Southern District of New York

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Anthony A. Scarpino Jr., the Westchester County District Attorney, and Christopher T. McNerney, Chief of the Greenburgh Police Department (“GPD”), announced the arrest of MAMADOU NDAO and DIABEL SAMB on charges of conspiracy to commit Hobbs Act robbery, Hobbs Act robbery, and a firearms offense.

Acting U.S. Attorney Joon H. Kim said:  “As alleged, Ndao and Samb endangered the lives of customers and store employees in a series of armed robberies.  Thanks to our law enforcement partners, the defendants are now in custody and will face justice in federal court.”

FBI Assistant Director William F. Sweeney Jr. said:  “Hard-working people go to work every day to earn a living, and abide by the laws of our country.  The subjects in this case allegedly chose to skip being hard-working and law abiding, and demanded money from stores at gunpoint, putting both customers and employees in harm’s way.  The FBI Westchester County Safe Streets Task Force pursues criminals each and every day who choose what they may believe is an easier way of life, but now face years in federal prison.”

Westchester County District Attorney Anthony A. Scarpino Jr. said:  “Due to the efforts of our dedicated partners in law enforcement, these perpetrators have been delivered into the Criminal Justice System where they belong.  We remain committed to reducing all types of crime, particularly those involving criminals who would resort to terrorizing retail store employees by robbing them at gunpoint. These arrests are a testament to our resolve and continued successful relationship with our partners in law enforcement at all levels.”

Greenburgh Police Chief Christopher T. McNerney said: “This successful investigation is the direct result of an outstanding cooperative effort by all of the agencies involved.  The arrests of these violent individuals and pending federal prosecution sends a message to the residents of Westchester and beyond that we are committed to using all resources available to fight crime and prosecute offenders to the fullest extent of the law.”

According to the allegations contained in the Complaint[1] charging NDAO and SAMB:

On October 24, 2017, NDAO and SAMB committed a gunpoint robbery of a Verizon store located in Scarsdale, New York.  SAMB entered the store carrying a firearm.  He displayed the gun to two store employees and directed them to open a safe in the back room of the store.  NDAO subsequently entered the store carrying a suitcase, which SAMB and NDAO filled with cellphones and other electronic devices.  Following the robbery, SAMB and NDAO fled in a vehicle that had been parked outside the store.  Law enforcement intercepted SAMB and NDAO in Mount Vernon, New York, where they were ultimately apprehended by the Greenburgh Police Department.  Law enforcement recovered clothing worn by SAMB and NDAO during at least two of these robberies in the vehicle the defendants had used to flee the scene.  Numerous stolen cellphones and other electronic devices were recovered from the suitcase NDAO had carried into the Scarsdale Verizon store.

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NDAO, 24, of New York, New York, and SAMB, 32, of New York, New York, are each charged with one count of Hobbs Act robbery, which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit Hobbs Act robbery, which carries a maximum sentence of 20 years in prison; and one count of using a firearm during and in relation to a crime of violence, which carries a maximum sentence of life in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge.

NDAO and SAMB were arrested by the GPD on October 24, 2017, and are expected to be presented tomorrow in White Plains federal court before United States Magistrate Judge Paul E. Davison.

Mr. Kim praised the outstanding investigative work of the Westchester County Department of Public Safety and the Real Time Crime Center, the Mount Pleasant Police Department, the Yonkers Police Department, the Tarrytown Police Department, the Town of Newburgh Police Department, the Pelham Police Department, the Greenburgh Police Department, and the FBI’s Westchester County Safe Streets Task Force, which comprises agents and task force officers from the FBI, the U.S. Probation Office, the Westchester County Department of Public Safety, the Westchester County District Attorney’s Office, the New York City Police Department, the City of Yonkers Police Department, the City of Yonkers Police Department, the Peekskill Police Department, and the Mount Vernon Police Department.  Mr. Kim thanked the Westchester County District Attorney’s Office for its significant contributions to the investigation and for its assistance in the arrest and apprehension of the defendants.

The case is being prosecuted by the Office’s White Plains Division.  Assistant United States Attorneys Christopher J. Clore and Gillian Grossman are in charge of the prosecution.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JOSEPH MELI pled guilty today in Manhattan federal court to securities fraud.  Between 2015 and January 2017, MELI conducted a scheme to defraud more than approximately 130 investors who invested a total of more than approximately $95 million through false representations that MELI would use investor funds to purchase tickets to various live events for resale at a profit on the secondary market.  MELI pled guilty earlier today before U.S. Magistrate Judge Barbara Moses.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As he admitted in court today, Joseph Meli created his own theatrical production – a fictitious business that purported to have access to blocks of tickets to Broadway shows and other events.  In fact, Meli was deceiving investors into giving him money that he pocketed to fund his own extravagant lifestyle.  Now he awaits sentencing for running a Ponzi scheme.”

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

From at least in or about 2015 through in or about January 2017, MELI conducted a scheme to defraud more than approximately 130 investors who invested a total of more than approximately $95 million through false representations that MELI would use investor funds to purchase tickets to various live events for resale at a profit on the secondary market.  In fact, MELI utilized a substantial portion of the investor funds he obtained for MELI’s personal expenses – including payments for a $3 million house in East Hampton, New York, a 2017 Porsche convertible, and expensive watches and jewelry – and to make payments, in a Ponzi-like manner, to previous investors in MELI’s ticket fraud scheme and in unrelated hedge fund.

In furtherance of the fraudulent scheme, MELI falsely represented to investors that he had entered into written agreements with production companies for popular Broadway shows and with management companies for popular singers and music bands (together, the “Production and Management Companies”) to purchase large blocks of tickets to the shows and performances.  In truth and in fact, MELI had not entered into such agreements and did not have any contractual rights to purchase such tickets from the Production and Management Companies. 

In furtherance of the scheme, moreover, MELI provided investors with falsified documents purporting to reflect agreements between MELI’s company, Advance Entertainment, LLC (“Advance”), and the Production and Management Companies, in which the Production and Management Companies agreed to sell Advance large blocks of tickets to the shows or performances.  In truth and in fact, the Production and Management Companies had not entered into agreements to sell tickets to MELI or Advance.  These fake agreements listed, as authorized representatives entering into the agreements on behalf of the Production and Management Companies, the names of individuals within those organizations, and furthermore contained fraudulent signatures of these individuals.

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MELI, 43, of New York, New York, pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5,000,000.  In addition, pursuant to a plea agreement with the Government, MELI agreed to forfeit proceeds of the offense and to pay restitution to the victims of the offense.  MELI is scheduled to be sentenced by Judge Kimba M. Wood on January 31, 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.

Mr. Kim praised the 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 U.S. Attorneys Elisha J. Kobre and Brendan F. Quigley are in charge of the prosecution.  

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that RASHOD LEWIS was sentenced by U.S. District Judge Kimba M. Wood to 360 months in prison in connection with his use of a firearm in the murder of Nelson Dubon on January 21, 2016.  LEWIS previously pled guilty before U.S. Magistrate Judge Gabriel W. Gorenstein to one count of discharging a firearm in furtherance of narcotics trafficking.  LEWIS murdered Dubon in the course of a robbery on Webster Avenue in the South Bronx, which Lewis and other members of the violent street crew “YNR” committed as part of that crew’s drug business.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Rashod Lewis, a leader of a violent drug trafficking and robbery crew, shot and killed Nelson Dubon after Dubon tried to assist other victims of Lewis’ robbery.  Yesterday Lewis received the lengthy prison term his vicious crime deserves.”

According to the charging documents filed in the case, as well as statements made during the sentencing proceeding and earlier court appearances:

Since at least 2012, a group of young men and women living in the vicinity of 188th Street and Webster Avenue, and referring to itself as “YNR,” engaged in a conspiracy to distribute crack cocaine and heroin.  LEWIS was a leader of YNR and personally participated in multiple drug-related armed robberies.  Those incidents included an armed robbery of a narcotics dealer and others located inside a billiards club on January 21, 2016, during which Lewis and his codefendant Kenneth Rudge shot and killed Nelson Dubon.  On that date, Lewis and four other members of YNR entered an after-hours club located near Park Avenue and 187th Street.  There, the crew threatened and assaulted a narcotics dealer before turning on the patrons of the club.  Lewis and others brandished handguns, while another YNR member beat patrons with a pool cue.  Dubon, who attempted to assist other victims of the robbery, was shot first by Lewis and then by Rudge, and later succumbed to his wounds.    

Rudge is scheduled to be sentenced by Judge Wood on January 25, 2018.

In furtherance of this violent drug crew’s activities, LEWIS stored multiple firearms, including a Mac-11 subcompact machine gun, in an apartment on Webster Avenue.  LEWIS also supplied and directed numerous underlings, including minors, in the sale of heroin and crack cocaine on Webster Avenue.   

In addition to the prison term, LEWIS, 26, of the Bronx, New York, was sentenced to five years of supervised release. 

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Mr. Kim praised the outstanding work of the NYPD and ATF for their investigative efforts and ongoing support and assistance with the case.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that LOUIS LITVIN, the former chief financial officer of United Realty Management (“URM”), was sentenced today by U.S. District Judge Naomi Reice Buchwald to 63 months in prison for his role in a fraudulent scheme to steal more than $1 million from URM. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Louis Litvin, the former chief financial officer of the real estate management company URM, abused his position and substantial control he had over URM’s books, to help orchestrate a million-dollar fraud against the very company he was supposed to be serving.  Today, this corporate executive was held accountable for his criminal greed.”

According to the Complaint, Information, and statements made on the record at sentencing:

From 1996 to 2011, LITVIN was the CFO for URM, and also a part-owner of URM.   Unbeknownst to his co-owners, LITVIN conspired with co-defendants Melissa Chan (a former URM bookkeeper) and Chitakra Ramudit (a former Capital One branch manager who handled URM’s banking relationship) to steal more than $1 million from URM through fraudulent wire transfers, cashier’s checks, and unauthorized transfers and deposits. 

LITVIN also took steps to cover up the fraud.  For example, after he was fired from URM, he filed for bankruptcy.  In connection with the bankruptcy proceeding, he lied in his sworn deposition, and he coached Chan to lie in her deposition, by providing her with a cover story to explain money she received from him.  The cover-up of the fraud continued for years after LITVIN was fired in October 2011, until it finally came to light when URM retained forensic auditors to review the accounts that LITVIN oversaw.

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In addition to his term of incarceration, LITVIN, 64, of West Palm Beach, Florida, was sentenced to five years of supervised release, and forfeiture and restitution in amounts to be determined.

LITVIN’s co-defendant Melissa Chan pled guilty to conspiracy to commit bank fraud on October 24, 2017, and is scheduled to be sentenced by Judge Buchwald on March 14, 2018.  LTIVIN’s co-defendant Chitakra Ramudit is charged in Information S2 17 Cr. 445 (NRB) with conspiracy to commit bank fraud, bank fraud, and conspiracy to commit money laundering.  The allegations in the Information as to Ramudit are merely accusations, and she is presumed innocent unless and until proven guilty.

Mr. Kim praised the Criminal Investigators of 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 Attorneys Eli J. Mark and Jacob Warren are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that TREVON GROSS and YURI LEBEDEV were sentenced by U.S. District Judge Alison J. Nathan to prison in connection with a bribery scheme to take over control of a federal credit union and a related fraud scheme to operate Coin.mx, an illegal Bitcoin exchange.  On March 17, 2017, GROSS and LEBEDEV were convicted following a jury trial on all counts with which they were charged in the controlling indictment.  On October 20, Judge Nathan sentenced LEBEDEV to 16 months in prison.  Earlier today, Judge Nathan sentenced GROSS to 60 months in prison.    

Acting U.S. Attorney Joon H. Kim said:  “Yuri Lebedev and others at Coin.mx, an unlawful Bitcoin exchange, tricked banks into processing millions of dollars in transactions by hiding the nature of their business.  When the banks caught on to their scheme, Lebedev and others bribed Trevon Gross in order to gain control of a credit union to process those transactions, undermining the credit union’s safety and solvency in the process.  Despite elaborate efforts by the defendants to hide their schemes, their brazen crimes were exposed at trial.  Gross and Lebedev’s criminal schemes have now landed them in federal prison.”  

According to the Superseding Indictment on which GROSS and LEBEDEV were convicted, evidence admitted at trial, and statements made during the sentencing proceedings: 

The Unlawful Bitcoin Exchange

Between 2013 and July 2015, LEBEDEV helped operate Coin.mx, an unlawful internet-based Bitcoin exchange, along with Anthony Murgio, the founder of Coin.mx.  LEBEDEV, Murgio, and their co-conspirators engaged in substantial efforts to evade detection of their unlawful Bitcoin exchange by operating through a phony front company called “Collectables Club.”  Coin.mx used the “Collectables Club” to open financial accounts in order to trick financial institutions into believing the unlawful Bitcoin exchange was simply a members-only association of individuals who discussed, bought, and sold collectible items and memorabilia.  LEBEDEV and his co-conspirators deceived financial institutions by deliberately misidentifying and miscoding Coin.mx customers’ credit and debit card transactions, in violation of bank and credit card company rules and regulations.  Through the illegal Coin.mx scheme, LEBEDEV and his co-conspirators caused more than $10 million in Bitcoin-related transactions to be processed illegally through financial institutions. 

The Credit Union Bribery Scheme

In 2014, in an effort further to evade scrutiny from financial institutions about the nature of the business engaged in by Coin.mx, LEBEDEV, Murgio, and their co-conspirators gained control of HOPE Federal Credit Union (“HOPE FCU”), a low-income designated federal credit union in Lakewood, New Jersey, for which GROSS served as Chairman and CEO.  After making more than $150,000 in illegal bribes at GROSS’s direction to bank accounts in the name of a church where GROSS served as the pastor, LEBEDEV, Murgio, and their co-conspirators took control of HOPE FCU.  With GROSS’s assistance, Murgio installed LEBEDEV and various co-conspirators on HOPE FCU’s Board of Directors and transferred Coin.mx’s banking operations to HOPE FCU.  GROSS also ceded operational control of the credit union to the board members installed by Murgio, including LEBEDEV.  Thereafter, GROSS, LEBEDEV, and others worked to run tens of millions of dollars of ACH (Automated Clearing House) transactions through the credit union without adequate capital or anti-money laundering controls, thus putting HOPE FCU’s financial condition at substantial risk. 

GROSS, LEBEDEV, Murgio, and their co-conspirators also obstructed an examination of HOPE FCU by the National Credit Union Administration (“NCUA”) and made false statements to the NCUA in order to perpetuate LEBEDEV and Murgio’s control of the credit union.  These included deliberately failing to disclose the bribe payments; misrepresenting the location of Coin.mx-affiliated businesses, including the “Collectables Club,” so as to claim that they were eligible to be members of the credit union and to serve as Board members; and manipulating the accounting at HOPE FCU so as to hide its true financial condition and the fact that it was processing tens of millions of dollars of ACH transactions without adequate controls.  HOPE FCU was operated as a captive bank by MURGIO and his co-conspirators until the end of 2014.  In October 2015, the NCUA placed HOPE FCU into conservatorship and subsequently liquidation.

On March 17, 2017, GROSS and LEBEDEV were convicted after a four-week jury trial of conspiring to make corrupt payments to an officer of a financial institution, to receive corrupt payments by an officer of a financial institution, to obstruct an NCUA examination of a financial institution, and to make false statements to the NCUA.  GROSS was also convicted of the receipt of corrupt payments by an officer of a financial institution.  LEBEDEV was also convicted of making corrupt payments to an officer of a financial institution, wire fraud, bank fraud, and conspiring to commit wire fraud and bank fraud.  In imposing today’s sentence, Judge Nathan found that GROSS committed perjury when he testified under oath at trial. 

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In addition to the prison sentences, GROSS, 47, of Jackson, New Jersey, and LEBEDEV, 39, of St. Johns, Florida, were each sentenced to three years of supervised release and ordered to pay fines of $12,000 and $10,000, respectively.  In addition, GROSS and LEBEDEV were ordered to forfeit the proceeds of their crimes and to pay restitution, jointly and severally with Murgio, to the NCUA. 

All four of LEBEDEV and GROSS’s co-defendants have been convicted and have been sentenced or are awaiting sentence by Judge Nathan.

Anthony R. Murgio pled guilty on January 9, 2017, to conspiring to operate an unlicensed money transmitting business, conspiring to commit wire fraud and bank fraud, and conspiring to obstruct an examination of HOPE FCU by the NCUA in furtherance of the illegal Coin.mx scheme.  On June 27, 2017, Murgio was sentenced to 66 months in prison, three years of supervised release, and a $12,000 fine. 

Michael J. Murgio pled guilty on October 27, 2016, to conspiring to obstruct an NCUA examination of a financial institution, and was sentenced on January 27, 2017, to one year of probation and a $12,000 fine.

Jose M. Freundt pled guilty on October 13, 2016, to operating an unlicensed money transmitting business, conspiring to operate an unlicensed money transmitting business, making corrupt payments to an officer of a financial institution, conspiring to make corrupt payments to an officer of a financial institution, wire fraud, and conspiring to commit wire fraud.  Freundt is scheduled to be sentenced on December 18, 2017.

Ricardo Hill pled guilty on January 17, 2017, to operating an unlicensed money transmitting business; conspiring to operate an unlicensed money transmitting business; making corrupt payments to an officer of a financial institution; conspiring to make corrupt payments to an officer of a financial institution, to receive corrupt payments by an officer of a financial institution, to obstruct an NCUA examination of a financial institution, and to make false statements to the NCUA; wire fraud; bank fraud; and conspiring to commit wire fraud and bank fraud.  Hill is scheduled to be sentenced on December 18, 2017.

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation and the United States Secret Service.  He also thanked the NCUA for its assistance with the investigation and prosecution.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Eun Young Choi, Daniel S. Noble, and Won S. Shin are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that STEVEN SIMMONS pled guilty in Manhattan federal court today to conspiring to commit securities fraud and wire fraud.  Between 2013 and January 2017, SIMMONS solicited more than $6 million in investments for a hedge fund (the “Hedge Fund”).  SIMMONS, however, misappropriated some of these funds for his own use and knew that the Hedge Fund used the remainder of the funds to pay back prior investors, as part of a Ponzi-like scheme.  SIMMONS pled guilty earlier today before U.S. Magistrate Judge Barbara Moses.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Steven Simmons engaged in one of the oldest frauds in the book: using investor funds to pay back earlier investors, all while skimming funds off the top for his own personal use.  When investors demanded the returns promised to them, they learned that the entire investment was just a scam.  Now Simmons, who admitted his guilt in court today, will answer for his crimes.”

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

Between 2013 and January 2017, SIMMONS solicited investments by falsely representing to investors that their funds would be used by the Hedge Fund for legitimate, specified investment purposes, that they would receive specific rates of return, and that their investments would not be placed at risk or commingled with other funds.  In fact, SIMMONS failed to invest the investor monies as promised, but, instead, diverted investor funds for his own use and also, together with others, used the money in a Ponzi-like fashion to fund the repayment of earlier investors in the Hedge Fund whose redemption requests could not be forestalled.

Among other false and misleading statements, SIMMONS told one investor (“Victim Entity-1”) that its funds would be placed by the Hedge Fund with a highly successful group of portfolio managers and provided performance information for these portfolio managers.  In truth and in fact, SIMMONS solicited those investment funds from Victim Entity-1 for the purpose of repaying an earlier investor in the Hedge Fund which had demanded the return of its investment.  Most of Victim Entity-1’s funds were, within minutes of their receipt by the Hedge Fund, wired to the earlier investor.  The following day, $50,000 was wired by the Hedge Fund to an account controlled by SIMMONS.  In a later consensually recorded conversation with a cooperating witness (the “CW”), SIMMONS expressed concern that Victim Entity-1 would contact the portfolio managers with whom it believed its funds were invested and learn that “there’s no . . . money.”  As part of the fraudulent scheme, Simmons also created and provided investors with false monthly statements.

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SIMMONS, 48, of Wilton, Connecticut, pled guilty to one count of conspiracy to commit securities fraud and wire fraud.  The conspiracy count carries a maximum sentence of five years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense.  In addition, pursuant to a plea agreement with the Government, SIMMONS agreed to forfeit $6,900,000. 

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.  SIMMONS will be sentenced at a date set by the Court.

Mr. Kim praised the 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 U.S. Attorneys Elisha J. Kobre and Brendan F. Quigley are in charge of the prosecution.  

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that FEI YAN, who works as a post-doctoral associate at a major research university in Cambridge, Massachusetts, pled guilty in Manhattan federal court to insider trading.   In December 2016, YAN made approximately $110,000 in connection with trading in options to buy the stock of Stillwater Mining Company, based on misappropriated material nonpublic information.  YAN pled guilty earlier today before U.S. District Judge Katherine B. Forrest.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As he admitted in Manhattan federal court today, Fei Yan made options trades based on inside information to net over $100,000 in illegal profits.  Yan got the information from his spouse, whose position at an international law firm gave her access to confidential mergers and acquisitions secrets.  Now Yan awaits sentencing before a federal judge for his crimes.”

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

YAN’s spouse (“Spouse-1”) worked at the New York office of an international law firm (the “Law Firm”).  In the summer of 2016, the Law Firm was retained by a mining company (the “Mining Company”) to represent it in negotiations to acquire Stillwater Mining Company (“Stillwater Mining”), a publicly traded company whose shares are traded on the New York Stock Exchange under the symbol “SWC.”  On or about August 25, 2016, in connection with Spouse-1’s work at the Law Firm, Spouse-1 learned of the negotiations between the Mining Company and Stillwater Mining and continued to work on the transaction through December 9, 2016, when it was publicly announced for the first time that the Mining Company would be acquiring Stillwater Mining.  While working on the transaction during the fall of 2016, Spouse-1 had access to material, non-public information regarding the potential acquisition.  

The Law Firm required its employees, including Spouse-1, to abide by a confidentiality policy, which prohibited disclosure of “information received from and about . . . clients . . . [and] other parties involved in transactions with clients.”  YAN and Spouse-1 had a history, pattern, and practice of sharing confidences. 

In early and mid-November 2016, Spouse-1 billed dozens of hours working on the potential merger between the Mining Company and Stillwater Mining, and YAN and Spouse-1 were in frequent phone contact.  During this period, YAN conducted Internet searches for “yahoo swc” and “stillwater merger,” even though the Mining Company’s potential acquisition of Stillwater Mining had not yet been publicly announced. 

On November 22, 2016, Spouse-1 participated in a call at the Law Firm regarding the potential acquisition.  That same day, YAN, using a brokerage account he had previously set up in his mother’s name, bought 71 options to buy Stillwater Mining stock.  The next day, there were two phone calls between a phone used by YAN and a phone used by Spouse-1.  After these calls, YAN bought an additional 200 options to buy Stillwater Mining stock. 

Negotiations between the Mining Company, represented by the Law Firm, and Stillwater Mining continued to progress, and Spouse-1 continued to work on the transaction.  On December 1, 2016, after a 78-minute phone call with Sposue-1 the night before, YAN purchased an additional 100 Stillwater Mining options. 

The following day, YAN conducted multiple Internet searches and research related to mergers and acquisitions, including searches for “process of acquisition” and “company acquisition process.”  Several minutes after conducting these searches, YAN called Spouse-1.

YAN and Spouse-1 also spoke on the phone multiple times on the night of December 5 and the early morning hours of December 6.  Later on the morning of December 6, YAN bought an additional 341 options to buy Stillwater Mining stock.  Later that day, YAN conducted internet research related to insider trading.  For example, YAN searched for “how sec detect unusual trade” and accessed at least three articles on financial websites related to insider trading.  YAN also searched for the name of an individual who was charged in this District in May 2016 with insider trading. 

The next day, shortly after speaking with Spouse-1 on the phone for approximately 30 minutes, YAN conducted an Internet search for “insider trading with international account” and, shortly thereafter, viewed articles entitled “U.S. Insider Trading Enforcement Goes Global” and “Want to Commit Insider Trading? Here’s How Not to Do It.”  The following day, YAN bought an additional 54 options to buy Stillwater Mining stock.

Early on the morning of December 9, 2016, it was publicly announced that the Mining Company would acquire Stillwater Mining for $18 per share.  Beginning at approximately 9:33 a.m. Eastern time, minutes after the open of regular market trading.  YAN sold the Stillwater Mining options he had previously purchased, resulting in a profit of approximately $109,420.  Also that day, YAN conducted Internet searches for “insider trading cases,” and “insider trading options.”

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YAN pled guilty to one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense.  In addition, pursuant to a plea agreement with the Government, YAN agreed to forfeit $119,428.50, representing the amount of proceeds obtained as a result of trading in Stillwater Mining and related relevant conduct.

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

YAN is scheduled to be sentenced by Judge Forrest on March 2, 2018, at 3:00 p.m.

Mr. Kim praised the investigative work of the Federal Bureau of Investigation (“FBI”) and thanked the SEC, which has filed civil charges in a separate action.  Mr. Kim also thanked the FBI’s Boston Office and the U.S. Attorney’s Office for the District of Massachusetts for their assistance in this investigation. 

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Danny Kennedy, the Acting Assistant Director-in-Charge of the Los Angeles Field Office of the Federal Bureau of Investigation (“FBI”), announced the indictment today of  BENJAMIN CHOW, a/k/a “Ben Chow Zhou Bin,” a/k/a “Benjamin Bin Chow,” a/k/a “Bin Zhou,” for conspiracy to commit securities fraud and securities fraud in connection with a $5 million insider trading scheme relating to the securities of Lattice Semiconductor Corporation (“Lattice”).  The case is assigned to U.S. District Judge Gregory H. Woods.

Acting U.S. Attorney Joon H. Kim said:  “As alleged, Benjamin Chow tipped his friend about a potential acquisition of Lattice Semiconductor Corporation by private equity firms he managed, including one based in China.  Chow’s illegal tips resulted in multimillion-dollar profits for his friend and business associate.  This type of alleged illegal tipping is not only illegal, but erodes public confidence in our markets.  Protecting the integrity of our financial markets remains a top priority of this Office.”

FBI Assistant Director-in-Charge Danny Kennedy said:  “Mr. Chow misused his position of trust to undermine the integrity of the market.  The FBI and our partners are committed to fairness in the marketplace by holding accountable those who threaten legitimate exchanges by trading on proprietary knowledge.”

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

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 subsequently between Lattice and Firm-2.   

