ROCHESTER, NY—U.S. Attorney William J. Hochul, Jr. announced today that Brian Campbell, 74, of Rochester, New York, who was convicted of conspiring to launder money, was sentenced to one year of home confinement and five years’ probation by U.S. District Judge Frank P. Geraci.
Assistant U.S. Attorney John J. Field, who handled the case, stated that the defendant worked for Kenneth Griffin, a co-defendant who was convicted in May 2013, at an employment staffing business that was used to commit fraud. The fraud involved creating false invoices and other supporting documents that the defendant then sold to a series of financing companies on a weekly basis for immediate cash. When a financing company realized that it had been sold uncollectible invoices and stopped dealing with Griffin’s business, the defendant would change business names and continue the scheme with another financing company.
Griffin and others involved in the conspiracy sought to conceal their ill-gotten gains, which totaled approximately $567,000, by laundering the proceeds of the fraud using anonymous debit cards. These cards were provided to lower-level employees, who were directed to go to ATMs in the Rochester area to withdraw cash and return with the money, which was shared among the co-conspirators. Kenneth Griffin was sentenced to 46 months in prison.
The sentencing is the culmination of an investigation on the part of special agents of the Internal Revenue Service, Criminal Investigation Division, under the direction of Shantelle P. Kitchen, Acting Special Agent in Charge, New York Field Office, and the Federal Bureau of Investigation.
Showing posts with label money laundering. Show all posts
Showing posts with label money laundering. Show all posts
Thursday, April 10, 2014
Monday, March 31, 2014
Members of Cocaine Trafficking Organization Indicted on Federal Charges
MARTINSBURG, WV—A large drug trafficking organization was disrupted as a result of a 73-count federal indictment charging cocaine trafficking and money laundering.
United States Attorney William J. Ihlenfeld, II, who announced the charges on Monday in Wheeling, said that the lead defendant in the case is Cedric Malachi Jones, also known as “BG,” 32 years old, of Palm Coast, Florida. Jones is charged with conspiracy to distribute cocaine and cocaine base, conspiracy to launder monetary instruments, money laundering, distribution of cocaine and cocaine base, distribution of cocaine and cocaine base within 1,000 feet of a protected location, and possession with intent to distribute cocaine.
Jones is alleged to be the leader of a group that caused controlled substances to be transported from other parts of the country to Keyser, West Virginia, for redistribution. Jones is also alleged to have laundered money that was generated as a result of the drug trafficking. Jones faces a total of 58 counts.
Others named in the indictment include:
This prosecution of this case is being handled by Assistant United States Attorney Jarod J. Douglas. It was investigated by the Potomac Highlands Drug & Violent Crime Task Force, which consists of officers from the Federal Bureau of Investigation and the West Virginia State Police-Bureau of Criminal Investigations.
United States Attorney William J. Ihlenfeld, II, who announced the charges on Monday in Wheeling, said that the lead defendant in the case is Cedric Malachi Jones, also known as “BG,” 32 years old, of Palm Coast, Florida. Jones is charged with conspiracy to distribute cocaine and cocaine base, conspiracy to launder monetary instruments, money laundering, distribution of cocaine and cocaine base, distribution of cocaine and cocaine base within 1,000 feet of a protected location, and possession with intent to distribute cocaine.
Jones is alleged to be the leader of a group that caused controlled substances to be transported from other parts of the country to Keyser, West Virginia, for redistribution. Jones is also alleged to have laundered money that was generated as a result of the drug trafficking. Jones faces a total of 58 counts.
Others named in the indictment include:
- Ebony Ishia Haynes Jack, age 32, of Palm Coast, Florid
- Patrice Dominique Stephens a/k/a “Everett Backstreets,” 34, of Westernport, Maryland
- Paul Harland Ellis, 35, of Keyser, West Virginia
- Tequila L. Smith, 32, of Ranson, West Virginia
- Dixie Sherylann Layman, 40, of Keyser, West Virginia
- Sheena Collins, 26, of Oakland, Maryland
- Travis Sinclair Howard, 34, of Palatka, Florida
- Samaria Alice Clifford, 32, of Keyser, West Virginia
- Robert Lee Jessie, 34, of Keyser, West Virginia
- Christopher Lee Redman, 30, of Keyser, West Virginia
- Adrian Nicholas Sanchez a/k/a “ACE,” 30, of Cumberland, Maryland
- Troy Aaron Wilt, 30, of Keyser, West Virginia
This prosecution of this case is being handled by Assistant United States Attorney Jarod J. Douglas. It was investigated by the Potomac Highlands Drug & Violent Crime Task Force, which consists of officers from the Federal Bureau of Investigation and the West Virginia State Police-Bureau of Criminal Investigations.
Friday, March 28, 2014
Solon Man Charged with Defrauding Parker Hannifin of $1.5 Million
A 15-count criminal indictment was filed charging a Solon man with defrauding his former employer of nearly $1.5 million, law enforcement officials said.
John A. Miller, 53, was charged with one count of conspiracy to commit mail fraud, nine counts of mail fraud, three counts of tax evasion, and two counts of money laundering in connection with a scheme to defraud Parker Hannifin Corp.
“This defendant is accused of running a scheme in which he stole nearly $1.5 million from his employer,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “This type of self-dealing is not fair to workers or shareholders and will not be tolerated.”
Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Office, said: “Mr. Miller put a lot of effort into orchestrating and maintaining this seven year fraudulent scheme. Law enforcement will continue efforts to follow the money trial to ensure financial fraudsters are brought to justice.”
“Fraud and embezzlement schemes harm everyone,” said Kathy Enstrom, Special Agent in Charge, IRS-Cincinnati Field Office. “As we often see, the victims are not only the taxpayers, but also the individuals and entities who suffer financial harm.”
Miller worked at Parker Hannifin Corp. (PHC) for 25 years, where he directed work to outside contractors. In 2002, he approached his neighbor, Nancy Seaman, to do IT work for PHC, according to the indictment.
To do this, Seaman established Digital Design Services Inc., which she operated out of her residence in Solon. In 2004, Miller approached R.K. (not charged herein), who owned and operated a billing company in Pennsylvania that had previously been a subcontractor for PHC. Miller requested that R.K. and his billing company prepare invoices and billings for PHC, and R.K. agreed to do so, according to the indictment.
Beginning around 2004, Miller engaged in a fraudulent scheme to increase the payment he was receiving from PHC by using subcontractors Seaman and R.K. to funnel payments to himself. He did his despite having a salaried position at PHC and without the knowledge or consent of PHC, according to the indictment.
Miller did this by falsely inflating the invoices submitted by Digital Design and Seaman and by asking R.K. to process payments and to pay subcontractors as designated by Miller. Under this arrangement, Miller submitted invoices in the names of Miller’s wife and son, even though neither had done any of the work submitted in these invoices nor were they even aware that Miller was using their names to submit such billings to PHC, according to the indictment. Miller caused a loss to PHC of approximately $1,489,494 between 2004 through 2011, according to the indictment.
Seaman was aware that additional amounts, over and above her Digital Design billings, were being sent to her. Miller instructed Seaman to pay these additional funds to him in cash, less a 30 percent commission to Seaman, according to the indictment.
Seaman previously pleaded guilty in U.S. District Court to conspiring with Miller to conceal Miller’s tax liability from the Internal Revenue Service and to conspiring with Miller to commit wire fraud in a scheme to defraud Parker Hannifin. She is awaiting sentencing.
Miller is also charged with money laundering for using the funds he stole from Parker Hannifin Corporation to pay his tax liabilities to the IRS and to pay for his son’s tuition at Cornell University, according to the indictment.
Miller is also charged with tax evasion for calendar years 2009 to 2011. During the calendar year 2009, Miller received approximately $192,042 in taxable income, and owed approximately $30,568 in income tax; during the calendar year 2010, Miller received approximately $378,571 in taxable income, and owed approximately $93,745 in income tax; and during the calendar year 2011, Miller had received approximately $217,060 in taxable income and owed approximately $43,488.00 in income tax, according to the indictment.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigations in Cleveland and is being handled by Assistant U.S. Attorney Christian H. Stickan.
If convicted, the defendants’ sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
John A. Miller, 53, was charged with one count of conspiracy to commit mail fraud, nine counts of mail fraud, three counts of tax evasion, and two counts of money laundering in connection with a scheme to defraud Parker Hannifin Corp.
“This defendant is accused of running a scheme in which he stole nearly $1.5 million from his employer,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “This type of self-dealing is not fair to workers or shareholders and will not be tolerated.”
Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Office, said: “Mr. Miller put a lot of effort into orchestrating and maintaining this seven year fraudulent scheme. Law enforcement will continue efforts to follow the money trial to ensure financial fraudsters are brought to justice.”
“Fraud and embezzlement schemes harm everyone,” said Kathy Enstrom, Special Agent in Charge, IRS-Cincinnati Field Office. “As we often see, the victims are not only the taxpayers, but also the individuals and entities who suffer financial harm.”
Miller worked at Parker Hannifin Corp. (PHC) for 25 years, where he directed work to outside contractors. In 2002, he approached his neighbor, Nancy Seaman, to do IT work for PHC, according to the indictment.
To do this, Seaman established Digital Design Services Inc., which she operated out of her residence in Solon. In 2004, Miller approached R.K. (not charged herein), who owned and operated a billing company in Pennsylvania that had previously been a subcontractor for PHC. Miller requested that R.K. and his billing company prepare invoices and billings for PHC, and R.K. agreed to do so, according to the indictment.
Beginning around 2004, Miller engaged in a fraudulent scheme to increase the payment he was receiving from PHC by using subcontractors Seaman and R.K. to funnel payments to himself. He did his despite having a salaried position at PHC and without the knowledge or consent of PHC, according to the indictment.
Miller did this by falsely inflating the invoices submitted by Digital Design and Seaman and by asking R.K. to process payments and to pay subcontractors as designated by Miller. Under this arrangement, Miller submitted invoices in the names of Miller’s wife and son, even though neither had done any of the work submitted in these invoices nor were they even aware that Miller was using their names to submit such billings to PHC, according to the indictment. Miller caused a loss to PHC of approximately $1,489,494 between 2004 through 2011, according to the indictment.
Seaman was aware that additional amounts, over and above her Digital Design billings, were being sent to her. Miller instructed Seaman to pay these additional funds to him in cash, less a 30 percent commission to Seaman, according to the indictment.
Seaman previously pleaded guilty in U.S. District Court to conspiring with Miller to conceal Miller’s tax liability from the Internal Revenue Service and to conspiring with Miller to commit wire fraud in a scheme to defraud Parker Hannifin. She is awaiting sentencing.
Miller is also charged with money laundering for using the funds he stole from Parker Hannifin Corporation to pay his tax liabilities to the IRS and to pay for his son’s tuition at Cornell University, according to the indictment.
Miller is also charged with tax evasion for calendar years 2009 to 2011. During the calendar year 2009, Miller received approximately $192,042 in taxable income, and owed approximately $30,568 in income tax; during the calendar year 2010, Miller received approximately $378,571 in taxable income, and owed approximately $93,745 in income tax; and during the calendar year 2011, Miller had received approximately $217,060 in taxable income and owed approximately $43,488.00 in income tax, according to the indictment.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigations in Cleveland and is being handled by Assistant U.S. Attorney Christian H. Stickan.
If convicted, the defendants’ sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Wednesday, March 26, 2014
Loan Shark Sentenced to Prison
A Troy man was sentenced today to serve 41 months in prison for loan sharking activities within the Albanian community, U.S. Attorney Barbara L. McQuade announced today.
Joining in the announcement was Paul M. Abbate, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation, and Carolyn Weber, Acting Special Agent in Charge of the Internal Revenue Service-Criminal Investigations.
U.S. District Judge Nancy G. Edmunds imposed the sentence on Tomo Duhanaj, 44, who pleaded guilty to charges of making extortionate extensions of credit and money laundering on December 19, 2013.
The information presented to the court established that Duhanaj, an undocumented alien from Kosovo, loaned hundreds of thousands of dollars at high interest rates, sometimes exceeding 100 percent per year, to members of the Albanian community with the understanding that failure to repay the loans would result in violence by Duhanaj and his organization. Duhanaj concealed the proceeds of these activities, in part, by placing assets in the names of other people. Duhanaj will be deported to Kosovo at the conclusion of his sentence.
“This defendant used his contacts in his community to prey upon people who were desperate for cash,” McQuade said.
“Loaning cash at excessively high interest rates while enforcing repayment through violence or threat is a federal crime,” said Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “Those who prey upon members of the community in this manner and act outside the bounds of the law will be brought to justice.”
“Today’s sentencing is a direct result of the excellent partnership IRS, FBI, and the U.S. Attorney’s office have and demonstrates our role in combating all types of financial fraud,” said Carolyn Weber, Acting Special Agent in Charge IRS Criminal Investigation, Detroit Field Office.
McQuade commended the efforts of special agents of the FBI and the IRS who investigated this case, and Assistant U.S. Attorneys Kenneth Chadwell, Margaret Smith and Linda Aouate, who prosecuted the case.
Joining in the announcement was Paul M. Abbate, Special Agent in Charge of the Detroit Field Office of the Federal Bureau of Investigation, and Carolyn Weber, Acting Special Agent in Charge of the Internal Revenue Service-Criminal Investigations.
U.S. District Judge Nancy G. Edmunds imposed the sentence on Tomo Duhanaj, 44, who pleaded guilty to charges of making extortionate extensions of credit and money laundering on December 19, 2013.
The information presented to the court established that Duhanaj, an undocumented alien from Kosovo, loaned hundreds of thousands of dollars at high interest rates, sometimes exceeding 100 percent per year, to members of the Albanian community with the understanding that failure to repay the loans would result in violence by Duhanaj and his organization. Duhanaj concealed the proceeds of these activities, in part, by placing assets in the names of other people. Duhanaj will be deported to Kosovo at the conclusion of his sentence.
“This defendant used his contacts in his community to prey upon people who were desperate for cash,” McQuade said.
“Loaning cash at excessively high interest rates while enforcing repayment through violence or threat is a federal crime,” said Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “Those who prey upon members of the community in this manner and act outside the bounds of the law will be brought to justice.”
“Today’s sentencing is a direct result of the excellent partnership IRS, FBI, and the U.S. Attorney’s office have and demonstrates our role in combating all types of financial fraud,” said Carolyn Weber, Acting Special Agent in Charge IRS Criminal Investigation, Detroit Field Office.
McQuade commended the efforts of special agents of the FBI and the IRS who investigated this case, and Assistant U.S. Attorneys Kenneth Chadwell, Margaret Smith and Linda Aouate, who prosecuted the case.
Thursday, March 6, 2014
Businessman Sentenced to More Than 17 Years for Bankruptcy Fraud and Money Laundering
SACRAMENTO, CA—Steven K. Zinnel, 50, of Gold River, was sentenced today by United States District Judge Troy L. Nunley to 17 years and eight months in prison and a $500,000 fine for 15 counts of bankruptcy fraud and money laundering, United States Attorney Benjamin B. Wagner announced. Judge Nunley also ordered Zinnel to forfeit to the United States real estate and corporate interests worth more than $2.8 million.
