Southern District of New York

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JUAN THOMPSON pled guilty today to one count of cyberstalking and one count of making hoax bomb threats as part of THOMPSON’s campaign to harass and intimidate a particular woman (“Victim-1”), by, among other things, communicating at least 12 threats to Jewish Community Centers (“JCCs”) and other Victim Organizations in Victim-1’s name. 

Acting U.S. Attorney Joon H. Kim said:  “Fueling fear and distress, Juan Thompson made fake bomb threats to over a dozen Jewish Community Centers and organizations around the country.  As he admitted today in pleading guilty, Thompson made these threats as part of a cruel campaign to cyberstalk a victim with whom he previously had a relationship.  Thompson’s threats not only inflicted emotional distress on his victim, but also harmed Jewish communities around the country.  Thanks to the dedicated work of the FBI and NYPD, Thompson will now be held to account for his crimes.”  

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

In July 2016, THOMPSON began a months-long campaign of harassment targeting Victim-1 after Victim-1 ended their relationship.  THOMPSON’s conduct culminated with a series of hoax threats, including hoax bomb threats, targeting JCCs, organizations that provide service to and on behalf of the Jewish community, schools, and police departments.

THOMPSON started his campaign of harassment of Victim-1 in 2016.  In July of that year, an email was sent to Victim-1’s employer, which made false allegations about Victim-1, including that she had broken the law, using an internet protocol (“IP”) address that THOMPSON had previously used to access his social media account.  On October 15, 2016, an IP address that traced back to THOMPSON’s residence was used to falsely report that Victim-1 possessed child pornography.  When confronted by law enforcement on November 22, 2016, THOMPSON claimed that his email account had been hacked a few weeks earlier. 

THOMPSON also made at least 12 hoax threats targeting JCCs, organizations that provide service to and on behalf of the Jewish community, schools, and police departments.  For instance, on or about February 21, 2017, the Anti-Defamation League (“ADL”) received an emailed threat at their midtown Manhattan office, which indicated that “[Victim-1’s name and birthdate] is behind the bomb threats against jews. She lives in nyc and is making more bomb threats tomorrow.”  The next day, the ADL received a phone call claiming that explosive material had been placed in the ADL’s midtown Manhattan office. 

Some of THOMPSON’s threats were made in his own name, as part of an effort to claim that Victim-1 was trying to frame THOMPSON for a crime.  For instance, on or about February 7, 2017, a JCC in Manhattan received an emailed bomb threat from an anonymous email account that stated: “Juan Thompson [THOMPSON’s birthday] put two bombs in the office of the Jewish center today.  He wants to create Jewish newtown tomorrow.”  The email’s use of the phrase “Jewish newtown” appeared to refer to a December 2012 school shooting in Newtown, Connecticut, in which a gunman murdered 26 victims.

In February 2017, a Twitter account used by THOMPSON (the “Thompson Twitter Account”) was used to accuse Victim-1 of responsibility for the JCC Threats and to claim that Victim-1 was trying to frame THOMPSON for her crimes.  For instance, on February 24, 2017, the Thompson Twitter Account posted: “[s]he [Victim-1], though I can’t prove it, even sent a bomb threat in my name to a Jewish center, which was odd given her antisemitic statements.  I got a visit from the FBI.  So now I’m battling the racist FBI and this vile, evil, racist white woman.”  On February 26, 2017, the Thompson Twitter Account posted “The hatred of Jews goes across all demos.  Ask NYC’s [Victim-1’s employer].  They employ a filthy anti-Semite in [Victim-1].  These ppl are evil.”

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THOMPSON, 32, of Saint Louis, Missouri, pled guilty to one count of cyberstalking, which carries a maximum sentence of five years in prison, and one count of hoax threats, which also 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.  

THOMPSON is scheduled to be sentenced by U.S. District Judge Kevin P. Castel on September 15, 2017.

Mr. Kim praised the outstanding investigative work of the FBI, and thanked the United States Secret Service, New York City Police Department, and Saint Louis Police Department for their ongoing investigative assistance. 

The prosecution is being handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Jacob Warren and Andrew DeFilippis are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that a federal jury today found RUBEN PIZZARO guilty of murder, participating in a narcotics conspiracy, and firearms charges.

Acting U.S. Attorney Joon H. Kim said:  “As a unanimous jury found, Ruben Pizzaro shot and killed David Rivera in broad daylight in front of a daycare center in the Bronx.  The prosecution of this type of gang and drug violence helps make our communities safer, and we are committed to that.  I commend the FBI and the NYPD for their dogged work in this case and in all their work in keeping New York City safe.”          

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

Between August 2015 and January 2016, PIZZARO was a member of a street gang that sold cocaine and crack cocaine in the vicinity of 180th Street and Arthur Avenue in the Bronx, New York.  PIZZARO and his crew of drug dealers were in competition with a neighboring drug crew on Hughes Avenue in the Bronx.  That competition played out in several violent shootings in late 2015.  For example, on at least three occasions in October and November 2015, PIZZARO and his drug crew committed at least three shootings at members of the Hughes Avenue drug crew.  Individuals were shot during two of those three incidents, and the third occurred in the immediate vicinity of a Bronx middle school. 

On November 24, 2015, in broad daylight at 9:15 in the morning, PIZZARO shot and killed rival drug dealer David Rivera in front of a daycare center in the vicinity of 175th Street and Crotona Avenue in the Bronx.

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PIZZARO, 25, of the Bronx, New York, was found guilty of one count of conspiring to distribute cocaine and crack cocaine, which carries a mandatory minimum sentence of five years in prison and a maximum sentence of 40 years in prison; one count of causing the death of another person through use of a firearm, which carries a mandatory minimum sentence of 25 years in prison and a maximum sentence of life in prison; and one count of using firearms, which were brandished and discharged, in furtherance of a narcotics conspiracy, which carries a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison. 

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

Mr. Kim thanked the Federal Bureau of Investigation and the New York City Police Department for their work on the investigation.

The case is being prosecuted by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Shawn Crowley, Max Nicholas, and Robert Allen are in charge of the prosecution. 

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that HAROLD LEVINE, a Manhattan tax attorney, and RONALD KATZ, a Florida certified public accountant, pled guilty today in Manhattan federal court to tax crimes based upon their roles in a corrupt multi-year tax evasion scheme involving the failure to report to the Internal Revenue Service (“IRS”) millions of dollars in fee income stemming from tax shelter transactions. LEVINE and KATZ are scheduled to be sentenced by Judge Rakoff on October 11, 2017.

 

Acting U.S. Attorney Joon H. Kim said: “As tax professionals, both Harold Levine and Ronald Katz well knew their obligations to report their income to the IRS. As they have now admitted, they instead engaged in a corrupt scheme to evade taxes on millions of dollars of income. Now both defendants will be held to account for their crimes.”

 

According to the allegations in the Indictment to which LEVINE and KATZ pleaded guilty, 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 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. For his involvement in this scheme, KATZ received and failed to report to the IRS over $1.2 million in income on his personal tax returns.

 

As part of the scheme, for example, LEVINE caused tax shelter fees paid by a Law Firm client to be routed 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 had 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 or about 2013, LEVINE was questioned by IRS agents concerning his involvement in certain tax shelter transactions and the fees received by LEVINE and KATZ from those transactions. During that questioning, LEVINE falsely represented 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 represent to the IRS that she had paid $1,000 per month in rent to LEVINE.

 

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LEVINE, 59, of New York, New York, and KATZ, 59, of Boca Raton, Florida, each pled guilty to one count of corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws, which carries a maximum sentence of three years in prison, and one count of tax evasion, which carries a maximum sentence of five years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

 

Mr. 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 TIMOTHY SEDLAK was sentenced in Manhattan federal court to 18 months in prison for attempting to access without authorization the computer network of a global charitable organization based in New York, New York (the “Organization”), and as a result of such conduct, recklessly causing damage to computers of the Organization.  He was convicted on February 23, 2017, and was sentenced today by U.S. District Judge Ronnie Abrams.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Timothy Sedlak used dozens of computers and electronic devices to unlawfully access others’ computer networks, making hundreds of thousands of attempts to steal information from one charitable organization.  Although he was ultimately unsuccessful, Sedlak’s efforts impaired the organization’s ability to operate.  I want to thank our partners at the Secret Service for their work to combat cyber attacks like this one.”

According to the Superseding Information, other documents filed in Manhattan federal court, and statements made at various proceedings in this case, including the guilty plea:

SEDLAK made hundreds of thousands of attempts to gain access without authorization to the computer network systems of the Organization, and in so doing, impaired the availability of the email accounts and web-based applications of more than 10 employees of the Organization.

From June 2015 to July 2015, computers associated with two internet protocol addresses subscribed to SEDLAK at SEDLAK’s residence in Florida (the “IP Addresses”) made nearly 400,000 attempts to gain unauthorized access to the Organization’s computer network. As a result, numerous Organization employees experienced difficulty accessing their Organization email accounts, and were disrupted in their ability to conduct regular business functions. In particular, between June 22 and July 8, 2015, from one of the IP Addresses, there were approximately 195,000 attempts to log into approximately 20 email accounts of the Organization. Between July 8 and July 10, 2015, from the other IP Address, there were an additional approximately 195,000 attempts to log into approximately six email accounts of the Organization. SEDLAK has never been employed by the Organization, and was not authorized to access any email accounts of the Organization.

On September 11, 2015, U.S. Secret Service (“USSS”) agents executed a search warrant at the Sedlak Residence, from which they seized 42 computers and electronic devices (the “Sedlak Computers”).  The forensic examination of the Sedlak Computers revealed that 31 devices contained known hacking software and/or artifacts, indicating they were used in attempts to gain unauthorized access to a network. The forensic examination of the Sedlak Computers also revealed that at least 11 personal email accounts were successfully accessed without authorization. The email accounts belong to individuals in the United States and abroad, none of whom are known to be associated with the Organization.  In addition, unsuccessful attempts to gain unauthorized access to over 1,000 entities and IP addresses were uncovered. SEDLAK targeted international and domestic victim entities, including charitable organizations, political organizations, law firms, financial firms, and businesses.  When he was interviewed by USSS agents, Sedlak claimed that he hoped to sell the information he found. 

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SEDLAK, 44, of Ocoee, Florida, was sentenced to 18 months in prison, to be followed by three years of supervised release.  The defendant’s right, title, and interest in specific property seized by the USSS – including 31 electronic devices – was ordered to be forfeited to the United States.

Mr. Kim praised the investigative work of the United States Secret Service.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Kristy J. Greenberg and Jennifer L. Beidel are in charge of the prosecution.

Ali Kourani, 32, of the Bronx, New York, and Samer el Debek, 37, of Dearborn, Michigan, aka, “Samer Eldebek,” were arrested on Thursday, June 1, on charges related to their alleged activities on behalf of Hizballah, a designated foreign terrorist organization.

Acting Assistant Attorney General for National Security Dana 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.

Acting U.S. Attorney Kim said: “Today, we announce serious terrorism charges against two men who allegedly trained with and supported the Islamic Jihad Organization, a component of the foreign terrorist organization Hizballah.  Recruited as Hizballah operatives, Samer El Debek and Ali Kourani allegedly received military-style training, including in the use of weapons like rocket-propelled grenade launchers and machine guns for use in support of the group’s terrorist mission.  At the direction of his Hizballah handlers, El Debek allegedly conducted missions in Panama to locate the U.S. and Israeli Embassies and to assess the vulnerabilities of the Panama Canal and ships in the Canal. Kourani allegedly conducted surveillance of potential targets in America, including military and law enforcement facilities in New York City. Thanks to the outstanding work of the FBI and NYPD, the allegedly destructive designs of these two Hizballah operatives have been thwarted, and they will now face justice in a Manhattan federal court.”

Assistant Director in Charge Sweeney Jr. said: “The charges announced today reveal once again that the New York City region remains a focus of many adversaries, demonstrated as alleged in this instance by followers of a sophisticated and determined organization with a long history of coordinating violent activities on behalf of Hizballah. Our announcement today also reveals, however, that the dozens of agencies working together with our FBI JTTFs nationwide are just as determined to disrupt the plans of those working to harm our communities.  I’d like to thank the hundreds of investigators who comprise the FBI’s New York JTTF and display constant vigilance on our behalf, and I encourage the public to remain engaged and to immediately report suspicious activity to law enforcement.”

Commissioner O’Neill said: “As part of his work for Hezbollah, Kourani and others allegedly conducted covert surveillance of potential targets, including U.S. military bases and Israeli military personnel here in New York City. Pre-operational surveillance is one of the hallmarks of Hezbollah in planning for future attacks. As alleged, Kourani, on at least two occasions, received sophisticated military training overseas, including the use of a rocket propelled grenade. In addition, El Debek is charged in an unrelated complaint, for allegedly possessing extensive bomb making training received from Hezbollah. Today’s charges of two for their work on behalf of Hezbollah is a tribute to the collaborative work of the agents and detectives of the Joint Terrorism Task Force.”

Kourani was arrested in the Bronx for providing, attempting, and conspiring to provide material support to Hizballah; receiving and conspiring to receive military-type training from Hizballah; a related weapons offense that is alleged to have involved, among other weapons, a rocket-propelled grenade launcher and machine guns; violating and conspiring to violate the International Emergency Economic Powers Act (IEEPA); and naturalization fraud to facilitate an act of international terrorism. Kourani was presented on Friday, June 2, before Magistrate Judge Barbara Moses in Manhattan federal court.

El Debek was arrested in Livonia, Michigan, outside of Detroit, for providing, attempting and conspiring to provide material support to Hizballah; receiving and conspiring to receive military-type training from Hizballah; use of weapons in connection with a crime of violence that is alleged to have involved, among other weapons, explosives, a rocket-propelled grenade launcher, and machine guns; and violating and conspiring to violate IEEPA. El Debek was presented on June 5, before Magistrate Judge Henry Pitman in Manhattan federal court.

As alleged in the criminal Complaints against Kourani and el Debek,[1] both of which were unsealed today in Manhattan federal court:

Background on Hizballah and the Islamic Jihad Organization

Hizballah is a Lebanon-based Shia Islamic organization with political, social, and terrorist components. Hizballah was founded in the 1980s with support from Iran after the 1982 Israeli invasion of Lebanon, and its mission includes establishing a fundamentalist Islamic state in Lebanon. Since Hizballah’s formation, the organization has been responsible for numerous terrorist attacks that have killed hundreds, including U.S. citizens and military personnel. In 1997, the U.S. Department of State designated Hizballah a Foreign Terrorist Organization, pursuant to Section 219 of the Immigration and Nationality Act, and it remains so designated today. In 2001, pursuant to Executive Order 13224, the U.S. Department of State designated Hizballah a Specially Designated Global Terrorist entity. In 2010, State Department officials described Hizballah as the most technically capable terrorist group in the world, and a continued security threat to the U.S.

The Islamic Jihad Organization (“IJO”), which is also known as the External Security Organization and “910,” is a component of Hizballah responsible for the planning and coordination of intelligence, counterintelligence, and terrorist activities on behalf of Hizballah outside of Lebanon. In July 2012, an IJO operative detonated explosives on a bus transporting Israeli tourists in the vicinity of an airport in Burgas, Bulgaria, which killed six people and injured 32 others. Law enforcement authorities have disrupted several other IJO attack-planning operations around the world, including the arrest of an IJO operative surveilling Israeli targets in Cyprus in 2012, the seizure of bomb-making precursor chemicals in Thailand in 2012, including chemicals manufactured by a medical devices company based in Guangzhou, China (“Guangzhou Company-1”), and a similar seizure of chemicals manufactured by Guangzhou Company-1 in Cyprus in May 2015 in connection with the arrest of another IJO operative.

Kourani’s Alleged Support of Hizballah

Kourani, who was born in Lebanon, attended Hizballah-sponsored weapons training in Lebanon in 2000 when he was approximately 16 years old. After lawfully entering the U.S. in 2003, Kourani obtained a Bachelor of Science in biomedical engineering in 2009, and a Masters of Business Administration in 2013.

Kourani and certain of his relatives were present during the summer 2006 conflict between Israel and Hizballah in Lebanon, when a residence belonging to his family was destroyed. Kourani was subsequently recruited to join the IJO by 2008. In August 2008, Kourani submitted an application for naturalization in the U.S. in which he falsely claimed, among other things, that he was not affiliated with a terrorist organization. In April 2009, Kourani became a naturalized citizen and was issued a U.S. passport. Despite claiming in his passport application that he had no travel plans, Kourani traveled to Guangzhou, China – the location of Guangzhou Company-1 – on May 3, 2009. He later claimed to the FBI that the purpose of the trip was to meet with medical device manufacturers and other businessmen.

Kourani was assigned an IJO handler, or mentor, responsible for providing him with taskings, debriefings, and arranging training. Kourani sometimes communicated with his handler using coded email communications, including messages sent by the handler that informed Kourani of the need to return to Lebanon. In order to establish contact with his handler when Kourani returned to Lebanon, Kourani called a telephone number associated with a pager (the “IJO Pager”) and provided a code that he understood was specific to him. After Kourani called the IJO Pager, the handler would contact Kourani to set up an in-person meeting by calling a phone belonging to one of Kourani’s relatives. The IJO also provided Kourani with additional training in tradecraft, weapons, and tactics. In 2011, for example, Kourani attended an IJO military training camp located in the vicinity of Birkat Jabrur, Lebanon, where he was provided with military-tactics and weapons training, including training in the use of a rocket propelled grenade launcher, an AK-47 assault rifle, an MP5 submachine gun, a PKS machine gun (a Russian-made belt-fed weapon), and a Glock pistol.

Based on other taskings from IJO personnel, which were conveyed during periodic in-person meetings when Kourani returned to Lebanon, Kourani conducted operations that included searching for weapons suppliers in the U.S. who could provide firearms to support IJO operations, identifying individuals affiliated with the Israeli Defense Force, gathering information regarding operations and security at airports in the U.S. and elsewhere, and surveilling U.S. military and law enforcement facilities in Manhattan and Brooklyn. Kourani transmitted some of the products of his surveillance and intelligence-gathering efforts back to IJO personnel in Lebanon using digital storage media.

El Debek’s Alleged Support of Hizballah

El Debek, a naturalized U.S. citizen, was first recruited by Hizballah in late 2007 or early 2008, began to receive a salary from Hizballah shortly thereafter, and was paid by Hizballah through approximately 2015. In July 2006, shortly before he was recruited by Hizballah, el Debek expressed by email his support for Hassan Nasrallah, the leader of Hizballah.

El Debek received military training from Hizballah in Lebanon on several occasions, from approximately 2008 through approximately 2014. El Debek received training in basic military tactics, the handling of various weapons, surveillance and counter-surveillance techniques, and the creation and handling of explosives and explosive devices. Based on information el Debek provided to the FBI, FBI bomb technicians have assessed that el Debek received extensive training as a bomb-maker, has a high degree of technical sophistication in the area, and was trained in techniques and methods similar to those used to construct the improvised explosive device used in Hizballah’s 2012 Burgas, Bulgaria, bus bombing, a bombing that el Debek reported was carried out by a relative of his. El Debek received by email in 2010 a list of raw materials that could be sent from Syria or Dubai, including items often used in explosives and improvised explosive devices.

El Debek also conducted missions for Hizballah in Thailand and Panama. In May 2009, el Debek traveled from Lebanon, through Malaysia, to Thailand, where his mission was to clean up explosive precursors in a house in Bangkok that others had left because they were under surveillance. El Debek used his U.S. passport to enter and leave Thailand, consistent with his instructions from Hizballah to use his U.S. passport so he could travel from Malaysia to Thailand without obtaining a visa. 

El Debek first traveled to Panama for Hizballah in 2011, where his operational tasks included locating the U.S. and Israeli Embassies, casing security procedures at the Panama Canal and the Israeli Embassy, and locating hardware stores where explosive precursors could be purchased. Shortly before traveling to Panama, el Debek updated his status on Facebook with a post that read, in part, “Do not make peace or share food with those who killed your people.”

In early 2012, el Debek again traveled to Panama for Hizballah, passing through New York and New Jersey, and was asked to identify areas of weakness and construction at the Panama Canal, as well as provide information about how close someone could get to a ship passing through the Canal. Upon his return from Panama, el Debek’s IJO handlers asked him for photographs of the U.S. Embassy there and details about its security procedures.  

El Debek has told the FBI that he was detained by Hizballah from December 2015 to April 2016 and falsely accused of spying for the U.S. Between November 2014 and February 2017, el Debek, who received religious training from Hizballah, has conducted more than 250 Facebook searches using search terms such as “martyrs of the holy defense,” “martyrs of Islamic resistance,” “Hizballah martyrs,” and “martyrs of the Islamic resistance in Lebanon.”

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Kourani is charged with providing and attempting to provide material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; conspiracy to provide material support and resources to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; receiving military-type training from a designated foreign terrorist organization, which carries a sentence of 10 years in prison or a fine; conspiracy to receive military-type training from a designated foreign terrorist organization, which carries a maximum sentence of five years in prison; conspiracy to possess, carry, and use firearms and destructive devices during and in relation to crimes of violence, which carries a maximum sentence of life in prison; making and receiving a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, which carries a maximum sentence of 20 years in prison; conspiracy to make and receive a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, which carries a maximum sentence of 20 years in prison; and naturalization fraud in connection with an act of international terrorism, which carries a maximum sentence of 25 years in prison.

El Debek is charged with providing and attempting to provide material support to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; conspiracy to provide material support and resources to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; receiving military-type training from a designated foreign terrorist organization, which carries a sentence of 10 years in prison or a fine; conspiracy to receive military-type training from a designated foreign terrorist organization, which carries a maximum sentence of five years in prison; possessing, carrying, and using firearms and destructive devices during and in relation to crimes of violence, which carries a maximum sentence of life in prison; making and receiving a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, which carries a maximum sentence of 20 years in prison; and conspiracy to make and receive a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, 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 a judge.

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 FBI’s Detroit Office and the Counterterrorism Section of the Department of Justice’s National Security Division.

These prosecutions are handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Emil J. Bove III and Amanda L. Houle for the Southern District of New York are in charge of the prosecution of Kourani. Assistant U.S. Attorneys Andrew D. Beaty and Stephen J. Ritchin for the Southern District of New York are in charge of the prosecution of el Debek. Trial Attorneys Lolita Lukose and Alexandra Hughes of the National Security Division’s Counterterrorism Section are assisting the prosecutions.

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

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[1] As the introductory phrase signifies, the entirety of the text of the Complaints and the description of the Complaints 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, Thomas Zugibe, the Rockland County District Attorney, and James J. Hunt, Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), today announced the unsealing of an indictment charging nine defendants with participating in a drug trafficking organization that distributed a variety of narcotics, including heroin, fentanyl, cocaine, and crack cocaine, in and around Rockland County, New York, and obtained those narcotics for resale from the Bronx, Brooklyn, and Queens, New York.  The indictment alleges that the use of heroin distributed by defendant ROBERT DIAZ, a/k/a “Facey,” a/k/a “Face,” resulted in serious bodily injury to a particular victim (“Victim-1”) on or about December 15, 2016, in Queens, New York.

All but one of the defendants were arrested last night and today.  RENE SANCHEZ, PABLO PEREZ, CHRISTIAN CARDENAS, DAVID ALMONTE, and RONALD BOLANOS were presented in federal court in Manhattan before U.S. Magistrate Judge Gabriel W. Gorenstein this afternoon.  ROBERT DIAZ, THERESA KEEFE, and NICOLE MUNDERVILLE will be presented tomorrow before Judge Gorenstein.  ROLANDO PAULINO remains at large.

Acting U.S. Attorney Joon H. Kim stated:  “As alleged, the defendants conspired to sell deadly drugs, including heroin and fentanyl, even though some of them knew that users were overdosing on their drugs. The opioid epidemic, and in particular, overdoses on fentanyl, is on the rise in too many of our communities, including Rockland County. Together with our partners at the DEA and the Rockland County District Attorney’s Office, we are working to combat this deadly epidemic.”

Rockland County District Attorney Thomas Zugibe stated:  “Sadly, we're seeing high numbers of fentanyl and heroin related overdoses in Rockland County. Dealers selling heroin-laced fentanyl or replacing the heroin entirely with fentanyl are a major threat to our community. Often times, users never know that the substance they purchased has been cut with this opioid, which is 50 times more powerful than regular heroin. Today’s arrests help to stem the flow of heroin and fentanyl into our neighborhoods. Along with our law enforcement partners, the Rockland County District Attorney's Office is committed to holding dealers accountable with the full force of the law.”

DEA Special Agent in Charge James J. Hunt stated: “The after effects of this Rockland County drug crew added casualties to the number of opioid overdoses nationwide, as they callously discussed doing the ‘fentanyl dance.’ In addition to dismantling drug trafficking organizations, law enforcement and our community partners are collaborating to alert the public on the dangers of drug dealers pushing heroin and fentanyl into our neighborhoods.”

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

ROBERT DIAZ, a/k/a “Facey,” a/k/a “Face,” RENE SANCHEZ, a/k/a “Renny,” PABLO PEREZ, a/k/a “Menor,” CHRISTIAN CARDENAS, a/k/a “Chris,” a/k/a “Spoonie,” DAVID ALMONTE, a/k/a “Elli,” RONALD BOLANOS, a/k/a “Ronny,” a/k/a “ET,” ROLANDO PAULINO, a/k/a “Santana Paulino,” THERESA KEEFE, a/k/a “Terry,” and NICOLE MUNDERVILLE, a/k/a “Nicki,” conspired to distribute significant amounts of narcotics, including heroin, cocaine, crack cocaine, and fentanyl, in and around Rockland County, New York, from 2012 to May 2017 as members of a drug trafficking organization (the “Rockland DTO”).  CARDENAS, ALMONTE, PEREZ, PAULINO, and BOLANOS acted as suppliers for the Rockland DTO, while DIAZ, SANCHEZ, KEEFE, and MUNDERVILLE distributed and assisted in distributing the narcotics to customers in and around Rockland County.  The Rockland DTO distributed narcotics on a daily basis, and obtained narcotics for resale from the Bronx, Brooklyn, and Queens.

Some members of the Rockland DTO were aware of the potency and danger of the narcotics they were distributing.  For example, from December 2016 to May 2017, DIAZ indicated to certain other members of the Rockland DTO that the narcotics he, KEEFE, and MUNDERVILLE were selling, and that CARDENAS was supplying, contained fentanyl, were particularly dangerous, and had caused adverse reactions in multiple customers, including at least one overdose that had required the administration of naloxone to Victim-1 on or about December 15, 2016.  Also, as described in the Indictment, on January 5, 2017, DIAZ told CARDENAS that “three people fell out” from the drugs DIAZ had provided.  DIAZ subsequently informed KEEFE and MUNDERVILLE that the drugs they were selling, thought by customers to be heroin, actually contained fentanyl.  In addition, on March 20, 2017, DIAZ, in a conversation with PEREZ, laughed as he discussed doing the “fentanyl dance,” telling PEREZ that he had a “new connect” for “straight up fentanyl” and that customers “love it.”

*              *             *

Each defendant is charged with one count of conspiracy to distribute narcotics, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years in prison.  DIAZ also faces a mandatory minimum sentence of 20 years in prison for having distributed heroin resulting in serious bodily injury to a victim.  The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.  A chart with the defendants’ ages and residences is below.

Mr. Kim thanked the DEA’s Westchester Tactical Diversion Squad, the Rockland County Drug Task Force, the Rockland County REACT Team, and the Rockland County District Attorney’s Office for their work on the investigation. The DEA’s Westchester TDS comprises agents and officers of the DEA, Westchester County Police Department, Town of Orangetown Police Department, Rockland County Sheriff’s Office, Rockland County District Attorney’s Office, Yonkers Police Department, New Windsor Police Department, Putnam County Sheriff’s Office and U.S. Health and Human Services.

This matter is being handled by the Office’s Narcotics Unit.  Assistant United States Attorneys Jane Kim, Jason Richman, and Elizabeth Hanft are in charge of the prosecution.

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

 

DEFENDANT

AGE

RESIDENCE

ROBERT DIAZ, a/k/a “Facey,” a/k/a “Face”

49

Haverstraw, New York

RENE SANCHEZ, a/k/a “Renny”

52

Haverstraw, New York

PABLO PEREZ, a/k/a “Menor”

37

Bronx, New York

CHRISTIAN CARDENAS, a/k/a “Chris,” a/k/a “Spoonie”

41

Queens, New York

DAVID ALMONTE, a/k/a “Elli”

36

Bronx, New York

RONALD BOLANOS, a/k/a “Ronny,” a/k/a “ET”

47

Queens, New York

ROLANDO PAULINO, a/k/a “Santana Paulino”

46

Manhattan, New York

THERESA KEEFE, a/k/a “Terry”

55

Haverstraw, New York

NICOLE MUNDERVILLE, a/k/a “Nicki”

34

Haverstraw, New York

 

 

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[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, Dana Boente, the 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 Commissioner of the Police Department for the City of New York (“NYPD”), announced that ALI KOURANI and SAMER EL DEBEK, a/k/a “Samer Eldebek,” were arrested on Thursday, June 1, 2017, on charges related to their alleged activities on behalf of Hizballah, a designated foreign terrorist organization. 