In violation of these agreements, and in breach of his duties, CHOW provided CC-1 with material nonpublic information regarding the potential mergers between Lattice and Firm-1 and Lattice and Firm-2, through in-person meetings, voice messages, and text exchanges.  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, 46, of Los Angeles, California, is charged with one count of conspiring to commit securities fraud, which carries a maximum prison sentence of five years in prison, and 13 counts of securities fraud, which carry maximum sentences of between 20 and 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. Kim 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 Amanda Kramer and Elisha Kobre are in charge of the prosecution. 

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JOSEPH CERVONE was sentenced to 22 months in prison on tax fraud charges.  CERVONE plead guilty on March 29, 2017, to one count of endeavoring to obstruct and impede the due administration of the internal revenue laws and one count of subscribing to false tax returns before U.S. District Judge Nelson S. Román, who imposed today’s sentence.

According to the Information previously filed in White Plains federal court and court proceedings:

From 2009 through 2012, CERVONE, a certified public accountant with an office in White Plains, obstructed and impeded the IRS by filing false tax returns claiming more than $23 million of energy and coal credits on behalf of his clients in order to obtain tax refunds.  In addition, CERVONE also filed false tax returns for the tax years 2010 and 2011 that failed to report income relating to personal expenses paid on behalf of CERVONE from funds obtained as a result of his clients’ false tax returns.

*                      *                     *

In addition to the prison term, CERVONE, 64, of White Plains, New York, was sentenced to one year of supervised release and a $15,000 fine. 

Mr. Kim praised the outstanding efforts of the Internal Revenue Service - Criminal Investigation.  He also thanked U.S. Department of Justice’s Tax Division for its significant assistance in the investigation

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney John P. Collins Jr. is in charge of the prosecution.

Attorney General Jeff Sessions recognized 202 Department of Justice employees – including seven from the Office of the United States Attorney for the Southern District of New York (“SDNY”) who received the Department’s highest award for employee service – for their distinguished public service today at the 65nd Annual Attorney General’s Awards Ceremony.  This annual ceremony recognizes individuals for their outstanding service and dedication to carrying out the missions of the Department of Justice.

Attorney General Jeff Sessions said:  “Every single day, the 115,000 men and women of the Department of Justice work to protect our national security against terrorist threats, defend the civil rights of all Americans, reduce violent crime in our communities, stop deadly drug dealers and their organizations, and strengthen the rule of law.  This work benefits every American, and each Department of Justice employee plays a role that helps us accomplish our objectives.  Today, we take a moment to recognize those who have distinguished themselves by exemplary service to the Department.  Each one of these men and women – through their dedication and commitment – has made a difference.  Meeting with them and their families today, I am more confident than ever that the Department – and the safety of the American people – are in good hands.”

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that the Attorney General’s Award for Exceptional Service, the Department’s highest award for employee service, was presented to SDNY Assistant U.S. Attorneys Nola B. Heller, Sarah R. Krissoff, Matthew J. Laroche, Michael D. Maimin, Rachel Maimin, and Micah W.J. Smith, and paralegal specialist Darci Brady.  This team, along with fellow award recipients ATF Special Agents Kenneth G. Crotty and Andrew J. Daher, DEA Special Agents William D. Melodick and Moises Walters, HSI Special Agent Paul H. Pasuco, and NYPD Detectives Pedro Alfonso, Paul Jeselson, and John Urena, investigated, arrested, and prosecuted more than 100 members of the violent Bronx-based Trinitarios gang.  These RICO cases resulted in clearance of numerous murders and other acts of extreme violence through guilty pleas or convictions at trial.  The Trinitarios cases had a direct impact on the homicide rate in the Bronx, which has declined to record-low levels in the aftermath of the initial takedown and subsequent investigation and prosecution.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Our Office serves no higher mission than helping to keep the citizens of our city safe, including from gang and gun violence.  That is why we are extremely proud of those in our Office and with our law enforcement partners who received today the Attorney General’s Award for Exceptional Service, the Department's highest honor for employee service.  These fine women and men were honored for their work in investigating and prosecuting the vicious and violent Trinitarios gang, including prosecutions that dismantled its leadership and took over a hundred violent gang members off the streets.  Their commitment has helped make Bronx safer and has had a positive impact on the lives of New Yorkers.”

Nineteen other individuals outside the department were also honored for their work.    The department will also present one posthumous award to Deputy Commander Patrick T. Carothers of the U.S. Marshals Service for exceptional heroism in the line of duty during a fugitive apprehension in Georgia last November in which Deputy Commander Carothers was mortally wounded.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, James J. Hunt, the Special Agent-in-Charge of the New York Field Office of the Drug Enforcement Administration (“DEA”), Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), James P. O’Neill, the Police Commissioner of the City of New York (“NYPD”), George P. Beach II, the Superintendent of the New York State Police (“NYSP”), and 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”), announced today the arrest of CRISTIAN RODRIGUEZ, who distributed through the U.S. mail heroin, oxycodone and other prescription drugs that were illegally sold over the Internet and on “dark web” marketplaces.  When RODRIGUEZ was arrested yesterday, the DEA and USPIS seized approximately 32 kilograms of prescription drugs that were in his apartment.  The defendant was presented yesterday before U.S. Magistrate Judge Ronald L. Ellis in Manhattan federal court.     

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, Cristian Rodriguez used the anonymity of the internet to peddle massive quantities of addictive pain killers without valid prescriptions.  Hiding behind computers, Rodriguez and his co-conspirators allegedly sold and shipped multiple kilograms of highly addictive prescription drugs and potentially lethal opioids.  Thanks to the outstanding work of our law enforcement partners, Rodriguez has been arrested and his dangerous business has been taken offline.”

DEA Special Agent-in-Charge James J. Hunt said:  “Anonymity is a drug trafficker’s friend and law enforcement’s foe.  Yesterday’s street corner dealer has been replaced by the dark web that enables criminal activity and drug addiction.  Online illicit marketplaces challenge law enforcement, but this investigation demonstrates how joint efforts can lead to the arrest of an alleged major drug distributor based in New York City.”

USPIS Inspector-in-Charge Philip R. Bartlett said: “The opioid crisis has become a national emergency impacting the lives of so many unsuspecting families.  Postal Inspectors, along with their law enforcement partners, are determined to put a stop to the distribution of illegal narcotics, safeguarding the American public.”

NYPD Commissioner James P. O’Neill said:  “This defendant attempted to use the anonymity of the internet to peddle heroin, counterfeit oxycodone, and other prescription drugs to those battling serious addiction.  Those who profit on at the expense of others’ well-being will be investigated and prosecuted, aggressively. Today’s arrest is the latest example of our continued commitment.”

NYSP Superintendent George P. Beach II said:  “This arrest is another example of how dedicated police work and strong law enforcement partnerships are succeeding in keeping dangerous narcotics from infiltrating our neighborhoods.  Criminals who illegally sell counterfeit prescription drugs are putting our communities as risk.  These pharmaceuticals, when not taken under the supervision of a doctor, can be highly addictive and destroy lives.  I commend the hard work of the Strike Force and all of our law enforcement partners as they fight to keep drugs off our streets and work to prevent prescription drug abuse.”

HSI Special Agent-in-Charge Angel Melendez said:  “These multi-agency task forces are essential in the fight against the illegal proliferation of potentially deadly and highly-addictive prescription drugs.  The arrest of the defendant and the significant seizures announced today ensure that these drugs will never make it into our communities to do untold harm.”

According to the allegations in the Complaint and statements made in Manhattan federal court:[[1]]    

Since at least May 2016, RODRIGUEZ and his co-conspirators anonymously sold and distributed controlled substances over the Internet via online marketplaces and “dark web” sites.  RODRIGUEZ shipped various prescription drugs, including counterfeit oxycodone, which was actually made of heroin and other substances, to individuals across the United States.  RODRIGUEZ maintained a stockpile of these drugs in his apartment in the Bronx, New York.  A search of RODRIGUEZ’s residence at the time of his arrest uncovered, among other things, approximately 32 kilograms of prescription drugs, shipping supplies, drug paraphernalia, money transfer records, and electronics typically used in the operation of online narcotics distribution schemes.                

*                      *                     *

RODRIGUEZ, 43, of the Dominican Republic, was charged with one count of distributing and possessing with intent to distribute heroin and oxycodone, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. 

Mr. Kim praised the outstanding investigative work of the U.S. Postal Inspection Service and the DEA’s New York Organized Crime Drug Enforcement Strike Force.  The Strike Force comprises agents and officers of the DEA, the New York City Police Department, Homeland Security Investigations, the New York State Police, the U.S. Internal Revenue Service Criminal Investigative Division, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the U.S. Secret Service, the U.S. Marshals Service, the New York National Guard, the Clarkstown Police Department, the U.S. Coast Guard, the Port Washington Police Department, and the New York State Department of Corrections and Community Supervision.  The Strike Force is partially funded by the New York/New Jersey High Intensity Drug Trafficking Area (“HIDTA”), which is a federally funded crime fighting initiative and part of the Organized Crime Drug Enforcement Task Force (“OCDTEF”) program.

In an effort to help prevent prescription drug abuse and theft, the DEA and its local law enforcement, community, and tribal partners are offering the public its 14th opportunity in seven years to rid their homes of potentially dangerous expired, unused, and unwanted prescription drugs.  This Saturday, October 28, 2017, from 10:00 a.m. to 2:00 p.m., individuals can take pills and other solid forms of medication to one of almost 5,000 collection sites manned by more than 4,000 partners nationwide.  Individuals can find nearby collection sites at www.DEATakeBack.com.  The service is free and anonymous, no questions asked.

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorney Nicolas Roos 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 descriptions of the Complaint set forth below constitute only allegations, and every fact described should be treated as an allegation.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ANTON SALJANIN and GJON SALJANIN pled guilty this week before U.S. Magistrate Judge Lisa Margaret Smith to charges associated with participating in a scheme to steal, transport, and sell a shipment of approximately 1,200 computers, valued at over $1 million, that were bound for two public high schools in New Jersey.  All four defendants charged in the scheme have pled guilty.  ANTON SALJANIN and GJON SALJANIN are scheduled to be sentenced by U.S. District Judge Kenneth M. Karas in February 2018.

According to the Complaint and Superseding Indictment filed in White Plains federal court, as well as materials submitted in connection with the plea proceedings:

On or about January 15, 2014, ANTON SALJANIN, a driver for a shipping company, drove a truck from Yorktown Heights, New York, to a technology company located in Massachusetts to pick up a shipment of approximately 1,200 computers.  ANTON SALJANIN brought his brother, GJON SALJANIN, with him.  The computers were being shipped to two public high schools located in New Jersey, and were valued at over $1 million.

The next morning, ANTON SALJANIN reported to the Yorktown Police Department that the truck had been stolen from a parking lot located in Yorktown Heights.  Later that day, ANTON SALJANIN reported to Yorktown Police that he had been driving around looking for the truck when he happened to spot it from the highway in a parking lot in Danbury, Connecticut.  The truck would not have been visible in the Danbury parking lot to a driver passing by on the highway.  Furthermore, historical cell site data for ANTON SALJANIN’s cellphone contradicts his claims about the route he took to look for the truck.

Yorktown Police detectives examined the truck and found that a window had been broken.  The detectives found broken glass on the scene in the Danbury parking lot but found no broken glass on the scene in the Yorktown Heights parking lot, suggesting that the window had been broken at the Danbury parking lot rather than at the Yorktown Heights parking lot.

During interviews with the Yorktown Police, ANTON SALJANIN and GJON SALJANIN both falsely claimed that on the night of January 15, 2014, they drove directly from a convenience store outside of Yorktown Heights to the Yorktown Heights parking lot.  Security camera footage from various locations in Yorktown Heights shows that a truck matching the description of the truck driven by the SALJANIN brothers departed from their claimed route, and instead traveled in the direction of the residence of Ujka Vulaj, a long-time friend of ANTON SALJANIN.  The video surveillance footage also shows that the duration of the detour corresponds to the approximate length of time it would have taken to drive to Vulaj’s residence, unload the computers from the truck, and return to the route to the Yorktown Heights parking lot.

From in or about January 2014 through at least in or about April 2014, Vulaj sold the stolen computers, some with the help of a co-worker, Carlos Caceres.  They sold the computers, which had a retail value of approximately $1,000, for far below the market price.  Vulaj and Caceres charged approximately $500 to $800 in cash for each computer, and handed over each computer in plain brown cardboard packaging.

*                *                *

ANTON SALJANIN, 45, of Yorktown Heights, New York, pled guilty on October 18, 2017, to one count of conspiracy to commit theft from an interstate shipment, interstate transportation of stolen property, and receipt, possession, and sale of stolen property, which carries a maximum sentence of five years in prison; and one count of theft from an interstate shipment, which carries a maximum sentence of ten years in prison.  He is scheduled to be sentenced on February 6, 2018.

GJON SALJANIN, 42, of Yorktown Heights, New York, pled guilty on October 16, 2017, to one count of conspiracy to commit theft from an interstate shipment, interstate transportation of stolen property, and receipt, possession, and sale of stolen property, which carries a maximum sentence of five years in prison.  He is scheduled to be sentenced on February 2, 2018.

The SALJANINs’ co-defendants have been convicted and sentenced.  Vulaj, 56, of Yorktown Heights, New York, pled guilty on June 17, 2016, to one count of conspiracy to commit theft from an interstate shipment, interstate transportation of stolen property, and receipt, possession, and sale of stolen property, and was sentenced by Judge Karas on May 12, 2017, to 12 months and one day in prison and two years of supervised released (including 6 months of home confinement).  Judge Karas also ordered Vulaj to forfeit $889,424.15 in ill-gotten gains and to pay $889,424.15 in restitution.

Caceres, 39, of the Bronx, New York, pled guilty on July 21, 2016, to one count of conspiracy to commit receipt, possession, and sale of stolen property, and was sentenced by Judge Karas on January 6, 2017, to 27 months in prison and three years of supervised released.  Judge Karas also ordered Caceres to forfeit $331,188 in ill-gotten gains and to pay $331,188 in restitution.

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation, the Yorktown Police Department, the Westchester County Police Department, and the New York City Police Department.  He also thanked the Bronx County District Attorney’s Office for its assistance.

This case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Won S. Shin, Benjamin Allee, and Scott Hartman are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Anthony A. Scarpino Jr., Westchester County District Attorney, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging MARKEL OVERTON, a/k/a “Kellz,” THOMAS BLANTON, a/k/a “LT,” MARQUIS COLLIER, a/k/a “Keise,” KADEEM DINHAM, a/k/a “Polo,” DONNIE DIXON, a/k/a “Scooter,” RAHEEM JONES, a/k/a “Rah Trigger,” a/k/a “Trigga,” JAMAAL SINCLAIR, a/k/a “Diggz,” and NOEL SMITH, a/k/a “Georgie,” with various crimes relating to racketeering, narcotics, and firearms offenses.  The defendants have been charged as a result of their membership in the “Goonies” street gang that operated in the City of Mount Vernon, New York. OVERTON was arrested on these charges yesterday. COLLIER and DIXON were arrested on these charges today. DINHAM, who was already in custody on state charges, was transferred to federal custody today; BLANTON, SINCLAIR, and SMITH, who were also already in custody on state charges, will be transferred to federal custody as soon as possible; and JONES was already in federal custody on related charges.  The defendants will be arraigned before United States Magistrate Judge Lisa M. Smith this afternoon in White Plains federal court.

Acting U.S. Attorney Joon H. Kim said:  “As alleged, the eight members and associates of a violent Mount Vernon street gang charged today engaged in attempted murder, drug dealing and firearms offenses.  One of our most important missions, as federal prosecutors, is to investigate and prosecute street gangs that threaten our communities through violence and narcotics trafficking, as the Goonies allegedly did in Mount Vernon.”

Westchester County District Attorney Anthony A. Scarpino Jr. said:  “This gang was allegedly engaged in serious criminal activity that included shooting incidents, armed robberies, gun possession and narcotics distribution.  We are pleased that this is now coming to an end.  I want to thank our partners at the United States Attorney’s Office for the Southern District and the New York office of the FBI for their unstinting dedication and determination that led to this indictment and today’s arrests.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, the motives of this gang were sinister and criminal, using violence and illegal drugs to intimidate the community.  The FBI Westchester County Safe Streets Task Force works diligently with our law enforcement partners every day to stop these gangs, and keep them from negatively impacting communities.”

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

From 2007 to 2017, in the Southern District of New York and elsewhere, OVERTON, BLANTON, DINHAM, DIXON, JONES, SINCLAIR, and SMITH were members or associates of a racketeering enterprise known as the “Goonies.”  In order to fund the enterprise, protect and expand its interests, and promote its standing, members and associates of the Goonies committed, conspired, attempted, and threatened to commit acts of violence, including attempted murder and robbery; they conspired to distribute and possess with the intent to distribute narcotics; and they obtained, possessed, and used firearms, including by brandishing and firing them.  BLANTON, COLLIER, DINHAM, DIXON, and JONES also conspired with one another, and certain other members of the Goonies, to distribute and possess with the intent to distribute crack cocaine and marijuana. 

*                *                *

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. Kim thanked the Westchester County District Attorney’s Office and praised the outstanding investigative work of the FBI’s Westchester County Safe Streets Task Force, which comprises agents and detectives from the Yonkers Police Department, Westchester County District Attorney’s Office, Westchester County Police Department, Peekskill Police Department, Mount Vernon Police Department, New York City Police Department, and U.S. Probation.

The prosecution is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Anden F. Chow, Christopher J. Clore, Sarah Krissoff, Olga Zverovich, and Special Assistant United States Attorneys John O’Rourke and Lauren Abinanti 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. Markel Overton, et al.

CHARGE

DEFENDANTS

MAXIMUM PENALTIES

Count One

Racketeering Conspiracy

MARKEL OVERTON

  a/k/a “Kellz”

THOMAS BLANTON

  a/k/a “LT”

MARQUIS COLLIER

  a/k/a “Keise”

KADEEM DINHAM

  a/k/a “Polo”

DONNIE DIXON

  a/k/a “Scooter”

RAHEEM JONES

  a/k/a “Rah Trigger”

  a/k/a “Trigga”

JAMAAL SINCLAIR

  a/k/a “Diggz”

NOEL SMITH

  a/k/a “Georgie”

20 years in prison

Count Two

Firearms Offense

MARKEL OVERTON

THOMAS BLANTON

MARQUIS COLLIER

KADEEM DINHAM

DONNIE DIXON

RAHEEM JONES

JAMAAL SINCLAIR

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

Count Three

Firearms Offense

NOEL SMITH

Life in prison with a mandatory minimum of 7 years in prison

Count Four

Narcotics Conspiracy

THOMAS BLANTON

MARQUIS COLLIER

KADEEM DINHAM

DONNIE DIXON

RAHEEM JONES

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

DEFENDANT

AGE

MARKEL OVERTON

27

THOMAS BLANTON

24

MARQUIS COLLIER

33

KADEEM DINHAM

25

DONNIE DIXON

28

RAHEEM JONES

28

JAMAAL SINCLAIR

29

NOEL SMITH

24

[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.

Joon H. Kim, the Acting 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 D. Robnett, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), Angel M. Melendez, the Special Agent in Charge of the New York Field Office of Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging HALLIL TABAR, ASMIN HERNANDEZ, JOHN MUNOZ-GARCIA, JAIRO CIENFUEGOS, WILLIAM BAEZ, HENRY RODRIGUEZ, DANNY HANNAH, JR., KEVIN UMEJEI, and STARLY HERNANDEZ with conspiracy to distribute marijuana, and a Complaint charging LORNE VICTORIA with conspiracy to distribute marijuana and use of a firearm in furtherance of drug trafficking.  Nine of the defendants were arrested yesterday and presented before United States Magistrate Judge Sarah Netburn in Manhattan federal court, and STARLY HERNANDEZ was arrested this morning and will be presented before Judge Netburn later today.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, these defendants conspired to ship millions of dollars’ worth of drugs across the country for eventual sale in New York City.  Searches of apartments where the defendants allegedly resided uncovered guns and ammunition, multiple kilograms of cocaine, hundreds of pounds of marijuana, and thousands of dollars in cash.  Drug trafficking organizations endanger public safety, and today’s multi-agency effort has successfully halted another such alleged organization.”

DEA Special Agent-in-Charge James J. Hunt said:  “Yesterday’s arrests were part of ‘Operation Green Giant’, a Strike Force investigation targeting an organization allegedly reaping millions off the sale of marijuana in New York City.  The alleged operation traversed the country with $22 million worth of marijuana sent to our city and the profit laundered back to California.  I commend the good work of the Strike Force, Southern District of New York and our law enforcement partners on these arrests and dismantlement.”

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

The defendants are members of a Bronx-based large-scale drug trafficking organization (the “DTO”) that shipped hundreds of boxes containing thousands of pounds of marijuana from California to various locations in New York.  Between at least March 2016 and the present, the DTO trafficked in over 6,600 pounds of marijuana worth approximately $22 million, which was sent to residences and businesses in Manhattan, the Bronx, and New Rochelle.  After the drugs were shipped to New York, the defendants transferred multiple boxes of marijuana per week to several stash houses from which the DTO members further distributed the drugs to customers and dealers.    

In connection with yesterday’s arrests, law enforcement agents executed search warrants at 12 locations in the Bronx, including apartments occupied by several of the defendants.  During the execution of those search warrants, agents recovered, among other items, three handguns, one sawed-off shotgun, ammunition, multiple kilograms of cocaine, hundreds of pounds of marijuana, and thousands of dollars in cash.  DEA agents previously seized over $230,000 in cash from TABAR on October 14, 2017, at San Francisco International Airport.

*                      *                     *

Charts setting forth the names, ages, charges, residences, 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 sentencings of the defendants will be determined by the judge.

Mr. Kim 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 NYPD, HSI, the New York State Police, IRS-CI, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), 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.  The Strike Force is partially funded by the New York/New Jersey High Intensity Drug Trafficking Area (HIDTA), which is a federally funded crime fighting initiative and part of the Organized Crime Drug Enforcement Task Force (“OCDTEF”) program.

This case is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Catherine Geddes and Nicholas Folly 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.       

###

United States v. Hallil Tabar et al. &

United States v. Lorne Victoria

CHARGE

DEFENDANTS

MAX. PENALTIES

Conspiracy to Distribute Narcotics

21 U.S.C. §§ 846 and 841(b)(1)(A)

HALLIL TABAR,

JAIRO CIENFUEGOS,

WILLIAM BAEZ,

HENRY RODRIGUEZ,

DANNY HANNAH, JR.,

STARLY HERNANDEZ,

and

LORNE VICTORIA

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

Conspiracy to Distribute Narcotics

21 U.S.C. §§ 846 and 841(b)(1)(B)

ASMIN HERNANDEZ,

JOHN MUNOZ-GARCIA,

and

KEVIN UMEJEI

Life in prison with a mandatory minimum of 5 years in prison

Use of Firearms in Furtherance of Narcotics Trafficking

18 U.S.C. § 924(c)(1)(A)

LORNE VICTORIA

Life in prison with a mandatory minimum of 5 years in prison

DEFENDANT

AGE

RESIDENCE

HALLIL TABAR

29

BRONX

ASMIN HERNANDEZ

27

BRONX

JOHN MUNOZ-GARCIA

30

BRONX

JAIRO CIENFUEGOS

27

BRONX

WILLIAM BAEZ

31

BRONX

HENRY RODRIGUEZ

41

BRONX

DANNY HANNAH, JR.

48

BRONX

KEVIN UMEJEI

25

BRONX

STARLY HERNANDEZ

30

CALIFORNIA

LORNE VICTORIA

37

BRONX

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced the unsealing of a Superseding Indictment charging CHRISTOPHER WILSON, a/k/a “Eric Fields,” JACK KAVNER, a/k/a “Bob Wiley,” a/k/a “Phil Powers,” and DANIEL QUIRK, a/k/a “Lou Epstein,” a/k/a “Bill Huckabee,” a/k/a “Josh Newman,” with conspiring to commit wire fraud and money laundering.  WILSON also is charged with destruction, alteration, or falsification of records in a federal investigation.  WILSON, KAVNER, and QUIRK were arrested this morning and will be presented and arraigned this afternoon before U.S. District Judge Sidney H. Stein in Manhattan federal court.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “These three defendants, together with their previously charged co-defendants, allegedly targeted the elderly in a callous telemarketing scheme.  They allegedly lured their victims into making ‘investments’ in businesses, then just stole their money.  Together with HSI and the NYPD, we will continue to investigate and prosecute all those who target victims who are vulnerable because of their age.”

According to the allegations in the Superseding Indictment[1], a Complaint filed against co-defendants, and other statements in the public record:

Beginning in at least October 2013 through at least September 2016, WILSON, KAVNER, and QUIRK operated telemarketing companies (the “Telemarketing Companies”) that engaged in a fraudulent scheme (the “Telemarketing Scheme”), by which they promised to earn victims’ (the “Victims”) money in exchange for particular Victims making an initial cash “investment” in business development, website design, grant applications, or tax preparation services.  Many Victims, the majority of whom are over 70 years old, “invested” thousands of dollars with the Telemarketing Companies, but did not earn any of the promised returns.  When Victims of the Telemarketing Scheme sought refunds, or fought credit card charges, the Telemarketing Companies provided explanations and documentation to the credit card companies falsely representing that the Victims had received the promised services. 

WILSON, KAVNER, and QUIRK participated in the Telemarketing Scheme by, among other things, operating the interrelated Telemarketing Companies as set forth in the below chart:

Telemarketing Company

Defendants

Olive Branch Marketing

CTO Consulting

CHRISTOPHER WILSON, a/k/a “Eric Fields”

Carlyle Management Group

Vanguard Business Solutions

JACK KAVNER, a/k/a “Bob Wiley,” a/k/a “Phil Powers”

DANIEL QUIRK, a/k/a “Lou Epstein,” a/k/a “Bill Huckabee,” a/k/a “Josh Newman”

            Six other individuals were previously indicted in this case, which is scheduled for trial on April 16, 2018.

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            WILSON, 32, of Teaneck, New Jersey, KAVNER, 31, of West New York, New Jersey, and QUIRK, 33, of Little Ferry, New Jersey, are each charged with one count of conspiring to commit wire fraud and one count of conspiring to commit money laundering, each of which carries a maximum sentence of 20 years in prison.  WILSON also is charged with one count of destruction, alteration, or falsification of records in a federal investigation, which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.  

