Southern District of New York

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that ALEKSANDR BURMAN, a/k/a “Alexander Burman,” was sentenced today by U.S. District Judge Paul G. Gardephe to 10 years in prison. BURMAN organized and managed a large health care fraud scheme through six medical clinics in Brooklyn, through which BURMAN and his co-conspirators defrauded the Medicare and New York State Medicaid (“Medicaid”) programs of more than $26 million. As part of the scheme, BURMAN and his co-conspirators paid cash kickbacks to elderly and financially disadvantaged patients insured by Medicare and/or Medicaid, to induce those patients to receive medically unnecessary medical services and equipment, and then to bill Medicare and Medicaid for those unnecessary services or for additional non-existent services and equipment. BURMAN pled guilty on March 18, 2016, before U.S. Magistrate Judge Henry B. Pitman to conspiring to commit wire fraud and health care fraud, health care fraud, and committing an offense while on pretrial release in an earlier criminal case.

Acting U.S. Attorney Joon H. Kim said: “Aleksandr Burman victimized both patients and taxpayers. He established and operated six fraudulent medical clinics, bilking Medicare and Medicaid out of more than $26 million. Medicare and Medicaid were established to assist the elderly and disadvantaged, not to enrich corrupt fraudsters.”

According to the Information to which BURMAN pled guilty, other filings in Manhattan federal court, and statements made in connection with BURMAN’s sentencing:

ALEKSANDR BURMAN established six clinics in Brooklyn (the “BURMAN Clinics”) that operated between 2007 and July 2013, which purported to offer medical services and diagnostic testing performed by or under the supervision of licensed medical doctors. Although BURMAN in fact owned and operated the Clinics, he caused them to employ three doctors (the “Clinic Doctors”) and arranged for these doctors to be listed as the respective nominal owners of the Clinics, since New York State law requires that such clinics be owned by health care professionals. Under BURMAN’s direction, employees of the Clinics paid cash kickbacks to elderly and disadvantaged people insured by Medicare and/or Medicaid to undergo unnecessary medical tests and procedures, and then fraudulently billed Medicare and Medicaid for such visits. The bills submitted to Medicare and Medicaid were fraudulent because, among other things, (a) they were for medically unnecessary treatment; (b) patients were paid kickbacks for receiving treatment; and (c) the bills fraudulently claimed that the Clinic Doctors had treated the patients. In other cases, BURMAN and his co-conspirators billed Medicare and Medicaid for medical services and supplies that were not provided at all.

The fraud also extended to other companies. For example, prescriptions from the doctors at the BURMAN clinics were used by a supply company that BURMAN partly owned to bill Medicaid for more than $3.5 million in durable medical equipment such as adult diapers, many of which were never provided to patients. Similarly, referrals from these same doctors were used by transportation companies to bill Medicaid for millions of dollars for medically unnecessary ambulette services.

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In addition to his prison term, BURMAN, 55, a resident of Manhattan, was ordered to pay $16,686,811 in forfeiture, of which $1.8 million, plus 22 pieces of real estate, have already been forfeited. BURMAN was also sentenced to three years of supervised release and a restitution order of $18,683,691. BURMAN was immediately remanded to the custody of the U.S. Bureau of Prisons.

Nine former employees of the BURMAN clinics, as well an additional associate, are facing charges in a separate case for related conduct. Those defendants are awaiting trial before United States District Judge Lorna G. Schofield in United States v. Vaid.

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation and the New York State Office of the Medicaid Inspector General (“OMIG”).

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JEFFREY HERRING, 27, was convicted today of robbing and murdering Michael Northcote on October 12, 2015, in Swan Lake, New York, as well as racketeering charges in connection with his membership in the Askari, a Bloods gang. The jury convicted HERRING on all five counts in the controlling indictment following a two-week trial before U.S. District Judge Kenneth M. Karas.

Acting U.S. Attorney Joon H. Kim stated: “Jeffrey Herring, as a member of the Bloods gang Askari, carried out a violent home-invasion robbery with fellow gang members and senselessly murdered Michael Northcote. Today, a unanimous jury convicted him of racketeering and murder, holding him accountable for his brutal crimes. We want to thank our law enforcement partners – federal, state, and local – for their outstanding work on this case. We are particularly grateful to Sullivan County District Attorney James Farrell for his extraordinary partnership with our Office on this and so many other cases. We hope the jury’s verdict brings some comfort and justice to the family of the victim of Herring’s crimes.”

According to court papers and evidence admitted at trial:

From 2014 to May 2016, JEFFREY HERRING was a member of the Askari in Sullivan County. The Askari is a subset of the Bloods gang that engaged in, among other things, robberies, shootings, and drug dealing. On October 12, 2015, HERRING and several other individuals, including other Askari members, carried out a home-invasion robbery of Michael Northcote, a marijuana dealer, at 177 Cohen & Cohen Road, Swan Lake, New York. In the course of that robbery, HERRING shot and killed Northcote.

For these activities, HERRING was convicted of one count of conspiracy to commit robbery, which carries a maximum sentence of 20 years; one count of robbery, which carries a maximum sentence of 20 years; one count of murder through the use of a firearm, which carries a mandatory minimum sentence of 10 years, to be served consecutively to any other sentence, and a maximum sentence of life; conspiring to violate the racketeering laws, which carries a maximum sentence of 20 years; and felony murder in aid of racketeering, which carries a mandatory minimum sentence of life imprison. 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.

HERRING is scheduled to be sentenced on November 16, 2017, before Judge Karas.

Acting U.S. Attorney Kim praised the Sullivan County District Attorney, the FBI, the New York State Police, the Sullivan County Sheriff’s Office, the Village of Monticello Police Department, and the Village of Liberty Police Department for their outstanding work in this investigation.

The case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Michael Gerber, Lauren Schorr, and Maurene Comey are in charge of the prosecution.

A Bronx, New York attorney, who ran a tax preparation business, was sentenced to serve 24 months in prison today for filing thousands of fraudulent tax returns that claimed more than $6 million in bogus deductions, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Joon H. Kim for the Southern District of New York.

“William Doonan used his status as an attorney to attract clients to his tax preparation business,” said Acting Deputy Assistant Attorney General Goldberg. “But instead of performing honest and professional work, he routinely falsified their returns, adding more than $6 million in phony deductions and causing the Internal Revenue Service (IRS) to incur more than $1.8 million in lost taxes. Doonan’s prison sentence today makes clear that those who prepare and file fraudulent returns face significant penalties.”

William Doonan’s so-called ‘business’ didn’t prepare taxes, it manufactured lies and false tax returns that resulted in more than $1.8 million in lost revenue for the IRS,” said Acting U.S. Attorney Kim. “In filing thousands of federal tax returns, Doonan used his legal knowledge to circumvent the law. Thanks to the dedicated investigators of the IRS, he will be held to account for his criminal misdeeds.”

“Doonan wreaked havoc on the taxpayers whose returns he prepared,” said Chief Richard Weber of IRS Criminal Investigation (CI). “Return preparer fraud is a priority for IRS CI and we are committed to investigating and putting a stop to unscrupulous criminals who take advantage of their clients. But, taxpayers must be diligent too and be careful when choosing a return preparer. It is important to know that even if someone else prepares your return, you are ultimately responsible for all the information on the tax return.”

According to documents and allegations in the Information to which William Doonan, pleaded guilty, other documents filed in Manhattan federal court, and statements made in court proceedings:

Doonan, 69, a New York licensed attorney since 1982, ran a tax preparation business in the Bronx using the firm name, “William Doonan, Esq.” Every year from 2010 through 2013, Doonan prepared and filed between 3,000 and 5,000 federal tax returns with the IRS for taxpayer-clients in exchange for a fee. Several thousand of these returns were fraudulent and reported bogus “consulting” businesses and business losses, while others claimed fake deductions based on false medical and dental expenses, state and local taxes, home mortgage interest, charitable donations and job expenses. In total, Doonan included more than $6 milion in fabricated and inflated items on his clients’ federal tax returns and caused a tax loss of more than $1.8 million.

In addition to the term of prison imposed, U.S. District Judge Vernon S. Broderick also ordered Doonan to serve one year of supervised release, to pay $65,820 in restitution to the IRS and to pay a fine of $10,000. Doonan previously pleaded guilty in November 2016 to aiding and assisting in the preparation of a false tax return and obstructing and impeding the due administration of internal revenue laws.

Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Kim praised special agents of IRS–Criminal Investigation, who conducted the investigation, and Assistant Chief Jorge Almonte of the Tax Division, who prosecuted the case.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Stuart M. Goldberg, the Acting Deputy Assistant Attorney General for the Tax Division of the Department of Justice, announced today that WILLIAM DOONAN, an attorney who operated a tax preparation business in the Bronx, New York, was sentenced today to 24 months in prison by U.S. District Judge Vernon S. Broderick for preparing and filing thousands of false and fraudulent returns that claimed more than $6 million in bogus deductions. DOONAN pled guilty on November 1, 2016, before Judge Broderick to one count of aiding and assisting in the preparation of a false tax return, and one count of obstructing and impeding the due administration of internal revenue laws.

Acting Manhattan U.S. Attorney John H. Kim said: “William Doonan’s so-called ‘business’ didn’t prepare taxes, it manufactured lies and false tax returns that resulted in more than $1.8 million in lost revenue for the IRS. In filing thousands of federal tax returns, Doonan used his legal knowledge to circumvent the law. Thanks to the dedicated investigators of the IRS, he will be held to account for his criminal misdeeds.”

Acting Deputy Assistant Attorney General Stuart M. Goldberg said: “William Doonan used his status as an attorney to attract clients to his tax preparation business. But instead of performing honest and professional work, he routinely falsified their returns, adding more than $6 million in phony deductions and causing the IRS to incur more than $1.8 million in lost taxes. Doonan’s prison sentence today makes clear that those who prepare and file fraudulent returns face significant penalties.”

According to the allegations in the Information to which DOONAN pled guilty, other documents filed in Manhattan federal court, and statements made in court proceedings:

DOONAN, a New York-licensed attorney since 1982, carried out a tax preparation business in the Bronx using the firm name “William Doonan, Esq.” Every year from 2010 through 2013, DOONAN prepared and filed between 3,000 and 5,000 federal tax returns with the Internal Revenue Service (“IRS”) for taxpayer-clients in exchange for a fee. Several thousands of these returns were false and fraudulent in that they attached Schedules C to the clients’ returns that reported “consulting” businesses the clients did not own, operate, or materially participate in, and business losses that the relevant clients did not incur. DOONAN also prepared returns that attached Schedules A that reported false medical and dental expenses, state and local taxes, home mortgage interest, gifts to charity, job expenses, and other miscellaneous deductions. Between tax year 2009 through tax year 2012, DOONAN included in excess of $6 million in these fabricated and inflated items on his clients’ federal tax returns. As part of his plea, DOONAN agreed that he caused a tax loss of between $1.5 and $3.5 million.

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In addition to the term of imprisonment, DOONAN, 69, of the Bronx, New York, was sentenced to one year of supervised release, ordered to pay $65,820 in restitution to the IRS, and ordered to pay a fine of $10,000.

Mr. Kim and Mr. Goldberg praised the outstanding efforts of IRS-Criminal Investigation in the investigation.

This case is being handled by the U.S. Attorney’s Office’s Complex Frauds and Cybercrime Unit. Special Assistant U.S. Attorney Jorge Almonte of the Department of Justice’s Tax Division is in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Kenneth A. Blanco, the Acting Assistant Attorney General of the Department of Justice’s Criminal Division, announced that MAHMOUD THIAM was convicted in Manhattan federal court yesterday of money laundering charges stemming from his scheme to launder $8.5 million in bribes that THIAM received from senior representatives of a Chinese conglomerate. THIAM was charged with using his official position as Minister of Mines for the Republic of Guinea to facilitate the award to the Chinese conglomerate of exclusive and highly valuable investment rights in various sectors of the Guinean economy. THIAM was convicted after a seven-day trial before U.S. District Judge Denise L. Cote.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As a New York federal jury has now found, Thiam abused his official government position to enrich himself at the expense of one of Africa’s poorest countries. Thiam laundered the proceeds of his bribery scheme into the United States to fund his lavish lifestyle, buying a multi-million dollar estate in Dutchess County, and paying for private schools for his children. Thanks to the work of the FBI, Thiam’s scheme was exposed and he was swiftly convicted.”

Acting Assistant Attorney General Kenneth A. Blanco said: “As a high-level Minister in Guinea, Thiam sold out his country and then used U.S. banks and real estate to hide millions in bribes paid to him by a Chinese conglomerate. Corruption is a global disease that undermines the rule of law everywhere. The Justice Department is committed to investigating and prosecuting those who commit these crimes and use the U.S. financial system and free marketplace to conceal and benefit from their crimes.”

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

THIAM, a United States citizen who was Minister of Mines and Geology of the Republic of Guinea in 2009 and 2010, engaged in a scheme to accept bribes from senior representatives of a Chinese conglomerate and to launder that money into the United States and elsewhere. In exchange for these multimillion-dollar bribe payments, THIAM used his position as Minister of Mines to facilitate the award to the Chinese conglomerate of exclusive and highly valuable investment rights in a wide range of sectors of the Guinean economy, including near-total control of Guinea’s significant mining sector.

In order to receive the bribes covertly, THIAM opened a bank account in Hong Kong (the “Hong Kong Account”) and misreported his occupation to the Hong Kong bank to conceal his status as a public official in Guinea. Upon receiving the bribes, THIAM transferred millions of dollars in bribe proceeds from the Hong Kong Account to, among others, THIAM’s bank accounts in the United States; a Malaysian company that facilitated and concealed THIAM’s purchase of a $3,750,000 estate in Dutchess County, New York; private preparatory schools in Manhattan attended by THIAM’s children; and at least one other West African public official.

To further conceal the unlawful source of the bribery proceeds that THIAM transferred from the Hong Kong Account to banks in the United States, THIAM lied to two banks based in Manhattan and on tax returns filed with the Internal Revenue Service regarding the bribe payments, his position as a foreign public official, and the source of the funds in the Hong Kong Account. In total, THIAM received approximately $8.5 million in bribes from the Chinese conglomerate.

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THIAM, 50, of Manhattan, was convicted of one count of transacting in criminally derived property, which carries a maximum sentence of 10 years in prison, and one count of money laundering, which carries a maximum sentence of 20 years in prison. THIAM is scheduled to be sentenced before Judge Cote on August 11, 2017, at 10:00 a.m.

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 Federal Bureau of Investigation. The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter. The Office is grateful to the government of Guinea for providing substantial assistance in gathering evidence during this investigation.

The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorneys Elisha J. Kobre and Christopher J. Dimase and Trial Attorney Lorinda I. Laryea of the Fraud Section of the Justice Department’s Criminal Division are in charge of the prosecution.

A former Minister of Mines and Geology of the Republic of Guinea, has been convicted by a federal jury for his role in a scheme to launder bribes paid to him by executives of China Sonangol International Ltd. (China Sonangol) and China International Fund, SA (CIF). The jury reached its verdict yesterday after five hours of deliberations, following a seven-day trial.

Acting Assistant Attorney General Kenneth Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Joon Kim for the Southern District of New York, Assistant Director Stephen Richardson of the FBI’s Criminal Investigative Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office announced the conviction.

Mahmoud Thiam, 50, of New York, was convicted of one count of transacting in criminally derived property and one count of money laundering. According to the charges, the funds that were laundered were proceeds derived through violations of Guinean bribery laws.

“As a high-level Minister in Guinea, Thiam sold out his country and then used U.S. banks and real estate to hide millions in bribes paid to him by a Chinese conglomerate,” said Acting Assistant Attorney General Blanco. “Corruption is a global disease that undermines the rule of law everywhere. The Justice Department is committed to investigating and prosecuting those who commit these crimes and use the U.S. financial system and free marketplace to conceal and benefit from their crimes.”

“As a New York federal jury has now found, Thiam abused his official government position to enrich himself at the expense of one of Africa’s poorest countries,” said Acting U.S. Attorney Kim. “Thiam laundered the proceeds of his bribery scheme into the United States to fund his lavish lifestyle, buying a multi-million dollar estate in Dutchess County, and paying for private schools for his children. Thanks to the work of the FBI, Thiam’s scheme was exposed and he was swiftly convicted.”

“This conviction showcases the FBI’s commitment to combatting corruption domestically and abroad,” said Assistant Director Stephen Richardson. “Thiam’s misuse of his official position for personal gain violated federal law and the trust of the Guinean people. I applaud the excellent work that our employees put into this case and thank all of our partners who helped bring Thiam to justice.”

“The conviction of Thiam demonstrates that no one who violates public office is above the law when they are involved in corruption,” said Assistant Director in Charge Sweeney. “The FBI’s International Corruption Squads were established to take on foreign corruption cases like this that use money laundering and lies to deceive the trust in public office.”

According to evidence presented at trial, China Sonangol, CIF and their subsidiaries signed a series of agreements with Guinea that gave them lucrative mining rights in Guinea, and Thiam influenced the Guinean government’s decision to enter into those agreements while serving as Guinea’s Minister of Mines and Geology from 2009 to 2010.

The evidence showed that Thiam participated in a scheme to launder money from 2009 to 2011, during which time China Sonangol and CIF paid him $8,500,000 to a bank account in Hong Kong. Thiam then transferred approximately $3,900,000 to the United States through bank accounts and other means, and used the money to pay for luxury goods and other expenses, according to trial evidence. To conceal the bribe payments, Thiam falsely claimed to banks in Hong Kong and the United States that he was employed as a consultant and that the money was income from the sale of land which he earned before he was a minister, according to the evidence.

The purpose of the bribes, according to the evidence presented at trial, was to obtain substantial rights and interests in natural resources in Guinea, including the right to be the first and strategic shareholder with Guinea of a national mining company into which Guinea had to, among other things, transfer all of its stakes in various mining projects and future mining permits or concessions that the government decided to develop on its own. China Sonangol and CIF, through their subsidiaries, also obtained exclusive and valuable rights to conduct business operations in a broad range of sectors of the Guinean economy, including mining, according to the trial evidence.

Thiam was detained pending trial and is still in the custody of the U.S. Marshals. Sentencing is scheduled for Aug. 11, 2017.

Trial Attorney Lorinda Laryea of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Elisha Kobre and Christopher DiMase of the Southern District of New York are prosecuting the case. Fraud Section Assistant Chief Tarek Helou, Senior Trial Attorney Jason Linder, Trial Attorney Sarah Edwards, and Money Laundering and Asset Recovery Section Senior Trial Attorney Stephen Parker and Trial Attorney Alexis Loeb previously investigated the case. The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter. The department is grateful to the government of Guinea for providing substantial assistance in gathering evidence during this investigation. The department also thanks Israel and Switzerland for their assistance in the department’s investigation.

The FBI’s International Corruption Squads in New York City and Los Angeles are investigating the case. In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption.

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

To learn more about the government’s FCPA enforcement efforts, go to www.justice.gov/criminal/fraud/fcpa.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Jamal El-Hindi, the Acting Director of the Financial Crimes Enforcement Network (“FinCEN”), announced today that the United States Department of the Treasury (the “Treasury Department”) has settled its claims under the Currency and Foreign Transactions Reporting Act of 1970 (“Bank Secrecy Act” or “BSA”) against THOMAS E. HAIDER (“HAIDER”), the former chief compliance officer of MoneyGram International, Inc. (“MoneyGram”). During the relevant time period, MoneyGram operated a money transfer service that enabled its customers to transfer money from one MoneyGram outlet to another. In the settlement – which resolves claims that HAIDER is liable under the BSA for failing to ensure that MoneyGram implemented and maintained an effective anti-money laundering (“AML”) program and filed timely suspicious activity reports (“SARs”) with FinCEN – HAIDER has agreed to a three-year injunction barring him from performing a compliance function for any money transmitter. HAIDER has also agreed to pay $250,000, and has admitted, acknowledged, and accepted responsibility for, among other things, (1) failing to terminate specific MoneyGram outlets after being presented with information that strongly indicated the outlets were complicit in consumer fraud schemes, (2) failing to implement a policy for terminating outlets that presented a high risk of fraud, and (3) structuring MoneyGram’s AML program such that information that MoneyGram’s Fraud Department had aggregated about outlets, including the number of reports of consumer fraud that particular outlets had accumulated over specific time periods, was not generally provided to the MoneyGram analysts who were responsible for filing SARs.

The settlement was approved yesterday by U.S. District Judge David S. Doty of the U.S. District Court for the District of Minnesota.

Acting U.S. Attorney Joon H. Kim said: “Compliance officers perform an essential function, serving as the first line of defense in the fight against fraud and money laundering. Unfortunately, as today's settlement shows, Thomas Haider violated his obligations as MoneyGram's chief compliance officer. By failing to terminate MoneyGram outlets that presented a high risk for fraud and to take other actions clearly required of him, Haider allowed criminals to use MoneyGram to defraud innocent consumers. We are committed to working with FinCEN to enforce the requirements of the Bank Secrecy Act and to hold individuals like Haider accountable.”

Acting FinCEN Director Jamal El-Hindi said: “FinCEN relies on compliance professionals from every corner of the financial industry. FinCEN and our law enforcement partners need their judgment and their skills to effectively fight money laundering, fraud, and terrorist financing. Compliance professionals occupy unique positions of trust in our financial system. When that trust is broken, it is important that we take action so that the reputations of thousands of talented compliance officers are not diminished by any one individual’s outlying egregious actions. We have repeatedly said that when we take an action against an individual, the record will clearly reflect the basis for that action. Here, despite being presented with various ways to address clearly illicit use of the financial institution, the individual failed to take required actions designed to guard the very system he was charged with protecting, undermining the purposes of the BSA. Holding him personally accountable strengthens the compliance profession by demonstrating that behavior like this is not tolerated within the ranks of compliance professionals.”

As part of the settlement, filed in federal court in Minneapolis, HAIDER has admitted, acknowledged, and accepted responsibility for the below-described conduct that occurred during the period 2003 through May 23, 2008 (the “Covered Period”).

MoneyGram operated a money transfer service that enabled its customers to transfer money to and from various locations in the United States and abroad through MoneyGram’s global network of agents and outlets.

HAIDER was MoneyGram’s chief compliance officer, and was the most senior MoneyGram employee with direct oversight over MoneyGram’s Fraud Department and AML Compliance Department. As such, HAIDER had the authority to implement a policy for terminating or otherwise disciplining MoneyGram agents and outlets. In 2006 and 2007, members of MoneyGram’s Fraud Department proposed that MoneyGram implement a policy for terminating or otherwise disciplining agents and outlets that presented a high risk of fraud. A draft policy was provided to HAIDER no later than March 2007. However, MoneyGram’s Sales Department objected to a discipline/termination policy for high-fraud agents and outlets, and therefore, during HAIDER’s employment at MoneyGram, no such policy was implemented.

