Last edited on Friday, August 28, 2020, at 2:11 PM.
Welcome to The Blanch Law Firm’s weekly digest of New New York Criminal Cases. Our goal is to keep the public informed as to recent events in federal courts around the country.
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Friday, August 28, 2020
I. Acting Manhattan U.S. Attorney Announces Securities and Wire Fraud Charges Against Pharmaceutical Company Officer
On August 25, 2020, Audrey Strauss, the Acting U.S. Attorney for the Southern District of New York, along with William F. Sweeney Jr., the Assistant Director-in-Charge of the FBI’s New York Office, announced that Sepehr Sarshar was charged with securities fraud and other fraud offenses in connection with Sarshar’s scheme to provide inside information to his friends and family so they could trade in the securities of a pharmaceutical company Sarshar founded and of which he was a member of the board of directors.
According to the Complaint, which was unsealed August 25, 2020 in Manhattan federal court, between in or about January 2015 and March 2015, Sarshar, a founder, former chief executive officer, and member of the board of directors of Auspex Pharmaceuticals, Inc. allegedly misappropriated material non-public information (MNPI) from Auspex relating to an anticipated tender offer for Auspex by Teva Pharmaceutical Industries Ltd. Sarshar passed that MNPI to friends and family, including a college friend, his then-girlfriend, another long-time friend, and a close family relative, so they could execute profitable securities trades based on it. They executed trades based on the MNPI he misappropriated and generated more than approximately $700,000 in illicit profits.
II. Acting U.S. Attorney Announces Extradition Of Ghanaian National For Multimillion-Dollar Fraud Scheme
Audrey Strauss, the Acting U.S. Attorney for the Southern District of New York, William F. Sweeney Jr., along with Assistant Director-in-Charge of the New York Field Office of the FBI, and Jonathan D. Larsen, Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced that Deborah Mensah, a Ghanaian citizen, was extradited from the Republic of Ghana (Ghana) to the United States on August 21, 2020.
Mensah was arrested on January 16, 2020, in Accra, Ghana for charges in connection with a fraud conspiracy based in Ghana involving the theft of over $10 million through business email compromises and romance scams that targeted the elderly from at least in or about 2014 through in or about 2018. Mensah is the eighth defendant charged in the case. Mensah was presented on August 26, 2020 in Manhattan federal court before U.S. Magistrate Judge Debra Freeman. Mensah’s case is assigned to U.S. District Judge Denise L. Cote.
According to allegations in the Complaint and the Indictment and other filings in the case, from at least in or about 2014 through in or about 2018, Mensah was a member of a criminal enterprise (the Enterprise) based in Ghana that committed a series of business email compromises and romance scams against individuals and businesses located across the United States, including in the Southern District of New York.
The objective of the Enterprise’s business email compromise fraud scheme was to trick and deceive businesses into wiring funds into accounts controlled by the Enterprise.
III. Bosnian National Charged with Robbery and Firearms Offenses in Connection with Attack on NYPD Officers
An indictment was returned August 26, 2020 in Brooklyn federal court charging Dzenan Camovic with robbery and firearms offenses for his June 3, 2020 knife and firearm attack on multiple New York City Police Department (NYPD) police officers in Brooklyn. As set forth in the court filings, the defendant, a Bosnian national in the United States illegally, was motivated to attack the officers because of his interest in and support for violent Islamist extremism. The defendant is currently in state custody and will be arraigned at a later date.
The indictment charges Camovic with Hobbs Act robbery, using and discharging a firearm during that robbery, theft of a firearm that moved in interstate commerce and unlawful possession of a firearm as an illegal alien. According to the indictment, Dzenan Camovic, an illegal alien and Bosnian national, is alleged to have used the cover of chaos during recent civil unrest in New York City to launch a premeditated and cowardly attack from behind against two New York City Police officers, brutally slashing one with a knife, stealing his weapon and opening fire, and injuring several other responding officers.
Camovic also allegedly yelled, ‘Allahu Akbar’ during the attack, and he allegedly possessed a significant volume of materials that demonstrates his interest in and support for violent Islamist extremism, including materials related to the Islamic State of Iraq and al-Sham (ISIS).
IV. New York Man Charged with Receipt of Child Pornography and Possession of a Firearm by a Felon
On August 25, 2020, Richard J. Potter, Jr., 55, of Springport, New York, was arrested on charges of receipt of child pornography and possession of a firearm by a convicted felon. The charges were announced by U.S. Attorney Grant C. Jaquith and Thomas F. Relford, Special Agent in Charge of the FBI’s Albany Field Office.
Potter appeared before U. S. Magistrate Judge Thérèse Wiley Dancks that very day. Potter is a registered sex offender based on a 2003 state felony conviction related to the sexual abuse of a minor. He was ordered detained pending the resolution of his case.
The criminal complaint unsealed August 25, 2020, alleges that Potter used a computer to receive images and videos of child pornography from the Internet, and stored thousands of digital copies of those images and videos on cellular telephones. In addition, Potter is alleged to be in possession of a 12-gauge shotgun, despite a previous felony conviction.
If convicted of receipt of child pornography, Potter faces at least 15 and up to 40 years in prison, a fine of up to $250,000, a term of supervised release of at least 5 years and up to life, and mandatory registration as a sex offender. The charge of unlawful possession of a firearm by a convicted felon carries up to 10 years in prison, a fine of up to $250,000, and a term of supervised release of up to 3 years.
V. Final Mafia Member In 2017 Takedown Sentenced To Life In Prison For Murder, Racketeering, And Other Crimes
On August 27, 2020, Audrey Strauss, the Acting U.S. Attorney for the Southern District of New York, announced that Steven L. Crea, the Underboss of the Luchese Family, was sentenced today to life in prison, a $400,000 fine, and the forfeiture of $1 million following his conviction for the 2013 murder of Michael Meldish, conspiracy to commit racketeering, and other felonies.
A jury convicted Crea and three co-defendants on November 15, 2019, following a six-week trial before U.S. District Judge Cathy Seibel, who also imposed today’s sentence.