            Mr. Kim praised the outstanding investigative work of HSI and the NYPD.  He added that the investigation is ongoing.

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

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

            If you have any information regarding WILSON, KAVNER, QUIRK, or victims of the Telemarketing Companies, please report it by phone at (917) 480-7167 or by email at christopher.bastos@nypd.org.

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

“On September 17, 2016, Ahmad Khan Rahimi attacked our country and our way of life.  Inspired by ISIS and al Qaeda, Rahimi planted and detonated bombs on the streets of Chelsea, in the heart of Manhattan, and in New Jersey, hoping to kill and maim as many innocent people as possible.  Rahimi’s crimes of hate have been met with swift and resolute justice.  Just over a year after his attacks, and following a fair and open trial, Rahimi now stands convicted of his crimes of terror by a unanimous jury of New Yorkers.  As a result, he now faces a mandatory sentence of life in prison.  Today’s verdict is a victory for New York City, a victory for America in its fight against terror, and a victory for all who believe in the cause of justice.”

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Ray Donavan, Special Agent in Charge of the Special Operations Division of the United States Drug Enforcement Administration (“DEA”), today announced that a grand jury had returned a Superseding Indictment, which charged JOSEPH MANUEL HUNTER, a U.S. citizen and former member of the U.S. Army, and two co-defendants with offenses relating to the February 2012 murder of a woman in the Philippines.  HUNTER’s co-defendants, ADAM SAMIA and CARL DAVID STILLWELL, were previously arrested in North Carolina in July 2015 and are scheduled to start trial on the offenses charged in the Superseding Indictment on April 2, 2018.  HUNTER is expected to arrive in the Southern District of New York on October 25, 2017.  The case has been assigned to the Honorable Ronnie Abrams.

According to the allegations in the Superseding Indictment against HUNTER, SAMIA, and STILLWELL returned today[1]:

HUNTER served from 1983 to 2004 in the United States 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 people 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.  According to STILLWELL’s résumé, he has training and experience in the field of information technology and has 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 monthly 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 plans for the murders.  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.  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 arrests.  

*          *          *

HUNTER, 52, of Owensboro, Kentucky, SAMIA, 43, of Roxboro, North Carolina, and STILLWELL, 49, of Roxboro, North Carolina, have each been charged with 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; 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 are also each charged with conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison.

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 Atlanta Field Division, Raleigh Resident Office; 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; and the Customs and Border Protection’s National Targeting Center.  Mr. Kim also thanked the United States Attorney’s Office for the Middle District of North Carolina for its 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.

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

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

A jury returned a guilty verdict today against Ahmad Khan Rahimi, aka, “Ahmad Rahami,” 29, of Elizabeth, New Jersey, in Manhattan federal court on all eight counts of the Indictment, which charged him with offenses related to his execution and attempted execution of bombings in New York City on Sept. 17, 2016.  Rahimi, who faces mandatory sentence of life in prison, is scheduled to be sentenced on Jan. 18, 2018.

Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Joon H. Kim for the Southern District of New York, Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Office and  Commissioner James P. O’Neill of the NYPD made the announcement.  U.S. District Judge Richard M. Berman presided over the two-week trial.

“Ahmad Khan Rahimi constructed bombs with high explosives and shrapnel to inflict maximum damage to innocent victims in multiple locations,” said Acting Assistant Attorney General Boente.  “The defendant's bombs caused injuries to numerous people.  Thanks to outstanding investigative work, the defendant was identified and arrested before he could do any more harm.  This verdict is an important step in holding him accountable for his crimes.  Pursuing those who seek to conduct attacks on our homeland will remain the highest priority of the National Security Division.  I would like to commend all of the agents, analysts and prosecutors who made this result possible.”

“On September 17, 2016, Ahmad Khan Rahimi attacked our country and our way of life,” said Acting U.S. Attorney Kim.  “Inspired by ISIS and al Qaeda, Rahimi planted and detonated bombs on the streets of Chelsea, in the heart of Manhattan, and in New Jersey, hoping to kill and maim as many innocent people as possible.  Rahimi’s crimes of hate have been met with swift and resolute justice.  Just over a year after his attacks, and following a fair and open trial, Rahimi now stands convicted of his crimes of terror by a unanimous jury of New Yorkers.  As a result, he now faces a mandatory sentence of life in prison.  Today’s verdict is a victory for New York City, a victory for America in its fight against terror, and a victory for all who believe in the cause of justice.”

“It’s no secret New York City remains a desirable target for those who wish to disrupt our way of life,” said Assistant Director in Charge Sweeney Jr.  “Last September, Rahimi set out to harm innocent people who were simply living their lives one Saturday evening.   He underestimated the resilience of New Yorkers as well as the resolution of the FBI’s Joint Terrorism Task Force to see justice served. Today and always, along with our partners, we remain committed to putting terrorists and would-be terrorists behind bars. While the threat posed by Rahimi has been mitigated, I can’t overstate the critical role the public continues to play in combating the threats we face. As we welcome this victory today, I ask everyone to remain engaged, stay aware, and immediately report suspicious activity to the authorities.”

“Ahmed Rahimi deliberately placed two bombs on the streets of Chelsea in the dark of night with the intention of maiming and killing innocent New Yorkers enjoying a September Saturday night,” Commissioner O’Neill.  “The fact that victims were not killed when one bomb exploded and another failed to detonate is miraculous.  Mr. Rahimi was following to the hateful propaganda of al-Qaida and ISIS that calls for the killing of Americans.  The combined efforts of the FBI, NYPD, the New York State Police and the Linden New Jersey Police Department led to the capture of Mr. Rahimi within 50 hours of the bombing.  The investigation, as well as this conviction is an example of the work of the nation’s best counterterrorism team.  I want to commend the detectives, agents and police officers, the prosecutors of the United States Attorney’s Office for the Southern District of New York, and the members of the jury for bringing Ahmed Rahimi to justice.  Today’s verdict is the most forceful deterrent for anyone considering waging terror in our City.  We will investigate; we will find those responsible; and justice will prevail.”

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

On Sept. 17, 2016, Rahimi transported two improvised explosive devices from New Jersey to New York, New York.  Rahimi placed one of the devices in the vicinity of 135 West 23rd Street in the Chelsea neighborhood of New York (the “23rd Street Bomb”) and the other in the vicinity of 131 West 27th Street in the Chelsea neighborhood of New York (the “27th Street Bomb”). 

At approximately 8:30 p.m., the 23rd Street Bomb – containing a high explosive main charge – detonated, causing injuries to over 30 people and multimillion-dollar property damage across a 650-foot crime scene.  The injuries included, among other things, lacerations to the face, abdomen, legs and arms caused by flying glass; metal shrapnel and fragmentation embedded in skin and bone; and various head injuries.  The explosive components appear to have been placed inside a pressure cooker and left near a dumpster.  The explosion propelled a more-than-one-hundred-pound dumpster – which was introduced as an exhibit at trial – more than 120 feet.  The blast shattered windows as far as approximately 400 feet from the blast site and, vertically, more than three stories high. 

Shortly after the 23rd Street Bomb detonated, the 27th Street Bomb was identified by a civilian who promptly called 911, which recorded call was introduced in evidence and played at trial.  The 27th Street Bomb, which was rendered safe prior to detonation, consisted of, among other things, a pressure cooker connected with wires to a cellular telephone (likely to function as a timer) and packaged with an explosive main charge, ball bearings and steel nuts. 

Earlier that day, at approximately 9:35 a.m. on Sept. 17, 2016, another improvised explosive device, which had been planted by Rahimi in the early morning hours, detonated in the vicinity of Seaside Park, New Jersey, along the route for the Seaside Semper Five Marine Corps Charity 5K race.  The start of the race – which was scheduled to begin at 9:00 a.m. – was delayed.  Had the race started on time, the bomb would have detonated as runners were passing by where Rahimi had planted it. 

On Sept. 18, 2016, at approximately 8:40 p.m., six additional improvised explosive devices that Rahimi also planted were found inside a backpack located at the entrance to the New Jersey Transit station in Elizabeth.  One of these devices detonated as law enforcement used a robot to defuse it.

On Sept. 19, 2016, at approximately 9:30 a.m., Rahimi was arrested by police in Linden, New Jersey.  Rahimi fired multiple shots at police, striking and injuring multiple police officers before he was himself shot, subdued and placed under arrest.  In the course of Rahimi’s arrest, a handwritten journal was recovered from Rahimi’s person.  Written in the journal were, among other things, mentions of explosive devices (including “The sounds of bombs will be heard in the streets” and “Bombs set off in the streets they plan to run a mile”),  and laudatory references to Usama Bin Laden, the former leader of al Qaeda, Anwar al-Awlaki, a former senior leader of al Qaeda in the Arabian Peninsula, Mohammed al-Adnani, a former senior leader of the Islamic State in Iraq and al Sham and Nidal Hasan, who shot and killed 13 people in Foot Hood, Texas.

*                *                *

Rahimi was convicted of one count of using a weapon of mass destruction, which carries a maximum sentence of life in prison; one count of attempting to use a weapon of mass destruction, which carries a maximum sentence of life in prison; one count of bombing a place of public use, which carries a maximum sentence of life in prison; one count of destroying property by means of fire or explosive, which carries a maximum sentence of 20 years in prison; one count of attempting to destroy property by means of fire or explosive, which carries a maximum sentence of 20 years in prison; one count of interstate transportation and receipt of explosives, which carries a maximum sentence of 20 years in prison; and two counts of using of a destructive device in furtherance of a crime of violence, namely, the use and attempted use of weapons of mass destruction, each of which individually carries a mandatory minimum consecutive sentence of 30 years in prison, a potential maximum sentence of life in prison, and, by virtue of his convictions on both counts, a mandatory sentence of life in prison.

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

In addition to the charges of which he was convicted in Manhattan federal court, Rahimi also has been charged in the District of New Jersey in a Complaint with offenses in connection with his alleged efforts to detonate explosives in Seaside Park and Elizabeth.

Mr. Boente and Mr. Kim praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD.  Mr. Kim also thanked the Counterterrorism Section of the Department of Justice’s National Security Division for its assistance.

Assistant U.S. Attorneys Emil J. Bove III, Andrew J. DeFilippis and Shawn G. Crowley of the Southern District of New York are prosecuting this case with assistance from Trial Attorney Brian Morgan of the National Security Division’s Counterterrorism Section.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Dana J. Boente, Acting Assistant Attorney General for National Security, 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 Police Commissioner of the City of New York (“NYPD”), announced that a jury returned a guilty verdict today against AHMAD KHAN RAHIMI, a/k/a “Ahmad Rahami,” in Manhattan federal court on all eight counts of the Indictment, which charged him with offenses related to his execution and attempted execution of bombings in New York City on September 17, 2016.  RAHIMI, who faces a mandatory sentence of life in prison, is scheduled to be sentenced on January 18, 2018, by U.S. District Judge Richard M. Berman, who presided over the two-week trial.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “On September 17, 2016, Ahmad Khan Rahimi attacked our country and our way of life.  Inspired by ISIS and al Qaeda, Rahimi planted and detonated bombs on the streets of Chelsea, in the heart of Manhattan, and in New Jersey, hoping to kill and maim as many innocent people as possible.  Rahimi’s crimes of hate have been met with swift and resolute justice.  Just over a year after his attacks, and following a fair and open trial, Rahimi now stands convicted of his crimes of terror by a unanimous jury of New Yorkers.  As a result, he now faces a mandatory sentence of life in prison.  Today’s verdict is a victory for New York City, a victory for America in its fight against terror, and a victory for all who believe in the cause of justice.”

Acting Assistant Attorney General Dana J. Boente said:  “Ahmad Khan Rahimi constructed bombs with high explosives and shrapnel to inflict maximum damage to innocent victims in multiple locations.  The defendant’s bombs caused injuries to numerous people.  Thanks to outstanding investigative work, the defendant was identified and arrested before he could do any more harm.  This verdict is an important step in holding him accountable for his crimes.  Pursuing those who seek to conduct attacks on our homeland will remain the highest priority of the National Security Division.  I would like to commend all of the agents, detectives, analysts and prosecutors who made this result possible.”

FBI Assistant Director William F. Sweeney Jr. said:  “It’s no secret New York City remains a desirable target for those who wish to disrupt our way of life. Last September, Rahimi set out to harm innocent people who were simply living their lives one Saturday evening.   He underestimated the resilience of New Yorkers as well as the resolution of the FBI’s Joint Terrorism Task Force to see justice served. Today and always, along with our partners, we remain committed to putting terrorists and would-be terrorists behind bars. While the threat posed by Rahimi has been mitigated, I can’t overstate the critical role the public continues to play in combating the threats we face. As we welcome this victory today, I ask everyone to remain engaged, stay aware, and immediately report suspicious activity to the authorities.”

NYPD Commissioner James P. O’Neill said:  “Ahmed Rahimi deliberately placed two bombs on the streets of Chelsea in the dark of night with the intention of maiming and killing innocent New Yorkers enjoying a September Saturday night.  The fact that victims were not killed when one bomb exploded and another failed to detonate is miraculous.  Mr. Rahimi was following to the hateful propaganda of al-Qaida and ISIS that calls for the killing of Americans.  The combined efforts of the FBI, NYPD, the New York State Police and the Linden New Jersey Police Department led to the capture of Mr. Rahimi within 50 hours of the bombing.  The investigation, as well as this conviction is an example of the work of the nation’s best counterterrorism team.  I want to commend the detectives, agents and police officers, the prosecutors of the United States Attorney’s Office for the Southern District of New York, and the members of the jury for bringing Ahmed Rahimi to justice.  Today’s verdict is the most forceful deterrent for anyone considering waging terror in our City.  We will investigate; we will find those responsible; and justice will prevail.”

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

On September 17, 2016, RAHIMI transported two improvised explosive devices from New Jersey to New York, New York.  RAHIMI placed one of the devices in the vicinity of 135 West 23rd Street in the Chelsea neighborhood of New York, New York (the “23rd Street Bomb”) and the other in the vicinity of 131 West 27th Street in the Chelsea neighborhood of New York, New York (the “27th Street Bomb”). 

At approximately 8:30 p.m., the 23rd Street Bomb – containing a high explosive main charge – detonated, causing injuries to over 30 people and multimillion-dollar property damage across a 650-foot crime scene.  The injuries included, among other things, lacerations to the face, abdomen, legs, and arms caused by flying glass; metal shrapnel and fragmentation embedded in skin and bone; and various head injuries.  The explosive components appear to have been placed inside a pressure cooker and left near a dumpster.  The explosion propelled a more-than-one-hundred-pound dumpster – which was introduced as an exhibit at trial – more than 120 feet.  The blast shattered windows as far as approximately 400 feet from the blast site and, vertically, more than three stories high. 

Shortly after the 23rd Street Bomb detonated, the 27th Street Bomb was identified by a civilian who promptly called 911, which recorded call was introduced in evidence and played at trial.  The 27th Street Bomb, which was rendered safe prior to detonation, consisted of, among other things, a pressure cooker connected with wires to a cellular telephone (likely to function as a timer) and packaged with an explosive main charge, ball bearings, and steel nuts. 

Earlier that day, at approximately 9:35 a.m. on September 17, 2016, another improvised explosive device, which had been planted by RAHIMI in the early morning hours, detonated in the vicinity of Seaside Park, New Jersey, along the route for the Seaside Semper Five Marine Corps Charity 5K race.  The start of the race – which was scheduled to begin at 9:00 a.m. – was delayed.  Had the race started on time, the bomb would have detonated as runners were passing by where RAHIMI had planted it. 

On September 18, 2016, at approximately 8:40 p.m., six additional improvised explosive devices that RAHIMI also planted were found inside a backpack located at the entrance to the New Jersey Transit station in Elizabeth, New Jersey.  One of these devices detonated as law enforcement used a robot to defuse it.

On September 19, 2016, at approximately 9:30 a.m., RAHIMI was arrested by police in Linden, New Jersey.  RAHIMI fired multiple shots at police, striking and injuring multiple police officers before he was himself shot, subdued, and placed under arrest.  In the course of RAHIMI’s arrest, a handwritten journal was recovered from RAHIMI’s person.  Written in the journal were, among other things, mentions of explosive devices (including “The sounds of bombs will be heard in the streets” and “Bombs set off in the streets they plan to run a mile”),  and laudatory references to Usama Bin Laden, the former leader of al Qaeda, Anwar al-Awlaki, a former senior leader of al Qaeda in the Arabian Peninsula, Mohammed al-Adnani, a former senior leader of the Islamic State in Iraq and al Sham, and Nidal Hasan, who shot and killed 13 people in Foot Hood, Texas.

*                *                *

RAHIMI, 29, of Elizabeth, New Jersey, was convicted of one count of using a weapon of mass destruction, which carries a maximum sentence of life in prison; one count of attempting to use a weapon of mass destruction, which carries a maximum sentence of life in prison; one count of bombing a place of public use, which carries a maximum sentence of life in prison; one count of destroying property by means of fire or explosive, which carries a maximum sentence of 20 years in prison; one count of attempting to destroy property by means of fire or explosive, which carries a maximum sentence of 20 years in prison; one count of interstate transportation and receipt of explosives, which carries a maximum sentence of 20 years in prison; and two counts of using of a destructive device in furtherance of a crime of violence, namely, the use and attempted use of weapons of mass destruction, each of which individually carries a mandatory minimum consecutive sentence of 30 years in prison, a potential maximum sentence of life in prison, and, by virtue of his convictions on both counts, a mandatory sentence of life in prison.

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

In addition to the charges of which he was convicted in Manhattan federal court, RAHIMI also has been charged in the District of New Jersey in a Complaint with offenses in connection with his alleged efforts to detonate explosives in Seaside Park, New Jersey, and Elizabeth, New Jersey.

Mr. Kim and Mr. Boente praised the outstanding efforts of the Federal Bureau of Investigation’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the New York City Police Department.  Mr. Kim also thanked the Counterterrorism Section of the Department of Justice’s National Security Division for its assistance.

The prosecution of this case is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Emil J. Bove III, Andrew J. DeFilippis, and Shawn G. Crowley are in charge of the prosecution, with assistance from Trial Attorney Brian Morgan of the National Security Division’s Counterterrorism Section.

Acting Manhattan U.S. Attorney Joon H. Kim stated:  “As a unanimous jury found today, Scott Tucker and Timothy Muir targeted and exploited millions of struggling, everyday Americans by charging them illegally high interest rates on payday loans, as much as 700 percent.  Tucker and Muir sought to get away with their crimes by claiming that this $3.5 billion business was actually owned and operated by Native American tribes.  But that was a lie.  The jury saw through Tucker and Muir’s lies and saw their business for what it was – an illegal and predatory scheme to take callous advantage of vulnerable workers living from paycheck to paycheck.”

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that SCOTT TUCKER and TIMOTHY MUIR were convicted after a five-week jury trial on all fourteen counts against them, for operating a nationwide internet payday lending enterprise that systematically evaded state laws in order to charge illegal interest rates as high as 1000% on loans.

Acting Manhattan U.S. Attorney Joon H. Kim stated:  “As a unanimous jury found today, Scott Tucker and Timothy Muir targeted and exploited millions of struggling, everyday Americans by charging them illegally high interest rates on payday loans, as much as 700 percent.  Tucker and Muir sought to get away with their crimes by claiming that this $3.5 billion business was actually owned and operated by Native American tribes.  But that was a lie.  The jury saw through Tucker and Muir’s lies and saw their business for what it was – an illegal and predatory scheme to take callous advantage of vulnerable workers living from paycheck to paycheck.”

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

The Racketeering Influenced Corrupt Organizations (“RICO”) Crimes

From at least 1997 until 2013, TUCKER engaged in the business of making small, short-term, high-interest, unsecured loans, commonly referred to as “payday loans,” through the Internet.  TUCKER’s lending enterprise, which had up to 1,500 employees based in Overland Park, Kansas, did business as Ameriloan, f/k/a Cash Advance; OneClickCash, f/k/a Preferred Cash Loans; United Cash Loans; US FastCash; 500 FastCash; Advantage Cash Services; and Star Cash Processing (the “Tucker Payday Lenders”).  TUCKER, working with MUIR, the general counsel for TUCKER’s payday lending businesses since 2006, routinely charged interest rates of 600% or 700%, and sometimes higher than 1,000%.  These loans were issued to more than 4.5 million working people in all fifty states, including more than 250,000 people in New York, many of whom were struggling to pay basic living expenses.  Many of these loans were issued in states, including New York, with laws that expressly forbid lending at the exorbitant interest rates TUCKER charged.  Evidence at trial established that TUCKER and MUIR were fully aware of the illegal nature of the loans charged and in fact prepared scripts to be used by call center employees to deal with complaints by customers that their loans were illegal. 

Fraudulent Loan Disclosures

The Truth-in-Lending Act (“TILA”) is a federal statute intended to ensure that credit terms are disclosed to consumers in a clear and meaningful way, both to protect customers against inaccurate and unfair credit practices, and to enable them to compare credit terms readily and knowledgeably.  Among other things, TILA and its implementing regulations require lenders, including payday lenders like the Tucker Payday Lenders, to accurately, clearly, and conspicuously disclose, before any credit is extended, the finance charge, the annual percentage rate, and the total of payments that reflect the legal obligation between the parties to the loan.

The Tucker Payday Lenders purported to inform prospective borrowers, in clear and simple terms, as required by TILA, of the cost of the loan (the “TILA Box”).  For example, for a loan of $500, the TILA Box provided that the “finance charge – meaning the “dollar amount the credit will cost you” – would be $150, and that the “total of payments” would be $650.  Thus, in substance, the TILA Box stated that a $500 loan to the customer would cost $650 to repay.  While the amounts set forth in the Tucker Payday Lenders’ TILA Box varied according to the terms of particular customers’ loans, they reflected, in substance, that the borrower would pay $30 in interest for every $100 borrowed.

In fact, through at least 2012, TUCKER and MUIR structured the repayment schedule of the loans such that, on the borrower’s payday, the Tucker Payday Lenders automatically withdrew the entire interest payment due on the loan, but left the principal balance untouched so that, on the borrower’s next payday, the Tucker Payday Lenders could again automatically withdraw an amount equaling the entire interest payment due (and already paid) on the loan.  With TUCKER and MUIR’s approval, the Tucker Payday Lenders proceeded automatically to withdraw such “finance charges” payday after payday (typically every two weeks), applying none of the money toward repayment of principal, until at least the fifth payday, when they began to withdraw an additional $50 per payday to apply to the principal balance of the loan.  Even then, the Tucker Payday Lenders continued to assess and automatically withdraw the entire interest payment calculated on the remaining principal balance until the entire principal amount was repaid.  Accordingly, as TUCKER and MUIR well knew, the Tucker Payday Lenders’ TILA box materially understated the amount the loan would cost, including the total of payments that would be taken from the borrower’s bank account.  Specifically, for a customer who borrowed $500, contrary to the TILA Box disclosure stating that the total payment by the borrower would be $650, in fact, and as TUCKER and MUIR well knew, the finance charge was $1,425, for a total payment of $1,925 by the borrower. 

The Sham Tribal Ownership of the Business

In response to complaints that the Tucker Payday Lenders were extending abusive loans in violation of their usury laws, several states began to investigate the Tucker Payday Lenders.  To thwart these state actions, TUCKER devised a scheme to claim that his lending businesses were protected by sovereign immunity, a legal doctrine that, among other things, generally prevents states from enforcing their laws against Native American tribes.  Beginning in 2003, TUCKER entered into agreements with several Native American tribes (the “Tribes”), including the Santee Sioux Tribe of Nebraska, the Miami Tribe of Oklahoma, and the Modoc Tribe of Oklahoma.  The purpose of these agreements was to cause the Tribes to claim they owned and operated parts of TUCKER’s payday lending enterprise, so that when states sought to enforce laws prohibiting TUCKER’s loans, TUCKER’s lending businesses would claim to be protected by sovereign immunity.  In return, the Tribes received payments from TUCKER, typically one percent of the revenues from the portion of TUCKER’s payday lending business that the Tribes purported to own.  

In order to create the illusion that the Tribes owned and controlled TUCKER’s payday lending business, TUCKER and MUIR engaged in a series of lies and deceptions.  Among other things:

• MUIR and other counsel for TUCKER prepared false factual declarations from tribal representatives that were submitted to state courts, falsely claiming, among other things, that tribal corporations substantively owned, controlled, and managed the portions of TUCKER’s business targeted by state enforcement actions.

• TUCKER opened bank accounts to operate and receive the profits of the payday lending enterprise, which were nominally held by tribally owned corporations, but which were, in fact, owned and controlled by TUCKER.  TUCKER received over $380 million from these accounts on lavish personal expenses, some of which was spent on a fleet of Ferraris and Porsches, the expenses of a professional auto racing team, a private jet, a luxury home in Aspen, Colorado, and his personal taxes.

• Employees of TUCKER making payday loans over the phone told borrowers, using scripts directed and approved by TUCKER and MUIR, that they were operating in Oklahoma and Nebraska, where the Tribes were located, when in fact they were operating at TUCKER’s corporate headquarters in Kansas in order to deceive borrowers into believing that they were dealing with Native American tribes.

These deceptions succeeded for a time, and several state courts dismissed enforcement actions against TUCKER’s payday lending businesses based on claims that they were protected by sovereign immunity.  In reality, the Tribes neither owned nor operated any part of TUCKER’s payday lending business.  The Tribes made no payment to TUCKER to acquire the portions of the business they purported to own.  TUCKER continued to operate his lending business from a corporate headquarters in Kansas, and TUCKER continued to reap the profits of the payday lending businesses, which generated over $3.5 billion in revenue from just 2008 to June 2013 – in substantial part by charging struggling borrowers high interest rates expressly forbidden by state laws.

*                      *                     *

TUCKER, 55, and MUIR, 46, were convicted in all 14 counts in the Indictment, including one count of conspiring to commit racketeering through the collection of unlawful debt, three counts of participating in a racketeering enterprise through the collection of unlawful debt, one count of conspiring to commit wire fraud, one count of wire fraud, one count of conspiring to commit money laundering, two counts of money laundering, and five counts of violating TILA. 

Mr. Kim praised the outstanding investigative work of the St. Louis Field Office of the IRS-CI.  Mr. Kim also thanked the Criminal Investigators at the United States Attorney’s Office, the Federal Bureau of Investigation, and the Federal Trade Commission for their assistance with the case.

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.