KOURANI was arrested in the Bronx for providing, attempting, and conspiring to provide material support to Hizballah; receiving and conspiring to receive military-type training from Hizballah; a related weapons offense that is alleged to have involved, among other weapons, a rocket-propelled grenade launcher and machine guns; violating and conspiring to violate the International Emergency Economic Powers Act (“IEEPA”); and naturalization fraud to facilitate an act of international terrorism.  KOURANI was presented on Friday, June 2, 2017, before Magistrate Judge Barbara Moses in Manhattan federal court.

EL DEBEK was arrested in Livonia, Michigan, outside of Detroit, for providing, attempting, and conspiring to provide material support to Hizballah; receiving and conspiring to receive military-type training from Hizballah; use of weapons in connection with a crime of violence that is alleged to have involved, among other weapons, explosives, a rocket-propelled grenade launcher, and machine guns; and violating and conspiring to violate IEEPA.  EL DEBEK was presented on Monday, June 5, 2017, before Magistrate Judge Henry Pitman in Manhattan federal court.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Today, we announce serious terrorism charges against two men who allegedly trained with and supported the Islamic Jihad Organization, a component of the foreign terrorist organization Hizballah.  Recruited as Hizballah operatives, Samer El Debek and Ali Kourani allegedly received military-style training, including in the use of weapons like rocket-propelled grenade launchers and machine guns for use in support of the group’s terrorist mission.  At the direction of his Hizballah handlers, El Debek allegedly conducted missions in Panama to locate the U.S. and Israeli Embassies and to assess the vulnerabilities of the Panama Canal and ships in the Canal.  Kourani allegedly conducted surveillance of potential targets in America, including military and law enforcement facilities in New York City.  Thanks to the outstanding work of the FBI and NYPD, the allegedly destructive designs of these two Hizballah operatives have been thwarted, and they will now face justice in a Manhattan federal court.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “The charges announced today reveal once again that the New York City region remains a focus of many adversaries, demonstrated as alleged in this instance by followers of a sophisticated and determined organization with a long history of coordinating violent activities on behalf of Hizballah.  Our announcement today also reveals, however, that the dozens of agencies working together with our FBI JTTFs nationwide are just as determined to disrupt the plans of those working to harm our communities.  I’d like to thank the hundreds of investigators who comprise the FBI’s New York JTTF and display constant vigilance on our behalf, and I encourage the public to remain engaged and to immediately report suspicious activity to law enforcement.”

NYPD Commissioner James P. O’Neill said:  “As part of his work for Hezbollah, Kourani and others allegedly conducted covert surveillance of potential targets, including U.S. military bases and Israeli military personnel here in New York City.  Pre-operational surveillance is one of the hallmarks of Hezbollah in planning for future attacks.  As alleged, Kourani, on at least two occasions, received sophisticated military training overseas, including the use of a rocket propelled grenade. In addition, El Debek is charged in an unrelated complaint, for allegedly possessing extensive bomb making training received from Hezbollah. Today’s charges of two for their work on behalf of Hezbollah is a tribute to the collaborative work of the agents and detectives of the Joint Terrorism Task Force.”

As alleged in the criminal Complaints against KOURANI and EL DEBEK,[1] both of which were unsealed today in Manhattan federal court:

Background on Hizballah and the Islamic Jihad Organization

Hizballah is a Lebanon-based Shia Islamic organization with political, social, and terrorist components.  Hizballah was founded in the 1980s with support from Iran after the 1982 Israeli invasion of Lebanon, and its mission includes establishing a fundamentalist Islamic state in Lebanon.  Since Hizballah’s formation, the organization has been responsible for numerous terrorist attacks that have killed hundreds, including United States citizens and military personnel.  In 1997, the U.S. Department of State designated Hizballah a Foreign Terrorist Organization, pursuant to Section 219 of the Immigration and Nationality Act, and it remains so designated today.  In 2001, pursuant to Executive Order 13224, the U.S. Department of State designated Hizballah a Specially Designated Global Terrorist entity.  In 2010, State Department officials described Hizballah as the most technically capable terrorist group in the world, and a continued security threat to the United States.

The Islamic Jihad Organization (“IJO”), which is also known as the External Security Organization and “910,” is a component of Hizballah responsible for the planning and coordination of intelligence, counterintelligence, and terrorist activities on behalf of Hizballah outside of Lebanon.  In July 2012, an IJO operative detonated explosives on a bus transporting Israeli tourists in the vicinity of an airport in Burgas, Bulgaria, which killed six people and injured 32 others.  Law enforcement authorities have disrupted several other IJO attack-planning operations around the world, including the arrest of an IJO operative surveilling Israeli targets in Cyprus in 2012, the seizure of bomb-making precursor chemicals in Thailand in 2012, including chemicals manufactured by a medical devices company based in Guangzhou, China (“Guangzhou Company-1”), and a similar seizure of chemicals manufactured by Guangzhou Company-1 in Cyprus in May 2015 in connection with the arrest of another IJO operative. 

KOURANI’s Alleged Support of Hizballah

KOURANI, who was born in Lebanon, attended Hizballah-sponsored weapons training in Lebanon in 2000 when he was approximately 16 years old.  After lawfully entering the United States in 2003, KOURANI obtained a Bachelor of Science in biomedical engineering in 2009, and a Masters of Business Administration in 2013.

KOURANI and certain of his relatives were present during the summer 2006 conflict between Israel and Hizballah in Lebanon, when a residence belonging to his family was destroyed.  KOURANI was subsequently recruited to join the IJO by 2008.  In August 2008, KOURANI submitted an application for naturalization in the United States in which he falsely claimed, among other things, that he was not affiliated with a terrorist organization.  In April 2009, KOURANI became a naturalized citizen and was issued a United States passport.  Despite claiming in his passport application that he had no travel plans, KOURANI traveled to Guangzhou, China – the location of Guangzhou Company-1 – on May 3, 2009.  He later claimed to the FBI that the purpose of the trip was to meet with medical device manufacturers and other businessmen. 

KOURANI was assigned an IJO handler, or mentor, responsible for providing him with taskings, debriefings, and arranging training.  KOURANI sometimes communicated with his handler using coded email communications, including messages sent by the handler that informed KOURANI of the need to return to Lebanon.  In order to establish contact with his handler when KOURANI returned to Lebanon, KOURANI called a telephone number associated with a pager (the “IJO Pager”) and provided a code that he understood was specific to him.  After KOURANI called the IJO Pager, the handler would contact KOURANI to set up an in-person meeting by calling a phone belonging to one of KOURANI’s relatives.  The IJO also provided KOURANI with additional training in tradecraft, weapons, and tactics.  In 2011, for example, KOURANI attended an IJO military training camp located in the vicinity of Birkat Jabrur, Lebanon, where he was provided with military-tactics and weapons training, including training in the use of a rocket propelled grenade launcher, an AK-47 assault rifle, an MP5 submachine gun, a PKS machine gun (a Russian-made belt-fed weapon), and a Glock pistol.

Based on requests from IJO personnel, which were conveyed during periodic in-person meetings when KOURANI returned to Lebanon, KOURANI also conducted operations that included searching for weapons suppliers in the United States who could provide firearms to support IJO operations, identifying individuals affiliated with the Israeli Defense Force, gathering information regarding operations and security at airports in the United States and elsewhere, and surveilling U.S. military and law enforcement facilities in Manhattan and Brooklyn.  KOURANI transmitted some of the products of his surveillance and intelligence-gathering efforts back to IJO personnel in Lebanon using digital storage media. 

EL DEBEK’s Alleged Support of Hizballah

EL DEBEK, a naturalized U.S. citizen, was first recruited by Hizballah in late 2007 or early 2008, began to receive a salary from Hizballah shortly thereafter, and was paid by Hizballah through approximately 2015.  In July 2006, shortly before he was recruited by Hizballah, EL DEBEK expressed by email his support for Hassan Nasrallah, the leader of Hizballah. 

EL DEBEK received military training from Hizballah in Lebanon on several occasions, from approximately 2008 through approximately 2014.  EL DEBEK received training in basic military tactics, the handling of various weapons, surveillance and counter-surveillance techniques, and the creation and handling of explosives and explosive devices.  Based on information EL DEBEK provided to the FBI, FBI bomb technicians have assessed that EL DEBEK received extensive training as a bomb-maker, and has a high degree of technical sophistication in the area.  EL DEBEK received by email in 2010 a list of raw materials that could be sent from Syria or Dubai, including items often used in explosives and improvised explosive devices. 

EL DEBEK also conducted missions for Hizballah in Thailand and Panama.  In May 2009, EL DEBEK traveled from Lebanon, through Malaysia, to Thailand, where his mission was to clean up explosive precursors in a house in Bangkok that others had left because they were under surveillance.  EL DEBEK used his U.S. passport to enter and leave Thailand, consistent with his instructions from Hizballah to use his U.S. passport in that manner, so he could travel from Malaysia to Thailand without obtaining a visa.    

EL DEBEK first traveled to Panama for Hizballah in 2011, where his operational tasks included locating the U.S. and Israeli Embassies, casing security procedures at the Panama Canal and the Israeli Embassy, and locating hardware stores where explosive precursors could be purchased.  Shortly before traveling to Panama, EL DEBEK updated his status on Facebook with a post that read, in part, “Do not make peace or share food with those who killed your people.” 

In early 2012, EL DEBEK again traveled to Panama for Hizballah, passing through New York and New Jersey, and was asked to identify areas of weakness and construction at the Panama Canal, as well as provide information about how close someone could get to a ship passing through the Canal.  Upon his return from Panama, EL DEBEK’s IJO handlers asked him for photographs of the U.S. Embassy there and details about its security procedures.      

EL DEBEK has told the FBI that he was detained by Hizballah from December 2015 to April 2016 and falsely accused of spying for the United States.  Between November 2014 and February 2017, EL DEBEK, who received religious training from Hizballah, has conducted more than 250 Facebook searches using search terms such as “martyrs of the holy defense,” “martyrs of Islamic resistance,” “Hizballah martyrs,” and “martyrs of the Islamic resistance in Lebanon.” 

*                      *                      *

KOURANI, 32, of the Bronx, is charged with providing material support and resources to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; conspiracy to provide material support and resources to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; receiving military-type training from a designated foreign terrorist organization, which carries a sentence of 10 years in prison or a fine; conspiracy to receive military-type training from a designated foreign terrorist organization, which carries a maximum sentence of five years in prison; conspiracy to possess, carry, and use firearms and destructive devices during and in relation to crimes of violence, which carries a maximum sentence of life in prison; making and receiving a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, which carries a maximum sentence of 20 years in prison; conspiracy to make and receive a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, which carries a maximum sentence of 20 years in prison; and naturalization fraud in connection with an act of international terrorism, which carries a maximum sentence of 25 years in prison. 

EL DEBEK, 37, of Dearborn, Michigan, is charged with providing material support and resources to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; conspiracy to provide material support and resources to a designated foreign terrorist organization, which carries a maximum sentence of 20 years in prison; receiving military-type training from a designated foreign terrorist organization, which carries a sentence of 10 years in prison or a fine; conspiracy to receive military-type training from a designated foreign terrorist organization, which carries a maximum sentence of five years in prison; possessing, carrying, and using firearms and destructive devices during and in relation to crimes of violence, which carries a maximum sentence of life in prison; making and receiving a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, which carries a maximum sentence of 20 years in prison; and conspiracy to make and receive a contribution of funds, goods, and services to and from Hizballah, in violation of IEEPA, 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 a judge.

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 FBI’s Detroit Office and the Counterterrorism Section of the Department of Justice’s National Security Division.

These prosecutions are handled by the Office’s Terrorism and International Narcotics Unit.  Assistant U.S. Attorneys Emil J. Bove III and Amanda L. Houle are in charge of the prosecution of KOURANI, and Assistant U.S. Attorneys Andrew D. Beaty and Stephen J. Ritchin are in charge of the prosecution of EL DEBEK.  Trial Attorneys Lolita Lukose and Alexandra Hughes of the National Security Division’s Counterterrorism Section are assisting the prosecutions.

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

 

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[1] As the introductory phrase signifies, the entirety of the text of the Complaints and the description of the Complaints 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, and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of a complaint charging PAUL IFEANYICHUKWU ONWUVUARIRI with conspiracy to commit wire fraud in connection with a scheme that targeted and victimized elderly people across the United States.  As alleged, ONWUVUARIRI and his co-conspirators tricked victims, by phone, into believing that they were speaking to the NYPD or another law enforcement agency, and that the victims’ grandchildren or relatives had been arrested and needed bail money immediately to avoid prison.  ONWUVUARIRI was arrested last night and will be presented later today in federal court in Manhattan.  

Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, Paul Ifeanyichukwu Onwuvuariri and his co-conspirators targeted vulnerable grandparents, callously preying on their emotions by convincing them that their loved ones were in trouble. Participants in this scheme allegedly swindled elderly victims out of thousands of dollars by pretending to be members of law enforcement, including the NYPD, and falsely claiming that victims’ family members were in custody and needed bail. We urge victims of this type of fraud to contact law enforcement, including our Office’s Victim/Witness unit.”

NYPD Commissioner James P. O’Neill said: “As alleged, the defendant and his co-conspirators exploited victims’ trust in law enforcement to defraud the elderly.  Tricking someone into thinking that a family member is in trouble, to further their fraud, is a particularly low bar.  I want to thank the US Attorney’s Office, the Utica Police Department, and the detectives from the NYPD for their work on this case.”

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

Beginning in approximately 2015, ONWUVUARIRI and his co-conspirators perpetrated a scheme to defraud elderly people around the United States by tricking them into believing their grandchildren or other relatives had been arrested and needed immediate bail money.  A member of the conspiracy typically contacted the victim by phone, purported to be either the relative or a law enforcement official, and falsely claimed that the victim’s grandchild or relative had been taken into custody for a narcotics offense and would not be released unless the victim paid thousands of dollars in purported bail money.  A member of the conspiracy also frequently posed on the call as the victim’s grandchild, pleading with the elderly victim to send money to secure the grandchild’s release from jail, and asking the victim not to contact any other family members because the grandchild felt ashamed.  In each case, the defrauded victim has sent thousands of dollars, at a minimum, as instructed, to certain individuals who, among other things, have provided that money to ONWUVUARIRI.  After paying the “bail” money as directed, victims have learned that their grandchild or relative had not, in fact, been arrested, that the grandchild or relative knew nothing about the claims made on the call to the victim, and that the call appeared to be fraudulent.

For example, among the examples set forth in the complaint, one 82-year-old victim in Brooklyn, New York, received a phone call in November 2015 from an individual who identified himself as the victim’s grandson and claimed that he had been arrested.  The victim then spoke to an individual who identified himself as an NYPD sergeant and said the victim’s grandson would be released if the victim wired $7,600 in bail money.  The victim deposited the money as directed, and then received additional calls the next day asking for additional money and the victim’s credit card number.  The victim subsequently spoke with the victim’s daughter, and learned that the victim’s grandson had not been arrested, and knew nothing about the purported sergeant or the basis for his request for bail money.    

In fact, the victim’s money was wired to an individual working with ONWUVUARIRI who collected the wired funds on ONWUVUARIRI’s behalf and provided the money to ONWUVUARIRI.

*                      *                      *

ONWUVUARIRI, 29, of Utica, New York, is charged with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Acting U.S. Attorney Kim praised the outstanding investigative work of the Criminal Investigators for the United States Attorney’s Office for the Southern District of New York and the New York City Police Department.  He also thanked the Utica Police Department for its assistance.

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 Nicolas Landsman-Roos 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.

 

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[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, and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of a complaint charging WILLIE WHITE with access device fraud and aggravated identity theft in connection with a scheme that targeted vulnerable young men and women whom he met at a bar in Manhattan. As alleged, WHITE identified intoxicated victims he met at the bar, and then took them to an apartment in Brooklyn where he forced them to inhale a controlled substance that appeared to be crack cocaine. WHITE took the victims’ credit and debit card information and made unauthorized purchases for his own benefit. WHITE was arrested this morning and will be presented later today in federal court in Manhattan.

 

Manhattan U.S. Attorney Joon H. Kim said: “Willie White allegedly took advantage of intoxicated men and women at a Manhattan bar by taking them to another location and then further incapacitated them by forcing them to take drugs. White then allegedly stole their debit and credit cards and made unauthorized purchases. We thank the NYPD for their work in putting a stop to White’s crimes.”

 

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

Between April and May of 2017, WHITE stole or otherwise improperly obtained the credit or debit cards of individuals whom he met in a Manhattan bar, and then used the stolen bank information to make purchases and cash withdrawals without the authorization or consent of the victims. In connection with the scheme, WHITE took at least two victims to an apartment in Brooklyn, where he forced the victims to ingest what they believed to be crack cocaine. While the victims were under the influence of the controlled substance, WHITE used the victims’ credit and debit cards to make purchases of clothing, shoes, and cash withdrawals without the victims’ knowledge or consent. WHITE detained the victims without their consent for hours, and in one case for over a day, while engaged in shopping sprees at the victims’ expense.

 

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WHITE, 46, of Brooklyn, New York, is charged with one count of access device fraud, which carries a maximum sentence of 15 years in prison, and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison that must be imposed consecutively to any other sentence. 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.

 

Acting U.S. Attorney Kim praised the outstanding investigative work of the New York City Police Department, particularly Detective John McAuliffe and Detective Gregg Licari.

 

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 Aline R. Flodr 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.

 

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[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, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that LURLYN A. WINCHESTER, a Justice for the Town Court of Monroe, was charged with making false statements in connection with an application for a loan to purchase a residence in Monroe which satisfied the residency requirement of her position as Town Justice. She was also charged with obstruction of justice for providing law enforcement officers, who questioned her about her mortgage loan, with false documents, including fabricated rent payment receipts. WINCHESTER was arrested this morning at her home in New City, New York, and was presented before U.S. Magistrate Judge Lisa Margaret Smith in White Plains federal court this morning.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As alleged, Lurlyn Winchester, a municipal court judge for the Town of Monroe, lied and provided fake documents to secure a mortgage on a Monroe condominium in an attempt to falsely satisfy the judicial residency requirement. We should expect and demand integrity in our government. This Office is committed to pursuing corruption in all forms and in all three branches of government, including the judiciary. I thank our partners at the FBI for their work in exposing this fraud and holding accountable our public officials.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. stated: “As alleged, Lurlyn Winchester falsely represented her primary residence in order to fulfill requirements for her position as justice for the Town of Monroe. Winchester, who claimed she had relocated her primary residence from New City to Monroe, allegedly remained in her New City home, despite representations to the contrary. She allegedly provided false information to her mortgage company, claiming her New City property was being rented to a prospective tenant, and later lied to federal agents who interviewed her about her claims. If anyone should have respect for the rule of law, it should most certainly be those entrusted to uphold it. Many thanks to our partners in this investigation as we continue to reinforce our commitment to uncover illegal activity on behalf of public officials at every level.”

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

In or about 1997, LURLYN A. WINCHESTER, the defendant, and her husband purchased a home in New City, New York (the “New City Home”), which they continue to own. On or about October 6, 2013, WINCHESTER, an attorney practicing in New City, was nominated to be the democratic candidate for Town of Monroe Justice. At that time, she provided an address in Monroe, New York (“Monroe Residence-1”), as her residence, and on or about October 7, 2013, she registered to vote in Monroe, New York. WINCHESTER was then elected Town of Monroe Justice on or about November 5, 2013.

On or about October 14, 2014, Hudson United Mortgage, LLC (“Hudson United”), a mortgage broker located in New City, New York, received a letter from WINCHESTER indicating that she had been elected Town Justice for the Town of Monroe and that she was relocating to Monroe in order to comply with a residency requirement attached to that position. In or about December 2014, the defendant and her husband submitted an application for a residential loan to Hudson United, and indicated that the loan was to be used to purchase a condominium located in Monroe, New York (“Monroe Residence-2”). On both the loan application and a disclosure notice, signed by the defendant and her husband, they asserted that Monroe Residence-2 would be their primary residence.

WINCHESTER also represented to Hudson United that she and her husband were going to rent out their New City Home to a tenant. Specifically, on or about February 6, 2015, Hudson United received a letter from the defendant in which she identified the New City Home as her “current primary residence” and she stated that she and her husband intended to rent the New City Home and they “already had a prospective tenant” who was “anxiously awaiting to take occupancy of the residence.”

In or about March 2015, WINCHESTER learned that the ultimate loan issuer, Plaza Home Mortgage Inc. (“Plaza”), was going to decline to issue the loan due to insufficient income. In response, WINCHESTER again represented that she and her husband were going to rent out the New City Home and indicated they would have rental income of $4,500 a month. Plaza requested copies of a fully executed 12-month lease and a canceled check for a security deposit. WINCHESTER provided a copy of a lease agreement, signed by the defendant, her husband, and a tenant (the “Tenant”). She also submitted a copy of two $4,500 checks for the security deposit and one month’s rent, made out to the defendant, and drawn on the Tenant’s bank account, as well as other documents reflecting that the checks were deposited into WINCHESTER’s bank account. In or about April 2015, Plaza issued the loan.

Contrary to the defendant’s representations, WINCHESTER did not intend to and did not lease the New City Home to Tenant in 2015; instead she fabricated a 2015 lease and caused checks to be issued and deposited to make it falsely appear that Tenant had paid rent and a security deposit. Tenant did not sign a lease in March 2015, never moved in to the New City Home, and WINCHESTER provided the $9,000 that covered the two $4,500 checks purportedly provided by Tenant.

Further, Monroe Residence-2 was not intended to be, and has not been, the primary residence of the defendant and her husband. Interviews with neighbors, cellphone records, and credit card records indicate that WINCHESTER did not move to Monroe. Finally, in a statement to agents, WINCHESTER admitted that: she resided at the New City Home, she had informed Hudson United that she would be renting the New City Home, she submitted rental checks and other documents relating to renting the New City Home, and the Tenant never moved into the New City Home.

With respect to the obstruction charge, during an interview with members of the FBI Task Force relating to WINCHESTER’s statements and submissions in connection with her loan, she provided them with, among other things, purported receipts for rent payments she claimed to have received from the Tenant for rent of the New City Home. The Tenant, however, indicated that he did not know anything about the receipts and never gave WINCHESTER the cash payments supposedly memorialized in them.

* * *

WINCHESTER, 58, of New City, New York, is charged with one count of making false statements to a mortgage lending business, which carries a maximum sentence of 30 years in prison, as well as falsifying records in a federal investigation, with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of a federal department or agency, which carries a maximum sentence of 20 years in prison. 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 outstanding investigative work of the FBI. He also thanked the Orange County Sheriff’s Office and the Orange County District Attorney’s Office for their assistance.

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

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

 

---

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

 

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”), Leon Hayward, Acting Director of the New York Field Office of U.S. Customs and Border Protection, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of three Indictments and one Complaint charging 33 defendants with a variety of racketeering, fraud, narcotics, firearms, and stolen property offenses.

Of the charged defendants, 27 are associated with a nationwide racketeering enterprise led by RAZHDEN SHULAYA and ZURAB DZHANASHVILI and are charged in United States v. Razhden Shulaya, et al. (the “Shulaya Indictment”) and an accompanying superseding indictment, which has been assigned to U.S. District Judge Katherine B. Forrest. Of those defendants, 23 were taken into federal custody. 18 will be presented before U.S. Magistrate Judge Gabriel W. Gorenstein today. One defendant will be presented in the District of Nevada.  Three defendants will be presented in the Southern District of Florida.  DENIS SAVGIR, EREKLE KERESELIDZE, GIORGI LOMISHVILI, MAMUKA CHAGANAVA, and SEMYON SARAIDAROV remain at large. One defendant, TIMUR SUYUNOV, is currently detained in federal custody and will be brought to Manhattan federal court on a writ.

Two additional defendants are charged in United States v. Nikoloz Jikia, et al. (the “Marat-Uulu Complaint”), with conspiracy to commit murder-for-hire and with additional firearms offenses.  Of those defendants, one of whom is also charged in the Shulaya Indictment, both were taken into federal custody last evening and will be presented before Judge Gorenstein today. 

Three additional defendants are charged in United States v. Alex Fishman, et al. (the “Fishman Indictment”), which has been assigned to U.S. District Judge Richard J. Sullivan.  Each of those three defendants was taken into federal custody today and will be presented before Judge Gorenstein this afternoon. 

Finally, one additional defendant was charged in United States v. Sergey Gindinov (the “Gindinov Indictment”), which has been assigned to U.S. District Judge Alison J. Nathan.  GINDINOV was taken into federal custody today and will be presented this afternoon before Judge Gorenstein. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Today, we have charged 33 members and associates of a Russian organized crime syndicate allegedly engaging a panoply of crimes around the country. The indictments include charges against the alleged head of this national criminal enterprise, one of the first federal racketeering charges ever brought against a Russian ‘vor.’ The dizzying array of criminal schemes committed by this organized crime syndicate allegedly include a murder-for-hire conspiracy, a plot to rob victims by seducing and drugging them with chloroform, the theft of cargo shipments containing over 10,000 pounds of chocolate, and a fraud on casino slot machines using electronic hacking devices. Thanks to the remarkable interagency partnership of FBI, CBP, and NYPD, we have charged and arrested 33 defendants allegedly involved in this criminal enterprise.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “The suspects in this case cast a wide net of criminal activity, aiming to make as much money as possible, all allegedly organized and run by a man who promised to protect them. But that protection didn't include escaping justice and being arrested by the agents and detectives on the FBI New York Eurasian Organized Crime Task Force. Our partnerships with other FBI field offices, the NYPD and CBP allows us to do everything we can to go after criminals who don't believe the law applies to them.”

Acting CBP New York Director Leon Hayward said:  “U.S. Customs and Border Protection is extremely proud to have assisted our federal partners in this operation.  It is through our interagency partnerships, and collaborative approaches like the one leading to today’s arrests, that law enforcement successfully combats modern criminal organizations.”

NYPD Commissioner James P. O’Neill said:  “The Thief-in-Law allegedly established an extensive cross country criminal enterprise from Brighton Beach to Las Vegas that engaged in bribes, gambling, and murder for hire.  Thanks to all whose work resulted in the arrest and indictment of 33 today.”

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

The Shulaya Enterprise was an organized criminal group operating under the direction and protection of RAZHDEN SHULAYA a/k/a “Brother,” a/k/a “Roma,” a “vor v zakonei” or “vor,” which are Russian phrases translated roughly as “thief-in-law” or “thief,” and which refer to an order of elite criminals from the former Soviet Union who receive tribute from other criminals, offer protection, and use their recognized status as vor to adjudicate disputes among lower-level criminals.  As a vor, SHULAYA had substantial influence in the criminal underworld and offered assistance to and protection of the members and associates of the Shulaya Enterprise.  Those members and associates, and SHULAYA himself, engaged in widespread criminal activities, including acts of violence, extortion, the operation of illegal gambling businesses, fraud on various casinos, identity theft, credit card frauds, and trafficking of large quantities of stolen goods.

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

The Shulaya Enterprise was led principally by SHULAYA and ZURAB DZHANASHVILI, a/k/a “Zura,” his lieutenant.  Along with SHULAYA and DZHANASHVILI, AKAKI UBILAVA, a/k/a “Ako,” HAMLET UGLAVA, MAMUKA CHAGANAVA, MIKHEIL TORADZE, NAZO GAPRINDASHVILI, a/k/a “Anna,” ARTUR VINOKUROV, a/k/a “Rizhy,” EVGHENI MELMAN, TIMUR SUYUNOV, ZURAB BUZIASHVILI, GIORGI LOMISHVILI, AZER ARSLANOUK, IVAN AFANASYEV, a/k/a “Vanya,” DENIS SAVGIR, DIEGO GABISONIA, LEVAN MAKASHVILI, SEMYON SARAIDAROV, a/k/a “Sammy,” and VACHE HOVHANNISYAN are charged in Count One of the Shulaya Indictment with racketeering conspiracy.

The Enterprise’s criminal activities included:

• The operation of illicit poker businesses in Brighton Beach;
• The extortion of gamblers who became indebted to the Shulaya Enterprise;
• Attempts to extort local business owners;
• Efforts to defraud casinos in Atlantic City and Philadelphia by using electronic devices and computer servers to predict and exploit the behavior of electronic slot machines;
• The theft of cargo shipments, including a shipment containing approximately 10,000 pounds of chocolate confections;
• The use of a female member of the Shulaya Enterprise to seduce men, incapacitate them with gas, and then rob them;
• Attempts to create an after-hours nightclub that would host, among other things, the sale of narcotics;
• The transportation and sale of numerous cases of untaxed cigarettes;
• Plans to pay bribes to local law enforcement; and
• Creation and use of forged identification documents, checks, and invoices.

SHULAYA, DZHANASHVILI, UGLAVA, CHAGANAVA, TORADZE, VINOKUROV, SUYUNOV, BUZIASHVILI, LOMISHVILI, AFANASYEV, KANADASHVILI are charged in Count Two of the Shulaya Indictment with conspiring to sell and transport stolen goods in a scheme involving contraband cigarettes, falsified bills of lading, and assorted stolen merchandise.