U.S. Attorney Wagner stated, “Mr. Zinnel attempted to escape his financial responsibilities through the fraudulent misuse of the bankruptcy court. Today’s sentence, believed to be the longest prison sentence ever imposed in a bankruptcy fraud case in this district, holds him responsible for his crimes and helps protect the integrity of the federal bankruptcy process.”
“Zinnel knowingly broke laws in a spiteful attempt to deprive his former spouse and children of his support,” said Special Agent in Charge Monica M. Miller of the FBI’s Sacramento Field Office. “Today, he is seeing the cost of his creative scheme to intentionally conceal his assets.”
“Today’s sentencing sends a clear message to those who use the bankruptcy system to evade their debt obligations to the government and their creditors,” said José M. Martínez, Special Agent in Charge, IRS-Criminal Investigation. “This was a serious, long-running crime committed by a man who gave it a lot of thought and purpose. Mr. Zinnel’s crimes were filled with fraud and deceit, and he deserves the punishment handed down today.”
Trial testimony established that Zinnel concealed assets from the bankruptcy court by putting his property in other people’s names. One of the things that Zinnel hid from the bankruptcy court was an investment in an electrical infrastructure company in which he had invested as a “silent partner.” Zinnel invested hundreds of thousands of dollars and prepared the corporate filings, but his name did not appear in any public filing of this company. For years, the company paid distributions to Zinnel as an owner, but those distributions were disguised as payments to a shell company, Done Deal Inc., held in the name of co-defendant Derian Eidson. The court noted that the purpose of establishing Done Deal was to “raid the coffers” of the electrical infrastructure company without being identified anywhere. The court ordered Zinnel’s interest in that company forfeited, and the government is to receive $2.8 million from its sale to its records owner.
After the successful concealment of the property and the discharge of Zinnel’s bankruptcy, Zinnel laundered funds back to himself through attorney Derian Eidson’s company, Done Deal Inc., her attorney-client trust account, and her personal bank account. Zinnel throughout this time used several different corporations registered in others’ names, including one registered with a forged signature, to disguise his control of property and to direct the disposition of money. Eidson gave Zinnel signature authority over her company’s bank account, which he used for his personal expenses.
At today’s sentencing hearing, Zinnel’s ex-wife explained how the investigation of Steven Zinnel began with Zinnel’s call to the FBI asking that the FBI investigate her. According to papers on file with the court, when agents followed up on Zinnel’s call to the FBI, his own bankruptcy crimes were discovered.
Calling Zinnel “narcissistic,” Judge Nunley cited Zinnel’s repeated deception of the bankruptcy court, the bankruptcy trustee, and family court as evidence of Zinnel’s culpability in the complex bankruptcy fraud and money laundering scheme. Even after the bankruptcy, Zinnel laundered his money through shell corporations in order to disguise income that otherwise would have affected his child support obligations.
“You don’t lie before a court of law,” Judge Nunley admonished Zinnel. “You don’t continue to lie, which is what you did.” Judge Nunley found that Zinnel’s gifts of being articulate and charismatic were used toward promoting Zinnel’s “own selfish ends.”
This case is the product of an investigation by the FBI and IRS-Criminal Investigation. Assistant United States Attorneys Matthew D. Segal and Audrey B. Hemesath prosecuted the case. The Office of the U.S. Trustee provided important support and expertise in the course of the prosecution.
Zinnel’s restitution hearing is set for March 31, 2014, at 9:00 a.m. At that time, Judge Nunley will also sentence Zinnel’s co-defendant, attorney Derian Eidson, for her role in Zinnel’s scheme.
U.S. Attorney Wagner stated, “Mr. Zinnel attempted to escape his financial responsibilities through the fraudulent misuse of the bankruptcy court. Today’s sentence, believed to be the longest prison sentence ever imposed in a bankruptcy fraud case in this district, holds him responsible for his crimes and helps protect the integrity of the federal bankruptcy process.”
“Zinnel knowingly broke laws in a spiteful attempt to deprive his former spouse and children of his support,” said Special Agent in Charge Monica M. Miller of the FBI’s Sacramento Field Office. “Today, he is seeing the cost of his creative scheme to intentionally conceal his assets.”
“Today’s sentencing sends a clear message to those who use the bankruptcy system to evade their debt obligations to the government and their creditors,” said José M. Martínez, Special Agent in Charge, IRS-Criminal Investigation. “This was a serious, long-running crime committed by a man who gave it a lot of thought and purpose. Mr. Zinnel’s crimes were filled with fraud and deceit, and he deserves the punishment handed down today.”
Trial testimony established that Zinnel concealed assets from the bankruptcy court by putting his property in other people’s names. One of the things that Zinnel hid from the bankruptcy court was an investment in an electrical infrastructure company in which he had invested as a “silent partner.” Zinnel invested hundreds of thousands of dollars and prepared the corporate filings, but his name did not appear in any public filing of this company. For years, the company paid distributions to Zinnel as an owner, but those distributions were disguised as payments to a shell company, Done Deal Inc., held in the name of co-defendant Derian Eidson. The court noted that the purpose of establishing Done Deal was to “raid the coffers” of the electrical infrastructure company without being identified anywhere. The court ordered Zinnel’s interest in that company forfeited, and the government is to receive $2.8 million from its sale to its records owner.
After the successful concealment of the property and the discharge of Zinnel’s bankruptcy, Zinnel laundered funds back to himself through attorney Derian Eidson’s company, Done Deal Inc., her attorney-client trust account, and her personal bank account. Zinnel throughout this time used several different corporations registered in others’ names, including one registered with a forged signature, to disguise his control of property and to direct the disposition of money. Eidson gave Zinnel signature authority over her company’s bank account, which he used for his personal expenses.
At today’s sentencing hearing, Zinnel’s ex-wife explained how the investigation of Steven Zinnel began with Zinnel’s call to the FBI asking that the FBI investigate her. According to papers on file with the court, when agents followed up on Zinnel’s call to the FBI, his own bankruptcy crimes were discovered.
Calling Zinnel “narcissistic,” Judge Nunley cited Zinnel’s repeated deception of the bankruptcy court, the bankruptcy trustee, and family court as evidence of Zinnel’s culpability in the complex bankruptcy fraud and money laundering scheme. Even after the bankruptcy, Zinnel laundered his money through shell corporations in order to disguise income that otherwise would have affected his child support obligations.
“You don’t lie before a court of law,” Judge Nunley admonished Zinnel. “You don’t continue to lie, which is what you did.” Judge Nunley found that Zinnel’s gifts of being articulate and charismatic were used toward promoting Zinnel’s “own selfish ends.”
This case is the product of an investigation by the FBI and IRS-Criminal Investigation. Assistant United States Attorneys Matthew D. Segal and Audrey B. Hemesath prosecuted the case. The Office of the U.S. Trustee provided important support and expertise in the course of the prosecution.
Zinnel’s restitution hearing is set for March 31, 2014, at 9:00 a.m. At that time, Judge Nunley will also sentence Zinnel’s co-defendant, attorney Derian Eidson, for her role in Zinnel’s scheme.
Wednesday, February 26, 2014
Leader of Massive Real Estate Fraud Scheme Sentenced to 22 Years in Prison for Fraud and Money Laundering
TRENTON, NJ—An Ocean County, New Jersey man was sentenced today to 264 months in prison for running a real estate investment fraud scheme that caused $200 million in losses and laundering the proceeds of the scheme, U.S. Attorney Paul J. Fishman announced.
Eliyahu Weinstein, a/k/a “Eli Weinstein,” a/k/a “Edward Weinstein,” a/k/a “Eddie Weinstein,” 38, of Lakewood, New Jersey, previously pleaded guilty before U.S. District Judge Joel A. Pisano to two counts of an indictment charging him with conspiracy to commit wire fraud and money laundering. Weinstein’s co-defendant, Vladimir Siforov, is charged in the indictment with three counts of wire fraud and remains a fugitive. According to documents filed in this case and statements made in court:
From June 2004 through August 2011, Weinstein orchestrated—with the help of Siforov and others—a real estate investment fraud scheme headquartered in Lakewood that resulted in multi-million-dollar losses to victim investors.
To induce victims to invest, Weinstein and others made various types of materially false and misleading statements and omissions. Weinstein and others told victims that Weinstein’s inside access to certain real estate opportunities allowed him to buy a particular piece of property at a below-market price. Weinstein and others also told victims that their money would be used to purchase a specific property, and the property would be quickly resold—or “flipped”—to a third-party purchaser that Weinstein had lined up. Victims were also told that the victims’ money would be held in escrow until the closing of a purported real estate transaction.
Weinstein bolstered his lies by creating and causing to be created various types of fraudulent documents, including “show checks,” which Weinstein led victims to believe represented Weinstein’s investments in specific transactions but which in fact were never deposited; forged checks, which had actually been negotiated for small amounts but which Weinstein altered so as to appear worth millions of dollars; and various kinds of phony legal documents, including mortgages and deeds.
Weinstein and others initially targeted victims from the Orthodox Jewish community to which Weinstein belonged, exploiting his standing in and knowledge of the customs and practices of this community to further the scheme. Weinstein abused the Orthodox community’s practice of engaging in transactions based on trust, and without paperwork, to obtain money from his victims without substantial written records. He would then falsely represent that specific real estate transactions existed, that the victims’ monies were used to fund those transactions, or that the victims’ profits from those transactions were being “rolled” into new investments. Weinstein also used a portion of the fraud’s proceeds to fund “charitable and religious contributions,” which he used to elevate his reputation within the Orthodox Jewish community.
By 2010, Weinstein had tarnished his reputation in the Orthodox Jewish community due to the massive losses caused by his fraud scheme and found it difficult to obtain more money to further the scheme from within the community. In April 2010, Weinstein and others began soliciting victims from outside of the Orthodox Jewish community, whom they defrauded of additional millions of dollars.
Weinstein also used millions of dollars fraudulently obtained from his victims to fund his own lavish spending, including millions of dollars’ worth of antique Judaica and other artwork; a multi-million-dollar collection of jewelry and watches; gambling in Las Vegas and elsewhere; and Weinstein’s personal expenses, including millions of dollars in credit card bills, millions of dollars in legal bills, and luxury car lease payments.
In addition to the prison term, Judge Pisano sentenced Weinstein to three years of supervised release. Judge Pisano ordered Weinstein to pay restitution of $215.4 million and forfeiture of $215.4 million.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s sentence. He also credited agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for their important contributions to the investigation.
The government is represented by Assistant U.S. Attorneys Zach Intrater, Gurbir S. Grewal, Rachael A. Honig, and Evan Weitz.
The charges and allegations against Siforov are merely accusations, and he is considered innocent unless and until proven guilty.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. 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 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 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.
Eliyahu Weinstein, a/k/a “Eli Weinstein,” a/k/a “Edward Weinstein,” a/k/a “Eddie Weinstein,” 38, of Lakewood, New Jersey, previously pleaded guilty before U.S. District Judge Joel A. Pisano to two counts of an indictment charging him with conspiracy to commit wire fraud and money laundering. Weinstein’s co-defendant, Vladimir Siforov, is charged in the indictment with three counts of wire fraud and remains a fugitive. According to documents filed in this case and statements made in court:
From June 2004 through August 2011, Weinstein orchestrated—with the help of Siforov and others—a real estate investment fraud scheme headquartered in Lakewood that resulted in multi-million-dollar losses to victim investors.
To induce victims to invest, Weinstein and others made various types of materially false and misleading statements and omissions. Weinstein and others told victims that Weinstein’s inside access to certain real estate opportunities allowed him to buy a particular piece of property at a below-market price. Weinstein and others also told victims that their money would be used to purchase a specific property, and the property would be quickly resold—or “flipped”—to a third-party purchaser that Weinstein had lined up. Victims were also told that the victims’ money would be held in escrow until the closing of a purported real estate transaction.
Weinstein bolstered his lies by creating and causing to be created various types of fraudulent documents, including “show checks,” which Weinstein led victims to believe represented Weinstein’s investments in specific transactions but which in fact were never deposited; forged checks, which had actually been negotiated for small amounts but which Weinstein altered so as to appear worth millions of dollars; and various kinds of phony legal documents, including mortgages and deeds.
Weinstein and others initially targeted victims from the Orthodox Jewish community to which Weinstein belonged, exploiting his standing in and knowledge of the customs and practices of this community to further the scheme. Weinstein abused the Orthodox community’s practice of engaging in transactions based on trust, and without paperwork, to obtain money from his victims without substantial written records. He would then falsely represent that specific real estate transactions existed, that the victims’ monies were used to fund those transactions, or that the victims’ profits from those transactions were being “rolled” into new investments. Weinstein also used a portion of the fraud’s proceeds to fund “charitable and religious contributions,” which he used to elevate his reputation within the Orthodox Jewish community.
By 2010, Weinstein had tarnished his reputation in the Orthodox Jewish community due to the massive losses caused by his fraud scheme and found it difficult to obtain more money to further the scheme from within the community. In April 2010, Weinstein and others began soliciting victims from outside of the Orthodox Jewish community, whom they defrauded of additional millions of dollars.
Weinstein also used millions of dollars fraudulently obtained from his victims to fund his own lavish spending, including millions of dollars’ worth of antique Judaica and other artwork; a multi-million-dollar collection of jewelry and watches; gambling in Las Vegas and elsewhere; and Weinstein’s personal expenses, including millions of dollars in credit card bills, millions of dollars in legal bills, and luxury car lease payments.
In addition to the prison term, Judge Pisano sentenced Weinstein to three years of supervised release. Judge Pisano ordered Weinstein to pay restitution of $215.4 million and forfeiture of $215.4 million.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, for the investigation leading to today’s sentence. He also credited agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen, for their important contributions to the investigation.
The government is represented by Assistant U.S. Attorneys Zach Intrater, Gurbir S. Grewal, Rachael A. Honig, and Evan Weitz.
The charges and allegations against Siforov are merely accusations, and he is considered innocent unless and until proven guilty.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. 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 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 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.
Friday, February 21, 2014
Former Director of Cleveland and Dayton VA Medical Centers Pleads Guilty to Taking Money While Steering VA Work to Design Firm
The former director of the Cleveland and Dayton VA Medical Center pleaded guilty today to a scheme to enrich himself by working as a consultant for and taking money and other things of value from a design firm bidding on VA jobs and sharing confidential information about construction projects while still employed by the VA, law enforcement officials said.
William D. Montague, 61, of Brecksville, pleaded guilty to 64 counts, including Hobbs Act conspiracy, conspiracy to commit honest services mail fraud, violating the Hobbs Act, money laundering, multiple counts of wire fraud, mail fraud, disclosing public contract information, and other charges.
Montague is scheduled to be sentenced on May 20. He agreed to pay more than $390,000 to satisfy restitution and forfeiture requirements
“As a Veterans Affairs Medical Center Director, William Montague misled staff and misused his position to enrich himself and businesses pursuing contracts with the agency,” said Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Field Office. “We are pleased with the acceptance of responsibility by Mr. Montague, along with the significant forfeiture amount to be returned to the Department of Veteran’s Affairs.”