According to the evidence presented at trial, the admissions of defendants who pled guilty, and other court documents, Crea was the Underboss, or second-in-command, of the Luchese Family of La Cosa Nostra, one of the “Five Families” that constitute the Mafia in the New York City area. From 2000 to his arrest in 2017, Crea helped lead the Luchese Family, which made millions of dollars in profit from crimes committed by the Family’s members and associates in New York City, Westchester, Long Island, New Jersey, and elsewhere.
In 2013, Crea helped orchestrate the murder of Michael Meldish In May 2017, charges were filed against 12 members of the Luchese Family, including the Acting Boss, Underboss, Consigliere, four captains, and five soldiers, for their commission of a wide array of crimes with the Mafia from at least in or about 2000 up to and including in or about 2017.
VI. California Mother and Son Arrested for Operating A $5 Million Mortgage Modification Fraud
Audrey Strauss, the Acting U.S. Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Office of the United States Postal Inspection Service (USPIS), announced today that Eva Christine Rodriguez and Sergio Lorenzo Rodriguez, mother and son, of Orange County, California, were arrested and charged with wire fraud offenses in connection with a fraudulent foreclosure rescue scheme that took in more than $5 million in prohibited advance fees from thousands of financially distressed homeowners.
According to the complaint that was unsealed August 27, 2020 in Manhattan federal court, from approximately March 2014 through April 2018, Eva Christine Rodriguez and Sergio Lorenzo Rodriguez owned and/or managed a series of mortgage modification companies through which they perpetrated a scheme to defraud and attempt to defraud financially distressed consumers.
Among other ways, the Defendants charged desperate homeowners thousands of dollars in prohibited advance fees by tricking them into believing that they had been pre-approved by their lender or servicer for a mortgage modification; falsely represented prohibited advance fees to be closing costs or other non-prohibited costs; fraudulently claimed that the Companies achieved success rates of 95 percent or higher for mortgage modifications; and made empty promises of a no-risk money back guarantee.
As a result of their intentional misrepresentations, they induced thousands of homeowners to pay an aggregated $5 million in prohibited advance fees to the Companies, including a large number of consumers who were ultimately denied mortgage modifications or who received modification offers that were less favorable than they had been led to expect at the time they paid advance fees.
VII. More Charges Brought Against Executive Director Of NEAD And Former Chairman Of The RHA, And A Co-defendant
On August 27, 2020, the U.S. Attorney for the Western District of New York James P. Kennedy, Jr. announced that a federal grand jury has returned a fifth superseding indictment charging George Moses, 50, and Janis White, 58, both of Rochester, NY, with additional charges. Moses is facing additional charges of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, and money laundering.
White faces additional charges of money laundering. If convicted, Moses faces up to 20 years in prison and White faces up to 10 years. According to Assistant U.S. Attorneys Richard A. Resnick and Melissa M. Marangola, who are handling the case, the new charges set forth in the fifth superseding indictment, allege that between February and August 2018, defendant Moses conspired with co-defendant Shirley Boone to defraud the Dormitory Authority of the State of New York (DASNY).
In June 2016, Moses, as Executive Director of the North East Area Development Association (NEAD), applied for a $125,000 grant for renovation of the Freedom Market, owned by Freedom Community Enterprise Inc., a subsidiary of NEAD.
In August 2017, the grant was approved. Between February and July 2018, Moses and Boone tricked DASNY into believing that NEAD paid Freedom Community $45,000 for construction work which never occurred.
VIII. New York City Man Arrested, Charged With Cyberstalking, Identity Theft
The U.S. Attorney for the Western District of New York James P. Kennedy Jr. announced on August 27, 2020 that David Mondore, 29, of New York City was arrested in Manhattan and charged by complaint with unauthorized access to computer systems in furtherance of any criminal act in violation of state law; unauthorized access to a protected computer in furtherance of fraud; and aggravated identity theft.
The unauthorized access charges carry a maximum penalty of five years in prison and a $250,000 fine. Aggravated identity theft carries a mandatory two years in prison, which must be served consecutive to any penalty imposed on other charges. Assistant U.S. Attorney Charles M. Kruly, who is handling the case, stated that according to the complaint, on December 5, 2019, the FBI received information that the Snapchat account of a SUNY Geneseo student (Victim l) may have been compromised.
According to Victim 1, she received a message from a Snapchat account owned by an acquaintance (Acquaintance 1). The person messaging Victim 1 from Acquaintance l’s account asked her for her Snapchat login credentials under the ruse that Acquaintance 1 would use Victim l’s account to check whether Acquaintance 1 had been “blocked” by another user. Victim 1 shared her credentials to the person using Acquaintance l’s account.
Soon after, Victim 1 received a text message purported to be from Snapchat Security indicating that her account had been locked and that she needed to provide a pin number to unlock it. The text message also advised that the pin requested would be the same pin used for Victim l’s “My Eyes Only” folder in her Snapchat account. Victim 1 replied and provided the pin number for the folder.
Friday, August 21, 2020
I. Leaders Of ‘We Build The Wall’ Online Fundraising Campaign Charged With Defrauding Hundreds Of Thousands Of Donors
On August 20, 2020, Audrey Strauss, the Acting U.S. Attorney for the Southern District of New York, and Philip R. Bartlett, Inspector-in-Charge of the New York Field Office of the United States Postal Inspection Service (“USPIS”), announced the unsealing of an indictment charging Brian Kolfage, Stephen Bannon, Andrew Badolato, and Timothy Shea for their roles in defrauding hundreds of thousands of donors in connection with an online crowdfunding campaign known as “We Build the Wall” that raised more than $25 million.
According to the Indictment, starting in approximately December 2018, Brian Kolfage, Steve Bannon, Andrew Badolato, and Timothy Shea, with others, orchestrated a scheme to defraud hundreds of thousands of donors, including donors in the Southern District of New York, in connection with an online crowdfunding campaign ultimately known as “We Build The Wall” that raised more than $25 million to build a wall along the southern border of the United States.