In addition, in April 2007, MoneyGram’s Fraud Department recommended terminating a number of specific MoneyGram outlets that were located in Canada. To support this recommendation, the Director of Fraud provided HAIDER and other senior managers with specific information on 49 Canadian outlets, which included spreadsheets analyzing the 49 outlets’ money transfer activity during the six-month period from September 2006 through February 2007. The spreadsheets revealed that the 49 outlets accounted for approximately 58% of all reported fraud involving money sent through MoneyGram’s money transfer system to Canada during this six-month period. The spreadsheets also reflected, among other things, that each of the 49 outlets had characteristics that HAIDER and the other members of the Fraud and AML Compliance Departments who reported to him viewed as strong indicators that an outlet was complicit in consumer fraud schemes. Among the 49 outlets were four outlets that were owned and/or operated by the same individual, James Ugoh. The April 2007 spreadsheets revealed that, during the six-month period, the four Ugoh outlets alone had collectively accumulated 150 consumer fraud reports, totaling more than $300,000 in consumer losses. Ugoh has since pled guilty to various crimes relating to consumer fraud, and he has admitted that almost all of the money his outlets received constituted fraud proceeds.

HAIDER had ultimate authority to terminate agents and outlets because of fraud or AML compliance concerns, but in the face of pushback from the Sales Department did not exercise that authority with respect to the vast majority of the 49 outlets identified in the April 2007 spreadsheets.

By April 2007, HAIDER was aware that MoneyGram’s Fraud Department had the ability to aggregate – and had been aggregating – information relating to MoneyGram’s agents and outlets, including the number of consumer fraud reports particular outlets had accumulated over specific time periods. However, HAIDER structured MoneyGram’s AML program such that this information was not generally provided to the MoneyGram analysts who were responsible for filing SARs. During the Covered Period, there were numerous outlets that the Fraud Department identified as having accumulated a disproportionate number of consumer fraud reports, but for which MoneyGram did not file SARs. In addition, MoneyGram’s AML Compliance Department failed to conduct adequate audits of many of those agents/outlets, and certain of the agents were permitted to open additional outlets.

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The Treasury Department filed its complaint in this lawsuit in the United States District Court for the Southern District of New York in December 2014. In March 2015, the parties agreed to transfer the case to the United States District Court for the District of Minnesota, where MoneyGram was headquartered for the period of time relevant to the Government’s complaint.

Mr. Kim thanked FinCEN’s Enforcement Division, Office of Chief Counsel, and Office of Special Investigations for their extraordinary assistance with this case.

This case has been handled at all times by the Civil Frauds Unit of the United States Attorney’s Office for the Southern District of New York. Assistant United States Attorneys Christopher B. Harwood, Jessica Jean Hu, Caleb Hayes-Deats, and Elizabeth M. Tulis are in charge of the case, having been designated as Special Assistant United States Attorneys for the District of Minnesota for that purpose.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Andriana Vamvakas, District Director of the Office of Labor-Management Standards, U.S. Department of Labor (“OLMS”), announced today the arrest of VICTOR DAVILA, the former president of the Hunts Point Police Benevolent Association (“HPPBA”), for embezzling union funds. As alleged in a Complaint unsealed today, DAVILA stole more than $35,000 from the HPPBA by fraudulently charging personal expenses to the HPPBA and by withdrawing thousands of dollars in cash from union accounts for his own purposes. DAVILA will be presented this afternoon before U.S. Magistrate Judge Sarah Netburn.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Victor Davila allegedly embezzled thousands of dollars from the union he was entrusted to serve as its president. Instead of serving his fellow police officers, he allegedly stole from them, using union funds to pay for his own travel to Puerto Rico, meals, and other personal expenses.”

DOL-OLMS District Director Andriana Vamvakas said: “Union officials are required to use the union’s funds only for legitimate purposes, not their own personal gain. Financial mismanagement by union officials not only breaks the law, it betrays the trust their membership placed in them.”

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

The HPPBA is the union for peace officers who work at and patrol the Hunts Point Market in the Bronx, New York. DAVILA served as the elected president of the HPPBA from in or about March 2011 through in or about March 2014. Beginning in at least July 2011, only months after becoming the union’s president, through February 2014, DAVILA stole money from the union by using an HPPBA debit card, linked to an HPPBA checking account, to charge expenses with no apparent relation to the business of the HPPBA, including, among other things: (1) multiple charges at a wholesale club in Westchester, New York, including for the purchase of eggs, soap, facial cream, a baking set, a waterproof camcorder, flowers, a video game, a mystery novel, women’s clothing, and a showerhead, (2) multiple charges at fast food and other restaurants, and (3) multiple charges for plane tickets to Puerto Rico. In addition, DAVILA withdrew thousands of dollars in cash from the HPPBA checking account using ATMs, and frequently then deposited corresponding amounts of cash into his own bank account. Based on the investigation to date, it appears that DAVILA stole more than $35,000 in total from the HPPBA.

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DAVILA, 50, of the Bronx, New York, was arrested this morning in Manhattan. DAVILA was charged with embezzling union funds, 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.

Mr. Kim praised the efforts of the United States Department of Labor, Office of Labor-Management Standards, in this investigation.

This case is being handled by the Office’s Public Corruption Unit. Assistant United States Attorney Jacob Warren 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.

[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, announced that JEFFREY GREEN, a former correction officer at the Bedford Hills Correctional Facility for Women (the “Bedford Facility”), pled guilty today before U.S. Magistrate Judge Paul E. Davison to violating the constitutional civil rights of an inmate by sexually assaulting her at the Bedford Facility.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As he admitted in court today, Jeffrey Green sexually assaulted a defenseless female inmate. Green betrayed his duty as a correction officer and violated the Constitution. The protections of our Constitution do not end at our prisons’ walls.”

According to the allegations contained in the Information to which GREEN pled guilty today, and the related Complaint in which he was originally charged on February 15, 2017:

The Bedford Facility is a jail complex located in Bedford Hills, in Westchester County, New York, maintained by the New York State Department of Corrections and Community Supervision. At the time of the assault, Victim-1 was an inmate incarcerated at the Bedford Facility.

In the late evening hours of March 10, 2016, GREEN unlocked and opened the cell of Victim-1, and entered her cell unaccompanied by any other correction officer or other Bedford Facility staff. GREEN then grabbed Victim-1 by her arms, held her with her back against the wall of her cell, and began to lick, kiss, and bite her neck area, and to fondle her chest. After Victim-1 pushed GREEN away, he grabbed her, pushed her up against the wall of her cell, and again forced himself on her. GREEN then pulled up the shirt and bra of Victim-1 and bit, licked, and kissed her neck, chest, and breast and nipple areas, and fondled Victim-1’s groin area. GREEN was subsequently interrupted by the arrival of another correction officer knocking on a door to be admitted into the unit, upon which GREEN immediately departed Victim-1’s cell.

Victim-1 reported the assault the following morning, and a medical examination produced samples taken from Victim-1’s neck, left breast, and right breast that gave positive results with a presumptive test for saliva. A swab from Victim-1’s left breast generated a single-source male profile.

* * *

JEFFREY GREEN, 48, of Brooklyn, New York, pled guilty to one count of violating the constitutional civil rights of an inmate by subjecting her to cruel and unusual punishment, by subjecting her to abusive sexual contact, which carries a maximum sentence of one year 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.

GREEN is scheduled to be sentenced by Judge Davison on August 7, 2017.

Mr. Kim praised the investigative work of the New York State Department of Corrections and Community Supervision Office of Special Investigations and the Criminal Investigators at the United States Attorney’s Office. He also thanked the Westchester County District Attorney’s Office for their assistance in the investigation.

This case is being handled by the Office’s Civil Rights and Public Corruption Units. Assistant U.S. Attorneys Alex Rossmiller and Ellen Blain are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Philip R. Bartlett, the Inspector in Charge of the U.S. Postal Inspection Service, and David E. Beach, Special Agent in Charge of the New York Field Office of the U.S. Secret Service, announced the indictment and arrest today of MICHAEL MENDLOWITZ, a/k/a “Moshe Mendlowitz,” and RICHARD D. HART, a/k/a “Rick Hart,” on charges of fraudulently operating a payment card processing company that operated under various names including Commerce Payment Systems (“CPS”). MENDLOWITZ, the chief executive officer and part owner of CPS, and HART, a CPS vice president and director of sales and the president of a number of CPS affiliated companies, are charged with masterminding a years-long scam that took more than $30 million from more than 10,000 small businesses, who relied upon CPS to help them process debit card and credit card sales. MENDLOWITZ and HART were arrested this morning and will be presented and arraigned later today before U.S. District Judge Vernon S. Broderick.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Michael Mendlowitz and Richard Hart, executives of a credit card processing company, allegedly preyed on small business owners, defrauding over ten thousand businesses of over $30 million. Small businesses – like all businesses – are entitled to be treated fairly and to have their bills honestly reflect the services they received. That is not what the businesses that Mendlowitz and Hart dealt with got. Instead, they allegedly got a series of lies and misrepresentations to support tens of millions of dollars in overbilling.”

U.S. Postal Inspector in Charge Philip R. Bartlett said: “In an economy where small businesses are already struggling, it’s disappointing these individuals allegedly devised a scheme to prey upon these business owners by lying and manipulating the fees they are required to pay for debit and credit transactions. Postal Inspectors reminds fraudsters that defrauding members of the business community will never be tolerated. We will find you and bring you to justice for misuse of the US Mail.”

Secret Service Special Agent in Charge David E. Beach said: “Technological advancements have led to the sophistication of fraudulent schemes. While these schemes have a profound impact on our financial crimes investigations, this case demonstrates the combined power of law enforcement and our federal partners to share information and resources, and ultimately bring the alleged perpetrators to justice.”

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

MENDLOWITZ and HART operated a fraud scheme founded on false claims of very low fees, along with false promises that there were “no hidden fees,” and that rates were “guaranteed for life.” In truth, however, CPS customers were charged all manner of hidden fees, and MENDLOWITZ subsequently altered customer accounts to add even higher fees. Among other deceptive tactics, MENDLOWITZ and HART used a “cost comparison calculator” that ostensibly showed potential customers a direct comparison between what they were currently paying versus what they would pay if they became customers of CPS. However, these cost comparison calculators were intentionally designed to conceal many of the fees that the customers would be charged.

In furtherance of their fraud, MENDLOWITZ and HART also concealed from customers pages of contract terms that directly contradicted representations made to customers during the sales process. When internet ratings of CPS became particularly negative, MENDLOWITZ and HART surreptitiously created a series of other corporate names, each with its own email domain, internet web page, and phone number, to operate their scheme free of the negative reviews. These brand-new affiliates were marketed under false brochures and websites that falsely claimed that the affiliate had been in business for many years, had “300,000 satisfied customers,” and that those customers included major national hotel chains, restaurant chains, and a university.

* * *

MENDLOWITZ, 42, of Woodmere, Long Island, and HART, 36, of East Meadow, Long Island, are each charged in three counts, with wire fraud, mail fraud, and conspiracy to commit wire and mail fraud. Each charge carries a maximum sentence of 20 years in prison, and a maximum fine of $250,000 or twice the gross gain or loss from the offense. The maximum potential sentences 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 U.S. Postal Inspection Service and the United States Secret Service, as well as the Office of the Special Investigator General for the Troubled Asset Relief Program (“SIGTARP”).

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

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Philip R. Bartlett, Inspector in Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), Adolphus P. Wright, the Special Agent in Charge of the Miami Field Division of the Drug Enforcement Administration (“DEA”), James J. Hunt, the Special Agent in Charge of the New York Field Division of the DEA, Peter Forcelli, Special Agent in Charge of the Miami Field Division and Puerto Rico Field Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”), Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), and  George P. Beach II, the Superintendent of the New York State Police (“NYSP”), announced the unsealing today of an Indictment charging eight members and associates of La Organizacion de Narcotraficantes Unidos (“La ONU”) with various racketeering, drug trafficking, and firearms offenses, including six murders. 

Five of the defendants are already in custody for other offenses.  The remaining three defendants – OSCAR VALDES-GARCIA, a/k/a “Pony,” WILLIAM VASQUEZ-BAEZ, and RALPH LABOY – will be presented today in the District of Puerto Rico before U.S. Magistrate Judge Silvia Carreno-Coll.  VASQUEZ-BAEZ was an active member of the Puerto Rico Police Department when he allegedly committed the May 9, 2007, murder of Anthony Castro-Carrillo, as charged in Counts 13 and 14 of the Indictment.  LABOY had recently resigned from the Puerto Rico Police Department when he allegedly committed the Castro-Carillo murder.  The case has been assigned to United States District Judge Jesse M. Furman in Manhattan.

All eight defendants are charged with murder.  In connection with the racketeering conspiracy and a narcotics conspiracy, members and associates of La ONU are charged in the Indictment with committing the following murders in Puerto Rico:

• The April 9, 2005, murder of Crystal Martinez-Ramirez.
• The June 23, 2006, double murder of Ken Gonzalez-Rodriguez and Jean Adorno-Caballero.
• The December 28, 2006, murder of Israel Crespo-Cotto.
• The May 9, 2007, murder of Anthony Castro-Carrillo.
• The March 20, 2009, murder of Carlos Barbosa.

Acting U.S. Attorney Joon H. Kim said: “Members and associates of a violent drug trafficking organization, La ONU, allegedly committed six ruthless murders to further a drug trade that funneled massive quantities of cocaine from Puerto Rico to New York. Frighteningly, one of those six murders allegedly was committed by an active and a former member of the Puerto Rico Police Department. As alleged, when police officers, sworn to protect the citizens they serve, instead kill to protect drug trafficking profits, that tears at the very fabric of civilized society. Such alleged lawlessness simply cannot be left unchecked. We thank all of our federal and local law enforcement partners for their tireless investigative work to bring these defendants to justice in a court of law.”

USPIS Inspector in Charge Philip R. Bartlett said:  “This criminal enterprise stopped at nothing to allegedly move drugs from Puerto Rico to the Bronx; it was all about money.  They didn’t care who or what got in their way, and based on the indictment, they ‘got rid’ of their perceived obstacles. Fortunately, members of this criminal enterprise underestimated the power of interagency cooperation and collaboration. These individuals will be brought to justice for their alleged heinous crimes against the community and the misuse of the US Mail to facilitate the transport of illegal drugs into the United States.”

DEA Special Agent in Charge Adolphus P. Wright said:  “Through this collaborative effort with our law enforcement partners, drug traffickers committing not only drug violations, but also other equally egregious and violent crimes, have been taken off the streets. We remain committed to pursuing their prosecution to the fullest extent of the law.”

DEA Special Agent in Charge James J. Hunt said:  “A 2013 investigation grew legs into something much more dangerous than a local drug distribution organization operating out of a daycare center in the Bronx. It led investigators to identifying the organization’s alleged source of supply comprising corrupt cops and violent thugs who were arrested today in Puerto Rico. This is a great example of collaborative law enforcement efforts.”

ATF Special Agent in Charge Peter Forcelli said:  “For years, ATF has made combatting violent crime its top priority and this case is a perfect example of our commitment to making our communities safer.  We will work tirelessly with our state, local, and federal partners to identify, investigate, and prosecute those who use or traffic in illegal firearms, regardless of where they engage in criminal activity. This case is a clear example of interagency teamwork and collaboration across several jurisdictions and I’m proud of the work that was done here.”

Superintendent George P. Beach II said:  “This investigation is yet another example of law enforcement partners working collaboratively to get dangerous individuals and drugs off our streets.  The expertise and dedication of our law enforcement colleagues charges eight individuals in multiple murders in Puerto Rico. Two of the individuals were police officers, trusted with enforcing the law, and were instead breaking it and causing terror in communities.  I thank all of our law enforcement partners for their hard work, professionalism and commitment to making our neighborhoods safer.”

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

La ONU was a criminal enterprise involved in the trafficking of cocaine from Puerto Rico to the Bronx, New York. The cocaine was distributed in New York, including out of a daycare center in the Bronx, New York.  Members and associates of La ONU engaged in acts of violence, including murder, to protect and expand the enterprise’s criminal operations and in connection with rivalries with other criminal organizations.  In particular, members of the enterprise shot and killed suspected rival drug trafficking members.

Count One of the Indictment charges JULIO MARQUEZ ALEJANDRO, a/k/a “Chino Montero,” LUIS BLONDET, a/k/a “Cabezon,” OSCAR VALDES-GARCIA, a/k/a “Pony,” JASON DONES-GONZALEZ, a/k/a “Jason,” a/k/a “Arrabal,” JOSE VICTOR PELLOT CARDONA, a/k/a “Vitito,” and REINALDO CRUZ-FERNANDEZ with participating in a racketeering conspiracy for criminal involvement in La ONU. 

Counts Two and Three of the Indictment charge LUIS BLONDET with the murder of Crystal Martinez-Ramirez in aid of racketeering, and a related firearms offense.

Counts Four, Five, and Six of the Indictment charge JULIO MARQUEZ ALEJANDRO and OSCAR VALDES-GARCIA with the murder of Jean Adorno-Caballero in aid of racketeering and in connection with a drug crime, as well as a related firearms offense.

Counts Seven, Eight, and Nine of the Indictment charge JULIO MARQUEZ ALEJANDRO and OSCAR VALDES-GARCIA with the murder of Ken Gonzalez-Rodriguez in aid of racketeering and in connection with a drug crime, as well as a related firearms offense.

Counts 10, 11, and 12 of the Indictment charge JULIO MARQUEZ ALEJANDRO and OSCAR VALDES-GARCIA with the murder of Israel Crespo-Cotto in aid of racketeering and in connection with a drug crime, as well as a related firearms offense.

Counts 13 and 14 of the Indictment charge RALPH LABOY and WILLIAM VASQUEZ-BAEZ with the murder of Anthony Castro-Carrillo in connection with a drug crime, as well as a related firearms offense.

Counts 15, 16, and 17 of the Indictment charge JULIO MARQUEZ-ALEJANDRO, JASON DONES-GONZALEZ, JOSE VICTOR PELLOT-CARDONA, and REINALDO CRUZ-FERNANDEZ with the murder of Carlos Barbosa in aid of racketeering and in connection with a drug crime, as well as a related firearms offense.

* * *

Charts containing the names, ages, 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 USPIS, the DEA, the ATF, and the NYPD. He also thanked the United States Attorney’s Office for the District of Puerto Rico, U.S. Attorney’s Office for the Middle District of Pennsylvania, the Office of the Special Narcotics Prosecutor for the City of New York, and the Puerto Rico Police Department for their support in this ongoing investigation.

This case is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Jordan Estes, Dina McLeod, Andrew Thomas, and Lara Pomerantz 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.

COUNT

CHARGE

DEFENDANTS

MAX. PENALTIES

1

Racketeering conspiracy

18 U.S.C. § 1962(d)

JULIO MARQUEZ-ALEJANDRO (age 47)

LUIS BLONDET (age 42)

OSCAR VALDES-GARCIA (age 35)

JASON DONES-GONZALEZ (age 37)

JOSE VICTOR PELLOT-CARDONA (age 38)

REINALDO CRUZ-FERNANDEZ (age 43)

Life in prison

2

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

LUIS BLONDET

Death penalty, or life in prison

3

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

LUIS BLONDET

Death penalty, or life in prison

4

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

5

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

6

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

7

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

8

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

9

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

10

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

11

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

12

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

JULIO MARQUEZ-ALEJANDRO

OSCAR VALDES-GARCIA

Death penalty, or life in prison

13

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

RALPH LABOY (age 36)

WILLIAM VASQUEZ-BAEZ (age 48)

Death penalty, or life in prison

14

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

RALPH LABOY

WILLIAM VASQUEZ-BAEZ

Death penalty, or life in prison

15

Murder in aid of racketeering activity

18 U.S.C. § 1959(a)(1)

JULIO MARQUEZ-ALEJANDRO

JASON DONES-GONZALEZ

REINALDO CRUZ-FERNANDEZ

JOSE VICTOR PELLOT-CARDONA

Death penalty, or life in prison

16

Murder in connection with a drug crime

21 U.S.C. § 848(e)(1)(A)

JULIO MARQUEZ-ALEJANDRO

JASON DONES-GONZALEZ

REINALDO CRUZ-FERNANDEZ

JOSE VICTOR PELLOT-CARDONA

Death penalty, or life in prison

17

Use of a firearm for murder

18 U.S.C. § 924(j)(1)

JULIO MARQUEZ-ALEJANDRO

JASON DONES-GONZALEZ

REINALDO CRUZ-FERNANDEZ

JOSE VICTOR PELLOT-CARDONA

Death penalty, or life in prison

[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 KWAME INSAIDOO, the former executive director of United Block Association (“UBA”), a New York-based non-profit organization, and his wife ROXANNA INSAIDOO, were found guilty in Manhattan federal court of embezzlement from a federally funded program, money laundering, and defrauding their mortgage lender. KWAME INSAIDOO was also found guilty of defrauding the City of New York in connection with UBA’s contracts to operate senior centers in Upper Manhattan. The jury convicted KWAME and ROXANNA INSAIDOO on all counts in the superseding indictment following a one-week trial before U.S. District Judge Valerie E. Caproni.

​Acting U.S. Attorney Joon H. Kim said: “As a unanimous jury found today, Kwame Insaidoo and his wife Roxanna Insaidoo stole hundreds of thousands of dollars from a government-funded non-profit organization that operated senior centers in Manhattan, and used that money to pay for luxury cars and personal expenses. The defendants’ brazen theft deprived some of the City’s neediest residents of public money for healthy meals and senior citizen programs. Despite efforts to hide their schemes, including the use of a fake charity, the outstanding investigative work of our partners at the New York City Department of Investigation exposed the defendants’ conduct, and the jury swiftly convicted them.”

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

UBA is a non-profit organization headquartered in New York, New York, that was controlled by KWAME INSAIDOO, its former Executive Director. UBA received funding from New York City’s Department for the Aging to operate and provide healthy meals and programming at four senior centers in Upper Manhattan. From in or about July 2008 through March 2015, the Department for the Aging paid UBA more than $8,700,000 in federal, state, and local funds to provide such services.