“Today’s guilty plea is the result of a two-year investigation conducted by special agents of the Cleveland Veterans Affairs Office of Inspector General and the Federal Bureau of Investigation,” said Gavin McClaren, U.S. VA Office of Inspector General, Resident Agent in Charge, Cleveland. “We will continue to protect taxpayers against those who would enrich themselves at the expense of our nation’s veterans.”
Montague served as director of the Cleveland VA Medical Center from 1995 until February 3, 2010. On March 11, 2011, Montague began working as director of the Dayton VA Medical Center, a position he held through December 17, 2011, according to the indictment.
The superseding indictment details interactions between Montague and a company identified as Business 75, an integrated design firm with offices throughout the United States, including New York, Illinois, Virginia, Missouri, and California. The company performed work for the VA directly and through its participation in joint ventures and other teaming agreements, according to the indictment.
From January 2010, Montague, Business 75, and employees of the company conspired to defraud the VA of its right to the honest and faithful service of Montague through bribery and kickbacks and to defraud the VA and other potential VA contractors by means of false and fraudulent pretenses, according to the indictment.
Montague secretly used his position as Dayton VA Medical Center director to enrich himself and his designees (including House of Montague, a financial services company Montague operated) by soliciting and accepting gifts, payments, and other things of value from Business 75 in exchange for favorable official actions, according to the indictment.
Montague solicited money and a consulting contract from Business 75 in exchange for information related to VA contracts and projects, which would benefit Business 75, Business 75’s principal and their designees, according to the indictment.
This was done to give Business 75 an advantage in obtaining VA contracts and projects. Montague gave false and misleading information to VA employees about his reasons for requesting VA documents and information, according to the indictment.
For example, on March 1, 2011, Business 75 issued a $20,000 check payable to Montague, which he deposited into the House of Montague’s account. Ten days later, Business 75’s principal sent an e-mail to some employees with Montague’s consulting agreement explaining: “His job is to help us bring in more work from the VA, in part by helping us access key decision makers,” according to the indictment.
On March 14, 2011, Business 75’s principal sent another e-mail to some employees stating that Business 75 will end the current “$15 [million VA] IDIQ contract with just slightly over $12M in sales. $3M in fee, therefore, will be left on the table…[O]ne of MONTAGUE’s jobs will be to fill up the bucket by directing task orders toward our contract, Going forward, we have two $15M buckets to fill (Central and Eastern regions). That’s a lot of shoveling to get to $30M…BILL has the relationships to help us maximize the contracts…On the VA ‘major construction’ front here is the list of medical centers and their approximate construction cost in the pipeline: West Los Angeles, CA: $750M; San Francisco, CA: $125M, Reno, NV: $115M, Alameda, CA: $225M. Montague told us about these before they were advertised, which has allowed us to get an early start in developing the team. If we bring him on board, he can help us pull in one or two of these large projects,” according to the indictment.
On May 26, 2011, Montague traveled to Washington, D.C. on official VA business. On June 17, 2011, he caused to be submitted a government expense report seeking reimbursement for $1,204 for hotels, parking, per diems, and other expenses. On June 12, 2011, Montague caused to be sent a $2,741 invoice to Business 75 for “consulting services” for work performed at “Wash/Cleve/Dayton.” The invoice included $211 for hotel and $30.60 for hotel taxes incurred on May 26, 2011, according to the indictment.
The case was prosecuted by Assistant United States Attorneys Antoinette T. Bacon and Justin J. Roberts following an investigation by the FBI and United States Department of Veterans Affairs-Office of Inspector General.
William D. Montague, 61, of Brecksville, pleaded guilty to 64 counts, including Hobbs Act conspiracy, conspiracy to commit honest services mail fraud, violating the Hobbs Act, money laundering, multiple counts of wire fraud, mail fraud, disclosing public contract information, and other charges.
Montague is scheduled to be sentenced on May 20. He agreed to pay more than $390,000 to satisfy restitution and forfeiture requirements
“As a Veterans Affairs Medical Center Director, William Montague misled staff and misused his position to enrich himself and businesses pursuing contracts with the agency,” said Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland Field Office. “We are pleased with the acceptance of responsibility by Mr. Montague, along with the significant forfeiture amount to be returned to the Department of Veteran’s Affairs.”
“Today’s guilty plea is the result of a two-year investigation conducted by special agents of the Cleveland Veterans Affairs Office of Inspector General and the Federal Bureau of Investigation,” said Gavin McClaren, U.S. VA Office of Inspector General, Resident Agent in Charge, Cleveland. “We will continue to protect taxpayers against those who would enrich themselves at the expense of our nation’s veterans.”
Montague served as director of the Cleveland VA Medical Center from 1995 until February 3, 2010. On March 11, 2011, Montague began working as director of the Dayton VA Medical Center, a position he held through December 17, 2011, according to the indictment.
The superseding indictment details interactions between Montague and a company identified as Business 75, an integrated design firm with offices throughout the United States, including New York, Illinois, Virginia, Missouri, and California. The company performed work for the VA directly and through its participation in joint ventures and other teaming agreements, according to the indictment.
From January 2010, Montague, Business 75, and employees of the company conspired to defraud the VA of its right to the honest and faithful service of Montague through bribery and kickbacks and to defraud the VA and other potential VA contractors by means of false and fraudulent pretenses, according to the indictment.
Montague secretly used his position as Dayton VA Medical Center director to enrich himself and his designees (including House of Montague, a financial services company Montague operated) by soliciting and accepting gifts, payments, and other things of value from Business 75 in exchange for favorable official actions, according to the indictment.
Montague solicited money and a consulting contract from Business 75 in exchange for information related to VA contracts and projects, which would benefit Business 75, Business 75’s principal and their designees, according to the indictment.
This was done to give Business 75 an advantage in obtaining VA contracts and projects. Montague gave false and misleading information to VA employees about his reasons for requesting VA documents and information, according to the indictment.
For example, on March 1, 2011, Business 75 issued a $20,000 check payable to Montague, which he deposited into the House of Montague’s account. Ten days later, Business 75’s principal sent an e-mail to some employees with Montague’s consulting agreement explaining: “His job is to help us bring in more work from the VA, in part by helping us access key decision makers,” according to the indictment.
On March 14, 2011, Business 75’s principal sent another e-mail to some employees stating that Business 75 will end the current “$15 [million VA] IDIQ contract with just slightly over $12M in sales. $3M in fee, therefore, will be left on the table…[O]ne of MONTAGUE’s jobs will be to fill up the bucket by directing task orders toward our contract, Going forward, we have two $15M buckets to fill (Central and Eastern regions). That’s a lot of shoveling to get to $30M…BILL has the relationships to help us maximize the contracts…On the VA ‘major construction’ front here is the list of medical centers and their approximate construction cost in the pipeline: West Los Angeles, CA: $750M; San Francisco, CA: $125M, Reno, NV: $115M, Alameda, CA: $225M. Montague told us about these before they were advertised, which has allowed us to get an early start in developing the team. If we bring him on board, he can help us pull in one or two of these large projects,” according to the indictment.
On May 26, 2011, Montague traveled to Washington, D.C. on official VA business. On June 17, 2011, he caused to be submitted a government expense report seeking reimbursement for $1,204 for hotels, parking, per diems, and other expenses. On June 12, 2011, Montague caused to be sent a $2,741 invoice to Business 75 for “consulting services” for work performed at “Wash/Cleve/Dayton.” The invoice included $211 for hotel and $30.60 for hotel taxes incurred on May 26, 2011, according to the indictment.
The case was prosecuted by Assistant United States Attorneys Antoinette T. Bacon and Justin J. Roberts following an investigation by the FBI and United States Department of Veterans Affairs-Office of Inspector General.
Thursday, February 20, 2014
Final Defendant Pleads Guilty to Wire Fraud and Money Laundering Charges as Part of $5 Million Ponzi Scheme
DENVER—Stanley W. Anderson, age 69, of Arvada, Colorado, pled guilty before U.S. District Court Judge Christine M. Arguello late last week to one count of wire fraud and one count of money laundering, federal law enforcement announced. Anderson, who is free on bond, is scheduled to be sentenced by Judge Arguello on May 6, 2014. Anderson was indicted by a federal grand jury in Denver on March 22, 2012, along with co-defendants Pastor Charles Lawrence Kennedy, Jr. of Tampa, Florida, and Edwin Alexander Smith of Denver, Colorado. Kennedy and Smith pled guilty and were sentenced to 12 and 30 months, respectively, to federal prison.
According to the facts contained in the indictment as well as the stipulated facts contained in the various plea agreements, beginning in October 2005 and continuing through December 2008, Anderson, Smith, and Kennedy, together with each other, and aiding and abetting other persons known and unknown to the grand jury, devised a scheme to defraud investors.
Anderson and Smith resided in Colorado and conducted business through CFO- LLC and Trinity International Enterprises Inc, two companies they controlled. Trinity had no business operations apart from soliciting investment funds related to an investment program. Anderson was the chairman and chief executive officer of CFO-5 and Trinity. Smith was the secretary of CFO-5 and president of Trinity. Kennedy resided in Florida, where he worked as a pastor and conducted business through a company identified as Keys to Life Corporation. Kennedy through a formal partnership with Trinity assisted Anderson and Smith in soliciting investment funds.
They solicited investors’ funds for use in an investment program where significant profits would supposedly be generated through the trading of European medium term notes (MTN program), when in fact, the MTN program did not exist. Furthermore, they represented that their MTN program would pay nearly immediate returns in amounts ranging from 200 to 1000 percent.
They raised approximately $5 million dollars from approximately 100 investors nationwide over the course of the scheme. The investors’ funds were not used to trade in financial instruments but were instead misappropriated by Anderson, Smith, and Kennedy for unauthorized uses. Investors, with the exception of those who received Ponzi scheme-like payments, that is, money taken from one investor to compensate another, lost their total investments. Anderson and Smith generally commingled and deposited investors’ funds into bank accounts controlled by Anderson and Smith.
Anderson was the lead person for the investment program and managed the daily operations of the program, made key decisions as it related to the use of investor funds, handled investor communications, and oversaw the relationship with various promoters responsible for soliciting investors. During periodic conference calls with investors, Anderson conducted such calls and provided investors with purported updates. Similarly, Anderson would typically author and distribute e-mail communications to investors in which false information regarding the status of the investment was contained. As it related to the handling of funds collected by investors, Anderson typically controlled and determined the expenditure of such funds. He diverted thousands of dollars in investor funds for personal use including, house payments, meals and entertainment, personal judgments, and salary payments for his children.
This case was investigated by the Internal Revenue Service-Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection Service.
This case is being prosecuted by Assistant U.S. Attorney Timothy Neff.
According to the facts contained in the indictment as well as the stipulated facts contained in the various plea agreements, beginning in October 2005 and continuing through December 2008, Anderson, Smith, and Kennedy, together with each other, and aiding and abetting other persons known and unknown to the grand jury, devised a scheme to defraud investors.
Anderson and Smith resided in Colorado and conducted business through CFO- LLC and Trinity International Enterprises Inc, two companies they controlled. Trinity had no business operations apart from soliciting investment funds related to an investment program. Anderson was the chairman and chief executive officer of CFO-5 and Trinity. Smith was the secretary of CFO-5 and president of Trinity. Kennedy resided in Florida, where he worked as a pastor and conducted business through a company identified as Keys to Life Corporation. Kennedy through a formal partnership with Trinity assisted Anderson and Smith in soliciting investment funds.
They solicited investors’ funds for use in an investment program where significant profits would supposedly be generated through the trading of European medium term notes (MTN program), when in fact, the MTN program did not exist. Furthermore, they represented that their MTN program would pay nearly immediate returns in amounts ranging from 200 to 1000 percent.
They raised approximately $5 million dollars from approximately 100 investors nationwide over the course of the scheme. The investors’ funds were not used to trade in financial instruments but were instead misappropriated by Anderson, Smith, and Kennedy for unauthorized uses. Investors, with the exception of those who received Ponzi scheme-like payments, that is, money taken from one investor to compensate another, lost their total investments. Anderson and Smith generally commingled and deposited investors’ funds into bank accounts controlled by Anderson and Smith.
Anderson was the lead person for the investment program and managed the daily operations of the program, made key decisions as it related to the use of investor funds, handled investor communications, and oversaw the relationship with various promoters responsible for soliciting investors. During periodic conference calls with investors, Anderson conducted such calls and provided investors with purported updates. Similarly, Anderson would typically author and distribute e-mail communications to investors in which false information regarding the status of the investment was contained. As it related to the handling of funds collected by investors, Anderson typically controlled and determined the expenditure of such funds. He diverted thousands of dollars in investor funds for personal use including, house payments, meals and entertainment, personal judgments, and salary payments for his children.
This case was investigated by the Internal Revenue Service-Criminal Investigation, the Federal Bureau of Investigation, and the United States Postal Inspection Service.
This case is being prosecuted by Assistant U.S. Attorney Timothy Neff.
Wednesday, February 12, 2014
Twenty-Four Defendants with Ties to Powerful Italian Organized Crime Syndicate Known as the ‘Ndrangheta Arrested in Coordinated U.S.-Italian Takedown
BROOKLYN—A 15—count indictment was unsealed this morning in federal court in the Eastern District of New York charging seven defendants with narcotics trafficking, money laundering, and firearms offenses based, in part, on their participation in a transnational heroin and cocaine trafficking conspiracy involving the ‘Ndrangheta, one of Italy’s most powerful organized crime syndicates. The defendants—‘Ndrangheta member Raffaele Valente, also known as “Lello”; Gambino associate Franco Lupoi; Bonanno associate Charles Centaro, also known as “Charlie Pepsi”; Dominic Ali; Alexander Chan; Christos Fasarakis; and Jose Alfredo Garcia, also known as “Freddy”—were arrested earlier today. In a coordinated operation, Italian law enforcement authorities arrested 17 members and associates of the ‘Ndrangheta in Calabria, Italy, who were involved in the narcotics trafficking conspiracy, among other crimes.
The seven defendants arrested in the United States are scheduled to be arraigned this afternoon before Chief United States Magistrate Judge Steven M. Gold, at the United States Courthouse at 225 Cadman Plaza East in Brooklyn, New York. The case has been assigned to United States District Judge Sterling Johnson, Jr.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“The ‘Ndrangheta is an exceptionally dangerous, sophisticated, and insidious criminal organization with tentacles stretching from Italy to countries around the world,” stated United States Attorney Lynch. “The defendant Lupoi sought to use his connections with both ‘Ndrangheta and the Gambino crime family to extend his own criminal reach literally around the globe. Today, thanks to the vigilance and sustained cooperation of the Department of Justice and its law enforcement partners in Italy, the ‘Ndrangheta’s efforts to gain a foothold in New York have been dealt a lasting blow.” Ms. Lynch praised the outstanding investigative efforts of the Federal Bureau of Investigation and expressed her thanks to law enforcement partners in Italy, including the Prosecutor of the Republic of Reggio Calabria; the Italian National Police (INP), in particular, the Squadra Mobile of Reggio Calabria and the Servizio Centrale Operativo; the Direzione Centrale per i Servizi Antidroga; and the Direzione Nazionale Antimafia. Ms. Lynch also expressed gratitude to the U.S. Department of Justice Attaché and the the FBI Legal Attaché at the U.S. Embassy in Rome, who coordinated extensive evidence-sharing and undercover operations.