In particular, they induced donors to donate to the campaign, Kolfage repeatedly and falsely assured the public that he would “not take a penny in salary or compensation” and that “100% of the funds raised . . . will be used in the execution of our mission and purpose” because, as Bannon publicly stated, “we’re a volunteer organization.” Those representations were false. In truth, Kolfage, Bannon, Badolato, and Shea received hundreds of thousands of dollars in donor funds from We Build the Wall, which they each used in a manner inconsistent with the organization’s public representations.
In particular, Kolfage covertly took for his personal use more than $350,000 in funds that donors had given to We Build the Wall, while Bannon, through a non-profit organization under his control (Non-Profit-1), received over $1 million from We Build the Wall, at least some of which Bannon used to cover hundreds of thousands of dollars in personal expenses.
To conceal the payments to Kolfage from We Build the Wall, Kolfage, Bannon, Badolato, and Shea devised a scheme to route those payments from We Build the Wall to Kolfage indirectly through Non-Profit-1 and a shell company under Shea’s control by using fake invoices and sham “vendor” arrangements, among others.
II. Two Queens Men Charged with the Murder Of RUN-DMC D.J. “Jam Master Jay”
A 10-count indictment was unsealed on August 17, 2020 in the Eastern District of New York charging Ronald Washington and Karl Jordan, Jr., with the October 30, 2002 murder of Jason Mizell, also known as “Jam Master Jay,” a member of the famed hip hop group Run-DMC. Each defendant is charged with murder while engaged in narcotics trafficking and firearm-related murder for the fatal shooting of Mizell inside the victim’s recording studio in Hollis, Queens.
Jordan is charged with several additional narcotics distribution counts. Jordan was arrested August 16, 2020 and was scheduled to be arraigned August 17, 2020 via videoconference by U.S. Magistrate Judge Lois Bloom. Washington is in federal custody and will be arraigned at a later date.
Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, along with a number of law enforcement officials announced the arrests and indictment. As alleged in court filings, on October 30, 2002, Mizell was present at his recording studio, 24/7 Studio, located on Merrick Boulevard in Jamaica, Queens. At approximately 7:30 p.m., Washington and Jordan, armed with firearms, entered the studio.
Washington pointed his firearm at an individual located inside the studio and demanded that the person lie on the floor. Jordan approached Mizell, pointed his firearm at him, and fired two shots at close range, striking the victim once in the head, killing him. The second shot struck another individual in the leg.
The investigation revealed that the motive for the killing resulted from Mizell’s previous acquisition of approximately 10 kilograms of cocaine from a narcotics supplier in the Midwest. In addition to the murder, Jordan is also charged with one count of conspiracy to distribute cocaine and seven counts of cocaine distribution.
III. Charges Brought In $7 Million Scheme To Defraud Loan Programs Intended To Help Small Businesses During COVID-19 Pandemic
Audrey Strauss, the Acting U.S. Attorney for the Southern District of New York, along with William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the FBI, Kevin Kupperbusch, Special Agent-in-Charge of the Eastern Region Office of the Inspector General of the SBA, and Jonathan D. Larsen, Special Agent in Charge of the New York Field Office of the IRS Criminal Investigation, announced on August 18, 2020 the arrest of Sheng-Wen Cheng, a/k/a “Justin Cheng,” a/k/a “Justin Jung,” a Taiwanese national residing in New York City for a fraudulent scheme to obtain over $7 million in government-guaranteed loans designed to provide relief to small businesses during the novel coronavirus/COVID-19 pandemic.
In connection with loan applications for relief available from the Paycheck Protection Program (“PPP”) and the Economic Injury Disaster Loan (“EIDL”) Program, Cheng used the identities of other individuals to falsely represent to the SBA and five financial institutions that companies controlled by him had a total of over 200 employees and paid $1.5 million in monthly wages, when, in fact, his companies appear to have a total of no more than 14 employees.
Of the approximately $2.8 million in PPP loan proceeds that Cheng has received to date, he transferred over $880,000 abroad, withdrew approximately $360,000 in cash and/or cashier’s checks, and spent over $275,000 on personal expenses. Cheng was charged with several counts of fraud, including major fraud against the United States, wire fraud, and bank fraud, as well as one count of aggravated identity theft for forging the electronic signature of a payroll company employee in payroll documents provided to financial institutions.
IV. R. Kelly’s Manager Charged with Placing Threatening Call to Manhattan Theater
Audrey Strauss, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced today that Donnell Russell, manager of music recording artist Robert Sylvester Kelly, better known as “R. Kelly,” was charged in two counts with threatening physical harm by interstate communication, and conspiracy to do the same, for placing a threatening phone call to a theater in Manhattan to prevent the December 4, 2018, screening of a docuseries exploring allegations of R. Kelly’s sexual abuse of minor girls and adult women.
Russell,L is expected to make his initial appearance later today before U.S. Magistrate Judge Ona T. Wang. According to the allegations contained in the Complaint unsealed today in Manhattan federal court and publicly available documents, Donnell Russell, then-manager for R. Kelly, participated in a coordinated effort, including through the use of threats of violence, to prevent the screening in December 2018 of a multi-part documentary or “docuseries” entitled “Surviving R. Kelly” at NeueHouse, a theater in New York City (the “Screening”).
The docuseries explores allegations that R. Kelly engaged in abusive sexual relationships with minor girls and adult women. Throughout the day of the Screening, Russell, who was located in Chicago, Illinois, worked with, among others, another individual associated with R. Kelly (“CC-1”) who was in New York the day of the Screening, to draft correspondence to an executive at the Lifetime television channel discouraging the executive from airing the docuseries. Additionally, RUSSELL admitted that he sent NeueHouse a “cease and desist” letter to stop the Screening from going forward.
When that failed to stop the Screening, RUSSELL attempted to contact various law enforcement agencies in and around the theater, seemingly in a further effort to disrupt the Screening, a phone call from Russell’s home address in Chicago, was used to threaten that there was a person in the theater with a gun prepared to shoot up the Screening (the “Threat Call”). After receiving the threat call, the NeueHouse employee called 911, NeueHouse cancelled the screening and evacuated the theater.
