NEWARK, N.J. – An East Orange, New Jersey, man was sentenced today to 26 months in prison for his role in a conspiracy to file false federal income tax returns on behalf of inmates at the Essex County Correctional Facility, Acting U.S. Attorney William E. Fitzpatrick announced.

Winfred Moses, 49, previously pleaded guilty before U.S. District Judge William H. Walls to an information charging him with conspiracy to make and present false, fictitious, and fraudulent claims to the IRS. Judge Walls imposed the sentence today in Newark federal court.

According to the documents filed in this case and statements made in court:

From 2013 through Aug. 5, 2014, Moses, Reginald Eaford, 46, also of East Orange, and others conspired to file bogus federal tax returns in order to fraudulently obtain tax refunds.

Eaford was an inmate at the Essex County Correctional Facility from approximately May 20, 2013 through Feb. 12, 2014. As part of the scheme, Eaford, Moses, and others obtained social security numbers, dates of birth, and other information from inmates at the jail. Eaford and Moses would then generate false W-2 forms indicating that the inmates had earned income during the relevant tax year and that federal income tax had been withheld from their paychecks.

Afterwards, Eaford and Moses filed false federal income tax returns on behalf of the inmates and had the refund checks sent to the Essex County Correctional Facility or to Moses’s East Orange residence. The proceeds of the fraud were split among Eaford, Moses, and the relevant inmates. Eaford and Moses admitted that they filed 112 phony tax returns that sought approximately $670,206 in fraudulent refunds.

In addition to the prison term, Judge Walls sentenced Moses to three years of supervised release and ordered him to pay restitution of $200,045. Eaford previously pleaded guilty with Moses on Dec. 19, 2016 and awaits sentencing.

Acting U.S. Attorney Fitzpatrick credited special agents of IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, postal inspectors from the U.S. Postal Inspection Service, under the direction of Inspector in Charge James V. Buthorn, and the Internal Affairs Division of Essex County Jail, under the leadership of Warden Roy Hendricks, with the investigation.

The government is represented by Assistant U.S. Attorney Francisco J. Navarro of the U.S. Attorney’s Office Criminal Division in Newark.

Defense counsel: Leigh-Anne Mulrey Esq., Morristown, New Jersey

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LOS ANGELES – The fifth and final defendant charged with using credit and debit cards obtained from a series of cyberattacks on U.S. companies that resulted in an estimated $5 million in losses – and caused one victim company to go out of business – has pleaded guilty to federal fraud charges.

Irina Fedoseeva, 33, a Russian national who resides in the Koreatown District of Los Angeles, pleaded guilty yesterday afternoon to conspiracy to use unauthorized credit and debit cards and admitted causing more than $225,000 in losses.

In a plea agreement filed in United States District Court, Fedoseeva admitted to helping make fraudulent purchases with debit cards obtained as a result of cyberattacks on two healthcare administrators in December 2015 and February 2016.

After helping a co-defendant make unauthorized purchases from retail stores that included Apple and Best Buy, Fedoseeva resold the merchandise on the internet.

Four other defendants previously pleaded guilty to federal fraud charges for their roles in the computer attacks.

Timur Safin, 29, of Burbank; Dmitry Fedoseev, 34, of Koreatown; and Kristina Gerasimova, 22, of the Miracle Mile District of Los Angeles, all of whom are Russian nationals, each pleaded guilty on March 20 to aggravated identity theft and debit/credit card fraud.

The fifth defendant charged as a result of this investigation – Siarhei Patapau, 26, of the Miracle Mile District of Los Angeles, a native of Belarus – pleaded guilty on March 6 to similar felony charges.

All five defendants pleaded guilty before United States District Judge Stephen V. Wilson, who is scheduled to sentence the defendants during hearings scheduled in June and September.

According to court documents filed in two separate cases, the five defendants conspired with computer hackers, some of whom are believed to be in Russia. The hackers staged attacks that included:

• a July 2014 intrusion into an airline’s computer system in which the hackers funded pre-paid credit cards in the amount of $900,000;
• a December 2015 hack into the system of a healthcare administrator that allowed the cybercriminals to reactivate a dormant dependent care account and order the production of numerous debit cards that were used to make approximately $550,000 in fraudulent purchases; and
• a February 2016 attack on another healthcare administrator that allowed the intruders to order the production of debit cards linked to reactivated accounts that were used to make approximately $3.5 million in fraudulent purchases.

The computer hackers directed the pilfered debit and credit cards to be sent to the five defendants charged in Los Angeles and other co-conspirators. Members of the conspiracy then used the unauthorized cards to make cash withdrawals, purchase money orders and make purchases at retail outlets such as Apple, Best Buy, Home Depot and Target.