The prosecution is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Niketh Velamoor, Hagan Scotten, and Sagar Ravi are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that MICHAEL S. WRIGHT pled guilty today before U.S. District Judge Paul A. Engelmayer to commodities fraud in connection with WRIGHT’s operation of an investment fund, Wright Time Capital Group (“WTCG”).  WRIGHT induced victims to invest in his fund by misrepresenting the historical trading performance of WTCG, and, after obtaining investor funds, misappropriated a large portion of them for his personal use and benefit.  Additionally, after losing most of the funds he actually invested in unsuccessful forex trades, WRIGHT hid those losses from investors by issuing fake account statements and began operating WTCG as a Ponzi scheme, obtaining funds from new investors and using those funds to make payments to earlier investors who were demanding the return of their investments. 

Acting U.S. Attorney Joon H. Kim said:  “Michael Wright used WTCG as his personal piggy bank, issuing fraudulent account statements that covered up the losses WTCG incurred, and ultimately operating WTCG as a Ponzi scheme.  Thanks to the dedicated work of the FBI, Wright will now be held to account for his fraudulent scheme.” 

According to the Complaint, the Indictment, and other statements made in open court:

WRIGHT started WTCG in January 2011, and ultimately obtained more than $400,000 in investments from victims (the “Victims”).  In his pitch to potential investors, WRIGHT misrepresented WTCG’s investment performance, falsely claiming that he had achieved double-digit gains through forex trading in WTCG’s first six months of existence.  In fact, from the outset of WTCG, WRIGHT earned little to no money through his forex trading, and WRIGHT repeatedly falsified account statements to the Victims.  Additionally, after obtaining Victim funds, WRIGHT did initially purchase some forex trades on their behalf, but then began to steal their money, using investor funds to pay for personal expenses, including hotel stays, travel, and tattoos. 

Eventually, WRIGHT operated WTCG as a Ponzi scheme, soliciting funds from new investors in order to use their funds to make payments to other Victims who were demanding the return of their investments.  

*          *          *

WRIGHT, 30, of Rockville Centre, New York, pled guilty to one count of commodities fraud, which carries a maximum sentence of 10 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the Judge.

WRIGHT is scheduled to be sentenced by Judge Engelmayer on January 25, 2018, at 10:00 a.m.

Mr. Kim praised the efforts of the FBI in this investigation. 

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Charles Brandeis, the Special Agent in Charge of the New York Field Office of the U.S. Department of State's Diplomatic Security Service (“DSS”), and Philip Bartlett, the Inspector in Charge of the New York Division of the United States Postal Inspection Service (“USPIS”), announced charges today against a Massachusetts businessman, DAVID STASIOR, for providing financing and financial advice to an illegal brothel operating in Manhattan, and conspiring with the brothel owner to use the proceeds from the brothel to promote the brothel’s activities. STASIOR was arrested by agents from DSS, the USPIS, and the U.S. Attorney’s Office for the Southern District of New York this morning and will be presented in federal court in Massachusetts later today.

This case arises from a multiple-year-long investigation in which 17 additional individuals have previously been charged with conspiracy to commit money laundering and conspiracy to violate the Travel Act.  The previously charged individuals have included the owners of a network of at least 10 brothels in Manhattan, and individuals who provided advertising services for these brothels.  These brothels were independently owned but worked cooperatively, and employed prostitutes who typically came to the United States from South Korea pursuant to fraudulently obtained visas or visa waivers.  STASIOR allegedly provided financing for one of these brothels, whose owner was previously charged and pled guilty to money laundering conspiracy.

Acting U.S. Attorney Joon H. Kim stated:  “For years, the defendant allegedly helped launder the proceeds of an illegal brothel operation in Manhattan, providing start-up money, ongoing financial advice, and record-keeping services.  As alleged, the defendant financially supported and profited from this business that exploited vulnerable women and laundered money.”

Special Agent in Charge Charles Brandeis stated:  “DSS continues to disrupt and dismantle transnational criminal organizations seeking to profit from the entry and illicit activities of vulnerable foreign nationals.  This investigation demonstrates the global reach of the Diplomatic Security Service.”

Inspector in Charge Philip R. Bartlett stated:  “This arrest represents the continued effort of law enforcement to put a stop to illegal activity wherever it is found.  Many claim prostitution is the oldest profession in the world.  The anonymity of the internet was used to hide the identity of its operators, keeping law enforcement in the dark.  As in this case, what is done in the dark will always be revealed in the light.”

According to the Complaint[1]:

Since 2012, DSS, USPIS, and the U.S. Attorney’s Office for the Southern District of New York have been investigating a group of brothels (the “Brothels”) operating in and around New York.  Each of the Brothels was independently owned and operated, but the owners of the Brothels worked cooperatively through, among other things, the sharing of approved customer lists and information.  STASIOR started out as a customer of the Brothels.  In 2013, he provided a co-conspirator (“CC-1”)[2] with financing to open a brothel (the “Brothel”), while requiring the co-conspirator to make periodic payments from the Brothel’s proceeds in return for his investment. 

The Brothel used a website to advertise the women prostituted in the Brothel, as well as an online aggregator of advertisements to advertise the Brothel.  The management of online advertising and payment for this advertising was coordinated by the defendant and CC-1, among others.  STASIOR sent multiple emails to CC-1 in which he provided business advice to the Brothel, including advice on how to use online advertising for the Brothel to increase the Brothel’s profits.  STASIOR’s emails included spreadsheets that listed him as a “Partner” in the business and itemized the Brothel’s prostitution revenues and the various expenses involved in running the Brothel, including the cost of advertising.  In these emails, STASIOR also itemized the payments made to him out of the Brothel’s proceeds, and stated that he was concerned about the Brothel’s profitability to ensure that CC-1 would be able to “pay back” the “debt” that had been incurred by his investment in the Brothel.          

*          *          *

STASIOR, 53, of Concord, Massachusetts, is charged with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison, and one count of conspiracy to violate the Travel Act, which carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

Mr. Kim praised the outstanding efforts of DSS, USPIS, and the criminal investigators working in the United States Attorney’s Office for the Southern District of New York.  He added that the investigation is ongoing.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Danielle R. Sassoon and Thane Rehn 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 herein constitute only allegations, and every fact described should be treated as an allegation.

[2] CC-1 has been separately charged in the Southern District of New York with money laundering conspiracy and Travel Act conspiracy, and has pleaded guilty to money laundering conspiracy.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that HAROLD LEVINE, a Manhattan tax attorney, was sentenced today by U.S. District Judge Jed S. Rakoff to 24 months in prison for tax evasion and obstruction of the Internal Revenue Service (“IRS”), stemming from his scheme to siphon millions of dollars of tax shelter fee income from the law firm at which he worked and failing to report the diverted fees as income.  LEVINE’s scheme also involved making false statements to IRS auditors, and urging a witness to provide false testimony to the same IRS auditors who were investigating LEVINE’s receipt of the fees. 

Acting U.S. Attorney Joon H. Kim said:  “Harold Levine stole first from his law firm partners and then from American taxpayers by filing tax returns that left out millions of dollars of income.  As if tax evasion by a tax attorney were not bad enough, Levine tried to get out of it by lying to the IRS during an audit and urging a witness to give false testimony.  Levine’s jail sentence should serve as a reminder that everyone – including tax lawyers – must be truthful in reporting their income, and deal honestly with, the tax authorities.”

According to the Indictment, LEVINE’s guilty plea, and statements made during the plea proceedings and other court proceedings:

Between 2004 and 2012, LEVINE, a tax attorney and former head of the tax department at a major Manhattan Law Firm (the “Law Firm”), schemed with co-defendant Ronald Katz, a certified public accountant, to obstruct and impede the due administration of the Internal Revenue laws by evading income taxes on millions of dollars of fee income generated from tax shelter and related transactions that LEVINE worked on while a partner of the Law Firm.  Specifically, LEVINE failed to report approximately $3 million in income to the IRS on his personal tax returns during the period 2005-2011.  Most of the fee income LEVINE failed to report was routed by him through a limited liability company LEVINE controlled, which was nominally owned by a family member. 

As part of the scheme, for example, LEVINE caused tax shelter fees paid by a Law Firm client to be routed from the Law Firm’s escrow account to a partnership entity he co-owned with Katz and thereafter used those fees – totaling approximately $500,000 – to purchase a home in Levittown, on Long Island.  LEVINE caused the home to be purchased as a residence for a Law Firm employee (the “Law Firm Employee”) with whom he then enjoyed a close personal relationship.  Although LEVINE allowed the Law Firm Employee to reside in the Levittown house for over five years without paying rent, LEVINE and Katz prepared tax returns for the entity through which the home was purchased that claimed false deductions as a rental property.

In February 2013, LEVINE was questioned by IRS agents concerning his involvement in certain tax shelter transactions and the fees received by LEVINE from those transactions.  During that questioning, LEVINE falsely told the IRS that the Law Firm Employee paid him $1,000 per month in rent while living in the Levittown home.  In addition, when the Law Firm Employee was contacted by the IRS and summoned to appear for testimony, LEVINE urged the employee to falsely tell the IRS that she had paid $1,000 per month in rent to LEVINE.

*                *                *

In imposing sentence today, Judge Rakoff said, “There was no one in the world who knew better that he was committing a crime than Harold Levine.”

In addition to the 24-month prison sentence, LEVINE, 59, of New York, New York, was sentenced to three years of supervised release, and ordered to pay restitution to the IRS in an amount to be determined at a hearing on November 13, 2017.

Co-defendant Ronald Katz, who also pled guilty in June 2017, is scheduled to be sentenced on November 13, 2017.

Mr. Kim thanked the IRS for its assistance in this investigation and praised the outstanding investigative work of both IRS-CI and IRS Civil – Large Business & International. 

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Special Assistant United States Attorney Stanley J. Okula and Assistant United States Attorney Daniel S. Noble are in charge of the prosecution.

 Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that LAQUAN PARRISH, a/k/a “MadDog,” a/k/a “Quanzaa,” a leader of a violent street gang in the Bronx called the “2Fly YGz” (“2Fly”), was sentenced today to 195 months in prison on racketeering and firearms charges.  PARRISH was sentenced by United States District Judge Lewis A. Kaplan.  

Acting U.S. Attorney Joon H. Kim said:  “Laquan Parrish led the violent 2Fly street gang, and participated in the gang’s violence.  In August 2012, Parrish and other 2Fly members opened gunfire at a group of rival gang members sitting in a playground.  By good fortune, no one was killed, but a bullet struck one rival gang member in the chest and another in the leg, and a 14-year-old girl was wounded in the crossfire.  Today’s sentence holds Parrish accountable for this senseless violence.”

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

PARRISH was a leader of 2Fly, a subset of the “Young Gunnaz,” or “YGz” street gang, which operates throughout New York City.  2Fly is based in the Bronx, within and around the Eastchester Gardens public housing development (“ECG”) and in an area called the “Valley” or the “V,” which is in the vicinity of Gun Hill Road.  ECG is a rectangular complex of residential buildings bordered by Burke, Adee, Yates, and Bouck Avenues, in the middle of which is a playground.  The gang war between 2Fly and rival street gangs has led to an enormous amount of fatal and non-fatal violence between 2007 and 2016 in the Northern Bronx, including shootings, stabbings, slashings, beatings, and robberies.  Members and associates of 2Fly controlled the narcotics trade at ECG, which took place in the open air at the playground and in apartments at ECG.  2Fly primarily sold marijuana and crack cocaine, but also sold powder cocaine and prescription pills, such as oxycodone.  2Fly members and associates stored guns at the playground or in nearby apartments or cars in order to protect the narcotics business and for protection against rival gangs.

In addition to leading 2Fly, PARRISH personally participated in a number of acts of violence with the Gang, including a shootout with rival gang members on August 7, 2012, in a public park in the Bronx.  Three victims were shot, including a 14-year-old girl caught in the crossfire.

*                      *                     *

PARRISH, 27, of the Bronx, New York, was arrested in this case as a result of a multi-year investigation by the New York City Police Department’s Bronx Gang Squad (the “Bronx Gang Squad”), the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Violent Gang Unit (“HSI”), the New York Field Division of the Drug Enforcement Administration (“DEA”), and the Joint Firearms Task Force of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) into gang violence in the Northern Bronx.  On April 27, 2016, the Indictment captioned United States v. Laquan Parrish et al., 16 Cr. 212 (LAK) was unsealed, charging 57 members and associates of 2Fly with racketeering conspiracy, narcotics conspiracy, narcotics distribution, and/or firearms charges.  To date, 54 of these defendants have pled guilty.

Mr. Kim praised the outstanding work of NYPD’s Bronx Gang Squad, HSI, DEA, and ATF.  He also thanked the Bronx County District Attorney’s Office, the Department of Investigation, NYCHA Inspector General’s Office, and the New York State Department of Parole for their ongoing support in this investigation.

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

Joon H. Kim, the Acting 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 the arrest and unsealing of a complaint charging LISA BERSHAN, BARRY SCHWARTZ, and JOEL MARGULIES with securities fraud, wire fraud, and conspiracy to commit those offenses in connection with a scheme to defraud investors in a company variously called The Awake Company and Starship Snacks (“Starship”). 

BERSHAN and SCHWARTZ were presented earlier today in federal court in Atlanta, and MARGULIES was presented earlier today in federal court in Tennessee. 

In a separate action, the SEC filed civil charges against BERSHAN, SCHWARTZ, and MARGULIES.  

Acting U.S. Attorney Joon H. Kim said:  “As alleged, while promising a sure thing, in the form of guaranteed returns, the defendants were actually selling nothing but lies.  Instead of using investors’ money to grow the business, they allegedly spent it on plastic surgeries, jewelry, and cars.  Thanks to the terrific investigative work of the FBI, the defendants will now have to answer in court for their lies.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Bershan, Schwartz, and Margulies allegedly led investors to believe their company was on a guaranteed path to success. To further support their claim, as charged today, they promised to buy back any shares that didn’t appreciate within a year, including a supplemental interest payment of five percent. Samples of chocolate intended to represent the caffeinated snack they had supposedly developed were provided to some for good measure, but the chocolate was void of its key ingredient. In the end the numbers didn’t add up as this sweet deal turned sour.”

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

As alleged, BERSHAN, SCHWARTZ, and MARGULIES created Starship with the stated goal of marketing and selling a caffeinated chocolate snack.  BERSHAN, SCHWARTZ, and MARGULIES subsequently raised over $2 million from investors by telling them that their investments in Starship would be personally guaranteed against any losses; that Starship was on the verge of a lucrative acquisition by another entity, Monster Beverage Corp. (“Monster”); and that Starship’s signature product had been developed successfully.  All of these representations were false and misleading.  Starship had no ability to honor the guarantees that it and BERSHAN made to investors.  It was never in talks with Monster to be acquired.  And it had never developed or engaged a third party to develop its caffeinated snack.  After receiving investor monies, moreover, BERSHAN, SCHWARTZ, and MARGULIES used those funds to maintain their own extravagant lifestyles, spending hundreds of thousands of dollars on things like luxury clothing, plastic surgery, interior decorating, and luxury housing in New York City. 

Beginning in August 2015, BERSHAN, MARGULIES, and SCHWARTZ began soliciting investments in Starship.  In order to assure investors that their investments in Starship would be safe, BERSHAN sent investors images of herself in what appeared to be a mansion with subject lines like, “Just a glimpse – my parents sure as hell didn’t leave me this.”  BERSHAN and MARGULIES also signed investment documents providing that “[t]he Company and Lisa Bershan, its founder, have committed to repurchase” investors’ shares at the price that they had paid for them if they had not appreciated within a year, and further guaranteeing that “Lisa Bershan . . . [would] add an interest payment of 5%” in such an event.  These guarantees were not made in good faith, as neither BERSHAN nor Starship had any significant assets or ability to honor the guarantees they were making.  To the contrary, BERSHAN had unpaid tax liabilities and multiple outstanding civil judgments (and did not actually own the mansion that, as discussed above, she implicitly held out to investors as her own).

In addition to making bogus guarantees, BERSHAN, SCHWARTZ, and MARGULIES also told investors that Starship was in discussions to be acquired by Monster, and that this transaction would take place through a one-to-one exchange of Starship stock for Monster stock.  In October 2015, for example, MARGULIES sent an email to multiple investors that sought additional investments and expressly stated, “[t]he deal as I am certain you have heard is done thanks in no small part to the extraordinary talents and skills of our CEO, Lisa Bershan.  If you are not aware of the deal, it is a one to one --- share for share exchange of [Starship] for Monster after a six month holding period of [Starship] shares.”  Given that Monster’s stock was, at the time, trading at many multiples of the $3 per share that Starship’s investors initially paid at the time, this purported transaction would result in tremendous gains for Starship investors.  But there was no basis for the claim that the “deal . . . [was] done.”  Starship was never acquired by Monster or any other entity, and, indeed, was never in negotiations with Monster. 

Finally, BERSHAN, SCWHARTZ, and MARGULIES misrepresented the nature and progress of Starship’s purported business to investors.  BERSHAN, SCHWARTZ, and MARGULIES told investors that Starship had developed its caffeinated chocolate snack, when, in reality, it had not done so.  Indeed, in order to mislead investors into thinking that the product was further along than it actually was, BERSHAN, SCHWARTZ, and MARGULIES actually provided samples of normal chocolates to certain investors, falsely telling them that the chocolates were caffeinated as per Starship’s business plan. 

In total, BERSHAN, SCHWARTZ, and MARGULIES raised over approximately $2 million from investors based on these false representations.  Much of this amount was simply misappropriated by BERSHAN and SCHWARTZ (or paid to MARGULIES).  Between August 2015 and July 2017, for example, BERSHAN and SCHWARTZ spent over $39,000 on plastic surgery; over $209,000 on retail purchases, including jewelry, clothes, and interior decorating; over $11,900 at a Mercedes dealership; and hundreds of thousands of dollars on luxury housing. 

*                      *                      *

MARGULIES, 72, of Murfreesboro, Tennessee, BERSHAN, 65, and SCHWARTZ, 71, are each charged with one count of conspiring to commit securities and wire fraud, which carries a maximum prison sentence of five years in prison; one count of securities fraud, which carries a maximum sentence of 20 years in prison; and one count of wire fraud, which carries a maximum sentence of 20 years in prison.  The 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 judge.           

Mr. Kim 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 Attorney Robert Allen is 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.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), James J. Hunt, the Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing today of three Indictments and two Complaints charging 33 individuals with racketeering, narcotics, firearms, and bank fraud offenses in connection with violent gang and drug trafficking conduct near the Mill Brook Houses, in the Bronx, New York.    

The indictment in U.S. v. Michael White, et al. charges a total of 14 individuals, eight of whom are charged with racketeering conspiracy in connection with their membership in a gang known as “MBG” (also known as “Money Bitches Guns” and “Millbrook Gangstas”) and 11 of whom are charged with racketeering conspiracy in connection with their association with the gang known as the “Young Gunnaz,” also known as the “YGz.”  The indictment in U.S. v. Gary Davis, et al. charges a total of 15 individuals, four of whom are charged with racketeering conspiracy in connection with their membership in a gang known as “Killbrook.”  The indictment in U.S. v. Algi Crawford, et al. charges two individuals with bank fraud.  The complaint in U.S. v. Bernard Franklin, charges one individual with heroin distribution.  The complaint in United States v. James Green, 17 Mag. 7566, charges one individual with crack cocaine distribution.

A total of 24 defendants were taken into custody today; five other defendants are already in state custody on other charges.  Of the 33 defendants, 23 will be presented before U.S. Magistrate Judge Katharine H. Parker later today.  DAVID OQUENDO was arrested in the Northern District of New York and will be presented and arraigned in the United States District Court for the Northern District of New York later today.  U.S. v. Michael White is assigned to U.S. District Judge Robert W. Sweet.   U.S. v. Gary Davis is assigned to U.S. District Judge Lorna G. Schofield.   U.S. v. Algi Crawford is assigned to U.S. District Judge J. Paul Oetken.   U.S. v. Bernard Franklin and U.S. v. Eric Green are not yet assigned to District Judges

Acting U.S. Attorney Joon H. Kim said:  “As alleged, members and associates of these gangs and crews plagued the Mill Brook Houses for a decade, engaging in violence and selling drugs.  One of the victims was Bolivia Beck, a 21-year-old who was shot dead in broad daylight.  Thanks to the terrific investigative work of the FBI, DEA, and NYPD, the defendants will now face justice in federal court.” 

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “The gang members we rounded up in this case, and in many other investigations, seem to not learn the lesson that they cannot act with impunity.  These gangs have a significantly negative impact on the neighborhoods where they operate, but we can’t make these arrests in a vacuum.  We need the community to seize the chance at a fresh start to rebuild a safer place to live.  With that said, we have had tremendous success in bringing down crime in New York City through our collaboration on the FBI NY Metro Safe Streets Task Force.  We will keep focusing our resources against these gangs, and we won’t ever stop pursing the most violent criminals who look to fill the void.”

DEA Special Agent in Charge James J. Hunt said:  “The drug trafficking of all three gangs around the Mill Brook Houses was a breeding ground for violence.   By working collaboratively with our partners, law enforcement removed these gang members who are allegedly responsible for jeopardizing the safety of their neighbors by putting them in the middle of their turf war.”

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

MBG was a criminal enterprise involved in committing numerous acts of violence, including attempted murders, in the vicinity of the Mill Brook Houses in the Bronx.  Members and associates of MBG enriched themselves by selling drugs, such as crack cocaine and marijuana.  In particular, on or about February 4, 2013, MBG member DAVID OQUENDO attempted to murder a rival gang member in the Mill Brook Houses. On August 17, 2014, CHRISTOPHER HOWARD, a/k/a “Juju,” attempted to murder rival gang members in the Mill Brook Houses.

The YGz was a criminal enterprise involved in committing numerous acts of violence, including attempted murders, in the vicinity of the Mill Brook Houses in the Bronx.  Members and associates of the YGz enriched themselves by selling drugs, such as crack cocaine and marijuana.  On October 28, 2012, YGz member MICHAEL WHITE, a/k/a “Mike,” attempted to murder rival gang members, causing injuries to multiple people.

Killbrook was a criminal enterprise involved in committing numerous acts of violence, including murder and attempted murders, in the vicinity of the Mill Brook in the Bronx.  Members and associates of Killbrook enriched themselves by selling drugs such as crack cocaine and marijuana.  On or about April 18, 2011, Killbrook member GARY DAVIS, a/k/a “Reckless,” a/k/a “Poppa,” murdered Bolivia Beck in the Mill Brook Houses. 

*                      *                     *

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

Mr. Kim praised the outstanding investigative work of the FBI, DEA, and NYPD. 

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

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

United States v. Michael White, et al.

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Racketeering conspiracy

18 U.S.C. § 1962(d)

MICHAEL WHITE (age 29)

JOEY COLON (age 28)

DEMETRIUS WINGO (age 25)

ANTHONY BUSH (age 27)

DAVID OQUENDO (age 27)

CHRISTIAN PEREZ (age 24)

JAMES ROBINSON (age 30)

CHRISTOPHER HOWARD (age 25)

20 years in prison

2

Racketeering conspiracy

18 U.S.C. § 1962(d)

MICHAEL WHITE

JOEY COLON

DEMETRIUS WINGO

ANTHONY BUSH

DAVID OQUENDO

CHRISTIAN PEREZ

ALLEN KNIGHT (age 28)

MIGUEL CALDERON (age 23)

JAMESE SNIPES (age 19)

WESLEY MONGE (age 20)

OSCAR BRIONES (age 20)

20 years in prison

3

Narcotics conspiracy

21 U.S.C. § 846

JOEY COLON

DEMETRIUS WINGO

ANTHONY BUSH

DAVID OQUENDO

CHRISTIAN PEREZ

JAMES ROBINSON

ALLEN KNIGHT

MIGUEL CALDERON

JAMESE SNIPES

WESLEY MONGE

OSCAR BRIONES

ROY ROBINSON (age 38)

Life in prison

Mandatory minimum of 10 years in prison

4

Violent crime in aid of racketeering

18 U.S.C. § 1959(a)(3), (5)

MICHAEL WHITE

20  years in prison

5

Violent crime in aid of racketeering

18 U.S.C. § 1959(a)(3), (5)

DAVID OQUENDO

20 years in prison

6

Violent crime in aid of racketeering

18 U.S.C. § 1959(a)(3), (5)

CHRISTOPHER HOWARD

20 years in prison

7

Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a crime of violence or drug trafficking crime

18 U.S.C. § 924(c )

JOEY COLON

DEMETRIUS WINGO

ANTHONY BUSH

DAVID OQUENDO

CHRISTIAN PEREZ

JAMES ROBINSON

CHRISTOPHER HOWARD

Life in prison

Mandatory minimum of 10 years in prison

8

Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a crime of violence or drug trafficking crime

18 U.S.C. § 924(c )

MICHAEL WHITE

ALLEN KNIGHT

MIGUEL CALDERON

WESLEY MONGE

OSCAR BRIONES

Life in prison

Mandatory minimum of 10 years in prison

9

Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a drug trafficking crime

18 U.S.C. § 924(c )

ROY ROBINSON

Life in prison

Mandatory minimum of 5 years in prison

United States v. Gary Davis, et al.

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Racketeering conspiracy

18 U.S.C. § 1962(d)

GARY DAVIS (age 27)

RAMEL JACKSON (age 26)

ANDREW BURRELL (age 26)

QUENTIN STARKES (age 25)

For GARY DAVIS, life in prison

For all other defendants, 20 years in prison

2

Narcotics conspiracy

21 U.S.C. § 846

ANDRE COFIELD (age 40)

PATRICK INNIS (age 39)

GARY DAVIS

RAMEL JACKSON

ANDREW BURRELL

QUENTIN STARKES

MATTHEW COOPER (age 26)

JUSTIN COOPER (age 29)

NAYSEAN CHAVIS (age 25)

HASSAN MUHAMMAD (age 20)

CHIMBA CARLOS (age 31)

WILLIAM RAY (age 27)

JEFFREY GOODRIDGE (age 30)

MICHAEL LAMAR (age 36)

LUIS GOMEZ (age 24)

Life in prison

Mandatory minimum of 10 years in prison

3

Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a crime of violence or drug trafficking crime

18 U.S.C. § 924(c )

GARY DAVIS

RAMEL JACKSON

ANDREW BURRELL

Life in prison

Mandatory minimum of 10 years in prison

4

Using or carrying a firearm during and in relation to, or possessing a firearm in furtherance of, a drug trafficking crime

18 U.S.C. § 924(c )

WILLIAM RAY

Life in prison

Mandatory minimum of 5 years in prison

United States v. Algi Crawford, et al.