SHULAYA, DZHANASHVILI, UGLAVA, CHAGANAVA, TORADZE, KANADASHVILI, and VINOKUROV are charged in Count Three of the Shulaya Indictment in connection with a multi-year conspiracy to transport and sell purportedly stolen contraband cigarettes.

SHULAYA, DZHANASHVILI, SUYUNOV, AFANASYEV, SAVGIR, HOVHANNISYAN, DAVYDOV, KERESELIDZE, and MITSELMAKHER are charged in Count Four of the Shulaya Indictment in connection with a conspiracy to create and use false identification documents.

SHULAYA, UBILAVA, UGLAVA, MELMAN, GABISONIA, and MAKASHVILI are also charged in Count Five with wire fraud in connection with their plot to defraud casinos through the use of electronic devices and software designed to predict the behavior of particular models of electronic “slot” machines, thereby removing the element of chance from play of those machines.

LOMISHVILI, MARAT-UULU, and PETRUSHYN are charged in Count Six of the Shulaya Indictment with narcotics conspiracy in connection with their efforts to sell cocaine and heroin.

LERNER is charged in Count Seven of the Shulaya Indictment with obstruction of justice for lying to the FBI about information LERNER provided the Shulaya Enterprise about the FBI’s investigation.

MARAT-UULU and JIKIA are charged in the Jikia Complaint with conspiring to commit a murder-for-hire, and with firearms offenses.

GINDINOV is charged in the Gindinov Indictment with conspiring to sell narcotics in Manhattan and Brooklyn.

ALEX FISHMAN, STEVEN FISHMAN, and MELNYK are charged in the Fishman Indictment with conspiring to transport and sell contraband cigarettes in Manhattan and Brooklyn.

A detailed chart with the defendants’ ages, residences, and maximum sentences are attached.

*                *                *

Mr. Kim praised the outstanding work of the FBI, including the Atlantic City, New York, Los Angeles, Las Vegas, and Miami offices, the CBP, the NYPD, and the St. Pierce, Florida, Field Office of Homeland Security Investigations 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 Andrew Thomas are in charge of the case.

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. Shulaya, et al.

 

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

RICO Conspiracy

 

18 U.S.C. § 846

RAZHDEN SHULAYA

ZURAB DZHANASHVILI

AKAKI UBILAVA

HAMLET UGLAVA

MAMUKA CHAGANAVA

MIKHEIL TORADZE

ATVANDIL KANADASHVILI

NAZO GAPRINDASHVILI

ARTUR VINOKUROV

EVGHENI MELMAN

TIMUR SUYUNOV

ZURAB BUZIASHVILI

GIORGI LOMISHVILI

AZER ARSLANOUK

IVAN AFANASYEV

DENIS SAVGIR

DIEGO GABISONIA

LEVAN MAKASHVILI

ANDRIY PETRUSHYN

SEMYON SARAIDAROV

VACHE HOVHANNISYAN BAKAI MARAT-UULU

AVTANDIL KHURTSIDZE

 

20 years in prison; 3 years supervised release; $250,000 fine, or twice gross pecuniary gain/loss

2

Conspiracy to transport and sell stolen goods

 

18 U.S.C. § 371

RAZHDEN SHULAYA

ZURAB DZHANASHVILI

HAMLET UGLAVA

MAMUKA CHAGANAVA

MIKHEIL TORADZE

ATVANDIL KANADASHVILI

ARTUR VINOKUROV

TIMUR SUYUNOV

ZURAB BUZIASHVILI

GIORGI LOMISHVILI

IVAN AFANASYEV

 

5 years in prison; 3 years supervised release; $250,000 fine, or twice gross pecuniary gain/loss

 

3

Conspiracy to transport and sell contraband cigarettes

 

18 U.S.C. § 371

RAZHDEN SHULAYA

ZURAB DZHANASHVILI

HAMLET UGLAVA

MAMUKA CHAGANAVA

MIKHEIL TORADZE

AVTANDIL KANADASHVILI

ARTUR VINOKUROV

5 years in prison; 3 years supervised release; $250,000 fine, or twice gross pecuniary gain/loss

 

4

Conspiracy to commit identity fraud

 

18 U.S.C. § 1028(f)

RAZHDEN SHULAYA

ZURAB DZHANASHVILI

TIMUR SUYUNOV

IVAN AFANASYEV

DENIS SAVGIR

VACHE HOVHANNISYAN

DENYS DAVYDOV

EREKLE KERESELIDZE

ALEX MITSELMAKHER

 

15 years in prison; 3 years supervised release; $250,000 fine, or twice gross pecuniary gain/loss

5

Conspiracy to commit wire fraud

 

18 U.S.C. 1349

RAZHDEN SHULAYA

AKAKI UBILAVA

HAMLET UGLAVA

EVGHENI MELMAN

DIEGO GABISONIA

LEVAN MAKASHVILI

AVTANDIL KHURTSIDZE

 

20 years in prison; 3 years’ supervised release; $250,000 fine, or twice gross pecuniary gain/loss

 

6

Narcotics conspiracy

 

21 U.S.C. § 846

GIORGI LOMISHVILI

BAKAI MARAT-UULU

ANDRIY PETRUSHYN

 

40 years in prison; mandatory 5 five years in prison; mandatory 4 years supervised release; the greater of $5,000,000 or twice the gross loss/gain

 

7

Obstruction of justice

 

18 U.S.C. § 1001

YURIY LERNER

5 years in prison; 3 years supervised release; $250,000 fine

 

 

 

DEFENDANT

AGE

RESIDENCE

Razhden Shulaya

a/k/a “Brother”

a/k/a “Roma”

40

Edgewater, NJ

Zurab Dzhanashvili

a/k/a “Zura”

37

Brooklyn, NY

Avtandil Khurtsidze,

a/k/a “the Kickboxer”

33

Brooklyn, NY

Akaki Ubilava

a/k/a “Ako”

32

Brooklyn, NY

Hamlet Uglava

39

Brooklyn, NY

Mamuka Chaganava

38

Brooklyn, NY

Mikheil Toradze

36

Brooklyn, NY

Avtandil Kanadashvili

36

Brooklyn, NY

Nazo Gaprindashvili

a/k/a “Anna”

33

Brooklyn, NY

Artur Vinokurov

a/k/a “Rizhy”

37

Brooklyn, NY

Evgheni Melman

22

Brooklyn, NY

Timur Suyunov

28

Brooklyn, NY

Zurab Buziashvili

37

Manhattan, NY

Giorgi Lomishvili

29

Brooklyn, NY

Azer Arslanouk

27

Brooklyn, NY

Ivan Afanasyev

a/k/a “Vanya”

59

Brooklyn, NY

Denis Savgir

34

Brooklyn, NY

Bakai Marat-Uulu

25

Brooklyn, NY

Andriy Petrushyn

24

Brooklyn, NY

Diego Gabisonia

28

Brooklyn, NY

Levan Makashvili

28

Brooklyn, NY

Semyon Saraidarov

a/k/a “Sammy”

50

Rego Park, NY

Vache Hovhannisyan

30

Brooklyn, NY

Denys Davydov

32

Brooklyn, NY

Erekle Kereselidze

23

Brooklyn, NY

Alex Mitselmakher

a/k/a “Globus”

44

Brooklyn, NY

Yuriy Lerner

a/k/a “Yuri”

44

Brooklyn, NY

 

 

 

United States v. Fishman, et al.

 

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Conspiracy to transport, receive, and sell contraband cigarettes

 

18 U.S.C. § 371

ALEX FISHMAN

KOSTYANTYN MELNYK

STEVEN FISHMAN

5 years in prison; 3 years supervised release; $250,000 fine, or twice gross pecuniary gain/loss

 

 

DEFENDANT

AGE

RESIDENCE

ALEX FISHMAN

51

Brooklyn, NY

KOSTYANTYN MELNYK

54

Brooklyn, NY

STEVEN FISHMAN

23

Brooklyn, NY

 

United States v. Jikia, et al.

 

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Murder for hire conspiracy

 

18 U.S.C. § 1958

NIKOLOZ JIKIA

BAKAI MARAT-UULU

 

10 years in prison

2

Possession of firearms in furtherance of a crime of violence

 

18 U.S.C. § 924

Life in prison

3

Conspiracy to sell firearms to a felon

 

18 U.S.C. § 371

5 years in prison

 

DEFENDANT

AGE

RESIDENCE

NIKOLOZ JIKIA

26

Brooklyn, NY

BAKAI MARAT-UULU

25

Brooklyn, NY

 

United States v. Gindinov

 

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Narcotics conspiracy

 

18 U.S.C. § 846

SERGEY GINDINOV

 

40 years in prison; mandatory 5 five years in prison; mandatory 4 years supervised release; the greater of $5,000,000 or twice the gross loss/gain

 

 

DEFENDANT

AGE

RESIDENCE

SERGEY GINDINOV

48

Brooklyn, NY

 

---

[1] As the introductory phrase signifies, the entirety of the text of the Indictments and Complaint, and the description of the Indictments 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, today announced that SHALOM LAMM pled guilty to conspiracy to corrupt the electoral process, in connection with an election in Bloomingburg, New York. LAMM pled guilty earlier today before United States District Judge Vincent Briccetti in White Plains federal court.

 

Acting Manhattan U.S. Attorney Joon H. Kim said: “As he has now admitted, Shalom Lamm conspired to advance his real estate development project by corrupting the democratic process, specifically by falsely registering voters. The integrity of our electoral process must be inviolate at every level; our democracy depends on it.”

 

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

 

Starting in 2006, SHALOM LAMM, a real estate developer, sought to build and sell real estate in Bloomingburg, New York. From these real estate development projects, LAMM and others hoped for and anticipated making hundreds of millions of dollars. But by late 2013, the first of their real estate developments had met local opposition, and still remained under construction and uninhabitable. When met with resistance, rather than seek to advance their real estate development project through legitimate means, LAMM and others instead decided to corrupt the democratic electoral process in Bloomingburg by falsely registering voters and paying bribes for voters who would help elect public officials favorable to their project.

 

Specifically, in advance of an election in March 2014 for Mayor of Bloomingburg and other local officials, LAMM and others, and people working on their behalf, developed and worked on a plan to falsely register numerous people who were not entitled to register and vote in Bloomingburg because they actually lived elsewhere. Those people included some who never intended to live in Bloomingburg, some who had never kept a home in Bloomingburg, and indeed, some who had never set foot in Bloomingburg in their lives. LAMM and others took steps to cover up their scheme to register voters who did not actually live in Bloomingburg by, among other things, creating and back-dating false leases and placing items like toothbrushes and toothpaste in unoccupied apartments to make it seem as if the falsely registered voters lived there.

 

LAMM and others also bribed potential voters by offering payments, subsidies, and other items of value to get non-residents of Bloomingburg to register unlawfully and vote there.

 

* * *

 

LAMM, 57, of Bloomingburg, New York, pled guilty to one count of conspiracy to corrupt the electoral process, which carries a maximum sentence of five 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.

 

LAMM's sentencing is scheduled for September 28, 2017, at 10:00 a.m.

 

Co-defendant Kenneth Nakdimen pled guilty on May 25, 2017, to one count of conspiracy to corrupt the electoral process. His sentencing is scheduled for September 7, 2017, at 2:00 p.m.

 

Mr. Kim praised the outstanding investigative work of the FBI-Hudson Valley White Collar Crime Task Force, the Sullivan County District Attorney’s Office, the Sullivan County Sherriff’s Office, the Orange County Sheriff’s Office, the Orange County District Attorney’s Office, the Internal Revenue Service, and the United States Postal Inspection Service. Mr. Kim also thanked the Department of Justice’s Public Integrity Section, Election Crimes Branch, for its assistance in the case.

 

This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Kathryn Martin, Benjamin Allee, and Perry Carbone are in charge of the prosecution.

 

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that brothers BURNELL SCOTT, a/k/a “B.U.,” and BURCHANTI SCOTT, a/k/a “Napp,” were sentenced in Manhattan federal court today. BURCHANTI SCOTT was sentenced to 11 years in prison for distributing heroin, while BURNELL SCOTT was sentenced to 25 years in prison in connection with the 2005 drug-related murder of Kason Pinnick, a/k/a “Marijuana” (“Pinnick”) in Paterson, New Jersey. U.S. District Judge Laura Taylor Swain imposed both sentences.

 

Acting U.S. Attorney Joon H. Kim said: “As they admitted in their guilty pleas, Burnell and Burchanti Scott, brothers and longtime members of the Bloods street gang, distributed heroin and used violence to protect their drug distribution territory. Burnell Scott in fact shot and killed Kason Pinnick over a territorial dispute in Paterson, New Jersey. Today, each brother was sentenced to the lengthy prison term their crimes merit.”

 

BURCHANTI SCOTT previously pled guilty to participating in a conspiracy to distribute and possess with the intent to distribute more than 100 grams of heroin.

 

BURNELL SCOTT previously pled guilty to participating in a conspiracy to distribute and possess with the intent to distribute more than one kilogram of heroin.

 

According to the indictments and the felony information previously filed in Manhattan federal court, and public information:

 

BURNELL SCOTT, a long-time member of the G-Shine set of the Bloods street gang, was arrested on October 30, 2013, in Paterson, New Jersey. On February 24, 2016, SCOTT pled guilty to participating in a conspiracy to distribute and possess with the intent to distribute more than one kilogram of heroin, from 2005 through 2014. SCOTT admitted that, as part of the charged narcotics distribution offense, he and his co-conspirators were engaged in an ongoing dispute concerning, inter alia, drug distribution territory in Paterson. In connection with that ongoing dispute, on or about September 28, 2005, SCOTT encountered Pinnick in the vicinity of Twelfth Avenue and East 23rd Street, in Paterson. SCOTT pulled out a firearm, and discharged multiple rounds at Pinnick at point-blank range, striking Pinnick in the head, and killing him.

 

BURCHANTI SCOTT, the brother of BURNELL SCOTT and a high-ranking member of the Fruit Town Brims set of the Bloods street gang, who used violence or the threat of violence to protect his drug distribution territory, was writted into federal custody on March 18, 2014, from the New Jersey Department of Corrections, where he was incarcerated. On August 17, 2016, BURCHANTI SCOTT pled guilty to participating in a conspiracy to distribute and possess with the intent to distribute more than 100 grams of heroin, from 2012 through 2014.

 

* * *

 

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation (“FBI”) Safe Streets Task Force, Newark Division, the Paterson Police Department, the Passaic County Prosecutor’s Office, the Clifton Police Department, and the New Jersey State Police.

 

The Office’s Violent and Organized Crime Unit is overseeing the case. Assistant U.S. Attorney Justina L. Geraci is in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that JAMES CAPERS, a/k/a “Mitch,” was sentenced to 42 years in prison for the murder of Allen McQueen and participating in racketeering and narcotics conspiracies, all in connection with a violent street gang known as the “Leland Avenue Crew,” which is based primarily in and around the New York City’s 43rd Precinct in the Bronx, New York. The sentence was imposed by United States District Judge William H. Pauley III, after CAPERS was convicted following a jury trial in December 2016.

 

Acting Manhattan U.S. Attorney Joon H. Kim said: “Gangs do enormous damage to our communities through drug dealing and the violence that often accompanies it. Today, James Capers, a gang member who sold drugs and participated in that violence, was sentenced to 42 years in prison for the horrific murder of a rival gang member, whom Capers shot and killed while the victim was holding his one-year-old daughter. Our Office remains committed to eradicating senseless violence from our city streets.”

 

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

CAPERS was a member of the Leland Avenue Crew, which controlled the distribution of crack cocaine in and around Leland Avenue in the Bronx, New York. As a member of the Crew, CAPERS sold crack cocaine and marijuana, carried weapons, and committed robberies of unsuspecting members of the public. To protect its drug-selling turf, the Leland Avenue Crew engaged in a long-running dispute with members of a rival gang based two streets over on Taylor Avenue. This dispute resulted in multiple shootings, some of which were fatal. On or about July 7, 2015, in connection with the ongoing dispute between Leland and Taylor, CAPERS went looking for Allen McQueen, a rival gang member on Taylor Avenue. After finding McQueen, who was walking down the street holding his one-year-old daughter, CAPERS ran up behind McQueen and fired several shots, striking McQueen once and killing him.

 

* * *

 

Mr. Kim praised the extraordinary investigative work of the New York City Police Department, the Drug Enforcement Administration, and Homeland Security Investigations. He also thanked the Bronx County District Attorney’s Office for their participation and support in this case.

The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Scott Hartman, Jessica Lonergan, and Jason Swergold are in charge of the prosecution.

 

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”), George P. Beach II, the Superintendent of the New York State Police (“NYSP”), and Peter J. Graziano Jr., Chief of the Village of Chester Police Department (“Chester PD”), announced the arrest of JOSEPH BIGGS, a security guard at a school in Hastings-On-Hudson, New York, for a quadruple murder committed in Chester, New York in April 2016. BIGGS was charged in a 17-count Superseding Indictment, along with NICHOLAS TARTAGLIONE, a retired police officer who was previously arrested and charged in this case, for their participation in a conspiracy to distribute five kilograms and more of cocaine and for the murders of Martin Luna, Urbano Santiago, Miguel Luna, and Hector Gutierrez in furtherance of that conspiracy. The new indictment also includes firearms and kidnapping charges against both defendants in connection with the murders.

 

Acting U.S. Attorney Joon H. Kim stated: “As alleged, Joseph Biggs, a school security officer, participated in the brutal drug-related kidnapping and murder of four people in a bar in Chester, New York. Biggs allegedly committed these cold-blooded crimes with Nicholas Tartaglione, a retired police officer. Murders are always frightening, but when allegedly committed by people entrusted with the safety of others, it is all the more disturbing.”

 

FBI Assistant Director-in-Charge William F. Sweeney Jr. stated: “The FBI and our law enforcement partners in this investigation are following leads wherever they take us, and we will continue to search out any information that will help us solve the case. We are purposefully methodical, and careful about gathering facts and evidence, and we won’t stop until we bring to justice all of those responsible for the murders of these four men.”

 

NYSP Superintendent George P. Beach II said: “I praise the work of law enforcement in bringing these two suspected men to justice. Illicit drugs can not only be fatal to their users, but the crimes that surround these illegal operations are deadly and dangerous to our communities. With these two alleged actors charged, dangerous drugs are not making it to our streets, and those streets are now safer. The State Police pledge to continue to work and partner with other law enforcement agencies. The work we are doing will make a difference in the lives of the people we serve.”

 

Village of Chester Police Chief Peter J. Graziano Jr. said: “We are fortunate and humbled to be able to work with such talented people as a team in the arrest of Mr. Biggs in connection with the unspeakable and callous murder of these victims. That Mr. Bigs is alleged to be involved in a case such as this and be entrusted with the safety of children defies explanation.”

 

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

 

From at least in or about June 2015 up to and including April 2016, NICHOLAS TARTAGLIONE, JOSEPH BIGGS, and others conspired to sell five kilograms or more of cocaine. In April 2016, NICHOLAS TARTAGLIONE and JOSEPH BIGGS participated in the killing of Martin Luna, Urbano Santiago, Miguel Luna, and Hector Gutierrez in furtherance of that cocaine distribution conspiracy. Specifically, on April 11, 2016, TARTAGLIONE and BIGGS lured Martin Luna to a bar called the Likquid Lounge in Chester, New York under false pretenses, where he was held captive and killed. The other three victims – Urbano Santiago, Miguel Luna, and Hector Gutierrez – accompanied Martin Luna to the bar, where they were then held captive, shot, and killed.

 

* * *

 

JOSEPH BIGGS, 55, of Nanuet, New York, was taken into federal custody this morning. BIGGS was presented in White Plains federal court today before U.S. Magistrate Judge Judith McCarthy and ordered detained. His case has been assigned to United States District Judge Kenneth M. Karas. NICHOLAS TARTAGLIONE was previously arrested on December 19, 2016, and has been detained in federal custody since that date.

 

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

 

Mr. Kim praised the outstanding investigative work of the FBI, the New York State Police, and the Village of Chester Police Department. Mr. Kim also thanked the City of Middletown Police Department for its assistance in the case.

 

This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Maurene Comey and Michael Gerber 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.

 

 

United States v. Nicholas Tartaglione and Joseph Biggs, S3 16 Cr. 832 (KMK)

 

COUNT

CHARGES

MAXIMUM PENALTIES

1

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

Life in prison

Mandatory minimum: 10 years in prison

2

Murder of Martin Luna in furtherance of a conspiracy to distribute 5 kilograms or more of cocaine.

Life in prison or death

Mandatory minimum: 20 years in prison

3

Murder of Urbano Santiago in furtherance of a conspiracy to distribute 5 kilograms or more of cocaine.

Life in prison or death

Mandatory minimum:

20 years in prison

4

Murder of Miguel Luna in furtherance of a conspiracy to distribute 5 kilograms or more of cocaine.

Life in prison or death

Mandatory minimum:

20 years in prison

5

Murder of Hector Gutierrez in furtherance of a conspiracy to distribute 5 kilograms or more of cocaine.

Life in prison or death

Mandatory minimum:

20 years in prison

6

Use of a firearm in furtherance of drug trafficking crime resulting in the death of Urbano Santiago.

Life in prison or death

 

Mandatory minimum:

10 years in prison

7

Use of a firearm in furtherance of drug trafficking crime resulting in the death of Miguel Luna.

Life in prison or death

 

Mandatory minimum:

10 years in prison

8

Use of a firearm in furtherance of drug trafficking crime resulting in the death of Hector Gutierrez.

Life in prison or death

 

Mandatory minimum:

10 years in prison

9

Kidnapping conspiracy.

Life in prison

10

Kidnapping resulting in the death of Martin Luna.

Life in prison or death

 

Mandatory minimum:

Life in prison

11

Kidnapping resulting in the death of Urbano Santiago.

Life in prison or death

 

Mandatory minimum:

Life in prison

12

Kidnapping resulting in the death of Miguel Luna.

Life in prison or death

 

Mandatory minimum:

Life in prison

13

Kidnapping resulting in the death of Hector Gutierrez.

Life in prison or death

 

Mandatory minimum:

Life in prison

14

Travel or use of interstate facility with intent to commit crime of violence, resulting in death of Martin Luna.

Life in prison

15

Travel or use of interstate facility with intent to commit crime of violence, resulting in death of Urbano Santiago.

Life in prison

16

Travel or use of interstate facility with intent to commit crime of violence, resulting in death of Miguel Luna.

Life in prison

17

Travel or use of interstate facility with intent to commit crime of violence, resulting in death of Hector Gutierrez.

Life in prison

 

 

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and Patrick Carroll, the Commissioner of the New Rochelle Police Department (“NRPD”), announced the arrest of and unsealing of an indictment against FRANKIE BEQIRAJ charging him with conspiracy to distribute heroin, cocaine, oxycodone, and alprazolam. The indictment alleges that heroin distributed by BEQIRAJ and his co-conspirators resulted in the deaths of Robert Vivolo and Leonides Madrid.

BEQIRAJ was presented in federal court in Manhattan before U.S. Magistrate Judge Barbara C. Moses today and ordered detained. The case has been assigned to U.S. District Judge Richard M. Berman.

Acting U.S. Attorney Joon H. Kim stated: “As alleged in the Indictment, Frankie Beqiraj worked with others to sell a whole range of drugs, including heroin, cocaine, oxycodone, and alprazolam. As alleged, two young people are dead, victims of Beqiraj’s alleged heroin dealing and of the opioid epidemic that is sweeping the country. Thanks to the exceptional work of our partners at the New York City Police Department, the New Rochelle Police Department, and the Westchester County District Attorney’s Office, Beqiraj will be held accountable for the drugs he allegedly peddled and the tragic deaths that resulted.”

NYPD Commissioner James P. O’Neill stated: “The defendant in this case faces a mandatory minimum sentence of 20 years in prison – and a maximum of life behind bars – after investigators linked the heroin that he distributed to two overdose deaths, one in the Bronx and one in New Rochelle. It is the latest example of our commitment to holding drugs dealers criminally responsible. I want to thank the NYPD and the New Rochelle PD investigators, as well as the Southern District, for their work on this case.”

NRPD Commissioner Patrick Carroll stated: “The arrest and indictment of Frankie Beqiraj, holding him accountable for the death of New Rochelle resident Leonides Madrid, is an example of the New Rochelle Police Department’s commitment to fight against the opioids epidemic that our community faces today. Working collaboratively with our law enforcement partners, the NYPD, the Westchester County District Attorney’s Office, and the United States Attorney sends a strong message to drug dealers that we will do all we can to arrest and prosecute those selling drugs in our community.”

 

As alleged in the Indictment against BEQIRAJ [1]:

From July 2016 up to January 2017, in the Southern District of New York and elsewhere, FRANKIE BEQIRAJ and others conspired to sell one kilogram and more of heroin, as well as cocaine, oxycodone, and alprazolam. The use of heroin distributed by BEQIRAJ and his co-conspirators resulted in the deaths of Robert Vivolo, 25, of the Bronx, New York, on October 21, 2016, and of Leonides Madrid, 28, of New Rochelle, New York, on January 9, 2017.

 

* * *

FRANKIE BEQIRAJ, 27, faces a maximum sentence of life in prison, and a mandatory sentence of 20 years in prison.

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

Mr. Kim praised the outstanding investigative work of the NYPD, the NRPD, and the Westchester County Overdose Response Initiative. Mr. Kim thanked the Westchester County District Attorney’s Office for its assistance in the investigation.

 

This matter is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys David W. Denton Jr. and Elizabeth Hanft 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, announced that RAHEEM J. BRENNERMAN, a/k/a “Jefferson R. Brennerman,” a/k/a “Ayodeji Soetan,” has been charged with conspiracy to commit bank and wire fraud, bank fraud, wire fraud, and visa fraud in connection with a wide-ranging international scheme to fraudulently obtain multimillion-dollar business loans for several companies controlled by BRENNERMAN, including The Blacksands Pacific Group, Inc. BRENNERMAN was arrested yesterday in New Jersey, presented today before United States District Judge Richard Sullivan, and ordered detained.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As alleged, for years Raheem J. Brennerman conned financial institutions and investors into extending loans to his phony businesses. Instead of using that money on actual business deals, Brennerman spent millions on himself, paying personal expenses including on international travel, luxury hotels and fine jewelry. Having perpetrated this multi-million dollar fraud, Brennerman allegedly took elaborate steps to cover it up. We thank our law enforcement partners for their excellent work in uncovering this fraud.”

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

BRENNERMAN, from at least in or about 2011, has orchestrated a scheme to defraud financial institutions through his operation of a purported oil and gas company called The Blacksands Pacific Group, Inc. (“Blacksands Pacific”), as well as several subsidiaries and associated corporate entities. BRENNERMAN sought financing for purported business deals by falsely representing that Blacksands Pacific had significant worldwide involvement in the exploration and development of oil and gas reserves, produced over 10,000 barrels of oil per day, had over $1 billion in long-term assets and over 100 million barrels of proved oil reserves, and employed approximately 100 employees, when, in fact, BRENNERMAN knew that Blacksands Pacific lacked any long-term assets, and had, at most, a few employees and minimal involvement in the oil and gas industry. As part of the fraudulent scheme, BRENNERMAN also lied about his name, place of birth, citizenship, and finances, and invented fake employees. Once BRENNERMAN received financing from victims based on his false statements, BRENNERMAN used significant amounts of the money to pay his own personal expenses, including the lease of a luxury condominium in Las Vegas, Nevada, and stays at expensive hotels (including thousands of dollars’ worth of in-room dining service), as well as the purchase of international flights to Europe, chartered car services, fine jewelry, high-end designer clothing, and spa treatments. In total, BRENNERMAN attempted to defraud financial institutions of more than $300 million.

* * *

BRENNERMAN, 39, of Las Vegas, Nevada, is charged with one count of conspiracy to commit bank and wire fraud and one count of bank fraud, each of which carries a maximum sentence of 30 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; and one count of visa fraud, which carries a maximum sentence of 10 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the Criminal Investigators for the United States Attorney’s Office for the Southern District of New York. He also thanked the United States Department of State’s Diplomatic Security Service, United States Immigration and Customs Enforcement’s Homeland Security Investigations, the United States Postal Inspection Service, the United States Attorney’s Office for the Central District of California, and the United States Attorney’s Office for the District of Nevada for their assistance.

On March 3, 2017, BRENNERMAN and Blacksands Pacific were charged in a separate case in Manhattan federal court with criminal contempt of court. That case is pending before United States District Judge Lewis A. Kaplan and is scheduled for trial on September 7, 2017.

* * *

If you have any information regarding BRENNERMAN, please report it by phone at 212-637-2267 or by email at justin.ellard@usdoj.gov.