V. MS-13 Gang Member Arrested in El Salvador for Long Island Murder
José Jonathan Guevara-Castro, a/k/a “Suspechoso” (“Guevara-Castro”), an alleged member of the violent transnational criminal organization La Mara Salvatrucha, also known as the “MS-13,” and a fugitive from justice, was arrested on U.S. Attorney for the Eastern District of New York; John J. Durham, Director, Joint Task Force Vulcan (JTFV); and William F. Sweeney, Jr., Assistant Director-in-Charge in the FBI’s New York Field Office, announced the arrest.
Guevara-Castro is charged in a 24-count indictment, along with seven other MS-13 members, with racketeering offenses, murder and narcotics trafficking. In particular, Guevara-Castro is charged with participating in the murder of 20-year-old Kerin Pineda, who was believed to be a member of the 18th Street gang, one of MS-13’s principal rivals.
Pineda’s murder was committed as a joint venture between two different subgroups, or “cliques,” of the MS-13 operating on Long Island: the Hollywood Locos Salvatruchas (“Hollywood”) clique, of which Guevara-Castro was an alleged member; and the Sailors Locos Salvatruchas Westside (“Sailors”) clique. On May 21, 2016, MS-13 members, armed with machetes, lured Pineda to a secluded wooded area near the Merrick-Freeport border, where he was surrounded and violently attacked.
Pineda’s machete-mutilated corpse was then buried in a hole that had been dug the day before. Pineda’s corpse was recovered more than one year later. If convicted, Guevara-Castro faces up to life in prison.
VI. Three Indicted for Selling Deadly Fentanyl to Navy Sailor
Two King County, Washington men and a former U.S. Navy sailor have been indicted for conspiracy and various drug distribution and firearms charges in connection with their trafficking in counterfeit pills laced with deadly fentanyl. The charges were announced nu the U.S. Attorney for the Western District of Washington Brian T. Moran.
Chase Friedrich, 28, was arrested April 21, 2020, at his Des Moines, Washington, apartment. His drug supplier, Raoul V. Normandia, Jr., 28, was arrested April 24, 2020, near his Federal Way, Washington, residence. Ivan Armenta, 20, was separated from the Navy and taken into federal custody August 7, 2020. Friedrich sold counterfeit Percocet pills to Navy Sailor Artmenta, who then provided them to another sailor who died of a drug overdose. The pills were tainted with deadly fentanyl.
The investigation began April 18, 2020, when a Navy sailor was found dead in his workspace aboard a Navy ship. In his pocket were two counterfeit pills that were laced with fentanyl. The Naval Criminal Investigative Services (NCIS) were able to identify Armenta as the sailor who provided the pills to the victim and identified Friedrich as his supplier.
A search of Friedrich’s apartment revealed cocaine, a handgun, and a bag of approximately 100 counterfeit pills. Investigators were able to trace the pills to Normandia. Normandia and Friedrich are both charged with conspiracy, while Friedrich and Armenta are charged with distribution of fentanyl.
Friedrich is also charged with possession of cocaine and fentanyl with intent to distribute, and with possession of a firearm in furtherance of a drug trafficking crime. Finally, Normandia is charged with possession of MDMA and cocaine with intent to distribute and with possession of a firearm in furtherance of a drug trafficking crime. All three defendants face up to twenty years in prison.
VII. Operators of Global Cryptocurrency Ponzi Scheme and Attorney Charged with Fraud, Money Laundering
Audrey Strauss, Acting U.S. Attorney for the Southern District of New York, and Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced the unsealing of an indictment charging Pablo Renato Rodriguez, Gutemburg Dos Santos, Scott Hughes, Cecilia Millan, and Jackie Aguilar for their roles in an internationally coordinated fraud and money laundering ring involved in defrauding individuals through investments in AirBit Club, a purported cryptocurrency mining and trading company.
According to the allegations in the Superseding Indictment unsealed today, Rodriguez, Dos Santos, Hughes, Millan, and Aguilar participated in a coordinated scheme in which victim-investors were induced to invest in AirBit Club based on the promise of guaranteed profits in exchange for cash investments in club “memberships.”
Beginning in late 2015, AirBit Club, through its founders, Rodriguez and Dos Santos as well as its promoters (the “Promoters”), including Millan and Aguilar, marketed AirBit Club as a multilevel marketing club in the cryptocurrency industry. Promoters falsely promised Victims that AirBit Club earned returns on cryptocurrency mining and trading and that Victims would earn passive, guaranteed daily returns on any membership purchased.
VIII. “Lottery Lawyer” and Three Co-Conspirators Indicted in $107 Million Scheme to Defraud Lottery-Winning Clients
An indictment was unsealed on August 18, 2020 in Brooklyn federal court in charging attorney Jason Kurland, as well as Christopher Chierchio, Francis Smookler, a former securities broker, and Frangesco Russo with wire fraud, wire fraud conspiracy, money laundering and money laundering conspiracy in connection with a scheme to defraud Kurland’s clients that resulted in $107 million in losses.
In addition, Kurland was charged with honest services fraud for his role in the scheme, and Russo and Smookler are charged with extortionate extension and collection of credit for threatening to kill an individual and his family for failure to repay a usurious loan. The defendants were arrested and arraigned August 18, 2020 via teleconference before United States Magistrate Judge Lois Bloom.
Seth D. DuCharme, Acting U.S. Attorney for the Eastern District of New York, and William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), announced the arrests and charges. As set forth in court filings, Kurland is a self-dubbed “Lottery Lawyer” purporting to represent dozens of lottery winners throughout the country with total winnings of approximately $3 billion.
