Bridgeport Bank Manager Arraigned for Embezzlement

SACRAMENTO, CA—Roxanna Foley, 52, of Bridgeport, was arraigned today in federal court in Sacramento, United States Attorney Benjamin B. Wagner announced.
On April 18, 2013, a federal grand jury returned an indictment charging her with theft and embezzlement by a bank employee. According to the indictment and statements made in court, between October 2011 and March 20, 2012, Foley embezzled approximately $320,000 from the Eastern Sierra Community Bank where she was employed as a manager.
Foley was released today on a $50,000 bond. She is scheduled to appear before United States District Judge Kimberly J. Mueller on May 29, 2013, for a status conference.
If convicted, Foley faces a maximum statutory penalty of 30 years in prison, a $1 million fine, and a five-year term of supervised release. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case is the product of an investigation by the Federal Bureau of Investigation, the Mono County Sheriff’s Office, and the Mono County District Attorney’s Office. Assistant United States Attorney Kyle Reardon is prosecuting the case.

Fort McDowell Yavapai Man Sentenced to Federal Prison for Sexual Abuse

PHOENIX—On April 22, 2013, Arthur Victor Smith, 20, of Peach Springs, Arizona, was sentenced by U.S. District Judge G. Murray Snow to 140 months’ imprisonment, followed by lifetime supervised release. Smith, a Fort McDowell Yavapai Nation member, pleaded guilty on February 5, 2013, to sexual abuse.
Smith was charged by indictment with one count of aggravated sexual abuse of a minor pursuant to 18 U.S.C. § 2241(c). According to the plea agreement, the defendant sexually abused a minor female, age 14, and the sexual abuse occurred on the Hualapai Nation Indian Reservation.
The investigation in this case was conducted by the Hualapai Nation Police Department and the Federal Bureau of Investigation. The prosecution was handled by Christina J. Reid-Moore, Assistant U.S. Attorney, District of Arizona, Phoenix.

Navajo Man Sentenced to 17 Years in Prison for Kidnapping

PHOENIX—On April 22, 2013, Brian Douglas Kanuho, 47, of Low Mountain, Arizona, was sentenced by U.S. District Judge G. Murray Snow to 204 months’ imprisonment, followed by five years of supervised release. Kanuho pleaded guilty on February 27, 2013, to kidnapping.
According to the plea agreement, Kanuho kidnapped the victim at his residence. While the victim was kidnapped, Kanuho assaulted and sexually abused her. As a result of the kidnapping and assault, the victim sustained serious bodily injury.
The investigation in this case was conducted by the Chinle Police Department and the Federal Bureau of Investigation. The prosecution was handled by Christina J. Reid-Moore, Assistant U.S. Attorney, District of Arizona, Phoenix.

Two Northern California Men in Sextortion Plot Targeting Professional Poker Players Receive Federal Prison Sentences

LOS ANGELES—Two Silicon Valley men were sentenced today to federal prison terms of three-and-a-half years and two years for their roles in a scheme that used naked photographs and other private information stolen from e-mail accounts in an attempt to extort hundreds of thousands of dollars from professional players on the World Poker Tour.
Tyler Schrier, 23, of Menlo Park, was sentenced to 42 months in prison after pleading guilty to conspiracy, extortion, and unauthorized access to a protected computer to obtain information.
In addition to the sextortion plot, Schrier admitted that he had previously extorted and received more than $26,000 from professional poker players in another plot. He further admitted that while free on bond after being charged in the sextortion case, he illegally accessed two e-mail accounts that allowed him to steal approximately $4,000 from online poker accounts.
The second man sentenced today—Keith James Hudson, 39, of San Jose—received a two-year prison term after pleading guilty to unauthorized access to a protected computer to obtain information for purposes of private financial gain. Hudson admitted that he hacked into a poker player’s e-mail account, stole naked photographs from the illegally accessed account, and plotted with Schrier to extort poker players with those naked images.
Schrier and Hudson were sentenced by United States District Judge S. James Otero.
According to court documents, the sextortion scheme took place in the fall of 2010 after members of the conspiracy illegally accessed an e-mail account belonging to Joe Sebok. Armed with intimate e-mails and photographs of the victim, Schrier threatened to post those intimate photographs and e-mails on the Internet unless Sebok and other victims paid hundreds of thousands of dollars in extortion payments. Sebok and the other victims in this sextortion case did not make any payments.
As part of the scheme, in November 2010, Schrier sent an e-mail with a nude photograph of Sebok to approximately 100 individuals.
During today’s sentencing hearing, Sebok addressed the court and said the victims of the plot had “their lives altered and shattered in irreparable ways.”
After the defendants hacked into his e-mail account and released some information to the public, the fallout “instantly damaged my ability to sustain my livelihood doing what I had been since 2005,” Sebok told Judge Otero. “In short, I was no longer able to maintain my then-current level of participation in the poker industry, representing the brands that I had been previously, as well as greatly destroying my ability to do so with new companies moving forward. Without belaboring the point too much, it was a nightmare, and one that I was forced to live through with millions of people watching.”
A third defendant in the case, Ryder Finney, 22, of Philadelphia, pleaded guilty to conspiracy and will be sentenced later this year in federal court in Philadelphia. At sentencing, Finney faces a statutory maximum sentence of five years in prison.
The sextortion case was investigated by the Federal Bureau of Investigation.
Schrier pleaded guilty pursuant to a plea agreement that involved federal prosecutors in Los Angeles, San Francisco, Connecticut, Boston, Tampa, and Minnesota.

Ringleader Sentenced to Federal Prison for Stealing and Reselling U.S. Military Goods

In Waco this afternoon, 62-year-old Michael Bartch, Sr. was sentenced to two years in federal prison for a scheme to resell millions of dollars worth of U.S. military property stolen from Fort Hood and other U.S. military installations, announced United States Attorney Robert Pitman and Internal Revenue Service-Criminal Investigation Special Agent in Charge Steve McCollough.
In addition to the prison term, United States District Judge Walter S. Smith ordered that Bartch pay a $2,000 fine and be placed under supervised release for a period of two years after completing his prison term.
On March 29, 2012, Bartch pleaded guilty to one count of illegally exporting defense articles, one count of receiving stolen government property, and one count of money laundering. By pleading guilty, Bartch admitted that beginning in 2007, he knowingly violated U.S. export laws by selling stolen U.S. military equipment. Bartch admitted selling night vision equipment, optics for weaponry, body armor, helmets, military clothing, and other items. As a result of the scheme, authorities believe that Bartch and others dealt with in excess of $7 million worth of stolen U.S. military property.
Seven other individuals, all convicted on federal charges resulting from this investigation, have previously been sentenced to terms ranging from six months’ incarceration to 120 months in federal prison. Charges included receipt of stolen government property, money laundering, illegal export of defense articles, conspiracy, theft of government property, and felon in possession of a firearm.
IRS Special Agent in Charge Steve McCollough commented, “Government employees, both active duty military personnel and their civilian counterparts, like Bartch and his criminal associates, have a sworn duty to protect the assets of the government and to ensure that the governments valuable resources are not stolen. The potentially sensitive military property stolen by these individuals could be used against the U.S. by its enemies. IRS-Criminal Investigation plays a crucial role with its law enforcement partners in bringing these individuals to justice.”
This continuing investigation is being conducted by the Central Texas Counter Proliferation Task Force made up of the Internal Revenue Service-Criminal Investigation, Defense Criminal Investigative Service, U.S. Naval Criminal Investigative Service, Homeland Security Investigations, U.S. Army Criminal Investigative Division, Department of Commerce, Federal Bureau of Investigation, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Assistant U.S. Attorney Gregg N. Sofer prosecuted this case on behalf of the government.

Mike Alfons Campa Pleads Guilty in U.S. Federal Court

The United States Attorney’s Office announced that during a federal court session in Great Falls, on April 22, 2013, before U.S. District Judge Sam E. Haddon, Mike Alfons Campa, a 54-year-old resident of Yorba Linda, California, pled guilty to conspiracy to commit fraud, wire fraud, and mail fraud. Sentencing has been set for August 5, 2013. He is currently detained.
In an offer of proof filed by Assistant U.S. Attorneys Carl E. Rostad and Ryan G. Weldon, the government stated it would have proved at trial the following:
Campa started a company with his wife. The name of the company was Domestic Energy Solutions. Campa and his wife obtained leases from D.C. for oil and gas rights on the Fort Peck Indian Reservation. Campa and his wife never paid for the lease rights and never visited Montana or the Fort Peck Indian Reservation.
The oil and gas rights were terminated on October 5, 2007. Despite being terminated, Campa continued to solicit investors for money by claiming to have oil and gas rights on the Fort Peck Indian Reservation. This continued for approximately five years. It was never explained to any potential “investor” that the leases were terminated, and Campa had no right to drill for oil or gas on the Fort Peck Indian Reservation. Nor was there ever an attempt to spend any money toward a legitimate oil and gas venture on the Fort Peck Indian Reservation.
Campa also used e-mails to solicit money from individuals. Had these individuals known that no money was spent on the Fort Peck Indian Reservation for the oil and gas venture and the oil and gas leases were terminated in 2007, they would not have “invested” with Campa. The individuals who invested either mailed or wired money to Campa. Many of these wires crossed state lines and went into the state of California. In total, Campa and his cohorts bilked investors into paying well in excess of half-a-million-dollars in a non-existent venture.
Campa worked with another individual, S.C., and others to start U.S. Oil and Gas to solicit more money out of unsuspecting victims. Victims were told that they needed to pay additional money or their entire investment that began with Domestic Energy Solutions, or other companies, would be lost. Not only did Campa work with S.C., but he also shared money with him.
When arrested and in jail, Campa admitted that he knew the leases on the Fort Peck Indian Reservation were cancelled.
Campa faces possible penalties of five years in prison, a $250,000 fine, and three years’ supervised release for the conspiracy to commit fraud charge; and 20 years in prison, a $250,000 fine, and three years’ supervised release for each of the wire fraud and mail fraud charges.
The investigation was a cooperative effort between the Federal Bureau of Investigation and the U.S. Department of Interior-Office of Inspector General.

