Last edited on Friday, October 29, 2021, at 12:04 PM.
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Friday, October 29, 2021
Among the Most Common Offenses in New York is Securities Fraud
Based on recent allegations, Damian Williams, the U.S. Attorney for the Southern District of New York, announced on Oct. 25 that Steven Gallagher, 50, of Maumee, Ohio, had been arrested and charged in a complaint with securities fraud, wire fraud, and market manipulation. As a licensed stock trader, Gallagher made numerous attempts to increase his earnings through a Twitter-based “Pump-and-Dump” scheme. His aim was allegedly used to defraud retail investors. In all, Gallagher allegedly “earned” more than $1 million worth of illegal proceeds.
The scheme involved Gallagher opening a Twitter account in September 2019, which is when he adopted the alias of “Alex DeLarge” and found himself with 70,000 followers within a short period of time. Using his Tweets, Gallagher adopted old-fashioned tactics, not unlike those that have traditionally been used in boiler rooms for decades but adapting them to Twitter.
He used his Twitter feed to pump up the appeal of over-the-counter penny stocks, which they would then buy, thus driving up the stock’s value. He had repeated the scheme several times, at least enough to earn more than $1 million. Gallagher was arrested on Oct. 26 and was presented to a magistrate judge later the same day.
According to investigators, this is not Gallagher’s first foray into the realm of pump-and-dump. He has previously tried several ways to defraud retail investors in the past few years to get them to buy over-the-counter stocks at inflated prices. The “pump” phase of the scheme causes the prices of the stock to rise artificially as they purchased them, usually due to fraudulent statements made by Gallagher.
However, Forms of Frauds of All Kinds Still Happen
For several years now, an organization has operated a series of boiler rooms in many countries, with its main purpose being to defraud its victims worldwide and gain more than a million dollars in the process. Finally, on October 26, 2021, the U.S. Attorney for the Southern District of New York, Damian Williams, along with other prominent law enforcement officials, announced the unsealing of indictments charging Nicholas Russell, James Gillie, Neophytos Georgiou, Urs Meisterhans, Scott Steven Neilson, Liam James Smout, Daniel Nielsen, Brenda Laverty, Andrew Georgiou, Thomas Andrew Kenny, and Jake Mardell.
They are all charged with numerous crimes, including conspiracy to commit wire fraud, money laundering, and aggravated identity theft. All charges are based on their scheme to impersonate prominent investment professionals and firms, to defraud people worldwide. The case has been assigned to U.S. District Judge J. Paul Oetken.
Most of the defendants were arrested in several countries earlier this year, including Cyprus, Spain, Romania, and the UK, while one defendant, Meisterhaus, a Swiss national, has remained at large in Switzerland since at least May 2021 as a fugitive from the U.S. justice.
Some Frauds Costs Taxpayers A Lot
Sometimes, the victims of fraud rip off taxpayers. For instance, on Oct. 26, the U.S. Attorney for the Eastern District of New York, Breon Peace, managed to put a dent in the numerous attempts by scofflaws to take as much taxpayers’ money as possible by announcing the filing and unsealing a criminal complaint in Brooklyn federal court and charging at least nine therapists, including Marsiste Adolphe, Margaret Dominique-McLain, Mercedes Falcon, Tracy Gibson, Roselee Johnson, Jeannette Monclova, Manuel Moore, Kikelomo Ogundiran, and Dino Paolicelli, with stealing more than $3 million from the New York State Early Intervention Program EIP, which is supported through federal Medicaid and Medicare funds.
The therapists were charged with billing the federal Medicaid program nearly $1 million and the New York City Department of Health and Mental Hygiene just under $2 million for many therapy sessions that were never actually conducted, which is a felony. All of the defendants listed are EIP therapists, and they were arrested on Oct. 26. They also made their initial appearance later that same day, in front of U.S. Chief Magistrate Judge Cheryl L. Pollak.
What Happens When a Fraud is Computer-Related?
In many cases, the problem is less about outright fraud and more about intellectual property (IP) theft. For example, on Oct. 28, the U.S. Attorney for the Southern District of New York, Damian Williams, along with officials with the FBI, announced that Joshua Streit, a/k/a “Josh Brody,” 30, of St. Louis Park, Minnesota, had been charged with conducting intrusions into professional sports leagues’ computer systems, in order to illegally stream copyrighted content from MLB, the NBA, the NFL, and the NHL, to his website “Streit.”
Streit is also being charged with extortion for attempting to take approximately $150,000 from MLB. Overall, it is alleged that Brody hacked into the systems of several of our country’s biggest professional sports leagues and illegally streamed copyrighted live games. After he was caught, instead of quitting while he was ahead, Streit apparently decided to continue his ruse by extorting MLB by threatening to expose the vulnerability he used to hack them if they didn’t pay him $150,000.
If Streit is convicted in a court of law, he. Will face as much as five years in prison for each count, except for the charge of wire fraud, which carries up to 20 years.
Some Frauds Can Be Deadly
On Oct. 27, the U.S. Attorney for the Eastern District of New York, Breon Peace, along with several prominent law enforcement officials with the FBI and the NYPD, announced that a superseding indictment had been filed in Brooklyn charging Cory Martin, 34, of Queens, with conspiracy to commit murder-for-hire and murder-for-hire. Previously, Martin was already charged with wire fraud for his role in a scheme to fraudulently obtain life insurance policies in the name of Brandy Odom, a 26-year-old woman they planned to murder and then collect the benefits of the policies.
According to the indictment, in April 2018, Martin strangled Odom to death, then dismembered her over the course of several days, scattering her body parts all over a Brooklyn public park so that he could profit from the life insurance policies. The U.S. Attorney’s Office’s Organized Crime and Gangs Section is handling the case, which will be prosecuted by AUSAs Tanya Hajjar and Emily Dean.
The Kiddie Porn Problem Can Also be Found in New York
On Oct. 25, the U.S. Attorney for the Northern District of New York, Carla B. Freedman, along with Matthew Scarpino, the Acting Special Agent in Charge of the Buffalo Field Office of HIS, announced that John H. Ruthosky, 36, of Schenectady, had appeared in federal court on charges that he sexually exploited a child. Ruthosky initially appeared on Oct. 25 before U.S. Magistrate Judge Christian F. Hummel, and the next day, he waived his right to a detention hearing, which means he will remain detained pending trial.
According to the details contained in the criminal complaint, it is alleged that, on or about October 20, 2021, Ruthosky produced sexually explicit videos of a 7-year-old child. If he is convicted in a court of law, Ruthosky faces at least 15 years and up to 30 years in prison, as well as a fine of up to $250,000, as well as a term of supervised release of between 5 years and life. He will also be required to register as a sex offender for the rest of his life.