One of the winners won the $1.5 billion Mega Millions lottery, another won the $245 million Powerball jackpot, and the third won the $150 million jackpot (together, the “Lottery Victims”). The Lottery Victims each paid Kurland and his law firm hundreds of thousands of dollars, in part so that he could advise them on how to safely invest their money. After gaining their trust with primarily traditional investments, Kurland steered his clients to invest in various entities and business deals controlled and directed by Russo, Smookler and Chierchio, and received kickbacks in return – which Kurland failed to disclose to his clients.
The defendants then used the money from the Lottery Victims’ investments to keep their scheme going and to enrich themselves. A portion of these funds was funneled back to the Lottery Victims and falsely presented to them as “interest payments” on their investments, other funds went to Kurland as kickbacks, and millions of dollars were stolen to support the defendants’ lavish lifestyles – private jets, expensive vacations and luxury vehicles including two yachts. The funds that the defendants actually invested in various entities and deals were, in large part, eventually lost.
IX. Four Charged With $19 Million Fraudulent Invoicing Scheme Targeting Amazon’s Vendor System
Audrey Strauss, the Acting U.S. Attorney for the Southern District of New York, and Peter C. Fitzhugh, Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), announced the indictment and arrest today of Yoel Abraham, Heshl Abraham, Zishe Abraham, and Shmuel Abraham, who are brothers, on charges of engaging in a scheme to systematically defraud Amazon.com, LLC, (Amazon), an online retailer and e-commerce platform.
Through the course of the scheme, the defendants manipulated Amazon’s vendor system in attempts to fraudulently induce Amazon to pay for goods that Amazon had not ordered. In executing the scheme, the defendants fraudulently attempted to obtain at least $32 million and successfully obtained at least $19 million. Yoel Abraham, Heshl Abraham, Zishe Abraham, and Shmuel Abraham were arrested and arraigned August 19, 2020 before U.S. Magistrate Judge Stewart D. Aaron. The case is assigned to U.S. District Judge Ronnie Abrams.
According to the unsealed indictment, the defendants, who purportedly operated wholesale businesses, opened vendor accounts with Amazon to sell the company small quantities of goods. By accepting a purchase order, the defendants agreed to supply specific goods, at specific prices, in specific quantities.
Instead, they manipulated Amazon’s vendor system, and then, in the most egregious iteration of the scheme, invoiced the company for substitute goods at grossly inflated prices and excessive quantities. The defendants frequently shipped and invoiced for more than 10,000 units of an item, even though Amazon had requested, and the defendants had agreed to ship, fewer than 100.
Friday, August 14, 2020
I. Broome County Man Arrested on Charges of Attempted Coercion and Enticement of a Minor
On August 7, 2020, Richard O’Hara, 31, of Glen Aubrey, New York had an initial appearance in federal court in Binghamton, New York yesterday on charges that he attempted to coerce and entice a minor to engage in sexual activity that would constitute a crime in New York. The announcement was made by the U.S. Attorney for the Northern District of New York Grant C. Jaquith and Thomas F. Relford, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (FBI).
As alleged in the criminal complaint, O’Hara responded to a public message on a social networking website and then communicated with an undercover law enforcement officer who he believed to be a parent and 10-year-old daughter. O’Hara was arrested after he showed up at a house expecting to engage in sex acts with the girl, after promising her gifts if she engaged in sex acts with him.
If convicted, O’Hara faces at least 10 years and a maximum term of imprisonment of life, a maximum fine of $250,000, and a term of supervised release of between five years and life. He will also be required to register as a sex offender.
II. Georgia Man Indicted for Bomb Threat to New York IRS Office
A St. Simons Island, Ga., man was indicted in U.S. District Court on August 7, 2020 on federal charges for allegedly threatening to blow up an IRS office in New York. Benjamin Stasko, 32, is charged with Willful Threat to Kill Using Firearms or Explosives, and Interstate Transmission of a Threat to Injure, said Bobby L. Christine, U.S. Attorney for the Southern District of Georgia.
The charges carry a possible sentence of up to 10 years in federal prison, followed by a period of supervised release. There is no parole in the federal system. A threat alleging that a pipe bomb had been planted in the Ted Weiss Federal Building in New York was found July 6, 2020, posted in a comment on a federal agency’s website and directed toward the Internal Revenue Service.
Federal protective police officers with bomb sniffing dogs and officers from the New York Police Department searched the facility and found no explosives. Investigators later located and arrested Stasko in St. Simons.
III. Former Newark High School Faculty Member Faces Child Exploitation Charges
U.S. Attorney James P. Kennedy, Jr. announced today that Matthew Holland, 28, of Newark, NY, who was arrested in Leesburg, Virginia, on July 17, 2020, was returned to the Western District of New York on August 7, 2020, to face charges which have been filed against him here.
Specifically, Holland was charged in the Western District of New York in a criminal complaint with production, receipt, and possession of child pornography, and online enticement of a minor, made an initial appearance today in Rochester before U.S. Magistrate Judge Marian W. Payson, and was held pending a detention hearing on August 11, 2020.
According to the complaint filed against Holland, on March 9, 2020, investigators with the Loudoun County Sheriff’s Office in Leesburg, Virginia, received a report that Snapchat user “Tjohnson755” had engaged in sexually explicit conversations with a 14-year-old minor. The complaint states that “Tjohnson755,” who was later identified as Matthew Holland, coerced the minor into sending him nude photographs.
When the minor indicated that she did not wish to continue communicating, the defendant threatened to disseminate the minor’s photographs over the internet. Using this and other threats, Holland coerced the minor to continue to send him sexually explicit photographs and videos.
IV. Grand Island Man Arrested, Charged With Multiple Drug And Gun Charges
U.S. Attorney James P. Kennedy Jr. announced today that David Montemage, 37, of Grand Island, NY, was arrested and charged by criminal complaint with possessing with intent to distribute marijuana, maintaining a drug involved premises, and possession of a firearm in furtherance of drug trafficking crimes. The charges carry a minimum penalty of five years in prison, a maximum of 20 years, and a $500,000 fine.