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Bank fraud conspiracy

18 U.S.C. § 1349

ALGI CRAWFORD (age 35)

JONATHAN GRIFFIN (age 31)

30 years in prison

2

Bank fraud

18 U.S.C. § 1344

ALGI CRAWFORD

JONATHAN GRIFFIN

30 years in prison

United States v. Bernard Franklin

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Distribution of heroin

21 U.S.C. §§ 812, 841(a)(1), 841(b)(1)(C)

BERNARD FRANKLIN (age 32)

20 years in prison

United States v. James Green

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Possession with the intent to distribute crack cocaine

21 U.S.C. §§ 812, 841(a)(1), 841(b)(1)(B)

JAMES GREEN (age 49)

40 years in prison

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that TERRICK WASHINGTON, 45, a registered sex offender, was sentenced to 262 months in prison by United States District Judge Kenneth M. Karas for his attempted enticement of a minor to engage in sexual activity.  Judge Karas also imposed a 5-year term of supervised release to follow the prison term.  The sentencing today followed WASHINGTON’s guilty plea on March 8, 2017.

Acting U.S. Attorney Joon H. Kim stated:  “Protecting children from those who prey on them is a priority for this Office and our partners at the FBI.  As today’s sentencing demonstrates, we will use every tool available to law enforcement to prosecute and punish those who sexually exploit children.” 

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

On or about December 21, 1993, Washington was convicted in New Jersey of Aggravated Sexual Assault and sentenced to a 15-year prison term.  As a result of that conviction, he was required to register in New Jersey as a sexual offender. 

In November 2015, an individual (the “Reporter”) advised the FBI that the Reporter, posing as a 13-year-old girl, had engaged in online communications with a person using the screen name “X.Terrick..X.”  During the communications, “X.Terrick..X” indicated that “X.Terrick..X” wanted to engage in sexual activities with the Reporter.  The FBI instructed the Reporter to continue to engage in discussions, to provide the FBI with daily logs of the communications, and to attempt to arrange a meeting with “X.Terrick..X.”

Between November 6, 2016, and November 27, 2015, the Reporter and “X.Terrick..X,” later identified as TERRICK WASHINGTON, engaged in a series of text communications.  Among other things, the Reporter told WASHINGTON she was 13 years old and WASHINGTON told the Reporter that he was 44 years old.  During the communications, WASHINGTON described in detail a variety of sexual acts he wanted to perform on the 13-year-old and made arrangements to meet her in Orange County, New York.

On November 28, 2015, WASHINGTON was arrested when he arrived at the Harriman Metro North Station, in Harriman, New York.  Following his arrest, he admitted that he had met a young girl on the internet while using a chat application from his cell phone and that he made arrangements to meet her so that he could have sex with her.  Initially, WASHINGTON said that the girl told him she was 15, but he later admitted that, in fact, the girl said she was 13.  WASHINGTON also said that he had been convicted of a sex offense when he was 18 involving a 5-year-old girl and that, as a result of that conviction, he is required to register as a sex offender.

Mr. Kim praised the efforts of the Federal Bureau of Investigation, the Orange County District Attorney’s Office, the Orange County District Attorney’s Investigators, and the Orange County Sheriff’s Department in connection with this investigation.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that JOHN C. GALLAGHER JR., the former Director of Environmental Services for the City School District of New Rochelle, pled guilty before U.S. District Judge Kenneth M. Karas in White Plains federal court to bribery in connection with a scheme to solicit bribes from an outside contractor to channel school district business to the contractor’s company.

Acting U.S. Attorney Joon H. Kim said:  “As he admitted today, John Gallagher demanded and received more than $150,000 in cash bribes from a contractor for the school district where Gallagher worked.  As a school district employee, Gallagher was a public servant, whose job it was to do what was in the best interest of schoolchildren and taxpayers.  Instead, Gallagher corruptly did what was in his own interests, lining his pockets with bribes.  Combatting public corruption at all levels in government remains one of the Office’s top priorities.”

According to the allegations contained in the Indictment charging GALLAGHER and in the Information to which Mauro Zonzini pled guilty on May 9, 2017, as well as statements made in related court filings and proceedings:

The City School District of New Rochelle (the “School District”), which receives federal benefits significantly in excess of $10,000 each year, has a Buildings and Grounds Department.  It is responsible for, among other things, maintenance and repair of facilities used by the School District to educate the children.  To do certain maintenance and repair work, the School District uses outside contractors. 

Among the outside contractors used by the School District are companies with specialties – in, for example, masonry, electrical work, plumbing, and carpentry – sometimes referred to as “bid vendors” or “time and materials” contractors.  These contractors bid annually, using set rates, and if awarded contracts, are paid by the School District to handle any projects within the contractors’ specialties that do not exceed a certain threshold cost.  (As of 2009, that amount, per New York State law, was $35,000.)  A more costly project that exceeds the threshold is offered for bid and awarded to the lowest responsible bidder, unless the project is deemed a health and safety emergency (i.e., a major plumbing leak during the school year), in which case, the time and materials vendor may be asked to do the job, regardless of the cost.

GALLAGHER, the defendant, was the School District’s Director of Environmental Services, overseeing the School District’s buildings and grounds.  To fill this position, the School District contracted with a company that provided, among other things, management services (“Company-1”).  GALLAGHER, as an employee of Company-1, was thereby made the School District’s Director of Environmental Services, and worked full-time in the School District, as its agent, with authority to act on its behalf.  GALLAGHER, as Director of Environmental Services, had influence over which contractors were awarded work by the School District, and over whether, when, and how contractors were assigned work and paid for work. 

Mauro Zonzini owned and wholly controlled a construction company in Westchester County (the “Company”).  The Company contracted with the School District to do masonry work, and was hired each year by the School District as its time and materials contractor for masonry work.

From in or about 2009 through in or about 2013, GALLAGHER engaged in a corrupt, criminal scheme, in which he solicited, demanded, and accepted bribes in the form of cash payments, intending to be influenced and rewarded in connection with the School District’s business and transactions with the Company.  The bribe payments that GALLAGHER solicited, demanded, and accepted were paid by Zonzini.  Routinely, after the School District paid the Company for work performed, GALLAGHER met in person with Zonzini in a parking lot, where Zonzini provided GALLAGHER with a kickback in the amount of 10 percent of the payment the Company had received from the School District.  In this way, GALLAGHER received dozens of cash bribe payments from Zonzini, over the course of at least approximately four years, which together amounted to more than $150,000.  GALLAGHER solicited, demanded, and accepted the bribe payments intending to be influenced in and rewarded for the School District’s decisions to award the Company contracts for masonry work, to assign masonry projects to the Company, and to make timely payment to the Company.

To avoid detection of his corrupt scheme, GALLAGHER concealed the cash bribe payments he received from Zonzini.  GALLAGHER did so, as he admitted during a secretly recorded conversation, by keeping the payments “in my car or in my trunk.”  In some instances he used the cash to make payments directly toward living expenses, without depositing it in his bank account.  For example, during the corrupt scheme, GALLAGHER used the bribe money to make credit card payments, car payments, and, as he admitted during the secretly recorded conversation, “I paid for some college.”

*                *                *

GALLAGHER, 53, of Harrisburg, Pennsylvania, pled guilty to one count of bribery, in violation of Title 18, United States Code, Section 666(a)(1)(B), which carries a maximum sentence of 10 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

GALLAGHER’s sentencing is scheduled for January 9, 2018, at 2:00 p.m., before Judge Karas.      

Zonzini is scheduled to be sentenced on February 16, 2018, at 10:30 a.m., before Judge Nelson S. Román.

 Mr. Kim praised the outstanding investigative efforts of the United States Postal Inspection Service, the Internal Revenue Service, Criminal Investigation, and the Office’s criminal investigators.  He also thanked the U.S. Department of Education’s Office of Inspector General for its assistance. 

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Kathryn Martin and Benjamin Allee are in charge of the prosecution.

GALLAGHER’s sentencing is scheduled for January 9, 2018, at 2:00 p.m., before Judge Karas.          

Zonzini is scheduled to be sentenced on February 16, 2018, at 10:30 a.m., before Judge Nelson S. Román.

Mr. Kim praised the outstanding investigative efforts of the United States Postal Inspection Service, the Internal Revenue Service, Criminal Investigation, and the Office’s criminal investigators.  He also thanked the U.S. Department of Education’s Office of Inspector General for its assistance. 

The case is being handled by the Office’s White Plains Division.  Assistant U.S. Attorneys Kathryn Martin and Benjamin Allee are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that MARIO HERRERA, a/k/a “Mo,” was sentenced today to 151 months in prison for conspiring to distribute cocaine and oxycodone.  HERRERA pled guilty to one count of narcotics conspiracy on June 2, 2017, before U.S. Magistrate Judge Barbara C. Moses.  U.S. District Judge Loretta A. Preska imposed today’s sentence. 

Acting U.S. Attorney Joon H. Kim said:  “Mario Herrera led a massive drug trafficking organization that stole and forged prescriptions to illegally distribute an estimated 40,000 oxycodone pills.  Herrera’s contribution to the ongoing opioid crisis has now earned him over 12 years in federal prison.  We commend the hard work of the DEA and ATF on this important case.”

According to the Indictment and other documents filed in federal court, statements made at various proceedings in this case, and materials presented at the sentencing hearing:

From in or about late 2012 up to and including in or about December 2015, HERRERA was the leader of a drug trafficking organization (the “Herrera DTO”) that distributed large quantities of oxycodone and cocaine in the Bronx and elsewhere.  As part of his plea, HERRERA admitted his involvement in the distribution of the equivalent of 40,000 oxycodone 30-milligram pills.  In order to obtain the oxycodone that the Herrera DTO distributed, HERRERA, among other things, obtained stolen prescription pads, fabricated oxycodone prescriptions, and then pretended to be a doctor when called by pharmacies to verify the prescriptions.  In addition, HERRERA purchased oxycodone from legitimate prescription holders and others in his community for redistribution.  HERRERA also coordinated the procurement and distribution of cocaine.  As part of this cocaine distribution, HERRERA traveled to Mexico, Texas, and elsewhere.     

*                *                  *

In addition to the prison term, HERRERA, 32, of the Bronx, New York, was sentenced to seven years of supervised release.  

Mr. Kim praised the outstanding investigative work of the Drug Enforcement Administration and Bureau of Alcohol, Tobacco, Firearms and Explosives in this investigation. 

This prosecution is being handled by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Gina Castellano, Jordan Estes, and Jason A. Richman are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that DAVID W. KENT, the founder of professional networking website Oilpro.com (“Oilpro”), was sentenced today in Manhattan federal court to one year and one day in prison for intentionally accessing a protected computer without authorization.  The charge stemmed from KENT’s role in repeatedly hacking into a competitor’s database to steal customer information and attempting to sell Oilpro to the same company whose database KENT had hacked.  Today’s sentence was imposed by U.S. District Judge Denise L. Cote.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “David Kent admitted to hacking into a competitor’s computer network and stealing client data to boost the value of Oilpro, a company he founded.  Kent then attempted to sell Oilpro – a company he grew using the stolen information -- to the very company he had hacked.  For his criminal attempts to gain an unfair business edge, Kent has now been sentenced to prison.”           

In sentencing DAVID W. KENT, Judge Cote said:  “This was a betrayal of trust, a breach of loyalty, and a level of deceit and dishonesty that was very sad and disappointing.”

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

In or about March 2000, KENT founded a website (“Website-1”) that provides, among other things, networking services to professionals working in the oil and gas industry.  Website-1 allows its members to create profiles, which includes personal and professional information.  As part of their profiles, members can also upload their resumes.  The profiles are contained in a database maintained by Website-1 (the “Members Database”).  Members are assigned login credentials (i.e., usernames and passwords) when they create their profiles.  Members use these login credentials to access their profiles.

In or around August 2010, KENT sold Website-1 for approximately $51 million to a publicly traded company headquartered in New York, New York (“Company-1”).  KENT entered into an employment agreement with Company-1 and agreed to continue to serve as the President of Website-1 after the acquisition.  However, KENT left Website-1 in September 2011 and launched Oilpro in October 2013.  Like Website-1, Oilpro provides networking services to professionals working in the oil and gas industry.  Oilpro is headquartered in Houston, Texas.

Between October 2013 and February 2016, KENT conspired to access information belonging to Website-1 without authorization and to defraud Company-1.  KENT accessed the Website-1 Members Database without authorization and stole customer information, including information from over 700,000 customer accounts.  KENT then exploited this information by inviting Website-1’s members to join Oilpro.  Similarly, one of Kent’s employees at Oilpro who previously worked for Website-1 (“CC-1”) accessed information in Website-1’s Google Analytics account without authorization and forwarded the information to KENT.  In the meantime, KENT attempted to defraud Company-1 by misrepresenting during discussions about a potential acquisition of Oilpro by Company-1 that Oilpro had increased its membership through standard marketing methods.                

*                *                *

In addition to the prison term, KENT, 41, of Spring, Texas, was sentenced to three years of supervised release.

Mr. Kim praised and thanked the Federal Bureau of Investigation for their outstanding work.  Mr. Kim also thanked the Office of International Affairs and the United Kingdom’s National Cyber Crime Unit (NCCU).

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Sidhardha Kamaraju and Andrew K. Chan are in charge of the prosecution.

Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Joon H. Kim for the Southern District of New York, Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office, Assistant Director in Charge Danny Kennedy of the FBI’s Los Angeles Field Office, Special Agent in Charge Calvin A. Shivers of the FBI’s Denver Field Office and Commissioner James P. O’Neill of the NYPD, announced the Court’s unsealing of federal terrorism charges against three men alleged to have plotted attacks on New York City during the summer of 2016 in support of the Islamic State of Iraq and al-Sham (ISIS), which were thwarted by law enforcement.  All three men have been arrested, and one has pleaded guilty.

The defendants are: Abdulrahman El Bahnasawy, a 19-year-old Canadian citizen; Talha Haroon, a 19-year-old U.S. citizen residing in Pakistan; and Russell Salic, a 37-year-old Philippine citizen.  Communicating through Internet messaging applications, these three men allegedly plotted to conduct bombings and shootings in heavily populated areas of New York City during the Islamic holy month of Ramadhan in 2016, all in the name of ISIS (the NYC Attacks).  El Bahnasawy purchased bomb-making materials and helped secure a cabin within driving distance of New York City to use for building the explosive devices and staging the NYC Attacks.  Haroon allegedly made plans to travel from Pakistan to New York City to join El Bahnasawy in carrying out the attacks, and traveled within Pakistan to meet with explosives experts in furtherance of the plot.  And as El Bahnasawy and Haroon prepared to execute the NYC Attacks, Salic allegedly wired money from the Philippines to the United States to help fund the terrorist operation.

• The planned attacks included detonating bombs in Times Square and the New York City subway system and shooting civilians at specific concert venues.
• Law enforcement – the FBI and the NYPD – successfully thwarted this terrorist plot.  An undercover FBI agent (the UC) convinced the defendants that the UC was an ISIS supporter prepared to carry out the attacks with them.
• El Bahnasawy, who has been in custody since he was arrested by the FBI in May 2016, pleaded guilty to terrorism offenses and is awaiting sentencing.
• Haroon and Salic have been arrested in foreign countries by foreign authorities in connection with these charges and it is the hope and expectation of this Office and U.S. law enforcement that they will be extradited to the United States to face justice in a United States court.

On May 21, 2016, El Bahnasawy was arrested in New Jersey, after traveling to the United States from Canada in preparation for carrying out the NYC Attacks.  Haroon was arrested in Pakistan in or about September 2016, and Salic was arrested in the Philippines in or about April 2017.  El Bahnasawy pleaded guilty on Oct. 13, 2016, to a seven-count Superseding Information before U.S. District Judge Richard M. Berman.  Today, the Court unsealed the Superseding Information and El Bahnasawy’s guilty plea, as well as the Complaint and Indictment previously filed against El Bahnasawy.[1]  The Court also unsealed today the five-count Complaint charging Talha Haroon (the Haroon Complaint), and the seven-count Complaint charging Russell Salic (the Salic Complaint), based on their alleged participation with EL Bahnasawy in the plot to carry out the NYC Attacks.

According to the allegations in the Haroon Complaint and the Salic Complaint[2]; the Complaint, Indictment, and Superseding Information filed against El Bahnasawy; and the transcript of El Bahnasawy’s guilty plea[3]:

In the spring of 2016, El Bahnasawy and Haroon were plotting to carry out terrorist attacks in New York City in support of ISIS during the Islamic holy month of Ramadhan (which ran from approximately June 5 to July 5 in 2016).  In the course of their preparations, El Bahnasawy and Haroon communicated, via electronic messaging applications accessible on cellphones, with a certain individual posing as an ISIS supporter who was, unbeknownst to them, the UC.

El Bahnasawy and Haroon declared their allegiance to ISIS in electronic communications with the UC, and expressed their intention of carrying out Paris- and Brussels-like terrorist attacks on behalf of ISIS in New York City.  El Bahnasawy explained to the UC that he was in contact with an ISIS affiliate about obtaining official sanction of the planned attacks by the Khorasan Province, a branch of ISIS active in Pakistan.  Haroon, who was based in Pakistan and was introduced to the UC by El Bahnasawy, informed the UC that he was in contact with ISIS associates within the Khorasan Province, and that “khurasan dawla [ISIS] has o[u]r back.”  El Bahnasawy stated to the UC that “[t]hese Americans need an attack,” that he aspired to “create the next 9/11,” and that he planned to “com[e] to new York at around may 22” from Canada.  Haroon stated that he intended to fly from Pakistan to New York City to carry out the NYC Attacks with El Bahnasawy, and hoped to “cause great destruction to the filthy kuffars[4] by our hands.”[5] 

El Bahnasawy and Haroon identified multiple locations and events in and around New York City as targets of the planned attacks, including the New York City subway system, Times Square, and certain concert venues.  For example, on May 1, 2016, El Bahnasawy sent the UC multiple images of maps of the New York City subway system containing markings that depicted plans for attacking the subway system, including by identifying the subway lines in which explosives would be detonated as part of the NYC Attacks.  On May 12, 2016, El Bahnasawy sent the UC an image of Times Square and stated:  “[W]e seriously need a car bomb at times square. . Look at these crowds of people!”  That same day, El Bahnasawy also expressed his desire to “shoot up concerts cuz they kill a lot of people.”  El Bahnasawy described the plan to attack concerts as follows:  “[W]e just walk in with guns in our hands.  That’s how the Paris guys did it.” 

On May 5, 2016, Haroon expressed to the UC that the subway was a “perfect” target, that they should shoot as many passengers on the train as possible, including “women or kids,” and that “when we run out of bullets we let the vests go off.”  That same day, Haroon discussed with the UC the necessary supplies for making explosive devices for use in the NYC Attacks.  On May 9, 2016, Haroon stated to the UC:  “NY Needs to fall.  It’s a must.”    

During May 2016, El Bahnasawy, while in Canada, purchased an array of bomb-making materials for use in the NYC Attacks, including approximately 40 pounds of hydrogen peroxide (the “Hydrogen Peroxide”) – which is a primary ingredient in TATP (triacetone triperoxide), a powerful explosive commonly used in improvised explosive devices.  El Bahnasawy also purchased, among other things, batteries, Christmas lights, thermometers, and aluminum foil for use in constructing explosive devices to carry out the NYC Attacks.

Meanwhile, in Pakistan, based on Haroon’s communications with the UC, Haroon traveled to a certain city to meet with an explosives expert for the purpose of obtaining additional information to be used in building bombs for the planned NYC Attacks.  Haroon advised that they would need “perming cords” (i.e., detonator cords) for constructing the improvised explosive devices, and conveyed his expectation that El Bahnasawy was acquiring “all that’s needed.”  Haroon repeatedly expressed his commitment to travel to New York City as soon as feasible to carry out the planned attacks in support of ISIS, and described the steps that he had taken to renew the necessary travel documents to enable him to exit Pakistan and travel to the United States for the purpose of carrying out the NYC Attacks.    

In early May 2016, El Bahnasawy informed the UC that El Bahnasawy had been communicating with Salic – who was known to El Bahnasawy as “Abu Khalid” and “the doctor” – about providing additional funding for the NYC Attacks.  EL Bahnasawy further informed the UC that Salic was a trusted ISIS supporter who had provided funding in support of ISIS on prior occasions.  El Bahnasawy advised that Salic would send approximately $500 to help fund the NYC Attacks, and that the money sent by Salic would be used to acquire additional ammunition and bomb-making materials for carrying out the attacks.  El Bahnasawy informed the UC that he had sent the UC’s account information to Salic so that Salic could transfer money to the United States in support of the NYC Attacks, and El Bahnasawy provided the UC with Salic’s contact information on an electronic messaging application, to enable Salic to execute the planned money transfer.

Shortly thereafter, Salic, using the alias Abu Khalid, began messaging with the UC.  Salic informed the UC that he had been in contact with El Bahnasawy, and that Salic was prepared to transfer money to the United States to help fund the NYC Attacks.  Salic, who allegedly maintained an active pro-ISIS social media presence, also conveyed that he had previously sent money to multiple other countries in support of ISIS, and expressed his allegiance to ISIS.  For example, on May 9, 2016, Salic informed the UC that he was “desperate” to travel to Syria to join ISIS.  Salic also expressed his belief that he could safely send money to support the NYC Attacks from the Philippines, where he claimed to be at the time, without attracting law enforcement scrutiny, stating:  “[I]ts not strict here. Unli[k]e in Aus [Australia] or Uk [the United Kingdom] even liking FB [Facebook] status will put[] u in jail . . . Terrorists from all over the world usually come here as a breeding ground for terrorists . . . hahahaha . . . But no worry here in Philippines. They dont care bout IS [ISIS]..loll[.] Only in west.” 

On May 11, 2016, Salic sent approximately $423 from the Philippines to the UC to help fund the planned NYC Attacks.  Salic also informed the UC that he intended to continue sending additional money in support of ISIS in the future, stating:  “In Sha Allah once we have the blessings again we will distribute again.”

As described above, El Bahnasawy acquired an array of bomb-making materials for use in carrying out the NYC Attacks.  In mid-May 2016, El Bahnasawy shipped those bomb-making materials, including the Hydrogen Peroxide, to the UC in the United States.  El Bahnasawy planned to build the explosive devices and prepare for the NYC Attacks with Haroon and the UC at a rural cabin within driving distance of New York City.  EL Bahnasawy helped to secure such a cabin for a period beginning in late May 2016, when he planned to arrive in the New York City area.  El Bahnasawy informed the UC that the cabin would need to contain a refrigerator for purposes of making the explosives, and that El Bahnasawy wanted to “practise shooting” at the cabin site if it was not “too close to people.”

On May 12, 2016, when the UC sent Salic a photograph of the Hydrogen Peroxide that El Bahnasawy had purchased for use in the NYC Attacks, Salic reiterated his support for the planned attacks, and Salic also conveyed that if he was unable to travel to Syria to join ISIS, he might carry out an attack himself.  During subsequent communications with the UC, Salic described New York City as “the capital of Kufr [Kuffar],” and stated that “[i]t would be a great pleasure if we can slaughter” people in New York City.  Salic further conveyed to the UC that he would be praying to Allah for the success of the operation when the planned attacks were imminent.

On May 20, 2016, Haroon conveyed to the UC that Times Square was “a perfect spot to hit them,” and suggested that the plan could include “[d]rive by or we surround the whole street and trap them and kill as many as possible.”  In the course of his communications with the UC, Haroon also stated:  “I wanna kill . . . them in thousands”; and “we have to make a ocean out of their blood[.] Leave no one standing.”  Haroon reiterated his intention of traveling to New York City, and discussed attempting to execute the attacks as soon as Memorial Day (i.e., May 30, 2016), stating that “that’s a day that will change history” and that the attacks “will scar them for life knowing the soldiers of Allah are everywhere and ready.”

On May 21, 2016, El Bahnasawy traveled from Canada to the New York City area, in preparation for staging and ultimately carrying out the NYC Attacks with Haroon.  In coordination with Canadian law enforcement, U.S. law enforcement closely monitored El Bahnasawy’s travel to the United States on May 21, 2016, and El Bahnasawy was arrested by the FBI that night in Cranford, New Jersey.  Haroon was subsequently arrested in Pakistan based on the charges in the Haroon Complaint, and Salic was subsequently arrested in the Philippines based on the charges in the Salic Complaint.    

*                      *                      *

The chart below reflects: (i) the charges in the Superseding Information to which El Bahnasawy, 19, of Mississauga, Canada, pled guilty; (ii) the charges in the Haroon Complaint filed against Haroon, 19, a U.S. citizen residing in Pakistan; and (iii) the charges in the Salic Complaint filed against Salic, 37, of the Philippines.

CHARGE

STATUTE

DEFENDANTS CHARGED (COUNT)

MAXIMUM PENALTY

Conspiracy to use weapons of mass destruction

18 U.S.C. § 2332a

El Bahnasawy (1)

Haroon (1)

Salic (1)

Life in prison

Conspiracy to commit acts of terrorism transcending national boundaries

18 U.S.C. § 2332b

El Bahnasawy (2)

Haroon (2)

Salic (2)

Life in prison

Conspiracy to bomb a place of public use and public transportation system

18 U.S.C. § 2332f

El Bahnasawy (3)

Haroon (3)

Salic (3)

Life in prison

Conspiracy to provide material support and resources to terrorists

18 U.S.C. § 2339A

El Bahnasawy (4)

Haroon (4)

Salic (4)

15 years in prison

Attempted provision and provision of material support and resources to terrorists

18 U.S.C. § 2339A

El Bahnasawy (5)

Salic (5)

15 years in prison

Conspiracy to provide material support and resources to a designated foreign terrorist organization, i.e., ISIS

18 U.S.C. § 2339B

El Bahnasawy (6)

Haroon (5)

Salic (6)

20 years in prison

Attempted provision and provision of material support and resources to a designated foreign terrorist organization, i.e., ISIS

18 U.S.C. § 2339B

El Bahnasawy (7)

Salic (7)

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 a judge. The charges contained in the Haroon Complaint and the Salic Complaint are merely accusations, and Haroon and Salic are presumed innocent unless and until proven guilty.