Louis Michael Healy Found Guilty in U.S. Federal Court

The United States Attorney’s Office announced that on April 16, 2013, in Great Falls, after a federal district court trial before Chief U.S. District Judge Dana L. Christensen, Louis Michael Healy, a 40-year-old resident of Hays and an enrolled member of the Fort Belknap Tribes, was found guilty of assault resulting in serious bodily injury, aggravated sexual abuse, and abusive sexual contact. Sentencing is set for July 26, 2013. He is currently detained.
At trial, the following evidence and testimony was presented to the jury.
On October 13, 2012, the victim drove Healy to the store where he bought several black cans of Smirnoff. After leaving the store, the victim drank a little from a can, and Healy drank one can very quickly. They drove to a hill where Healy drank two or three more cans of Smirnoff. The victim drank an additional can. Healy then asked the victim to marry him. The victim replied that she would not marry Healy unless he could prove he had ceased speaking with his ex-girlfriend.
Healy and the victim returned to his home on the Fort Belknap Indian Reservation. They turned on Healy’s computer and the victim read e-mails that indicated Healy was still speaking with his ex-girlfriend. The victim was sitting in a rolling computer chair. She became upset and Healy grabbed her neck with his right hand and pushed her across the floor in the chair. Due to the force of the push, she crashed and hit her head. When she awoke, Healy had his hand on her throat applying pressure. He then walked to the kitchen and grabbed a knife. Healy stood over the victim, placed the knife to her throat, and told her to get up.
The victim began to cry, her throat hurt, and Healy told her to get into the bedroom. He instructed her to lie down and said, “If you don’t stop —— crying, you know what you’re going to get, and we both aren’t coming out of the room, so stop —— crying.” At that point, the victim believed Healy was going to kill her. The victim continued to complain that her throat hurt, so Healy went to the kitchen where he returned with water and a popsicle. She then began to vomit due to the drinking or strangulation she had experienced. According to the victim, she spoke with Healy for a little bit while sitting on the bed until Healy grabbed her and sexually assaulted her while she continued to tell him to stop. Healy then told the victim to get back on the computer and instructed her to tell his ex-girlfriend that the victim was going to leave her alone.
Healy went to the bathroom after this instruction. The victim decided this was her chance to escape and she ran out of the house to the next door neighbor’s home. Healy realized the victim had run away and he chased after her, but she got inside the neighbor’s home safely.
The neighbors testified that they had awoken at approximately 4:00 a.m. to someone pounding on the door. The victim was at the door very upset and trying to get inside. The victim was crying and saying her boyfriend was trying to kill her. He had held a knife to her throat and she said, “He’s going to kill me.”
When law enforcement arrived at Healy’s home, Healy was walking and carrying two black bags. Healy was ordered to stop and Healy turned around and yelled, “F— you.” The police ordered Healy to the ground and pepper sprayed him in an effort to subdue him.
An ambulance arrived and transported the victim to the hospital where a nurse immediately assessed that the victim had trouble swallowing due to strangulation. The nurse noted the left side of the victim’s throat had a few areas of linear petechial, which is bruising around the throat. She applied ice and the victim told the nurse she was sexually assaulted and strangled. The hospital also performed a sexual assault examination. The victim ended up returning to the hospital a few days later due to continued throat pain and inability to swallow.
Assistant U.S. Attorney Jessica A. Betley prosecuted the case for the United States.
Healy faces possible penalties of life imprisonment, a $250,000 fine, and up to a lifetime of supervised release.
The investigation was conducted by the Federal Bureau of Investigation.

Informational: Federal Court Arraignment

The United States Attorney’s Office announced that during a federal court session in Great Falls, on April 23, 2013, before U.S. Magistrate Judge Keith Strong, the following individual was arraigned:
Edward Henry Pratt, a 34-year-old resident of Browning, appeared on charges of assault with intent to commit murder, assault resulting in serious bodily injury, assault with a dangerous weapon, and being a felon-in-possession of a firearm. He is currently detained. If convicted of these charges, Pratt faces possible penalties of 20 years in prison, a $250,000 fine, and three years’ supervised release. Assistant U.S. Attorney Laura B. Weiss is the prosecutor for the United States. The investigation was a cooperative effort between the Federal Bureau of Investigation and the Blackfeet Law Enforcement Services.
The defendant pled not guilty to the charges.
The charge, an indictment, information, or complaint, is merely an accusation, and all persons named as defendants are presumed innocent until proven guilty. A pre-trial conference and a trial date will be set and the United States will be required to prove the allegations set forth in the indictment beyond a reasonable doubt.

Jasper Wade Half Pleads Guilty in U.S. Federal Court

The United States Attorney’s Office announced that during a federal court session in Billings, on April 23, 2013, before Senior U.S. District Judge Jack D. Shanstrom, Jasper Wade Half, a 37-year-old resident of Crow Agency and an enrolled member of the Crow Tribe of Indians, pled guilty to assault with a dangerous weapon. Sentencing has been set for July 24, 2013. He is currently detained.
In an offer of proof filed by Assistant U.S. Attorney Lori Harper Suek, the government stated it would have proved at trial the following:
On May 20, 2011, Half and the victim were drinking alcohol in Hardin. They left together and were on the off-ramp outside Hardin when they began to argue. They pulled over and began to fist-fight. The victim beat up Half. Half got into his car and drove away across the interstate. He then turned around and returned to the exit. When Half was on the on ramp, he stopped, pulled out a .22 caliber rifle from the trunk, and shot at the victim. Half individually loaded the second round and fired again.
Shortly after Half shot the gun, he was arrested by Big Horn County Sheriff’s deputies. Half initially stated that he had aimed the gun “in the air.” Later, Half reconsidered his previous statement and explained that he had pointed the gun at the victim and then up in the air.
A witness saw the incident and explained that, to her, it looked like Half was pointing the gun at and shooting at the victim.
Half faces possible penalties of 10 years in prison, a $250,000 fine, and three years’ supervised release.
The investigation was a cooperative effort between the Big Horn County Sheriff’s Office and the Federal Bureau of Investigation.

Columbia Man Pleads Guilty to Running Interstate Prostitution Ring

COLUMBIA, SC—United States Attorney Bill Nettles stated today that George McLeod, III, a/k/a “Pimpstick Quezzy,” age 30, of Columbia, pled guilty today in federal court in Columbia, to interstate transportation for the purpose of prostitution, a violation of Title 18, United States Code, Section 2421, and aggravated identity theft, a violation of Title 18, United States Code, Section 1028A. United States District Judge Joseph Anderson of Columbia accepted the plea. The court will impose sentence after reviewing the presentence report, which will be prepared by the U.S. Probation Office.
Evidence presented at the change of plea hearing established that McLeod engaged in running a prostitution ring that transported young women from South Carolina into other states. McLeod posted the females on the Internet website Backpage.com and traveled to various hotels and strip clubs in South Carolina, Tennessee, and Florida. The women engaged in acts of prostitution in the various locations and gave the income to McLeod. The evidence presented also established that McLeod arranged a fraudulent South Carolina identification card for one of the women so that she could obtain employment in a strip club.
Mr. Nettles stated the maximum penalty McLeod can receive is a fine of $250,000 and/or imprisonment for 12 years, plus a special assessment of $200.
The case was investigated by agents of the Federal Bureau of Investigation. Assistant United States Attorney T. DeWayne Pearson of the Columbia office handled the case.

Witness Who Refused to Testify Convicted of Contempt of Court and Obstruction of Justice

Abdullahi Farah, a/k/a Grey Goose, age 23, of Nashville, was convicted yesterday by a federal jury of obstruction of justice and contempt of court, announced David Rivera, Acting United States Attorney for the Middle District of Tennessee.
Farah was found guilty of willfully and knowingly misbehaving in or near the presence of United States District Judge Todd J. Campbell; of willfully and knowingly disobeying and resisting a lawful order, decree, or command of Judge Campbell; and of knowingly and intentionally attempting to obstruct or interfere with and prevent the enforcement of Title 18 U.S.C. Section 1591(a), the federal statute that prohibits the sex trafficking of children and sex trafficking by force, fraud, or coercion.
It was stipulated at the trial that Farah had material information regarding multiple counts of the indictment in the case of United States v. Adan, et al., including information regarding charges of sex trafficking females under the age of 18. On August 23, 2012, Judge Campbell ordered Farah to testify in a deposition for the purpose of obtaining his testimony for use at trial in the Adan case.
Pursuant to Judge Campbell’s Order, a deposition was convened on September 12, 2012, at the United States Federal Courthouse in Nashville for the purpose of taking Farah’s testimony regarding the charges in the Adan indictment. When asked if he would testify, Farah refused.
As a result of his refusal, Farah was taken before Judge Campbell, who found that it would be futile to hold Farah in civil contempt of court and stated that the United States could commence criminal contempt charges against Farah.
Farrah was subsequently indicted by a federal grand jury for contempt and obstruction charges. He faces a maximum sentence of life in prison when he is sentenced at a date yet to be determined.
Farah’s case and the Adan case were part of a joint investigation by the St. Paul Minnesota Police Department, Homeland Security Investigations, the FBI, the Tennessee Bureau of Investigation, and the Nashville Metropolitan Police Department. The case was prosecuted by Assistant U.S. Attorneys Van S. Vincent and Blanche Cook.

Arrest of Suspects Juan Carlos Ortiz-Figueroa and Jonathan Mora-Diaz in Carjacking and for Use of a Firearm During and in Relation to a Crime of Violence

SAN JUAN—On April 18, 2013, at approximately 4:00 p.m., Juan Carlos Ortiz-Figueroa and Jonathan Mora-Diaz were taken into custody by the Federal Bureau of Investigation (FBI). Juan Carlos Ortiz-Figueroa and Jonathan Mora-Diaz are charged with carjacking and the use of a firearm during and in relation to a crime of violence in which the person may be prosecuted in a court of the United States.
The criminal complaint alleges on April 18, 2013, at approximately 1:50 a.m. K.R.R. and K.E.O. (collectively referred to as “victims”) were in La Pared beach in Luquillo, Puerto Rico, when they were approached by three individuals who told them that they had to leave. Two of the individuals had guns in their hands. The victims complied with all of the subjects requests because they were fearful for their life.
One of the subjects, later identified as Jonathan Mora-Diaz, having a gun in his hand, requested from K.R.R the car keys of a motor vehicle Toyota Corolla 2012 (hereinafter the vehicle). Around the same time, Juan Carlos Ortiz-Figueroa had a firearm in his hand and provided back-up to Mora-Diaz. K.R.R., under intimidation and fearing for his life, handed Mora-Diaz the car keys of the vehicle. One of the individuals told the victims to get in the car. K.R.R. and K.E.O. then entered the car along with the three subjects.
The subjects took the victims to a street with no exit. Once there, the victims were told to get out of the car. The victims went to the police station in Luquillo, Puerto Rico, and made a criminal complaint.
The POPR agents were conducting patrolling duties when a call came over the radio in regards to the carjacking mentioned above providing a description of the car and subjects. The POPR officers spotted the vehicle matching the description in Rio Grande, Puerto Rico, and they pulled them over. The officers then arrested the three individuals fitting the description. They also recovered two firearms and some black masks. The individuals arrested included a minor, Juan Carlos Ortiz-Figueroa, and Jonathan Mora-Diaz. The two firearms recovered were loaded FN Herstal Belgium and a loaded Sig Sauer model P229.
After being advised of their rights Ortiz-Figueroa and Mora-Diaz agreed to speak to the investigating agents and both admitted to their participation in the carjacking of K.R.R. and K.E.O. In addition, both admitted that they used a firearm during and in relation to a crime of violence, that is, a carjacking.
If convicted, the defendants faces up to a maximum of 15 years’ imprisonment for taking a vehicle from a person by force and violence or by intimidation (carjacking) and a maximum of seven years for the use of a firearm.
Defendants were taken before the Magistrate today at approximately 12:30 p.m. This case is being prosecuted by Special Assistant United States Attorney (SAUSA) Vanessa Danette Bonano-Rodriguez and is being investigated by the Safe Our Streets Task Force (SOS), composed of FBI, Police of Puerto Rico, and the San Juan Municipal Police.
The public is reminded that a criminal complaint contains only charges and is not evidence of guilt. A defendant is presumed to be innocent until and unless proven guilty. The U.S. government has the burden of proving guilt beyond a reasonable doubt.