Assistant U.S. Attorney Justin G. Bish, who is handling the case, stated that according to the complaint, on August 5, 2020, Homeland Security Investgations (HSI), U.S. Border Patrol, U.S. Customs and Border Protection, the Niagara County Sheriff’s Office, and the Erie County Sheriff’s Office, executed the search warrant at a residence on Blue Pointe Lane on Grand Island.
During the search of the residence, investigators recovered a .22 caliber rifle; 28 rounds of .22 caliber ammunition with magazines; approximately 1.88 kilograms of marijuana; marijuana and THC based products; several large plastic vacuum seal type packages containing marijuana residue; several small plastic bags containing marijuana; a digital scale; $7,480 in cash; and marijuana smoking pipes.
V. Buffalo Man Arrested, Charged With Threatening To Kill An Individual On Social Media
On August 11, 2020, the U.S. Attorney for the Western District of New York James P. Kennedy, Jr. announced that Samuel Mara, 24, of Buffalo, NY, was arrested and charged by criminal complaint with posting a video on Facebook threatening to injure or kill another person. The charge carries a maximum penalty of five years in prison and a $250,000.
Assistant U.S. Attorney Joshua A. Violanti, who is handling the case, stated that according to the complaint, on June 6, 2020, the FBI and New York State Police began investigating a two (2) hour and ten (10) minute live stream video posted on Facebook Live. The video, apparently taken in front of the Buffalo Police Department — C District Station, was live streamed by an individual identified as A.M., a close associate of Samuel Mara.
In the video, a crowd is peacefully protesting, and at times, A.M. is heard commenting in the video. Defendant Mara is also seen sporadically throughout the video. Approximately 45 minutes into the video, several members of the crowd begin shouting, “hey hey, ho ho, [Victim 1] has got to go.”
Facebook users watching the live stream video posted comments, including information about a purported KKK rally which was allegedly scheduled to take place in downtown Buffalo on the following day. A.M. and defendant Mara are then heard discussing the rally.
Mara can be heard saying: “Listen…what they’re gonna do is, they’re gonna drive themselves crazy outta’ all the overwhelming fear and one of them is (inaudible) gonna hurt us or kill us and that’s gonna start (inaudible) and then we gonna do whatever the (expletive) we want. It will happen, we are in power. They are scared. They will act off impulse and they will try to kill us, when they do that. Then they will all die. We will kill them all. I will personally kill [Victim 1].”
VI. Two Members of Brooklyn-Based Gang Charged with Possessing a Firearm Used in a Shooting
On August 11, 2020, a two-count indictment was unsealed in federal court in Brooklyn charging Davon Brown and Christian Williams, members of the violent street gang Folk Nation Gangster Disciples, with being felons in possession of a firearm in connection with their involvement in a March 14, 2020 shooting that wounded a man.
The defendants were arrested this morning and will make their initial appearance this afternoon via videoconference before United States Magistrate Judge Peggy Kuo. Seth D. DuCharme, the Acting U.S. Attorney for the Eastern District of New York, along with several prominent law enforcement officials, announced the charges and arrests.
As detailed in the government’s detention letter, which was also filed August 11, 2020, Brown and Williams were involved in the shooting of a victim who was disrespectful toward their gang. On March 20, 2020, an individual with the victim threw a drink at a woman inside the Gold Room Restaurant and Lounge in Prospect Lefferts Gardens, splashing a person standing with Brown.
An argument ensued, and the victim, a Crips gang member, flashed a gang sign known as “dropping the rake” — a gesture intended to be insulting to the Folk Nation. The argument continued outside the bar where Brown allegedly displayed a gun and fired a shot into the air. Brown then handed the gun to Williams who walked behind the victim and shot him in the buttocks at close-range.
Williams fled and discarded the gun a half block away. The gun was recovered by law enforcement, and DNA from both defendants was found on the weapon.
VII. Ten Individuals Charged with Possessing Firearms in Brooklyn Over Two Days
Ten individuals were separately charged by complaint or indictment during the past week in the Eastern District of New York with being a felon in possession of a firearm. Seth D. DuCharme, Acting United States Attorney for the Eastern District of New York, announced the arrests and charges.
As alleged, the following defendants, having previously been convicted in a court of a crime punishable by a term of imprisonment exceeding one year, intentionally possessed a firearm. They include Dashawn Andrews, Paol Alfaro Barber, Terrence Brown, Jahquel Giddeon, Macye McCall, Tony McQueen, Avery Millington, Kennan Nurse, Marvin Pickett, and Aaron Swaby.
These cases are part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.
VIII. Three Individuals Arrested for Separate Schemes to Harass, Threaten, Intimidate and Bribe Alleged R. Kelly Victims
Three separate criminal complaints were unsealed yesterday in federal court in Brooklyn charging defendants Richard Arline, Jr., Donnell Russell and Michael Williams, respectively, with crimes relating to their efforts to harass, intimidate, threaten or corruptly influence individuals named as alleged victims in the racketeering case against Robert Sylvester Kelly, also known as “R. Kelly,” currently pending in the Eastern District of New York (the Kelly case).
Arline, Jr. is charged with attempting to corruptly persuade the testimony of an alleged victim in the Kelly case, identified in the complaint as “Jane Doe,” and engaging in misleading conduct towards the victim, with intent to influence, delay and prevent her testimony in the Kelly case, as well as corruptly offering something of value to the victim, with the intent to influence her testimony as a witness upon a trial, hearing and other proceeding.
Arline, Jr. was arrested earlier today in Dolton, Illinois, and his initial appearance took place yesterday afternoon before United States Magistrate Judge Young B. Kim at the federal courthouse in Chicago, Illinois.
Friday, August 07, 2020
I. Buffalo Man Indicted on Charges of Making False Statements on Immigration Documents
On August 5, 2020, the U.S. Attorney for the Western District of New York James P. Kennedy, Jr. announced that a federal grand jury has returned an indictment charging Mohammed Moinul Hossain, 44, of Buffalo, NY, with making false statements in an immigration matter, and making a false statement in a matter within the jurisdiction of the executive branch.