For example, Safin admitted in court that he used a number of the pre-paid credit cards to withdraw approximately $5,074 at ATMs throughout Los Angeles County and to purchase money orders totaling $19,420. He used debit cards obtained from the healthcare administrators to make at least $225,000 in fraudulent purchases.

When they were arrested last year, Fedoseev was in the possession of more than 519 unauthorized credit, debit and gift cards, and Patapau was found with approximately 525 credit and debit cards in other people’s names.

As a result of their guilty pleas, Patapau, Safin and Fedoseev each face a statutory maximum sentence of 12 years in federal prison when they are sentenced by Judge Wilson. Gerasimova faces a statutory maximum sentence of seven years, and Fedoseeva faces a statutory maximum sentence of five years.

The investigation that led to the two cases filed in Los Angeles was conducted by the Federal Bureau of Investigation.

The two criminal cases are being prosecuted by Assistant United States Attorneys Bryant Yang and Eric Tung of the General Crimes Section.

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The Virginia Department of Social Services (VDSS) has agreed to pay the United States $7,150,436 to resolve allegations that it violated the False Claims Act in its administration of the Supplemental Nutrition Assistance Program (SNAP), the Department of Justice announced today. Until 2008, SNAP was known as the Food Stamp Program.

Under SNAP, the U.S. Department of Agriculture (USDA) provides eligible low-income individuals and families with financial assistance to buy nutritious food. Since 2010, SNAP has served on average more than 45 million Americans per month, and provided more than $71 million annually.

“SNAP is an important vehicle for helping needy families,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This settlement reflects the Justice Department’s commitment to ensuring that taxpayer funds are spent appropriately so that the public can have confidence in the integrity of vital programs like SNAP.”

Although the federal government funds SNAP benefits, it relies on the states to determine whether applicants are eligible for benefits, to administer those benefits, and to perform quality control to ensure that its eligibility decisions are accurate. USDA requires that the quality control processes the states use ensure that benefits are correctly awarded, are free from bias, and accurately report states’ error rates in making eligibility decisions. The USDA reimburses states for a portion of their administrative expenses in administering SNAP, including expenses for providing quality control. The USDA also pays performance bonuses to states that report the lowest and the most improved error rates each year, and can impose monetary sanctions on states with high error rates that do not show improvement.

As part of the settlement, VDSS admitted that, beginning in 2010, it retained Julie Osnes Consulting, a quality control consultant, to reduce its SNAP benefits determination error rate by training VDSS quality control workers to “use whatever means necessary” to find a benefits decision “correct” rather than finding an error. VDSS also admitted that if its quality control staff “could not find a way to make a benefits decision correct,” they were instructed to “find a reason to ‘drop’ the case, or eliminate it from the sample.” VDSS acknowledged that this outcome-driven method, as implemented by VDSS between 2010 and 2015, “injected bias into the case review process” because it was designed to lower VDSS’s reported error rate by falsely reporting errors as “correct” or eliminating them from the sample. Through its use of these biased methods, VDSS was improperly awarded USDA performance bonuses for 2011, 2012, and 2013.

VDSS further admitted that VDSS quality control workers did not want to use the methods proposed by Julie Osnes Consulting because they believed the methods lacked integrity, injected bias into the quality control process, and violated USDA requirements, and that they communicated these concerns to their supervisors. VDSS admitted that the former VDSS quality control manager pressured and intimidated these employees to force them to adopt these methods, including, according to these employees, threatening termination, providing negative performance reviews, taking away teleworking and flexible scheduling privileges, and engaging in other forms of harassment and retaliation.

As part of the settlement, VDSS and the United States also agreed that VDSS had taken certain corrective actions beginning in 2015, including terminating its use of the improper quality controls methods devised by Julie Osnes Consulting.

“We appreciate the commitment and investigative assistance provided by our partners at the U.S. Department of Justice’s Civil Division, U.S. Attorney’s Office, and Virginia Office of the State Inspector General,” said Special Agent-in-Charge Bethanne M. Dinkins of the USDA Office of Inspector General (OIG). “We also wish to note the technical assistance provided by our colleagues in the Office of Audit at USDA, OIG. During our investigation, we worked together to address the concerns of state employees and others who alleged that the integrity of the SNAP quality control process was weakened by third-party consultants. These concerned individuals reported that cases were not being treated in a consistent manner, and that certain advice from consultants resulted in identified errors being diminished rather than used to improve eligibility determinations. Today’s settlement sends a strong message regarding the Government’s commitment to work across agency lines to protect the integrity of SNAP.”