This case is being handled by the Office’s General Crimes Unit. Assistant United States Attorneys Nicolas Landsman-Roos and Robert B. Sobelman 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, announced that DAVID HOPE, a/k/a “Capo,” was sentenced yesterday to 18 years in prison for running a criminal sex trafficking and prostitution enterprise involving minor girls, as well as possession of child pornography and possession of a firearm as a convicted felon. In addition, KEMAR WILLIAMS, a/k/a “K-bag,” a co-defendant in the case, was sentenced yesterday to 42 months in prison for conspiracy to commit sex trafficking of minors with Hope. HOPE and WILLIAMS pled guilty on December 1, 2016, and December 8, 2016, respectively, before United States District Judge Sidney H. Stein, who also imposed yesterday’s sentences.

 

Acting Manhattan U.S. Attorney Joon H. Kim said: “David Hope sexually exploited and trafficked vulnerable women and minor girls, and Kemar Williams assisted in the exploitation. Hope and Williams used physical violence, weapons, coercion, and intimidation to exert control over their trafficking victims. Both have now received the significant sentences that their crimes deserve.”

 

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

 

Since at least 2013, HOPE directed and conducted a criminal sex trafficking and prostitution enterprise (the “Enterprise”) that recruited and exploited minor girls and young women, and then prostituted them using an online classifieds website for his own profit. HOPE, who was wheelchair-bound, operated the Enterprise at his apartment in the Bronx, New York (the “Hope Apartment”), Connecticut, and elsewhere. WILLIAMS participated and engaged in the Enterprise and facilitated the prostitution of minor girls.

 

HOPE recruited minors who looked up to him to participate in the Enterprise and other criminal activity. HOPE, who was known to carry a firearm, employed myriad tactics – including manipulation, intimidation, coercion, threats, and violence – to recruit and maintain the girls and young women he sold for sex. For example, on at least two occasions, HOPE physically beat one of the adult women he prostituted, and on at least one occasion, threatened that victim with a firearm. At least four minor victims were exploited by HOPE’s Enterprise.

 

In or about November 2015 when he was arrested, HOPE also possessed on his cellphone a sexually explicit video of one of the minor girls whom he trafficked.

In or about January 2015, HOPE possessed a defaced firearm (the “Firearm”) after he had been previously convicted of a felony crime. Specifically, on January 16, 2015, when New York City Police Department (“NYPD”) officers were executing a search warrant at the Hope apartment, HOPE instructed a minor female to throw the loaded Firearm out the rear window of the HOPE Apartment. Before it was thrown out the window, the Firearm was in the bed where HOPE was sleeping.

* * *

 

Mr. Kim praised the investigative work of the Federal Bureau of Investigation. He thanked the NYPD for its assistance throughout the investigation, and the United States Attorney’s Office for the District of Connecticut and the Connecticut Child Exploitation Task Force for their assistance with investigating HOPE’s operations in Connecticut. Mr. Kim also thanked the United States Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) and the ATF/NYPD Joint Robbery Task Force (SPARTA) for its assistance in the early stages of the investigation.

Any individuals who believe they have information concerning the exploitation of children may contact the Federal Bureau of Investigation at 1-212-384-1000 or https://tips.fbi.gov/.

The case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorney Sagar K. Ravi is in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeny Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that JASON NISSEN was arrested and charged in Manhattan federal court today with defrauding victims of at least $70 million by falsely representing that he was using the victims’ money to further a profitable, multimillion-dollar wholesale ticket business.  NISSEN was arrested this morning and will be presented in Manhattan federal court later today. 

Acting Manhattan U.S. Attorney Kim said:  “Jason Nissen claimed he was investing in premium tickets for events like the Super Bowl, the World Cup and the Broadway hit ‘Hamilton,’ but as alleged, Nissen was actually cheating his investors out of over $70 million and spending it on himself. The veneer of a successful and interesting business was allegedly just that, an alleged cover for a massive Ponzi scheme.”      

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:   “As charged today, Nissen represented his business as an investment opportunity for those willing to finance the purchase of large quantities of premium tickets to a number of sporting events and entertainment venues.  The tickets were supposed to be sold for profit, but they weren’t.  As alleged, Nissen eventually defrauded his victims out of at least $70 million collectively, all of which he used in furtherance of his scheme and for his own personal gain.  For Nissen, the final quarter didn’t prove as profitable as anticipated; he must now face the penalty for his actions.”

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

Since 2012, NISSEN has operated a ticket resale business (the “Ticket Company”) located in Manhattan, New York, through which NISSEN purchased large quantities of premium tickets for sporting and entertainment events, and then resold such tickets for a profit.  NISSEN was the Ticket Company’s chief executive officer and president.  

The Ticket Company’s website states that “[The Ticket Company] is an industry leader in providing VIP access and premium tickets to all concerts, Broadway theatre, red carpet premieres and sporting events worldwide . . . the Ticket Company stocks one of the largest revolving inventories for sports, concerts, and theatre worldwide.”

From 2015 to May 2017, NISSEN defrauded multiple victims of tens of millions of dollars through the Ticket Company.  NISSEN represented to victims that he would use money lent to him and his ticket business by victims to purchase bulk quantities of premium tickets to sporting and entertainment events such as the Super Bowl, the World Cup, the U.S. Open, and “Hamilton,” and then resell the tickets at a profit.  However, in truth and in fact, NISSEN used the victims’ money in large part to repay other victims and to enrich himself. 

For example, one victim, referred to as “Victim-2” in the Complaint, gave NISSEN and his ticket business more than $1.9 million to be used for the bulk purchase of tickets to a UFC fight in New York to be resold by NISSEN.  Instead of purchasing tickets, NISSEN used the money as follows: (i) he made two cash withdrawals – one for $20,000 and the other for $23,250; (ii) he transferred $383,000 to the bank account of another company he controlled to bring that company’s account balance out of a negative balance of about $382,000 to a positive balance of about $578; and (iii) he transferred $1,500,050 to his personal bank account, which had a balance of $88 at the time, and then that same day, NISSEN transferred $1,500,025 from his personal account to another victim to whom he owed money. 

To further perpetuate his fraudulent scheme and to raise additional sums from victims, NISSEN falsified financial documents and inflated accounts receivable ledgers, which NISSEN presented to certain victims as purported proof that their money was being used to purchase premium tickets for resale. 

On May 7, 2017, unable to obtain more financing to continue the scheme through existing or new victims, NISSEN admitted to an executive of Victim-2 that he had been operating a Ponzi scheme.  When the CFO of Victim-2 asked NISSEN the next day whether a bank document that NISSEN had previously provided to Victim-2 was forged, NISSEN admitted he had fabricated the bank document.  When asked how he had done so, NISSEN replied: “Photoshop.  Ever hear of it?”  

Two days later, on May 10, 2017, NISSEN told another victim, referred to in the Complaint as “Victim-1,” that he had been committing a fraud and that he had fabricated the income numbers of the Ticket Company that he had been reporting to Victim-1.

In total, JASON NISSEN defrauded victims of at least $70 million.     

*                *                *

NISSEN, 44, of Roslyn, New York, has been charged with one count of wire fraud, which carries a maximum sentence of 20 years in prison.  The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the investigative work of the FBI and noted that the investigation is continuing. 

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Kan M. Nawaday, Lauren B. Schorr, and Russell Capone 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.

 

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[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”), Angel M. Melendez, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), and Walter M. Arsenault, Executive Director of the Waterfront Commission of New York Harbor, announced today the filing of a Superseding Indictment charging 19 members and associates of the Luchese Family of La Cosa Nostra with racketeering, murder, narcotics, and firearms offenses.

 

The Superseding Indictment builds on charges previously filed against Luchese soldier CHRISTOPHER LONDONIO and Luchese associate TERRENCE CALDWELL, who were charged in February 2017 with racketeering offenses, including the murder of Michael Meldish, a Luchese associate who was killed in the Bronx on November 15, 2013.

 

The Superseding Indictment charges MATTHEW MADONNA, the alleged street boss of the Luchese Family, STEVEN CREA SR., the alleged underboss of the Family, and STEVEN CREA JR., LONDONIO’s alleged captain in the Family, with ordering the murder of Meldish. The Superseding Indictment also contains additional racketeering charges against MADONNA, CREA SR., and CREA JR., as well as the alleged consigliere of the Luchese Family, JOSEPH DiNAPOLI, and numerous other members and associates of La Cosa Nostra.

 

Fifteen of the defendants charged were taken into custody today. CHRISTOPHER LONDONIO, TERRENCE CALDWELL, and VINCENT BRUNO were already in federal custody on other charges. MATTHEW MADONNA was already in custody on state charges and was transferred today to federal custody. All defendants arrested today will be presented in White Plains federal court before U.S. Magistrate Judge Judith C. McCarthy this afternoon. The case is assigned to United States District Judge Cathy Seibel, who will hold an initial conference on Thursday, June 1, 2017, at 2:00 p.m.

 

Acting U.S. Attorney Joon H. Kim said: “As today’s charges demonstrate, La Cosa Nostra remains alive and active in New York City, but so does our commitment to eradicate the mob’s parasitic presence. We have charged 19 members and associates of the Luchese Crime Family, including its entire administration – the street boss, underboss and consigliere – with serious racketeering offenses. The defendants allegedly used violence and threats of violence, as the mob always has, to make illegal money, to enforce discipline in the ranks, and to silence witnesses. The mob members and associates charged today will answer for their alleged misdeeds in a court of law.”

 

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Organized crime families believe their way of life is acceptable and continue to show through their criminal behavior that they don’t plan to stop. Their crimes aren’t victimless, and this case proves they’re willing to use murder and many other violent tactics to enforce their dominance. The FBI/NYPD Joint Organized Crime Task Force and our other law enforcement partners, who have done exceptional work in this case, don’t plan to stop our pursuit of these crime families because they have a direct negative impact on communities and neighborhoods where they operate.”

 

HSI Special Agent in Charge Angel M. Melendez said: “The Luchese Family and its associates are alleged to be linked to guns, drugs, racketeering, and murder. They are also alleged to have used their criminal enterprise to launder money, tamper with witnesses and extortion. It is clear that this ‘family’ business is of no benefit to its community or to this great city. HSI will continue to strengthen its partnership with the FBI and NYPD to ensure that alleged criminals like the Luchese Family face the consequences of their actions.”

 

NYPD Commissioner James P. O’Neill said: “The allegations and extent of the criminal behavior are extraordinary. The Luchese Family operated with seeming impunity, allegedly carrying out murder, robberies, extortion, among a myriad of other charges unsealed today. We will not stop until violence has been eradicated – be it from a street gang or the mob.”

 

Waterfront Commission Executive Director Walter M. Arsenault said: “The Waterfront Commission will continue to work with all of its law enforcement partners to eliminate Organized Crime wherever it is found.”

 

According to the allegations in the Superseding Indictment[1], which was filed in White Plains federal court on May 24, 2017, and was unsealed today:

La Cosa Nostra or “the Mafia” is a criminal organization composed of leaders, members, and associates who work together and coordinate to engage in criminal activities.

 

La Cosa Nostra operates through entities known as “Families.” In the New York City area, those families include the Genovese, Gambino, Luchese, Bonanno, Colombo, and Decavalcante Families. Each Family operates through groups of individuals known as “crews” and “regimes.” Each “crew” has as its leader a person known as a “Caporegime,” “Capo,” “Captain,” or “Skipper,” who is responsible for supervising the criminal activities of his crew and providing “Soldiers” and associates with support and protection. In return, the Capo typically receives a share of the illegal earnings of each of his crew’s Soldiers and associates, which is sometimes referred to as Atribute.@

 

Each crew consists of “made” members, sometimes known as “Soldiers,” “wiseguys,” “friends of ours,” and “good fellows.” Soldiers are aided in their criminal endeavors by other trusted individuals, known as “associates,” who sometimes are referred to as “connected” or identified as “with” a Soldier or other member of the Family. Associates participate in the various activities of the crew and its members. In order for an associate to become a made member of the Family, the associate must first be of Italian descent and typically needs to demonstrate the ability to generate income for the Family and/or the willingness to commit acts of violence.

 

At most times relevant to the charges in the Superseding Indictment, MATTHEW MADONNA was the street boss of the family – that is, the individual who managed the affairs of the Family on behalf of the formal boss, who is serving a life sentence in federal prison. STEVEN CREA SR., a/k/a “Wonder Boy,” was the Underboss of the Luchese Family, and JOSEPH DINAPOLI was the Consigliere of the Luchese Family. Additionally, STEVEN CREA JR., DOMINIC TRUSCELLO, JOHN CASTELUCCI, a/k/a “Big John,” and TINDARO CORSO, a/k/a “Tino,” were Captains or Acting Captains in the Luchese Family. JOSEPH VENICE, JAMES MAFFUCCI, a/k/a “Jimmy the Jew,” JOSEPH DATELLO, a/k/a “Big Joe,” a/k/a “Joey Glasses,” PAUL CASSANO, a/k/a “Paulie Roast Beef,” and CHRISTOPHER LONDONIO were Soldiers in the Luchese Family.

 

The Superseding Indictment alleges that from at least in or about 2000 up to and including in or about 2017, MATTHEW MADONNA, STEVEN CREA SR., JOSEPH DINAPOLI, STEVEN CREA JR., DOMINIC TRUSCELLO, JOHN CASTELUCCI, TINDARO CORSO, JOSEPH VENICE, JAMES MAFFUCCI, JOSEPH DATELLO, PAUL CASSANO, CHRISTOPHER LONDONIO, TERRENCE CALDWELL, a/k/a “T,” VINCENT BRUNO, BRIAN VAUGHAN, CARMINE GARCIA, a/k/a “Spanish Carmine,” RICHARD O’CONNOR, ROBERT CAMILLI, and JOHN INCATASCIATO, along with other members and associates of La Cosa Nostra, committed a wide array of crimes in connection with their association with the mafia, including murder, attempted murder, assault, robbery, extortion, gambling, narcotics trafficking, witness tampering, fraud, money laundering, and trafficking in contraband cigarettes.

 

Of particular significance, on or about November 15, 2013, MADONNA, CREA SR. CREA JR., LONDONIO, and CALDWELL murdered and procured the murder of Michael Meldish in order to maintain or increase their status in La Cosa Nostra.

 

The Superseding Indictment also alleges the following additional violent incidents:

 

In late 2012, PAUL CASSANO and VINCENT BRUNO, acting at the direction of CREA SR. and CREA JR., attempted to murder a mafia associate who had shown disrespect toward CREA SR.

 

As charged in the initial Indictment, on May 29, 2013, TERRENCE CALDWELL attempted to murder a Bonanno Soldier in the vicinity of First Avenue and 111th Street, in Manhattan.

 

In or about October 2016, STEVEN CREA SR. and JOSEPH DATELLO attempted to murder a witness who had previously provided information regarding the activities of La Cosa Nostra to state and federal law enforcement.

 

* * *

 

A chart containing the ages, residency information, and charges against the defendants, as well as the maximum penalties they face, is attached.

Mr. Kim praised the outstanding investigative work of the FBI’s Organized Crime Task Force, which comprises agents and detectives of the FBI, NYPD, Homeland Security Investigations, and the Waterfront Commission of New York Harbor. He also thanked the Bronx County District Attorney’s Office, the New York County District Attorney’s Office, the Queens County District Attorney’s Office, the New York State Inspector General's Office, the Chesterfield County (VA) Police Department, and the Guardia Civil (Spain). He added that the investigation is continuing.

 

Assistant U.S. Attorneys Scott Hartman, Hagan Scotten, and Jacqueline Kelly are in charge of the prosecution. The case is being handled by the Office’s Violent and Organized Crime Unit and White Plains Division.

 

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

 

 

United States v. Mathew Madonna, et al., S1 17 Cr. 89 (CS)

 

DEFENDANT

AGE

CITY OF RESIDENCE

CHARGES

MAX SENT.

Madonna, Matthew

81

Incarcerated

18 U.S.C. § 924(c)

18 U.S.C. § 924(j)

18 U.S.C. § 1959(a)(1)

18 U.S.C. § 1959(a)(5)

18 U.S.C. § 1962(d)

Life

Crea, Sr., Steven

69

Crestwood, NY

18 U.S.C. § 924(c)

18 U.S.C. § 924(j)

18 U.S.C. § 1959(a)(1)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1959(a)(5)

18 U.S.C. § 1962(d)

Life

DiNapoli, Joseph

81

Bronx, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

Life

Crea, Jr., Steven

45

New Rochelle, NY

18 U.S.C. § 924(c)

18 U.S.C. § 924(j)

18 U.S.C. § 1959(a)(1)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1959(a)(5)

18 U.S.C. § 1962(d)

Life

Truscello, Dominic

83

Staten Island, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

Life

Castelucci, John

57

Staten Island, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

Life

Corso, Tindaro

56

Staten Island, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

Life

Venice, Joseph

56

Yonkers, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

Life

Maffucci, James

69

Manhattan, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

21 U.S.C. § 846

Life

Datello, Joseph

66

Staten Island, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1962(d)

21 U.S.C. § 846

Life

Londonio, Christopher

43

Incarcerated

18 U.S.C. § 924(c)

18 U.S.C. § 924(j)

18 U.S.C. § 1959(a)(1)

18 U.S.C. § 1959(a)(5)

18 U.S.C. § 1962(d)

21 U.S.C. § 846

Life

Cassano, Paul

38

Yonkers, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1962(d)

Life

Caldwell, Terrence

59

Incarcerated

18 U.S.C. § 924(c)

18 U.S.C. § 924(j)

18 U.S.C. § 1959(a)(1)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1959(a)(5)

18 U.S.C. § 1962(d)

Life

Bruno, Vincent

33

Incarcerated

18 U.S.C. § 924(c)

18 U.S.C. § 1959(a)(3)

18 U.S.C. § 1962(d)

Life

Vaughan, Brian

51

Matawan, NJ

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

21 U.S.C. § 846

Life

Garcia, Carmine

65

Hawthorne, NJ

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

21 U.S.C. § 846

Life

O’Connor, Richard

63

Staten Island, NY

18 U.S.C. § 924(c)

18 U.S.C. § 1962(d)

21 U.S.C. § 846

Life

Camilli, Robert

60

Briarcliff Manor, NY

18 U.S.C. § 1962(d)

20 Years

Incatasciato, John

42

Elmsford, NY

18 U.S.C. § 1962(d)

20 Years

 

 

---

[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.

Joon Kim, the Acting United States Attorney for the Southern District of New York, Darcel Clark, the Bronx County District Attorney, Ashan Benedict, Special Agent-in-Charge of the New York Field Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), Angel M. Melendez, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (“HSI”) New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), today announced the unsealing of two Indictments charging 25 defendants with a variety of narcotics, firearms, and robbery-related offenses. 

Of the 25 defendants, 21 are associated with a drug-distribution organization operating primarily in the Hunts Point neighborhood in the Bronx and are charged in United States v. Hector Palermo, et al. (the “Palermo Indictment”), which has been assigned to U.S. District Judge Gregory H. Woods.  Of those defendants, 14 were taken into federal custody today and were presented before Magistrate Judges Barbara C. Moses today.  One defendant, FREDERICK BURGOS, was presented in the Eastern District of Pennsylvania.  MIGUEL RAMIREZ, FELIX CORDERO SR., KHAALIQ HARRIS, ANGEL BERMUDEZ, ELVIN MALDONADO, AND STEVEN VEGA remain at large.

The remaining four defendants are charged in United States v. Lattine Clark, et al. (the “Clark Indictment”), which has been assigned to U.S. District Judge Vernon S. Broderick.  Of those defendants, three were taken into federal custody today and were presented before Magistrate Judges Barbara C. Moses today.  One defendant, TREVON NEDD, is currently detained in federal custody on unrelated charges and will be brought into federal custody on a writ.

Manhattan Acting U.S. Attorney Joon Kim said:  “One by one, our office, along with our law enforcement partners, is identifying and prosecuting the violent gangs and drug dealing crews operating in the Bronx. These alleged gangs and drug crews – including the ones charged today – bring narcotics, guns, and violence to our neighborhoods. The residents of the communities they harm deserve better.”

ATF Special Agent-in-Charge Ashan Benedict said:  “Today's arrests are the culmination of a nearly two-year long investigation by ATF's Joint Firearms Task Force, NYPD, and HSI into alleged narcotics trafficking, armed robberies, and the illicit possession of firearms by criminal elements operating in the Hunts Point area of the Bronx. Through the cooperative efforts of law enforcement, these individuals are off the streets and will face justice in federal court for their alleged crimes. Today it is a better day to be a resident of Hunts Point, and all of us will continue our efforts to ensure it stays that way. I would like to extend my gratitude to the ATF and HSI Special Agents, NYPD Detectives, and Assistant United States Attorneys for their hard work and dedication throughout this investigation.”

HSI Special Agent-in-Charge Angel M. Melendez, said:  “It’s a good day when more than two dozen alleged gun-wielding drug pushers are taken off the street. These individuals are alleged to deal crack cocaine and heroin in their own backyards and commit robberies at gunpoint.  Today’s arrests are another great example of law enforcement working together in the interest of justice and making our communities safer.”

NYPD Commissioner James P. O’Neill said:  “We will continue to pursue those who commit violence in our streets.  This morning’s arrest of 25 defendants in the Bronx is just the latest example.  I’m thankful to the help and cooperation from our many law enforcement partners in this takedown and many others.”

The Indictments arise from a joint investigation by the NYPD, ATF, and HSI into several drug trafficking organizations operating in the Hunts Point area of the Bronx, New York.  As alleged in the Palermo Indictment, the 21 defendants charged in that case are responsible for the distribution of large amounts of crack cocaine and heroin, and used, carried, and possessed firearms in connection with that drug trafficking. 

As alleged in the Clark Indictment, LATTINE CLARK, MICHAEL PATTERSON, and TREVON NEDD participated in a conspiracy to distribute crack cocaine in the Hunts Point area, and RUBEN VIZCARRANDO participated in another conspiracy to distribute crack cocaine in Hunts Point.  As further alleged, CLARK was a participant in a shootout, during which he fired a gun, in the vicinity of Coster Street and Spofford Avenue, on October 16, 2016.  PATTERSON, NEDD, and VIZCARRANDO are all alleged to have participated in a Hobbs Act robbery conspiracy, and a gunpoint Hobbs Act robbery of suspected narcotics traffickers in the Marble Hill area on June 22, 2016, during which robbery PATTERSON and another unnamed co-conspirator fired their weapons.         

Count One of the Palermo Indictment unsealed today in Manhattan federal court,[1] charges HECTOR PALERMO, MIGUEL GUZMAN, MIGUEL RAMIREZ, FELIX CORDERO SR.,  MATTHEW PRESTOL, CHRIS ALICEA, KHAALIQ HARRIS, ADRIAN QUINONES, FREDERICK BURGOS, RAFAEL GONZALEZ, ANGEL BERMUDEZ, JUAN CARLOS RODRIGUEZ, JESUS ANDINO, ELVIN MALDONADO, JOSE AYALA, ESTEBAN MARTINEZ, CHRISTIAN RIVERA, STEVEN VEGA, DENISE ORTIZ, CARMEN ROMAN, and ASHLEY RODRIGUEZ with conspiring to distribute and possess with intent to distribute crack cocaine and heroin.    

Count Two charges GUZMAN, RAMIREZ, CORDERO SR., PRESTOL, ALICEA, BURGOS, GONZALEZ, RODRIGUEZ, and VEGA, with using, possessing, and carrying firearms in furtherance of the drug conspiracy charged in Count One.

Count Three charges RAMIREZ with possessing ammunition, which had previously been shipped in interstate commerce, after a prior felony conviction.

Count One of the Clark Indictment unsealed today in Manhattan federal court,[2] charges LATTINE CLARK, TREVON NEDD, and MICHAEL PATTERSON with conspiring to distribute and possess with intent to distribute crack cocaine.

Count Two charges CLARK with using, possessing, and carrying firearms in furtherance of the drug conspiracy charged in Count One. 

Count Three charges RUBEN VIZCARRONDO with conspiring to distribute and possess with intent to distribute crack cocaine.

Count Four charges NEDD, PATTERSON, and VIZCARRONDO with participating in a conspiracy to commit Hobbs Act Robbery between 2015 and May 2017.  Count Four charges that this conspiracy involved armed robberies of suspected narcotics traffickers and others involved in commercial activities that affected interstate commerce.

Count Five charges NEDD, PATTERSON, and VIZCARRONDO with committing a robbery of suspected narcotics traffickers on June 22, 2016, in the vicinity of Marble Hill, New York.

*                      *                     *

Charts containing the names, ages, residences, 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 NYPD, ATF, and HSI, and expressed gratitude for the coordinated efforts of the NYPD’s Violent Crime Squad and 41st Precinct.

This case is being handled by the Office’s Violent and Organized Crime Unit.  Assistant United States Attorneys Sarah Krissoff and Jason A. Richman are in charge of the prosecution.

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

 

United States v. Hector Palermo, et al.

 

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Narcotics conspiracy

 

21 U.S.C. § 846

HECTOR PALERMO MIGUEL GUZMAN

MIGUEL RAMIREZ

FELIX CORDERO SR.  MATTHEW PRESTOL CHRIS ALICEA

KHAALIQ HARRIS

ADRIAN QUINONES FREDERICK BURGOS RAFAEL GONZALEZ ANGEL BERMUDEZ

JUAN CARLOS RODRIGUEZ

JESUS ANDINO

ELVIN MALDONADO

JOSE AYALA

ESTEBAN MARTINEZ CHRISTIAN RIVERA STEVEN VEGA

DENISE ORTIZ

CARMEN ROMAN

ASHLEY RODRIGUEZ

Life in prison

 

Mandatory minimum of 10 years in prison

2

Using, carrying, possessing firearms in furtherance of narcotics conspiracy

 

18 U.S.C. §§ 924(c) and 2

 

MIGUEL GUZMAN

MIGUEL RAMIREZ

FELIX CORDERO SR.

MATTHEW PRESTOL

CHRIS ALICEA

FREDERICK BURGOS

RAFAEL GONZALEZ

JUAN CARLOS RODRIGUEZ

STEVEN VEGA

Life in prison

 

Mandatory minimum of 5 years in prison

3

Felon in possession of ammunition

 

18 U.S.C. §§ 922(g) and 2

MIGUEL RAMIREZ

10 years’ imprisonment

 

 

DEFENDANT

AGE

RESIDENCE

HECTOR PALERMO,

a/k/a “Hec”

35

Newark, New Jersey

MIGUEL GUZMAN

29

Bronx, New York

MIGUEL RAMIREZ,

a/k/a “Mickey”

27

Bronx, New York

FELIX CORDERO SR.,

a/k/a “Pops”

50

Bronx, New York

MATTHEW PRESTOL,

a/k/a “Wiz”

19

Bronx, New York

CHRIS ALICEA

18

Bronx, New York

KHAALIQ HARRIS,

a/k/a “Rooster”

21

Bronx, New York

ADRIAN QUINONES,

a/k/a “Five”

24

Bronx, New York

FREDERICK BURGOS,

a/k/a “Flee,”

a/k/a “Lee”

37

Bethlehem, Pennsylvania

RAFAEL GONZALEZ,

a/k/a June”

45

Bronx, New York

ANGEL BERMUDEZ,

a/k/a “Para”

21

Bronx, New York

JUAN CARLOS RODRIGUEZ,

a/k/a “J.C.”

20

Bronx, New York

JESUS ANDINO,

a/k/a “Chico”

32

Bronx, New York

ELVIN MALDONADO,

a/k/a “LV”

30

Bronx, New York

JOSE AYALA

49

Bronx, New York

ESTEBAN MARTINEZ,

a/k/a “Esco”

34

Bronx, New York

CHRISTIAN RIVERA,

a/k/a “Rico”

23

Bronx, New York

STEVEN VEGA,

a/k/a “Nene”

25

Bronx, New York

DENISE ORTIZ

36

Bronx, New York

CARMEN ROMAN

56

Bronx, New York

ASHLEY RODRIGUEZ

20

Bronx, New York

 

 

United States v. Lattine Clark, et al.

 

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Narcotics conspiracy

 

21 U.S.C. § 846

LATTINE CLARK

TREVON NEDD

MICHAEL PATTERSON

 

Life in prison

 

Mandatory minimum of 10 years in prison

 

2

Using, carrying, possessing, brandishing, and discharging firearms

 

18 U.S.C.
§§ 924(c)(1)(A)(i), (ii), and (iii), 2

LATTINE CLARK

Life in prison

 

Mandatory minimum of 10 years in prison

3

Narcotics conspiracy

 

21 U.S.C. § 846

RUBEN VIZCARRONDO

 

Life in prison

 

Mandatory minimum of 10 years in prison

 

4

Robbery Conspiracy

 

18 U.S.C. § 1951

 

TREVON NEDD

MICHAEL PATTERSON

RUBEN VIZCARRONDO

20 years in prison

5

Robbery

 

18 U.S.C. § 1951

TREVON NEDD

MICHAEL PATTERSON

RUBEN VIZCARRONDO

 

20 years in prison

 

 

DEFENDANT

AGE

RESIDENCE

LATTINE CLARK,

a/k/a “Dutts”

20

Bronx, New York

TREVON NEDD,

a/k/a “Hat Boy”

31

Federal Custody

MICHAEL PATTERSON

22

Bronx, New York

RUBEN VIZCARRONDO

26

Bronx, New York

 

 

---

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

[2] As the introductory phrase signifies, the entirety of the text of the Indictments, and the description of the Indictments 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 today that DEBORAH KELLEY, a former managing director of institutional fixed income sales at a New York-based broker-dealer (the “Broker-Dealer”), pled guilty today before U.S. District Judge J. Paul Oetken 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. 