Mortgage Broker Pleads Guilty in Two Separate Fraud Schemes That Resulted in Losses of More Than $2 Million

GREENBELT, MD—Emeka Udeze, age 38, of Bowie, Maryland, pleaded guilty today to conspiring to commit wire fraud in connection with two separate mortgage fraud schemes that resulted in over $2,013,478 of actual losses to mortgage lenders.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge David Beach of the United States Secret Service-Washington Field Office; Inspector General Jon T. Rymer of the Federal Deposit Insurance Corporation; Special Agent in Charge Joe Clarke of the Housing and Urban Development Office of Inspector General-Office of Investigations; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Special Agent in Charge Gene E. Morrison, Washington Field Office, U.S. Department of Justice Office of the Inspector General; Howard County Police Chief William McMahon; Acting Special Agent in Charge Lisa Quinn of the United States Secret Service-Baltimore Field Office; and Howard County State’s Attorney Dario Broccolino.
According to his plea, Udeze was a licensed mortgage broker who worked at various companies, including Newgate Mortgage, owned by co-defendant Shola Risikat Balogun, and EWA Mortgage. Udeze also registered a Maryland company called E&T Consulting Inc., which he claimed was established to provide general services, among other things.
Udeze admitted that in both schemes, he submitted fraudulent mortgage loan applications for buyers, inflating the buyer’s income and creating bogus employment information in an effort to qualify these individuals for loans that they otherwise were unqualified to secure. In some cases, no mortgage payments were made and the property went swiftly into default. In other cases, the borrowers attempted to make mortgage payments for a period of time until they could no longer make payments.
In the first scheme, from at least 2006 through at least December 2008, Udeze, Balogun, and others contacted individuals who wished to purchase homes. The buyers, who typically had moderate to low incomes, provided the conspirators with accurate income and employment information. Udeze and others then submitted fraudulent loan applications on behalf of the buyers, inflated the buyer’s income, and created bogus employment information in an effort to secure the loan. Udeze, Balogun, and others profited from these fraudulent transactions by collecting origination fees, commissions, yield spread premiums, and broker’s fees from each loan that closed.
In a separate scheme, from May 2009 to January 2010, Udeze, co-defendant Niesha Williams, and others arranged for individuals to buy and sell real estate so they could improperly obtain money from the transactions. Udeze, Williams, and others submitted fraudulent loan applications, created multiple versions, of settlement statements to deceive lenders, lien holders, buyers, and sellers; and arranged for proceeds from mortgage transactions to be disbursed to shell companies created by Udeze and others in order to disguise that the money was really for their benefit. Co-conspirators also failed to make required disbursements of settlement funds to pre-existing lien holders, funneling the money instead to themselves.
For example, Udeze made arrangements for an individual, C.H., to purchase 4853 Brookstone Terrace, Unit 29, Bowie, Maryland, 20720 from an individual with the initials D.H. Udeze also had a personal relationship with C.H., who trusted him. Udeze admitted that he prepared and sent a fraudulent loan application to the lender, which included false statements about C.H.’s employment, income, her bank accounts, and the bank account balances, so that C.H. could obtain a loan of approximately $250,000 and purchase the property for $255,000. Udeze and Williams prepared a false HUD-1 Settlement Statement for C.H. and the lender, which falsely represented that the purchase price of the property was $255,000. Udeze knew that Williams had prepared a second HUD-1 Settlement Statement for D.H., which listed a sales price of $200,000. The difference between the loan amount and the true sales price was $50,000 in extra cash at settlement. A total of $31,000 was sent from the title company’s escrow account to E&T Consulting Inc. for Udeze’s benefit, and Williams received $10,000 from the sale. These payments were not listed on the HUD-1 Settlement Statement.
As part of his plea agreement, Udeze will be required to pay restitution and forfeit $2,013,478, the amount of actual losses suffered by the mortgage lenders as the result of the at least 20 transactions Udeke brokered in furtherance of the fraud schemes.
Udeze faces a maximum penalty of 30 years in prison and a $1 million fine on each of the two counts of conspiracy to commit wire fraud. U.S. District Judge Peter J. Messitte did not set a date for sentencing.
Shola Risikat Balogun, age 46, of Upper Marlboro and Niesha Williams, age 33, of Fort Washington, Maryland, each previously pleaded guilty to their role in the fraud schemes. No sentencing date has been scheduled for them at this time.
The Maryland Mortgage Fraud Task Force was established to unify the agencies that regulate and investigate mortgage fraud and promote the early detection, identification, prevention, and prosecution of mortgage fraud schemes. This case, as well as other cases brought by members of the task force, demonstrates the commitment of law enforcement agencies to protect consumers from fraud and promote the integrity of the credit markets. Information about mortgage fraud prosecutions is available www.justice.gov/usao/md/Mortgage-Fraud/index.html.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
United States Attorney Rod J. Rosenstein commended the U.S. Secret Service, FDIC, and HUD-OIG for their work in the investigation of the first scheme; and the FBI, Department of Justice-OIG, Howard County Police Department, Secret Service, and Howard County State’s Attorney’s Office for their work in the investigation of the second scheme. Mr. Rosenstein thanked Assistant U.S. Attorney Sujit Raman, who is prosecuting the first case, and Assistant United States Attorney Harry Gruber and Special Assistant United States Attorney Colleen McGuinn assigned to this case from the Howard County States Attorney’s Office, who are prosecuting the second case.

Thirteen Correctional Officers Among 25 Black Guerilla Family Gang Members and Associates Indicted on Federal Racketeering Charges

BALTIMORE—A federal grand jury returned a racketeering indictment charging 25 individuals, including 13 correctional officers with the Maryland Department of Public Safety and Correctional Services, for conspiring to run operations of the Black Guerilla Family (BGF) gang inside correctional facilities. All 25 defendants also are charged with conspiracy to distribute and possession with intent to distribute drugs, and 20 of the defendants are charged with money laundering conspiracy.
The indictment and a detailed affidavit were unsealed today upon the arrests of the defendants and the execution of 15 search warrants. Approximately 170 agents and officers assisted in today’s arrests and search warrants. The indictment was returned on April 2, 2013. One defendant was killed in a robbery several hours before the indictment was filed. The defendants are identified at the conclusion of this press release.
The indictment arose from the efforts of the Maryland Prison Task Force, a group of local, state, and federal stakeholders that met regularly for more than two years and generated recommendations to reform prison procedures.
The indictment was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Stephen E. Vogt of the Federal Bureau of Investigation; Baltimore Police Commissioner Anthony W. Batts; Secretary Gary D. Maynard of the Maryland Department of Public Safety and Correctional Services; and Chief Mark A. Magaw of the Prince George’s County Police Department.
U.S. Attorney Rosenstein also recognized the efforts of the other members of the Maryland Prison Task Force in this investigation and prosecution, including: Baltimore City State’s Attorney Gregg L. Bernstein; Colonel Marcus L. Brown, Superintendent of the Maryland State Police; United States Marshal Johnny Hughes; Special Agent in Charge Karl C. Colder of the Drug Enforcement Administration-Washington Field Division; Tom Carr, Director of the Washington-Baltimore High Intensity Drug Trafficking Area; and Dave Engel, Executive Director of the Maryland Coordination and Analysis Center.
“Correctional officers were in bed with BGF inmates, in violation of the first principle of prison management,” said U.S. Attorney Rod J. Rosenstein. “Preventing prison corruption requires intensive screening at prison entrances and punishment for employees who consort with inmates or bring cell phones and drugs into correctional facilities.”
“This investigation revealed the pervasive nature of prison corruption in Baltimore City’s Detention Centers,” said FBI Special Agent in Charge Stephen E. Vogt. “Such corruption causes the FBI to divert crucial investigative resources away from addressing violence on the streets of Baltimore. In this case, the inmates literally took over ‘the asylum,’ and the detention centers became safe havens for the BGF. Such a situation cannot be tolerated. Law enforcement should not have to concern itself with criminal subjects who have already been arrested and relegated to detention centers.”
“Ninety-nine percent of our correctional officers do their jobs with integrity, honesty, and respect,” said Secretary Gary Maynard of the Maryland Department of Public Safety and Correctional Services. “Today’s indictment, along with those in the past, show that our department will not stand idly by and let a few bad actors affect the security of our institutions. Nor will we allow them to impugn the reputation of the men and women who come to work every day and go about their jobs honorably. Those who would break the law should know we will always work tirelessly with our federal, state, and local partners to root out corruption.”
“Today’s multi-jurisdictional takedown of suspected BGF gang members and orchestrators who infiltrated the criminal justice system is another example of the Baltimore Police Department’s relentless focus on targeting the malignant gang organizations that plague our communities,” said Police Commissioner Anthony Batts. “Thanks to the hard working detectives, federal agents, and prosecutors who worked behind the scenes to build these cases. Our continued pledge to the people of Baltimore is that we will leverage the full capacity of our state and federal partnerships to identify those responsible for violence and bring them to justice.”
The 10 men and 15 women charged in the indictment are alleged to be members or associates of the BGF, a gang active in prisons throughout the United States. According to the indictment, BGF has been the dominant gang at the Baltimore City Detention Center (BCDC) and in several connected facilities, especially the Baltimore Central Booking Intake Center, the Women’s Detention Center (which houses many men), and in the Jail Industries Building. The indictment alleges that since at least 2009, BGF members and associates in BCDC and related prison facilities engaged in criminal activities, including drug trafficking, robbery, assault, extortion, bribery, witness retaliation, money laundering, and obstruction of justice.
BGF members and associates allegedly bribed correctional officers at BCDC and related prison facilities to smuggle drugs, cell phones, and other contraband. Correctional officers arranged favored treatment and privileges for imprisoned BGF gang members, and officers thwarted interdiction and law enforcement efforts against BGF inmates. BGF members and associates allegedly had long-term sexual relationships with several correctional officers and impregnated them.
BGF leaders allegedly used contraband cell phones to order contraband. Co-conspirators delivered contraband to corrupt correctional officers who smuggled the items into the prisons. Correctional officers often arranged payment for the contraband. Some gang dues and drug profits were used to support activities of BGF street organizations outside the prisons.
The charging documents allege that correctional officers were able to bring contraband directly into the prisons through the main entrances. Inside the prisons, BGF was able to control contraband smuggling because BGF gang members were designated as “working men.” Working men are inmates who are paid to assist management and are free to move about the facility.
Green Dot cash debit cards were allegedly used by inmates to pay BGF for smuggled contraband and used by BGF to transfer criminal proceeds. Luxury automobiles were among the purchases made by BGF with Green Dot cards.
According to the indictment, members, and associates followed directions from the ranking BGF members in BCDC, especially inmate Tavon White. On January, 5, 2013, White explained in a phone call:
“This is my jail. You understand that? I’m dead serious....I make every final call in this jail...and nothing go past me, everything come to me....Any of my brothers that deal with anybody, it’s gonna come to me. You see what I am saying? Everything come to me. Everything. Before a mother-f—— hit a n—— in the mouth, guess what they do, they gotta run it through me. I tell them whether it’s a go ahead, and they can do it or whether they hold back. Before a mother-f—— stab somebody, they gotta run it through me....Anything that get done must go through me. ”
Tavon White summarized his position in a conversation with correctional officer Adrena Rice on February 11, 2013:
“I told them worker men that they had to step down off the worker men spots or they was getting hit....I hold the highest seat you can get....My word is law...so if I told any mother-f—— body they had to do this, hit a police, do this, kill a mother-f——, do anything, it got to get done. Period.”
White allegedly used contraband cell phones to discuss BGF activities inside BCDC, such as the collection of fees and taxes, to request information about inmates, to hear grievances from other BGF inmates, and to coordinate his contraband smuggling operation. White and other gang members developed sexual relationships with officers in order to gain influence over them.
White allegedly had long-term sexual relationships inside BCDC with four correctional officers—Jennifer Owens, Katera Stevenson, Chania Brooks, and Tiffany Linder—impregnating each of the four officers at least once. Owens had “Tavon” tattooed on her neck and Stevenson had “Tavon” tattooed on her wrist. All four officers allegedly help smuggle contraband into BCDC and related facilities. White allegedly gave Owens a diamond ring and provided luxury automobiles to Owens, Stevenson, and Brooks. The indictment includes many overt acts in furtherance of the racketeering enterprise. For example, in November 2012, correctional officer Jasmin Jones allegedly stood guard outside a closet in BCDC so that correctional officer Kimberly Dennis and inmate Derius Duncan could have sex. Corrupt officers also warned BGF inmates about law enforcement operations. For example, Brooks and Linder allegedly notified White when they learned about upcoming canine scans and jail cell searches. The affidavit specifies two occasions in which warning calls to White were intercepted: December 21, 2012 (from Brooks) and January 6, 2013 (from Linder). White then used his cell phone to spread the word to other inmates.
On January 6, 2013, White allegedly said:
“I just got a message (from Officer Tiffany Linder) saying that they was going to pull a shake down (prison search) tonight. Let me call all these dudes in my phone and let them know.”
The U.S. Attorney expressed appreciation to Secretary Maynard and select members of his senior staff who confidentially arranged for 30 trusted correctional officers from outside Baltimore to join with federal agents and conduct surprise searches of BGF members and their jail cells on February 14, 2013, resulting in the discovery of important evidence.
The indictment seeks the forfeiture of $500,000 and other proceeds of the enterprise, including luxury automobiles.
The defendants face a maximum sentence of 20 years in prison on the racketeering and drug conspiracies, as well as for conspiracy to commit money laundering. Stevenson, Yarborough, and Pinder each also face five years in prison for possession with intent to distribute marijuana.
The defendants are expected to have initial appearances in U.S. District Court in Baltimore this afternoon.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
United States Attorney Rod J. Rosenstein praised the FBI, Maryland Department of Public Safety and Correctional Services, Baltimore Police Department, the Prince George’s County Police Department and Maryland Prison Task Force, Baltimore City Assistant State’s Attorneys Kevin Wilson, and Katie O’Hara for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys Robert R. Harding and Ayn B. Ducao, who are prosecuting this Organized Crime Drug Enforcement Task Force case.
The following defendants are charged in the indictment unsealed today:
Inmates:

• Tavon White, a/k/a Bulldog and Tay, age 36, of Baltimore
• Jamar Anderson, a/k/a Hammer and Hamma Head, age 26, of Baltimore
• Derius Duncan, age 26, of Baltimore
• Steven Loney, a/k/a Stevie, age 24, of Baltimore
• Jermaine McFadden, a/k/a Maine, age 24, of Baltimore
• Kenneth Parham, age 23, of Baltimore
• Joseph Young, a/k/a Monster, age 30, of Baltimore

Correctional officers:

• Antonia Allison, age 27, of Baltimore
• Ebonee Braswell, age 26, of Baltimore
• Chania Brooks, age 27, of Baltimore
• Kimberly Dennis, age 26, of Baltimore
• Jasmin Jones, a/k/a J.J., age 24, of Baltimore
• Taryn Kirkland, age 23, of Baltimore
• Katrina LaPrade, a/k/a Katrina Lyons, age 31, of Baltimore
• Tiffany Linder, age 27, of Baltimore
• Vivian Matthews, age 25, of Essex, Maryland
• Jennifer Owens, a/k/a O and J.O., age 31, of Randallstown
• Adrena Rice, age 25, of Baltimore
• Katera Stevenson, a/k/a KK, age 24, of Baltimore
• Jasmine Thornton, a/k/a J.T., age 26, of Glen Burnie

Outside suppliers:

• Tyesha Mayo, age 29, of Baltimore
• Teshawn Pinder, age 24, of Baltimore
• Tyrone Thompson, a/k/a Henry, age 36, of Baltimore
• Ralph Timmons, Jr., a/k/a Boosa, age 34, of Baltimore (deceased)
• James Yarborough, a/k/a J.Y., age 26, of Baltimore.

Dr. David G. Millaud Sentenced for Defrauding the Small Business Administration

Dr. David G. Millaud, age 52, a resident of New Orleans, Louisiana, was sentenced today by U.S. District Court Judge Eldon E. Fallon to three years’ probation after previously pleading guilty to theft of government funds in connection with a disaster loan that he received from the Small Business Administration, announced U.S. Attorney Dana J. Boente. Millaud was further ordered to pay restitution in the amount $56,449.91 to the Small Business Administration.
According to court documents, Millaud submitted false invoices to the Small Business Administration in order to support his request for a loan disbursement. As a result of the false invoices, Millaud received a loan disbursement totaling $56,449.91 in government funds to which he was not entitled.
The case was investigated by the U.S. Department of Housing and Urban Development, Office of the Inspector General; Small Business Administration, Office of Inspector General; and the Federal Bureau of Investigation. The case was prosecuted by Assistant U.S. Attorney Spiro G. Latsis.

U.S. Attorney’s Office and Detroit One Members Observe National Crime Victims’ Rights Week

DETROIT—United States Attorney Barbara L. McQuade and Detroit Police Chief Chester Logan, along with several law enforcement agencies and community members of Detroit One and the mother of a crime victim, will hold an observance in memory of crime victims. The observance will take place on Thursday, April 25, 2013, at 2:30 p.m. at Lafayette Green Park, located on the corner of W. Lafayette Blvd and Shelby in the downtown area of Detroit.
This event is being held in conjunction with the observance of National Crime Victims’ Rights Week, April 21-27. This year’s theme, “New Challenges. New Solutions,” celebrates the spirit of Detroit One and also highlights the need for us to assist and serve each and every victim in need of hope and help.
A perennial cottage garden will be planted in remembrance of crime victims who have lost their lives to violence in the city of Detroit, with the event to serve as an announcement and invitation to come out and view this lovely memorial. The perennials will re-bloom each year, symbolizing those who are not forgotten. The garden is tended regularly and is kept looking beautiful year-round.
“The U.S. Attorney’s Office is deeply committed to assisting victims of federal crimes, ensuring they are afforded their rights under the Crime Victims’ Rights Act, protecting them from further harm, and helping them reshape their futures,” said U.S. Attorney McQuade. “This week is a time to raise awareness about the rights and needs of crime victims, the challenges victims face in the recovery process, and the positive impact of those who provide services and support to victims.”
The Crime Victims’ Rights Act (CVRA), enacted in 2004, grants victims in federal criminal proceedings certain enforceable rights, including the right to be reasonably heard at public court proceedings and to receive full and timely restitution as provided by law. The Eastern District of Michigan, like other federal, state, and local law enforcement agencies, has a dedicated Victim Witness Unit that serves federal crime victims across the district’s many counties. Members of this unit notify victims of significant case events through the Department of Justice’s Victim (DOJ) Notification System (VNS). Such notice enables victims to participate in court proceedings and make their voices heard. According to Department of Justice Statistics, in fiscal year (FY) 2011, the U.S. Attorneys’ offices provided notice of over 10.4 million case events, including notices regarding criminal charges filed, plea hearings, bond hearings, and sentencing hearings.
Notification of significant case events leads to increased victim participation in court proceedings. In FY 2011, victim-witness personnel in the United States Attorney’s Offices accompanied over 28,000 victims to court hearings and trials. Court accompaniment helps ensure that victim participation in court proceedings is meaningful as victim-witness personnel can answer questions and explain the federal judicial process.
In addition to notification and court accompaniment, the Eastern District of Michigan’s Victim Witness Unit provides essential services to victims, such as making referrals for counseling, securing temporary housing, assisting with access to victim compensation funds, and accompanying victims to court to provide support and guidance during the proceedings. These services provide tools victims need to reshape their futures.
Further information about National Crime Victims’ Rights Week is available at http://ovc.ncjrs.gov/ncvrw/.

New York Man Charged with Internet Extortion and Cyber Stalking

A 21-year-old Great Neck, New York man was charged in a criminal complaint in the Eastern District of Michigan with Internet extortion and cyber stalking, announced United States Attorney Barbara L. McQuade.
Joining in the announcement were Special Agent in Charge Robert D. Foley, III, Federal Bureau of Investigation, and Chief John Seto, Ann Arbor Police Department.
According to the affidavit, from May 2012 through February 2013, Adam Paul Savader sent anonymous text messages using Google Voice numbers to 15 women stating that he had nude photographs of the women and threatening to distribute the nude photographs to the women’s friends and family members unless the women sent him more nude photographs of themselves. Savader sent some of the victims links to a photo-sharing website where nude pictures of the victims had been posted.
The case was brought to the attention of the Federal Bureau of Investigation by detectives from the Ann Arbor Police Department, who received a complaint from a victim stating that she had received threatening messages from a person who had illegally obtained nude photographs of her from her e-mail account. Detectives with the Ann Arbor P.D. partnered with FBI agents to investigate the case and together identified 15 victims in Detroit; Washington, D.C.; and Long Island, New York.
If convicted on these charges, Savader faces a maximum penalty of five years’ imprisonment.
Savader is currently in federal custody in New York awaiting removal to Michigan.
A complaint is only a charge and is not evidence of guilt. Trial cannot be held on felony charges in a complaint. When the investigation is completed a determination will be made whether to seek a felony indictment.