The settlement was the result of an investigation conducted by the USDA Office of Inspector General (USDA-OIG), the Civil Division’s Commercial Litigation Branch, and the U.S. Attorney’s Office for the Western District of Wisconsin that arose out of a nationwide audit of SNAP QC processes by the USDA-OIG.

Tax Preparer Sentenced to 84 Months in Prison in $1.2 Million Tax Refund Fraud Scheme

DOJ and IRS Remind Taxpayers to File Timely and Accurate Tax Returns by Tuesday, April 18, 2017

TALLAHASSEE, FLORIDA – Jorge Maldonado, 52, of Oviedo, Florida, has been sentenced to 84 months in prison and ordered to pay $1,203,073 in restitution for conspiracy, wire fraud, theft of government property, and aggravated identity theft. His three tax fraud conspirators are scheduled to be sentenced later this month. The sentence was announced by Christopher P. Canova, United States Attorney for the Northern District of Florida.

The co-defendants are:

• Jennifer Maldonado, 29, of Oviedo, sentencing set for April 19 at 10:00 a.m.;
• Sharon Glover, 55, of Sanford, Florida, sentencing set for April 20 at 2:00 p.m.; and
• Diane White, 54, of Sanford, sentencing set for April 20 at 10:00 a.m.

In July 2016, a federal jury convicted the Maldonados of conspiracy, wire fraud, theft of government property, and aggravated identity theft. Co-conspirators Glover and White pled guilty in February 2016 to conspiracy, theft of government property, and aggravated identity theft.

During the six-day trial, the government presented evidence that, between 2009 and 2011, Jorge Maldonado and his daughter Jennifer, who were both tax preparers, conspired with Glover and White to obtain more than $1.2 million in income tax refunds issued on fraudulent tax returns. The Maldonados filed fraudulent returns that generated refunds. Glover and White cashed refund checks issued as a result of the fraudulent returns. They deposited cash proceeds of the checks into the Maldonados’ bank accounts or delivered the cash to the Maldonados. Glover and White cashed 505 checks by using fraudulent powers of attorney, approximately 16 different forged notary seals, and forged taxpayer signatures.

United States Attorney Canova said: “When fraudsters submit fraudulent tax returns, they are actually stealing from the millions of honest taxpayers who fulfilled their tax obligations accurately and on time. My office is committed to working with our law enforcement partners, such as the Internal Revenue Service, to ensure that tax dollars are used for their intended purpose.”

IRS-Criminal Investigation Tampa Special Agent in Charge Mary Hammond said: “When Jorge and Jennifer Maldonado used their tax return preparation service to steal client identities and make a fast buck for themselves and their co-conspirators, they underestimated the special agents of IRS Criminal Investigation. IRS-CI works diligently to protect the American tax system and root out criminals who prey on unsuspecting taxpayers. ”

This case resulted from an investigation by the Internal Revenue Service – Criminal Investigation. Assistant United States Attorneys Herbert S. Lindsey and Gary K. Milligan prosecuted the case.

The United States Attorney’s Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General.

To access public court documents online, please visit the U.S. District Court for the Northern District of Florida website.

For more information about the United States Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.

For more information, contact:
Amy Alexander, Public Information Officer

amy.alexander@usdoj.gov

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Ten Arrested For Defrauding Victims Out Of More Than $9 Million In Diamonds

Schemers targeted victims in New York, Las Vegas, and Mumbai, India

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, William F. Sweeney Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Leon Hayward, Acting Director of the New York Field Office of U.S. Customs and Border Protection, and James P. O’Neill, the Commissioner of the New York City Police Department (“NYPD”), announced the arrests of GODEL SEZANAYEV a/k/a “Gary,” MARK MULLAKANDOV, ALBERT FOOZAILOV, IMANIL MURATOV a/k/a “Eddy,” MANASHE SEZANAYEV a/k/a “Michael,” NATHAN ITZCHAKI, ARKADIY ISRAILOV, ALI JAVIDNEZHAD, MARK NATANZON, SHOLOM MURATOV, MENACHEM ABRAMOV, and NIZAMUDEN AKBARI for their role in fraudulently obtaining millions of dollars in virtually untraceable diamonds from victim wholesalers.  Ten of the defendants were arrested this morning and will be presented this afternoon before U.S. Magistrate Judge Andrew J. Peck in Manhattan federal court.  JAVIDNEZHAD and AKBARI remain at large.

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

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

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

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

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

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

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

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

Among the schemes described in the Complaint:

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

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

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

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

Mr. Kim praised the outstanding work of the FBI, the CBP, and the NYPD for their investigative efforts and ongoing support and assistance with the case.

The prosecution of this case is being overseen by the Office’s Violent and Organized Crime Unit.  Assistant U.S. Attorneys Noah Falk and Andrew Thomas are in charge of the case.

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

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