As found by the jury, ​KWAME INSAIDOO, with the assistance of his wife ROXANNA INSAIDOO, abused his authority as UBA’s executive director by embezzling over $580,000 from UBA. KWAME INSAIDOO and ROXANNA INSAIDOO, who were both signatories on a UBA bank account that was not subject to audits by the City, wrote hundreds of checks from that UBA account to themselves, their son, and a fake charity they used to launder some of the money. The defendants used the stolen funds to pay for personal expenses, including their home mortgage, the purchase of a Mercedes Benz and a Cadillac, and telephone bills and other personal utilities. They also wired more than $300,000 abroad.

​In addition, KWAME INSAIDOO repeatedly lied to the Department for the Aging in an effort to evade scrutiny for these unauthorized payments and to maintain UBA’s funding.

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

* * *

KWAME INSAIDOO, 60, and ROXANNA INSAIDOO, 63, both of Bay Shore, Long Island, were each found guilty of embezzlement from a federally funded program, conspiracy to commit money laundering, wire fraud of their mortgage lender, and conspiracy to commit wire fraud of their mortgage lender, each of which carries a maximum penalty of 20 years in prison, and also each was found guilty of conspiracy to embezzle from a federally funded program, which carries a maximum penalty of five years in prison. KWAME INSAIDOO was also found guilty of one count of defrauding the City of New York, which carries a maximum penalty of 20 years in prison. Their sentencings are set for August 11, 2017, before the Honorable Valerie E. Caproni.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, James G. Hunt, Special Agent in Charge of the New York Field Office of the Drug Enforcement Administration (“DEA”), and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced today the unsealing of an Indictment charging seven members of the “MMOB” drug trafficking organization with participating in a narcotics trafficking conspiracy.  The case has been assigned to United States District Judge Paul G. Gardephe.  Six of the defendants are currently in custody, and were presented before United States Magistrate Judge Kevin Nathaniel Fox later this afternoon. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “With today’s indictment of seven alleged members of a drug trafficking organization, we seek to stem the flow of drugs and the havoc they wrought on the Norwood neighborhood of the Bronx. As the Indictment alleges, these defendants trafficked in all types of drugs, including crack cocaine, cocaine, oxycodone and marijuana, and peddled them on the streets, by delivery, and out of apartment buildings in the area. I thank our partners at the NYPD and DEA for their continued commitment to combatting drug trafficking and making our city safer.”  

Special Agent in Charge James J. Hunt said:  “Law enforcement’s collaboration since last summer has led to the indictments of members of the MMOB crew on narcotics conspiracy charges. The Norwood section of the Bronx has been plagued by these individuals for some time and today’s efforts are a step in reclaiming this neighborhood for the community. These gang members allegedly trafficked a myriad of drugs to include strong prescription narcotics, which is a focus of our current investigative efforts, as these drugs are causing serious issues for our citizens.”        

Police Commissioner James P. O’Neill said:  “This indictment is another example of the NYPD’s commitment to hold responsible those who distribute narcotics into our communities. I commend the work of the NYPD investigators involved and our federal partners who continue to work tirelessly to protect our communities.”

As alleged in the Indictment and in other court papers[1]: 

The MMOB crew (“Mosholu Money Over Bitches”) is a group of individuals who are engaged in narcotics trafficking in the vicinity of Gates Place, Knox Place, and Mosholu Parkway, in the Norwood neighborhood of the Bronx (the “MMOB DTO”).  From July 2016 up to April 2017, in the Southern District of New York and elsewhere, JOSHUA PEREZ a/k/a “Link,” JAVIER COLLAZO, HIRAM COLLAZO, a/k/a “Alex, NATALIE JUSINO, KEVIN MIESES, AMAURY MODESTO, and ANDREW PEREZ conspired to distribute significant amounts of narcotics, including crack cocaine, cocaine, oxycodone, and marijuana, in and around the Norwood neighborhood of the Bronx, on a daily basis.  The MMOB DTO controlled narcotics sales between Gates Place and Knox Place, primarily between Mosholu Parkway and West Gun Hill Road, including by selling on the streets and in and around apartment buildings in that area. 

Each defendant is charged with one count of conspiracy to distribute narcotics, which carries a maximum sentence of life in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.  A chart with the defendants’ ages and residences is below.

All of the defendants except for JOSHUA PEREZ, who remains at large, are in custody.    

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

The case is being prosecuted by the Office’s Narcotics Unit.  Assistant U.S. Attorneys Eli J. Mark and Jilan J. Kamal 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

JOSHUA PEREZ a/k/a “Link”

30

Bronx, New York

JAVIER COLLAZO

20

Bronx, New York

HIRAM COLLAZO, a/k/a “Alex”

19

Bronx, New York

NATALIE JUSINO, a/k/a “Papo”

34

Bronx, New York

KEVIN MIESES

25

Bronx, New York

AMAURY MODESTO

37

Bronx, New York

ANDREW PEREZ

24

Bronx, New York

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

A former resident of Poughkeepsie, New York, pleaded guilty today in U.S. District Court in the Southern District of New York to filing fraudulent tax returns for others and for himself, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Joon H. Kim for the Southern District of New York.

“Just about a week ago, many Americans did their civic duty and sent off their returns to the IRS, enclosing checks for taxes duly owed,” said Acting Deputy Assistant Attorney General Goldberg. “They have the right to expect that those like Damyon Shuler who threaten the integrity of the tax system by preparing fraudulent returns and submitting false refund claims will be fully prosecuted.”

“Damyon Shuler stole from the U.S. Treasury by preparing and filing false tax returns,” said Acting U.S. Attorney Kim. “We thank our partners at the Justice Department’s Tax Division and IRS Criminal Investigations for their work in bringing Shuler’s crimes to light.”

“People who create and promote fraudulent tax schemes against the United States, will be held accountable,” said Special Agent in Charge James D. Robnett of the IRS-CI New York Field Office. Today’s guilty plea by Mr. Shuler again emphasizes that IRS-Criminal Investigation will continue their aggressive pursuit of those who would attempt to defraud America’s tax system.”

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

Damyon Shuler, 47, pleaded guilty to filing his own fraudulent tax return and filing a fraudulent return on behalf of another taxpayer. Between February 2010 and March 2011, Shuler approached relatives and others and told them that he could claim slave reparations on their behalf by filing tax returns with the IRS, for which he charged a $4,000 to $5,000 fee. Shuler then filed 30 returns with the IRS on behalf of other taxpayers, claiming bogus refunds of between $48,184 and $61,300 on each return. To generate the fraudulent refunds, Shuler reported fake capital gains income and taxes paid on that income in the exact same amount. He also attached to each return a form falsely reporting that a Treasury Department office or program identified as “Overpayment of Black Invest Taxes” had paid the taxes to the IRS. To conceal that he prepared these returns, Shuler did not list himself as the preparer. Shuler also filed a fraudulent 2009 income tax return for himself claiming a refund of $46,685 based on the same scheme. In total, Shuler’s fraudulent refund scheme led to losses of more than $1.2 million.

Sentencing is scheduled for Sept. 14. Shuler faces a statutory maximum sentence of three years in prison for each count of filing a fraudulent return, a period of supervised release, restitution and monetary penalties.

Acting Deputy Assistant Attorney General Goldberg and Acting U.S. Attorney Kim praised the outstanding work of special agents of IRS–CI, who conducted the investigation, and Assistant Chief Andrew J. Kameros of the Tax Division and Assistant U.S. Attorney Olga I. Zverovich, who are prosecuting the case.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Stuart M. Goldberg, Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division, and James D. Robnett, Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigations (“IRS-CI”), announced that DAMYON SHULER pled guilty today to charges relating to his preparation and filing of federal income tax returns that sought refunds based on the fraudulent claim that the taxpayers were entitled to slave-reparations payments.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Damyon Shuler stole from the U.S. Treasury by preparing and filing false tax returns. We thank our partners at the Justice Department’s Tax Division and IRS Criminal Investigations for their work in bringing Shuler’s crimes to light.”

Tax Division Acting Deputy Assistant Attorney General Stuart M. Goldberg said: “Just about a week ago, many Americans did their civic duty and sent off their returns to the IRS, enclosing checks for taxes duly owed. They have the right to expect that those like Damyon Shuler who threaten the integrity of the tax system by preparing fraudulent returns and submitting false refund claims will be fully prosecuted.”

IRS-CI Special Agent in Charge James D. Robnett said: “People who create and promote fraudulent tax schemes against the United States will be held accountable. Today’s guilty plea by Mr. Shuler again emphasizes that IRS-Criminal Investigation will continue their aggressive pursuit of those who would attempt to defraud America’s tax system.”

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

In January 2011, SHULER prepared a 2010 federal income tax return for a client claiming a bogus refund of $61,300. To generate the fraudulent refund, SHULER reported a fake capital gain of $60,575 and a tax paid on that income in the exact same amount. He also attached to the return a form falsely reporting that a Treasury Department office or program identified as “Overpayment of Taxes Black Investme (sic)” had paid the taxes to the IRS. To conceal that he prepared this return, SHULER did not list himself as the preparer.

In February 2010, SHULER also prepared a 2009 federal income tax return for himself that included a false Form 2439 claiming that taxes had been paid to the IRS on his behalf in the amount of $50,575 and fraudulently claiming a refund of $46,685.

SHULER has agreed to pay restitution to the IRS in the amount of $1,233,130 for this tax scheme.

* * *

SHULER, 47, pled guilty to the filing of his own false income tax return and the preparation and filing of a return on behalf of one of his clients. SHULER faces a statutory maximum sentence of three years in prison and a $250,000 fine on each of the two counts to which he pled guilty, and will be sentenced before United States District Judge Nelson S. Román on September 14, 2017, at 9:30 a.m.

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

This case is being handled by the Office’s White Plains Division. Assistant Chief Andrew J. Kameros of the Tax Division and Assistant U.S. Attorney Olga I. Zverovich are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Anthony Levey, Region 2 Director of the Federal Protective Service (“FPS”), announced today the unsealing of criminal charges against EDWIN CABAN, a Protective Security Officer, in the assault of a member of the public at a branch of the Social Security Administration (“SSA”). CABAN was charged with violating the civil rights of the victim by pushing the victim over a desk and then repeatedly punching the victim in the ribs without physical provocation. CABAN also is charged with filing a false report and making false statements to FPS agents to cover up the incident. CABAN was arrested this morning and is expected to be presented in federal court later today.

Acting Manhattan U.S. Attorney Joon H. Kim said: “The Federal Protective Service’s mission is to protect federal facilities, including employees and visitors. But in this case, we’ve alleged, an innocent visitor needed protection from a violent and unprovoked attack by Protective Security Officer Edwin Caban, which fractured the visitor’s ribs. Officer Caban then allegedly lied about the incident, falsely claiming the victim was disruptive and required removal from the building.”

FPS Region 2 Director Anthony Levey said: “The Federal Protective Service relies heavily on security guard contract vendors and the security guards they employ to assist in our mission of securing federal facilities throughout the nation. We recognize the importance of citizens being able to conduct business with their government safely and free from mistreatment, and will not tolerate conduct that infringes on this ability. We are taking these allegations of misconduct seriously. As soon as FPS learned of the allegations, we immediately took steps to remove this PSO from his position at the SSA building, and FPS agents were assigned to investigate further. FPS agents conducted interviews, collected evidence, and as a result, a complaint was filed by the United States Attorney’s Office for the Southern District of New York. SDNY issued an arrest warrant which was promptly executed, safely and professionally, by FPS law enforcement members. We would like to thank our colleagues in the United States Attorney’s Office for their guidance, assistance, and support throughout the course of this investigation.”

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

The SSA has multiple branch offices located throughout New York City, where claimants may request SSA services and make inquiries regarding social security benefits and Social Security cards. One branch office is located at 123 William Street (the “123 William Office”), in Manhattan. The 123 William Office is staffed by two Protective Security Officers, who are employees of a contractor for the Federal Protective Service of the United States Department of Homeland Security. The 123 William Office has several surveillance cameras, which captured the assault.

The Assault and Cover-Up
 

At approximately 12:37 p.m. on June 22, 2016, the victim (“Victim-1”) entered the 123 William Office, wheeling an elderly gentleman in a wheelchair into the reception area. CABAN attempted to move the wheelchair, which Victim-1 asked him not to do. After CABAN stepped away, Victim-1 withdrew a cellphone from his pocket. CABAN then walked back to Victim-1 and repeatedly accused him of taking a picture with his cellphone, which Victim-1 denied.

As recorded by security camera footage obtained from the SSA, CABAN at this point reached out toward Victim-1, and Victim-1 put both of his hands up in the air, with his palms facing CABAN. CABAN then took hold of Victim-1’s waist with both hands, pivoted, turned Victim-1 around, and then pushed Victim-1 backward toward the elevator bank. CABAN continued to push Victim-1 backward, toward a desk adjacent to the opening to the elevator bank, until Victim-1 fell backward over the desk. CABAN then took hold of Victim-1’s arms, and, as Victim-1 struggled to shake free of CABAN’s hold, CABAN took Victim-1 into the elevator bank.

After a brief struggle in the elevator bank, CABAN pushed Victim-1 up against a wall. Placing his left hand at the base of Victim-1’s throat, CABAN pinned Victim-1 against the wall. As Victim-1 stood there, not moving, with his hands up in the air in a gesture of surrender, CABAN punched Victim-1 four times in the chest and ribs. Victim-1 collapsed forward, and CABAN continued to hold on to Victim-1 as Victim-1 remained bent forward, clutching his abdomen.

At this point, CABAN’s partner, another Protective Security Officer (“PSO-1”), arrived in the elevator bank from a back area of the office and approached CABAN and Victim-1. CABAN let go of Victim-1, who remained against the wall, not moving. As PSO-1 stood a few feet away, CABAN punched Victim-1 again in the chest. After several minutes passed, CABAN and PSO-1 escorted Victim-1 out of the elevator bank and back into the main floor area, back toward where the man in the wheelchair was waiting.

As a result of the attack, Victim-1 suffered bodily injuries, including fractured ribs, bruising, and physical pain.

Shortly after the assault, Victim-1 called 911 and two New York City Police Department officers responded. One of these officers (“Officer-1”) entered the 123 William Office and spoke with CABAN about Victim-1’s allegations. CABAN stated to Officer-1 that he put his hands on Victim-1 to remove him from the office, at which point Victim-1 “flopped” onto the desk, knocking things over. CABAN denied touching Victim-1 after that point and denied entering the elevator bank during the incident.

That same afternoon, CABAN placed a telephone call to an FPS reporting center, in which CABAN made an oral report about the incident. CABAN stated that there was “a disruptive client in here that needed to be escorted out;” he did not disclose that he struck Victim-1.

After the incident, CABAN and PSO-1 discussed the event. PSO-1 wrote and submitted a Security Incident Report. CABAN asked PSO-1 to show him the report, which PSO-1 did. In that report, the only reference to use of force is PSO-1’s note that CABAN was “attempting to detain [Victim-1]” when PSO-1 arrived in the elevator bank. PSO-1 did not state in that report that CABAN struck Victim-1.

CABAN also wrote and submitted a Security Incident Report. In that report, CABAN stated that, as he “attempted to guide [Victim-1] out” of the office, Victim-1 “yelled and jumped onto the security desk flairing [sic] arms and legs knocking equipment around.” CABAN then stated that he placed Victim-1 in an “arm bar” and “took him by the elevator banks,” that Victim-1 “tried to break [his] hold” at which point CABAN “grabbed him under his chin” and “mainta[ined] a hold of his arm.” CABAN stated that PSO-1 then arrived. CABAN reported no other use of force against Victim-1. In particular, nowhere in the report did CABAN state that he struck Victim-1.

CABAN was interviewed twice by FPS agents. During the course of the first interview, CABAN hand-wrote and signed an affidavit. In those interviews and in that affidavit, CABAN denied that he spoke with PSO-1 about the incident after it occurred and denied seeing PSO-1’s report, though he did both. CABAN also falsely stated that Victim-1 threw himself over the desk, when in fact CABAN pushed Victim-1 over the desk, and that Victim-1 was resisting detention when CABAN struck him, when in fact Victim-1 was not resisting at that time.

* * *

CABAN, 55, of Astoria, New York, is charged with one count of deprivation of rights under color of law, which carries a maximum sentence of 10 years in prison, and one count of filing false forms and making false statements, 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.

Mr. Kim praised the investigative work of the FPS.

The case is being handled by the Office’s Public Corruption and Civil Rights Units. Assistant U.S. Attorneys Alison Moe and Jacob Lillywhite are in charge of the prosecution.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a superseding indictment charging ANTHONY DODAJ, 46, and DUANE MARTINEZ, 44, with narcotics dealing that resulted in the heroin overdose death of a 41-year-old patient in a hospital rehabilitation clinic.

On April 20, 2017, a grand jury returned an indictment charging DODAJ and MARTINEZ with conspiracy to distribute heroin. The indictment alleges that heroin distributed by DODAJ and MARTINEZ on January 1, 2017, resulted in the death of Ivy Katz, age 41.

DODAJ was arrested on a complaint on March 27, 2017, and was held without bail. MARTINEZ will be presented in federal court in Manhattan before U.S. Magistrate Judge Kevin Nathaniel Fox later today. The case has been assigned to U.S. District Judge Vernon S. Broderick. DODAJ and MARTINEZ each face a mandatory minimum term of 20 years in prison.

Acting U.S. Attorney Joon H. Kim stated: “As alleged, Duane Martinez and Anthony Dodaj worked together to deliver a fatal dose of heroin to Ivy Katz, even as she was a patient in a hospital rehabilitation clinic. Martinez and Dodaj will now be held to account for their role in fueling the tragic overdose death crisis in New York City.”

NYPD Commissioner James P. O’Neill stated: “These defendants face 20-years-to-life in prison in connection with the overdose death of a 41-year-old woman. Those who sell heroin should know that the NYPD is committed to investigating overdoses to hold dealers responsible for their deaths. I want to thank the U.S. Attorney’s Office and the NYPD detectives who worked on this case. Together, we’re fighting the alarming rise in overdoses with every tool we have.”

As alleged in the Indictment against DODAJ and MARTINEZ[1]:

From at least in or about September 2016 through in or about March 2017, in the Southern District of New York and elsewhere, ANTHONY DODAJ and DUANE MARTINEZ, the defendants, and others conspired to sell heroin. In addition, the use of controlled substances distributed by DODAJ and MARTINEZ on or about January 1, 2017, resulted in the death of Ivy Katz.

* * *

ANTHONY DODAJ, 46, and DUANE MARTINEZ, 44, each face a maximum of life in prison, and a mandatory term of 20 years in prison.

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

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

This matter is being handled by the Office’s Narcotics Unit. Assistant United States Attorney David W. Denton Jr. is in charge of the prosecution.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), and James P. O’Neill, Commissioner of the New York City Police Department (“NYPD”), announced today that PAUL DEAN, ROBERT ESPINEL, GAETANO VALASTRO, a/k/a “Guy,” and JOHN CHAMBERS were arrested and charged in Manhattan federal court with conspiracy to commit bribery, among other offenses, in connection with a scheme involving the approval of gun licenses by the NYPD License Division in exchange for cash payments and non-monetary bribes.  Acting U.S. Attorney Kim also announced the unsealing of the guilty pleas of David Villanueva, a former NYPD Sergeant assigned to the License Division, and Frank Soohoo, a gun license expediter.  In connection with their guilty pleas, Villanueva and Soohoo have agreed to cooperate with the Government.

DEAN and ESPINEL were arrested and charged in Manhattan federal court with two counts of conspiracy to commit bribery, and one count of extortion; VALASTRO was arrested and charged in Manhattan federal court in the same case with two counts of conspiracy to commit bribery, and one count of making false statements.  CHAMBERS was arrested and charged separately in Manhattan federal court with one count of conspiracy to commit bribery and one count of bribery.  All four defendants were arrested this morning by FBI agents and officers from the NYPD’s Internal Affairs Bureau (“IAB”), and will be presented before U.S. Magistrate Judge Kevin Nathaniel Fox in Manhattan this afternoon.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Corruption was allegedly pervasive at the NYPD’s License Division going up as high as Lieutenant Paul Dean, until recently the Division’s second in command, and including three other officers, Sergeant David Villanueva, Officer Robert Espinel and Officer Richard Ochetal.  Corruption at the License Division also spawned a cottage industry of parasitic profiteers, alleged bribers masquerading as so-called expediters, that included other former police officers and John Chambers, a lawyer and former Brooklyn prosecutor.  As alleged, for the police officers and expediters charged in this case, the critically important police function of issuing and controlling gun licenses was one they were willing to pervert for personal profit.  When police officers violate their oath in this way, they not only betray the public they have sworn to protect, but their fellow officers who do their jobs the right way, remaining faithful to the duties they owe to the public and to each other.  This Office, along with our partners at the FBI and NYPD, remain as committed as ever to ensure that public servants serve the public, not their personal pocketbooks.” 

FBI Assistant Director William F. Sweeney Jr. said:  “Law enforcement officials are granted authority to uphold the fundamental rule of law. But any abuse of this power – no matter how great or how small – is nothing short of a crime in and of itself.  Today, as alleged, a series of gun expediters and former NYPD officers of various ranks face charges for their alleged role in a scheme that threatened the safety of our communities.  The vast majority of NYPD officers who willingly protect our city each and every day, no matter the risks, shouldn’t be associated with a select few who, as charged, placed a higher priority on satisfying their desires than upholding the law.”

NYPD Commissioner James P. O’Neill said:  “Over the past three years, the NYPD’s Internal Affairs Bureau has conducted a thorough and comprehensive investigation in coordination with the FBI.  The behavior, as alleged in today’s charging documents, is intolerable. The charges reflect a serious violation of the oath these officers swore to uphold, eroding at the trust the public has in this Department.  The NYPD will continue to investigate alleged wrongdoing and root out corruption wherever it might be found.”

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

court[1]:

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

From at least 2013 through 2016, DEAN, ESPINEL, Villanueva, and Police Officer Richard Ochetal solicited and accepted bribes from gun license expediters in exchange for providing assistance to the expediters’ clients in obtaining gun licenses quickly and often with little to no diligence.   They obtained bribes from at least three expediters: VALASTRO, Soohoo, and Alex Lichtenstein, a/k/a “Shaya.”  VALASTRO was a former NYPD Detective who retired in 1999, and who operated a gun store out of which he sold guns, gun paraphernalia, and gun safety courses.

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

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

*                *                *

In addition to this bribery scheme, JOHN CHAMBERS, a former Assistant District Attorney in Kings County, was arrested for a separate bribery conspiracy with Villanueva.  CHAMBERS is an attorney who represents individuals before the License Division, and who markets himself to potential clients as the “Top Firearms Licensing Attorney in NY.”  From at least 2010 through 2015, CHAMBERS gave Villanueva numerous valuable items, including tickets to sporting and entertainment events for Villanueva and his family, free dinners and lunches for Villanueva, sports memorabilia, and a wristwatch valued at approximately $8,000.