“As alleged, ‘Ndrangheta’s clan members conspired with members of the Gambino organized crime family in New York in an attempt to infiltrate our area with their illegal activities. Under the auspices of legitimate shipping businesses, the two criminal groups worked together to establish a plan of moving cocaine and heroin between the United States and Italy. Little did they know, there was an ongoing collaboration between the FBI and the Italian National Police to investigate and identify their scheme. This international cooperation between our great law enforcement agencies is one that was established at the beginning of our investigation, and it remains in place today. With every arrest made, both here and in Italy, FBI agents and Italian National Police officers closely coordinated their operations and share the success of this operation,” said FBI Assistant Director in Charge Venizelos.
As detailed in the indictment and detention letter filed today, defendant Franco Lupoi, a Brooklyn resident who has lived in Calabria, used his close criminal ties to both the Gambino organized crime family and the ‘Ndrangheta, an Italian criminal organization akin to the Mafia in Sicily and the Camorra in Naples, to pursue criminal activity that stretched across the globe. The Italian charges unsealed today reveal how the ‘Ndrangheta has operated for decades in Calabria in localized clans—known as ‘ndrine—based primarily on close family ties. In this case, Lupoi’s father-in-law, Italian defendant Nicola Antonio Simonetta, is a member of the Ursino clan of the ‘Ndrangheta. In 2012, Simonetta traveled to Brooklyn and met with Lupoi and an undercover FBI agent, who recorded Simonetta and Lupoi discussing plans to ship narcotics between the U.S. and Italy via the port of Gioia Tauro in Calabria, an infamous hub of ‘Ndrangheta activity. Simonetta revealed that his ‘Ndrangheta associates at the port would guarantee the safe arrival of container ships containing contraband.
As alleged in court documents, Lupoi exploited these underworld connections to link his criminal associates in New York with those in Calabria, forming conspiracies to traffic heroin and cocaine. On the Italian side, he allegedly engaged Italian defendant and ‘Ndrangheta leader Francesco Ursino and others as suppliers of heroin and buyers of cocaine. During two joint FBI-INP operations in Italy, Lupoi and Ursino sold more than 1.3 kilograms of heroin to an FBI undercover agent for what they believed was eventual distribution in the United States. In New York, Lupoi, Chan, and Garcia sold the undercover agent more than a kilogram of heroin.
As alleged, Lupoi also set into motion a plot to transport 500 kilograms of cocaine, concealed in frozen food, in shipping containers from Guyana to Calabria. In the course of these conspiracies, Lupoi assured his confederates of his relationship with a corrupt port official in Gioia Tauro, indicating that in return for €200,000, the official could guarantee passage of unlimited containers of contraband. In New York, Lupoi joined forces with defendants Alexander Chan and Garcia to orchestrate the Guyana-Italy cocaine conspiracy. In conversations recorded by the undercover agent, the conspirators discussed their connections to Mexican drug cartels operating in Guyana, South America, and plotted to transport 500 kilograms of cocaine internationally, hidden in shipments of frozen fish or pineapples. On the Italian side, Ursino and his co-conspirators planned to use a fish importation company to receive the shipment. As set forth in Italian court documents, the conspiracy slowed when shipping containers originating from the same Guyanese shipping company were seized in Malaysia and found to contain more than $7 million in cocaine hidden in pineapples and coconut milk.
As set forth in court documents, Lupoi also worked closely with U.S. defendant and ‘Ndrangheta member Raffaele Valente, who sold an illegal silencer and sawed-off shotgun to the FBI undercover agent at the Royal Crown Bakery in Brooklyn. In conversations intercepted on Italian wiretaps, Valente revealed that he had assembled a group of well-armed men in New York and that their base of operations was as secure as Fort Knox. Valente also discussed his devotion to St. Michael the Archangel as the purported “patron saint” of the ‘Ndrangheta and exhorted Italian defendant Andrea Memmolo to wear a special ring as a sign of pride and mutual recognition. Valente and Lupoi are charged with conspiracy to transfer a firearm, and Valente is charged with two counts of illegal possession of a silencer. Valente is also charged in Italy with the crime of mafia association based on his role in establishing an ‘Ndrangheta cell in New York.
As alleged, Lupoi further maintained a network of money laundering associates in New York. He and his co-defendants Dominic Ali, Charles “Charlie Pepsi” Centaro, and Christos Fasarakis, an employee of Alma Bank in Brooklyn, laundered more than $500,000 in funds that they believed were the proceeds of narcotics and illegal weapons trafficking. Centaro was recorded describing his access to bank accounts with millions of dollars through which he could launder and conceal criminal proceeds.
If convicted, Lupoi, Chan, and Garcia face a maximum sentence of life imprisonment; Ali, Centaro, and Fasarakis face a maximum sentence of 20 years’ imprisonment on each money laundering charge; and Valente faces a maximum sentence of 10 years’ imprisonment on each firearms charge.
The government’s case is being prosecuted by Assistant United States Attorneys Cristina Posa, Kristin Mace, and Kevin Trowel.
The charges contained in the indictment and complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Defendants
Franco Lupoi
Age: 44
Brooklyn, New York
Dominic Ali
Age: 55
Brooklyn, New York
Charles Centaro, a.k.a. “Charlie Pepsi”
Age: 50
Brooklyn, New York
Alexander Chan
Age: 46
New York, New York
Christos Fasarakis
Age: 42
Brooklyn, New York
Raffaele Valente, a.k.a. “Lello”
Age: 42
Brooklyn, New York
Jose Alfredo Garcia, a.k.a. “Freddy”
Age: 47
New York, New York
The seven defendants arrested in the United States are scheduled to be arraigned this afternoon before Chief United States Magistrate Judge Steven M. Gold, at the United States Courthouse at 225 Cadman Plaza East in Brooklyn, New York. The case has been assigned to United States District Judge Sterling Johnson, Jr.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“The ‘Ndrangheta is an exceptionally dangerous, sophisticated, and insidious criminal organization with tentacles stretching from Italy to countries around the world,” stated United States Attorney Lynch. “The defendant Lupoi sought to use his connections with both ‘Ndrangheta and the Gambino crime family to extend his own criminal reach literally around the globe. Today, thanks to the vigilance and sustained cooperation of the Department of Justice and its law enforcement partners in Italy, the ‘Ndrangheta’s efforts to gain a foothold in New York have been dealt a lasting blow.” Ms. Lynch praised the outstanding investigative efforts of the Federal Bureau of Investigation and expressed her thanks to law enforcement partners in Italy, including the Prosecutor of the Republic of Reggio Calabria; the Italian National Police (INP), in particular, the Squadra Mobile of Reggio Calabria and the Servizio Centrale Operativo; the Direzione Centrale per i Servizi Antidroga; and the Direzione Nazionale Antimafia. Ms. Lynch also expressed gratitude to the U.S. Department of Justice Attaché and the the FBI Legal Attaché at the U.S. Embassy in Rome, who coordinated extensive evidence-sharing and undercover operations.
“As alleged, ‘Ndrangheta’s clan members conspired with members of the Gambino organized crime family in New York in an attempt to infiltrate our area with their illegal activities. Under the auspices of legitimate shipping businesses, the two criminal groups worked together to establish a plan of moving cocaine and heroin between the United States and Italy. Little did they know, there was an ongoing collaboration between the FBI and the Italian National Police to investigate and identify their scheme. This international cooperation between our great law enforcement agencies is one that was established at the beginning of our investigation, and it remains in place today. With every arrest made, both here and in Italy, FBI agents and Italian National Police officers closely coordinated their operations and share the success of this operation,” said FBI Assistant Director in Charge Venizelos.
As detailed in the indictment and detention letter filed today, defendant Franco Lupoi, a Brooklyn resident who has lived in Calabria, used his close criminal ties to both the Gambino organized crime family and the ‘Ndrangheta, an Italian criminal organization akin to the Mafia in Sicily and the Camorra in Naples, to pursue criminal activity that stretched across the globe. The Italian charges unsealed today reveal how the ‘Ndrangheta has operated for decades in Calabria in localized clans—known as ‘ndrine—based primarily on close family ties. In this case, Lupoi’s father-in-law, Italian defendant Nicola Antonio Simonetta, is a member of the Ursino clan of the ‘Ndrangheta. In 2012, Simonetta traveled to Brooklyn and met with Lupoi and an undercover FBI agent, who recorded Simonetta and Lupoi discussing plans to ship narcotics between the U.S. and Italy via the port of Gioia Tauro in Calabria, an infamous hub of ‘Ndrangheta activity. Simonetta revealed that his ‘Ndrangheta associates at the port would guarantee the safe arrival of container ships containing contraband.
As alleged in court documents, Lupoi exploited these underworld connections to link his criminal associates in New York with those in Calabria, forming conspiracies to traffic heroin and cocaine. On the Italian side, he allegedly engaged Italian defendant and ‘Ndrangheta leader Francesco Ursino and others as suppliers of heroin and buyers of cocaine. During two joint FBI-INP operations in Italy, Lupoi and Ursino sold more than 1.3 kilograms of heroin to an FBI undercover agent for what they believed was eventual distribution in the United States. In New York, Lupoi, Chan, and Garcia sold the undercover agent more than a kilogram of heroin.
As alleged, Lupoi also set into motion a plot to transport 500 kilograms of cocaine, concealed in frozen food, in shipping containers from Guyana to Calabria. In the course of these conspiracies, Lupoi assured his confederates of his relationship with a corrupt port official in Gioia Tauro, indicating that in return for €200,000, the official could guarantee passage of unlimited containers of contraband. In New York, Lupoi joined forces with defendants Alexander Chan and Garcia to orchestrate the Guyana-Italy cocaine conspiracy. In conversations recorded by the undercover agent, the conspirators discussed their connections to Mexican drug cartels operating in Guyana, South America, and plotted to transport 500 kilograms of cocaine internationally, hidden in shipments of frozen fish or pineapples. On the Italian side, Ursino and his co-conspirators planned to use a fish importation company to receive the shipment. As set forth in Italian court documents, the conspiracy slowed when shipping containers originating from the same Guyanese shipping company were seized in Malaysia and found to contain more than $7 million in cocaine hidden in pineapples and coconut milk.
As set forth in court documents, Lupoi also worked closely with U.S. defendant and ‘Ndrangheta member Raffaele Valente, who sold an illegal silencer and sawed-off shotgun to the FBI undercover agent at the Royal Crown Bakery in Brooklyn. In conversations intercepted on Italian wiretaps, Valente revealed that he had assembled a group of well-armed men in New York and that their base of operations was as secure as Fort Knox. Valente also discussed his devotion to St. Michael the Archangel as the purported “patron saint” of the ‘Ndrangheta and exhorted Italian defendant Andrea Memmolo to wear a special ring as a sign of pride and mutual recognition. Valente and Lupoi are charged with conspiracy to transfer a firearm, and Valente is charged with two counts of illegal possession of a silencer. Valente is also charged in Italy with the crime of mafia association based on his role in establishing an ‘Ndrangheta cell in New York.
As alleged, Lupoi further maintained a network of money laundering associates in New York. He and his co-defendants Dominic Ali, Charles “Charlie Pepsi” Centaro, and Christos Fasarakis, an employee of Alma Bank in Brooklyn, laundered more than $500,000 in funds that they believed were the proceeds of narcotics and illegal weapons trafficking. Centaro was recorded describing his access to bank accounts with millions of dollars through which he could launder and conceal criminal proceeds.
If convicted, Lupoi, Chan, and Garcia face a maximum sentence of life imprisonment; Ali, Centaro, and Fasarakis face a maximum sentence of 20 years’ imprisonment on each money laundering charge; and Valente faces a maximum sentence of 10 years’ imprisonment on each firearms charge.
The government’s case is being prosecuted by Assistant United States Attorneys Cristina Posa, Kristin Mace, and Kevin Trowel.
The charges contained in the indictment and complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Defendants
Franco Lupoi
Age: 44
Brooklyn, New York
Dominic Ali
Age: 55
Brooklyn, New York
Charles Centaro, a.k.a. “Charlie Pepsi”
Age: 50
Brooklyn, New York
Alexander Chan
Age: 46
New York, New York
Christos Fasarakis
Age: 42
Brooklyn, New York
Raffaele Valente, a.k.a. “Lello”
Age: 42
Brooklyn, New York
Jose Alfredo Garcia, a.k.a. “Freddy”
Age: 47
New York, New York
Tuesday, February 11, 2014
Former Executive of Power Generation Company Charged with Fraud and Money Laundering
Asem Elgawhary, the former principal vice president of Bechtel Corporation and general manager of the Power Generation Engineering and Services Company (PGESCo), was indicted by a grand jury in Maryland today on charges that he defrauded his former employers, laundered the proceeds of the fraudulent scheme, and violated federal tax laws.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge Stephen E. Vogt of the FBI’s Baltimore Division, and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement after the indictment was returned earlier today.
“As today’s indictment alleges, this high-ranking executive took millions of dollars in kickbacks from power companies in exchange for preferential treatment and, in doing so, defrauded his former employer, other companies who were playing by the rules, and U.S. tax authorities,” said Acting Assistant Attorney General Raman. “He then allegedly concealed his kickback scheme by hiding the payments in off-shore bank accounts, giving false information to his former employer and destroying evidence. The Justice Department is committed to prosecuting not just the companies and individuals who pay bribes and kickbacks, but also those who solicit and accept them.”
“Mr. Elgawhary has been charged with using his corporate position for his own personal gain,” stated IRS-CI Chief Weber. “No matter what your career or position is in a corporation, all U.S. citizens are obligated to comply with the tax laws. When individuals and corporations deliberately fail to comply, IRS-Criminal Investigation agents conduct investigations and recommend prosecution to the Department of Justice.”
The eight-count indictment alleges that from 1996 to 2011, Elgawhary, 72, of Maryland, was assigned by Bechtel—a U.S. corporation engaged in engineering, construction and project management—to be the general manager at PGESCo, a joint venture between Bechtel and a state-owned and state-controlled electricity company (EEHC). PGESCo assisted EEHC in identifying possible subcontractors, soliciting bids, and awarding contracts to perform power projects for EEHC. The charges allege that Elgawhary used his position at PGESCo to provide preferential treatment to three power companies attempting to secure projects with EEHC in exchange for kickbacks from those power companies and their third-party consultants. The court documents allege that the power companies and their consultants paid more than $5 million in kickbacks into various off-shore bank accounts under the control of Elgawhary, including various Swiss bank accounts. In return, the power companies secured more than $2 billion in lucrative contracts.
The indictment alleges that Elgawhary then also attempted to conceal the kickback scheme and the proceeds he obtained from it. Elgawhary allegedly sent to Bechtel executives and members of the PGESCo board of directors in Maryland various documents and “Representation Letters” that falsely represented that he had no knowledge of any fraud or suspected fraud at PGESCo and that there were no violations or possible violations of law or regulations whose effects were material and should have been considered for disclosure in PGESCo’s financial statements. In addition, when Elgawhary was interviewed by counsel for Bechtel in April 2011, he claimed that he never received money from power companies or their consultants and that he did not maintain control over any foreign bank accounts. With the help of other employees at PGESCo, Elgawhary also allegedly caused evidence about the kickback scheme to be deleted and destroyed, according to the charges.
