARTA, MARAIO, and RUBERO were arrested earlier today at their residences, and will be presented later today in Manhattan federal court before U.S. Magistrate Judge Robert Lehrburger.

Manhattan U.S. Attorney Geoffrey S. Berman stated:  “As alleged, these three defendants, all former law enforcement officers, told lie after lie to obtain a total of over one million dollars in disability benefits through fraud.  In doing so, they allegedly took money from truly disabled individuals who are dependent on this important source of public support.  Scparta and Maraio also allegedly concealed their employment and income from the Social Security Administration by hiding behind corporate entities purportedly owned by their wives.  I would like to thank the Social Security Administration, Office of the Inspector General, for their work in bringing these alleged schemes to their proper end.”

Special Agent-in-Charge John F. Grasso stated:  “Social Security Disability benefits are an earned benefit, for those who are truly deserving.  It is not a treasure chest to be pilfered by alleged greedy liars and scammers.  Unlike other crimes, when someone allegedly cheats Social Security, they are not just taking from one of us, they are stealing from all of us.  I would like to thank our partners in this investigation, the IRS Criminal Investigation Division, and the NYC Department of Investigation.  If you suspect Social Security fraud, I strongly encourage you to call the Social Security Fraud Hotline at 800-269-0271 or visit oig.ssa.gov/report<http://oig.ssa.gov/report>.”

According to the allegations contained in Complaints unsealed today:

The SSA administers Social Security Disability Insurance (“SSD”), a federal benefits program that provides monthly cash benefits to individuals who have worked in the past and paid into Social Security, but who can no longer engage in any substantial gainful activity due to medical disabilities.  SSD is a disability benefit available only to individuals who have a qualifying disability and are unable to work in any profession.  In order to receive SSD, a beneficiary must certify that he or she is incapable of performing any gainful activity due to disability.  In addition, a beneficiary must report to the SSA all sources of income from work activity and any changes in the beneficiary’s medical condition, which are taken into account in determining whether the beneficiary is entitled to payments and the amount of those payments. 

GERARD SCPARTA

Between in or about 1986 and in or about 1997, SCPARTA worked as a police officer with the NYPD.  In or about 1997, after reportedly sustaining an injury at the age of 32, SCPARTA was referred to an individual (“CC-1”) who helped him fraudulently obtain disability benefits.  Specifically, CC-1 submitted SSD application materials signed by SCPARTA that falsely stated, among other things, that SCPARTA suffered from severe depression and anxiety, could not do anything around his house, and was unable to work in any capacity.  In addition, CC-1 coached SCPARTA to make the same false statements to physicians who examined SCPARTA for the purpose of establishing his disability and submitting reports to the SSA.  Based on these false statements and representations by SCPARTA in documents and reports submitted to the SSA, the SSA approved SCPARTA to receive disability benefits from in or about 1997 onward.

In addition to lying about his disability status and inability to work, SCPARTA falsely claimed on multiple forms submitted to the SSA that he did not work, and failed to report earnings from employment as required.  In fact, from in or about April 2004 up to and including at least in or about December 2017, SCPARTA worked as a security guard and host at a strip club located in Manhattan, New York (the “Strip Club”).  From in or about 1997 up to and including in or about 2017, SCPARTA received a total of over approximately $638,000 in disability benefits for himself, his wife, and his children, during which time SCPARTA earned approximately $1.6 million from his work at the Strip Club.  In order to conceal his income and prevent the SSA from discovering his fraud, SCPARTA arranged for the income from his work in connection with the Strip Club to be paid to a third-party corporate entity purportedly owned by SCPARTA’s wife.

SCOTT MARAIO

From in or about 1985 through in or about 1986, MARAIO worked as an NYPD police officer.  Beginning in or about July 1987, MARAIO began working as a firefighter with the FDNY.  In or about January 2002, at the age of 37, MARAIO stopped working as a firefighter due to a claimed disability, and began receiving disability benefits.  On multiple forms submitted to the SSA, MARAIO falsely claimed he could not work due to problems with his neck and back and failed to report earnings from employment as required.  In fact, from in or about September 2008 through in or about August 2014, MARAIO worked as a security guard at the Strip Club.  In addition, from in or about July 2012 through at least in or about February 2018, MARAIO worked for a staffing company (the “Staffing Company”) in various positions relating to fire safety on construction sites, including as a fire safety manager and fireguard. 

From in or about October 2008 through in or about February 2018, MARAIO received a total of over approximately $364,000 in disability benefits for himself, his wife, and his children, during which time MARAIO earned a total of approximately $450,000 from his employment at the Strip Club and with the Staffing Company.  In order to conceal his income and prevent the SSA from discovering his fraud, MARAIO arranged for the income from his work in connection with the Strip Club and the Staffing Company to be paid to a third-party corporate entity purportedly owned by MARAIO’s wife called Blondie Consultants (“Blondie Consultants”), as well as another company.

KENNETH RUBERO

In or about 1985, RUBERO began working as an NYPD police officer and was subsequently promoted to detective in or about 1991.  In or about December 1997, at the age of 33, RUBERO stopped working with the NYPD due to a claimed disability, and began receiving disability benefits.  On multiple forms submitted to the SSA, RUBERO falsely claimed he could not work due to problems with his knees, neck, and back, and failed to report earnings from employment as required.  In fact, since at least in or about 2008, RUBERO has been an owner and manager of Baychester Payment Center, LLC (“Baychester”), a check cashing and money services business located in the Bronx, New York, and an owner and president of Secure Logistics, Inc., a purported security company located at RUBERO’s residence.  From at least in or about 2008 up to and including at least in or about February 2018, RUBERO received a total of approximately $396,000 in disability benefits for himself and his child, during which time RUBERO had earned a total of over approximately $720,000 from his work with Baychester and Secure Logistics.

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SCPARTA, 53, of Campbell Hall, New York, MARAIO, 53, of Staten Island, New York, and RUBERO, 53, of White Plains, New York, are each charged with one count of theft of government property, which carries a maximum sentence of 10 years in prison, one count of making false statements, which carries a maximum sentence of five years in prison, and one count of making false statements in connection with Social Security disability benefits, which carries a maximum sentence of five years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Berman praised the outstanding investigative work of the United States Social Security Administration, Office of the Inspector General.  Mr. Berman also thanked the Internal Revenue Service Criminal Investigation Division, the Manhattan District Attorney’s Office, and the New York City Department of Investigation for their assistance with the investigation.  

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

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