Acting U.S. Attorney Joon H. Kim said:  “As she admitted today, Deborah Kelley bribed Navnoor Kang to steer state pension business to her brokerage firm, reaping hundreds of thousands of dollars in additional commissions for the firm.  In the process, she was complicit in defrauding New York pensioners and depriving them of Kang’s honest services.  The hard-earned retirement savings of New Yorkers should not be a vehicle for corrupt pension administrators and securities brokers to profit.”

According to allegations contained in the Indictment charging KELLEY and statements made during her plea 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 hundreds of thousands of dollars in commissions to the Broker-Dealer, of which KELLEY personally earned approximately 35 to 40 percent.

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, pled guilty to one count of conspiracy to commit securities fraud and honest services wire fraud, which carries a maximum sentence of five years in prison and three years of supervised release. 

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. 

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, announced today that the United States has resolved its investigation into complaints alleging that the New York State Education Department (the “NYSED”) violated Title II of the Americans with Disabilities Act of 1990 (the “ADA”), 42 U.S.C. §§ 12131-12134, and related regulations by refusing to permit parent and guardian involvement in the adjustment of a child’s diabetes medication, with the approval of the child’s doctor, during school or at school-sponsored events.

Acting U.S. Attorney Joon H. Kim said: “Parents of children with diabetes have a right to play a role in the treatment of their children while at school. We are pleased to have reached an agreement with the New York State Education Department that will help students with diabetes receive during school the same adjustments to their medication that they receive outside of school, as their doctors direct.”

This Office’s investigation found that, in September 2015, the NYSED issued Guidelines for Medication Management in Schools that caused schools to reject certain types of orders issued by physicians treating children with diabetes authorizing parents and guardians to be involved in the adjustment of their child’s diabetes medication administered by the school healthcare team. The rejected orders included model orders developed by national diabetes organizations such as the National Diabetes Education Project and the American Diabetes Association by which a physician could authorize a parent or guardian to direct a school healthcare professional to adjust, within limits, the dosage and timing of correction doses of insulin, insulin-to-carbohydrate ratios, and fixed insulin doses. As these model orders reflect, it is common for parents and guardians of children with diabetes to have particularized knowledge with respect to their child’s recent activities, food intake, reaction to medication, and the like, and, through training and experience, to develop expertise regarding the adjustment of the dosage and timing of their child’s diabetes medication, information that is essential to the provision of necessary medical care for children with diabetes at all times, including at school. The investigation found that the Guidelines were hindering the communication of this vital information and in certain instances preventing necessary adjustments to diabetes medication from occurring at school. This Office detailed its conclusions in a Letter of Findings dated January 18, 2017.

In response to the investigation, the NYSED agreed to amend the Guidelines. The NYSED has also agreed to provide a model form for a physician to use to authorize the involvement of the parents/guardians in adjustment decisions where appropriate. The final decision with respect to the dosage and timing of diabetes medication shall remain with the school nurse as a matter of the nurse’s exercise of professional judgment, which will include consideration of the information communicated by the parent or guardian.

Specifically, under the resolution, NYSED has agreed to take the following actions: (i) amend the provisions of the Guidelines that were identified by the investigation as causing concerns; (ii) include additional language in the Guidelines explaining the respective roles of the school nurse and the parents/guardians who have been authorized to recommend adjustments of their child’s diabetes medication within specified limits; and (iii) provide a link to a model form through which physicians can provide such authorization to the parent/guardian (provided that the student’s Diabetes Medical Management Plan also includes authorization of the school nurse to make adjustments within the same range(s) as a matter of the nurse’s professional judgment). These changes, which resolve the issues addressed in the Letter of Findings, are explained in more detail in the attachments to the Office’s resolution letter. An amended version of the Guidelines reflecting these changes appears on the NYSED website at the following address: http://www.p12.nysed.gov/sss/schoolhealth/schoolhealthservices/.

Mr. Kim also thanked NYSED for its cooperation. The case is being handled by the Office’s Civil Rights Unit. Assistant United States Attorney Michael J. Byars is in charge of the matter.

Joon H. Kim, Acting United States Attorney for the Southern District of New York, announced that the United States has settled a federal civil rights lawsuit against SLCE ARCHITECTS, LLP (“SLCE”), by consent decree.  The suit alleges that SLCE violated the federal Fair Housing Act (“FHA”) by failing to design the Verdesian Apartments (“The Verdesian”), a Manhattan residential apartment complex, with the features required by the FHA to ensure accessibility for persons with disabilities.  

Under the settlement, SLCE agrees to establish procedures, including the appointment of a Coordinator for Accessibility Education, to ensure that its ongoing and future development projects will comply with the accessibility requirements of the federal Fair Housing Act (“FHA”).  Further, as part of the consent decree, SLCE has agreed to provide up to $15,000 to compensate aggrieved persons and to pay a civil penalty of $30,000.  The consent decree was entered on May 24, 2017, by U.S. District Judge Jed S. Rakoff.

The developer of The Verdesian, Albanese Organization, Inc., and three of its affiliates, North End Associates, LLC, River Terrace Associates, LLC, and Chelsea Associates, LLC (together, the “Developer Defendants”), were also named as defendants in the suit, and Judge Rakoff approved a consent decree between the Government and the Developer Defendants on February 12, 2017, under which the Developer Defendants, among other remedial measures, agreed to make retrofits to The Verdesian.      

Acting U.S. Attorney Joon H. Kim said:  “Through this lawsuit, the Office continues its efforts to require not only developers, but also architects, to comply with the law by creating rental properties that are accessible to New Yorkers with disabilities. This settlement ensures that future projects designed by SLCE will comply with the FHA and can be fully enjoyed by individuals with disabilities.”

The FHA’s accessible design and construction provisions require new multifamily housing complexes constructed after January 1993 to have basic features accessible to persons with disabilities.  According to the allegations in the Complaint, The Verdesian, a rental complex located at 211 North End with 253 rental units, was designed and constructed with numerous inaccessible features, including excessively high thresholds interfering with accessible routes in the public and common areas as well as into and within individual units, and insufficient widths, clearance, and clear floor space in bedrooms, bathrooms, closets, and kitchens for maneuvering by people who use wheelchairs.    

To ensure future FHA compliance, the settlement requires SLCE to certify its plans, drawings, and blueprints as adhering to the requirements of the FHA and to institute policies and training to ensure that its employees and agents will comply with the FHA’s accessibility requirements.

Finally, the settlement requires SLCE to pay a civil penalty of $30,000 and to provide up to $15,000 to compensate aggrieved persons.   

Aggrieved individuals may be entitled to monetary compensation from the fund created through the settlement.  Aggrieved individuals may include those who:

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

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

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

                        86 Chambers Street, 3rd Floor

                        New York, New York  10007

                        Attention:  Chief, Civil Rights Unit

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

 

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”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced today the indictment of two former members of the BSM gang, PARIS SOTO, a/k/a “P,” and “JOSEPH DENFIELD,” a/k/a “Denfield Joseph,” a/k/a “Denny,” for the gang-related murder of Donnell Harris on August 31, 2010. The case has been assigned to United States District Judge Victor Marrero. DENFIELD was presented yesterday before Magistrate Judge Ronald L. Ellis; SOTO is currently in state custody.

As alleged in the Indictment[1]:

BSM, which stands for “Brim Stone Mafia,” and later “Blood Stone Mafia,” was a criminal enterprise that operated mainly in and around the Bronx, New York, including in the vicinity of East 173rd Street and Topping Avenue. Members and associates of BSM engaged in the sale of narcotics, robberies, credit card fraud, and murder.

On August 31, 2010, BSM members SOTO and DENFIELD participated in the murder of Donnell Harris in order to maintain and increase their standing within BSM.

SOTO and DENFIELD are each charged with one count of murder in aid of a racketeering conspiracy, which carries a maximum sentence of death, or life in prison. The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.

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

This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Jessica Feinstein, Michael Gerber, and Hadassa Waxman 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.

 

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[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, today announced that KENNETH NAKDIMEN pled guilty to conspiracy to corrupt the electoral process, in connection with an election in Bloomingburg, New York.  NAKDIMEN pled guilty earlier today before United States District Judge Vincent Briccetti in White Plains federal court. 

Acting Manhattan U.S. Attorney Joon H. Kim stated:  “Fair elections are the bedrock of democracy.  As he has now admitted, Kenneth Nakdimen devised a scheme to advance his real estate project by falsely registering voters and corrupting this sacred process.  We will not allow greed to influence elections at any level.” 

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

Starting in 2006, KENNETH NAKDIMEN, a real estate developer, sought to build and sell real estate in Bloomingburg, New York.  From these real estate development projects, NAKDIMEN and others hoped for and anticipated making hundreds of millions of dollars.  But by late 2013, the first of their real estate developments had met local opposition, and still remained under construction and uninhabitable.  When met with resistance, rather than seek to advance their real estate development project through legitimate means, NAKDIMEN and others instead decided to corrupt the democratic electoral process in Bloomingburg by falsely registering voters and paying bribes for voters who would help elect public officials favorable to their project.

Specifically, in advance of an election in March 2014 for Mayor of Bloomingburg and other local officials, NAKDIMEN and others, and people working on their behalf, developed and worked on a plan to falsely register numerous people who were not entitled to register and vote in Bloomingburg because they actually lived elsewhere.  Those people included some who never intended to live in Bloomingburg, some who had never kept a home in Bloomingburg, and indeed, some who had never set foot in Bloomingburg in their lives.  NAKDIMEN and others took steps to cover up their scheme to register voters who did not actually live in Bloomingburg by, among other things, creating and back-dating false leases and placing items like toothbrushes and toothpaste in unoccupied apartments to make it seem as if the falsely registered voters lived there.

NAKDIMEN and others also bribed potential voters by offering payments, subsidies, and other items of value to get non-residents of Bloomingburg to register unlawfully and vote there. 

*                      *                     *

NAKDIMEN, 64, of Monsey, New York, pled guilty to one count of conspiracy to corrupt the electoral process, which carries a maximum sentence of five 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.

NAKDIMEN’s sentencing is scheduled for September 9, 2017.      

Mr. Kim praised the outstanding investigative work of the FBI-Hudson Valley White Collar Crime Task Force, the Sullivan County District Attorney’s Office, the Sullivan County Sherriff’s Office, the Orange County Sheriff’s Office, the Orange County District Attorney’s Office, the Internal Revenue Service, and the United States Postal Inspection Service.  Mr. Kim also thanked the Department of Justice’s Public Integrity Section, Election Crimes Branch, for its assistance in the case.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorneys Kathryn Martin, Benjamin Allee, and Perry Carbone are in charge of the prosecution.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector in Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced the arrest of VITALY BORKER, the operator of “OpticsFast.com,” an online retailer of purported designer eyewear.  BORKER was arrested pursuant to a complaint charging him with mail and wire fraud in connection with a scheme to defraud unsuspecting customers by misrepresenting the authenticity and condition of eyeglasses sold through the website, and to harass customers who complained or attempted to return their purchases.  BORKER was arrested this morning and will be presented later today before the Honorable Ronald L. Ellis.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, Vitaly Borker ran his eyewear business, OpticsFast.com, as an online platform for fraud, selling defective and counterfeit merchandise. And as alleged, when his customers rightfully complained or tried to get their money back, Borker harassed and abused them. Borker’s shameless brand of alleged abuse cannot be tolerated, and we are committed to protecting consumers from becoming victims of such criminal behavior. We thank our partners at the U.S. Postal Inspection Service for their shared commitment to this mission.”

USPIS Inspector in Charge Philip R. Bartlett said: “As the adage goes, what goes around comes around - Mr. Borker took this to the extreme when he allegedly devised his fraud scheme to cheat consumers attempting to purchase eyewear.  His cool shades couldn’t shield him from the bright light of law enforcement who illuminated his alleged illicit scheme.  He should have realized he could never outwit Postal Inspectors.”

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

BORKER operates the eyewear website “OpticsFast.com” that purported to sell “brand new and 100% authentic” luxury eyewear, and that advertised itself as “the planet’s biggest online website for designer discount sunglasses and eyeglasses.”  But customers of OpticsFast.com frequently received damaged and counterfeit items, were refused refunds, charged unauthorized restocking fees, or never sent eyewear for which they had been charged.  When those customers tried to return merchandise, BORKER, using an alias, subjected them to a campaign of abusive emails and text messages.  BORKER also insulted customers, called them names, and threatened to refer disputed sales to debt collectors.

*          *          *

BORKER, 41, of Brooklyn, New York, is charged with mail fraud and wire fraud, each of 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.

Acting U.S. Attorney Kim praised the efforts of the USPIS in this case.  He added that the investigation is ongoing.

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Nicolas Landsman-Roos and Danielle R. Sassoon 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.

 

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[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, and Timothy Gallagher, the Special Agent-in-Charge of the Newark Field Office of the Federal Bureau of Investigation (“FBI”), announced charges against four defendants for their participation in a brutal kidnapping conspiracy, in which a victim was forcibly abducted at gunpoint in Georgia, stabbed, shot at, held hostage, and then driven north from Georgia toward the Bronx, New York. The victim was finally rescued by law enforcement authorities at the New York/New Jersey border.

 

Acting Manhattan U.S. Attorney Joon H. Kim said: “The defendants allegedly committed a brutal kidnapping – seizing their victim at gunpoint, shooting at him, stabbing him, and then driving him from Georgia, headed for the Bronx. Thankfully, the victim was rescued, and the defendants apprehended. I want to thank our partners at the FBI for their tremendous work in this investigation and commitment to confronting violent crime.”

 

FBI SAC Timothy Gallagher said: “Combating violent crime is, and will always remain, a priority of the FBI. These charges reinforce that commitment, and send a message to individuals who engage in violent acts, that the FBI and our law enforcement partners will pursue them with the full force of the law.”

 

The Indictment[1], which was filed yesterday, charges ISMAEL CASTREJON-GUIZAR, a/k/a “Guero,” EDGARDO NAVAREZ, a/k/a “Edgar,” DULCE SANTOS-VALENZUELA, and RICARDO OCASIO-REYES, a/k/a “Ricky,” in two counts, with participating in a conspiracy to kidnap the victim in or about December 2016, and with the use and possession of firearms, which were brandished and discharged, during and in relation to that kidnapping conspiracy. se charges carry maximum statutory penalties of life in prison.

 

The defendants were all previously arrested by state authorities, and have been detained. They will each be brought into federal custody on writs. The case is assigned to U.S. District Judge Lewis A. Kaplan.

 

Mr. Kim thanked the FBI’s Violent Crimes Task Force, and also thanked the Port Authority Police Department, the Bergen County Prosecutor’s Office, and the Chamblee Police Department for their excellent work in apprehending the defendants.

 

The prosecution is being handled by the Office’s Violent and Organized Crime Unit. Assistant U.S. Attorney Justina L. Geraci is 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.

 

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[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 NICHOLAS MITSAKOS pled guilty in Manhattan federal court today to conspiring to commit securities and wire fraud.  MITSAKOS’s plea stems from his participation in a scheme to defraud investors through his operation of a purported hedge fund called Matrix Capital.  MITSAKOS solicited investments in his fund by overstating its past performance and its assets under management, when, in fact, Matrix Capital had never actually purchased or held any securities during the vast majority of its existence.  Moreover, once he actually received investments based on these false statements, MITSAKOS misappropriated significant amounts of the money to pay his own personal expenses. 

MITSAKOS was arrested on August 11, 2016, and pled guilty today before the Honorable Denny Chin, who was sitting by designation as a United States District Judge. 

Acting U.S. Attorney Joon H. Kim said:  “As he admitted in pleading guilty today, Nicholas Mitsakos purported to operate a successful hedge fund, but in reality, it was a sham from the outset. He touted his track record when in fact he had no trading history whatsoever. In the course of his fraud, he took hundreds of thousands of dollars from a single investor, and spent it on personal expenses. Mitsakos now stands a convicted felon and awaits sentencing for his crime.”

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

In or about October 2013, MITSAKOS created a purported hedge fund called Matrix Capital (“Matrix”).  Matrix purported to be a “long-short” fund that invested in undervalued securities and sold overvalued securities short with a long track record of success.  In order to raise money for his fund, MITSAKOS and others sent marketing materials and newsletters to numerous potential investors.  Certain of these materials claimed that Matrix had achieved returns exceeding major indices like the S&P 500, including, in one newsletter, purported gains of approximately 25% in 2012, 66% in 2013, 20% in 2014, and 49% between January and October of 2015.  MITSAKOS also led potential investors to believe that these returns were based on actual securities trades by Matrix, and that Matrix had millions in assets under management (“AUM”). 

MITSAKOS’s representations regarding Matrix’s performance and AUM were false.  In fact, Matrix had no track record in actually purchasing and selling securities, and, indeed, had no meaningful assets until receiving funds from a victim in September 2015.  Instead, the purported performance results provided to potential investors were premised on how a hypothetical portfolio would have performed had Matrix actually acquired certain securities.  No such trading actually took place and Matrix never actually owned any of the securities in the hypothetical portfolio that MITSAKOS maintained.  Even in regard to Matrix’s hypothetical investment portfolio, MITSAKOS retroactively manipulated the investments in that portfolio from time to time in order to improve dramatically its hypothetical performance. 

Based in part on MITSAKOS’s misrepresentations, Matrix received approximately $2 million from an investor in September 2015.  MITSAKOS, however, used only a portion of that amount – about $1.2 million – to actually buy and sell securities.  Of the remaining amount, MITSAKOS spent hundreds of thousands of dollars on business expenses and personal expenses like car payments, credit cards, and rent.  MITSAKOS’s trading of the $1.2 million that he did invest, moreover, resulted in significant losses.

* * *

MITSAKOS, 57, pled guilty to one count of conspiring to commit securities and wire fraud. This charge carries a maximum term of five 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 exceptional work of the Office’s criminal investigators, 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 Robert Allen and Brendan Quigley are in charge of the prosecution.

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”), and Elton Malone, Special Agent in Charge, Special Investigations Branch, U.S. Department of Health and Human Services, Office of Inspector General (“HHS-OIG”), announced today the arrests of DAVID BLASZCZAK, a political intelligence consultant, and CHRISTOPHER WORRALL, a government employee at the Centers for Medicare and Medicaid Services (“CMS”).  THEODORE HUBER and ROBERT OLAN, two partners and analysts at a healthcare-focused hedge fund in New York, New York (“Investment Adviser-A”), were also arrested. 

BLASZCZAK, WORRALL, HUBER, and OLAN were charged with participating in a scheme, from in or about 2012 through in or about 2014, to convert United States property, to defraud the United States, and to commit securities fraud and wire fraud for obtaining material nonpublic information from CMS and using it to execute profitable trades at Investment Adviser-A.  In addition, Mr. Kim announced today the unsealing of charges against JORDAN FOGEL, a former partner and analyst at Investment Adviser-A, who pled guilty and is cooperating with the Government.

As part of the scheme, BLASZCZAK is charged with obtaining confidential and nonpublic information from CMS employees, including his friend, CHRISTOPHER WORRALL, who worked at CMS, and who is charged with breaching his duties as a CMS employee by providing confidential information to BLASZCZAK.  BLASZCZAK then is alleged to have provided this material nonpublic information in advance of market-moving CMS announcements to employees at Investment Adviser-A, including HUBER, OLAN, and FOGEL, who allegedly recommended trades on the basis of the information.  As a result of these trades, Investment Adviser-A reaped more than $3,500,000 in profits.

BLASZCZAK is also charged in a separate scheme for obtaining confidential and nonpublic CMS information about cuts in CMS’s reimbursement rates for home health providers, and for providing that information to Christopher Plaford, a portfolio manager at a different healthcare-focused hedge fund in New York, New York (“Investment Advisor-B”).    Plaford then used BLASZCZAK’s information to execute profitable trades.  Plaford has previously pled guilty to this conduct and is also cooperating with the Government. 

HUBER and OLAN will be presented later today before United States District Magistrate Judge Ronald L. Ellis.  BLASZCZAK will be presented later today in the District of South Carolina.  WORRALL will be presented later today in the District of Maryland.   BLASZCAK, WORRALL, HUBER, OLAN, and FOGEL’s cases are assigned to United States District Judge Denise Cote.

In separate actions, the Securities and Exchange Commission (“SEC”) filed civil charges against BLASZCZAK, WORRALL, HUBER, and FOGEL.

Acting U.S. Attorney Joon H. Kim said:  “The five defendants – three with a hedge fund, one political intelligence consultant, and one government CMS employee – allegedly participated in an insider trading scheme to get highly sensitive and confidential information from CMS and feed it to a hedge fund to make illegal profits. David Blaszczak, the consultant, obtained stolen government information from his former CMS colleague and funneled it to his hedge fund clients Theodore Huber, Robert Olan, and Jordan Fogel. Armed with this highly valuable, secret government information, Huber, Olan, and Fogel made trades that allegedly netted the fund over $3.5 million in illegal profits. Just like trading on material nonpublic corporate information can be a federal crime, so can trading based on secret government information, as alleged to have happened here. We remain as committed and vigilant as ever in protecting the integrity of the securities markets and our government institutions.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Inside information should remain harbored with those who are trusted to protect it until such a time it becomes available to the public.  Employees, especially government employees, who have access to this information should honor this code of ethics at all times; not just because it’s the right thing to do, but because it’s the lawful thing to do.  Likewise, when individuals outside an organization receive information they know they shouldn’t have, they too have an obligation not to use this to their personal advantage. As alleged, those charged today didn’t abide by these rules, and they are now called upon to stand up and face the charges for what went down.”

HHS-OIG Special Agent in Charge Elton Malone said:  “HHS-OIG Special Agent in Charge Elton Malone said:  “Profiting based on sensitive, insider information is illegal and taints the image of thousands of hard working federal government employees.  We continue to hold federal government employees accountable and to the highest standards of conduct and integrity.”

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

CMS

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

WORRALL began working at CMS in or about 1999.  Beginning in January 2012, WORRALL worked in the Director’s Office for the Center for Medicare (“CM”), which gave WORRALL broad access to CMS’s confidential deliberations about upcoming reimbursement decisions.  WORRALL also served as a project manager for a confidential CMS database that contained CMS’s most up-to-date claims data that CMS used to inform its decision-making.  As an employee of the executive branch of the United States Government, WORRALL was prohibited from sharing CMS’s confidential information with people outside CMS, and WORRALL was subject to Section 21A(h) of the Securities Exchange Act (added by the STOCK Act), which provides, in relevant part, that “each executive branch employee . . . owes a duty arising from a relationship of trust and confidence to the United States Government and the citizens of the United States with respect to material, nonpublic information derived from such person’s position.” 

David Blaszczak

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

As a former CMS employee, BLASZCZAK was well aware of CMS’s rules governing the dissemination of nonpublic information.  BLASZCZAK also received training on the STOCK Act.         

Investment Adviser-A

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

The Scheme to Convert and Use Confidential CMS Information

The Scheme

As alleged in the Indictment, from at least in or about 2012 through in or about 2014, BLASZCZAK, WORRALL, HUBER, OLAN, FOGEL, and others participated in a scheme to convert to their own use confidential and material nonpublic information from CMS concerning, among other things, CMS’s internal deliberations regarding coverage and reimbursement decisions.

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

BLASZCZAK obtained material nonpublic information from his close friend and former CMS colleague WORRALL.  Beginning in at least 2012, WORRALL began tipping BLASZCZAK about impending CMS decisions, for at least two reasons.  First, BLASZCZAK and WORRALL were friends since their time working together at CMS.  BLASZCZAK also frequently offered to help WORRALL find lucrative private sector employment opportunities, in exchange for WORRALL giving BLASZCZAK confidential government information.  

BLASZCZAK conveyed the information obtained from WORRAL to HUBER, OLAN, and FOGEL, who – knowing that BLASZCZAK had obtained the information improperly from a CMS insider – used the information to trade.  In exchange for being provided with this inside information, HUBER, OLAN, and FOGEL caused Investment Adviser-A to pay BLASZCZAK more than $263,000 in consulting fees.

July 6, 2012 Proposed Radiation Oncology Rule

For example, in or around May 2012, BLASZCZAK improperly obtained confidential and material nonpublic information about CMS’s planned radiation oncology reimbursement cuts from WORRALL.  BLASZCZAK then provided that information to HUBER, OLAN, and FOGEL, who used the information to cause Investment Adviser-A to make profitable trades in public companies that would be adversely affected by the cuts.  BLASZCZAK continued to provide updates about CMS’s internal radiation oncology deliberations throughout May and June 2012, and Investment Adviser-A continued to trade on the confidential information.  When CMS ultimately announced the cuts in a proposed rule, Investment Adviser-A made approximately $1.85 million in trading profits. 

After these successful trades, Investment Adviser-A discussed whether to pay BLASZCZAK a bonus.  In an email, HUBER wrote, “I think Dave earned his bonus with his work on Rad Onc Q2.  We did pretty well on that and it was really 100% Dave[.]”  OLAN responded, “I agree.”  Investment Adviser-A subsequently paid BLASZCZAK’s firm $47,500, which included a $29,000 discretionary bonus.  That was the highest quarterly bonus Investment Adviser-A paid BLASZCZAK’s firm in 2012.

July 1, 2013, Kidney Dialysis Preliminary Rule

In addition, on or about July 1, 2013, after markets closed, CMS announced in a preliminary rule that it planned to cut the reimbursement rate for various kidney dialysis treatments, services, and drugs (known as the “base rate”) by 12%.  Before this announcement, in around March 2013, WORRALL gave BLASZCZAK two confidential, internal CMS documents related to CMS’s kidney dialysis rule.  One of the documents contained a warning that the slides were “for internal government use only” and that “[u]nauthorized disclosure may result in prosecution to the full extent of the law.” 

On or about June 14, 2013, BLASZCZAK and WORRALL attended a baseball game together.  Four days later, on or about June 18, 2013, BLASZCZAK forwarded FOGEL his kidney dialysis prediction and explained that he was “much higher than others on a cut.”  FOGEL asked, “How high?  4-5%?”  BLASZCZAK replied, “12% total but phased in over 3 years 50/25/25.”  That prediction mirrored CMS’s internal proposal for the proposed kidney dialysis rule, which was confidential.

On or about June 25, 2013, FOGEL checked in with BLASZCZAK on the proposed kidney dialysis rule.  BLASZCZAK reported, “No change in my numbers.  I am pretty confident.”  Minutes later, Investment Adviser-A entered orders to short the stock of a company that would be hurt by such a significant kidney dialysis reimbursement reduction.

After the reimbursement rate of 12% was announced, Investment Adviser-A made more than $865,000 in trading profits.  On or about July 2, 2013, after CMS announced the proposed rule, FOGEL wrote to others at Investment Adviser-A about the kidney dialysis announcement.  FOGEL stated, “Credit to d blazcack [sic] on this one.  Wish we didnt wuss out but will still make a couple million on it.” 

*                      *                      *

On May 19, 2017, JORDAN FOGEL, 33, of Sands Point, New York, pled guilty before Magistrate Judge Gabriel W. Gorenstein to six counts: one count of conspiracy to convert United States property, to commit securities fraud, and to defraud the United States; two counts of conversion of property of the United States; two counts of securities fraud; and one count of conspiracy to commit wire fraud.  Count One carries a maximum sentence of five years in prison.  Counts Two and Three each carry a maximum sentence of 10 years in prison.  Counts Four, Five, and Six each carry a maximum sentence of 20 years in prison. 

On June 9, 2016, Christopher Plaford, 38, of Bedford, New York, pled guilty before United States District Judge Ronnie Abrams to seven counts: one count of conspiracy to commit securities fraud and wire fraud; one count of securities fraud; one count of conspiracy to defraud the United States and to convert United States property; one count of conversion of United States property; one count of conspiracy to convert United States property, to commit securities fraud, and to defraud the United States; one count of securities fraud; and one count of conspiracy to commit wire fraud.  Counts One, Three, and Five each carry a maximum sentence of five years in prison.  Counts Two, Six, and Seven each carry a maximum sentence of 20 years in prison.  Count Four carries a maximum sentence of 10 years in prison.  

A chart identifying the charges and the maximum penalties applicable to BLASZCZAK, WORRALL, HUBER, and OLAN is below.