As noted above, El Bahnasawy was arrested in New Jersey on May 21, 2016, and has remained in custody since that date.  On Oct. 13, 2016, El Bahnasawy pled guilty to the seven-count Superseding Information.  El Bahnasawy is scheduled to be sentenced on Dec. 12.  Haroon was arrested in September 2016 in Pakistan in connection with the charges in the Haroon Complaint, and proceedings for his extradition to the United States are currently pending in Pakistan.  Salic was arrested in April 2017 in the Philippines in connection with the charges in the Salic Complaint, and proceedings for his extradition to the United States are currently pending in the Philippines.

Mr. Boente and Mr. Kim praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD, and the FBI’s Los Angeles and Denver Field Offices.  Mr. Kim also thanked the Royal Canadian Mounted Police, the FBI’s Cleveland Field Office, the FBI’s Legal Attaché Offices in Canada, Pakistan, and the Philippines, the New York State Police, the Department of Justice’s Office of International Affairs, the Counterterrorism Section of the Department of Justice’s National Security Division, and the U.S. Attorney’s Office for the Central District of California for their assistance.

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

[1] Certain portions of the transcript of El Bahnasawy’s guilty plea remain sealed pursuant to judicial order.  Those portions have been redacted from the version of the transcript unsealed today.

[2] As the introductory phrase signifies, the entirety of the texts of the Haroon Complaint and the Salic Complaint, and the descriptions of the allegations against Haroon and Salic in those charging documents set forth herein, constitute only allegations, and should be treated as allegations.  El Bahnasawy has pled guilty, so as to him, the descriptions are not merely allegations.

[3] The Complaint, Indictment, and Superseding Information filed against El Bahnasawy refer to Haroon as “CC-1” and to SALIC as “CC-2.”  The Haroon Complaint refers to El Bahnasawy as “CC-1” and to SALIC as “CC-2.”  The Salic Complaint refers to El Bahnasawy as “CC-1” and to Haroon as “CC-2.”

[4] “Kuffar” generally means “disbelievers.”  

[5] Unless otherwise indicated, the communications quoted herein have not been altered to correct for grammatical, spelling, or other errors that exist in the original communications. 

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Dana J. Boente, the Acting Assistant Attorney General for National Security, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Danny Kennedy, the Acting Assistant Director-in-Charge of the Los Angeles Field Office of the FBI, Calvin A. Shivers, Special Agent-in-Charge of the Denver Field Office of the FBI, and James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), announced the Court’s unsealing of federal terrorism charges against three men alleged to have plotted attacks on New York City during the summer of 2016 in support of the Islamic State of Iraq and al-Sham (“ISIS”), which were thwarted by law enforcement.  All three men have been arrested, and one has pled guilty.

The defendants are: ABDULRAHMAN EL BAHNASAWY, a 19-year-old Canadian citizen; TALHA HAROON, a 19-year-old U.S. citizen residing in Pakistan; and RUSSELL SALIC, a 37-year-old Philippine citizen.  Communicating through Internet messaging applications, these three men allegedly plotted to conduct bombings and shootings in heavily populated areas of New York City during the Islamic holy month of Ramadhan in 2016, all in the name of ISIS (the “NYC Attacks”).  EL BAHNASAWY purchased bomb-making materials and helped secure a cabin within driving distance of New York City to use for building the explosive devices and staging the NYC Attacks.  HAROON allegedly made plans to travel from Pakistan to New York City to join EL BAHNASAWY in carrying out the attacks, and traveled within Pakistan to meet with explosives experts in furtherance of the plot.  And as EL BAHNASAWY and HAROON prepared to execute the NYC Attacks, SALIC allegedly wired money from the Philippines to the United States to help fund the terrorist operation.

• The planned attacks included detonating bombs in Times Square and the New York City subway system, and shooting civilians at specific concert venues.

• Law enforcement – the FBI and the NYPD – successfully thwarted this terrorist plot.  An undercover FBI agent (the “UC”) convinced the defendants that the UC was an ISIS supporter prepared to carry out the attacks with them.

• EL BAHNASAWY, who has been in custody since he was arrested by the FBI in May 2016, pled guilty to terrorism offenses and is awaiting sentencing.

• HAROON and SALIC have been arrested in foreign countries by foreign authorities in connection with these charges and it is the hope and expectation of this Office and U.S. law enforcement that they will be extradited to the United States to face justice in a United States court.

On May 21, 2016, EL BAHNASAWY was arrested in New Jersey, after traveling to the United States from Canada in preparation for carrying out the NYC Attacks.  HAROON was arrested in Pakistan in or about September 2016, and SALIC was arrested in the Philippines in or about April 2017.  EL BAHNASAWY pled guilty on October 13, 2016, to a seven-count Superseding Information before U.S. District Judge Richard M. Berman.  Today, the Court unsealed the Superseding Information and EL BAHNASAWY’s guilty plea, as well as the Complaint and Indictment previously filed against EL BAHNASAWY.[1]  The Court also unsealed today the five-count Complaint charging TALHA HAROON (the “Haroon Complaint”), and the seven-count Complaint charging RUSSELL SALIC (the “Salic Complaint”), based on their alleged participation with EL BAHNASAWY in the plot to carry out the NYC Attacks.

According to the allegations in the Haroon Complaint and the Salic Complaint[2]; the Complaint, Indictment, and Superseding Information filed against EL BAHNASAWY; and the transcript of EL BAHNASAWY’s guilty plea[3]:

In the spring of 2016, EL BAHNASAWY and HAROON were plotting to carry out terrorist attacks in New York City in support of ISIS during the Islamic holy month of Ramadhan (which ran from approximately June 5 to July 5 in 2016).  In the course of their preparations, EL BAHNASAWY and HAROON communicated, via electronic messaging applications accessible on cellphones, with a certain individual posing as an ISIS supporter who was, unbeknownst to them, the UC.

EL BAHNASAWY and HAROON declared their allegiance to ISIS in electronic communications with the UC, and expressed their intention of carrying out Paris- and Brussels-like terrorist attacks on behalf of ISIS in New York City.  EL BAHNASAWY explained to the UC that he was in contact with an ISIS affiliate about obtaining official sanction of the planned attacks by the Khorasan Province, a branch of ISIS active in Pakistan.  HAROON, who was based in Pakistan and was introduced to the UC by EL BAHNASAWY, informed the UC that he was in contact with ISIS associates within the Khorasan Province, and that “khurasan dawla [ISIS] has o[u]r back.”  EL BAHNASAWY stated to the UC that “[t]hese Americans need an attack,” that he aspired to “create the next 9/11,” and that he planned to “com[e] to new York at around may 22” from Canada.  HAROON stated that he intended to fly from Pakistan to New York City to carry out the NYC Attacks with EL BAHNASAWY, and hoped to “cause great destruction to the filthy kuffars[4] by our hands.”[5] 

EL BAHNASAWY and HAROON identified multiple locations and events in and around New York City as targets of the planned attacks, including the New York City subway system, Times Square, and certain concert venues.  For example, on May 1, 2016, EL BAHNASAWY sent the UC multiple images of maps of the New York City subway system containing markings that depicted plans for attacking the subway system, including by identifying the subway lines in which explosives would be detonated as part of the NYC Attacks.  On May 12, 2016, EL BAHNASAWY sent the UC an image of Times Square and stated:  “[W]e seriously need a car bomb at times square. . Look at these crowds of people!”  That same day, EL BAHNASAWY also expressed his desire to “shoot up concerts cuz they kill a lot of people.”  EL BAHNASAWY described the plan to attack concerts as follows:  “[W]e just walk in with guns in our hands.  That’s how the Paris guys did it.” 

On May 5, 2016, HAROON expressed to the UC that the subway was a “perfect” target, that they should shoot as many passengers on the train as possible, including “women or kids,” and that “when we run out of bullets we let the vests go off.”  That same day, HAROON discussed with the UC the necessary supplies for making explosive devices for use in the NYC Attacks.  On May 9, 2016, HAROON stated to the UC:  “NY Needs to fall.  It’s a must.”    

During May 2016, EL BAHNASAWY, while in Canada, purchased an array of bomb-making materials for use in the NYC Attacks, including approximately 40 pounds of hydrogen peroxide (the “Hydrogen Peroxide”) – which is a primary ingredient in TATP (triacetone triperoxide), a powerful explosive commonly used in improvised explosive devices.  EL BAHNASAWY also purchased, among other things, batteries, Christmas lights, thermometers, and aluminum foil for use in constructing explosive devices to carry out the NYC Attacks.

Meanwhile, in Pakistan, based on HAROON’s communications with the UC, HAROON traveled to a certain city to meet with an explosives expert for the purpose of obtaining additional information to be used in building bombs for the planned NYC Attacks.  HAROON advised that they would need “perming cords” (i.e., detonator cords) for constructing the improvised explosive devices, and conveyed his expectation that EL BAHNASAWY was acquiring “all that’s needed.”  HAROON repeatedly expressed his commitment to travel to New York City as soon as feasible to carry out the planned attacks in support of ISIS, and described the steps that he had taken to renew the necessary travel documents to enable him to exit Pakistan and travel to the United States for the purpose of carrying out the NYC Attacks.    

In early May 2016, EL BAHNASAWY informed the UC that EL BAHNASAWY had been communicating with SALIC – who was known to EL BAHNASAWY as “Abu Khalid” and “the doctor” – about providing additional funding for the NYC Attacks.  EL BAHNASAWY further informed the UC that SALIC was a trusted ISIS supporter who had provided funding in support of ISIS on prior occasions.  EL BAHNASAWY advised that SALIC would send approximately $500 to help fund the NYC Attacks, and that the money sent by SALIC would be used to acquire additional ammunition and bomb-making materials for carrying out the attacks.  EL BAHNASAWY informed the UC that he had sent the UC’s account information to SALIC so that SALIC could transfer money to the United States in support of the NYC Attacks, and EL BAHNASAWY provided the UC with SALIC’s contact information on an electronic messaging application, to enable SALIC to execute the planned money transfer.

Shortly thereafter, SALIC, using the alias “Abu Khalid,” began messaging with the UC.  SALIC informed the UC that he had been in contact with EL BAHNASAWY, and that SALIC was prepared to transfer money to the United States to help fund the NYC Attacks.  SALIC, who allegedly maintained an active pro-ISIS social media presence, also conveyed that he had previously sent money to multiple other countries in support of ISIS, and expressed his allegiance to ISIS.  For example, on May 9, 2016, SALIC informed the UC that he was “desperate” to travel to Syria to join ISIS.  SALIC also expressed his belief that he could safely send money to support the NYC Attacks from the Philippines, where he claimed to be at the time, without attracting law enforcement scrutiny, stating:  “[I]ts not strict here. Unli[k]e in Aus [Australia] or Uk [the United Kingdom] even liking FB [Facebook] status will put[] u in jail . . . Terrorists from all over the world usually come here as a breeding ground for terrorists . . . hahahaha . . . But no worry here in Philippines. They dont care bout IS [ISIS]..loll[.] Only in west.” 

On May 11, 2016, SALIC sent approximately $423 from the Philippines to the UC to help fund the planned NYC Attacks.  SALIC also informed the UC that he intended to continue sending additional money in support of ISIS in the future, stating:  “In Sha Allah once we have the blessings again we will distribute again.”

As described above, EL BAHNASAWY acquired an array of bomb-making materials for use in carrying out the NYC Attacks.  In mid-May 2016, EL BAHNASAWY shipped those bomb-making materials, including the Hydrogen Peroxide, to the UC in the United States.  EL BAHNASAWY planned to build the explosive devices and prepare for the NYC Attacks with HAROON and the UC at a rural cabin within driving distance of New York City.  EL BAHNASAWY helped to secure such a cabin for a period beginning in late May 2016, when he planned to arrive in the New York City area.  EL BAHNASAWY informed the UC that the cabin would need to contain a refrigerator for purposes of making the explosives, and that EL BAHNASAWY wanted to “practise shooting” at the cabin site if it was not “too close to people.”

On May 12, 2016, when the UC sent SALIC a photograph of the Hydrogen Peroxide that EL BAHNASAWY had purchased for use in the NYC Attacks, SALIC reiterated his support for the planned attacks, and SALIC also conveyed that if he was unable to travel to Syria to join ISIS, he might carry out an attack himself.  During subsequent communications with the UC, SALIC described New York City as “the capital of Kufr [Kuffar],” and stated that “[i]t would be a great pleasure if we can slaughter” people in New York City.  SALIC further conveyed to the UC that he would be praying to Allah for the success of the operation when the planned attacks were imminent.

On May 20, 2016, HAROON conveyed to the UC that Times Square was “a perfect spot to hit them,” and suggested that the plan could include “[d]rive by or we surround the whole street and trap them and kill as many as possible.”  In the course of his communications with the UC, HAROON also stated:  “I wanna kill . . . them in thousands”; and “we have to make a ocean out of their blood[.] Leave no one standing.”  HAROON reiterated his intention of traveling to New York City, and discussed attempting to execute the attacks as soon as Memorial Day (i.e., May 30, 2016), stating that “that’s a day that will change history” and that the attacks “will scar them for life knowing the soldiers of Allah are everywhere and ready.”

On May 21, 2016, EL BAHNASAWY traveled from Canada to the New York City area, in preparation for staging and ultimately carrying out the NYC Attacks with HAROON.  In coordination with Canadian law enforcement, U.S. law enforcement closely monitored EL BAHNASAWY’s travel to the United States on May 21, 2016, and EL BAHNASAWY was arrested by the FBI that night in Cranford, New Jersey.  HAROON was subsequently arrested in Pakistan based on the charges in the Haroon Complaint, and SALIC was subsequently arrested in the Philippines based on the charges in the Salic Complaint.    

*                      *                      *

The chart below reflects: (i) the charges in the Superseding Information to which EL BAHNASAWY, 19, of Mississauga, Canada, pled guilty; (ii) the charges in the Haroon Complaint filed against HAROON, 19, a U.S. citizen residing in Pakistan; and (iii) the charges in the Salic Complaint filed against SALIC, 37, of the Philippines.

CHARGE

STATUTE

DEFENDANTS CHARGED (COUNT)

MAXIMUM PENALTY

Conspiracy to use weapons of mass destruction

18 U.S.C. § 2332a

EL BAHNASAWY (1)

HAROON (1)

SALIC (1)

Life in prison

Conspiracy to commit acts of terrorism transcending national boundaries

18 U.S.C. § 2332b

EL BAHNASAWY (2)

HAROON (2)

SALIC (2)

Life in prison

Conspiracy to bomb a place of public use and public transportation system

18 U.S.C. § 2332f

EL BAHNASAWY (3)

HAROON (3)

SALIC (3)

Life in prison

Conspiracy to provide material support and resources to terrorists

18 U.S.C. § 2339A

EL BAHNASAWY (4)

HAROON (4)

SALIC (4)

15 years in prison

Attempted provision and provision of material support and resources to terrorists

18 U.S.C. § 2339A

EL BAHNASAWY (5)

SALIC (5)

15 years in prison

Conspiracy to provide material support and resources to a designated foreign terrorist organization, i.e., ISIS

18 U.S.C. § 2339B

EL BAHNASAWY (6)

HAROON (5)

SALIC (6)

20 years in prison

Attempted provision and provision of material support and resources to a designated foreign terrorist organization, i.e., ISIS

18 U.S.C. § 2339B

EL BAHNASAWY (7)

SALIC (7)

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 a judge.

As noted above, EL BAHNASAWY was arrested in New Jersey on May 21, 2016, and has remained in custody since that date.  On October 13, 2016, EL BAHNASAWY pled guilty to the seven-count Superseding Information.  EL BAHNASAWY is scheduled to be sentenced on December 12, 2017.  HAROON was arrested in September 2016 in Pakistan in connection with the charges in the Haroon Complaint, and proceedings for his extradition to the United States are currently pending in Pakistan.  SALIC was arrested in April 2017 in the Philippines in connection with the charges in the Salic Complaint, and proceedings for his extradition to the United States are currently pending in the Philippines.

Mr. Kim praised the outstanding efforts of the FBI’s New York Joint Terrorism Task Force, which principally consists of agents from the FBI and detectives from the NYPD, and the FBI’s Los Angeles and Denver Field Offices.  Mr. Kim also thanked the Royal Canadian Mounted Police, the FBI’s Cleveland Field Office, the FBI’s Legal Attaché Offices in Canada, Pakistan, and the Philippines, the New York State Police, the Department of Justice’s Office of International Affairs, the Counterterrorism Section of the Department of Justice’s National Security Division, and the U.S. Attorney’s Office for the Central District of California for their assistance.

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

The charges contained in the Haroon Complaint and the Salic Complaint are merely accusations, and HAROON and SALIC are presumed innocent unless and until proven guilty.        

[1] Certain portions of the transcript of EL BAHNASAWY’s guilty plea remain sealed pursuant to judicial order.  Those portions have been redacted from the version of the transcript unsealed today.

[2] As the introductory phrase signifies, the entirety of the texts of the Haroon Complaint and the Salic Complaint, and the descriptions of the allegations against HAROON and SALIC in those charging documents set forth herein, constitute only allegations, and should be treated as allegations.  EL BAHNASAWY has pled guilty, so as to him, the descriptions are not merely allegations.

[3] The Complaint, Indictment, and Superseding Information filed against EL BAHNASAWY refer to HAROON as “CC-1” and to SALIC as “CC-2.”  The Haroon Complaint refers to EL BAHNASAWY as “CC-1” and to SALIC as “CC-2.”  The Salic Complaint refers to EL BAHNASAWY as “CC-1” and to HAROON as “CC-2.”

[4] “Kuffar” generally means “disbelievers.”  

[5] Unless otherwise indicated, the communications quoted herein have not been altered to correct for grammatical, spelling, or other errors that exist in the original communications. 

Joon H. Kim, the Acting 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 that MICHAEL SCRONIC, a hedge fund manager in Westchester County, was arrested this morning and charged with securities fraud and wire fraud arising out of his execution of a $19 million Ponzi scheme through the Scronic Macro Fund.  SCRONIC will be presented before United States Magistrate Judge Lisa Margaret Smith in White Plains federal court later today.

Acting U.S. Attorney Joon H. Kim said: “Michael Scronic allegedly stole more than $19 million from investors by lying about the performance of his investment fund, and then spent much of that money on his own lavish lifestyle.  Hedge fund managers who lie to their investors and steal their money, as Scronic is alleged to have done, will always be in our sights as targets for federal prosecution.”

FBI Assistant Director William F. Sweeney Jr. said:  “Scronic’s alleged get-rich-quick scheme was, in fact, a plan to deceive investors, luring them into a false sense of security about their investments by overselling the reliability and success of the fund. The FBI will continue to identify and investigate those who defraud investors. We ask anyone who has information related to investor fraud submit a tip at https://tips.fbi.gov/.”

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

SCRONIC, a graduate of Stanford University and the University of Chicago’s business school, raised more than $19 million from 45 investors in the Scronic Macro Fund (the “Fund”) from April 2010 to the present.  SCRONIC told investors that the Fund had positive returns in all but one of the 22 quarters from January 2012 through June 2017, with the highest reported quarterly return being 13.4 percent in the fourth quarter of 2014.  In reality, the Fund lost money in 28 out of 29 quarters of its operation, with a total net loss of about $15.7 million before commissions.  The Fund’s only positive quarter was its first quarter of operation in 2010.

As a result of these trading losses, the total assets SCRONIC claimed the Fund had in each quarter far exceeded its actual assets.  For example, SCRONIC sent account statements to investors that together showed total fund assets of $21.7 million as of June 30, 2017.  On that date, the combined balance of SCRONIC’s brokerage and bank accounts was $102,376.

In addition to losing money on trades, SCRONIC used investor money for personal expenses.  His personal expenditures averaged more than $500,000 a year since January 2012 and included monthly rent of $12,275 on his primary residence in Westchester, mortgage payments on a vacation home in Stratton, Vermont, fees for multiple beach and country clubs, including a $30,000 payment to the Stratton Mountain Club in July 2017, and miscellaneous items charged to credit cards in amounts averaging more than $15,000 a month.

In recent months, SCRONIC has been unable to pay redemptions requested by existing Fund investors.  Between June and August of this year, four Fund investors requested redemptions totaling about $1.5 million.  SCRONIC has not had sufficient funds on hand to pay these redemptions.  He instead has told these investors that the Fund would pay redemptions only at quarter end, that he was too busy and preoccupied with a relative’s medical condition to pay redemptions, and that he was unavailable to pay redemptions because he was on vacation.  In some cases, SCRONIC ignored redemption requests.

*                *                *

SCRONIC, 46, of Westchester County, New York, is charged with one count of securities fraud and one count of wire fraud.  Each charge carries a maximum sentence of 20 years in prison. 

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

Mr. Kim praised the investigative work of the FBI.  Mr. Kim also thanked the Securities & Exchange Commission for its assistance in the investigation.

In a related case, the Securities & Exchange Commission brought a civil action today against SCRONIC in U.S. District Court in White Plains.

The criminal case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorney James McMahon and Special Assistant U.S. Attorney Daniel Loss 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 below constitute only allegations and every fact described should be treated as an allegation.

The middleman in a foreign bribery scheme who falsely held himself out as an agent of a foreign official was sentenced today to 42 months in prison for each count, to run concurrently, for his role in a scheme to bribe a foreign official in the Middle East to land a real estate deal, and to defrauding his co-schemers.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Joon H. Kim of the Southern District of New York and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office made the announcement.

Malcom Harris, 53, of New York City, was sentenced by U.S. District Judge Edgardo Ramos of the Southern District of New York.  Harris pleaded guilty to one count of wire fraud and one count of money laundering on June 21.

According to admissions made in connection with Harris’s plea, Harris participated in a corrupt scheme to pay bribes to a foreign official in a country in the Middle East in order to facilitate the sale by South Korean construction company Keangnam Enterprises Co., Ltd., (Keangnam) of a commercial building known as Landmark 72 in Hanoi, Vietnam, to the Middle Eastern country’s sovereign wealth fund.  According to the indictment, the building sale was valued at $800 million, and purported bribe would total $2.5 million. 

In connection with his guilty plea, Harris admitted that, from on or about March 2013 to on or about March 2015, he wrongfully obtained $500,000 from his co-defendants by falsely holding himself out as an agent of a foreign official in text messages and emails.  Harris admitted directing the $500,000 to be deposited into an account in the name of Muse Creative Consulting, but which Harris actually controlled.  Thereafter, Harris used the illegally obtained money to engage in transactions exceeding $10,000, he admitted. 

Harris was charged in a December 2016 indictment along with codefendants Joo Hyun Bahn aka Dennis Bahn (Bahn) and Ban Ki Sang (Ban).  According to the indictment, during this time, Ban was a senior executive at Keangnam, and allegedly convinced Keangnam to hire his son Bahn, who worked as a broker at a commercial real estate firm in Manhattan, to secure an investor for Landmark 72. 

Bahn and Ban are awaiting trial.  The charges and allegations contained in an indictment are only accusations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The FBI’s International Corruption Squad in New York City investigated the case.  In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption.  Trial Attorney Dennis R. Kihm of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Daniel S. Noble of the Southern District of New York are prosecuting the case.  The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter.

The 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/foreign-corrupt-practices-act.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Kenneth A. Blanco, Acting Assistant Attorney General of the Criminal Division of the U.S. Department of Justice, announced that MALCOLM HARRIS was sentenced today by U.S. District Judge Edgardo Ramos to 42 months in prison for wire fraud and money laundering charges arising from his role as a middleman in a corrupt scheme to pay millions of dollars in bribes to a foreign official (“Foreign Official-1”) of a country in the Middle East (“Country-1”).  The bribes were intended to facilitate the sale by South Korean construction company Keangnam Enterprises Co., Ltd. (“Keangnam”) of a 72-story commercial building known as Landmark 72 in Hanoi, Vietnam, to Country-1’s sovereign wealth fund (the “Fund”) for $800 million.  Instead of paying an initial $500,000 bribe to Foreign Official-1 as he had promised, HARRIS simply pocketed the money and spent it on himself.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Malcolm Harris schemed to bribe a foreign official, then double-crossed his alleged co-conspirators by pocketing the half-million dollars intended to be bribes.  Harris’s international bribery and fraud scheme centered around a Korean construction company’s attempt to sell a 72-story skyscraper in Vietnam through corruption.  This sentence and the prosecution of Harris and his co-conspirators, Joo Hyun Bahn, and Ban Ki Sang should send a message that if you bring international corruption to New York, you may very well find yourself in a Manhattan federal court being sentenced to significant time in a federal prison.”

According to the Indictment to which HARRIS pled guilty, statements made during the plea and sentencing proceedings, and statements made at other court proceedings: 

From in or about March 2013 through in or about May 2015, HARRIS’s co-defendants Joo Hyun Bahn, a/k/a “Dennis Bahn” (“Bahn”), and his father Ban Ki Sang (“Ban”) engaged in an international conspiracy to bribe Foreign Official-1 in connection with the attempted $800 million sale of a building complex in Hanoi, Vietnam, known as Landmark 72.  During this time, Ban was a senior executive at Keangnam, a South Korean construction company that built and owned Landmark 72.  Ban convinced Keangnam to hire his son Bahn, who worked as a broker at a commercial real estate firm in Manhattan, to secure an investor for Landmark 72. 

Instead of obtaining financing through legitimate channels, Bahn and Ban engaged in a corrupt scheme to pay $2.5 million in bribes to Foreign Official-1, through HARRIS, who held himself out as an agent of Foreign Official-1, to induce Foreign Official-1 to use his influence to convince the Fund to acquire Landmark 72 for approximately $800 million.  In furtherance of the scheme, HARRIS sent Bahn numerous emails purportedly sent by Foreign Official-1 and bearing Foreign Official-1’s name.  In or about April 2014, following communications with HARRIS, Bahn and Ban agreed to pay, through HARRIS, a $500,000 upfront bribe and a $2 million bribe upon the close of the sale of Landmark 72 to Foreign Official-1 on behalf of Keangnam. 

Unbeknownst to Bahn or Ban, however, HARRIS did not have the claimed relationship with Foreign Official-1 and did not intend to pay the bribe money to Foreign Official-1.  Instead, HARRIS simply stole the $500,000 upfront bribe arranged by Bahn and Ban, which HARRIS then spent on lavish personal expenses, including rent for a luxury penthouse apartment in Williamsburg, Brooklyn.

*                *                *

In addition to the prison sentence, HARRIS, 53, of New York, New York, was sentenced to three years of supervised release and ordered to pay forfeiture of $500,000 and restitution of $760,148.57 to victims.