In exchange, Villanueva assisted CHAMBERS’s clients in several ways.  He ensured that renewal applications submitted by CHAMBERS’s clients, which typically take 30 to 40 days for approval, were renewed more expeditiously, sometimes as quickly as within one day.  In addition, in evaluating “incidents” – investigations to determine whether an individual’s gun license should be suspended or revoked – Villanueva expedited the investigations, and then shortened the suspension periods, for CHAMBERS’s clients.
           
Villanueva also helped CHAMBERS renew gun licenses for clients before the Pistol Section of the Nassau County Police Department, where Villanueva had contacts.  Starting in or about 2012, CHAMBERS brought his clients’ renewal applications to Villanueva at One Police Plaza, and Villanueva mailed those applications to the Pistol Section using his NYPD License Division stationery.  Villanueva did so knowing that because he was submitting the renewal applications using his NYPD License Division stationery, the renewals would be approved in a significantly faster time for CHAMBERS’s clients than for other applicants.  In exchange, CHAMBERS paid Villanueva several times in cash, as well as with tickets to sporting and entertainment events for Villanueva and his family.  CHAMBERS typically mailed Villanueva the cash by taping it to the inside of a magazine.      

*                *                *

DEAN, 44, who resides in Wantagh, New York, has been charged with two counts of conspiracy to commit bribery, each of which carries a maximum term of five years in prison, and one count of extortion, which carries a maximum term of 10 years in prison.

ESPINEL, 47, who resides in Seaford, New York, has been charged with two counts of conspiracy to commit bribery, each of which carries a maximum term of five years in prison, and one count of extortion, which carries a maximum term of 10 years in prison.

VALASTRO, 58, who resides in Queens, New York, has been charged with two counts of conspiracy to commit bribery, each of which carries a maximum term of five years in prison, and one count of making false statements, which also carries a maximum term of five years in prison.

CHAMBERS, 62, who resides in Manhattan, New York, has been charged with one count of bribery, which carries a maximum term of 10 years in prison, and one count of conspiracy to commit bribery, which carries a maximum term of five years in prison.

Villanueva, 43, pled guilty in February 2017 to one count of conspiracy to commit bribery, four counts of bribery, and one count of making false statements.

Soohoo, 55, pled guilty in October 2016 to one count of conspiracy to commit bribery, one count of bribery, one count of making false statements, and one count of mail fraud.

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 praised the investigative work of the FBI and the NYPD Internal Affairs Bureau, and noted that the investigation is continuing.  

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

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

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

There will be a press conference today to announce federal public corruption charges relating to the New York City Police Department. Relevant charging documents are attached.

WHO:

Joon H. Kim, Acting United States Attorney for the Southern District of New York

William F. Sweeney, Special Agent-in-Charge of the New York Field Office of the Federal Bureau of Investigation

 James P. O’Neill, Commissioner of the Police Department for the City of New York

WHEN:

Tuesday, April 25, 2017

11:00 a.m.

WHERE:

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

1 St. Andrew’s Plaza

New York, NY 10007

CONTACT:

James Margolin, Dawn Dearden, Nicholas Biase

(212) 637-2600

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 AVANEESH KRISHNAMOORTHY, who works as a vice president and risk management specialist for a Manhattan-based investment bank (the “Investment Bank”), was arrested this morning and charged with insider trading. KRISHNAMOORTHY made approximately $48,000 in connection with stock and options trading based on material nonpublic information he misappropriated from the Investment Bank and its parent company (the “Company”), about a private equity fund’s potential acquisition of a publicly traded company.

KRISHNAMOORTHY was presented today in Manhattan federal court before United States Magistrate Judge Kevin Nathaniel Fox.

Acting U.S. Attorney Joon H. Kim said: “Avaneesh Krishnamoorthy is charged with violating his duty to his company and trading on insider information. He allegedly exploited his access to information about a pending acquisition to purchase stock and options, making tens of thousands of dollars in illegal profit for himself. This Office remains committed to enforcing the nation’s securities laws to protect the fairness and integrity of the markets.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “When one has access to material nonpublic information, they are afforded significant knowledge that could give them a competitive edge in stock and options trading. But, as we all know, it’s illegal to use this information in furtherance of personal gain. As alleged today, Krishnamoorthy ignored these rules, using the information at his fingertips to his advantage, and made personal profits in the tens of thousands. The FBI and our partners will continue to investigate and prosecute those who cheat the system in this way.”

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

As a vice president and risk management specialist, KRISHNAMOORTHY had access to material nonpublic information concerning mergers and acquisitions for which the Investment Bank might potentially provide financing. In November 2016, a private equity fund (the “Fund”) contacted the Investment Bank concerning financing for the Fund’s acquisition of Neustar, Inc. (“Neustar”), a publicly traded company whose shares trade on the New York Stock Exchange. Around that time, KRISHNAMOORTHY received multiple emails regarding the Investment Bank’s potential involvement in the transaction, including emails that summarized the details of the deal. In violation of the Company’s policies and in breach of his duties to the Company, KRISHNAMOORTHY used this material nonpublic information to acquire Neustar stock and options. In the days and weeks after receiving the emails, and prior to the public announcement of the Fund’s acquisition of Neustar, KRISHNAMOORTHY purchased numerous Neustar call options and shares of Neustar stock. Purchases of Neustar securities took place in brokerage accounts held in the names of both KRISHNAMOORTHY and his spouse. Contrary to the policies of the Company, KRISHANMOORTHY did not reveal these trades or the existence of these brokerage accounts to the Company.

The public announcement of the Fund’s acquisition of Neustar on December 14, 2016, resulted in an approximately 20 percent increase in the value of Neustar stock in the hours following the announcement, resulting in a corresponding increase in the value of the call options and equity stock held by KRISHNAMOORTHY and his spouse. As a result of the insider trading alleged in the Complaint, KRISHNAMOORTHY generated at least $48,000 in profits.

* * *

KRISHNAMOORTHY is charged with one count of securities fraud, which carries a maximum sentence of 20 years in prison and a maximum fine of $5 million, or twice the gross gain or loss from the offense. The statutory maximum sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Mr. 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 Brendan F. Quigley is in charge of the prosecution.

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

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

Fuyi Sun, aka “Frank,” 53, a citizen of the People’s Republic of China (“China”), pleaded guilty today to violating the International Emergency Economic Powers Act (IEEPA) in connection with a scheme to illegally export to China, without a license, high-grade carbon fiber, which is used primarily in aerospace and military applications.

The announcement was made by Acting Assistant Attorney General for National Security Mary B. McCord and Acting U.S. Attorney Joon H. Kim for the Southern District of New York. The plea was entered before U.S. District Judge Alvin K. Hellerstein.

“Today, Sun admitted to attempting to procure high-grade carbon fiber – which has sophisticated aerospace and defense applications – for the Chinese military. The defendant was willing to pay a premium to evade U.S. export laws and illegally transfer this highly protected material,” said Acting Assistant Attorney General McCord. “The National Security Division will continue to identify those who violate IEEPA and other laws that protect our national assets from reaching the hands of potential adversaries.”

“As Fuyi Sun admitted today in court, he tried to skirt U.S. export laws by hiding his purchase of high-grade carbon fiber for the Chinese military. Sun used fraudulent documents and code words in his efforts to obtain this highly protected material, which is used in aerospace and defense programs, and to avoid detection,” said Acting U.S. Attorney Kim. “Together with our law enforcement partners, we will continue to enforce the laws that protect our national security.”

According to the allegations contained in the Complaint and the Indictment filed against Sun and statements made in court filings and proceedings, including today’s guilty plea:

Since approximately 2011, Sun has attempted to acquire extremely high-grade carbon fiber, including Toray type M60JB-3000-50B carbon fiber (“M60 Carbon Fiber”). M60 Carbon Fiber has applications in aerospace technologies, unmanned aerial vehicles (commonly known as drones) and other government defense applications. Accordingly, M60 Carbon Fiber is strictly controlled – including that it requires a license for export to China – for nuclear non-proliferation and anti-terrorism reasons.

In furtherance of his attempts to illegally export M60 Carbon Fiber from the U.S. to China without a license, Sun contacted what he believed was a distributor of carbon fiber – but which was, in fact, an undercover entity created by HSI and “staffed” by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) undercover special agents (the “UC Company”). Sun inquired about purchasing the M60 Carbon Fiber without the required license. In the course of his years’ long communications with the undercover agents and UC Company, Sun repeatedly suggested various security measures that he believed would protect them from “U.S. intelligence.”

Among other such measures, at one point, Sun instructed the undercover agents to use the term “banana” instead of “carbon fiber” in their communications. Consequently, soon thereafter he inquired about purchasing 450 kilograms of “banana” for more than $62,000. In order to avoid detection, Sun also suggested removing the identifying barcodes for the M60 Carbon Fiber, prior to transshipment, and further suggested that they identify the M60 Carbon Fiber as “acrylic fiber” in customs documents.

On April 11, 2016, Sun traveled from China to New York for the purpose of purchasing M60 Carbon Fiber from the UC Company. During meetings with the undercover agents, on or about April 11 and 12, among other things, Sun repeatedly suggested that the Chinese military was the ultimate end-user for the M60 Carbon Fiber he sought to acquire from the UC Company, and claimed to have personally worked in the Chinese missile program. Sun further asserted that he maintained a close relationship with the Chinese military, had a sophisticated understanding of the Chinese military’s need for carbon fiber, and suggested that he would be supplying the M60 Carbon Fiber to the Chinese military or to institutions closely associated with it.

On April 12, 2016, Sun agreed to purchase two cases of M60 Carbon Fiber from the UC Company. On that date, Sun paid the undercover agents purporting to represent the UC Company $23,000 in cash for the carbon fiber, as well as an additional $2,000 as compensation for the risk he believed the UC Company was taking to illegally export the carbon fiber to China without a license. Sun was arrested the next day on April 13, 2016.

Attempting to violate IEEPA carries a maximum sentence of 20 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. Sun is scheduled to be sentenced by Judge Hellerstein on July 26 at 11:00 a.m.

Mr. Kim praised the extraordinary investigative work of the New York Field Office of ICE-HSI; the New York Field Office of the Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and the Northeast Field Office of the Department of Defense, Defense Criminal Investigative Service. Mr. Kim also thanked the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division.

This prosecution is being handled the Office’s Terrorism and International Narcotics

and Complex Fraud and Cybercrime Units. Assistant U.S. Attorneys Matthew Podolsky, Patrick Egan and Nick Lewin of the Southern District of New York are in charge of the prosecution, with assistance from Trial Attorney David Recker 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 Mary B. McCord, the Acting Assistant Attorney General for the National Security Division of the Department of Justice (“NSD”), announced that FUYI SUN, a/k/a “Frank,” a citizen of the People’s Republic of China (“China”), pled guilty today before U.S. District Judge Alvin K. Hellerstein to violating the International Emergency Economic Powers Act (“IEEPA”) in connection with a scheme to illegally export to China, without a license, high-grade carbon fiber, which is used primarily in aerospace and military applications.

Acting Manhattan U.S. Attorney Joon H. Kim said: “As Fuyi Sun admitted today in court, he tried to skirt U.S. export laws by hiding his purchase of high-grade carbon fiber for the Chinese military. Sun used fraudulent documents and codewords in his efforts to obtain this highly protected material, which is used in aerospace and defense programs, and to avoid detection. Together with our law enforcement partners, we will continue to enforce the laws that protect our national security.”

NSD Acting Assistant Attorney General Mary McCord said: “Today, Fuyi Sun admitted to attempting to procure high-grade carbon fiber – which has sophisticated aerospace and defense applications – for the Chinese military. The defendant was willing to pay a premium to evade U.S. export laws and illegally transfer this highly protected material. The National Security Division will continue to identify those who violate IEEPA and other laws that protect our national assets from reaching the hands of potential adversaries.”

According to the allegations contained in the Complaint and the Indictment filed against SUN and statements made in court filings and proceedings, including today’s guilty plea:

Since approximately 2011, SUN has attempted to acquire extremely high-grade carbon fiber, including Toray type M60JB-3000-50B carbon fiber (“M60 Carbon Fiber”). M60 Carbon Fiber has applications in aerospace technologies, unmanned aerial vehicles (commonly known as “drones”) and other government defense applications. Accordingly, M60 Carbon Fiber is strictly controlled – and requires a license for export to China – for nuclear non-proliferation and anti-terrorism reasons.

In furtherance of his attempts to illegally export M60 Carbon Fiber from the United States to China without a license, SUN contacted what he believed was a distributor of carbon fiber – but was, in fact, an undercover entity created by HSI and “staffed” by HSI undercover special agents (the “UC Company”). SUN inquired about purchasing the M60 Carbon Fiber without the required license. In the course of his years’ long communications with the undercover agents and UC Company, SUN repeatedly suggested various security measures that he believed would protect them from “U.S. intelligence.” Among other such measures, at one point, SUN instructed the undercover agents to use the term “banana” instead of “carbon fiber” in their communications. Consequently, soon thereafter he inquired about purchasing 450 kilograms of “banana” for more than $62,000. In order to avoid detection, SUN also suggested removing the identifying barcodes for the M60 Carbon Fiber, prior to transshipment, and further suggested that they identify the M60 Carbon Fiber as “acrylic fiber” in customs documents.

On April 11, 2016, SUN traveled from China to New York for the purpose of purchasing M60 Carbon Fiber from the UC Company. During meetings with the undercover agents, on or about April 11 and 12, among other things, SUN repeatedly suggested that the Chinese military was the ultimate end-user for the M60 Carbon Fiber he sought to acquire from the UC Company, and claimed to have personally worked in the Chinese missile program. SUN further asserted that he maintained a close relationship with the Chinese military, had a sophisticated understanding of the Chinese military’s need for carbon fiber, and suggested that he would be supplying the M60 Carbon Fiber to the Chinese military or to institutions closely associated with it.

On April 12, 2016, SUN agreed to purchase two cases of M60 Carbon Fiber from the UC Company. On that date, SUN paid the undercover agents purporting to represent the UC Company $23,000 in cash for the carbon fiber, as well as an additional $2,000 as compensation for the risk he believed the UC Company was taking to illegally export the carbon fiber to China without a license. SUN was arrested the next day, April 13, 2016.

* * *

SUN, 53, pled guilty today to attempting to violate IEEPA, 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. SUN is scheduled to be sentenced by Judge Hellerstein on July 26, 2017 at 11:00 a.m.

Mr. Kim praised the extraordinary investigative work of the New York Field Office of the Department of Homeland Security, Homeland Security Investigations; the New York Field Office of the Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and the Northeast Field Office of the Department of Defense, Defense Criminal Investigative Service. Mr. Kim also thanked the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division.

This prosecution is being handled by the Office’s Terrorism and International Narcotics and Complex Frauds and Cybercrime Units. Assistant United States Attorneys Matthew Podolsky, Patrick Egan, and Nick Lewin are in charge of the prosecution, with assistance from Trial Attorney David Recker of the Counterintelligence and Export Control Section.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, James P. O’Neill, the Commissioner of the Police Department for the City of New York (“NYPD”), Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), and James J. Hunt, the Special Agent-in-Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), announced charges yesterday against 19 members and associates of the “Slut Gang,” a violent street gang operating in the Bronx, New York, primarily at the Boston Secor public housing development (“Secor”). The defendants are charged with racketeering conspiracy, narcotics conspiracy, robbery conspiracy, extortion, and firearms offenses.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Today’s indictment charges members and associates of a violent street gang with allegedly wreaking havoc on the streets of the Northern Bronx for years, committing countless acts of violence against rival gang members and innocents alike. Thanks to the terrific investigative work of the NYPD’s Bronx Gang Squad, HSI’s Violent Gang Unit, and the New York Field Division of the DEA, these alleged criminals will face justice in federal court.”

NYPD Commissioner James P. O’Neill said: “This gang allegedly acted with impunity in the Bronx. But this morning, detectives and agents carried out precise, targeted arrests against the defendants who, as alleged, committed robberies, shootings, and other violence to protect their drug trade. Tonight, the Bronx will be even safer because of the persistence of our detectives, DEA and HIS agents, and prosecutors in the Southern District who brought today’s charges.”

HSI Special Agent-in-Charge Angel M. Melendez said: “Drugs, guns, and robbery are just the beginning of the charges faced by members of the Slut Gang. This is a violent street gang with alleged involvement in shootings, stabbings, and beatings over several years. The collaboration between federal and local law enforcement agencies is paramount to gang investigations in New York and forcing gang members to face charges for their actions.”

DEA Special Agent-in-Charge James J. Hunt said: “Gangs in New York that allegedly traffic drugs throughout our city streets fuel addiction and violent crime. Law enforcement’s focused efforts to reclaim our city from these gangs have led to numerous takedowns over the past three years and yesterday’s arrests.”

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

The Superseding Indictment arises from a joint investigation, beginning in 2014, by the NYPD, HSI, the DEA, and the Bureau of Alcohol, Tobacco, Firearms & Explosives into a number of warring street gangs in the Northern Bronx. On April 27, 2016, 120 members of two of these gangs – the Big Money Bosses (“BMB”) and the 2Fly YGz (“2Fly”) – were charged in two cases pending now before United States District Judges Alison J. Nathan and Lewis A. Kaplan – U.S. v. Nico Burrell et al., and U.S. v. Laquan Parrish et al. Forty-seven of 63 defendants in Burrell have already pled guilty, and 49 of 57 defendants in Parrish have already pled guilty.

One of the primary rivals of BMB and 2Fly was the Slut Gang. The Superseding Indictment charges members and associates of the Slut Gang with numerous acts of fatal and non-fatal violence during last several years, including shootings, stabbings, slashings, beatings, extortion, and robberies, as well as drug dealing.

To date, agents and officers have seized, among other evidence, quantities of crack, heroin, MDMA, and marijuana, as well as firearms and ammunition. During the investigation, pursuant to court-authorized electronic surveillance, agents and officers also intercepted hundreds of phone calls, during many of which various members and associates of the

Slut Gang discussed their racketeering and narcotics activities.

* * *

In a coordinated operation, 12 defendants were arrested in New York Wednesday and yesterday. They were presented yesterday afternoon in Manhattan federal court. Defendant KERMIT IRIZARRY was in custody on state charges and was transferred to federal custody. Defendant MAURICE STEELE was arrested and was presented yesterday in the Middle District of Florida. Defendant STEVE BORIA was already in federal custody on a related charge. The following defendants are still being sought: NIORGE LOPEZ, JONATHAN FERRELL, DAYVON WILSON, and ISAIAH GRANT. Charts identifying each defendant, the charges, and the maximum penalties are attached to this release.

The case is assigned to U.S. District Judge Ronnie Abrams.

Mr. Kim praised the outstanding investigative work of the NYPD’s Bronx Gang Squad, HSI’s Violent Gang Unit, and the New York Field Division of the DEA, as well as the United States Marshals’ Service, New York State Office of Probation, and New York State Division of Parole for their assistance in yesterday’s arrests. He also thanked the Bronx County District Attorney’s Office and the Department of Investigation for their support in this ongoing investigation.

The Office’s Violent and Organized Crime Unit is overseeing the case. Assistant U.S. Attorneys Rachel Maimin, Hagan Scotten, Jessica Feinstein, Drew Johnson-Skinner, and Alison Moe are in charge of the prosecution.

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

[1] As the introductory phrase signifies, the entirety of the text of the Superseding Indictment, and the description of the Superseding Indictment set forth 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 TRAVELL THOMAS, the owner, chief executive officer (“CEO”), and president of Four Star Resolution (“Four Star”), a Buffalo, New York-based debt collection company, was sentenced in Manhattan federal court to 100 months in prison for orchestrating a scheme to coerce thousands of victims across the country, through false threats and representations, into paying a total of more than $31 million to Four Star to resolve debts these victims purportedly owed.  All 14 individuals charged in connection with the Four Star scheme have been convicted.  THOMAS pled guilty on November 1, 2016, to conspiracy to commit wire fraud and wire fraud before U.S. District Court Judge Katherine Polk Failla, who also imposed today’s sentence.

Acting U.S. Attorney Kim said:  “Travell Thomas was the mastermind behind the largest criminal debt collection scheme ever charged.  Using abusive and outrageous threats to take advantage of vulnerable Americans, Thomas and his co-conspirators defrauded victims out of $31 million and Thomas made a small fortune for himself.  Thomas will now serve a significant term in federal prison.  This Office is committed to prosecuting those who prey and abuse everyday consumers.”

According to the Indictment and other filings in Manhattan federal court, and statements made in connection with THOMAS’s sentencing and other court proceedings:

Between 2010 and February 2015, THOMAS was the co-owner, CEO, and president of Four Star. In that capacity, Thomas oversaw four debt collection offices operated by Four Star in Buffalo and a team of managers and debt collectors. As part of his scheme to defraud individuals throughout the United States, THOMAS falsely inflated the balances of debts owed by individuals in Four Star’s debt collection software so that THOMAS’s debt collectors could collect more money from the victims than the victims actually owed, a practice known within Four Star as “juicing” balances. THOMAS also placed purported debts with more than one of his offices so that multiple collectors from within Four Star could solicit and coerce a particular victim to repay a debt more than once.

As owner and president of Four Star, THOMAS drafted, approved, and disseminated debt collection scripts that contained a variety of misrepresentations and instructed his collectors to make those misrepresentations to consumers over the telephone. At THOMAS’s direction and under his supervision, Four Star’s debt collectors, using a variety of aliases, attempted to trick and coerce thousands of victims throughout the United States into paying millions of dollars in consumer debts through a variety of false statements and false threats, including that: (1) Four Star was affiliated with local government and law enforcement agencies, including the “county” and the district attorney’s office; (2) the consumers had committed criminal acts, such as “wire fraud” or “check fraud,” and if they did not pay the debt immediately, warrants or other process would be issued, at which point they would be arrested or hauled into court; (3) the victims would have their driver’s licenses suspended if they did not pay their debts immediately; (4) Four Star was a law firm or mediation firm and that Four Star’s employees were working with lawyers, a law firm, mediators, or arbitrators; and (5) a civil lawsuit would be filed, or was pending, against the victims for failing to pay their debts. THOMAS also approved an abusive and coercive “mailing campaign,” in which Four Star sent mailers to victims across the country that purported to be from courts and government agencies.