 

Count

Charge

Defendants

Maximum Penalty

1

Conspiracy to convert property of the United States, to commit securities fraud and to defraud the United States (18 U.S.C. § 371)

All

5 years in prison

2

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

All

25 years in prison

3

Conversion of property of the United States (18 U.S.C. §§ 641 and 2)

All

10 years in prison

4-8

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

All

20 years in prison

9

Wire fraud (18 U.S.C. §§ 1343 & 2)

All

20 years in prison

10

Securities fraud (18 U.S.C. §1348 & 2)

All

25 years in prison

11

Conversion of property of the United States (18 U.S.C. §§ 641 & 2)

David Blaszczak, Christopher Worrall

10 years in prison

12

Wire fraud (18 U.S.C. §§ 1343 & 2)

David Blaszczak, Christopher Worrall

20 years in prison

13

Conversion of property of the United States (18 U.S.C. §§ 641 & 2)

David Blaszczak, Christopher Worrall

10 years in prison

14

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

David Blaszczak, Christopher Worrall

20 years in prison

15

Wire Fraud (18 U.S.C. §§ 1343 & 2)

David Blaszczak, Christopher Worrall

20 years in prison

16

Securities fraud (18 U.S.C. §1348 & 2)

David Blaszczak, Christopher Worrall

25 years in prison

17

Conspiracy to defraud the United States and to convert property of the United States (18 U.S.C. § 371)

David Blaszczak

5 years in prison

18

Conversion of property of the United States (18 U.S.C. §§ 641 & 2)

David Blaszczak

10 years in prison

 

Defendants’ Ages and Residences

 

Defendant

Residence

Age

Theodore Huber

Westport, Connecticut

55

Robert Olan

Rumson, New Jersey

46

David Blaszczak

Isle of Palms, South Carolina

41

Christopher Worrall

Linthicum Heights, Maryland

39

 

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 work of the FBI and HHS-OIG, and thanked the SEC for its assistance. 

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

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

 

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[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, and Mark G. Peters, Commissioner of the New York City Department of Investigation (“DOI”), announced today the arrest of DEREK BROOMES, the former president and chief executive officer of a nonprofit housing organization based in Harlem, New York (the “Housing Nonprofit”). BROOMES is charged with fraud, embezzlement, and misappropriating more than $800,000 from a federally funded program intended to provide housing to low-income individuals living with HIV and AIDS. BROOMES was arrested this morning in the Bronx, New York, and is scheduled to appear before U.S. Magistrate Judge Ronald L. Ellis in Manhattan federal court later today.

 

Acting U.S. Attorney Joon H. Kim said: “As alleged, Derek Broomes, the former president and CEO of a non-profit organization, abused his position to divert more than $800,000 in public funds designed to assist low-income citizens living with HIV/AIDS. By his scheme to enrich himself at the expense of the non-profit, Broomes allegedly jeopardized housing for dozens of vulnerable tenants. I thank our partner at the Department of Investigation for their work in rooting out fraud and corruption in New York City.”

 

Commissioner Mark G. Peters said: “This defendant saw more value in purchasing luxury items than in putting a roof over the heads of his clients, according to the charges. He not only defrauded the organization and the City out of hundreds of thousands of dollars, but callously stole precious resources allocated to pay the rent of some of the City’s neediest New Yorkers. DOI thanks the Office of the United States Attorney for the Southern District of New York for their partnership on this case.”

 

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

 

The Housing Nonprofit is a faith-based, nonprofit organization located in New York, New York, that develops and provides low-income housing in Harlem to a variety of constituencies. In approximately 2002, DEREK BROOMES, the defendant, became the chief financial officer of the Housing Nonprofit and, in approximately 2011, became its president and CEO. Prior to joining the Housing Nonprofit, BROOMES worked as a Deputy Commissioner at the New York City Human Resources Administration (“HRA”) and, for three years at DOI in various capacities, including as an investigator and Deputy Inspector General.

 

Since at least 1999, the Housing Nonprofit has participated in the federally funded Scattered Site Housing Program (“SSHP” or the “Program”), through which the Housing Nonprofit receives federal funds that it uses to subsidize rents for low-income individuals who are living with HIV and/or AIDS. According to Program rules, SSHP funds are to be maintained in a segregated account and used exclusively for Program costs, including rental payments for residents covered by the Program. In fiscal year 2014, which ran from July 2013 through June 2014, the Housing Nonprofit received approximately $1,590,845.67 in SSHP funds. In fiscal year 2015, which ran from July 2014 through June 2015, the Housing Nonprofit received approximately $1,552,378.01 in SSHP funds from the City.

 

Beginning in at least 2013, BROOMES abused his position as president and CEO of the Housing Nonprofit to steal hundreds of thousands of dollars in funds from his employer by charging personal and unauthorized expenses to a corporate credit card issued in his name (the “Corporate Credit Card”). Using the Corporate Credit Card, BROOMES routinely paid for personal auto repairs, medical bills, electronics, clothing, and gifts. None of these charges were authorized by the Housing Nonprofit, which ultimately was required to pay the monthly bills on the Corporate Credit Card. In total, between approximately March 2013, when the Corporate Credit Card was issued, and March 2015, when it was cancelled, BROOMES charged $394,145.65 to the Corporate Credit Card. Of that, an analysis conducted by the Housing Nonprofit determined that at least $243,907.35 in charges were either personal or otherwise unauthorized.

 

To cover those expenditures and other operating expenses at the Housing Nonprofit, BROOMES misappropriated more than $800,000 in federal funds that were provided through the SSHP. Specifically, BROOMES diverted the SSHP funds, which were intended to be used to cover rent payments for residents covered by the Program, to the Housing Nonprofit’s operating account, where they were used to pay for unauthorized expenses, including the monthly Corporate Credit Card bills. For example, in July 2014, the Housing Nonprofit received a $284,000 advance from the SSHP intended to be used exclusively to cover Program expenses. Instead, that same day, BROOMES directed the transfer of approximately $200,000 of that advance into HCCI’s operating account, where it was used to pay various unauthorized expenses, including $64,875.29 in payments to the credit card company that issued the Corporate Credit Card.

 

As a result of BROOMES’s diversion of SSHP funds, the Housing Nonprofit was often unable to make rent payments for SSHP apartments on a timely basis. Instead, rent checks were written by the Housing Nonprofit and signed by BROOMES along with a member of the Housing Nonprofit’s Board, but then stored in a filing cabinet and held for several months prior to being mailed to landlords. As the Housing Nonprofit fell increasingly behind on its rent obligations due to a lack of sufficient SSHP funds in its accounts, tenants it sponsored in the SSHP began to receive threats of eviction by landlords who were owed months’ worth of back rent by the Housing Nonprofit. In a January 2, 2015, email to BROOMES, another Housing Nonprofit employee reported: “Attached, are some of the outstanding rent arrears for SSHP. Rental payment is a priority for our program. Consumers have been receiving 3 Day [Eviction] Notices and are very concerned of their housing status.”

 

Moreover, and despite the fact that the Housing Nonprofit was using SSHP funds for unauthorized purposes and thus not making rental payments for the SSHP units, in order to perpetuate his scheme and avoid detection, BROOMES submitted, and caused others to submit, false and fraudulent reimbursement requests to HRA, which administers the SSHP, in which BROOMES and others acting at his direction certified that the Housing Nonprofit had paid rent on the SSHP units. In truth and in fact, the Housing Nonprofit had not made those payments. BROOMES personally signed paperwork submitted to HRA as a part of the Housing Nonprofit’s monthly certifications and reimbursement requests on May 8, 2013, and July 19, 2013, and directed others to sign monthly certifications and related paperwork throughout the duration of the charged scheme.

 

* * *

 

BROOMES, 71, of New York, New York, is charged in a complaint with one count of wire fraud and one count of embezzlement from a federally funded program, each of which carries a maximum penalty of 20 years in prison.

 

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

 

Acting U.S. Attorney Kim praised the work of DOI and the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York.

 

The case is being prosecuted by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Edward B. Diskant and Alison G. Moe 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.

 

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[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, and Philip R. Bartlett, Inspector in Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced the unsealing of an Indictment yesterday charging JOHN C. GALLAGHER JR., former Director of Environmental Services of the City School District of New Rochelle (the “School District”), with bribery. The charge arises from an alleged corruption scheme in which GALLAGHER solicited and accepted kickbacks from an outside contractor for the School District in the amount of 10 percent of the funds paid to the contractor’s company by the School District. Mr. Kim also announced the guilty plea of MAURO ZONZINI, a former contractor for the School District, to bribery and tax evasion, charged in a separate Information unsealed yesterday.

 

Acting U.S. Attorney Joon H. Kim said: “A school district official should be doing what is best for our children and their education. Instead, as alleged, John Gallagher demanded and received more than $150,000 in kickbacks and bribes from a contractor for the school district. We are committed to finding and rooting out corruption wherever it lurks, including, in our public schools, and we thank our partners at the U.S. Postal Inspection Service for their work in this shared mission.”

 

USPIS Inspector in Charge Philip R. Bartlett said: “Mr. Gallagher and Mr. Zonzini were in positions of trust and therefore had a responsibility to act in the best interest of their employer and client. Unfortunately they allegedly allowed their judgment to be clouded by money. Postal Inspectors and their law enforcement partners will not tolerate the use of US Mail to facilitate alleged kickback and tax evasion schemes.”

 

As alleged in an Indictment and an Information unsealed yesterday in White Plains federal court[1]:

 

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 ten 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 was arrested yesterday and was presented in the federal court in Harrisburg, Pennsylvania. He will be arraigned on the Indictment in the United States Courthouse in White Plains at 11:00 a.m. today, before United States Magistrate Judge Paul E. Davison.

GALLAGHER, 53, of Harrisburg, Pennsylvania, is charged with one count of bribery, which carries a maximum sentence of 10 years in prison.

ZONZINI, 52, of South Carolina, pled guilty to two counts: (1) bribery of a public official, which carries a maximum sentence of 10 years in prison, and (2) tax evasion, which carries a maximum sentence of five years in prison. The defendant will be sentenced at a future date.

The statutory maximum penalties are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants would be determined by the judge. The case is assigned to United States District 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.

 

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Carl J. Kotowski, the Special Agent in Charge of the New Jersey Division of the Drug Enforcement Administration (“DEA”), announced today the unsealing of an Indictment charging six defendants with operating a national drug trafficking organization that distributed synthetic cannabinoids. In conjunction with the unsealing of the Indictment, search warrants were executed at locations in Illinois, Indiana, Kentucky, Missouri, and Wisconsin.

 

HIKMAT HAMED, a/k/a “Abu Amjad,” was arrested by DEA agents this morning and will be presented today before U.S. Magistrate Judge David D. Noce in St. Louis, Missouri.

 

MOHAMMAD ABDELELAH AL BARBARAWI, a/k/a “Abu Yazan,” and HATEM K. EL HAJ, a/k/a “Tug Tug,” were arrested by DEA agents this morning and will be presented today before U.S. Magistrate Judge Jeffrey Cole in Chicago, Illinois.

 

NEHAD THAHER, a/k/a “Nick,” SHADI SHUAIBI, and MAYTHEM AL ABOUDI were arrested by DEA agents this morning and will be presented today before U.S. Magistrate Judge Colin H. Lindsay in Louisville, Kentucky.

 

Acting Manhattan U.S. Attorney Joon H. Kim said: “Trafficking of synthetic cannabinoids – sometimes called K2 or Spice – is on the rise and posing a serious threat to public health and safety. Packaged attractively to appeal to teenagers and young adults, synthetic cannabinoids are in reality a toxic cocktail that can be very dangerous to consume. As alleged, thanks to our partners at the DEA, a sprawling operation of alleged traffickers has been dismantled.”

 

DEA Special Agent in Charge Carl J. Kotowski said: “This multi-jurisdictional investigation puts an end to this alleged drug trafficking organization. This is just another example of an organization allegedly more concerned about making a profit selling their poison than they are about the safety of the public.”

 

According to the allegations in the Indictment unsealed today in Manhattan federal

court[1]:

Between October 2016 and May 2017, HIKMAT HAMED, a/k/a “Abu Amjad,” MOHAMMAD ABDELELAH AL BARBARAWI, a/k/a “Abu Yazan,” NEHAD THAHER, a/k/a “Nick,” SHADI SHUAIBI, HATEM K. EL HAJ, a/k/a “Tug Tug,” and MAYTHEM AL ABOUDI participated in a conspiracy to distribute and possess with the intent to distribute leaves treated with 5F-MDMB-PINACA and FUB-AMB, each of which is an analogue of a schedule I controlled substance. Many of the synthetic cannabinoids the defendants distributed were packaged in packets that contained inaccurate descriptions of their contents and were misleadingly labeled as “Potpourri Product,” “NOT FOR HUMAN CONSUMPTION,” and “complies with all federal and state legislation.”

 

* * *

 

Each of the defendants is charged with one count of conspiracy to distribute and possess with the intent to distribute controlled substance analogues, which carries a maximum sentence of 20 years in prison; and one count of conspiracy to introduce misbranded drugs into interstate commerce with the intent to defraud and mislead, which carries a maximum sentence of five years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge. The case is assigned to U.S. District Judge Katherine Polk Failla.

Mr. Kim praised the investigative work of the DEA Newark’s Tactical Diversion Squad. Mr. Kim also thanked the United States Postal Inspection Service, the Indiana State Police, the Louisville Metropolitan Police Department, the West Virginia State Police, as well as the United States Attorney’s Offices for the Northern District of Illinois, the Northern District of Indiana, the Southern District of Indiana, the Eastern District of Kentucky, the Eastern District of Missouri, the District of New Jersey, and the Eastern District of Wisconsin for their assistance in this investigation. He added that the investigation is continuing.

This case is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Andrew K. Chan, Benet J. Kearney, and Michael D. Neff 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.

 

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ROCKWELL GAJWANI pled guilty today to one count of wire fraud and three counts of tax evasion in connection with embezzling over $1.6 million from the Manhattan-based real estate investment company for which he had served as chief executive officer and president. As part of his plea, GAJWANI agreed to pay $1,975,068.04 in restitution and $1,612,841 in forfeiture. GAJWANI pled guilty before United States District Judge Loretta A. Preska.

Acting U.S. Attorney Joon H. Kim said: “As he admitted today, for years Rockwell Gajwani siphoned money from his employer’s accounts, lining his own pockets with more than $1.6 million. Instead of working diligently as his company’s CEO, Gajwani put his efforts into concealing his crimes and hiding his ill-gotten gains from the IRS. Thanks to the dedicated work of the Postal Inspection Service and the IRS, Gajwani will now be held to account for his crimes.”

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

From October 2011 through March 2013, GAJWANI was the chief executive officer and president of a real estate investment company based in Manhattan (the “Manhattan Real Estate Company”). During this period, GAJWANI took more than $1.6 million in company funds to which he was not entitled by, among other means, making wire transfers from the company’s bank account to his personal bank account, writing company checks to himself, and making cash withdrawals from the company’s bank account.

 

To accomplish this scheme, among other means, GAJWANI took steps to conceal his true salary and to conceal from the Manhattan Real Estate Company’s parent company (the “Parent Company”) the amount of money he had taken from the Manhattan Real Estate Company’s bank account.

 

Beginning in late 2012, the director of accounting for the Manhattan Real Estate Company (the “Director of Accounting”) asked GAJWANI for details regarding GAJWANI’s compensation on more than one occasion, and GAJWANI repeatedly said he would get such details to her, but failed to do so. On another occasion, in connection with a request from the Parent Company for financial information, GAJWANI told the Director of Accounting not to provide that information to the Parent Company. To further conceal the funds he had taken from the Manhattan Real Estate Company, GAJWANI directed employees of the Manhattan Real Estate Company to lump the compensation of all employees together in accounting materials provided to the Parent Company, so that GAJWANI’s compensation would not be listed separately from the aggregate figure. GAJWANI also directed certain employees of the Manhattan Real Estate Company not to communicate with employees of the Parent Company.

 

Over the course of his employment, GAJWANI wrote himself over $940,000 in checks from the Manhattan Real Estate Company’s bank account, and wired over $1.7 million to his personal bank account. Although some of these funds were purportedly for expenses, by the end of his employment GAJWANI had taken over $1.6 million more from the Manhattan Real Estate Company’s bank account than he was entitled to under his employment agreement.

 

GAJWANI also concealed his fraud on the Manhattan Real Estate Company. Specifically, on two occasions in May 2012, wrote checks to an employee of the Manhattan Real Estate Company (“Employee-2”) from the company’s bank account. wrote “expenses” in the memo line of each check, although neither check was meant to pay company expenses, and instructed Employee-2 to write a check in return directly to GAJWANI himself. Employee-2 did so on both occasions. In this manner, was able to secure over $30,000 in payments that GAJWANI appeared to receive from Employee-2 but in reality were funds GAJWANI had taken from the Manhattan Real Estate Company.

 

In addition to defrauding the Manhattan Real Estate Company, GAJWANI did not file tax returns or pay taxes for his legitimate salary or for the money he had secured through fraud. Ultimately, in July 2015, after he learned of a criminal investigation, GAJWANI filed tax returns for calendar years 2011, 2012, and 2013. Each of those returns included false representations. For tax year 2011, the federal income tax return that GAJWANI filed understated GAJWANI’s actual income by more than $480,000, and included over $85,000 in false, impermissible tax deductions. For tax year 2012, the federal income tax return that GAJWANI filed included over $260,000 in false, impermissible tax deductions. For tax year 2013, the federal income tax return that GAJWANI filed underreported GAJWANI’s actual income by $270,000.

 

* * *

 

GAJWANI, 53, of Darien, Connecticut, pled guilty to one count of wire fraud, which carries a maximum sentence of 20 years in prison, and three counts of tax evasion, each of 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. As part of his plea, GAJWANI agreed to pay $1,975,068.04 in restitution and $1,612,841.04 in forfeiture.

 

GAJWANI is scheduled to be sentenced by Judge Preska on September 12, 2017, at 4:00 p.m.

 

Mr. Kim praised the outstanding investigative efforts of law enforcement personnel at U.S. Postal Inspection Service and the Internal Revenue Service, Criminal Investigation Division.

 

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Jonathan Cohen and Andrew D. Beaty are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), announced the arrest and unsealing of a complaint charging ROBERT WALTER MURRAY with securities and wire fraud in connection with a scheme to manipulate the public market for the stock of Fitbit, Inc. (“Fitbit”) by filing a sham tender offer with the Securities and Exchange Commission (“SEC”). The sham tender offer reported a fictitious bid to purchase all outstanding Fitbit stock at a significant premium to the then-existing market price, resulting in a temporary but significant increase in the price of Fitbit stock on the NASDAQ stock exchange. Given the number of shares outstanding, the sham tender offer resulted in a manipulation of the market by over $100 million. MURRAY was arrested in Virginia and will be presented in the federal court in Manhattan today.

In a separate action, the SEC filed civil charges against MURRAY.

Acting U.S. Attorney Joon H. Kim said: “As alleged, Robert Walter Murray created a fake tender offer for Fitbit to drive up its share price and then illegally profit from his manipulation of the market. After profiting at the expense of the public, Murray allegedly took elaborate steps to hide that he was behind the fraud. Our Office remains committed to ensuring that the securities markets are fair and free from manipulation. And we thank our partners at the U.S. Postal Inspection Service, as well as the SEC, who as committed to this mission as we are.”

USPIS Inspector-in-Charge Philip R. Bartlett said: “Mr. Murray was clever, but not as much as the Fitbit brand he allegedly used when he set out to devise his stock manipulation scheme. In an effort to ‘get rich’ quick fraudsters believe they can game the system, but this arrest proves that no matter how much thought goes into a devious scheme, you can never outsmart law enforcement.”

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

On or about November 8, 2016, MURRAY, purporting to be an officer at a China-based entity called ABM Capital, filed forms with the SEC requesting access to the SEC’s Electronic Data Gathering, Analysis, and Retrieval (or “EDGAR”) system. The following day, on or about November 9, 2016, MURRAY submitted a filing on EDGAR that reported that ABM Capital had offered to purchase Fitbit for approximately $12.50 a share, a significant premium to the price of Fitbit stock at the time. Fitbit’s stock jumped when this filing was made public on EDGAR the following day: while Fitbit’s stock closed at approximately $8.55 a share on November 9, 2016, it reached a high of approximately $9.27 per share, with significantly increased trading volume, after the tender offer filing was made public. Fitbit, however, had not actually received a tender offer from ABM Capital, and MURRAY’s filing was entirely fictitious.

Moreover, MURRAY took significant steps to hide his connection to the tender offer filing. MURRAY used a different name, purporting to be an officer at ABM Capital. And he created a separate email account to register with the SEC and file the sham tender offer, taking care to disguise his actual IP address when accessing it. While logged into that email account, MURRAY visited websites explaining how to use the SEC’s EDGAR system and conducted internet searches for similar market-manipulation schemes. Indeed, just days before filing his own sham tender offer with the SEC, MURRAY accessed a Bloomberg article that detailed a similar fraudulent tender offer for stock in Avon Products, Inc. – conduct that led to charges being filed in this District in United States v. Nedko Nedev, 16 Cr. 093.

In order to profit from his scheme, MURRAY bought call options for Fitbit stock on or about November 9, 2016. When the sham tender offer become public the following day, MURRAY sold his options for a profit. The options that MURRAY purchased had strike prices near or above the market price of Fitbit stock when they were purchased, and had expiration dates of November 11, 2016, meaning that they were set to expire the day after MURRAY filed his sham tender offer.

* * *

MURRAY is charged with one count of securities fraud and one count of wire fraud. Each of these charges carries a maximum term 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 defendant will be determined by the judge.

Mr. Kim praised the exceptional work of the Office’s criminal investigators, and thanked the USPIS, the Securities and Exchange Commission, and the SEC office of Inspector General 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.

 

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[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 a federal jury today found former Ramapo Town Supervisor Christopher St. Lawrence guilty of 20 counts of conspiracy, securities fraud, and wire fraud in connection with municipal bonds issued by the Town of Ramapo (the “Town”) and the Ramapo Local Development Corporation (“RLDC”).  St. Lawrence was acquitted of one count of securities fraud and one count of wire fraud.  Today's verdict, which came after a four-week trial in federal court in White Plains, marks the first conviction for securities fraud in connection with municipal bonds.

Acting U.S. Attorney Kim said:  “As the jury found today after trial, Christopher St. Lawrence lied repeatedly to the investing public about the state of Ramapo’s finances. The integrity of the $3.7 trillion municipal bond market is of critical importance to both investors and municipalities that rely on this market. The verdict today in a case of public corruption meets securities fraud, stands as a victory for both honest government and fair financial markets.”

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

As of August 2015, the Town had more than $128 million in outstanding bonds that had been issued for various municipal purposes, while the RLDC, a corporation created and owned by the Town under state law, had issued $25 million in bonds to pay for the construction of Provident Bank Park, a minor league baseball stadium in Ramapo.

While the fraud predated the construction of the stadium, the Town's financial problems were caused largely by the $58 million total cost of the stadium.  The Town paid more than half of that cost, despite the rejection of the Town's guarantee of bonds to pay for construction of the stadium in a Town-wide referendum in 2010 and St. Lawrence’s public statements that no public money would be used to pay for the stadium.

The Indictment charged that St. Lawrence lied to investors in the Town’s and RLDC’s bonds in order to conceal the deteriorating state of the Town’s finances and the inability of the RLDC to make scheduled payments of principal and interest to holders of its bonds from its own money.  St. Lawrence lied to investors primarily by making up false assets in the Town’s General Fund. 

The General Fund is the Town’s primary operating fund.  The accumulated difference over time between how much money the Town receives in taxes and fees and how much it spends in a year is the fund’s balance.  The fund balance is a cushion that can be spent during difficult financial times.  The size of the fund balance relative to the amount of the fund’s revenue and trends in a town’s General Fund balance over time are the primary indicators of the town’s financial health. 

According to the Indictment and the evidence, St. Lawrence lied to the RLDC’s bond rating service in January 2013 when he told them in a telephone call that the 2012 fund balance would remain unchanged from the 2011 balance.  Immediately after that call ended, St. Lawrence told Town employees “to do [an upcoming] refinancing of the short term debt as fast as possible because . . . we’re going to have to all be magicians to get to some of those numbers.”

When the RLDC issued $25 million in bonds to build the stadium building itself in 2011, St. Lawrence inflated the size of the Town’s General Fund by including a false $3.6 million receivable in the General Fund.  The Town’s financial condition was important to investors in the RLDC’s bonds because the Town guaranteed the payments of principal and interest on the bonds.  Without that fake asset, the General Fund’s balance would have negative in that year.

In addition, St. Lawrence inflated the General Fund with another fake receivable for $3.08 million from 2010 through 2015.  It first went on the Town’s books when the RLDC agreed to buy property known as The Hamlets from the Town for $3.08 million.  That sale never closed because the land turned out to be a habitat for rattlesnakes.  Rather than take the receivable off the Town’s books - and reduce the size of the General Fund balance by $3.08 million, thereby pushing it into negative territory - St. Lawrence claimed the receivable had to do with the RLDC’s purchase of another property from the Town, which had already taken place.  To keep it on the books, St. Lawrence then caused the Town Attorney to tell the Town’s auditors over a period of years that the receivable would be paid back within a year, which was required if the receivable was going to stay in the General Fund.  Without this fake receivable alone, the Town’s General Fund balance would have been negative for years. 

In May 2013, the FBI searched Town Hall in connection with this investigation.  Less than 10 days later, St. Lawrence inflated another receivable in the General Fund - this one for money from the Federal Emergency Management Agency (“FEMA”) to reimburse the Town for expenses from Hurricanes Irene and Sandy.  St. Lawrence claimed that the Town was going to receive $3.145 million from FEMA when the Town hadn’t even submitted those claims to FEMA yet.  Without St. Lawrence’s inflation of this receivable alone, the projected General Fund balance for 2012 would have been negative when the Town sold bonds in May 2013.

Finally, the Indictment alleged and the evidence showed that St. Lawrence told investors in the Town’s and RLDC’s bonds that the RLDC was making the payments on its bonds from its operating revenue meaning money it was making from its ordinary business of running the baseball stadium and selling condominiums at a development it had built.  That was important to investors because it led them to believe that the Town would not have to pay off the RLDC’s $25 million bonds.  It also made the RLDC’s bonds look less risky.  The RLDC actually made those payments from money it borrowed from the bank or money it got from the Town. 

*                *                *

ST. LAWRENCE, 65, of Wesley Hills, New York, was found guilty of 11 counts of wire fraud, each of which carries a maximum sentence of 20 years in prison; eight counts of securities fraud, each of which carries a maximum sentence of 20 years in prison; and one count of conspiracy, 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 a defendant will be determined by the judge.

Mr. Kim praised the investigative work of the FBI and the Rockland County District Attorney's Office.  Mr. Kim also thanked the Securities & Exchange Commission for its substantial assistance in the investigation and trial.

The criminal case is being prosecuted by the Office’s White Plains Division.  Assistant U.S. Attorneys James McMahon, Stephen Ritchin and Daniel Loss are in charge of the prosecution.

Today, Xu Jiaqiang, 31, formerly of Beijing, China, pleaded guilty to economic espionage and theft of a trade secret, in connection with Xu’s theft of proprietary source code from Xu’s former employer, with the intent to benefit the National Health and Family Planning Commission of the People’s Republic of China. Xu pleaded guilty to all six counts with which he was charged.

The announcement was made by Acting Assistant Attorney General for the National Security Dana Boente and Acting U.S. Attorney Joon H. Kim for the Southern District of New York. The pleas were entered before U.S. District Judge Kenneth M. Karas in White Plains, New York federal court. 

“Today, Xu pleaded guilty to stealing trade secrets from his former employer for his own profit and intending to benefit the People’s Republic of China,” said Acting Assistant Attorney General Boente. “The Economic Espionage Act is a key tool in protecting our economic and security interests. The National Security Division will pursue and prosecute any individual who steals intellectual property from American businesses to benefit a foreign government.”

“Xu Jiaqiang admitted and pled guilty today to stealing high tech trade secrets from a U.S. employer, intending to benefit the Chinese government. What Xu did was not only a federal crime, but a threat to our national security and the American spirit of innovation. Our Office is committed to finding, arresting and holding accountable those who take advantage of American businesses by engaging in economic espionage.”

According to the allegations contained in the Complaint and the Superseding Indictment filed against Xu, as well as statements made in related court filings and proceedings:

From November 2010 to May 2014, Xu worked as a developer for a U.S. company (the “Victim Company”). As a developer, Xu enjoyed access to certain proprietary software (the “Proprietary Software”), as well as that software’s underlying source code (the “Proprietary Source Code”). The Proprietary Software is a clustered file system developed and marketed by the Victim Company in the U.S. and other countries. A clustered file system facilitates faster computer performance by coordinating work among multiple servers. The Victim Company took significant precautions to protect the Proprietary Source Code as a trade secret. Among other things, the Proprietary Source Code is stored behind a company firewall and can be accessed only by a small subset of the Victim Company’s employees. Before receiving Proprietary Source Code access, Victim Company employees must first request and receive approval from a Victim Company official. Victim Company employees must also agree in writing at both the outset and the conclusion of their employment that they will maintain the confidentiality of any proprietary information. The Victim Company took these and other precautions in part because the Proprietary Software and the Proprietary Source Code are economically valuable, which value depends in part on the Proprietary Source Code’s secrecy. 

In May 2014, Xu voluntarily resigned from the Victim Company. Xu subsequently communicated with one undercover law enforcement officer (“UC-1”), who posed as a financial investor aiming to start a large-data storage technology company, and another undercover law enforcement officer (“UC-2”), who posed as a project manager, working for UC-1. In these communications, Xu discussed his past experience with the Victim Company and indicated that he had experience with the Proprietary Software and the Proprietary Source Code. On March 6, 2015, Xu sent UC-1 and UC-2 code, which Xu stated was a sample of Xu’s prior work with the Victim Company. A Victim Company employee (“Employee-1”) later confirmed that the code sent by Xu included proprietary Victim Company material that related to the Proprietary Source Code.