Lawyer Pleads Guilty in Manhattan Federal Court to Participating in Massive Immigration Fraud Scheme

Preet Bharara, the United States Attorney for the Southern District of New York; George Venizelos, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”); Raymond W. Kelly, the Commissioner of the Police Department for the City of New York (“NYPD”); and Patricia A. Menges, the Director of the New York Asylum Office of the United States Citizenship and Immigration Services (“USCIS”), announced that attorney JOHN LIN pled guilty today in Manhattan federal court to one count of conspiring to commit immigration fraud. LIN is the eighth lawyer charged for his participation in a massive immigration fraud scheme involving thousands of fraudulent asylum applications that were allegedly submitted by at least 10 law firms in the New York City area. He pled guilty before U.S. Magistrate Judge Andrew J. Peck.
Manhattan U.S. Attorney Preet Bharara said: “For those seeking asylum from persecution in their native countries, United States immigration laws provide a vital escape hatch. Not only did John Lin abuse those laws and violate his duties as an officer of the court, but he also made it harder for legitimate asylum seekers. We will continue to work with our law enforcement partners to identify and prosecute those who violate this country’s immigration laws.”
FBI Assistant Director in Charge George Venizelos remarked: “Lin, a lawyer and officer of the court, violated the ethical obligations of his profession while breaking the law. Assisting others with their fraudulent asylum claims enabled them to enter the country under false pretenses. The scheme exploited a program designed to provide safe haven for real victims of persecution.”
NYPD Commissioner Raymond W. Kelly said: “It’s bad enough when new arrivals to this country are victimized by common criminals, but despicable when a member of the bar dishonors his sworn duties to exploit a system designed to protect some of the most vulnerable among us.”
USCIS New York Asylum Office Director Patricia A. Menges stated: “Asylum is a humanitarian protection that represents the best of American values. USCIS is committed to ensuring that criminals like Mr. Lin aren’t allowed to abuse this protection for personal gain. We appreciate the efforts of U.S. Attorney Bharara’s office, the NYPD, the FBI, and USCIS’s Fraud Detection and National Security Program in helping us protect the integrity of this important program.”
According to the information and other documents filed in this case:
LIN was an attorney at a law office located in New York City (the “Law Firm”). As part of the scheme, the defendant and his co-conspirators profited by creating and submitting asylum applications containing false stories of persecution purportedly suffered by Chinese alien applicants.
The law firm made up stories of persecution that often followed one of three fact patterns: (a) forced abortions performed pursuant to China’s family planning policy; (b) persecution based on the client’s belief in Christianity; or (c) political or ideological persecution, typically for membership in China’s Democratic Party or followers of Falun Gong. Since 2006, the Law Firm has submitted more than 500 asylum applications.

***

LIN, 53, of Staten Island, New York, faces a maximum sentence of five years in prison and three years of supervised release. He is scheduled to be sentenced by U.S. District Court Judge Sidney H. Stein, on August 12, 2013 at 4:00 p.m.
Mr. Bharara praised the investigative work of the FBI, NYPD, and USCIS.
The prosecution is part of Operation Fiction Writer, a joint investigation led by the United States Attorney’s Office for the Southern District, the FBI, the NYPD, and the USCIS. To date, 28 defendants, including eight lawyers, have been charged with participating in nine separate but overlapping immigration fraud schemes in New York City. Of the 28 defendants charged, two defendants—LIN and attorney Meng Fei Yu—have pled guilty. Charges against the remaining 26 defendants are merely accusations, and they are presumed innocent unless and until proven guilty.
This case is being handled by the Office’s Organized Crime Unit. Assistant U.S. Attorneys Harris Fischman and Robert Boone are in charge of the prosecution.

Former Credit Suisse Managing Director Pleads Guilty in Connection with Scheme to Hide Losses in Mortgage-Backed Securities Trading Book

Preet Bharara, the United States Attorney for the Southern District of New York, today announced the guilty plea of KAREEM SERAGELDIN, the former managing director/global head of structured credit in the Investment Banking Division of Credit Suisse Group (“Credit Suisse”). SERAGELDIN was extradited from the United Kingdom on Friday, April 5, 2013, to face charges that he fraudulently inflated the prices of asset-backed bonds in Credit Suisse’s trading book in late 2007 and early 2008. The bonds were comprised of subprime residential mortgage backed securities (“RMBS”) and commercial mortgage backed securities (“CMBS”). Once discovered, SERAGELDIN’s manipulation of these bond prices contributed to Credit Suisse taking a $2.65 billion write-down of its 2007 year-end financial result. He pled guilty to conspiring to falsify the books and records of Credit Suisse before U.S. District Judge Alvin K. Hellerstein.
As a result of his manipulation, SERAGELDIN was able to secure significant year-end bonuses since the trading book’s profitability was one of the factors in determining bonus amounts. His 2007 bonus was over $1.7 million and his incentive share unit award was more than $5.2 million. The latter was rescinded after Credit Suisse discovered the alleged fraud. SERAGELDIN’s co-conspirators, David Higgs and Salmaan Siddiqui, previously pled guilty and are cooperating with the government’s investigation.
Manhattan U.S. Attorney Preet Bharara said: “While the real estate market was imploding and the financial crisis emerging, Kareem Serageldin and his co-conspirators concealed significant subprime mortgage-related losses in order to secure multi-million-dollar paydays. Serageldin’s extradition to face charges for his role in this conspiracy and the guilty plea he entered today demonstrate, once again, that no one is above the law.”
The following allegations are based on the indictment filed against SERAGELDIN and the informations to which Higgs and Siddiqui pled guilty:
SERAGELDIN was employed at Credit Suisse as a managing director. He held the position of global head of the Structured Credit Group in the securities department of Credit Suisse’s Investment Banking Division, and divided his time between the company’s New York and London offices. The Structured Credit Group held and traded ABS (“Asset Backed Security”) cash bonds, which included RMBS and CMBS. SERAGELDIN oversaw and managed a number of trading books, including a trading book known as “ABN1.” The ABN1 book was comprised primarily of several thousand individual long and short subprime-related positions and also included other securities. The long positions consisted of, among other things, various types of cash securities, including AAA-rated and non-AAA-rated cash bonds. Until March 2008, ABN1 had a net asset value of approximately $5.35 billion, approximately $3.71 billion of which consisted of ABS cash bonds, including RMBS and CMBS positions.
Pricing of Mortgage-Backed Securities
Credit Suisse traders were required at all relevant times to price securities they held at their fair value, that is, on a “mark-to-market” basis, which was determined by reference to either the current market price of the asset or liability, or the current price for a similar asset or liability. In the absence of a liquid market, Credit Suisse traders were required to look to other indicia in order to determine the fair value of the assets on their books. During this time, the ABX Index served as a benchmark for certain securities backed by home loans. It was widely understood within Credit Suisse that traders were to consult the corresponding ABX indices when pricing RMBS bonds and related products.
The Bond Pricing Scheme
The deterioration throughout 2007 of the real estate market in the United States, including the subprime housing market, led to significant reductions in valuations of mortgage-backed securities. As mortgage delinquencies increased across the country, the value of the securities backed by these mortgages decreased and the market for them became increasingly illiquid.
By late November 2007, SERAGELDIN was aware that the market for mortgage-backed securities had declined enormously. On November 28, 2007, SERAGELDIN told Higgs, Siddiqui, and a co-conspirator (“CC-1”) that “the housing market [was] going down the tubes” and that they had to “find a way to sell these bonds,” i.e., mortgage-backed bonds in ABN1. As SERAGELDIN recognized, “[t]hose bonds are going to start trading worse than the [ABX] Index.” SERAGELDIN and his co-conspirators did not sell the bonds because the market prices for the bonds were substantially below the inflated value at which they marked the bonds.
From August 2007 through February 2008, SERAGELDIN, Higgs, Siddiqui, and their co-conspirators artificially increased the price of bonds in order to create the false appearance of profitability in the ABN1 trading book. Specifically, SERAGELDIN directed Higgs on numerous occasions to reach specific Profit & Loss (“P&L”) targets on a daily and month-end basis. Higgs, in turn, instructed Siddiqui and another unnamed co-conspirator to mark the books so as to achieve the particular P&L targets specified by SERAGELDIN, rather than to reflect the fair value of the bonds.
In order to reach specific P&L targets, SERAGELDIN, Higgs, Siddiqui, and their co- conspirators marked up bond prices without regard to fair market value; improperly offset mark- downs with gains realized in other parts of the book to avoid a P&L impact; and engaged in the practice of “reversing out,” which involved freezing marks at a favorable point in time to achieve a desired P&L result. In addition, as part of their scheme, SERAGELDIN, Higgs, Siddiqui, and their co-conspirators concealed their manipulation of bond marks from internal control personnel within Credit Suisse who were charged with independently ensuring the accuracy of bond prices, and they devised other ways to avoid detection of their fraud.
Credit Suisse’s ABN1 Trading Book was Falsely Inflated as a Result of the Scheme
As a result of the scheme, there was a growing disparity between the values ascribed to the marks in the ABN1 book and the available external benchmarks, such as the ABX Index. From August 2007 through the end of that year, as ABX Index prices fell, bond prices in ABN1 that were supposed to reflect the ABX Index remained effectively stable, thereby giving the false impression to Credit Suisse senior management that the ABN1 book was profitable. On one occasion in January 2008, SERAGELDIN expressed concern to Higgs that the overpriced bonds were at risk of being discovered: “We should mark these down because someone is going to spot this,” he said.
The February 2008 Mark-Down
On March 20, 2008, Credit Suisse issued a press release which announced completion of its internal review and stated that the fair value reduction, or write-down, of the ABS positions—which included but was not limited to the ABNl book—was approximately $2.65 billion. Approximately $540 million of this write-down was attributable to the ABN1 trading book and included ABS cash bonds for the fourth quarter 2007 that SERAGELDIN manipulated and inflated in connection with his scheme.

***

SERAGELDIN, 39, a citizen of the United Kingdom, faces a maximum sentence of five years in prison and a maximum fine of the greater of $250,000, or twice the gross gain or loss from the offense. He is scheduled to be sentenced before Judge Hellerstein on August, 2, 2013 at 1:30 p.m.
Mr. Bharara praised the work of the Federal Bureau of Investigation and thanked the Securities and Exchange Commission for its assistance in the investigation of this case.
This case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant United States Attorney Eugene Ingoglia is in charge of the prosecution.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a co-chair of the Securities andCommodities Fraud Working Group. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.stopfraud.gov.