The court documents also allege that Elgawhary used money from one of his Swiss bank accounts to purchase a $1.78 million home in Maryland for two close family members. In order to conceal the origin of the money, however, Elgawhary and others made it appear that the money was from an unsecured loan from a marketing company owned and operated by another relative.
Elgawhary also allegedly obstructed and impeded the administration of U.S. tax laws by falsely claiming that he maintained only one foreign bank account and denying that he received any income from any foreign bank account. Elgawhary also allegedly failed to report any of the kickbacks as income for the tax years 2008 through 2011.
The mail and wire fraud counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The tax count carries a maximum penalty of three years in prison and a fine of $5,000.
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The department has received significant assistance in this matter from its law enforcement counterparts in Switzerland, Germany, Italy, and Cyprus. Significant assistance was also provided by the Criminal Division’s Office of International Affairs.
The case is being investigated by the FBI’s and IRS-CI’s Baltimore Divisions. The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Salem of the District of Maryland.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge Stephen E. Vogt of the FBI’s Baltimore Division, and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement after the indictment was returned earlier today.
“As today’s indictment alleges, this high-ranking executive took millions of dollars in kickbacks from power companies in exchange for preferential treatment and, in doing so, defrauded his former employer, other companies who were playing by the rules, and U.S. tax authorities,” said Acting Assistant Attorney General Raman. “He then allegedly concealed his kickback scheme by hiding the payments in off-shore bank accounts, giving false information to his former employer and destroying evidence. The Justice Department is committed to prosecuting not just the companies and individuals who pay bribes and kickbacks, but also those who solicit and accept them.”
“Mr. Elgawhary has been charged with using his corporate position for his own personal gain,” stated IRS-CI Chief Weber. “No matter what your career or position is in a corporation, all U.S. citizens are obligated to comply with the tax laws. When individuals and corporations deliberately fail to comply, IRS-Criminal Investigation agents conduct investigations and recommend prosecution to the Department of Justice.”
The eight-count indictment alleges that from 1996 to 2011, Elgawhary, 72, of Maryland, was assigned by Bechtel—a U.S. corporation engaged in engineering, construction and project management—to be the general manager at PGESCo, a joint venture between Bechtel and a state-owned and state-controlled electricity company (EEHC). PGESCo assisted EEHC in identifying possible subcontractors, soliciting bids, and awarding contracts to perform power projects for EEHC. The charges allege that Elgawhary used his position at PGESCo to provide preferential treatment to three power companies attempting to secure projects with EEHC in exchange for kickbacks from those power companies and their third-party consultants. The court documents allege that the power companies and their consultants paid more than $5 million in kickbacks into various off-shore bank accounts under the control of Elgawhary, including various Swiss bank accounts. In return, the power companies secured more than $2 billion in lucrative contracts.
The indictment alleges that Elgawhary then also attempted to conceal the kickback scheme and the proceeds he obtained from it. Elgawhary allegedly sent to Bechtel executives and members of the PGESCo board of directors in Maryland various documents and “Representation Letters” that falsely represented that he had no knowledge of any fraud or suspected fraud at PGESCo and that there were no violations or possible violations of law or regulations whose effects were material and should have been considered for disclosure in PGESCo’s financial statements. In addition, when Elgawhary was interviewed by counsel for Bechtel in April 2011, he claimed that he never received money from power companies or their consultants and that he did not maintain control over any foreign bank accounts. With the help of other employees at PGESCo, Elgawhary also allegedly caused evidence about the kickback scheme to be deleted and destroyed, according to the charges.
The court documents also allege that Elgawhary used money from one of his Swiss bank accounts to purchase a $1.78 million home in Maryland for two close family members. In order to conceal the origin of the money, however, Elgawhary and others made it appear that the money was from an unsecured loan from a marketing company owned and operated by another relative.
Elgawhary also allegedly obstructed and impeded the administration of U.S. tax laws by falsely claiming that he maintained only one foreign bank account and denying that he received any income from any foreign bank account. Elgawhary also allegedly failed to report any of the kickbacks as income for the tax years 2008 through 2011.
The mail and wire fraud counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value gained or lost. The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction. The tax count carries a maximum penalty of three years in prison and a fine of $5,000.
The charges contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The department has received significant assistance in this matter from its law enforcement counterparts in Switzerland, Germany, Italy, and Cyprus. Significant assistance was also provided by the Criminal Division’s Office of International Affairs.
The case is being investigated by the FBI’s and IRS-CI’s Baltimore Divisions. The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Salem of the District of Maryland.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Twenty-Four Defendants with Ties to Powerful Italian Organized Crime Syndicate Known as the ‘Ndrangheta Arrested in Coordinated U.S.-Italian Takedown
BROOKLYN—A 15—count indictment was unsealed this morning in federal court in the Eastern District of New York charging seven defendants with narcotics trafficking, money laundering, and firearms offenses based, in part, on their participation in a transnational heroin and cocaine trafficking conspiracy involving the ‘Ndrangheta, one of Italy’s most powerful organized crime syndicates. The defendants—‘Ndrangheta member Raffaele Valente, also known as “Lello”; Gambino associate Franco Lupoi; Bonanno associate Charles Centaro, also known as “Charlie Pepsi”; Dominic Ali; Alexander Chan; Christos Fasarakis; and Jose Alfredo Garcia, also known as “Freddy”—were arrested earlier today. In a coordinated operation, Italian law enforcement authorities arrested 17 members and associates of the ‘Ndrangheta in Calabria, Italy, who were involved in the narcotics trafficking conspiracy, among other crimes.
The seven defendants arrested in the United States are scheduled to be arraigned this afternoon before Chief United States Magistrate Judge Steven M. Gold, at the United States Courthouse at 225 Cadman Plaza East in Brooklyn, New York. The case has been assigned to United States District Judge Sterling Johnson, Jr.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“The ‘Ndrangheta is an exceptionally dangerous, sophisticated, and insidious criminal organization with tentacles stretching from Italy to countries around the world,” stated United States Attorney Lynch. “The defendant Lupoi sought to use his connections with both ‘Ndrangheta and the Gambino crime family to extend his own criminal reach literally around the globe. Today, thanks to the vigilance and sustained cooperation of the Department of Justice and its law enforcement partners in Italy, the ‘Ndrangheta’s efforts to gain a foothold in New York have been dealt a lasting blow.” Ms. Lynch praised the outstanding investigative efforts of the Federal Bureau of Investigation and expressed her thanks to law enforcement partners in Italy, including the Prosecutor of the Republic of Reggio Calabria; the Italian National Police (INP), in particular, the Squadra Mobile of Reggio Calabria and the Servizio Centrale Operativo; the Direzione Centrale per i Servizi Antidroga; and the Direzione Nazionale Antimafia. Ms. Lynch also expressed gratitude to the U.S. Department of Justice Attaché and the the FBI Legal Attaché at the U.S. Embassy in Rome, who coordinated extensive evidence-sharing and undercover operations.
“As alleged, ‘Ndrangheta’s clan members conspired with members of the Gambino organized crime family in New York in an attempt to infiltrate our area with their illegal activities. Under the auspices of legitimate shipping businesses, the two criminal groups worked together to establish a plan of moving cocaine and heroin between the United States and Italy. Little did they know, there was an ongoing collaboration between the FBI and the Italian National Police to investigate and identify their scheme. This international cooperation between our great law enforcement agencies is one that was established at the beginning of our investigation, and it remains in place today. With every arrest made, both here and in Italy, FBI agents and Italian National Police officers closely coordinated their operations and share the success of this operation,” said FBI Assistant Director in Charge Venizelos.
As detailed in the indictment and detention letter filed today, defendant Franco Lupoi, a Brooklyn resident who has lived in Calabria, used his close criminal ties to both the Gambino organized crime family and the ‘Ndrangheta, an Italian criminal organization akin to the Mafia in Sicily and the Camorra in Naples, to pursue criminal activity that stretched across the globe. The Italian charges unsealed today reveal how the ‘Ndrangheta has operated for decades in Calabria in localized clans—known as ‘ndrine—based primarily on close family ties. In this case, Lupoi’s father-in-law, Italian defendant Nicola Antonio Simonetta, is a member of the Ursino clan of the ‘Ndrangheta. In 2012, Simonetta traveled to Brooklyn and met with Lupoi and an undercover FBI agent, who recorded Simonetta and Lupoi discussing plans to ship narcotics between the U.S. and Italy via the port of Gioia Tauro in Calabria, an infamous hub of ‘Ndrangheta activity. Simonetta revealed that his ‘Ndrangheta associates at the port would guarantee the safe arrival of container ships containing contraband.
As alleged in court documents, Lupoi exploited these underworld connections to link his criminal associates in New York with those in Calabria, forming conspiracies to traffic heroin and cocaine. On the Italian side, he allegedly engaged Italian defendant and ‘Ndrangheta leader Francesco Ursino and others as suppliers of heroin and buyers of cocaine. During two joint FBI-INP operations in Italy, Lupoi and Ursino sold more than 1.3 kilograms of heroin to an FBI undercover agent for what they believed was eventual distribution in the United States. In New York, Lupoi, Chan, and Garcia sold the undercover agent more than a kilogram of heroin.
As alleged, Lupoi also set into motion a plot to transport 500 kilograms of cocaine, concealed in frozen food, in shipping containers from Guyana to Calabria. In the course of these conspiracies, Lupoi assured his confederates of his relationship with a corrupt port official in Gioia Tauro, indicating that in return for €200,000, the official could guarantee passage of unlimited containers of contraband. In New York, Lupoi joined forces with defendants Alexander Chan and Garcia to orchestrate the Guyana-Italy cocaine conspiracy. In conversations recorded by the undercover agent, the conspirators discussed their connections to Mexican drug cartels operating in Guyana, South America, and plotted to transport 500 kilograms of cocaine internationally, hidden in shipments of frozen fish or pineapples. On the Italian side, Ursino and his co-conspirators planned to use a fish importation company to receive the shipment. As set forth in Italian court documents, the conspiracy slowed when shipping containers originating from the same Guyanese shipping company were seized in Malaysia and found to contain more than $7 million in cocaine hidden in pineapples and coconut milk.
As set forth in court documents, Lupoi also worked closely with U.S. defendant and ‘Ndrangheta member Raffaele Valente, who sold an illegal silencer and sawed-off shotgun to the FBI undercover agent at the Royal Crown Bakery in Brooklyn. In conversations intercepted on Italian wiretaps, Valente revealed that he had assembled a group of well-armed men in New York and that their base of operations was as secure as Fort Knox. Valente also discussed his devotion to St. Michael the Archangel as the purported “patron saint” of the ‘Ndrangheta and exhorted Italian defendant Andrea Memmolo to wear a special ring as a sign of pride and mutual recognition. Valente and Lupoi are charged with conspiracy to transfer a firearm, and Valente is charged with two counts of illegal possession of a silencer. Valente is also charged in Italy with the crime of mafia association based on his role in establishing an ‘Ndrangheta cell in New York.
As alleged, Lupoi further maintained a network of money laundering associates in New York. He and his co-defendants Dominic Ali, Charles “Charlie Pepsi” Centaro, and Christos Fasarakis, an employee of Alma Bank in Brooklyn, laundered more than $500,000 in funds that they believed were the proceeds of narcotics and illegal weapons trafficking. Centaro was recorded describing his access to bank accounts with millions of dollars through which he could launder and conceal criminal proceeds.
If convicted, Lupoi, Chan, and Garcia face a maximum sentence of life imprisonment; Ali, Centaro, and Fasarakis face a maximum sentence of 20 years’ imprisonment on each money laundering charge; and Valente faces a maximum sentence of 10 years’ imprisonment on each firearms charge.
The government’s case is being prosecuted by Assistant United States Attorneys Cristina Posa, Kristin Mace, and Kevin Trowel.
The charges contained in the indictment and complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Defendants
Franco Lupoi
Age: 44
Brooklyn, New York
Dominic Ali
Age: 55
Brooklyn, New York
Charles Centaro, a.k.a. “Charlie Pepsi”
Age: 50
Brooklyn, New York
Alexander Chan
Age: 46
New York, New York
Christos Fasarakis
Age: 42
Brooklyn, New York
Raffaele Valente, a.k.a. “Lello”
Age: 42
Brooklyn, New York
Jose Alfredo Garcia, a.k.a. “Freddy”
Age: 47
New York, New York
The seven defendants arrested in the United States are scheduled to be arraigned this afternoon before Chief United States Magistrate Judge Steven M. Gold, at the United States Courthouse at 225 Cadman Plaza East in Brooklyn, New York. The case has been assigned to United States District Judge Sterling Johnson, Jr.
The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI).
“The ‘Ndrangheta is an exceptionally dangerous, sophisticated, and insidious criminal organization with tentacles stretching from Italy to countries around the world,” stated United States Attorney Lynch. “The defendant Lupoi sought to use his connections with both ‘Ndrangheta and the Gambino crime family to extend his own criminal reach literally around the globe. Today, thanks to the vigilance and sustained cooperation of the Department of Justice and its law enforcement partners in Italy, the ‘Ndrangheta’s efforts to gain a foothold in New York have been dealt a lasting blow.” Ms. Lynch praised the outstanding investigative efforts of the Federal Bureau of Investigation and expressed her thanks to law enforcement partners in Italy, including the Prosecutor of the Republic of Reggio Calabria; the Italian National Police (INP), in particular, the Squadra Mobile of Reggio Calabria and the Servizio Centrale Operativo; the Direzione Centrale per i Servizi Antidroga; and the Direzione Nazionale Antimafia. Ms. Lynch also expressed gratitude to the U.S. Department of Justice Attaché and the the FBI Legal Attaché at the U.S. Embassy in Rome, who coordinated extensive evidence-sharing and undercover operations.
“As alleged, ‘Ndrangheta’s clan members conspired with members of the Gambino organized crime family in New York in an attempt to infiltrate our area with their illegal activities. Under the auspices of legitimate shipping businesses, the two criminal groups worked together to establish a plan of moving cocaine and heroin between the United States and Italy. Little did they know, there was an ongoing collaboration between the FBI and the Italian National Police to investigate and identify their scheme. This international cooperation between our great law enforcement agencies is one that was established at the beginning of our investigation, and it remains in place today. With every arrest made, both here and in Italy, FBI agents and Italian National Police officers closely coordinated their operations and share the success of this operation,” said FBI Assistant Director in Charge Venizelos.
As detailed in the indictment and detention letter filed today, defendant Franco Lupoi, a Brooklyn resident who has lived in Calabria, used his close criminal ties to both the Gambino organized crime family and the ‘Ndrangheta, an Italian criminal organization akin to the Mafia in Sicily and the Camorra in Naples, to pursue criminal activity that stretched across the globe. The Italian charges unsealed today reveal how the ‘Ndrangheta has operated for decades in Calabria in localized clans—known as ‘ndrine—based primarily on close family ties. In this case, Lupoi’s father-in-law, Italian defendant Nicola Antonio Simonetta, is a member of the Ursino clan of the ‘Ndrangheta. In 2012, Simonetta traveled to Brooklyn and met with Lupoi and an undercover FBI agent, who recorded Simonetta and Lupoi discussing plans to ship narcotics between the U.S. and Italy via the port of Gioia Tauro in Calabria, an infamous hub of ‘Ndrangheta activity. Simonetta revealed that his ‘Ndrangheta associates at the port would guarantee the safe arrival of container ships containing contraband.