Xu subsequently informed UC-2 that Xu was willing to consider providing UC-2’s company with the Proprietary Source Code as a platform for UC-2’s company to facilitate the development of its own data storage system. Xu informed UC-2 that if UC-2 set up several computers as a small network, then Xu would remotely install the Proprietary Software so that UC-1 and UC-2 could test it and confirm its functionality.

In or around early August 2015, the FBI arranged for a computer network to be set up, consistent with Xu’s specifications. Files were then remotely uploaded to the FBI-arranged computer network (the “Xu Upload”). Thereafter, on or about Aug. 26, 2015, Xu and UC-2 confirmed that UC-2 had received the Xu Upload. In September 2015, the FBI made the Xu Upload available to a Victim Company employee who has expertise regarding the Proprietary Software and the Proprietary Source Code (“Employee-2”). Based on Employee-2’s analysis of technical features of the Xu Upload, it appeared to Employee-2 that the Xu Upload contained a functioning copy of the Proprietary Software. It further appeared to Employee-2 that the Xu Upload had been built by someone with access to the Proprietary Source Code who was not working within the Victim Company or otherwise at the Victim Company’s direction.

On Dec. 7, 2015, Xu met with UC-2 at a hotel in White Plains, New York (the “Hotel”).  Xu stated, in sum and substance, that Xu had used the Proprietary Source Code to make software to sell to customers, that Xu knew the Proprietary Source Code to be the product of decades of work on the part of the Victim Company, and that Xu had used the Proprietary Source Code to build a copy of the Proprietary Software, which Xu had uploaded and installed on the UC Network (i.e., the Xu Upload). Xu also indicated that Xu knew the copy of the Proprietary Software that Xu had installed on the UC Network contained information identifying the Proprietary Software as the Victim Company’s property, which could reveal the fact that the Proprietary Software had been built with the Proprietary Source Code without the Victim Company’s authorization. Xu told UC-2 that Xu could take steps to prevent detection of the Proprietary Software’s origins – i.e., that it had been built with stolen Proprietary Source Code – including writing computer scripts that would modify the Proprietary Source Code to conceal its origins.

Later on Dec. 7, 2015, Xu met with UC-1 and UC-2 at the Hotel. During that meeting, Xu showed UC-2 a copy of what Xu represented to be the Proprietary Source Code on Xu’s laptop. Xu noted to UC-2 a portion of the code that indicated it originated with the Victim Company as well as the date on which it had been copyrighted. Xu also stated that Xu had previously modified the Proprietary Source Code’s command interface to conceal the fact that the Proprietary Source Code originated with the Victim Company and identified multiple specific customers to whom Xu had previously provided the Proprietary Software using Xu’s stolen copy of the Proprietary Source Code. 

In connection with the economic espionage counts charged in the Superseding Indictment, Xu stole, duplicated, and possessed the Proprietary Source Code with the intent to benefit the National Health and Planning Commission of the People’s Republic of China.

Xu pleaded guilty to three counts of economic espionage, each of which carries a maximum sentence of 15 years in prison, and three counts of theft of a trade secret, each of which carries a maximum sentence of 10 years in prison. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

Xu’s sentencing is scheduled for October 13.

Mr. Kim praised the FBI’s outstanding investigative efforts. He also thanked the U.S. Department of Justice’s National Security Division. 

The case is being handled by the Office’s Terrorism and International Narcotics Unit and its White Plains Division. The prosecution is being handled by Assistant U.S. Attorneys Benjamin Allee, Ilan Graff and Shane T. Stansbury for the Southern District of New York, with assistance from Trial Attorney David Aaron of the National Security Division’s Counterintelligence and Export Control Section.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Dana Boente, Acting Assistant Attorney General for National Security, announced today that XU JIAQIANG pled guilty to economic espionage and theft of a trade secret, in connection with XU’s theft of proprietary source code from XU’s former employer, with the intent to benefit the National Health and Family Planning Commission of the People’s Republic of China. XU pled guilty earlier today to all six counts with which he was charged, before the U.S. District Judge Kenneth M. Karas in White Plains federal court.

 

Acting U.S. Attorney Joon H. Kim said: “Xu Jiaqiang admitted and pled guilty today to stealing high tech trade secrets from a U.S. employer, intending to benefit the Chinese government. What Xu did was not only a federal crime, but a threat to our national security and the American spirit of innovation. Our Office is committed to finding, arresting and holding accountable those who take advantage of American businesses by engaging in economic espionage.”

 

Acting Assistant Attorney General Dana Boente said: “Today, Xu pleaded guilty to stealing trade secrets from his former employer for his own profit and intending to benefit the People’s Republic of China. The Economic Espionage Act is a key tool in protecting our economic and security interests. The National Security Division will pursue and prosecute any individual who steals intellectual property from American businesses to benefit a foreign government.”

 

According to the allegations contained in the Complaint and the Superseding Indictment filed against XU, as well as statements made in related court filings and proceedings:

 

From November 2010 to May 2014, XU worked as a developer for a particular U.S. company (the “Victim Company”). As a developer, XU enjoyed access to certain proprietary software (the “Proprietary Software”), as well as that software’s underlying source code (the “Proprietary Source Code”). The Proprietary Software is a clustered file system developed and marketed by the Victim Company in the United States and other countries. A clustered file system facilitates faster computer performance by coordinating work among multiple servers. The Victim Company takes significant precautions to protect the Proprietary Source Code as a trade secret. Among other things, the Proprietary Source Code is stored behind a company firewall and can be accessed only by a small subset of the Victim Company’s employees. Before receiving Proprietary Source Code access, Victim Company employees must first request and receive approval from a particular Victim Company official. Victim Company employees must also agree in writing at both the outset and the conclusion of their employment that they will maintain the confidentiality of any proprietary information. The Victim Company takes these and other precautions in part because the Proprietary Software and the Proprietary Source Code are economically valuable, which value depends in part on the Proprietary Source Code’s secrecy.

 

In May 2014, XU voluntarily resigned from the Victim Company. XU subsequently communicated with one undercover law enforcement officer (“UC-1”), who posed as a financial investor aiming to start a large-data storage technology company, and another undercover law enforcement officer (“UC-2”), who posed as a project manager, working for UC-1. these communications, XU discussed his past experience with the Victim Company and indicated that he had experience with the Proprietary Software and the Proprietary Source Code. On March 6, 2015, XU sent UC-1 and UC-2 a code, which XU stated was a sample of XU’s prior work with the Victim Company. A Victim Company employee (“Employee-1”) later confirmed that the code sent by XU included proprietary Victim Company material that related to the Proprietary Source Code.

 

XU subsequently informed UC-2 that XU was willing to consider providing UC-2’s company with the Proprietary Source Code as a platform for UC-2’s company to facilitate the development of its own data storage system. XU informed UC-2 that if UC-2 set up several computers as a small network, then XU would remotely install the Proprietary Software so that UC-1 and UC-2 could test it and confirm its functionality.

 

In or around early August 2015, the FBI arranged for a computer network to be set up, consistent with XU’s specifications. Files were then remotely uploaded to the FBI-arranged computer network (the “Xu Upload”). Thereafter, on or about August 26, 2015, XU and UC-2 confirmed that UC-2 had received the Xu Upload. In September 2015, the FBI made the Xu Upload available to a Victim Company employee who has expertise regarding the Proprietary Software and the Proprietary Source Code (“Employee-2”). Based on Employee-2’s analysis of technical features of the Xu Upload, it appeared to Employee-2 that the Xu Upload contained a functioning copy of the Proprietary Software. It further appeared to Employee-2 that the Xu Upload had been built by someone with access to the Proprietary Source Code who was not working within the Victim Company or otherwise at the Victim Company’s direction.

 

On December 7, 2015, XU met with UC-2 at a hotel in White Plains, New York (the “Hotel”). XU stated, in sum and substance, that XU had used the Proprietary Source Code to make software to sell to customers, that XU knew the Proprietary Source Code to be the product of decades of work on the part of the Victim Company, and that XU had used the Proprietary Source Code to build a copy of the Proprietary Software, which XU had uploaded and installed on the UC Network (i.e., the Xu Upload). XU also indicated that XU knew the copy of the Proprietary Software that XU had installed on the UC Network contained information identifying the Proprietary Software as the Victim Company’s property, which could reveal the fact that the Proprietary Software had been built with the Proprietary Source Code without the Victim Company’s authorization. XU told UC-2 that XU could take steps to prevent detection of the Proprietary Software’s origins – i.e., that it had been built with stolen Proprietary Source Code – including writing computer scripts that would modify the Proprietary Source Code to conceal its origins.

 

Later on December 7, 2015, XU met with UC-1 and UC-2 at the Hotel. During that meeting, XU showed UC-2 a copy of what XU represented to be the Proprietary Source Code on XU’s laptop. XU noted to UC-2 a portion of the code that indicated it originated with the Victim Company as well as the date on which it had been copyrighted. XU also stated that XU had previously modified the Proprietary Source Code’s command interface to conceal the fact that the Proprietary Source Code originated with the Victim Company and identified multiple specific customers to whom XU had previously provided the Proprietary Software using XU’s stolen copy of the Proprietary Source Code.

* * *

XU, 31, formerly of Beijing, China, pled guilty to three counts of economic espionage, each of which carries a maximum sentence of 15 years in prison, and three counts of theft of a trade secret, each of which carries a maximum sentence of 10 years in prison. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Xu's sentencing is scheduled for October 13, 2017.

Mr. Kim praised the FBI’s outstanding investigative efforts. He also thanked the U.S. Department of Justice’s National Security Division.

The case is being handled by the Office’s Terrorism and International Narcotics Unit and its White Plains Division. Assistant U.S. Attorneys Benjamin Allee, Ilan Graff, and Shane T. Stansbury, with assistance from Trial Attorney David Aaron of the National Security Division’s Counterintelligence and Export Control Section, 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 Office of the Federal Bureau of Investigation (“FBI”) announced that ANTHONY WEINER was charged with, and pled guilty to, transferring obscene material to a minor.  WEINER surrendered to the FBI in New York this morning, pled guilty before United States District Judge Loretta A. Preska, and was released on bail pending sentencing.  Sentencing has been scheduled for September 8, 2017, at 11 a.m.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Today, former Congressman Anthony Weiner admitted and pled guilty to sending sexually explicit images and directions to engage in sexual conduct to a girl he knew to be 15 years old. Weiner’s conduct was not only reprehensible, but a federal crime, one for which he is now convicted and will be sentenced. We thank the FBI and the NYPD for their work in this investigation.”

FBI Assistant Director in Charge William F. Sweeney Jr. said: “We work every day in the FBI and law enforcement to stop adults from preying on vulnerable children. Our partnership with the NYPD cannot be stressed enough in this case, and we would like to thank the Special Victims Unit for all the work and effort they put into this investigation.”

According to the Information filed in Manhattan federal court today and statements made in Court during today’s plea proceeding, between in or about January and March 2016, WEINER used online messaging and video chat applications to communicate with a minor girl he knew to be 15 years old (the “Minor Victim”).  In the course of those communications, WEINER transferred obscene material to the Minor Victim, including directions to engage in sexual conduct and sexually explicit images. 

*                *                *

WEINER, 52, of New York, New York, has pled guilty to one count of transferring obscenity to a minor, which carries a maximum sentence of 10 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 investigative work of the Federal Bureau of Investigation and the Special Victims Division of the New York City Police Department.

The case is being handled by the Office’s General Crimes unit.  Assistant United States Attorneys Amanda Kramer and Stephanie Lake are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today the filing of a criminal complaint charging CHITAKRA RAMUDIT, a/k/a “Lilian Ramudit,” LOUIS LITVIN, and MELISSA CHAN with conspiracy to commit bank fraud, bank fraud, and conspiracy to commit money laundering in a multimillion-dollar scheme to steal from a real estate company (“Company-1”), which was a client of a major retail bank in Manhattan at which RAMUDIT was a branch manager. LITVIN was Company-1’s chief financial officer, and CHAN was a bookkeeper for Company-1. RAMUDIT abused her position as a bank manager to help LITVIN and CHAN steal from Company-1, and RAMUDIT also separately stole more than $100,000 from two elderly account holders at the bank. RAMUDIT and CHAN were arrested and will be presented later today before the U.S. Magistrate Judge Gabriel W. Gorenstein. LITVIN was arrested in Florida this morning and was presented before a Magistrate Judge in the Southern District of Florida.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Chitrakra Ramudit, a former bank manager, allegedly abused her position to steal more than a million dollars from the bank’s customers, including elderly account holders. Together with Louis Litvin and Melissa Chan, who worked at a victim real estate company, Ramudit also worked to launder their fraud proceeds through various back office dealings. These defendants allegedly took advantage of their positions at the bank and the victim company to steal money and launder it through a series of opaque transactions.”

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

RAMUDIT is a former branch manager at a major retail bank in Manhattan (“Bank-1”), with significant management authority and control over large financial transactions. RAMUDIT abused her position and authority to steal more than $1 million from client accounts, including accounts held by Company-1 and elderly individual account holders. RAMUDIT conspired with LITVIN, Company-1’s former CFO, and CHAN, a former Company-1 bookkeeper, to steal from Company-1. The defendants carried out their scheme through various means, including fraudulent wire transfers, unauthorized writing and cashing of cashier’s checks, and unauthorized withdrawals from Company-1’s accounts. The defendants laundered the illicit proceeds from these schemes through multiple bank accounts, and used the illicit proceeds to purchase various assets.

RAMUDIT appears to have received substantial kickbacks from LITVIN and CHAN for facilitating their theft from Company-1. For example, in 2010 and 2011, RAMUDIT conducted several transactions to help LITVIN and CHAN steal approximately $400,000 from Company-1, for which RAMUDIT received approximately $175,000 in payments to a bank account she controlled that was in the name of a family member. RAMUDIT also helped CHAN and LITVIN steal money by permitting them to cash or deposit Company-1’s checks. RAMUDIT would often personally cash Company-1’s checks for CHAN and CHAN would meet at RAMUDIT’s office to receive the cash from RAMUDIT. Some of the money CHAN stole was invested into a Brooklyn-based restaurant, in which RAMUDIT was also an investor.

LITVIN, who solely controlled Company-1’s payroll system, separately also stole more than $7 million from Company-1 through its payroll account with Bank-1. After LITVIN’s theft through the payroll system was discovered, he was fired by Company-1, and CHAN discussed unleashing a virus on Company-1’s computer systems to corrupt their files and cover up the crimes.

* * *

RAMUDIT, 56, of Queens, LITVIN, 63, of West Palm Beach, Florida, and CHAN, 38, of Queens, are each charged with conspiracy to commit bank fraud and bank fraud, each of which carries a maximum sentence of 30 years in prison, and conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison. RAMUDIT and LITVIN are each also separately charged with an additional count of bank fraud, which carries a maximum sentence of 30 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.

Acting U.S. Attorney Kim praised the work of the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York, and the agents of the Federal Bureau of Investigation.

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.

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 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., the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), announced today the unsealing of an Indictment charging 13 members of a Bronx-based drug trafficking organization with narcotics trafficking and firearms offenses. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “As alleged, these defendants, many of them members of the violent and dangerous Crips street gang, used gun violence to control their territory in the North Bronx and to flood the streets with heroin, crack cocaine, and cocaine. Together with our partners at the FBI and NYPD, we are committed to making our city safer from drug-related violence.”    

FBI Assistant Director in Charge William F. Sweeney Jr. said:  “Our most important job as the FBI NY Metro Safe Streets Task Force is to protect the community from dangerous gangs that use threats and violence to maintain control. Gangs impact innocent people’s lives every day, people who often have no way to rid their neighborhoods of the dealers on the street corners. Our agents and investigators from our partner law enforcement agencies will be dogged in our pursuit of these criminals.”

NYPD Commissioner James P. O’Neill said:  “Today’s arrests are the latest example of the NYPD’s commitment to combatting narcotics trafficking and violent gun crimes.  The dismantling of this crew and the amount of evidence seized represents a significant blow to criminal networks operating in the Bronx. Thanks to FBI and U.S. Attorney in the Southern District—our partners on this and many other cases.”

According to the Indictment[1] unsealed in Manhattan federal court and other publicly filed documents:

The members of the Davidson Avenue drug trafficking organization (the “Davidson Avenue DTO”) controlled narcotics trafficking on Davidson Avenue between West Tremont Avenue and West Burnside Avenue in the Bronx, New York (the “Davidson Block”).  From 2012 to May 2017, members of the Davidson Avenue DTO sold heroin, crack cocaine, and cocaine, among other illegal narcotics, on the Davidson Block, and prevented others from doing the same by the threat of violence.  

Members of the Davidson Avenue DTO are also members and associates of the “55” and “Wildcard” neighborhood sets of the nationwide Crips street gang.  Members of the Davidson Avenue DTO possessed firearms, and planned and engaged in acts of violence to, among other reasons, protect and maintain their drug business.  In particular, members of the Davidson Avenue DTO used their firearms in territory battles with members and associates of the rival Bloods gang, as well as during internal disputes over authority within the Crips sets that composed the DTO.

Count One of the Indictment charges OVED VEGA, a/k/a “O,” a/k/a “Mantha,” FRANKIE REYES, a/k/a “Biscuit,” HENRY MEJIA, a/k/a “Bigs,” FELIX CASTILLO, a/k/a “Spyder,” JUSTIN RODRIGUEZ, a/k/a “Poochie,” JESSICA GLENN, a/k/a “J,” GABRIEL CRUZ, a/k/a “Gabe,” ISIAH PEREZ, a/k/a “Izzy,” NOEL PEREZ, a/k/a “Lito,” ALFREDO RODRIGUEZ, a/k/a “Fetti,” MARKEEN JORDAN, a/k/a “Kingo,” STEFAN CROMARTIE, a/k/a “Stef,” and DAYQUAN SALAMAN, a/k/a “Domo Gz,” with participating in a conspiracy to distribute narcotics, including heroin, crack cocaine, and cocaine.

Count Two of the Indictment charges OVED VEGA, a/k/a “O,” a/k/a “Mantha,” FRANKIE REYES, a/k/a “Biscuit,” HENRY MEJIA, a/k/a “Bigs,” FELIX CASTILLO, a/k/a “Spyder,” JUSTIN RODRIGUEZ, a/k/a “Poochie,” JESSICA GLENN, a/k/a “J,” GABRIEL CRUZ, a/k/a “Gabe,” ISIAH PEREZ, a/k/a “Izzy,” NOEL PEREZ, a/k/a “Lito,” ALFREDO RODRIGUEZ, a/k/a “Fetti,” MARKEEN JORDAN, a/k/a “Kingo,” STEFAN CROMARTIE, a/k/a “Stef,” and DAYQUAN SALAMAN, a/k/a “Domo Gz,” with possessing and discharging firearms in furtherance of the narcotics conspiracy charged in Count One.

*                   *                  *

In a coordinated operation, 10 defendants were arrested in New York on Tuesday afternoon and earlier today.  They will be presented this afternoon in Manhattan federal court.  Defendant MARKEEN JORDAN was already in federal custody on a violation of supervised release.  Defendant DAYQUAN SALAMAN is in custody on state charges and will be transferred to federal custody.  FELIX CASTILLO remains at large.  Charts identifying each defendant, the charges, and the maximum penalties are attached to this release.

The case is assigned to U.S. District Judge Loretta A. Preska. 

Mr. Kim thanked the FBI and NYPD for their work on the investigation.

The Office’s Violent and Organized Crime Unit is overseeing the case.  Assistant U.S. Attorneys Gina Castellano and Hagan Scotten 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. Oved Vega et al.

 

Count

Charge

Defendant

Maximum Penalty

1

Conspiracy to Distribute Narcotics

 

 

OVED VEGA,

     a/k/a “O,”

     a/k/a “Mantha,”

 

FRANKIE REYES,

     a/k/a “Biscuit,"

 

HENRY MEJIA,

     a/k/a “Bigs,”

 

FELIX CASTILLO,

     a/k/a “Spyder,”

 

JUSTIN RODRIGUEZ,

     a/k/a “Poochie,”

 

JESSICA GLENN,

   a/k/a “J,”

 

GABRIEL CRUZ,

   a/k/a “Gabe,”

 

ISIAH PEREZ,

   a/k/a “Izzy,”

 

NOEL PEREZ,

   a/k/a “Lito,”

 

ALFREDO RODRIGUEZ,

   a/k/a “Fetti,”

 

MARKEEN JORDAN,

   a/k/a “Kingo,”

 

STEFAN CROMARTIE,

   a/k/a “Stef,”

 

DAYQUAN SALAMAN,

   a/k/a “Domo Gz,”

 

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

2

Discharge of Firearms in Furtherance of Narcotics Trafficking

OVED VEGA,

     a/k/a “O,”

     a/k/a “Mantha,”

 

FRANKIE REYES,

     a/k/a “Biscuit,"

 

HENRY MEJIA,

     a/k/a “Bigs,”

 

FELIX CASTILLO,

     a/k/a “Spyder,”

 

JUSTIN RODRIGUEZ,

     a/k/a “Poochie,”

 

JESSICA GLENN,

   a/k/a “J,”

 

GABRIEL CRUZ,

   a/k/a “Gabe,”

 

ISIAH PEREZ,

   a/k/a “Izzy,”

 

NOEL PEREZ,

   a/k/a “Lito,”

 

ALFREDO RODRIGUEZ,

   a/k/a “Fetti,”

 

MARKEEN JORDAN,

   a/k/a “Kingo,”

 

STEFAN CROMARTIE,

   a/k/a “Stef,”

 

DAYQUAN SALAMAN,

   a/k/a “Domo Gz,”

 

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

Defendants

Age

Oved Vega

39

Frankie Reyes

22

Henry Mejia

37

Felix Castillo

29

Justin Rodriguez

24

Jessica Glenn

33

Gabriel Cruz

23

Isiah Perez

29

Noel Perez

32

Alfredo Rodriguez

26

Markeen Jordan

24

Stefan Cromartie

18

Dayquan Salaman

25

 

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[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, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that JOHN FARCHIONE, a former customer operations manager of a public utility company (the “Public Utility”), and LOUIS BENDEL, who ran a business purporting to assist customers with payments to the Public Utility, were arrested this morning and charged with honest services fraud, bank fraud, mail fraud, aggravated identity theft, and conspiracy, for their roles in a scheme to defraud the Public Utility and its customers out of more than $3.8 million.  BENDEL was presented today before U.S. Magistrate Judge Gabriel W. Gorenstein.  FARCHIONE was arrested in Maine this morning and was presented in federal court there today.

Acting U.S. Attorney Joon H. Kim said:  “John Farchione, an employee of a public utility, and Louis Bendel, the owner of a payment processing vendor, allegedly stole more than $3.8 million from the public utility and its customers. As alleged, instead of providing the fair and honest services the public deserves and the law requires, the defendants instead looked to the public utility as a vehicle to satisfy their personal greed. We thank our partners at the FBI for protecting New York’s public utilities and their customers.”

FBI Assistant Director William F. Sweeney Jr. said:  “As alleged, Farchione, aided by his inside knowledge of the billing and payment process of the public utility for which he worked, found a way to exploit procedures in furtherance of a scheme abetted by Bendel.  Bendel, whose job it was to remit customer payments to the utility company, allegedly conspired with Farchione to subvert the system, allowing for their personal enrichment to the detriment of the company and its consumers.  The right to honest services is something every member of the public should enjoy, and those who stand in the way will most certainly be held accountable.”

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

From at least in or about 2005, up to and including in or about November 2016, FARCHIONE and BENDEL engaged in fraudulent schemes resulting in the theft of more than $3.8 million from the Public Utility and its customers.

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

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

Additionally, FARCHIONE and BENDEL conspired to create fraudulent positive balances on certain customer accounts associated with BENDEL, causing the Public Utility to issue unearned account refunds, the proceeds of which were obtained and shared by FARCHIONE and BENDEL.

*                      *                      *

FARCHIONE, 64, of Queens, and BENDEL, 69, of Seaford, Long Island, are each charged with one count of honest services fraud, which carries a maximum sentence of 20 years in prison; mail fraud, which carries a maximum sentence of 20 years in prison; bank fraud, which carries a maximum sentence of 30 years in prison; conspiracy to commit honest services fraud, mail fraud, and bank fraud, which carries a maximum sentence of 30 years in prison; and aggravated identity theft in connection with the fraudulent schemes, which carries a mandatory sentence of two years in prison, to be served consecutively to any other sentence imposed.

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

Mr. Kim praised the investigative work of the FBI in this investigation.

This case is being handled by the Office’s Public Corruption Unit.  Assistant U.S. Attorney Alex Rossmiller is in charge of the prosecution.

 

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[1] The charges contained in the Complaint are merely accusations, and FARCHIONE and BENDEL are presumed innocent unless and until proven guilty.

Joon Kim, the Acting United States Attorney for the Southern District of New York, Darcel D. Clark, the Bronx County District Attorney, Angel M. Melendez, Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced today the arrest of OLIVER SOHNGEN, a/k/a “Helmuth Moss,” a/k/a “Stephan Weierbach.”  SOHNGEN is charged with conspiracy to commit sex trafficking of minors, sex trafficking of minors, attempted sex trafficking of minors, and attempted inducement of minors to engage in sexual activity.  SOHNGEN was arrested this morning and presented today before U.S. Magistrate Judge Gabriel W. Gorenstein in Manhattan federal court.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Oliver Sohngen, a music school teacher, allegedly engaged in disturbing, predatory conduct: preying on minor girls for sex. He allegedly had sexual contact with minor girls at least twice, and attempted to engage in sex trafficking of girls under the age of 14. Together with our partners at HSI, NYPD, and the Bronx District Attorney, we are committed to working to protect our most vulnerable victims, children, from sexual exploitation.”

Bronx District Attorney Darcel D. Clark said:  “This defendant came to the Bronx to allegedly engage in the dehumanizing treatment of girls ensnared in sex trafficking, even allegedly trying to arrange sexual encounters with girls as young as 8 years old.  We have a duty to protect our vulnerable youth, and with our partners in the Manhattan U.S. Attorney’s Office, we will prosecute to the fullest extent of the law anyone who supports this cruel exploitation.”

HSI Special Agent in Charge Angel M. Melendez said:  “It is unfathomable that Sohngen, who runs a music school, allegedly paid a pimp hundreds of dollars to arrange sexual encounters with underage girls. We at HSI remain committed to working together with our law enforcement partners to keep our children safe and ridding our neighborhoods of these dangerous sexual predators.”

Police Commissioner James P. O’Neill said:  “The trafficking of minors for the purpose of sex is a deeply disturbing and reprehensible crime.  We remain resolute in working along with our law enforcement partners to identify, apprehend, and prosecute those individuals who prey upon our most innocent victims. I commend the detectives and agents involved in this investigation and the US Attorney’s Office, Southern District for their efforts that resulted in these arrests.”

According to the allegations in the Complaint[1]:

Between March 2013 and November 2013, SOHNGEN exchanged text messages with a co-conspirator to arrange paid sexual encounters with minor girls ranging in age from 8 to 17.  On at least two occasions, SOHNGEN engaged in sexual contact with minor girls at the co-conspirator’s apartment in the Bronx, New York.  In addition, between November 2015 and January 2016, SOHNGEN participated in recorded telephone conversations with an undercover NYPD officer who was posing as a 15-year-old girl.  SOHNGEN proposed to meet with the purported 15-year-old girl in order to engage in sexual conduct.

*                      *                     *

OHNGEN, 52, of Queens, New York, is charged with one count of conspiracy to engage in sex trafficking of minors, which carries a maximum term of life in prison, as well as two counts of sex trafficking of minors under the age of 18, each which carries a mandatory minimum term of 10 years in prison and a maximum of life in prison; three counts of attempted sex trafficking of minors under the age of 14, each of which carries a mandatory minimum term of 15 years in prison and a maximum of life in prison; and two counts of attempted inducement of minors under the age of 18 to engage in sexual activity, each of which carries a mandatory minimum term of 10 years in prison and a maximum 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 defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative work of HSI and the NYPD, and expressed gratitude for the efforts of HSI’s New York Trafficking in Persons Unit and the NYPD’s Vice Enforcement Division Major Case Team.  Mr. Kim also expressed gratitude to the Bronx County District Attorney’s Office for its partnership in this investigation.   

This case is being handled by the Office’s General Crimes Unit.  Assistant United States Attorneys Frank Balsamello and Michael Krouse are in charge of the prosecution, with assistance from Bronx County Assistant District Attorney Meagan Powers.

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

 

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[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, Acting United States Attorney for the Southern District of New York, announced that ONEIL DASILVA, a/k/a “Soxx,” a/k/a “Bobby Soxx,” an associate of the violent Big Money Bosses (“BMB”) street gang, was sentenced today to 15 years in prison in connection with a shooting in 2011 at a backyard party in the Bronx, New York, during which eight people were shot, including a 13-year-old girl and a 14-year-old girl.  DASILVA pled guilty on December 8, 2016, before United States District Judge Alison J. Nathan, who also imposed today’s sentence.