Former Full Tilt Poker CEO Pleads Guilty and is Sentenced in Manhattan Federal Court

Preet Bharara, the United States Attorney for the Southern District of New York, announced that Raymond Bitar, the former chief executive officer of Full Tilt Poker, pled guilty today to unlawful Internet gambling and to conspiracy to commit bank fraud and wire fraud and was sentenced to time served by U.S. District Judge Loretta A. Preska. In pleading guilty, Bitar admitted to working with others to defraud his poker customers by lying to them about the security of their funds and falsely promising players that their funds would be protected in “segregated” accounts. In connection with his plea and sentencing, Bitar agreed to forfeit $40 million dollars in money and other property derived from his offenses. In sentencing Bitar, Judge Preska made clear that she would have imposed a substantial term of imprisonment had it not been for the fact that Bitar has an extremely serious heart condition and is in urgent need of a heart transplant.
Manhattan U.S. Attorney Preet Bharara said, “With his guilty plea and sentencing today, former Full Tilt Poker CEO Raymond Bitar now stands convicted and must forfeit tens of millions of dollars in ill-gotten gains in connection with the massive fraud his company orchestrated against the U.S. banking system and the scheme that defrauded Full-Tilt Poker’s U.S. customers.”
The following allegations are based on the superseding information filed today in Manhattan federal court, the superseding indictment unsealed following the defendant’s arrest in 2012, and the indictment unsealed on April 15, 2011, in which Bitar was initially charged, other documents previously filed in the case, and statements made in court:
In late 2006, Congress enacted the Unlawful Internet Gambling Enforcement Act (UIGEA), making it a crime to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.” Notwithstanding the enactment of UIGEA, Full Tilt Poker—a company founded by professional poker players in the U.S. in 2004—continued to offer Internet gambling to U.S. residents and took in an estimated $1 billion from U.S. residents through April 15, 2011. Because U.S. banks were largely unwilling to process payments for illegal Internet gambling, Bitar relied on fraudulent means designed to trick U.S. banks by disguising payments to Full Tilt Poker as payments unrelated to Internet gambling.
In order to encourage players to deposit money with Full Tilt Poker, Bitar directed Full Tilt Poker employees to falsely assure potential customers that player deposits would be held in segregated accounts that would be kept separate and distinct from the company’s operating accounts. In fact, Full Tilt Poker did not protect player funds in segregated accounts and, instead, used them for whatever purposes Bitar directed, including to pay him and other owners millions of dollars. Because player funds were being used to cover operating expenses, Full Tilt Poker experienced an increasing shortfall between the cash it had in its bank accounts and the money it owed to players. For example, by early November 2010, Full Tilt Poker owed its customers approximately $344 million but had only approximately $145 million in all of its bank accounts. To conceal this financial shortfall, Bitar directed Full Tilt Poker employees to misrepresent how much cash the company had on hand.
Further, to prevent players from learning about Full Tilt Poker’s shaky finances and to induce them to continue gambling with Full Tilt poker, Bitar concocted a scheme in which Full Tilt Poker players were led to believe they were gambling real money when in actuality they were gambling with “phantom” online credits. As explained in greater detail in the superseding indictment, in the fall of 2010, Full Tilt Poker lost its ability to reliably collect deposits from U.S. bank accounts. Rather than terminate its U.S. operations—an option that would likely have exposed the fact that Full Tilt Poker was not holding player cash in segregated accounts and was holding less than half of the money it owed players—Bitar arranged for Full Tilt Poker to continue approving player deposits and to award credit to depositors even though Full Tilt Poker had not actually collected the money from players and had no ability to do so. As United States players gambled and won or lost these phantom funds—ultimately totaling over $130 million—Full Tilt Poker would list the phantom funds on players’ online account statements, even though the funds were never collected or available to pay the winning players.
Only weeks before U.S. law enforcement took action against Full Tilt Poker in April 2011, Full Tilt Poker’s internal financial statements reported $390 million in debts to players but only $60 million in its bank accounts. As players around the world began demanding their funds from Full Tilt Poker following the law enforcement action, rather than suspend operations, Bitar lured players to continue gambling with Full Tilt Poker by continuing to promise them that their funds were safe. In actuality, Bitar was using new customer deposits to pay off some of the backlog of player requests to withdraw funds and to cover the company’s operating expenses, including salary for himself and others. In effect, Full Tilt Poker operated what was, by then, nothing more than a Ponzi scheme. When the scheme finally collapsed, Full Tilt Poker was unable to pay players the approximately $350 million it owed them.

* * *

Bitar, 41 of Glendora, California, was also ordered to pay a $200 special assessment fee.
Mr. Bharara thanked the Federal Bureau of Investigation for its outstanding work in the investigation, which he noted is ongoing. He also thanked Immigration and Customs Enforcement’s Homeland Security Investigations New York and New Jersey offices for their continued assistance in the investigation.
Bitar is the eighth of the 11 defendants charged in connection with the original Internet poker indictment to have been arrested, all of whom have pled guilty. In addition to Bitar, they are: Bradley Franzen, Ryan Lang, Ira Rubin, Brent Beckley, Chad Elie, John Campos, and Nelson Burtnick. Charges are still pending against the remaining three defendants—Isai Scheinberg, Paul Tate, and Scott Tom—who are at large and are presumed innocent unless and until proven guilty.
This matter is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Arlo Devlin-Brown, Niketh Velamoor, and Nicole Friedlander are in charge of the criminal case, and Assistant U.S. Attorneys Sharon Cohen Levin, Jason Cowley, Andrew Goldstein, Michael Lockard and Christine Magdo are in charge of related civil money laundering and forfeiture actions.

Manhattan U.S. Attorney and FBI Assistant Director in Charge Announce Kidnapping Conspiracy Charges Against Massachusetts Veterans Affairs Police Chief and Former New York City High School Librarian

Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI), today announced the arrests of Richard Meltz, chief of police for the U.S. Department of Veterans Affairs for the Bedford, Massachusetts Veteran Affairs Medical Center, and Robert Christopher Asch, a former high school librarian, for conspiracy to kidnap, torture, rape, and kill women and children. Meltz was arrested yesterday afternoon, and Asch was arrested this morning by special agents of the FBI. Meltz and Asch will be presented today before U.S. Magistrate Judge James C. Francis, IV in Manhattan federal court.
Manhattan U.S. Attorney Preet Bharara said, “The bone-chilling conduct alleged in this complaint is a chronicle of sadism and depravity that includes the defendants’ very real steps to carry out their plans to kidnap, torture, rape, and kill the women and children they targeted. Asalleged, Richard Meltz and Robert Christopher Asch assiduously planned their plot in detailed conversations and alternately served as advisers and facilitators of the plan—Meltz provided ‘strategic advice,’ and Asch conducted surveillance and provided supplies including leather ties, a sleeping agent, instruments of torture, and a Taser gun. The only thing that stood between these alleged kidnappers and their horrifying plot was the outstanding investigative teamwork of the FBI and the prosecutors in this office.”
FBI Assistant Director in Charge George Venizelos said, “As alleged, both of these defendants took affirmative steps to carry out the conspiracy to kidnap and torture women. Their actions were not confined to talking about these ghoulish plans. They acquired the tools to accomplish the deed, including a Taser and the chemical means to anesthetize their victims. And they made detailed plans to use these instruments—plans that were foiled by the FBI’s intervention.”
According to the complaint filed today in Manhattan federal court:
Between 2011 and October 2012, Meltz, Asch, and a co-conspirator, Michael Vanhise, who was previously indicted on kidnapping conspiracy charges, engaged in a series of e-mail and instant message communications during which they discussed and planned in great detail the kidnapping, torture, and murder of women. In October 2012, FBI agents became aware of these communications. Specifically, they learned that Vanhise was sending e-mail and instant messages from various computers to solicit individuals, including Meltz and Asch, to kidnap, rape, and kill his wife, his sister-in-law, her children, and his step- daughter. Vanhise eventually met with FBI agents and told them that he sent Meltz and Asch photographs of his sister-in-law and her minor children. Meltz and Asch both expressed interest in kidnapping the proposed victims, and Vanhise provided Meltz and Asch with a location that was in close proximity to the kidnapping targets’ actual home address. In an e-mail exchange between Meltz and Vanhise about this plan, Meltz wrote, “we go over there she know you let’s [sic.] us in we choke her out tie her up throw her in the back of your car take her someplace and [rape and torture her].”
In October 2012, an FBI agent working in an undercover capacity (“UC-1”) contacted Asch online and began discussions about kidnapping a woman, who, unbeknownst to the defendants, was also actually an FBI undercover agent (“UC-3”). UC-1 and Asch met on a number of occasions in Manhattan, and during one such meeting on March 13, 2013, Asch provided UC-1 with a bag of materials to be used during the kidnapping and torture of UC-3, including a ski mask, hypodermic needles, leather ties, chrome forceps, a three-page gun show itinerary, documents relating to a “leg-spreader” and “dental retractor” that Asch claimed to have purchased, and the liquid form of doxepin hydrochloride, commonly used as a sleep agent. During the same meeting, Asch, along with UC-1 and another FBI agent acting in an undercover capacity (“UC-2”), conducted surveillance of UC-3, the intended victim, as she left her purported work place. Asch, upon viewing UC-3, said, “She has to die.”
Asch also introduced UC-1 to Meltz, who participated in multiple conversations with both UC-1 and Asch about the conspiracy’s objective to kidnap and commit acts of violence against women. For example, after Meltz and Asch discussed the widespread availability of stun guns in gun shops in New Hampshire, where Meltz lived, and at gun shows in Pennsylvania, and Meltz provided advice about the use of a stun gun in the commission of the kidnapping offense, Asch traveled from New York to Pennsylvania to attend a gun show and purchased a high-voltage Taser gun.
Throughout this investigation, the FBI intercepted numerous phone calls during which Meltz provided advice, information, and assistance to Asch on how to avoid detection and minimize the risks associated with abducting and murdering a woman. Examples of the techniques suggested by Meltz include the avoidance of toll roads, using rental cars, paying for “tools” in cash, looking for victims in desolate areas who are engaged in other activities (such as talking on the phone), abducting victims at night, and using disguises when first approaching a potential victim.
On April 14, 2013, Meltz met with UC-1 at a location in New Jersey. This meeting was recorded and observed by FBI agents. At the meeting, Meltz and UC-1 discussed the kidnapping and murder of UC-3. Meltz advised UC-1 on how best to dispose of UC-3’s body, including how to transport it from the crime scene to a desolate location in the woods in upstate New York. Meltz told UC-1 that given the weather at the time of year, if UC-3’s body were left in the woods, wild animals would likely find and destroy it before law enforcement could find it.
On April 15, 2013, Asch met UC-1 in lower Manhattan to conduct surveillance of UC- 3. UC-1 and Asch previously had discussed Asch giving UC-1 the tools Asch had gathered to use for the kidnapping, so that UC-1 could take them to the location where UC-3 was to be brought following her abduction. Asch brought to the April 15 meeting two bags of tools intended to be used in the kidnapping, rape, torture, and murder of UC-3, including, but not limited to, a Taser gun, rope, a meat hammer, duct tape, gloves, cleaning supplies, zip ties, a dental retractor, two speculums, 12-inch skewers, pliers, a wireless modem, and a leg spreader.