Trial in Bahn’s case is scheduled to begin on February 5, 2018, before Judge Ramos.  Ban is a fugitive believed to be residing in South Korea.  All defendants are presumed innocent unless and until convicted beyond a reasonable doubt in a court of law.

Mr. Kim praised the outstanding investigative work of the International Corruption Squad of the FBI’s New York Field Office.  Mr. Kim also thanked the Department of Justice’s Office of International Affairs for its ongoing assistance in this case. 

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorney Daniel S. Noble and Trial Attorney Dennis R. Kihm of the Fraud Section of the Justice Department’s Criminal Division are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Matthew Etre, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (“ICE”) Homeland Security Investigations (“HSI”) Boston Office, announced today the return of 95 works of art, previously acquired by Edemar Cid Ferreira, the former president of Banco Santos, S.A. (“Banco Santos”), in connection with money laundering and other crimes he committed in Brazil against the national financial system.  The 95 works of art will be returned to the Judicial Administrator of Banco Santos’s bankruptcy estate (the “Judicial Administrator”).  These works, which were recovered through an investigation by HSI and the United States Attorney’s Office for the Southern District of New York (the “U.S. Attorney’s Office”), will be returned pursuant to a Stipulation and Order between the U.S. Attorney’s Office and the Judicial Administrator, which was entered today by United States District Judge Lorna G. Schofield.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Our Office is proud of our role in returning these treasured works of art.  These works were used to mask an audacious criminal scheme by Edemar Cid Ferreira.  Thanks to the diligent efforts of our Office and HSI, these treasured pieces will be returned to their rightful owner, the bankruptcy estate of Ferreira’s insolvent Banco Santos.”

HSI Special Agent in Charge Matthew Etre said:  “Protecting the cultural heritage of our global community is important work and we are committed to identifying and returning these priceless items to their proper place.  It’s the responsibility of law enforcement worldwide to ensure criminals do not profit from the theft of these culturally and historically valuable items.”

The 95 works of art being returned to the Banco Santos Judicial Administrator once belonged to Brazilian banker Edemar Cid Ferreira, the founder and former president of Banco Santos.  Ferriera was convicted in Brazil of crimes against the national financial system and money laundering.  In December 2006, Ferreira was sentenced in Brazil to 21 years in prison.  Banco Santos ultimately entered bankruptcy.

As part of the case, a Sao Paulo Court Judge also ordered the search, seizure, and confiscation of assets that Ferreira, his associates, and members of his family had acquired with unlawfully obtained funds from Banco Santos.  Those assets included an extensive art collection, valued in the tens of millions of dollars.  The art collection was kept in several locations, including Ferreira’s home in the Morumbi neighborhood of Sao Paulo, the main offices of Banco Santos, and at a holding facility.  When Brazilian authorities searched these locations, they found that much of the collection was missing.

The Sao Paulo Court sought Interpol’s assistance after searching museums and institutions in Brazil for the missing artwork.  In October and November 2007, Interpol and the Government of Brazil sought the assistance of the United States to locate and seize the missing works on behalf of the Brazilian government.  The ensuing U.S. Attorney’s Office and HSI investigation found that large numbers of works of art had been smuggled out of Brazil by Ferreria and companies associated with him, and into the United States and various European nations. 

Through their investigation, HSI and the U.S. Attorney’s Office located and recovered the sculpture “Woman” by Henry Moore, from France, seven works from the United Kingdom, and 85 works from the Netherlands.  Two additional works were voluntarily turned over to HSI by third parties in the United States.  These 95 works will now by returned to the Judicial Administrator so they may be disposed of and distributed as part of the Banco Santos bankruptcy estate, under the jurisdiction of the Brazilian Bankruptcy Court.    

The U.S. Attorney’s Office previously repatriated five other works smuggled into the United States, which were seized by HSI and the subject of a successful civil forfeiture action brought by the U.S. Attorney’s Office: “Hannibal” by Jean-Michel Basquiat, “Modern Painting with Yellow Interweave” by Roy Lichtenstein, “Figures dans une structure” by Joaquin Torres-Garcia, “Composition abstraite” by Serge Poliakoff, and a Roman Togatus statue. 

*                *                *

Mr. Kim praised the investigative work of HSI in helping to locate and recover the artworks.  He was grateful for the assistance of the Department of Justice’s Office of International Affairs.  Mr. Kim thanked Brazilian authorities for their assistance in the case.  He also acknowledged the assistance of the U.S. Department of State and the U.S. Embassy in Brazil for their assistance in the investigation.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today that ADRIAN BROOKS, a/k/a “Abee,” was arrested for his alleged role as the leader of a sex trafficking and prostitution enterprise that exploited and abused women and minor girls.  BROOKS was charged in an Indictment with sex trafficking of minors and sex trafficking by force, fraud, and coercion.  BROOKS was also charged with the use of interstate facilities and interstate travel to promote a prostitution enterprise.  BROOKS was arrested this morning and will be presented before U.S. Magistrate Judge Gorenstein in Manhattan federal court this afternoon.  The case has been assigned to U.S. District Judge William H. Pauley.   

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, Adrian Brooks used threats and violence to coerce underaged girls into performing sex acts for money, and then kept most of the money for himself.  For his reprehensible alleged crimes, Brooks will now face federal sex trafficking charges.  This Office remains committed to protecting vulnerable children from the sick world of commercial sex trafficking.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Brooks’s alleged acts are horrendous, preying on and exploiting minors. Cases like this are disgraceful examples of the worst in our society. Sadly, too often these types of crimes are unknown or ignored in our communities. The FBI simply won't tolerate this behavior. Our Child Exploitation and Human Trafficking Task Force will be relentless in pursuing those who target our youth.  I encourage anyone with knowledge of trafficking activity to step forward to help us make a difference”

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

Since at least 2014, BROOKS directed and conducted a criminal sex trafficking and prostitution enterprise (the “Sex Trafficking Enterprise”) that recruited and exploited minor girls, and then forced them to engage in commercial sex acts for his own profit by, among other things, using an online classifieds website called Backpage.com (“Backpage”).  BROOKS operated the Sex Trafficking Enterprise out of motels in the Bronx, New York, and Yonkers, New York, as well as on the streets of the Bronx.

To evade detection by law enforcement, the Sex Trafficking Enterprise’s advertisements often purported to be offering escorts.  However, such advertisements often signaled that they were, in fact, offering individuals for commercial sex acts through a variety of cues, including pictures of partially-clothed women in sexually suggestive poses, and coded language indicating that the people being offered would perform sex acts in exchange for money.

The victims of BROOKS’s Sex Trafficking Enterprise were typically forced to engage in commercial sex acts with multiple customers in a single day.  Customers typically paid for such commercial sex acts in cash.  BROOKS kept most or all of the profits from his Sex Trafficking Enterprise.

BROOKS forced certain of his victims to take prescription pain relievers, to which they became addicted.  In addition, BROOKS set rules for his victims, controlled their actions, and punished violations of his rules and disobedience through physical violence, among other things.

*                *                *

BROOKS is charged with one count of sex trafficking conspiracy, which carries a maximum sentence of life in prison; two counts of sex trafficking of a minor and by force, fraud, or coercion, each of which carries a maximum sentence of life in prison and a mandatory minimum sentence of 15 years in prison; and one count of use of interstate facilities and interstate travel to promote a prostitution enterprise, which carries a maximum sentence of five years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Any individuals who believe they have information concerning ADRIAN BROOKS, a/k/a “Abee,” that may be relevant to the investigation, or information regarding other sex trafficking crimes, should contact the FBI at (212) 384-1000 or https://tips.fbi.gov/, or the New York City Police Department at (646) 610-7272.

The investigation was conducted through the New York Child Exploitation and Human Trafficking Task Force, a joint task force between the FBI and NYPD to combat human trafficking.  Mr. Kim praised the outstanding investigative work of the FBI and the NYPD.   Mr. Kim also thanked the Port Authority of New York and New Jersey - Youth Services Unit and the New York City Administration for Children’s Services for their assistance during the investigation.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Elizabeth Hanft, Sagar K. Ravi, and Alexandra N. Rothman 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.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Leon Hayward, Acting Director, Field Operations, New York, U.S. Customs and Border Protection (“CBP”), and 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”), announced today that the United States has settled civil fraud claims brought under the False Claims Act against NOTATIONS, INC. (“NOTATIONS”), a garment wholesaler based in Warminster, Pennsylvania, with a showroom in Manhattan.  As alleged in the Government’s complaint, NOTATIONS repeatedly ignored warning signs that its business partner, which imported garments from China, was engaged in a scheme to underpay customs duties owed on the imported garments it sold to NOTATIONS.  Pursuant to the settlement, NOTATIONS admits and accepts responsibility for failing to act in response to indications of fraudulent conduct, agrees to pay $1 million in damages, and agrees to implement measures designed to prevent future fraud by NOTATIONS or its business partners.  The stipulation of settlement was approved yesterday by United States District Judge Lewis A. Kaplan. 

Acting U.S. Attorney Joon H. Kim said:  “As this settlement makes evident, companies purchasing imported goods cannot turn a blind eye to fraud committed by their business partners.  We will be vigilant in holding accountable all parties who engage in or contribute to fraudulent conduct.” 

CBP Acting Director Leon Hayward said:  “As global supply chains grow more complex, it is important for American businesses to know their suppliers and be confident of their integrity.  The outcome of this case is a testament to the dedication of our partners in the United States Attorney’s Office, Homeland Security Investigations, and the men and women of CBP in enforcing our nation’s trade laws and holding accountable those perpetrating this type of fraud.”

HSI Special Agent in Charge Angel M. Melendez said:  “Evading the payment of customs duties to increase profit is not a victimless crime; it has a negative effect on the U.S. economy and law-abiding importers.  HSI special agents will continue to work diligently with the officers of CBP to locate these offenders and put an end to their fraudulent business practices.”

The Government’s complaint-in-intervention, filed last year, alleges that YINGSHUN GARMENTS, INC. (“YINGHSUN”), an importer of women’s apparel manufactured in China, and IMPORT GLOBAL DESIGNS INC. (“IMPORT GLOBAL”) and OLGREM LLC (“OLGREM”), successor entities to YINGSHUN, and MARIE ROGERS, an owner and/or officer of each entity, engaged in a double-invoice scheme whereby YINGSHUN (and later IMPORT GLOBAL and OLGREM) presented false and fraudulent invoices to CBP, showing prices for imported garments that were discounted by 75 percent or more, for the purpose of avoiding customs duties on the garments.  NOTATIONS, which was YINGSHUN’s biggest customer, aided the fraudulent scheme by ignoring warning signs that YINGSHUN’s irregular business practices were highly suggestive of fraud.

As part of the settlement, NOTATIONS agreed to pay $1 million in damages.  NOTATIONS also admits and accepts responsibility for its failure to take action in response to multiple warning signs that YINGSHUN, IMPORT GLOBAL, and OLGREM were undervaluing their imported goods and therefore paying less in import duties than they should have been paying.  NOTATIONS also has agreed to implement a written compliance policy, which will include measures to educate its employees on identifying red flags for fraud in import transactions, to monitor the conduct of its business partners who act as importers of overseas goods, and to report all potentially fraudulent conduct to CBP.   

This matter was initiated by a relator pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3729 et seq.  The Government’s claims against YINGSHUN, IMPORT GLOBAL, OLGREM, and MARIE ROGERS remain pending. 

*          *          *

Mr. Kim thanked CBP and HSI for their efforts and ongoing support and assistance with the case.

The case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorney Cristy Irvin Phillips is in charge of the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Ashan M. Benedict, the Special Agent-in-Charge of the New York Field Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of a complaint charging ALLANMON MAVUMKAL with a Hobbs Act robbery spree involving at least 10 livery cabs in the Bronx, Mt. Vernon, and Yonkers, during which MAVUMKAL robbed the cab drivers of cash, personal items, and their cabs at knife-point.  MAVUMKAL surrendered on October 1, 2017, and will be presented today in Manhattan federal court before the Honorable Gabriel W. Gorenstein.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, Allanmon Mavumkal preyed on innocent livery cab drivers who had the misfortune of responding to Mavumkal’s call for a ride.  Protecting hardworking New Yorkers from acts of violence is always a priority of this Office.” 

ATF Special Agent-in-Charge Ashan M. Benedict said:  “Mavumkal is alleged to have engaged in a pattern of armed robberies and carjackings of taxi drivers, extending from the Bronx to Mount Vernon and Yonkers.  Over the course of barely a month, he allegedly repeatedly preyed on hard working New Yorkers trying to do nothing more than to earn an honest living.  Today’s charges send a clear message that we and our law enforcement partners stand at the ready to bring violent offenders to justice.” 

NYPD Commissioner James P. O’Neill said:  "This series of violent robberies ended thanks to the hard work of investigators who worked diligently until this individual was identified and taken into custody. The NYPD will continue to work with our law enforcement partners to protect communities and ensure that this individual is held accountable for his actions."

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

On September 21, 2017, MAVUMKAL hailed a livery cab in the Bronx, and directed the driver to a particular destination.  After arriving at the drop-off location, MAVUMKAL threatened the driver with a large knife, which was captured on video from the cab, ordered the driver out of the cab, and then drove away in the cab. The investigation is continuing.

*          *          *

MAVUMKAL, 30, of Mount Vernon, New York, is charged with one count of Hobbs Act robbery, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

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 Wendy Olsen-Clancy, the Victim Witness Coordinator at the United States Attorney’s Office for the Southern District of New York, at (866) 874-8900, or Wendy.Olsen@usdoj.gov. 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 Attorney Justin V. Rodriguez is in charge of the prosecution.

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

17-319                                                                                                                                                                                                                                                      ###

[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.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that MARYSE LIBURDI was sentenced today in Manhattan federal court to 49 months in prison for her scheme to defraud investors in a technology company founded and operated by LIBURDI out of more than $7 million.  LIBURDI was sentenced by U.S. District Judge Denise L. Cote, before whom she previously pled guilty.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Maryse Liburdi lied to investors about the condition of her company and used over a million dollars in investor funds to pay for her own rent, clothing, spas and salons.  For those crimes, today she received a sentence of 49 months in federal prison.”

According to the allegations in the Indictment to which LIBURDI pled guilty, a criminal complaint filed against LIBURDI, and statements made during the plea and other court proceeding proceedings:

Since at least in or about 2010, LIBURDI perpetrated a multi-year scheme to defraud individuals into investing in a technology company (the “Company”) founded and run by LIBURDI.  LIBURDI repeatedly made misrepresentations to investors about the Company’s revenue and assets, manipulated Company bank accounts to hide the Company’s true financial condition and, contrary to LIBURDI’s express promises to the investors, converted investor funds to her own use.

While LIBURDI repeatedly told investors that the Company had millions of dollars in revenue, the Company’s bank records show that, from at least 2008 until the Company ceased operating in January 2015, the Company earned little or no revenue.  Moreover, as reflected in the Company’s bank records, LIBURDI misappropriated investor funds, transferring over $1 million to her and her former husband’s bank accounts and to pay LIBURDI’s personal expenses, including luxury clothing.  For example, LIBURDI used funds from one victim investor for, among other things, transfers to a personal bank account in the name of LIBURDI and her former husband, rental payments for LIBURDI’s three-bedroom Manhattan apartment, payments for personal credit cards, and substantial personal expenditures on corporate credit cards, including, among other things, expenditures at various retail clothing, accessories, and cosmetics stores, salons and spas, and wine and liquor stores. 

In order to hide her scheme, LIBURDI manipulated the Company’s bank accounts by, on at least three occasions, writing checks for hundreds of thousands of dollars drawn on accounts with insufficient funds in order to fraudulently inflate the balance of a Company bank account and thereby hide the Company’s true cash balance from the investors.  For example, in October 2013, LIBURDI wrote and deposited into the Company’s bank account a $700,000 check drawn on a different account that had a balance of only about $2,000.  LIBURDI then falsely represented to the victims that the Company’s bank account held approximately $700,000 and showed investors a bank statement for the Company account listing the inflated balance.  As result of LIBURDI’s fraud, victim-investors in the Company lost more than $7 million.

*                *                *

In addition to the prison term, LIBURDI, 46, formerly of Victoria, Minnesota, and New York, New York, was sentenced to three years of supervised release, and was ordered to forfeit $7,069,904.46 and to pay $7,069,904.46 in restitution to the victims of her offense.

Mr. Kim praised the investigative work of the Federal Bureau of Investigation.  He also thanked Italian law enforcement authorities, including Interpol Rome, for their assistance in LIBURDI’s arrest, as well as the Department of Justice’s Attaché at the U.S. Embassy in Rome and the DOJ Office of International Affairs.

The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Elisha J. Kobre is in charge of the prosecution.           

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that DEBORAH KELLEY, a former managing director of institutional fixed income sales at a New York-based broker-dealer (the “Broker-Dealer”), was sentenced today in Manhattan federal court to three years’ probation, including six months of home confinement, for participating in a “pay-to-play” bribery scheme involving the New York State Common Retirement Fund (“NYSCRF”), the nation’s third largest public pension fund.   KELLEY pled guilty to conspiracy to commit securities fraud and honest services wire fraud on May 30, 2017, before U.S. District Court Judge J. Paul Oetken, who also imposed today’s sentence.   

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Deborah Kelley bribed an official with control over the investment of more than $50 billion in state pension fund assets.  She did so to direct business to her brokerage firm and to reap hundreds of thousands of dollars in additional commissions for herself.  Kelly now has been sentenced for defrauding New York pensioners and depriving them of the honest services of the pension administrator.”

According to the Indictment charging KELLEY, other filings in Manhattan federal court, and statements made during her sentencing proceeding:

The NYSCRF

The NYSCRF is a pension fund administered for the benefit of public employees of the State of New York.  From January 2014 through February 2016, Navnoor Kang served as Director of Fixed Income and Head of Portfolio Strategy for the NYSCRF.  In that capacity, Kang was responsible for investing more than $53 billion in fixed-income securities on behalf of the NYSCRF.  Kang owed a fiduciary duty to the NYSCRF and its members and beneficiaries, and was required to make investment decisions in their best interests and free of any conflict of interest.  New York State law and NYSCRF policies prohibited Kang and other NYSCRF employees from receiving any bribes, gifts, benefits, or consideration of any kind, as KELLEY well knew.

The Scheme to Steer NYSCRF Fixed-Income Business in Exchange for Secret Bribes

From 2014 through 2016, Kang, KELLEY, and others participated in a scheme to defraud the NYSCRF and its members and beneficiaries, and to deprive the NYSCRF of its intangible right to Kang’s honest services.  The scheme involved, among other things, an agreement among Kang, KELLEY, and others to pay Kang bribes – in the form of entertainment, travel, and lavish meals, among other things – in exchange for fixed-income business from the NYSCRF.  Such bribes were strictly forbidden by the NYSCRF, and were paid secretly and without any disclosure to the NYSCRF and its members and beneficiaries concerning the conflicts of interests inherent therein. 

In exchange for the bribes paid by KELLEY, Kang used his position as Director of Fixed Income and Head of Portfolio Strategy at the NYSCRF to promote the interests of KELLEY and her brokerage firm.  Kang, in exchange for the bribes he received, agreed to steer fixed-income business to the Broker-Dealer.  In so doing, Kang, with KELLEY’s knowledge and approval, breached his fiduciary duty to make investment decisions in the best interest of the NYSCRF and its members and beneficiaries, and free of conflict, and deprived the NYSCRF of its intangible right to Kang’s honest services.  

As KELLEY paid bribes to Kang, the Broker-Dealer’s fixed-income business with the NYSCRF skyrocketed.  The value of NYSCRF’s domestic bond transactions with the Broker-Dealer increased from zero in the fiscal year ending March 1, 2014, to approximately $156 million in the fiscal year ending March 1, 2015, and to approximately $179 million in the fiscal year ending March 1, 2016.  Kang’s trades resulted in the payment of more than a half-million dollars in commissions to the Broker-Dealer, of which KELLEY personally earned nearly $200,000.

Obstruction of Justice

In late 2015, the Securities and Exchange Commission (“SEC”) opened an investigation into the entertainment and benefits that KELLEY had provided Kang, and the SEC subpoenaed both KELLEY and Kang for their testimony.  In advance of their testimony, KELLEY and Kang agreed to align their stories and testify falsely before the SEC in order to conceal their scheme.  In late 2015 and early 2016, KELLEY and Kang each falsely testified under oath before the SEC about expenses KELLEY had paid for Kang.  

*          *          *

KELLEY, 58, of Piedmont, California, was also ordered to pay a fine of $50,000, to forfeit $187,991.19, and to complete 1000 hours of community service.  Restitution will be determined within 90 days of sentencing.

In December 2016, Gregg Schonhorn, a former a vice president of fixed income sales at another New York-based broker-dealer, pled guilty for his participation in the scheme.  Kang, against whom charges for conspiracy, securities fraud, honest services wire fraud, and obstruction of justice are currently pending, is presumed innocent unless and until proven guilty.  Kang is scheduled to proceed to trial on December 4, 2017.

Mr. Kim praised the investigative work of the Federal Bureau of Investigation and noted that the investigation is continuing.   He also thanked the SEC, which filed civil charges against Kang, KELLEY, and Schonhorn in a separate civil action, and the Office of Inspector General for the Office of the New York State Comptroller.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Edward A. Imperatore and Joshua A. Naftalis are in charge of the prosecution.  

            Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Catherine Leahy Scott, New York State Inspector General, and Debbi Mayer, Assistant Special Agent in Charge of the U.S. Department of Education Office of Inspector General, Northeastern Regional Office (“ED-OIG”), announced today that MAMDOUH ABDEL-SAYED, a full-time, tenured lecturer at the City University of New York’s Medgar Evers College (“Medgar Evers College”), was arrested this morning and charged in Manhattan federal court with fraud, corruption, and obstruction offenses related to his selling of sham Medgar Evers College certificates that purported to represent the completion of health care courses at the College.  ABDEL-SAYED was arrested this morning and will be presented this afternoon in Manhattan federal court.    

            Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, a faculty member of Medgar Evers College abused his position to enrich himself by creating and selling fake certificates stating students had completed health care programs at the college.  In allegedly doing so, Abedel-Sayed out of greed put public health at risk.  I want to thank our partners at the New York State Inspector General and Department of Education Office of Inspector General for their continued efforts to root out corruption at federally funded New York schools.”

            New York State Inspector General Catherine Leahy Scott said:  “This defendant ignored repeated warnings and allegedly still brazenly abused the name and resources of his college employer to operate what amounted to his own fraudulent trade school on the grounds of the City University of New York.  He allegedly traded on the reputation of Medgar Evers College and pocketed all the fees students paid while undercutting legitimate schooling being performed by his colleagues across the campus.  I will continue my overarching and ongoing investigation into the management and oversight of CUNY campuses while diligently pursuing anyone, as in this case, who allegedly violates the trust of their public position.”

            ED-OIG Assistant Special Agent in Charge Debbi Mayer said:  “Today’s action alleges that Mr. Abdel-Sayed not only abused his position of trust for personal gain, but did so at the expense of students.  That is unacceptable.  OIG will continue to aggressively pursue those who misappropriate education funds for their own purposes.  America’s students and taxpayers deserve nothing less.”

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

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

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

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

*                *                *

            ABDEL-SAYED, 68, of Kearny, New Jersey, is charged with one count of conversion from a program receiving federal funds and one count of soliciting bribes, each of which carries a maximum penalty of 10 years in prison, and one count of wire fraud, one count of mail fraud, and one count of obstruction of justice, each of which carry a maximum penalty of 20 years in prison.

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

            Mr. Kim praised the investigative work of the New York State Inspector General’s Office and ED-OIG. 

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, today announced the forfeiture of $48,238,116 in proceeds (the “Proceeds”) from the sale of the 144,336 Bitcoins that were recovered from Ross William Ulbricht’s laptop computer.  Ulbricht was found guilty in 2015, after a jury trial, of distributing narcotics, distributing narcotics by means of the Internet, conspiring to distribute narcotics, engaging in a continuing criminal enterprise, conspiring to commit computer hacking, conspiring to traffic in false identity documents, and conspiring to commit money laundering, in connection with his operation of the Silk Road underground website.  The Proceeds were the subject of a parallel civil forfeiture action filed in Manhattan federal court in 2013 seeking the forfeiture of all assets of Silk Road. United States District Judge Katherine Forrest entered a Stipulation and Order today in which Ulbricht withdrew his claim to the Proceeds, and the Proceeds were forfeited to the United States.

According to the evidence presented at Ublricht’s criminal trial, statements made during other public proceedings, and other court documents:

Ulbricht created Silk Road in January 2011, and owned and operated the underground website until it was shut down by law enforcement authorities in October 2013.  Silk Road emerged as the most sophisticated and extensive criminal marketplace on the Internet, serving as a sprawling black-market bazaar where unlawful goods and services, including illegal drugs of virtually all varieties, were bought and sold regularly by the site’s users.  While in operation, Silk Road was used by thousands of drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other unlawful goods and services to more than 100,000 buyers, and to launder hundreds of millions of dollars deriving from these unlawful transactions.

In connection with the investigation of Silk Road, the Government seized 144,336 Bitcoins derived from Silk Road’s illegal activities that were found on Ulbricht’s laptop computer.  These Bitcoins were ultimately sold by the United States Marshals Service pursuant to Court order for $48,238,116.

The civil forfeiture case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit.  Assistant United States Attorney Christine Magdo is in charge of the case.

United States Court of Appeals for the Second Circuit summary order below.  

UPDATE

The press release issued in this case on September 28, 2017, incorrectly identified Residential Home Mortgage Corp. as the settling defendant instead of Residential Home Funding Corp.  The defendant in this case is Residential Home Funding Corp. Residential Home Mortgage Corp. has no connection to this case and has not been accused of any wrongdoing.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Dane Narode, Associate General Counsel for Program Enforcement for the U.S. Department of Housing and Urban Development (“HUD”), and Christina Scaringi, the Special Agent in Charge of HUD’s Office of the Inspector General (“HUD-OIG”), Northeast Region, announced today that the United States has settled a civil mortgage fraud lawsuit against RESIDENTIAL HOME FUNDING CORP. (“RESIDENTIAL HOME FUNDING”) stemming from RESIDENTIAL HOME FUNDING’s participation in the Federal Housing Administration’s (“FHA”) Direct Endorsement Lender Program (“DEL Program”).  In the settlement, approved Monday by U.S. District Judge Jed S. Rakoff, RESIDENTIAL HOME FUNDING agreed to pay $1.67 million and admitted, acknowledged, and accepted responsibility for, among other things, failing to maintain a compliant quality control program and approving loans for FHA insurance that failed to meet the requirements established by HUD.  The settlement amount was based on RESIDENTIAL HOME FUNDING’s financial ability to pay after a review of the company’s financial records.  As part of the settlement, RESIDENTIAL HOME FUNDING also agreed to retain an independent compliance consultant to ensure its compliance with the HUD/FHA rules applicable to the DEL Program.