In total, from about January 2010 through November 2014, Four Star collected more than $31 million from thousands of victims across the United States. Of the money that Four Star took in from victims, approximately $1.5 million was paid in cash to THOMAS and his co-owner and co-defendant, Maurice Sessum, approximately $1.4 million was withdrawn from banks and ATMs, and hundreds of thousands of dollars were used to pay for THOMAS’s gambling expenses, season tickets for professional sports games, THOMAS’s wedding reception, and jewelry, among other expenses.

*          *          *

In addition to his prison term, THOMAS, 38, of Orchard Park, New York, was sentenced to three years of supervised release, and ordered to forfeit $31 million.

In total, 14 individuals associated with Four Star have been charged and pled guilty to defrauding consumers as part of this debt collection scheme. In addition to THOMAS, co-owner and chief financial officer Maurice Sessum, managers Jimmy Stokes, Tacoby Thomas, Heather Gasta, Mark Lavin, and John Salatino, and debt collectors Anthony Caba, Jessica Mann, Charles Starks, William Clark, Columbus Simmons, Michael Calandra, and Jennifer Sherk each pled guilty to conspiracy to commit wire fraud and wire fraud for their roles in the scheme.

Tacoby Thomas, Caba, Starks, Clark, Simmonds, Calandra, and Mann were sentenced by Judge Failla to prison terms of 70 months, 36 months, 37 months, 30 months, 28 months, 15 months, and one year and one day, respectively. The sentencing of the other defendants who have pled guilty is pending.

Mr. Kim praised the efforts of the Office’s Criminal Investigators who led the investigation of this matter.  He also thanked the Federal Trade Commission for its assistance.

The prosecution of this case is being overseen by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Edward A. Imperatore, Jennifer L. Beidel, and Jordan L. Estes are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and Eric S. Benderson, the Acting General Counsel of the U.S. Small Business Administration (“SBA”), announced today that the United States has settled a civil fraud lawsuit against HSBC BANK USA, N.A. (“HSBC”). The Government’s complaint, filed on April 10, 2017 (the “Complaint”), sought damages and civil penalties under the False Claims Act for misconduct in connection with HSBC’s participation in the SBAExpress loan program, which was designed to help start-ups and existing small businesses. The Complaint alleged that, as part of an internal review designed to identify reasons for defaults on loans to small and medium-size enterprises, HSBC identified dozens of SBAExpress loans as fraudulent or potentially fraudulent, since borrowers appeared to have submitted false information to HSBC to obtain the loans. The Complaint further alleged that after 42 of these loans defaulted, HSBC sought reimbursement from the SBA without revealing the facts suggesting that borrowers submitted false information to HSBC to obtain many of the loans, or the fact that HSBC had included the loans on an internal list of fraudulent or potentially fraudulent loans. In the settlement approved today by U.S. District Judge Lorna G. Schofield, HSBC agreed to pay $2,118,861.36 to resolve the Government’s claims, and admitted, acknowledged, and accepted responsibility for conduct alleged in the Complaint.

Manhattan Acting U.S. Attorney Joon H. Kim said: “Lenders must disclose material information for our agency partners like the SBA, who administer federal loan programs. When they fail to do so – as HSBC did here, by submitting loans for repayment on SBA guarantees without disclosing that the loans had been identified as potentially fraudulent – they need to be held to account. This settlement reflects the Office’s continuing commitment to keep lenders who participate in federal lending programs honest.”

SBA Acting General Counsel Eric S. Benderson said: “This case is yet another example of the tremendous results achieved through the joint efforts of the SBA and the Department of Justice to uncover and forcefully respond to civil fraud committed by those who participate in SBA’s lending programs. Identifying and aggressively pursuing instances of civil fraud by participants in the Agency’s lending programs is one of SBA’s top priorities.”

The Government’s lawsuit alleged as follows:

In or around 2006, HSBC conducted an internal review to identify reasons for the default rates on loans it had made to small and medium-size enterprises, including but not limited to loans issued pursuant to SBAExpress. HSBC created a list of known fraud accounts as part of the review. HSBC identified many SBAExpress loans as fraudulent or potentially fraudulent in which borrowers may have submitted false information to HSBC in obtaining their loans, including 42 loans (the “Loans”) referenced in an exhibit attached to the Complaint.

After the Loans defaulted, HSBC sought reimbursement from SBA for the guaranteed amount on each of these Loans (up to 50 percent of the principal of the Loans) without telling SBA that many of the Loans were fraudulent or potentially fraudulent. Specifically, HSBC did not inform SBA of all of the facts indicating that borrowers may have submitted false information to HSBC in connection with the origination of many of the Loans, or that HSBC had included these Loans on an internal list of fraudulent or potentially fraudulent loans. HSBC’s failure to disclose that it had determined that many of the Loans were fraudulent or potentially fraudulent rendered HSBC’s reimbursement requests for losses incurred in connection with the Loans false, misleading, and/or fraudulent. The submissions made to SBA in connection with seeking reimbursement on many of these Loans contained half-truths and material omissions by failing to disclose facts about fraud or potential fraud by borrowers when the Loans were originated.

The case was initially brought by a whistleblower under the False Claims Act, and the Government intervened in the case.

Pursuant to the settlement, HSBC will pay the United States $2,118,861.36. As part of the settlement, the bank admitted, acknowledged, and accepted responsibility for the following conduct:

• In or around 2006, HSBC voluntarily commenced an internal effort to gain an understanding of the reasons for the default rates on loans that it had made to small and medium-size enterprises, including but not limited to loans issued pursuant to the SBAExpress program. HSBC’s efforts included an attempt to identify whether any of the loans involved fraud or potential fraud by borrowers;

   

• As part of this effort, HSBC identified a number of loans as fraudulent or potentially fraudulent in which borrowers may have submitted false information to HSBC in obtaining their loans, including the Loans;

   

• HSBC subsequently sought from SBA the guaranteed amounts on each of these Loans (i.e., up to fifty percent of the principal of the Loans) after the loans defaulted;

   

• In submitting the requests for payment to SBA of the guaranteed amounts of certain Loans, HSBC did not inform SBA of all of the facts indicating that borrowers may have submitted false information to HSBC in connection with the origination of these loans, or that as a result HSBC had identified these loans as fraudulent or potentially fraudulent.

* * *

Mr. Kim thanked SBA for its investigative efforts and assistance with the case.

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

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 DMITRY SAZONOV was charged with attempted theft of trade secrets for his alleged attempted theft of proprietary computer code for a trading platform from his employer, a financial services firm with an office in New York, New York, that trades securities and other financial products (“Firm-1”). SAZONOV was arrested yesterday afternoon and presented today before U.S. Magistrate Judge Andrew J. Peck in federal court.

Acting U.S. Attorney Joon H. Kim said:  “As alleged, Dmitry Sazonov attempted to steal valuable proprietary computer code that took his employer years to develop.  Sazonov allegedly took elaborate steps to conceal his attempted theft, including camouflaging pieces of source code within harmless-looking draft emails on his work computer.  Thanks to the FBI, Sazonov has been stopped and is now in custody.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “As we allege, Sazonov went to great lengths to conceal source code for a trading platform in order to steal it from his former employer.  He researched and ultimately used the technique of steganography to hide the code within other PDF files like personal tax and immigration documents on his work computer. He also uploaded encrypted zip files to a third-party website to complete his heist.  Stealing from an employer is a serious offense especially when it comes to proprietary source code that companies have invested heavily in, and that they rely on to generate revenue.  The FBI is committed to enforcing laws that protect U.S. companies from the theft of trade secrets.”

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

Firm-1 acts as a market maker, facilitating trading and liquidity in a variety of financial markets.  A substantial portion of the trading done by Firm-1’s employees is facilitated by a proprietary computer trading platform (the “Trading Platform”), which deploys a computer program to take in many different pieces of market data, to use that data to develop trading strategies, and then to generate orders and automatically submit those orders to an exchange or market center.  Firm-1’s use of the Trading Platform accounts for a substantial volume of Firm‑1’s total trading activity.  For example, Firm-1 executes approximately $300 million in options trades through the Trading Platform every day.  The strategies and efficiency resulting from Firm-1’s use of the Trading Platform contribute substantially to Firm-1’s market share in the financial markets in which Firm-1 trades and to its overall trading profits. 

For at least approximately five years, Firm 1 has been in the process of developing an updated and improved version of the Trading Platform (the “Updated Trading Platform”).  Firm‑1 has, to date, invested more than approximately $5 million in the development of the Updated Trading Platform.  The Updated Trading Platform is expected by representatives of Firm-1 to continue to enhance the position of Firm-1 in the markets in which it participates and to contribute substantially to Firm-1’s market share and profits.  Accordingly, Firm-1 has put in place measures designed to protect the computer source code (the “Source Code”) underlying the Updated Trading Platform.

From July 2004 through February 6, 2017, SAZONOV was employed as a software engineer by Firm-1.  In that role, SAZONOV was involved in the development of trading strategies to be implemented in conjunction with the deployment of the Updated Trading Platform; as a result, SAZONOV had access to the Source Code.  On February 2, 2017, SAZONOV learned that his immediate supervisor at Firm-1 had resigned and began looking for a new job outside of Firm-1.  On Friday, February 3, 2017, SAZONOV learned that he would be meeting with another supervisor about the future of his role at Firm-1 the following Monday.   

Before that meeting took place, SAZONOV took various steps to attempt to steal the Source Code.  On the morning of February 6, 2017, SAZONOV downloaded the Source Code to his Firm-1 computer.  He ran Internet searches and viewed websites related to steganography, the practice of concealing messages or data within other files, among other things.  SAZONOV then deployed a computer program that appears to have used steganography, in order to break up a PDF file believed to contain the Source Code, and append pieces of the PDF file to various apparently innocuous documents and files contained in a folder on SAZONOV's desktop computer, including personal tax and immigration documents and images taken from the Internet, among others (the “Payload Documents”).  The program also appears to have produced a manifest, permitting the reassembly of the Source Code from the various Payload Documents.  SAZONOV used his Firm-1 computer to upload an encrypted zip file containing the manifest to a third-party website.  He also saved two draft emails to his Firm-1 email account, attaching the encrypted zip file containing the manifest to one email and a zip file containing the Payload Documents to the other email; the draft emails were addressed to an email address associated with SAZONOV.  SAZONOV did not send the emails before reporting to the meeting with the supervisor.  In the course of that meeting, SAZONOV was fired by Firm-1.  After being fired, SAZONOV repeatedly asked to be permitted to return to his desk to retrieve files from his computer.  Pursuant to Firm‑1 policy, however, SAZONOV was not permitted to return to his desk prior to being escorted out of Firm-1’s New York, New York, office.    

On multiple occasions following his termination by Firm-1, SAZONOV contacted individuals employed by Firm-1 by telephone and by email seeking the return of computer files on his Firm-1 desktop computer, which he claimed were personal documents.  Indeed, SAZONOV repeatedly requested that Firm-1 return to him the documents contained in the file in which the Payload Documents were saved.  On April 12, 2017, SAZONOV reported to the lobby of the building in which the New York, New York, office of Firm-1 is located and retrieved a disk he believed contained those files.  He was subsequently arrested.

*                *                *

SAZONOV, 44, of Rockland County, New York, is charged with one count of attempted theft of trade secrets, which carries a maximum sentence of 10 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

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

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorney Katherine Reilly 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 phase 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, and James J. Hunt, Special Agent in Charge, New York Field Division of the Drug Enforcement Administration (“DEA”), today announced that an indictment was returned by a grand jury charging MATTHEW DRAPER, a/k/a “Mata,” a resident of Haverstraw, New York, with allegedly trafficking wholesale amounts of cocaine in and around Rockland County, New York. DRAPER was arrested on a criminal complaint on October 6, 2016, and has been in custody since that date.

According to the allegations contained in the Indictment and the Complaint[1] charging DRAPER:

DRAPER was part of a cocaine distribution conspiracy responsible for transporting wholesale amounts of cocaine from the Dominican Republic to the New York area on commercial airline flights. The conspiracy relied on contacts working in airports both in the Dominican Republic and in the United States to facilitate the deliveries. From in or around September 2016 through October 5, 2016, DRAPER worked with a confidential informant and a supplier in the Dominican Republic to facilitate the transport of approximately 20 kilograms of cocaine from the Dominican Republic to New York. DRAPER intended to have the confidential informant retrieve the cocaine from the airport and provide it to DRAPER at a predetermined location. On October 5, 2016, DEA agents learned from the confidential informant that the 20 kilograms of cocaine DRAPER purchased from the Dominican Republic had been secreted in luggage, and placed on an airplane scheduled to arrive at JFK Airport. DEA agents were able to locate the airplane and the luggage in question. DEA agents recovered approximately 20 kilograms of cocaine that had been wrapped and sealed in a clear vacuum-sealed bag. DRAPER was arrested that same day attempting to obtain the cocaine from the confidential informant at the predetermined location. Upon his arrest, law enforcement recovered approximately $23,000 in cash and what appeared to be an additional kilogram of cocaine from DRAPER’s vehicle. Law enforcement agents also executed a search warrant on DRAPER’s residence. During the search, agents recovered an additional half-kilogram of a substance that appeared to be cocaine.

* * *

DRAPER, 49, of Haverstraw, New York, is charged with one count of conspiracy to distribute narcotics, which carries a maximum sentence of life in prison, and one count of possession of narcotics with intent to distribute, which also carries a maximum sentence of life in prison. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the Court.

Mr. Kim praised the outstanding investigative work of the Drug Enforcement Administration. Mr. Kim also thanked the Rockland County Drug Task Force and the Town of Haverstraw Police Department Street Crime Unit for their cooperation and assistance in this investigation.

The prosecution is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Jennifer Burns, Lauren Schorr, and Christopher J. Clore are in charge of the prosecution.

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

[1] As the introductory phrase signifies, the entirety of the texts of the Indictment and the Complaint, and the descriptions of the Indictment and 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 today that the United States has settled a federal civil rights lawsuit alleging that the CITY OF NEW YORK (the “City”), and specifically the NEW YORK CITY POLICE DEPARTMENT (“NYPD”), violated the Americans with Disabilities Act of 1990 (“ADA”) through its medical disqualification of an HIV positive applicant for a Police Communications Technician position. The settlement agreement was entered today by U.S. District Judge Ronnie Abrams.

Acting U.S. Attorney Joon H. Kim said: “The ADA prohibits employers from denying job applicants employment opportunities on the basis of a disability or perceived disability. As a result of this lawsuit, the City of New York has acknowledged that HIV status is not a basis to deny an individual employment. We will continue to work to ensure that employers do not discriminate against job applicants with disabilities.”

According to the Complaint, filed in federal court in Manhattan on January 17, 2017, the applicant – who is HIV positive – applied for the position of Police Communications Technician. The applicant successfully underwent an initial screening process, which included a background check, and received a conditional offer of employment. Following receipt of the conditional offer of employment, the applicant was required to undergo a medical examination. Shortly after completion of the medical examination, the NYPD informed the applicant that he needed to submit additional paperwork, including a blood test. After the applicant submitted the requested paperwork, the NYPD disqualified him solely because of his “HIV low CD4 count.”

The NYPD’s failure to hire the applicant because of his HIV status was in clear violation of the ADA. ADA prohibits employers from discriminating against qualified individuals solely on the basis of a disability, such as being HIV positive, in the hiring process.

As part of the settlement, the City extended the applicant a conditional offer of employment, is paying the applicant $85,000, and acknowledges that its disqualification of the applicant based on his HIV low CD4 count was in error.

More information on the obligations of employers with respect to job applicants with disabilities is available at www.ada.gov and www.eeoc.gov.

Mr. Kim thanked the Equal Employment Opportunity Commission for its initial investigation of the Complaint.

The case is being handled by the Office’s Civil Rights Unit. Assistant United States Attorney Natasha Waglow Teleanu is in charge of the case.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that the United States has retained the Garden City Group (“GCG”) to oversee a process for compensating eligible victims of a fraud committed by Absolute Poker against United States players who were unable to withdraw funds from Absolute Poker following the Office’s filing in 2011 of a civil money laundering and forfeiture action against Absolute Poker and others in United States v. PokerStars, et al. 

GCG is already overseeing the claims process for eligible victims of the fraud committed by Full Tilt Poker against United States players, as described in both United States v. PokerStars, et al., and the indictment in the parallel criminal case, United States v. Bitar, et. al.  To date, approximately $118 million has been paid to Full Tilt Poker fraud victims through that process. 

Background

In July 2012, the United States entered into settlement agreements with Full Tilt Poker and PokerStars – two of the three online poker companies named as defendants in a civil forfeiture action brought by the United States alleging bank fraud, wire fraud, money laundering, and illegal gambling offenses.  On July 16, 2013, the third online poker company named in the complaint, Absolute Poker, along with certain of its affiliates, entered into a settlement agreement in which they also agreed to the forfeiture of their assets.  Under the terms of the July 2012 settlement with Full Tilt Poker, the company agreed to forfeit virtually all of its assets to the United States (the “Forfeited Full Tilt Assets”) in order to fully resolve the action. The amended complaint filed in that action alleged that Full Tilt Poker defrauded its players by misrepresenting to the public that player funds held by Full Tilt Poker were safe, secure, and available for withdrawal at any time.  In reality, the company did not maintain funds sufficient to repay all of its players and instead used player funds to finance more than $400 million in dividend payments to Full Tilt Poker’s owners.

Under the terms of the settlement with PokerStars (the “PokerStars Settlement”), the company agreed, among other things, to forfeit $547 million to the United States (the “Forfeited Poker Funds”) and to assume Full Tilt Poker’s liability for the approximately $184 million owed by Full Tilt to foreign players.  The PokerStars Settlement also provided that PokerStars will acquire the Forfeited Full Tilt Assets from the Government and also precludes PokerStars from offering online poker for real money in the United States unless and until it becomes permissible to do so under relevant law.

The Full Tilt Poker Claims Process

Pursuant to the regulations governing remission, the Department of Justice may use forfeited funds to compensate victims of a charged criminal offense or a related offense that was the underlying basis for forfeiture.   

Using a portion of the Forfeited Poker Funds, the Department of Justice established a process (the “FTP Claims Process”) by which eligible U.S. victims of Full Tilt Poker were able to seek compensation for their losses.  GCG was selected as Claims Administrator by the United States to process claims submitted by the U.S. Full Tilt fraud victims.

GCG is a class action settlement and bankruptcy administration company that has provided comprehensive legal administration services for nearly 30 years.  GCG has worked on numerous complex administrations, including the U.S. Victims of State-Sponsored Terrorism Fund; the Gulf Coast Claims Facility; the Deepwater Horizon Economic and Property Damage Settlement; the Visa Check/MasterMoney Antitrust Litigation; the WorldCom Securities Litigation; and the IPO Securities Litigation.

The FTP Claims Process was announced in March 2013 and is winding down.  GCG received and reviewed 53,220 claims submitted by U.S. Full Tilt fraud victims during the claims period.  To date, 44,320 claims have been approved for payment and approximately $118,116,918.04 has been paid to U.S. Full Tilt fraud victims. 

The Absolute Poker Claims Process

As alleged in the operative forfeiture complaints and indictments in this case, the three online poker companies, including Absolute Poker, and their principals, conspired with one another, and others, such as payment processors who worked with multiple poker companies, to carry out the offense conduct that served as the basis for the forfeiture of the Forfeited Poker Funds. 

Additionally, the Department of Justice has concluded that players of Absolute Poker who were unable to recover their funds from Absolute Poker are similarly situated to the eligible victims of Full Tilt Poker, in that Absolute Poker, like Full Tilt Poker, did not maintain funds sufficient to repay all of its players.

Accordingly, remaining Forfeited Poker Funds will be used to fund a claims process for eligible Absolute Poker victims. 

That victim claims process will begin shortly.  Information about the claims administration will be posted on the dedicated website GCG has established in connection with the victim compensation process, www.AbsolutePokerClaims.com.  Information is also available from the toll-free hotline number at (855) 907-3254.

This aspect of the matter is being handled by the Office’s Money Laundering and Asset Forfeiture Unit. 

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that WILLIAM T. WALTERS, a/k/a “Billy,” was found guilty on all 10 counts of conspiracy, securities fraud, and wire fraud charges after a four-week trial before U.S. District Judge P. Kevin Castel relating to his scheme to commit insider trading from 2008 through 2014, principally relating to securities of Dean Foods Company (“Dean Foods” or the “Company”). 

Acting U.S. Attorney Joon H. Kim said: “Today, Billy Walters lost his bet that he could cheat the securities markets on a massive scale and get away with it scot-free. As a unanimous jury swiftly found, Walters received inside information about Dean Foods for years – directly from one its board members – and illegally traded on it, netting over $43 million. Armed with his illegal edge, Walters made huge, perfectly-timed trades, at times accounting for over a third of the trading volume in Dean Foods stock. In engaging in his years-long stock fraud scheme, Walters underestimated law enforcement’s resolve to pursue and catch those who cheat the market. The integrity of the American financial markets is a bedrock principle upon which our economy and justice system relies, and this Office and our partners at the FBI are as committed as ever to protecting it.”

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

From 2008 through 2014, WALTERS and Thomas C. Davis, among others, participated in a scheme to commit insider trading principally related to securities of Dean Foods, a Fortune 500 company that is the largest processor and distributor of fresh milk in the United States.  Davis pled guilty to insider trading, perjury, and obstruction of justice charges on May 16, 2016 and has been cooperating with the investigation.

From 2001 until August 7, 2015, Davis served as a member of the Board of Directors of Dean Foods (the “Board”), and regularly possessed material, nonpublic information about Dean Foods, including about the Company’s financial performance and results, comprising quarterly earnings results; contemplated and actual corporate transactions; and other significant corporate and strategic developments (the “Inside Information”).  In furtherance of the scheme, Davis violated his duties of trust and confidence to Dean Foods by providing Inside Information to WALTERS in advance of public announcements.  WALTERS, knowing that Davis owed duties of trust and confidence to the Company, used the Inside Information to execute profitable trades in Dean Foods stock.  In total, WALTERS’ trading on the basis of Inside Information netted realized and unrealized profits of approximately $32 million and avoided additional losses of approximately $11 million.  In return for Davis providing the Inside Information to WALTERS, WALTERS, among other things, provided capital to Davis for joint business ventures and made two loans to Davis for approximately $1 million in total, which Davis largely did not repay.

In furtherance of the scheme, and to avoid detection by law enforcement, WALTERS provided Davis with a prepaid cellular phone to use when passing Inside Information to WALTERS.  Moreover, WALTERS further instructed Davis to use code words when discussing the Inside Information, including by referring to Dean Foods as the “Dallas Cowboys.”