As alleged in court documents, Lupoi exploited these underworld connections to link his criminal associates in New York with those in Calabria, forming conspiracies to traffic heroin and cocaine. On the Italian side, he allegedly engaged Italian defendant and ‘Ndrangheta leader Francesco Ursino and others as suppliers of heroin and buyers of cocaine. During two joint FBI-INP operations in Italy, Lupoi and Ursino sold more than 1.3 kilograms of heroin to an FBI undercover agent for what they believed was eventual distribution in the United States. In New York, Lupoi, Chan, and Garcia sold the undercover agent more than a kilogram of heroin.
As alleged, Lupoi also set into motion a plot to transport 500 kilograms of cocaine, concealed in frozen food, in shipping containers from Guyana to Calabria. In the course of these conspiracies, Lupoi assured his confederates of his relationship with a corrupt port official in Gioia Tauro, indicating that in return for €200,000, the official could guarantee passage of unlimited containers of contraband. In New York, Lupoi joined forces with defendants Alexander Chan and Garcia to orchestrate the Guyana-Italy cocaine conspiracy. In conversations recorded by the undercover agent, the conspirators discussed their connections to Mexican drug cartels operating in Guyana, South America, and plotted to transport 500 kilograms of cocaine internationally, hidden in shipments of frozen fish or pineapples. On the Italian side, Ursino and his co-conspirators planned to use a fish importation company to receive the shipment. As set forth in Italian court documents, the conspiracy slowed when shipping containers originating from the same Guyanese shipping company were seized in Malaysia and found to contain more than $7 million in cocaine hidden in pineapples and coconut milk.
As set forth in court documents, Lupoi also worked closely with U.S. defendant and ‘Ndrangheta member Raffaele Valente, who sold an illegal silencer and sawed-off shotgun to the FBI undercover agent at the Royal Crown Bakery in Brooklyn. In conversations intercepted on Italian wiretaps, Valente revealed that he had assembled a group of well-armed men in New York and that their base of operations was as secure as Fort Knox. Valente also discussed his devotion to St. Michael the Archangel as the purported “patron saint” of the ‘Ndrangheta and exhorted Italian defendant Andrea Memmolo to wear a special ring as a sign of pride and mutual recognition. Valente and Lupoi are charged with conspiracy to transfer a firearm, and Valente is charged with two counts of illegal possession of a silencer. Valente is also charged in Italy with the crime of mafia association based on his role in establishing an ‘Ndrangheta cell in New York.
As alleged, Lupoi further maintained a network of money laundering associates in New York. He and his co-defendants Dominic Ali, Charles “Charlie Pepsi” Centaro, and Christos Fasarakis, an employee of Alma Bank in Brooklyn, laundered more than $500,000 in funds that they believed were the proceeds of narcotics and illegal weapons trafficking. Centaro was recorded describing his access to bank accounts with millions of dollars through which he could launder and conceal criminal proceeds.
If convicted, Lupoi, Chan, and Garcia face a maximum sentence of life imprisonment; Ali, Centaro, and Fasarakis face a maximum sentence of 20 years’ imprisonment on each money laundering charge; and Valente faces a maximum sentence of 10 years’ imprisonment on each firearms charge.
The government’s case is being prosecuted by Assistant United States Attorneys Cristina Posa, Kristin Mace, and Kevin Trowel.
The charges contained in the indictment and complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Defendants
Franco Lupoi
Age: 44
Brooklyn, New York
Dominic Ali
Age: 55
Brooklyn, New York
Charles Centaro, a.k.a. “Charlie Pepsi”
Age: 50
Brooklyn, New York
Alexander Chan
Age: 46
New York, New York
Christos Fasarakis
Age: 42
Brooklyn, New York
Raffaele Valente, a.k.a. “Lello”
Age: 42
Brooklyn, New York
Jose Alfredo Garcia, a.k.a. “Freddy”
Age: 47
New York, New York
Friday, February 7, 2014
Alabama Man Admits Attempted Murder of Witness, Mortgage Fraud Conspiracy, and Money Laundering
CAMDEN, NJ—An Alabama man admitted today to conspiring to defraud financial institutions and launder stolen funds as part of a $15 million mortgage fraud scam that used phony documents and “straw buyers” to make illegal profits on overbuilt condos, U.S. Attorney Paul J. Fishman announced.
Kinard Henson, 41, of Ventress, Alabama, also admitted to the attempted murder of a straw buyer who was a witness to the mortgage fraud scheme.
Henson pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to a second superseding indictment charging him with one count of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering, and one count of attempted murder of a witness in a federal case.
According to the documents filed in this case and statements made in court:
Henson was among 11 defendants charged in July 2012 with conspiracy to commit wire fraud and conspiracy to commit money laundering. Two additional defendants, Nicholas Tarsia, 65, of Totowa, New Jersey, and Mashon Onque, 43, of East Orange, New Jersey, were charged in November 2013 with conspiracy to commit wire fraud. Tarsia was also charged with one count of conspiracy to commit money laundering.
Henson’s conspirators, including Timothy Ricks, 46, of East Orange, New Jersey, who pleaded guilty before Judge Simandle on February 27, 2013, located oceanfront condominiums overbuilt by financially distressed developers and negotiated a buyout price with the sellers. They then caused the sales prices for the properties—located in Wildwood Crest and North Wildwood, New Jersey, other locations in New Jersey, and in Naples, Florida—to be much higher than the buyout price to ensure large proceeds. Other defendants helped conceal the true sales prices of certain properties through inflated sales contracts and sale and finder’s fee agreements.
Henson recruited one of the straw buyers to purchase certain properties at the inflated rates. The straw buyers had good credit scores but lacked the financial resources to qualify for mortgage loans. The conspirators created false documents, such as fake W-2 forms, paystubs, bank statements, and investment statements, to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans.
Henson and his conspirators caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings, Henson received a portion of the proceeds from his conspirators, after his conspirators had funds wired or checks deposited into various accounts they controlled. Henson’s conspirators also distributed a portion of the proceeds to other members of the conspiracy for their respective roles.
Henson learned of a subpoena seeking documents in connection with a straw buyer’s purchases of real estate properties shortly after it was served by federal law enforcement agents on a mortgage brokerage firm. Henson, who had recruited the straw buyer, contacted another individual to kill the straw buyer. They then lured the straw buyer to a wooded area in Mobile, Alabama. At Henson’s direction and using Henson’s firearm, the other individual shot the straw buyer multiple times.
The wire fraud conspiracy charge is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine. The money laundering conspiracy charge is punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine. The attempted murder of a witness charge carries a maximum potential penalty of 30 years in prison and a $250,000 fine. Henson’s is scheduled to be sentenced July 11, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen in Newark, for their roles in the ongoing investigation.
The government is represented by Assistant U.S. Attorneys Matthew T. Smith and Jacqueline M. Carle of the U.S. Attorney’s Office Criminal Division in Camden.
Kinard Henson, 41, of Ventress, Alabama, also admitted to the attempted murder of a straw buyer who was a witness to the mortgage fraud scheme.
Henson pleaded guilty before U.S. District Judge Jerome B. Simandle in Camden federal court to a second superseding indictment charging him with one count of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering, and one count of attempted murder of a witness in a federal case.
According to the documents filed in this case and statements made in court:
Henson was among 11 defendants charged in July 2012 with conspiracy to commit wire fraud and conspiracy to commit money laundering. Two additional defendants, Nicholas Tarsia, 65, of Totowa, New Jersey, and Mashon Onque, 43, of East Orange, New Jersey, were charged in November 2013 with conspiracy to commit wire fraud. Tarsia was also charged with one count of conspiracy to commit money laundering.
Henson’s conspirators, including Timothy Ricks, 46, of East Orange, New Jersey, who pleaded guilty before Judge Simandle on February 27, 2013, located oceanfront condominiums overbuilt by financially distressed developers and negotiated a buyout price with the sellers. They then caused the sales prices for the properties—located in Wildwood Crest and North Wildwood, New Jersey, other locations in New Jersey, and in Naples, Florida—to be much higher than the buyout price to ensure large proceeds. Other defendants helped conceal the true sales prices of certain properties through inflated sales contracts and sale and finder’s fee agreements.
Henson recruited one of the straw buyers to purchase certain properties at the inflated rates. The straw buyers had good credit scores but lacked the financial resources to qualify for mortgage loans. The conspirators created false documents, such as fake W-2 forms, paystubs, bank statements, and investment statements, to make the straw buyers appear more creditworthy than they actually were in order to induce the lenders to make the loans.
Henson and his conspirators caused fraudulent mortgage loan applications in the name of the straw buyers, including the supporting documents, to be submitted to mortgage brokers that the brokers knew were false. Once the loans were approved and the mortgage lenders sent the loan proceeds in connection with real estate closings, Henson received a portion of the proceeds from his conspirators, after his conspirators had funds wired or checks deposited into various accounts they controlled. Henson’s conspirators also distributed a portion of the proceeds to other members of the conspiracy for their respective roles.
Henson learned of a subpoena seeking documents in connection with a straw buyer’s purchases of real estate properties shortly after it was served by federal law enforcement agents on a mortgage brokerage firm. Henson, who had recruited the straw buyer, contacted another individual to kill the straw buyer. They then lured the straw buyer to a wooded area in Mobile, Alabama. At Henson’s direction and using Henson’s firearm, the other individual shot the straw buyer multiple times.
The wire fraud conspiracy charge is punishable by a maximum potential penalty of 30 years in prison and a $1 million fine. The money laundering conspiracy charge is punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine. The attempted murder of a witness charge carries a maximum potential penalty of 30 years in prison and a $250,000 fine. Henson’s is scheduled to be sentenced July 11, 2014.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark; and IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen in Newark, for their roles in the ongoing investigation.
The government is represented by Assistant U.S. Attorneys Matthew T. Smith and Jacqueline M. Carle of the U.S. Attorney’s Office Criminal Division in Camden.
Wednesday, January 29, 2014
Florida Attorney Sentenced to Six Months in Prison for Laundering Purported Stock Fraud Proceeds
Michael J. Scaglione, Esq., an attorney in Coral Gables, Florida, was sentenced today in federal court in Brooklyn, New York, to six months in prison, to be followed by four months of home detention with electric monitoring to be served during a two-year term of supervised release. As part of the sentence, Scaglione was ordered to perform 200 hours of community service and to forfeit approximately $31,950 to the government. In October 2013, Scaglione pleaded guilty to a money laundering charge for laundering over $750,000, which he believed were the proceeds of a penny stock fraud scheme. In July 2013, Scaglione was arrested after taking possession of $500,000 in cash from an undercover federal agent posing as a criminal stock promoter in connection with a government sting operation.
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Toni Weirauch, Special Agent in Charge, United States Internal Revenue Service, Criminal Investigation, New York (IRS).
“Abusing his position as an attorney by laundering money, Scaglione not only violated the code of ethics by which he was bound—he also broke the law. Those attorneys who seek to misuse the trust that is instilled in them by the public to perpetrate crime are on notice that they will be held accountable for their crimes,” stated United States Attorney Lynch. Ms. Lynch thanked the FBI and the IRS for their work on this investigation.
From approximately February to July 2013, Scaglione exploited his position as an attorney to launder money through an escrow account for an undercover law enforcement agent who posed as a corrupt stock promoter. Scaglione believed that the undercover agent was a middleman for a network of corrupt stock brokers who fraudulently inflated prices of worthless stock in exchange for high commissions. Scaglione agreed to launder what he believed were proceeds of this stock fraud through his attorney escrow account to hide that money from the United States Securities and Exchange Commission and the IRS. In total, Scaglione funneled over $750,000, including $88,000 in cash given to him in a Federal Express box in the lobby of a Miami Beach hotel, through the escrow account into the undercover agent’s bank account in Long Island, New York. Scaglione carefully structured the movement of these funds to avoid triggering financial reporting requirements. In exchange, Scaglione collected more than $25,000 in fees. In recorded conversations, Scaglione assured the undercover agent that their conversations were “completely privileged” and that his money was “safe” with Scaglione. When the undercover agent explained to Scaglione that he did not “want to go to jail,” Scaglione stated to the undercover agent that the escrow account was “tight as can be.” On the day of his arrest, Scaglione accepted an additional $500,000 in cash from the undercover agent, which Scaglione believed to be proceeds from the stock fraud, at a hotel in Miami Beach, Florida.
The government’s case is being prosecuted by Assistant United States Attorney Jacquelyn Kasulis.
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 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Defendant:
Michael J. Scaglione
Age: 42
Residence: Miami Springs, Florida
The sentence was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Toni Weirauch, Special Agent in Charge, United States Internal Revenue Service, Criminal Investigation, New York (IRS).
“Abusing his position as an attorney by laundering money, Scaglione not only violated the code of ethics by which he was bound—he also broke the law. Those attorneys who seek to misuse the trust that is instilled in them by the public to perpetrate crime are on notice that they will be held accountable for their crimes,” stated United States Attorney Lynch. Ms. Lynch thanked the FBI and the IRS for their work on this investigation.
From approximately February to July 2013, Scaglione exploited his position as an attorney to launder money through an escrow account for an undercover law enforcement agent who posed as a corrupt stock promoter. Scaglione believed that the undercover agent was a middleman for a network of corrupt stock brokers who fraudulently inflated prices of worthless stock in exchange for high commissions. Scaglione agreed to launder what he believed were proceeds of this stock fraud through his attorney escrow account to hide that money from the United States Securities and Exchange Commission and the IRS. In total, Scaglione funneled over $750,000, including $88,000 in cash given to him in a Federal Express box in the lobby of a Miami Beach hotel, through the escrow account into the undercover agent’s bank account in Long Island, New York. Scaglione carefully structured the movement of these funds to avoid triggering financial reporting requirements. In exchange, Scaglione collected more than $25,000 in fees. In recorded conversations, Scaglione assured the undercover agent that their conversations were “completely privileged” and that his money was “safe” with Scaglione. When the undercover agent explained to Scaglione that he did not “want to go to jail,” Scaglione stated to the undercover agent that the escrow account was “tight as can be.” On the day of his arrest, Scaglione accepted an additional $500,000 in cash from the undercover agent, which Scaglione believed to be proceeds from the stock fraud, at a hotel in Miami Beach, Florida.
The government’s case is being prosecuted by Assistant United States Attorney Jacquelyn Kasulis.
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 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Defendant:
Michael J. Scaglione
Age: 42
Residence: Miami Springs, Florida
Thursday, January 23, 2014
Maryland Man Sentenced to 12 Years in Prison for Real Estate Fraud
ALEXANDRIA, VA—Colin Conroy Williams, 42, of Dayton, Maryland, was sentenced today to 12 years in prison, followed by three years of supervised release, for serving as the mastermind of a multi-year conspiracy to commit real estate fraud.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia, and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after sentencing by United States District Judge Gerald Bruce Lee.