* * *

Asch, 60, of Manhattan, and Meltz, 65, of Stanhope, New Jersey and Nashua, New Hampshire, are each charged with one count of conspiracy to commit kidnapping, which carries a maximum sentence of life in prison and a maximum fine of $250,000 or twice the gross gain or gross loss from the offense.
Mr. Bharara praised the outstanding investigative work of the FBI. He also thanked the New Jersey State Police. Mr. Bharara added that the investigation is continuing.
This case is being handled by the Office’s Violent Crimes Unit. Assistant United States Attorneys Hadassa Waxman and Brooke E. Cucinella are in charge of the prosecution.
The charges contained in the complaint and the indictment against Vanhise are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Obstruction Charges Filed in Ongoing Foreign Corrupt Practices Act Investigation into Alleged Guinean Mining Rights Bribe Scheme

WASHINGTON—Frederic Cilins, 50, a French citizen, has been arrested and accused of attempting to obstruct an ongoing investigation into whether a mining company paid bribes to win lucrative mining rights in the Republic of Guinea.
Mythili Raman, Acting Assistant Attorney General for the Justice Department’s Criminal Division; Preet Bharara, the U.S. Attorney for the Southern District of New York; and George Venizelos, the Assistant Director in Charge of the FBI’s New York Field Office, made the announcement.
“Mr. Cilins is charged with scheming to destroy documents and induce a witness to give false testimony to a grand jury investigating potential violations of the Foreign Corrupt Practices Act,” said Acting Assistant Attorney General Raman. “The Justice Department is committed to rooting out foreign bribery, and we will not tolerate criminal attempts to thwart our efforts.”
“A grand jury can never learn the truth, and justice cannot prevail, where documents are intentionally destroyed and testimony is tainted by lies,” said U.S. Attorney Bharara. “As alleged, Frederic Cilins attempted to obstruct a significant investigation by corrupting evidence and testimony in precisely those ways. With today’s arrest, he now begins his own path to justice for his alleged conduct.”
“As alleged, Cilins attempted to buy evidence he sought to destroy,” said FBI Assistant Director in Charge Venizelos. “The destruction of evidence was in furtherance of Cilins’s alleged effort to obstruct an investigation into a bribery scheme. In effect, he was allegedly willing to commit bribery in an effort to cover up a bribery.”
Cilins was arrested in Jacksonville, Florida, on April 14, 2013, and a criminal complaint was filed in the Southern District of New York today charging Cilins with tampering with a witness, victim, or informant; obstructing a criminal investigation; and destroying, altering, or falsifying records in a federal investigation. The obstruction charge carries a maximum penalty of five years in prison, and the tampering and record-destruction charges each carry a maximum penalty of 20 years in prison. Cilins made an initial appearance in the Middle District of Florida and was detained pending a detention hearing scheduled for April 18, 2013.
According to the complaint, Cilins allegedly attempted to obstruct an ongoing federal grand jury investigation concerning potential violations of the Foreign Corrupt Practices Act and laws proscribing money laundering. The complaint states the federal grand jury is investigating whether a particular mining company and its affiliates—on whose behalf Cilins has been working—transferred into the United States funds in furtherance of a scheme to obtain and retain valuable mining concessions in the Republic of Guinea’s Simandou region. During monitored and recorded phone calls and face-to-face meetings, Cilins allegedly agreed to pay substantial sums of money to induce a witness to the bribery scheme to turn over documents to Cilins for destruction, which Cilins knew had been requested by the FBI and needed to be produced before a federal grand jury. The complaint also alleges that Cilins sought to induce the witness to sign an affidavit containing numerous false statements regarding matters under investigation by the grand jury.
The complaint alleges that the documents Cilins sought to destroy included original copies of contracts between the mining company and its affiliates and the former wife of a now-deceased Guinean government official, who at the relevant time held an office in Guinea that allowed him to influence the award of mining concessions. The contracts allegedly related to a scheme by which the mining company and its affiliates offered the wife of the Guinean official millions of dollars, which were to be distributed to the official’s wife as well as ministers or senior officials of Guinea’s government whose authority might be needed to secure the mining rights.
According to the complaint, the official’s wife incorporated a company in 2008 that agreed to take all necessary steps to secure the valuable mining rights for the mining company’s subsidiary. That same contract stipulated that $2 million was to be transferred to the official’s wife’s company and an additional sum was to be “distributed among persons of good will who may have contributed to facilitating the granting of” the valuable mining rights. According to the complaint, in 2008, the mining company and its affiliates also “commit[ted] to giving five percent of the shares of stock” in particular mining areas in Guinea to the official’s wife.
A complaint is merely an accusation, and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The case is being prosecuted by Trial Attorney Stephen J. Spiegelhalter of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Elisha J. Kobre of the Southern District of New York. The case is being investigated by the FBI. The Justice Department’s Office of International Affairs and Office of Enforcement Operations have also assisted in the investigation.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Manhattan U.S. Attorney Charges 34 Members and Associates of Two Russian-American Organized Crime Enterprises with Operating International Sportsbooks That Laundered More Than $100 Million

Preet Bharara, the United States Attorney for the Southern District of New York; George Venizelos, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI); Toni Weirauch, the Special Agent in Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (IRS-CI); and Raymond W. Kelly, the Police Commissioner of the City of New York (NYPD), announced today the unsealing of charges against 34 alleged members and associates of two related Russian-American organized crime enterprises, including a Russian “Vor,” for a range of offenses including the operation of at least two international bookmaking organizations—or “sportsbooks”—that catered to multi- millionaires and billionaires in the U.S., Russia, and the Ukraine. One enterprise, the Taiwanchik-Trincher Organization, run by VADIM TRINCHER, is alleged to have laundered tens of millions of dollars from Russia and the Ukraine through Cyprus and into the U.S. The other enterprise, the Nahmad-Trincher Organization, run by ILLYA TRINCHER, the son of VADIM TRINCHER, is alleged to have been financed by, among other entities, a prestigious art gallery in New York City.
In connection with the indictment unsealed today in the Southern District of New York, 29 defendants have been arrested in New York, Philadelphia, Detroit, and Los Angeles. The 20 defendants taken into custody today in New York were presented and arraigned in Manhattan federal court before U.S. Magistrate Judge James C. Francis, IV this afternoon. The remaining defendants arrested today will be presented in federal court in Philadelphia, Detroit, and Los Angeles this afternoon. An additional defendant, HILLEL NAHMAD, is expected to surrender in Los Angeles later today. The remaining four defendants—DONALD McCALMONT, BRYAN ZURIFF, WILLIAM EDLER, and ALIMZHAN TOKHTAKHOUNOV—are fugitives and are still being sought.
Manhattan U.S. Attorney Preet Bharara said, “As alleged, these criminal enterprises were vast and many-tentacled, with one of them reaching across the Atlantic to launder tens of millions of dollars from Russia to the U.S. via Cyprus and, in some cases, back again. International money laundering is a serious offense, and we will do everything within our power to inhibit those who seek to sanitize the proceeds of crime through legitimate investment vehicles in this country from doing so.”
FBI Assistant Director in Charge George Venizelos said, “Today’s charges demonstrate the scope and reach of Russian organized crime. One of the principal defendants is a notorious Russian ‘thief-in-law’ allegedly directing an international conspiracy through Cyprus to the U.S. The defendants are alleged to have handled untold millions in illegal wagers placed by millionaires and billionaires, laundered millions, and in some cases are themselves multi-millionaires. Crime pays only until you are arrested and prosecuted.”
IRS-CI Special Agent in Charge Toni Weirauch said, “International money laundering is not a victimless crime. Rather, it is a national and global threat that can provide criminal enterprises with resources to conduct further illegal activity. The laundering of illegal gambling proceeds, in particular, facilitates the underground, untaxed economy which, in turn, harms our nation’s economic strength.”
NYPD Commissioner Raymond W. Kelly said, “The subjects in this case ran high-stakes illegal poker games and online gambling, proceeds from which are alleged to have been funneled to organized crime overseas. The one thing they didn’t bet on was the New York City police and federal investigators’ attention. I commend the NYPD Organized Crime Investigations Division and their partners in the FBI and U.S. Attorney Bharara’s office for identifying and bringing the members of this organization to justice.”
According to the allegations in the Indictment unsealed today in Manhattan federal court and other court documents:

The Taiwanchik-Trincher Organization

The Taiwanchik-Trincher Organization is a nationwide criminal enterprise with strong ties to Russia and Ukraine. The leadership of the organization ran an international sportsbook that catered primarily to Russian oligarchs living in Russia and Ukraine and throughout the world. The Taiwanchik-Trincher Organization laundered tens of millions of dollars in proceeds from the gambling operation from Russia and the Ukraine through shell companies and bank accounts in Cyprus and from Cyprus into the U.S. Once the money arrived in the U.S., it was either laundered through additional shell companies or invested in seemingly legitimate investments, such as hedge funds or real estate.
The Taiwanchik-Trincher Organization operated under the protection of ALIMZHAN TOKHTAKHOUNOV, who is known as a “Vor,” a term translated as “Thief-in-Law” that refers to a member of a select group of high-level criminals from the former Soviet Union.
TOKHTAKHOUNOV used his status as a Vor to resolve disputes with clients of the high-stakes illegal gambling operation with implicit and sometimes explicit threats of violence and economic harm. During a single two-month period, TOKHTAKHOUNOV was paid $10 million for his services by the Taiwanchik-Trincher Organization. TOKHTAKHOUNOV is also under indictment in the Southern District of New York for his alleged involvement in bribing officials at the 2002 Winter Olympics held in Salt Lake City, Utah.