Assistant U.S. Attorney Jonathan Cantil, who is handling the case, said, according to the indictment, in August 2018, Hossain filed an application for lawful permanent residency in the United States. On that form, Hossain indicated that he had not previously used or gone by any other name and denied ever submitting fraudulent or counterfeit documentation to any U.S. Government official to obtain or attempt to obtain an immigration benefit.
Hossain also indicated that he had never lied about, concealed, or misrepresented any information on an application or petition to obtain a visa. However, subsequent investigation determined that the defendant did in fact file an application for permanent residency in February 1997 using the name Saifur Rahman, and the application was denied.
Hossain failed to disclose this prior identity and prior application for conditional permanent residency. The defendant was arraigned today before U.S. Magistrate Judge H. Kenneth Schroeder, Jr. and released on conditions. If convicted, Hossain faces up to 10 years in prison and a $250,000 fine.
II. Brooklyn Man Charged with Sabotage of NYPD Vehicle
On August 5, 2020, a criminal complaint was unsealed in federal court in Brooklyn charging Jeremy Trapp with sabotaging a New York City Police Department (NYPD) van by cutting one of the vehicle’s brake lines. Trapp was arrested earlier the same day at his home in Brooklyn and was ordered detained pending trial by U.S. Magistrate Judge Steven M. Gold that afternoon.
Seth D. DuCharme, the acting U.S. Attorney for the Eastern District of New York, along with William F. Sweeney, Jr., Assistant Director-in-Charge of the FBI’s New York Field Office, and Dermot F. Shea, Commissioner, NYPD, announced the arrest and charges.
As set forth in the complaint, on July 13, 2020, Trapp participated in a demonstration outside the Brooklyn Criminal Court building that was objecting to the arrests of individuals who had earlier confronted pro-law enforcement demonstrators in Bay Ridge, Brooklyn. As the demonstration was winding down, Trapp spoke with an individual who was a confidential source (CS) for the NYPD and he stated that he wanted to harm police officers and their supporters.
Trapp also stated that he wanted to cut the brake lines on police cars. On July 17, 2020, after Trapp and the CS communicated via telephone calls and text messages, the CS drove to Trapp’s home and picked him up in the CS’s vehicle, where Trapp showed the CS his backpack, which contained, among other things, a scissor-like tool.
At approximately 4:00 p.m. on July 17, 2020, Trapp and the CS approached a marked NYPD van parked near Fourth Avenue and 42nd Street in Sunset Park. Trapp crawled under the van and reached for something near one of the vehicle’s wheel wells while the CS stood nearby acting as a purported “lookout.” If convicted, Trapp faces up to 20 years in prison.
III. Former Mexican Secretary of Public Security Genaro Garcia Luna Charged with Engaging in a Continuing Criminal Enterprise
A superseding indictment was returned July 30, 2020 in federal court in Central Islip, New York, charging Genaro Garcia Luna, the former Secretary of Public Security in Mexico from 2006 to 2012, with engaging in a continuing criminal enterprise. Luis Cardenas Palomino and Ramon Pequeno Garcia, former high-ranking Mexican law enforcement officials who worked under Garcia Luna, are each charged with three counts of cocaine trafficking conspiracy.
Seth D. DuCharme, Acting U.S. Attorney for the Eastern District of New York, announced the superseding indictment. As set forth in the superseding indictment and other court filings, from 2001 to 2012, while occupying high-ranking law enforcement positions in the Mexican government, Garcia Luna received millions of dollars in bribes from the Sinaloa Cartel in exchange for providing protection for its drug trafficking activities.
From 2001 to 2005, Garcia Luna led Mexico’s Federal Investigation Agency, and from 2006 to 2012, he served as Mexico’s Secretary of Public Security, controlling Mexico’s Federal Police Force. Cardenas Palomino and Pequeno Garcia also were high-level Mexican law enforcement officials who worked under Garcia Luna during this time. They each received millions of dollars in bribes from the Sinaloa Cartel.
IV. President and One Employee of Brooklyn Moving Company Charged with Defrauding Customers
A criminal complaint was unsealed on August 5, 2020 in federal court in Brooklyn charging Yakov Moroz, the president of Great Movers Inc. and its successor company New City Movers, and company employee Tal Ohana with wire fraud and wire fraud conspiracy by misrepresenting estimated charges for moving services and then requiring customers to pay additional fees that far exceeded the original estimate in order to recover their belongings.
Moroz and Ohana were arrested earlier the same day and made their initial appearance that same afternoon before U.S. Magistrate Judge Steven M. Gold. The charges were announced by Seth D. DuCharme, Acting U.S. Attorney for the Eastern District of New York; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Douglas Shoemaker, Special Agent-in-Charge, United States Department of Transportation, Office of the Inspector General (DOT-OIG).
According to the complaint, Moroz and Ohana, through Great Movers Inc., which operated through the website greatmovingusa.com and other affiliated moving companies, defrauded dozens of customers by misrepresenting the estimated charges for moving services and then (i) requiring customers to pay additional fees, often more than 10 percent of the original estimate, (ii) requiring payment before delivery of goods, or (iii) refusing to return and threatening to sell and auction the customers’ belongings if the fees were not paid.
These practices violate federal regulations for companies engaged in the transportation of household goods in interstate commerce. Many customers ultimately paid the inflated and additional fees to ensure delivery of their property.
V. 5 Defendants Indicted In Connection With Kidnapping, Narcotics, And Firearm Offenses
On August 5, 2020, Audrey Strauss, the Acting U.S. Attorney for the Southern District of New York, and several law enforcement officials, announced the unsealing of an indictment charging Mario Reynoso-Hiciano, Joel Cabrera, a/k/a “Gordo,” a/k/a “Oso,” Vladimir Reyes, Yudith Reynoso-Hiciano, a/k/a “La Classica,” and Pedro Reynoso with kidnapping, narcotics, and firearm offenses.