Williams pleaded guilty on October 28, 2013, to conspiracy to commit wire fraud, wire fraud, aggravated identity theft, and money laundering. According to court records, much of Williams’ criminal activity involved fraudulently selling homes that did not belong to the purported property owner. As part of this scheme, Williams first would identify vulnerable properties based on several characteristics—for example, because the property had significant tax liabilities, the true owners lacked a sophisticated understanding of real estate transactions, or the true titleholder had died recently and the rightful heirs had not come forward to claim the property.
Williams used a variety of means to identify the vulnerable properties. He sometimes would visit the D.C. tax courts to identify properties with overdue property tax bills, which was an indication that the rightful owner was not alive or able to pay those tax bills. In other instances, Williams would use open source or subscription services, such as ancestry.com and the D.C. property tax database, to determine whether a particular property was owned by a recently deceased person and whether that person had any living or nearby relatives.
After identifying vulnerable properties, Williams would manipulate the District of Columbia Probate Court process to have a co-conspirator appointed as a “personal representative” for the rightful owner. Williams then would arrange for that newly appointed representative to sell the property without the rightful owner’s knowledge. In so doing, Williams stole multiple identities belonging to the living or recently deceased property owners.
Williams conducted this scheme on at least five homes, including after he knew that he was under investigation by the FBI. He also conducted this scheme despite knowing that two of the actual homeowners were alive. Nevertheless, once the properties were sold, Williams would keep hundreds of thousands of dollars in proceeds for himself, which he laundered to buy expensive cars and fancy jewelry.
Before Williams began conducting this “personal representative” scheme, he repeatedly engaged in more conventional real estate fraud, including directing co-conspirators to lie on loan documents and placing false liens on homes to force his victims to pay him thousands of dollars before they could sell their homes. All told, Williams defrauded numerous victims of more than $1,700,000 in actual and intended losses.
This case was investigated by the FBI’s Washington Field Office. Assistant United States Attorneys Chad Golder and Kosta Stojilkovic prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.
Dana J. Boente, Acting United States Attorney for the Eastern District of Virginia, and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after sentencing by United States District Judge Gerald Bruce Lee.
Williams pleaded guilty on October 28, 2013, to conspiracy to commit wire fraud, wire fraud, aggravated identity theft, and money laundering. According to court records, much of Williams’ criminal activity involved fraudulently selling homes that did not belong to the purported property owner. As part of this scheme, Williams first would identify vulnerable properties based on several characteristics—for example, because the property had significant tax liabilities, the true owners lacked a sophisticated understanding of real estate transactions, or the true titleholder had died recently and the rightful heirs had not come forward to claim the property.
Williams used a variety of means to identify the vulnerable properties. He sometimes would visit the D.C. tax courts to identify properties with overdue property tax bills, which was an indication that the rightful owner was not alive or able to pay those tax bills. In other instances, Williams would use open source or subscription services, such as ancestry.com and the D.C. property tax database, to determine whether a particular property was owned by a recently deceased person and whether that person had any living or nearby relatives.
After identifying vulnerable properties, Williams would manipulate the District of Columbia Probate Court process to have a co-conspirator appointed as a “personal representative” for the rightful owner. Williams then would arrange for that newly appointed representative to sell the property without the rightful owner’s knowledge. In so doing, Williams stole multiple identities belonging to the living or recently deceased property owners.
Williams conducted this scheme on at least five homes, including after he knew that he was under investigation by the FBI. He also conducted this scheme despite knowing that two of the actual homeowners were alive. Nevertheless, once the properties were sold, Williams would keep hundreds of thousands of dollars in proceeds for himself, which he laundered to buy expensive cars and fancy jewelry.
Before Williams began conducting this “personal representative” scheme, he repeatedly engaged in more conventional real estate fraud, including directing co-conspirators to lie on loan documents and placing false liens on homes to force his victims to pay him thousands of dollars before they could sell their homes. All told, Williams defrauded numerous victims of more than $1,700,000 in actual and intended losses.
This case was investigated by the FBI’s Washington Field Office. Assistant United States Attorneys Chad Golder and Kosta Stojilkovic prosecuted the case on behalf of the United States.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.
Wednesday, January 22, 2014
Rogers Businessman Pleads Guilty to Fraud and Money Laundering Charges
FORT SMITH, AR—Conner Eldridge, United States Attorney for the Western District of Arkansas, announced today that James W. Bolt, 60, of Rogers, pleaded guilty to one count of wire fraud, one count of mail fraud, and one count of money laundering. The plea took place before the Honorable Robert T. Dawson in United States District Court for the Western District of Arkansas in Fort Smith.
U.S. Attorney Eldridge stated, “This case involves serious fraud, including forgery and a course of deceitful conduct designed to steal money from others. Today, defendant Bolt has been convicted and held accountable for this criminal conduct. Our office remains committed to pursuing and prosecuting fraud, wherever it manifests itself.”
According to documents filed in the case, in August 2012, the FBI launched an investigation into suspicious activity involving Bolt’s company, Situs Cancer Research Center, located in Rogers, Arkansas. The investigation revealed that Bolt had committed mail and wire fraud by preparing and sending fraudulent documents containing forged signatures and false authentication features to various entities and individual persons in order to persuade them to send him unclaimed property and assets from defunct companies held by the state of California for Community Medical Group of Corona Inc. The Community Medical Group had never authorized any transfer of its property to Situs.
The defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record (if any), the defendant’s role in the offense, and the characteristics of the violations. The sentence will not exceed the statutory maximum, and in most cases will be less than the maximum. In this case, Bolt faces a maximum sentence of 10 years in prison for the fraud charges and a maximum sentence of 10 years in prison for money laundering.
This case is being investigated by the FBI and IRS. Assistant U.S. Attorneys Glen Hines, Kyra Jenner, and Benjamin Wulff are prosecuting the case for the United States.
U.S. Attorney Eldridge stated, “This case involves serious fraud, including forgery and a course of deceitful conduct designed to steal money from others. Today, defendant Bolt has been convicted and held accountable for this criminal conduct. Our office remains committed to pursuing and prosecuting fraud, wherever it manifests itself.”
According to documents filed in the case, in August 2012, the FBI launched an investigation into suspicious activity involving Bolt’s company, Situs Cancer Research Center, located in Rogers, Arkansas. The investigation revealed that Bolt had committed mail and wire fraud by preparing and sending fraudulent documents containing forged signatures and false authentication features to various entities and individual persons in order to persuade them to send him unclaimed property and assets from defunct companies held by the state of California for Community Medical Group of Corona Inc. The Community Medical Group had never authorized any transfer of its property to Situs.
The defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record (if any), the defendant’s role in the offense, and the characteristics of the violations. The sentence will not exceed the statutory maximum, and in most cases will be less than the maximum. In this case, Bolt faces a maximum sentence of 10 years in prison for the fraud charges and a maximum sentence of 10 years in prison for money laundering.
This case is being investigated by the FBI and IRS. Assistant U.S. Attorneys Glen Hines, Kyra Jenner, and Benjamin Wulff are prosecuting the case for the United States.
Friday, December 27, 2013
Amid corruption inquiry, Turkish prosecutor slams police
A Turkish prosecutor has openly accused police of interfering with a high-level corruption investigation.
"Court orders have not been carried out and there has been open pressure on the judicial process from both the chief prosecutor's office and from the police force, which is supposed to carry out the decisions of the courts," Muammer Akkas said in a Thursday statement.
He spoke one day after three Cabinet ministers resigned their posts, after their sons were arrested or temporarily detained in an anti-graft sting, semiofficial news agency Anadolu reported.
One of them, Urbanization and Environment Minister Erdogan Bayraktar, went further than the other two, not just resigning his Cabinet position but also calling on Prime Minister Recep Tayyip Erdogan to step down.
Turkish media reported a possible second wave of detentions as imminent late Wednesday, but the raids did not materialize.
Instead, an apparent deadlock within the judiciary emerged as Akkas, the prosecutor, issued his statement saying the judiciary was under the heel of the government.
Akkas accused police and prosecutors of ignoring a decision of the courts by refusing to carry out more raids.
In a televised statement, Chief Istanbul Prosecutor Turan Colakkadi fired back, saying that Akkas had mishandled the investigation and leaked information to the press, leading to his removal from the case.
Economy Minister Zafer Caglayan and Interior Minister Muammer Guler, whose sons were also arrested in the investigation, also resigned Wednesday. Erdogan accepted the resignations, Anadolu reported.
The sons were detained in a roundup that included the head of a public bank, several bureaucrats and high-profile businessmen. The roundup came after a two-year investigation by the Istanbul Prosecutor's Office into allegations of corruption including money laundering, gold smuggling and bribery.
Many analysts see the corruption investigation as a public fight between Erdogan and Fethullah Gulen, an Islamist preacher living in self imposed exile in Pennsylvania.
Erdogan has repeatedly said since the corruption arrests began that international organizations with branches inside Turkey are trying to destabilize the country.
"This country has never been and never will be the operational space of international organizations. We will not allow the interest lobby, the war lobby, the blood lobby to carry out an operation under the guise of a corruption operation," he said Sunday.
Turkey is expected to hold local elections next year, and some analysts see the raids as a test of Erdogan's grip on power, especially after a turbulent year of unprecedented anti-government protests.
Demonstrations continued Thursday, with marches in Istanbul, Mersin, Izmir and Adana, where police used water cannons on marchers.
Protesters chanted: "The ministers are thieves," "Everywhere is bribery, everywhere is corruption," the "Public will clean this dirt" and the "Prime Minister is a thief."
The Prime Minister had been expected to reorganize his Cabinet, because some of his ministers will be running for office in March. Late Wednesday, he announced a Cabinet shuffle, naming 10 new people.
After the announcement, former Culture Minister Ertugrul Gunay tweeted his displeasure.
"I wish success to the new members of the Cabinet. I will suffice to say for now that I don't find the choices for Justice and Interior positions suitable," he wrote Wednesday.
One day later, he and two other members of parliament -- Izmir MP Erdal Kalkan and Ankara MP Haluk Ozdalga -- were sent to Erdogan's ruling Justice and Development Party's disciplinary committee with a request for their dismissal.
According to Anadolu, the party announced it is taking this disciplinary action against three of its members for "disparaging remarks" against its ideals and core policies.
Tuesday, December 24, 2013
Former Detroit Public Schools Accountant Sentenced on Fraud and Money Laundering Charges
Sandra Campbell, 60, a former Detroit Public Schools contract accountant and School Board candidate, was sentenced to nearly six years in federal prison today by United States District Judge Julian Abele Cook on charges of program fraud conspiracy, money laundering conspiracy, and tax charges, following a five-week jury trial that took place in August, United States Attorney Barbara L. McQuade announced today.
McQuade was joined in the announcement by Special Agent in Charge Paul M. Abbate, Federal Bureau of Investigation; Special Agent in Charge, Erick Martinez, Internal Revenue Service, Criminal Investigation; and Detroit Public Schools Emergency Manager Jack Martin.
Sandra Campbell was sentenced to 70 months in federal prison on charges of program fraud against the Detroit Public Schools, money laundering, and criminal tax fraud. In addition, Campbell was ordered to pay restitution to the Detroit Public Schools in the amount of $530,091. Co-defendant Domonique Campbell, daughter of Sandra Campbell, is set to be sentenced on January 7, 2014, at 11 a.m.
The evidence presented at trial established that between 2004 and 2008, Sandra Campbell and Domonique Campbell obtained in excess of $530,000 from the Detroit Public Schools through a fraudulent scheme in which orders were placed with the Campbells’ sham company for books and educational materials never provided to the schools. Sandra Campbell and Domonique Campbell conspired to launder the fraud proceeds and to defraud the Internal Revenue Service and failed to report the money they fraudulently obtained from the Detroit Public Schools as income on their tax returns.
United States Attorney Barbara L. McQuade said, "Anyone who considers defrauding our schools should take note that we are scrutinizing records and conduct, and we will prosecute those who steal funds intended to educate our children."
DPS Emergency Manager Martin stated, “This sentence sends a powerful message that fraudulently converting DPS resources for personal gain and thereby depriving students of the tools they need to prepare for educational and employment opportunities will not be tolerated. If you steal DPS resources, you will get caught, and you will be prosecuted."
FBI Special Agent in Charge Paul M. Abbate stated, “In this case, the defendant’s criminal actions amounted to stealing the opportunity for a quality education from our children. Such conduct cannot, and will not, be tolerated. The FBI Detroit Field Office, together with our local, state, and federal partners, will continue to battle public corruption and hold those responsible accountable for their actions."
IRS Special Agent in Charge Erick Martinez stated, “Those who profit at the expense of our children and steal from our community will be held accountable for their greedy actions."
McQuade was joined in the announcement by Special Agent in Charge Paul M. Abbate, Federal Bureau of Investigation; Special Agent in Charge, Erick Martinez, Internal Revenue Service, Criminal Investigation; and Detroit Public Schools Emergency Manager Jack Martin.
Sandra Campbell was sentenced to 70 months in federal prison on charges of program fraud against the Detroit Public Schools, money laundering, and criminal tax fraud. In addition, Campbell was ordered to pay restitution to the Detroit Public Schools in the amount of $530,091. Co-defendant Domonique Campbell, daughter of Sandra Campbell, is set to be sentenced on January 7, 2014, at 11 a.m.
The evidence presented at trial established that between 2004 and 2008, Sandra Campbell and Domonique Campbell obtained in excess of $530,000 from the Detroit Public Schools through a fraudulent scheme in which orders were placed with the Campbells’ sham company for books and educational materials never provided to the schools. Sandra Campbell and Domonique Campbell conspired to launder the fraud proceeds and to defraud the Internal Revenue Service and failed to report the money they fraudulently obtained from the Detroit Public Schools as income on their tax returns.
United States Attorney Barbara L. McQuade said, "Anyone who considers defrauding our schools should take note that we are scrutinizing records and conduct, and we will prosecute those who steal funds intended to educate our children."
DPS Emergency Manager Martin stated, “This sentence sends a powerful message that fraudulently converting DPS resources for personal gain and thereby depriving students of the tools they need to prepare for educational and employment opportunities will not be tolerated. If you steal DPS resources, you will get caught, and you will be prosecuted."
FBI Special Agent in Charge Paul M. Abbate stated, “In this case, the defendant’s criminal actions amounted to stealing the opportunity for a quality education from our children. Such conduct cannot, and will not, be tolerated. The FBI Detroit Field Office, together with our local, state, and federal partners, will continue to battle public corruption and hold those responsible accountable for their actions."
IRS Special Agent in Charge Erick Martinez stated, “Those who profit at the expense of our children and steal from our community will be held accountable for their greedy actions."
Third City of Buffalo Employee Guilty of Stealing Thousands of Dollars from Parking Meters
BUFFALO, NY—U.S. Attorney William J. Hochul, Jr. announced today that Francis Tronolone, 33, of Buffalo, New York, pleaded guilty to stealing thousands of dollars from the City of Buffalo, a governmental agency that receives federal funding. The charge carries a maximum penalty of 10 years in prison, a fine of $250,000, or both.
“Today’s developments mean that three different employees of the same city department have now been convicted of collectively stealing hundreds of thousands of dollars from the residents of this area,” said U.S. Attorney Hochul. “These crimes occurred day in and day out over many months and years. This office will continue to pursue this investigation until all who may have abused their positions are identified and caught.”