Nahmad-Trincher Organization

The Nahmad-Trincher Organization is a nationwide criminal enterprise with leadership in Los Angeles, California, and New York City. The organization ran a high-stakes illegal gambling business that catered primarily to multi-millionaire and billionaire clients. The organization utilized several online gambling websites that operated illegally in the U.S. Debts owed to the Nahmad-Trincher Organization sometimes reached hundreds of thousands of dollars and even millions. One client, who lost approximately two million dollars to the organization, surrendered his plumbing company to the organization as payment of the debt.
The Nahmad-Trincher Organization was financed by, among others, HILLEL NAHMAD, a/k/a “Helly,” and the art gallery he operates in New York City, the Helly Nahmad Gallery. NAMHAD is also charged with conspiring to commit wire fraud in connection with the sale of a painting worth approximately $250,000.
The organization laundered tens of millions of dollars through various companies and bank accounts. It was assisted in its money laundering by RONALD UY, a branch manager at a bank in New York City.  UY advised ILLYA TRINCHER on how to structure financial transactions so as to avoid bank reporting requirements.

Illegal Poker Rooms

The indictment also charges various defendants with promoting and operating high-stakes illegal poker rooms in and around New York City, including EDWIN TING, MOLLY BLOOM, and EUGENE TRINCHER, who is the son of VADIM and brother of ILLYA. The poker games operated by the defendants resulted in gambling debts as high as hundreds of thousands of dollars.
A chart containing the ages, residency information, and charges against the defendants, as well as the maximum penalties they face is below.
Mr. Bharara thanked the FBI, specifically the Eurasian Organized Crime Squad of the New York Office, IRS-CI, and the NYPD for their work in the investigation.
The case is being prosecuted by the Office’s Organized Crime Unit. Assistant U.S. Attorneys Harris Fischman, Peter Skinner, and Joshua A. Naftalis of the Organized Crime Unit are in charge of the prosecution. Assistant U.S. Attorney Alexander Wilson of the Office’s Asset Forfeiture Unit is responsible for the forfeiture aspects of the case.
The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

NAME	AKA	AGE	RESIDENCE	CHARGES	MAXIMUM PENALTY
ALIMZHAN TOKHTAKHOUNOV	Taiwanchik Alik	64	Moscow, Russia	18 USC: 1962(d) (RICO Conspiracy); 1962(c) (RICO substantive); 1956(h) (Money Laundering Conspiracy); 1955 (Operating an Illegal Gambling Business); 894 (Extortion Conspiracy); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	90 years in prison; 18 years of supervised release; $1,750,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $600 special assessment
VADIM TRINCHER	Dima	52	New York, NY	18 USC: 1962(d) (RICO Conspiracy); 1962(c) (RICO substantive); 1956(h) (Money Laundering Conspiracy); 1955 (Operating an Illegal Gambling Business); 894 (Extortion Conspiracy); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	90 years in prison; 18 years of supervised release; $1,750,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $600 special assessment
ANATOLY GOLUBCHIK	Tony	56	Fort Lee, NJ and New York, NY	18 USC: 1962(d) (RICO Conspiracy); 1962(c) (RICO substantive); 1956(h) (Money Laundering Conspiracy); 1955 (Operating an Illegal Gambling Business); 894 (Extortion Conspiracy); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	90 years in prison; 18 years of supervised release; $1,750,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $600 special assessment
MICHAEL SALL		68	Sunny Isles Beach, FL	18 USC: 1962(d) (RICO Conspiracy); 1956(h) (Money Laundering Conspiracy	40 years in prison, six years of supervised release; $750,000 fine or twice the amount gained from the crimes or twice amount lost by victims; $200 special assessment
STAN GREENBERG	SLAVA	48	New York, NY	18 USC: 1962(d) (RICO Conspiracy); 1956(h) (Money Laundering Conspiracy	40 years in prison, six years of supervised release; $750,000 fine or twice the amount gained from the crimes or twice amount lost by victims; $200 special assessment
ILLYA TRINCHER		27	Beverly Hills, CA	18 USC: 1962(d) (RICO Conspiracy); 1962(c) (RICO substantive); 1956(h) (Money Laundering Conspiracy); 1955 (Operating an Illegal Gambling Business); 894 (Extortion Conspiracy);1084 (Transmission of Wagering Information); 31 USC 5363 and 5366 (Unlawful Internet Gambling); 31 USC 5324 (structuring)	97 years in prison; 22 years of supervised release; $2,250,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $800 special assessment
HILLEL NAHMAD	“Helly”	34	New York	18 USC: 1962(d) (RICO Conspiracy); 1962(c) (RICO substantive); 1956(h) (Money Laundering Conspiracy); 1955 (Operating an Illegal Gambling Business); 1084 (Transmission of Wagering Information); 1349 (Wire Fraud Conspiracy); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	92 years in prison; 19 years of supervised release; $2,000,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $700 special assessment
NOAH SIEGEL	“The Oracle”	30	New York, NY	18 USC: 1962(d) (RICO Conspiracy); 1962(c) (RICO substantive); 1956(h) (Money Laundering Conspiracy); 1955 (Operating an Illegal Gambling Business); 1084 (Transmission of Wagering Information); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	72 years in prison; 16 years of supervised release; $1,750,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $600 special assessment
JOHN HANSON		48	New York, NY	18 USC: 1962(d) (RICO Conspiracy); 1962(c) (RICO substantive); 1956(h) (Money Laundering Conspiracy); 1955 (Operating an Illegal Gambling Business); 894 (Extortion Conspiracy);1084 (Transmission of Wagering Information) 31 USC 5363 and 5366 (Unlawful Internet Gambling)	92 years in prison; 19 years of supervised release; $2,000,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $700 special assessment
JONATHAN HIRSCH		30	New York, NY	18 USC: 1962(d) (RICO Conspiracy); 1955 (Operating an Illegal Gambling Business); 1084 (Transmission of Wagering Information); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	32 years in prison; 19 years of supervised release; $1,000,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $400 special assessment
ARTHUR AZEN		43	Staten Island, NY	18 USC: 1962(d) (RICO Conspiracy); 1962(c) (RICO substantive); 1956(h) (Money Laundering Conspiracy); 2 Counts of 1955 (Operating an Illegal Gambling Business); 2 Counts of 894 (Extortion Conspiracy); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	115 years in prison; 24 years of supervised release; $2,250,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $800 special assessment
DONALD MCCALMONT	DON	45	Massapequa, NY	18 USC: 1962(d) (RICO Conspiracy); 1956(h) (Money Laundering Conspiracy	40 years in prison, six years of supervised release; $750,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment
DMITRY DRUZHINSKY	DIMA BLONDIE	42	Brooklyn, NY	18 USC: 1956(h) (Money Laundering Conspiracy); 1955 (Operating an Illegal Gambling Business); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	30 years in prison, nine years of supervised release; $1,000,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $300 special assessment
ALEXANDER ZAVERUKHA	SASHA	51	Newtown, PA	18 USC 1955 (Operating an Illegal Gambling Business); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	10 years in prison, six years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment
ALEXANDER KATCHALOFF	Murushka	53	Brooklyn, NY	18 USC 1955 (Operating an Illegal Gambling Business); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	10 years in prison, six years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment
ANATOLY SHTEYNGROB	Tony	51	Brooklyn, NY	18 USC 1956(h) (Money Laundering Conspiracy)	20 years in prison, three years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $100 special assessment
ILYA ROZENFELD		53	Staten Island, NY	18 USC 1956(h) (Money Laundering Conspiracy)	20 years in prison, three years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $100 special assessment
PETER SKYLLAS		50	Manhattan	18 USC 1956(h) (Money Laundering Conspiracy)	20 years in prison, three years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $100 special assessment
RONALD UY		32	Jamaica, NY	18 USC 1956(h) (Money Laundering Conspiracy); 31 USC 5324 (structuring)	22 years in prison, six years of supervised release; $750,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment
NICHOLAS HIRSCH		34	New York, NY	18 USC 1349 (Wire Fraud Conspiracy)	20 years in prison, three years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $100 special assessment
BRYAN ZURIFF		43	Los Angeles, CA	18 USC 1955 (Operating an Illegal Gambling Business); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	10 years in prison, six years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment
MOSHE ORATZ		37	Brooklyn, NY	18 USC 1955 (Operating an Illegal Gambling Business); 31 USC 5363 and 5366 (Unlawful Internet Gambling) 894 (Extortion Conspiracy);	30 years in prison, six years of supervised release; $750,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $300 special assessment
KIRILL RAPOPORT		41	Brooklyn, NY	18 USC 894 (Extortion Conspiracy);	20 years in prison, three years of supervised release; $250,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $100 special assessment
DAVID AARON	D.A.	30	Brooklyn, NY	18 USC 1955 (Operating an Illegal Gambling Business); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	10 years in prison, six years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment
JUSTIN SMITH		25	Los Angeles, CA	18 USC 1955 (Operating an Illegal Gambling Business); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	10 years in prison, six years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment
ABRAHAM MOSSERI		39	Longboat Key, FL	18 USC 1955 (Operating an Illegal Gambling Business); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	10 years in prison, six years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment
WILLIAM EDLER		49	Las Vegas, NV	18 USC 1955 (Operating an Illegal Gambling Business); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	10 years in prison, six years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice amount lost by victims; $200 special assessment
PETER FELDMAN		35	Las Vegas, NV	18 USC 1955 (Operating an Illegal Gambling Business); 31 USC 5363 and 5366 (Unlawful Internet Gambling)	10 years in prison, six years of supervised release; $500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment
EUGENE TRINCHER		26	New York, NY	18 USC 1956(h) (Money Laundering Conspiracy); 18 USC 1955 (Operating an Illegal Gambling Business); 18 USC 1952 (Travel Act)	30 years in prison, nine years of supervised release; $1,000,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $300 special assessment
EDWIN TING	Eddie	41	New York, NY	18 USC 1956(h) (Money Laundering Conspiracy); 18 USC 1955 (Operating an Illegal Gambling Business); 18 USC 1952 (Travel Act)	30 years in prison, nine years of supervised release; $1,000,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $300 special assessment
MOLLY BLOOM		34	Keystone, CO	18 USC 1955 (Operating an Illegal Gambling Business); 18 USC 1952 (Travel Act)	10 years in prison, six years of supervised release; $1500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment
WILLIAM BARBALAT		41	New York, NY	18 USC 1955 (Operating an Illegal Gambling Business); 18 USC 1952 (Travel Act)	10 years in prison, six years of supervised release; $1500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment
YUGESHWAR RAJKUMAR	MATEO	42/43	Teaneck, NJ	18 USC 1955 (Operating an Illegal Gambling Business); 18 USC 1952 (Travel Act)	10 years in prison, six years of supervised release; $1500,000 fine or twice the amount gained from the crimes or twice amount lost by victims; $200 special assessment
JOSEPH MANCUSO	JOE THE HAMMER	29	Staten Island, NY	18 USC 1955 (Operating an Illegal Gambling Business); 18 USC 1952 (Travel Act)	10 years in prison, six years of supervised release; $1500,000 fine or twice the amount gained from the crimes or twice the amount lost by victims; $200 special assessment