*                      *                      *

WALTERS, 70, of Las Vegas, Nevada, was convicted of one count of conspiracy to commit securities fraud, four counts of securities fraud, one count of conspiracy to commit wire fraud, and four counts of wire fraud.  Count One carries a maximum sentence of five years in prison.  Counts Two through 10 each carry a maximum sentence of 20 years in prison.  The charges also carry a maximum fine of $5 million, or twice the gross gain or loss from the offense.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentence for WALTERS will be determined by the judge.  WALTERS will be sentenced by Judge Castel on July 14, 2017.

Mr. Kim praised the work of the FBI and the Postal Inspection Service, and thanked the SEC and the Financial Industry Regulatory Authority (“FINRA”) for their assistance.  He also thanked the Las Vegas offices of the FBI and the Internal Revenue Service, Criminal Investigation Division.

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorneys Brooke E. Cucinella, Daniel S. Goldman, and Michael Ferrara are in charge of the prosecution.  

“Today, Billy Walters lost his bet that he could cheat the securities markets on a massive scale and get away with it scot-free.  As a unanimous jury swiftly found, Walters received inside information about Dean Foods for years – directly from one its board members – and illegally traded on it, netting over $43 million.  Armed with his illegal edge, Walters made huge, perfectly-timed trades, at times accounting for over a third of the trading volume in Dean Foods stock.  In engaging in his years-long stock fraud scheme, Walters underestimated law enforcement’s resolve to pursue and catch those who cheat the market.  The integrity of the American financial markets is a bedrock principle upon which our economy and justice system relies, and this Office and our partners at the FBI are as committed as ever to protecting it.”

Joon H Kim, the Acting United States Attorney for the Southern District of New York, announced that PEDRO JARAMILLO, a/k/a “Enrique Jaramillo,” pled guilty in Manhattan federal court yesterday to commodities fraud and wire fraud stemming from his scheme to defraud more than two dozen investors, mostly retirees and professionals from Peru and countries in Latin America, of more than $1.2 million through a fraud scheme in which JARAMILLO solicited investments largely for the purported purpose of short-term commodity futures contracts but instead diverted the funds for his own purposes.  As a result of their investments with JARAMILLO, investors have lost their life savings, retirement funds, and their homes.

Among other false and misleading statements, JARAMILLO represented to clients that he was an accomplished Wall Street commodities trader who partnered with a certain well-known international investment bank (the “Global Investment Bank”) to earn returns of 25 percent every 90 days for his investors.  In fact, JARAMILLO utterly failed to invest monies as promised, had no partnership with the Global Investment Bank, and instead diverted the majority of investor funds to his own use through cash withdrawals, debit purchases, and by wiring funds offshore.  The investor funds not diverted offshore or directly to JARAMILLO were used to repay earlier investors whose redemption requests could not be forestalled, in a Ponzi-like fashion. 

JARAMILLO was arrested on December 2, 2016, and pled guilty yesterday before United States District Judge Laura Taylor Swain. 

Acting U.S. Attorney Joon H. Kim said:  “As he admitted, Pedro Jaramillo lured investors with the promise of guaranteed high returns, but the only one who profited was Jaramillo.  He failed to invest funds as promised, and paid back early investors with funds from later investors.  Many of the victims of his frauds lost their life savings.  I want to thank the FBI for working with us to protect investors.”

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

From at least January 2014 to in or about December 2016, JARAMILLO solicited more than $1.2 million in investments from more than two dozen investors, primarily for the purported purpose of investing in commodity futures contracts, by falsely representing, orally and in writing, that investor monies would be invested in short-term commodities contracts with a guaranteed rate of return.

To help attract investors, JARAMILLO maintained an office on Wall Street (the “Wall Street Office”) where he met with prospective investors to tout his prior success and relationship with the Global Investment Bank.  JARAMILLO also starred in a youtube.com video (the “Video”) set to the soundtrack of Frank Sinatra’s “New York, New York.”  The Video featured a series of images of Wall Street, the New York Stock Exchange, and JARAMILLO in front of the Wall Street Office.  In the video, JARAMILLO told prospective investors that he was a “proven winner” and “trusted partner” who would maintain individually managed and federally insured accounts for each client.  JARAMILLO told prospective investors that these safeguards would ensure that prospective investors would “be protected against fraud and brokerage failure.” 

In truth and in fact, JARAMILLO not only failed to create individual investment accounts, he also failed to use investor funds to make any legitimate investments, instead diverting the majority of funds to his own use, out of the country, or to repay earlier investors whose redemption requests could not be forestalled.  In total, JARAMILLO diverted more than $700,000 to his own use in the form of cash withdrawals and debit card purchases used to fund his lifestyle, including thousands of dollars on three vacations to Disney World for JARAMILLO, family, and guests. 

To hide his misappropriations and continue to fund his personal lifestyle, JARAMILLO also used new investor funds to pay back other investors in a Ponzi-like fashion.  In total, since January 2014, JARAMILLO distributed more than $200,000 back to investors from funds deposited by new investors.  During that time, JARAMILLO also diverted more than $100,000 of investor funds out of bank accounts he controlled in the United States to foreign bank accounts, including in Peru, where JARAMILLO is a citizen.

*                      *                      *

JARAMILLO, 48, a Peruvian National who was residing in Queens, New York, before his arrest, pled guilty to one count of commodities fraud and one count of wire fraud. The commodities fraud count carries a maximum sentence of 10 years in prison and a maximum fine of $1 million, or twice the gross gain or loss from the offense.   The wire fraud count carries a maximum sentence of 20 years in prison and a maximum fine of $250,000, or twice the gross gain or loss from the offense.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  The defendant, who has been detained since his arrest, will be sentenced at a future date by Judge Swain.

Mr. Kim praised the work of the Federal Bureau of Investigation.  He also noted that the investigation is continuing.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that UMAIR HAMID, a/k/a “Shah Khan,” a/k/a the “Shah,” pled guilty yesterday before U.S. District Judge Ronnie Abrams to conspiracy to commit wire fraud in connection with an international “diploma mill” scheme that collected tens of millions of dollars from thousands of customers.  As alleged in the Indictment to which HAMID pled guilty and the related criminal Complaint, HAMID and his co-conspirators made false and fraudulent representations to consumers on websites and over the phone to trick them into enrolling in purported colleges and high schools, and issued fake diplomas upon receipt of upfront fees from consumers.  

Acting U.S. Attorney Joon H. Kim said: “Operating from Pakistan, Umair Hamid helped fraudulently rake in millions of dollars from unwitting American consumers who paid to enroll in, and get degrees from, high schools and colleges that did not exist. As a result of his fraud, people who thought they were investing in an education received nothing more than worthless diplomas and a harsh lesson in the worldwide reach of deceit. Together with our partners at the FBI and the Postal Service, we will continue to work to protect consumers from scams that victimize our citizens.”

According to the allegations contained in the Indictment and the Complaint against HAMID, as well as other court filings in this matter:

The Axact Scheme

HAMID, using the aliases “Shah Khan” and the “Shah,” and others operated a massive education “diploma mill” through the Pakistani company “Axact,” which has described itself as one of the world’s leading information technology (“IT”) providers.  Working on behalf of Axact, HAMID and others made misrepresentations to individuals across the world, including throughout the United States and in the Southern District of New York, in order to dupe these individuals into enrolling in supposed high schools, colleges, and other educational institutions.  Consumers paid upfront fees to HAMID and his co-conspirators, believing that in return they would be enrolled in real educational courses and, eventually, receive legitimate degrees.  Instead, after paying the upfront fees, consumers did not receive any legitimate instruction and were provided fake and worthless diplomas. 

Axact promoted and claimed to have an affiliation with approximately 350 fictitious high schools and universities, which Axact advertised online to consumers as genuine schools.  During certain time periods since 2014, Axact received approximately 5,000 phone calls per day from individuals seeking to purchase Axact products or enroll in educational institutions supposedly affiliated with Axact.  At least some of those consumers appeared to believe that they were calling phone numbers associated with the respective schools.  When consumers asked where the schools were located, sales representatives were instructed to give fictitious addresses. 

Once a consumer paid for a school certificate or diploma that falsely reflected a completed course of study, Axact sales agents were trained to use sales techniques to persuade the consumer to purchase additional “accreditation” or “certifications” for such certificates or diplomas in order to make them appear more legitimate.  Axact, through HAMID and his co-conspirators, falsely “accredited” purported colleges and other educational institutions by arranging to have diplomas from these phony educational institutions affixed with fake stamps supposedly bearing the seal and signature of the U.S. Secretary of State, as well as various state agencies and federal and state officials. 

HAMID’s Role in the Scheme

HAMID served as Axact’s “Assistant Vice President of International Relations.”  Among other things, HAMID made various false and fraudulent representations to consumers in order to sell fake diplomas.  HAMID controlled websites of purported “schools” that (1) falsely represented that consumers who “enrolled” with the schools by paying tuition fees would receive online instruction and coursework, (2) sold bogus academic “accreditations” in exchange for additional fees, (3) falsely represented that the schools had been certified or accredited by various educational organizations, and (4) falsely represented that the schools’ degrees were valid and accepted by employers, including in the United States. 

As a further part of the scheme, HAMID and a co-conspirator (1) opened bank accounts in the United States in the names of shell entities, effectively controlled by HAMID, that received funds transferred by consumers in exchange for fake diplomas, (2) transferred funds from those bank accounts to bank accounts associated with other entities located elsewhere in the United States and abroad, at the direction of HAMID, and (3) opened and operated an account to collect and distribute consumer funds obtained in connection with their fraudulent scheme.

In May 2015, Axact was shut down by Pakistani law enforcement, and certain individuals associated with Axact were prosecuted in Pakistan.  Nevertheless, after May 2015, HAMID resumed his fraudulent business of selling fake diplomas to consumers in the United States for upfront fees based upon false and fraudulent representations.  Most recently, HAMID traveled to the United States in 2016 in order to open a bank account used to collect money from defrauded consumers.

*                *                *

HAMID, 31, of Karachi, Pakistan, pled guilty to one count of conspiracy to commit 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.  HAMID is scheduled to be sentenced by Judge Abrams on July 21, 2017, at 3:00 p.m. 

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation and the U.S. Postal Inspection Service.

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

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Edward A. Imperatore, Noah D. Solowiejczyk, and David Abramowicz are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Catherine Leahy Scott, New York State Inspector General, and Brian M. Hickey, the Special Agent-in-Charge of the Northeast Regional Office of the U.S. Department of Education Office of Inspector General (“ED-OIG”), announced today that CARMINE MARINO, the former budget and finance director of City University of New York’s School of Professional Services (“CUNY SPS”) was arrested this morning and charged in Manhattan federal court with embezzling funds from CUNY SPS.  MARINO voluntarily surrendered to federal authorities this morning and will be presented this afternoon in Manhattan federal court.    

Acting U.S. Attorney Joon H. Kim said:  “As alleged, the former budget and finance director at CUNY SPS abused his position of trust, taking money that belonged to New York City college students for his own benefit.  I want to thank our partners at the New York State Inspector General and Department of Education Office of Inspector General for their work to root out corruption at federally assisted New York schools.”

New York State Inspector General Catherine Leahy Scott said:  “This arrest involving federal fraud and embezzlement charges against a former top university official underscores CUNY’s lack of supervision and appropriate controls, which unfortunately has been a consistent theme in my investigation of the CUNY system.  I thank Acting U.S. Attorney Kim for prosecuting the case, and I will continue to work with current CUNY leadership and use all of the resources of my office to restore the trust among the student and taxpayers at large and to protect the integrity of the institution.”

ED-OIG Special Agent-in-Charge Brian M. Hickey said:  “Today’s charges allege that Mr. Marino knowingly and willfully abused his positions of trust for personal gain. That is completely unacceptable.  OIG Special Agents will continue to aggressively pursue those who seek to enrich themselves at the expense of our nation’s students. America’s students, their families, and taxpayers deserve nothing less.”

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

CARMINE MARNIO was in charge of finance and fiscal operations at CUNY SPS between 2007 and 2012, first as its Manager of Fiscal Operations, and then as its Director of Fiscal and Business Operations.  In those roles, he controlled and oversaw CUNY SPS’s finances and bank accounts.  In two separate but similar schemes, MARINO used his power over CUNY SPS’s finances to set up unauthorized bank accounts in CUNY SPS’s name, and to fund those accounts with money from CUNY SPS’s tuition account, among others.  MARINO then used those unauthorized accounts, which only he knew about, to embezzle tens of thousands of dollars for his personal use.    

*                *                *

MARINO, 43, of Los Angeles, California, is charged with one count of embezzlement and misappropriation from a program receiving federal funds, which carries a maximum penalty of 10 years in prison, and two counts of bank fraud, each of which carries a maximum penalty of 30 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.

Mr. Kim praised the investigative work of the New York State Inspector General’s Office, ED-OIG, and the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York, and noted that the investigation is continuing. 

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

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, 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 ZHENGQUAN ZHANG, a/k/a “Zheng Quan Zhang,” a/k/a “Jim Z. Zhang,” was charged with theft of trade secrets for his alleged theft of proprietary computer code concerning algorithmic trading models and trading platforms from his employer, a global financial services firm headquartered in New York, New York, that engages in the trading of publicly traded securities and other financial products (“Firm-1”).  ZHANG was arrested this morning in Santa Clara, California, and was presented this afternoon in federal court in San Jose, California.

Acting U.S. Attorney Joon H. Kim said: “As alleged, Zhengquan Zhang went to great lengths to surreptitiously steal confidential computer code from his employer. Zhang allegedly installed code designed to steal his employer’s proprietary information and illegally accessed colleagues’ computer systems to further his theft. The theft charged here can happen to even the most sophisticated companies, but this arrest was made possible by the exemplary cooperation between the FBI and the victim company, which came forward promptly and alerted law enforcement of this alleged crime.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Proprietary computer code may not be a tangible asset that people can observe, but it is indeed one of the most critical assets that companies possess. Significant investments are made to develop code, safeguard it and use it to generate revenue. As we allege, Zhang misused his access to an employer’s computer system and proceeded to download and remove over three million files of data and computer code. The FBI is committed to enforcing laws that protect U.S. companies from the theft of trade secrets.”

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

Firm-1 uses proprietary algorithmic trading models to help it predict market movements and make trading decisions.  In addition, Firm-1 uses proprietary trading platforms to create orders, automatically submit those orders to an exchange or market center, and execute orders.  These trading models and trading platforms contribute substantially to Firm-1’s market share and profits, and their economic value depends, in part, on remaining undisclosed.  Firm-1 accordingly has put in place substantial measures designed to protect the computer source code underlying its trading models and trading platforms (the “Source Code”), including the use of encryption keys to encrypt and decrypt portions of the Source Code, limits on employee access to the Source Code, and restrictions on employee use of file sharing websites and portable storage devices.

Beginning in March 2010, ZHANG was employed in technical roles within Firm-1 for which he was granted access to certain parts of Firm-1’s computer system.  From December 2016 through March 2017, ZHANG took various steps to steal the Source Code.  For example, ZHANG installed on Firm-1’s system computer code designed to look for encryption keys to gain access to portions of the Source Code.  ZHANG also installed computer code designed to send data from Firm-1’s system to an external third-party software development site, which ZHANG accessed thousands of times from Firm-1’s system.  ZHANG used an area of Firm-1’s computer system to store over 3 million files of data, including unencrypted portions of the Source Code, before sending it to the external site.

In addition, in late March 2017, ZHANG accessed parts of Firm-1’s computer system that he was not authorized to access.  For example, ZHANG remotely accessed the computer desktops of certain quantitative analysts employed by Firm-1.  ZHANG subsequently admitted to a supervisor that he did so without authorization, using software that he had modified in order to capture individuals’ usernames and passwords.

*                *                *

ZHANG, 31, of Santa Clara, California, is charged with one count of theft of trade secrets, which carries a maximum sentence of 10 years in prison and a maximum fine of $250,000 or twice the gross gain or loss from the offense.  The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the FBI.  He also thanked the San Jose office of the FBI as well as the Santa Clara and Palo Alto Police Departments for their assistance.

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

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

[1] As the introductory phase 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, Anthony A. Scarpino, Jr., District Attorney for the County of Westchester, and William F. Sweeney, Jr., Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging ten individuals with participating in a conspiracy to commit robberies, including at least nine robberies and attempted robberies that occurred in Westchester County and the Bronx, New York. The indictment also charges certain defendants with carrying, brandishing, and discharging firearms in connection with the robbery conspiracy, as well as other theft-related offenses.

Seven of the defendants charged were taken into custody today. Three defendants, JASON AUZA, GUILLERMO FERNANDEZ and KASEAN GALLOWAY, were already in state custody on other charges. All of the defendants arrested today will be presented before U.S. Magistrate Judge Paul E. Davison in White Plains federal court this afternoon.

Acting U.S. Attorney Joon H. Kim said: “As alleged, the ten defendants charged today went on a brazen crime spree across Westchester and the Bronx, robbing and attempting to rob at least nine businesses and drug dealers, often armed with guns. We are grateful to all of our law enforcement partners for their work in bringing the dangerous alleged crimes by this determined crew to an end.”

Westchester County District Attorney Anthony A. Scarpino, JR. said: “I applaud the outstanding police work that enabled us to apprehend these dangerous criminals. This inter-agency collaboration is critical to our efforts to bring down these gangs who have been terrorizing our citizens over the past two years.”

FBI Assistant Director-in-Charge William F. Sweeney, Jr. said: “As we allege, robberies and burglaries were the profit making ways of the 10 members of a loosely organized criminal charged group today. Sometimes armed, sometimes not, this crew varied their targets from commercial establishments to drug dealers. Getting criminal groups off our streets is the mission of the Westchester County Safe Streets Task Force and I’m proud to say today’s arrest meets that mission. I commend the FBI agents and the task force detectives and officers on their hard work and collaboration in bringing this investigation towards prosecution.”

According to the allegations in the Indictment and other publicly filed documents[1]:

From at least 2012 to in or about December 2016 ALEX AYALA, a/k/a “Al Bundy,” JASON AUZA, DENNIS BROWN, a/k/a “Bundles,” NELSON CARTAGENA, ANDRE EMILIEN, a/k/a “Dre,” ELBIO ESPAILLAT, a/k/a “LB,” GUILLERMO FERNANDEZ, a/k/a “Chino,” KESEAN GALLOWAY, a/k/a “K,” JOHN NASSAR, a/k/a “Mush,” a/k/a “Big Johnny,” and PAUL VALLARO, were members of a loosely organized criminal crew based primarily in Westchester County, New York (the “Crew”). Members of the Crew worked together to enrich themselves and their fellow Crew members through thefts, burglaries, and robberies, both armed and unarmed. From 2015 to December 2016, members of the Crew burglarized over 50 commercial establishments in Westchester, Rockland, Putnam, Dutchess, and Fairfield (CT) Counties. With respect to robberies, members of the Crew targeted both commercial establishments and drug dealers. Additionally, members of the Crew worked together to sell drugs, including drugs stolen from drug dealers during robberies and other thefts, and shared in the profits from those sales.

* * *

Count One of the Indictment charges AYALA, AUZA, BROWN, CARTAGENA, EMILIEN, ESPAILLAT, FERNANDEZ, GALLOWAY, and VALLARO with conspiring to commit Hobbs Act robberies. Count Two charges FERNANDEZ and NASSAR with robbing a pizzeria employee at gunpoint in the vicinity of Morsmere Avenue in Yonkers on October 5, 2012. Count three charges AYALA, AUZA, CARTAGENA, FERNANDEZ, GALLOWAY, and VALLARO with using and carrying firearms, some of which were brandished and discharged, during and in relation to the robbery conspiracy charged in Count One. Court Four charges FERNANDEZ and NASSAR with using, carrying and brandishing firearms during and in relation to the robbery charged in Count Two. Count Five charges CARTAGENA with transporting over $25,000 in stolen goods across state lines in connection with a commercial burglary in Connecticut on December 2, 2016. Count Six charges GALLOWAY with committing a carjacking in Yonkers on February 21, 2016.

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 FBI’s Westchester County Safe Streets Task Force, which is comprised of agents and investigators from the FBI, the United States Probation Office, the Westchester County District Attorney’s Office, the Westchester County Department of Public Safety, the New York City Police Department, the City of Yonkers Police Department, the City of Peekskill Police Department, and the Mount Vernon Police Department.

Mr. Kim also thanked the following law enforcement agencies for their assistance: the Westchester County Department of Public Safety, the Bedford Police Department, the Irvington Police Department, the Greenburgh Police Department, the Yorktown Police Department, the Mount Pleasant Police Department, the Village of Pleasantville Police Department, the Clarkstown Police Department, Town of Kent Police Department, the Putnam County Sheriff's Office, the New York State Police, the Ridgefield (CT) Police Department, and the Danbury (CT) Police Department.

The case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Kathryn Martin and Scott Hartman, and Special Assistant U.S. Attorney Lauren Abinanti, of the Westchester County District Attorney’s Office, 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. AYALA, ET AL., 17 Cr. 202 (___)

DEFENDANT

AGE

CITY OF RESIDENCE

CHARGES

MAX SENT.