Acting Manhattan U.S. Attorney Kim said:  “We are committed to holding lenders accountable when they recklessly approve loans for FHA insurance and then fail to live up to their promises to HUD.  With this settlement, Residential Home Funding accepts responsibility for its conduct and will pay $1.67 million.”

HUD Associate General Counsel for Program Enforcement Dane Narode said:  “This case demonstrates HUD’s resolve in protecting the integrity of its mortgage insurance programs for the benefit of all Americans, especially first-time homebuyers.  We’re pleased that Residential Home Funding has accepted responsibility for its actions and has agreed to improve its training and quality control program.”  

HUD-OIG Special Agent in Charge Christina Scaringi said:  “This settlement with Residential Home Funding is the latest example of our continued commitment to hold mortgage industry professionals accountable for their actions.  HUD OIG’s Joint Civil Fraud Division and Office of Investigations will continue to work together with our partners at the U.S. Attorney’s Office to root out lenders who choose to use deceptive practices that ultimately cause FHA to suffer losses on mortgages that should never have been approved.”

The Government’s Complaint in this action alleged as follows:      

During the period 2006 through 2012 (“Covered Period”), RESIDENTIAL HOME FUNDING participated in the DEL Program.  As a DEL lender, RESIDENTIAL HOME FUNDING had the authority to originate, underwrite, and approve mortgages for FHA insurance.  If a DEL lender like RESIDENTIAL HOME FUNDING approved a loan for FHA insurance and the loan later defaulted, the holder of the loan could submit an insurance claim to HUD and HUD had to pay the costs associated with the default.  Throughout the Covered Period, HUD therefore required DEL lenders to follow HUD’s program rules, including its underwriting requirements and its requirement that lenders maintain a compliant quality control program.  A compliant quality control program must include procedures to ensure that the lender reviews loans for compliance with HUD requirements, promptly discloses to HUD all loans containing evidence of fraud or other serious underwriting problems, and conducts a full review of all loans that go into default within the first six payments (“early payment defaults”).  RESIDENTIAL HOME FUNDING failed to comply with all three of these basic requirements, and it also routinely approved loans for FHA insurance that did not meet HUD’s underwriting requirements.  Notwithstanding these failures, RESIDENTIAL HOME FUNDING continued to fraudulently certify to HUD, each year, that it “conforms to all HUD-FHA regulations necessary to maintain its HUD-FHA approval.”

            As part of the settlement, RESIDENTIAL HOME FUNDING has admitted, acknowledged, and accepted responsibility for the following misconduct during the Covered Period:

• RESIDENTIAL HOME FUNDING failed to conform to the HUD and FHA rules requiring DEL lenders to maintain a compliant quality control program by, among other things:

• • not taking action to address loans with underwriting deficiencies that were identified through RESIDENTIAL HOME FUNDING’s own quality assurance review process;

• • not reviewing early payment default loans; and

• • not reporting to HUD loans that were identified in RESIDENTIAL HOME FUNDING’s quality control reviews as having indicia of fraud or other serious deficiencies.

• Contrary to representations in RESIDENTIAL HOME FUNDING’s annual certifications, RESIDENTIAL HOME FUNDING did not conform to all applicable HUD and FHA regulations.

• RESIDENTIAL HOME FUNDING endorsed for FHA mortgage insurance loans that did not meet all underwriting requirements contained in HUD’s handbooks and mortgagee letters.

• RESIDENTIAL HOME FUNDING submitted to HUD and FHA loan-level certifications stating that loans were eligible for FHA mortgage insurance when in fact they were not.

*                      *                      *

Mr. Kim thanked HUD-OIG for its assistance in this case.

This case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Jessica Jean Hu and Elizabeth M. Tulis are in charge of the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JASON MOYE, a/k/a “Tall Jay,” was sentenced this afternoon to a term of 444 months in prison, which must run consecutive to a prior prison sentence of five years, for his crimes as a high-ranking member of the “Young Gunnaz” or “YGz” gang, including the December 22, 2011, murder of Taisheem Ferguson, a/k/a “Trey,” 17.  MOYE was sentenced in Manhattan federal court by United States District Judge Valerie E. Caproni, before whom he previously pled guilty. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “A few days before Christmas in 2011, in broad daylight on a busy street, Moye ordered a fellow YGz gang member to shoot into a crowd, senselessly killing 17-year-old Taisheem Ferguson.  With today’s sentence, Moye has been held to account for this tragic murder and for his other crimes.  We hope that today’s sentence brings some consolation and justice to the victims of Moye’s crimes, in particular the family of Taisheem Ferguson.  Together with our law enforcement partners, we will continue to aggressively investigate and prosecute gang violence in our community.”

According to the charging and other documents filed in the case, and statements made during MOYE’s guilty plea and sentencing proceedings and other court proceedings in this case:

MOYE was a high-ranking member of the Bronx-based street gang known as the YGz.  From 2005 to 2016, members and associates of the YGz enriched themselves by committing robberies and by selling drugs, such as crack cocaine, heroin, and marijuana, and committed numerous acts of violence, including the murder of both rivals and innocent bystanders. 

As part of his involvement in the YGz gang, MOYE participated in numerous acts of violence in the South Bronx.  In particular, on the afternoon of December 22, 2011, MOYE ordered a member of the YGz to shoot into a crowd of rival gang members who were approaching them on Morris Avenue near 151st Street in the Bronx.  The YGz member fired several gunshots as directed, one of which killed Ferguson.

*                      *                     *

MOYE, 29, of the Bronx, is the sixth defendant to be sentenced this year by Judge Caproni for participation in a YGz-related murder.

Mr. Kim praised the outstanding work of the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration, and the New York City Police Department in the investigation of this case.  He also thanked the Bronx County District Attorney’s Office for their support in this case.

This case is being handled by this Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Samson Enzer, Gina M. Castellano, and Andrew C. Adams are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that KWAME INSAIDOO, the former executive director of United Block Association (“UBA”), a New York-based non-profit organization, was sentenced to 48 months in prison and his wife ROXANNA INSAIDOO was sentenced to 30 months in prison, in connection with their embezzlement of over $580,000 from UBA, defrauding their mortgage lender of approximately $200,000, and related crimes.  They were convicted on May 2, 2017, following a one-week jury trial before United States District Judge Valerie E. Caproni, who also imposed today’s sentence.

Acting U.S. Attorney Joon H. Kim said:  “As a Manhattan jury found, Kwame Insaidoo and Roxanna Insaidoo stole hundreds of thousands of dollars from a government-funded non-profit organization dedicated to serving senior citizens.  The Insaidoos enriched themselves and their family with taxpayer money that was supposed to support four senior centers in Upper Manhattan.  Now this husband-and-wife crime duo will serve time in prison for those crimes.”  

In imposing sentence, Judge Caproni stated that the “message has to be sent” that “it is not acceptable to steal money from the City that is designed for charitable goals to line your own pockets.”

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

UBA was a non-profit organization headquartered in New York, New York, that was controlled by KWAME INSAIDOO, its former Executive Director.  UBA had contracts with New York City through which it received taxpayer funds, including federal funds, to operate and provide healthy meals and programming to the elderly at four senior centers in Upper Manhattan.

As the jury found, KWAME INSAIDOO abused his authority as UBA’s Executive Director to embezzle, with the assistance of his wife, ROXANNA INSAIDOO, over $580,000 of UBA’s funds for his own benefit and that of his wife and son.  KWAME INSAIDOO and ROXANNA INSAIDOO concealed their embezzlement by laundering the money, in part, through a shell company that they had created.  KWAME INSAIDOO and ROXANNA INSAIDOO used the embezzled funds to pay for personal expenses, including the mortgage for their Long Island residence and the purchase of a Mercedes Benz and a Cadillac.  They also wired more than $300,000 to family members living abroad.    

In an effort to evade scrutiny regarding the embezzled funds, KWAME INSAIDOO repeatedly lied to the City, including to its auditors, in order to maintain UBA’s funding and to conceal the funds he and his wife had diverted to their shell company. 

In 2011, KWAME INSAIDOO and ROXANNA INSAIDOO also engaged in a scheme to defraud their mortgage lender in connection with a modification of their mortgage under the federally-sponsored Home Affordable Modification Program, by underreporting their income and assets, including the hundreds of thousands of dollars they had embezzled from UBA.  This scheme led to a write-off of almost $200,000 from KWAME INSAIDOO and ROXANNA INSAIDOO’s home mortgage.

*          *          *

In addition to the prison terms imposed today by Judge Caproni, KWAME INSAIDOO, 61, and ROXANNA INSAIDOO, 63, both of Bay Shore, Long Island, were ordered to forfeit a sum of $779,039.62.  

Mr. Kim praised the outstanding investigative work of the New York City Department of Investigation and the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York. 

The case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorneys Eli J. Mark and David Zhou are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the arrest today of 10 individuals, including four Division I NCAA men’s basketball coaches and a senior executive at a major athletic apparel company (“Company-1”), in connection with two related fraud and corruption schemes.  In the first scheme, as alleged in the three Complaints unsealed today, college basketball coaches took cash bribes from athlete advisors, including business managers and financial advisors, in exchange for using their influence over college players under their control to pressure and direct those players and their families to retain the services of the advisors paying the bribes.  In the second scheme, a senior executive at Company-1, working in connection with corrupt advisors, funneled bribe payments to high school-aged players and their families to secure those players’ commitments to attend universities sponsored by Company-1, rather than universities sponsored by rival athletic apparel companies. 

The three Complaints unsealed today charge four coaches, CHUCK CONNORS PERSON, LAMONT EVANS, EMANUEL RICHARDSON, a/k/a “Book,” and ANTHONY BLAND, a/k/a “Tony”; three athlete advisors, CHRISTIAN DAWKINS, MUNISH SOOD, and RASHAN MICHEL; a senior executive at Company-1, JAMES GATTO, a/k/a “Jim,” along with two individuals affiliated with Company-1, MERL CODE and JONATHAN BRAD AUGUSTINE, with wire fraud, bribery, travel act, and conspiracy offenses.  The defendants were all arrested this morning in various parts of the country.  DAWKINS, SOOD, and AUGUSTINE are scheduled to appear before U.S. Magistrate James L. Cott in federal court later today.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “The picture of college basketball painted by the charges is not a pretty one – coaches at some of the nation’s top programs taking cash bribes, managers and advisors circling blue-chip prospects like coyotes, and employees of a global sportswear company funneling cash to families of high school recruits.  For the ten charged men, the madness of college basketball went well beyond the Big Dance in March.  Month after month, the defendants allegedly exploited the hoop dreams of student-athletes around the country, treating them as little more than opportunities to enrich themselves through bribery and fraud schemes.  The defendants’ alleged criminal conduct not only sullied the spirit of amateur athletics, but showed contempt for the thousands of players and coaches who follow the rules, and play the game the right way.”

FBI Assistant Director William F. Sweeney Jr. said:  “Today’s charges detail a corrupt practice in which highly rated high school and college basketball players were steered toward lucrative business deals with agents, advisors, and an international athletics apparel company.  As alleged, NCAA Division I and AAU coaches created a pay-to-play culture, agreeing to provide access to their most valuable players while also effectively exerting their influence over them.  Today’s arrests should also serve as a warning to those who conduct business this way in the world of college athletics.”
According to allegations contained in the three Complaints[1] unsealed today in Manhattan federal court, and other publicly available documents:

Overview of the Investigation

The charges in the Complaints result from a scheme involving bribery, corruption, and fraud in intercollegiate athletics.  Since 2015, the U.S. Attorney’s Office for the Southern District of New York and the FBI have been investigating the criminal influence of money on coaches and student-athletes who participate in intercollegiate basketball governed by the NCAA.  The investigation has revealed two related schemes.  In the first scheme (the “Coach Bribery Scheme”), athlete advisors – including financial advisors and business managers, among others – allegedly paid bribes to assistant and associate head basketball coaches at NCAA Division I universities, and sometimes directly to student-athletes at those universities, facilitated by the coaches.  In exchange for the bribes, the coaches agreed to pressure and exert influence over student-athletes under their control to retain the services of the bribe-payors once the athletes entered the National Basketball Association (“NBA”).  

In the second scheme (the “Company-1 Scheme”), athlete advisors working with high-level Company-1 employees, allegedly paid bribes to student-athletes playing at, or bound for, NCAA Division I universities, and to the families of such athletes.  These bribes were paid in exchange for a commitment by the athletes to matriculate at a specific university sponsored by Company-1, and a promise to ultimately sign agreements to be represented by the bribe-payors once the athletes entered the NBA.

Participants in both schemes allegedly took steps to conceal the illegal payments, including (i) funneling them to athletes and/or their families indirectly through surrogates and entities controlled by the scheme participants; and (ii) making or intending to make misrepresentations to the relevant universities regarding the involvement of student-athletes and coaches in the schemes, in violation of NCAA rules.

As described in the complaints, these schemes operated as a fraud on the universities involved, all of which provide scholarships to players and salaries to coaches with the understanding and expectation that the players and coaches are in full compliance with all relevant NCAA rules and regulations.  Moreover, these schemes subject the universities to substantial potential penalties by the NCAA, including, but not limited to, financial fines and penalties as well as the potential loss of eligibility to compete in various NCAA events. 

The Coach Bribery Schemes

The first scheme alleged in the Complaints entailed bribes by DAWKINS and SOOD, among others, to four men’s basketball coaches, PERSON, EVANS, RICHARDSON and BLAND, in exchange for the coaches’ agreement to direct players under their control, and the players’ families, to retain DAWKINS and SOOD once the players entered the NBA.  These corrupt arrangements, which turn on the coaches’ abuse of their positions of trust at the universities, are valuable both to the coaches, who receive cash bribes, and to the bribe-payors, for whom securing a future NBA player as a client can prove extremely profitable. 

Allegations Involving Chuck Person

Beginning in or around 2016, and continuing into 2017, PERSON, a former NBA player and the associate head coach at University-1, abused his coaching position at University-1 to solicit and obtain approximately $91,500 in bribe payments from a financial advisor and business manager for professional athletes, who, unbeknownst to PERSON, was providing information to law enforcement (“CW-1”).  In exchange for the bribes, PERSON agreed to direct certain University-1 basketball players to retain the services of CW-1 when those student-athletes entered the NBA.  The bribe payments initially were arranged by MICHEL, who had a preexisting relationship with PERSON and operated a clothing store that specialized in making bespoke suits for professional athletes.  Over the course of the scheme, PERSON did, in fact, arrange multiple meetings between CW-1 and players and/or their family members, in which he falsely touted CW-1’s qualifications without disclosing that he was being bribed to recommend CW-1.  For example, at one meeting, PERSON told the mother of a player at University-1 that CW-1 was PERSON’s own financial advisor and had also advised NBA Hall of Fame inductee (and University-1 alumnus) Charles Barkley, neither of which was true.  PERSON similarly told another player that CW-1 would purchase him a separate cell phone over which they could communicate so as to conceal the nature of the scheme.  

In addition to the bribe payments that PERSON solicited and received, PERSON also arranged for CW-1 to make payments directly to the families of the players PERSON was steering to CW-1.  PERSON further claimed to have given approximately $18,500 of the bribe money he received to the families of two student-athletes whom PERSON sought to steer to retain CW-1.

Allegations Involving Lamont Evans

Beginning in 2016, and continuing into 2017, EVANS solicited at least $22,000 from CW-1 and SOOD in exchange for EVANS’s agreement to exert his official influence over certain student-athletes that EVANS coached at two NCAA Division I universities, University-3 and University-4, to retain SOOD and CW-1’s business management and financial advisory services once those players entered the NBA.  In return, EVANS (who had received bribe payments from DAWKINS previously), promised SOOD and CW-1 that he would steer multiple specific players to retain their services.  Indeed, as a part of the scheme, EVANS arranged for CW-1 to meet with a student-athlete EVANS coached at University-4 (“Player-4”), and arranged for SOOD to meet with the mother of another student-athlete EVANS had previously coached at University-3, for the purpose of pressuring them to retain SOOD and CW-1.  Moreover, and in return for the bribe payments, EVANS falsely touted the services of SOOD and CW-1 to players and their families, telling Player-4, for example, that CW-1 was “my guy,” adding, falsely, that CW-1 “has helped me personally.  And I trust that,” and assuring Player-4 that “[i]t’s going to benefit you.  I promise you that.”  In explaining the benefit of bribing an assistant coach such as EVANS, DAWKINS explained to SOOD and CW-1 that because coaches like EVANS could not get “caught” receiving bribes because “his job is on the line,” EVANS and other corrupt coaches would have an incentive to “block” other athlete advisors from accessing the players under the coaches’ supervision and directing those players to the bribe-payors.

Allegations Involving Emanuel Richardson, a/k/a “Book”

Beginning in or around February 2017, and continuing through September 2017, DAWKINS and SOOD, along with two undercover law enforcement agents posing as financial backers of CW-1 (“UC-1” and “UC-2,” respectively), paid or facilitated the payment of $20,000 in bribes to RICHARDSON in return for RICHARDSON’s commitment to steer players under his control at University-4 to retain DAWKINS and SOOD’s services upon entering the NBA.  During that period, RICHARDSON repeatedly assured DAWKINS and SOOD that RICHARDSON would use his influence over players at Univeristy-4 to direct them to DAWKINS and SOOD, explaining, with respect to one particular player DAWKINS and SOOD sought to sign (“Player-6”), that Player-6 would be “insulated in who he talks to.”  RICHARDSON added, with respect to himself, that “you’re looking at the guy” whom Player-6 trusted.  RICHARDSON subsequently facilitated at least one meeting between DAWKINS, SOOD, and a representative of Player-6 for the purpose of having that representative commit the player to retain DAWKINS and SOOD’s business management and financial advisory services.  In addition, RICHARDSON appears to have provided a portion of the bribe money he received from DAWKINS, SOOD, UC-1, and UC-2 to at least one prospective high school basketball player (“Player-5”) in order to recruit that player to play for University-4. 

Allegations Involving Anthony Bland, a/k/a “Tony,”

Beginning in or around July 2017, and continuing into September 2017, DAWKINS and SOOD, working with UC-1, paid and/or facilitated the payment of at least $13,000 in bribes to BLAND in exchange for BLAND’s agreement to exert his official influence over certain student-athletes BLAND coached at University-5, to retain DAWKINS and SOOD’s business management and/or financial advisory services once those players entered the NBA.  In particular, as BLAND told DAWKINS and SOOD, in return for their bribe payments, “I definitely can get the players. . . .  And I can definitely mold the players and put them in the lap of you guys.”  In addition, and as part of the scheme, at BLAND’s direction DAWKINS and SOOD paid or facilitated the payment of an additional $9,000 directly to the families of two student-athletes at University-5.  In return, BLAND facilitated a meeting between DAWKINS and SOOD and a relative of a player currently attending University-5 (“Player-9”) for the purpose of pressuring Player-9 to retain DAWKINS and SOOD.

The Company-1 Scheme

In addition to the Coach Bribery Scheme described above, the investigation further revealed a second, related scheme.  In the second scheme, JAMES GATTO, a/k/a “Jim,” a high-level executive at Company-1, and MERL CODE, an individual affiliated with Company-1 and its high school and college basketball programs, conspired to pay high school basketball players or their families for commitments by those players to attend and play for aCompany-1-sponsored university, and to sign with Company-1 upon turning professional.  In addition, DAWKINS, SOOD, and JONATHAN BRAD AUGUSTINE brokered and facilitated the corrupt payments in exchange for a promise that the players also would retain the services of DAWKINS and SOOD upon turning professional. 

Specifically, in or around 2017, GATTO, CODE, DAWKINS, AUGUSTINE, and SOOD agreed to pay bribes to at least three high school basketball players or their families in the following manner:

Allegations Involving Player-10 and University-6

First, GATTO, CODE, DAWKINS, and SOOD worked together to funnel $100,000 from Company-1 to the family of a high school basketball player (“Player-10”) in exchange for Player-10’s commitment to play at an NCAA Division I university whose athletic programs are sponsored by Company-1 (“University-6”), and in further exchange for a commitment from Player-10 to retain DAWKINS and SOOD, and to sign with Company-1, once Player-10 joined the NBA.  DAWKINS told CW-1 and others on a recorded conversation that he did so at the request of a coach at University-6 (“Coach-2”), and call records show that GATTO spoke directly with Coach-2 multiple times in the days before Player-10 publicly committed to attending University-6. 

Moreover, because the payments to the family of Player-10 were both in violation of NCAA rules and illegal, they were disguised by GATTO, CODE, DAWKINS, and SOOD using fake purchase orders, invoices and related documents to make them appear to be payments from Company-1 to CODE’s company.  As CODE explained to DAWKINS, while such payments are sometimes made “off the books,” for this particular payment, GATTO and CODE had identified it to Company-1 as “as a payment to my team, to my organization, so it’s on the books, [but] it’s not on the books for what it’s actually for.”  Indeed, the money, once allocated by Company-1, was funneled back to DAWKINS to use to pay the father of Player-10 in cash.

Allegations Involving Player-11 and University-6

Second, DAWKINS and AUGUSTINE agreed to facilitate payments to the family of another high school basketball player (“Player-11”) in exchange for Player-11’s commitment to play at University-6 and ultimately to retain DAWKINS’s services.  While these payments were not directly funded by Company-1, they were made to benefit Company-1, which, as noted, sponsors University-6, and with the expectation that Company-1 would provide additional funding to AUGUSTINE in return.  AUGUSTINE noted, “all [Coach-2] has to do is pick up the phone and call somebody [and say] these are my guys, they’re taking care of us.” 

Because these payments from DAWKINS to Player-11’s family were both in violation of NCAA rules and illegal, AUGUSTINE suggested that the “easiest way” for DAWKINS to provide money for Player-11 and his family would be to send the money to AUGUSTINE’s “non-profit for the grassroots team,” although AUGUSTINE confirmed that he also would accept cash.

As DAWKINS subsequently explained to UC-2 in the context of providing such money to AUGUSTINE and others, “obviously some of it can’t be completely accounted for on paper because some of it is, whatever you want to call it, illegal.”

Allegations Involving Player-12 and University-7

Third, GATTO, CODE, DAWKINS, and AUGUSTINE agreed to make payments of as much as $150,000 from Company-1 to another high school basketball player (“Player-12”) in order to secure Player-12’s commitment to play at an NCAA Division I university whose athletic programs are also sponsored by Company-1 (“University-7”).  Because Player-12 played for an amateur team run by AUGUSTINE and sponsored by Company-1, AUGUSTINE, with the assistance of CODE and DAWKINS, attempted to broker the deal to secure Player-12’s commitment to attend University-7 rather than a school sponsored by a rival athletic apparel company.  In exchange for the payment, Player-12 similarly was expected to commit to retaining DAWKINS’s services and signing with Company-1 once Player-12 joined the NBA.

Much as with the payments to Player-10 described above, according to intercepted calls, GATTO stated that the payments from Company-1 to Player-12 were allegedly requested specifically by a coach at University-7 (“Coach-3”), who allegedly called GATTO directly and who, according to DAWKINS, CODE, and AUGUSTINE, “knows everything” and, in particular, “knows something’s gotta happen for” Player-12 to commit to attending University-7. 

*                *                *

Defendant

Age

Hometown

Charges (Potential Maximum Term of Imprisonment)

Chuck Connors Person

53

Auburn, AL

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud, Wire fraud conspiracy; Travel Act conspiracy (80 years)

Rashan Michel

43

Smyrna, GA

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Wire fraud conspiracy; Travel Act conspiracy (80 years)

Lamont Evans

40

Stillwater, OK

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Conspiracy to commit wire fraud; Travel Act conspiracy (80 years)

Emanuel Richardson, a/k/a “Book”

44

Tucson, AZ

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Conspiracy to commit wire fraud; Travel Act conspiracy (80 years)

Anthony Bland, a/k/a “Tony”

37

Los Angeles, CA

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Conspiracy to commit wire fraud; Travel Act conspiracy (80 years)

Christian Dawkins

24

Atlanta, GA

Bribery conspiracy, Payments of bribes, Honest services fraud conspiracy, Honest services fraud (3 counts), Wire fraud conspiracy (2 counts), Wire fraud (2 counts), Travel Act conspiracy, Money laundering conspiracy (200 years)

Munish Sood

45

Trenton, NJ

Bribery conspiracy, Payments of bribes, Honest services fraud conspiracy, Honest services fraud (3 counts), Wire fraud conspiracy (2 counts), Wire fraud (2 counts), Travel Act conspiracy, Money laundering conspiracy (200 years)

James Gatto, a/k/a “Jim”

47

Wilsonville, OR

Wire fraud conspiracy, Wire fraud (2 counts), Money laundering conspiracy (80 years)

Merl Code

43

Greer, SC

Wire fraud conspiracy, Wire fraud (2 counts), Money laundering conspiracy (80 years)

Jonathan Brad Augustine

32

Winter Garden, FL

Wire fraud conspiracy, Wire fraud (2 counts), Money laundering conspiracy (80 years)

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

Mr. Kim praised the work of the FBI and the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York.

Anyone with information relevant to the investigation is asked to contact the FBI at the special phone number established to receive such information, (212) 384-2135.

The case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Robert Boone, Russell Capone, Edward B. Diskant, and Noah Solowiejczyk are in charge of the prosecution.

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

“The Second Circuit, while finding that the evidence was more than sufficient to convict Dean and Adam Skelos, held that a part of the jury instruction is no longer good law under the Supreme Court decision in McDonnell.  While we are disappointed in the decision and will weigh our appellate options, we look forward to a prompt retrial where we will have another opportunity to present the overwhelming evidence of Dean Skelos and Adam Skelos’s guilt and again give the public the justice it deserves.  Cleaning up corruption is never easy, and that is certainly true for corruption in New York State government.  But we are as committed as ever to doing everything we can to keep our government honest.  That is what we will do in this prosecution as well.”