Acting U.S. Attorney Joon H. Kim said:  “Oneil Dasilva, a Big Money Boss gang associate, terrorized his neighborhood in the Bronx, engaging in a reckless shooting spree that led to eight people, including two young teenagers, getting shot. For his crimes, Dasilva will now spend 15 years in a federal prison. Gang and gun violence must be confronted forcefully, as we did in this case with our law enforcement partners.”

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

DASILVA was an associate of BMB, a subset of the “Young Bosses,” or “YBz” street gang, which operates throughout New York City.  Between 2007 and 2016, members and associates of BMB committed numerous acts of violence against rival gang members in the Bronx and sold crack cocaine and marijuana.  

As part of his involvement in with BMB, on September 4, 2011, DASILVA opened fire at a backyard barbeque in the vicinity of 221st Street in the Bronx.  Eight people were shot, including a 13-year-old girl and a 14-year-old girl.  All of the victims survived.  

DASILVA 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”), 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. DASILVA was charged in an Indictment unsealed on April 27, 2016 (United States v. Nico Burrell et al., 15 Cr. 95), charging 63 members and associates of BMB with racketeering conspiracy, narcotics conspiracy, narcotics distribution, and/or firearms charges.  To date, 47 of these defendants have pled guilty.

* * *

Mr. Kim praised the outstanding work of the NYPD’s Bronx Gang Squad, HSI, DEA, and ATF.  

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that the United States has settled a money laundering and civil forfeiture action against assets of 11 corporations, including some that own luxury residential and high-end commercial real estate in Manhattan. The Government’s complaint alleged that the defendant corporations laundered some proceeds of a $230 million Russian tax refund fraud scheme involving corrupt Russian officials that was uncovered by Sergei Magnitsky, a Russian lawyer who died in pretrial detention in Moscow under suspicious circumstances and was posthumously prosecuted by Russia.

 

In the stipulation of settlement filed with U.S. District Judge William H. Pauley III today, which is still subject to approval by the Court, one of the defendant corporations, Prevezon Holdings Ltd., agrees to pay $5,896,333.65 to resolve the Government’s claims against all defendants. This payment represents triple the value of the proceeds that the Government alleged could be traced directly from the Russian treasury fraud to the defendants ($1,965,444.55), and more than ten times the amount of proceeds the Government alleged could be traced directly to property in New York (approximately $582,000).

 

Acting Manhattan U.S. Attorney Joon H. Kim said: “We will not allow the U.S. financial system to be used to launder the proceeds of crimes committed anywhere – here in the U.S., in Russia, or anywhere else. Under the terms of this settlement, the defendants have agreed to pay not just what we alleged flowed to them from the Russian treasury fraud, but three times that amount, and roughly 10 times the money we alleged could be traced directly into U.S. accounts and real estate.”

 

The Government’s lawsuit alleged as follows:

 

In 2007, a Russian criminal organization engaged in an elaborate tax refund fraud scheme resulting in a fraudulently obtained tax refund of approximately $230 million from the Russian treasury. As part of the fraud scheme, members of the organization stole the corporate identities of portfolio companies of the Hermitage Fund, a foreign investment fund operating in Russia. The organization’s members then used these stolen identities to make fraudulent claims for tax refunds.

 

In order to procure the refunds, the criminal organization fraudulently re-registered the Hermitage companies in the names of members of the organization, and then orchestrated sham lawsuits against these companies. These sham lawsuits involved members of the organization as both the plaintiffs (representing sham commercial counterparties suing the Hermitage companies) and the defendants (purporting to represent the Hermitage companies). In each case, the members of the organization purporting to represent the Hermitage companies confessed full liability in court, leading the courts to award large money judgments to the plaintiffs.

 

The purpose of the sham lawsuits was to fraudulently generate money judgments against the Hermitage companies. Members of the organization purporting to represent the Hermitage companies then used those money judgments to seek tax refunds. The basis of these refund requests was that the money judgments constituted losses eliminating the profits the Hermitage companies had earned, and thus the Hermitage companies were entitled to a refund of the taxes that had been paid on these profits. The requested refunds totaled 5.4 billion rubles, or approximately $230 million.

 

Members of the organization who were officials at two Russian tax offices corruptly approved the requests within one business day, and approximately $230 million was disbursed to members of the organization, purportedly on behalf of the Hermitage companies, two days later.

 

After perpetrating this fraud, members of the organization undertook illegal actions in order to conceal this fraud and retaliate against individuals who attempted to expose it. After learning of the lawsuits against its portfolio companies, Hermitage retained attorneys, including Russian lawyer Sergei Magnitsky, to investigate. Magnitsky and other attorneys for Hermitage uncovered the refund fraud scheme, and the complicity of Russian governmental officials in it, and were subject to retaliatory criminal proceedings against them. Magnitsky was arrested and died approximately a year later in pretrial detention. An independent Russian human rights council concluded that Magnitsky’s arrest and detention were illegal, that Magnitsky was denied necessary medical care in custody, that he was beaten by eight guards with rubber batons on the last day of his life, and that the ambulance crew that was called to treat him as he was dying was deliberately kept outside of his cell for more than an hour until he was dead.

 

Members of the criminal organization, and associates of those members, have also engaged in a broad pattern of money laundering in order to conceal the proceeds of the fraud scheme. In a complex series of transfers through shell corporations, the $230 million from the Russian treasury was laundered into numerous accounts in Russia and other countries. A portion of the funds stolen from the Russian treasury passed through several shell companies into Prevezon Holdings, Ltd., a Cyprus-based real estate corporation that is a defendant in the forfeiture action. Prevezon Holdings laundered these fraud proceeds into its real estate holdings, including investment in multiple units of high-end commercial space and luxury apartments in Manhattan, and created multiple other corporations, also subject to the forfeiture action, to hold these properties.

 

* * *

 

A chart listing the companies named as defendants in the lawsuit is attached.

 

Mr. Kim praised the outstanding investigative work of ICE HSI New York’s El Dorado Task Force.

 

This case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit. Assistant United States Attorneys Paul M. Monteleoni, Cristine Irvin Phillips, and Tara M. LaMorte are in charge of the case.

 

Prevezon Holdings, Ltd.

Prevezon Alexander, LLC

Prevezon Soho USA, LLC

Prevezon Seven USA, LLC

Prevezon Pine USA, LLC

Prevezon 1711 USA, LLC

Prevezon 1810, LLC

Prevezon 2009 USA, LLC

Prevezon 2011 USA, LLC

Ferencoi Investments, Ltd.

Kolevins Ltd.

 

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that RANDY CROWELL, a/k/a “Roger,” was sentenced today to 60 months in prison for fraudulently distributing, through his Utah-based wholesale distribution company, more than $100 million worth of prescription drugs obtained through a nationwide black market. The defendant distributed the drugs in question, which were predominantly used to treat HIV/AIDS, to pharmacies, where they were dispensed to unsuspecting patients. As part of his sentence, CROWELL also agreed to forfeit more than $13 million in personal profits from the scheme and was ordered to pay an additional $65 million in restitution to Medicaid. CROWELL pled guilty on January 6, 2017, to one count of conspiracy to commit healthcare fraud before United States District Judge Edgardo Ramos, who also imposed today’s sentence.

Acting Manhattan U.S. Attorney Joon H. Kim said: “For more than two years, Randy Crowell personally profited from perverting a system designed to ensure patients receive safe and effective medication. He victimized healthcare companies and government benefit programs, as well as countless people suffering from life-threatening illnesses. The recipients of Crowell’s black market medications had no way to know that the medicines they purchased at pharmacies might be dangerous.”

CROWELL’s sentence marks the culmination of a six-year investigation by the U.S. Attorney’s Office in conjunction with the Federal Bureau of Investigation into a massive, nationwide healthcare fraud scheme involving the resale of black market medications worth more than $500 million. Including CROWELL, 57 defendants have been charged and convicted for their roles in the scheme. Through these prosecutions, hundreds of millions in restitution and criminal forfeiture have been recovered for victims, including Medicaid.

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

From early 2010 until at least July 2012, CROWELL, who was the owner and operator of a licensed wholesale distributor of prescription medications based in St. George, Utah (“Wholesaler-1”), participated in a sophisticated scheme to defraud health insurance companies and government programs such as Medicaid out of hundreds of millions of dollars by trafficking prescriptions through a nationwide black market. CROWELL, through Wholesaler-1, purchased more than $100 million worth of prescription medications from this black market at a fraction of the legitimate prices for these drugs, before selling the same as new, legitimate bottles of medication to pharmacies all over the country.

To maximize their profits, CROWELL and his co-conspirators focused on some of the most expensive medications on the market, including those used to treat HIV/AIDS. The profitable scheme was potentially dangerous to the tens of thousands of patients ultimately receiving and taking these prescription drugs. Many of the bottles purchased through the underground market and then distributed as safe, legitimate medications by CROWELL and Wholesaler-1 had in fact been previously dispensed to others, including individuals based in the Southern District of New York. To conceal the fact that they had been previously dispensed, the bottles were typically “cleaned” with hazardous chemicals such as lighter fluid before being transported and stored in conditions that were frequently unsanitary and insufficient to ensure the safety and efficacy of the medication.

Rather than purchasing medications from manufacturers or legitimate authorized distributors at full price, scheme participants, including CROWELL, created and exploited an underground market for these prescription drugs. Scheme participants targeted the cheapest possible source of supply for these drugs – Medicaid patients and other individuals who received these prescription drugs on a monthly basis for little or no cost, and who were then willing to sell their medicines rather than taking them as prescribed (the “Insurance Beneficiaries”).

Insurance Beneficiaries had prescriptions filled for medications each month at pharmacies across the country, including in Manhattan and the Bronx, and then sold their medications to low-level participants (“Collectors”) in the scheme who worked on street corners and bodegas and would pay cash – typically as little as $40 or $50 per bottle. Health care benefit programs would not have paid for the medications issued by pharmacies to the Insurance Beneficiaries had these health care benefit programs known that the Insurance Beneficiaries were selling their drugs to others, rather than taking them as prescribed.

Collectors then sold these second-hand drugs to higher-level scheme participants (“Aggregators”) who bought dozens, and sometimes hundreds, of bottles at a time from multiple collectors before selling them to higher-level scheme participants with direct access to legitimate distribution channels, including corrupt wholesale companies like Wholesaler-1. The corrupt wholesale companies, including Wholesaler-1, then resold the bottles as new, at full price, to pharmacies, including potentially the very same pharmacies that initially dispensed these medications. In so doing, CROWELL and other corrupt wholesale companies intentionally misrepresented where these medications were coming from and, in particular, concealed the fact that these prescription drugs had been obtained from an illegal and illegitimate black market.

Between 2010, when Wholesaler-1 was created by CROWELL, and July 2012, Wholesaler-1 had no legitimate sources of supply. Instead, CROWELL caused Wholesaler-1 to purchase exclusively from illegitimate sources – including the so-called “Aggregators” – who sold to CROWELL at substantially reduced rates, sometimes as much as 50 percent less than the price of acquiring these medications from legitimate sources. Consistent with their illegitimate origins, inbound shipments of prescription drugs frequently arrived at Wholesaler-1 improperly packaged in unsealed, unsecure cardboard boxes. On some occasions, bottles of medication arrived at Wholesaler-1 with the initial patient labels still affixed to them. On other occasions, bottles arrived having already been opened, or containing what appeared to be the wrong medication. At the direction of CROWELL, employees of Wholesaler-1 then inventoried these bottles, attempted to remove any bottles that still had patient labels affixed to them or were otherwise visibly used or damaged, and then arranged for the medications to be shipped out to Wholesaler-1’s customers – pharmacies all over the country, including pharmacies in Manhattan and the Bronx.

To effectuate the scheme – and, in particular, to convince pharmacies to buy these medications, and health care benefit programs to pay for them, CROWELL and others made false and fraudulent representations about the origins of these medications. Specifically, CROWELL and others acting at his direction created false and fraudulent documents known as “pedigrees” for these medications, which purported to document the legitimate movement of these medications bought and sold by Wholesaler-1 from a manufacturer to the pharmacy.

In order to evade detection, CROWELL took additional steps to conceal the unlawful nature of his activities, including using the name “Roger,” frequently changing or “dropping” the phones he used to communicate with co-conspirators, and paying co-conspirators through front or “sham” companies.

* * *

In addition to the term of imprisonment, CROWELL, 56, of Henderson, Nevada, was sentenced to three years of supervised release, ordered to forfeit $13,046,635.00, and ordered to pay restitution of $65 million to Medicaid.

Mr. Kim praised the investigative work of the FBI.

The prosecution of this case is being overseen by the Office’s Money Laundering and Asset Forfeiture Unit. Assistant U.S. Attorneys Edward B. Diskant and Matthew Podolsky are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that HAMLET PERALTA pled guilty today to wire fraud in connection with his scheme to obtain money from investors by fraudulently representing that he was using their investments to further a profitable, multimillion-dollar wholesale liquor business. PERALTA pled guilty before United States District Judge Katherine B. Forrest. Sentencing has been scheduled for September 8, 2017, at 10:00 a.m.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Hamlet Peralta swindled millions of dollars from unsuspecting investors who trusted him because of his reputation in the community as a business owner and restaurateur. As Peralta has now admitted, instead of being an honest broker, he stole their money and used it to fund his own lavish lifestyle and to further a massive Ponzi scheme.”

According to the Complaint and Indictment filed in Manhattan federal court and today’s plea proceeding:

From 2013 through 2014, PERALTA solicited more than $12 million from multiple investors by falsely representing that the investors’ money would be used to engage in wholesale liquor distribution for a profit. He made these promises both orally and in written contracts. To bolster the supposed bona fides of his fictitious business, he provided investors with forged invoices and other documentation, purporting to establish the high volume of liquor he both bought from licensed wholesalers in New York and sold to wholesale and retail clients for a profit.

In truth and in fact, however, PERALTA misappropriated the millions of dollars in investments he received. He took out much of the money in cash and used some of it to both support his lifestyle and rehabilitate a failing restaurant he owned. Because he purchased very little liquor and had no profits with which to pay back investors, he then began borrowing large sums of money from new investors on the false promise that he was investing that money in the liquor business, and used that money to repay prior investors.

In or about 2013, for example, PERALTA told a prospective investor (“Investor-1”) who was a frequent customer at PERALTA’s restaurant and who had become friendly with PERALTA that he (PERALTA) owned a separate business called West 125th Street Liquors and that he had been approved as an exclusive wine distributor to a major national restaurant supply company (the “Restaurant Supply Company”) that was beginning a wholesale wine business. PERALTA told the investor that he would receive significant interest on his investments, based on profits from the wholesale liquor distribution business. In truth and in fact, however, PERALTA did not own West 125th Street Liquors, and he had not been approved to be a distributor for the Restaurant Supply Company. Indeed, neither PERALTA nor West 125th Street Liquors ever supplied anything to the Restaurant Supply Company. PERALTA also provided vestor-1 with fake documentation on the Restaurant Supply Company’s letterhead, falsely representing that the Restaurant Supply Company would be electronically transferring PERALTA $1,826,350 within seven days.

Investor-1 provided PERALTA with more than $3.5 million over the course of the next year, a substantial portion of which was used to pay back other investors. Ultimately, PERALTA owed Investor-1 approximately $2 million. In all, PERALTA, who obtained approximately $12 million from investors, failed to pay back millions of dollars of that money.

* * *

PERALTA, 37, of the Bronx, New York, has pled guilty to one count of wire fraud, which carries a maximum term 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 investigative work of the Federal Bureau of Investigation and the NYPD Internal Affairs Bureau.

This case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorneys Kan M. Nawaday, Russell Capone, Martin S. Bell, and Lauren Schorr are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and Ashan M. Benedict, the Special Agent in Charge of the New York Field Office of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”), announced today the filing of a criminal complaint charging JORDANY FRIAS-ROSARIO, a/k/a “Julio,” and PEDRO CASTILLO, a/k/a “Juan Antonio Frias,” with robbery, kidnapping, and use of a firearm during the commission of a crime of violence. As alleged, FRIAS-ROSARIO and CASTILLO committed a home invasion robbery in the Bronx on March 30, 2017, and forcefully tied up two victims, including a 7-year-old boy with autism. FRIAS-ROSARIO was arrested in Utica, New York, this morning and will be presented this afternoon before the Honorable Thérèse Wiley Dancks. CASTILLO is still at large, and the general public is encouraged to contact Crime Stoppers at 800-577-TIPS (800-577-8477) with any information on CASTILLO’s whereabouts.

Acting Manhattan U.S. Attorney Joon H. Kim said: “The defendants are charged with a callous crime of violence. They allegedly terrorized two people at gunpoint during a home invasion robbery, tying up a 7-year-old autistic child and pistol-whipping an adult. We commend our partners at the ATF and NYPD for the exemplary work that led to the charges today.”

ATF SAC Ashan M. Benedict said: “The defendants are alleged to have brazenly and viciously committed a gunpoint home invasion, during which one victim was tied up and violently assaulted in the presence of the second victim, an autistic child, who was also tied up. Such acts of violence and depravity will not be tolerated, and the defendants will now face justice for their actions. I would like to express my gratitude to the ATF Special Agents and NYPD Detectives assigned to the ATF SPARTA Task Force for their hard work throughout this investigation, and the many others in which they are successfully targeting armed robbers for arrest and prosecution. I would also like to thank the United States Attorney’s Office for their continued partnership and dedication in pursuing the prosecution of violent offenders.”

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

On March 30, 2017, JORDANY FRIAS-ROSARIO, a/k/a “Julio,” and PEDRO CASTILLO, a/k/a “Juan Antonio Frias,” committed a home invasion robbery in the Bronx, New York (the “Robbery”). During the course of the Robbery, FRIAS-ROSARIO and CASTILLO brandished a firearm and forcefully tied up two victims (“Victim-1” and “Victim-2”). Victim-1, a 66-year-old man, was pistol whipped, leaving a deep gash over his left ear. Victim-2, a 7-year-old boy with autism, was also tied up during the course of the Robbery.

* * *

FRIAS-ROSARIO, 24, of the Bronx, was arrested this morning. CASTILLO, 56, also of the Bronx, is still at large and the general public is encouraged to call Crime Stoppers with any information on CASTILLO’s whereabouts. FRIAS-ROSARIO and CASTILLO are each charged with robbery, kidnapping, and using a firearm during the commission of a crime of violence; the charge carries a maximum sentence of life 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 defendants will be determined by the judge.

Mr. Kim praised the efforts of the NYPD and ATF in this investigation, specifically the Bronx Robbery Squad and the Joint Robbery Task Force.

This case is being handled by the Office’s Violent and Organized Crime Unit. Assistant United States Attorneys Jacob Warren and Michael Longyear 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.

 

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[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint 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, and Scott Lampert, Special Agent in Charge of the New York Regional Office for the Office of Inspector General for the Department of Health and Human Services (“HHS-OIG”), announced today that the United States simultaneously filed and settled a civil fraud lawsuit against benefits management company CaRECORE NATIONAL LLC (“CARECORE”), now part of eviCore healthcare, for authorizing medical diagnostic procedures paid for with Medicare and Medicaid funds over a period of at least eight years without properly assessing whether the procedures were necessary or reasonable. The settlement, approved in Manhattan federal court by U.S. District Judge Richard J. Sullivan, resolves CARECORE’s civil liabilities to the United States under the federal False Claims Act. Under the settlement, CARECORE must pay a total of $54 million, of which $45 million will be paid to the United States and $9 million will be paid to the states that are named as plaintiffs in the suit. CARECORE also admitted and accepted responsibility for, among other things, improperly approving prior authorizations requests for hundreds of thousands of diagnostic procedures paid for with Medicare Part C and Medicaid funds.

 

Acting U.S. Attorney Joon H. Kim said: “Benefit management companies are supposed to determine whether medical diagnostic procedures paid for with Medicare and Medicaid funds are necessary and reasonable. Instead, CareCore blindly approved hundreds of thousands of medical procedures over a period of many years, leaving Medicare and Medicaid to foot the bill. This lawsuit and settlement shows our commitment to ensuring that fraud and waste involving federal funds will be identified and stopped.”

 

HHS-OIG Special Agent in Charge Scott J. Lampert said: “CareCore’s irresponsible behavior compromised the integrity of the Medicare and Medicaid programs, and wasted millions of taxpayer dollars. HHS-OIG will continue to ensure that companies that do business with federally-funded health care programs do so in an honest fashion.”

 

The United States Complaint-In-Intervention (the “Complaint”) alleges that starting in as early as 2005, CARECORE, which performs prior authorization review for diagnostic procedures on behalf of many insurers, including those providing insurance through Medicare Part C and Medicaid Managed Care, was unable to review prior authorization requests in a timely fashion, and in order to avoid contractual penalties for failing to timely process the requests, CARECORE instituted a practice of improperly approving prior authorization requests. By 2007, CARECORE had formalized this practice into the “PAD program.” Between 2007 and 2013, through the PAD program, CARECORE improperly authorized over 200,000 diagnostic procedures.

 

As part of the settlement, CARECORE must pay $54,000,000 to resolve both federal and state false claims act claims, the latter of which will be the subject of a separate settlement agreement between CARECORE and the states. In the settlement, CARECORE admits, acknowledges and accepts responsibility for the following conduct:

 

1. CARECORE provides services to health insurers, including managed care organizations that provide services to beneficiaries of the Medicare Part C and Medicaid programs (collectively, “MCOs”). CARECORE provides prior authorization services, which consist of screening prior authorization requests for certain procedures for medical reasonableness and necessity. During the times pertinent to this matter, CARECORE’s Clinical Reviewers, who generally were nurses, received information from the treating physicians and input that information into CARECARE’s proprietary software system. That software system, based on the information provided, either recommended approval of the prior authorization or recommended further review by a physician.

1. Under the applicable regulations and contractual provisions, if a plan decides to implement prior medical necessity review in order to cover physician-ordered services, only a physician or other appropriate health care professional with sufficient expertise has the authority to deny a procedure. Thus, if a prior authorization could not be issued based on the information currently supplied by the treating physician, the prior authorization request, including all of the related information, was placed in an electronic queue, the Medical Review Queue. The prior authorization request could be accessed in the Medical Review Queue by a CAERCORE Medical Director, who is a physician retained by CARECORE, who would review the information and determine whether to conduct a peer call with the treating physician or appraise information gathered after the initial request in order to determine whether prior authorization of the procedure was appropriate, or should be denied.

1. In order for the MCOs to meet timelines in the applicable regulations and/or pursuant to its contractual obligations and provisions, CARECORE was required to issue a determination on prior authorization requests within fixed time periods known as “Turn Around Times,” or “TATs”, often as little as 4 hours for urgent requests, and 48 hours for non-urgent requests. CARECORE was also subject to contractual monetary penalties if it failed to maintain performance standards, including meeting the processing deadlines set forth in the regulations and contracts.

1. Starting in at least 2007, CARECORE developed the “Process As Directed,” or “PAD” Program. Under the PAD Program, CARECORE’s Clinical Reviewers would approve certain prior authorization requests awaiting physician review that had been on the queue for nearly the entire applicable TAT. The PAD Program consisted of Clinical Reviewers improperly approving certain prior authorization requests on the Medical Review Queue without having obtained any new objective medical information about the request, and without a Medical Director having independently reviewed the prior authorization request. These prior authorization requests (“padded requests”) were then transmitted to CARECORE’s client insurers, including MCOs, as preauthorized requests.

1. In 2007, the PAD Program was formalized into corporate policy, which included detailed training materials and daily reporting of the number of padded requests to high-level executives then-employed at CARECORE. When daily regular review of the Medical Review Queue showed the volume of cases in the Medical Review Queue was too high to make a timely decision for a significant volume of requests for prior authorization, certain Clinical Reviewers were directed by then-management to approve requests for prior authorization without obtaining or considering any new medical information.

1. From 2007 through June 13, 2013, CARECORE padded between 200,000 and 300,000 prior authorization requests.

1. In CARECORE’s role managing the prior authorization process, it had medical information of the beneficiaries seeking prior authorization. When CARECORE approved padded requests, CARECORE made a representation that it had appropriately reviewed the requests when it knew it had not. Thus, those padded requests incorporated CARECORE’s false representation that it had approved a case after completing the required review process. The MCOs thereafter provided coverage based on CARECORE’s approval of the prior authorizations.

1. MCOs would only pay for procedures that require a prior authorization if the prior authorization was granted in a manner consistent with the MCO’s policies and procedures. Thus, the PAD Program resulted in insurance claims related to the padded requests being presented to the MCOs for payment with federal and/or state government funds, and MCOs actually paid insurance claims made in connection with the padded requests.

The Complaint in this case was filed under the federal False Claims Act, which punishes violators who submit false claims or make false statements material to claims submitted to entities administering programs funded by the government. The allegations of fraud stated in the Complaint were first brought to the attention of the government by a whistleblower, who filed a lawsuit under the qui tam provisions of the False Claims Act. Those provisions allow private parties who have knowledge of fraud committed against the government to file suit on behalf of the government and share in any recovery. The United States may then intervene and file a complaint, as it did here.

 

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Mr. Kim praised the investigative work of the Offices of the State Attorneys General of the 29 states also named as plaintiffs in the qui tam complaint. He also thanked the U.S. Department of Health and Human Services, Office of Inspector General, for its assistance in this case.

The case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Arastu K. Chaudhury is in charge of this matter.

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 Office of the Federal Bureau of Investigation (“FBI”), announced today that WALTER C. LITTLE, a/k/a “Chet,” a former partner at an international law firm (the “Firm”), and ANDREW BERKE, a business associate of LITTLE, were arrested this morning and charged with insider trading. LITTLE and BERKE collectively made approximately $1 million in profits in connection with options and stock trading based on material nonpublic information that LITTLE improperly accessed from the Firm’s databases and then provided to BERKE. LITTLE and BERKE were arrested today and presented before a Magistrate Judge in the Middle District of Florida.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Walter Little, a former partner at a major international law firm, allegedly used confidential information – entrusted to the firm by its clients – to illegally trade for personal gain. Although he billed no work for these clients, Little allegedly used his position at the firm to access and share their nonpublic business information. As alleged, Little and Andrew Berke then used that inside information to make approximately $1 million in illegal profits. We continue the fight against illegal insider trading, and are committed, along with our partners at the FBI and the SEC, in ensuring fairness and integrity in our financial markets.”

FBI Assistant Director William F. Sweeney Jr. said: “Little and Berke allegedly used Little’s position at the firm to access material, nonpublic information and engage in insider trading – a scheme that ultimately resulted in collective profits of approximately $1 million. Having access to this type of information is a privilege, one that is extended in furtherance of trusted business-related matters. When clients’ proprietary information is used in this way, they’re not the only ones at risk of losing; keeping our markets fair for all investors remains a top priority for the FBI. We will continue to work with our law enforcement partners to bring charges against those who use illegal and unfair advantages in our securities markets.”

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

Between February 2015 and May 2016, LITTLE was employed at the Firm as a partner. During that time, the Firm provided transactional and regulatory legal advice to a wide variety of corporations, among other services. Clients regularly entrusted the Firm with nonpublic information and the Firm consequently enacted policies requiring its employees to keep such information confidential. LITTLE, however, failed to abide by these policies. Even though he did not perform any billable work for the associated clients, LITTLE accessed documents relating to seven different companies containing material nonpublic information about (1) a client’s anticipated delisting from the NASDAQ stock exchange; (2) multiple clients’ involvement in mergers and acquisitions; (3) multiple clients’ anticipated earnings announcements; and (4) a securities offering being planned by a client. LITTLE then purchased and sold stock and options based on the information contained in these documents, making profits of over approximately $320,000.

In addition to trading on the information himself, LITTLE also provided the information to BERKE, his business associate and friend. BERKE also traded on the information, making profits of over approximately $660,000. For example, on or about July 23, 2015, LITTLE accessed a document on the Firm’s document management system entitled “Revised Merger Agreement,” which contained material nonpublic information about an upcoming merger of a Firm client. The following morning, between approximately 8:31 a.m. and 8:34 a.m., LITTLE and BERKE exchanged approximately six text messages. Approximately an hour later, at 9:41 a.m., BERKE purchased hundreds of shares of stock in the relevant company. The merger referenced in the document that LITTLE had accessed became public approximately three days later, resulting in significant profits for BERKE.

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LITTLE, 43, of Tampa, Florida, and BERKE, 49, of Apollo Beach, Florida, are each charged with one count of conspiring to commit securities fraud and six counts of securities fraud. LITTLE is also charged with an additional five counts of securities fraud. The charge of conspiring to commit securities fraud carries a maximum sentence of five years in prison, and each securities fraud count 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 statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants would be determined by the judge.

Mr. Kim praised the investigative work of the FBI and thanked the SEC, which has filed civil charges in a separate action. He added that the FBI’s investigation is ongoing.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorney Robert Allen is in charge of the prosecution. The allegations contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

 

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[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.