AYALA, ALEX

a/k/a “Al Bundy”

37

Bronx, NY

Hobbs Act Robbery Conspiracy

18 U.S.C. § 1951

Firearms Offense

18 U.S.C. § 924

20 Years

Life

AUZA, JASON

27

Yonkers, NY

Hobbs Act Robbery Conspiracy

18 U.S.C. § 1951

Firearms Offense

18 U.S.C. § 924

20 Years

Life

DENNIS BROWN

a/k/a “Bundles”

36

Yonkers, NY

Hobbs Act Robbery Conspiracy

18 U.S.C. § 1951

20 Years

NELSON CARTAGENA

30

Yonkers, NY

Hobbs Act Robbery Conspiracy

18 U.S.C. § 1951

Firearms Offense

18 U.S.C. § 924

Interstate Transportation of Stolen Property

18 U.S.C. § 2314

20 Years

Life

10 Years

ANDRE EMILIEN

a/k/a “Dre”

33

Yonkers, NY

Hobbs Act Robbery Conspiracy

18 U.S.C. § 1951

20 Years

ELBIO ESPAILLAT

a/k/a “LB”

42

Bronx, NY

Hobbs Act Robbery Conspiracy

18 U.S.C. § 1951

20 Years

GUILLERMO FERNANDEZ

a/k/a “Chino”

43

Yonkers, NY

Hobbs Act Robbery Conspiracy

18 U.S.C. § 1951

Hobbs Act Robbery

18 U.S.C. § 1951

Firearms Offense

18 U.S.C. § 924

20 Years

20 Years

Life

KASEAN GALLOWAY

a/k/a “K”

20

Yonkers, NY

Hobbs Act Robbery Conspiracy

18 U.S.C. § 1951

Firearms Offense

18 U.S.C. § 924

Carjacking

18 U.S.C. § 2119

20 Years

Life

15 Years

JOHN NASSAR

a/k/a “Mush”

a/k/a “Big Johnny”

42

Yonkers, NY

Hobbs Act Robbery

18 U.S.C. § 1951

Firearms Offense

18 U.S.C. § 924

20 Years

Life

PAUL VALLARO

39

Elmsford, NY

Hobbs Act Robbery Conspiracy

18 U.S.C. § 1951

Firearms Offense

18 U.S.C. § 924

20 Years

Life

[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, William F. Sweeney Jr., the 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 arrests of GODEL SEZANAYEV a/k/a “Gary,” MARK MULLAKANDOV, ALBERT FOOZAILOV, IMANIL MURATOV a/k/a “Eddy,” MANASHE SEZANAYEV a/k/a “Michael,” NATHAN ITZCHAKI, ARKADIY ISRAILOV, ALI JAVIDNEZHAD, MARK NATANZON, SHOLOM MURATOV, MENACHEM ABRAMOV, and NIZAMUDEN AKBARI for their role in fraudulently obtaining millions of dollars in virtually untraceable diamonds from victim wholesalers.  Ten of the defendants were arrested this morning and will be presented this afternoon before U.S. Magistrate Judge Andrew J. Peck in Manhattan federal court.  JAVIDNEZHAD and AKBARI remain at large.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “The twelve charged defendants allegedly participated in a global conspiracy to defraud diamond dealers out of more than $9 million. Centered in Manhattan’s diamond district, America’s busiest hub in the diamond trade, the defendants allegedly took advantage of an industrywide system of credit and trust to obtain largely untraceable diamonds, and then, using various allegedly illegal schemes, refused to pay. We commend our law enforcement partners for their work in shutting this alleged criminal scheme down for good.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said:  “Diamonds have value worldwide so it comes as no surprise that an alleged organized ring would target diamond wholesalers in Manhattan's diamond district in a worldwide scheme. Using everything from forged documents to bad checks and tall tales, the group allegedly swindled more than $9 million from victim wholesalers. The FBI-NYPD-CBP Joint Eurasian Organized Crime Task Force is committed to rooting out organized crime groups- big or small-wherever we find them operating I want to commend the FBI agents, NYPD detectives, and CBP officers on their hard work and collaboration in bringing this investigation towards prosecution.”

NYPD Commissioner James P. O’Neill said:  “As alleged, these defendants bought nine million in untraceable diamonds with bad checks, forged documents, and long stories to perpetuate their scheme. I want to thank the NYPD detectives, the FBI, the U.S. Customs and Border Protection and the Acting United States Attorney for the Southern District for their efforts to bring these defendants to justice.”

Acting CBP NY Field Office Director Leon Hayward said:  “U.S. Customs and Border Protection is proud of the expertise we bring to support and assist investigations that result in the takedown of criminal enterprises. It is through interagency partnerships and collaborative efforts, like the one leading to today’s arrests, that law enforcement successfully combats today’s criminal organizations.”

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

Since in or about 2015, the FBI has been investigating a series of predatory frauds perpetrated by a group of diamond merchants in New York City. This group swindles diamond wholesalers in a variety of ways, and then resells the ill-gotten diamonds through Manhattan’s diamond district.  In order to avoid detection, the group focuses on obtaining small round stones called melee diamonds, which are virtually untraceable, as they do not bear the unique numerical identifiers common on larger stones.

The group uses a variety of methods to defraud its victims, including bad checks, false references, forged documents, and tall tales—all to convince its victims to part with their diamonds before receiving payment.  The group’s most common technique is the “bust out”: first the group builds up credit and trust with a victim by paying for goods on delivery, and then, at the moment of maximum credit, the group walks away with the millions of dollars in diamonds, leaving the victim high and dry.

Once victims begin to realize their predicament, and begin to insist on payment, members of the group refuse and, instead, inform the wholesalers that their diamonds have been lost, or that another customer took the victim’s diamonds and has refused to pay, or that a different member of the group will repay the victim at some point in the future.  Members of the group have even conditioned payment on the victim’s willingness to assist the group in still another fraud.

Among the schemes described in the Complaint:

From at least January 2015 to November 2016, GODEL SEZANAYEV a/k/a “Gary”, ALBERT FOOZAILOV, IMANIL MURATOV a/k/a “Eddy,” MANASHE SEZANAYEV a/k/a “Michael,” and ALI JAVIDNEZHAD deployed an ad hoc strategy to obtain as much of the diamond inventory of a wholesaler (“Victim-1”) as possible without full payment. The defendants’ scheme caused Victim-1 in excess of $2.4 million in losses.

In or about May 2015, GODEL SEZANAYEV a/k/a “Gary,” ARKADIY ISRAILOV, and NIZAMUDEN AKBARI conspired to defraud a jewelry merchant at a Las Vegas trade show.

From in or about December 2015 to December 2016, ALBERT FOOZAILOV, NATHAN ITZCHAKI, MARK MULLAKANDOV, MARK NATANZON, MENCHAM ABRAMOV, and SHOLOM MURATOV induced numerous victims in Mumbai, India (“Victim-2,” “Victim-3,” “Victim-4,” and “Victim-5”) to send diamonds by interstate carrier by purporting to agree to payment terms that they had no intention to, and did not, honor. The defendants caused these victims losses in excess of $7.44 million.

*          *          *

GODEL SEZANAYEV a/k/a “Gary,” 40, ALBERT FOOZAILOV, 53, IMANIL MURATOV a/k/a “Eddy,” 60, MANASHE SEZANAYEV a/k/a “Michael,” 34, ALI JAVIDNEZHAD, 51, ARKADIY ISRAILOV, 38, and NIZAMUDEN AKBARI, 56, are each charged with conspiring to commit wire fraud, which carries a maximum sentence of 20 years in prison. FOOZAILOV, NATHAN ITZCHAKI, 58, MARK MULLAKANDOV, 41, MARK NATANZON, 68, MENCHAM ABRAMOV, 31, and SHOLOM MURATOV, 35, are charged with conspiring to commit mail fraud, which also carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Kim praised the outstanding work of the FBI, the CBP, and the NYPD 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 Noah Falk and Andrew Thomas are in charge of the case.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, Keith Barwick, the Special Agent-in-Charge of U.S. Immigration and Customs Enforcement’s (“ICE”) Office of Professional Responsibility (“OPR”) Northeast, and Angel M. Melendez, the Special Agent-in-Charge of the New York Field Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced that JUAN ANTHONY NIEVES was sentenced yesterday by U.S. District Judge Cathy Seibel to six years in prison for impersonating a federal immigration official to defraud victims in New York and Connecticut. 

Acting Manhattan U.S. Attorney Joon H. Kim said:  “Juan Nieves exploited vulnerable immigrants working toward U.S. citizenship by posing as a federal immigration officer, charging his victims fraudulent fees while providing no assistance.  Nieves not only defrauded his victims of money but also undermined their trust in the immigration system.  Today’s significant sentence is a clear message that this outrageous behavior will not be tolerated.”

OPR Special Agent-in-Charge Keith Barwick said: “This case identified an illegal scheme to extort victims—impersonating a U.S. Department of Homeland Security official undermines the confidence people have in their government and in law enforcement.  We are committed to aggressively pursue impersonation cases. Having people come forward to report such schemes is crucial to deterring this type of fraud and preventing others from becoming victims.”

HSI Special Agent-in-Charge Angel M. Melendez said:  “This law enforcement impersonator demanded thousands of dollars in fees by preying on members of his own community.  The imitation of officers is not only illegal, but it also perpetuates a fear and panic within our city. The sentencing of Nieves demonstrates law enforcement’s commitment to locating and prosecuting these criminals so they can face the consequences of their actions.”

According to the Complaint and Information filed in White Plains federal court, as well as statements made in connection with the plea and sentencing proceedings:

NIEVES is not, and never has been, employed by the Department of Homeland Security.  But in March 2015 and from November to December 2015, in Orange County, New York, and Hartford County, Connecticut, NIEVES posed as a federal immigration officer capable of providing assistance in the immigration matters of certain victims and their family members.  NIEVES claimed that he was a “boss” or “chief” (“jefe” in Spanish) with United States Immigration; that he worked at 26 Federal Plaza in Manhattan and had numerous employees working for him; and that he signed the final paperwork that permits an individual to enter the United States or orders an individual to be deported.

NIEVES offered to help the victims and their family members with their immigration paperwork and in return demanded and received thousands of dollars in so-called fees.  In connection with this purported help, NIEVES received from the victims and their family members legitimate immigration paperwork that they had completed, and he also took photos or made copies of their identification documents.  NIEVES also engaged in a charade of purporting to contact, in the victims’ presence, one or more individuals who worked for him at U.S. Customs and Immigration Services to do certain work related to the victims’ applications.

In addition to the prison sentence, NIEVES, 49, of Manhattan, was sentenced to three years of supervised release.  Judge Seibel also ordered NIEVES to forfeit $15,080 in ill-gotten gains and to pay $15,080 in restitution.

*                *                *

Mr. Kim praised the outstanding investigative work of OPR and HSI.  Mr. Kim also thanked the U.S. Attorney’s Office for the District of Connecticut and the Village of Monroe, New York, Police Department for their assistance.

This case is being handled by the Office’s White Plains Division.  Assistant United States Attorney Won S. Shin is in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that TAKIEM EWING, a/k/a “Mulla,” pled guilty to firearms offenses in connection with the fatal carjackings of two livery cab drivers: Maodo Kane, who was killed in the Bronx on August 5, 2014, and Aboubacar Bah, who was killed in the Bronx on August 12, 2014. EWING faces a mandatory minimum term of 35 years in prison and a maximum term of life in prison, and will be sentenced before United States District Judge Vincent L. Briccetti on July 12, 2017, at 10:00 a.m.

Acting Manhattan U.S. Attorney Joon H. Kim said: “On August 5, 2014, Maodo Kane, a livery cab driver, just trying to earn an honest living, was shot and killed during a carjacking in the Bronx. A week later, Aboubacar Bah, another innocent livery cab driver in the Bronx, was killed in another carjacking. Today, Takiem Ewing has admitted and pled guilty to his participation in these two senseless killings. I want to thank our partners at the FBI, the NYPD, and the City of Yonkers Police Department for their work in bringing Ewing to justice. And we hope that this conviction gives the victims’ friends and families a measure of justice.”

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

On August 5, 2014, Ewing participated with others in the armed carjacking of Maodo Kane. During the course of the carjacking, one of the perpetrators discharged a gun and Kane was killed in the vicinity of Hunter Avenue, in the Bronx. Subsequently, on August 12, 2014, Ewing participated in the carjacking of Aboubacar Bah. Again, one of the perpetrators discharged a gun in the course of the carjacking, and Mr. Bah was killed in the vicinity of Bryant Avenue, in the Bronx.

Tyrone Felder, Kareem Martin, and Tommy Smalls have also been charged in connection with the carjackings and resulting deaths of Mr. Kane and Mr. Bah. Their trial is scheduled to begin before Judge Briccetti on February 19, 2018.

* * *

Mr. Kim praised the outstanding investigative work of the New York City Police Department (“NYPD”), the City of Yonkers Police Department, and the Federal Bureau of Investigation’s (“FBI”) Westchester County Safe Streets Task Force, which comprises agents and investigators from the FBI, the United States Probation Office, the Westchester County District Attorney’s Office, the Westchester County Department of Public Safety, the NYPD, the City of Yonkers Police Department, the City of Peekskill Police Department, and the Mount Vernon Police Department.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York and Terence S. Opiola, the Special Agent-in-Charge of the Newark Field Office of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today the arrest of CHARLES JASON LORE for visa fraud, aggravated identity theft, and mail fraud. LORE was arrested this morning and presented this afternoon in Manhattan federal court before U.S. Magistrate Judge Andrew J. Peck.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Charles Lore, an immigration attorney, is alleged to have submitted fraudulent forms for over 150 clients, claiming a rare exception intended for individuals with extraordinary achievements in film and television. When approached by law enforcement about the unusually high number of exceptions he sought, Lore allegedly stole the identity of another attorney and filed almost 200 additional petitions for the same exception under the unsuspecting attorney’s name.”

HSI Special Agent-in-Charge Terence S. Opiola said: “Attorneys allegedly misrepresenting their role should be put on notice that their actions will be uncovered. I commend our special agents on a job well done.”

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

Beginning in April 2011 through January 2015, LORE participated in a scheme to submit fraudulent I-129 Forms in connection with applications for temporary nonimmigrant worker visas, known as O-1 visas. Specifically, LORE submitted over 150 fraudulent “no-objection letters” from trade associations that represent actors, musicians, and artists in support of scores of O-1 visa petitions. United States Citizenship and Immigration Services relies on these letters in determining whether the applicant possesses the extraordinary ability, or has demonstrated the requisite achievement necessary to obtain an O-1 visa. In addition, after he was approached by law enforcement agents concerning an apparently fraudulent letter, LORE stole the identity of an unsuspecting lawyer, and submitted nearly 200 additional visa petitions in this victim’s name.

* * *

LORE, of Denville, New Jersey, is charged with one count of visa fraud, one count of aggravated identity theft, and one count of mail fraud. Mail fraud carries a maximum sentence of 20 years in prison; visa fraud carries a maximum sentence of 10 years in prison; and aggravated identity theft carries a mandatory sentence of two 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 HSI.  He also praised the U.S. Citizenship and Immigration Services, Office of Fraud Detection and National Security, and the Department of State's Diplomatic Security Service for their assistance.  He added that the investigation is ongoing.

The prosecution is being handled by the Office’s General Crimes Unit. Assistant United States Attorney Michael D. Longyear is in charge of the prosecution.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that PETRONILA PERALTA, a/k/a “Petra,” a former employee with the New York City Human Resources Administration (“HRA”), was sentenced in Manhattan federal court to 90 months in prison for defrauding a public assistance program that she had administered during the time when she worked for HRA, resulting in the theft of more than $600,000 in public funds, and for trafficking more than 100 kilograms of cocaine following her separation from HRA. Sentence was imposed by U.S. District Judge Gregory H. Woods.

Acting U.S. Attorney Joon H. Kim stated: “Petronila Peralta not only trafficked in large quantities of cocaine, but also abused her position of trust by enriching herself and her co-conspirators at the expense of some of New York City’s neediest citizens. For her serious crimes, she has now been sentenced to over seven years in federal prison.”

According to the Complaint, Indictment, plea agreement, and other information in the public record:

HRA is an agency of the City of New York responsible for administering various public assistance programs. Among other things, HRA provides temporary help to individuals and families with social service and economic needs to assist them in reaching self-sufficiency. Its services include, among others, administering the federally funded Supplemental Nutrition Assistance Program (more commonly known as “food stamps”), administering the federally funded Temporary Aid to Needy Families Program, and providing rental assistance to low-income families and individuals.

Between 2005 and August 2014, PERALTA worked at HRA. Although PERALTA was supposed to provide economic support and employment-related services to persons in need, between approximately 2009 and 2011, PERALTA abused her position by fraudulently issuing certain public assistance benefits not to the individuals who were entitled to them, but rather to her co-conspirators. The scheme led by PERALTA resulted in the loss of more than approximately $600,000 in public funds. In addition, following her separation from HRA, between approximately January 2013 and March 2015, PERALTA received, and helped others to receive, through the mail more than 100 kilograms of cocaine meant for re-distribution. In handing down the sentence, Judge Woods called PERALTA the “lynchpin” of both the HRA fraud and the narcotics conspiracy.

* * *

In addition to the prison sentence, PERALTA, 53, of Bronx, New York, was ordered to pay $600,000 in restitution and $675,000 in forfeiture.

Acting U.S. Attorney Kim praised the work of the New York City Department of Investigation, the Drug Enforcement Administration, and the United States Postal Inspection Service.

The case is being prosecuted by the Office’s Public Corruption and Narcotics Units. Assistant U.S. Attorneys Daniel C. Richenthal and Shawn G. Crowley are in charge of the prosecution.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that EDWARD J. SERVIDER, a/k/a “Nick Halden,” pled guilty to defrauding approximately 100 investors of over $2.4 million through his firm EJS Capital Management, LLC. SERVIDER pled guilty to one count of conspiracy to commit commodities fraud before U.S. District Judge Jed S. Rakoff.

Acting Manhattan U.S. Attorney Joon H. Kim said: “Edward Servider lured investors into his scheme by falsely telling them he had achieved high annual rates of return through his Forex trading. In fact, he never made a single trade or achieved any returns for any of his nearly 100 investor-clients. Instead, he used his investors’ money to pay for personal luxuries like hotels, cars, and an engagement ring. I want to thank the FBI for their great work in putting a stop to this fraud.”

According to allegations contained in the Complaint and the Indictment filed against SERVIDER and statements made in related court filings and proceedings:

In March 2013, SERVIDER set up a retail foreign currency exchange (“Forex”) trading firm, called EJS Capital Management, LLC (“EJS”), in Brooklyn. SERVIDER and his business partner (“CC-1”) ran EJS from March 2013 through July 2014. EJS employed salespeople (“cold callers”) who made unsolicited telephone calls to prospective investors. SERVIDER and the EJS cold callers told prospective investors that their funds would be used to trade in Forex transactions, and provided them with a “performance report” that falsely claimed that between 2010 and 2013, EJS had achieved gross annual returns for its investors of approximately 18 percent, 22 percent, 49 percent, and 77 percent (the “EJS Performance Report”). In truth, EJS had never conducted any trading or achieved any returns for its investors. To sustain the fraud, SERVIDER directed EJS employees to send account statements to the EJS investors, falsely showing positive returns on their investments.

In fact, instead of using the investor funds to execute Forex trading, the majority of the moneys was misappropriated and used to pay SERVIDER and CC-1’s personal expenses and purported business expenses for EJS. For example, SERVIDER used investor funds to purchase an engagement ring, to lease a BMW vehicle for his girlfriend, and to pay for hotel rooms, rental cars, and parking tickets.

* * *

SERVIDER, 29, pled guilty to one count of conspiracy to commit commodities fraud, which carries a maximum term of five years in prison and a maximum fine of the greatest of $250,000, twice the gross gain from the offense, or twice the gross 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.

SERVIDER’s sentencing is scheduled for July 27, 2017, at 4:00 p.m.

Mr. Kim praised the work of the FBI, and thanked the U.S. Commodity Futures Trading Commission for its assistance.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that JOSEPH CERVONE, a certified public accountant, pled guilty to tax fraud charges before the U.S. District Judge Nelson S. Román this morning. CERVONE pled guilty to one count of endeavoring to obstruct and impede the due administration of the internal revenue laws and one count of subscribing to false tax returns. 

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

From 2009 through 2012, CERVONE, a certified public accountant with an office in White Plains, obstructed and impeded the IRS by filing false tax returns claiming more than $23 million of energy and coal credits on behalf of his clients in order to obtain tax refunds.  In addition, CERVONE also filed false tax returns for the tax years 2010 and 2011 that failed to report more than $500,000 in income.

*          *         *

CERVONE, 63, of White Plains, New York, is charged with one count of endeavoring to obstruct and impede the due administration of the internal revenue laws, and one count of subscribing to false tax returns, each of which carries a maximum sentence of three 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.

CERVONE’s sentencing is scheduled for June 29, 2017.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that today ELIJAH DAVILA, a/k/a “Montana,” pled guilty to committing the murder of Pablo Beard, participating in racketeering and narcotics conspiracies, and committing a firearms offense, all in connection with a violent street gang known as the “Taylor Avenue Crew” or “Bugatti,” which is based primarily in and around the New York City Police Department’s 43rd Precinct in the Bronx, New York. As part of his guilty plea, DAVILA admitted to shooting and killing Pablo Beard, in the vicinity of Leland Avenue in the Bronx. DAVILA faces a mandatory minimum term of 40 years in prison and a maximum term of life in prison, and will be sentenced before United States District Judge Katherine Polk Failla on July 13, 2017.

Manhattan Acting U.S. Attorney Joon H. Kim said: “Elijah Davila and the Taylor Avenue Crew wrought havoc in their Bronx neighborhood, selling drugs and committing acts of violence. As he admitted today, as part of his racketeering and drug crimes, Davila murdered Pablo Beard. We are committed to bringing federal prosecutions like this one to reduce violent crime and drug dealing in our neighborhoods.”

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

DAVILA was a member of the Bronx-based street gang known as the Taylor Avenue Crew or Bugatti, and in that capacity committed the murder of Beard. From at least 2008 to September 2015, members and associates of the Taylor Avenue Crew enriched themselves by selling drugs, such as “crack” cocaine, and committed acts of violence, including murder and attempted murder, against various people, including rival gang members, rival drug traffickers, and innocent bystanders. As part of this enterprise, members and associates of the Taylor Avenue Crew – including DAVILA – killed and attempted to kill others individuals. On March 3, 2015, DAVILA shot Beard to death in the vicinity of 1504 Leland Avenue.

* * *

Mr. Kim praised the 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.

This 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, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Division of the Federal Bureau of Investigation (“FBI”), announced the unsealing of a Complaint charging MEHMET HAKAN ATILLA with conspiring with others, including Reza Zarrab, a/k/a “Riza Sarraf,” to use the U.S. financial system to conduct transactions on behalf of the Government of Iran and other Iranian entities, which were barred by United States sanctions, and to defraud U.S. financial institutions by concealing the true nature of these transactions. ATILLA was arrested on March 27, 2017, and will be presented later today in Manhattan federal court before United States Magistrate Judge James C. Francis IV.

Acting U.S. Attorney Joon H. Kim stated: “As alleged, Mehmet Hakan Atilla, a Turkish banker, participated in a years-long scheme to violate American sanctions laws by helping Reza Zarrab, a major gold trader, use U.S. financial institutions to engage in prohibited financial transactions that illegally funneled millions of dollars to Iran. As alleged in the criminal complaint unsealed today, Atilla worked with Zarrab to create and use fraudulent documents to try to disguise prohibited Iranian financial transactions as food that would qualify under the humanitarian exception to the sanctions regime. United States sanctions are not mere requests or suggestions; they are the law. And those who use the American financial system to violate the sanctions laws, as Atilla is alleged to have done, will be investigated and prosecuted aggressively. I thank the FBI and the career prosecutors in my Office for their tireless work and dedication in this and other important investigations of alleged sanctions violators.”