Assistant U.S. Attorney Maura K. O'Donnell, who is handling the case, stated that from November 2003 to the present, the defendant was employed as a coin collector and later a parking meter mechanic in the City of Buffalo Department of Parking Enforcement. In this capacity, Tronolone was responsible for collecting coins deposited into parking meters and repairing malfunctioning meters.
During the period of his employment, the defendant stole approximately $9,000 in coins from city parking meters, money that was supposed to be deposited into the city treasury. Some of the money was stolen from parking meters that had been rigged by other parking meter mechanics. Tronolone kept a small cooler in the back of his vehicle where he would conceal the stolen coins.
Tronolone is the third employee of the Department of Parking Enforcement to be convicted in this case. James Bagarozzo was convicted of stealing over $200,000 from Buffalo parking meters and sentenced to 30 months in prison on August 16, 2013. Bagarozzo was also ordered to pay $210,000 in restitution. Lawrence Charles has also been convicted of stealing over $10,000 from Buffalo parking meters and was sentenced to six months and prison and ordered to pay $15,000 in restitution. A fourth employee, Franklin Lopez, is charged also charged with stealing thousands of dollars from the City of Buffalo, a governmental agency that receives federal funding. The fact that a defendant has been charged with a crime is merely an accusation, and the defendant is presumed innocent until and unless proven guilty.
“Today’s developments mean that three different employees of the same city department have now been convicted of collectively stealing hundreds of thousands of dollars from the residents of this area,” said U.S. Attorney Hochul. “These crimes occurred day in and day out over many months and years. This office will continue to pursue this investigation until all who may have abused their positions are identified and caught.”
Assistant U.S. Attorney Maura K. O'Donnell, who is handling the case, stated that from November 2003 to the present, the defendant was employed as a coin collector and later a parking meter mechanic in the City of Buffalo Department of Parking Enforcement. In this capacity, Tronolone was responsible for collecting coins deposited into parking meters and repairing malfunctioning meters.
During the period of his employment, the defendant stole approximately $9,000 in coins from city parking meters, money that was supposed to be deposited into the city treasury. Some of the money was stolen from parking meters that had been rigged by other parking meter mechanics. Tronolone kept a small cooler in the back of his vehicle where he would conceal the stolen coins.
Tronolone is the third employee of the Department of Parking Enforcement to be convicted in this case. James Bagarozzo was convicted of stealing over $200,000 from Buffalo parking meters and sentenced to 30 months in prison on August 16, 2013. Bagarozzo was also ordered to pay $210,000 in restitution. Lawrence Charles has also been convicted of stealing over $10,000 from Buffalo parking meters and was sentenced to six months and prison and ordered to pay $15,000 in restitution. A fourth employee, Franklin Lopez, is charged also charged with stealing thousands of dollars from the City of Buffalo, a governmental agency that receives federal funding. The fact that a defendant has been charged with a crime is merely an accusation, and the defendant is presumed innocent until and unless proven guilty.
Wednesday, December 11, 2013
Former Real Estate Investor Sentenced to Five Years in Prison for Bank Fraud and Money Laundering
ORLANDO—U.S. District Judge Gregory A. Presnell today sentenced James Olivos (47, Lake Mary) to five years in federal prison for bank fraud and money laundering. As part of his sentence, the court also entered a money judgment in the amount of $2,866,121.39, the proceeds of the fraud scheme. Olivos pleaded guilty on September 18, 2013.
According to court documents, between March 2003 and November 2007, Olivos engaged in a scheme wherein he recruited other individuals ("straw purchasers") to purchase expensive homes, which they could not afford. Olivos prepared loan applications for these straw purchasers, which grossly overstated their incomes and gave false employment histories. Additionally, these applications stated that these homes would be used as primary residences, but Olivos had actually told these buyers that the homes would be investments and that he would find renters to cover the mortgage payments. Further, in order to increase his profits, Olivos convinced the sellers of the homes to inflate the sales prices by stating additional money would be necessary for home improvement. Olivos would then split the proceeds of the sales with the sellers. As a result of this fraud, Olivos caused a total loss to the lenders of approximately $3.2 million dollars.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. It was prosecuted by Assistant United States Attorney Vincent S. Chiu.
According to court documents, between March 2003 and November 2007, Olivos engaged in a scheme wherein he recruited other individuals ("straw purchasers") to purchase expensive homes, which they could not afford. Olivos prepared loan applications for these straw purchasers, which grossly overstated their incomes and gave false employment histories. Additionally, these applications stated that these homes would be used as primary residences, but Olivos had actually told these buyers that the homes would be investments and that he would find renters to cover the mortgage payments. Further, in order to increase his profits, Olivos convinced the sellers of the homes to inflate the sales prices by stating additional money would be necessary for home improvement. Olivos would then split the proceeds of the sales with the sellers. As a result of this fraud, Olivos caused a total loss to the lenders of approximately $3.2 million dollars.
This case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. It was prosecuted by Assistant United States Attorney Vincent S. Chiu.
Tuesday, December 3, 2013
Former Governor of State of Tamaulipas, Mexico Indicted in the Southern District of Texas
BROWNSVILLE, TX—A federal indictment charging Tomas Yarrington Ruvalcaba, the former governor of the state of Tamaulipas, Mexico, has been unsealed.
The unsealing was announced by United States Attorneys Kenneth Magidson and Robert L. Pitman, of the Southern and Western Districts of Texas, respectively, along with Janice Ayala, special agent in charge, Homeland Security Investigations (HSI); Javier Peña, special agent in charge, Drug Enforcement Administration (DEA); Bernard Butler, acting special agent in charge, Internal Revenue Service-Criminal Investigation (IRS-CI); and Armando Fernandez, special agent in charge, FBI.
Following an investigation that spanned several years, the sealed indictment was returned in May 2013 by a federal grand jury sitting in Brownsville. The indictment charges Yarrington, 56, and Fernando Alejandro Cano Martinez, 57, the owner of a Mexican construction firm, with conspiring to violate the provisions of the Racketeer Influenced and Corrupt Organization (RICO) statute. The two men are also charged with conspiracy to launder money, conspiracy to defraud, and conspiracy to make false statements to federally insured U.S. banks.
Yarrington is also separately charged with a conspiracy to violate the provisions of the Controlled Substances Act, two substantive bank fraud charges, and a conspiracy to structure currency transactions at a domestic financial institution, while Cano is separately charged with three counts of bank fraud.
Yarrington served as governor of Tamaulipas from 1999 to 2004. Tamaulipas lies along the southern border between the United States and Mexico directly across from Brownsville and Laredo.
According to the indictment, beginning in approximately 1998, Yarrington received large bribes from major drug traffickers operating in the Mexican state of Tamaulipas, including the Gulf Cartel. In return, Yarrington allegedly allowed them to operate their large scale, multi-ton enterprises freely, which included the smuggling of large quantities of drugs to the United States for distribution. From 2007 to 2009, Yarrington allegedly became involved in the smuggling of large amounts of cocaine through the Port of Veracruz into the United States.
Yarrington also allegedly collected bribes from commercial operations in Mexico, according to the indictment. Cano operated Materiales y Construcciones Villa de Aguayo, S.A. de C.V., a construction firm in Tamaulipas that received significant public works contracts during Yarrington’s term as governor. The indictment alleges Cano, in turn, paid bribes to Yarrington to include the acquisition of real estate in front names for him.
The indictment further alleges Yarrington also received control over stolen public funds in the latter part of 2004. Portions of those funds were allegedly used to buy a Sabreliner 60 airplane in January 2005. As part of that purchase, $300,000 was transferred to a bank account in the United States. Another portion of the allegedly stolen funds, $5 million Mexican pesos, was transferred to Cano in the spring of 2005, according to the indictment.
The indictment further alleges that starting in approximately 1998, Yarrington, and later to include Cano, became involved in the acquisition of valuable assets in the United States, using front names and business entities established starting in 2005 to disguise the true ownership of the assets. The assets allegedly included bank accounts, residences, airplanes, vehicles, and real estate in Bexar, Cameron, Hidalgo, and Hays Counties, many of which were acquired via allegedly fraudulent loans from banks in Texas. According to the indictment, bank accounts established in front names at Texas banks were used to receive and disburse money to carry the ongoing costs of the assets, such as loan costs and condo fees.
The indictment identifies numerous specific front entities involved in the scheme, each of which allegedly applied for multi-million-dollar fraudulent loans at Texas banks, which Cano allegedly personally guaranteed. The indictment details a total of more than $7 million in transfers into the U.S. accounts of the front entities.
Additional entities were created and used to apply for other loans to fund the purchase of still other assets, according to the indictment. Numerous currency transactions were allegedly conducted at First National Bank, headquartered in Edinburg, Texas, in a structured manner in amounts at or below $10,000 in order to evade the filing of Currency Transaction Reports by the bank.
Neither Yarrington nor Cano is in the custody of the United States and warrants remain outstanding for their arrests. Anyone with information about their whereabouts is asked to contact Homeland Security Investigations at 956-542-5811. Persons calling from Mexico should call 001-800-010-5237.
The RICO and money laundering charges each carry sentences of up to 20 years in prison, while conspiracy to commit bank fraud carries as possible punishment up to 30 years. The drug conspiracy charges carry a term of imprisonment of at least 10 years. The currency structuring charges carry a possible five-year term of imprisonment.
The indictment also includes a notice of forfeiture. Some of the assets identified in the indictment already have been seized by the United States in civil forfeiture actions over the course of the investigation, to include approximately 46 acres in Bexar County, a condo on South Padre Island, a 2005 Pilatus airplane, and residences in Hidalgo and Hays counties.
The investigation leading to the indictment has been conducted by the Organized Crime Drug Enforcement Task Force in Brownsville, San Antonio, Houston, Corpus Christi, and New York and has included agents and officers with HSI, DEA, IRS-CI, FBI, and the Texas Attorney General’s Office. The United States government also acknowledges with gratitude the significant assistance received from the government of Mexico in the course of this investigation, including through sharing evidence and expertise.
The case is being prosecuted by Assistant United States Attorneys Charles Lewis, Julie K. Hampton, and Jody Young.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.
The unsealing was announced by United States Attorneys Kenneth Magidson and Robert L. Pitman, of the Southern and Western Districts of Texas, respectively, along with Janice Ayala, special agent in charge, Homeland Security Investigations (HSI); Javier Peña, special agent in charge, Drug Enforcement Administration (DEA); Bernard Butler, acting special agent in charge, Internal Revenue Service-Criminal Investigation (IRS-CI); and Armando Fernandez, special agent in charge, FBI.
Following an investigation that spanned several years, the sealed indictment was returned in May 2013 by a federal grand jury sitting in Brownsville. The indictment charges Yarrington, 56, and Fernando Alejandro Cano Martinez, 57, the owner of a Mexican construction firm, with conspiring to violate the provisions of the Racketeer Influenced and Corrupt Organization (RICO) statute. The two men are also charged with conspiracy to launder money, conspiracy to defraud, and conspiracy to make false statements to federally insured U.S. banks.
Yarrington is also separately charged with a conspiracy to violate the provisions of the Controlled Substances Act, two substantive bank fraud charges, and a conspiracy to structure currency transactions at a domestic financial institution, while Cano is separately charged with three counts of bank fraud.
Yarrington served as governor of Tamaulipas from 1999 to 2004. Tamaulipas lies along the southern border between the United States and Mexico directly across from Brownsville and Laredo.
According to the indictment, beginning in approximately 1998, Yarrington received large bribes from major drug traffickers operating in the Mexican state of Tamaulipas, including the Gulf Cartel. In return, Yarrington allegedly allowed them to operate their large scale, multi-ton enterprises freely, which included the smuggling of large quantities of drugs to the United States for distribution. From 2007 to 2009, Yarrington allegedly became involved in the smuggling of large amounts of cocaine through the Port of Veracruz into the United States.
Yarrington also allegedly collected bribes from commercial operations in Mexico, according to the indictment. Cano operated Materiales y Construcciones Villa de Aguayo, S.A. de C.V., a construction firm in Tamaulipas that received significant public works contracts during Yarrington’s term as governor. The indictment alleges Cano, in turn, paid bribes to Yarrington to include the acquisition of real estate in front names for him.
The indictment further alleges Yarrington also received control over stolen public funds in the latter part of 2004. Portions of those funds were allegedly used to buy a Sabreliner 60 airplane in January 2005. As part of that purchase, $300,000 was transferred to a bank account in the United States. Another portion of the allegedly stolen funds, $5 million Mexican pesos, was transferred to Cano in the spring of 2005, according to the indictment.
The indictment further alleges that starting in approximately 1998, Yarrington, and later to include Cano, became involved in the acquisition of valuable assets in the United States, using front names and business entities established starting in 2005 to disguise the true ownership of the assets. The assets allegedly included bank accounts, residences, airplanes, vehicles, and real estate in Bexar, Cameron, Hidalgo, and Hays Counties, many of which were acquired via allegedly fraudulent loans from banks in Texas. According to the indictment, bank accounts established in front names at Texas banks were used to receive and disburse money to carry the ongoing costs of the assets, such as loan costs and condo fees.
The indictment identifies numerous specific front entities involved in the scheme, each of which allegedly applied for multi-million-dollar fraudulent loans at Texas banks, which Cano allegedly personally guaranteed. The indictment details a total of more than $7 million in transfers into the U.S. accounts of the front entities.
Additional entities were created and used to apply for other loans to fund the purchase of still other assets, according to the indictment. Numerous currency transactions were allegedly conducted at First National Bank, headquartered in Edinburg, Texas, in a structured manner in amounts at or below $10,000 in order to evade the filing of Currency Transaction Reports by the bank.
 |  |
|---|---|
| Tomas Yarrington Ruvalcaba | Fernando Alejandro Cano Martinez |
Neither Yarrington nor Cano is in the custody of the United States and warrants remain outstanding for their arrests. Anyone with information about their whereabouts is asked to contact Homeland Security Investigations at 956-542-5811. Persons calling from Mexico should call 001-800-010-5237.
The RICO and money laundering charges each carry sentences of up to 20 years in prison, while conspiracy to commit bank fraud carries as possible punishment up to 30 years. The drug conspiracy charges carry a term of imprisonment of at least 10 years. The currency structuring charges carry a possible five-year term of imprisonment.
The indictment also includes a notice of forfeiture. Some of the assets identified in the indictment already have been seized by the United States in civil forfeiture actions over the course of the investigation, to include approximately 46 acres in Bexar County, a condo on South Padre Island, a 2005 Pilatus airplane, and residences in Hidalgo and Hays counties.
The investigation leading to the indictment has been conducted by the Organized Crime Drug Enforcement Task Force in Brownsville, San Antonio, Houston, Corpus Christi, and New York and has included agents and officers with HSI, DEA, IRS-CI, FBI, and the Texas Attorney General’s Office. The United States government also acknowledges with gratitude the significant assistance received from the government of Mexico in the course of this investigation, including through sharing evidence and expertise.
The case is being prosecuted by Assistant United States Attorneys Charles Lewis, Julie K. Hampton, and Jody Young.
An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.
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