Three defendants were taken into custody earlier the same day and were presented before U.S. Magistrate Judge Kevin Nathaniel Fox. A fourth defendant remains at large, and a fift is already in federal custody in connection with another matter and will be presented and arraigned at a later date. The case is assigned to U.S. District Judge Denise L. Cote.
According to the allegations in the indictment, on or about May 2019, Mario Reynoso-Hiciano, Joel Cabrera, and Vladimir Reyes engaged in a conspiracy to distribute cocaine. A dispute arose between Mario Reynoso-Hiciano and another individual who had brokered the sale of cocaine (“Victim-1”) because Reynoso-Hiciano believed that he had been paid less than the full negotiated purchase price for the cocaine.
As part of that dispute, Mario Reynoso-Hiciano, Yudith Reynoso-Hiciano, Pedro Reynoso and others kidnapped Victim-1, tied him to a chair inside an apartment in the Bronx (“Apartment-1”), threatened to and did physically assault Victim-1, and demanded that Victim-1 provide information relating to the aforementioned cocaine transaction. Portions of the kidnapping were recorded with a cellphone by Yudith Reynoso-Hiciano.
In the early morning of May 31, 2019, Cabrera brandished and discharged a firearm in connection with the cocaine transaction that occurred the day before.
VI. Florida Man Arrested in New York in Connection with Nationwide Gas Station Skimming Scheme
On August 5, 2020, another Florida resident was arrested in connection with an access device fraud and money laundering scheme, for stealing credit and debit card numbers of gas station customers across the country, including in Albany, Broome and Montgomery Counties in the Northern District of New York. The announcement was made by U.S. Attorney Grant C. Jaquith, along with law enforcement officials with the FBI and the U.S. Postal Inspection Service (USPIS).
The defendant arrested today was Yanio Montes De Oca, 33, of Miami, Florida, charged with conspiracy to commit money laundering. Four other defendants were arrested and charged in a superseding indictment, which was unsealed August 4, 2020, including Yudiel Ceballos, 33, of Miami, charged with conspiracy to commit access device fraud; Arley Gonzalez, 34, of Miami, also charged with conspiracy to commit access device fraud; Marlon Palacios, 36, of Miami and Pittsburgh, Pennsylvania, charged with conspiracy to commit access device fraud and aggravated identity theft; and Yuny Hurtado Rodriguez, age 31, of Miami, charged with conspiracy to commit access device fraud.
An initial indictment in this case, unsealed in October 2019, resulted in the arrests of Joan Jesus Manso Dieguez, age 33, of Miami, charged with conspiracy to commit access device fraud and money laundering; Atnetys Ferreira, age 40, of Miami, charged with conspiracy to commit money laundering; and Hugo Hernandez, age 32, of Miami Lakes, Florida, charged with conspiracy to commit access device fraud and money laundering.
According to the superseding indictment, from April 2016 through approximately December 2018, the defendants charged with conspiring to commit access device fraud built gas station skimming devices and installed them inside gas pumps so that they could steal credit and debit card data of customers who used the “pay at the pump” function to purchase gasoline.
The defendants then used that data to create fraudulent debit and credit cards, which they or co-conspirators used to obtain money orders, gift cards, cash, and other merchandise. The indictment also alleges that certain defendants – those charged with conspiring to launder money – engaged in financial transactions with money orders and gift cards obtained through the scheme, to conceal the source of the funds and transfer money to bank accounts controlled by the members of the conspiracy.
VII. Ontario Man Charged with Bulk Cash Smuggling
Jade Martin, 25, of Cornwall Island, Ontario, Canada, made his initial appearance on August 6, 2020 in federal court in Plattsburgh, New York on charges that he knowingly concealed $256,910 in U.S. currency in his car, with the intent to evade currency reporting requirements, and attempted to transport that currency from the United States into Canada.
The charges were announced by the U.S. Attorney for the Northern District of New York Grant C. Jaquith, along with several law enforcement officials from the Buffalo Field Office of Homeland Security Investigations (HSI) and U.S. Customs and Border Protection (CBP).
The complaint alleges that on August 4, 2020, Martin concealed $256,910 in two boxes, and drove with these boxes to the Massena, New York, Port of Entry, where he attempted to transport them into Canada. The complaint further alleges that CBP Officers discovered the cash during an outbound inspection, after Martin denied traveling with more than $10,000 in currency.
Federal law requires a person to report the transportation of currency over $10,000 upon exiting the United States. If convicted, Martin faces up to five years in prison and a term of supervised release of up to 3 years. Martin may also be ordered to forfeit to the United States any property involved in the offense.
VIII. Company President And Employee Arrested In Alleged Scheme To Violate The Export Control Reform Act
On August 6, 2020, Audrey Strauss, the Acting U.S. Attorney for the Southern District of New York, along with John C. Demers, Assistant Attorney General for National Security, and Jonathan Carson, Special Agent in Charge of the New York Field Office of the U.S. Department of Commerce, Office of Export Enforcement (OEE), announced the arrests today of Chong Sik Yu, a/k/a “Chris Yu,” and Yunseo Lee.
Yu and Lee are charged with conspiring to unlawfully export dual-use electronics components, in violation of the Export Control Reform Act, and to commit wire fraud, bank fraud, and money laundering. Yu and Lee were arrested early on Augsut 6, 2020 and were expected to be presented later the same day before U.S. Magistrate Judge Kevin Nathaniel Fox in Manhattan federal court.
As alleged in the criminal complaint, since at least 2019, a U.S. company named America Techma Inc. (ATI) has illegally exported electronic components from the United States to Hong Kong for apparent re-export to other countries, including China, in violation of the Export Control Reform Act of 2018 (ECRA). Pursuant to the ECRA controls, the Department of Commerce administers export-licensing and other requirements for the export of goods, software, and technologies from the United States to foreign countries.
These requirements restrict the export of items that could make a significant contribution to the military potential of other nations or that could be detrimental to the foreign policy or national security of the United States. The Commerce Department identifies the most sensitive items subject to Export Administration Regulations (EAR) on the Commerce Control List (CCL), which is categorized by Export Control Classification Number (ECCN).