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “Iran continues to illustrate it will use whatever means necessary to evade sanctions and violate U.S. law. Our work in this case shows the unscrupulous behavior by exposing how the men charged allegedly moved massive amounts of money through U.S. banks disguised as humanitarian efforts to feed people in need. In this instance, they allegedly utilized a Turkish national and a financial institution that knowingly shielded the true nature of the transactions. The FBI and the U.S. Intelligence Community have dedicated investigators and analysts who won’t stop weeding out every action Iran takes to continue its alleged illegal activity.”

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

Beginning in or about 1979, the President has repeatedly found that the situation in Iran constitutes an unusual and extraordinary threat to the national security, foreign policy, and economy of the United States and declared a national emergency to deal with the threat. Pursuant to these presidential declarations, the United States has instituted a host of economic sanctions against Iran and Iranian entities pursuant to the International Emergency Economic Powers Act (the “IEEPA”). This sanctions regime prohibits, among other things, financial transactions involving the United States or United States persons that were intended for the Government or Iran or Iranian entities.

Specifically, ATILLA, Zarrab, and others protected and hid Zarrab’s ability to provide access to international financial networks, including U.S. financial institutions, to the Government of Iran, Iranian entities, and entities identified by the Department of the Treasury Office of Foreign Assets Control as Specially Designated Nationals (“SDNs“). They did so by, among other things, using the Turkish bank at which ATILLA acted as Deputy General Manager of International Banking (“Turkish Bank-1”) to engage in transactions that violated U.S. sanctions against Iran. In particular, they took steps to protect and hide Zarrab’s ability to supply currency and gold to the Government of Iran, Iranian entities, and SDNs using Turkish Bank-1 without subjecting Turkish Bank-1 to U.S. sanctions. As described in more detail in the Complaint, ATILLA, Zarrab, and others conspired to create and use false and fraudulent documents to disguise prohibited transactions for Iran and make those transactions falsely appear as transactions involving food and thus falling within humanitarian exceptions to the sanctions regime.

* * *

MEHMET HAKAN ATILLA, 47, is a resident and citizen of Turkey. ATILLA is charged with conspiracies to violate the IEEPA and to commit bank fraud. The conspiracy to violate the IEEPA carries a maximum term of 20 years in prison. The bank fraud conspiracy count carries a maximum term of 30 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 FBI and its New York Field Office, Counterintelligence Division, and the Department of Justice, National Security Division, Counterintelligence and Export Control Section. He also thanked U.S. Customs and Border Protection for their assistance in the arrest, and the Justice Department’s Office of International Affairs for its assistance on this case.

The prosecution of this case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant United States Attorneys Michael D. Lockard, Sidhardha Kamaraju, and David W. Denton, Jr., and Special Assistant United States Attorney Dean Sovolos, are in charge of the prosecution, with assistance from Trial Attorney David Recker of the Counterintelligence and Export Control Section.

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, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the unsealing of a complaint charging ANTHONY DODAJ with narcotics dealing that resulted in the heroin overdose death of a 41-year-old woman while the victim was a patient in a hospital rehabilitation clinic.

The complaint alleges that DODAJ participated in a conspiracy to distribute heroin, and that heroin distributed by DODAJ on January 1, 2016, resulted in the death of Ivy Katz in New York, New York. DODAJ was arrested this morning and presented today in Manhattan federal court before United States Magistrate Judge James C. Francis IV. DODAJ faces a mandatory minimum term of 20 years in prison.

Acting U.S. Attorney Joon H. Kim stated: “As alleged, Anthony Dodaj hand-delivered a fatal dose of heroin to a recovering addict inside a rehabilitation facility. Together with our partners at the NYPD, we will continue to prosecute those who prey on others’ addictions, as alleged here.”

NYPD Commissioner James P. O’Neill stated: “As alleged, the defendant preyed on the vulnerable – peddling poison to those seeking help. Today, the defendant finds himself under arrest with the possibility of spending the rest of his life in prison for the crimes alleged in the complaint.”

According to the complaint[1]:

From December 2016 up to January 2017, in the Southern District of New York and elsewhere, ANTHONY DODAJ and others conspired to sell heroin. As part of that conspiracy, on January 1, 2016, DODAJ delivered heroin to Ivy Katz, a 41-year-old recovering heroin addict. In mid-December 2016, Katz had voluntarily checked herself into an inpatient rehabilitation program for opioid dependence at a hospital located in New York, New York (the “Hospital”). On January 1, 2017, DODAJ entered the Hospital and met with Katz in the Hospital’s inpatient rehabilitation ward. Approximately 30 minutes after DODAJ left the Hospital, Katz was found comatose in her room with a needle containing heroin in her arm. Katz never regained consciousness, and ultimately died on January 16, 2017.

* * *

DODAJ, 46, of the Bronx, New York, faces a maximum sentence of life in prison, and a mandatory minimum sentence of 20 years in prison.

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

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

This matter is being handled by the Office’s Narcotics Unit. Assistant United States Attorney David W. Denton Jr. is in charge of the prosecution.

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

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that the Office obtained recoveries of more than $1.4 billion in forfeiture actions, more than $2.2 billion in civil actions, and more than $31 million from restitution, criminal fines, and special assessments, between October 1, 2015, and September 30, 2016.

Manhattan Acting U.S. Attorney Joon H. Kim said: “The $3.7 billion in forfeitures, penalties, and fines for fiscal year 2016 recovered by this Office demonstrate that those who break the law or commit civil offenses will not be allowed to profit from their misconduct. We are committed to taking the profit out of crime and compensating victims whenever possible through our prosecutions and civil actions.”

Forfeitures

Forfeited funds are generally deposited into the Department of Justice Assets Forfeiture Fund (the “Assets Forfeiture Fund”) and the Department of Treasury Forfeiture Fund. The forfeited funds are used to restore money to crime victims and for a variety of law enforcement purposes.

General Motors

$900 million forfeited

In September 2015, the General Motors Company (“GM”) entered into a deferred prosecution agreement with this Office based on charges that GM concealed a potentially deadly safety defect from its U.S. regulator, the National Highway Traffic Safety Administration, and, in the process, misled consumers concerning the safety of certain of GM’s cars. Pursuant to the deferred prosecution agreement, GM, among other things, agreed to the forfeiture of $900 million to the United States, which was completed in 2015.

Bank Julius Baer

$219,250,000 forfeited

In February 2016, Bank Julius Baer & Co. Ltd. (“Julius Baer”), a Swiss bank headquartered in Zurich, entered into a deferred prosecution agreement with this Office based on charges that Julius Baer conspired with many of its U.S. taxpayer-clients and others to help U.S. taxpayers hide billions of dollars in offshore accounts from the IRS and to evade U.S. taxes on the income earned in those accounts. Pursuant to the deferred prosecution agreement, Julius Baer, among other things, agreed to the forfeiture of $219,250,000 to the United States.

PokerStars and Related Cases

$81,003,765 forfeited

In July 2012, the United States reached an agreement with the two largest online poker companies in the United States, Full Tilt Poker and PokerStars. The United States had brought a civil forfeiture and money laundering action against these companies and their assets. Under the terms of the settlement, Full Tilt Poker forfeited essentially all of its assets to the United States. PokerStars agreed to forfeit $547 million, to be paid in several installments, and to reimburse the approximately $184 million owed by Full Tilt Poker to foreign players. The settlement further provided that PokerStars would acquire the forfeited Full Tilt Poker assets from the United States. Fiscal Year 2016, $48 million was forfeited to the United States by PokerStars and more than $33 million was forfeited by other parties in related actions. To date, in excess of $1.3 billion has been forfeited in the PokerStars civil forfeiture action and related cases.

U.S. v. Tucker et al., and Related Cases

$48 million forfeited

In February 2016, this Office charged Scott Tucker and Jason Muir with violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) and the Truth in Lending Act (“TILA”) for operating a $2 billion nationwide internet payday lending enterprise that systematically evaded state laws in order to charge illegal interest rates as high as 700% on loans. In connection with that investigation, on February 9, 2016, the United States entered into a non-prosecution agreement with two tribal corporations controlled by the Miami Tribe of Oklahoma, a Native American tribe. As part of that agreement, the tribal corporations agreed to the forfeiture of $48 million in criminal proceeds from Tucker’s payday lending enterprise that were held in tribal bank accounts.

VimpelCom

$40 million forfeited

In February 2016, VimpelCom Limited, an Amsterdam-based telecommunications company, entered into a deferred prosecution agreement with this Office and the Fraud Section of the Criminal Division of the Department of Justice based on charges that VimpelCom conspired to make bribe payments to a government official in Uzbekistan between 2006 and 2012. Pursuant to the deferred prosecution agreement, VimpelCom, among other things, agreed to forfeit $40 million to the United States.

Civil Actions and Restitution, Criminal Fines, and Special Assessments

U.S. v. Wells Fargo Bank, N.A. et al.

$1.2 billion collected

In April 2016, Wells Fargo Bank, N.A., settled a False Claims Act lawsuit brought by this Office alleging that Wells Fargo had engaged in reckless underwriting of Federal Housing Administration mortgage loans for nearly a decade. As part of the settlement, Wells Fargo paid $1.2 billion and admitted to certain conduct alleged in the complaint, and a Wells Fargo executive also made admissions.

U.S. v. CenterLight Healthcare, Inc. et al.

$46.7 million collected

In January 2016, this Office simultaneously filed a lawsuit against and entered into a settlement with CenterLight Healthcare, Inc., and CenterLight Health System, Inc. (collectively, “CenterLight”), resolving False Claims Act claims arising from the enrollment of ineligible members in CenterLight’s managed long-term care plan. Under the terms of the settlement, CenterLight paid a total of $46,751,086.74 to the Medicaid Program, $18,700,434.70 of which went to the United States. In addition, CenterLight was required to reform its business practices and admit to conduct alleged in the complaint.

U.S. ex rel. Krigstein v. Motives, Inc.

$13.375 million collected

In July 2016, this Office simultaneously filed a False Claims Act lawsuit and entered into a $13.375 million settlement with Motives, Incorporated, an importer of clothing, and Motives Far East and Motives China Limited, foreign manufacturers of clothing (collectively, “Motives”), for conspiring to underpay customs duties. (United States v. Motives, Inc., No. 13 Civ. 9030 (GBD)). As part of the settlement, Motives paid a total of $13.375 million and admitted to allegations in the complaint.

United States ex rel. Peikin et al. v. Salix Pharmaceuticals, Inc. and United States ex rel. Dhaliwal v. Salix Pharmaceuticals, Inc.

$54 million collected

In June 2016, this Office simultaneously sued and settled with Salix Pharmaceuticals, Inc. (“Salix”), a specialty pharmaceutical company. The settlement, in the amount of $54 million, resolved claims that Salix violated the Anti-Kickback Statute and False Claims Act by using its “speaker programs” as a mechanism to pay kickbacks to doctors to induce them to prescribe Salix drugs and medical devices that were reimbursed by federal health care programs. In connection with the settlement, Salix admitted to paying doctors to serve as “speakers” at events that were primarily social in nature, that were held at high-end restaurants, and where the “speakers” spent little or no time discussing the relevant Salix product.

* * *

The Criminal Division’s Money Laundering and Asset Forfeiture Unit is led by Chief Sarah Eddy and Deputy Chief Alexander Wilson and handles all criminal and civil forfeiture actions for the Office. Civil recoveries are handled by the Office’s Civil Division, which is led by Jeffrey Oestericher. Criminal and civil collections are handled by the Civil Division’s Financial Litigation Unit, which is led by Kathleen Zebrowski.

For further information, the United States Attorneys’ Annual Statistical Reports can be found online at http://www.justice.gov/usao/reading_room/foiamanuals.html.

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that CHRISTOPHER CERVINO, a/k/a “Smitty,” and SHEIK F. KHAN, a/k/a “Abida Khan,” were found guilty yesterday afternoon in Manhattan federal court after a three-week jury trial before U.S. District Judge Andrew L. Carter, Jr. for their roles in a securities fraud scheme involving a publicly traded over-the-counter company called VGTel, Inc. (“VGTL”).

Acting U.S. Attorney Joon H. Kim said:  “Yesterday, a unanimous jury found Sheik Khan, an investment adviser, and Christopher Cervino, a registered broker, guilty of securities fraud relating to a company called VGTel.  The stock fraud scheme Khan and Cervino participated in defrauded 100 investors of more than $15 million, including nearly $5 million from Khan’s clients.  For their roles in the scheme, Khan and Cervino now stand convicted of federal crimes.”

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

The VGTL scheme was conceived and led by Edward Durante, a recidivist securities fraud defendant who pleaded guilty in August 2016 to various crimes related to VGTL, including conspiracy, securities fraud, money laundering and perjury.  The defendants’ efforts to artificially inflate the market for VGTL increased the stock price from approximately $.25 per share in April 2012 to as much as $1.90, and dramatically inflated the trading volume, which increased the defendants’ abilities to raise private investments in VGTL.  To compensate CERVINO for his efforts to control and manipulate the market in VGTL, Durante made at least two cash payments to CERVINO totaling $35,000, in addition to the substantial commissions Cervino received for executing trades in VGTL.  For her part, KHAN received more than $400,000 from Durante, including more than $100,000 in payments for liquidating her clients’ investments in safe annuities so that the money could then be invested into VGTL.  KHAN’s clients lost virtually the entirety of their investments in VGTL. 

*                      *                      *

CERVINO, 44, of Franklin Lakes, New Jersey, and KHAN, 50, of Las Vegas, Nevada, were each convicted of one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison; one count of securities fraud, which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; and one count of wire fraud, which carries a maximum sentence of 20 years in prison.  In addition to these charges, KHAN was also convicted of investment adviser fraud, which carries a maximum sentence of five years in prison, and aggravated identity theft crimes, which carries a mandatory sentence of two years in prison.

The statutory maximum 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 work of the Federal Bureau of Investigation and the U.S. Postal Inspection Service, and thanked the Securities and Exchange Commission for its assistance. 

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced today that LARRY GREEN, a/k/a “Mafia,” a/k/a “Maf,” was sentenced in Manhattan federal court to 22 years in prison, in connection with the 2006 drug-related murder of Shawn Williams, a/k/a “Showtime” (“Williams”) in Paterson, New Jersey. Sentenced was imposed by U.S. District Judge Laura Taylor Swain.

Acting U.S. Attorney Joon H. Kim said: “This case is yet another example of the senseless violence that often accompanies drug dealing on our city streets. Today, Larry Green was sentenced to 22 years in prison for murdering a rival drug dealer over a turf dispute in Paterson, New Jersey. This case exemplifies the determination of this Office and our law enforcement partners to ensure that even after 11 years, the perpetrator would be held responsible for this ruthless murder.”

GREEN 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 indictment previously filed in Manhattan federal court and public information:

GREEN, an enforcer of the Fruit Town Brims set of the Bloods street gang, was arrested on February 22, 2014, in Paterson, New Jersey. On March 17, 2016, GREEN pled guilty to participating in a conspiracy to distribute and possess with the intent to distribute more than one kilogram of heroin, from 2006 through 2014. GREEN admitted that, as part of the charged narcotics distribution offense, he and his co-conspirators were engaged in an ongoing dispute concerning, alia, drug distribution territory in Paterson. In connection with that ongoing dispute, on or about July 2, 2006, GREEN encountered Williams, who was inside a vehicle that was driving in the vicinity of 145 North Main Street, in Paterson. GREEN pulled out a firearm, and fired one shot at the vehicle, striking and killing Williams.

* * *

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation (“FBI”) 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, and Jonathan Schofield, Special Agent in Charge of the Office of Inspector General for the U.S. Agency for International Development (“USAID-OIG”), announced today the settlement of a civil fraud lawsuit against AMERICAN UNIVERSITY OF BEIRUT (“AUB”), a teaching-centered research university located in Beirut, Lebanon, that receives funding from USAID.  The settlement resolves claims that during the period December 2007 through March 2016 (the “Covered Period”), AUB violated the federal False Claims Act (the “FCA”) by providing material support to three entities that had been included on the U.S. Office of Foreign Assets Control’s (“OFAC”) Specially Designated Nationals and Blocked Persons List (the “SDN List”).  The SDN List is a list of individuals and entities, such as terrorists and narcotics traffickers, that have been identified as engaging in conduct antithetical to U.S. interests.  The three SDN List entities at issue here are al Nour Radio, al Manar TV, and Jihad al-Binaa.  Al Nour Radio and al Manar TV have been on the SDN List since March 2006, while Jihad al-Binaa has been on the SDN List since February 2007, and thus all three are prohibited parties under U.S. law.  The Government’s Complaint alleges that AUB provided material support to those three SDN List entities by (1) providing specialized training on a variety of media topics to representatives of al Nour Radio and al Manar TV, and (2) including Jihad al-Binaa in a database that AUB maintained on its public website (the “NGO database”) for the stated purpose of connecting Non-Governmental Organizations (“NGOs”) with students and others interested in assisting them.

Today, U.S. District Court Judge J. Paul Oetken approved a settlement agreement to resolve the Government’s claims against AUB.  Under the settlement, AUB is required to pay $700,000 to the United States and has revised its internal policies to ensure that, going forward, it complies with applicable U.S. laws.  In addition, in connection with the settlement, AUB has admitted to and accepted responsibility for (1) holding journalism training workshops that were attended by representatives of entities that were prohibited parties under U.S. law, and (2) including in the NGO database an entity that was a prohibited party under U.S. law.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “For years, the American University of Beirut accepted grant money from USAID, but failed to take reasonable steps to ensure against providing material support to entities on the Treasury Department’s prohibited list.  Without such proper safeguards, the University ended up providing training to entities that were prohibited parties under U.S. law.  With today’s settlement, the University is being made to pay a financial penalty for its conduct, and importantly, it has admitted to its conduct and agreed to put proper precautions in place to ensure that it does not happen again.” 

USAID-OIG Special Agent in Charge Jonathan Schofield said:  “USAID OIG thanks the Southern District of New York for partnering so effectively to ensure the programs of USAID are executed safely and effectively.  Implementers executing USAID’s critical programs around the world, regardless of the context, must remember that all contract regulations and applicable laws still apply to them.  Too often, implementers and funding recipients report to USAID that they have taken necessary precautions or requisite steps – such as checking the SDN List – when in fact those actions were not undertaken or done properly.  Today, we see once again that there are consequences for those who fail to live up to their obligations while executing their award or mandate under a USAID program.”

As alleged in the Government’s Complaint and set forth in the parties’ settlement agreement, both of which have been filed in Manhattan federal court:

Since at least 2007, AUB has received monetary grants from USAID to fund various university projects and programs.  As a condition of receiving those grants, AUB submitted certifications to USAID each year in which it represented, inter alia, that it “has not provided, and will take all reasonable steps to ensure that it does not and will not knowingly provide, material support or resources to any individual or entity that commits, attempts to commit, advocates, facilitates, or participates in terrorist acts, or has committed, attempted to commit, facilitated, or participated in terrorist acts.”  In these annual certifications, AUB further represented that “[b]efore providing any material support or resources to an individual or entity, [it] will verify that the individual or entity does not appear . . . on the [SDN List].”  The annual certifications defined “material support and resources” to include, among other things, “training, expert advice or assistance, . . . [and] personnel.”

Notwithstanding the above-referenced certifications, during the Covered Period, AUB provided specialized training to al Nour Radio and al Manar TV.  Specifically, AUB held three multi-day training workshops (in 2007, 2008 and 2009) during which it provided specialized training on a variety of media topics to a group of journalists that included representatives of al Nour Radio and al Manar TV.  For example, one of the training workshops, titled “Citizen/Online Journalism,” was conducted over five days in December 2007, and consisted of two Internet and news media experts providing training to the attendees – one of whom was from al Nour Radio – on various topics, including the creation of online blogs; photo, audio and video editing and production; linking to other websites; podcasting; packaging stories for multimedia and different platforms; and presentation of final products.  The three training workshops provided the two SDN List entities with knowledge and insight they could use to more effectively communicate their desired message and reach their target audience.  At the time the three training workshops were conducted, AUB was on notice that they were being attended by representatives of al Nour Radio and al Manar TV.

In addition, during the Covered Period, AUB allowed Jihad al-Binaa to be included in the NGO database.  This was also contrary to the above certifications, as it provided a mechanism for this SDN List entity to recruit persons interested in assisting it.

Because AUB provided specialized journalism training to representatives of two SDN List entities and included a third SDN List entity in the NGO database, its certifications to USAID during the Covered Period that it had not provided and would take all reasonable steps to ensure that it did not knowingly provide material support or resources to SDN List entities were false.  As a result of those false certifications, AUB induced USAID to provide it with monetary grants that but for the false certifications, USAID would not have provided. 

As part of the settlement, AUB admitted, acknowledged, and accepted responsibility for the following conduct:

• During the period 2007 through 2009, as part of its Journalism Training Program, AUB held on-campus workshops taught by experienced journalists, highly-regarded academics, and representatives from government organizations.  The workshops were full-day events which typically took place over the course of several days.

• Three of the Journalism Training Program workshops that AUB held during the period 2007 through 2009 were conducted in a manner that was inconsistent with AUB’s certifications to USAID, in that they were attended by representatives of entities that were prohibited parties under U.S. law.

• During the Covered Period, AUB maintained a public website that included a database of NGOs.  The purpose of this database was to connect students interested in engaging in social work with relevant NGOs. 

• During the Covered Period, AUB included information in the NGO database that was inconsistent with its certifications to USAID.  Specifically, AUB included in the NGO database an entity that was a prohibited party under U.S. law, along with contact information for that entity.

In connection with the settlement, AUB has also agreed to revise its internal policies to ensure that it complies with applicable U.S. laws and the terms of the grants it receives.  Such revisions include revisions to its USAID Grant Compliance Policy and its Policy on Compliance with U.S. Economic Sanctions Programs to provide for additional training of AUB administrative and academic staff on compliance with applicable U.S. laws and grant terms; regular audits by an external auditor of AUB’s compliance with applicable U.S. laws and grant terms; and periodic reviews for purposes of making appropriate updates to relevant AUB internal policies and procedures.  Moreover, upon request by USAID or any other U.S. agency that provides AUB with grants or any other type of funding, AUB shall provide such agency with, inter alia, a list of the administrative and academic staff who received the above-referenced training, together with a description of the training they received, as well as a written report, prepared by the external auditor, of the results of each of the above-referenced audits, and a description of any actions taken by AUB in response to such audits.

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

*                      *                     *

Mr. Kim thanked USAID-OIG for its investigative efforts and assistance with the case.

The case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorney Christopher B. Harwood is in charge of the case.